|Previous Section||Home Page|
Mr. Heseltine: I shall try to explain to the right hon. Gentleman. A few years ago, British Gas was a cosy monopoly, protected from any competition and with virtually no international ramifications. Today, it faces intense competition in the industrial and commercial markets. It has lost a significant part of its market, because the private sector has come in with lower prices. It has turned itself into a major investor in North sea oil and gas, and has become a world-class company trading in 45 countries. That represents a transformation in Britain's ability to fight in the international market place.
The endless endeavours of the right hon. Gentleman and his party to pretend that British Gas today is what it was five years ago are a manipulation of the reality. British Gas is now a major British international company.
Dr. Cunningham: The right hon. Gentleman seems to be saying that pay and share options can be taken regardless of company performance. Incidentally, he is wrong about something else as well: in no circumstances do my right hon. Friends and I want to make such decisions, but we want proper systems. We want remuneration committees that are not stuffed with the cronies of those whose salaries they are raising; and we want duties and obligations to be laid on people to behave with some decency when the stewardship is theirs.
Dr. Cunningham: It is all too typical of the Government to refuse-- as the President of the Board of Trade has done again today--to deal with abuses perpetrated by those on large incomes, while at the same time introducing legislation to weaken consumer protection and, perhaps, increase charges for pensioners, disabled people and families on low incomes. True to type, the right hon. Gentleman proposes again to risk the widening of inequalities in his legislation.
We know that the Prime Minister is pressing the right hon. Gentleman on these matters, and that the public want action; we also know that the President of the Board of
Column 597Trade is loth to take such action. We know that because someone sent me a copy of a letter from the right hon. Gentleman's office to the Prime Minister's office--a letter from the right hon. Gentleman's private secretary, Ms Rachel Jenkinson, to Mrs. Mary Francis, the Prime Minister's private secretary at No. 10 Downing street. The letter says:
"On this issue, obtaining information from Stock Exchange sources and direct approaches to the companies would run the risk of becoming a rather public exercise which the President is loth to undertake." I am not surprised that he is loth to undertake it. With the letter is a 20-page memorandum listing the bodies--British Gas, London Electricity, Eastern Electricity, Manweb, Northern Electric, Anglian Water, North West Water and so on--and the millions of share options that have been awarded regardless of performance. The right hon. Gentleman apparently intends to do nothing about that.
The letter says:
"The results suggest that there are potentially more causes ce le bres to be found. In view of the figures shown in table 2 against the RECs in particular, this suggests that we should expect a good deal of publicity in June and July this year."
That shows that self-awarded bonuses and share options, unattached to any performance criteria, are a matter of fact under the present Government. They are part of the system that the President of the Board of Trade and his right hon. and hon. Friends have established, and he intends to do nothing about it. So be it; the public will make their own judgment. The Bill raises that and many other issues of public concern. On this issue the President appears to be paralysed. He is more like Ulysses than Tarzan, sulking in his tent. The Bill raises a wide range of enormously important issues such as the right to supply, safety, pricing policy and consumer protection. It threatens the employment of thousands of people. The President and the Government have been widely condemned for issuing a false prospectus just a few days ago for the share sale in National Power and PowerGen. By pursuing these issues in Committee we intend to try to prevent them from doing that again. That is why I ask the House to vote for our amendment.
Sir Michael Grylls (Surrey, North-West): The right hon. Member for Copeland (Dr. Cunningham) has given the Labour party's response to the Bill. As his speech rolled on, I felt a bit sorry for him because, apart from picking out one or two important points which I agree should be considered in Committee, he could find nothing to say against the Bill's general principle. Therefore, he spent the greater part of his speech digging around in the same rather unpleasant way as the hon. Member for Dunfermline, East (Mr. Brown) and trying to mislead the public even further about the facts of some of the remuneration for people in the recently privatised industries. For example, he suggested that the share options and other packages are offered to a small number of people. I think that the hon. Member for Dunfermline, East spoke about a handful of directors, but, as is well
Column 598established throughout British industry, share options are generally given to many people in a business to motivate them. The right hon. Gentleman is the shadow President of the Board of Trade and, if there were an accident, he could be in office. I do not think that there will be an accident but there could be, and the right hon. Gentleman needs to understand these matters. I hope that I can take him with me on this issue. Does he agree that motivation for people doing any work in industry is important? The right hon. Gentleman nods assent. He and I, like most people, would agree that finding proper ways to motivate people to be successful is important. Therefore, we cannot begrudge the result of that motivation when people are successful. In a sense, that is what the share option argument is about.
