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Column 607about the market place. Mr. Baker's speech, which was of particular interest to the Opposition in its leaked form, made the position clear for future employees. He was categoric when he said, in effect, "Unless we start to realise that we are in competition from now onwards with other companies, your jobs and our business will be at stake." That is precisely the change in attitude that I call in aid in justifying the argument that the Bill is in the interests of consumers.
Mr. Spicer : I can tell the hon. Gentleman what I told him only the other day. The motivation of the companies does not reside in any price structure that is either imposed on them or given to them, or in conditions of the sort to which the hon. Gentleman has referred. Instead, it resides in their knowledge of the efficiency with which they will be able potentially to compete with existing players. They know that they have new technologies, ideas, management structures and practices that will enable them to compete with the successor bodies.
Mr. Blair : Perhaps the Minister will care to confirm something that he was not prepared to commit himself to in Committee. Under the contracts concluded by area boards and the duopoly structure--PowerGen and National Power--that the Government are setting up, there will be no yardstick competition prevailing.
Mr. Spicer : The question of contracts is one that is yet to be settled. I have never made any bones about that. There is no secret about it. Nor is there any secret about the fact that the Government intend that the contracts should not be agreed to in a way that will prevent future and further competition.
As for competition--
The hon. Gentleman based his speech on the argument that we are doing nothing for the consumer. I have said already that that is manifestly untrue in respect of generation. Even if the considerations and worries that the hon. Gentleman has presented were realities, the fact remains that the generation side of the industry is to be changed radically. The hon. Gentleman cannot get away from the fact that there is one monopoly supplier. That supplier is to have his monopoly broken, and from now on the industry will be geared up to encourage new entrants.
Incidentally, the amendment refers to area boards. I thought that we would be able to agree that the Bill refers to public electricity suppliers. Area boards will be abolished by the Bill. However, I put that on one side. Opposition Members have argued that competitive pressures will bear too strongly on the public electricity supply companies. For example, large companies or smaller companies will have a right not to contract with their local public electricity supply company. The supply companies will face pressures that have never existed in the past. As they will have the right to charge the tariff structures that they wish to introduce under the regulatory conditions, undoubtedly there will be a measure of competitive pressure that does not presently exist.
Column 608Where competitive pressures do not exist, there will be the regulator and the regulatory rules. For the first time, the regulator will have the consumer as one of his prime responsibilities when he comes to focus upon his duties. The regulatory duties that relate to the consumer are spelt out in a way that is different from anything which has existed in the past. That is denied by the hon. Member for Sedgefield, but it is a fact that duties will be placed upon the regulator to regard as paramount the interests of consumers. Under the Bill, there is a right to the supply of electricity that did not exist previously for anyone with connections, or potential connections, more than 50 yd away from the mains supply. That is another consumer right that has been introduced. There is to be a panoply of new consumer rights under the Bill. At least give us the credit for that. If the companies do not meet certain standards, moneys will be returned to consumers. That is a brand new provision. That is something which the hon. Member for Sedgefield might acknowledge in a debate that is about consumers.
Mr. Blair : The Bill does not do a single thing for consumers that could not be done separately from privatisation. The hon. Gentleman must make a case showing why the Government are privatising the industry. So that the public fully understand, will the hon. Gentleman confirm that the ordinary, average consumer will have no choice but to continue contracting with his area board?
Mr. Spicer : The case that the hon. Gentleman must make is in answer to the hon. Member for Ashfield, who said that he wanted to put the industry back into public control. I shall not leave that point alone and I shall certainly address the question "Why privatise?" put by the hon. Member for Sedgefield.
I have already said that customers, including, for instance, those managing large new estates or large blocks of flats, would have the right to opt out --as everyone has--and it might even be a practical proposition-- [Interruption.] The hon. Member for Sedgefield is not listening to my answer to his question. Domestic customers will have the right to opt out, and certain managers of large new estates or large blocks of flats may well want to do so--
Several Hon. Members rose--
Mr. Spicer : I have answered one question put by the hon. Member for Sedgefield and I want to deal with his other questions. One feature for which no Opposition Member has given credit in the context of a debate on consumer rights, although I am sure that they have understood it, is the new place of the consumers' committees within the regulatory body. For the first time, instead of shouting outside the industry and giving the benefit of their advice to anyone who wishes to listen, consumers' committees will be players involved in the regulatory process. They will have statutory rights that they did not have before. At least the Opposition might congratulate the Government on this new innovative approach to the involvement of consumers' committees within the regulatory authority.
