Mr. Duncan: Does the hon. Gentleman accept that if a company such as British Gas improves the credit performance of its customers and attracts as many people who can give security of payment as possible, the ensuing benefits will bear on all consumers through the greater efficiency that will have been achieved?
Mr. O'Neill: British Gas could similarly have benefited small consumers who pay regularly and on time. In fact, British Gas has been able to pull a stroke that may be difficult for its competitors to follow in securing access to 19,000 post offices. It remains to be seen whether there will be that number of post offices when the Bill is enacted and begins to be implemented. We shall worry about that when the time comes. If British Gas had really wanted to be of assistance, it would have introduced the discount at the earliest opportunity. That would have prevented yet another PR boob. Our concerns are not limited to payment. The starting point must be safety. Of all energy sources, gas is potentially the most dangerous. My hon. Friend the Member for Wallsend (Mr. Byers) talked about the work that is done at Killingworth and throughout the country by trained BG staff. Many of those who are now responsible for installation, maintenance and safety work are Corgi employees. They are not employed by British Gas. Under the Corgi scheme, contractors are registered. There is no requirement on the contractors to secure properly qualified staff.
Many gas fitters who are unemployed as a result of redundancies are available to be recruited. It is to be hoped that the men will get jobs elsewhere. It must be understood, however, that many of the installation and maintenance contracts for gas consumers are being undertaken by Corgi contractors who do not adhere to proper safety standards. They are not capable of doing so because they do not have properly trained staff in the relevant disciplines.
Column 650As far as we are concerned, that is an anxiety, but we recognise that the Government have taken it into account in their requirement that the Health and Safety Executive makes proper provision for it. The only problem is that the Government have not provided the HSE with the resources to do so. Members of the HSE--the Trades Union Congress and the GMB--who are the people responsible for picking up the pieces when something goes wrong with the safety arrangements for British Gas, have expressed great disquiet about the funding and resourcing of the work for which the HSE will now be responsible, and I would hope--
Perhaps when he replies, the Minister will be able to tell us about the financial provisions that the Government will make available to the HSE to carry out its work, because one of the areas about which there is considerable disquiet is in the Bill's consideration of financial matters generally. It is not enough to say that provisions should be made to take out a financial bond or make other arrangements to the director general's satisfaction to cover the financial costs of suppliers--basically, having to cover the cost when a supplier goes bust. It is our view that leaving it to the discretion of the director general is not ideal, and we shall table amendments to secure that companies that wish to enter are required to take out bonds.
We know that there is a certain shyness, or diffidence, on the part of the director general to require people to put down money. She does not like the idea of handling other people's money, as we found in the debate on the E- factor levy, but we believe that the provision of a commodity as substantial and potentially dangerous as gas should be undertaken only by people with the appropriate financial resources, sufficient concern for safety and a degree of security in their financial activities, which will enable some form of guarantee to be part and parcel of the package. Something along the lines of the air tour operator's licence, which is required by people involved in the travel business, would be of assistance.
We want greater protection for the consumer. It was widely predicted that the director general wanted to remove the Gas Consumers Council. I am pleased that she was not successful. We believe that the role of the GCC as a separate body, apart from both the Government and the regulator, is important. We want it to continue in its present role. We want the statutory responsibility for consumer protection, which is contained in the Gas Act 1986, continued in the proposed legislation. We do not think that discretionary licence control is the best way of doing that, because at the moment, as I understand from the memorandum that has been made available by the Minister--we are grateful for it at this stage and look forward to receiving the licences at his earliest
convenience--the discretionary provisions that are left in the hands of the director general are insufficient. The GCC has echoed that and says that the provisions that are made in the 1986 Act, as amended by the Competition and Service (Utilities) Act 1992, provide an obligation to supply, to publish prices, and not to show undue preference or discrimination between customers. Those principles should be enshrined in the proposed legislation.
Column 651Reference has been repeatedly made this evening to the standard of service, particularly to the old and disabled, and few people will forget the contribution of my hon. Friend the Member for Dagenham (Ms Church), who went out and saw the work of the properly qualified home service advisers. We can joke about the passion with which she made her point, but it was a vital point. She said that elderly people who were infirm and dependent on specialist advice and equipment were entitled to receive those services in perpetuity.
