House of Commons Hansard Debates for 20 Jul 1989

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Warren, Kenneth

Watts, John

Wells, Bowen

Wheeler, John

Whitney, Ray

Widdecombe, Ann

Wiggin, Jerry

Wilkinson, John

Wilshire, David

Winterton, Mrs Ann

Winterton, Nicholas

Wolfson, Mark

Wood, Timothy

Woodcock, Dr. Mike

Yeo, Tim

Young, Sir George (Acton)

Tellers for the Noes :

Mr. Tony Durant and

Mr. David Maclean.

Amendment accordingly negatived.

Amendment proposed in lieu of the Lords amendment agreed to. Amendments made to the Bill in lieu of Lords amendment No. 3 disagreed to : (b), in page 32, line 4, leave out and'. (c), in page 32, line 6, at end insert

and

(c) the levels of performance achieved by such suppliers in connection with the promotion of the efficient use of electricity by consumers.'.

(d), in page 32, line 14, after 39', insert

or (Promotion of efficient use of electricity)'.

(e), in page 32, line 15, leave out overall'.-- [Mr. Michael Spicer.]

Clause 2

Consumers' committees

Lords amendment : No. 2, in page 2, line 22, leave out subsection (4).

Mr. Wallace : I beg to move, as an amendment to the Lords amendment, amendment (a) in line 1, at end add

and insert

(4) In appointing a person to be a member of a consumers committee the Director shall have regard to the desirability of appointing a person who has knowledge of the geographical make up of the area.'.

Madam Deputy Speaker : With this it will be convenient to take Lords amendments Nos. 100 and 62 to 64.

Lords amendment No. 65, after clause 50, insert the following new clause-- National Consumers' Consultative Committee --

" .--(1) There shall be a committee, to be known as the National Consumers' Consultative Committee, of which the Director shall be chairman and the ordinary members shall be the persons who for the time being hold office as chairmen of consumers' committees. (2) The Committee shall meet at least four times a year and shall be under a duty--

(a) to keep under review matters affecting the interests of consumers of electricity generally ; and

(b) to facilitate the exchange of information relating to such matters between the Director, the ordinary members and their respective consumers' committees."

Amendment (a) to the proposed Lords amendment, at end add-- and

(c) to make a report available to the public at least once a year on matters affecting the interests of consumers generally.'.

Mr. Wallace : The Under-Secretary of State may recall that we had a similar debate on Report on an amendment tabled by the hon. Member for Rother Valley (Mr. Barron) to provide for a geographical link between membership of a consumers' committee and the area in which the committee served. I do not deny that I make this point very much from a Highlands and Islands viewpoint, but I am sure that it has similar consequences in other

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parts of the country. Issues will arise in a particular geographical area that can best be reflected by people with a knowledge of that area.

The cost of connecting new consumers to the electricity supply has caused considerable controversy in the north of Scotland. The Bill states that the cost of supply will be reasonable in the circumstances. I should welcome the Minister's assurance that the circumstances refer to the consumer as well as to the supplier. People would certainly not be satisfied if large sums were charged, but it would be more satisfactory if their views were represented on the consumers' committee by people from their area rather than by people from other areas. It is theoretically possible under the Bill for a person from Carlisle who has never set foot in the Highlands and Islands and has no concept of the problems of consumers to represent that area on the committee.

I do not intend to elaborate the point. It is straightforward and very much in the consumers' interest. I cannot see how it compromises what the Government are trying to do in privatising electricity. However, it would mean that the interests of consumers were more likely to be represented by those who knew what those interests were.

Mr. Simon Hughes (Southwark and Bermondsey) : It may be helpful for me to add an equally short point from a different geographical perspective. A matter that concerns me, and is a regular concern of hon. Members who represent inner cities, is the way in which our fuel industries and the cost of them affect those on the lowest incomes. A quarter of my constituents are pensioners, and the problem of fuel poverty is illustrated most graphically by a simple comparative statistic. In general terms, for people in the middle classes and middle income brackets, fuel bills are on average 5 per cent. or less of their domestic outgoings. For those in the lowest socio-economic groups and those in the bottom 20 per cent. of income groups, the fuel bill is sometimes as high as one quarter of the regular household budget. The Minister will know that the figure is sometimes one fifth, but often rises up to one quarter.