Share options are of no value whatever unless the recipients have performed so well that the shares have gone up in price. The right hon. Gentleman and I debated this a few days ago in the House. I hope he realises that profits from share options do not come from the company. They are an economical way to reward people or to motivate them towards success. The profit comes from the remaining shareholders and not from a company's coffers.
Dr. John Cunningham: I am grateful to the hon. Gentleman for allowing me to intervene because I spoke for longer than I had intended. Let me be quite clear. I believe in high rewards for high performance. It is right for people to be highly rewarded for outstanding performance. If people create wealth and employment in the British economy and for their organisations they deserve high rewards, but such rewards must be merited and in the cases that I mentioned they cannot be justified. They were not merited by the performance of the individuals or the organisations, and that is especially true of British Gas. Shares were overvalued in the electricity supply industry, not on the basis of performance, but because consumers were being overcharged.
Dr. Hampson: My hon. Friend will recall that Mr. Cedric Brown had his salary package changed because, as many of us agree, the existing share option was unsatisfactory. The new share option is performance related, which is what the right hon. Member for Copeland (Dr. Cunningham) was calling for. Ironically, in his speech he somehow condemned that because he said that if it had been in place, Mr. Cedric Brown would not have got his bonus increases. The scheme was changed to a performance-related system and the length of time that his contract had to run was reduced.
It is rather strange to hear the shadow President of the Board of Trade, in what we are led to believe is the new model Labour party, saying--I carefully wrote it down--that it is wrong for people "to make themselves rich". I thought that the Labour party had changed and wanted to see an improvement in the living standards of our people and to see people in industry doing well, being motivated and getting the rewards of that motivation.
Column 599encouragement to people. How many share options did the manageress of the British Gas shop in Hemsworth receive to encourage her?
Sir Michael Grylls: I cannot answer that precisely, but I can respond to the hon. Gentleman as I am about to move to that matter. I am grateful to the hon. Gentleman for reminding me. I shall correct some of the deliberately misleading statements by Labour in recent weeks about some of the share options. For example, some 200 staff and managers have share options in Seeboard, which is one of the smallest regional electricity companies. However, the hon. Member for Dunfermline, East spoke about only six of its directors. He has misled people over that. In Yorkshire Electricity, there were 54 such people, but the hon. Gentleman referred to only five and divided the sum of money between them. That is the sort of sleight of hand that would get an accountant behind bars very quickly. It is extraordinary how a Member of Parliament can get away with that.
In East Midlands Electricity, 37 employees received the benefit of share options rather than the four directors mentioned by the hon. Member for Dunfermline, East in his news release. I could give further examples, but I suspect that I might be told that we are debating British Gas and not other companies.
It is important to have truth and accuracy, and it is certainly important that, where possible, there should be agreement between the two sides. If we agree that people need to be motivated it is quite wrong and intellectually dishonest to attack those who are so motivated. That is my principal point on that issue.
I warmly welcome the Bill. It could have been improved by being called the gas competition Bill, because that is what it is all about. My right hon. Friend the President of the Board of Trade rightly sketched the early history of gas supply. At one time it was generally accepted that it had to be a monopoly, but while Conservative Members realise that we have moved on from those days, apparently Labour Members do not. Nowadays, there can be safe and effective competition and it can operate in the interests of the consumer. That is what the Bill is about: it is not just about price.
Price, of course, is affected by competition. All our experience of shopping in the high street leads us to believe that competition encourages prices to be kept down and, if possible, reduced, but competition also leads to improved service. This is what I find strange about the Opposition. They talk as if the introduction of competition will lead to the disappearance of services for the disabled, the blind and others who particularly need looking after. Experience shows the opposite.
Most hon. Members will remember that, some years ago, when British Gas was a sleepy old state-owned company, a great deal of our constituency mail consisted of letters from desperate people who could not get the gas board to come round and put their appliances right, and so on. I can only speak for myself, although I suspect that most hon. Members share my experience: since privatisation, the complaints have all but disappeared. To be sure, mistakes still happen in any industry, but they have been greatly reduced in this one. I cannot remember
Column 600when I last had a letter from a constituent complaining about the service that he had received from a gas supplier. I accept, however, that the service can be improved--hence the argument behind this extension of competition, which is about improving the standard of service.
