Lords Sitting of 21 June 2000

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Oxford.

Colombia
The Lord Bishop of Durham The Lord Bishop of Durham asked Her Majesty's Government:
How they intend to support Plan Colombia at its meeting with donor governments in Madrid on 6th and 7th July.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, we are keen to support the Colombian Government's efforts to bring peace to Colombia. In preparation for the Madrid conference in July, the Foreign and Commonwealth Office hosted a meeting of senior officials on Monday 19th June to examine ways in which the international community can help. Neither we nor our EU partners has made any decision about what aid we could give to Colombia. We are determined, however, that any aid will support human rights, long-term economic and social development and an end to violence in Colombia.
The Lord Bishop of Durham: My Lords, I am grateful for the Minister's Answer. Can the noble Baroness elaborate on the kinds of conditions that might be attached to any aid, especially with regard to military activity in Colombia and consultation with human rights organisations?
Baroness Scotland of Asthal: My Lords, I reassure the right reverend Prelate that, as I said in my original Answer, the aid to be given by Her Majesty's Government will be directed towards the maintenance and support of human rights and long-term economic and social development. We are at the discussion stage in this matter and a good deal of consultation will be needed. We are pleased that on 19th June the NGOs participated and were able to make a special presentation. We very much value their contribution.
Lord Avebury: My Lords, can the Minister confirm that the plan contains a 600 million dollar military component, including massive armaments such as Black Hawk helicopters, and that serious reservations have been voiced about it by some of our partners in Europe, including the Belgians, the Dutch, the French and the Germans? How will the Government and EU ensure that the views of non-governmental organisations are fed into the July consultation? In particular, has the noble Baroness noted the opposition to the plan by the Regional Association for
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the Defence of Human Rights and the National Organisation of Indigenous of Colombia? How will the Minister ensure that their voices are heard?
Baroness Scotland of Asthal: My Lords, there are no set figures relating to the aid that the Government intend to give. I hear what the noble Lord says about the military component of any such aid. Since we have not yet fashioned precisely how the aid is to be given, and its quantum, I am unable to confirm anything that the noble Lord says. However, as we have already demonstrated, I reassure the noble Lord that we shall continue to listen to, and seek to engage, non-governmental organisations as appropriate.
Baroness Rawlings: My Lords, I hope that the Minister will acknowledge the very important role that the Royal Navy West Indies guard ship has played in countering drug operations from Latin America and the Caribbean. Therefore, do Her Majesty's Government now regret their decision to cut the amount of time that the guard ship spends in the region, and why was that done?
Baroness Scotland of Asthal: My Lords, I am unable to answer the precise question put by the noble Baroness. However, with respect, that has precious little to do with this Question.
Lord Wallace of Saltaire: My Lords, does the Minister accept that in the past the American attitude to problems of social unrest, economic under-development and the attendant drugs problems in Latin America has been very much a military and policing response and not sufficiently a political and economic response? As a general part of this question, will Her Majesty's Government ensure that a broader response than merely a military one is an important part of Plan Colombia?
Baroness Scotland of Asthal: My Lords, in this situation EU and American aid needs to be co-ordinated in such a way that it responds appropriately to the perceived difficulties that Colombia faces. We hope that in the work that we do together we shall be able to fashion a holistic approach that better addresses the needs of Colombia.
Lord Mackay of Ardbrecknish: My Lords, I wonder whether the noble Baroness wants to review her response to my noble friend Lady Rawlings. The Plan Colombia with which the Question is concerned is about trafficking in narcotics, is it not? Is not one of the roles of the guard ship in the West Indies to try to stop drug trafficking? Surely, my noble friend deserved a better answer than the Minister gave.
Baroness Scotland of Asthal: My Lords, I assure the House that the patrols of the West Indies guard ship to control drug trafficking continue, and we are satisfied that it is able to do its job.

Artificial Limbs: Audit Commission Report
2.41 p.m.
Lord Campbell Lord Campbell of Croy asked Her Majesty's Government:
What action they are taking as a result of the Audit Commission's report, published in March, on the quality of artificial limbs, surgical appliances and disability equipment services in the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, we welcome the report and are already taking action to improve standards. We are also considering currently all of the recommendations and hope to make further announcements soon.
Lord Campbell of Croy: My Lords, I am grateful to the noble Lord for his reply. Does it mean that he agrees with the report that urgent reorganisation is required in the supply of orthotic equipment such as callipers and surgical appliances because the quality of what has been described as fragmented services is, in many places, unacceptable?
Lord Hunt of Kings Heath: My Lords, alongside many of the other recommendations, the Government are considering with careful interest the suggestion to which the noble Lord refers, in particular that units should be large enough and throughput sufficient enough to make for quality and cost effectiveness. Part of the process of improving the quality of services at local level is to remind health authorities and local authorities of their responsibilities in that area. Where changes need to be made to improve the organisation, I am sure that that will occur.
Lord Ashley of Stoke: My Lords, is the Minister aware that his constructive response to a recent debate on the subject was warmly appreciated? The urgent requirement now is a clear timetable. In the debate, the Minister was not enthusiastic about that need. However, without specific targets, dates and outputs we shall get nowhere. Will my noble friend think again?
Lord Hunt of Kings Heath: My Lords, I am not in a position today to give an explicit timetable. I assure my noble friend that my honourable friend Mr John Hutton is considering urgently the recommendations in the Audit Commission's report and what the Government's response should be. The Government have taken action. They are promoting the value of integrated community services providing a single point of access for service users. The sum of £14 million is being provided recurrently for wheelchair developments. As my noble friend well knows, £4 million is being invested this year to modernise the NHS
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hearing aid service. We agree that the deficiencies identified by the Audit Commission need to be addressed.
Lord Addington: My Lords, notwithstanding his previous answer, does the Minister agree that the report raises some points which could be dealt with easily? Recommendation 15 states:
"Service managers should review and eliminate the potential conflicts of interest that arise when commercial suppliers discharge the services of both clinician and salesman".
That relates to the supply of orthotics and wheelchairs. Will the Minister draw his department's attention to this matter? Such a straightforward conflict of interest can surely be quickly dealt with.
Lord Hunt of Kings Heath: My Lords, the noble Lord raises the issue of whether the role of the orthotist as both clinician and salesman creates a conflict of interest. I understand that the matter has been addressed in Department of Health guidelines on orthotic services. Ultimately it is a matter for local management. We must ensure that the lessons of the Audit Commission report are fully considered at local level by health authorities and, where appropriate, local authorities. In order to have effective performance management of health authorities and performance assessment of local authorities the Government must ensure that account is taken of current guidelines and any future guidelines.
Baroness Masham of Ilton: My Lords, does the Minister agree that some materials used are heavy and old fashioned whereas others are light and more attractive? Will he consider how important it is for a young girl, for example, who has lost limbs through meningitis to have equipment which is usable and attractive?
Lord Hunt of Kings Heath: My Lords, I very much understand the noble Baroness's point. A working group has been set up to consider the introduction of silicone cosmeses coverings in artificial limb services. In addition, the NHS Purchasing and Supply Agency has set up a strategic commissioning group which brings together commissioners, providers, the industry and user representatives to inform future specification for artificial limb contracts. I hope that, as part of that process, we can take account of the point the noble Baroness raises.
Lord McColl of Dulwich: My Lords, is the Minister aware that the supply of artificial limbs in many places in developing countries in Africa is better and quicker than in this country? It is an urgent issue. What will the Government do?
Lord Hunt of Kings Heath: My Lords, I pay tribute to the noble Lord for his work over many years on this issue, in particular in relation to the artificial limb and appliance centres. We need to be careful not to suggest that everything is poor about current services. There are many examples of excellent services around the

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country. The problem is that high standards are not universal. The Government are seized of the need to ensure that best practice is adopted throughout the country. In addition, through its local inspectors, the Audit Commission will monitor what will happen at local level. Although we should always consider the experience of other countries, we can also look to our own country for experience of best practice.
Lord Clement-Jones: My Lords, the Minister is aware of the problem when medical staff, in particular occupational therapists, are faced with widely differing standards from social services departments and health authorities about the equipment which can be provided for patients on discharge from hospital. The position as regards charges made and the type of equipment provided needs urgent consideration. Can the Minister say something on that?
Lord Hunt of Kings Heath: My Lords, I do not disagree with that point. We need to bear in mind that effective investment in appropriate equipment in the long term will ensure that many people make fewer demands on the services in the future. We need to bring home to the health service and local government the message that the more effective services they can develop in this area the better the spin- off for users of the services and the services themselves.
As regards community equipment services, the Government are keen to encourage health and local authorities to work together. As regards charges, the noble Lord will know that we intend to table amendments to ensure that we can issue statutory guidance.
Lord Campbell of Croy: My Lords, will the Minister recognise that, owing to our ageing population, demand for surgical appliances is increasing but that new materials and technologies, as referred to by the noble Baroness, Lady Masham, which are becoming available, could alleviate the situation?
Lord Hunt of Kings Heath: Yes, my Lords. Part of the effective delivery of high quality services in future is the need to ensure that those in NHS health services and local authorities who commission services relating to community equipment are keeping up to date with developments and ensuring that its quality and acceptability are of the highest order. We want to encourage that.

Medical Students
2.51 p.m.
Lord Roberts of Conwy Lord Roberts of Conwy asked Her Majesty's Government:
What progress has been made towards increasing the number of medical students in the United Kingdom.
Lord Hunt of Kings Heath: My Lords, in July 1998, the Government announced that the annual intake of
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medical students in the United Kingdom would be increased by about 1,000 places per annum by 2005. In England, the Higher Education Funding Council for England has announced the allocation of a total of 1,126 additional places. The Government are now considering a further increase in medical school intake in England. The information relating to Scotland, Wales and Northern Ireland is a matter for the devolved administrations.
Lord Roberts of Conwy: My Lords. I declare an interest as president of the University of Wales College of Medicine. I appreciate the increase of about 1,000 in the number of medical students. However, are the Government convinced that the number is adequate to meet the needs of the United Kingdom? Bearing in mind that during the past five years only 42 per cent of doctors registering each year for service in the United Kingdom have been trained here, is it not time that the Government changed their target?
Lord Hunt of Kings Heath: My Lords, an additional 1,126 places is a considerable achievement. However, I assure noble Lords that as part of our further developments within the NHS we are looking at the number of places over and above the 1,126 which we shall need. As regards the statistics which the noble Lord gave, I understand that 76 per cent of the medical workforce is UK trained. The advice given by the Medical Workforce Standing Advisory Committee in 1997, on which much of the development in medical school places is based, suggested that we needed to stabilise that proportion. I believe that the additional places we have announced will help us to do that, as will any future expansion.
Lord Cledwyn of Penrhos: My Lords, my noble friend has given us important information, but is he aware that we could do with many more trained doctors throughout Wales—in the villages, outside Cardiff and Swansea, where they are badly needed?
Lord Hunt of Kings Heath: My Lords, I am in danger of trespassing on another country's arena. I pay tribute to the high quality of medical education in Wales, of which I have experience. The new training places allow us to develop links outside traditional medical school centres, both in terms of the new medical schools—for instance, in Norwich at the University of East Anglia and at the Peninsular Medical School in the West Country—and in places where medical schools have been expanded—for instance, in Birmingham through links with other parts of the Black Country. There is no doubt that in ensuring that we have high quality doctors we have to ensure a broad-based education for medical students which enables them to experience all facets of life in the health service.
Lord Clement-Jones: My Lords, although the Government's announcement is welcome, the Minister will be aware of comments made by his honourable friend Frank Field pointing out that the number of

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doctors per head of population in France is 75 per cent greater than in this country; two and a half times greater in Spain than in this country; and three times greater in Germany. Are the Minister and his department examining the question of additional medical students in a sufficiently fundamental way?
Lord Hunt of Kings Heath: My Lords, international comparisons can often be misleading. In terms of doctors per 1,000 of population, the UK is comparable with Finland, Norway, the Netherlands and the US. But we accept that we need to do better. We need to expand the NHS workforce as a whole and doctors will be an important component of that. Furthermore, we must break down some of the working barriers between the different professions. By the sensible reordering of responsibilities we can take some of the load from doctors, nurses and other professionals in order to allow them to focus on the most important and serious elements of their work.
Baroness Young: My Lords, does the Minister recognise that we need a considerable increase in the number of doctors? Do the figures he has given mean an absolute increase over and above those who retire every year? Is what we read in the newspapers about the two new medical schools at East Anglia and Exeter true; that they will take in students with lower qualifications who will therefore require a longer training period? Can we be satisfied that they will achieve the correct standard?
Lord Hunt of Kings Heath: My Lords, medical workforce planning has proved to be a difficult art. The noble Baroness is right that a considerable number of doctors are coming up to retirement. That statistic needs to be factored into the further development of training places.
It is right that we should consider everything we can to widen access to medical education. I point to King's College, London, whose medical school is working with local schools and colleges in south London to identify potential medical students at a young age, and where alternative tests will be applied to demonstrate a suitability and general aptitude for medicine. However, I do not believe that that or other initiatives will in any way impact on the high quality of medical students and doctors in this country. I believe that the number of applications for places is at a healthy level, enabling us to ensure that high quality students enter our medical schools.
Lord McColl of Dulwich: My Lords, is the Minister aware that according to OECD figures, Britain's number of practising doctors per head of population is one of the lowest compared with the majority of OECD countries? Only Turkey, Korea and Mexico have a lower number. At the other end of the scale, will he comment on unemployment among fully trained obstetricians and on last year's cut of 33 per cent in the number of new consultants as opposed to an annual increase under the previous government of 4 per cent?
Lord Hunt of Kings Heath: My Lords, so far as concerns obstetrics and gynaecology, the noble Lord will know that the Government have been in discussion with the president of the Royal College of Obstetricians and Gynaecologists. We are looking closely at a range of proposals to address that issue and the way forward. So far as concerns the OECD report, my understanding is that that information was based on 1996 statistics and therefore, I believe, comes under the responsibility of the party of the noble Lord.

Pension Increase: Basis of Calculation
2.59 p.m.
Lord Brabazon of Tara Lord Brabazon of Tara asked Her Majesty's Government:
For what reason the Treasury uses different bases for calculating inflation for increasing petrol prices and pensions.
Lord McIntosh of Haringey: My Lords, the increase in prices in the year to September is used as the basis for the inflation increase in both excise duties and pensions. Exactly the same methodology has been used this year as in previous years. Next year we shall index pensions by the out-turn for September 2000 RPI, which we forecast at 3.4 per cent.
Lord Brabazon of Tara: My Lords, I am grateful to the Minister for that reply. However, in his Budget Statement the Chancellor said that he was raising both pensions and petrol tax in line with inflation. Why did he not go on to say that he was using two completely different measures of inflation; that is, petrol at 3.3 per cent and pensions at 1.1 per cent? How can he possibly justify using two completely different measures in one Budget Statement? Is that not a scam of epic proportions, even for this Chancellor? Is the Minister aware that, had pensions been increased by the same rate as petrol, they would now by rising by £2.25 per week instead of a measly 75 pence per week?
Lord McIntosh of Haringey: My Lords, pensions have always been raised on the basis of the out-turn in September figures. Excise duties were raised in the July 1997 Budget, which we had to introduce when we came into office, on the basis of the forecast. In order not to count the same year twice, we continued with the forecast base, which explains the difference. However, the noble Lord refers to this year's figures. He should recognise that these matters balance out. Last year, the excise duties were indexed by 1.3 per cent and personal allowances by 3.2 per cent. Next year, we shall index pensions by the out-turn for the September 2000 RPI, which we forecast at 3.4 per cent. On the whole, over the years the Treasury loses out and pensioners gain.
Lord Mackay of Ardbrecknish: My Lords, has the Minister told the Bank of England that inflation will rise by well over 3 per cent? According to the rules laid down in the Act of Parliament which set up the Monetary Policy Committee, I should have thought

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that that would put the jobs of its members at risk. However, leaving aside that interesting answer from the Minister, does he believe that it is a good defence to say that when the Chancellor suggested using the same rate of inflation, he then went on to use two rates? Is that not a case of double standards? Those are not my words. It was the Daily Record, the determinedly Labour paper in Scotland, read by all the Chancellor's constituents in Dunfermline, which accused the Chancellor of double standards. Is the Daily Record right or wrong?
Lord McIntosh of Haringey: My Lords, when the noble Lord asks me a question and then proposes to leave it on one side, I am not sure whether or not he wishes me to answer. I shall answer, because I always answer his questions when they are serious. As he very well knows, the figure of 3.4 per cent which appears in the Red Book was announced at the time of the Budget. The answer to the second question is that I am not responsible for the Daily Record. I have explained exactly and precisely on what basis the September figures are calculated for each of the two purposes.
Lord Goodhart: My Lords, is it not the case that perhaps the main reason why the pension increase last year came out at such an appallingly, ridiculously low figure was that the index on which the increase was based included mortgage interest? Given that very few pensioners have mortgages and that, on the other hand, cuts in interest rates harm pensioners because the income from their savings is reduced, would it not be desirable, once pensioners have had a chance to catch up from the effects of last year, to base pension increases on an index which does not include mortgage interest?
Lord McIntosh of Haringey: My Lords, there are several different bases for calculating inflation. Some of them are unfair to some people and some are unfair to others. The RPIX version is used widely for a variety of purposes.
Baroness Hogg: My Lords, in the light of that answer, can the Minister explain why the Government have refused to subject their calculations of inflation to the independent scrutiny of the new statistics commission?
Lord McIntosh of Haringey: My Lords, I am not aware that that is the case. The new statistics commission is barely in existence. When it is, it will no doubt ask for the figures that it wants.
Lord Davies of Oldham: My Lords, does my noble friend recall whether, when they introduced the fuel escalator, the last Conservative government believed that pensions should be accelerated by the same amount?
Lord McIntosh of Haringey: My Lords, my noble friend points to the fact that it was the previous government who withdrew the earnings link and
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replaced it with a prices link for pensions. My noble friend is also aware that the full benefit of the provisions that have, and are being, made for pensioners in this Parliament amount to £6.5 billion whereas restoration of the earnings link would cost only £4.5 billion.
Lord Clark of Kempston: My Lords, surely the Minister agrees that the public, pensioners and motorists were misled by the Statement of the Chancellor of the Exchequer. It was a shabby trick to play on pensioners and motorists. Does the Minister agree that it is high time that Statements from whichever government department should be unassailably true?
Lord McIntosh of Haringey: My Lords, unless the noble Lord is saying that something that I have said this afternoon is not unassailably true, I believe that he should be careful about the words he uses.

Business
Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement which is being made in another place on the European Council at Feira.

House of Lords' Offices: Select Committee Report
3.6 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Fifth Report from the Select Committee be agreed to (HL Paper 70).—(The Chairman of Committees.)
Following is the report referred to:
The Committee have met and been attended by the Clerk of the Parliaments and the Gentleman Usher of the Black Rod.
1. Fast stream pay proposals
The Committee agreed to new arrangements, developed in conjunction with the House of Commons, for paying fast-stream Clerks and Library Clerks.
2. Salaries of the Chairman and Principal Deputy Chairman of Committees
The Committee approved revised salaries with effect from 1 April 2000.
3. Lords' reimbursement allowances
The Committee was informed that from 1 April 2000 the motor mileage allowance had been up-rated in line with the retail prices index to 52.5 pence per mile for the first 20,000 miles and 24.2 pence per mile thereafter; and that the bicycle allowance had been up-rated to 6.7 pence per mile.
4. Appointment of a management consultant
The Committee approved the appointment of a management consultant, Mr Michael Braithwaite, to undertake a review of the management structure and the structure, including the Committee structure, for taking decisions about the services of the House and

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other domestic matters, which were introduced in the House of Lords in 1991–92 following the Ibbs reforms in the House of Commons.
5. Commercial activities
The Committee agreed that the House of Lords should not be used by Members as a business address nor the name used for the promotion of any commercial activity.
Lord Barnett: My Lords, I believe that the House is being asked to approve a Motion which, frankly, is ridiculous. Perhaps I may trouble the House with a few questions that I wish to ask the Chairman of Committees. First, item 1 of the report states that:
"The Committee agreed to new arrangements"
it does not tell us what the new arrangements are—
"for paying fast-stream Clerks",
but it does not tell us who fast-stream Clerks are.
Item 2 tells us that the committee "approved revised salaries" for the Chairman and Principal Deputy Chairman. It does not tell us what those revised salaries are and by what amount they have been increased.
Item 3, regarding Lords' reimbursement allowances, tells us that the Committee was informed that from 1st April 2000 (in other words, backdated) the motor mileage allowance has been uprated in line with the retail prices index—not the RPIX but the retail prices index. There will also be an increase in the bicycle allowance, which has been uprated to 6.7p per mile. However, no reference is made to noble Lords' other allowances, which I should have thought were much more important than those two items.
What of the committee? I gather that it is composed of the usual channels, and of course we know who they are. They are part of the House authorities. We read that the Clerk of the Parliaments and the Gentleman Usher of the Black Rod were also in attendance at that meeting.
The worst item that we are asked to approve is item 4, which concerns the appointment of a management consultant. We are told that he is a certain gentleman called Michael Braithwaite, who will,
"undertake a review of the management structure and the structure, including the Committee structure, for taking decisions about the services of the House".
We are not told what salary that gentleman will receive, or why we need a management consultant when a small committee of your Lordships' House could, at no cost at all, do a job that we understand.
I am sorry to trouble the House with those four items, but it is nonsense and does a disservice to the House to ask us to approve a document when we have been given so little information. I should be obliged if the Chairman of Committees could answer some of my questions.
Lord Cocks of Hartcliffe: My Lords, perhaps I can help my noble friend. I understand that Mr Braithwaite is picking up £70,000 for the job.
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I wish to concentrate on this item selected by my noble friend, because this Michael Braithwaite investigation follows a similar exercise in the House of Commons. His report on the Commons was debated there on 20th January. Introducing the report on behalf of the House of Commons Commission, Mr Archy Kirkwood gave enormous detail about Mr Braithwaite's work, for which he received £77,000 on that occasion. To assist the process, 105 people were interviewed, many on two or more occasions, and information was gathered from 14 overseas countries. Mr Kirkwood did not say whether there were fact-finding missions, but an enormous amount of work was done.
Imagine my surprise when I read through the debate and found a contribution from the honourable Member for Newcastle-under-Lyme, who said:
"the thing that concerns me about the report is its lack of clarity on what is happening to ordinary staff here".—[Official Report, Commons, 20/1/00; col. 1083.]
I must stress that point, because conflicts could arise. With a lot of young, zealous Members in the other place and a changing situation in your Lordships' House, there is a growing demand for resources for Members in either place. An Early Day Motion in the other place calling for an extra £20,000 on the office costs allowance has already attracted 124 signatures.
I am afraid that the constant pressure for more resources for Members of both Houses may lead to a temptation to find savings in the ordinary staff who service us here. I do not regard them as ordinary—I am using the phrase of my honourable friend from Newcastle-under-Lyme. They are very faithful, very experienced and very reliable. More than anything, when we have security problems, we can trust them. Anything that could set us against them must be thought about very carefully. I have heard rumours that there are attempts to cut the overtime rate of the catering staff in the other place. A big operation is going on among the security staff, with young people being recruited to replace old, experienced staff. We may be getting into a situation of penny wise, pound foolish.
The Committee should have had a word with the House formally before undertaking such a massive operation. Following my noble friend's remarks, I wonder whether it is too late to allow the House to discuss the matter, or whether we are faced with a fait accompli.
Lord Boardman: My Lords, the motor allowances increases in paragraph 3 are said to be in line with the retail prices index. What index was used for their calculation—the figure applied by the Government for pensions or the one used for petrol prices?
Lord Monson: My Lords, consultants never come cheap. How many days will Mr Braithwaite be working in return for his £70,000?
3.15 p.m.
Viscount Cranborne: My Lords, I endorse the remarks of the noble Lord, Lord Barnett, who, not for the first time, has rendered great service to your Lordships' House by drawing our attention to the shortcomings in the report. I associate myself with every word that he said.
In particular, I should like to ask the Chairman of Committees a little more about paragraph 4 of the report, which relates to Mr Braithwaite and the management consultancy. I must pick my words with some care, as I am all too well aware that the leader of my party was once a management consultant, I yield to no one in my admiration for the leader of my party.
Why was Mr Braithwaite appointed and at whose suggestion? What ills endemic in your Lordships' House are his attentions designed to put right? What are his riding instructions? How much is he going to be paid? Why is it so important that we should spend the large sums of money that I assume are involved in getting his views? Is it true that the suggestion of appointing a management consultant came from another place? If so, why have the authorities of this House undertaken to follow that suggestion without further consultation with your Lordships' House?
I am concerned about management consultants. I remember my American employer in California many years ago telling me that there were only two reasons that enterprises consulted management consultants: one was because the management did not know what to do and the second was because there was an argument that the managing director—or president, in American terms—wished to resolve without an internal quarrel. Do either of those conditions apply in your Lordships' House?
The Chairman of Committees: My Lords, I shall deal first with the points raised by the noble Lord, Lord Barnett. In doing so, I shall refer to other noble Lords who have spoken. If it is the wish of your Lordships that more information should be given, I am certainly prepared to view that request with sympathy. On the whole, I attempt to put forward less written material rather than more because, as I have said on previous occasions, I do not wish to overburden your Lordships. However, if your Lordships want more, you are entitled to have more. I also remind your Lordships that the minutes of Committees are available in the Library and can be consulted there.
I can ensure that the noble Lord, Lord Barnett, is provided with fuller details on the first item without burdening your Lordships now. We always intend to recruit the high quality staff from whom your Lordships' House has traditionally benefited. But recently there have not always been as many high quality applicants as on previous occasions and it was felt that this means of accelerating recruitment in certain instances would add to the incentive for those who might be available to be appointed to your Lordships' House.
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The increases in the reimbursement allowances follow the lines of previous years. The usual formula has been used. I readily concede, particularly this week, when we have heard something about bicycling, that the rewards in the bicycling allowances are not excessive. In fact, your Lordships may be interested to have a little more information on that point than is in the report; that is, the amount has gone up by 0.2p per mile from 6.5p to 6.7p per mile. That is a rise of approximately 3 per cent which is slightly more than the petrol allowance. I know that this week a number of your Lordships have joined in the cycle ride from the office of the noble Lord, Lord Macdonald of Tradeston, at the Department of Transport in Victoria Street to your Lordships' House. So there is something of a reward there.
As regards the allowances not mentioned in the report, as the noble Lord, Lord Barnett, will remember, those go up in August and are effective from that time. So that matter will be dealt with again in accordance with the normal procedure which is followed.
The noble Lord, Lord Cocks of Hartcliffe, and the noble Viscount, Lord Cranborne, raised the question of the proposed appointment of the management consultant, Mr Michael Braithwaite. Perhaps I may make a few remarks about that appointment. In the first place, your Lordships' committees, particularly the Offices Committee and its two sub-committees, were persuaded that there was a need to examine various options by which the House could make decisions on domestic matters. That has not been looked into since the reforms following the inquiry carried out by Sir Robin Ibbs in 1991–92.
I make this point—and your Lordships' Offices Committee was persuaded of this too—that sometimes there is advantage in having a qualified person from outside look at our management structures. That was done by Sir Robin Ibbs at the beginning of the last decade. As many of your Lordships will know, he was a highly qualified person. As a result of his inquiry, reforms were not only introduced in another place but were also introduced in your Lordships' House in relation to the financial management of your Lordships' affairs.
It is true to say that it was felt generally at that time that there had been advantage in having an independent mind to look at that matter.
Lord Ampthill: My Lords, I succeeded soon after the Ibbs report on the House of Commons. I have a belief that I was appointed Chairman of Committees for the sole reason that we did not think that we needed an Ibbs report but that we could manage to find somebody, and it happened to fall upon me—for goodness knows what reason—to take on the job which the noble Lord now fulfils. We did not need Ibbs here. Our affairs were in far better shape than the affairs of the House of Commons. I merely make the point that there surely is enough talent sitting on the Benches in this House, not to mention sitting at the Table and among all the other learned Clerks who look

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after us so well, for it to be totally unnecessary to bring in somebody who will not have a clue about how well we conduct our affairs compared with the other place.
The Chairman of Committees: My Lords, it is indeed the case that there is a great deal of talent in your Lordships' House already. I wholly agree with the noble Lord, Lord Ampthill, about that. Also, I pay tribute to him on the way in which he carried out his duties as Chairman of Committees when he occupied that post.
However, I remind the noble Lord that, in relation to the Ibbs inquiry, Deborah Williams was, at that time, appointed by your Lordships' House to assist with advising on the financial management of your Lordships' House. So that assistance was here at that time.
Of course, there is ample talent in your Lordships' House. If I can say so without too much immodesty, even I am not bereft of the occasional idea to put forward to your Lordships. There is no doubt about the range of talent and that we know a great deal about our own affairs, sufficient to put forward many ideas.
But I emphasise—and I feel this quite strongly—that from time to time there is advantage in drawing upon the experience, knowledge and inquiring mind of somebody from outside. This will be the first time in some 10 years that we have done that.
Lord Hooson: My Lords, I am grateful to the noble Lord for giving way and I am sorry to interrupt him. It would be extremely helpful if he could tell us what experience Mr Braithwaite has of management problems in legislative assemblies.
The Chairman of Committees: My Lords, he is a former senior partner of Deloitte & Touche. He has considerable experience of management matters. He carried out the inquiry for the other place.
In saying that, perhaps I may answer one of the specific points which was raised by the noble Viscount, Lord Cranborne. The suggestion to have management consultancy in this House did not come from another place. The further point on that is that there has been the suggestion that your Lordships' House should have considered these matters from the outset. It is always the practice of your Lordships' House that preliminary decisions and any recommendations are considered first in your Lordships' committees. That is the way in which we operate. That is the way in which proposals come before your Lordships' House. I suggest that it would be wasting the time of your Lordships' House if we did not follow that procedure.
There is a further fundamental point about that. Whatever recommendations the management consultant may make, in the first place, it is for your Lordships' appropriate committees to consider any such recommendations and then, if thought fit, to make recommendations to your Lordships. It is, always has been and, as far as I am concerned, always
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will be for your Lordships to make the ultimate decisions on any such recommendations. That will not be departed from.
Baroness Knight of Collingtree: My Lords, before the Chairman of Committees sits down, although he has generously and freely offered a great deal of information which has been sought, for which I am sure the House is grateful, I am not clear whether he proposes that the House should agree to that which many of us are worried about and on which we should prefer to have a rather fuller debate. Will he agree to that?
Lord Strathclyde: My Lords, before the Chairman of Committees responds to that point and, indeed, to any other points that are made—and I can see that a number of noble Lords wish to play a part—perhaps I may make a few remarks not just as Leader of the Opposition but also as a member of the Offices Committee. Apart from the Chairman of Committees, I believe that I am the only person so far who has spoken as a member of that committee.
I want to make two points: one a general one and one a more specific one. On the general point, the noble Lord, Lord Barnett, quite rightly raised the question of the report which we are debating. He said that it is rather thin. Having read it again, I agree entirely with that.
I know and suspect that that follows a format which has been well laid down by precedent, but perhaps the time has come, given the greater interest that there is in the House on such matters, for the way in which the reports are laid out to be reviewed and for more information to be provided. That may, in part, allow Peers who have an interest in those matters to raise questions informally with the Chairman of Committees or the authorities of the House before raising them in the House in this manner. I hope that that is a valuable suggestion which the Chairman of Committees may bring forward.
The second matter concerns the appointment of the management consultant. I should like to assure the House that this was agreed to in committee only after a great deal of discussion, debate and advice coming from the Chairman of Committees and others about the role of Mr Braithwaite.
The two points that were made were, first, that although Members of the House may be suitable to undertake this role, the Clerks were tied up in doing a great deal of other business servicing this House, so that they did not have the time to carry out this work themselves. The second point was made by the Chairman of Committees about having somebody from outside examining our structures. I, for one, agree with that. I hope that the noble Lord, Lord Barnett, and others will agree to accept this report. If it should come to a Division—I hope that it will not—I shall support the conclusions of the Offices Committee.
Lord. Peston: My Lords, I must say I was very disturbed by the intervention of the Leader of the Opposition just now. I had intended to rise earlier, but the Chairman of Committees got to his feet before I was able to join in. I am particularly concerned about how we operate. We are told that, of course, when we get this document we are free to spend as much time as we like debating it, except that if we debate for too long everybody gets irritated, so de facto, we are not.
We are also told that, of course, we can divide on such a Motion, but in practice we do not, because we are all so sensitive to the feelings of those who serve on this committee that we would not care to offend them. I agree very much with my noble friend Lord Barnett, except that as always in his restrained manner he talked in rather delicate language. I regard this report as ridiculous and if there were an opportunity to vote against it, I say categorically that I would vote against it on this occasion.
I am concerned not merely with the lack of a factual basis but, like the noble Viscount, Lord Cranborne, having had at least a minimum of experience of what management consultants do, I know that you end up doing all the work for them. All this is is a way of bringing somebody in at £70K so that some of us can then do the job. In my judgment, my noble friend Lord Barnett. is quite right: in which case why do we not save the £70K, organise a dinner for ourselves and still do the job? The serious point is that we will end up doing the job even if we spend that £70K. Therefore, I personally would not like to spend it.
It seems to me this is an example of what is going wrong with your Lordships' House. I do not say this to the noble Lord in any personal way—he is doing this in his role as a member of the Procedure Committee—but to put forward the argument that the Clerks have not got the facilities for doing the job themselves simply confirms what we have all been saying for some time: it is about time that we dealt with the resources problem and did not go in for this minimal incrementalism of doing a little bit here and a little hit there but never facing up to the realities of what needs to be done in your Lordships' House. Therefore, I particularly reject the argument that we have to follow this course because the Clerks are too busy. I have no idea what my noble friend Lord Barnett will propose in a moment, but were he for once, instead of being conciliatory, to adopt a rather revolutionary approach to this matter, he would have at least one noble friend supporting him.
Lord Campbell of Alloway: My Lords, before the noble Lord sits down, may I ask—
Noble Lords: Lord Barnett!
Lord Barnett: My Lords, first, I welcome the intervention of the noble Lord, Lord Strathclyde. I thought it was very helpful. If I may say so, I have found quite incredible some of the replies from the Chairman of Committees. He told us that he did not want to overburden us with information. Well, he certainly did not do that. He said that he would send
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me the details. I do not want him to send me the details; I want your Lordships to have the details. We were told that the procedure of this House is that such information is sent to committees and that committees examine it, and that that is the normal way that we do these things. Of course, we also have another normal course of action: we do not have to agree with committees when they put a report before us. I do not suggest to the Chairman of Committees that we should vote against this report today. I hope that he will withdraw it—
Noble Lords: Hear, hear!
Lord Barnett: My Lords, it would be, frankly, outrageous to ask us to agree to a report which suggests, for example, spending thousands of pounds on a consultant without telling us the answer to all the other points that we need to know, some of which have not yet come forward. Therefore, I hope that the Chairman of Committees will tell us that he does not propose to put this Motion to the House. If he does, I ask your Lordships to oppose it.
Lord Campbell of Alloway: My Lords, the only point I wanted to make has been made by the noble Lord, Lord Barnett, with greater force than I would have been able to make it. I sincerely ask the noble Lord the Chairman of Committees if he will withdraw this Motion now and for it not to be debated today.
Lord Berkeley: My Lords, as a former member of the Administration and Works Sub-Committee, perhaps I may say that my noble friend Lord Peston is actually wrong. We did divide the House over the matter of carparking at the front of your Lordships' House, so there is a precedent. I, too, hope that the Chairman of Committees will withdraw this Motion, but if he decides not to do so, I shall certainly vote against it.
Could the Chairman of Committees let the House know whether Mr Braithwaite has been chosen as a result of a competitive tendering procedure? There are many thousands of management consultants in this country and I would like to hear that he has been appointed because of his excellence rather than because he is somebody's friend, but I am sure that is not the case.
The Chairman of Committees: My Lords, perhaps I may provide one or two additional pieces of information before I respond to the suggestions which have been most recently made. I am very grateful indeed to the noble Lord, Lord Strathclyde, the Leader of the Opposition, and to the noble Baroness, Lady Knight of Collingtree, for raising the points that they did. If I may say so, the noble Lord, Lord Strathclyde, made a very helpful point as a member of your Lordships' committee which considered these matters in some detail.

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It is proposed that Mr Michael Braithwaite will be helped by two Officers of your Lordships' House. They are the Yeoman Usher, Brigadier Hedley Duncan and the Establishment Officer, Dr R Walters. It has been suggested that Mr Michael Braithwaite will not be in a position, because of lack of knowledge, to assist your Lordships. I would suggest that is far from the case. He has already become very familiar indeed with the workings of Parliament through the examination which he made in another place. It is for that reason that if he undertakes this work it will be less costly than it otherwise would have been, and indeed he will not have to spend a great deal of time in finding out about the basic workings of the House.
In answer to the point made by the noble Lord, Lord Monson, no set number of days has been set aside: that has been left open depending upon how the work proceeds. Although I have attempted to indicate that some more detailed information is already available in the normal way to your Lordships through the Library, I am persuaded that it might be helpful for your Lordships to be presented with a further report, which will contain more information of the kind requested by your Lordships this afternoon.
In the circumstances, I shall not press this Motion this afternoon but return to your Lordships with a more detailed report which, so far as its basic elements are concerned, will be similar to this one but contain the additional information which your Lordships, quite understandably, require.
Lord Denham: My Lords, before the noble Lord sits down, he has said that he will produce further information. Does he mean that he will refer the matter back to the committee—I think that is what the House wants—rather than just produce more information? I think that we want this to be referred back to the committee before we reach a decision on it.
The Chairman of Committees: My Lords, my immediate answer to the point raised by the noble Lord, Lord Denham, which I well understand, is that I should like to consider that. Another meeting of the Administration and Works Sub-Committee is scheduled for early July. If I may reflect upon it, that may be the appropriate point at which to ask that sub-committee to take another look at this. I do not want now, on the spot, to commit myself to referring the matter back in that way. What I shall certainly do, as I have indicated, is come back with a new report which contains more information. If the noble Lord will allow me to reflect upon that I will do so and if, on reflection, it does seem to be a better way of proceeding I will of course do that.
I suspect that I have not, on this occasion, been able to satisfy many of your Lordships with this report. However, I hope that your Lordships feel that it is appropriate for me to take the course of action I have suggested. That being the case, I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

European Council, Feira
3.40 p.m.
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, with the leave of the House, I should like to repeat a Statement on the Feira European Council which is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"Together with my right honourable friends the Chancellor of the Exchequer and the Foreign Secretary, I attended a meeting of the European Council in Santa Maria da Feira, Portugal, on 19th and 20th June. A copy of the Council's conclusions is available in the Library of the House. I had a series of meetings in the margins with the Prime Minister of Belgium, Mr Verhofstadt, on illegal trafficking in people and football hooliganism; with the Prime Minister of Greece, Mr Simitis, in the wake of the appalling killing of Brigadier Saunders; with the Spanish Prime Minister, Mr Aznar, on economic reform; and with the French Prime Minister, Mr Jospin, on French plans for their presidency.
"As regards savings tax, the most contentious issue at the Council itself was the question of how best to tackle the problem of cross-border tax evasion within the EU. For many years the Commission and, indeed, most member states, have argued that the best way to deal with this issue is through tax harmonisation by requiring all countries to introduce a withholding tax on savings income paid out to non-residents. We, for our part, have argued consistently that a EU-wide withholding tax would not only be seriously damaging for the City of London; it would also be completely ineffective in tackling tax evasion. But we have also made it clear through these long and complex negotiations that we do fully agree with the objective of fighting international tax abuse caused by banking secrecy.
"The outcome my right honourable friend the Chancellor and I achieved at Feira was fully in line with the principles and objectives we set out. It was, as I said yesterday, a personal triumph for the Chancellor. This is a comprehensive agreement which fully protects the competitiveness of the City. All 15 countries have now agreed to accept exchange of information, not a withholding tax, as the way forward for the EU. Implementation of the European Union regime will depend on the progress made in agreeing similar measures with third countries and dependent territories. Even in the transitional period, only two of the 15 countries have said that they will definitely retain a withholding tax.
"This is an excellent agreement for Britain and for Europe. It shows once again how the Government's strategy of positive engagement in Europe both protects and indeed enhances the country's national economic interest.
"As regards economic reform, that was also demonstrated at the last European Council at Lisbon where we agreed a radical 10-year

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programme of economic reform for Europe. Since Lisbon we have made progress in taking this agenda forward, including directives on e-commerce and e-money, agreement in respect of copyright and new proposals on public procurement. At Feira we agreed a charter for small enterprises, a new strategy on scientific and technological research and a hugely ambitious action plan on e-Europe, which will underpin efforts to create a dynamic knowledge economy in Europe. At the same time we invited the Commission to accelerate work on the single market in financial services, energy liberalisation and aviation.
"Heads of Government discussed the proposed charter of rights. I made clear my view that the charter should pull together in a single document the rights European citizens enjoy, that it should be political in nature, not legally binding, and that it should not impose new legal obligations on the member states. The House will welcome the fact that there was a good deal of support for this approach from other Heads of Government. The charter will he one of the main issues for discussion at the Biarritz European Council in October.
"On enlargement, we agreed on the need to keep up the momentum in the negotiations with the candidate countries.
"On the European Union's own preparations in the inter-governmental conference, we heard a progress report from the Portuguese presidency setting out the options for re-weighting votes in the Council of Ministers in favour of the larger member states like the UK, for reforming the size and structure of the Commission and for looking again at what issues should be decided by qualified majority voting.
"We also discussed the arrangements agreed at Amsterdam to allow closer co-operation among a group of member states. Such arrangements already exist, for example in Schengen. And we will need more such flexible co-operation in an enlarged EU. But in this context, the Council reaffirmed in its conclusions the need for coherence and solidarity in an enlarged European Union.
"We made further progress on European defence. Close working links between the European Union and NATO are being put in place, together with special consultation arrangements with those European allies who are not in the EU. The priority now is on how Europe will deliver on the headline goal we set ourselves at Helsinki, and this will be the focus of work in the next six months. We also adopted targets for the civilian aspects of crisis management, such as the provision of police officers.
"Finally, we discussed a range of international issues: Russia, the Balkans, the Middle East peace process, and Africa on which President Mbeki of South Africa addressed the Council.
"This was, again, a successful summit for Europe and the United Kingdom. I have no doubt at all that it is vital for British ideas, British industry and
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British influence that we continue with the policy of constructive partnership with the EU and under this Government that is what we shall do."
My Lords, that concludes the Statement.
3.45 p.m.
Lord Strathclyde: My Lords, I am grateful to the noble Baroness for repeating the Statement. I understand that she has taken time off from the "Body Image Summit" being held by the Prime Minister at No. 10. I thank her for putting the interests of the House first.
In the past I have often been accused of being churlish in response to EU summits in this House. Perhaps I may say at once that I welcome the commitment to the completion of the internal market, the overdue emphasis placed on small businesses and the action plan on drugs. I also welcome the success achieved in resisting the threat of a withholding tax which would have done much damage to the City of London. Let us hear no more about unfair tax competition. Does the noble Baroness agree that that owes much to the Chancellor of the Exchequer, Mr Brown? Can she confirm the Treasury briefing to today's Financial Times that Downing Street urged Mr Brown to give way on this issue at the Helsinki summit but that the Chancellor refused to do so? Did the Chancellor, not for the first time, show better judgment than the Prime Minister? Can she confirm, however, that this agreement will not be put into effect unless the European Union can achieve exactly the same agreement of the Swiss and the US authorities to exchange information on savings? I wonder how the Government assess that particular prospect.
Can the noble Baroness assure the House that the Government will not try to prove its euro credentials by harassing the authorities in the Isle of Man or the Channel Islands in pursuit of an agreement that may never come into force if the Swiss Government will not lift their secrecy laws?
I wonder whether the noble Baroness has had the opportunity to see the comment of the Swiss Finance Minister, Kaspar Villiger, in today's Corriere della Sera that Swiss banking secrecy is "non-negotiable"? Is that very same newspaper not right in saying that the English may be speaking of a very important result but that the Feira agreement has already received a cold shower in the shape of a "No" from the Swiss?
We, on this side of the House, do not favour EU intervention in pursuit of tax harmonisation. The Chancellor may have held a threat at bay, but is it not a threat that should never have been made in the first place? Does not this episode show once again the utter futility of the schoolboy boycott of the democratically elected government of Austria? Is not the noble Baroness ashamed of the admission by her noble friend Lady Scotland that Austria is the only member of the United Nations with whom we have a policy of refusing bilateral ministerial talks?
What do we do if an Austrian Minister comes up to a member of this Government at one of these summits? Do we shuffle away, muttering, "Not today, thank you

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very much?" Is it not high time that this farcical and offensive policy was brought to an end? Can the noble Baroness take that message with her when she meets with the rest of the Cabinet tomorrow morning?
At least the Chancellor could say that he was at centre stage in Feira. The Prime Minister can say no such thing. During the summit the Prime Minister hovered on the fringe, unable to say with which of his Minister's views on the euro he agreed; he was left in the wings while Herr Schroeder and President Chirac set out their plans for what they called "reinforced co-operation". If any of the Prime Minister's diminishing legion of spin doctors had bothered to mention that in yesterday's briefing, the translation into English is a "two-speed Europe".
That "two-speed Europe" will now officially be on the agenda in Nice. So too will the charter of fundamental rights. Can the noble Baroness tell the House this afternoon whether the Government are in favour of "reinforced co-operation" or against it? Are they ready to agree to a charter of fundamental rights, or will they oppose that concept? There are clear choices to be made. Parliament needs to be told and so too do the British public.
Is not the brutal truth that the Prime Minister was an increasingly forlorn figure as he boasted of his euro leadership, but then had to listen to the blunt words of the German chancellor that,
"A two-speed Europe already exists. You should know because you are not a member of the euro"?
Does the noble Baroness agree with the noble Lords, Lord Owen and Lord Healey, that any further major concessions of power should be made only after they have been endorsed by the British people in a referendum? Was there any discussion of the United Kingdom's entry into the euro at the summit, given that the entry of the Greek drachma was endorsed? Did the summit agree with the words of Mr Duisenberg that there was a "psycho-political" problem in the United Kingdom Government as to the euro? I do not know who inside the Government is a psycho, but it is a serious point.
Everyone in this country and across Europe knows from whispers and spin that the Prime Minister wants to enter the euro soon, and that he does not believe that there are any constitutional implications of this matter at all. We differ with him on that. But is not the stark truth that he could carry more respect at these summits if he came out for what he believed instead of dithering and simpering on the fringe?
That is the "psycho-political" problem accurately identified by Mr Duisenberg. It goes right to the top of this increasingly incoherent and indecisive Government. On the biggest issues facing the EU in Nice and after, the Prime Minister is not offering the leadership that the country expects. As President Chirac bluntly put it, in Europe,
"there will be leaders and followers".
Increasingly we can see that, in today's Europe, the Prime Minister is not one of its leaders.
3.54 p.m.
Lord Rodgers of Quarry Bank: My Lords, on behalf of these Benches, I too thank the Leader of the House for repeating today the Statement made by the Prime Minister elsewhere.
I too welcome the outcome on what we call "tax evasion". I agree that it is an excellent agreement both for the United Kingdom and for the European Union. I find no embarrassment on this occasion in congratulating the Chancellor on his achievement. Unlike the noble Lord, Lord Strathclyde, I am not too bothered about trivial newspaper stories, whether or not they are accurate. I feel that they are irrelevant to the outcome, which was a good one. It shows what can be done in the European Union through persuasion, given a good case. For that reason it is strengthening both of the Union, as well as of those who believe that Britain's full membership, in every respect, at all times, is to the United Kingdom's advantage.
I ask the noble Baroness only one question in that regard. The Statement refers to the need to make progress with the agreement after negotiations with third countries and dependent territories. Can she say how those negotiations will be started? Will they be carried out by the Europe Union or through bilateral exchanges? Is there any timetable by which implementation of that important agreement will take place?
Compared with the outcome on tax evasion, other matters were, perhaps not subsidiary, but less striking. I should like to ask questions on two or three of those topics. A reference was made to something which is not unfamiliar to us; that is, closer co-operation among groups of member states. It may be my shortcoming, but I do not fully understand what that means. That is an area in which there could be a danger of two-tier membership or of unravelling. I am sure that that is not the intention and it should be possible to welcome the progress that has been made. However, could the House be told a little more as to precisely what that involves?
A vague statement was made on European defence, with no indication of exactly what has been agreed. Perhaps the noble Baroness could tell us explicitly what was new on the whole question of the emergency unit being able to take express action. Also, we know that there has been a real problem—Kosovo among others—of obtaining the target of police officers which had been set. Can the Minister say what the new target is and what is the likelihood of it being achieved?
I referred earlier to rapid response. I am afraid I was tumbling over my words. I was asking explicitly what progress had been made on rapid response.
As often happens, the Statement began with reference to other meetings that the Prime Minister had on the margins of the Council, including the meeting with the French Prime Minister, Mr Jospin. In that respect, can the Minister say a word or two about the agendas for Nice and, before that, Biarritz? She referred to progress on the charter in Biarritz. It would be helpful to have an indication, not necessarily of the agenda, which presumably will be for the French

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presidency to arrange, but of the United Kingdom's objectives, both at Biarritz and the Nice Council meeting in December.
It is clear that there was no substantive discussion of the euro at the summit meeting, and no explicit statement of the United Kingdom's intentions. In that respect the Chancellor likes to make extramural statements of one kind or another. I should like to believe that his success with the withholding tax has given him some confidence and courage to think rather differently about the whole question of entering the eurozone. I agree with Mr Duisenberg that it is not only a matter of convergence; it is not only a matter of five conditions, of which three have probably already been met; it is a political decision. I am not expecting the noble Baroness to give us a great deal of hope today, but perhaps he can confirm that that political decision will be made sooner rather than later and that the Chancellor is in high spirits and open to persuasion.
3.58 p.m.
Baroness Jay of Paddington: My Lords, as always I am grateful to the noble Lords, Lord Strathclyde and Lord Rodgers, for their overall welcome of this report on the summit and, indeed, as the noble Lord, Lord Strathclyde, said, for his enthusiasm for certain parts of it.
As the noble Lord, Lord Strathclyde, is concerned about the issue of interpretation of various events as he has read them in what one might call secondary sources, I can assure him—I should not like this to go unchallenged or unassailed—that the Prime Minister was certainly not involved in the "Body Image Summit"; that that summit was not held at No. 10 Downing Street; and that it finished at 10.15 this morning. There was therefore no challenge to my responsibilities towards your Lordships' House in that regard.
I refer the noble Lord, Lord Strathclyde, to those matters which are on record in relation to this conference to assist him in obtaining the correct position of Her Majesty's Government. For example, I refer him to the press conference which my right honourable friends the Prime Minister, the Chancellor of the Exchequer and the Foreign Secretary gave yesterday and, on the issue of the convergence criteria and whether or not convergence is closer or further away, to the speech made by my right honourable friend the Chancellor of the Exchequer at the Mansion House last week. Those may be more instructive and more authoritative than some of the second-hand sources on which he commented this afternoon.
With regard to the general point made by the noble Lord, Lord Strathclyde, about the sense in which Britain was lagging behind the leaders at this conference, a reading of the conclusions of the presidency will again lead him from the primary sources to a rather different view from that which he took this afternoon.
If we leave aside the welcome that he rightly gave to the points made by my right honourable friend the Chancellor of the Exchequer as regards the
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withholding tax, of which he was able to convince the rest of his colleagues, he will see that, in relation to the charter of rights, the question of the post-Lisbon agreements, the economic agreements which were set out at that previous summit on, for example, a more subsidiary but, none the less, very important issue of the drugs trade, not to mention the question of trafficking in people, the British Government took a very important leading position in the discussion and, as is often the case, those positions which we espoused were ones which resulted in considerable agreement from our colleagues.
The noble Lord raised the question of what he described as the "two-speed Europe", and thought that somehow the Prime Minister had been disadvantaged by the fact that some of the issues which could fall into this category would be put on the agenda at the Nice summit. Again, I refer to the Prime Minister's reported statements in the past 24 hours on this matter. He said very clearly that he realised that these issues would be on the agenda of the Nice summit; that this was not something into which we were suddenly being bounced by the French government; and that, as was referred to in the Statement which I repeated, on certain issues—for example, the question of Schengen—there were different kinds of co-operation at different periods and in different ways between different countries.
I refer again to the terms of the conclusion. If I can find the exact words for your Lordships, I will quote them precisely. The conclusion was that, where it was thought possible to look at enhanced co-operation, it would be—and I quote directly from the conclusion—
"in the context of cohesion and solidarity within the European Union".
That could not be much clearer.
The noble Lord, Lord Rodgers, raised whether there were specific issues which might fall into this basket of concerns which might be discussed during the IGC. The Government's position is that they are willing to consider those issues, in the spirit in which they are seen in the context of cohesion and solidarity. However, at present the Government are not convinced that the existing treaty provisions are sufficient in terms of making allowance for those different forms of progress in the specific areas of which I have given examples.
With regard to the question of the development of the very important and successful agreement that we achieved in relation to the exchange of information, as opposed to the withholding tax, I remind the House—and in this respect I concur with the point made by the noble Lord, Lord Rodgers, that, given a good case, this is an example of achieving much through persuasion—that six months ago the UK Government were in a position of 1:14 on this particular issue. We have now resolved it in the way in which the Government and particularly the City of London were concerned to resolve it. We have done that through persuasion, on the basis of a good argument, and entirely accept that description by the noble Lord, Lord Rodgers.