The group made up of pensioners and the poorest in our society needs to be well represented round the table at which consumers' needs and the implementation of supply systems and programmes that affect consumers' needs and the cost of supply will be determined. I must say to the Minister with some strength that I am aware that his Department has regularly monitored the way in which the cost of fuel bites on those who are least able to afford it simply because they have the lowest household income for everything, including fuel. I am aware that the Department knows and agrees that the statistics are often as I have specified and that fuel can use up a substantial part of those household budgets.

In those circumstances, will the Minister give me and those of us who represent areas where there are many on low incomes and many pensioners, including those living alone, some reassurance that the voice of those people will be well and truly represented on the consumers' committees?

Mr. Thomas McAvoy (Glasgow, Rutherglen) : The Opposition welcome the Government's decision to accept the Lords amendment and I want to spend a couple of minutes outlining the reasons for that. In Committee, we took the view strongly that information is power and that it is essential that there is as wide a spread of information

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as possible to ensure that the system brought forward by the Government for monitoring the electricity industry is accountable not only to local people, but, more widely, to allow full accountability and scrutiny.

The Government originally outlined a regional set-up which meant that there was no link-up for information to be shared throughout the country and for knowledge to be used to put pressure on the system for the benefit of the consumer. The intention behind the amendments and the reason for our support for them is to ensure that matters that affect the interests of electricity consumers generally, including the important issue of prices, are kept under review at a national level in a formal structure. That would ensure a forum for discussion and the exchange of information relating to national policy for electricity consumers. In Committee, we maintained strongly that the Government's proposals were not enough and that there should be some improvements. We welcome the proposals in the amendments which will ensure that there is a national forum to scrutinise what is happening in the electricity industry. I always shudder when I quote an hon. Member from a Committee Hansard because I think that in future another hon. Member may do the same to me. However, I will take that risk, so here goes. I will quote from a series of debates in which we were putting forward the point that the Government's proposals were not enough. I take some delight at this stage in quoting some of the Minister's comments. He said :

"The hon. Member for Gordon claimed that our proposals would not allow for comparison or variation of performance between different areas and regions."

That is, of course, the purpose of the amendment. He continued : "That is highly unlikely for two reasons. Clause 46(2)(d) provides a statutory duty under which the director general must publish in his annual report a general survey of the activities during that year of the consumers' committees'. That applies to all consumers' committees throughout the country. On that basis, people will have the means by which they can compare the advice and activities of the different consumers' committees. That is clearly stated as an obligation in the Bill."

The Minister was saying then that the status quo was fine, yet he is now prepared to accept an amendment that puts forward a principle that he rejected in Committee.

7.45 pm

He also said :

"It is right that the Bill allows for independent reports to be made more often than annually and on a regional basis. It is also proper that the reporting structure should be encompassed within the new regulatory regime of which the committees will be part. That is the radical new step which I think that hon. Gentlemen will understand if they reflect on it later outside the rhetoric of party confrontation. If they do not, they should have a word with the area councils in their constituencies. The councils are over the moon about the new teeth that we are giving to consumer representatives-- [Interruption.] I am not exaggerating."

His rhetoric was part of party confrontation and he automatically rejected the Labour amendment. That rhetoric has now been shown to be misplaced and he has accepted the principle that he was attacking then. However, his rhetoric carried him away in Committee. About major improvements for consumers he said :

"We have given them teeth and made them part of the regulatory body. On that basis, we unashamedly ask Opposition Members to withdraw their amendment. If they do not, we shall triumphantly vote against it."--[ Official Report, Standing Committee E, 16 February 1989 ; c. 1033-34.]

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We welcome unashamedly the conversion of the Government to our point of view and triumphantly we will not vote against the proposal.