As has been pointed out, British Gas--which some defend, describing it as the only provider of good services--has already sacked some 61 home service advisers this year. They were graduates with proper technical qualifications, capable of arguing their case with their superiors. Such services for the old and disabled must be central. Some organisations, including the Consumers Association, have expressed a degree of cynicism about United Gas's claim that the standard of service would be enhanced-- "the thirty-nine steps", as United Gas described the process. It is suspected that United Gas said that in the certain knowledge that the consumers who would supposedly benefit from such protection would be discouraged from doing business with it, thus imposing an additional burden on British Gas. I do not know whether that will happen, but we shall examine the issue carefully in Committee.
My hon. Friend the Member for Denton and Reddish (Mr. Bennett), who is a member of the Select Committee on the Environment, mentioned the absence of proper attention to the environment in the Bill. We want more than a token gesture in regard to pipelines; we want to consider the whole question of energy efficiency. It seems that what was crystal clear in the days of James McKinnon has become a grey area; certainly it is well known, and has been recorded in the minutes of several Select Committees, that Mrs. Spottiswoode is not enthusiastic about the E-factor. She does not want a levy to provide for effective energy-efficiency advice.
Mrs. Spottiswoode has seen fit to approve only a handful of schemes suggested by the Energy Saving Trust, the body through which such advice would be channelled. However, Lord Moore--a former Secretary of State for Energy, now chair of the Energy Saving Trust--has said that the aims of the Rio summit should be incorporated in legislation, and that there should be a statutory requirement to provide for energy efficiency. We shall return to that in Committee.
Investment in energy efficiency, however, is of secondary importance to investment in research and development. British Gas has invested in R and D for many years. One reason for our claim that we want British Gas to be a major player not only in the United Kingdom but throughout the world is that it would sustain its investment in the UK as well as abroad.
Representations by British Gas to the Select Committee on Trade and Industry suggested that the company should not be subject to special restrictions on commercial freedom to restructure if that would not be in the interests of the shareholders. We believe that such restrictions should apply if they will require British Gas to invest in the most modern and efficient methods of gas provision--if for no other reason, because, as no one has disputed, British Gas will remain the major gas supplier for some time. As for the other suppliers, there are the regional
Column 652electricity companies, whose records leave something to be desired in some areas. Seven are linked to Utilicorp alone, and another group is linked to other major oil and gas companies. We should certainly like greater attention to be paid to the activities of those companies. There should be greater provision for the regulator or the legislation should enshrine provisions to ensure that the executive salaries of directors are given proper attention.
Last week Mr. Giordano told the Select Committee on Employment that he was happy to have full transparency either through a change in stock exchange rules or by the introduction of a new law. This is an opportunity for the House to introduce such legislation. Mr. Giordano is not against it, we want it, and we cannot understand why Conservative Members should turn their backs on it. If it is good enough for the chairman of British Gas it should be good enough for the Government. Such payments are certainly distasteful to the Prime Minister, but we are not sure about the attitude of the President of the Board of Trade.
Before long pilot areas will be in operation. We are concerned that the trials will not just be about operational and technical efficiency but will be used to monitor the practices and policies and the advertising techniques of the companies that want to challenge British Gas. As the Select Committee said, during the transitional period we should be able to look at all aspects of the legislation. We welcome that period and hope that before long we shall be able to review what has taken place.
The Bill marks a change in the British consumers' opportunity to buy gas. British Gas should not have a monopoly because that is not necessary. However, if that monopoly is broken due protection should be provided and it should be enshrined in the legislation and not in the licences. Protection should clearly be provided for the elderly and the infirm, it should relate to the duty to supply and it should require all the companies to publish their tariffs so as to make clear what is happening.
We appreciate that the legislation could place a tremendous burden on the regulatory process, which has much to answer for. In the past 10 days we have seen its inadequacy when applied to electricity, and in the past few months there have been inconsistencies in application between one regulator and another in the same area. The Bill should correct many of the shortcomings. There will be opportunities to debate these matters in Committee, where our amendment will provide an opportunity to improve legislation that leaves a lot to be desired. We are not prepared to support it in its present form and shall look to see what we can achieve in Committee and on Third Reading.
The Minister for Energy and Industry (Mr. Tim Eggar): This has been an interesting debate on what is essentially a technical Bill. Hon. Members who have been here for the debate will realise that it had a detail which is normally associated with Committee discussions. Many of the issues that have been raised can be debated in Committee.