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With regard to the question of how we go forward, particularly on the attitude of the Swiss and indeed the relationship and negotiations which will need to take place with the dependent territories and others, I am sure that noble Lords are aware that the question of the OECD discussions has already thrown up a more optimistic overall view of what the position may be vis-à-vis the Swiss government and specifically the United States government than was perhaps indicated from, yet again, the second-hand source of the noble Lord, Lord Strathclyde, in quoting a particular Minister today.
On the negotiations with the independent territories, we shall be working with our own independent territories on a bilateral basis, as I understand it, to fulfil our commitment set out in the conclusions. However, on the question of Switzerland—and this relates to the general point made by the noble Lord, Lord Strathclyde—this is precisely the reason that the UK has retained its right to veto the directive on the entire package, if these kind of agreements are not met within two years. I hope that that meets the point made by the noble Lord, Lord Rodgers. I cannot today give him a precise indication of exactly how discussions will proceed between the EU and other governments with which we are not as involved in terms of our bilateral arrangements as we obviously are with dependent territories. If I have further information, I shall, of course, write to the noble Lord.
I think I have covered most of the major points that were raised, except for the specific one which was raised by the noble Lord, Lord Rodgers, in relation to what practical progress has been achieved on the defence and security agreement. The wording of the presidency conclusions, which allows a very positive engagement between non-European NATO countries and other NATO countries, underlies what one might describe as the spirit of this development. The specific points are that the permanent political and military structures should be put in place in early 2001, and that the practical ways forward will be those which have previously been outlined. The proposals are a development of the mechanisms which have previously been agreed at other summits, and various benchmarks have been agreed. If the noble Lord requests it, I shall be happy to write to him with the precise details.
With regard to the European police force, I can reassure the noble Lord, Lord Rodgers, that the target for civilian police capabilities is to be met by voluntary contributions from the national police forces of member states. These contributions will be available for operations carried out by any international organisation, including, for example, the UN or the OSCE.
I believe that I have covered most of the main points made by noble Lords. In conclusion, I say to the noble Lord, Lord Strathclyde, that, although he perceives the British Government to be on the margins of the summit, if he looks at the conclusions and at the agreements which have been made on the basic
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principles, as well as the practical development of some of the earlier summits, he will discover that much was achieved on the basis of our leadership. I again commend to him the phrase of the noble Lord, Lord Rodgers—that much is achieved through persuasion, given a good case.
4.7 p.m.
Lord Renton: My Lords, I welcome the agreement that the proposed charter will not be legally enforceable. Perhaps I can ask the noble Baroness whether she is aware that that would be a very useful precedent for future agreements. That arises because the Treaty of Rome and its enactments have, to a great extent, not been legally enforceable. The economies, constitutions and climates of the European countries differ so greatly that it is difficult to expect them to be legally enforceable. Will the Government do all that they can to ensure, especially if the Community is to be enlarged, that future agreements will not be legally enforceable, but merely good aims?
Baroness Jay of Paddington: My Lords, I would be reluctant and foolish to give from the Dispatch Box this afternoon that overriding assurance to the noble Lord, Lord Renton. However, I was very interested to read the extremely authoritative debate on the charter of fundamental rights which was held in your Lordships' House last Friday, when regrettably I could not be present. The way in which those issues were covered lends great credit to those who took part in the debate, and notably the people who were actually involved in the discussion on the convention. Many of the points made this afternoon by the noble Lord, Lord Renton, were thoroughly examined and very positively aired.
I reinforce the point that I made in answer to the noble Lord, Lord Strathclyde, that the Prime Minister led off the discussion on the charter at the Feira summit, saying that it should be declaratory and limited to existing rights. As I emphasised in my earlier reply, this position was supported by several partners. I also reinforce the point made by my noble friend Lady Scotland in her reply to the debate last week, that it is the Government's position that the charter should not extend competence or disturb member states' legal relations with their citizens within areas of national competence. To that extent, the declaratory point, which the noble Lord, Lord Renton, made as his primary, opening contribution, is one which we very strongly feel should be supported. It should not be an aspiration or a legal requirement.
Lord Shore of Stepney: My Lords, I congratulate my noble friend on the Statement. It is one of unusual importance. She has covered a vast menu of subjects. Looking ahead to Nice, one has to pick up, as it were—this Council is only a stepping stone towards that—what will be the big issue. The big issue is undoubtedly closer co-operation, which the French and Germans have placed on the agenda of the IGC. However, we would be only too happy if it was not there.

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Let us be clear about the matter. I ask my noble friend to confirm my next point. This is almost the breaking point. "Closer co-operation" is code for "full steam ahead" to that European state and ever-closer union upon which the founding six set their sights from the beginning. We should not be dragged along behind, unwillingly, at this moment when a great enlargement is bound to influence and offer opportunities for change in the whole European Union relationship. This is a great opportunity for us—if we have only the wit and the will to take it—to change our own relationship with the European Union into an honest one. We do not intend to become part of a federal union state. We need to have an honest relationship with the European Union and at the same time do great service to the rest of Europe, particularly to a number of the applicant countries which will lose their own freedoms in being subjected to the 31-odd chapters of the acquis communautaire which they are supposed to swallow at the point of entry.
I should be grateful if my noble friend would at least indicate that she realises that the big issue is now with us and that the Foreign Office and the Government are thinking carefully about where we go from now.
Baroness Jay of Paddington: My Lords, I am grateful for my noble friend's comments. I hope that it is self-evident that the Government are thinking about the issues. However, the question remains as to whether or not they are thinking about them from the same perspective as that of my noble friend. I am not sure whether my noble friend was present in the Chamber when I said in response to an earlier question that the Government have recognised for some time—the Prime Minister stated this explicitly at the news conference that he gave yesterday afternoon in Portugal—that these issues would be on the agenda for the Nice summit. As I said, this is not something into which we have suddenly found ourselves "bounced".
We have always accepted that in a more diverse Europe some flexibility will be needed. However, on the other hand—I emphasise this point—we do not accept that closer co-operation automatically leads to the creation of an inner core of member states, nor indeed, in the fashionable phrase, to a "two-tier Europe". As I said earlier, this is made explicit in the Presidency conclusions in terms of seeing this whole process within the solidarity and cohesion of the wider Europe.
My noble friend Lord Shore challenges the Government to demonstrate wit and will in this area. I emphasise again what I said in my first reply; namely, that what has been demonstrated above all at the Feira summit—given the strong leadership that exists on the specific issues which I mentioned, and which are included in the Statement—is that the Government have a good record of achieving change through persuasion and of achieving leadership on those issues in which they wish to play a prominent role.
Lord Wallace of Saltaire: My Lords, I am surprised at the passing reference to EU enlargement in the Statement as many of us consider that this is the main
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strategic project for the European Union for the next five years. Will the Government give us an assurance that one of their objectives for the Nice European Council is to achieve an agreed target date for EU enlargement? As the noble Baroness the Leader of the House is aware, the current timetable is slipping badly. The date has informally been agreed to be January 2003. I understand that the other week the German Chancellor said informally to the conference of Baltic states that they should not expect to join before January 2005 because serious negotiations are unlikely to begin until after the next German and French elections.
Many within the applicant states consider that the British Government are not giving great priority to enlargement. The Foreign Secretary has just cancelled his visit to Warsaw which was due to take place this coming weekend. This follows two cancelled visits of the Prime Minister to Warsaw during the past year. There is a queue of Prime Ministers and Foreign Ministers from the applicant states asking to visit London and waiting for acceptance. The image is therefore not given that the British Government attach great priority to that matter. Will the noble Baroness give us some assurance that in preparing for the Nice Summit the British Government will attempt to achieve an early target date?
Baroness Jay of Paddington: My Lords, as regards the target date, it was decided at Feira—this may not have been set out in the conclusions as precisely as the noble Lord wished—that all remaining chapters with the best prepared Helsinki 6 countries would he opened as early as possible in 2001. The noble Lord will be aware that the EU is committed to be ready to welcome new members by the end of 2002 and has set aside funding for new member states to join the EU from 2002 to 2006. However, as the noble Lord will appreciate, the date of accession depends on each applicant's readiness. It would be foolish to make artificial predictions about that this afternoon.
On the broader point about the Government's commitment to the enlargement process, there is no moving away from the position that that remains our greatest opportunity and a great challenge to the European Union. Clearly, the Government are aware that achieving successful enlargement enhances not only the security and the stability, but also the prosperity, of Europe. This is therefore a matter on which we have certainly not slowed down. However, the fact that it was not given the prominence in the conclusions that the noble Lord expected was simply because other issues, such as the withholding tax, took greater priority in this particular two-day meeting.
Lord Monson: My Lords, I hope that I may put one short and one slightly longer question to the noble Baroness the Leader of the House. First, has she seen the report in yesterday's Times which reveals that support in Poland for EU entry has dropped from 80 per cent to 50 per cent and is still falling, and gives the reason why that has occurred? I hope that the noble Baroness will comment on that report, if she has read it.

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Secondly, although, as the noble Baroness pointed out, the agreement to drop the withholding tax seems to have been welcomed by many other EU countries, nevertheless the United Kingdom is obviously the main beneficiary by virtue of the importance of the City of London. Can the noble Baroness guarantee that the Government have not privately indicated to the other countries that, as a quid pro quo for the dropping of the withholding tax, the United Kingdom will be prepared to accept certain integrationist measures that may be desired by the more federalist members of the Community?
Baroness Jay of Paddington: My Lords, I am afraid that I cannot be as helpful as I normally like to be to the noble Lord, Lord Monson, as regards both his questions. First, I regret that I have not read the article in The Times to which he referred. I am sure that he will know as well as I that in general the perspective of the populations of individual countries on such matters tends to vary enormously. The views expressed in, for example, Denmark and the United Kingdom in relation to the Maastricht Treaty showed variations in public opinion at different stages of the process.
As regards the withholding tax, I understand that no measures of the kind that the noble Lord mentioned were agreed in the margins or at any stage of the summit. However, as I was not present I cannot make a categorical statement about whispers in corridors, although I do not think that is what the noble Lord seeks. As regards the positions that were agreed, I can state categorically that there was no undertaking of the kind that the noble Lord mentioned.
Lord Grenfell: My Lords, does my noble friend the Leader of the House agree that perhaps my noble friend Lord Shore would be able to avoid some of his nightmares about a United States of Europe if he were to remove Mr Joschka Fischer's speech from his bedside reading and not read too much into it, particularly when most of the 15 member states do not seek a "United States of Europe" but a "united Europe of states"? That makes a great deal more sense.
Having said that, I congratulate my noble friend on the highly significant and successful result obtained on the withholding tax. It is a major step forward after, as she rightly pointed out, the United Kingdom had been in a very isolated position.
I am pleased that the European Council has recognised the problem that Austria will have with the amendment of its constitution in order to remove banking secrecy. Does my noble friend welcome the fact that a seven-year period of grace has been accorded to both Austria and Luxembourg in which to change their banking secrecy laws.
Finally, is my noble friend aware that there is talk of a Portuguese presidency initiative which includes proposals for monitoring the policies and actions of the Austrian Government in place of sanctions? If that is so, can she assure the House that Her Majesty's Government would welcome this? In my view, it is
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exactly what should have happened when Austria formed its new government. If we had agreed to monitor their actions at that time, there would have been no need to impose these sanctions, which I find absolutely unnecessary and damaging to the European Union.
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend Lord Grenfell for raising the point of the Portuguese initiative. I apologise to the noble Lord, Lord Strathclyde, who specifically raised that issue in his initial comments. He asked whether there had been any further action in relation to Austria after the Feira summit, and I am afraid that I simply forgot that in responding to him.
My noble friend Lord Grenfell is right. Although there was no substantive discussion on this issue at Feira, it was understood from the presidency that Prime Minister Guterres would be in contact with the Austrian Government—we hope by the end of this month—in order to raise some of the issues mentioned by my noble friend. As I say, because there was no substantive discussion of this issue at the Feira conference, it would be premature to say what the hypothetical outcome of that kind of communication or contact with the Austrian Government will be and, therefore, whether the British Government would welcome the outcome. As to the mechanics, it is true, and obviously welcome, that Prime Minister Guterres is taking this initiative.
As to my noble friend's other point, he is right to raise the question of the difficulties surrounding the speech to which he referred. I was present in the House on an earlier occasion when my noble friend Lady Scotland referred to that speech and emphasised to the House its unofficial and personal nature. I know that that did not necessarily reassure some Members of the House on that occasion—it probably will not again today—but I underline once more what both my noble friends Lady Scotland and Lord Grenfell have said on many occasions—that a "united Europe of states" is the worthwhile objective, not a "United States of Europe".
Lord Pearson of Rannoch: My Lords, does the noble Baroness accept that it is a measure of how deeply we have become involved in this whole perilous European venture that we should regard the kicking into the long grass of the entirely destructive and senseless proposal of the withholding tax with such relief? In that respect, can the noble Baroness assure the House that the rest of tax harmonisation—which, as she knows, is "Eurospeak" for British taxes being increased by some 20 per cent—is now firmly off the agenda, both at Nice and in the related initiatives which are running parallel to Nice?
Does the noble Baroness also agree that even if the charter of fundamental rights is to be only declaratory—we shall have to wait and see—that

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would still allow the court to take the charter into account in its future pursuit of the ever-closer union of the peoples of Europe?
Baroness Jay of Paddington: My Lords, as your Lordships are well aware, the noble Lord, Lord Pearson, takes a particular constitutional stance on this country's position vis-à-vis the European Union. Indeed, I think it is true that he has introduced legislation in his name to try to effect that. Am I right? The noble Lord looks sceptical. I give way.
Lord Pearson of Rannoch: My Lords, in 1997 your Lordships' House was good enough to give a Second Reading—by two votes in a record vote on a Friday afternoon—to that effect. But the Bill which is passing through your Lordships' House at the moment has the entirely reasonable purpose of requiring a committee of inquiry to consider what life may be like outside the European Union.
Baroness Jay of Paddington: My Lords, in that case the noble Lord, Lord Pearson, deals in hypotheticals to some extent on this issue. In practical reality, of course, the directive has been agreed around some of the issues on the exchange of information rather than the withholding tax. The noble Lord feels that that is an indication of the mire in which we find ourselves, but he was kind enough to say that we had at least extricated ourselves from this particular mire with some degree of dexterity.
I am sure that the noble Lord is aware that this directive is not about with tax harmonisation; it reaffirms that it is for member states to decide how their residents' income should be taxed. So the issue of tax harmonisation—although it was a potential answer to this particular issue—does not arise, either hypothetically or in practice, in this instance. The noble Lord, of course, will be aware that the British Government have always taken a very firm position on tax harmonisation, which the Chancellor of the Exchequer reinforced at this conference. His leadership skills in achieving this agreement on the withholding tax have demonstrated his authority in this particular field.
As to the other point raised by the noble Lord, I refer him to the detailed discussions which took place in your Lordships' House last Friday—I know he took part in the debate—on the potential implications of a declaratory charter. A number of notable jurists, including those who are members of the convention on the charter, also took part, and no clear apprehension was shown by the people most directly involved about the kind of scenario suggested by the noble Lord. Some of them are distinguished jurists, and I would rest on their opinion.
Lord Bruce of Donington: My Lords, can my noble friend—
Lord Harrison: My Lords, does my noble friend the Leader of the House recognise that the Feira Council—
Lord Bruce of Donington: My Lords, can my noble friend give some indication of the official legal status
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of a presidential declaration as distinct from an agreed communiqué? It may not have much significance today, but it may have some significance in the future.
Baroness Jay of Paddington: My Lords, I cannot help my noble friend on that technical point, but I shall, of course, write to him on it.

Utilities Bill
4.27 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Lockwood) in the Chair.]
Clause 24 [Provision of information to the Council]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 132:
Page 21, line 30, leave out from beginning to ("under") in line 39 and insert ("(1) The Council may direct—

(a) the Authority; or

(b) the holder of a gas licence or an electricity licence,

to supply to it, in such form as it may reasonably specify, such information specified or described in the direction as it may require for the purpose of exercising its functions.

(2) A person to whom a direction under this section is given shall comply with it as soon as is reasonably practicable.

(3) Before giving a direction").

The noble Lord said: This amendment was spoken to with Amendment No. 104. I beg to move.
On Question, amendment agreed to.
[Amendment No. 133 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 134:
Page 21, line 43, leave out subsections (6) to (11) and insert—
("(6) If the Authority fails to comply with a direction under this section it shall, if so required by the Council, give notice to the Council of the reasons for its failure.").
The noble Lord said: This amendment was spoken to with Amendment No. 104. I beg to move.
On Question, amendment agreed to.
Lord Kingsland Lord Kingsland moved Amendment No. 135:
Page 22, line 19, at end insert—
("(12) Neither the Authority nor any licence holder shall be required by virtue of this section or any regulations made under it to supply any information which the Authority or that licence holder could not be compelled to give in evidence in civil proceedings in the High Court or, in Scotland, the Court of Session.").
The noble Lord said: In moving Amendment No. 135, I shall speak also to Amendment Nos. 202, 203, 261 and 262. These amendments concern information which is legally privileged. I think I am

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right in saying that legal privilege protection appears in only two clauses of the Bill—Clauses 69(9) and 98(9). I also believe that I am right—although I am not absolutely sure about this—that these provisions were added to the Bill during the course of the Committee stage in another place. At any rate, it is the view of the Opposition that legal privilege protection should be given in those other parts of the Bill to which Amendment No. 135 and the other amendments to which I have spoken relate. I beg to move.
Lord McIntosh of Haringey: These amendments are designed to exclude legally privileged information from that which the authority or the Secretary of State may require to be disclosed under Clauses 92, 93 and 97, and from that which the council may require under Clause 24.
In relation to Amendment No. 135, the amendment which relates to Clause 24, there is a slight chance—I stress that it is very slight—that the council might seek information to which legal privilege attaches under Clause 24. But our consultation document on which information licensees and the authority should be entitled to withhold from the council included legally privileged information. For that reason, this amendment is unnecessary.
The noble Lord, Lord Kingsland, referred to the even slighter possibility of a dispute about information which is legally privileged in relation to a court case to which the authority is a party. On the face of it, that could give rise to a concern that the authority will see information it could not see in court when it determines whether the licensee may withhold the information from the council. However, the situation will not be fundamentally different from that which now exists under the licences. Condition 16(3) of the Standard Conditions of Public Gas Transporters' Licences excludes legally privileged information from the director-general's right to information under condition 16(1).
In both cases the issue would proceed by a submission of arguments, but not the allegedly privileged documents, by the licensee to the regulator. If the regulator rejected the licensee's arguments and ordered him to produce the documents, the licensee could still secure that the compellability of the documents is decided by a judge in court, by contesting the regulator's enforcement order.
As regards the other amendments in the group—those relating to Clauses 92, 93 and 97—it is inconceivable that the information provisions in the case of these clauses could require companies to disclose information of a legally privileged kind. Examples of the sorts of disclosure required would be the number of cases when companies failed to meet individual standards of performance and the amount of compensation they therefore paid to customers under Clause 92; statistics on standards of performance and levels achieved under Clause 93; and information relating to types of customers to enable the effective functioning of a scheme on fuel poverty
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under Clause 97. There is no prospect of requiring companies to disclose information such as legal advice, which is subject to legal privilege.
I have to say that I have dealt as fairly as I can with Amendment No. 135 which would have some point if the Government had not already dealt with it in the consultation document. The other amendments simply would not contribute anything to the Bill.
Lord Kingsland: I understand the Minister to be saying that he agrees with my amendments but that he does not accept them.
Lord McIntosh of Haringey: On the contrary, I am saying that none of these amendments is necessary. There are no circumstances in which any of these requirements could involve legal privilege.
Lord Kingsland: Can the Minister tell me why it would subtract from the Bill if these amendments were included? Clearly, the Minister agrees with the policy that lies behind the amendments.
Lord McIntosh of Haringey: The Bill already provides the protection which the noble Lord seeks. It would therefore be quite inappropriate to include his amendments.
Lord Kingsland: In light of the Minister's last remarks, I shall again look closely at the Bill and consider whether it will be necessary to pursue this matter at Report stage. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 24, as amended, agreed to.
Clause 25 [Publication of notice of reasons]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 136 and 137:
Page 22, line 21, leave out ("24(7) or (10)") and insert ("24(4)").
Page 22, line 23, leave out ("not be") and insert ("be excluded from any notice").
On Question, amendments agreed to.
[Amendment No. 138 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 139:
Page 22, line 28, leave out ("disclosure") and insert ("publication").
On Question, amendment agreed to.
[Amendments Nos. 140 to 146 not moved.]
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 147:
Page 22, line 44, leave out from first ("section") to end of line and insert ("(General restrictions on disclosure of information)".
On Question, amendment agreed to.
Clause 25, as amended, agreed to.
Clause 26 [Provision of information by the Council to the Authority]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 148 and 149:
Page 23, line 1, leave out subsections (1) and (2) and insert—
("(1) The Authority may direct the Council to supply to it, in such form as it may reasonably specify, such information specified or described in the direction as it may require for the purpose of exercising its functions.
(2) The Council shall comply with a direction under this section as soon as is reasonably practicable.").
Page 23, line 18, leave out subsection (5).
On Question, amendments agreed to.
Clause 26, as amended, agreed to.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 150:
After Clause 26, insert the following new clause—

Utilities Bill

  SECTIONS 24 TO 26: SUPPLEMENTARY
  (".—(1) The Secretary of State may make regulations prescribing—

  (a) descriptions of information which the Authority, a licence holder or the Council may refuse to supply under section 24 or 26; or

  (b) circumstances in which the Authority, a licence holder or the Council may refuse to comply with a direction under section 24 or 26.

  (2) The Council may, if no person is prescribed for the purpose under subsection (3), refer a failure by a licence holder to comply with a direction under section 24 to the Authority.
  (3) The Secretary of State may make regulations for the purpose of enabling a failure to comply with a direction under section 24 or 26 to be referred by the person who gave the direction to such person (other than the Authority) as may be prescribed by the regulations.
  (4) A person to whom such a failure is referred (whether under subsection (2) or regulations under subsection (3)) shall—

  (a) consider any representations made by either party;

  (b) determine whether the person failing to comply with the direction is entitled to refuse to do so and, if not, order him to comply with the direction; and

  (c) give notice of his determination and any order under subsection (4)(b), with reasons, to both parties.

  (5) A notice under subsection (4) may be published by either party to the reference; and subsections (2) to (5) of section 25 apply to the publication of such a notice as they apply to the publication of a notice under section 24(4).
  (6) Section 60 of the 1989 Act (powers to make regulations) applies to regulations under this section as if they were made under Part I of that Act.
  (7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").
  On Question, amendment agreed to.
  [Amendments Nos. 151 and 152 not moved.]
  Clause 27 agreed to.
  Clause 28 [Exemptions from electricity licensing]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 153:
  Page 24, line 3, leave out (", after consultation with the Authority,").
  The noble Lord said: In moving Amendment No. 153, I should like to speak also to Amendments Nos. 154, 155, 181, 182, 185, 187 and 323.
  Clause 28 of the Bill provides for exemptions from the requirement to hold a licence to carry out the activities otherwise prohibited by Section 4 of the Electricity Act; that is, the generation, supply, transmission and, for the future, distribution of electricity. Clause 85 is similarly concerned with exemptions from the requirement to hold a licence to carry out the activities otherwise prohibited by Section 5 of the Gas Act.
  Why do we have exemptions? Smaller generators, suppliers and the like are granted exemptions because, as they operate on a limited scale or for a particular purpose, it would be unduly onerous to subject them to the full regulatory burden associated with holding a licence. For example, owners of caravan sites who take a supply of electricity or gas from the system and redistribute it to the caravans would qualify for an exemption.
  Amendments Nos. 153, 154, 155 and 323 introduce a requirement for the Secretary of State to go out to consultation before granting an exemption under Clauses 28 or 85. They require him to produce a notice that sets out the exemption he proposes to make, together with the reasons why he proposes to do so.
  A copy of the notice should be served on the authority and the consumer council, and it should be published so as to bring it to the attention of those likely to be affected by the exemption. Those wishing to make representations are given a minimum of 28 days in which to do so.
  In the context of this new obligation to consult, Amendments Nos. 181, 182, 185 and 187 remove the granting of exemptions from the list of decisions that triggers the duty to give reasons under Clause 41 and 86. This change helps to avoid setting an unfortunate precedent, since exemptions are granted by statutory instrument and it is not usual practice to require the giving of reasons for the making of legislation. This can be distinguished, however, from the giving of reasons for a proposal to grant exemptions, as required by the new consultation procedure.
  Amendments Nos. 182 and 187 have two further effects. First, in the context of the general requirement introduced for the first time by Clauses 41 and 86 to publish reasons for key decisions, they clarify the matters which the authority or the Secretary of State should consider excluding when publishing those reasons. The amendments require that matters should relate,
  "to the affairs of a particular individual or body of persons",
  before the requirement to consider exclusion is triggered.
  Secondly, they ensure that the subsection (5) exception to the duty to give reasons—a decision subject to a disapplication direction by the Secretary of State—applies whether the decision itself was taken by the authority or the Secretary of State.
  I hope that the Committee can agree with me that, taken together, this package of amendments represents a strengthening of the provisions of the Bill. I beg to move.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 154:
  Page 24, line 10, at end insert—
  ("(1A) Before making an order under subsection (1) the Secretary of State shall give notice—

  (a) stating that he proposes to make such an order and setting out the terms of the proposed order;

  (b) stating the reasons why he proposes to make the order in the terms proposed; and

  (c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations with respect to the proposals may be made,

  and shall consider any representations which are duly made in respect of the proposals and not withdrawn.
  (1B) The notice required by subsection (1A) shall be given—

  (a) by serving a copy of it on the Authority and the Council; and

  (b) by publishing it in such manner as the Secretary of State considers appropriate for bringing it to the attention of those likely to be affected by the proposed order.").

  The noble Lord said: I have just spoken to this amendment. I beg to move.
  On Question, amendment agreed to.
  Clause 28, as amended, agreed to.
  Clause 74 agreed to.
  Clause 85 [Exemptions from gas licensing]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 155:
  Page 83, line 4, at beginning insert—
  ("( ) In subsection (1) of section 6A of the 1986 Act (exemptions from prohibition) the words ", after consultation with the Director," shall be omitted.
  ( ) After subsection (1) of that section there is inserted—
  "(1A) Before making an order under subsection (1) the Secretary of State shall give notice—

  (a) stating that he proposes to make such an order and setting out the terms of the proposed order;

  (b) stating the reasons why he proposes to make the order in the terms proposed; and

  (c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations with respect to the proposals may be made,

  and shall consider any representations which are duly made in respect of the proposals and not withdrawn.
  (1B) The notice required by subsection (1A) shall be given—

  (a) by serving a copy of it on the Authority and the Council; and

  (b) by publishing it in such manner as the Secretary of State considers appropriate for bringing it to the attention of those likely to be affected by the proposed order."").

  The noble Lord said: I have spoken to this amendment. I beg to move.
  On Question, amendment agreed to.
  Clause 85, as amended, agreed to.
  Clauses 29 and 30 agreed to.
  4.45 p.m.
  Clause 31 [Electricity licence conditions]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 156:
  Page 29, line 9, at end insert—
  ("(4A) After subsection (3) there is inserted—
  "(3A) Conditions included in a transmission licence or a distribution licence by virtue of subsection (1)(a) may require the holder, in such circumstances as are specified in the licence—

  (a) so to increase his charges for the transmission or distribution of electricity as to raise such amounts as may be determined by or under the conditions; and

  (b) to pay the amounts so raised to such licence holders as may be so determined.").

  The noble Lord said: This amendment addresses a point raised by the noble Lord, Lord Currie, at Second Reading. He rightly noted (at cols. 1167–8) the absence from the Bill of measures relating to the provision of a supplier of last resort in electricity. This relates to the appointment of a supplier to take over the customers of another supplier whose licence has been revoked or suspended by the authority other than with his consent.
  As in gas, we propose that there should be two routes through which funds might be made available to finance the costs of the appointment of a supplier of last resort.
  First, each supplier will be required to post some form of approved bond with a person appointed by the authority. These bonds might take the form of, for example, insurances or parent company guarantees. In the event that a supplier's licence is revoked or suspended and one or more supplier of last resort is appointed, the bond of the failed supplier may be called to finance the additional costs of the appointee.
  Secondly, standard conditions in transmission and distribution licences will permit the authority to require licence holders to increase the charge they make for the transmission and distribution of electricity and to pay the moneys raised to licence holders as directed. It is intended that this levy route will be used only in the event that the moneys which could be raised by calling the failed supplier's bond were not sufficient to cover the additional costs of the supplier of last resort.
  The levy route is needed because the costs of a supplier of last resort are not readily calculable in advance and so it is not clear that there is a sensible level of bond cover which could be set which would cover every eventuality. The levy spreads the top-up costs across the whole of the supply industry.
  We want it to be clear on the face of the legislation that the power exists for the authority to raise such a levy. The present power in the Electricity Act (Section 7, as amended by Clause 31 of the Bill) to include conditions in a licence condition does not give that clarity. Parliament took a similar view in respect of the

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  Gas Act provisions when considering the Gas Act 1995. It used that Act to amend the Gas Act 1986 to make ex press provision of just this sort.
  So the levy power which this amendment creates is not new. It replicates in electricity the existing gas provision and so allows for electricity licence conditions—and hence the supplier of last resort arrangements—to be established to mirror those in gas. Indeed, the draft standard conditions of electricity licences already contain both the bond and levy conditions which I have described. I beg to move.
  Baroness Buscombe: We should like to express concern with regard to the amendment. As we read it, it would permit the imposition of additional charges for the transmission or distribution of electricity. It would allow licence conditions to be imposed on a transmission or distribution licence which require the licence holder to increase charges to raise an amount set in the condition, and then to pay that money to other licence holders as directed by the authority.
  The amendment refers, as indeed does the clause, to increased charges,
  "for the transmission or distribution of electricity as to raise such amounts as may be determined by or under the conditions; and … to pay the amounts so raised to such licence holders as may be so determined".
  We are concerned about this provision. What does it actually mean?
  Distributors are under a duty to operate the network in a manner that can demonstrate a level playing field. They are in effect under a duty to keep their charges down. But then along comes this stealth tax, in the form of what we consider to be a very vague power.
  Lord McIntosh of Haringey: I am disappointed to hear the reference to "stealth tax", which has not previously arisen in relation to the Bill.
  First, the provisions in the amendment are already contained in the Gas Act 1986, as amended by the Gas Act 1995. They exactly mirror the provisions in those Acts, which were passed by the previous administration. As I have said, there is nothing new in this provision; it is simply being extended to electricity.
  What the supplier of last resort who comes in to receive the money is doing is to provide continuity of supply when a supplier fails in whatever way. The provision must be left at large, even though it is intended to be used for this single, narrow purpose.
  In determining the standard conditions of electricity and gas licences under powers in Clauses 32 and 80, the Government intend that this power shall be used only for the purposes of supporting supplier of last resort arrangements. The purpose of the power is left at large because it may be useful in some unforeseeable way in the future, but there are safeguards against its being used in the way that the noble Baroness, Lady Buscombe, fears.
  If the authority decides that it wishes to use the power for other purposes, it will need to use the licence modification procedures set down in the Bill so as to
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  amend existing licence conditions or introduce further conditions providing for the use which may be made of any levy raised. As I said in introducing the amendment, provision is made for the amendment in the draft conditions which have already been published. The licence modification procedures require that the Secretary of State be consulted and provide him with a power to veto the authority's proposal. If that veto is not exercised, the authority must still gain sufficient support within the industry for its proposals. Failing that, a reference to the Competition Commission followed by an adverse public interest finding would be necessary before the new use for the power could be established in licence conditions.
  I hope that that convinces the noble Baroness not only that the powers, which have existed for a very long time in the gas industry, are not likely to be abused, but that the amendment and other provisions in the Bill make it certain that they cannot be used other than for the single and narrow purpose of ensuring continuity of supply of electricity to the customer.
  Lord Borrie: I should like briefly to welcome the amendment. Perhaps I may say on behalf of my noble friend Lord Currie of Marylebone, who expects to be here for most of the discussion in the Committee today, that I am sure that he too would welcome the amendment, because it fills the gap that my noble friend the Minister has explained: that gap between the position in the gas industry and the position in the electricity industry.
  The amendment is to deal with a very limited situation that one hopes will very rarely, if ever, arise. The noble Baroness, Lady Buscombe, will recognise that in a competitive situation—and we are all in favour of the increased competition that has already been brought about and will be developed further—there is bound to be at any rate the possibility of a supplier's failing and being unable to meet the needs of customers. The notion of the supplier of last resort is intended to fill that gap and ensure that whoever becomes the supplier of last resort and therefore ensures that customers are not without supply will be compensated.
  Given the qualifications, and the limited occasions when the provision would apply, this is a helpful equating of the existing position under the Gas Act 1986 with the position in electricity.
  Lord Jenkin of Roding: Like the noble Lord, Lord Borrie, I completely understand the purpose for which the amendment is required. It seems to me that it is very necessary in the new arrangements, as it was in relation to gas in the former arrangements. The problem is how it is to be quantified. In the end, the levy has to be of a sum of money. No doubt the supplier of last resort will provide the Government with his estimate of how much it will cost him to take over and re-establish the supply. Surely there must be some way of testing that: some way in which there can be, as it were, an arbitration between what he will ask

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  for and be paid and what the rest of the industry will have to find. It is not just a question of the principle; it is a question of the quantum.
  Lord McIntosh of Haringey: Of course, this is a last resort of last resort. First, it is a last resort in the sense that we do not really expect electricity companies to go to the wall and fail and be in a position in which they are unable to meet the needs of electricity customers.
  Lord Jenkin of Roding: I recall when I was Chief Secretary to the Treasury having to pick up the bits when Rolls-Royce went to the wall.
  Lord McIntosh of Haringey: That was the case.
  The noble Lord asked for quantum. I am saying that, first, we do not expect it to happen, because we expect the licence conditions to be sufficient to secure what is after all an objective of the authority under the Bill, which is that suppliers shall be in a financial position to meet their obligations.
  After that, the next option is that the supplier of last resort shall post some form of approved bond with a person approved by the authority. That could be insurances or parent company guarantees, as I made clear. We think that in the remote case of a supplier's failing, it is most likely that it would be possible to achieve continuity of supply through a bond. For example, a parent company is likely to wish to support a supplier of last resort.
  The last resort of last resort is that one has to go to a levy. We have had to provide a rather broader power, precisely because we do not know what the levy would be. Perhaps it is a good thing that I cannot give a very precise answer on this question. It is because there has been no practical experience in the gas industry, since the 1986 Act was passed, of having to appoint a supplier of last resort and having to cover that person's additional costs.
  The supplier of last resort conditions in gas supply specify what a supplier appointed by the director to be a supplier of last resort must do. He is required to use all reasonable endeavours to secure that a new meter reading is taken at the premises of each of his new customers within 14 days of his appointment and to send a notice to all his new customers explaining that their supplier has changed and setting out the terms on which they are now being supplied. Many of the customers transferred from the previous supplier probably would not grasp what was going on anyway. The supplier of last resort would be in a reasonable commercial situation.
  I know that that does not address the quantum question. All I can say about how large the levy would be is that it will be as small as possible and that for a levy to be proposed to the industry as a whole the authority would have to justify in the circumstances of
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  each case how much money was required. By definition there cannot be a general answer to the question that the noble Lord, Lord Jenkin, asks.
  Lord Jenkin of Roding: I am very grateful to the noble Lord for that very helpful description. In the last resort, is this a justiciable issue? Could it be tested in the courts?
  Lord McIntosh of Haringey: All the authority's decisions are in the end justiciable.
  In my response to the noble Baroness, Lady Buscombe, I set out the ways in which the power would have to be used. In particular, I referred to the licence modification procedures and the need to consult the Secretary of State and gain sufficient support within the industry, as well as the possibility of a reference to the Competition Commission.
  As to how far those matters apply to the issue of the size of the levy, which is the particular point raised by the noble Lord, I shall have to write to him. I suspect that we are dealing in last resorts of last resorts of last resorts.
  On Question, amendment agreed to.
  Clause 31, as amended, agreed to.
  Clause 73 [Gas licence conditions]:
  5 p.m.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 157:
  Page 73, line 9, at end insert—
  ("( ) After subsection (2) there is inserted—
  "(2A) Where the Authority proposes to refuse the application, it shall give to the applicant a notice—

  (a) stating that it proposes to refuse the application;

  (b) stating the reasons why it proposes to refuse the application; and

  (c) specifying the time within which representations with respect to the proposed refusal may be made,

  and shall consider any representations which are duly made and not withdrawn."").
  The noble Lord said: I rise to move Amendment No. 157. I should like to speak also to Amendments Nos. 158 to 179, 288, 290, 291, 297, 298, 310, 311, 324 to 326, 330, 335, 336, 341 and 348. I acknowledge that this is a large group comprising 39 amendments, but I hope that the Committee takes comfort when I say that all of them are designed to do no more than tidy up the existing provisions of the Bill and the Gas and Electricity Acts. They stem from our desire to align the electricity and gas regulatory regimes as far as possible. This group of amendments covers a number of themes related to licences and licensing. We have organised the amendments within this group under those themes with the intention to help structure the debate. The themes are: gas licence conditions; standard conditions of licences; collective licence modifications; licence modification references to the Competition Commission; and a few minor miscellaneous amendments.
  I begin with gas licence conditions, which are dealt with in Clause 73. Two of these amendments are worth a quick mention. The remaining three, Amendments Nos. 158, 159 and 325, are minor tidying-up amendments. Amendment No. 157 provides that the authority shall give reasons to an applicant for a gas licence should it propose not to grant a licence. This brings gas into line with the provisions in Clause 29 in relation to electricity licences. Amendment No. 160 delegates to the authority the power to make regulations in relation to applications for gas licences. We have already made a similar provision for electricity in Clause 29. The Government consider it is appropriate that the authority, which will be solely responsible for granting all licences, should have the power to specify the information it requires in order properly to assess applications.
  The second group is concerned with standard conditions of licences (Clauses 32 and 80). There are five amendments in this group, four of which—Amendments Nos. 161, 169, 170 and 325—are related to the same point. They provide that the standard conditions to be included in electricity or gas licences granted after the establishment of the standard conditions by the Secretary of State should incorporate any changes which have been made to the standard conditions under powers elsewhere in the Electricity and Gas Acts respectively. The remaining amendment, Amendment No. 162, merely attempts to clarify the meaning of subsection (10)(b) of the new Section 11A inserted by Clause 32.
  There are five collective licence modification amendments in Clauses 34 and 81: Amendments Nos. 163, 171, 172, 173 and 298. Four are minor tidying-up amendments of no significance. Amendment No. 172 corrects a small but significant drafting error in Clause 81 which relates to the tests which the authority is to apply in order to determine whether the level of opposition to a proposed collective licence modification is sufficient to prevent it proceeding with the modification. Without this amendment, the statutory frameworks for gas and electricity collective licence modification would be markedly different one from the other. The intention is, of course, that they should be the same.
  The next group, comprising 10 amendments, deals with references to the Competition Commission in Clauses 35 to 39 and 82. All of these amendments are minor or consequential. Briefly, Amendments Nos. 164 and 291 are similar in nature and extend the definition of "relevant conditions" and "relevant licence" holder used elsewhere in the Electricity Act 1989 and the Gas Act 1986 to the Competition Commission's new power to veto licence modifications in Clauses 38 and 82.
  Amendments Nos. 165 and 175 serve to clarify that the Competition Commission may veto proposed electricity licence modifications which do not go far enough to remedy or prevent adverse effects identified in its report as well as those that go too far. Identical amendments, Amendments Nos. 166 and 176, clarify that where the Competition Commission exercises its veto it may in turn modify only relevant conditions of licences as defined in the Electricity Act and Gas Act
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  respectively. Identical amendments, Amendments Nos. 167 and 177, clarify that where the Competition Commission has vetoed collective gas or electricity licence modifications, the holders of such licences should be notified and receive notice of the Competition Commission's own proposed modifications. Amendments Nos. 168 and 178 provide for the consequential modifications to electricity and gas licences that might be necessary following modification by the Competition Commission of the standard conditions of a type of licence.
  There are 11 amendments in the miscellaneous group: Amendments Nos. 288, 290, 297, 310, 311, 326, 330, 335, 336, 241 and 348. These amendments are related to licences and licensing but do not share any common theme. They are minor and technical amendments of no real consequence. I beg to move Amendment No. 157.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 158 to 160:
  Page 73, line 11. leave out from ("for") to second ("and") in line 12 and insert (-section 4 or 4A above" there is substituted "sections 4AA, 4AB and 4A").
  Page 73, line 28, after ("described") insert ("in the licence"").
  Page 73, line 29, at end insert—
  ("( ) After subsection (10) there is inserted—
  "(11) In this section "prescribed" means prescribed in regulations made by the Authority."").
  On Question, amendments agreed to.
  Clause 73, as amended, agreed to.
  Clause 32 [Standard conditions of electricity licences]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 161 and 162:
  Page 29, line 30, after ("shall") insert (", subject to such modifications of the conditions made under Part I of the 1989 Act after the determination under this subsection.").
  Page 30, line 47, at end insert ("being modified)").
  On Question, amendments agreed to.
  Clause 32, as amended, agreed to. Clause 33 agreed to.
  Clause 34 [Modification of standard conditions of licences]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 163:
  Page 33, line 29, leave out ("standard conditions") and insert ("anything done").
  On Question, amendment agreed to.
  Clause 34, as amended, agreed to.
  Clause 35 [Electricity licence modification references]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 164:
  Page 34, line 26. leave out ("and 14") and insert (", 14 and 14A").
  On Question, amendment agreed to.
  Clause 35, as amended, agreed to.
  Clauses 36 and 37 agreed to.
  Clause 38 [Competition Commission's power to veto modifications following report]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 165 to 168:
  Page 36, line 34, after ("be") insert ("the modifications which are").
  Page 36. line 43, after ("modifications") insert ("of the relevant conditions").
  Page 37, line 30, at end insert ("or, as the case may be, the relevant licence holders").
  Page 37, line 34, at end insert—
  ("(8A) Where, in consequence of a reference under section 12(1A), the Commission modifies under subsection (4)(b) the standard conditions of licences of any type, the Authority may make such incidental and consequential modifications as it considers necessary or expedient of any conditions of licences of that type granted before that time.
  (8B) Where the Commission modifies the standard conditions of licences of any type as mentioned in subsection (8A) the Authority—

  (a) shall make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and

  (b) shall publish the modifications made for those purposes in such manner as it considers appropriate.

