House of Commons Hansard Debates for 18 Nov 1991

Mr. David Nicholson (Taunton) : I must apologise as I shall not be here for the wind-up speeches. I shall refer to the speech by the hon. Member for Worsley (Mr. Lewis) later as it was rather more constructive than the speech of the hon. Member for Dunfermline, East (Mr. Brown), who opened the debate for the Opposition. His speech was singularly sterile and he spent a large part of it making fairly obvious points. They were obvious coming from the Opposition, but there was a certain amount of assent from Conservative Members about some of the salary increases for chairmen and chief executives of the newly privatised companies.

The hon. Member for Dunfermline, East was singularly unfair when he said repeatedly that there was no ministerial response to those increases and my hon. Friend the Under-Secretary of State heard him. I recall my right hon. Friend the Prime Minister and my right hon. Friend the Secretary of State for Energy commenting that some of those increases were beyond the pale.

However, I shall dwell not on those matters but on a general issue which is valid. As industries pass from the nationalised to the private sector, previous distortions and holding down salaries will become apparent and a rectification of salary levels will have to take place to enable the companies to compete with the private sector in this country and with similar organisations abroad.

I regret that so many of the utilities hoiked up the salaries of the chairmen and chief executives without considering those of senior and middle management, or of the professional, scientific and technical grades which they need to attract to do their jobs competently. In both my constituency and the House I have been critical of the way in which the utilities have handled that matter. The hon. Member for Dunfermline, East was scathing about what he described as the excessive profits of the

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utilities. The Labour party cannot have it both ways--it has criticised the Government in the past 10 years for the low level of investment in the water industry, while ignoring the fact that the last Labour Government slashed investment in that industry. Where will investment come from if not from profit? Are not the bulk of those profits being ploughed back into investments in the industries to enable, them, as in the case of British Telecom, to compete in a competitive and technically advanced world? It is vital to carry out the vast work in the water industry that the last Labour Government and this Government in their early years neglected. The fact that there will be £28 billion of investment in the water industry in the next 10 years, the bulk of it from profits, is an achievement. That is one of the most important arguments in support of privatisation.

I welcome the Bill and the debate on Second Reading which will enable me to mention various aspects of some utilities. The debate also enables us to review the progress of privatisation and the success thereof. To start with, we must judge by constituents' letters and queries. In the past year and in this Parliament I have received a number of complaints about British Telecom--not a large number, but perhaps a score every nine months.

I must inform the hon. Member for Worsley that a number of those complaints refer to the chatline scandal that he mentioned. I shall not develop that argument as he has stated his case, but I pay tribute to his pioneering work on the subject. Of course, such calls can be traced. When a wife finds that a massive bill has built up as a result of calls to such numbers--as happened in a case in my constituency--every other member of the family goes to considerable lengths, such as visiting a priest, to deny that they made the calls. What does that do to relationships within the family? The hon. Member for Worsley made his point and I endorse it.

As for British Gas, I must confess that, with one exception, I have received no complaints. That may be because I live in a semi-rural constituency. Although most of Taunton and Wellington are on the gas main, the rural areas are not. I shall mention the availability of electricity to some of my more rural constituents in a moment. It is a great tribute to British Gas that I encountered no complaints. I hope that the Bill will help in this further regard. At a recent meeting with my branch of the National Farmers Union, some fruit growers told me how gas prices affect them. The case is always made that competition, particularly from Holland, is more heavily subsidised. There is an article in Under Glass about it. In the 1970s many growers were happily converting to gas on interrupted supply contracts. When British Gas was privatised, that arrangement came to an end, so the debate on energy costs has been reopened. A case is given of a grower, not in my constituency, who has 2.25 acres of tomatoes. He burns about 120,000 therms a year. Until 18 months ago he praised the use of gas. In 1988-89 he was paying about 27p a therm. During the season the price for him has been raised to 32.3p a therm and he is told that for the following season his price will go up to 35.84 a therm. He says that those price levels make it very difficult to make a living and he fears that the size of his undertaking makes him a prey. His neighbours,

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whose undertakings are twice the size of his, still pay 27p a therm--5p less than he does. He reckons that that makes a difference of £12,000 to his income.