In conversations with some of the gas suppliers, I have been told that they see improved standards as part of their role. I have, for instance, a circular from United Gas, one of the new private companies. The company says on the first page:
"Gas is fundamental to quality of life and is not merely a commodity. Service to the customer is not only essential but is also one of the principal ways, along with price, that companies will gain market share."
In other words, the company views it as important to its business to be able to say to the consumer, "Come to us for your supply, because we will offer you a better service than will any other supplier." That is competition, and it is just the same as a high street shop offering people a better service than the shop next door. Gas is no different.
United Gas goes on to say:
"We see opportunities to improve standards in areas such as (1) no disconnection in winter months for elderly customers with debt problems, (2) more frequent meter reading to avoid debt and disconnection problems, and (3) maintenance of an industry-wide Gas Care Register".
Those ideas have been advanced by one of the new competing gas companies. They show that such companies want to enter the marketplace. Thanks to the Bill, they will be allowed to do so, so as to offer better services and, one hopes, lower prices.
We saw the same thing when British Telecom was privatised. Waiting lists for telephones have evaporated. There used to be 250,000 people waiting for telephones, but there are no waiting lists now and people can get telephones installed quickly.
When British Airways was the sole airline flying the London-Glasgow route-- I remember this well, as I used to go to Glasgow quite often--the company used to tell passengers that the flight was so short that it did not have time to serve them breakfast. That was unfortunate, since I rather like breakfast early in the morning--as, I suspect, do many other people. Wonder of wonders: once British Midland was allowed on the route, it said, "Of course we can supply breakfast while flying between London and Glasgow", and it did. Business men benefited, and--lo and behold--British Airways found a way of supplying breakfast, too. That is what competition does. Strangely, the new model Labour party seems to have forgotten what competition is all about.
Monopoly can do a great deal of damage to the public. It may be the dream of many business men; most business men would love to misbehave by rigging the market to create a monopoly. That is why we need competition authorities--to ensure that it does not happen and to protect the consumer. I believe that it is the duty of every Government to end monopolies wherever they find them--in the utilities or in the ordinary marketplace that we encounter every day. As for the opportunities offered by competition, there is always--understandably--a great deal of emphasis on the reduction in unemployment that follows the modernisation and privatisation of those industries, because they have to be run efficiently. British Gas had about three people for every two jobs. Clearly, that could not go on in a competitive marketplace. Quite reasonably,
Column 601the Opposition called the loss of jobs a bad thing. So it is when people lose their jobs in the first instance, but let us look at the positive side. New jobs are created in other companies entering the marketplace. That is exactly what happened in the telecommunications industry, and I believe that it will happen in the gas industry, too.
For the employee, competition can also be beneficial. As long as there is only a monopoly, the employee is in a dicey position. If he falls out with his manager or director, he has nowhere else to go. There is only one gas company and if he leaves it, he has nowhere to work. If, however, there are a dozen competing companies and the employee does not like one of them, he goes to another. That is what happened with BT; there are now about 120 competing firms in the telecommunications market, where there used to be only one, and we know what good results that has had for the public.
When the election comes, the electors will have an interesting choice. They can choose the new model Labour party which is apparently going to renationalise some of the utilities. We do not yet know which ones, but no doubt Labour will tell the country. It will make them into monopolies again and close independent gas companies, for instance. The outcome will be lower services at higher prices. Alternatively, the electors can chose to stick with the Conservative party which has brought about competition, with lower utilities prices, to the benefit of the consumer.
That is a clear choice. I believe that people will chose the Government and the party who really believe in competition and in the free market; and in giving other companies a chance of coming into the market. What is proposed here for the gas industry is a massive step forward, for which the Government should be warmly applauded. 5.57 pm
Mr. Stephen Byers (Wallsend): I begin by declaring the fact that I am sponsored as a Member of Parliament by Unison, the trade union which represents many of the workers in the gas industry. I might explain for the record that that means that I receive no money personally, but my constituency party receives about £600 a year towards its running costs and, at the last election, received £2,200 towards election expenses.