Mr. Spicer : I am saying that everyone will have the right to opt out. The question on which, I suspect, the Labour Front Bench will wish to come back to me is whether that is a practical proposition. I have told the House that in certain circumstances the managers of large new estates or large blocks of flats may decide that, at the very least, they want to ensure that their local public electricity supply company understands that they have that right. The pressure that those managers could exert might be satisfactory from the consumers' point of view
Mr. Deputy Speaker : Order. The Minister is right. I was a little overrelaxed in allowing a wide debate. The Minister is being given an adequte opportunity to respond to those points which I should not perhaps have allowed. I hope that, now that the matter has been redressed, we shall return to the amendments.
Mr. Spicer : You allowed the Opposition to ask why we were going to privatise, Mr. Deputy Speaker. I am sure that they felt that that question was related to the question of surveying costs for, as they described it, each area board, although it will not be an area board. This matter is relevant and, if I may, I should like to answer the question "Why privatise?" It is a fair question in the context of consumerism and prices.
One reason why we wish to privatise is that the country is faced--this relates directly to the question of surveying costs--with a massive investment programme. We have argued about exactly what it will comprise. The central part of our position is that that investment will not take place on the taxpayers' back, as it would in the public sector.
More fundamentally, it will occur in a form that is not dependent upon political decisions taken behind beige doors in Whitehall but has reference to genuine market needs. That must be a better way of engaging in investment decisions than having decisions that are a result of political infighting, as so many investment decisions are at present.
Because of your strictures, Mr. Deputy Speaker, let me leave aside the issue of increasing further public ownership of shares. By "public ownership of shares" we mean increasing ownership from the present 9 million shareholders and particularly increasing ownership of shares by employees--something about which the Opposition have never liked hearing.
I should like to ask the Opposition a question which we have asked before but to which we have not had an answer. Do they or do they not agree with the Labour Whip, the hon. Member for Ashfield, who jumps from the Front Bench to the Back Benches and makes a statement on the Opposition's behalf that he would renationalise
Column 610House. I hope that when hon. Members demand flexibility from the Chair they realise the consequences of opening that door.
Mr. Spicer : Of course I bow to your ruling, Mr. Deputy Speaker. I shall ask that question later. I serve notice on the Opposition that, when it is in order, I should like them to say whether public control means renationalisation under a different name.
We have not heard much about the Government's amendments, I suspect, because the Opposition basically agree-- [Interruption.] I have been answering the points raised by the hon. Member for Sedgefield, and I think that it is fair for the Government to do that. Hon. Members should not provoke me if they do not want answers.
The Government amendments were suggested after discussion in Committee, as were a number of Government amendments that have been tabled in the past few days, as the Opposition recognise. These amendments relate to the power of the director general to deal with matters when it is likely in his view that a public electricity supplier or licence holder will take actions that may break the licence conditions. The hon. Member for Sedgefield asked whether an enforcement procedure would be provided for in subsequent Government amendments. There is such a procedure. It concerns various levels and is allowed for in the Bill, as a reading of the Bill makes clear. There is no question of enforcement being a problem. I can give that assurance.
These Government amendments have been brought forward in a desire to meet the points made by hon. Members in Committee.
Amendment agreed to.
Amendments made : No. 23, in page 18, line 9, leave out has contravened and is likely again'
and insert is likely'.
No. 24, in page 18, line 30, leave out
has contravened and is likely again'
and insert is likely'.
No. 25, in page 18, line 38, after order', insert--
(aa) that the licence holder has agreed to take and is taking all such steps as it appears to the Director for the time being to be appropriate for the licence holder to take for the purpose of securing or facilitating compliance with the condition or requirement in question ;'.
No. 26, in page 19, line 18, leave out
the preceding provisions of this part'
section 8 or sections 15 to 19, (Additional terms of supply) 20 and 21 above'.-- [Mr. Michael Spicer.]
Amendment made : No. 27, in page 21, line 20, leave out the supplier' and insert him'.-- [Mr. Michael Spicer.]