British Gas softened its position slightly when it announced a tiering of prices, depending on quantity used, but that applies only to growers using up to 25,000 therms. As I have said, the Dutch price is below that. In May, any Dutch user of 10,000 therms upwards was paying 21.5 a therm. The matter was drawn to my attention by Mr. Newton-Scanlon of Nailsborne nurseries in my constituency. Most hon. Members with semi-rural constituencies will know of people who face similar competition from the Dutch and similar problems with British Gas. It is pointed out that Ofgas has behaved well and pursued the matter vigorously. I hope that we may be able to pursue the matter in Committee.

I had little controversy from my constituents about the privatisation of electricity. A small but significant number who knew quite a lot about the industry wrote to me two years ago about the chosen method. I must pay tribute to my right hon. Friend the Secretary of State for Energy for the way in which he has overcome what might have become considerable difficulties in the privatisation process. I think that we have a satisfactory arrangement now. In a rural constituency, people expect to be off the gas main--they do not expect to have gas. However, these days they expect to have access to electricity. I am sorry to say that there are still small groups, perhaps only a dozen, such as those in a particular valley near Winsford on the edge of Exmoor, who are not yet connected to the grid. They have pursued the matter and tried as a group to explore what the cost would be to be linked to the grid. These are small-scale farmers who face the sort of difficulties that many farmers face at present. They have been told that it would cost about £10,000 per family, which is beyond their means. Therefore, they must generate their electricity and their own generator is costly and not always reliable. Again, I hope that we may explore that in Committee.

About two years ago, when the matter was first raised with me, I tabled a written question asking what estimates the Minister or the electricity industry had of the number of people in England who were not connected to the grid. I obtained the reply that that information was not available. It is in the public interest that that information should be available. We should know how many of our fellow citizens--it is only a tiny minority-- are unfortunate enough not to be connected to the electricity grid in England and, I imagine, in Scotland and Wales.

I have been slightly critical of the electricity industry, but I pay tribute to the way in which, in the past few days, South Western Electricity has responded to my representations by some constituents assisted by me. It was proposing to shut down the supply one Saturday to do urgent maintenance work at the Wellington sewage plant. That would have meant considerable difficulty for one or two firms and shops.

This morning, I received a letter dated 14 November saying that the SWE engineer had advised my constituents that it was not feasible to change the shut-down date, but had offered technical assistance so that a small generator could be used as an alternative supply for the duration of the shut-down. That was accepted ; my constituents arranged to hire a generator and, as far as everyone is aware, those businesses could function throughout the

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shut-down period last Saturday. I welcome that. It shows a utility responding to reasonable representations--in this case, from small industrial customers. I hope that it is a harbinger of the way in which matters will progress.

British Telecom was the first major utility to be privatised. We have heard legitimate criticisms from the hon. Member for Worsley and a fair amount of flak from the hon. Member for Dunfermline, East, so it is important to place it on record that BT's prices have fallen by more than 20 per cent. in real terms since 1984 and will fall by a third by the end of the present price cap in July 1993.

The price formula governing BT prices has been strengthened three times since privatisation. It now stands at RPI minus 6.25 per cent. That means that the cost of a range of calls will fall in cash terms next year. As a result, a three-minute cheap-rate call now costs less in absolute terms than it did in 1981. There is a reduction of 50 per cent. in real terms. BT's new low user scheme means that 2 million people will pay half the normal rental and get 30 free call units per quarter.

In my first year as the Member for Taunton, I had several complaints, particularly from villages and small towns in rural areas, about telephone boxes. Many hon. Members will have had similar complaints about the inadequacy of call boxes. Tremendous tribute should be paid to BT--I am not saying that this removes my criticisms of the salary increases of the chairman or chief executive--that since 1984 the number of call boxes has increased from 77,000 to 98,000 and that 96 per cent. of those boxes work at any one time. That is an increase from only 75 per cent. in 1987. It is a considerable achievement, and we should see similar performance achievements in the other utilities.