Reference was made earlier to a bundle of documents that had been mislaid. I have now had the benefit of reading the Minister of State's wind-up speech, which we shall not hear officially until later this evening. As usual, it is an excellent speech--written, I believe, on 8 March, when the Minister predicted the nature of the contributions that would be heard from Opposition Members:
"What I have found particularly fascinating is the muddle, contradiction and hypocrisy emanating from the Benches opposite."
Column 602What marvellous foresight that shows on the part of the Minister of State. Perhaps he could also predict the winner of the gold cup at Cheltenham on Thursday--that would be of real benefit to hon. Members on both sides of the Chamber.
In his Second Reading speech, the President of the Board of Trade referred at some length to the licensing regime and rightly stressed the importance of the licensing procedures. It was interesting and a matter of some concern that the documents contained a briefing note to the Minister stating clearly that the Minister should not "refer to licences being available at the beginning of the committee stage",
which his civil servants say is unlikely. The note goes on to say that the Minister should always refer to licences being available in Committee but without specifying exactly when that important information will be made available. I urge the Minister to ensure that the licences are available at the beginning of the Committee stage.
Mr. Eggar: As the old adage states, civil servants are there to advise, and Ministers are there to decide. Having received the advice that the hon. Gentleman has clearly read, I have given an undertaking to Opposition Front-Bench spokesmen that I shall do my utmost to make the suppliers licence available on the first morning of the Committee. I cannot give the assurance that I had hoped to give that the transportation and shippers licences will be available on the first morning of the Committee, but I am extremely hopeful that, if they are not available on that morning, they will be available later. I have always said that I will make the suppliers licence available as early as possible, and that it would available on the first day of the Committee.
It is right that licences should be available to the House and to the Committee as early as possible. I have always been critical of situations in which hon. Members have been deprived of information that is essential if a Committee is properly to consider a proposal.
Mr. Byers: I welcome the Minister's comments. Clearly, the licensing regime and the details contained in the licences will be of crucial importance for a proper consideration of the Bill. I welcome the assurance that he has given.
Superficially, it is attractive to open up the domestic gas market for competition. I have always taken the view that competition is necessary if we are to have a strong, dynamic and vibrant private sector. That is good for the economy as a whole, with our industries competing, as they must, in the world market. Competition will often bring real benefits to the consumer in terms of wider choice, better quality and lower costs. It is important that Labour Members recognise the important role that competition can play in the private sector.
I therefore start from a presumption in favour of competition in industry. Overriding reasons must exist as to why, in the public interest and for the common good, competition should not be imposed on the domestic gas market. On balance, I take the view that, for practical
Column 603reasons, the Bill's provisions do not benefit all our people. Therefore, the Bill is not in the public interest. Nevertheless, my party's Front-Bench team and I recognise the importance of competition. We have therefore tabled a reasoned amendment which seeks to deal with some of the genuine concerns of many hon. Members and of the public about the provisions of the Bill.
The Monopolies and Mergers Commission recommended that British Gas's domestic monopoly should not be removed until some three to five years after the company had divested itself of its trading arms, but that recommendation has in effect been ignored by the Government. Unfortunately, they have allowed political dogma to triumph over reason in imposing competition on the domestic market at a rapid rate.
In the relatively brief time available, I wish to deal with two issues to which the reasoned amendment refers: the pricing that is to be put into place, and hon. Members' real concerns about the Bill's safety provisions. Some 18 million domestic gas consumers use less than 2,500 therms per year. The President of the Board of Trade and my right hon. Friend the Member for Copeland (Dr. Cunningham) dealt earlier with cross-subsidy. Such a subsidy in the domestic gas market is highly significant. I think that all hon. Members recognise that the cross-subsidy is considerable and that domestic consumers who use a relatively high volume of gas--I think that the figure is more than 635 therms a year--are in effect subsidising the costs of consumers who use smaller amounts of gas.
The effect of that is that people in larger properties, who will be consuming greater amounts of gas and who will often be among the wealthier members of the community, are subsidising pensioners, people on low incomes, and people with a disability, who will often be living in accommodation where a relatively low amount of gas is used each year. The bills of the low-volume users are being subsidised by the wealthy high- volume users. That has been described to me as socialism in action.