  (8C) The modification under this section of part of a standard condition of a particular licence in consequence of a reference under section 12(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part.").
  On Question, amendments agreed to.
  Clause 38, as amended, agreed to.
  Clause 39 agreed to.
  Clause 80 [Standard conditions of gas licences]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 169 and 170:
  Page 77, line 1, after ("shall") insert (", subject to such modifications of the conditions made under Part I of the 1986 Act after the determination under this subsection,").
  Page 77, line 6, after ("licences)") insert ("—

  (a) the words "and sections 23(2), 26(1A) and 27(2) below" shall be omitted; and

  (b)")

  On Question, amendments agreed to.
  Clause 80, as amended, agreed to.
  Clause 81 [Modification of standard conditions of gas licences]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 171 to 173:
  Page 77, line 13, at end insert ("; and
  (b) after "the holder of the licence" there is inserted "being modified".").
  Page 77. line 45, leave out ("or") and insert ("and").
  Page 78, line 2, at end insert ("or").
  On Question, amendments agreed to.
  Clause 81, as amended, agreed to.
  Clause 82 [Modification of licence conditions following Competition Commission report]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 174 to 179:
  Page 78, line 46, at end insert—
  ("( ) After subsection (5) of that section there is inserted—
  "(6) The modification under subsection (1) of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").
  Page 79, line 20, after ("be") insert ("the modifications which are").
  Page 79, line 29, after ("modifications") insert ("of the relevant conditions").
  Page 80, line 15, at end insert ("or, as the case may be, the relevant licence holders.").
  Page 80, line 19, at end insert—
  ("(8A) Where, in consequence of a reference under section 24(1A), the Commission modifies under subsection (4)(b) the standard conditions of licences of any type (that is to say, licences under section 7 or section 7A(l) or 7A(2)) the Authority may make such incidental and consequential modifications as it considers necessary or expedient of any conditions of licences of that type granted before that time.
  (8B) Where the Commission modifies the standard conditions of licences of any type as mentioned in subsection (8A) the Authority—

  (a) shall make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and

  (b) shall publish the modifications made for those purposes in such manner as it considers appropriate.

  (8C) The modification under this section of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").
  Page 80, line 45, at end insert—
  ("( ) In section 27 of that Act (modification of licences by order under enactments other than the 1986 Act), after subsection (1) there is inserted—
  "(1A) The modification under subsection (1)(a) of part of a standard condition of a particular licence in consequence of a reference under section 24(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part."").
  On Question, amendments agreed to.
  Clause 82, as amended, agreed to.
  Clause 84 agreed to.
  5.15 p.m.
  The Deputy Chairman of Committees: There has been a wrong placing of Amendment No. 180. It will come after Amendment No. 181.
  Clause 40 agreed to.
  Clause 41 [Reasons for decisions under the 1989 Act]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 181:
  Page 40, leave out line 31
  On Question, amendment agreed to.
  Lord Kingsland Lord Kingsland moved Amendment No. 180:
  Page 41, line 6, at end insert—
  ("( ) A notice under subsection (2) shall, in particular, contain details of—

  (a) how the decision is proportionate; and

  (b) how it complies with the Human Rights Act 1998.").

  The noble Lord said: In moving the amendment I speak also to Amendments Nos. 183, 184, 186, 188 and 189.
  Amendment No. 180 has a twin amendment, Amendment No. 186. The issue is straightforward. Clause 41 of the Bill sets out the circumstances in which reasons for the decisions under the 1989 Act are given. The clause applies to seven decisions. Clause 41(2) states:
  "As soon as reasonably practicable after making such a decision the Authority or the Secretary of State shall publish a notice stating the reasons for the decision in such manner as it or he considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be interested".
  Amendments Nos. 180 and 186 simply wish to add an obligation to he contained in the notice requiring the authority or the Secretary of State to say how the decision is proportionate and how it complies with the Human Rights Act 1998.
  I do not see how the amendment could be objectionable to the Government. The Government introduced the Human Rights Bill into this Chamber in 1997. It became an Act the following year and is due to come into force in October 2000. I am in no doubt that those who are the subject of any decision taken under Clause 41 will scrutinise carefully the notice to see whether it conforms with the provisions of the European convention. In my submission it can only be in the interest of the Secretary of State or the authority to explain in exactly what way he or it believes that the decision has conformed with the terms of the convention.
  Clause 58, concerning electricity, and Clause 94, concerning gas, insert new provisions into Sections 27A to F of the Electricity Act and Sections 30A to F of the Gas Act. They give the authority power to impose penalties for contravention of relevant conditions or requirements or failure of performance standards. As I am sure the Committee is aware, relevant conditions or requirements are defined under the Acts and amplified by the Bill.
  The penalty has to be reasonable in all the circumstances but is otherwise wholly unconstrained. If the licence holder is aggrieved by inter alia the imposition or amount of the penalty, it may make an application to the court. If the court is satisfied that the imposition of the penalty was not within the power of the authority, it can quash or reduce it.
  The Opposition take the view that procedures introduced by the new provisions constitute the determination of a civil right or obligation under Article 6 of the European Convention on Human Rights and, therefore, should provide a fair and public hearing before an independent and impartial tribunal. The provisions before the Committee do not do so
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  because the authority is not independent of the executive. It is involved in the imposition of licence conditions, relevant requirements and setting performance standards; and there is no provision for an oral hearing.
  It is true that the Government have furnished us with a procedure that they describe as a right of appeal. However, that right of appeal is no more than a narrowly confined right of review—a sort of judicial review "minus". In our submission it cannot cure the deficiencies of these procedures.
  The amendments offer two alternative forms of appeal: the first based on the telecoms analogue contained in Statutory Instrument 1999 No. 3180; and the other based on the Competition Act model. Amendment No. 183, which refers to electricity, and Amendment No. 188, which refers to gas, insert new sections into Section 49B of the Electricity Act and Section 38B of the Gas Act, giving broader grounds of appeal from all relevant decisions of the authority including a decision to impose a penalty under the new Section 27A or 30A: that is, an appeal to the court on grounds of material error of fact, material procedural error, error of law or other forms of illegality including unreasonableness or lack of proportionality.
  Amendment No. 184, dealing with electricity legislation, and Amendment No. 189 dealing with gas legislation, insert, as an alternative, new sections into the Electricity and Gas Acts giving even broader grounds of appeal, again from all relevant decisions of the authority including a decision to impose a penalty under the new Section 27A or 30A. Thus, the Opposition have helpfully provided the Minister with two alternative approaches from which he has the luxury of choice.
  I want to comment, now, in more detail on the Government's so-called right of appeal. Under the new Section 27E, a licence holder can make an application to the court if it is aggrieved over the amount of the penalty. But there is no provision which would enable the court to find that the amount was unreasonable. In other words, the right of appeal is in reality a narrowly confined right of review rather than a proper right of appeal and does not even appear to offer similar grounds of review to those available on an application for judicial review.
  As a court would not normally substitute its own findings of fact, it is not clear how a court would exercise the power to substitute another penalty from that originally imposed by the authority, or the power to substitute a different payment date from that originally prescribed.
  Moreover, it is not clear whether the provisions in new Section 27E(3) are intended to take the place of any right on the part of a licence holder to bring an action for judicial review on the lawfulness of the actions and the authority in imposing the penalty. Are the provisions intended to provide the only right of redress for a licence holder?
  That view appears to be supported by new Section 27E(8), which provides that:
  "Except as provided by this section, the validity of a penalty shall not be questioned by any legal proceedings whatever".
  Here we have a fine example of a classic ouster clause. It would preclude a licence holder from taking any further form of action, or even to seek an appellate review of a decision of the court. On that basis, it would not appear to be open to an aggrieved licence holder to apply to the court for a determination as to whether the authority has acted lawfully, reasonably and fairly in imposing a penalty, or has made a material error of fact in imposing a penalty.
  In the Standing Committee debate in another place, the Opposition argued that the appeal procedure was extremely limited and contended that the first ground of appeal in Section 27E(4) was similar, though more restricted, to a provision for a judicial review and as such precluded an appeal on the fine itself or the actual facts, limiting it to a view on the basis of whether the authority acted in a quasi-judicial and fair manner, regardless of the decision made. The fine could therefore be unreasonable under an objective assessment but provided the authority regarded it as reasonable, and the authority had taken all steps to enable it to take that view, there could be no appeal.
  We also argued that the second ground of appeal in Section 27E(4) was confined to procedural matters and that the third ground of appeal in Section 27E(4) was restricted to the timing of payment of the fine but that there were no grounds for appeal on the quantum or reasonableness of the fine.
  We believe that as the authority will be the body responsible for establishing and enforcing obligations—for example, under the Electricity Act 1989—and for setting standards of performance, and for determining whether there has been a contravention of the Act or failure to achieve a standard of performance, and for imposing financial penalties, there should be a full right of appeal against the decisions of the authority. In this respect, the arrangements under the Bill are wholly inadequate. It should be possible to challenge a substantive decision of the authority in respect of any particular matter or to challenge that it has made a material error of fact or law.
  I have already said that the remedy provided is less than that provided by judicial review and does not provide a full and proper appeal to an independent tribunal. As such, there must be considerable doubt whether the arrangements will be consistent with the Human Rights Act.
  In the debate in Standing Committee in the other place (cols. 565 and 566), the Government maintained that no amendments were necessary and they referred to the explicit provision in new Section 27E(3) which allows the court, on an application from the licence holder concerned, to quash the penalty or substitute such lesser penalty as it considers appropriate in all the circumstances.
  The Government maintained that it would be odd to insert these provisions if they did not intend licence holders to have the right to challenge the authority's decisions. The Government also argued that there was an inherent power of the judiciary to ensure that the executive complied with the will of Parliament as expressed in statute; and that the Bill was explicit that the reasonableness criteria should apply and that this was a term recognised in the United Kingdom courts. However, they suggested that ministerial references to reliance on reasonableness could be invoked in support in court.
  It is likely that the provisions in Clause 58, in their present form, will be the subject of an application in due course to the court under the Human Rights Act 1998 on the ground that an aggrieved licence holder does not have unfettered access to an independent appeal tribunal which has power to examine all aspects of the contested decision involving a financial penalty.
  We have suggested two alternative approaches to resolve the problem. The Minister is aware that an appeals procedure can be found in the Telecommunications (Appeals) Regulations 1999, which came into effect on 20th December 1999. The regulations provide an appeals procedure for a range of decisions of national regulatory authorities in respect of telecommunications in accordance with Article 1(6) of Directive 97/51/EC and Articles 5(3), 9(4), 9(6) and 19 of Directive 97/13/EC, which require member states to ensure that suitable mechanisms exist at national level under which a party affected by a decision of the national regulatory authority has a right of appeal independent of the parties involved.
  Under the regulations, a new Section 46B is inserted into the Telecommunications Act 1984 which provides for an appeal against certain decisions of the Secretary of State and the Director-General of Telecommunications. An appeal can be made on one or more of the following grounds: namely, that a material error as to the facts had been made; that there was a material procedural error; that an error of law had been made; that there was some other material illegality, including unreasonableness or lack of proportionality. An appeal lies to the High Court or, for Scotland, to the Court of Session.
  We recognise that the regulations apply only to appeals against the decisions specified in the regulation and that the regulations were introduced to meet the requirements of EC directives and as such they have no direct effect on the issues being raised by the electricity and gas companies. However, the provisions for appeals under the regulations address the concerns of these industries and it is difficult to see why the Government are not prepared to consider an equivalent arrangement for appeals against decisions under Clause 58. Indeed, the arrangements in the regulations provide a model which could be of general application in providing a basis for appeal by an agreed body from the decision of a regulatory body. I beg to move.
  Lord Borrie: My Lords, the noble Lord, Lord Kingsland, has ranged widely in his closely argued

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  submission, and properly so, because he has addressed himself to a range of amendments which are grouped together and he has discussed all of them. I do not propose to do that. I simply want to raise an issue regarding what I believe was a fundamental theme running through his remarks.
  He said that the court, right of appeal to which is provided for in Clause 58, cannot review whether or not the amount of the penalty is reasonable. I believe that I quote correctly the noble Lord, Lord Kingsland, in saying that the court will have no right to say that the amount of the penalty is unreasonable. The noble Lord quoted from Clause 58.
  However, we should bear in mind that the clause states that the penalty imposed by the authority must be reasonable in all the circumstances of the case; that is, the authority has power only to impose a penalty which is reasonable in all the circumstances of the case. We should also bear in mind the other part of Clause 58 which states that a ground for appeal to the court exists if the imposition of the penalty was not within the power of the authority.
  In my submission, if the authority imposes a penalty which is not reasonable in all the circumstances of the case, it will have acted ultra vires (to use the English that we must all use nowadays in this regard) and the penalty will be beyond the powers of the authority. Therefore, the court may turn it down on that basis. I am referring to subsection (4) on page 58 of the Bill which states that:
  "The grounds falling within this subsection are—
  (a) that the imposition of the penalty was not within the power of the Authority under section 27A".
  That is a fundamental point in the noble Lord's argument and it does not seem to me that he is entirely right in that regard.
  5.30 p.m.
  Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Kingsland, for one thing: the concept of twinned amendments. I wish that I had thought of that. It makes it much easier to understand the proliferation of amendments, some of which relate to gas and some of which relate to electricity. Of course, I am familiar with the arguments that he adduced with regard to ECHR compliance. We debated that issue on a number of occasions during discussion on the Financial Services and Markets Act and I am glad that he has not lost his skill in presenting his case.
  The amendments deal broadly with the ECHR compatibility of decisions taken by the Secretary of State and/or the gas and electricity markets authority in relation to licences and the appropriateness or otherwise of provisions by which licence holders may challenge those decisions.
  Amendments Nos. 180 and 186 seek to ensure that any notice published under the new sections (inserted by Clauses 41 and 86 respectively) of the Electricity Act 1989 or the Gas Act 1986 which sets out the reasons for the key decisions listed in those new sections should contain details of how the Secretary of
  300
  State or the authority have ensured that the decision is proportionate and compliant with the Human Rights Act 1998 and, therefore, with the European convention.
  A key point with regard to the amendment is that it would not secure compliance. Under Section 6 of the Human Rights Act, it will be unlawful for any public authority to act in a way which is incompatible with the European convention. However, nothing in the Human Rights Act 1998 requires public authorities to explain how each decision that they take is compliant with the convention. Even if it did so require, an explanation would not ensure that the decisions were compliant. Whatever was asserted by such an authority, ultimately it would be for the courts to decide whether a decision was compliant. Therefore, the amendment does not add anything in that respect.
  By requiring the authority and the Secretary of State to give reasons for their key decisions—they are set out in Section 49A, inserted by Clause 41——the Bill helps interested parties to judge for themselves whether decisions are compliant with the European convention and to take appropriate action if they believe that they are not.
  Each amendment also requires the notice to contain details of how the decision is proportionate. It does not say what is meant by "proportionate" in this context. The concept of proportionality is, of course, one which applies under the European convention. If the word is used here in the sense that it is used in the human rights context, it is covered by the second limb of the amendment. If it means something else, I must ask what that is. It is hardly to be supposed that the authority or the Secretary of State will say that their decisions are not proportionate in the sense of "reasonable". Therefore, I am afraid that I cannot accept Amendments Nos. 180 or 186.
  Amendments Nos. 183, 184, 188 and 189 would make all the decisions taken by the authority and/or the Secretary of State in relation to licence holders—including, but not limited to, those for which reasons must be given under the Bill—appealable to the High Court or, in Scotland, the Court of Session; and/or an appeals tribunal of the Competition Commission. The grounds for appeal to the High Court include material error as to the facts, material procedural error, an error of law and some other material illegality, including unreasonableness or lack of proportionality.
  I believe that it is helpful to look at the issues raised by these amendments in order to distinguish the different kinds of decision which can be taken by the Secretary of State or by the authority. Some decisions fall into a category that, broadly speaking, sets the framework for regulation; that is, decisions such as the determination of specific licence conditions. In those cases, it is appropriate that the route of appeal should be to the reporting arm of the Corn petition Commission, which is well placed to take a view on this type of public interest decision.

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  Other decisions, such as those in relation to the granting or revocation of licences, or enforcement, have more to do with the application of the rules as they stand. In such cases, judicial review provides an appropriate right of challenge.
  A third category of decision may require grounds for challenge that go beyond that of judicial review; for example, in the case of financial penalties the Government have provided for companies to challenge both the imposition and the amount of a penalty in the courts. In examining whether the amount of a penalty was reasonable in all the circumstances of the case, which it must be if the authority is acting within its powers, we believe that a court would be bound to consider the facts underlying the case. Therefore, those grounds of appeal go beyond judicial review.
  The point that I make is that for each of the three types of decision the Government have provided a right of review that is appropriate to the case. By contrast, the amendments seek to impose a blanket provision for all decisions to be subject to exactly the same appeals procedures in the High Court and/or an appeals tribunal of the Competition Commission. We do not believe that that is the right way forward.
  The noble Lord, Lord Kingsland, set out in some detail the analogies that he sees between these provisions and those of, first, the Competition Act and, secondly, the telecommunications appeals regulations. We do not believe that those analogies are sound.
  I turn first to the Competition Act. In many cases, the nature of the decisions involved under the utilities Acts and under the Competition Act are quite different. Under the utilities statutes, decisions may fall into a range of categories of the kind that I have set out. A number of types of appeal may be appropriate, ranging from a route of appeal to the reporting arm of the Competition Commission, where a public interest-type decision is involved, through judicial review and into cases where something beyond judicial review is provided for, as in the case of financial penalties. The important point is that the right of appeal is appropriate to the type of decision.
  A decision under the Competition Act about whether or not one of the prohibitions on anticompetitive behaviour has been breached is a determination as to how the law, which is to be interpreted in accordance with existing jurisprudence, applies to the facts. The appeal is heard by the appeal tribunal of the Competition Commission which is headed by the president, who has status equivalent to that of a High Court judge. Again, the important point is that the right of appeal is appropriate to the decision.
  The noble Lord, Lord Kingsland, also referred to the Telecommunications Appeal Regulations 1999. As he rightly said, those were introduced in response to the requirements of the European Commission directives on telecom licensing and ONP, which, among other things, required member states to provide an appeals mechanism against certain
  302
  regulatory decisions in the telecommunications sector. I thought that I heard him recognising that that directive is telecoms-specific and does not apply to the gas and electricity sectors, although he is at liberty to argue that it should apply.
  The important point is that the rights of appeal against regulatory decisions in the gas and electricity sectors should be appropriate to those decisions. For example—I am repeating myself to some extent—the Government have provided for electricity companies to challenge the imposition of financial penalties on the following grounds: that the imposition of the penalty was not within the power of the authority under Section 27A; that any of the procedural requirements of subsections (2) to (4) or subsection (6) of Section 27A, which are concerned with the giving of notice, had not been complied with in relation to the imposition of the penalty, and that the interests of the operator had been substantially prejudiced by that non-compliance; or that it was unreasonable of the authority to require the penalty imposed, or any portion of it, to be paid by the date or dates by which it was required to be paid.
  The Government believe that the provisions on financial penalties go further than judicial review and allow for appeal on similar grounds to those provided under the Telecommunications (Appeals) Regulations 1999, which include material factual or procedural error, error of law or some other material illegality. A court considering whether the imposition of a penalty was within the authority's powers would have to consider whether the penalty was, as the noble Lord, Lord Borrie, quoted,
  "of such amount as is reasonable in all the circumstances of the case".
  The court would therefore have to consider the circumstances or facts of the case.
  It is important to stress that a company will be able to challenge the imposition and the amount of any penalty. New Section 27A of the Electricity Act 1989 and new Section 30A of the Gas Act 1986 give the authority the power to impose only such a penalty as is reasonable in all the circumstances of the case. If it is not reasonable in all the circumstances, its imposition will not be within the power of the authority under that section. Accordingly, if a company challenges the amount of a penalty on the grounds that its imposition was not within the authority's power under Section 27A of the Electricity Act or Section 30A of the Gas Act—which the Bill expressly makes a ground of challenge—the court will have to consider whether it was reasonable in all the circumstances. If it does not think so, it may quash or lower the penalty, as it thinks appropriate.
  In all those respects, the Bill conforms with the requirements of the European Convention on Human Rights, with the Human Rights Act 1998, and with the objective of ensuring justice in these matters—an objective that I think that the noble Lord, Lord Kingsland, shares.
  Lord Kingsland: I thank the Minister for his responses. Our reason for tabling the twinned

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  Amendments Nos. 180 and 186 was not that we thought that the Government were under an obligation under the convention to explain exactly how they have fulfilled the proportionality criteria.
  Lord McIntosh of Haringey: I think that the noble Lord means for the authority to do so in relation to each decision. That would be the effect of the amendments.
  Lord Kingsland: Or the Secretary of State. The intention is to avoid needless litigation by requiring the authority or the Secretary of State to provide sufficient information on the facts so that anybody who is concerned about a decision can be satisfied that the Government have arrived at it properly. In that respect, we are trying to be helpful to the Secretary of State and the authority. There can surely be no objection in principle to such a clause. If the Government are convinced that they have to comply with the principle of proportionality, I see no reason why they should not have to comply with the requirements of the principle in a particular set of circumstances.
  Lord McIntosh of Haringey: That is what Clause 41 does. New Section 49A to the 1989 Act gives a full list of the key decisions of the authority or the Secretary of State for which reasons have to be given.
  5.45 p.m.
  Lord Kingsland: The giving of reasons and satisfying the principle of proportionality are two entirely different things. Someone can give reasons for a decision that is disproportionate.
  Lord McIntosh of Haringey: The amendment would merely ask for a statement from the Secretary of State or the authority that the decisions are proportionate. Neither is likely to say, "These are my reasons. They are not proportionate".
  Lord Kingsland: The amendment would require the Secretary of State or the authority to say in what way the decision was proportionate. They would have to set out the facts to demonstrate that the decision was not excessively penal. We may well return to that point on Report.
  The Minister also talked about the range of decisions that the authority or the Secretary of State will have to make, the different circumstances in which each decision is made, and the inappropriateness of having a uniform appeals procedure for so many unpredictable events. If that is true for the appeals procedure that we propose, it must also be true for the procedure that the Government propose. With great respect to the Minister, I am not impressed by his argument. Perhaps he should have accepted that there should be a different appeals procedure to fit every decision procedure but that it should satisfy a minimum standard of review or appeal, which should reflect the fundamental principles in the European convention.
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  As the noble Lord, Lord Borrie, said—this point was endorsed by the Minister—the grounds under new Section 27E(4)(a), in Clause 58, for challenging the authority's decision under the new procedures introduced by the Bill include the submission that the imposition of the penalty was not within the power of the authority under new Section 27A.
  However, that does not empower the court to reopen the underlying facts of the case that gave rise to the authority's decision. Under Section 27A(1), the authority needs only to be satisfied that a contravention has occurred or is occurring. The Minister maintains that the court can look at the facts, because the authority has to impose a penalty that is reasonable in all the circumstances. In contrast, we say that that confuses two issues: the authority's power to impose a penalty and the amount of that penalty. The two alternative forms of appeal that we are putting forward would allow the court or the tribunal to review the underlying facts. In our submission, that option is not open in the procedure set out by the Government.
  The Minister rightly recognised that the telecoms model, which the Opposition have tabled as one alternative, is telecom specific because the Government were obliged to introduce the procedure as a result of the European Community directive. But I should like to leave the Minister with this thought. Why is something that is considered appropriate to telecommunications as a public utility not appropriate to electricity and gas as public utilities? Is there something about the nature of decision-making in the telecoms industry which requires the rights of-licensees in that industry to be so much greater than those for electricity and gas? I do not expect the Minister to respond to that now but he may wish to reflect on it.
  Lord McIntosh of Haringey: I have responded to it already. I went into some detail as to what is the important issue in what is being proposed by the Opposition; namely, the extension of rights under appeal under the telecommunications appeal regulations to gas and electricity. As I said, there are different kinds of decision, different from those relating to telecommunications. The right of appeal which is provided in the Bill is appropriate to those three types of conditions. There is no less protection in the Bill than there is in the telecommunications appeal regulations. It is just that the protection is more appropriate to gas and electricity.
  Lord Kingsland: I thank the noble Lord the Minister for generously providing me with that response. My thesis is that the Minister's last remark cannot be right on the face of the Bill. But we now have an extensive account of what has occurred in the debate on the amendments on the face of Hansard. In begging leave to withdraw my amendment, between now and Report stage I shall read that account and the Minister can be reasonably confident that we shall return to this matter at Report stage.
  Amendment, by leave, withdrawn.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 182:
  Page 41, line 11, leave out from beginning to ("resulting") in line 18 and insert ("In preparing a notice under subsection (2) the Authority or the Secretary of State shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where it or he considers that publication of that matter would or might seriously and prejudicially affect the interests of that individual or body.
  (5) This section does not apply to a decision").
  On Question, amendment agreed to.
  [Amendments Nos. 183 and 184 not moved.]
  Clause 41, as amended, agreed to.
  Clause 86 [Reasons for decisions under the 1986 Act]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 185:
  Page 84, leave out line 23.
  On Question, amendment agreed to.
  [Amendment No. 186 not moved.]
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 187:
  Page 85, line 1, leave out from beginning to ("resulting") in line 8 and insert ("In preparing a notice under subsection (2) the Authority or the Secretary of State shall have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where it or he considers that publication of that matter would or might seriously and prejudicially affect the interests of that individual or body.
  (5) This section does not apply to a decision").
  On Question, amendment agreed to.
  [Amendments Nos. 188 and 189 not moved.]
  Clause 86, as amended, agreed to.
  Clause 42 agreed to.
  Clause 87 agreed to.
  Clauses 43 to 46 agreed to.
  Clause 47 [Additional terms of connection]:
  Baroness Buscombe Baroness Buscombe moved Amendment No. 190:
  Page 50, line 11, after ("negligence") insert ("or breach of contract").
  The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 191. These amendments concern the nature of the relationship between distributor and customer. Under the new arrangements for the supply of electricity, customers will have a direct contractual relationship with the supplier who sells them electricity but the customer's connection to the network will remain the responsibility of a distributor.
  Clause 43, which amends Sections 16 and 17 of the Electricity Act 1989, places a statutory duty on distributors to make and maintain a connection to premises if required to do so by the customer or a supplier acting on the customer's behalf.
  Clause 47, which amends Section 21 of the 1989 Act, permits distributors, as part of the arrangements for such a connection, to limit their liability to the customer for economic loss which arises from the distributor's negligence.
  There is one crucial issue which the DTI has, with respect, been unable to answer; namely, whether the distributor-customer relationship is entirely statutory or whether the initial statutory obligation then triggers a contractual relationship.
  Amendment No. 190 asks whether the relationship between the customer and the distributor is contractual by extending the limitation of liability to loss arising from breach of contract by the distributor.
  Clause 48, which substitutes a new section for Section 22 of the 1989 Act, permits customers to enter into a special agreement with a distributor under which the terms of the connection would be agreed between them outside of the statutory framework provided by Clause 43. However, unlike the present Section 22, no provision is made for the distributor to be able to compel a customer to do so.
  While a distributor may agree to connect a customer only subject to certain safeguards—for example, providing security for costs—we believe that there will be some instances when the nature of the connection will impose additional burdens on the distributor, who should have the ability in such cases to require the customer to agree the terms of connection contract outside of the statutory framework. Amendment No. 191 would enable the distributor to do so where it was reasonable in all the circumstances. I beg to move.
  Lord McIntosh of Haringey: Amendment No. 190 would mean that a person requiring a connection could be required by a distributor to accept terms which would limit the distributor's liability to that person in respect of economic loss resulting from a breach of contract.
  The Government are opposed to this amendment on legal and policy grounds. From the point of view of the law, we are not convinced that a court would conclude that terms agreed under Section 16A form a contract. Our reasons are as follows. Sections 16(1) to (3) place a duty on distributors to make a connection when required to do so. That duty encompasses not just the making of the connection but the subsequent maintenance of it for so long as the connection is required.
  The terms themselves which are mentioned in Section 16(3) and 16A form the basis of a statutory agreement which governs the performance of and adds a gloss to the statutory duties in Section 16(1) and (2). We would not expect any terms derived from these provisions to be regarded as terms of an ordinary and independent contract.
  As a result, the distributor is under an obligation to make and maintain a connection once terms are agreed. Such terms may be determined by a third party—that is, the authority—in the event that the parties cannot agree the terms between themselves.
  For that reason, we do not think that the amendment achieves what it sets out to achieve and in any case, we do not consider it appropriate to second guess what the courts may decide by making reference in the Bill to a contract.

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  I am aware that some parts of the distribution industry are concerned about how they might enforce the obligations of the other party if such an agreement is not a contract. In our view, where a term provides for connections to be satisfied by the customer before the making of a connection, failure to satisfy the conditions would absolve the distributor from the duty to connect on the basis of Section 17(1)(c).
  In the event of a continuing breach by a customer of an obligation of his, we are confident that a court would reach a sensible conclusion, imposing such a remedy as it considered appropriate, taking account of all the circumstances of the case. We do not think that the existence of statutory duties would necessarily preclude the award of damages in appropriate circumstances.
  However, as I said, we also have difficulties with this amendment on policy grounds. Our view is that it would not he proper to allow distributors as of right to include terms which limit their liability in respect of economic loss arising from any breach of any term agreed under Section 16A of the Electricity Act. We understand that the concerns which lie behind this amendment stem in the main from the rapid growth in the use of computers and other electronic equipment which use and store information of huge commercial value. Such equipment, and the information it stores, is especially vulnerable to any interruption in, or deterioration in the quality of, its supply of electricity. Anybody who tries to connect into the Palace of Westminster at the weekend will know about that! This is an issue which has increased greatly in importance since the present legislation was enacted in 1989.
  It is not difficult to see why distributors may be concerned about their exposure to economic loss as a result of this development, but it is important to bear in mind that customers who rely heavily on IT equipment face the prospect of severe—possibly fatal—business disruption in the event of some damaging change in their electricity supply. Clearly, both sides must take the necessary measures to protect themselves both physically and financially. In designing the legislative framework, it is necessary to strike the right balance between the interests of both parties. We believe that Amendment No. 190 would provide distributors with an inappropriate level of protection compared with the person requiring the connection; that is, the customer.
  I turn now to Amendment No. 191. The effect of this amendment would be to remove from an undefined group of persons the right to seek a connection under Section 16 and to require them instead to enter into a special connection agreement, provided for by Section 22. This amendment seems to be designed to allow distributors in effect to require customers with large loads or embedded generation to make a connection agreement under Section 22. For such customers, connection agreements are inevitably complex and wide ranging. This is because both the making of the connection and the subsequent behaviour of the
  308
  customers can have effects on the wider operation of a distribution system which can give rise to further, and possibly continuing, costs for the distributor.
  I think it might be helpful if I were to say a word or two about the distinct purpose for which special connection agreements under Section 22 have been designed. Sections 16 to 21 of the Act, as amended by this Bill, set out a statutory framework governing connections to electricity distribution systems. In discussing Amendment No. 190, I set out the Government's views on the status in law of the terms made under Section 16A. We have concluded that it is not certain that the courts would interpret such an agreement as a contract.
  For this reason, we are providing in Section 22 an alternative means for obtaining a connection. The intention is that there should be no doubt as to the status of the special connection agreement as a contract, since it is not governed by the provisions in the previous sections. The Bill says nothing about which of the routes made available by the Bill for the making of a connection agreement, whether it is Section 16A or Section 22, should be used for the purpose of agreeing the terms on which a connection is to be made. That is deliberate. The Government's policy is that everyone requiring a connection should be on the same legal footing.
  This is especially important in the case of embedded generation, which is one of the targets of this amendment. The Government have sought through various provisions in this Bill to make sure that embedded generators get fair access to distribution systems so that they can compete in the generation market on level terms with conventional large-scale generation. There are a number of reasons why we think this is important, but perhaps the key one is that we are conscious of the crucial role that embedded generation, in the form of renewables and CHP plant, will have to play in meeting the Government's climate change targets.
  The amendment, at a stroke, would undermine all of what I have just explained to your Lordships about the Government's intentions, and that is why we must oppose it. However, although I am opposing the amendment, I accept that we must be clear that the provisions in Sections 16 to 21 do in fact support the inclusion in Section 16A terms of the full range of matters which it is proper for distributors to wish to incorporate in large and complex cases.
  The Electricity Association has suggested to Department of Trade and Industry officials that this is not the case. Officials have promised to look further at this point and to let the association know in good time whether they think that anything needs to be done in order to address this concern. On this basis, I hope that the noble Baroness, Lady Buscombe, will not press either of these amendments.
  Baroness Buscombe: I thank the Minister for his response. First, in relation to Amendment No. 191. I am pleased to have his suggestion that the Department

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  of Trade and Industry will meet again with the Electricity Association to discuss this issue. It is one of considerable concern to the industry.
  Turning to Amendment No. 190, the noble Lord is also right in saying that this is of enormous interest to the industry. With great respect, we are not satisfied with the Minister's response, and I wish to test the opinion of the Committee.
  6.5 p.m.
  On Question, Whether the said amendment (No. 190) shall be agreed to?
  Their Lordships divided: Contents, 61; Not-Contents, 130.

  Division No. 1

  CONTENTS

  Anelay of St Johns, B.

  Jenkin of Roding, L.

  Astor of Hever, L. [Teller]

  Jopling, L.

  Attlee, E.

  Kingsland, L.

  Blatch, B.

  Knight of Collingtree, B.

  Brabazon of Tara, L.

  Laird, L.

  Brougham and Vaux, L.

  Luke, L.

  Buscombe, B.

  Lyell, L.

  Butterworth, L.

  McConnell, L.

  Campbell of Croy, L.

  Mackay of Ardbrecknish, L.

  Carnegy of Lour, B.

  Mancroft, L.

  Clark of Kempston, L.

  Marlesford, L.

  Coe, L.

  Montrose, D.

  Colwyn, L.

  Naseby, L.

  Craig of Radley, L.

  Northesk, E. [Teller]

  Crathorne, L.

  Oxfuird, V.

  Dean of Harptree, L.

  Palmer, L.

  Dixon-Smith, L.

  Park of Monmouth, B.

  Pearson of Rannoch, L.

  Feldman, L.

  Rawlings, B.

  Ferrers, E.

  Reay, L.

  Fookes, B.

  Rees, L.

  Fraser of Carmyllie, L.

  Renton, L.

  Freeman, L.

  Roberts of Conwy, L.

  Gardner of Parkes, B.

  Rogan, L.

  Geddes, L.

  Seccombe, B.

  Hanham, B.

  Selborne, E.

  Hayhoe, L.

  Skidelsky, L.

  Henley, L.

  Stodart of Leaston, L.

  Higgins, L.

  Taylor of Warwick, L.

  Hooper, B.

  Thomas of Gwydir, L.

  Howe, E.

  Tombs, L.

  NOT-CONTENTS

  Acton, L.

  Brooke of Alverthorpe, L.

  Addington, L.

  Burlison, L.

  Ahmed, L.

  Carter, L. [Teller]

  Alli, L.

  Christopher, L.

  Amos, B.

  Clarke of Hampstead, L.

  Andrews, B.

  Cledwyn of Penrhos, L.

  Archer of Sandwell, L.

  Clinton-Davis, L.

  Bach, L.

  Cocks of Hartcliffe, L.

  Barnett, L.

  Currie of Marylebone, L.

  Bassam of Brighton, L.

  David, B.

  Beaumont of Whitley, L.

  Davies of Oldham, L.

  Berkeley, L.

  Desai, L.

  Blackstone, B.

  Dholakia, L.

  Blease, L.

  Dixon, L.

  Borrie, L.

  Dormand of Easington, L.

  Bragg, L.

  Dubs, L.

  Brennan, L.

  Elder, L.

  Brett, L.

  Evans of Parkside, L.

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  Evans of Watford, L.

  Massey of Darwen, B.

  Ezra, L.

  Merlyn-Rees, L.

  Falconer of Thoroton, L.

  Methuen, L.

  Farrington of Ribbleton, B.

  Miller of Chilthorne Domer, B.

  Faulkner of Worcester, L.

  Mitchell, L.

  Filkin, L.

  Molloy, L.

  Fyfe of Fairfield, L.

  Morris of Castle Morris, L.

  Gale, B.

  Morris of Manchester, L.

  Geraint, L.

  Newby, L.

  Gibson of Market Rasen, B.

  Nicol, B.

  Gladwin of Clee, L.

  Patel of Blackburn, L.

  Goldsmith, L.

  Phillips of Sudbury, L.

  Goodhart, L.

  Pitkeathley, B.

  Goudie, B.

  Plant of Highfield, L.

  Graham of Edmonton, L.

  Ponsonby of Shulbrede, L.

  Greaves, L.

  Prys-Davies, L.

  Grenfell, L.

  Ramsay of Cartvale, B.

  Hardy of Wath, L.

  Razzall, L.

  Harris of Greenwich, L.

  Redesdale, L.

  Harris of Richmond, B.

  Rendell of Babergh, B.

  Harrison, L.

  Rodgers of Quarry Bank, L.

  Hayman, B.

  Russell, E.

  Hilton of Eggardon, B.

  Sawyer, L.

  Hollis of Heigham, B.

  Scotland of Asthal, B.

  Howells of St. Davids, B.

  Scott of Needham Market, B.

  Howie of Troon, L.

  Serota, B.

  Hoyle, L.

  Sharp of Guildford, B.

  Hughes of Woodside, L.

  Shore of Stepney, L.

  Hunt of Kings Heath, L.

  Shutt of Greetland, L.

  Irvine of Lairg, L. (Lord Chancellor)

  Simon, V.

  Stone of Blackheath, L.

  Janner of Braunstone, L.

  Symons of Vernham Dean, B.

  King of West Bromwich, L.

  Tomlinson, L.

  Kirkhill, L.

  Tordoff, L.

  Layard, L.

  Uddin, B.

  Lea of Crondall, L.

  Wallace of Saltaire, L.

  Lipsey, L.

  Walmsley, B.

  Lockwood, B.

  Warner, L.

  Lofthouse of Pontefract, L.

  Warwick of Undercliffe, B.

  Longford, E.

  Weatherill, L.

  Macdonald of Tradeston, L.

  Whitaker, B.

  McIntosh of Haringey, L. [Teller]

  Whitty, L.

  Wigoder, L.

  McIntosh of Hudnall, B.

  Wilkins, B.

  MacKenzie of Culkein, L.

  Williams of Mostyn, L.

  Mackenzie of Framwellgate, L.

  Williamson of Horton, L.

  Mar and Kellie, E.

  Woolmer of Leeds, L.

  Mason of Barnsley, L.

  Young of Old Scone, B.

  Resolved in the negative, and amendment disagreed to accordingly.
  6.15 p.m.
  Clause 47 agreed to.
  Clause 48 [Special agreements with respect to connection]:
  [Amendment No. 191 not moved.]
  Clause 48 agreed to.
  Clause 49 [General duties of electricity distributors]:
  Lord Ezra Lord Ezra moved Amendment No. 192:
  Page 50, line 36, at end insert—
  ("( ) to facilitate the development of embedded generation"").
  The noble Lord said: In moving Amendment No. 192, I shall speak also to Amendment No. 193. The purpose of these amendments is to add to the general duties of licensed electricity distributors. In the case of Amendment No. 192, it is to add the duty of

  311
  facilitating the development of embedded generation to which the Minister referred in commenting on the last amendment.
  Perhaps I may remind the Committee that embedded generation is small-scale generation, generally deriving from renewables or combined heat and power, which is too small to supply onto the national network and has to link up with local networks. It brings power and heat generation closer to communities and local industry. The successful development and growth of embedded generation helps to develop new environmentally-friendly technologies and services.
  According to the DTI, the amount of embedded generation is likely to increase by an extra 8,000 to 10,000 megawatts over the next decade. By then, more than 25 per cent of generating capacity could come from this source. This is one of the most significant developments in electricity generation and distribution since the development of the National Grid. It reflects major technological change. Bringing the source of generation close to consumers could lead to big savings. Less electricity would be lost through long-distance transmission. Embedded generation technology is more flexible and less polluting. It changes altogether the electricity scene we have been used to in the post-war period, with mammoth power stations distant from their customers. Here we have a situation in which more and more power will be generated in smaller amounts close to the customer.
  Embedded generation can usefully supplement the capacity of the grid in particular localities. The difficulty under the earlier system was that the capacity of the grid could be augmented only on a very large scale. Embedded generation introduces much greater flexibility, adding to capacity where it is needed.
  In the latest report of the Royal Commission on Environmental Pollution, which was issued on 15th June, specific reference is made to the importance of embedded generation. The report states that:
  "The relatively small size of renewable energy plants generating electricity and local CHP plants does not fit easily with an electricity distribution and transmission network based on massive generators and highly centralised control".
  That refers to the previous system. It goes on,
  "The national grid and the regional distribution systems need to become more favourable to small and very small environmentally friendly generators which sometimes need to import electricity. Regulatory policies will need to promote, and must not inhibit, this development. The government and the electricity supply industry must together devise a system which can handle a growing quantity of this embedded generation securely and efficiently".
  I should like to read from the debate which took place yesterday on combined heat and power, when the Parliamentary Under-Secretary of State for the Environment, Transport and the Regions, Mr Chris Mullin, said,
  "We want to ensure that CHP and other embedded generation is treated on the same basis as conventional generation. We also want to ensure that it has fair access to the wider networks at fair prices, and that it is fairly rewarded for the benefits that it brings to the network through its "focus on local solutions on sustainable energy".—[Official Report, Commons, 20/6/00: col. 318.]
  In the light of this important development, I hope that the Government will seriously consider the amendment. Unless we have something like this on the face of the Bill, the need to secure fair and open access to the growing amounts of embedded generation will not be secured.
  The related Amendment No. 193 deals with the more precise problem of net metering in the case of small, localised generation. The basis of net metering is that the same price is paid for any electricity received as is paid to the user for any electricity sent out. That would be particularly important for very small operations including, possibly, as the technology develops, operations on a domestic scale. So that too is an important aspect of the same problem. I beg to move.
  Lord Jenkin of Roding: In the course of trying to begin to make myself familiar with the Royal Commission report—it is a formidable document and one which will repay a great deal of study—I too was impressed with the passages on the importance of this growing feature of our electricity supply, embedded energy.
  The noble Lord, Lord Ezra, quoted one recommendation. I was particularly struck by the recommendation in paragraph 8.54, which says,
  "There appears to have been no research as yet into these problems";
  that is, that it requires a much more sophisticated distribution network if it is going to take account both of the large generators and of a large number of small generators. But no research has been conducted either by the National Grid Company or by any other body. The paragraph continues,
  "We recommend that the government takes responsibility for promoting, and ensuring sufficient funding is available for research into technologies that solve the problems of controlling electricity networks in which there is a high proportion of embedded and intermittent generation, and into the economic and institutional issues that will need to be resolved".
  My interest in this arises partly because we shall be coming, I hope shortly, to the question of renewable energy. Many renewable energy sources will qualify as embedded generation. I am astonished that there has been no research into the distribution consequences of the growth of embedded generation sources.
  Baroness Sharp of Guildford: I support the amendment of my noble friend Lord Ezra, and pick up the same theme of the need to support the development of renewable sources of energy.
  My noble friend mentioned, and we shall be debating later, the combined heat and power issues. I should like to mention another area which is growing fast, though not as fast in this country as it might; that is, small-scale solar power photovoltaics. In 1992 the Energy Technology Studies Unit (ETSU) produced a study which showed that, if units were suitably placed on roofs, two-thirds of the electricity in this country could be acquired from solar power.