Amendment made : No. 28, in page 22, line 25, leave out from efficient' to end of line 30 and insert--
(b) protecting the public from dangers arising from the generation, transmission or supply of electricity, from the use of electricity supplied or from the installation, maintenance or use of any electric line or electrical plant ; and
Column 611(c) without prejudice to the generality of paragraph (b) above, eliminating or reducing the risks of personal injury, or damage to property or interference with its use, arising as mentioned in that paragraph.'.-- [Mr. Michael Spicer.]
Amendments made : No. 29, in page 96, line 22, after whom' insert
and the circumstances in which'.
No. 30, in page 98, line 9, leave out from supplier' to end of line 10 and insert
otherwise than in respect of the supply of electricity, the provision of an electric line or electrical plant or the provision of the meter'.-- [Mr. Michael Spicer.]
Amendments made : No. 31, in page 24, line 16, leave out from made' to end of line 18 and insert--
(a) such arrangements ; or
(b) where a previous order under this subsection has had effect in relation to him, such additional arrangements,
as will secure the result mentioned in subsection (1A) below. (1A) The result referred to in subsection (1) above is that (
(a) on and after the second day appointed by the order ; or'. No. 32, in page 24, line 22, leave out first him' and insert the public electricity supplier.'
No. 33, in page 24, line 23, leave out this section' and insert subsection (1) above'.
No. 34, in page 24, line 29, leave out that subsection' and insert subsection (1A) above'.-- [Mr. Michael Spicer.]
has made one or more orders'.
Mr. Spicer : After the previous debate, I shall be brief, although the Opposition may want me to come back to some points. I shall explain the purpose of the amendments. If the contract between the generator and the supply company contains terms that allow for payments to be made before stations are commissioned, the amendments will allow the costs to be covered through the levy.
The issue is complicated, so the best way to proceed is for me to listen to any Opposition comments and respond to them if necessary.
Mr. Doran : I was interested to hear the Minister's point. My interpretation is that the amendment extends considerably the scope of the nuclear levy and introduces the concept of advance payments. There is no reference to contracts between suppliers and generators, so it seems that the amendment seeks to introduce the concept of payment in advance of the intended nuclear generating
Column 612capacity. We have heard of four new generators and we have already referred today to the cost of that scheme, which the Minister put at £38 billion. That is interesting in the context of the debates in Committee. My hon. Friend the Member for Sedgefield (Mr. Blair) often pressed the Secretary of State and the Minister to make clear what was covered by the nuclear levy and it was made clear at that time that it did not cover advance payments.
One possible interpretation of the amendment is that the whole cost of any new generating capacity can be included in those advance payments. In Committee, the Minister conceded that the level of the levy was likely to be in excess of 8 per cent., and gave a figure approaching 10 per cent. when pressed by my hon. Friend the Member for Sedgefield. That is a crucial and fundamental question on a day that is devoted to consumers and prices. The Minister should advise us what extra cost has been added to consumer costs as a result of the amendment, which allows the payment of advance expenses. The Minister conceded a figure of 8 per cent. If we take into account the additional expenditure of about £30 billion between now and the turn of the century, we must be talking about a considerably increased cost. We are entitled to an answer at this stage of the debate. It is also important to note--although we are talking about a different degree of cost--that amendment No. 40 allows the Government to farm out the whole process. In Committee, the Minister talked about the possible use of a firm of accountants. That is another area where the bureaucratic structure of regulation and the collection of the levy will involve more cost for the consumer. I shall be interested to hear from the Minister what costs he envisages will be involved. The structure required to assess the level of levy and to collect it will be considerable. Amendment No. 36 appears to add substantially to the costs brought within the scope of the levy. We demand to know what that will mean for the consumer.
Mr. Hardy : I had not intended to speak on these amendments, and I want merely to make one point. In his rather long reply to the previous debate, the Minister did not say a word to explain the grossly unsatisfactory situation that faces industries that are high energy users, such as the one in my own constituency to which I referred. The Minister will be aware that, while the Bill was in Committee, the chemical industry expressed deep anxiety about its position. British industry, especially that part of it that uses a great deal of energy, will have found no cause for comfort in anything the Minister has said. He did not appear to address the problem at all.