Mr. Byers: The Bill deals specifically with the domestic gas consumer. The point that I am trying to make is that the high-volume domestic consumer is subsidising the low-volume domestic consumer through the cross-subsidy. Conservative Members have advanced the argument to me that competition will drive down costs for everyone. That is an important point that I feel obliged to deal with later. I was surprised at the extent of cross-subsidy. The House of Commons Library considered the effect of the subsidy in a purely statistical way. It showed that some 5 million gas domestic consumers who use 350 therms a year or less will pay 12.5 per cent. more for their gas if the cross-subsidy is removed while the cost for consumers using more than 2,000 therms will be cut by 10 per cent. if the subsidy is removed. An argument could be made that competition even protects people using low amounts of gas.
Column 604Mr. Eggar: The hon. Gentleman obviously did not get to the part of my briefing which referred to that calculation. Had he read that far, he would have realised that the whole basis of that calculation--assuming the accuracy of the leak of his speech that I read in The Guardian this morning--is false. That calculation appears to be based on a British Gas figure given in August 1992 which was subsequently withdrawn in the evidence given by British Gas to the Select Committee on Trade and Industry in 1994. There is the old adage, "Garbage in, garbage out." The hon. Gentleman should not try to make that kind of capital.
Mr. Byers: The Minister is probably more of an expert in garbage than I am. He will be aware that he cannot guarantee the level of charges or that there will be no losers under the Bill. If the Minister can give a guarantee, I will allow him to intervene again.
Mr. Eggar: It is the view of independent competitors of British Gas that there should be no losers. In a free market, it is impossible to predict with certainty the effect on the individual consumer. As I am not sure that this assumption was in the hon. Gentleman's calculation either, I remind him that the regulator's decision to fix the transportation standing charge at £15 per individual consumer means that the interests of low- volume consumers will be more than protected.
Mr. Byers: If the Minister could guarantee that the charge will remain at £15, I would welcome that enormously--as would low-volume users--but he knows that he will not take responsibility for maintaining the charge at £15. If he would, we should all breathe a sigh of relief. The Government have washed their hands of that responsibility and are prepared to leave the matter to the regulator. The Minister cannot guarantee that the £15 standing charge will remain.
Mr. Nigel Griffiths (Edinburgh, South): It is difficult for Opposition Members to accept that figures are independent. Giving evidence to the Monopolies and Mergers Commission on one occasion, British Gas implied that the majority of its domestic consumers were contributing not profits but losses, but when giving evidence to the Select Committee on Trade and Industry British Gas changed its position. It has the facts at its fingertips, but if it cannot interpret its own facts, it is difficult for the public and the House to do so. I commend my hon. Friend for endeavouring to enlighten the public and to express our fears--
Mr. Byers: My hon. Friend made the point that there is clear evidence of the political view currently held within the Department of Trade and Industry. The DTI paper "The Prospects for Coal", published in 1993, is a clear example of Government thinking on energy:
"The aim of Government policy is to ensure that service is provided to customers in a commercial environment in which customers pay the full cost of the energy resources they consume."
Column 605If that happens in the way that the Department proposed in 1993, the Minister must accept that a large number of consumers will be losers under the Bill.
The argument is made that competition will drive prices down for all consumers, but in practice that will not be the case because new independent suppliers will be looking for the most profitable consumers. The suppliers will cherry pick. When profit is the motive, one can expect nothing else.
Mr. Nigel Evans (Ribble Valley): The hon. Gentleman suggests that low-volume users will incur extra costs or higher prices as a consequence of the lack of cross-subsidisation. The same fears were expressed about British Telecom, but low users now enjoy a rebate rather than the opposite. How does the hon. Gentleman argue against that?
Mr. Byers: If the Bill required such a rebate, I would accept the hon. Gentleman's point. Government advisers have warned about the implications of the Bill. Mr. Dieter Helm of New college, Oxford is not just an academic--I would not rely on his words if he were--but a member of the Government's energy panel and an adviser to the Minister. He said:
"There are almost certainly going to be winners and losers. Some people are paying too much for their gas at the moment and some people are paying too little. The new competitors coming into the market will want to pick the cherries . . . The losers are going to be those people who haven't really been paying the true cost of their gas supply in the past. Those are people who take relatively low amounts of gas, they're people who are, to put it bluntly, very difficult customers for British Gas or anyone else to service." That Government adviser was telling the public what can be expected from the Bill. Even more significant is the view of the independent suppliers who will move into the market. The managing director of Alliance Gas, Mr. Kristoffer Maroe, said one month ago that "it's impossible to stop cherry picking: that's what competition is all about."