I welcome the fact that the Bill will provide Oftel with powers to set guaranteed standards of service for residential and small business customers and that, if a designated operator fails to meet guaranteed standards, he can be required to pay compensation to the customer. I also welcome the fact that, if a customer and a designated operator disagree on whether standards have been met or compensation is due, either may ask the director to settle the dispute. The director's decision will be final. I welcome the measures taken, and I hope that we can explore them in detail in Committee.

I referred earlier to problems with the gas industry, but, as a general rule, British Gas has performed extraordinarily well since privatisation. Gas prices for domestic users have fallen by 14 per cent. in real terms, and those prices are among the lowest in Europe. The prices charged to some European businesses may be lower, but, on average, European households using gas for central heating pay 40 per cent. more than British ones.

An important fact was revealed last week when a number of my hon. Friends and I met the south-west and west midlands branches of the Gas Consumers Council. We were told that disconnections for debt are at their lowest level since records began. I welcome that. I also welcome the proposals in the Bill which mean that a further 7 per cent. of the supply market will be taken out of the monopoly. That will enable new customers to benefit from competition as they will be allowed to buy gas from anyone on better terms and at a lower price. Such customers may include the market gardeners whom I discussed earlier as well as small and medium-sized manufacturers who use gas to operate their furnaces and larger retailers who use gas for heating.

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My hon. Friend the Member for Beaconsfield (Mr. Smith) said that certain provisions in the Bill will mean that schools which use gas for heating can group together and thus achieve economies of scale in the cost of their gas. I hope that those measures will be successful.

Certain basic superstitions were expressed about the privatisation of part of the water industry. Responsibility for sewage remains under public control, which is correct. The privatisation was controversial because of the widely held belief that water was some sort of natural, God-given commodity that we enjoyed without the interference of nasty industrial money-making processes. Anyone who knows anything about how water, of varying quality, reaches our taps, must realise that that process relies on major investment and infrastructure.

Such investment is also important to attain the environmental requirements that we all desire for our rivers, beaches and the disposal of sewage. People have come to recognise the necessity for the privatisation and the way in which it was undertaken. They also welcome the great investment that is now being made in the water industry.

There are complaints about water charges, and I receive my fair share of them. Earlier, an hon. Member referred to the way in which water charges are assessed. That issue is probably not relevant to the Bill, but we may be able to squeeze in a debate about it in Committee. For the majority of people, water charges are assessed on rateable values and that produces a number of inequalities. I hope that the water companies will make rapid progress in the introduction of meters and charges that are more closely related to the amount of water used. Such progress is important given that, in many cases, rateable values are 15 years old.

A number of building companies in my constituency have long complained to me about the infrastructure charges on new houses. I shall not develop that argument now, but I understand that the director general of Ofwat has expressed reservations about whether infrastructure charges are the most suitable way in which to recover the costs of extending water and sewerage systems. As part of his public consultation on his paper "Paying for Water", the director general has said that further thought needs to be given to those charges.

In a letter to me on 30 September, the secretary of Ofwat wrote that the director general

"will be examining the position of infrastructure charges within the overall charges for each company in considering responses to his consultation paper on Paying for Water'."

I welcome that, because we need to pay attention to the way in which infrastructure charges for new housing operate. We must consider whether they are fair to the businesses involved and whether they serve the interests of reviving the building industry, which is in considerable difficulty.

I share the regret expressed by my hon. Friend the Member for Beaconsfield that British Rail does not come within the purview of the Bill. I use the InterCity link between Taunton and Paddington, and I do not encounter the ghastly problems faced by my hon. Friends who represent Essex and other southern regions. However, we are all irritated when there is a delay or rolling stock breaks down for no apparent reason. It is also irritating, although it may seem a trivial point, when a train running

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on a Sunday--I accept that it may happen at any time--which is scheduled to have a buffet car does not have one.