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  There is absolutely no incentive for households to make use of such new technologies when at the moment they are charged 6p to 7p per unit for electricity, and, if they offer it to the grid, they are offered 2.5p to 4p back for it. It is important therefore that the net metering issue is brought to light and considered.
  The Americans are moving forward extremely fast in photovoltaic technology. Last year there was a 20 per cent increase in California in the use of photovoltaics and the Germans too have been introducing legislation to encourage it. This is a small amendment for which we are asking, but one that will provide a considerable incentive to help to develop the new technologies.
  Baroness Buscombe: We on these Benches have difficulty in supporting these amendments. We feel that they undermine what is otherwise a completely neutral position.
  Clause 49 imposes a simple obligation on the distributor who is, we must remember, the keeper of the monopoly distribution network. He is there to develop and maintain a system which is efficient, co-ordinated and economical, and to facilitate competition in supply and generation. Add anything else to that and we risk upsetting the balance. We therefore cannot support the amendments.
  Lord McIntosh of Haringey: I hope it was clear from my opposition to Amendment No. 191, which the noble Baroness, Lady Buscombe, moved a few minutes ago, that we do not agree with the Opposition on this, but that we recognise the importance of small-scale—typically embedded—generation to renewables and to the electricity market more broadly, and of course of combined heat and power.
  The Bill introduces changes to the regulatory structure of the electricity industry which will remove barriers to embedded generation, which Amendment No. 191 would have brought back again, and enable it to compete fairly on its own merits. That is the key to encouraging renewable and combined heat and power generation. For example, the separation of electricity supply and distribution, presently combined in the Public Electricity Suppliers, will change the way distribution systems are managed to the benefit of embedded generators. That is underpinned in the Bill by the explicit duty imposed on distributors to facilitate competition in generation, including embedded generation, as well as supply.
  It is also supported by the draft distribution licence conditions which, for example, place system entry and exit points on an equal footing and introduce a power for the regulator to direct distributors to publish long-term development plans, as transmission licence holders are already required to do. In addition, distributors will be obliged to offer terms for connection to embedded generators—something which is not a feature of the present legislation.
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  The aim is to put in place a framework so that embedded generators will be able to obtain full value for their energy output and any locational benefits they provide, and so that distribution companies will look at embedded generation on an equitable and transparent basis when considering any network augmentation.
  The Government committed themselves to addressing any continuing problems relating to the operation of distributed generation and its connection to the distribution system that are identified by a new industry-wide working group chaired by Ofgem and involving DTI, DETR and representatives of the industry.
  Given all those measures, we believe that, on the face of the Bill, in regulation, in licences and in every place where it is appropriate, we are taking practical steps to encourage embedded generation and we believe that that is more important and significant than the declaration which Amendment No. 192 would place on the face of the Bill. We believe that in practice it would not achieve anything that we are not already addressing.
  I turn to Amendment No. 193 on net metering. I make it clear that the Bill does not rule out net metering. However, we think that it is wrong in principle to prescribe a system of net metering, since it would ignore the real difference in value between the electricity that a customer supplies to the network and that which he takes from it. Any such general obligation would imply a degree of cross-subsidisation, which would have to be paid for by other consumers.
  It is, of course, open to electricity suppliers to offer net metering to their customers if they choose to do so. We understand that at least one company has already done this. We are glad about that and we welcome that initiative. But the way forward, from the point of view of the legislation, lies in the measures which benefit embedded generation, which I have already set out in some detail, and not in declarations of the sort provided by Amendment No. 193.
  I hope that the noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp, will recognise that we are on the same side and that the Government are taking the practical steps.
  6.30 p.m.
  Lord Beaumont of Whitley: I am delighted to hear that the Government are taking these important steps, which will become more important as further efficient methods of generation of renewable energy are made available. I particularly refer to the article in this week's edition of New Scientist about the new breakthrough in the production of wind generation, using much smaller wind generators and much better methods of transmitting power over longer distances.
  Am I to understand from the Government that, in spite of their good intentions, they believe that these amendments would not only be superfluous but would in some way be deleterious to their aims? It appears to me that the inclusion of small-scale renewable

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  generation through net metering does not in any way imply, as the Government seem to be saying, the forcible application of net metering on an obligatory basis at a particular rate. The inclusion of small-scale renewable generation through net metering would involve a considerable amount of discretion about how it is done. I might be persuaded by the Government that it is unnecessary, but I am not at all persuaded that it would be deleterious to their objectives. I find it very difficult to accept both apparently contradictory arguments at the same time.
  Lord McIntosh of Haringey: If I may respond to the noble Lord, Lord Beaumont, I never used the word "deleterious". I said that nothing in Amendment No. 192 adds to the practical measures that we have in hand. I see no point or advantage in adding a declaration when the practical measures of policy contained on the face of the Bill, in regulation, in licences, are already in hand. As to—
  Lord Beaumont of Whitley: I absolutely accept that. It may be that the word "deleterious" is the wrong word to use. It was the word which leapt to my mind at the time. I was referring to the Government's opposition to Amendment No. 193, which we are discussing at the same time.
  Lord McIntosh of Haringey: The argument is that net metering may be appropriate in some circumstances. However, where a genuine difference exists in the value of input and output, the singling out of net metering for praise on the face of the Bill would have the effect of imposing cross-subsidies, which do not seem to us to be justified.
  Lord Ezra: I thank those who have participated in this interchange. I also thank the Minister for his response, and particularly for his reaffirmation of the Government's support of the major changes that are now taking place in electricity generation away from large, centralised stations to embedded localised Generation.
  However, I am sorry that the Government are not prepared to include in the Bill the proposed declaration. In my view, it would act as a coping stone for the various practical measures which the Minister has indicated are being taken. It could regularly be referred to as symbolising and indicating, in a few words, the Government's intention; the detail could then be found elsewhere. I should like to reconsider this issue to see whether the concept can be introduced elsewhere, which the Government may be prepared to accept at a later stage.
  I also regret the fact that net metering cannot be introduced. The amendment does not suggest that it should be imposed, but that it should be taken into account. The concept of net metering is a relatively new one. It is not yet practised in this country, but it is widely practised in other countries and has facilitated—the word that we use—these new developments, particularly at the very small end. Unless something like this is introduced, a lot of
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  technological development that is taking place here and elsewhere could be frustrated so far as this country is concerned. That is also a matter which I should like to reconsider. In the mean time, however, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 193 not moved.]
  Clause 49 agreed to.
  Clause 50 agreed to.
  Schedule 4 [Schedule to be substituted for Schedule 6 to the 1989 Act]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 194:
  Page 116, line 32, at end insert—
  ("Deemed contracts in certain cases
  2A.—(1) Where an electricity supplier supplies electricity to any premises otherwise than in pursuance of a contract, the supplier shall be deemed to have contracted with the occupier (or the owner if the premises are unoccupied) for the supply of electricity as from the time ("the relevant time") when he began so to supply electricity.
  (2) Where—

  (a) the owner or occupier of any premises takes a supply of electricity which has been conveyed to those premises by an electricity distributor;

  (b) that supply is not made by an authorised supplier; and

  (c) a supply of electricity so conveyed has been previously made by an electricity supplier,

  the owner or occupier shall be deemed to have contracted with the appropriate supplier for the supply of electricity as from the time ("the relevant time") when he began to take such a supply.
  (3) Nothing in sub-paragraph (2) shall be taken to afford a defence in any criminal proceedings.
  (4) The Authority shall publish a document containing provision for determining the "appropriate supplier" for the purposes of sub-paragraph (2).
  (5) The Authority may revise the current document published under sub-paragraph (4); and where it does so it shall publish the revised document.
  (6) The express terms and conditions of a contract which, by virtue of sub-paragraph (1) or (2), is deemed to have been made shall be provided for by a scheme made under this paragraph.
  (7) Each electricity supplier shall make (arid may from time to time revise), a scheme for determining the terms and conditions which are to be incorporated in the contracts which, by virtue of sub-paragraph (1) or (2), are to be deemed to have been made.
  (8) The terms and conditions so determined may include terms and conditions for enabling the electricity supplier to determine, in any case where the meter is not read immediately before the relevant time, the quantity of electricity which is to be treated as supplied by the supplier to the premises, or taken by the owner or occupier of the premises, during the period beginning with the relevant time and ending with—

  (a) the time when the meter is first read after the relevant time: or

  (b) the time when the supplier ceases to supply electricity to the premises, or the owner or occupier ceases to take a supply of electricity,

  whichever is the earlier.
  (9) A scheme under this paragraph may (subject to section 7B) make different provision for different cases or classes of cases, or for different areas, determined by, or in accordance with, the provisions of the scheme.
  (10) As soon as practicable after an electricity supplier makes a scheme under this paragraph, or a revision of such a scheme, he shall—

  (a) publish, in such manner as he considers appropriate for bringing it to the attention of persons likely to be affected by it, a notice stating the effect of the scheme or revision:

  (b) send a copy of the scheme or revision to the Authority and to the Council: and

  (c) if so requested by any other person, send such a copy to that person without charge to him.

  SECTIONS 24 TO 26: SUPPLEMENTARY

    Supplies of electricity illegally taken
    2B.—(1) Where any person takes a supply of electricity which is in the course of being conveyed by an electricity distributor, the distributor shall be entitled to recover from that person the value of the electricity so taken.
    (2) Where—

    (a) any person at premises at which a connection has been restored in contravention of paragraph 3(1) takes a supply of electricity which has been conveyed to those premises by an electricity distributor; and

    (b) the supply is taken otherwise than in pursuance of a contract made with an authorised supplier, or of a contract deemed to have been made with an electricity supplier by virtue of paragraph 2A above or paragraph 4S (former tariff customers) of Schedule 7,

    the distributor shall be entitled to recover from that person the value of the electricity so taken.
    (3) Each electricity distributor shall make, and from time to time revise, a scheme providing for the manner in which, and the persons by whom, the quantity of electricity taken in such circumstances as are mentioned in sub-paragraph (1) or (2) is to be determined for the purposes of that sub-paragraph.
    (4) Sub-paragraphs (9) and (10) of paragraph 2A shall apply in relation to a scheme under this paragraph as they apply in relation to a scheme under that paragraph.
    (5) In this paragraph "value", in relation to any electricity taken in such circumstances as are mentioned in sub-paragraph (1) or (2), means the amount which, if the electricity had been taken in such circumstances as are mentioned in sub-paragraph (2) of paragraph 2A, could reasonably be expected to have been payable in respect of the electricity under a contract deemed to have been made by virtue of that sub-paragraph.").
    The noble Lord said: In moving this amendment, I speak also to Amendments Nos. 201, 292, 299, 300, 303, 304, 312, 337, 338, 344, 346 and 347. This group includes Amendments Nos. 195 to 197, for which I imagine that the Opposition would prefer to put their case before I knock it down.
    The government amendments deal with provisions for deemed contracts and the determination of disputes. The provisions for deemed contracts are included in Amendments Nos. 194, 299, 337 and 338, which introduce provisions into the Electricity Act for deemed contracts such as already exist in the Gas Act. They provide that where a supply is made to premises without an agreed contact being in place between a customer and a supplier, a contract shall be deemed to be in place with the appropriate supplier. An example of a case in which this is necessary is when someone moves into premises without previously having made a contract with a supplier. In addition, they provide a right to a distributor to recover the value of electricity illegally taken from a distribution system through the civil process of debt recovery. This reminds me of the bedsit days of my youth!
    In addition, the Gas Act is amended to align it with the Electricity Act, in that the provisions which restrict deemed contracts to categories of customer whose demand is below a specified threshold are being repealed, making them applicable to all categories of customer.
    Amendments Nos. 201, 292 and 300 relate to disputes determination. These amendments update the existing provisions of the Electricity Act, so that disputes determination by the authority applies to the statutory obligations on distributors to provide a connection. At present, it applies to statutory obligations to supply by a public electricity supplier, which are being repealed. In addition, they amend the Gas Act to align with the electricity provisions so that disputes determination applies to all customers not just domestic customers.
    The consequential Amendments Nos. 303, 304, 312, 344 and 347 make some small, technical changes to the Bill, resulting from the abolition in the Electricity Act of the concept of "public electricity suppliers" and the separate definition of supplier and distributor. I beg to move.
    Baroness Buscombe: I shall do battle on Amendment No. 195 and, in so doing, speak also to Amendments Nos. 196 and 197. Amendments Nos. 195 and 196 would provide electricity distributors with rights of access to meters in the case of an emergency.
    Electricity suppliers will be responsible for providing meters at each point they supply and retrieving and processing the readings from them (described as "metering services" and "data services"). The supplier can appoint an agent to fulfil its responsibilities in respect of those services.
    While distributors will retain ownership of the thousands of meters currently in place and must offer suppliers terms for the provision and operation of meters, they will not have any right of access to their meters. The powers to enter premises for access to meters will be given to suppliers who will be able to exercise those powers themselves or through persons appointed by them. A distributor could be appointed for this purpose, but a supplier will not have to accept the distributor's terms and will be able to select another party to provide metering services.
    Where the supplier has not appointed the distributor as its agent for metering services, the distributor will not be able to deal with a faulty meter on the customer's premises. In that event a distributor will be able to disconnect the supply only in order to leave a safe situation, and ask the supplier—he would be in rather an unenviable position of explaining this to the customer—to arrange for its meter operator to deal with the meter; until this is done, the consumer will be without electricity. The amendments would enable distributors to enter premises in an emergency to inspect, repair and reinstall meters. In that way we believe that they are entirely practical.
    The purpose of Amendment No. 197 is to clarify that the protection of electricity supply equipment from distress will pass to the successor of the company

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    that installed that equipment. As presently drafted, Schedule 4 provides immunity from distress for equipment which is marked or branded with the name of an electricity company. As a result of the reforms in the electricity market, many of these assets will pass to different owners but remain in place for some time bearing the name of a predecessor in title. It is unclear whether the immunity from distress will pass to the successor company. The amendment deals with this point.
    6.45 p.m.
    Lord McIntosh of Haringey: I am grateful to the noble Baroness, Lady Buscombe, for her explanation of those amendments. I apologise for my flippant remarks at the beginning. The noble Baroness, Lady Buscombe, knows better than to take me seriously.
    I turn to Amendments Nos. 195 and 196. At present, the distribution arm of public electricity suppliers owns most of the meters in the country. We intend that in future suppliers and not distributors should be responsible for providing customers with meters and related services. Suppliers will not have to own the meters or provide services themselves, but may procure them from specialist metering firms or, as the noble Baroness, Lady Buscombe, said, from distributors. This policy aims to increase competition in metering and also ensure that customers have a "one-stop shop"; that is, they deal with the supplier for everything, rather than having to deal with different people for different aspects of their electricity service.
    Distributors will continue to be responsible for line and plant, and so it is right that they should have various rights of entry related to those, including emergency access. But there is no reason for them to have privileged access to meters, for which they are not responsible.
    It is important to remember that this is not an issue of safety. Of course it is usually the distributor who needs entry in an emergency and we have made provision for this. But if the fault is with an electric heater or cooker, there are no additional rights of entry enforceable by court warrants to inspect or replace these items, and similarly it is not necessary for a faulty meter. It is irrelevant that the distributor might happen to own it.
    Moreover, it is anti-competitive. It would retain a link between supply and distribution which runs against the thrust of the Bill in separating the two. Also, specialist metering firms, which may also provide meters to suppliers for use by consumers, do not directly get these rights, so why should we skew the competitive playing field against them?
    Of course, both specialist firms and distributors can benefit from a supplier's right of entry in relation to meters if they are authorised by the supplier, for example when the supplier has sub-contracted its metering requirements. But the responsibility for how those rights are exercised should remain with the supplier who has the responsibility.
    I turn to Amendment No. 197. The current drafting in Schedule 4 states that if electrical plant lines or meters are marked sufficiently to indicate an electricity
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    company as the owner, they cannot be treated as part of the landlord's property or be seized if, say, the landlord goes bankrupt. I think that it was the issues of seizure and distress that the noble Baroness, Lady Buscombe, was most concerned about.
    The drafting does not say that the name of the company which owns the relevant equipment must be marked, only that the mark should be sufficient to indicate that some electricity supplier or distributor is the owner. This seems sufficient to cover the case which might lie behind the amendment; namely, when equipment is marked with the name of a company which might no longer exist, for example a public electricity supplier, where ownership has passed to a successor supplier or distributor. Therefore I do not believe that this amendment is necessary.
    On Question, amendment agreed to.
    [Amendments Nos. 195 to 197 not moved]
    Schedule 4, as amended, agreed to.
    Clause 83 [The gas code]:
    Baroness Buscombe Baroness Buscombe moved Amendment No. 198:
    Page 81, line 18, at end insert—
    ("( ) In paragraph 12 (failure to notify connection or disconnection of service pipe). in sub-paragraph (1) after "meter" in both places where it occurs there is inserted "or gas device".
    ( ) In paragraph 13 (Failure to notify disconnection of meter)—

    (a) in sub-paragraphs (1) to (3) after "meter" in each place where it occurs there is inserted "or gas device", and

    (b) after sub-paragraph (4) there is inserted—

    "(5) In this paragraph and in paragraph 12, "gas device" means any device other than a meter forming part of' or used in conjunction with the metering installation at any premises."").
    The noble Baroness said: In moving Amendment No. 198, I wish to speak also to Amendments Nos. 199 and 200. These three amendments are technical amendments to clarify the legal uncertainty in the current provisions of the gas code in the Gas Act. They complement the authority's current activities in bringing greater competition in meter ownership in the gas market and in the carrying out of meter installation and maintenance activities. Encouraging competition in these areas will bring down prices for the benefit of consumers.
    Amendment No. 198 seeks to amend paragraphs 12 and 13 of the schedule. The two sub-paragraphs require persons carrying out work which involves removing a meter or connecting a meter to a service pipe to inform the supplier and the gas transporter concerned. The information in question is specified in regulations under paragraph 12. However, in any metering installation, there are other fittings than purely the meter and service pipe. In a domestic installation there will be a small pressure regulator and connecting pipes. For larger industrial and commercial installations there may also be pressure and temperature controls apparatus.
    In the new competitive environment it may be the case that different parties will own the meter and other parts of the apparatus. This amendment ensures that if work is carried out to any part of the metering installation other than the meter the same information

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    is given to the supplier and transporter in respect of that work as is currently given in respect of work involving the meter alone. This enables the supplier and transporter to ensure that their records of ownership and work carried out are kept up to date and helps to ensure the overall safe operation of the metering installation.
    Amendment No. 200 seeks to remove a barrier to the free transfer of title in meters when installed in consumers' premises. A failure to attend to this is likely to discourage new meter owners and so reduce the scope for competition in the market.
    The issue is that ownership in items such as gas meters can normally be transferred by what is known as "delivery"—that is, a physical or symbolic handing over of the meters—if at the relevant time they are in the possession of the party seeking to sell them. This is, however, not the case if at the relevant time they are in the possession of a third party, such as the hirer or consumer. In such a case, in order to transfer title the consent of the party in possession of the goods would be required. This is a considerable barrier to the transfer of title. Amendment No. 199 makes that consent unnecessary without changing the terms of the hiring agreement.
    The third amendment seeks to amend paragraph 29 of Schedule 2B. This paragraph provides that meters and gas fittings of gas transporters and suppliers, provided that they are marked with a sufficient mark indicating the owner, are not liable to be seized by creditors of the consumer in recovering debts, and are also not deemed to be the landlord's fixtures. The latter provision is of particular importance as otherwise the common law could deem the ownership in the meter to pass from the gas transporter to the owner of the property as soon as the meter was fixed to the property. I beg to move.
    Lord McIntosh of Haringey: I hope that I can reassure the noble Baroness, Lady Buscombe, that these amendments are not necessary.
    Amendment No. 198 would have the effect that a notice should be given if a "device" which is not a gas meter but "forms part of it" or is used "in conjunction with it" is to be disconnected. The present drafting would require such notice to be given only if the meter is to be disconnected. The amendment is unnecessary and also far too broad. It is unnecessary because if the device is part of the meter, disconnecting the device would automatically entail disconnecting the meter, thus triggering the existing notice provisions.
    The other part of the definition of "device" relates to something that is not part of the meter but used in conjunction with it. If it does not simply mean something that is necessary to the operation of the meter, how far does it go? A gas cooker is used in conjunction with a meter in some sense. Any reasonable interpretation of the word "meter" already covers what needs to be covered, and does not extend to cookers and the like. So the amendment is not only unnecessary but goes too far.
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    Amendment No. 199 is also unnecessary and would have effects which extend far beyond the provisions of the gas code, with which these amendments are concerned. The current wording of the gas code says that any gas "fittings" owned by gas transporters or suppliers cannot be treated as landlord's fixtures and cannot be subject to distress or taken in bankruptcy or other court proceedings. Amendment No. 199 seeks to extend this to cover fittings owned by anyone other than the consumer.
    The term "fittings" is defined by Section 48 of the Gas Act to include pipes and meters, and also apparatus and appliances for use by consumers for heating, lighting and other purposes. In other words, it covers both pipes and such things as cookers. Gas pipes are unlikely to be owned by anyone other than a transporter, supplier or the owner of the premises. So the amendment would be unlikely to have any effect in that regard.
    But when it comes to items such as cookers, the effect of the amendment would be that if the cooker was owned by, say, a gas appliances company which was providing it under a hire purchase agreement, it could not be seized—not even by the company which provided it. Equally, a gas appliance belonging to a landlord would be deemed not to be a landlord's fixture, notwithstanding that it was fixed or fastened to the premises. These are odd effects to seek to achieve.
    The purpose of the existing provision is simply to protect the property of gas transporters and suppliers. The amendment does not seem to benefit them and has the perverse consequences to which I have referred.
    Amendment No. 200 is also unnecessary, as well as being too broad. It would apply to all gas meters, including meters owned by the customer himself. But even if it were tighter than that, it is unnecessary. This is because the consent of consumers is not necessary to transfer ownership of meters or fittings owned by suppliers or transporters. For the sale of a gas meter which is in a consumer's premises, Section 29(4) of the Sale of Goods Act 1979 would simply require an acknowledgement by the consumer that the meter or fitting is held on behalf of the buyer rather than the seller, and this would constitute delivery of the goods by the seller. The contract that the consumer signs with the supplier could simply say that such acknowledgement will be deemed to have been given in the event of a sale of a meter, or, alternatively, that the payment of a bill on which the change of ownership is mentioned constitutes delivery.
    The Sale of Goods Act requires there to be a "delivery" of the goods by the seller, whether actual or constructive. This amendment would mean that the seller of a gas meter would have no way of making "delivery" of the meter to the buyer, and some alternative method would have to be prescribed. It would also mean that the position in respect of gas meters differed from that in respect of electricity meters.
    The gas code has been around for a number of years. The first two amendments simply cast doubt on generally accepted interpretations of terms to the

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    detriment of every other place where they are used. I hope that the noble Baroness will not press these amendments.
    Baroness Buscombe: I have listened with great care to what the Minister said. I simply cannot agree with him that these amendments are either unnecessary or too broad—not least because we have developed these proposals very much in consultation with the gas industry, which is deeply concerned about these issues. With great respect, we are not satisfied with the Minister's response and I should like to test the opinion of the Committee.
    6.56 p.m.
    On Question, Whether the said amendment (No. 198) shall be agreed to?
    Their Lordships divided: Contents, 44; Not-Contents, 114.

    Division No. 2

    CONTENTS

    Anelay of St Johns, B.

    Jopling, L.

    Astor of Hever, L. [Teller]

    Kingsland, L.

    Attlee, E.

    Knight of Collingtree, B.

    Blatch, B.

    Laird, L.

    Brougham and Vaux, L.

    Lamont of Lerwick, L.

    Buscombe, B.

    Lucas, L.

    Carnegy of Lour, B.

    Lyell, L.

    Crathorne, L.

    Mackay of Ardbrecknish, L.

    Dean of Harptree, L.

    Marlesford, L.

    Dixon-Smith, L.

    Naseby, L,

    Dundee, E.

    Northesk, E. [Teller]

    Ferrers, E.

    Oxfuird, V.

    Fookes, B.

    Reay, L.

    Freeman, L.

    Renton, L.

    Gardner of Parkes, B.

    Roberts of Conwy, L.

    Geddes, L.

    Rogan, L.

    Glentoran, L.

    Seccombe, B.

    Hanham, B.

    Skidelsky, L.

    Henley, L.

    Stodart of Leaston, L.

    Higgins, L.

    Strathclyde, L.

    Howe, E.

    Thomas of Gwydir, L.

    Jenkin of Roding, L.

    Wakeham, L.

    NOT-CONTENTS

    Acton, L.

    Christopher, L.

    Addington, L.

    Clarke of Hampstead, L.

    Ahmed, L.

    Cohen of Pimlico, B.

    Alli, L.

    Currie of Marylebone, L.

    Amos, B.

    David, B.

    Andrews, B.

    Davies of Coity, L.

    Archer of Sandwell, L.

    Davies of Oldham, L.

    Bach, L.

    Desai, L.

    Barnett, L.

    Dholakia, L.

    Bassam of Brighton, L.

    Dixon, L.

    Beaumont of Whitley, L.

    Donoughue, L.

    Berkeley, L.

    Dormand of Easington, L.

    Blackstone, B.

    Dubs, L.

    Blease, L.

    Elder, L.

    Borrie, L.

    Evans of Parkside, L.

    Bragg, L.

    Ezra, L.

    Brennan, L.

    Falconer of Thoroton, L.

    Brett, L.

    Falkland, V.

    Brooke of Alverthorpe, L.

    Farrington of Ribbleton, B.

    Brookman, L.

    Faulkner of Worcester, L.

    Burlison, L. [Teller]

    Filkin, L.

    Carter, L. [Teller]

    Fyfe of Fairfield, L.

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    Gale, B.

    MacKenzie of Culkein, L.

    Gibson of Market Rasen, B.

    Mackenzie of Framwellgate, L.

    Gladwin of Clee, L.

    Massey of Darwen, B.

    Goldsmith, L.

    Merlyn-Rees, L.

    Goodhart, L.

    Miller of Chilthorne Domer, B

    Goudie, B.

    Mitchell, L.

    Gould of Potternewton, B.

    Morris of Castle Morris, L.

    Graham of Edmonton, L.

    Newby, L.

    Grenfell, L.

    Nicol, B.

    Hardy of Wath, L.

    Patel of Blackburn, L.

    Harris of Greenwich, L.

    Phillips of Sudbury, L.

    Harris of Haringey, L.

    Pitkeathley, B.

    Harris of Richmond, B.

    Ramsay of Cartvale, B.

    Harrison, L.

    Razzall, L.

    Hayman, B.

    Rendell of Babergh, B.

    Hilton of Eggardon, B.

    Sawyer, L.

    Hollis of Heigham, B.

    Scotland of Asthal, B.

    Howells of St. Davids, B.

    Serota, B.

    Howie of Troon, L.

    Sharp of Guildford, B.

    Hoyle, L.

    Simon, V.

    Hughes of Woodside, L.

    Stone of Blackheath, L.

    Irvine of Lairg, L. (Lord Chancellor)

    Symons of Vernham Dean, B.

    Taverne, L.

    Islwyn, L.

    Tomlinson, L.

    Tope, L.

    Jenkins of Putney, L.

    Uddin, B.

    King of West Bromwich, L.

    Wallace of Saltaire, L.

    Kirkhill, L.

    Walmsley, B.

    Layard, L.

    Warner, L.

    Lea of Crondall, L.

    Warwick of Undercliffe, B.

    Lipsey, L.

    Whitaker, B.

    Lockwood, B.

    Whitty, L.

    Lofthouse of Pontefract, L.

    Wilkins, B.

    Macdonald of Tradeston, L.

    Williamson of Horton, L.

    McIntosh of Haringey, L.

    Woolmer of Leeds, L.

    McIntosh of Hudnall, B.

    Young of Old Scone, B.

    Resolved in the negative, and amendment disagreed to accordingly.
    7.6 p.m.
    [Amendments Nos. 199 and 200 not moved.]
    Clause 83 agreed to.
    Clause 51 agreed to.
    Schedule 5 [Electricity metering]:
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 201:
    Page 120, line 19, after (""provided";") insert—
    ("(bb) after sub-paragraph (2) there is inserted—
    "(2A) Section 23 of this Act shall apply in relation to any dispute arising under this paragraph between an electricity supplier and a customer.";").
    On Question, amendment agreed to.
    Schedule 5, as amended, agreed to.
    Clause 52 agreed to.
    Clauses 88, 53, 89, 54, 90, 55, 91 and 56 agreed to.
    Clause 92 [Information with respect to levels of performance]:
    [Amendment No. 202 not moved.]
    Clause 92 agreed to.
    Clause 57 agreed to.
    Clause 93 [Information to be given to customers]:
    [Amendment No. 203 not moved.]
    Clause 93 agreed to.
    Clause 58 [Financial penalties]:
    Lord Kingsland Lord Kingsland moved Amendment No. 204:
    Page 55, line 29, at beginning insert ("and that compliance by the licence holder cannot be secured by other means,").
    The noble Lord said: Clauses 58 and 94 introduce a power for the authority to impose financial penalties of,
    "such amount as is reasonable in all the circumstances of the case".
    on any licence holder that,
    "(a) has contravened or is contravening any relevant condition or requirement: or
    "(b) has failed or is failing to achieve any standard of performance prescribed under",
    the relevant Acts.
    The authority is obliged, prior to imposing a penalty, to give notice of its intentions to do so, and to set out the acts or omissions by the licence holder which have resulted in the contravention or failure, together with the relevant condition, requirement or standard of performance. In the event that the authority, having considered any objections or representations made by the licence holder in question, proceeds with the penalty, the authority must give at least 42 days' notice of payment.
    The authority is required, for example, by virtue of the proposed Section 30B, to prepare and publish a statement of policy with respect to the imposition of penalties and the determination of their amounts and undertake such consultation as it deems appropriate when preparing or revising the statement.
    Proposed Section 30C provides certain time limits on the imposition of penalties where no final or provisional order has been made in relation to a contravention or failure. The authority may not impose a penalty in respect of the contravention or failure unless the notice relating to the penalty was served on the licence holder within 12 months from the time of the contravention or failure. Where a final or provisional order has been made, the notice must be served within three months from the confirmation of the provisional order or the making of the final order or, when the provisional order is not confirmed, within six months from the making of the provisional order.
    An aggrieved licence holder may make an application to the court, which shall have the power to quash the penalty, substitute a lesser amount or substitute alternative dates for payment. The grounds on which the court may exercise its powers are only on the basis that the imposition of the penalty was not within the powers of the authority under, say, the proposed Section 30A; that the requirements of, say, proposed Section 30A have not been complied with; or that the date by which the penalty is to be paid is unreasonable.
    The Opposition's view is that this is an enormous concentration of power in the authority. The authority is already empowered to determine and impose licence conditions and standards of service; Clauses 58 and 94 add the power to levy a fine. The limitations which circumscribe a court's ability to intervene in an abuse of this power leave the power exercisable without
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    proper supervision. In the case of the authority, the powers of the "legislature", the "executive" and the "judiciary" are combined in one board with only one full-time member, and all its members are unelected. That is constitutionally unsound, especially in an activity where penalties are imposed.
    The Minister is well aware of the Opposition's view that the use of these powers is likely to introduce conflict, most obviously with the European Convention on Human Rights. The Clause 58 and Clause 74 procedures, which authorise the imposition by the regulator of potentially unlimited penalties on licence holders with a wide swathe of obligations, clearly constitutes the determination of a civil right or obligation within the meaning of Article 6 of the convention. The procedure may also constitute the determination of a criminal charge within Article 6.
    Since the procedure determines a civil obligation, Clauses 58 and 94 ought to offer a fair and public hearing before an independent and impartial tribunal. These clauses do not do so. The authority which determines whether to impose a penalty is not independent of the executive and, in any event, there is no provision for an oral hearing. As the Minister is aware, it is the Opposition's view that the right of appeal provided by Section 27E is a narrowly confined right and not a proper right of appeal, which at best offers similar grounds of review to those available on an application for judicial review. As such, it cannot operate to cure the deficiencies in the procedure before the authority.
    The powers granted by Clauses 58 to 94 also lead to multiple exposure by licence holders. The licence holder is likely to be exposed to penalties both under the Competition Act 1998 and under Clauses 58 and 94. Whereas the Competition Act provides a clear framework determining the levels of fines that will be imposed, Clauses 58 and 94 have no such structure. There may also arise an obligation to make compensation payments to customers where they have failed to achieve a certain standard of performance.
    Our amendments to these clauses seek to do the following. Amendment No. 204 relating to the electricity industry and Amendment No. 217 relating to the gas industry require the authority to be satisfied that compliance cannot be secured by other means before it imposes a penalty under the new Section 27A for electricity or 30A for gas.
    Amendment No. 205 for electricity and Amendment No. 218 for gas insert a defence into what is otherwise an offence of strict liability—that is to say, a defence that says that if there was no intention or recklessness and the licence holder took all reasonable steps to avoid the alleged contravention or failure to act, there should be no penalty imposed.
    This matter was debated in Committee in another place. If the Minister looks at columns 556 and 557 of Hansard, he will see that at one point in her contribution the Minister appeared to be suggesting that there should be no penalty where the contravention was genuinely inadvertent; but there are other parts of her contribution which suggest the

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    opposite. If it really is the Government's intention that no penalty should be imposed where the breach was truly inadvertent, I suggest, with the greatest possible respect to the Minister, that that intention should be on the face of the Bill.
    Amendments Nos. 210 to 214 with respect to electricity and Amendments Nos. 223 to 227 with respect to gas remove from the Bill the references to the expression "application procedure" and replace them with references to the rights of appeal under the new Sections 49B and 38B which the Opposition are trying to insert.
    Finally, Amendment No. 215 regarding electricity and Amendment No. 228 regarding gas insert new Sect ion 27G into the Electricity Act and new Section 30G into the Gas Act, requiring the authority to keep under review licence conditions which will give rise to penalties if breached. If they are insufficiently clear, in our view the authority must take appropriate steps to amend or revoke them. I beg to move.
    7.15 p.m.
    Lord Borrie: It may be helpful to the Committee if I speak at this point to Amendments Nos. 206 and 219 standing in my name and that of my noble friend Lord Currie of Marylebone. The amendments form part of the group that we are discussing.
    Our amendments propose to introduce an upper limit on the financial penalties envisaged in Clauses 58 and 94. The Liberal Democrat Front Bench has amendments covering similar ground, and will no doubt wish to speak to them. At present the only limitation on the penalty that may be imposed is—this phrase has been quoted many times today—that it should be,
    "reasonable in all the circumstances of the case".
    The lack of any upper limit is a matter of concern, because it may cause some unease, even some alarm among licensees because, apart from the phrase that I have just quoted, the amount of the penalty seems unlimited.
    The amendments represent one option for addressing the point by imposing an upper limit similar to that to be found in the Competition Act, passed as recently as 1998. On Second Reading of this Bill on 4th May, my noble friend the Minister said, as reported at col. 1175 of Hansard, that that Act was different, because it was based on European law, which is true, and that there was no reason to follow that. But in my view the Competition Act is an interesting, perhaps valid, precedent. There is a degree of overlap in the malpractices covered by that Act and by the Bill, and the gas and electricity regulator and the new authority created by the Bill have concurrent powers with those of the Director-General of Fair Trading to enforce the Competition Act.
    Indeed, in March this year the Director-General of Fair Trading and the specific industry regulators, including the Office of Gas and Electricity Markets—the immediate predecessor of the new authority to be created by the Bill—published guidance, which I have in my hand. It is only eight pages long. It helpfully
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    elucidates for anyone interested the factors that those regulators would take into account in assessing penalties under the Competition Act within the 10 per cent turnover maximum that that Act provides. In that guidance the regulator stated that the twin objectives of policy would be to reflect in the imposition of any penalty the seriousness of any infringement and to ensure that the threat of penalties would deter undertakings from breaking the law.
    It seems to me that when the new authority created by the Bill publishes, as the Bill requires it to do, its statement of policy on penalties, it is very likely to state very similar objectives; namely, to reflect the seriousness of the offence and the need to "incentivise" compliance and to use penalties as deterrents to malpractice.
    The new authority may also have regard to the experience of the European Commission over not just a few months of the Competition Act 1998, which came into effect only in March this year, but over 30 years, with that maximum penalty of 10 per cent of turnover. That experience demonstrates that in determining penalties the European Commission has—I summarise, of course—taken account, on the one hand, of the length and gravity of infringement, the behaviour of the parties and the profits that may have been made out of unlawful behaviour, and, on the other hand, of such mitigating factors as a cooperative attitude towards the investigations.
    Financial penalties under the Competition Act or under the Bill will need to reflect a very wide range of different circumstances, so the size of penalties in particular cases will vary considerably. But I rather doubt that any penalty would be above 10 per cent of turnover, because I doubt whether above 10 per cent of turnover could feasibly be,
    "reasonable in all the circumstances of the case".
    There might be a perception by the public, licensees and the industry generally that without a top limit the authority newly created by the Bill would have an unduly large amount of power and be unduly arbitrary, even though we may think differently. Therefore, as a matter of perception, it may be as well if, as with the Competition Act 1998, we insert into the Bill such a maximum as we suggest in the amendments, or such other maximum as the Government think appropriate.
    Baroness Sharp of Guildford: I rise to speak to Amendments Nos. 207 and 222, which are part of the group of amendments currently before the Committee.
    As the noble Lord, Lord Borrie, pointed out, our amendments are very similar to those that he and the noble Lord, Lord Currie of Marylebone, have put forward; they are twin amendments on the same issue. The main difference is that their amendments specify not only that there shall he a penalty cap of 10 per cent of an undertaking's turnover, but also that the turnover shall be that not only of the undertaking itself, but also of its affiliated and related undertakings. In this respect, the amendments of the

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    noble Lords are probably preferable to ours, because they are more specific and make it clear that it should be the broader, rather than the narrower undertaking.
    I should like to say a few words about the amendment and very much support the noble Lord's line of thinking, because, as he made clear, the purpose is to provide a cap on fines. The current terminology in Clause 58 is very open ended. It talks of,
    "a penalty of such amount as is reasonable in all the circumstances of the case".
    That was the point that the noble Lord, Lord Kingsland, made when explaining the purpose of the Opposition's amendments.
    When discussing the issue in Committee in the other place, the Minister of State for Energy and Competitiveness in Europe argued that the term "reasonable" was well recognised in English law and gave the authority more flexibility. I accept that, but it totally misses the point of the amendment, the purpose of which is not to suggest that all penalties should be set at 10 per cent of turnover, but that that should be the maximum penalty imposed.
    I take on board the fact that the authority has published its policy for assessing and imposing penalties and will review it and, in the process of review, consult very widely. As the noble Lord, Lord Borrie, pointed out, at present it is minded to have the 10 per cent limit, but in the measure as it stands no limit is imposed. That seems to me to be unreasonable in the circumstances of the case.
    The issue is one about which gas and electricity undertakings are extremely concerned. The CBI, the Electricity Association and Powergen have all expressed a wish to see a cap of some sort imposed. Powergen, indeed, has raised the possibility of being exposed to a multiple risk of penalties simultaneously from different sources—from the Office of Fair Trading and the regulator at the same time. That is probably over the top. Nevertheless, it argues that such regulatory risk translates itself into higher borrowing rates which, given the capital-intensive nature of the industry, have a knock-on effect on capital expenditure.
    As the noble Lord, Lord Borrie, made clear, the regulator has concurrent powers with the Director-General of Fair Trading. We on these Benches believe that the Competition Act 1998 provides a good precedent. That considered penalty, which is imposed on a company that has abused its position of power in relation to customers and suppliers, was debated at length in the context of that legislation. It seems to us to provide a very good precedent for this Bill.
    7.30 p.m.
    Lord Currie of Marylebone: I rise briefly to speak to the amendments in my name and that of my noble friend Lord Borrie. In practice, this ceiling on fines will not make any difference to the penalty actually levied, but it will make a difference to perceptions, as my noble friend so clearly indicated. I just flag up one important area in addition to those mentioned by my
    330
    noble friend: overseas investment. The British utilities sector, in particular electricity and gas, has benefited from inward investment. Such decisions are often made on the basis of relatively simple checklists, and the warning sign of no limit on penal fines can easily deter inward investors. I believe that that would be detrimental to the sector and the economy. Therefore, I support the amendment.
    Lord McIntosh of Haringey: All these amendments are concerned with financial penalties and enforcement but they cover a number of different topics within that broad heading. I should like to speak first to the government amendments and then respond to the other amendments which have been moved or spoken to.
    I turn first to government Amendments Nos. 208, 209, 216, 221, 222, 229, 230 and 231. Amendments Nos. 209, 216, 222 and 229, which form a group, are tabled in response to a concern raised during Second Reading by my noble friends Lord Borrie and Lord Currie. The concern was that the limit of 12 months for the imposition of a financial penalty from the date of contravention, where no enforcement action had been taken, would leave too little time for investigation of alleged malpractice and could provide a company being investigated with a view to the imposition of a financial penalty with an incentive to drag its feet in supplying information so as to avoid a penalty altogether.
    The Government have listened to that concern and take it very seriously. It is crucial that the financial penalties powers operate effectively. It is equally important that companies can operate in the knowledge that there will be some kind of statute of limitation on the authority's ability to probe past events. It is a matter of striking the right balance. That is why the Government have tabled amendments to Clauses 58 and 94. The amendments apply to situations where no enforcement order has been issued; that is, where the authority becomes aware of an alleged contravention in the past and wishes to investigate it with a view to imposing a financial penalty. The amendments make no change where an enforcement order has been issued in relation to the contravention. Clearly, in that case the authority will already have carried out its investigation and will have enough information to decide whether a penalty is justified.
    The effect of Amendments Nos. 209 and 222 is, therefore, to provide two separate triggers for the power to impose a financial penalty. First, as at present, the authority will be able to impose a financial penalty if within 12 months of the contravention it has issued a notice stating its intention to do so. Alternatively—this is the new point—it will also be able to impose a penalty so long as, within 12 months of the alleged contravention, it has issued a notice under Section 28(2) of the Electricity Act, or Section 38(1) of the Gas Act, requiring information from the licence holder for the purpose of exercising its enforcement functions (including the power to impose financial penalties) where it appears to the regulator

    331
    that a licence holder may be contravening, or has contravened, a licence condition or other relevant obligation.
    The amendment removes any incentive for companies to drag their feet in providing information to the authority. It does not alter the financial penalties provisions in any other way. In particular, it does not widen the scope of the powers, but is simply intended to ensure that the authority has long enough to investigate any alleged contravention and, where appropriate, impose a reasonable financial penalty in cases where 12 months is insufficient to gather enough information about the contravention.
    Amendments Nos. 216 and 229 are effectively consequential on Amendments Nos. 209 and 222. They extend the scope of the powers to require information. Therefore, they apply to the financial penalties provisions and to information requested in relation to alleged contraventions of individual standards of performance, as well as contraventions of relevant conditions and requirements. This is to ensure that the scope of the relevant information provisions matches that of the financial penalties provisions.
    The other government amendments to which I should like to speak are technical and consequential. Amendments Nos. 208 and 221 replace a reference to commencement of a subsection with a more accurate reference to commencement of a section of the Utilities Act 2000. Amendments Nos. 230 and 231 flow from amendments made to the Gas and Electricity Acts by Clauses 59 and 95, which relate to licence enforcement rather than financial penalties. Those amendments are designed to ensure consistency with the existing enforcement provisions. They have the effect that, where the authority decides to use its new discretion not to make an enforcement order, it will be required to give notice to the licence holder and publish a notice setting out its decision, in the same way as it would where it was precluded by its duties from taking enforcement action.
    I turn to the various other amendments that have been moved or spoken to. Amendments Nos. 204 and 217 seek to insert into the financial penalties provisions a requirement that the imposition of a penalty must be essential to secure compliance. This would seem to rule out the imposition of penalties for contravention of licence conditions, standards of performance and other statutory requirements where the licensee had—possibly under pressure—desisted before the proposed penalty was imposed. I remind the Committee what we are trying to achieve by introducing the powers to impose financial penalties. The crucial point to note is that under the current enforcement system the regulator is always one step behind the company. There is little to prevent a company breaching its obligations, provided it is not caught, and as a result the level of protection afforded to consumers is very poor. These amendments would reintroduce those weaknesses just as we have sought to eliminate them. They would reproduce some of the weaknesses in the financial penalties provisions inserted into the Gas Act by the party opposite.
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    At present, the regulator is under a duty to "make orders" to secure compliance with licence conditions and specified statutory obligations. The regulator must issue an order, subject to certain exceptions, if it appears to him that a supplier is contravening, or is likely to contravene, a licence condition or a specified statutory requirement. The key point about the existing enforcement regime is that it applies only to current and likely future breaches of obligations. This means that a company which is breaching its obligations but which ceases to do so when challenged cannot face further action, regardless of how long the contravention has been continuing or the harm it has done to consumers or competitors.
    If subsequently the company contravenes the same licence condition, the regulator is compelled to start enforcement action again. Every time a company is challenged, it has only to desist from the act or omission to avoid the consequences of noncompliance. The regulator is left chasing shadows. Under the Gas Act 1986, as amended, the regulator may impose a financial penalty on a licence holder of such amount as is reasonable in all the circumstances (which is the standard phrase) for contravention of licence conditions and other statutory obligations. However, the penalty can be imposed only as part of a final order aimed at securing compliance (as in the words of the opposition amendments). It therefore relates only to current and likely future breaches and suffers from the same flaw as the enforcement order process within which it is couched: and it provides little or no real deterrent. That is why it is necessary to introduce powers to impose penalties for past as well as current breaches of obligations. That means that the authority is able to ensure compliance on an ongoing basis and to deter future breaches rather than being left one step behind.
    Of course, everybody is worried about financial penalties. However, if companies do not contravene their licence conditions, no financial penalty will ever be imposed. I hope that that will always be the case. However, if the authority is to have these powers it must have the necessary tools to enforce them in all the conditions to which I have referred. To do anything else would be unfair to consumers.
    Amendments Nos. 205 and 218 provide a defence for the licence holder against the imposition of financial penalties where the licence holder can prove that the contravention did not occur as a result of intentional or reckless behaviour, or where the licence holder took all reasonable steps to avoid the contravention or failure.
    It has a similar effect to Section 36(3) of the Competition Act 1998 which provides that a penalty can be imposed only for breaching the prohibitions where the breach has occurred intentionally or negligently. Frankly, it is of no interest at all to the consumers, those who are on the receiving end of contraventions of licence conditions and statutory obligations, and failures to meet standards of performance, whether those contraventions occurred intentionally or recklessly, or whether they were down to other factors—particularly when the consumers

    333
    concerned cannot move to another service provider, as is the case where the electricity transmission and distribution companies, and gas transporters, are concerned. The fact is that utility companies provide vital services to industry and the public. The onus should be on the utility companies to strive to fulfil their obligations, and to overcome whatever difficulties they face in doing so. They should be making strenuous efforts to play by the rules they accepted when they entered the sector and to adhere to their obligations.
    Restricting financial penalties to cases of reckless or intentional contraventions, or cases where insufficient effort has been made to remedy the contravention, would send the wrong signals about the importance of these services and would risk omitting some serious contraventions from the scope of financial penalties. The amendments also ignore the nature of the powers we are providing. I stress that the authority will have a power, not a duty, to impose financial penalties. It will not be compelled to do so.
    When speaking about reasonableness, the noble Lord, Lord Kingsland, said that in Committee in another place Mrs Liddell appeared to suggest that there was no penalty if the contravention were inadvertent. She was explaining the point that the penalty has to be reasonable in all the circumstances. The fact of culpability—that is, where on the scale the inadvertence or negligence of the operator lies—is relevant to the amount of the penalty. The court is able to review whether the penalty is reasonable.
    On the noble Lord's point about multiple jeopardy, the Government do not accept that the powers to impose financial penalties will cause multiple jeopardy. It is important to remember that the financial penalty has to be reasonable in all the circumstances of the case. Any financial penalty would have to take into account compensation paid to customers or penalties imposed under the Competition Act in respect of the same conduct. Any penalty which did not take proper account of those issues would in itself be unreasonable.
    I turn to Amendments Nos. 206, 207, 219 and 220 to which the noble Lord, Lord Borrie, the noble Baroness, Lady Sharp, and the noble Lord, Lord Currie, spoke. There are minor variations in the formulation used in the two sets of amendments, as the noble Baroness pointed out, but they seek the same thing. The Government still take the view that what matters is the explicit requirement that the penalty must be reasonable. I think that the noble Lord, Lord Currie, veered in that direction. We have taken the view that a specific limit of this kind is not necessary.
    A penalty could indeed be very large, but only if the breach in question had been sufficiently serious, and had done enough harm, to warrant a large penalty. On the other hand, a minor contravention could not attract a penalty of anything like 10 per cent of turnover.
    There will be transparency in the arrangements. The authority will have to consult on and publish a statement of policy with regard to the imposition of
    334
    penalties; and to have regard to that statement when it imposes a penalty. And, of course, companies will be able to challenge both the imposition and the amount of any penalty in the courts. The Government believe that those factors represent genuine constraints on the level of any penalty and a genuine protection for licence holders.
    We take the view that a specific upper limit on financial penalties is not strictly necessary. Penalties are limited to that which is reasonable, and that is a genuine constraint. However, I have listened to the concerns expressed by those who have spoken in the debate. I recognise that some points have been made in favour of a limit. I recognise that there is persistent pressure for such a limit from the industry; and that even consumer bodies are not unanimous about our current proposals. I can see that there are issues here which merit serious consideration. I certainly agree that I shall consider the matter before the next stage.
    Finally, I turn to the group of amendments starting with Amendment No. 210 relating to the statutory right of review which is available under the Utilities Bill in relation to the imposition of financial penalties. These would have the effect, as did the group of amendments starting with Amendment No. 180, of replacing that right of review with a right of appeal to the High Court on grounds set out in proposed new Section 49B of the Electricity Act and Section 38B of the Gas Act as proposed by Amendments Nos. 183 and 188 respectively. It would provide for appeal to the High Court, or in Scotland the Court of Session, on the imposition and amount of a financial penalty and the payment scheduled for that penalty. The grounds for appeal would be material error as to the facts, material procedural error, an error of law or some other material illegality including unreasonableness or lack of proportionality. But the Government believe that the provision in the Bill for companies to challenge the imposition and amount of a financial penalty and the payment schedule for that penalty in the courts are entirely appropriate to the financial penalties provisions. I set out my arguments to that in response to Amendment No. 180.
    The Bill allows companies to apply to the High Court to challenge the decisions of the authority in relation to the imposition of a penalty. The High Court is clearly an independent tribunal for the purpose of Article 6 of the European Convention on Human Rights. Clauses 58 and 94 therefore comply with the European Convention on Human Rights in accordance with a number of decisions of the European Court of Human Rights, most notably the Bryan case. These cases take a composite approach looking to a combination of initial regulatory procedures and subsequent rights of appeal in order to ascertain Article 6 compliance.
    I shall try to avoid repeating the other arguments which I used in a lengthy speech in response to Amendment No. 180. I hope that these arguments will persuade noble Lords not to press the amendments.
    7.45 p.m.
    Lord Kingsland: I listened with interest to the introduction of his amendment by the noble Lord, Lord Borrie, and to the Minister's response. Superficially, a cap on penalties would be an improvement to the Bill. However, from the way the noble Lord, Lord Borrie, formulated his amendment, it is clear that he intends to include not only the company but also an aggregated turnover measure of any affiliate or related undertaking.
    If one considers the financial scale today of some of these utility companies, and the international complexity of their ownership, 10 per cent of the total turnover of some groups could involve a massive figure. I do not say that, on behalf of the Opposition, I would not be prepared to entertain a limit. However, with respect to the noble Lord, Lord Borrie, the provision needs more careful shaping.
    If the Bill includes a limit, there will be a tendency for the penalising authority to aim at that target. If the target is 10 per cent on a large utility company which is owned, perhaps, by an American corporate entity, the turnover could be in billions of pounds of which 10 per cent would be a vast figure. I say that in order to encourage debate on the matter rather than to agree or disagree on the issue. I believe that it is a good idea to consider the matter further and to return to it at Report stage.
    The Minister has encouraged me to reflect on two other matters. The first is the question of intention. It is a subject over which he ranged widely in the Financial Services and Markets Act. We contend that, if an act by a licensee is done neither intentionally nor recklessly nor negligently, that act should not attract a penalty; the act has been done innocently. The Minister said that that may be unfair to the consumer. One the other hand, to penalise a licensee in those circumstances may be very unfair to the licensee.
    In my submission, in those circumstances, the proper approach of the Government is to be as fair as possible to both parties. The Opposition can see no rational reason in such circumstances for being unfair to a licensee. If the penalty-attracting offence is inadvertent, imposing a penalty will never be a deterrent, so why impose it? Who are the Government intending to impress by imposing it? I ask the Minister to reflect on that between now and the Report stage.
    The final point to which I want to refer is the question of reasonableness. I was interested to hear the remarks made by the noble Baroness, Lady Sharp. "Reasonable in all the circumstances" is the test in the Bill. But the test in law, the test for an authority acting outside or beyond its authority, requires an action to be so unreasonable that no reasonable person would ever entertain it. So we have the difficulty of two contrasting tests of reasonableness: first, the test of reasonableness in the Bill, which is reasonable in all the circumstances; and, secondly, the test that a court will apply in order to intervene, which is so unreasonable that no reasonable person would entertain it.
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    What is so lacking in the Bill is some mechanism whereby a common definition of reasonableness can be achieved so that the court will inevitably intervene if the authority has not acted reasonably in all the circumstances. That is the legislative challenge which the noble Lord faces. He is so good at meeting challenges, I am sure that by the Report stage he will have met that challenge on the face of the Bill. I beg leave to withdraw my amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 205 not moved.]
    Lord Borrie Lord Borrie had given notice of his intention to move Amendment No. 206:
    Page 56, line 39, at end insert—
    ("(6A) No penalty imposed by the Authority under this section may exceed 10% of the aggregate turnover of the licence holder and any affiliate or related undertaking of the licence holder (determined in accordance with such provisions as may be specified in an order made by the Secretary of State).
    (6B) In this section—
    "affiliate" means any holding company (which has the meaning set out in sections 736, 736A and 736B of the Companies Act 1985) of the licence holder, any subsidiary (which has the meaning set out in sections 736, 736A and 736B of the Companies Act 1985) of the licence holder or any subsidiary of a holding company of the licence holder: and
    "related undertaking" means any undertaking (which has the meaning set out in section 259 of the Companies Act 1985) in which the licence holder has a participating interest (which has the meaning set out in section 260 of the Companies Act I985)."").
    The noble Lord said: I want to thank the noble Lord, Lord Kingsland, for his questioning but helpful comments and to thank my noble friend the Minister for his considerate response.
    [Amendment No. 206 not moved.]
    [Amendment No. 207 not moved.]
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 208 and 209:
    Page 56, line 45, leave out ("that subsection") and insert ("section 58 of the Utilities Act 2000").
    Page 57, line 18, leave out from ("failure") to end of line 21 and insert ("later than the end of the period of 12 months from the time of the contravention or failure, unless before the end of that period—

    (a) the notice under section 27A(2) relating to the penalty is served on the licence holder under section 27A(6), or

    (b) a notice relating to the contravention or failure is served on the licence holder under section 28(2).").