The Government's own energy advisers make the point that there will be losers under the Bill.
Only clause 6(6) makes an effort to protect vulnerable groups in our communities. It states that the director shall not licence where it is proposed artificially to exclude
"an undue proportion of premises likely to be owned or occupied by persons who are disabled or of pensionable age, or who are likely to default in the payment of charges."
Such wording will bring a smile to the lips of every lawyer in the country, because it will be a nightmare to define. Cash registers will be ringing in courts throughout the land. That matter should not be left to the judicial process. In the supply of an essential commodity such as gas, the Government have a responsibility to provide a safety net to ensure that there will be no losers. The public generally would consider it wrong to exclude a poor area of a city such as Newcastle, but clause 6(6) would not stop an independent supplier applying for a licence to supply the whole of a desirable area such as East Anglia--as opposed to north-east England, where a larger proportion of the population will be of pensionable age, on low incomes or unemployed.Writing in The Times recently, Melvyn Marckus commented:
"Eventually the penny will drop. Competition will herald cost-reflective prices, which in turn will mean winners and losers."
Column 606The other element in the reasoned amendment on which I wish to speak is safety, which must be paramount. The Minister has said that increased competition will not compromise safety, but I have bad news for him: it already has. He need only look at the way in which research and technology budgets, which are often devoted to improving safety, have been cut over the past few months because British Gas is cutting corners to prepare for competition.
I have a real constituency interest in this as the energy research station at Killingworth in my constituency is threatened with closure and the loss of almost 500 jobs. It would be inappropriate in this narrow debate to talk about the devastating impact on the north-east of England of the loss of highly skilled and well-paid jobs, but there will certainly be an impact on the ability of the gas industry to meet safety needs.
The gas business has been divided into five trading arms which last year spent £31.4 million on research and technology. This year the figure is down to £19.9 million and by 1999 it will be down to £14.2 million. Those budget reductions will have serious repercussions for the safety of the system. I am not talking about esoteric or academic research but about practical research which has real safety implications.
To be more competitive, British Gas is not just cutting the amount it spends on research and technology; even more dangerously, there are reductions in safety margins elsewhere. Pipelines are having to take higher pressure to increase profits. The programme to replace the old iron gas mains has been slowed down. The research station at Killingworth has three areas of responsibility connected with safety.
First, the Killingworth station contains the unit which monitors and identifies the risks involved in the non-renewal and maintenance of the old iron gas mains, some of which are now 100 years old. The real problem is the amount of disturbance to which those old mains are now subject. Cabling and the London docklands extension of the Jubilee line are creating great difficulties and problems for the old mains. All the work being done on that and on the safety risks is currently carried out at Killingworth.
Secondly, the work being conducted on the safety and security of supply in high-pressure transmission lines bringing gas from the landing points to the pressure reduction stations, to try to ensure that there is no serious escape, is mainly carried out by a team based at Killingworth. Thirdly, Killingworth is the base of the incidents team, who go out to investigate any pipe explosion to identify the error and to try to ensure that such mistakes do not happen again.
All that vital safety work is currently conducted at Killingworth, and it is being put at risk by the Government's proposals. The dedicated and highly motivated work force at Killingworth are to be the innocent victims of the Government's policies for the gas industry. The Bill is a triumph of political dogma over reason. It puts safety at risk and it will create many losers among gas consumers. For those reasons, the reasoned amendment is worthy of support today.
Column 607later tonight by my right hon. Friend the Minister for Energy and Industry. I have no doubt that it was entirely right that my right hon. Friend should have composed his speech somewhat ahead of the debate. The speech by the hon. Member for Wallsend was entirely predictable. It was full of doom and gloom, and everything that he could dredge up was thrown against the Bill. If ever there was a Bill that deserved to command a consensus, to be approached from an intelligent point of view and to be discussed in Committee, this Bill is it.
I suspect that few Opposition Members, including the right hon. Member for Copeland (Dr. Cunningham), actually read the report by the Select Committee on Trade and Industry. If they had read the evidence, they would have been convinced, as we on the Committee were, that it was right and proper for the Government to press ahead now with the deregulation of the gas industry. The evidence was overwhelming and the conclusion that we reached was that the Government should go ahead with the Bill. I am, therefore, delighted that we are debating the Bill today. I assure the House that I shall vote enthusiastically for the Bill, not for reasons of political dogma--I happen to believe in privatisation--but because of the evidence presented to the Select Committee, which pointed overwhelmingly to the Bill being necessary in the interests of the consumer.