I welcome the proposal to encourage British Rail to pay compensation to travellers when particularly bad service has been provided. That will mean that the consumer feels that he has got something back for the dreadful service he encountered and it is the means by which to tot up the number of occasions on which a particular service has had to offer such compensation. One would then get an idea which services are badly managed.

In the debate on the Queen's Speech, I said that I did not wholly endorse the privatisation pressures on British Rail. That argument must be examined carefully, although I accept that there is scope for improvement in the management of British Rail. A sensible process of privatisation may enhance that management. Although British Rail does not fall within the purview of the Bill--who knows?--we may have the occasional debate on it in Committee.

It is important to remind the House of what underlies the Opposition's response to the Bill as well as their carping about the process of privatisation. The Opposition make such criticism despite the fact that the privatisation of the telecommunications and gas industries is widely accepted as successful. There is also a growing recognition that the electricity and water privatisations undertaken in this Parliament will also be successful. I accept that time is needed to prove that.

Despite the fair and effective words of the hon. Member for Dunfermline, East, deep down the mentality governing the Opposition is a desire to nationalise, renationalise and control. I remind the House of remarks made by the Leader of the Opposition. He is now cleansed and purged, but in December 1974 in Labour Monthly --I accept that he was a young man at the time--he said :

"There is no need to be apologetic about the extension of public ownership or the establishment of workers' control. They are now prerequisites of the economic survival of Britain."

We should gently remind people of those words.

Ten years later, in October 1984, he said in Marxism Today : "The process of renationalisation is basic to my view to democratic socialism."

He may wish us to forget those words. The record of Labour's pledges to renationalise show that the hankering is still there. The two targets for Labour's first round of renationalisation are the water companies, for which the market capitalisation is £8.2 billion, and the National Grid Company, which would cost an estimated £1.7 billion. In addition to all their other spending commitments, that is a cool £10 billion for the first round of their renationalisation proposals.

In case anyone doubts my reference to those commitments, the Labour energy spokesman, the hon. Member for Holborn and St. Pancras (Mr. Dobson), said :

"We have said all along that we will bring the National Grid Company back into public ownership. It will be a high priority, I assure hon. Members".- - [Official Report, 2 July 1991 ; Vol. 194, c. 234.]

We must remember that.

Mr. Rowe : Will my hon. Friend remind me where high priority comes in the list of top priority, high priority and prime priority ?

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Mr. Nicholson : I hope that my hon. Friend will develop that interesting linguistic point in his own speech.

Labour Members have given so many priorities and made so many commitments to health, social security, industry and overseas aid that the poor shadow Chancellor must be desperate. "Opportunity Britain", which the hon. Member for Dunfermline, East said was a moderate document, said :

"The provision of water is so fundamental that it is a priority"-- not a high priority--

"for return to the public sector".

In an interview last September in Director, the Leader of the Opposition reaffirmed Labour's

"pledge to return the water companies to public ownership." Labour does not stop with those utilities and companies that have been privatised in this Parliament. The hon. Member for Kingston upon Hull, East (Mr. Prescott) has made it clear that other industries remain on the shopping list. For example, he said in Business of May 1990 that BAA plc--formerly the British Airports Authority--was one of the

"areas which we are going to turn into public utility companies. We are not going to leave them as private sector companies". I am not sure how an area can be nationalised, but I leave that to my hon. Friend the Member for Mid- Kent (Mr. Rowe), who may wish to pursue the linguistics of the matter.

When the hon. Member for Kingston upon Hull, East was pressed in that article about whether Labour's plans would involve nationalisation, he half backtracked and said :

"I have already told you more than I should".

That suggests that the Labour party have a secret agenda. The only renationalisations on the record are electricity and water, but there may be a little list, as in the run-up to previous elections, when they had programmes for sections of industry all over the place. Perhaps their plans are being kept under wraps and we shall have more leaks from the more honest or indiscreet Labour spokesmen in the coming months.