Mr. Malcolm Bruce : I want to speak briefly to amendment (a) to Lords amendment No. 2 which relates to the annual report. It is a matter that we debated fully in Committee, but as the amendment has been selected, it is an appropriate point at which to say to the Minister that the arguments we put in Committee, which the Labour party supported, about the desirability of having an annual report lead me to say that such a provision should be in the Bill. I hope that the Minister will tell us, if he is not prepared to accept the amendment, what assurances he can give.

The hon. Members for Rother Valley (Mr. Barron) and for Cardiff, West (Mr. Morgan) said in Committee that over the years much useful information had been contained within the annual reports from consumer bodies. Without an annual report, it is felt that one cannot monitor from year to year how effectively consumer interests are being protected. The objectives may not be set out and the success in meeting objectives may not be recorded from year to year. It remains my view and, I suspect, the view of Labour Members that annual reports are desirable. It is a matter of regret that the Bill does not require them.

I would be delighted if the Minister were to accept the amendment. If he does not, I hope that he will tell us what measures he is likely to take to ensure that, in general, annual reports will be the norm rather than the exception.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer) : I begin by speaking to the Lords amendments, which I ask the House to accept. They deal with a variety of aspects of the new regional consumer committees which will be set up under clause 2 and which will be a key component of the radically new consumer protection arrangements in the Bill. They will be the director general's eyes and ears. For the first time a set of statutory powers and duties will equip the committees with a formidable set of teeth to deal with consumers' concerns. The Government's basic proposals have been widely welcomed by existing consumer bodies.

The amendments address aspects of the committees' make-up and functions in ways which the Government believe will materially improve their effectiveness. There has not been a fundamental change in the Government's policy, as the hon. Member for Glasgow, Rutherglen (Mr. McAvoy) implied. These are strengthening amendments. We have listened to what was said in Committee, in the House and in the other place and we have introduced improving amendments which do not go against the concepts that we advanced earlier.

Amendment No. 2 removes the criterion which the director general was required to take into account when appointing members of the consumers' committee. That will increase his flexibility when making appointments to the committee and will help to ensure that the best people are appointed, from whatever background. In answer to the hon. Members for Orkney and Shetland (Mr. Wallace) and for Southwark and Bermondsey (Mr. Hughes), may I say that we are not specifying particular groups, whether on a regional basis or on the basis that they represent poor people or pensioners. They made a good point. It is right that the director general should consider such groups, but

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appointments will be at his discretion. That is right. Above all, he should look for ability. As the committees will be structured regionally, they will have a regional dimension.

In answer to the hon. Member for Rutherglen, may I say that I have never said that meetings of such groups were a bad thing. The Government have never suggested that. We are against reinstituting a completely independent national body such as the electricity consumers council. It is proposed in amendments Nos. 62, 63 and 65 that there should be a national consumers' consultative committee chaired by the director general and composed of the chairmen of the regional consumers' committees. The director general will include in his annual report a general survey of NCCC activities. That, incidentally, partly answers the question about annual reporting raised by the hon. Member for Gordon (Mr. Bruce).

The committee will meet at least four times a year. It will keep under review matters affecting the interests of consumers of electricity and facilitate the exchange of information between the director general and the consumers' committees. It will be a good forum for the chairmen of the committees to compare notes and for the director general to compare the standards of the committees. We welcome that and I propose that we accept the Lords amendments. The effect will not be the same as setting up a completely independent and different consumers' body, like the present one.

Mr. Simon Hughes : I sat on the Committee of the Bill to create London Regional Transport in which we had a similar debate about consumers' interests. At the end of the day some concessions were made to include a representative, for example, of the disabled, and undertakings were given that certain matters would be for the director general to consider. Will the Minister go further and say that people representing groups suffering from fuel poverty, whether on a geographic or demographic basis, will be specifically represented?

Mr. Spicer : The director general designate will look carefully at what the hon. Gentleman and other hon. Members say about the interests that should be represented on the committee. I am sure that he will take these exchanges seriously when assessing who should be represented. That is different from a statutory requirement to include certain groups. The problem with designating specific interest groups, whether regional, poor people or others, is that one can think of many types of groups. It is completely open-ended. We want an effective group to represent consumers and that can best be done by the director general appointing the members in conjunction with the chairmen.

