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Sir Michael Spicer (West Worcestershire): The hon. Gentleman is not quite right. Apparently, the Treasury will encourage something called social banking, which seems to go against what he has said.

Dr. Cable: That may be the case, but I have tabled an amendment, which may be debated tomorrow, that suggests that the financial services regulator--the Financial Services Authority--should have an obligation towards low-income consumers. If what the hon. Gentleman says is right, I hope that the Government will concede generously. So far at least, there has been a disparity in approach.

This is an important area. Many people are hurt by fuel poverty. As the debate proceeds, we will want to know more concretely exactly what clause 109 will mean. There are a number of issues: disconnection; whether utility companies will make provision for charge cards that people have to use for pre-paid supply; how easily those can be obtained; standing charges for low users such as pensioners; and people on low incomes who have high energy bills, often within badly insulated homes. Those issues have to be dealt with. It is important that we make it clear how far the obligations of the utility regulators will take those considerations into account.

As I understand the Bill, there are some interesting and useful bits of parliamentary accountability. Clauses 9 and 13 suggest that new regulations will have to be considered by the House in a quite innovative way. That is positive, but the Government may be missing an opportunity to build in a much stronger system of parliamentary regulation.

Occasionally, utility regulators appear before the Select Committee on Trade and Industry, and they are investigated by the Public Accounts Committee. I have seen at first hand, on the Select Committee on the Treasury, the record of scrutiny of the Bank of England. In many ways, that scrutiny arrangement is an ideal model that the utilities should follow--with confirmatory hearings of the regulators or, in the water industry, the regulator, plus regular accountability at particular intervals. The Governor of the Bank of England has

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always acknowledged publicly that being held to account in that manner is one of the most intimidating jobs that he has to do as part of fulfilling his responsibilities. All the regulators should feel similarly intimidated.

We should take advantage of the growing interest in the parliamentary scrutiny offered by our Select Committees to build such accountability into the system of management of the utility regulators.

Mr. O'Neill: The Trade and Industry Committee tries, as best it can, to frighten the living daylights out of the regulators, and occasionally it does it reasonably well. At a Select Committee sitting, the utility will get a hearing, and everyone else will also get a chance. If a utility goes to the Competition Commission, it will cost £2.5 million; if a utility goes for judicial review--which is usually grossly unsatisfactory--it will cost a lot of money and time; but if a utility comes to a Select Committee, it will not cost very much. There is a two-way dialogue in the hearings. Quite often, the companies themselves want their case to be heard, and our informal structures facilitate such a hearing much more easily than many people appreciate.

Dr. Cable: That was a helpful intervention. I hope that the hon. Gentleman will persuade Ministers of the need to build that safeguard more strongly into the legislation.

I should like to deal finally with the electricity trading arrangements, which are important not only for the economics of the utilities, but for environmental reasons. The hon. Member for Bournemouth, West (Mr. Butterfill) has already made the very important point that what the Minister stated as a matter of dogma--that there will be 10 per cent. savings--is being very seriously questioned by the professionals involved.

Many other regulatory issues in electricity trading have not yet been addressed. There is now a very large market in paper products, such as futures and options, in electricity and other energy trading, and those will be subject to double regulation--by both the FSA and the energy regulator. No one seems yet to have clarified how that very important and large market, which will be crucial to the new regime, will work.

The key problem is the environment. As I understand the new electricity marketing arrangements--which are very complex; I do not claim to be an expert on them--it will be much more difficult for renewable energy to make competitive bids within the new pool system. Wind and solar power generators, for example, are not able to guarantee fixed supply, as will be required under the new long-term contract structures. It is therefore important that we are clear, particularly with the fossil-fuel levy, about weighting and how renewable power will be protected and strengthened in the system.