I always enjoy quoting the hon. Member for Dagenham (Mr. Gould) on local government finance. He was Labour's trade and industry spokesman some time ago. In The Sunday Times of 6 November 1988, when he was part of a process of reforming, modernising and purging the Labour party, he said :

"Our purpose in looking at more flexible forms of common ownership is to enable us to represent more faithfully the objectives of clause 4, to which I remain personally committed".

That is what the Labour party really wants. I thought that the hon. Member for Dagenham was the face of the new 1990s Labour party, but he is personally committed to clause 4.

We all know what the Leader of the Opposition would like to do. If he ever obtained the power, I am sure that he would not require much pressure from the right hon. Member for Chesterfield (Mr. Benn) to drive him that way. The right hon. Member for Chesterfield said that the Labour party may have to keep quiet about certain plans if it is to win, but that when it had won it could scrap nuclear weapons, nationalise a few industries and possibly-- who knows?--start to take Britain out of the European Community. There, Mr. Deputy Speaker, I stray into a debate that we shall begin on Wednesday.

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I welcome the Bill and the measures of reform and guarantee that it gives to customers. I believe that it is welcomed by the utilities, the regulators and most of the press who have commented on it. Indeed, it is welcomed by most people except the Labour party. Although we may regret that, we should not be surprised.

8.15 pm

Mr. Malcolm Bruce (Gordon) : The Bill is certainly necessary, although it is rather late and its fundamental objectives are rather weak. The Secretary of State made more extravagant claims for the Bill than its content would justify. To some extent, it increases regulation on the margin, which is welcome and necessary, and proposes some competition on the margin. However, it does not deal with the fundamental problems in a radical way. Indeed, as several hon. Members have already said, it is a confession by the Government of how they have mismanaged the entire privatisation programme. During his opening speech, I asked the Secretary of State a question to which he did not give a full or satisfactory answer- -why had not the Government sought to introduce those measures before they privatised monopolies, rather than wait until the customers had suffered the consequences of several years of high prices and not necessarily improved services?

The Monopolies and Mergers Commission has already been mentioned and it has been suggested that it will have to be involved again. One of the problems is that the Government's momentum to privatise was determined for ideological reasons and on a tight time scale. As a consequence, it was not possible to privatise in a way that put customers' and consumers' interests first because the overriding interest was the Conservative Government and ensuring maximum take up. The potential shareholders' interests were far more important than those of the consumers. Indeed, it was necessary for the Government to carry the management of those companies with them so that any radical measures to expose the industries to serious restructuring or competition were not on the agenda.

It was well known that Sir Dennis Rooke made it clear to the right hon. Member for Worcester (Mr. Walker) that the privatisation of gas should be on his terms, and those were the terms on which gas was privatised. On the first major privatisation--that of British Telecom--the right hon. Member for Hertsmere (Mr. Parkinson) gave the game away when he said :

"I have decided against breaking up BT before offering it to the public. To do so would require a delay of many years in order to put British Telecom's accounts into a form that would make piecemeal disposals possible".

The idea was considered but rejected because it did not meet the Government's timetable. The right hon. Member for Hertsmere made extravagant claims at that time for the purposes of privatisation which, had they been fulfilled, would have made today's Bill unnecessary. He said :

"In the past, it seems, we have never been concerned enough to regulate our monopolies. Customers have had little redress against BT, or the Post Office before that. It has been impossible to judge whether increases in telephone charges could be justified. After all, when people point to the profits, a monopoly can turn in large profits year after year, whether it is efficient or not."--[ Official Report, 18 July 1983 ; Vol. 46, c. 30- 34.]

That is the crucial point about the argument about British Telecom's current profits.

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Mr. Redwood : How do the duopoly policy in telecommunications and the restructuring of the electricity industry fit that picture? Did the electricity industry management welcome it?