Column 653I listened to the hon. Member for Clackmannan (Mr. O'Neill) with considerable interest because on 27 February I received a letter from Clydebank district council. It was in response to my letter asking local authorities whether they wanted their districts to be included in the pilot areas for competition. Clydebank council said: "(a) Clydebank should be included in the first or at worst second batch of premises relating to the extension of competition." In other words, Clydebank wanted the benefits of competition that flow from this Bill--a clear and, one would have thought, unequivocal contribution. But it goes on:
"(b) Your Department be reminded of the policy of this district council in being against the privatisation of the gas industry." In other words, the council wanted the benefits of competition but not the implications of that competition--
Mr. Eggar: I heard something behind me, Madam Speaker. My hon. Friend said that Clydebank council sounded like a Liberal council. He was obviously not here to witness a great event: the hon. Member for North Devon (Mr. Harvey) came down on our side. The Liberals are going to join us in the Division to support the Bill. It was the hon. Member for Clackmannan who sat on the fence. He was in favour of this and against that. I have watched with considerable interest his struggle over this Bill inside the Labour party over the past few months. It has been a battle between neanderthal man, ably represented in this debate by the hon. Member for Dagenham (Ms Church), the old believer in clause IV, supported at one stage by the hon. Member for Neath (Mr. Hain), and modern Labour party man, as represented by the hon. Member for Clackmannan.
In October the hon. Gentleman made a courageous speech asking the Government to legislate as quickly as possible to introduce competition to the gas market. It was an important and thoughtful speech, a brave attempt to get the Labour party to seize the high ground in favour of competition. It was especially brave because he knew perfectly well that his hon. Friend the Member for Livingston (Mr. Cook) was in the
Column 654neanderthal camp--against competition and the privatisation of British Gas. He represented the other view of Clydebank council. Of course this was before the hon. Member for Livingston sold his conscience for the shadow Foreign Secretaryship. Greater love hath no man than that he give up 75 years of Labour party history for promotion, which is what the hon. Gentleman did when he turned turtle and opposed his old position on the retention of clause IV. Dr. Reid rose --
Mr. Eggar: I shall give way to the hon. Gentleman because I have a lot of sympathy with him; I know that he is engaged in a fierce battle with the Transport and General Workers Union, and he needs all the publicity he can get.
Dr. Reid: Yes, I have the guts to make a decision. Let us see what the Minister's guts are like tonight. Will he make a courageous decision? Does he support the faction, led by the Prime Minister, in the Cabinet that finds excessive pay and share options distasteful and needing regulation; or the faction led by his immediate boss at the Board of Trade, who is loth even to investigate these obscene pay increases and who regards any such investigation as unwarranted interference in the market?
Mr. Eggar: That intervention will not help the hon. Gentleman with his brothers in the Transport and General Workers Union one bit. He will have to fight that battle in his constituency. I should like to deal with the reasoned amendment that has been tabled by the Opposition. It also refers to top people's pay in the gas industry. I shall pick up the hon. Gentleman's points at that stage.
The reasoned amendment states that the Bill
"fails to provide effective safeguards for consumers".
Mr. Enright rose --
"The Bill should lead to all consumers benefiting from lower prices, improved service standards and a wider variety of service packages within the gas market from which to choose."
The Director General of the Gas Consumers Council, which is preserved in the Bill, said:
"The Council welcomes the Gas Bill as an imaginative solution to the difficulties of fast but orderly transition from a monopoly to a competitive market."
So the representatives of the consumer organisations support the Bill. We have dealt with every one of their concerns in the memorandum. If not, we will do so in the licence.
The reasoned amendment goes on to state that the Bill is damaging to many sections of the population and that it singles out the elderly and people living in the south-west. It appears that Opposition spokesmen are not aware of those people's views. The hon. Member for North Devon, my hon. Friend the Member for Falmouth and Camborne (Mr. Coe) and GCC South-West have made clear that they welcome the fact that the south-west is the pilot area for the introduction.
Column 655So why does the reasoned amendment say that the Bill will harm the people of the south-west? That is not their view.
The amendment draws attention to the position of pensioners, the disabled and the blind. The fact is that all those groups will have their present standards of service preserved, maintained and, if appropriate, improved. I say to the hon. Member for Dagenham that an obligation will be placed on alternative gas suppliers to provide fitments for gas appliances and cookers, and other such services to customers.
Mr. Eggar: I do not know whether you heard that sedentary intervention, Madam Deputy Speaker. The hon. Gentleman said that he did not believe me. I made a clear statement of Government policy from the Dispatch Box. [Interruption.]
Madam Speaker: Order. If the hon. Member for Edinburgh, South (Mr. Griffiths) has something to say, he should stand up and try to make an intervention. If not, it would be better if he kept quiet until he is allowed to intervene.