It will be interesting tonight to see where the Liberal Democrats stand on the issue. What are they going to do? Will they support the Labour party and go along with the old dogma of resisting and voting against any form of privatisation, irrespective of the proof of the pudding that has been eaten by the consumer, who has benefited so enormously from lower prices as a result of privatisation? The Liberal Democrats, just as much as the Labour party, are frightened of change. I suspect that if they do not vote with Labour, they will abstain as a means of keeping out of the decision-making process. It is all the more a pity for Parliament as a whole that we cannot join together and work in consensus, based on the hard evidence presented to the Select Committee.
Some 18 million consumers out there will benefit from lower prices. Some great words have been said about standing charges, a point that concerned the Committee. There is no doubt that standing charges will be reduced; Competition will have a major part to play because, as the licences are taken up, companies will be hungry to expand their territory for the provision of gas and to bring on board the smaller users. They will do so in a way that will encourage people to go for gas and to use gas. The companies will reduce standing charges as part of that promotion.
While the Select Committee took evidence, the subject of cherry-picking was exhaustively discussed. I am especially pleased that the Bill will ensure that suppliers are obliged to supply any customer in their licensed area. Surely that covers the point about some parts of the area not having large consumers and, therefore, being excluded. There is, however, a point about the geography of the licensed areas that will have to be addressed in Committee. The licensed areas must be comprehensive as opposed to just covering the areas where the better customers are and excluding those on the periphery.
Mr. Eggar indicated assent .
Column 608Safety is a very important factor. I have no doubt that it is sensible that safety throughout the United Kingdom should be in the hands of British Gas TransCo. It would be wrong to expect individual suppliers to set up their own teams and to make them available to rush out to deal with any emergency. There must be a comprehensive system to ensure that if a person suspects a leak in his gas supply, he can call a service which will be available immediately, irrespective of which supplier covers the territory. That has been agreed and accepted.
It is important, however, that we deal with electricity emergencies and water emergencies in the same way. We should have a single telephone number so that a consumer may ring 888, for example, and be able to get through to gas, electricity or water emergency services. I see no reason why we should not arrange such a service. It would be a simple process and invaluable if time were of the essence--as it often is with gas leaks--and one needed to get hold of the person at the other end of the line so that a team could quickly check the possible out-flow of gas. There is no reason why we should not be able to set up such an arrangement. The Select Committee on Trade and Industry certainly recommends the provision of one telephone number and it would be convenient to use that same number for calling out emergency services to deal with electricity and water as well. Another matter is pipe installation work. Inevitably, certain pipes will have to be replaced and serviced from time to time and there may be a programme for replacement of gas pipelines in certain parts of the United Kingdom. I am concerned about whether the costs of pipeline work in specific areas will fall on the licence holder for that area, which could affect the prices charged for gas, or whether those costs would be subsumed in the whole programme of servicing pipes in the United Kingdom. It would be fair to assure consumers on that matter at this stage, rather than to leave them to discover subsequently that they happen to be in an area where much replacement pipe work is needed, which would increase the licence fee and mean that their gas prices would not equate with those of somebody in a neighbouring town. I hope that that question may be answered. My right hon. Friend the President of the Board of Trade has referred to the cost of licences and I know that that matter will be addressed later in Committee. Some costs, however, as is explained in the memorandum, will be incurred by shippers of gas in meeting the obligations of their licences as well as in paying licence fees. The memorandum states:
"It has not yet been possible to determine these costs as the precise terms of the licences and the commercial background to the obligations are not settled. However, the Government will be publishing the draft shipper's licence shortly and will consider the views of business before finalising the proposals."
I welcome very much the consultation between my right hon. Friend and representatives of the various companies which are potential suppliers. Indeed, British Fuels in my constituency has consulted members of my right hon. Friend's Department and I am grateful for the arrangements that have been made.
However, I am somewhat concerned that the small supplier may often be left out and that the draft proposals in the Bill, which were sent out to a number of gas producers, were not sent out to some of the smaller potential suppliers. It is important that we consult as