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Mr. O'Neill: The legislation will still make provision for groups apart from the poor and the disadvantaged, such as the elderly and the disabled. Those two groups surely require special protection in the telecommunications market. Their dependence on telephones does not always reflect the operation of the market. The regulator should ensure the maintenance of minimum standards and the availability of a service to such groups, whom it is the regulator's specific responsibility to look after.
Mr. Chope: Much depends on the way in which that is done. At present, the water regulator has responsibilities to pay attention to those who suffer from disabilities or are otherwise disadvantaged, but even the Director General of Ofwat thinks that what is proposed in the Bill is over the top in imposing rigid new requirements on the regulator. I was going to refer later to the exact words that
he used in a recent article. The general proposition is fine. We should ensure that responsible providers of utilities take into account the needs of special groups. However, the Bill is over the top because it imposes on the regulators substantial requirements which can be met only at tremendous expense to other consumers.
What protection exists if the Minister or the Secretary of State acts against consumers' interests? The Secretary of State admitted that there was none, and effectively said that we would have to rely on his political judgment. That is a cause of deep anxiety because the most topical example of his judgment is his imposition of restrictions on new entrants into the electricity market. He has forbidden licences to those who provide gas-fired generation. He justified such anti-competitive intervention on the specious ground of security of supply. He repeated that today. I say that the reason is specious not because of my prejudice, which knows few bounds, against the Secretary of State but because his Department's advisers have criticised it. The current energy report shows that they have rejected the reason as unsustainable. The Director General of Ofgem also told the Select Committee that it has no substance. It shows that the Secretary of State is more interested in trying to prop up the coal industry as part of a muddled energy and climate change policy. That policy has led the Government to decide to restrict the ability of new entrants to compete for electricity generation.
A headline in last week's Utility Week magazine was "DTI advisers said gas ban was unjustified". The accompanying article stated:
My hon. Friend the Member for Rutland and Melton (Mr. Duncan) challenged the Secretary of State about Ian Byatt's comments on the reform of utility regulation. Ian Byatt has completed a successful period of 10 years as the water regulator. In a lecture entitled "Checks, Balances and Competing Pressures--Looking Forward at the Role of the Regulator" to mark the 10th anniversary of Ofwat in October last year, Ian Byatt made pertinent points about the legitimate role of the regulator and the proposed reform of utility regulation. I shall not quote extensively from the lecture, but I commend it to hon. Members who are interested in an informed view, based on 10 years' experience, from an acknowledged world expert on regulation, who has fallen out with the Government in a big way over recent months because of the changes that they propose to the regulatory regime.
The Secretary of State said, rather disingenuously, that Ian Byatt was the only regulator who had complained. Perhaps that is not unrelated to the fact that Mr. Byatt is giving up his role this summer, and is no longer beholden to the Secretary of State, whereas the other regulators
depend for their future livelihoods on keeping in with the Secretary of State. That is another comment on the total lack of independence that the regulatory regime possesses.
In his lecture, Mr. Byatt said, among other things:
Mr. David Chaytor (Bury, North):
I am pleased to welcome the Bill and, in particular, the lengthy consultation that took place during its formulation. That is extremely important because there is a well established consensus on these issues in which all concerned with them--consumer and environmental groups, the industry and many of the regulators--seem to share, apart, that is, from the Conservative party.
Interestingly, the Opposition defined the debate as an ideological struggle between privatisation and nationalisation and do not realise that things have moved on. It is almost as if the events of the past 10 years had not taken place and they have forgotten that the weaknesses of their regulatory regime for the privatised utilities were a reason for their dramatic loss of support and confidence over the past few years. The specific issues of directors' salaries, allegations about fat cats and people abusing the privatised utilities for their own ends lost them significant support in all parts of the country; and the idea that a completely deregulated market, which was called for by virtually every Conservative speaker, can do anything to deal with the challenges of climate change or the chronic problem of fuel poverty is absurd. The overwhelming majority of my constituents understand that, which is why the new regulatory regime will be widely welcomed by them and by the general public.
