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Mr. Benn: I am aware that that is the case. My point is about the charge that the gas companies levy.
I realise that not all pre-payment meter users are on low incomes, but the Government themselves estimate that 24 per cent. of households receiving income support pay for their gas by pre-payment meter. A recent MORI poll clearly shows that the use of pre-payment meters increases the lower down the socio-economic groups we go. Over half the users of pre-payment meters are people in households who are not working and a quarter are one-parent families.
I wanted to make the point in relation to the gas companies; that is the object of my contribution. It is extraordinary that the highest charges are levied on those with the lowest incomes.
The issue has been the subject of debate for quite some time. The Public Accounts Committee has commented on it. The recent report of the Gas Consumers Council says:
- It is time pre-payment meter consumers benefited from the liberalised gas market.
Mr. Stunell: I want to speak in support of amendments Nos. 29 and 30, and against the Conservative amendment, which the Liberal Democrats think is mistaken. It is clear that there are occasions on which the guiding force cannot be the straight issue of competition--the form that would be left if the words were deleted. The two amendments tabled by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) relating to gas and electricity are mistaken. I associate myself with the words of the hon. Member for Leeds, Central (Mr. Benn) in that regard.
Through our amendments, we are trying to reintroduce into the debate some of the issues that were discussed in Committee, but not dealt with sufficiently. The amendments would ensure that a broader duty was placed on the regulator--a duty not confined solely to issues of competition.
We have sought to delete the words "Subject to subsection (2)" in subsection (5). Subsection (2) places on the regulator the requirement to put competition first and foremost--before all other considerations. If subsection (2) is removed, issues relating to environmental and social and welfare activities can be given the significance that they deserve.
I return to the point that I made earlier. We are talking not simply of regulating competition but of regulating to achieve the overall policy objectives of this Government and, I believe, any Government: the protection of consumers on low incomes--a matter referred to by the hon. Member for Leeds, Central--and the protection of the environment, an issue over which the Minister was disturbingly glib in winding up the previous debate. It is absolutely clear that, as the decades go forward, the implementation of sound environmental policies will be highly dependent on the regulator having the power, the ability and, in some cases, the duty to act not solely on price and competition matters.
These two simple amendments are designed to swing the balance of the Bill back towards the environmental agenda. They have wide support among non- governmental organisations and groups outside the House that have been supplying information and support to Members and to Ministers. I will leave it at that, and simply urge the Government to have yet another look at the key issue of balancing their declared environmental policy objectives with the powers and duties that they are prepared to give those who have to implement their policies under the Bill.
Dr. Howells: There are some activities connected with the supply of gas and electricity in which competition simply cannot protect the interests of consumers. It is that practicality that Opposition Members have forgotten in tabling amendments Nos. 22 and 23.
There are natural monopolies--gas pipeline and electricity distribution networks, for example--in which it will never be cost-effective to develop competition. To facilitate competition in such activities would require the construction of duplicate networks, at colossal expense and with devastating consequences for the environment. Such action would rarely be in the interests of consumers.
Where natural monopolies exist, it is right that the interests of consumers should be protected by some means other than competition. That is why the regulator is given discretion to determine whether the promotion of competition is the most appropriate means of protecting
the interests of consumers--although competition should be the regulator's first choice in the absence of a good reason to the contrary.Where there are natural monopolies in which competition is powerless to protect consumers, what is a regulator to do? The amendments are silent on that point, so presumably the intention is that the regulator should do nothing at all. Certainly, the obligation to protect the interests of consumers would no longer apply. The amendments risk leaving the consumer exposed to exploitation by companies operating in monopoly markets, which is precisely what regulation is intended to prevent. I ask the House to reject amendments Nos. 22 and 23.
I do not fault the motives of the hon. Member for Hazel Grove (Mr. Stunell) in tabling amendments Nos. 29 and 30, but they shoot at the wrong target. The regulator's principal objective is cast in terms of protecting the interests of consumers, wherever appropriate by promoting effective competition. That objective reflects the basic rationale for the existence of gas and electricity regulation.
Although we recognise the necessity of ensuring that the environmental dimension of utility regulation is properly managed, we do not believe that environmental considerations should be part of the duty to further the principal objective. In the final analysis, the Bill is about economic rather than environmental regulation. The current status of duties ensures that, when making a choice between alternatives of equal benefit to the consumer, the regulator should lean towards the one that is most favourable from an environmental perspective. We think that that is the right outcome. I ask the House to resist amendments Nos. 29 and 30.
Mr. Gibb: That was a rapid and disappointing reply. I thought that the debate required something a little more substantial than that.
The hon. Member for Leeds, Central (Mr. Benn) raised his concern about the use of pre-payment meters, which will result in significantly higher gas bills for the poorest consumers. He makes a valid point. The same point applies to customers of electricity suppliers. It has long been my view--and, indeed, the view of many Conservative Members--that pre-payment meters hark back to a bygone era when gas and electricity suppliers were monopoly industries owned by the state. Monopoly state companies were able to treat their customers in that way. Rather than trying to sort out a person's slight payment problem, as many private sector companies now try to do, monopoly companies can simply install pre-payment meters and use their monopoly power to charge customers 10 to 25 per cent. more than they charge other customers--
7 pm
Mr. Deputy Speaker: Order. We come now to the Private Bill set down for this hour.
As there is no one in the Chamber to move it, we will continue with the Utilities Bill.
Mr. Gibb: The hon. Member for Leeds, Central made some valid points on pre-payment meters.
I strongly believe that pre-payment meters would not be used if we had increased competition in the utilities industries. As competition has increased, companies such as PowerGen have done deals with organisations such as Age Concern to provide a package of services to various groups which have not previously been the suppliers' prime targets. The more competition that we have, the more fierce companies will be in trying to target all groups in society as valuable customers. Without competition, companies may believe that it is too expensive to provide services to those groups.
The Minister said that if the phrase "wherever appropriate" were removed from clause 9, on natural monopolies, the regulator would be forced to require increased competition in sectors in which, because of a natural monopoly, competition cannot possibly operate. The gas and electricity distribution networks, for example, are natural monopolies, as they will be the foreseeable future.
The Minister's warnings are not justified by the operation of the previous regulatory regime, under which companies were not required to create new gas or electricity distribution networks. Such requirements have not been imposed under the current regulatory regime, and they would not be imposed under the proposed regime if the words "wherever appropriate" were removed from clause 9.
The issue reveals that the Government still do not understand the efficacy of increased competition in delivering benefits for consumers. It is disappointing that they have not been able to accept this group of amendments, but, in view of the debate, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10
Mr. Gibb: I beg to move amendment No. 24, in page 8, line 2, after "Parliament", insert--
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