Mr. Michael Spicer : I must remind the hon. Member for Wentworth (Mr. Hardy) of a point that needs to be made every so often, which is that, in real terms, electricity prices have been falling over the past five years. Industrial electricity prices have fallen by 6 per cent. It also has to be said--and I did not want to raise the point again--that in the five years of the last Labour Government, domestic prices rose by 9 per cent. and industrial prices by 6 per cent. in real terms. The hon. Gentleman asked a question on behalf of the chemical industry or possibly the steel industry--I do not know which. Under the last Labour Government, prices rose in real terms, whereas under this Government prices have fallen in real terms. What substantial case is the hon. Gentleman making?
Mr. Hardy : The Minister overlooks the central point. The Government should be looking at our industrial costs in comparison with those of our competitors. It is no good the Minister saying that electricity prices have fallen in real terms. I would not say whether they have or not. What we must do is to compare the costs faced by British industry with the costs faced by our competitors. As I said in an earlier debate, the competitive edge of British industrial high energy users is considerably blunted as a consequence of the decisions taken last year and this year. It seems that we are justified in being fearful about the effect next year or the year after.
Mr. Michael Spicer : I am grateful for that further intervention, because it gives me the chance to put the record straight. I gave one figure wrongly by 100 per cent. Industrial prices have fallen not by 6 per cent., but by 12 per cent. under this Conservative Government. That is one of those slips of the tongue on which the Opposition would be happy to sit. Industrial prices have fallen by 12 per cent. under this Conservative Government, whereas they rose by 6 per cent. in real terms under the last Labour Government.
The hon. Gentleman made a fair point about competitiveness, so I must point out that if one compares our industrial electricity prices with those of, for example, other European countries, we come in about the middle. If we consider the West Germans, we do much better than
Mr. Spicer : The hon. Gentleman refers to bulk supply and industry sometimes makes the case that there is a panoply of special contracts in Europe about which nobody knows much. I have asked the industry from time to time to come up with information that can be publicised about this mass of subterranean contracts which would give a different picture from the one that I have given to the House, but it is difficult to obtain specific, detailed evidence. However, we have published data about electricity prices for industry generally. That shows that British industry as a whole receives electricity at about the median price level compared with other European countries. Nobody denies that.
The hon. Member for Aberdeen, South (Mr. Doran) asked what was to be included in the levy, and whether the amendment would mean an increase in the levy. I shall make broadly the same point as my right hon. Friend the Secretary of State made in reply to the hon. Member for Sedgefield (Mr. Blair) in Committee. At the moment, the cost of financing nuclear power stations is taken directly, within the price. Whether that will be the case in future, and whether the levy will directly finance nuclear power stations--as it would under the present arrangements--depends on what contracts are struck. In particular it depends on the financing arrangements catered for and the timing of payments under those contracts. Until the contracts have been settled, therefore, I cannot give the hon. Gentleman the answer that he seeks.
What I can say is that the Government will ensure that the contracts strike the right balance between providing a
Column 614motivation for the industry to invest in nuclear power stations and ensuring that they do not make excess profit from, and are not wasteful in, that investment to the detriment of the consumer. I can give the hon. Gentleman that assurance.
Mr. Doran : The Minister seems to have confirmed what he refused to confirm in Committee. I want to be clear on exactly what he is saying. The amendment says nothing about contracts. It gives a specific right to the new supply industry to receive payments in certain specific circumstances. The amendment seems to cover the whole cost of providing the capacity and appears to have nothing to do with contracts or the Government's control of those contracts.
Mr. Spicer : The hon. Gentleman is absolutely correct, because the amendments are permissive and allow for the recouping of costs. I am not saying that the costs will be financed as he suggests, because that will depend on how the contracts are struck. At the moment, the industry finances its development directly and passes its costs straight on to the bulk supply tariff. In future, there will, no doubt, be an element of financing, but we cannot tell what the exact result will be until the contracts have been struck. I hope that, on the basis of that explanation, the Opposition will feel able to accept the amendments.
Mr. Morgan : That was a completely unsatisfactory reply. An issue of Electrical Review that came out over Christmas carried the headline "Proposed Contracts are Riskless". The description that the Minister has given is a perfect description of a contract that is riskless for the private sector. The electricity consumer will now have to pay the private generator to build private generating stations. If that is the purpose of the Bill, it is about time the consumer knew it.
