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Mr. Alan Simpson: That is a strange reading of this clause 28.
Mr. Luff: I am glad that the hon. Gentleman knows what I am referring to; at least he is awake, and I am grateful for that.
On 12 December 1988, today's Prime Minister said:
"All those unresolved contradictions underline the stupidity, indeed the impossibility, of an energy policy determined by the interests of the private sector. The very considerations most critical to securing the long-term future electrical supply are the very ones least suited to the inevitable short-term demands of the market."
That is the authentic voice of old Labour. He continued:
"That is why, at the crux of the right hon. Gentleman's proposals, lies a clash of interests that he cannot conceal between ideology that drags him toward market forces and reality that compels him to recognise the need for a strong public sector."--[Official Report, 12 December 1988; Vol. 143, c. 680-88.]
Now the boot is on the other foot. The clash of interests is the Prime Minister's--between the reality that drags him toward market forces and the ideology that compels him to recognise the need for a strong public sector--and it is encapsulated in the Bill. He and his Government have clearly opted for the public sector, not markets, and for regulation, not competition. That is a matter of deep regret.
7.22 pm
Mrs. Linda Gilroy (Plymouth, Sutton): After that excerpt from the horror movie "Nightmare on Deregulation Street", I welcome the Bill and join an impressive chorus of support from leading organisations with long and distinguished records in representing the interests of consumers. They would not be doing their job if they did not raise for our consideration aspects of the Bill that could be improved. I intend to discuss some of those later, but it is worth reflecting on some of the overwhelmingly positive points that they have made--particularly in view of the lack of any mention of these by Conservative Members in the Chamber--to see how much the regulatory system needs to be improved to benefit the consumer.
The National Consumer Council is
The Bill represents a rare opportunity to place the interests of all consumers at the heart of public policy for those essential services. Utilities are a special case. Consumers can choose between different suppliers, but, unlike some other purchases, those services are essential. The health of consumers and the social cohesion of communities are damaged if consumer protection and regulation in those industries are not as good as they should be and the market is clearly not delivering benefits to all consumers. The November 1999 issue of "Energy Action", which is published by National Energy Action,
carries a report on poor electricity consumers under the title, "Poor consumers switched off by competition". It says:
We need to protect the interests of the fuel poor. At least 4.3 million households experience some degree of fuel poverty. In other debates, it has been pointed out that some face a choice between eating and heating, and the challenge of finding between 20 and 30 per cent. of their income with which to meet fuel bills. How would Opposition Members, in particular, feel about having to find that amount?
Mr. Gibb:
Will not the 29 per cent. real-terms cut in fuel bills that has taken place since privatisation have helped those people? Had fuel remained in the state sector, it is more than likely that prices would have increased by 29 per cent.
Mrs. Gilroy:
I am not sure whether the hon. Gentleman was present when I pointed out that, owing to the policies of a Conservative Government, the price of gas rose by 10 per cent. above the rate of inflation for each of the three years immediately preceding privatisation--which then brought prices down, but only after they had risen by a whacking 30 per cent. above the rate of inflation.
Mr. Gibb:
That was always the history of the electricity and gas industries when they were in the state sector. The Secretary of State would set prices; they would fall in the run-up to a general election, and would be hiked immediately after it. That was the pattern that governed the setting of prices, and that is what we sought to get rid of by privatising the companies involved.
Mrs. Gilroy:
The hon. Gentleman cannot have been listening. I was talking about a period in the 1980s when
Let me turn to the concern that we feel for the fuel poor. As I have said, we have discussed the issues in other debates, and many of my constituents are having to find between 20 and 30 per cent. of their income to pay fuel bills. I am pleased that the new home energy efficiency scheme focuses much more on the fuel poor. The Government have doubled its budget and redesigned it to ensure that it is targeted on those who are most at risk from ill health caused by fuel poverty--the elderly, and families on low incomes.
Good news came in October, when the energy regulator announced a £100 million two-year programme of energy efficiency targets for gas and electricity suppliers. That, too, will focus largely on the fuel poor. Early indications that the Government are serious about tackling fuel poverty were followed, in November, by confirmation that an inter-ministerial team would be set up, co-chaired by my right hon. Friend the Minister and our noble Friend Lord Whitty, Under-Secretary of State for the Environment, Transport and the Regions. It will consider the impact of current programmes to develop a more accurate picture of the extent of the problem and how quickly it can be addressed, so that a target date can be set for the elimination of fuel poverty in England.