Mr. Eggar: That was typical of the hon. Gentleman. He does not bother to check his facts. He mutters into his beer belly-- [Interruption.] I am sorry. I have obviously maligned him. It was just the angle of the light. He has not got the guts to come to the Dispatch Box and to repeat his assertions because he knows that he has not done his research. [Interruption.] That would add to his beer belly.
The hon. Gentleman for Clackmannan referred to health and safety. I would like to welcome the Health and Safety Commission's work. The hon. Gentleman, who sat with me on the Committee that considered the Coal Industry Act, knows that I regard safety matters as paramount. The commission has identified the need for additional resources to underpin the new regime. The hon. Gentleman asked me, not unreasonably, about funding. I am discussing that matter with my Government colleagues, but there is no need at present for specific provision in the Bill for additional funding. I assure the hon. Gentleman that adequate resources will be made available.
Mr. O'Neill rose --
The hon. Member for Clackmannan asked also about financial surety. We are determined to give consumers the assurance that they require, that the supply of gas to their homes will be maintained. Suppliers will have to satisfy the director general that they are financially sound. We intend also that suppliers will take out a bond--in effect, an insurance arrangement--to help maintain gas supply to consumers. In addition, the director general will have the ability to nominate a supplier to step in, as a last resort if another supplier fails and the market does not deal with the situation.
Column 656business suffered from street works outside his shop? He was able to obtain compensation from North West Water but not, surprisingly, from British Gas.
Mr. Eggar: My hon. Friend has seen me about that complex case. I am studying and considering the various conflicting rights and obligations, and I assure my hon. Friend that I will give him another opportunity to discuss that matter with me.
As to regional electricity companies, having listened to the right hon. Member for Copeland (Dr. Cunningham) and to the hon. Member for Clackmannan, I remain unsure of the Opposition's concern. If it is lack of competition between suppliers of electricity and of gas, that can be dealt with through the Monopolies and Mergers Commission and normal competition policy. Other aspects can no doubt be covered in Committee.
The hon. Member for Denton and Reddish (Mr. Bennett) and my hon. Friend the Member for Harrogate (Mr. Banks) spoke of the need for energy efficiency. The Bill will increase the incentives for gas supply companies to offer consumers modern, energy-efficient gas installations--so in total, less gas will be consumed. I agree with my hon. Friend the Member for Harrogate that is likely to be an attractive selling point to many companies.
The Opposition believe that the regulator should in some way set senior employees' salaries.
My right hon. Friend the Prime Minister said that legislation will be considered in the light of the Greenbury committee. The suggestion that consumer price cuts should depend on the regulator operating, in effect, a top peoples' pay policy, shows a naive misunderstanding of the regulatory system and of basic mathematics.
If one takes the figures of the hon. Member for Dunfermline, East (Mr. Brown), even if the regulator returned to consumers all of Mr. Cedric Brown's 28 per cent. increase, that would amount to less than half of 1p per customer per year. The regulatory system sets prices--it does not attempt to control costs, which is for British Gas. If it can reduce its costs below those anticipated, it can increase profits and its competitiveness.
In short, by their amendment Opposition Members are proposing a pay policy through the regulator--not because that policy makes sense but because Labour, as ever, revels in the politics of envy. That assertion is all the more real because of what the right hon. Member for Copeland said in response to an intervention--
Mr. O'Neill rose --
Question put, That the amendment be made:--
The House divided : Ayes 244, Noes 318.
Division No. 99] [9.59 pm
Column 656Abbott, Ms Diane
Adams, Mrs Irene
Anderson, Donald (Swansea E)
Column 656Anderson, Ms Janet (Ros'dale)
Banks, Tony (Newham NW)
Column 657Barnes, Harry
Beckett, Rt Hon Margaret
Benn, Rt Hon Tony
Bennett, Andrew F
Brown, Gordon (Dunfermline E)
Brown, N (N'c'tle upon Tyne E)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Campbell-Savours, D N
Clark, Dr David (South Shields)
Clarke, Eric (Midlothian)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Cook, Frank (Stockton N)
Cook, Robin (Livingston)
Cunningham, Jim (Covy SE)
Cunningham, Rt Hon Dr John
Davies, Bryan (Oldham C'tral)
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham, H'dge H'l)
Donohoe, Brian H
Dunwoody, Mrs Gwyneth
Eagle, Ms Angela
Evans, John (St Helens N)
Ewing, Mrs Margaret
Field, Frank (Birkenhead)
Foster, Rt Hon Derek