My hon. Friend the Member for Aberdeen, South (Mr. Doran) and I spent a long time examining Government amendments Nos. 36 to 43, and concluded that they showed that the nuclear levy is in serious trouble. The Government and the electricity companies do not know, and the consumer and the House certainly do not know, how the nuclear levy will work. It has been devised at a Sir Humphrey's mad hatter's tea party and the amendments show us all just how much trouble the levy is in and just how short a time the Government have left to get it right.
The area boards do not know how the nuclear levy will be collected. They know only that the additional costs of nuclear production over coal production--which John Baker, the chief executive, told us would be 42 per cent. in the financial year that has just started--will be distributed in some way. The proposal cuts completely across the concept at the heart of the Bill and the idea of direct contracts between generators and suppliers. It looks to us as though the Government are beginning to admit that they have devised a wholly unworkable system for collecting the levy.
Amendment agreed to.
Amendment proposed : No. 36, in page 25, line 42, after the', insert
aggregate of the amounts given by subsections (2A) and (2B) below.
(2A) The amount given by this subsection is a one-twelfth part of any advance payments which, in pursuance of qualifying arrangements, fall to be made by the public
Column 615electricity supplier during the relevant year ; and in this subsection "the relevant year" means whichever one of the following periods the qualifying month falls within, namely
(a) the period of twelve months beginning on the first day appointed by the first order under section 30 above ; and (
(b) each successive period of twelve months.
(2B) The amount given by this subsection is the'.
Question put, That the amendment be made :--
The House divided : Ayes 262, Noes 180.
Division No. 148] [6.16 pm
Alison, Rt Hon Michael
Arnold, Jacques (Gravesham)
Baker, Rt Hon K. (Mole Valley)
Baker, Nicholas (Dorset N)
Banks, Robert (Harrogate)
Barnes, Mrs Rosie (Greenwich)
Bennett, Nicholas (Pembroke)
Biffen, Rt Hon John
Blackburn, Dr John G.
Body, Sir Richard
Bonsor, Sir Nicholas
Boscawen, Hon Robert
Bottomley, Mrs Virginia
Bowden, Gerald (Dulwich)
Braine, Rt Hon Sir Bernard
Brown, Michael (Brigg & Cl't's)
Browne, John (Winchester)
Bruce, Ian (Dorset South)
Buchanan-Smith, Rt Hon Alick
Buck, Sir Antony
Carlisle, Kenneth (Lincoln)
Chalker, Rt Hon Mrs Lynda
Channon, Rt Hon Paul
Clark, Hon Alan (Plym'th S'n)
Clark, Sir W. (Croydon S)
Coombs, Anthony (Wyre F'rest)
Coombs, Simon (Swindon)
Cope, Rt Hon John
Davies, Q. (Stamf'd & Spald'g)
Davis, David (Boothferry)
Douglas-Hamilton, Lord James
Emery, Sir Peter
Fairbairn, Sir Nicholas
Field, Barry (Isle of Wight)
Finsberg, Sir Geoffrey
Fishburn, John Dudley
Fookes, Dame Janet
Forsyth, Michael (Stirling)
Fowler, Rt Hon Norman
Fox, Sir Marcus
Glyn, Dr Alan
Goodhart, Sir Philip
Goodson-Wickes, Dr Charles
Greenway, Harry (Ealing N)
Greenway, John (Ryedale)
Griffiths, Sir Eldon (Bury St E')
Gummer, Rt Hon John Selwyn
Hamilton, Hon Archie (Epsom)
Hampson, Dr Keith
Hargreaves, A. (B'ham H'll Gr')
Hargreaves, Ken (Hyndburn)
Hayhoe, Rt Hon Sir Barney
Heseltine, Rt Hon Michael
Hogg, Hon Douglas (Gr'th'm)
Hordern, Sir Peter
Howarth, Alan (Strat'd-on-A)
Howarth, G. (Cannock & B'wd)
Howell, Rt Hon David (G'dford)
Howell, Ralph (North Norfolk)
Hughes, Robert G. (Harrow W)
Hunt, David (Wirral W)
Hunt, John (Ravensbourne)