Mr. Bruce : The point about the duopoly policy in

telecommunications has already been made by the statistics. The proportion of the telecommunications industry that is outside British Telecom control does not constitute a duopoly. It is a monopoly with a little managed competition on the fringes. That managed competition may increase in time but it is stretching credibility a long way to suggest that a company that accounts for more than 96 per cent. of the market does not have a monopoly. In that respect, the Minister's intervention is not valid, but he may have a point in relation to electricity.

The right hon. Member for Hertsmere blew the whistle on his colleagues when he disarmingly said that, when he privatised electricity, he would not make the same cock-up as they had done with British Telecom and British Gas. He did not, but he made a different one. He created two competing monopolies which are causing considerable unrest within the industry.

Only this weekend, industrial users in the electricity industry have been looking to break up power generators and introduce competition, and there is a suggestion that the Director General of Electricity Supply might yet refer the electricity industry to the Monopolies and Mergers Commission on the issue of industrial prices, as happened with British Gas.

The interesting factor in all those arguments is that my hon. Friends who sat on the respective Committees or spoke on the Second Reading of Bills associated with privatisation said at the time that the Government were privatising monopoly, not introducing effective competition and regulation, and the matter would have to be examined again. We were rubbished then, but we have been vindicated, and the matter will not rest when the Bill has been passed. Anyone who believes that the Bill goes far enough or is radical enough to satisfy customers' interests is living in cloud cuckoo land. Several more pieces of legislation will have to be enacted before there is effective competition or regulation within the privatised industries.

Despite the much-vaunted claims of Conservative and Labour Members about their faith in competition, it is interesting that a truly radical step to introduce competition into the privatised utilities has yet to come. Last week, the Liberal Democrats published proposals for breaking up British Telecom into a number of components to provide effective and proper competition, and create regional corporate headquarters of benefit to our regions, which find that massive monopolies concentrate their headquarters elsewhere in the country--by definition, in one place.

If effective competition is to be introduced, whether in gas supply, telecommunications, water or electricity, there will have to be a division of the market into effective competitors. That has not taken place. At present, we are the only party prepared to grasp the nettle and to recognise that consumers' interests require both effective competition in the marketplace--the Government have a long way to go before they create that--and effective regulation where the market cannot produce a solution. The Bill

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provides a little extra competition and regulation on the margin, but it does not fundamentally transform the regime.

The Bill was brought forward in response to the outcry from consumers and the industry about the way that, over the years, they have been ripped off by the privatised utilities and the fact that, while the regulators have made a contribution--no one would deny that--they have not done anything like enough and do not have the necessary power or resources to advance consumer interests and issues.

I want to make it absolutely clear so that the Minister and the House are in no doubt that, despite my criticisms, the Liberal Democrats will support the Bill, as any such measure is preferable to no measure at all. The Labour amendment is strange and perhaps a little revealing. It suggests that the Labour party has no interest in trying to explore the use of competition. I agree with comments made by some Conservative Members that there is still a desire within the Labour party--as there has been in their approach to every privatisation--to maintain the huge corporate structures in the hope that they can renationalise them or, through the back door, do it on the cheap. If the Labour party cannot afford to buy back the structures, it wants to create such a stranglehold on the regulator that it can manage and run the industry without owning or controlling it. If the amendment is put to the House, we shall vote against it. The question still remains as to why privatisation has so far failed and what could be done to try to ensure that we pick up the pieces in the interests of the customers and consumers. I find it difficult to believe that, in a company the size and scale of British Gas, no matter how ingenious and committed the regulator is--I have received considerable help and support from Mr. James McKinnon, the director of Ofgas, who has been able to use his resources--a work force of 28 will be anything like enough to shadow it. The other regulators have similar staffing levels.

I think that the hon. Member for Beaconsfield (Mr. Smith) mentioned one of the regulator's disadvantages. His ability to question, challenge, direct or intervene in the marketplace is dependent on the fundamental information that he can obtain about the costs involved. It is difficult to see how the regulators can effectively achieve their goal with the resources currently available. The Government must give the regulators more resources, thus giving them more power and the ability to follow up that power effectively and in detail. One reason why we are in the present difficulties is that the Government were driven by their short-term considerations, the need to secure revenue and to ensure successful flotations. They are still haunted by that problem. The electricity industry is looking for a reference to the Monopolies and Mergers Commission, which may yet happen. In addition, the second flotation of British Telecom is imminent and creating some controversy.