    On Question, amendments agreed to.
    [Amendments Nos. 210 to 215 not moved.]
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 216:
    Page 59, line 20, at end insert—
    ("( ) In section 28(1) of the 1989 Act (power to require information, etc.), for the words from "the Director" in the first place they appear, to "42B below" there is substituted "the Authority that a licence holder—

    (a) may be contravening, or may have contravened, any relevant condition or requirement; or

    337

    (b) may be failing, or may have failed, to achieve any standard of performance prescribed under section 39 or 39A,

    the Authority may, for any purpose connected with such of its functions under section 25 or 27A to 27F".").
    On Question, amendment agreed to.
    Clause 58, as amended, agreed to.
    Clause 94 [Financial penalties]:
    [Amendments Nos. 217 to 220 not moved.]
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 221 and 222:
    Page 96. line 9. leave out ("that subsection") and insert ("section 94 of the Utilities Act 2000").
    Page 96, line 30, leave out from ("failure") to end of line 33 and insert ("later than the end of the period of 12 months from the time of the contravention or failure, unless before the end of that period—

    (a) the notice under section 30A(2) relating to the penalty is served on the licence holder under section 30A(6), or

    (b) a notice relating to the contravention or failure is served on the licence holder under section 38(1).").

    On Question, amendments agreed to.
    [Amendments Nos. 223 to 228 not moved.]
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 229:
    Page 99, line 2, at end insert—
    ("( ) In section 38(1) of the 1986 Act (power to require information, etc.) —

    (a) for "Director" in each place where it appears, there is substituted "Authority",

    (b) after "requirement" there is inserted "or may be failing, or may have failed, to achieve any standard of performance prescribed under section 33A or 33AA,";

    (c) for the words from "his functions" to "signed by him" there is substituted "its functions under section 28 or 30A to 30F in relation to that matter, by notice in writing";

    (d) for "him" there is substituted "it".").

    On Question, amendment agreed to.
    Clause 94, as amended, agreed to.
    Clause 59 [Licence enforcement]:
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 230:
    Page 59, line 28, leave out ("and (4)") and insert (", (4) and (6)").
    On Question, amendment agreed to.
    Clause 59, as amended, agreed to.
    Baroness Amos: I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee stage begin again not before 8.55 p.m.
    Moved accordingly, and, on Question, Motion agreed to.
    House resumed.

Local Authority (Stocks and Bonds) (Amendment) Regulations 2000 Uncertified Securities (Amendment) Regulations 2000
7.55 p.m.
Lord McIntosh of Haringeyrose to move, That the draft regulations laid before the House on 12th May be approved [19th Report from the Joint Committee].
The noble Lord said: My Lords, the two instruments before us are part of a series of four that are necessary to enable the full merger between CREST, the computer system that settles transactions in equities and corporate bonds, and the Central Gilts Office (CGO), the computer system that settles transactions in gilts and other public sector securities. The merger was one of the key recommendations of the Bank of England's Securities Settlement Priorities Review and was widely endorsed by the financial markets because of the efficiency gains, the reduction in systemic risk and the improvement in the UK's competitive position which it is expected to bring.
In view of this widespread support and the highly technical nature of much of the legislation, I do not propose to detain the House with either a lengthy apologia for the merger or a detailed exposition of every bit of the regulations. However, there are a couple of points where the House may welcome a slightly fuller explanation.
The first of these relates to the new Regulation 36A of the Uncertificated Securities Regulation which is intended to clarify the meaning of "actual notice" for the purpose of the regulations as a whole. To understand the background to this regulation, it is necessary to understand that CREST operates what is known as an "assured payments" mechanism. This means that securities are transferred only if the requisite payment is guaranteed and, equally, payments are only made if the securities are transferred. A group of major banks—the settlement banks—plays a key part in this process by undertaking on behalf of their customers to make assured payments for security transfers. In other words, they will provide intra-day credit. To insure against risk, a settlement bank will normally take a floating charge over a customer's securities, supported by a power of attorney under which it is able to direct CREST to transfer the securities from the customer's account to its own account in certain closely defined circumstances.
The settlement banks have put it to the Government that they may be at a disadvantage using a power of attorney in CREST as compared with someone using a power of attorney outside CREST. They have suggested that the Uncertificated Securities Regulations would be interpreted as imposing more limitations on the actions of CRESTCo, which operates the CREST system.
The Government believe it unlikely that the courts would interpret the regulations in this restrictive way. However, it is important to clarify this as far as possible and this is done by the proposed amendment

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made by Regulation 36A. This says that if there is a dispute between a customer and a settlement bank as to whether the customer's obligation has been discharged, and hence as to whether the power of attorney is still in force, it will be up to the parties involved to resolve the matter and to submit notice to CRESTCo. CRESTCo itself will be under no obligation to make further investigations and will be entitled to rely on the settlement bank's instructions.
The second area where the House may welcome some explanation concerns the new Regulation 36B of the Uncertificated Securities Regulations. This provides that issuers of securities whose terms of issue specify that they may only be held in uncertificated form do not have to comply with the provisions in the regulations which relate to holdings in certificated form.
The main purpose of this regulation is to clarify the ability under the regulations to settle what are known as CREST depositary interests. These are English law securities issued by CRESTCo which represent interests in foreign securities held by it in overseas central securities depositories. They are in effect a mechanism which enables CRESTCo to settle foreign securities and for UK investors to buy and sell such securities through the CREST system.
Because CREST depositary interests are a rather specialised type of security, the Government believe that it is appropriate to exempt them from those provisions of the regulations which could require them to maintain a record of the units held in certificated form and to have procedures from converting from one form to another. That means that the investors will not need to fill in a stock transfer form in order to transfer them and will not have the option of receiving a share certificate.
That is not quite so much a departure from current practice as it may appear because complete dematerialisation is already a feature of the gilts market and will remain so in the future. As the House will have noted, the new regulation exempts certain specific public sector securities from the relevant provisions of the regulations as well. Because of that, and because of the need to ensure consistency of treatment, the Government consider it appropriate for any security whose terms of issue specify that it may be held only in dematerialised form to be similarly exempt. That will clarify the ability of corporate issuers to issue new securities in completely dematerialised form and thus to have the same freedom that hitherto only the Government have had.
Before I finish, perhaps I should say a brief word about the Local Authority (Stocks and Bonds) (Amendment) Regulations. These are entirely technical in nature and are intended to allow stocks issued under the Local Authority (Stocks and Bonds) Regulations 1974 to transfer through the CREST system after the merger. They are being dealt with under the affirmative resolution procedure because the power to amend them by the more usual negative resolution procedure was removed by statute in 1988.
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I apologise for detaining the House but inevitably these are long and complicated issues. I hope that I have highlighted those which may be of general interest. I beg to move.
Moved, That the draft regulations laid before the House on 12th May be approved [19th Report front the Joint Committee].—(Lord McIntosh of Haringey.)
The Earl of Northesk: My Lords, I am grateful to the Minister for his explanation of these two regulations. In essence, we have no objection to them. However, by your Lordships' leave, I should like to ask one or two questions that flow quite naturally from them.
In common with my noble friend Lord Kingsland, with respect to issues on the face of the Utilities Bill, I find that our debates on the Financial Services and Markets Act are still fresh in my memory. That being so, does the Minister expect that further regulations will need to be tabled in the event that the proposed merger between the London and Frankfurt exchanges proceeds and Xetra is adopted as the settlement system? I hope that I gathered from his explanation that that may not be necessary. I also acknowledge that this is something of a "how long is a piece of string" question. None the less, it would perhaps be a little odd to make these regulations, only to have to make new ones to supersede them within the space of a few months.
One other point occurs to me. A knock-on benefit of the regulations should be to improve the competitiveness and efficiency of the City. Indeed, as I understand it, CREST has cut transaction charges by 5 per cent in advance of the implementation of these changes. I am sure that none of us will have any argument with that. However, I hope that the Treasury, and the Chancellor in particular, are well seized of how important levels of stamp duty are to the City's continuing competitiveness.
Thus, does the Minister accept that, although some savings and efficiencies in transaction costs will of course arise as a result of the implementation of the regulations, those will be relatively modest compared to what many perceive to be the more pressing need to reduce stamp duty? I concede that the point is perhaps a little tangential to the subject matter of the regulations. None the less, I look forward to the Minister's replies.
Lord Razzall: My Lords, I share the views of the noble Earl in welcoming the regulations. Obviously, it is important that the full merger between CREST and the Central Gilts Office takes place.
Effectively I should like to ask the Minister one question. He indicated, as, indeed, did another place, that the regulations and their form, which inevitably is complicated, were welcomed generally by the City. Is he aware of reservations expressed by anyone in the City with regard to the regulations?
Lord McIntosh of Haringey: My Lords, perhaps, first, I may answer the noble Lord, Lord Razzall. The only reservations of which I am aware are those of the

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settlement banks. I hope that through the introduction of Regulation 36A the Government have convinced them that their fears are no longer relevant. I believe that to be the case.
The noble Earl, Lord Northesk, asked me whether the proposed merger between the London Stock Exchange and the Deutsche Börse affects CREST. That matter is not entirely clear because the deal is not entirely clear. However, both the London Stock Exchange and Deutsche Börse have made it clear that their merger will not affect settlement systems initially and that subsequent changes will be undertaken only following member consultation.
The noble Earl asked me about Xetra. However, Xetra is a trading and not a settlement system, and therefore is not affected by the regulations.
Finally, I turn to stamp duty. I recognise that it is what he calls politely "tangential", and of course the merger has no direct implications for the levying of stamp duty. However, the Government keep the level of stamp duty under review at all times, as they do all comparable matters.
On Question, Motion agreed to.

Army, Air Force and Naval Discipline Acts (Continuation) Order 2000
8.5 p.m.
The Minister of State, Ministry of Defence (Baroness Symons of Vernham Dean)rose to move, That the draft order laid before the House on 4th May be approved [18th Report from the Joint Committee].
The noble Baroness said: My Lords, your Lordships will be aware that Parliament is asked to consider an order of this nature in most years. It has a simple purpose: to continue in force for a further year the Army and Air Force Acts 1955 and the Naval Discipline Act 1957. Those three Acts provide the statutory basis for discipline in the Armed Forces.
Given that the Acts fulfil that purpose, it is hardly necessary for me to emphasise the importance that the Government attach to this order as the means of ensuring that the legislation remains in force. Therefore, this evening I ask your Lordships to approve the order, which was discussed in Committee in another place on 16th May.
Each annual continuation order may be regarded as a stepping stone between the quinquennial Armed Forces Bills. The quinquennial Bills provide the means for both renewing and reviewing the three service discipline Acts. The next Armed Forces Bill is due to be introduced in the forthcoming Session.
I need to make one observation about the order. My noble and learned friend the Attorney-General gave an undertaking on behalf of the Government to your Lordships' House on 2nd November last year. That was that when Ministers move regulations which are subject to the affirmative procedure, such as this order, they will always inform the House whether they are
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satisfied that the instrument is compatible with the rights provided under the European Convention on Human Rights.
That is by analogy with the procedure for primary legislation set out in Section 19 of the Human Rights Act 1998. That provides that the Minister in charge of the Bill will certify that the Bill concerned is compatible with the convention rights or, if he or she is not satisfied that it is, that he or she nevertheless wishes the Bill to proceed. There is no requirement in the legislation similarly to certify statutory instruments. Nevertheless, the Government have undertaken to give their view on compatibility in relation to those, subject to the affirmative procedure.
The continuation order which your Lordships are being invited to approve may not appear to raise issues of convention rights. It is a brief document with a mechanistic purpose. However, we need to consider that purpose, which, as I said, is to continue the life of three Acts. Of course, those three Acts have been amended quite extensively in the present Session by the Armed Forces Discipline Act. That had the quite specific purpose of addressing concerns about whether aspects of the service discipline Acts were compatible with the convention. However, the main provisions of the Act are not due to come into force until this October. Therefore, the service discipline Acts are not in their entirety compatible with the convention; nor is this order which renews them.
The Armed Forces Discipline Act is aimed at dealing with the most important convention points in the service legislation. We are satisfied that it has done so in a way that preserves the essential characteristics of the discipline system. Of course, we debated that at some length in your Lordships' House.
We are now completing our trawl of the body of service legislation to see whether any residual convention issues remain to be dealt with. Any that need still to he addressed will not be in such vital areas as those addressed in the Armed Forces Discipline Act because those areas naturally were the focus of our initial survey of the existing legislation. In any event, the most appropriate vehicle for further changes that may be needed would appear to be in the quinquennial Armed Forces Bill.
Nevertheless, as I have already stated, the Government consider it essential that the order should be approved as it provides the necessary parliamentary authority for continuing the services' system of discipline. The system serves the Armed Forces well—I believe that there is common ground in your Lordships' House on that—but that does not mean that the legislation underpinning the system is incapable of improvement.
The Government have made clear their wish to improve the structure of the legislation to enable it better to meet the needs of the services and the way in which they operate today. In the 1998 Strategic Defence Review, the Government for the first time expressed the view that,

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"there would be advantages to be gained from combining the three Service Discipline Acts into a single Act. Those differences which the Services need to retain for operational reasons would be kept hut reduced to the absolute minimum".
Those words were prompted by the realisation that the present legislation does not provide the best framework for discipline when the services work together in fully joint environments, as is increasingly the case. We are considering how best to give effect to the intention to develop a tri-service Act, bearing in mind that, as was also stated in the Strategic Defence Review,
"It would he a substantial and complex undertaking which will take some years to complete".
We are contemplating an exercise of rather greater ambition than merely putting the three existing Acts together into a single cover. We are looking at creating new legislation that will be greater than the sum of the existing parts. In the mean time, we have been taking stock of the intended consolidation of the legislation. In some minds, that has been confused with the creation of a tri-service Act. That confusion was evident from some of the remarks made in your Lordships' House during the passage of the Armed Forces Discipline Bill.
Consolidation would merely bring up to date the existing three separate Acts. In normal circumstances, that would be a worthwhile objective in itself, given the age and heavily amended state of the current legislation. Many of your Lordships know that work on consolidation has been under way for some years under the previous administration and the present one. It predates by some years the Strategic Defence Review and the intention to create a single tri-service Act.
The intention to move towards a tri-service Act has given us cause to consider whether to complete the consolidation project. Consolidation and the triservice Act would mean significant upheaval for the services. In both cases, it would mean not only having to adjust to new primary legislation, but the complete revision of all the extensive regulations and manuals that flow from primary legislation.
We are firmly of the view that it would not be a productive use of resources to go through that upheaval twice in a few years. Arguably it would even be counter-productive, because committing staff to implementing the effects of consolidation would divert them from work on the tri-service Act. As I announced in an answer last month, we have therefore decided to defer the consolidation and subsume it within the more fundamental exercise of creating the tri-service Act. That will provide the soundest foundation for service legislation in the 21st century.
As I have explained, the need for a tri-service Act derives from the importance of having a better disciplinary framework in those many circumstances in which the services work together. The operations in Sierra Leone have been a further demonstration of how effectively our Armed Forces operate together, notwithstanding any improvement that we may wish to include in the legislative framework.
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I should like to conclude by paying tribute to the sterling qualities that have been so much in evidence in the personnel of all our forces deployed in West Africa in the past few weeks. That has been a particularly graphic example of what we have come to expect. Discipline, resolve and initiative are amply displayed wherever our personnel serve, in single service or joint environments, however challenging the circumstances. I know that those qualities are fully valued in all parts of the House.
I invite your Lordships to improve—or, rather, approve—the order.
Moved, That the draft order laid before the House on 4th May be approved. [18th Report from the Joint Committee]—(Baroness Symons of Vernham Dean.)
8.15 p.m.
Earl Attlee: My Lords, I thank the Minister for explaining the need for her order and its desirability. I am sure that it does not need any improvement. I welcome her comments about the ECHR compatibility aspects of the order. I remind the House that I have an interest in these matters.
We normally have a substantial debate on this order, but, as the Minister said, we have discussed service discipline matters at length under the Armed Forces Discipline Bill. We remain unconvinced about the need for that legislation and we shall see how it works in practice.
The Minister referred to the quinquennial review, which is due next year. We expect further ECHR-related amendments. We shall look closely at the operation of the service discipline Acts. We agree with the need for tri-service legislation, which the Minister mentioned. My only slight concern is that it might result in a delay in consolidation. I am sure that the Minister expects us to pursue those matters when we deal with the quinquennial review—and indeed that she is looking forward to us doing so.
Overcommitment remains a problem. It was a major challenge to the previous government and the situation is no different for this Government. I hope that the problem will keep the Minister awake at night. It certainly worries us and we shall continue to press her on it.
The Minister lavished praise on our Armed Forces. We should like to echo that praise—and perhaps better still, to amplify it. We should admire the motivation of our servicemen. They are not in an ordinary job. It is paid employment, but it is more of a way of life or a vocation. Over the past decade, we have begun to regard service in the Armed Forces as just another job. That is a serious mistake. The nature of their duties means that members of Her Majesty's Armed Forces rightly hold a special place at the heart of the nation. That is why we fully support the Motion.
Lord Wallace of Saltaire: My Lords, we, too, welcome the order. I strongly approve of the need for regular parliamentary approval. I found myself in Ankara at a conference with several Turkish MPs in March and saw their looks of astonishment and horror

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as I described the process of the House going through the Armed Forces Discipline Bill, adapting courts martial to the requirements of the European Convention on Human Rights. That is some distance from what the Turkish armed forces have yet fully understood as the implications of becoming fully European.
I also had some interesting conversations last week in the Baltic states, when I met the Earl of Carlisle, whom we deeply miss. I also met a number of British Army officers in training teams. They were training the Baltic battalion and the other new forces of those new nations. I was struck by how difficult it is to change ideas about discipline in post-Soviet armed forces. It made them reflect on the importance of self-discipline, training and mutual confidence between officers and other ranks as the basis of an effective armed force. That is one of the most difficult things to instil in those who come from a former Soviet background.
My only hesitation is about the length of time that I understand that we may have to wait before we have a tri-service discipline Bill. We are moving rapidly towards tri-service operations with helicopters and in many other areas. The forces are working much more closely together. If I understood the Minister correctly, we may be facing a new quinquennial Act next year without a tri-service Bill at the same time.
The Government nowadays expect people in universities to do things in three to four weeks, even if extensive research is required. So I am puzzled as to why the Government should allow the armed services three to four years to go through a process which I should not have thought would be that complicated. May we have an assurance that the process of a new quinquennial Act and a consolidated but also reformed tri-service Act should not necessarily be one after the other to a great extent?
Baroness Symons of Vernham Dean: My Lords, I thank both noble Lords for their welcome of the continuation order. I should say to the noble Lord, Lord Wallace of Saltaire, that we tackled the most obvious areas of difficulty in terms of compatibility with the convention in the Armed Forces Discipline Act.
I stress to both noble Lords that there may be a degree of what one might describe as tidying up in the quinquennial Act. We are going through in enormous detail all the three discipline Acts to look at every single aspect of compatibility. I am not yet in a position to give your Lordships any indication of how much of such tidying up will be necessary.
I agree with the noble Lord, Lord Wallace of Saltaire, that the confidence between officers and other ranks is extremely important. The reason why the British Army is welcomed so much in areas where peacekeeping is the primary function being undertaken is because officers and other ranks work so very well together. Discipline is in the very life-blood of the British Armed Forces.
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I hope that I shall be forgiven my earlier slip. The Government are always happy to consider any improvement to legislation as the noble Earl will know because, on occasions, he has been able to persuade me.
Earl Attlee: My Lords, even secondary legislation?
Baroness Symons of Vernham Dean: My Lords, if the noble Earl wishes to come and see me and give me any ideas about secondary legislation, I shall be delighted to entertain those ideas.
But both noble Lords concentrated their remarks on the tri-service Act and whether that was going to postpone the consolidation. I tried to get that point across in my opening remarks. It is extremely important to impress this upon both noble Lords because I do not want there to be any misunderstanding. A tri-service Act is not simply taking forward the consolidation which was begun under the previous administration and continued under this Administration. It is not a matter of putting the three Acts together into a single cover.
I want to stress to both noble Lords that it creates a new structure of discipline, allowing the services to apply discipline more effectively in fully tri-service environments. Our Armed Forces are currently operating in those environments. We are looking at whether we can ensure that the same penalty for any indiscipline will be applied across all three services. That is not always the case at the moment and it leads to incidents where there is perceived unfairness; where officers or men from different parts of the Armed Forces are treated differently for the same misdemeanour or infringement of forces discipline. Therefore, that must be looked at.
But the new Act will, of course, maintain any of the essential differences which there are between the three services. It will be an extremely complex piece of legislation. I hope that both noble Lords will have the stamina to get through it when it reaches this House.
I should say to the noble Earl, Lord Attlee, that there is a problem as regards over-stretch in the Armed Forces, but I do not accept what he said about over-commitment. The Government have done what they said they would do. I know that the noble Earl has had doubts about some of those issues; for example, Sierra Leone. I remember noble Lords on the Benches opposite said that we would not be withdrawing from Sierra Leone when we said we would. We have fulfilled what we said we would do, certainly in respect of Sierra Leone. I remind the noble Earl that this year has been the best year for recruitment in the Army for 10 years. There is a problem with retention and we are working extremely hard to improve that record.
I agree wholeheartedly with what the noble Earl said. The Army is not just another job. I do not think that we need any greater reminder of the Army not just being another job than on the day when Brigadier Saunders has been buried. He was a man who was going about his lawful business, unarmed, and was so cruelly attacked and murdered simply because of the

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job he did. There is no doubt in the Government's mind but that the Army, Navy and Air Force are not just any profession; they command particular respect and consideration because of the danger in which their members often find themselves. I commend the order to the House.
On Question, Motion agreed to.

Horticultural Development Council (Amendment) Order 2000
8.24 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Hayman)rose to move, That the draft order laid before the House on 18th May be approved [20th Report from the Joint Committee].
The noble Baroness said: My Lords, the Horticultural Development Council was established by the Horticultural Development Council Order 1986. It is an executive non-departmental public body funded by a statutory levy on growers of horticultural produce. The main function of the council is to commission research and development on behalf of the horticulture industry, excluding apples, pears and hops.
The council raises around £3.6 million per year from the levy. Expenditure on research and development is proportional to the amount of levy raised from growers in each crop sector. Selection of research products gives due consideration to environmental benefits as well as to the needs of the industry, being directed at crop protection; reduction of input costs and chemical usage; increased efficiency and yield; and improved quality.
The HDC was subject to statutory review in 1999 when agriculture Ministers agreed that the HDC should continue for another five years. During the consultation process Ministers agreed that the levy on small growers was a burden and uneconomic for the council to collect. That has led to the amendment to the Horticultural Development Council Order which is before us today.
The amending order makes two changes to the statutory levy. There are two levies: one for mushroom growers with which I shall deal later; and another for growers of other horticultural produce. That latter levy is based on a percentage of the net sales of horticultural crops and is set at 0.5 per cent. Growers with an annual net turnover of horticultural produce below £25,000 are exempted from the levy. The figure of £25,000 was set in the original 1986 legislation. Under the 1999 statutory review it was agreed that the minimum threshold should be raised to £50,000 with effect from the levy year commencing 1st October 2000. The revised threshold would reduce levy income by around £125,000 per annum. It would have minimal effect on the research and development programme and lead to a switch of saved administrative costs to that programme. Around 660
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businesses would be released from the obligation to pay the levy at an average per business of around £190 a year.
The second change in the amendment order covers the maximum rate of levy that could be paid by mushroom growers. The mushroom levy is assessed on spawn purchased for use in compost. The order provides for a maximum levy of 7p per litre of spawn purchased which is currently applied. The amendment increases the maximum rate for mushroom growers to 15p per litre of spawn. That increase will provide the HDC with the flexibility to propose an increase to the mushroom levy if it becomes necessary to raise additional funds to meet additional research requirements. All available funds collected from the mushroom levy are at present fully committed and there are serious new disease problems facing the industry. The mushroom industry has been consulted and is content, although it does not want to see an increase within the new ceiling in the near future. However, increases are allowed only following industry consultation and with the collective approval of agriculture Ministers. On that basis, I commend the order to the House.
Moved, That the draft order laid before the House on 18th May be approved [20th Report from the Joint Committee].—(Baroness Hayman.)
On Question, Motion agreed to.

Royal Parks (Trading) Bill
8.28 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that this Bill be now read a second time.
The activities of illegal traders are a blight on the face of our magnificent Royal Parks and detract from their enjoyment by thousands of visitors. The purpose of this short Bill is to give my right honourable friend the Secretary of State for Culture, Media and Sport the powers to deal effectively with the problem.
The peace and beauty of our Royal Parks are well known to and appreciated by Londoners and visitors. The Royal Parks Agency maintains them to a high standard. They are kept clean and are well presented. They are a showpiece of excellence in the heart of our capital city. The activities of illegal traders detract from that.
Anyone who sells goods in a Royal Park must have the permission of my right honourable friend the Secretary of State. The Government ensure that what is on sale is of a high quality and at a reasonable price. Recognised catering firms are authorised to sell refreshments in all the royal parks. In addition to providing a quality service to the public, part of the income goes to the Royal Parks Agency for the upkeep of the parks.
The activities of illegal traders undermine every aspect of this arrangement. Many noble Lords will be only too well aware of the present position. Between spring and autumn the Central Royal parks, and St James's Park in particular, are dotted at every turn

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with individuals operating carts from which they sell hot dogs or ice-creams at exorbitant prices and with little, if any, regard for health and hygiene. It is difficult to pollute the fresh air in the Royal Parks but these traders more than achieve it with the unpleasant odours which waft from their carts. The image of the Royal Parks is tarnished both at home and abroad. More importantly, the products offered by the illegal traders are a threat to the health of visitors, exorbitant prices take advantage of the unwary and authorised traders and the Royal Parks are deprived of income. This is the problem which the Government are determined to deal with. We have been unable to do that effectively so far because current powers have proved to be inadequate.
The Royal Parks and Other Open Spaces Regulations 1997 require that anyone wishing to trade in one of the parks must obtain the written permission of the Secretary of State. If a person acts in contravention of the regulations, including that for trading within the parks, he or she commits an offence under the Parks Regulation (Amendment) Act 1926. At present the courts may impose a fine of up to £200 after conviction for such an offence. Fines, however frequently imposed by the courts, have failed to act as a deterrent compared with the money which can be made from unlicensed trading.
The Bill seeks to combat the current abuses by introducing the new concepts of "park trading regulations" and "park trading offences". These labels will apply to parts of the existing regulations, which will then attract the enhanced powers of seizure, forfeiture and level of fine in the Bill. Breach of a regulation that has not been designated as a "park trading regulation" will remain an offence but the authorities will not be able to use the powers in the Bill in that respect.
The problem of unlicensed trading in the parks has got worse in recent years. Until recently the City of Westminster faced the same problems of illegal trading on the streets of the city, where fines were failing to be a deterrent. Parliament provided the City of Westminster with more effective powers in the City of Westminster Act 1999. These allow the City of Westminster to seize property used in the commission of unlicensed trading. This puts an immediate stop to the illegal act. The courts also have greater powers; on conviction, the court may impose a fine up to level 3, which is currently £1,000, and may determine whether any property relating to the offence is to be forfeited.
The City of Westminster Act is working very effectively, so effectively that as a consequence the level of illegal trading in the Royal Parks has increased, as illegal traders have moved increasingly into the Royal Parks, where the sanctions are less effective. It is important that Parliament now provides similarly effective powers for the Royal Parks.
I turn now to the specific provisions of the Bill. It creates various powers to regulate illegal trading in the Royal Parks and other open spaces covered by the Parks Regulation (Amendment) Act 1926. The powers
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in the Bill are broadly comparable to the powers provided to deal with unlicensed traders in the City of Westminster.
Clause 1 of the Bill, as I indicated earlier, allows the Secretary of State to designate particular provisions of any regulations made under the Parks Regulation (Amendment) Act 1926, as "park trading regulations". This designation will be achieved by regulations made under the 1926 Act. Any failure to comply with a park trading regulation will, from then on, be a "park trading offence".
Clause 2 provides a penalty not exceeding level 3 (currently £1,000) on the standard scale for failure to comply with or contravention of regulations made under Clause 1 of the Bill. Clause 4 provides a power of seizure by a constable of non-perishable items used in connection with illegal trading. Clause 5 allows the Secretary of State, in specific circumstances, to retain and dispose of things seized. Clause 6 provides a power to order forfeiture of things seized, exercisable by a magistrates' court in the event of conviction.
The Government are grateful for the support they received for the Bill in another place from the Conservative and Liberal Democrat Front Benches.
The principles and purposes of the Bill are straightforward. We seek to deal with a criminal activity which has increased considerably in recent years, to the detriment of the Royal Parks and the health, the pocket and the comfort of visitors. The additional powers we seek are reasonable and have been shown to work fairly and effectively in the City of Westminster. The gap left by the illegal traders will be filled by additional catering kiosks provided by the authorised concessionaire. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)
8.35 p.m.
Lord Brougham and Vaux: My Lords, I thank the noble Lord the Minister for introducing this long overdue Bill so clearly this evening. I said "long overdue" as someone who lives in London and who is a regular user of our wonderful parks, with all the lovely gardens, the wildlife and other amenities. I have to congratulate here the Royal Parks Agency on the wonderful job that it does. I am regularly sickened to the stomach by the most revolting smell from the unlicensed street traders selling the most unattractive looking hotdogs that one could ever wish to see.
The problem has become much more serious since Westminster City Council, as the Minister said, acquired the power to confiscate and destroy trolleys and stocks of unlicensed street traders. Many of them have moved into the parks, and I am told that in St James's Park alone up to 40 illegal traders are regularly operating. There is no control over prices or, what is even more important, over standards of hygiene; and the activities of these illegal traders damage the business of the approved concessionaires.

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The Royal Parks Police have no powers. They can move these traders on but cannot prevent them from returning almost immediately. Most of these people are of foreign origin and speak very little, if any, English. The other day I saw a tourist ask for directions from one of these people and the reply that they got was a shrug of the shoulders.
Some months ago there was a fly-on-the-wall TV programme about these traders. It showed some unpleasant shots: in one of them the food fell on to the footpath and was picked up to be cooked and sold to the next unsuspecting customer. A few years ago some people took my dog for a walk and, having purchased a hotdog in one of the parks, they gave some of it to the dog, who was very ill for the next few days. I hate to think how many tourists have suffered the same fate.
This Bill, I am told, is the same as that which was introduced in another place by my right honourable friend Mr Peter Brooke last year. Regrettably, the Bill was blocked by Mr Eric Forth, as were other Bills, and he had another go at Third Reading a few weeks ago.
Ibis Bill has my 100 per cent support. I am told by the Royal Parks Agency and the Royal Parks Police that they also fully support it as it is and do not wish to see it amended. All the powers that they need are in it.
I have a few points for the Minister, of which I have already given him notice. I should like to repeat these points so that they are on the official record. I should like to ask, first, whether the Bill can achieve its Third Reading and Royal Assent before 24th July, which, I am told, is the day earmarked for the Bill. Secondly, I hope that the Victoria Tower Gardens are covered by this Bill. My last problem or concern is: where will the traders go once this Bill becomes law? My worry is that they will go to the east side of the river by the London Eye. Anyone who walks there, as I do, can see for themselves a number of illegal vendors selling their wares or performing to raise money. Some days there seem to be more traders than tourists, and it is all becoming very unattractive. Could the Minister ask the local authority to look into this, as it is a popular tourist area and does not give a good impression to visitors?
My last question is: when is the commencement date? In other words, when can the police start to clamp down? Is it the date of Royal Assent or do orders have to lie for 40 days after Royal Assent before the police can get to work? The sooner we get Royal Assent and the orders are laid, the better. I urge the House to support this Bill and not even to try to amend it. I can but quote from a letter from the Deputy Chief Officer, whose permission I have to quote it. The letter says:
"The past four years have been difficult in policing terms, for the Royal Parks Constabulary have been unable to deal effectively with unlicensed Street traders, and the powers enshrined in the Royal Parks (Trading) Bill are the only practical means of addressing the problems. I ask you to support the Bill and would urge you to generate support among their Lordships".
I concur with these statements, and I wish the Bill well.
8.39 p.m.
Viscount Falkland: My Lords, we on these Benches absolutely support the Bill. I congratulate the Minister
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on the tribute he made to the Royal Parks which are a pride to London. They are known world-wide for the recreation, peace and quiet, and beauty that they provide. As has been said by the Minister, and indeed, by the noble Lord, Lord Brougham and Vaux, the smell and offence given by the cooking, if one can call it such, which is done by illegal traders, creates a disturbance which does nothing for the parks.
Indeed, the authorised traders contribute by paying for the authority which they hold to trade. That is approved by the Secretary of State. Unauthorised traders contribute nothing. They leave rubbish, which has to be cleaned up. There are many traders and many who want to trade. It must, therefore, be a profitable business. We have all seen the queues of people standing behind the contraptions, which steam away and create offensive odours. One wonders how people can be in such dire need of refreshment that they need to give such people their custom. However, they do so. My only wish is that the Bill passes into law quickly and without delay. If it does not, all kinds of sinister things may happen. As we have seen in the past, once this is seen by unlawful traders as a lucrative source of income, rivalries between traders ensue, with undesirable social consequences.
There is nothing further to say; everything has been said. I hope that the dates mentioned by the noble Lord, Lord Brougham and Vaux, can be met and that we shall have that assurance from the Minister.
8.41 p.m.
Baroness Anelay of St Johns: My Lords, perhaps the only note of dissent tonight will be from me. I do not think that quite everything has been said on the Bill, as was stated by the noble Viscount. I have one or two new points to make. I shall, therefore, detain the House a little longer.
I have to remark also that in a spirit of co-operation, we agreed to have, most unusually, a Second Reading of a Bill during the dinner hour. At that stage I was not aware that the business which preceded this—that is, the orders—would be as lengthy as it was. In saying that, I make absolutely no criticism of anybody who spoke, Ministers or otherwise. The orders were important. The questions that were put and the answers given by the Ministers were absolutely vital. However, one only has to look at the clock to realise that an important Bill has been left with short shrift.
Lord McIntosh of Haringey: My Lords, I thank the noble Baroness for giving way. This debate is not time limited. The only decision the House has taken is not to resume before 8.55 p.m. If the noble Baroness wishes to speak for 20 minutes, she is at perfect liberty to do so.
Baroness Anelay of St Johns: My Lords, tempting though the offer is, I have never spoken for 20 minutes, and I do not intend to start tonight. My point is simply that the agreement was that this business be taken during the dinner hour and that it would be completed within that period. That was the basis upon which I

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agreed to take it. It is a matter which I shall bear carefully in mind when I am approached with regard to other such business.
I turn to the Bill. I join other noble Lords in welcoming the terms of the Bill. It addresses an issue which has recently caused much public concern; that is, the problem of illegal trading in the Royal Parks. This was a matter which was discussed by the House last year during debates on the Greater London Authority Bill and on an Unstarred Question on the future of the Royal Parks. That debate was initiated by my noble friend Lord St John of Fawsley, who is disappointed that he is unable to contribute his expertise tonight. Noble Lords will be aware that there is a special occasion at Windsor Castle and will not be surprised that his presence is required there.
I made it clear on each occasion that we on these Benches would support measures to clamp down on illegal trading in the Royal Parks, provided, of course, that such legislation addressed the problem in an appropriate, effective and fair manner. We believe that the Bill attempts to do just that. We therefore support it.
We hope that the Bill will have the effect of bringing powers in relation to Royal Parks and other open spaces broadly into line with those possessed by local authorities when they deal with illegal trading activities in the surrounding streets. As the Minister stated, the Royal Parks are a precious resource for Londoners and tourists alike. They form a ribbon of green across London and are, indeed, the lungs of the city, giving us all somewhere we can take shelter from the pressures of city life. We all pay tribute to the Royal Parks Agency for its work in keeping the parks as places of excellence for all of us to enjoy.
Other noble Lords referred in detail to the problem as it exists. I do not intend to repeat those points. I am grateful to my noble friend Lord Brougham and Vaux for giving such a clear description of the problem from his own expert view as a resident who has suffered the smells and has viewed what can happen. We are aware of the dangers for tourists and Londoners alike who buy food that may well not be proper to eat and may be contaminated.
The Minister referred to one issue that has caused the problem to become worse in recent years. I refer to the action rightly taken by Westminster City Council to deal effectively with unlicensed vendors on its streets. As the Minister pointed out, the result of that has simply been that the unlicensed vendors have plied their trade elsewhere; in other words, in the Royal Parks.
The second issue and new point to which I wish to refer is a matter which occurred last year which made the problem even worse than expected; namely, the decision of a Divisional Court of the Queen's Bench Division of the High Court in May in the case of Kol Curri v. Westminster City Council. Mr Justice Ognall, sitting with the noble and learned Lord the Lord Chief Justice, decided that when an unlicensed
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vendor sells goods on Crown land, only the owner of the trolley can be prosecuted under food safety laws, not the person selling the food.
In giving judgment to the Court, Mr Justice Ognall said:
"I reach these conclusions with a degree of regret, and certainly of reluctance. I am mindful that this analysis may make it easy for peripatetic entrepreneurs to assert in this sort of situation that they are no more than salesmen, and thus to escape prosecution or conviction".
I quote from the transcript of the case. He was absolutely right in his forecast. The decision meant that unlicensed hotdog sellers—or sellers of any food or other items—are virtually immune from prosecution because the proprietors can rarely, if ever, be found. If one reads the transcript of that judgment, one obtains a clear picture of the nature and scale of the problem in the Royal Parks.
When Mr Kol Curri was stopped on 3rd July 1997 in St James's Park, he was trading in hotdog sausages from his mobile trolley. It is said that the trolley itself, the food being sold and the appellant's clothing, appeared to fall below hygiene standards as set out in food safety legislation. That seems an understatement.
The importance of this is that Mr Kol Curri, an Albanian with limited command of English, was being organised by others. He was their agent. The owners of the trolleys, who were not from Albania, were called Bill and Dave. One therefore assumes they might be from closer to home. They were paying Mr Kol Curri between £20 and £50 per week depending on sales. He worked only part time. They were taking about £1,000 per day profit per trolley. They were the ones making the killing, perhaps.
It is against the background of that kind of trade that we believe the Bill tries to tackle the problem in the right way. It is important that a solution is to be found in having recourse not just to heavy fines but to other methods. It is important to have a deterrent.
The Minister referred to Clause 4 which gives park constables the right to seize all non-perishable goods used as part of the illegal trading activity. That provision is important.
There are other matters and questions one could justifiably ask about the provisions in the Bill. I refer, for example, to what happens to the perishable goods. None of us, I am sure, enjoys the thought of large piles of half-cooked burgers and onions being dumped in the Royal Parks. However, I shall not put those questions to the Minister tonight simply because, like other noble Lords, I welcome the Bill and wish it a fair wind. Like others, I do not do so because I am a killjoy. Like many, I believe that one can enjoy a very good hotdog or beefburger. However, I recognise that it is important to protect tourists and Londoners alike from being exploited by unlicensed traders in the Royal Parks. I wish the Bill speedy progress through the House.
8.50 p.m.
Lord McIntosh of Haringey: My Lords, I am grateful to all noble Lords who have taken part in this short debate and for the unreserved enthusiasm they expressed for this Bill.