Mr. Hughes : Will the Minister make it clear that it is his view that the issue of fuel poverty must be properly addressed by the representatives chosen by the director general? That is important because it affects the most vulnerable group of consumers. If the Minister can say that, it will confirm the importance of this exchange.

Mr. Spicer : I do not want to say anything from the Dispatch Box which gives the impression that the Government are leaning on the director general. Personally, I believe that it is a good idea to accommodate the interests of poor people within the new structure. That

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is why we have taken so much trouble to introduce licensing conditions on prepayment metering systems and why so much effort has been devoted to the licences. Clearly the interests of poor people will be borne in mind by the director general and in the licensing conditions for prepayment meters. The statutory position is clear. This is a discretionary, not a statutory, power. I am sure that the director will listen carefully to these and other exchanges. The hon. Member for Gordon wants an annual reporting system. Amendment No. 63 already places a duty on the Director General of Electricity Supply, who will chair the NCCC, to include in his annual report a general survey of its activities during the year. That is in addition to his existing duty to include a general survey of the activities during the year of the regional consumers' committees in his annual report, which will be published. We fully understand the purpose of amendment No. 65(a), but its spirit is accommodated within our amendments and in the Bill.

Mr. Malcolm Bruce : I hear what the Minister says, but he will recall the debate that we had in Committee, when we said that it was not entirely satisfactory that the director was effectively determining what he put in his report rather than putting in what the consumer committee wanted to be said. Will the Minister at least give an assurance that he will monitor the situation if there is any evidence that the consumers' committees are dissatisfied, and that the Government will review the matter if the feeling is that the consumer interest will not be adequately reported?

Mr. Spicer : I can speak with authority only to what is in the Bill. I can say authoritatively that we have taken on board many of the arguments made to us in Committee, and that there will be an annual publishing requirement on the various committees and the National Consumers' Consultative Committee as well. The hon. Gentleman has made this good point fairly, but it has been accommodated within the Bill. It would be worthless for me to go further because we are speaking to a future Act of Parliament, and, however many protestations or exhortations I make, that is what will determine what happens. The Bill meets the hon. Gentleman's objection, and I hope that on that basis he will not press his amendment to a vote. However, I urge the House to agree to the Lords amendments. Question, That the amendment to the Lords amendment be made, put and negatived.

Lords amendment No. 2 agreed to.

Lords amendments Nos. 100 and 62 to 65 agreed to.

Clause 3

General duties of Secretary of State and Director

Lords amendment : No. 6, in page 3, line 24, at end insert-- "(bb) to promote research into, and the development and use of, new techniques by or on behalf of persons authorised by a licence to generate, transmit or supply electricity ;"

8 pm

Motion made, and Question proposed, That this House doth agree with the Lords in the said amendment. [Mr. Michael Spicer.]

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Madam Deputy Speaker : With this it will be convenient to take Lords amendment No. 90, to insert the following new clause--

Promotion of New Techniques in National Interest

".-(1) The Secretary of State shall exercise the power conferred on him by section 3 of the Science and Technology Act 1965 (expenditure on research and development in science or technology) for the prupose of promoting such research into, and such development of, new techniques relating to the generation, transmission or supply of electricity as appears to him to be necessary in the national interest.

(2 The Secretary of State may, if he considers it expedient for purposes connected with the performance of his duty under this section, serve notice under this subsection on any licence holder or any person who is authorised by an exemption to generate or supply electricity.

(3) A notice under subsection (2) above may require the person on whom it is served to furnish, at a time and place specified in the notice, to the Secretary of State such information about that person's business as may be so specified.

(4) Subsections (3), (5) and (7) to (9) of section 94 above shall apply for the purposes of this section as they apply for the purposes of that section."

Amendment (a), in line 15, leave out (3)'.

Mr. Malcolm Bruce : As the Minister will realise, the purpose of the amendment is to delete subsection (3) of Lords amendment No. 90. It is an attempt to get some clarification from the Minister about what the other place had in mind when it required the person on whom the notice is served

"to furnish, at a time and place specified in the notice, to the Secretary of State such information about that person's business as may be so specified."