Another implication of the electricity trading arrangements is that it will become much clearer that gas, quite apart from its significant environmental advantages, has a competitive advantage over coal. As the Bill progresses, Ministers should clarify what they intend to do about the consents regime for gas-powered generators--which, when they were allowed to be developed, brought very considerable economic and environmental benefits to the United Kingdom. It is not clear whether the restrictions on supply from the gas sector will be maintained within the electricity trading arrangements.

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The Bill contains many positive provisions which we support, such as the emphasis on competition, the new emphasis on social obligations and the more flexible approach to regulation--recognising that we are now moving past a resale price index-minus X type of regime for all the utilities. There are, however, major question marks about the strength of consumer protection and the environment, which Liberal Democrat Members will highlight in a series of detailed amendments.

5.34 pm

Mr. Ivor Caplin (Hove): It is always heart-warming to listen to a Liberal Democrat agreeing with some and disagreeing with others, and I pay tribute to the hon. Member for Twickenham (Dr. Cable), who has managed to do that for the last 20 minutes.

The most interesting part of the speech by the hon. Member for Tiverton and Honiton (Mrs. Browning) was the last few sentences, in which she gave the game away by going back to the old rhetoric of privatisation that has dogged the Tory party for so many years. It struck me that although the faces have changed in the Opposition Trade and Industry team, their policy--such as it is--is still rather Redwoodian. They must move their policy from outer space back to the real world, and I must tell the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) that opposing a Bill such as this is not the real world. I will have more to say about him shortly, and he will enjoy that.

In an article in "The House Magazine" last year, I wrote:


I welcome the Bill in that regard.

Mr. Gibb: Does the hon. Gentleman know what the primary duty was under the previous legislation? If he does not, I can tell him. The previous primary obligation was security of supply. Does he accept that that should be the primary objective of the utilities?

Mr. Caplin: As I continue my remarks, the hon. Gentleman will realise that I have a different angle on this matter. If he had read that article, he would know that it was based on consumers, particularly vulnerable consumers.

In preparing that article, I looked at some key issues of post-privatisation Britain. Why had there been so many changes in the utility sector? It is clear that the number of customers having their service disconnected since privatisation has fallen, but, on the other hand--here I sound a bit like a Liberal Democrat--the number of complaints received by the various regulatory bodies has increased dramatically. The number of people employed by the utilities has fallen. The average bill in some utilities--such as gas, electricity and telecoms--has fallen, but the average annual bill for each of the privatised water companies has increased, and continues to do so.

Mr. Butterfill: The hon. Gentleman is right to note that water prices have increased, but he will know of two

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major factors. The first was years of Treasury reluctance to put capital into the industries, and the second--and more important one--is the correct environmental standards that are now required, not least by the EU, which have meant that even more investment is necessary.

Mr. Caplin: The hon. Gentleman may well be right, but I draw his attention to the comments of my hon. Friend the Member for Ochil (Mr. O'Neill) on the windfall tax, which we were told was unacceptable and would decimate the utility sector. However, it has been a great success, although it was opposed by the Conservatives and the Liberal Democrats.

My right hon. Friend the Secretary of State said that there were four key areas of the Bill. I think that there might be five, which I will take the House through. The first is to secure a fairer deal for consumers, which will be done by the establishment of the independent consumer councils so that there is an effective voice for those who pay the bills. The Bill will make sure that information can be published. There is also the principal objective of saying to the utilities that the protection and interests of consumers must be at the heart of their business.

The second area is that of disadvantaged consumers, to which reference has been made in the debate. The Bill proposes a new duty for the regulators--and the utilities, ultimately--to take into account the interests of low-income consumers. Few Labour Members will be unhappy to see that duty placed on the utilities.

Thirdly, the Bill modernises the regulatory framework. It is about 15 or 16 years since the privatisation of BT. We can argue about whether the framework used then was right or wrong, but we can all agree that the world has moved on and there is clearly a need for the system to be modernised to take account of market developments. [Interruption.] I understand that some Opposition Members may not want the world to move on. We have seen that already in the past two and a half years and we look forward to seeing it many more times.


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