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When I say "short debate", let me repeat to the noble Baroness, Lady Anelay, that I am grateful to her for agreeing to take the Second Reading in the dinner hour; as she said, it is unusual. I am sorry that she was approached without being told that orders were being taken at the same time. However, I want to assure her again that the fact that the orders were taken did not limit the amount of time available for the Second Reading of this Bill. It simply meant that this business began that much later in the evening. If that was inconvenient, I apologise to her.
It is true that the provisions of this Bill were debated in the context of the Greater London Authority Bill, and that last year the noble Baroness, Lady Anelay, and I took part in those debates. This matter was debated also in an Unstarred Question asked by the noble Lord, Lord St John of Fawsley, and we are sorry that he is not in his place today.
First, I want to deal with the questions raised by the noble Lord, Lord Brougham and Vaux. He asked when the Bill will come into effect. The answer is, immediately on Royal Assent. But orders have to be laid after that under the 1926 Act and cannot come into effect for 40 sitting days. Clearly, the earlier the Bill receives Royal Assent, the better, and the earlier we can conclude Committee stage, the better. If the suggestion of the noble Lord, Lord Brougham and Vaux, that there should be no amendments in Committee, is followed by the Opposition Front Benches, the order of commitment can be discharged and the Third Reading can be held very shortly thereafter. That will certainly advance the time by which the Bill will come into effect. I hope that the noble Lord will seek to persuade his Front Bench that that is the right way to proceed.
The noble Lord asked whether the Bill applies to Victoria Tower gardens. It does, and there is a particularly offensive hotdog seller right next to the Victoria Tower. The noble Lord asked also where the traders will go and what is to be done at the London Eye. I too have observed that illegal traders have found the London Eye a place of attraction. It is covered by the London Local Authorities Act 1990, which provides powers of seizure and forfeiture for unlicensed trading. I hope that the authority, which I assume to be Southwark council, will take action under that Act to deal with the problem there if indeed it shifts from the Royal Parks.
The noble Baroness, Lady Anelay, made a valid point in relation to who is guilty of an offence. As she will know, Clause 3 of the Bill ensures not only that the individual trader can be charged with an offence, but also a corporate body; and the officers of that corporate body, who are defined in the Bill, will be prosecuted under the Act.
The noble Baroness asked what happened to perishable goods that were not seized, although she did not want an answer. Traders are invited to take their perishable goods away. I believe that they take away the ice cream cones and probably the hotdogs and rolls. But if they do not, the goods are destroyed at the place to which the carts are taken. I am glad to say that
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there is good co-operation between Westminster and the Royal Parks. The carts will be taken to Westminster yard.
I am grateful to all noble Lords for everything they have said about the Bill. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Utilities Bill
8.53 p.m.
House again in Committee.
Baroness Sharp of Guildford Baroness Sharp of Guildford moved Amendment No. 230A:
After Clause 59, insert the following new clause—

Utilities Bill

  Determination of performance standards)
  DETERMINATION OF PERFORMANCE STANDARDS BY AUTHORITY
  After section 43 of the 1989 Act there is inserted—
  "Determination of performance standards by Authority.
  43A.—(1) The Authority may from time to time—

  (a) determine such standards of performance in connection with the selling of electricity by suppliers to consumers as, in its opinion, ought to be achieved by them and is consistent with their licence conditions;

  (b) arrange for the publication, in such form and in such manner as it considers appropriate, of the standards so determined; and

  (c) arrange for the publication, in such form and in such manner as it considers appropriate, or an assessment of which suppliers, in its opinion, are failing to meet those standards.

  (2) Where a supplier has failed to reach the standards set out in this section, the Authority may order that supplier to pay compensation to the consumers affected.
  (3) It shall be the duty of every electricity supplier to conduct his business in such a way as can reasonably be expected to lead to his achieving the standards set under this section."").
  The noble Baroness said: In moving Amendment No. 230A, I shall speak also to Amendments Nos. 231A, 266A, 266B and 267A.
  This group of amendments relates to the misselling of gas and electricity. They derive from the concern of the citizens advice bureaux throughout the country at the large number of misselling cases with which they have had to deal. Two different sets of problems are dealt with by the amendments. The first set arises from the choice consumers now face from the multiplicity of and from knowingly or unknowingly being switched from one supplier to another and then having difficulty cancelling contracts. In particular, the CABs are concerned about vulnerable people being pressured and misled into switching suppliers. The second set of problems arise from landlords selling gas and electricity supplies at inflated prices.
  Let me deal first with the problems that arise from the sheer multiplicity of suppliers. A range of different problems arise. First, there is a problem of suppliers being switched without consent. A number of

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  examples can be given. For example, a citizens advice bureau in London recently reported the case of a client on jobseeker's allowance who came into the bureau because he had suddenly started to receive electricity bills from a different company. He was emphatic that he had not signed up with the new supplier because he had been out of the country for approximately nine months visiting his family in Bangladesh.
  Another citizens advice bureau in the north of England reported the case of a client who found that his supplier had been switched after he signed a form which he was told was to confirm that his meter had been read. This is a difficult issue where people are switched from one supplier to another without realising that they have given their consent or, in some cases, without giving consent at all.
  Other cases arise where vulnerable people are treated inappropriately. A citizens advice bureau in the North West reported that a client who was profoundly deaf and with limited speech was visited by a doorstep salesman who wanted her to change supplier. She did not understand what she was being asked to do and felt that she was misled into changing supplier. It then took almost three months to restore her original supplier and sort out the billing problems that arose from the transfer.
  Another example arose in London, where a client of one of the bureaux with severe mental illness was misled into signing a paper confirming the visit of a sales agent but which was in fact a contract. The client was paying for fuel direct—an arrangement that would have been jeopardised had the bureau not intervened.
  Further problems arise with the cancelling of contracts. The citizens advice bureaux have seen a significant number of clients who are finding it difficult to cancel contracts in line with their right to do so. One bureau in the South East reported a client who had come into the bureau after finding it impossible to cancel the contract to switch supplier within the cooling-off period. The company continued to send him bills and made it extremely difficult for him to cancel the contract.
  Finally, there is the issue of poor administration. Again, there are examples of people having difficulties. A man over 85 years of age and partially blind and deaf had chosen an alternative electricity supplier. His existing supplier confirmed the cancellation of his contract in the spring of 1999. He then came into the citizens advice bureau seven months later, since he had not received any bills from anybody and was becoming extremely worried about the accumulation of his bills. His new supplier had no record of the fact that it was supplying him.
  In another example, a bureau in the north of England reported the case of a client who, having changed suppliers, continued to receive bills from both the old and new suppliers for nearly a year. He eventually visited the CAB in frustration, having received debt recovery actions from one of the
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  suppliers. All these examples illustrate the difficulties being faced by people these days in relation to these matters.
  In theory, the providers' licence conditions are intended to prevent companies from using such improper sales techniques. The licences are intended to provide a simple way of cancelling a contract when a customer changes his mind after further consideration. But, in practice, the regulator has taken action to enforce compliance under the licence conditions on only two occasions.
  The CAB advised over 140,000 people on utilities issues in the year 1998 to 1999. Many of those clients are low income earners and may be among groups who experience discrimination and consequent disadvantage through, for example, age and disability. It is particularly important for these clients that the sales techniques of gas and electricity providers should not exploit the complexity of and unfamiliarity with the products they are offering.
  If the licence conditions were being effectively enforced by Ofgem, these problems of misselling would not have to be raised so often with the citizens advice bureaux. Ofgem has recently said that it will come down very hard on companies who break the licence conditions. However, it is not clear what trigger will be used to initiate such action. It needs to be made clear to all concerned parties that the regulator will ensure that sanctions are put in place in relation to misselling. The CAB evidence indicates the necessity for such sanctions.
  The purpose of the first two of these amendments is to put this matter right. Their aim is to beef up the regulator's powers; to ensure that GEMA, in its new form, sets minimum performance standards; to ensure that they are published; and to ensure that a naming and shaming procedure is in place for those undertakings which do not meet minimum performance standards. In addition, they provide for compensation to be paid to those who have suffered. Those are the issues which arise from the problems of choice and the misselling of electricity.
  The second set of amendments arises from the on-selling of gas and electricity. The current provisions preventing landlords from selling on such services at inflated prices have failed, due to inadequate enforcement powers. If this overcharging is to be brought to an end, the provisions will have to be reformed and strengthened. Amendments Nos. 266A, 266B and 267A are aimed at probing this particular issue. The amendments are intended to allow the regulator or the trading standards official to pursue resale problems in cases where tenants are unable to pursue the problems themselves. I beg to move.
  Lord McIntosh of Haringey: Like the noble Baroness, Lady Sharp, I shall first discuss Amendments Nos. 230A and 231A and then move on to the other three amendments.
  I was glad to have the opportunity of hearing about the examples which the citizens advice bureaux have given of bad practice in the supply of utilities.

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  However, I have to say that there is nothing in the noble Baroness's amendment which is necessary to increase the powers to impose standards of performance under existing sections of the Electricity Act or under the new clauses to be inserted into that Act and the Gas Act by this Bill. Section 39 of the Electricity Act (as amended by Schedule 6 to the Bill) will allow the authority to set standards of performance
  "in connection with the activities of electricity suppliers so far as affecting customers or potential customers of theirs".
  This clearly encompasses any standards of performance which could be set under the clauses proposed in these amendments. In addition, the noble Baroness will recall that earlier today we dealt with the question of deemed contracts when there is a change of supplier.
  The existing clauses in the Bill require the authority to consult before setting standards of performance, so that there will be an opportunity for organisations concerned about misselling to suggest standards of performance in this area. That, of course, includes citizens advice bureaux and the examples which the noble Baroness, Lady Sharp, has provided in this debate. I am sure that Ofgem will have heard what the noble Baroness has said.
  In addition, there already are licence conditions on how companies sell electricity. The regulator is under a duty to take enforcement action when these conditions are breached. In future, contraventions of the conditions could also lead to the imposition of financial penalties on the licence holder concerned.
  With regard to publication powers that are proposed as part of the new clauses, Clauses 20(4) and 20(5) place the Gas and Electricity Consumer Council under a duty to publish such statistics as it thinks appropriate relating to levels of performance in relation to standards of performance, including any standards of performance concerned with misselling. This duty is unqualified by any consideration of the harm that such publication may cause to the companies concerned.
  I do not minimise the concerns behind these amendments. It is clear from the examples given by the noble Baroness, Lady Sharp, that much is to be desired in relation to the way in which some electricity companies supply electricity to their consumers. However, the Bill provides for no fewer powers than she would add to it by these two amendments.
  I also recognise the motivation behind Amendments Nos. 266A, 266B and 267A, but I do not believe that in practice they would improve the lot of those whom they are designed to assist.
  Let me outline what would happen under the Bill, as drafted, if a customer discovered that he or she was being overcharged by a landlord. It is very difficult, of course, to get people to complain in the first place. Landlords are in positions of authority over tenants and many tenants have difficulty getting past the first barrier of expressing a desire to complain. If a consumer is prepared to take action personally, the powers under Clauses 72 and 101 allow recovery of the
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  sums which have been overpaid, plus interest. If a consumer feels that he needs assistance because he is afraid to raise it with his landlord, the correct body to approach would be the new Gas and Electricity Consumer Council, rather than the authority or trading standards officers. That does not mean that the citizens advice bureaux, local authority advice bureaux and others do not provide a very valuable service.
  The council has a duty to investigate complaints and will be able to insist that the reseller, in this case the landlord, provides it with information relevant to the complaint. It will seek a satisfactory outcome by making representations to the reseller. But if this was unsuccessful and the consumer took his landlord to court, it would be open to him to utilise arguments, reports and so on prepared by the council as part of his legal case. I hope that that will occur only in extreme circumstances and that it will not occur often. However, those powers exist.
  The Gas Consumers' Council has in the past played an active and successful role in advising tenants on their rights in maximum resale price matters. There is, for example, a booklet which is sent to tenants who are considering making a complaint which can be passed to landlords. The Gas Consumers' Council has corresponded with resellers on behalf of consumers. The new council will pick up this important work on behalf of consumers both of gas and electricity but with the valuable new ability to insist that the reseller provides information relevant to the complaint.
  There is no need to revise Clauses 72 and 101 for the purpose of giving the council a role in maximum resale prices. It has this role already by virtue of the powers and functions set out in the Bill. We do not see any need to enable the council itself to receive overpayments on behalf of consumers. It is enough that the council has the duty to investigate complaints and to make representations and provide other assistance on behalf of the consumer. The remit of the council includes exempt as well as licensed suppliers, and so covers landlords, who are likely to be the suppliers in this sort of case.
  Also, conditions can be placed on exemptions similar to licence conditions. Failure to comply with exemption conditions could lead to the withdrawal of the exemption. For example, a caravan site which overcharged caravan owners could lose its exemption and its power to intervene between the supplier and the ultimate consumer. A landlord who continued to supply without a licence or exemption would be committing a criminal offence. We have not concluded our consideration of what conditions should be applied to exemptions but they will almost certainly include an obligation to supply information on request to the consumer council in relation to any complaint it is investigating. I hope that if a consumer sought assistance from the authority or from trading standards officers or from the CAB, he would be redirected towards the consumer council.
  I entirely accept the motivation behind the amendments. I am grateful—the consumer council and the authority will also be grateful—for the specific

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  examples which the noble Baroness, Lady Sharp, adduced in support of the amendments. However, I hope that she will accept that the powers that she seeks are already available.
  Baroness Sharp of Guildford: I am grateful to the Minister for his detailed reply on these two issues. One of the problems that has arisen in relation to misselling is that while it is recognised that Ofgem has powers, it has used them little to date. It would be good to see it using those enforcement powers rather more rigorously than it has. The new consumer council will have stronger powers of publication and I hope that it will use those powers to name and shame those who missell.
  It is a jungle for all consumers. I do not know whether other noble Lords have, like me, been rather amazed at the number of offers that are available and are not clear about what represents good value and what does not represent good value. One can see that this is a big problem, particularly for the more vulnerable groups in society.
  As regards misselling, the Minister is quite right to say that there is an imbalance between the position of the landlord who is selling the product at an excessive price and that of the tenant whose only recourse is to go to court. It is good to hear that the new consumer council will have increased powers in relation to such landlords. I hope that publicity will be given to those powers and that the CAB will keep the consumer council informed of events. I also hope that the consumer council will ensure that those who offer advice in the CABs are aware of those powers. In view of the reassurances I have been given, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 95 [Licence enforcement]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 231:
  Page 99, line 6, leave out ("and (4)") and insert (",(4) and (6)").
  The noble Lord said: I spoke to this amendment with Amendment No. 204. I beg to move.
  On Question, amendment agreed to.
  Clause 95, as amended, agreed to.
  [Amendment No. 231A not moved.]
  Clause 60 agreed to.
  Clause 96 agreed to.
  9.15 p.m.
  Clause 61 [Obligation in connection with electricity from renewable sources]:
  Lord Kingsland Lord Kingsland moved Amendment No. 232:
  Page 62, line 7, leave out from beginning to ("an") in line 8 and insert ("electricity suppliers").
  The noble Lord said: In moving Amendment No. 232, I shall speak also to Amendments Nos. 233 and 234. These are probing amendments in regard to obligations in relation to renewables.
  Clause 62 allows a renewable obligation to be created; it leaves it open to the Secretary of State to decide upon whom and for what the obligation is imposed. These amendments seek to remove that discretion and to make all suppliers liable to meet the obligation. I should emphasise that the motive for these amendments does not in any way undermine the Opposition's commitment to the measures being introduced to achieve environmental goals and to supporting the development of renewable sources generation.
  As currently drafted, the renewables obligation will favour those companies which operate at both ends of the supply chain, owning both supply and generation facilities. Smaller supply companies by contrast, including the innovative new entrants who have brought so much to the market place, could be squeezed out. Vertically integrated companies have the additional generation margin to fund such investment and, by doing so, they could gain significant commercial advantages. In effect, the current approach will compromise the commercial position of independent supply businesses compared with the vertically integrated players.
  These amendments will ensure that the renewables obligation is applied equally to all suppliers; and that the application of the obligation will not distort competition between suppliers. I beg to move.
  Lord Jenkin of Roding: Amendment No. 235, which stands in my name, is grouped with the amendments of my noble friend Lord Kingsland. The Minister will remember that I raised the issue of the renewables obligation at Second Reading and that I promised amendments; this is the first of the amendments to which I have put my name. I shall not repeat the arguments that I used at Second Reading, but I cannot be quite as brief as my noble friend has been in moving his amendment.
  I should like to remind the Committee of what lies behind the amendment. If generators from renewable sources are to meet the targets the Government have set—we shall come to the question of the targets in a moment—they must be able to do two things: they must be able to borrow to finance investment in existing technology for renewables; and they must be able to finance the research and development which will be necessary if the additional sources of renewable energy are to become effective. The fear of those concerned with this issue is that, as it is drafted, the new scheme in the Bill will achieve neither of those objectives.
  Since we last debated the Bill we have had the report of the Royal Commission, which was referred to by the noble Lord, Lord Ezra. Although I cannot claim to have studied it in detail in the couple of days that I have had it in my hands, I have read the parts of it which deal with renewables. The Royal Commission makes some fairly strong recommendations—not least at paragraph 7.106, which states:
  "We recommend that longer-term targets be set for expanding the contribution from renewable sources well beyond the 10 per cent of electricity supplies to cover a much larger share of primary energy demand".

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  The main thrust of the Royal Commission's report is that we will not achieve the reductions in CO2 unless we take a good deal more vigorous action as a nation and set an example to Europe—and one of those examples is in developing renewables. In Box 7D, in the same chapter, there is an interesting and helpful description of the proposed renewables obligation. It reinforces the point that,
  "To enable companies to plan ahead the period of the obligation is expected to apply until at least 2025".
  There is a distinction to be drawn between the period of the obligation and the terms of the contracts which the suppliers may negotiate with those who provide energy from renewable sources, and, over the page, it goes on to draw a distinction. It draws attention to the Government's own classification of new and renewable energy technologies.
  Those that are near term include biomass residues—which I mentioned in the debate on Second Reading—as well as landfill gas, onshore wind, hydro and what is known as passive solar. As regards the medium term, offshore wind and energy crops are added to the list. In the longer term we reach some of the proposals mentioned in the earlier amendment: fuel cells, photovoltaics, wave and photoconversion. In the very long term we shall see hydrogen, tidal barrage and geothermal hot dry rock.
  These technologies are not going to be developed quickly. Indeed, the essence of the conclusions of the Royal Commission is that a great deal of work needs to be done before such longer-term sources of renewable energy will be able to make a contribution.
  Another document I have received since we debated the matter on Second Reading is a letter from the noble Lord, Lord McIntosh. It took a little time to get a copy of it into my hands. I do not think that it was his fault, but only a full month after he signed it did I eventually secure a copy—on the third or fourth request. He made two points, with one of which I totally agree:
  "As we advance towards the Government's target, currently cheaper sources will almost certainly be insufficient to meet the obligation. The Government is currently considering the responses to its consultation on the energy crop scheme" —
  I also mentioned that scheme and I have now received a copy of the consultation.
  Perhaps I may say at this point that only 14 days were allowed between publication of that document from MAFF and the closing date of the consultation—from 14th to 27th April. It has become a habit of the present Government; namely, to publish a consultation and then to ask for responses in a wholly unrealistic timescale. Nevertheless, the consultation is complete. I shall continue with my quotation from the Minister's letter:
  "The scheme is likely to direct support towards readily exploitable crops such as short-rotation coppice and miscanthus. This will provide the foundation for a substantial increase in the contribution of these crops to meeting the renewables obligations".
  The letter goes on to say:
  "I should note that the Government is also considering the case for supplementary support for longer-term sources, such as energy crops and offshore wind, in the context of the 2000 spending review".
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  Clearly, we shall need to wait for the Chancellor's statement before we learn any more about that.
  My amendment seeks to give reality to what seem to me to be quite unexceptionable ambitions. Unless an assurance is given of offtake of renewable energy by electricity suppliers, those wishing to invest in renewables simply will not be able to raise the money to fund their investment.
  The Minister's letter turned to that argument. Perhaps I may quote from it once more:
  "You argued for a renewables obligation which required electricity suppliers to source a specified proportion of renewables from biomass at a fixed price on long term contracts—very similar, in fact, to the existing non-fossil fuel obligation. The Government has very deliberately taken the decision to move away from such picking of technologies"—
  I ask the Committee to note that phrase—
  "and instead to adopt a market-based approach, in keeping with the Bill's market-based reforms of electricity regulation as a whole. This will allow the market to identify the most economic methods of achieving the Government's renewables target, to the benefit of the environment, consumers and the economy as a whole".
  However, that argument is very seriously flawed. With one breath the Government say that they are willing to use grant aid—a scheme is promoted and is the subject of consultation—to support renewables. But what is grant aid if it is not a form of picking winners in order to be able to distribute the grants? Yet in the succeeding breath the Government say that they cannot pick different technologies, as required in my amendment, because it would interfere with the market. I hope the Minister will take note that there is a complete logical inconsistency in that proposition. Both grant aid and picking technologies amount to public expenditure. That is because the Treasury has ruled that any additional electricity costs associated with climate change rather than with electricity supply have to be treated as costs.
  The question is: which method will deliver the greatest amount of CO2 reduction per pound of public expenditure. The additional administration of setting up a grants structure, together with the normal market response of industries which are dependent on grant aid—which leads to a form of cost inflation—is inherently unlikely to deliver better value for money. I am not in the least surprised to learn from the trade press that there have been calls for the DTI to find, not £50 million, but £150 million per annum for renewable energy grant aid. How many schools or doctors could be funded with that kind of money?
  In contrast, my amendment places the additional cost of renewable energy fairly and properly where it belongs: on the electricity consumer. That accords with the well-established and widely respected "polluter pays" principle. It sends the right price signals about energy usage direct to consumers, exactly as was envisaged in the Government's own policy statements in New and Renewable Energy: Prospects for the 21st Century. The document states:
  "The Government believes that the additional cost of generation from renewable sources, whilst kept to a minimum, should be met directly or indirectly by electricity consumers. This would ensure that the costs of addressing environmental problems caused by electricity are met by those who create the demand".

  365
  That is completely right and proper. Yet, with great respect, that is not the scheme in the Bill. It would be the scheme were the Bill to be amended in the light of my proposal.
  I am sure that Ministers will be aware that the availability of near-market generating capacity is limited. The Government will be pushed for time to get the requisite reductions from renewable sources to meet their 10 per cent commitment. The near-market technology is limited by availability of resources and by the very considerable problem of planning consents, about which the Royal Commission has a number of useful things to say.
  In anything but the short term, there will have to be further contributions from biomass and from offshore wind if there is to be any chance of meeting the Government's targets. It takes four or five years to plan, finance, build and bring on stream a significant new electricity generating station. It is likely that, without an obligation to purchase electricity from these technologies from the outset, sufficient time will not be available to bring the generation on line and the Government's target will not be met. If it is not, we shall be in breach of our obligations under the Kyoto accord.
  The Government have recognised over and over again that the purchase contract lies at the heart of the financing of renewable energy. Perhaps I may quote another government publication which makes that point extremely clear. In financing renewable energy projects, published earlier this year, the Government state:
  "The contract is the cornerstone of most renewables projects. The power purchaser must be creditworthy. Lenders will want the contract term to extend beyond the term of the loan. The contract will be assessed by the lenders for its economics and conditions that might cause early terminations—lenders will want the ability to cure any defaults rather than face termination".
  Again, that is absolutely right—but, with great respect, that is not what is in the Bill. I find it depressing that the Government have committed themselves to the two propositions that I have quoted from their own publications, and both are ignored in the Bill.
  It must be recognised that, if we are to make any progress in achieving our renewables obligations, there must be longer term contracts, and there must be discrimination between the different forms of renewables. At the present stage, the prices at which the different forms of renewables can put electricity into the market are very different.
  The Government must look at this again. I do not say that my amendment is the only way of dealing with the matter, but I say with all the force that I can command, reinforced by the Royal Commission, which supports the new system, that it must be on the right terms. It is not on the right terms, and my amendment is one of the ways that could put that right.
  9.30 p.m.
  Baroness Sharp of Guildford: From these Benches we give our support to the noble Lord, Lord Jenkin of Roding, and his amendment. The noble Lord speaks a great deal of sense. He is absolutely right that we stand very little chance of meeting our Kyoto commitment to the 10 per cent renewable target by 2010 unless we move very quickly. We do not have the capacity in place. It takes a long time to get it in place, and we need mechanisms to encourage its being put in place.
  From the point of view of UK Inc. it is vital that we increase our ability to build renewable energy capacity and develop the industry. Other countries, such as Germany and Denmark, are forging ahead in this area, and we in the UK have been very laggardly. An amendment such as that proposed by the noble Lord is precisely what we need.
  Lord McIntosh of Haringey: When the noble Lord, Lord Kingsland, says that nothing in his amendments is intended to restrict the growth of supply from renewable sources, I accept what he says, but Amendments Nos. 232, 233 and 234 would have the effect of restricting that supply. They would remove the option to place an obligation only on certain categories of supplier and require it to be placed on all suppliers.
  I recognise that concerns have been expressed that the use of the flexibility to impose an obligation on some suppliers and not others could introduce unfair market distortions, but the Government's intention is quite the opposite. It is to ensure that the market works properly. Flexibility may be important in ensuring that inappropriate barriers are not placed in the way of new entry to the market.
  If we had exactly those barriers that we would have if the amendments were inserted, how would we deal with new entrants to the markets? Clearly, we cannot impose a full renewable obligation on day one, not least because entrants would have no market share from which to calculate the size of their obligation. We are still consulting on that point. There is one option—it is only an option, and we shall be canvassing views on it—which would be to exempt them from the obligation altogether in their first year of operation. Whatever may be the case, the working of a market of this kind will not be possible if these artificial restrictions, particularly on new entry into the market, are to be imposed.
  I find it ironic that I should be the one defending the market mechanism against noble Lords opposite. I do so because we believe that the market mechanism is the right way to approach the issue of renewables, as it is the right way to approach the other issues of consumer protection which form the basis of the Bill. The amendments that the noble Lord has put down would certainly restrict the market; they would restrict new entry to the market by creating unacceptable barriers to new entry.
  I turn now to the noble Lord, Lord Jenkin of Roding. His amendment is in some conflict with his very eloquent speech, to which I pay tribute. The

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  amendment seeks to impose a feature of the old-style, non-fossil fuel obligations—fixed, long-term supply contracts between suppliers and generators—which the Government simply cannot accept. It runs counter to the entire thrust of the new obligation to move away from this sort of rigid imposition and allow market participants to sort out for themselves the most effective way of meeting the obligation.
  There is nothing in Clause 61 or elsewhere in the Bill to prevent long-term contracts with renewable generators. Clearly, these contracts will be made in some cases. The difference is that it will be the market, not the Government, which decides the right terms of the contract. If the amendment in the name of the noble Lord, Lord Jenkin, were accepted, it would impose conditions for long-term contracts that might outlive the technology described so eloquently by the noble Lord. The noble Lord said that government policy did not address long-term technologies, such as biomass. However, in the context of our market-based approach we believe that the longer-term renewable technologies will also benefit.
  As electricity suppliers move towards the 10 per cent target, they are likely to experience insufficient availability of cheaper renewables and will look increasingly to offshore wind and energy crops, for example, to meet their obligations. These energy sources cannot be bought in over night. It would be prudent for energy suppliers to look ahead now to ensure that the technologies are brought forward on a timescale, and in sufficient quantities, to meet their needs.
  The noble Lord, Lord Jenkin, referred to the climate change levy. One possibility is to draw some funding from that levy. That was one of the issues referred to in yesterday's article in the Financial Times. Last year the Chancellor announced that £50 million from the climate change levy would be allocated to increase funding for energy efficiency, to promote the development of new sources of renewable energy and to encourage research and development and the take-up of low carbon technologies and energy-saving measures through a carbon trust. In November 1999 the Chancellor announced the trebling of support for energy efficiency measure from £50 million to £150 million to allow for the introduction of a system of 100 per cent first-year capital allowances for energy-saving instruments. Individual funding allocations have not yet been settled. The Government also made an announcement to exempt from the levy energy generated from new forms of renewable energy, such as solar and wind power and good quality combined heat and power plants.
  In addition to our plans to impose an obligation on licensed electricity suppliers to supply a specified proportion of their power from renewable sources, the Government are actively considering top-up financial support for offshore wind energy and energy crops, possibly in the form of capital grants. This reflects both the higher costs of those technologies and the importance of bringing them forward if we are to meet the renewables targets in 2010 and beyond.
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  The noble Lord, Lord Jenkin, appears to believe that there is some conflict between this grant aid and the rest of our policies. No. There is a big difference between direct support for research and development and the long-term framework of the renewables obligation. I am much more sympathetic to the motivation behind the amendment in the name of the noble Lord, Lord Jenkin, than the amendment moved by the noble Lord, Lord Kingsland, which would have a very damaging effect on the renewables obligation. I am afraid that the approach of going back to the long-term contract of the non-fossil fuel obligation is not the right way to proceed.
  Lord Ezra: In view of the fact that the Minister respects the motivation behind the amendment in the name of the noble Lord, Lord Jenkin, who says that he does not necessarily stick to the wording of his amendment, is it not possible to introduce into the order some preference for long-term contracts, bearing in mind the nature of the activity that we are talking about? The noble Lord, Lord Jenkin, is absolutely right. The thrust of the Royal Commission's report is that it will be extremely difficult for us to meet the targets which the Government have rightly set. This matter requires a good deal of long-term planning and thinking. While there is perhaps too much rigidity in the wording of the amendment, is it not possible to emphasise in the order the importance of providing long-term support for the renewables sector?
  Lord McIntosh of Haringey: I am very dubious about the role of long-term contracts, although I am insistent about the long-term nature of our policies. After all, the renewables obligation is intended to last until 2025. Rather than respond positively in the way suggested, I invite the noble Lords, Lord Ezra and Lord Jenkin, to talk to me and my officials between now and Report stage so that where there is common ground those matters can be thrashed out and we can see whether progress can be made.
  Lord Jenkin of Roding: Before my noble friend withdraws his amendment, perhaps I may say that I have been half encouraged by the response and very encouraged by the support of the noble Lord, Lord Ezra, and the noble Baroness, Lady Sharp.
  As I said, I am not wedded to the wording of the amendment. However, I wish to emphasise that if one could encourage big industry to come in on this aspect—I do not refer to the little man with his rubbish heap or the family which happens to have a hydro facility—it could result in good, embedded energy. We want to encourage the big players, perhaps from overseas as well as our own people, to make this a major part of their investment. They are not encouraged by grants because they always recognise that they can be switched off at any moment. They are looking for an environment which will encourage them to put their money into the investment and into research and development.

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  The Minister invited some of us to have meetings with him. It would be exceedingly churlish of me not to take that up with enthusiasm; and I do. Perhaps we can explore that.
  Lord McIntosh of Haringey: I do not want to be exclusive. The noble Lord refers to "some of us". If other noble Lords, including the Opposition Front Bench, wish to discuss these matters, I shall be pleased to do so with them as well.
  Lord Jenkin of Roding: I am sure that we should all like to come along. I should like to bring one or two of my advisers who have helped and guided me on this issue. I have not moved my amendment; therefore I do not need to withdraw it. It has been a short and useful debate. I am grateful to the Minister for the amount of trouble he has taken with his reply.
  Lord Kingsland: I shall be delighted to talk to the Minister about my amendment. However, after what I shall say he may not pleased to talk to me.
  I think it unfair of the Minister to assert that my amendment is anti-competitive. On the contrary, it seeks to ensure that the small entrepreneur is fairly treated in relation to the rest of the market. It is a competition-enhancing rather than competition-constricting amendment. The Minister was clear about his rejection of it. In those circumstances, I should like to test the opinion of the Committee.
  9.42 p.m.
  On Question, Whether the said amendment (No. 232) shall be agreed to?
  Their Lordships divided: Contents, 29; Not-Contents, 76.

  Division No. 3

  CONTENTS

  Anelay of St Johns, B.

  Jopling, L.

  Astor of Hever, L.

  Kingsland, L.

  Attlee, E.

  Knight of Collingtree, B.

  Blatch, B.

  Laird, L.

  Bridgeman, V. [Teller]

  Lamont of Lerwick, L.

  Brougham and Vaux, L.

  Lyell, L.

  Buscombe, B.

  Moynihan, L.

  Carnegy of Lour, B.

  Northbrook, L.

  Oxfuird, V.

  Crathorne. L.

  Palmer, L.

  Ferrers, E.

  Patten, L.

  Fookes, B.

  Roberts of Conwy, L.

  Geddes, L.

  Stodart of Leaston, L.

  Henley, L. [Teller]

  Wade of Chorlton, L.

  Jenkin of Roding, L.

  Willoughby de Broke, L.

  NOT-CONTENTS

  Acton, L.

  Bassam of Brighton, L.

  Alderdice, L.

  Berkeley, L.

  Alli, L.

  Borrie, L.

  Amos, B.

  Bragg, L.

  Andrews, B.

  Brennan, L.

  Archer of Sandwell, L.

  Brett, L.

  Bach, L.

  Brooke of Alverthorpe, L

  370

  Brookman, L.

  Hunt of Kings Heath, L.

  Burlison, L.

  Islwyn, L.

  Carter, L.[Teller]

  Lea of Crondall, L.

  Christopher, L.

  Lipsey, L.

  Clarke of Hampstead, L.

  Lockwood, B.

  Cocks of Hartcliffe, L.

  Macdonald of Tradeston, L.

  Cohen of Pimlico, B.

  McIntosh of Haringey, L.

  Crawley, B.

  McIntosh of Hudnall, B.

  Currie of Marylebone, L.

  MacKenzie of Culkein, L.

  David, B.

  Mackenzie of Framwellgate, L.

  Davies of Coity, L.

  Mar and Kellie, E.

  Dormand of Easington, L.

  Massey of Darwen, B.

  Dubs, L.

  Mitchell, L.

  Evans of Parkside, L.

  Morris of Castle Morris, L.

  Ezra, L.

  Nicol, B.

  Farrington of Ribbleton, B.

  Phillips of Sudbury, L.

  Faulkner of Worcester, L.

  Ramsay of Cartvale, B. [Teller]

  Fyfe of Fairfield, L.

  Rendell of Babergh, B.

  Gale, B.

  Sawyer, L.

  Gibson of Market Rasen, B.

  Scotland of Asthal, B.

  Goldsmith, L.

  Sharp of Guildford, B.

  Gould of Potternewton, B.

  Simon, V.

  Grenfell, L.

  Thomas of Gresford, L.

  Hardy of Wath, L.

  Tomlinson, L.

  Harris of Haringey, L.

  Tope, L.

  Harris of Richmond, B.

  Tordoff, L.

  Harrison, L.

  Walpole, L.

  Hilton of Eggardon, B.

  Warner, L.

  Howells of St. Davids, B.

  Whitaker, B.

  Hoyle, L.

  Whitty, L.

  Hughes of Woodside, L.

  Wilkins, B.

  Resolved in the negative, and amendment disagreed to accordingly.
  9.52 p.m.
  [Amendments Nos. 233 to 235 not moved.]
  Lord Hardy of Wath Lord Hardy of Wath moved Amendment No. 236:
  Page 62, line 28. after ("sources") insert ("or from the application of clean coal technology").
  The noble Lord said: In moving Amendment No. 236, I wish to speak also to Amendment No. 238. I do not intend to detain the Committee very long but some significant points need to be made.
  The Government deserve congratulations on their commitment to making a proper contribution to clean coal technology. Indeed, a number of other affluent countries would do well to do so and the world would benefit from emulating our record. However, the Government's targets are ambitious. Not all British projects are dispatched effectively. I think, for example, of the repairs to the escalator on the Victoria line at King's Cross Station which seem to be taking a long time. If some of our renewable projects took as long as that, we should be in dire straits in fulfilling our obligations. But I am more optimistic about that.
  We must consider that, although we have seen enormous reductions in the British mining industry, that which remains is exceedingly successful. The latest production figures for Richard Budge's pits—he owns the vast majority of them, as the noble Lord, Lord Ezra, will be aware—build on the contribution that the National Coal Board made under his chairmanship. The productivity rates are astonishing. Some coal faces produce 7,000 tonnes of coal a shift. A coal face maintained at that level would be a super-pit, with a 2 million tonne level of production.
  The noble Lord, Lord Jenkin, will recall our slight exchange last week on this. I have never been in favour of burning coal in a filthy manner. I am in favour of clean coal technology. I was bitterly critical of the previous administration, who put an end to substantial research. That research should be renewed with vigour because, although we may be reducing our coal burn and no longer puffing out noxious gases into the environment, making those changes will do us and the globe very little good if other huge coal-producing countries continue the practices that we have stopped. Given the amount of coal that will be burned in China, India and a number of other countries over the next five or 10 years, the world is clearly crying out for the new technology. We have a commercial opportunity to develop clean coal technology rapidly in Britain. It would be very useful for us and there would be international opportunities.
  The other reason for the Government to take a favourable view on the issue is to ensure a belt and braces approach. I am more optimistic than some in the Opposition about the development of some renewables, but that could take a little time. If it takes a little longer than the Government and the industry hope, there may well be a tendency, as the target dates are reached, to take an excessively generous view of particular approaches to renewable production. It should be possible to move rapidly on biomass and we ought to make a more vigorous effort to harness the power of water, but I am uneasy about wind, largely because, although a great deal is said about it, the amount of energy produced by the wind farms now operating is surprisingly small. I pointed out in the House last week a proposed wind farm near the Yorkshire coast which would not go down well with most local people, would not enhance our landscape and would produce as much energy in a year as Drax power station, which is fitted with flue gas desulphurisation, produces in six days.
  The noble Lord, Lord Jenkin, referred to planning consent. Those of us who have lived in coalfield areas know that in the 1980s the previous government virtually forced local authorities in areas where there were coal reserves to give planning permission for opencast mining. That caused enormous fury. As deep mined pits were closed, local people had to put up with opencast mining. I am not saying that there is no role for it—it has cleared a lot of dereliction in South Yorkshire—but no government of whatever complexion should seek to ride roughshod over the local population on issues such as wind farms. There may be a place for them offshore and onshore. But as a conservationist, I find the prospect of seeing huge numbers of birds destroyed by the windmill, as would certainly happen because of the sucking-in action which would develop, distasteful. If those windmills are built on lines of migration, the slaughter would be distasteful, especially given the relatively low energy yield which would then result.
  I hope that the Government will accept that clean coal technology should proceed apace, not merely for ourselves but because it will help to give the world a
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  capacity to meet the obligations which the United Kingdom is pursuing and which other countries also need to meet. I beg to move.
  10 p.m.
  Baroness Buscombe: I rise to speak to Amendment No. 241. That amendment concerns the granting of power to the Secretary of State to make different orders for different classes of supplier. We propose here that that power should be invoked only in a way which will not distort competition.
  Lord Ezra: I support the two amendments dealt with so eloquently by the noble Lord, Lord Hardy of Wath. In fact, I have a later amendment which deals with the same subject. It may be for the convenience of the Committee, and perhaps abbreviate the time that we must spend, if I deal now with that too.
  I agree entirely with the thrust of the remarks of the noble Lord, Lord Hardy, as regards clean coal technology. We have a very successful coal enterprise. It is much reduced compared with earlier days; nevertheless, it is successful and efficient. We have massive coal reserves and there are even greater coal reserves in the Far East and other developing countries.
  The problem that we have is how to burn and use that coal to minimum environmental disadvantage. Clean coal technology offers a way of doing that if we can establish the process.
  The Government have recently provided much needed short-term support for the coal industry. But long-term support must also be provided. That should take the form of stimulating the development of clean coal technology which can be done only if contracts are placed for that technology. Therefore, I fully support the case which has been made by the noble Lord, Lord Hardy, that that should he included in the obligation.
  Techniques for clean coal technology have been successfully proven in laboratories, and some countries—not Great Britain, unfortunately—have development plants in operation. We really need to get such plants going. I have been working for many years to bring that about. While at the coal board, I gave support to the Grimethorpe project in the 1970s, which some may remember, which was subsequently closed down.
  More recently, in 1998, I introduced a Bill,
  "to extend the obligation to generate electricity from certain fuel sources".
  The purpose of that Bill was to extend the non-fossil fuel obligation, which we then had, to include certain fossil fuel projects which could contribute to environmental improvement and, specifically, clean coal technology. Although that Bill successfully passed through this House and was supported in another place by the then Minister for Energy, as well as by the Select Committee on Trade and Industry, it foundered, as do the bulk of Private Member's Bills at the present time in the other place for reasons with which most of us are familiar.

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  The Utilities Bill provides a further opportunity for creating the circumstances which could lead to one or more clean coal projects in the UK. Unless there is specific support for those projects or there is a commitment to take their production, they will not come about.
  The problem for Britain will become very serious when the nuclear plants are closed down (in the period 2010–20); the whole balance of CO2 emissions will be altered by that fact. We must prepare for that now. We should be developing all the resources we can. The noble Lord, Lord Hardy, is absolutely right. While everything possible is being done to develop other renewable sources, we have here potential for the coal industry to make its contribution so long as the technologies can be developed.
  So I should like to ask the Government to consider the problem in this context. I do not suppose for one minute that the amendments that the noble Lord, Lord Hardy, and I have moved this evening will be agreed; we merely put down a marker. We say, "This is an issue which should be further considered". This is one of the remaining opportunities for introducing a new technology into coal usage. I very much hope that, one way or another, we shall seize it.
  Lord Jenkin of Roding: I hesitate to join in a debate with two such acknowledged experts on the coal industry but, for my sins, for part of my career I was both a shadow Minister and a Minister for energy and I had to deal with the coal industry at that time. I remember 25 years ago visiting the Coal Research Establishment just outside Cheltenham. There I came across a man who was working very hard on the underground gasification of coal. I do not know whether that was a "clean" technology—we did not think of it in those terms. I remember putting my arm round his shoulders and saying, "Do you realise, my friend, that you have the whole of the future of the coal industry on your shoulders?" It was quite clear that we were not going to go on burning large tonnages of coal on the surface.
  The noble Lord is absolutely right; it is another country. The resources of coal are huge. I remember discussing this issue with the then head of the energy department in Beijing, Mr Qu Che Ping. They were hoping to burn 1,200 million tonnes of coal, and I said to him, "My friend, you really cannot do that". This was some years ago, long before Kyoto and indeed before Rio. They are changing their view; they are realising that that actually is not on. They are now buying more nuclear energy. We have not said anything much about nuclear energy, but if there is clean coal technology which really can generate energy without polluting the earth, clearly that needs to be encouraged and promoted.
  The Royal Commission report talks a lot about what I call—although it does not—the sequestration of carbon dioxide, where the CO2 is extracted from the flue gases and put back down. The commission prefers it to be put back down under the sea, where it can
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  remain in perpetuity: it is taken out of the atmosphere. It does not know yet whether that is economic. Clearly more work needs to be done in order to achieve what is needed. I agree that if we are to meet these renewable obligations, everything has to be encouraged. I very much agree with the noble Lord, Lord Ezra, that this needs longer-term backing and preferably contracts if it is to be achieved.
  Lord McIntosh of Haringey: Perhaps I may speak first on Amendments Nos. 236 and 238, which would provide that obligations under the renewable powers could be met by clean coal as well as renewables. Let me start by saying that we certainly are supporters of clean coal. We have a substantial support programme for clean coal technology.
  The Government's policy is to encourage the development of cleaner coal technologies for application both at home and overseas. I entirely take the point made by my noble friend Lord Hardy, that research and development on cleaner coal technology will not only benefit the British coal industry but also provide huge export potential for very much larger coal industries in other countries.
  The policy is being implemented in a six-year programme, which started in April 1999, linking research and development with technology transfer and export promotion. The broad aim of the programme is to provide a catalyst for UK industry to develop cleaner coal technologies and to obtain an appropriate share of the growing world market for the technologies.
  The programme will encourage collaboration between UK industry and universities in the development of the technologies and expertise. It is expected that projects worth over £60 million in R&D will be generated as a result of the DTI's contribution of £12 million over three years. Through this programme the DTI will be able to contribute to a global strategy to contain the growth of carbon dioxide (CO2), a recognised greenhouse gas, in developing countries in collaboration with the IEA and OECD countries.
  The principal aim of the programme is to develop advanced power generation as recommended by the industry-led Foresight Task Force and to help industry meet the Foresight technology targets. Other aims are to encourage fundamental coal science research in support of the Foresight technology targets and to examine the potential for developing the UK coal-bed methane resource and underground coal gasification technology, to which the noble Lord, Lord Jenkin, referred.
  The Foresight investigation into cleaner coal technology identified a case for plant demonstration from 2005. This is the issue of the demonstration plant to which the noble Lord, Lord Ezra, referred and to which he has devoted a substantial part of his distinguished career. The Government undertook a detailed review of its cleaner coal technology programme and published their conclusions in April 1999 in Energy Paper 67. The Government undertook

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  to maintain strong support for cleaner coal R&D with DTI funding of £12 million, to which I have already referred.
  Government support for demonstration projects is not seen as a priority at present, for two main reasons. First, a number of commercially proven cleaner coal technologies are available to the electricity industry from a number of technology suppliers and licensees in both the UK and overseas. These do not need to be demonstrated again on a commercial scale and subsidised by the UK taxpayer. Information about these technologies, their technical characteristics and economics is well known to the UK electricity industry should it choose to invest in them. Government support is focused on supporting R&D to develop more advanced technologies capable of offering substantial improvements in efficiency and environmental performance.
  Secondly, the UK has a number of moderately efficient generating units which offer the electricity industry the option of incremental improvements to existing plant. These include the strategic installation of flue gas desulphurisation in the most heavily used stations rather than investing in new plant. Although the environmental benefits from that are not as good as those obtainable from currently available cleaner coal plant, the difference in cost is not sufficiently great to justify the very large difference in costs between the two approaches.
  I have expressed, I hope in some detail, our support for cleaner coal. However, it does not follow from that that we can support the amendments. We must bear in mind the fact that coal is not renewable and the Government do not consider that it could be considered as an alternative to renewables. The amendment would spread the number of technologies which would be available for the renewable obligation. That would dilute the renewable obligation rather than add to it. At present, we have the renewable obligation, the 10 per cent obligation and the expenditure on and research into clean coal on top of that. The renewable provisions are intended to meet environmental objectives. The effect of the amendments would tend to work in the opposite direction, either by displacing renewables directly or by imposing competing demands on the purse of the electricity consumers. We therefore regret that we are unable to support the amendment.
  On the other hand, Amendment No. 241 addresses a discrepancy in the Bill. There are provisions in the clauses on energy efficiency, standards of performance and licence modification which place requirements on the Secretary of State or the authority relating to avoiding distorting competition when exercising the powers. It is reasonable that renewables should be treated in that way.
  Amendment No. 241 goes too far by ruling out any distortion in competition. We envisage the possibility of some difference in the obligations on new suppliers, which I referred to in discussing the previous amendments, although noble Lords opposite did not care for that. As elsewhere in the Bill, we think that we
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  should be exercising powers so that no supplier should be unduly disadvantaged in competing with other suppliers.
  I accept the principle of the amendment, but I ask the noble Baroness, Lady Buscombe, not to move it. We shall come back with our own amendment at Report stage.
  10.15 p.m.
  Lord Ezra: I listened with pleasure to the enumeration of the ways in which the Government are helping forward research and development in relation to clean coal technology. However, I was disconcerted by the fact that they take a different view from my own and that of the noble Lord, Lord Hardy, on when we should see a large-scale plant in operation in the UK. Until we have that, we will not have got anywhere with clean coal technology—a technology that is well known.
  While more research is desirable and research always leads somewhere, the time comes when we must start producing what the research points to. Unless we can have a production plant here of sufficient size, we shall not obtain the overseas orders; they will go to those countries where such plants exist.
  Furthermore, we are offered the opportunity through the obligation to introduce an element of clean coal technology. I do not agree that this proposal will dilute the obligation; indeed, it would add to and strengthen it. It would mean that we are looking widely at all our energy resources to see how we can improve the atmospheric situation. I wonder whether the noble Lord will discuss this issue with the other matters we shall he discussing to see whether we can make headway perhaps in another direction and achieve what appears to be a common objective.
  Lord McIntosh of Haringey: I am sure that this will be on the agenda for the meetings in which we have already said we will take part with interested parties.
  Lord Hardy of Wath: I am grateful to my noble friend. Obviously the Government are sympathetic. But there is a need for demonstration. I trust that we can discuss that matter and that it will receive favourable consideration. Given the response of my noble friend, we have taken the matter as far as we can at this stage. I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord Ezra Lord Ezra moved Amendment No. 237:
  Page 62, line 32, at end insert—
  ("(3A) The renewables obligation shall ensure that 5% of Great Britain electricity requirements shall be met from renewables by the end of the year 2003 and 10% by 2010.").
  The noble Lord said: Amendment No. 237 relates to the renewable obligation which we have been discussing at considerable length. It aims to have printed on the face of the Bill the Government's 10 per cent objective for an increase in renewables by the year 2010.
  We were told in informal discussions that there is no need for this amendment; that the Government are fully committed to this objective. We know that they are. But we believe that the issue is of such considerable importance that it should find its place on the face of the Bill. I beg to move.
  Lord Jenkin of Roding: I added my name to that of the noble Lord, Lord Ezra, and in doing so I have one clear objective in mind. I have already referred to the need to finance the development of renewable resources. Generators must be able to borrow. One of the ways in which it will be possible to engender in lenders the confidence that this area has a future is by including the renewable targets on the face of the Bill. They would then be part of the law of the land. Lenders would be able to point to that and say, "That is what is going to happen" and would find themselves able to lend the money to the people who wanted to invest it.
  Lord McIntosh of Haringey: Amendment No. 237 seeks to fix the government targets for renewable electricity in statute. The Bill gives the Secretary of State power to place obligations on electricity suppliers and sets the framework for those obligations. This amendment seeks to establish a general target on the basis of which the level of the obligations would be set. The two would not, of course, be the same because some renewables, such as large-scale hydro, will count towards the Government's target but will not count towards an obligation.
  Let me make it clear, although I perhaps do not need to in the light of what the noble Lord, Lord Ezra said, that there is no question of the Government going back on their commitment to achieve 5 per cent renewable electricity by 2003 and 10 per cent by 2010, provided that the cost to consumers is acceptable. The only issue before us is whether it would be right to put such figures on the face of the Bill.
  We have said that we shall consult further about how the powers under this clause will be exercised. We need to consult on the profile that, so as to reach our target, the obligation will impose on the buy-out mechanism and on the cost to consumers of achieving the obligation. To get the profile right will not be a straightforward matter. We can be sure of doing so only if we listen carefully to the responses from the wide body of expertise in the electricity industry, including the renewables industry, as well as to the views of consumers, who will be paying for it through their electricity bills.
  We believe that the provision which the amendment would introduce, namely, that the obligations will ensure a particular target, is wrong in principle and that it therefore has no place in the Bill. However, that does not mean that we resile at all from our commitment to renewable energy.
  Amendment No. 247 refers to recycling buy-out receipts. That is an option which has advantages and disadvantages. The primary advantage is that it is an
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  additional incentive to meet the obligation by supplying renewables. One disadvantage is that it could push the price that suppliers are prepared to pay for renewable electricity above the price cap set by the buy-out mechanism, which would impose additional costs on consumers.
  The important point for us now is that the Government need to consult further on whether this or another mechanism is the right one. The order-making powers of Clause 61 allow a system of the kind that the amendment addresses, and that is where it should be—in secondary legislation, not on the face of the Bill.
  Amendment No. 248 refers to using buy-out receipts as additional support for renewables. We cannot accept that argument. It would undermine the objective of recycling the receipts in the first place, which is to limit the cost to consumers in the event that renewable generation turns out to be more costly than we expect. Of course, the recycling of buy-out receipts to finance specific technologies will create a further subsidy for renewables at a price much greater than we originally intended when the buy-out price was set. If we get the buy-out price and the incentives right, the level of buy-out receipts should be fairly small, which would not be a good way to support renewables.
  Therefore, with no derogation from our commitment to renewable energy, I regret that we cannot accept these amendments.
  Lord Ezra: If we are to have a discussion about renewables, I suppose we can widen the agenda to take on board these points.
  With regard to the other amendments with which I did not specifically deal, although the Minister did, the Secretary of State is due to make orders dealing with how these repayments should be made. Perhaps we can also discuss whether the ideas that are being formulated fit in with the proposals contained in these two amendments. Having said that, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  [Amendment No. 238 not moved.]
  Clause 61 agreed to.
  Clause 62 [Orders wider section 32: supplementary]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 239:
  Page 63, line 46, after ("32(6)") insert ("or in the definition of "renewable sources" in section 32(8)").
  The noble Lord said: This is a series of minor government amendments which, with one exception, do not make substantive changes to the renewable powers in the Bill, but make technical adjustments and enable the provisions to be more effectively applied. The one exception is Amendment No. 240 to Clause 62. This states that an order may provide that, to a specified level, underachievement or overachievement in a particular period of a supplier's obligation may be carried forward into a subsequent period. I believe that that is known as "banking and borrowing".
  The Government are considering whether to use this power to allow for a small percentage of a supplier's under or over-achievement of his obligation in a given period (probably a year) to be carried forward into the following period. This would help to avoid potential volatility in the market for renewable electricity that might otherwise take place at the end of a period, as suppliers attempt to clear their positions. It will not allow a supplier to escape his obligation. We intend to consult further on how the power should be used.
  Amendment No. 239 provides that an order under Clause 61 may determine how the proportion of fossil-derived material in waste that may count towards a renewables obligation is to be calculated.
  Amendments Nos. 242 and 243 provide that a "green certificate" may be issued to a supplier as well as to a generator to provide the flexibility which may be necessary.
  Amendments Nos. 245 and 246 provide that a different "buy-out price" may be set for different periods within the overall period of a renewables order and may be adjusted for inflation.
  Amendments Nos. 251 to 255 provide necessary flexibility in the order-making power under Clause 66 so that an order making transitional arrangement to preserve the existing non-fossil fuel obligation contracts can he made at the same time as the implementation of the new electricity trading arrangements.
  Amendment No. 256 allows for an order under Clause 66 to make different provision for Scotland from that for England and Wales. I beg to move.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 240:
  Page 64, line 12, at end insert—
  ("( ) An order may, in relation to any specified period ("the current period")—

  (a) provide that evidence of electricity supplied in a later period may, when available, be counted towards discharging the renewables obligation for the current period;

  (b) provide that evidence of electricity supplied in the current period may, in a later period, be counted towards discharging the renewables obligation for that period;

  (c) specify how much later the later period referred to in paragraph (a) or (b) may be;

  (d) specify a maximum proportion of the renewables obligation for any period which may be discharged as mentioned in paragraph (a) or (b);

  (e) specify a maximum proportion of electricity supplied in any period evidence of which may be counted towards discharging the renewables obligation for a different period.").