The Minister will understand that, to somebody with my background, that is a rather sweeping statement, which gives ill-defined powers to require information, for no clear purpose. To put it in a more populist expression, the purpose of my probing amendment is to assert the importance of freedom of information.

What information will be sought? Should it not be more clearly defined? What assurances do we have that the notices will not lead to the seeking of information that is not necessary or relevant? There could be an unwarranted interference because the person in question may not wish to disclose the information and may not feel it necessary or relevant. There could be an unwarranted interference because the person in question may not wish to disclose the information and may not feel it necessary to disclose it, but he might be penalised if he does not. This is an attempt to clarify the position. If the Government accept all of the new clause, what does subsection (3) mean? Would not the clause be better without it?

Mr. Michael Spicer : Amendments Nos. 6 and 90 concern a subject that was discussed at length in Committee--research and development and the impact that the Bill will have on it. The effect of Lords amendment No. 6 is to require the director general and the Secretary of State to take research and development into account when exercising their functions under part I. The essence of the new clause in Lords amendment No. 90, which implements recommendations expressed in another place, is to be found in subsection (1), which places a duty on the Secretary of State to use his powers to support research and development under the Science and Technology Act 1965, for the purpose of promoting research and development of new techniques relating to the generation, transmission or supply of electricity as it appears to him to be necessary in the national interest.

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After privatisation, the electricity industry may focus on near market and operational research and development. The practical significance of the new clause will be limited to long-term research and development. That is the first answer to the point put by the hon. Member for Gordon (Mr. Bruce) about how open ended all this is. It will require the Secretary of State to fill in any gaps that he feels should be filled in in the national interest. In order to discharge this duty, the Secretary of State will need to know what the industry is doing, so subsections (2) and (3) provide a reserve information-gathering power to enable the Secretary of State to get information from electricity licensees, or those exempted from the need to have a licence, about their relevant research and development programmes. Subsection (4) deals with the confidentiality of the information so provided and enforcement.

The answer to the hon. Member for Gordon is that there has to be a specific reason why the information should be gathered. That reason is where the Secretary of State believes that there might be a gap affecting the national interest in research and development in the privatised companies, and where he may therefore wish to take decisions that might involve future Government funding. The Government would not be able to collect information without cause and would, if necessary, have to prove what the cause was. That cause is specified, and there is a confidentiality subsection attached to the information-gathering process.

Hon. Members on both sides of the House have said that they are worried about this aspect of long-term research, and the Government are meeting that concern in this way. I hope that I have given the hon. Member for Gordon the assurances that he is seeking and that he will not press what he has already described as a probing amendment. I also hope that he will support the reasons behind the powers that the Government are giving themselves.

Mr. Malcolm Bruce : This part of the clause is less felicitously worded than some of the amendments and new clauses that I have tabled which could have improved the Bill. Therefore, I am surprised by the readiness with which the Minister is prepared to accept the clause, which is woolly, ill defined and sweeping. I accept his assurances, but, as he said earlier, the final authority is the legislation that we are passing. I am uneasy that we are giving the

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Secretary of State power to secure quite a lot of information that, at least in theory, could be detrimental to the company concerned--in other words, it could be commercial information.

I note what the Minister said about the confidentiality arrangements. On that basis, I shall let my remarks rest and I hope that I shall never have to refer to them again. I hope that practice does not prove that companies will be asked to divulge information in a way that is not in their interest and is not justified, and that the Secretary of State will not interfere in an unwarranted manner.

Mr. Kevin Barron (Rother Valley) : I do not share the optimism of the hon. Member for Gordon (Mr. Bruce) about what the Minister has said about Lords amendment No. 6 and the introduction, at long last in the history of this Bill, of a clause that mentions research and development in this industry or industries. I do not share his optimism that mounds of information will be collected, because the obligation that the clause imposes is only that, in the Minister's words, the director general and the Secretary of State must take account of research and development. I am not sure whether taking such considerations into account will result in a lot of gathering of information about these matters.