I was interested to read in yesterday's edition of The Independent on Sunday that the flotation is being regarded with much cynicism, even by people in the City. It says that the flotation and premium will

"plainly not be of the same magnitude as in the water and electricity privatisations, but the Government has injected enough greed factor' into the issue to underpin it."

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That illustrates the standard practice of offering a premium on the flotation that has to be underwritten by the taxpayer. In this case, the Government have provided a sum from taxpayers' resources to ensure that there will be no hiccup after the flotation.

The article in The Independent on Sunday mentions the "novelty of over- allocation" and states :

"This allows the Government to spend up to £400 million stabilising' the BT share price in the immediate aftermath of the issue. If the price shows signs of slipping by more than the market as a whole, Warburgs will step in and prop it up. Warburgs call it market management'. A ruder description might be market manipulation'. Isn't this what the Guiness chaps went to jail for?' asked one fund manager last week. Well, not exactly, but we all know what he means."

That is an apposite comment about how £400 million of taxpayers' money is being used to protect the Conservative party from possible embarrassment. It is quite a tidy sum to put in an election fund. The article concludes with a demonstration that the Bill does not hold many fears for the City and does not seriously change the regime. It states :

"For most investors, privatisation has nearly always been money for old rope. Despite the present negative background noise, there's no reason yet to suppose the BT issue won't be the same."

So much for the Government's sabre rattling, and their claims that they are getting to grips with effective regulation and it will all be different. We have it on good authority that those in the City consider it a minor change on the margin and believe that there is still much money to be ripped off from the consumers so that they do not need to worry too much about the Government causing them further serious embarrassment.

While I support the Bill, I do not do so because I believe that the Government are anywhere near solving the problem. They are merely taking small, halting, cosmetic steps towards it, with a few useful changes on the margin. We welcome the fact that the Government will allow water to be supplied across boundaries and will be interested to see what effect that potential competitive pressure will have. But I do not think that anybody believes that there will be a massive development of water pipes shooting across boundaries all over England to take advantage of that clause.

The Minister seems to be nodding, but if this is so, why do not the Government pursue similar legislation in the context of gas, electricity and telecommunications? The Liberal Democrats have proposed a policy of breaking up telecommunications into regional companies, which would have the benefit of bringing down the cost of local calls, which are the highest in the industrial world due to the ineffectiveness of competition from the duopoly of which the Minister seems so proud. The fact Mercury offers cheaper local calls has little impact on the market because most people do not have access to Mercury.

It is interesting that the Government are anxious to explore electricity and water but are not prepared to grasp the nettle of the other utilities. We need to create real competition. We must fundamentally restructure these industries. If the Government were serious about the ideological claim that they make for these measures, as opposed to their evident short-term political opportunism, they would be prepared to consider breaking up the utilities, thereby opening them up to genuine competition. That would have the added advantage of stimulating the regions in the process.

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I concede that the Labour amendment refers to the need for regulators to be accountable to Parliament and public. I do not think that an ombudsman is necessarily the right answer. One possible route, favoured by the Labour party, may make sense--that there should be a Select Committee charged with being the body through which directors of utilities and regulators would be accountable to this House. We should also consider combining the regulators into one organisation instead of their remaining independent in each industry. They all have the same approach but they must have a learning curve and they could benefit from exchanging experiences. I hope that the regulators meet and discuss these matters informally already, but it would be helpful if they operated from the same office using the same staff, thereby securing economies of scale, and exchanged experiences that make them more effective regulators.