  On Question, amendment agreed to.
  [Amendment No. 241 not moved.]
  Clause 62, as amended, agreed to.
  Clause 63 [Green certificates]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 242 and 243:
  Page 64, line 35, at end insert ("or to an electricity supplier").
  Page 64, line 37, after ("station") insert ("or, in the case of a certificate issued to an electricity supplier, a generating station specified in the certificate").
  The noble Lord said: These amendments were spoken to with Amendment No. 239. I beg to move them en bloc.
  On Question, amendments agreed to.
  Clause 63, as amended, agreed to.
  Clause 64 [Alternative way of discharging renewables obligation: payments]:
  Lord Jenkin of Roding Lord Jenkin of Roding moved Amendment No. 244:
  Page 65, line 6, at end insert—
  ("(2) The Secretary of State shall have regard both to the costs of production of differing sources of renewable electricity and to the implications of fulfilment of the renewables target when setting the differing sums which are to be regarded as discharging the renewables obligation under this section.").
  The noble Lord said: In view of what has been said already about a meeting, I can deal with this matter briefly. I listened with interest to what the Minister said on the previous group of amendments.
  Amendment No. 244 is intended to recognise, and therefore to ask the authorities to recognise, that renewables, certainly in the earlier years, will have many different price levels. The amendment suggests that a distinction should be drawn between what one might call the low cost and the higher cost renewables. There should not be a "one suit fits all" situation.
  In the light of what the Committee has just agreed to in a government amendment, that may already be taken into account. However, it is certainly something that needs to be discussed. Those who will have to operate the system and the "buy-out" provision—if I may describe it as that—would think it unfair that the same level of price should be fixed, whatever the gap between the normal energy price, as it were, and the higher price of the renewables.
  I also wish to give notice—I may write to the Minister on this matter—that a number of other issues have been raised with me by a rather splendid body called the Association of Electricity Producers, which represents some of the very small producers of electricity as well as some of the rather large producers. It has been involved in negotiations with officials in the DTI and has had some difficulty in getting its points effectively listened to. The association has some very interesting points as to how it could make this market work more flexibly and more effectively. I should like to draw the Minister's attention to those points as well. I beg to move.
  10.30 p.m.
  Lord McIntosh of Haringey: I am happy to add this to the agenda for our meeting. I do not fully understand the amendment. The fact that the Secretary of State was contemplating setting different buy-out prices for different technologies would imply,

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  of necessity, that he was having regard to the different costs of different technologies. By the same token, it is not conceivable that the Secretary of State would set different prices without regard to the implications for the level of renewables generation likely to be achieved as a result. But perhaps we can tease out this matter better off-line than in the Chamber.
  Lord Jenkin of Roding: With that assurance, I beg leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 245 and 246:
  Page 65, line 10, leave out ("and") and insert—
  ("( ) for different such sums in relation to different periods;").
  Page 65, line 14, at end insert ("and
  ( ) for any such sum to be adjusted from time to time for inflation by a method specified in the order (which may refer to a specified scale or index or to other specified data of any description, including such a scale or index or such data in a form not current when the order was made, but in a subsequent form attributable to revision or any other cause and taking effect afterwards).").
  The noble Lord said: I spoke to these amendments with Amendment No. 239. I beg to move.
  On Question, amendments agreed to.
  [Amendments Nos. 247 and 248 not moved.]
  Clause 64, as amended, agreed to.
  [Amendment No. 249 not moved.]
  Lord Ezra Lord Ezra moved Amendment No. 250:
  After Clause 65, insert the following new clause—

  OTHER PROVISIONS RELATING TO ORDERS UNDER SECTION 32 OF 1989 ACT
  (" . In making an order and other arrangements under sections 32, 32A, 32B and 32C of the 1989 Act the Secretary of State may also make provision for—

  (a) electricity generated by any form of combined heat and power stations;

  (b) heat or chilled water produced in association with electricity.").

  The noble Lord said: This amendment seeks to include combined heat and power in the obligation. The reason is that, first, the Government are fully committed to the concept of combined heat and power. I need only quote from the debate which took place yesterday in the other place to indicate what has already been contributed so far to the way in which energy has been saved and the environment improved by the combined use of heat and power. The Minister, Mr Chris Mullin, said:
  "The…combined heat and power capacity has already doubled in the past 10 years. It is now reducing energy costs by more than £500 million annually and cutting CO2 by approximately 5 million tonnes of carbon a year".
  In the course of his remarks he dealt with the question of how the Government will stimulate the further use of CHP under the Utilities Bill. He said:
  "I can confirm that the Government are taking powers under the Utilities Bill to set energy efficiency standards of performance obligations on energy suppliers to encourage and assist consumers to use less energy. For the avoidance of doubt, let me say that CHP is defined as a form of energy efficiency".
  So it comes into that part of the Bill. He went on to say,
  "The Government can also set specific CHP obligations, if they wish to do so. At present, we do not envisage that being necessary."—[Official Report, Commons, 20/6/00; cols. 317–19.]
  because of the other measures.
  The purpose of my amendment is to make absolutely sure that the Government have the power to include CHP in the obligation. According to Mr Mullin, that is the case. Perhaps that could be confirmed. I do not press for that to be done immediately but this is a reserve power to be used if the Government's targets for increasing the use of CHP up to the year 2010 are not achieved. It is against that background that I beg to move.
  Lord McIntosh of Haringey: Joined-up government requires that I should tell the Committee that what Chris Mullin, as a Minister in the Department of the Environment, Transport and the Regions, said yesterday in another place is endorsed by my remarks this evening on behalf of the Department of Trade and Industry. However, because I have not in fact read Chris Mullin's speech, I should prefer to be a little cautious here. I am sure that I will be able to confirm it, but it would be better if I gave that confirmation to the noble Lord, Lord Ezra, in writing rather than did so immediately.
  The amendment would provide that the renewables powers under Clause 61 could be used to support combined heat and power as well as renewable generation. The Government fully understand the importance of the contribution that CHP can make—here I may well repeat what was said by Chris Mullin—to our environmental and energy efficiency objectives. We have made provision for it.
  However, different approaches are required for CHP and renewables, reflecting their different market positions. CHP is not itself necessarily renewable. It is rather an established technology where what we need to ensure is that there is a level playing field in which it can compete. In the case of renewables, on the other hand, we are looking for the development of new technologies to deliver in the long term electricity which can be produced without damaging emissions of greenhouse gases. It is quite simply a matter of encouraging the new technologies which will protect the planet for our children. This is reflected in the structure for renewables provided for in Clauses 61 to 66.
  As I have already described when speaking to Amendments Nos. 192 and 193, other parts of the Bill provide the right framework for CHP by removing barriers to embedded generation. There are additional measures in the Bill which will assist CHP. Fossil-derived CHP can by no stretch of the imagination be

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  considered renewable but CHP which does use renewable sources may count towards the renewables obligation. Thus renewables in general may count towards our new energy efficiency targets under Clauses 69 and 98.
  All this amounts to a major programme of focused measures to assist CHP. But I do not think that it would be helpful to regard CHP and renewables as somehow interchangeable and deserving of identical treatment. Both are important. However, as I have said, our objectives in the two areas, though related, are distinct. That is why I ask the noble Lord, Lord Ezra, not to press this amendment.
  Lord Ezra: On the assumption that once the Minister has read the remarks made by his colleague yesterday in another place he will confirm that he agrees with what was said, I am willing to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Clause 66 [Supplementary]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 251 to 256:
  Page 65, line 28, at end insert—
  ("(za) providing for section 32 of the 1989 Act to have effect, before its substitution by section 61 of this Act, with modifications specified in the order (but if this power is exercised the modifications must include the omission of subsections (3) and (4) of section 32):").
  Page 65, line 29, leave out ("as that section had effect immediately") and insert ("made").
  Page 65, line 39, at end insert——
  ("( ) The power in subsection (1)(b) may be exercised both before the coming into force of section 61 and afterwards.").
  Page 66, line 19, at end insert—
  ("but while subsections (3) and (4) of section 32 of the 1989 Act remain in force an order may not provide for anything which would be an offence under section 32(3) to be treated as a relevant requirement").
  Page 66, line 25, leave out ("as saved by an order under this section") and insert ("made before the coming into force of section 61 of this Act").
  Page 66, line 30, at end insert—
  ("( ) An order under this section may make different provision for different areas.").
  On Question, amendments agreed to.
  Clause 66, as amended, agreed to.
  Clause 67 [Modification of licences: electricity trading arrangements]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 257:
  Page 66, line 35, leave out ("1989 Act") and insert ("Electricity Act 1989").
  The noble Lord said: In moving Amendment No. 257, I shall speak at the same time to Amendments Nos. 259 and 351. Once it has been spoken to, I shall respond also to Amendment No. 258 which is grouped with these amendments.
  The government amendments are technical amendments necessary to provide that Clause 67 commences at Royal Assent. Clause 67 gives the Secretary of State powers to change electricity licences
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  in order to implement the new electricity trading arrangements in England and Wales. Commencement at Royal Assent is essential so that the powers can he used in time to bring the new trading arrangements into effect in the autumn. The planned start date for the new arrangements is 21st November. I beg to move.
  Lord Kingsland: I shall speak to Amendment No. 258, which has a simple text. It replaces the expression,
  "where he considers it necessary or expedient",
  with the expression,
  "to the extent that it is necessary".
  Clause 67 is a very important clause. It gives the Secretary of State wide powers to modify licences. The circumstances in which he can do so are said to be,
  "where he considers it necessary or expedient".
  What exactly is meant by "expedient"? I can understand when the Secretary of State might think it necessary to make modifications. But, strictly speaking, we ought to read into the expression "necessary or expedient", "necessary or unnecessary but expedient". So we are told that there are circumstances where it is unnecessary to make modifications, but nevertheless it is expedient.
  As a good Conservative, I have always been brought up to believe that if it is not necessary to do something, it is necessary not to do it. So I do not recognise circumstances in which it is unnecessary to do something but nevertheless expedient. Would the Minister kindly like to speculate on what "expedient" might mean in the context of this important clause?
  Lord McIntosh of Haringey: My starting-point for responding to this amendment is, I hope, the common ground that we are both in favour of the new electricity trading arrangements. The noble Lord nods. That is very helpful. I am grateful for the way in which the noble Lord has spoken to his amendment.
  However, I do not see how the amendment is consistent with support for the reforms. Its aim is to narrow the scope of the powers under Clause 67. But the provision has been carefully drafted precisely to ensure that we have the scope to introduce the new arrangements without giving the Secretary of State overweening powers in other areas.
  What the amendment would do is put at risk the timely interpretation of the new arrangements by opening the possibility of new lines of legal attack on the use of the powers.
  Exercise of the powers is bound to be a matter of judgment, and the judgment has to be that of the Secretary of State. The clause as drafted makes that entirely clear. By removing the reference to the Secretary of State, the amendment would remove that clarity. By substituting "necessary" for "necessary or expedient", the amendment invites challenge as to what lies on which side of the boundary between the two adjectives.

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  I shall not take up the challenge of the noble Lord, Lord Kingsland, to define "expedient or necessary". The whole point about the provision as drafted is that it is for the Secretary of State to decide what is expedient and necessary, and he is subject in the end to the provisions of administrative law.
  I hope that the amendment does not reflect a fear that somehow the Government will decide to use the powers for some purpose other than introducing the new trading arrangements. That would be completely unfounded. In the cause of avoiding the possibility of legal challenge to the new trading arrangements, I hope that the noble Lord will not press his amendment.
  Lord Kingsland: Before the noble Lord sits down, I entirely accept that it is necessary to include a clause of this kind in the Bill for the purposes which the Minister has clearly outlined. However, that is not the issue. The issue is: to what extent should the Secretary of State's power be constrained on the face of the Bill?
  If one holds a licence, one is likely to have acquired it by spending a sum of money; and to have spent a great deal more to comply with its terms. If the Secretary of State suddenly says, "Even though you have acquired this licence, I now have to change the terms on which it was acquired", one is entitled to know as clearly as possible how widely he can cast his changes.
  My worry about "expedient" is that it is an expression that is almost not susceptible of judicial review. A licence is economically, if not in law, tantamount to an item of property, albeit constrained by a term of years.
  10.45 p.m.
  Lord McIntosh of Haringey: I do not think that that is the case. I oppose the amendment on the primary ground that it would remove the phrase,
  "where [the Secretary of State] considers it necessary".
  But I will think about the "necessary or expedient" issue, without any commitment, between now and Report.
  Lord Kingsland: I am much obliged to the Minister.
  On Question, amendment agreed to.
  [Amendment No. 258 not moved.]
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 259:
  Page 67, line 25, leave out ("commencement of this section"") and insert ("passing of the Utilities Act 2000."
  (2) This section shall come into force on the passing of this Act.").
  On Question, amendment agreed to.
  On Question, Whether Clause 67, as amended, shall stand part of the Bill?
  Lord Ezra: The clause gives the Secretary of State powers to make licence modifications relating to the
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  new electricity trading arrangements. The reason why my noble friend Lady Sharp of Guildford and I have indicated our intention to oppose the Question that Clause 67 stand part of the Bill is to draw attention to the serious problems which the smaller generators are likely to face, particularly involving renewables and combined heat and power, as a result of the proposed balancing and settlement code, which forms a crucial part of the new electricity trading arrangements.
  The present arrangements under the electricity pool provide a relatively benign environment for smaller companies. They place few demands on participants in terms of fulfilment of the existing levels of activity. For example, a wind generator expecting to produce a level of output that in the event it could not provide would not be penalised in the pool for non-delivery.
  However, NETA introduces an entirely different trading philosophy. In future participants would be expected to enter into prior contracts for the physical delivery of electricity, and they would be penalised to the extent that they could not produce all the electricity committed under their contract, or if they produced an excess amount. The operator would receive a low price for excesses—this is called the system sell price—and pay a high price to buy back shortfalls, known as the system buy price.
  Given that it is virtually impossible for, say, a wind farm to predict its output, it cannot safely contract in advance to sell it. It is therefore seriously exposed to the penalties under NETA. Larger companies, with their much larger scale of operations, can reduce these risks very substantially.
  The question is how, if at all, NETA's objective can be preserved for the bulk of operators, particularly the large ones, with some mitigation for the smaller ones, particularly those producing renewables and operating CHP, which cannot, by the very nature of their business, forecast accurately their production.
  I have written to the Minister about this, and have made a suggestion, which is that for specified generators, which would include those based on renewables and CHP, there would be a third price, to be known as the system average price—the average of the buy and the sell prices. It would not remove all the difficulties which smaller operators would face but it would reduce them substantially. I have indicated to the noble Lord how it might be done. The proposal would not involve an amendment to the Bill but would be part of the settlements code. I have provided the Minister with some wording and indicated where it might be inserted into the code. I should be glad to know whether the noble Lord is prepared to consider that proposition.
  Lord McIntosh of Haringey: I am most grateful to the noble Lord for writing to me with his proposal to amend the balancing and settlements code. I do not know whether Members of the Committee have seen that code; it is a terrifying document of incredible complexity about six or seven centimetres thick. The noble Lord has concerns about the effect of imbalance pricing on renewable and combined heat and power

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  generators; in particular, those with an unpredictable output. The Government are consulting on the code and will consider the noble Lord's proposal carefully in that context along with other responses.
  The consultation closes on 14th July and I am not in a position to give more than a preliminary reaction to the proposal. We are conscious of the concerns that have been raised, particularly in relation to unpredictable output. For that reason we have developed mechanisms for aggregation which will allow a licence-exempt generator to share the risk of imbalance with other generators, thereby reducing the overall risk to itself. We are confident that the mechanism is a practical one and that smaller generators will find it of significant benefit in minimising imbalance charges. We have consulted on raising the licence exemption threshold from 50 to 100 megawatts which will increase the number of generators for which the aggregation option is available.
  The Government will make an announcement on the results of the consultation. We are determined that the new trading arrangements should correct the distortions in the current market arrangements identified in the 1998 White Paper. A significant distortion is the failure of the market properly to reward flexible plant. The new arrangements will ensure that it is properly rewarded. I should note that that includes renewable and combined heat and power plant. But it must follow that plant that lacks flexibility or predictability will be less well rewarded. The mechanism for achieving that is precisely the imbalance arrangements targeted by the noble Lord's proposal. Therefore, there are difficulties about the noble Lord's proposal to which this is only a first reaction. The noble Lord's proposal will be considered, together with others, very carefully. If we have more to discuss with the noble Lord we shall certainly seek an opportunity to do so.
  Lord Ezra: I thank the noble Lord for his helpful response.
  Clause 67, as amended, agreed to.
  Lord Borrie Lord Borrie moved Amendment No. 260:
  After Clause 67, insert the following new clause—

  ARRANGEMENTS FOR SUPPLIERS OF LAST RESORT
  (" .—(1) In this section "last resort supplier" means a supplier required by or under that supplier's licence to supply electricity where circumstances have arisen which would entitle the Director to revoke or suspend the licence of another supplier otherwise than with the agreement of that other supplier.
  (2) The Secretary of State may by regulations make modifications of any enactment (including an enactment contained in this Act) for the purpose of implementing, or facilitating the operation of, arrangements relating to last resort suppliers.
  (3) The power of the Secretary of State to make regulations under this section shall he exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.
  (4) The power of the Secretary of State under subsection (2) may not be exercised after the end of the period of one year beginning with the commencement of that subsection.
  (5) After section 15A of the 1989 Act there is inserted—

  ARRANGEMENTS FOR SUPPLIERS OF LAST RESORT

    Licence modifications rehiring to arrangements for suppliers last resort.
    15B.—(1) In this section "last resort supplier" means a supplier required by or under that supplier's licence to supply electricity where circumstances have arisen which would entitle the Director to revoke or suspend the licence of another supplier otherwise than with the agreement of that other supplier.
    (2) The Secretary of State may, in accordance with this section, modify the conditions of a particular licence granted under section 6(1)(c) and 6(2) where he considers it necessary or expedient to do so for the purpose of implementing, or facilitating the operation of, arrangements relating to last resort suppliers.
    (3) The power to modify licence conditions under subsection (2) includes power to make incidental or consequential, or transitional, modifications.
    (4) Before making modifications under this section the Secretary of State shall consult the holder of any licence being modified and such other persons as he considers appropriate.
    (5) Any consultation undertaken by the Secretary of State before the commencement of this section shall he as effective, for the purposes of subsection (4), as if undertaken after; that commencement.
    (6) The Secretary of State shall publish any modifications under this section in such manner as he considers appropriate.
    (7) The power of the Secretary of State under this section may not he exercised after the end of the period of one year beginning with the commencement of this section."").
    The noble Lord said: We have already discussed today in Committee that from time to time, and inevitably under the more competitive conditions that now exist, a supplier may fail and cease to trade and his licence must be suspended or revoked. Without some kind of special provision there is a risk that customers will be left without the supply of a vital fuel. As far as concerns gas, the Gas Act 1986 provides adequately for such a situation by ensuring that another supplier, or supplier of last resort, is appointed to take on the old supplier's customers. Those customers are deemed by the regulator (as the Act puts it) to have a contract with the supplier of last resort.
    This very day in Committee the Government, through their amendments to Clause 31 and Schedule 4, have created a similar arrangement in the supply of electricity. However, there is a risk of failure of supplier before the relevant clauses of this Bill commence and the new licence arrangements come into force, which I believe—the Minister will correct me if I am wrong—will be the spring of 2001. With regard to gas customers, safeguards exist, but for a period there is uncertainty for electricity customers.
    In electricity, the present arrangements allow for the regulator to nominate a supplier of last resort, but they depend on customers taking the initiative to sign up for supply with the second supplier or supplier of last resort. If they do not do so, they can be disconnected and the supplier of last resort could have problems claiming his proper charges. Hence the amendment would enable the Secretary of State to create interim licence arrangements and obligations based on deemed contracts. That would assist in situations of failure by the original supplier before the new standard licence arrangements can take effect under the Bill. The Secretary of State would have power to modify licences to create more robust supplier of last resort arrangements.
    It is a modest amendment. It is time limited until new licence arrangements come into effect. I hope that the Government will look favourably upon it. I beg to move.
    Lord McIntosh of Haringey: I well understand the point the noble Lord makes: that the supplier of last resort arrangements which we have already been debating should be expedited ahead of the implementation of other licensing aspects of the Bill.
    We accept the importance of making arrangements for the appointment and financing of suppliers of last resort. That is why we have made provisions in the Bill—we discussed some of them today; the noble Lord referred to them—and draft standard licence conditions to replicate the arrangements which already exist in gas. As I am sure the noble Lord is aware from his position with Ofgem, we have consulted publicly on them.
    We have had full competition in electricity supply for more than a year. If there had been an urgent requirement for licence conditions to establish arrangements for a supplier of last resort, the Director-General for Electricity Supply would have been able to use his existing powers under Section 11 of the Electricity Act to modify electricity licences in an appropriate way.
    I accept that he could not have included a levy to recover the costs of the person appointed as supplier of last resort. But alternative arrangements could if necessary have been found to address that point pending passage of the Bill. As referred to in earlier discussion, the levy is a last resort of last resort of last resort.
    In any case, the Government do not believe that the amendment will make any significant practical difference. So far as I am aware, we are all agreed on what the supplier of last resort measures should be. We intend to establish these, along with the other standard conditions of licences, as soon as possible. I hope that the noble Lord will not press the amendment.
    Lord Borrie: I am grateful to the Minister. At this hour of the night I can do no more than read his remarks in Hansard and consider whether I need to pursue the matter; or whether, as he suggests, it is not essential, necessary or expedient to press it further. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 68 [Help for disadvantaged groups of electricity customers]:
    On Question, Whether Clause 68 shall stand part of the Bill?
    Lord Ezra: With debate on Clause 68 I should like to speak also to Clause 97. These two clauses deal with help for disadvantaged groups of electricity and gas consumers and therefore touch on the question of fuel poverty.
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    Fuel poverty affects some 4 million to 5 million households out of a total of 22 million. It is, therefore, a major problem. It arises from a combination of inadequate housing and low incomes. The Government have taken a number of measures to improve energy efficiency at the lower end of the housing spectrum. The new home energy efficiency scheme aims to insulate 250,000 houses a year.
    The energy efficiency standards and performance scheme, which is dealt with in the Bill, will add further to energy efficiency, especially in low income households. But, as stated in the latest report of the Royal Commission on Environmental Pollution, to which much reference has been made today, there is a pressing need for a further expansion of government programmes for raising energy efficiency and increasing warmth in low income homes. At the present rate, it would take some 20 years to deal with the problem, assuming that it gets no larger. We need to have an objective of dealing with the problem in not more than five years.
    While much needed home energy improvement has been carried out, the low income aspect of fuel poverty also needs to be dealt with. All pensioner households are now entitled to £150 fuel payment each winter. While that is helpful, something more fundamental is required. At Second Reading I referred to the law recently introduced in France to provide disadvantaged consumers with specially low-priced fuel. I was advised by the Minister that that was not possible in Britain.
    However, I believe that there is another way of achieving this result. TXU, which was formerly Eastern Electricity, has produced an imaginative scheme for assisting pensioners and persons on income support. This is known as the "Staywarm" scheme and has been piloted in the Barnsley area, where it has been estimated that some 300,000 people are in receipt of income support.
    The basis of the scheme is to guarantee to those who sign up gas and electricity at the lowest price in the area. An estimate would be made of their likely annual requirements based on the size of the house and the numbers in the family. A weekly payment would be calculated and would be paid irrespective of the amount of fuel actually used. Thus, if there were a really hard winter there would be no need for these low income households to deprive themselves of warmth. They could use as much as was necessary to keep them warm and pay no more for it.
    TXU estimates that such a scheme could save users approximately £120 on the typical energy cost of £500 a year and there would be a guarantee of warmth whatever the weather. They consider that they can achieve this desirable result through reducing the debt risk as a result of regular payments.
    At a meeting which I had with them, they advised me that the prices charged under the scheme could be still further reduced if the DSS could be persuaded to deduct the weekly payment from benefit and transmit it to the company. That would eliminate all risk of bad

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    debt and substantially reduce the costs of the operation, generating savings which TXU would be ready to pass straight on to the user.
    It seems to me that this is a very imaginative scheme which needs to be encouraged. There is a way in which the DSS, without adding any government expenditure, could help. TXU realises that other supply companies would want to follow the same scheme in other parts of the country and it is quite prepared to accept the competition. Therefore, I suggest that the scheme should receive serious consideration in order to overcome the problem of households on low incomes freezing in winter.
    11 p.m.
    Lord McIntosh of Haringey: Once again, the noble Lord, Lord Ezra, has approached the Committee stage in a constructive way. He has expressed general support for Clause 68 and therefore I shall not embark on a general defence of it. The noble Lord advocated a particular project, the TXU "Staywarm" tariff and made a suggestion about it and it is that to which I shall respond.
    It is correct that it is an innovative approach both to energy retailing and to providing assistance to the fuel poor with their energy costs by offering them a very low tariff. The pilot of the "Staywarm" scheme was launched on 17th May by Helen Liddell, the Minister for Energy and Competitiveness in Europe, and therefore our involvement with it is well established.
    Because the noble Lord has done so, I shall not set out the details of the scheme, except in so far as the payment is concerned. Ideally, customers will pay by direct debit but a weekly or fortnightly cash facility will be available via post offices. The pilot, which is taking place in Yorkshire in an area between Leeds and Sheffield, is intended to find out what are the best methods for attracting customers.
    The noble Lord, Lord Ezra, now suggests that there should be direct payment by the DSS in developing the new scheme. The problem which we have not resolved at present is that that would involve considerable manual processing by the Department of Social Security. There is a DSS scheme called Fuel Direct, which presently is used as a last resort for benefit claimants who are in need of protection against disconnection or court action. It is available only to people who receive income support and jobseeker's allowance (income-based).
    Fuel Direct is a manual addition to the benefits payments system. If it, or direct payment to TXU Staywarm, were to become a standard feature, it would involve substantial costs to the DSS, particularly in new computer systems. The DSS would also be obliged to make the facility available to others. Clearly, it could not be for TXU's exclusive use.
    Staywarm offers assistance to a wide range of low-income households, many of whom are on benefits which are not paid by the Benefits Agency and would not be included in the Fuel Direct payment arrangements. Ofgem has a specific working group as part of its follow-up to the Social Action Plan whose
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    remit is to consider whether and how Fuel Direct might be simplified and extended. That work will feed into the ministerial group on fuel poverty, which includes a DSS Minister.
    I suggest that the additional evidence given by the noble Lord, Lord Ezra, in his suggestions should be fed into that ministerial group. I shall undertake for that to be done in the hope that the difficulties that I have outlined can be overcome at some point in the future.
    Lord Ezra: I thank the noble Lord for his positive response that my suggestion will be taken forward. With that, I beg leave to withdraw the Motion.
    Clause 68 agreed to.
    Clause 97 [Help for disadvantaged groups of gas customers]:
    [Amendments Nos. 261 and 262 not moved.]
    Clause 97 agreed to.
    Clause 69 [Energy efficiency requirements for electricity distributors and suppliers]:
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 263 and 264:
    Page 69, line 20, leave out ("specified in or determined") and insert ("to be determined by the Authority").
    Page 69, line 28, leave out from beginning to ("must") in line 29 and insert ("Where the Secretary of State specifies in an order under this section an overall energy efficiency target in relation to electricity distributors and electricity suppliers on whom obligations are imposed under the order, the Authority shall determine energy efficiency targets under the order in the manner it considers best calculated to result in the achievement of the overall energy efficiency target so specified.
    (3A) The energy efficiency targets determined by the Authority for the purposes of an order under this section").
    On Question, amendments agreed to.
    Clause 69, as amended, agreed to.
    Clause 98 [Energy efficiency requirements for gas transporters and suppliers]:
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 265 and 266:
    Page 103, line 21, leave out ("specified in or determined") and insert ("to be determined by the Authority").
    Page 103, line 29, leave out from beginning to ("must") in line 30 and insert ("Where the Secretary of State specifies in an order under this section an overall energy efficiency target in relation to gas transporters and gas suppliers on whom obligations are imposed under the order, the Authority shall determine energy efficiency targets under the order in the manner it considers best calculated to result in the achievement of the overall energy efficiency target so specified.
    (3A) The energy efficiency targets determined by the Authority for the purposes of an order under this section").
    On Question, amendments agreed to.
    Clause 98, as amended, agreed to.
    Clauses 70 and 71 agreed to.
    Clause 72 [Maximum prices for reselling electricity]:
    [Amendments Nos. 266A and 266B not moved.]
    Clause 72 agreed to.
    [Amendments Nos. 267 and 267A not moved.]
    Clause 101 agreed to.
    [Amendment No. 268 not moved.]
    Clause 75 [Gas transporters]:
    [Amendments Nos. 269 to 273 not moved.]
    Clause 75 agreed to.
    Clause 76 [Restriction on use of certain pipe-lines for providing a supply of gas]:
    Baroness Buscombe Baroness Buscombe moved Amendment No. 274:
    Page 74, line 34, at end insert ("having regard to any guidelines drawn up by the Authority from time to time in consultation with gas transporters and to the provisions of section 7(8)(b)").
    The noble Baroness said: The aim of Amendments Nos. 274 and 275 is to clarify the provisions of Section 10 of the Gas Act 1986, which applies to the laying of pipes by owners or occupiers of premises. That area of the gas connections market has become known in the industry as the self-lay market, providing consumers with an alternative to the gas transporters supplying and laying the pipes. Gas transporters are required to connect such pipes to their system, provided that they are satisfied that the pipe laid is fit for the purpose.
    Section 10(6) of the Gas Act 1986 provides a swift transfer mechanism for the ownership of the pipe and rights and liabilities relating to it by vesting the pipe in the transporter at the time of connection. That reduces the costs involved in otherwise transferring legal ownership.
    In many cases, the owner or occupier will not lay the pipe himself, but will engage a self-lay contractor. The aim of the amendments is to make it clear that the vesting provisions apply equally to a pipe laid by a self-lay contractor on behalf of the owner or occupier. I beg to move.
    Lord McIntosh of Haringey: I am grateful to the noble Baroness, Lady Buscombe, for restricting my speaking notes on this group, but I should say a word about the purpose of Clauses 75, 76 and 77. I shall try to do so without referring to the amendments that have not been moved.
    The provisions will end the geographical exclusivity of gas transportation licences, which was an important, if technical policy. I shall explain geographical exclusivity and its effects in a moment, but first I shall summarise the Government's two-fold motivation for the policy: to reduce barriers to entry, thus increasing competition and driving down prices to the benefit of consumers; and to assist with compliance with the European Union gas directive.
    Public gas transporter—PGT—licences are currently geographically exclusive. Under Section 7(2)(a) of the Gas Act 1986, any given area may be within the authorised area of only one PGT and only that PGT may convey gas through pipes to premises in that area. In other words, we have a series of local monopolies. The main purpose of Clause 75, which has been agreed to, is to end geographical exclusivity by removing the requirement that PGT licences may not include areas that are specified in the licences of other PGTs.
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    It is no surprise that transporters object to that policy. It will increase competition for them and we hope that it will reduce the prices they can charge. Incumbent monopolies do not like that sort of thing but the Government want consumers to benefit from increased competition.
    Amendments Nos. 274 and 275 seek to amend Clause 76 which concerns the transitional issue of how to deal with pipes laid by transporters outside their authorised areas in the past. At present, gas transporters may have other transporters' pipes passing through their authorised areas in order to get gas to the other side. Such "pass-through" pipes cannot currently be used by their owners to give a supply of gas to premises.
    Now that Clause 75 will end exclusivity of authorised areas, the pass-through pipe could conceivably become a threat to the incumbent transporter. We feel that this could be unfair. Clause 76 therefore provides that the consent of the first transporter is required if a pass-through pipe which was built before the abolition of geographical exclusivity is to be used for giving a supply. If the first transporter refuses consent or fails to give it, the authority may intervene and override that refusal.
    As a general rule, we are trying to place broad duties on the authority but then not be too prescriptive about how it carries them out. Therefore we have not put on the face of the Bill detailed considerations about when to override a refusal to give consent. Amendment No. 274 would change that, reverting to the highly specific tests currently found in subsection (8)(b) of Section 7 of the Gas Act to which the noble Baroness, Lady Buscombe, referred. The clause as drafted is flexible enough to allow the authority to respond to changing circumstances. If the amendment were to be accepted, that flexibility would disappear.
    Amendment No. 75 relates to Clause 77. That deals with some of the consequences of the abolition of geographical exclusivity. It covers the procedures to be followed when one transporter wishes to lay pipes within 23 metres of another transporter's pipes and inserts a new version of what is known as the 23-metre rule into Section 22A of the Gas Act.
    Clause 77 provides important safeguards to deal with the consequences of the removal of geographical exclusivity, which Amendment No. 275 would remove, leaving in place the current provisions of Section 7, which are inappropriate to deal with overlapping authorised areas. I am afraid that the Government cannot accept those amendments.
    11.15 p.m.
    Baroness Buscombe: I thank the Minister for his response. There is no question that this area is causing great concern in the industry. I shall read carefully in Hansard what the noble Lord said and we may consider returning to this on Report. On that basis, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Clause 76 agreed to.
    Clause 77 [Construction of pipe-lines by gas transporters]:
    [Amendment No. 275 not moved.]
    Clause 77 agreed to.
    Clause 78 agreed to.
    Clause 79 [Gas transporters' duty to make a connection]:
    Baroness Buscombe Baroness Buscombe moved Amendment No. 276:
    Page 76, line 8, at end insert—
    ("( )In subsection (1)(b) after "premises" there is inserted "or by a person other than the transporter acting on behalf of the owner or occupier".").
    The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 277 to 280. The amendments seek to clarify certain consequences of subsections (4) and (5) of Clause 79 which were inserted as amendments in Committee in another place.
    Once the pipe is connected, the gas transporter will take over all responsibilities for the maintenance and subsequent renewal of the pipe. It will also take over responsibility, subject to any indemnity it may reasonably require, for any remedial reinstatement of the highway, should that be needed.
    The amendments do not seek to alter that situation. However, gas transporters enjoy certain powers which are not available to private individuals when excavating streets. In particular, planning permission to lay the pipe is deemed to be granted and gas transporters do not need to obtain individual streetwork licences to break open the street, lay the pipe and retain it in the street.
    These amendments seek to clarify that, once the transporters have connected the pipe, any issues over whether planning permission or a street works licence should have been obtained or complied with by the owner or occupier will cease to affect the transporter, but will not affect the ability of the planning authority or the highway authority to take action against the owner or occupier.
    This provision avoids the need for long-term indemnities from the owner or occupier or contractors which would otherwise inhibit competition in the laying of surface pipes. I beg to move.
    Lord McIntosh of Haringey: Am I right in thinking that the noble Baroness was speaking only to Amendments Nos. 276 and 280 or was she speaking to the whole group—the ones in between?
    Baroness Boscombe: I apologise to the Minister. I was speaking to Amendments Nos. 276, 277, 278, 279 and 280.
    Lord McIntosh of Haringey: I am grateful. Amendments Nos. 276, 278 and 279 all cover the same ground, and I am afraid that they are all completely unnecessary. The current drafting of the Gas Act differentiates between pipes laid by a transporter and pipes laid by the owner or occupier of premises. It would be absurd to interpret the existing words as
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    meaning that the householder has physically to dig the hole and lay the pipes with his own hands. That would be to deny the vast majority of people—that is to say those who are not gas pipeline experts—the opportunity to exercise the right in subsection (1)(b) of section 10 of the Gas Act to have a pipe laid by them connected to a transporter's main. And of course making this obvious interpretation explicit here would call into doubt any other instances which were not amended in the same way.
    Amendment No. 277 would be ineffectual. In summary, the amendment means that anyone who asks to be connected to the gas main could be asked by the transportation company for an indemnity in case the transporter lays the connecting pipe badly and it leaks, leading to an explosion which destroys the building next door. It is obvious that such a requirement would not be reasonable; indeed, nobody could reasonably demand an indemnity in respect of work he carries out himself. The amendment makes no substantive change to the clause.
    In order to explain why that is the case, I have to explain the existing provision in Clause 79. At present there are two ways for someone to get his premises connected to a gas main. The first is to request a gas transporter to lay appropriate pipes and make the connection, which transporters are required to do by subsection (2)(a) of section 10 of the Gas Act, if the premises are within 23 metres of an existing main.
    The second is for the owner of the premises to arrange to have pipes laid and then require the transporter simply to connect these new pipes to the main. These pipes are known as "self-lay" pipes, and the transporter's duty to connect them is covered by subsection (2)(b). Currently, once these pipes are connected to the gas main, all rights in them vest in the transporter. In the past, certain self-lay operators have not properly reinstated the ground they have dug up in order to lay the pipe. Some transporters have refused to repair or maintain the reinstatement, as they say that only the rights in the pipe are vested in them, and not the liabilities.
    We felt that local authorities and similar bodies should not be in any doubt as to which company to chase up in circumstances where the pipe has been laid badly. Licensed gas transporters have to have systems in place for dealing with repairs to their pipes, and so it is simpler for local authorities to go straight to the transporter and not to be bounced between various people. So subsections (4) and (5) of Clause 79 have the effect that liabilities as well as rights vest in the transporter on connection of self-lay pipes.
    However, it is very unfair to transporters, simply to load them up with all sorts of liabilities which are beyond their control; so subsection (2) of Clause 79 inserts a new subsection (3A) into Section 10 of the Gas Act, allowing transporters to insist that self-lay operators sign a contract containing reasonable indemnities in respect of any faults connected with the laying of the pipe.
    So now local authorities will know who to approach—namely, the transporter—and the transporter will be protected by contracts; and if the

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    self-lay operator refuses to accept reasonable terms, the transporter can simply refuse to connect the new pipes to the mains. The gas and electricity markets authority will determine any disputes as to what is reasonable.
    I turn to Amendment No. 280. We want local authorities not to have to chase between different people. It is therefore our policy that the transporter takes on the liabilities with reasonable indemnities. The situation should be no different when a self-lay operator fails to obtain, say, a streetworks licence. The local authority should be able to go straight to the transporter, which should have protected itself with appropriate due diligence and contractual indemnities.
    A failure by a self-lay operator to obtain or comply with permissions not required by transporters would have no impact on the transporter in respect of any criminal liability, which would remain with the self-layer. Any civil liabilities would be covered by indemnities. Since transporters could maintain and operate the pipes under their statutory powers, no streetworks licence would be necessary for them and they would not acquire a duty to pay ongoing fees for such a licence.
    The amendment is too detailed. It relates to an issue which arises rarely, if at all, and for which a perfectly sensible solution already exists in the ability of transporters to impose reasonable terms indemnifying themselves.
    Baroness Buscombe: I thank the Minister for his response to the amendments. Obviously, I am disappointed. However, I shall read carefully in Hansard what he has said. On that basis, I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 277 to 280 not moved.]
    Clause 79 agreed to.
    Clauses 99 and 100 agreed to.
    Clause 102 agreed to.
    Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 281:
    After Clause 102, insert the following new clause—

  GENERAL RESTRICTIONS ON DISCLOSURE OF INFORMATION
  (".—(1) Information which—

  (a) has been obtained under or by virtue of the provisions of this Act. Part I of the 1986 Act or Part I of the 1989 Act; and

  (b) relates to the affairs of any individual or to any particular business,

  shall not be disclosed during the lifetime of the individual or so long as the business continues to be carried on, except as provided below.
  (2) Subsection (1) does not apply to a disclosure made with the consent of the individual or the person for the time being carrying on the business.
  (3) Subsection (1) does not apply to a disclosure if—

  (a) it is made for the purpose of facilitating the performance of any functions of the Secretary of State, the Authority, the Council or the Competition Commission under the 1986 Act, the 1989 Act or this Act;

  (b) it is required by a notice under section 38(1A) of the 1986 Act or section 28(2A) of the 1989 Act;

  (c) it is made by a licence holder and is required to be made by a condition of his licence: or

  (d) it is made by one licence holder to another and is required by that other licence holder for purposes connected with the carrying on of relevant activities.