I think that that ambition is shared by those on both sides of the House who are members of the all-party group. The hon. Member for Hazel Grove (Mr. Stunell) is a regular and active member of the group, and other Opposition Members support it; but the Government are putting their money where their mouth is by introducing measures that can underpin the general aim.
Clauses 8 and 12 give us a chance at long last to ensure that utility regulation makes a greater contribution to the achievement of our goals. They are important goals. If there is any doubt about how seriously the Government want to tackle them, I invite hon. Members to consider the inter-ministerial group's terms of reference and objectives, and the programme that has been planned to implement them.
According to a response by my right hon. Friend the Minister to a question that I tabled on 10 January 2000, the programme of work includes improving identification of the fuel poor; researching the effect of changes in income, energy prices and energy efficiency; identifying the projected impact of existing and planned policies on the fuel poor; developing an understanding of the gap between the impact of those policies and fuel poverty objectives, and the policies and resources required to meet them; and developing a comprehensive strategy setting out Government fuel poverty objectives, policies to deliver them and targets and time scales for those objectives. The group will be invaluable as a means of informing the guidance that the Secretary of State will have powers to give the regulator under the Bill.
There can be no doubt about the size of the task, or the importance of the contribution that the new powers in the Bill can make. I welcome the Bill, but I want to draw my right hon. Friend's attention to concerns felt by those in the consumer movement. Perhaps, in Committee, there
can be some clarification and amendment to ensure that the Bill achieves all that can be achieved to strike the best balance for consumers, the industry and the economy.
If the aim is more regulatory certainty and all the benefits that derive from it, it is important for us to debate fully the concerns felt by experts. The main concerns--mentioned by the National Consumer Council, the Consumers Association, the Electricity Consumers Council, the Gas Consumers Council and Ofwat in their preliminary observations--relate to what is said about access to information, and the criteria that must be satisfied in order for consumer councils to publish information.
Clause 22(6), which refers to the energy sector, refers to the powers that the Secretary of State will have to make regulations setting out descriptions of information, and circumstances in which information can be refused by the companies. I hope that my right hon. Friend will confirm that she will be willing to discuss how the regulations will be drafted, to ensure that they do not--as some fear--so tie the spokespeople that they are effectively silenced. I hope that she will also consider the suggestion made by the National Consumer Council and, I think, the Consumers Association that the right of appeal could be to the information commissioner under the Freedom of Information Bill, rather than to the regulator, whose decisions will be subject to scrutiny by the councils. They fear that there could be tension and conflict if the councils have to rely on the regulator to gain access to the information. The same point has been made by Ofwat's national customer council.
These important points merit serious consideration, as does the right of disclosure. According to my reading of clause 21(6), information about energy will have to satisfy one of three criteria before the new consumer councils can publish information. The individual or body that would be subject to publication would have to have consented; the information would be available to the public from some other source; or the council would have to consider that to publish the information might not
My right hon. Friend may be able to offer some reassurance about what clause 21(6) means. Perhaps it is the intention that, as in the Freedom of Information Bill, there will be a public interest test, but it does not seem to be there now. I hope that the Minister agrees that it should be.
A further point has been brought to my attention by the Gas Consumers Council--a point well made in view of the comments of my hon. Friend the Member for Hamilton, South (Mr. Tynan) about the importance of safety. He said that a reduction in prices should not be at the price of health and safety. There is a clear safety remit for the council at the moment. However, under the Bill, the new consumer council does not appear to have a remit to investigate complaints regarding activities that are not licensed, including complaints about service, installation and repair of appliances, or general safety issues.
Again, in the light of clause 21, the intention may be for the duty to continue, but it is difficult to understand how it will be workable or practicable to inform the Secretary of State of each individual complaint when,
in 1999, the council dealt with 5,500 such matters. Again, the Minister's clarification as to whether that is a correct reading--perhaps not this evening, but at some point in the discussions on the Bill--would be helpful.
The Consumers Association is concerned at the lack of any mention of an advocacy or policy role for the councils. As many hon. Members have said, it is essential that the councils can fulfil the roles of consumer advocate and contributor to policy debates, as well as that of complaint handler and information provider. The lack of an advocacy role in the Bill will make it difficult for the council to ensure that it resources that essential side of its work. I would welcome the Minister's observations on why the Bill is less clear than previous legislation.
