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Mr. Nick Gibb (Bognor Regis and Littlehampton): Given that the price of electricity has fallen by 29 per cent.
in real terms since privatisation, that the cost of gas to consumers has fallen by 29 per cent. in real terms since privatisation, and given that there has also been a fall in the price of telephone charges to the consumer of 50 per cent. since privatisation, does the right hon. Gentleman now regret the Labour party's opposition to those privatisations in the 1980s?
Mr. Byers: The hon. Gentleman misses the important point that although those price reductions are welcome, they would have been far more substantial if the structure that the Conservatives put in place had been different. This afternoon, we shall see an example of that because the Bill contains proposals to change the way in which electricity is traded; as a result, prices will be reduced by 10 per cent. Since privatisation, people have been paying 10 per cent. more than they needed to pay because of the way in which the policy was introduced by the Conservative Government. The hon. Gentleman makes my point: it is because the policy was driven by dogma that consumers have not fully benefited from the changes.
Mr. Dale Campbell-Savours (Workington): The point raised by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) is interesting because it brings us into the discussion about BT and its charging structure. How is it possible for BT to charge, for long-distance calls in the United Kingdom and for overseas calls, often three times more than independent operators? How can Sky, through Skytalk, charge for local telephone calls about half of what BT charges, while BT turns over profits of about £3 billion a year? BT is grossly overcharging on all its calls and on internet access.
Mr. Byers: My hon. Friend, as always, makes a powerful and significant point, and I shall make sure that the regulator's attention is drawn to it. I have no doubt that the best way to reduce the costs and charges of companies such as BT is to introduce effective competition. We all know from the experience of the United States, where telephone charges are considerably lower than in the United Kingdom--particularly for the important service of internet access--that we need to ensure that the regulator takes into account the point that my hon. Friend has raised.
Mr. John Butterfill (Bournemouth, West): Is the Secretary of State aware that not all commentators who have studied the new electricity trading arrangements share his confidence that they will result in a further 10 per cent. fall in prices? As I hope to explain later, if I am fortunate enough to catch your eye, Madam Speaker, Professor Bunn of the London business school thinks that prices will rise, and his is by no means a lone view. Does the right hon. Gentleman think that we would have achieved the reductions that have occurred if we had carried on with his beloved Central Electricity Generating Board, under which prices went up every year?
Mr. Byers: The Bill does not seek to recreate the Central Electricity Generating Board. We are trying to introduce new trading arrangements. The hon. Gentleman makes an important point: one or two commentators are critical of the new arrangements. We have consulted widely on the new structure and, broadly speaking, most commentators believe that the arrangements will achieve
a minimum of a 10 per cent. reduction in the wholesale price of electricity. In 12 months, we will be able to debate the matter knowing exactly what has happened as a result of the changes. We are confident, because of the advice that we have received, that the changes will achieve that reduction.
Later, I shall explain why the operation of the present system is fundamentally flawed and that by introducing a more effective market discipline we shall achieve a reduction in the wholesale price of electricity. I accept the hon. Gentleman's point that there is a debate about the benefits that will accrue from the new trading arrangements.
Mr. David Chaytor (Bury, North):
Does my right hon. Friend agree that the problem of the previous, privatised regime was not only the costs themselves but the distribution of costs? One of the worst features of privatised utilities under the Conservative Government was that the distribution of costs in the energy industry was skewed against low-income households. For example, the standing charge was one of the ways in which low-income households paid, per unit of electricity or gas consumed, far more than better-off households.
Will my right hon. Friend join me in congratulating British Gas on announcing its intention to abolish the standing charge? Will he encourage other suppliers to follow that lead, not only in abolishing the standing charge but in ensuring that there is a much fairer tariff, so that low-income users--
Madam Speaker:
Order. That is a very long intervention. The hon. Gentleman might like to save himself to make a speech during the debate.
Mr. Byers:
My hon. Friend the Member for Bury, North (Mr. Chaytor) may not need to do so now, Madam Speaker. He raised two important points, the first of which relates to where the benefits of price reductions have gone. The price reduction that those who pay by direct debit have been able to achieve has been far greater than the reduction for those who have a pre-payment meter. There are concerns about that. My hon. Friend will know that we are introducing measures, through the Bill, that will enable us to ensure that all people can benefit from the price reductions that we are confident we shall achieve.
Secondly, my hon. Friend draws attention to the initiative from British Gas to end standing charges. I welcome that, provided that there is a real choice. Standing charges may go, but we must consider the unit cost that will be paid as a result. I would like to see a competitive market where the consumer has a genuine choice. It will be of benefit to some low-volume users to opt for a tariff that does not include a standing charge. That will not be the case for other consumers. Consumers should be able to choose the tariff that they want.
Mr. Norman Baker (Lewes):
The right hon. Gentleman has talked about fuel poverty, and we all support him in his efforts to eradicate it. However, will he say something about the environmental implications of the Bill? Does he accept that it presents an opportunity to increase the amount that is spent on energy efficiency and
Mr. Byers:
If the hon. Gentleman will wait a few minutes, I shall specifically address those matters in dealing with the environmental consequences of the Bill. I shall deal specifically with renewables.
Mr. Jonathan Shaw (Chatham and Aylesford):
What assurances can my right hon. Friend give to my constituents and to constituents throughout the country that the regulator will examine the way in which the utilities reduce consumers bills? Many of my constituents have received vastly overestimated Bills. When they have complained, their complaints have been ignored. Many pensioners have paid those bills in fear of being cut off.
One couple, Mr. and Mrs. Balchin of Chatham, complained time and again for two and a half years, but little was done. Eventually, and understandably, they chose to take their business elsewhere. When they telephoned the company, they were told that it would take £4,000 to pay off or clear their account. When they questioned that, they were told, "No, it will be £4,100." It has been possible to intervene and get a fair deal, but what assurance can my right hon. Friend give that that sort of thing will no longer happen?
Mr. Byers:
One of the important initiatives that will stem from the Bill will be far more powerful consumer councils. My hon. Friend has raised exactly the sort of issue that these councils will be able to address. Most importantly, they will have access to all the information in their own right, for the first time. It will not come through the regulator. They will be able directly to contact the regulator and draw the attention of the new authority to the sort of practice to which my hon. Friend has referred. It will then be for the regulator and new authority to take the appropriate steps. I am sure that my hon. Friend has raised exactly the sort of matter that the new independent consumer councils will wish to take up.
I shall try to make some progress. The previous Government's approach did not put the interests of the consumer first. There was no commitment to give the consumer a good deal.
Mrs. Angela Browning (Tiverton and Honiton):
Disconnection affects the poorest people. Does the Secretary of State agree that during the last years of the nationalised electricity industry, there were 80,000 disconnections a year? Last year, there were only 373. When the right hon. Gentleman makes carping comments about what he inherited when he took office, does he not recognise that there is a vast difference between the way in which the poorest people are treated now that we have a privatised industry, compared with their treatment under his much preferred state industry?
Mr. Byers:
The important point, as the hon. Lady will concede--this may be why she confuses nationalisation with privatisation--is that most companies in both the public and the private sectors now have a different approach to debt collection than they had 10 or 15 years ago. In the utilities sector, good practice is being adopted
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