  (4) Subsection (1) does not apply to any disclosure of information made—

  (a) for the purpose of facilitating the performance by a person or body mentioned in subsection (5) of any function under an Act or instrument specified in subsection (6);

  (b) for the purpose of facilitating the performance by the Comptroller and Auditor General, the Health and Safety Commission or the Health and Safety Executive of any of his or its functions;

  (c) for the purpose of facilitating the exercise by the Secretary of State of any power conferred by the Financial Services Act 1986 or by the enactments relating to companies, insurance companies or insolvency;

  (d) for the purpose of facilitating the performance of the functions of an inspector appointed under the enactments relating to companies;

  (e) for the purpose of facilitating the performance by an official receiver of his functions under the enactments relating to insolvency or by a recognised professional body for the purposes of section 391 of the Insolvency Act 1986 of its functions as such a body;

  (f) in connection with the investigation of any criminal offence or for the purposes of any criminal proceedings:

  (g) for the purposes of any civil proceedings brought under or by virtue of the 1986 Act, the 1989 Act, this Act or any Act or instrument specified in subsection (6) below; or

  (h) in pursuance of a Community obligation.

  (5) The persons and bodies specified for the purposes of subsection (4)(a) are—

  (a) a Minister of the Crown;

  (b) the Competition Commission:

  (c) the Director General of Fair Trading;

  (d) the Director General of Telecommunications;

  (e) the Director General of Water Services;

  (f) the Director General of Electricity Supply for Northern Ireland;

  (g) the Director General of Gas for Northern Ireland;

  (h) the Rail Regulator;

  (i) the Civil Aviation Authority:

  (j) the Insolvency Practitioners Tribunal;

  (k) the Coal Authority: and

  (l) a local weights and measures authority in Great Britain.

  (6) The Acts and instruments specified for the purposes of subsection (4)(a) and (g) are—

  (a) the Trade Descriptions Act 1968;

  (b) the Fair Trading Act 1973;

  (c) the Consumer Credit Act 1974;

  (d) the Estate Agents Act 1979;

  (e) the Competition Act 1980;

  (f) the National Audit Act 1983;

  (g) the Telecommunications Act 1984;

  (h) the Airports Act 1986:

  399

  (i) the Insolvency Act 1986;

  (j) the Consumer Protection Act 1987;

  (k) the Control of Misleading Advertisements Regulations 1988;

  (l) the Water Act 1989, the Water Industry Act 1991 or any of the other consolidation Acts (within the meaning of section 206 of the Water Industry Act 1991);

  (m) the Electricity (Northern Ireland) Order 1992

  (n) the Railways Act 1993;

  (o) the Coal Industry Act 1994;

  (p) the Gas (Northern Ireland) Order 1996;

  (q) the Competition Act 1998.

  (7) The Secretary of State may by order modify subsection (3), (4),(5) or (6).
  (8) Nothing in subsection (1) above is to be construed either as limiting the matters which may be—

  (a) published under section 33DA or 35 of the 1986 Act or section 42AA or 48 of the 1989 Act;

  (b) made public by the Authority as part of a notice under section 26; or

  (c) included in, or made public as part of, a report of the Authority, the Council or the Competition Commission under any provision of this Act, Part I of the 1986 Act or Part I of the 1989 Act;

  or as applying to information which has been so published or has been made public as part of such a notice or such a report.
  (9) A person who discloses any information in contravention of this section is guilty of an offence and liable—

  (a) on summary conviction, to a fine not exceeding the statutory maximum;

  (b) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

  (10) In this section—
  "licence holder" means the holder of a gas licence or an electricity licence; and
  "relevant activities", in relation to a licence holder means activities he is authorised by his licence to carry on (including, in the case of a gas transporter, the activities mentioned in section 7(1)(b) and (c) of the 1986 Act).
  (11) Information obtained by the Authority in the exercise of functions which are exercisable concurrently with the Director General of Fair Trading under Part I of the Competition Act 1998 is subject to sections 55 and 56 of that Act (disclosure) and not to subsections (1) to (10) of this section.
  (12) The power to make an order under subsection (7) is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
  On Question, amendment agreed to.
  Clause 3 [Transfer to Authority and Council of functions, property etc.]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 282 and 283:
  Page 2, line 3, leave out from ("Directors")") to ("are") in line 4.
  Page 2, line 23, at end insert—
  ("( ) Subsection (6) has effect in relation to property, rights or liabilities to which it applies in spite of any provision (of whatever nature) which would prevent or restrict the transfer of the property, rights or liabilities otherwise than by that subsection.").
  On Question, amendments agreed to.
  Clause 3, as amended, agreed to.
  Schedule 3 [Further provision about transfers of functions, property etc.]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments No. 284 to 286:
  Page 114, line 44, leave out ("or the Council").
  Page 115, line 35, leave out ("instruments, contracts and legal proceedings") and insert ("any document").
  Page 115, line 45, leave out ("IX") and insert ("XI").
  On Question, amendments agreed to.
  Schedule 3, as amended, agreed to.
  Clause 103 [Interpretation]:
  [Amendment No. 287 not moved.]
  Clause 103 agreed to.
  11.30 p.m.
  Clauses 104 and 105 agreed to.
  Schedule 6 [Minor and consequential amendments]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 288 to 312:
  Page 120, line 32, at end insert ("and for "public gas transporters" in each place where it appears, there is substituted "gas transporters"").
  Page 121, leave out line 1.
  Page 121, line 9, after ("In") insert ("section 19(6)(a), paragraph 5(2) of Schedule 2B and").
  Page 121, line 27, at end insert—
  (" . In section 24(8) (interpretation of sections 24 to 26 of the 1986 Act) for "and 26 below" there is substituted ", 26 and 26A".").
  Page 121, line 27, at end insert—
  (". In section 27A(1) (determination of certain disputes) for "domestic customer" there is inserted "customer of a person authorised by a licence or exemption to supply gas".").
  Page 121, line 38, leave out ("24 of the Utilities Act 2000".") and insert ("(Sections 24 to 26: supplementary)(4)(b) of the Utilities Act 2000 (order to comply with a direction under section 24 of that Act)".").
  Page 121, line 44, at end insert ("as in the Authority's opinion ought to be achieved in individual cases").
  Page 122, leave out lines 9 and 10 and insert—
  ("15. In section 38 (power to require information etc.)—

  (a) in subsection (1A) for "4 or 4A above" there is substituted "4AA, 4AB or 4A": and

  (b) in subsection (3) after "document" insert "or record".").

  Page 122. leave out lines 11 and 12.
  Page 122, line 12, at end insert—
  (" . In section 46(3), for "his authorised area" there is substituted "any authorised area of his.").
  Page 122, line 25, after ("inserted") insert (""23,").
  Page 122, line 32, at end insert—
  (" . In Schedule 2B (the gas code), in paragraph 8—

  (a) sub-paragraphs (4), (5) and (6) shall be omitted:

  (b) in sub-paragraph (8) the words from "but this" to the end shall cease to have effect;

  (c) in sub-paragraph (11)—

  (i) for the words from "a revision" to "such an election" there is substituted "or a revision of such a scheme"; and

  (ii) in paragraphs (a) and (b), for ", revision, election or withdrawal" there is substituted "or revision".").

  Page 122, leave out lines 38 to 40 and insert—
  ("23.—(1) Section 23 (determination of disputes) is amended as follows.
  (2) For subsections (1) to (2) there is substituted—
  "(1) This section applies (in addition to any disputes to which it applies by virtue of any other provision of this Act) to any dispute arising under sections 16 to 21 between an electricity distributor and a person requiring a connection.
  (1A) A dispute to which this section applies—

  (a) may be referred to the Authority by either party, or with the agreement of either party, by the Council; and

  (b) on such a reference, shall be determined by order made either by the Authority or, if the Authority thinks fit, by an arbitrator (or in Scotland an arbiter) appointed by the Authority.

  (1B) The practice and procedure to be followed in connection with any such determination shall be such as the Authority may consider appropriate.
  (1C) No dispute arising under sections 16 to 21 which relates to the making of a connection between any premises and a distribution system may be referred to the Authority after the end of the period of 12 months beginning with the time when the connection is made.
  (2) Where a dispute arising under sections 16 to 21 between an electricity distributor and a person requiring a connection falls to be determined under this section, the Authority may give directions as to the circumstances in which, and the terms on which, the distributor is to make or (as the case may be) to maintain a connection pending the determination of the dispute."
  (3) After subsection (4) there is inserted—
  "(4A) A person making an order under this section shall include in the order his reasons for reaching his decision with respect to the dispute.").
  (4) After subsection (6) there is inserted—
  "(7) Section 16(4)(a) does not apply to the references in this section to making a connection."").
  Page 123, line 2, leave out ("24 of the Utilities Act 2000".") and insert ("(Sections 24 to 26: supplementary)(4)(b) of the Utilities Act 2000 (order to comply with a direction under section 24 of that Act)".").
  Page 123, line 3, at end insert—
  (" .—(1) Section 28 (power to require information etc.) is amended as follows.
  (2) After subsection (2) there is inserted—
  "(2A) Where a licence has been or is to be revoked or suspended, or has expired or is about to expire by effluxion of time, and it appears to the Authority, having regard to the duties imposed by section 3A, 3B or 3C, to be requisite or expedient to do so for any purpose connected with the revocation, suspension or expiry, the Authority may, with the consent of the Secretary of State, by notice in writing—

  (a) require the licence holder to produce, at a time and place specified in the notice, to the Authority, or to any person so specified, any records which are specified or described in the notice and are in the licence holder's custody or under his control; or

  (b) require the licence holder to furnish to the Authority, or to any person specified in the notice, such information as may be specified or described in the notice, and specify the time, the manner and the form in which any such information is to be furnished.".

  (3) In subsection (3), after "documents" there is inserted "or records"
  (4) In subsection (4), after "subsection (2)" there is inserted "or (2A)".
  (5) In subsection (5)—

  (a) after "document" there is inserted "or record";

  (b) after "subsection (2)" there is inserted "or (2A)".

  (6) In subsection (6), after "subsection (2)" there is inserted "or (2A)".").
  Page 123, line 8, leave out ("paragraphs (a) and (c)") and insert ("paragraph (a)").
  Page 123, line 10, after ("transmission";") insert—
  ("( ) in paragraph (c) for "supply" there is substituted "distribute";").
  Page 123, line 33, at end insert ("as in the Authority's opinion ought to be achieved in individual cases."").
  Page 123, line 38, at end insert—
  ("( ) in subsection (2)(a) and (c) for "public electricity suppliers" there is substituted "electricity suppliers";
  ( ) in subsections (3) and (4) for "a public electricity supplier" there is substituted "an electricity supplier.").
  Page 123, line 44, at end insert—
  ("( ) in subsection (2) for "public electricity suppliers" there is substituted "electricity suppliers";
  ( ) in subsection (3) for "public electricity supplier" there is substituted "electricity supplier".").
  Page 123, line 44, at end insert—
  (" . In section 42 (information with respect to levels of performance)—

  (a) in subsection (1) for "public electricity suppliers" there is substituted "electricity suppliers";

  (b) in subsection (2) for "public electricity supplier" there is substituted "electricity supplier";

  (c) in subsection (3) for "a public electricity supplier" there is substituted "an electricity supplier".").

  Page 123, leave out lines 47 and 48.
  Page 124, leave out line 2.
  Page 124, line 9, at end insert—
  ("( ) In the definition of "electrical plant" after "transmission" there is inserted "distribution".").
  Page 124, line 22, at end insert—
  ("( ) The definition of "private electricity supplier", the definition of "public electricity supplier" and the definition of "tariff customer" shall be omitted.").
  The noble Lord said: These amendments were spoken to earlier. With the leave of the Committee, I shall move them en bloc. I beg to move.
  On Question, amendments agreed to.
  Schedule 6, as amended, agreed to.
  Schedule 7 [Transitional provisions and savings]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 313:
  Page 126, line 3, leave out Part I and insert—

  PART I SEPARATION OF ELECTRICITY SUPPLY AND DISTRIBUTION
  Application and purpose of Part I
  1.—(1) This paragraph applies to any holder of an existing supply licence under section 6(1)(c) or (2) of the 1989 Act whose activities, immediately before the passing of this Act, include both—

  (a) the supply of electricity to premises; and

  (b) the distribution of electricity for the purpose of giving a supply to premises or enabling a supply to be so given.

  (2) This Part of this Schedule has effect for the purpose of enabling the existing supply licence held by such a licence holder to have effect on and after the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force as if it were a distribution licence under section 6(1)(c) and a supply licence under section 6(1)(d), each granted to different persons.
  (3) Those persons must be—

  (a) the licence holder and one of his associates nominated for the purpose of holding whichever of the licences mentioned in sub-paragraph (2) is not to be retained by the licence holder; or

  (b) any two associates of the licence holder nominated by him for the purpose of holding those licences.

  (4) If immediately before the passing of this Act a person to whom this paragraph applies holds two or more existing supply licences, sub-paragraph (2) applies in relation to such one or more of those licences as the licence holder may, with the approval of the Secretary of State, nominate.
  (5) If immediately before the passing of this Act a person to whom this paragraph applies—

  (a) generates electricity in pursuance of an existing generation licence; and

  (b) transmits electricity in pursuance of an existing transmission licence,

  the provisions of this Part of this Schedule also have effect, if that person makes either or both of the nominations mentioned in sub-paragraph (6), for either or both of the purposes mentioned in sub-paragraph (6)(a) and (6)(b).
  (6) Those purposes are securing that on and after the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force—

  (a) the licence holder's existing generation licence has effect as if it were a generation licence granted to an associate of his nominated by him for the purpose; and

  (b) the licence holder's existing transmission licence has effect as if it were a transmission licence granted to an associate of his nominated by him for the purpose.

  (7) An associate nominated for the purposes of sub-paragraph (6)(a) may not be nominated for the purposes of sub-paragraph (3)(a), (3)(b) or (6)(b).
  Nominations and transfer schemes
  2.—(1) Before such date as the Secretary of State may direct, a person to whom paragraph 1 applies may (subject to paragraph 3)—

  (a) make a nomination for the purposes of paragraph (a) of paragraph 1(3) and make a scheme for the division of all his property, rights and liabilities between himself and the associate nominated under that paragraph; or

  (b) make two nominations for the purposes of paragraph (b) of paragraph 1(3) and make a scheme for the division of all his property, rights and liabilities between himself and the associates so nominated;

  and in this Part of this Schedule the person who makes such a scheme is referred to as "the supplier".
  (2) A scheme under sub-paragraph (1) (referred to in this Part of this Schedule as "a transfer scheme") may—

  (a) define the property, rights and liabilities to be allocated to a nominated associate—

  (i) by specifying or describing the property, rights and liabilities in question;

  (ii) by referring to all (or all but as much as may be excepted) of the property, rights and liabilities comprised in a specified part of the supplier's undertaking; or

  (iii) partly in the one way and partly in the other;

  (b) provide that any rights or liabilities specified or described in the scheme shall be enforceable either by or against any one or more of the persons between whom the supplier's property, rights and liabilities are being divided;

  (c) impose on any of those persons an obligation to enter into such written agreements with, or execute such other instruments in favour of the other such person or, where sub-paragraph (1)(b) applies, either or both of the other such persons as may be specified in the scheme; and

  404

  (d) make such supplemental, incidental and consequential provision as the supplier considers appropriate.

  (3) Without prejudice to the generality of sub-paragraph (2)(d), a transfer scheme may, in relation to transfers or transactions effected in pursuance of the scheme, make provision, either generally or for specified purposes—

  (a) for the transfers or transactions to be regarded as taking place in a specified order; and

  (b) for the nominated associate or, where sub-paragraph (1)(b) applies, either or both of the nominated associates to be treated as the same person in law as the supplier.

  (4) An obligation imposed by a provision included in a transfer scheme by virtue of sub-paragraph (2)(c) shall he enforceable by civil proceedings by the person or persons to whom it is owed for an injunction or for interdict or for any other appropriate relief or remedy.
  (5) A transaction of any description which is effected in pursuance of a provision included in a transfer scheme by virtue of sub-paragraph (2)(c)—

  (a) shall have effect subject to any statutory requirements for transactions of that description to be registered in any statutory register; but

  (b) subject to that, shall be binding on all other persons, notwithstanding that it would, apart from this sub-paragraph, have required the consent or concurrence of any other person.

  In this sub-paragraph "statutory requirements" means requirements imposed by or under any Act or any Act of the Scottish Parliament.
  (6) Where a lease of any land is granted in pursuance of a provision included in a transfer scheme by virtue of sub-paragraph (2)(c), any right of pre-emption or other like right affecting that land—

  (a) shall not become exercisable by reason of the grant of the lease; but

  (b) shall have effect as if the lessee were the same person in law as the lessor.

  3.—(1) If the supplier is a supplier to whom paragraph 1(5) applies, he may, before such date as the Secretary of State may direct—

  (a) make such nomination or nominations as he thinks fit for either or both of the purposes mentioned in paragraph 1(6); and

  (b) include the associate or associates so nominated among the persons between whom his property, rights and liabilities may be divided by the transfer scheme.

  (2) Paragraph 2 applies to a transfer scheme dividing property, rights and liabilities between persons including persons nominated for the purposes of paragraph 1(6) with the substitution—

  (a) in sub-paragraph (2)(c) for the words from "the other such" to "both"; and

  (b) in sub-paragraph (3)(b) for the words from "the" (in the first place it appears) to "both",

  of the words "any one or more".
  4. The Secretary of State may, on the application of a person to whom this paragraph applies, direct that paragraphs I and 2 are to apply to his existing supply licence (or such of his existing supply licences as may be nominated under paragraph 1 (4)) as if—

  (a) in paragraph 1(2) for "a distribution licence" there were substituted "two distribution licences"

  (b) in paragraph 1(3) for "one" there were substituted "two" and for "two" there were substituted "three";

  (c) in paragraph 2(1)(a) for "a nomination" and "associate" there were substituted respectively "two nominations" and "associates"; and

  (d) in paragraph 2(1)(6) for "two" there were substituted "three".

  Secretary of State's powers in relation to transfer schemes
  4A.—(1) A transfer scheme shall not take effect unless it is approved by the Secretary of State.
  (2) The Secretary of State may if he thinks fit, before approving a transfer scheme, make such modifications of the scheme as he considers appropriate for the purpose of securing that the scheme makes only such provision as he considers to be requisite or expedient for the purposes of this Part of this Schedule.
  (3) The powers of the Secretary of State under this paragraph may in particular be exercised with a view to ensuring that a proposed transfer scheme does not operate against the public interest.
  (4) It shall be the duty of the supplier to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by sub-paragraph (1) and (2).
  Effect of transfer scheme
  4B.—(1)Subject to the provisions of paragraph 4E, on the effective date for a transfer scheme, all property, rights and liabilities—

  (a) to which immediately before that day the supplier was entitled or subject; and

  (b) which are allocated to a nominated associate by the transfer scheme,

  shall become by virtue of this paragraph property, rights and liabilities of that associate.
  (2) For the purposes of this Part of this Schedule, the "effective date", in relation to a transfer scheme, is the day on which section 6(2) of the 1989 Act (as substituted by section 29 above) comes into force or such earlier day as the Secretary of State may direct for the purposes of the scheme.

  Supplementary provisions as to transfers
  4C.—(1) The provisions of Schedule 10 to the 1989 Act (supplementary provisions as to transfers) shall apply to any transfer which is effected by paragraph 4B—

  (a) with the modifications made by sub-paragraphs (2) and (3); and

  (b) to the extent mentioned in those provisions as modified by those sub-paragraphs;

  and paragraph 4B shall have effect subject to those provisions as so modified.
  (2) For the purpose of its application to a transfer effected by paragraph 4B, Schedule 10 to the 1989 Act shall apply as if—

  (a) paragraphs 2(4) and (5), 3 and 6(2) and in paragraphs 4(4)(b) and 8(1) and (2) the words "or of a direction under paragraph 2(4) above" were omitted;

  (b) any reference to transfers effected in pursuance of a transfer scheme were references to transfers effected by paragraph 4B;

  (c) any reference to the transferor were a reference to the supplier;

  (d) any reference to a transfer of all property, rights and liabilities comprised in a specified part of the transferor's undertaking were a reference to a transfer of all (or all but as much as may be excepted) of the property, rights and liabilities comprised in a specified part of the supplier's undertaking;

  (e) any reference to a transferee of a specified part or any other part of the transferor's undertaking were a reference to a transferee of a specified part or any other part of the supplier's undertaking; and

  (f) any reference to the transfer date were a reference to the effective date for the transfer scheme.

  (3) For the purposes of sub-paragraph (2)(a),(b), (d) and (e), any property, rights or liabilities retained by the supplier in pursuance of the transfer scheme shall be deemed to be transferred to the supplier by paragraph 4B in pursuance of the scheme.

  Shares issued in pursuance of a transfer scheme
  4D. Any shares issued to the supplier or to an associate of his by a transferee in pursuance of the transfer scheme—

  (a) shall be of such nominal value as may be specified in or determined under the scheme;

  (b) shall be issued or allotted on such terms as may be so specified or determined; and

  (c) shall be issued as fully paid and treated for the purposes of the Companies Act 1985 as if they had been paid up by virtue of the payment to the transferee in cash of their nominal value and, if the scheme so provides, such premium as may be so specified or determined.

  Statutory accounts
  4E.—(1) This paragraph has effect for the purposes of any statutory accounts of a transferee, that is to say, any accounts prepared by the transferee for the purpose of any provision of the Companies Act 1985 (including group accounts).
  (2) Subject to sub-paragraph (3), the value or amount to be assigned to any asset or liability which is vested in the transferee by virtue of paragraph 4B shall be—

  (a) the value or amount (if any) assigned to the asset or liability for the purposes of the corresponding statement of accounts prepared by the supplier in respect of the last complete accounting year of the supplier to end before the commencement day; or

  (b) if the asset or liability is part only of an asset or liability to which a value or amount is so assigned, so much of that value or amount as may be determined by or under the transfer scheme; or

  (c) if no value or amount is given by paragraph (a) or (b) or the value or amount so given is inappropriate in all the circumstances of the case, such value or amount as may be determined, on the basis of the supplier's accounting records, by or under the transfer scheme.

  (3) The amount to be included in respect of any item shall be determined as if so much of anything done by the supplier (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise) as may be determined by or under the transfer scheme had been done by the transferee.
  (4) Without prejudice to the generality of the preceding provisions of this paragraph, the amount to he included from time to time in any reserves of the transferee as representing the transferee's accumulated realised profits shall be determined as if such proportion of any profits realised and retained by the supplier as is determined by or under the transfer scheme had been realised and retained by the transferee.
  (5) In this paragraph, in relation to the supplier—
  "accounting records" means accounting records kept by the supplier in pursuance of section 221 of the Companies Act 1985;
  "complete accounting year" means a financial year of the supplier determined in accordance with section 223 of that Act.

  Consequential modifications of rating provisions
  4F.—(1) This paragraph applies where any transfer effected by paragraph 6 is a transfer of a hereditament which, immediately before the commencement day is a hereditament which falls within—

  (a) the description set out in Part 2 of the Schedule to the Central Rating List (England) Regulations 2000; or

  (b) the description set out in Part 2 of the Schedule to the Central Rating List (Wales) Regulations 1999.

  (2) The Secretary of State may by order make such modifications of that Part of that Schedule, and of the Electricity Supply Industry (Rateable Values)(England) Order 2000 or the

  407
  Electricity Supply Industry (Rateable Values)(Wales) Order 2000, as may appear to him necessary or expedient as a consequence of the transfer.
  (3) An order under this paragraph which is made after the commencement day may have effect as from that day or any later day.
  (4) Where, by virtue of sub-paragraph (3), an order under this paragraph has effect from a day earlier than that on which it is made, any necessary alteration shall be made with effect from that earlier day to any central rating list in which the hereditament is shown.
  (5) An order under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

  Interpretation
  4G. In this Part of this Schedule—
  "effective date" has the meaning given by paragraph 4B(2);
  "existing" in relation to an electricity licence, means in force immediately before the passing of this Act;
  "the supplier" means the person who makes a transfer scheme;
  "transferee" means the transferee under a transfer effected by paragraph 4B;
  "transfer scheme" means a scheme under paragraph 2.
  4H.—(1) For the purposes of this Part of this Schedule a company is an associate of the supplier if—

  (a) the company is a wholly owned subsidiary of the supplier;

  (b) the supplier is a wholly owned subsidiary of the company; or

  (c) the company and the supplier are both wholly owned subsidiaries of another company;

  and the company is registered under the Companies Act 1985 as a company limited by shares.
  (2) The references in sub-paragraph (2) to a wholly owned subsidiary shall be construed in accordance with section 736 of the Companies Act 1985.").
  The noble Lord said: In rising to move Amendment No. 313, I shall speak also to Amendments Nos. 314 to 316 and 352. This is a short group with long amendments. They introduce transitional provisions.
  Amendment No. 313 is a technical amendment which deals with the practicalities of separating electricity supply and distribution businesses. Its aim is to facilitate the legal separation of supply and distribution businesses required by the Bill. It gives those suppliers who will also be carrying out distribution activities an option to make transfer schemes to allocate property, rights and liabilities between new companies. There is no duty to use a scheme, which we think would be inappropriate given the diverse nature of the market and the different levels of operational separation which have already been achieved.
  Transfer schemes will be subject to the Secretary of State's approval. Our overall objective has been to introduce flexibility to take account of the more complex ownership and structure of the electricity sector now. We also wished to ensure that schemes recognised the interests of third parties.
  Through consultation with industry, we have sought in this amendment to provide for various possibilities for companies to restructure their businesses compatible with the regulator's requirements on business separation.
  Amendment No. 314 provides for the Secretary of State to make licensing schemes in respect of electricity and gas licences. These schemes are needed in order to ensure continuity of existing licences when the licensing provisions of the Bill come into force.
  Amendment No. 315 provides that, at the point where Section 18 of the Electricity Act is repealed by Clause 44 of the Bill, customers who are taking a tariff supply under that section from a public electricity supplier can be deemed to be subject to a contract with the supplier who is a successor to the public electricity supplier in question. Amendment No. 316 contains transitional provisions that define the "first financial year" of the authority and the new council; set out the periods to be covered by the initial forward work programmes of the two bodies; and set out the arrangements for producing the final annual reports of the outgoing directors general and Gas Consumers' Council.
  Amendment No. 352 makes provision that a commencement order made by the Secretary of State may contain transitional provisions and savings relating to the provisions being brought into force by the order. I beg to move.
  On Question, amendment agreed to.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 314 to 317:
  Page 127, line 41, at end insert—

PART II SECRETARY OF STATE'S LICENSING SCHEMES

  Existing electricity supply licences
  41.—(1) This paragraph applies to any holder of an existing supply licence under section 6(1)(c) or (2) ("the supplier") who has made a transfer scheme under paragraph 2 which has been approved by the Secretary of State.
  (2) As soon as practicable after the date specified in the Secretary of State's direction under paragraph 2(1) and in any event before the day on which section 6(2) of the 1989 Act (as substituted by section 29) comes into force, the Secretary of State shall make a scheme providing—

  (a) for the supplier's existing supply licence to have effect as mentioned in paragraph 1(2); and

  (b) if the supplier has nominated an associate or associates for either or both of the purposes of paragraph 1(6), for either or both of his existing generation and transmission licences to have effect as mentioned in paragraph 1(5).

  (3) In making a scheme under this paragraph, the Secretary of State shall have regard to the provisions of the supplier's transfer scheme.
  (4) In this paragraph "existing", in relation to a licence, means in force immediately before the passing of this Act.
  4J.—(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme providing for existing licences under section 6(1)(c) which—

  (a) are held by a person whose activities include both of those mentioned in paragraph 1(1); and

  (b) are not the subject of a scheme under paragraph 41.

  to have effect on and after such date as the scheme may specify as if it were—

  (a) a distribution licence and a supply licence, each granted to the holder of the existing licence;

  (b) a distribution licence; or

  409

  (c) a supply licence.

  (2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in subparagraph (1).
  4K.—(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme, in relation to existing licences under section 6(1)(c) other than licences which—

  (a) are the subject of a scheme under paragraph 41; or

  (b) fall within paragraph 4J(1),

  providing for each such licence to have effect on and after such date as the scheme may specify as if it were a supply licence under section 6(1)(d).
  (2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in sub-paragraph (1).
  4L.—(1) The Secretary of State shall as soon as practicable after the passing of this Act make a scheme, in relation to existing licences under section 6(2), providing for each such licence to have effect on and after such date as the scheme may specify as if it were—

  (a) a supply licence under section 6(1)(d); or

  (b) an exemption from section 4(1)(c) of the 1989 Act granted under section 5 of that Act (exemptions from prohibition).

  (2) In this paragraph "existing", in relation to a licence, means in force immediately before the date mentioned in subparagraph (1).
  4M.—(1) Subject to sub-paragraph (2), a scheme under paragraph 4I, 4J, 4K or 4L shall secure that each condition which by virtue of section 32(1) is a standard condition for the purposes of licences of the appropriate type is incorporated in any licence to be treated by virtue of the scheme as a supply licence or a distribution licence and, where the scheme makes the provision mentioned in paragraph 41(2)(b), in any licence to be treated as a generation licence or as a transmission licence.
  (2) Such a scheme may provide that each licence, and in the case of a scheme under paragraph 4L each exemption, which is to be treated as granted by virtue of the scheme (including both the terms and conditions of the licence or exemption which are derived from the existing licence and, in the case of a licence, the standard conditions which would otherwise he incorporated by virtue of sub-paragraph (1)) shall have effect with—

  (a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

  (b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the existing licence from which the licence or exemption is derived.

  (3) Such a scheme may—

  (a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

  (b) make different provision for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

  (4) As soon as practicable after making such a scheme the Secretary of State shall publish, as respects each different case or class of case—

  (a) the text of each licence which is to be treated as a licence granted by virtue of the scheme; and

  (b) in the case of a scheme under paragraph 4L, the text of any exemption which is to be treated as granted by virtue of the scheme.

  (5) Any text so published shall be treated as authoritative unless the contrary is shown.

  Existing generation and transmission licences
  4N.—(1) The Secretary of State may, before the day on which section 29 comes into force, make one or more schemes for securing (subject to sub-paragraph (2)) that, on and after that day, the standard conditions which by virtue of section 32(1) are standard conditions for the purposes of licences of the appropriate type are incorporated in each generation licence and each transmission licence which is in force immediately before that day.
  (2) A scheme under this paragraph may provide that the terms and conditions of any existing licence to which it relates (including the standard conditions which would otherwise be incorporated by virtue of sub-paragraph (1)) shall have effect with—

  (a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

  (b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the licence.

  (3) A scheme under this paragraph may—

  (a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

  (b) make different provision for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

  (4) As soon as practicable after making such a scheme the Secretary of State shall publish, as respects each different case or class of case, the text on the commencement of section 29 of each licence to which the scheme relates as it has effect by virtue of the scheme.
  (5) Any text so published shall be treated as authoritative unless the contrary is shown.

  Existing gas licences
  4O.—(1) The Secretary of State may, before the day on which section 80(2) comes into force, make one or more schemes for securing (subject to sub-paragraph (2)) that on and after that day the standard conditions which by virtue of section 80(2) are standard conditions for the purposes of gas licences of any type are incorporated in each gas licence of that type which is in force immediately before that day.
  (2) A scheme under this paragraph may provide that the terms and conditions of any existing licence to which it relates (including both the terms and conditions of that licence and the standard conditions which would otherwise be incorporated by virtue of sub-paragraph (1)) shall have effect with—

  (a) such incidental, consequential and supplementary amendments as appear to the Secretary of State to be necessary or expedient; and

  (b) such other amendments (if any) as may be agreed between the Secretary of State and the holder of the licence.

  (3) Such a scheme may—

  (a) make such transitional provision as appears to the Secretary of State to be necessary or expedient; and

  (b) make different provisions for different cases or classes of cases determined by, or in accordance with, the provisions of the scheme.

  (4) As soon as practicable after making a scheme under this paragraph, the Secretary of State shall publish, as respects each different case or class of case, the text on the commencement of section 80(2) of each gas licence to which the scheme relates.
  (5) Any text so published shall be treated as authoritative unless the contrary is shown.

  Effect of licensing schemes
  4P.—(1) On the day on which a scheme under this Part of this Schedule comes into operation, the licences to which it relates shall have effect as provided for by the scheme.
  (2) The modification under paragraph 4M(2). 4N(2) or 40(2) of part of what would otherwise be a standard condition of—

  411

  (a) a licence to be treated as granted by virtue of a scheme under paragraph 4I, 4J or 4K; or

  (b) a licence to which a scheme under paragraph 4L, 4N or 40 relates.

  shall not prevent any other part of the condition which is not so modified being regarded as a standard condition for the purposes of Part I of the 1989 Act or Part I of the 1986 Act, as the case may be.

  Provision of information by licence holders
  4Q.—(1) It shall be the duty of each holder of a licence under the 1986 Act to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by paragraph 4O in relation to such licences.
  (2) It shall be the duty of each holder of a licence under the 1989 Act to provide the Secretary of State with all such information and other assistance as he may require for the purposes of or in connection with the exercise of any function conferred on him by this Part of this Schedule in relation to such licences.

  Consultation hr Secretary of State
  4R The Secretary of State shall not exercise any function conferred on him by this Part of this Schedule except after consultation with—

  (a) the Authority; and

  (b) such holders of licences under the 1986 Act or such holders of licences under the 1989 Act as he considers appropriate.").

  Page 127, line 41, at end insert—

PART III ELECTRICITY LICENSING

  Former tariff customers
  4S.—(1) This paragraph applies where immediately before the commencement date a public electricity supplier ("the supplier") is supplying tariff customers with electricity.
  (2) The supplier's supply successor shall be deemed to have contracted with those customers for the supply of electricity as from that day.
  (3) The express terms and conditions of a contract which, by virtue of sub-paragraph (2), is deemed to have been made by the supplier shall be provided for by the scheme under this paragraph which relates to that supplier.
  (4) Before such date as the Secretary of State may direct, the supplier shall make a scheme for determining the terms and conditions which are to be incorporated in the contracts which, by virtue of sub-paragraph (2), are to be deemed to have been made by the supplier.
  (5) A scheme under this paragraph may (subject to section 7B of the 1989 Act)—

  (a) make different provisions for different cases or classes of cases, or for different areas, determined by, or in accordance with, the provisions of the scheme; and

  (b) make such supplemental, incidental, consequential and transitional provisions as the supplier considers appropriate.

  (6) A scheme under this paragraph shall not take effect unless it is approved by the Authority; and the Authority may modify such a scheme before approving it.
  (7) If, in relation to such a scheme—

  (a) the supplier fails, before the date specified under subparagraph (4), to submit the scheme for the approval of the Authority; or

  (b) the Authority decides not to approve the scheme that has been submitted by the supplier (either with or without modifications),

  the Authority may itself make the scheme.
  (8) It shall be the duty of the supplier to provide the Authority with all such information and other assistance as it may require for the purposes of or in connection with the exercise of any function conferred by sub-paragraph (6) or (7).
  (9) The Authority shall not exercise any function conferred by sub-paragraph (6) or (7) except after consultation with the supplier.
  (10) A scheme made under this paragraph shall be published in the London and Edinburgh Gazettes before the commencement date and shall come into operation on that date; and conclusive evidence of a scheme so made may be given in all courts of justice and in all legal proceedings whatever by the production of a copy of either of those Gazettes purporting to contain it.
  (11) In this paragraph—
  "commencement date" means the date on which section 44 comes into force; and
  "supply successor", in relation to a public electricity supplier, means the person who becomes an electricity supplier by virtue of a scheme made by or in relation to that public electricity supplier under Part II of this Schedule.").
  Page 128, line 7, at end insert—

  First financial rears of Authority and Council
  .—(1) In this paragraph "the body" means the Authority or the Council.
  (2) If the period beginning with the day on which the body is established and ending with the next 31st March is six months or more, the first financial year of the body is that period.
  (3) If the period mentioned in sub-paragraph (2) is less than six months, the first financial year of the body is the period beginning with the day on which the body is established and ending with 31st March in the following year.

  First forward work programmes of Authority and Council
  . The Authority's first forward work programme required by section 4(1) shall relate to the financial year following its first financial year.
  .—(1) The Council's first forward work programme required by section 4(1) shall be published within the period of three months beginning with the day on which the Council is established.
  (2) That forward work programme shall relate to the Council's plans for the period beginning with the day on which it is published and ending with the last day of the Council's first financial year (and section 4 shall apply accordingly).

  Last annual reports of the Directors
  .—(1) After the abolition of the offices of Director General of Gas Supply and Director General of Electricity Supply, any duty of either Director to make an annual report, in relation to any calendar year for which such a report has not been made, shall be carried out by the Authority.
  (2) The period between the abolition of those offices and the end of the preceding calendar year (if less than 12 months) shall be treated as the calendar year for which the last annual reports are required.
  (3) If that period is nine months or more, the Authority shall make the last annual reports as soon as practicable after the end of that period.
  (4) If that period is less than nine months the last annual reports shall be made no later than the first report of the Authority under section 5(1).
  (5) In this paragraph "annual reports" means reports required by section 39(1) of the 1986 Act and section 50(1) of the 1989 Act.

  Last annual report of the Gas Consumers' Council
  .—(1) After the abolition of the Gas Consumers' Council, any duty of the Gas Consumers' Council to make an annual report, in relation to any calendar year for which such a report has not been made, shall be carried out by the Council.
  (2) The period between the abolition of the Gas Consumers' Council and the end of the preceding calendar year (if less than 12 months) shall he treated as the calendar year for which the last annual report is required.
  (3) If that period is nine months or more, the Council shall make the last annual report as soon as practicable after the end of that period.
  (4) If that period is less than nine months the last annual report shall be made no later than the first report of the Council under paragraph 6 of Schedule 2.
  (5) In this paragraph "annual report" means a report required by section 41 of the 1986 Act.").
  Page 128, line 7, at end insert—

  Investigations being carried out under the 1986 Act
  .—(1) This paragraph applies to any matter—

  (a) being investigated by the Director General of Gas Supply under section 31 of the 1986 Act (duty to investigate certain matters) immediately before the repeal by this Act of that section;

  (b) being investigated by the Gas Consumers' Council under section 32 of the 1986 Act immediately before the commencement of section 22(1) above;

  (c) being investigated by that Council under section 32A of the 1986 Act immediately before the repeal by this Act of that section;

  (d) being investigated by that Council under section 33 of the 1986 Act (power to investigate certain matters) immediately before the commencement of section 23(1) above.

  (2) If the matter being investigated is a matter which appears to the Council to be a matter which is or amounts to a complaint to which section 32 of the 1986 Act (as substituted by section 22(1) above) applies, the Council shall treat the matter as if it were a complaint referred to it under that section.
  (3) In any other case the Authority shall either—

  (a) agree with the Council that the Council is to investigate the matter under section 33 of the 1986 Act (as substituted by section 23(1) above); or

  (b) make such further investigations of the matter, and take such action, as it considers appropriate.

  (4) Where the Council or the Authority is required by virtue of sub-paragraph (2) or (3) to investigate a matter, it may treat anything done by the Director General of Gas Supply or the Gas Consumers' Council in investigating that matter as if done for the purposes of its own investigation.
  (5) The Director General of Gas Supply and the Gas Consumers' Council shall give the Authority and the Council such information or assistance as may be necessary to enable them to of carry out their functions under this paragraph.

  Investigations being carried out under the 1989 Act
  .—(1) This paragraph applies to any matter—

  (a) being investigated by the Director General of Electricity Supply or a consumers committee under section 45 of the 1989 Act (investigation of enforcement matters) immediately before the repeal by this Act of that section;

  (b) being investigated by a consumers' committee under section 46 of the 1989 Act (duty of consumers' committees to investigate certain matters) immediately before the commencement of section 22(2) above.

  (2) If the matter being investigated is a matter which appears to the Council to be a matter which is or amounts to a complaint to which section 46 of the 1989 Act (as substituted by section 22(2) above) applies, the Council shall treat the matter as if it were a complaint referred to it under that section.
  (3) In any other case the Authority shall either—

  (a) agree with the Council that the Council is to investigate the matter under section 46A of the 1989 Act (as inserted by section 23(2) above); or

  414

  (b) make such further investigations of the matter, and take such action, as it considers appropriate.

  (4) Where the Council or the Authority is required by virtue of sub-paragraph (2) or (3) to investigate a matter, it may treat anything done by the Director General of Electricity Supply or a consumers' committee in investigating that matter as if done for the purposes of its own investigation.
  (5) The Director General of Electricity Supply and the consumers' committees shall give the Authority and the Council such information or assistance as may be necessary to enable them to carry out their functions under this paragraph.").
  The noble Lord said: With the leave of the Committee, I shall move Amendments Nos. 314 to 317 together. I beg to move.
  On Question, amendments agreed to.
  Schedule 7, as amended, agreed to.
  Schedule 8 [Repeals]:
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 318 to 349:
  Page 128, line 12, column 3, leave out from first ("the") to the end of line 15 and insert—

  ("East Midlands Region Electricity Consumers' Committee, the Eastern Region Electricity Consumers' Committee, the Office of the Director General of Electricity Supply, the Gas Consumers' Council, the Office of the Director General of Gas Supply, the London Region Electricity Consumers' Committee, the Merseyside and North Wales Region Electricity Consumers' Committee, the Midlands Region Electricity Consumers' Committee, the North Eastern Region Electricity Consumers' Committee, the North Western Region Electricity Consumers' Committee, the North of Scotland Region Electricity Consumers' Committee, the South Eastern Region Electricity Consumers' Committee, the South of Scotland Region Electricity Consumers' Committee, the South Wales Region Electricity Consumers' Committee, the South Western Region Electricity Consumers' Committee and the Southern Region Electricity Consumers' Committee.")

  Page 128, line 23, column 3, at beginning insert—

  ("In Part II of Schedule 1, the entry for the Gas Consumers' Council.")

  Page 128, line 24, column 3, after ("the") insert ("Chairman of a consumers' committee appointed under section 2 of the Electricity Act 1989, the Chairman of the Gas Consumers' Council, the").

  Page 128, line 28, column 3, at beginning insert—

  ("In Part II of Schedule 1, the entry for the Gas Consumers' Council.")

  Page 128, line 29, column 3, after ("the") insert ("Chairman of a consumers' committee appointed under section 2 of the Electricity Act 1989, the").

  Page 128, line 37, column 3, at end insert—

  ("In section 6A(1), the words "after consultation with the Director".")

  Page 129, line 5, column 3, at end insert ("in the licence"").

  Page 129, line 5, column 3, at end insert—

  ("In section 8(1), the words "and sections 23(2), 26(1A) and 27(2) below".")

  Page 129, line 8, column 3, at end insert—

  ("In section 22A(1), in paragraph (b) the words "in that area" (in both places where they appear) and the word "and" preceding paragraph (c).")

  Page 129, line 11, column 3, leave out ("the word "33BB"") and insert ("subsection (5)(aa) and (b), subsection (7A), the word "33BB" in subsection (8) and subsection (9)").

  Page 129, line 12, column 3, at end insert—

  ("Section 30(2)(b) (and the word "or" preceding it).")

  Page 129, line 13, column 3, leave out ("32") and insert ("31")

  Page 129, line 24, column 3, after ("words") insert (""notifications and directions under").

  Page 129, line 30, column 3, at end insert—

  ("Section 40.")

  Page 129, line 30, column 3, at end insert—

  ("Section 41.")

  Page 129, column 3, leave out lines 31 to 33 and insert—

  ("Section 42.")

  Page 129, line 33, column 3, at end insert—

  ("In section 47(7), the words from "and the" to the end.")

  Page 129, line 36, column 3, leave out ("Section 48(4).") and insert ("In section 48, subsections (3) and (4).").

  Page 129, line 40, column 3, after ("2B,") insert ("paragraph 7(2) and").

  Page 129, line 46, column 3, at end insert ("and paragraph 8(4), (5) and (6)").

  Page 129, line 46, column 3, at end insert ("and in paragraph 8(8) the words from "but this" to the end").

  Page 129, line 46, column 3, at end insert—

  ("In Schedule 3, paragraph 20.")

  Page 129, line 46, column 3, at end insert—

  ("In Schedule 7, paragraph 15(2).")

  Page 130, line 8, column 3, at end insert—

  ("In section 10(1)(a), the words "a public electricity supplier or".")

  Page 130, line 13, column 3, at end insert—

  ("In section 25(5), paragraphs (b) and (c).")

  Page 130, line 29, column 3, at end insert—

  ("Section 57.")

  Page 130, line 29, column 3, at end insert—

  ("In section 64(1), the

  definition of "private electricity supplier", the definition of "public electricity supplier" and the definition of "tariff customer".")

  Page 130, line 32, column 3, at end insert—

  ("In Schedule 3, paragraph 21")

  Page 130, line 32, column 3, at end insert—

  ("In Schedule 7, in paragraph 1(7) the words from "as if- to the end.")

  Page 130, line 32, column 3, at end insert —

  ("In Schedule 7, in paragraph 5(3) the words "a public electricity supplier or by", in paragraph 6(1) the words "a public electricity supplier or", paragraph 6(5), paragraph 10(3) and in paragraph 13 the definition of "electricity supplier".")

  Page 130, line 42, column 3, at end insert—

  ("Section 8(2).")

  Page 130, column 3, leave out lines 46 and 47 and insert ("31, 32, 33, 36, 41, 42(1)(a) and (2)(a), 48, 49 and 50").
  The noble Lord said: With the leave of the Committee, I beg to move Amendments Nos. 318 to 349 en bloc.
  On Question, amendments agreed to.
  Schedule 8, as amended, agreed to.
  Clause 106 agreed to.
  Clause 107 [Short title, commencement and extent]:
  Lord Kingsland Lord Kingsland moved Amendment No. 350:
  Page 109, line 20, leave out ("Utilities") and insert ("Gas and Electricity").
  The noble Lord said: This Bill originally contained four public utilities—gas, electricity, telecommunications and water. It now contains only two. In my submission, it would be more accurate to describe this Bill in your Lordships' House as the Gas and Electricity Bill. I beg to move.
  Baroness Sharp of Guildford: I rise to say that on these Benches we have some sympathy with this amendment.
  Lord McIntosh of Haringey: Everyone involved in the industry, consumer groups and other interest groups has become accustomed to the title "Utilities Bill". To change it would serve no purpose and would confuse some of those who have had the patience to pursue our debate. We estimate that to amend the short title consistently throughout the Bill a further

  417
  13 amendments would have to be moved in addition to the amendment to Clause 107 itself. We oppose this amendment.
  Lord Kingsland: I am naturally disappointed by the Minister's reply. I am very tempted to divide the House but, on mature reflection, I shall ask the Minister to think further about his rather categoric answer.
  Lord McIntosh of Haringey: No, I shall not think further about my categoric answer.
  Lord Kingsland: Nevertheless, I still invite him to do so, because we shall return to this matter at Report stage. Meanwhile, I beg leave to withdraw the amendment.
  418
  Amendment, by leave, withdrawn.
  Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendments Nos. 351 to 352:
  Page 109, line 21, after ("section") insert ("and section 67)").
  Page 109, line 23, at end insert—
  ("(2A) An order under subsection (2) may contain transitional provisions and savings relating to the provisions being brought into force by the order.").
  The noble Lord said: With the leave of the Committee, I beg to move Amendments Nos. 351 to 352 en bloc.
  On Question, amendments agreed to.
  Clause 107, as amended, agreed to.
  House resumed: Bill reported with amendments.
  House adjourned at twenty minutes before midnight.