I am curious to know more about why it has been thought right to depersonalise the energy and telecommunication regulatory bodies by appointing the sort of boards that are envisaged in clause 1 and schedule 1, and why an advisory panel is felt to be sufficient in clause 104 for the water industry. Arguably, we need an even stronger authority for the water industry than for the energy sector.
Those are important issues and it is an important Bill. My knowledge of the House and its procedures stemmed from my involvement in the Gas Acts 1986 and 1995, when I was regional manager of the Gas Consumers Council in the south-west. The Bill deals with many of the issues for which I and my colleagues in the council argued fruitlessly in the face of opposition from the Conservative Government, who were not concerned about whether consumers would get a good deal, let alone a fair deal.
"looking forward to a shift in the balance of regulation in favour of consumers, but we are also looking for a more accountable, open and consistent approach".
It welcomes the provisions on
"the elevation of the regulators' duty to protect consumers;
The Consumers Association welcomes the Bill
the duty of the regulators to have regard to the interests of disadvantaged groups;
the establishment of independent consumer councils;
the powers for consumer councils to have direct access to utility company information rather than through the regulators;
the replacement of individual regulators with regulatory authorities in energy and telecommunications;
the provision for the Secretary of State to give those regulators guidance on social and environmental issues".
"to put consumers at the heart of public policy for our essential utilities . . . in particular the measures on financial penalties, reform of the electricity pool and the establishment of independent utility consumer councils."
The national Electricity Consumers Council news release on the Bill states:
"The Utilities Bill promises better protection and lower prices for consumers. The Regulator will be under a new primary duty to protect consumers and we will see the reform of the wholesale electricity market, which should cut bills by 13 per cent.
Those comments suggest that those organisations share our aim to put consumers at the heart of utility regulation, which was set out by my right hon. Friend the Leader of the House when she was President of the Board of Trade. She initiated an interdepartmental review of regulation two years ago, describing the objective as setting
In addition, we look forward to the creation of a new independent Consumer Council to represent the interests of electricity and gas consumers and to help them with their complaints.
We shall be looking at the small print . . . We believe that electricity consumers, particularly disadvantaged people, need firm protection in the competitive market."
"a long-term stable framework for utility regulation, which is seen as fair by all the interest groups involved, particularly by consumers. Without fairness, there can be no long-term stability."--[Official Report, 30 June 1997; Vol. 297, c. 20W.]
Conservative Members have made much of regulatory risk, but without stability we shall be unable to achieve a reduction in regulatory risk, the low costs of capital that they so much want and the benefits of that in respect of achieving price reductions. As usual, social justice and economic efficiency go hand in hand and they are achieved by regulatory stability and certainty, not deregulation. I commend to the attention of Conservative Members the price differential between Scottish Power and its rather more heavily regulated American parent company, Pacificorp. The charge through regulation there is about half that in the United Kingdom.
"Disadvantaged consumers are worse informed about electricity competition and less likely to have switched supplier. This is particularly true of low-income groups, those without a bank account and prepayment meter users. Only 2 per cent. or fewer of these groups have switched to date, compared to the national average of 5 per cent.
The same edition of the magazine carried a report entitled "Gas consumers harassed, ignored, confused". It says:
The latest results of market research, commissioned by Ofgem and undertaken by MORI, suggest that companies could do more to inform low-income customers about the benefits of competition, in particular which payment method is the cheapest for their circumstances. Of those using prepayment meters, 26 per cent. thought they were using the cheapest payment method and a further 37 per cent. did not know."
"'The consumer experience is of being harassed on the doorstep, ignored if they're poor and fed with confusing information. If that's what it's like, who can blame consumers for staying with the devil they know rather than shopping round for gas.'
More than half the 20,000 complaints were about services offered by new suppliers. Calortex had received nearly 3,000 complaints, Northern Electric more than 2,500, Swalec 2,163, Eastern Energy more than 2,000 and Scottish Power 1,532.
Jenny Kirkpatrick, Chairman of the Gas Consumers Council, delivered this verdict on the competitive gas market following the release of new research on consumer views about switching suppliers . . .
Further evidence of consumer dissatisfaction emerged from the GCC's analysis of complaints--up by 46 per cent. so far this year."
"seriously and prejudicially affect the interests of that individual or body."
If that reading is correct, the criteria seem to be weighted heavily in favour of the companies being able to claim that information should not be published.
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