I want to be brief as time is short, but I must associate myself particularly with the concern of the hon. Member for Hazel Grove (Mr. Stunell) and my hon. Friend the Member for Harrow, West (Mr. Thomas), which was that the new powers in the Bill be used to advance Government policy on sustainable development. The Bill must be considered in the context of an energy policy and the document on Government policy on renewables, which I understand will be published shortly. I urge
Ministers to use their powers to ensure that we at last eliminate fuel poverty from the United Kingdom and enable the regulator to use his powers to make sure that the challenge of climate change is not ducked.
I consider the issue at the heart of the Bill to be the definition of the interests of consumers. The problem is that there are many different kinds of consumers of public utilities; however, I shall talk specifically about the consumption of energy. I feel that the focus must be not simply on achieving a cut in wholesale prices--we are told that there will be a 10 per cent. cut--but first and foremost on ensuring that the charging regime is adjusted. What matters to those who are using gas and electricity, as well as water and telecommunications, is not the wholesale price but the bill that they must pay.
One of the most glaring weaknesses of the regulatory regime established by the last Government was the fact that poor people paid more per unit cost for their gas and electricity. That is why I welcome the initiatives that have already been announced by various energy suppliers. I understand that PowerGen has announced a new arrangement in conjunction with Age Concern, and that British Gas has announced that it will abolish its standing charges. I think that, at long last, the energy suppliers are realising that they must change their tariff structure to help people on low incomes.
I also feel that the interest of the consumer must be defined in terms of short-term and long-term interest. That brings me to the environmental point. We would automatically assume the interest of consumers to involve ever-falling energy prices. The difficulty is that, if energy prices and energy bills fall indefinitely, both individuals and companies will once again become profligate in their use of energy. The Government must get to grips with the need for energy conservation and energy efficiency.
We need a definition of the consumer interest that stresses both the environmental impact and the need for a huge increase in investment in renewables and energy efficiency. If we concentrate simply on trying to cut energy bills year on year without having regard to energy supplies--without considering the availability of fossil fuels such as gas, coal and oil, which have a limited lifespan--we shall find in the first instance that our carbon dioxide emissions will continue to rise and we shall not be able to meet our Kyoto targets; and in the longer term that the availability of the raw materials for electricity, in particular, will no longer be there. I welcome the potential that the Bill provides for an increase in our investment in renewables, and in energy efficiency.
Let me ask some specific questions. First, can my right hon. Friend assure us that the new electricity trading arrangements will not prejudice renewables? I know that there is concern about the fact that it is more difficult for smaller energy suppliers, especially those involved in renewables, to predict the long-term volume of supply. It is an essential part of the new electricity trading arrangements that such predictions be made.
Secondly, can my right hon. Friend tell us something about the Government's view on net metering? In years to come, when new energy arrangements apply, when there are more and more small-scale producers and when more and more people generate their own electricity sources, I think there will be a proliferation of small suppliers who not only wish to service their own needs--
domestically or in their own companies--but wish to feed energy back into the national grid. That new form of energy supply will be possible only with a system of net metering, enabling them to be paid properly for the electricity that they feed back into the grid. Is it likely that such a system could be introduced in due course?
"Independent advisers to the Department of Trade and Industry told Ministers in an unpublished report"--
that is the story of this Parliament--
"that the government's current block on new gas-fired generation was unwarranted and unjustified on either security or diversity grounds."
The Secretary of State responds by telling us to trust him. He takes enormous powers to control the regulators, supposedly in consumers' interests, but if the regulators and other independent experts tell him that he is acting against consumers' interests, he claims that they are wrong and refuses to take any notice of them. That is intolerable.
"Ministers recognise the need for proper accountability. They wish to issue statutory guidance on social and environmental matters to which regulators would pay regard. Where, however, social or environmental measures have significant financial implications for consumers or for the regulated companies they recognise that they should be implemented through new, specific legal provision rather than through guidance."
Although almost exactly the same words appear on page 5 of the Green Paper "A Fair Deal for Consumers" under the heading "The Social and Environmental Framework", the Bill is totally different. Unlike the Green Paper, it does not say that the Government will
"implement social and environmental measures which have significant financial implications for consumers or for regulated companies"
other than by regulations made under it rather than through primary legislation, which is what they promised originally.
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