When the history of this period is written, the success of the privatisation programme will not go down as the greatest achievement of the Conservative regime. I am not a fan of that regime but I admit that there have been some achievements. Ultimately, the democratic reform of the trade unions will probably go down as the greatest achievement of the Conservative regime in the 1980s. Conservative Members have said that all types of regimes all over the world, regardless of political persuasion, are carrying out privatisation and that it might even have had to be contemplated by a Labour Government. But the Government have been found wanting in many areas of the execution of this policy ; they have failed to consider the consumers' interests paramount and they have squandered taxpayers' money to secure good flotations. They have privatised monopolies which have been out of control, and then, late in the day, they have had to introduce weak and ineffective means of controlling those monopolies.

The Government have not followed the logic of their own professed ideology- -of introducing effective competition. It remains our conclusion that consumers' interests can be served only if we promote competition at the core of services and effective regulation when competition cannot deliver. The Government are moving too slowly in both directions. They have a great deal to be ashamed of in respect of competition, and their rhetoric falls far short of its practical application.

8.33 pm

Mr. Andrew Rowe (Mid-Kent) : I do not think that this Bill will impinge in any noticeable way on my private interests, but it would be better to be safe than sorry, so I declare that for many years I have held a consultancy with Chevron United Kingdom. In so far as it has an interest in the provision of gas, it might have a tangential interest in this Bill.

It is unfortunate that we have so far heard little about the massive achievements of some of the great utilities. British telecommunications have advanced tremendously in the past decade, and we have every reason to feel proud of that industry. In that advance, British Telecom has played a major role. It would perhaps have sat more happily with Conservative philosophy if it had proved possible to create a more substantial competitor for British

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Telecom in the early years. It would have been an improvement if a series of competitors, as suggested by the hon. Member for Gordon (Mr. Bruce), had been built up.

But the Government had to start where they were : with a sluggish and backward-looking monopoly, heavily overmanned and with many out-of-date technologies. It was quite ready to be destroyed by international competiton. Now, British Telecom is consulted by companies from all over the world for its expertise ; we should be proud of that, and the Government should take some credit for it. The same is true of British Gas, which has also achieved some remarkable advances, especially in the ways in which it looks after consumers. It takes great care, for instance, to advise those whose gas supply may be affected by works done on mains outside the house or on feeder lines, and that is a model to other services of how to keep consumers informed. British Gas, like other modern industries, manages to lay mains nowadays with a minimum of disruption and considerable speed. We should not over-indulge in the British disease of looking only at what is wrong and not giving credit to what is going well.

I do not know how many hon. Members share my perception that complaints from the public about these great utilities have fallen off in recent months, but that is certainly true, to judge from my postbag. The possible exception is water, which was given a massive amount of bad publicity, mainly by paranoid Opposition Members. In the short term, that led to a marked increase in the numbers complaining about water.

It has been entirely beneficial, however, that the public have come to understand that water is not a commodity that costs nothing provided it rains. Neither is its quality maintained without effort. The British public, who are becoming increasingly sophisticated by the day, as our mailbags show, have suddenly realised that a great deal of work goes into providing water. In my part of Kent, we do not blame the water companies : we blame God. It does not rain in Kent any more, and we face severe shortages. Still, the public debate about water has been wholly beneficial. It has done the water companies a great deal of good and will lead to substantial improvements.

Before it is too late, the Minister should take a last look to make sure that he is as convinced as his Department sometimes tells me it is that the terms of competition between companies that were already private and the newly privatised ones are as level as is maintained. The old private companies are being asked to seek a return on their assets and are receiving little assistance, whereas the newly privatised companies will find such a return much easier to make. That is not good for competition or for the companies.

The most important development in the water industry has been the major drive to eliminate wastage. The vast majority of leaks in the system are now on private property and a move to metering is certain. Although I value the separateness of the great utilities and the possibility in some cases of competition between them, there are areas in which co-operation is essential. One is the reading of meters. It would be absurd and enormously expensive to have gas, electricity and water meters read separately. It is not yet possible to read meters by remote control. That will come much sooner than any of the companies believe, but until it does there must be sensible co-operation, which I am glad to see is beginning to develop.

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