The official Opposition are at least pleased that in the other place the Government decided to amend the Bill to promote research and development. It is a great pity that on Second Reading, in Committee and on Report the Government chose not to accept new clause 7 which went into detail on how research and development could be protected on behalf of the nation for many years to come. In Committee, the Minister told us that it was not necessary to write in a commitment to research and development because the need to provide a secure supply would be pressure enough on the privatised industry. Other similar unsupported assertions were made. I am glad that the Minister has now at least admitted that near-market considerations are more likely to be taken into account by the generators and others in the industry than the long-term research and development interest for which we argued.

In the same debate the Minister said that the industry should not have to provide information on environmental matters. That was another matter that was to be left completely to regulation. Yet, at this late stage, environmental considerations are being brought into play. Of course they are not the considerations for which my hon. Friends and I argued in the earlier stages of the Bill's passage but the Government are nevertheless admitting at long last that the purely ideological flotation that they planned many months ago is not practicable. The Bill's inadequacies would inevitably have meant that if such matters as research and development were left to the market, Britain's consumers would not have been afforded the protection that they need.

In moving the amendment in the other place, the Parliamentary Under- Secretary of State said :

"The new clause will ensure in an explicit and unambiguous way that after privatisation there will be a clearly defined long-stop responsibility for ensuring that R and D which is essential in the national interest is carried out. It will do that by providing statutory underpinning to the present informal arrangements by which National Power and Power Gen, the two main successor power generating companies, will continue to co-operate with ACORD so

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that the latter can advise the Secretary of State whether there are any research and development gaps which it is essential that he should fill in the national interest. It would then require the Secretary of State to fill those gaps if it appeared to him that they should be filled in the national interest".--[ Official Report, House of Lords, 5 July 1989 ; Vol. 509, c. 123-34.]

Does the Under-Secretary agree with what was said in the other place ; can he give us an unequivocal yes to that statement? If he does agree, we must go on to ask him--given that we are now dealing with the matter in this place--why we ended up with a provision which, it appears to observers, is unlikely to give us the commitment to R and D that was advocated in the other place.

8.15 pm

It is always interesting to hear this Government acknowledge that the private sector may not meet the needs of the nation and concede that Governments have to intervene from time to time. We must also note, however, that the Government's record in setting priorities and advancing the development of new design and technology in the energy sector has been dismal. They may recognise that the nation's interests must be looked after, but nothing that they have done in the past 10 years proves that they recognise what those needs are. Let me digress for a moment. I happened to read the report of questions to the Chancellor of the Duchy of Lancaster in yesterday's Hansard . In answer to a question directly related to civil research and development in industry, the Parliamentary Under- Secretary of State for Industry and Consumer Affairs said, I assume speaking on behalf of the Government :

"We believe, and continue to believe that by having a low tax regime and an environment in which companies can be profitable, we leave the decision on how to invest in their hands, rather than confiscating money from companies through taxation and imposing our decisions on them about how they should invest. That surely makes sense in a vigorous, capitalist economy."--[ Official Report , 19 July 1989 ; Vol. 157, c. 335.]

That may make sense to the Under-Secretary of State for Industry and Consumer Affairs, but it does not seem to make sense to Ministers in the Department of Energy who have introduced safeguards, however poor, in relation to investment in research and development in the energy sector.

The Government have not been able to get the balance quite right and the reason is only too clear. Parliamentary experts have recently commented in detail on research and development in the sectors covered by the Department of Energy. We need only look at the last two reports of the Select Committee on Energy to see that research and development has fallen by the wayside, and has not been promoted by the Secretary of State as the amendment suggests it should. That means that the national interest has not been served as the other place so rightly said it should be.

The Select Committee's latest report on the greenhouse effect contains an indictment of the way in which the Department has allocated its research budget. Given the urgency of the problem, it is remarkable that the Department's research budget is actually to fall in the near future. Let us compare the sums allocated to research and development by the Department of Energy in the next 12 months, because those figures will affect environmental matters, too. We find that a meagre £2.6 million is to be spent on coal research while a massive £208 million is to be allocated to nuclear research and development. That money is being given to research and development in an

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