Previous SectionIndexHome Page

Mr. Bob Laxton (Derby, North): On security of supply, do you not agree that there are real dangers in putting all our

31 Jan 2000 : Column 819

generating eggs into one basket? May I remind you of the occasion--I think that it was 17 November 1998--when the demand for gas outstripped supply and there was an increase of about 140 per cent. in the spot price for gas? There are real dangers, which you alluded to, about the difficulty of lack of security.

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. First, the hon. Gentleman's intervention is a bit too long. Also, I have not taken part in the debate, so he is best not to refer to me.

Mr. Butterfill: I agree with the hon. Gentleman that we must have diversity of supply. We cannot be wholly dependent on one type of energy generator. I hope that combined heat and power will take off. I believe that the Government should be making decisions now on new nuclear installations, because it will not be possible for us to comply with Kyoto unless they do. Because it takes an awfully long time to get planning consent for all the public inquiries and then to build the installations, such decisions must be made sooner rather than later.

I am concerned that the powers of the Secretary of State under the Bill are very wide-ranging. They impose a heavy burden of regulation--a burden we do not yet know the full extent of. Most of what is proposed in the Bill will become apparent when the regulations are made. As previous speakers have said, Members of Parliament do not like measures carried out by regulation because they avoid parliamentary scrutiny. Yet the Bill goes much further in that direction. It includes, within the Secretary of State's powers, all sorts of matters that are not immediately perceived as directly pertinent to the regulation of a utility.

Much has been said about social objectives, and we all agree with the idea of having them. But they should be dealt with by the Department of Social Security, not through the regulation of the manufacture and sale of a product.

Mr. Bercow: In the light of what he has said, is my hon. Friend not concerned that the Bill will dramatically increase the 2,800 regulations that have spewed forth from the Government's machinery since 1 May 1997? As a business man, in contrast to Labour Members, is he not concerned that, by increasing the regulatory risk to which the utilities are exposed, it will be substantially more expensive for them to have access to capital?

Mr. Butterfill: My hon. Friend anticipates precisely what I was about to say. The increased burdens that the Bill is likely to impose on the industry may well increase the cost of electricity to consumers. That is not what the House should be doing. One day, in some utopia, we may not have social ills, but we do, and they need to be addressed elsewhere. They should not be dealt with by a method that will increase the cost to some of the most vulnerable people in our society, sometimes in ways that we do not fully understand.

For example, the hon. Member for Hove (Mr. Caplin) said that it was wonderful to have got rid of standing charges. In principle, I think that some change in standing charges is a good idea. But he knows that one of the main beneficiaries of the abolition of standing charges is that group of rather affluent people who have second homes

31 Jan 2000 : Column 820

in constituencies such as mine and his. They go down only at weekends, do not pay the standing charge, and have lower bills. The people who live there all the time foot the bill.

Mr. Stunell: Is the hon. Gentleman arguing for strong Government intervention and expenditure on social welfare provision, or for something else?

Mr. Butterfill: I am saying that it will always be the responsibility of Government to help the poorest and most needy in our society, and that the Bill is not the right place in which to do that.

Mr. Hoyle: Does not the hon. Gentleman recognise that if people can turn on their electricity and gas without fear because the standing charge has been removed, it benefits those in our society who are worst off, not those with second homes?

Mr. Butterfill: I think that the hon. Gentleman has missed my point. It would be better to have a mechanism whereby we assisted the group that he is concerned about but did not at the same time give a massive bonus to some of the very wealthy people who have second homes in constituencies such as mine and that of the hon. Member for Brighton and Hove. They can well afford to pay their electricity bills. The fact that they are not paying that element of their bills increases the bill for the more needy in society.

Mr. Caplin: I actually represent Hove--indeed, I was waiting for the hon. Member for Buckingham (Mr. Bercow) to come in there.

Why would the Electricity Consumers Council welcome the publication of the Bill and the duty that it gives regulators if it did not believe that it put consumers first? That is the essence of the Bill.

Mr. Butterfill: I do not find it surprising that the council welcomed the Bill as there is likely to be considerable improvement in the areas with which it is concerned. It would be more surprising if it did not welcome the Bill.

The Bill enormously increases the burden of regulation. It may increase the cost of electricity generation. We are returning to the nanny state beloved of the Labour party, which should have learned from what has happened here and around the world that we can best help the poorest in society by producing goods efficiently.

Mrs. Gilroy: Will the hon. Gentleman give way?

Mr. Butterfill: I am winding up and I have been generous, so I shall not.

We must produce goods more efficiently and at lower cost. That is how to increase the wealth of society and help the most needy.

6.10 pm

Mr. Bill Tynan (Hamilton, South): Speaking in debates is a new experience for me, and I am glad to have the opportunity to speak in such an important one. The Bill relates to the essentials of life for my constituents. The range of issues it covers will affect utility shareholders

31 Jan 2000 : Column 821

and consumers. The Bill is the product of two years of extensive consultation, and the House should recognise the credibility that its proposals gain from that process.

The Bill's main principles deserve our support as they address some of society's problems. We must produce legislation that ensures the best delivery of service at the right price. However, we must also be committed to achieving the highest safety standards. Reducing prices at the cost of lower safety causes enormous problems. Recently, just four miles from where I live, a massive gas explosion destroyed a house, killing a family of four. The case is being investigated by the Health and Safety Executive, but pipes were known to have corroded. Concern remains that pipes on new estates in my constituency, which were recently laid, have the same problem. We must ensure that health and safety are not compromised by price reductions.

The Bill seeks to establish a fair balance between the interests of consumers and shareholders. The radical changes proposed will be welcomed by many. The establishment of an independent consumers council has prompted considerable debate, but unless we make the council powerful, we shall create a regulatory body that achieves nothing. Consumers' fears must be addressed. If consumers have problems or complaints, there must be a central point to which to take them. I welcome the introduction of a powerful council.

Regulators will have regard for the Government's social and environmental objectives. That approach is both sensible and desirable. It has not been taken in the past. I particularly welcome the Bill's provisions for increased transparency, accountability and consistency of regulation. There will be greater scope for consultation on key decisions in the various utilities, which will provide opportunities to examine what must be done and how it should be done.

It is inherent in that process that regulators should have more powers to publish information in the interests of consumers. I welcome openness. I recall that the distribution price review was based on a consultative report commissioned by Ofgem. The report assessed labour costs and possible savings, but its findings remain confidential despite their having been a key factor in the regulator's decision-making process. We never gained access to that report. Information is vital to the achievement of accountability, giving workers in industries and consumers the chance to see important facts that affect their lives. I would welcome an assurance from my hon. Friend the Minister for Competition and Consumer Affairs that reports of that nature will be accessible to the public when the Bill is enacted.

The final proposal that would benefit the consumer by creating a fairer system lies in the trading arrangements that other hon. Members have mentioned this evening. Making the market more competitive is the intention behind those arrangements. That would offer the prospect of lower electricity prices, which all of us should welcome. However, concerns remain about the Bill, arising principally from the proposal to reduce prices by 10 per cent. Consumers would welcome that, but I sound a slight note of caution. Reducing prices must not mean that utilities shed labour without regard for safety. It is easy for employers to decide that cutting labour should be

31 Jan 2000 : Column 822

the first way to reduce costs, but they must recognise the value of employees and search for greater efficiency and delivery of service.

Recent periodic price reviews in the electricity and water industries resulted in massive redundancies. Regulation should promote careful, constructive management of change rather than encouraging the short-termism shown by some electricity and water companies.

Next Section

IndexHome Page