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Dr. Howells: Will the hon. Gentleman tell us why--perhaps he has given us the reason--after 18 years of Tory rule, the car companies used to refer to Britain as treasure island?

Mr. Gibb: I think that we should leave the issue of car pricing for another day.

Of course, the businesses that I have described are run by people who, like the rest of us, have human failings. They make mistakes and they will contravene licence conditions and standards of performance from time to time.

Mr. Ian Bruce: My hon. Friend has just been given an exact example of how the Government consider the electricity and gas companies to be a milch cow from which they can extract money. The point about the motor

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industry that the Minister was so keen to throw at my hon. Friend does not reflect the experience of the people in Ford or Rover who are about to lose their jobs.

Mr. Deputy Speaker (Mr. Michael Lord): Order. The amendment is quite tightly drawn and I would be grateful if the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) were not drawn away from it.

Mr. Gibb: I am grateful to you, Mr. Deputy Speaker. However, the Minister's comment reveals the Government's misunderstanding of how business functions. They throw out phrases and cast out words and their remarks matter more than if they were uttered by other politicians or members of the public. When Ministers say such things, they cause severe damage.

The people who run businesses are human and they will fail from time to time. They will contravene licence conditions and standards of performance from time to time. Of course, regulations are needed to ensure that such transgressions are deterred in the utility sector and that they are kept to a minimum. However, the Government seek to extract the extra pound of flesh. The anti-business attitudes from the recesses of their old Labour heritage and instincts keep on re-emerging and they cause real damage to some of this country's most precious business assets.

Ministers fail to understand that the people who pay for those attitudes are not a mythical group of fat capitalists; the consumer always pays, just as it is always middle Britain that pays the Government's new stealth taxes. The average electricity and gas consumer will pay the cost of the extra-regulatory risk that the Bill and its penalty provisions will cause.

Amendments No. 26 and 27 would cap the level of the fine that the regulatory authority can impose. They suggest a cap of 5 per cent. of the annual turnover of the businesses concerned, but if the Government think that another figure is more appropriate, we may be able to support them. It is important that there is a cap of some sort. Without it, we shall damage the interests of the very consumers whom the Bill is meant to protect. I hope that the Government will, this time, respond to the debate far more constructively, so that the House can hear the arguments that were put in Committee about why the Government think that limitless fines on the utility companies are so vital. Such fines will undo all the potential good for the protection of the consumer that the Government purport to be doing. Those extra costs, arising from the higher regulatory risk, will have to be paid for by someone. That someone will be the consumer.

Mr. Syms: I know that we all want to make progress, so I shall be brief.

I support amendments Nos. 26 and 27. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) made compelling arguments that I hope that those on the Treasury Bench have listened to and concentrated on. The key point is that, in the capitalist system with limited companies and a corporate regime, it is important to be able to assess risk. If, as under clause 57, it is not possible to assess risk, there will be problems for companies, particularly those that are publicly quoted.

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8.15 pm

Under the corporate regime, such businesses have to abide by certain rules and have to produce their accounts in a certain way. However, an arbitrary decision of the regulatory authority could lead to a devastating impact on a business. That business may have shareholders, among whom many may be pensioners, or it may be owned by pension funds. Employers in the business may have share options or they may look forward to bonuses. Therefore, amendment No. 26 would quantify the maximum penalty that an authority could levy against a business, so that risk could be quantified by those who make judgments in the market.

As the clause is drafted, there could be a regime of fines that are not time limited and a company could be caught for what it had done several years ago, and the fines could be multiple.

Dr. Howells: There is a time limit. The penalty must be imposed within 12 minutes--[Interruption.] It would be all right if it was within 12 minutes. The penalty must be imposed within 12 months of the offence taking place.

Mr. Syms: I thank the Minister for that explanation and for correcting me on that point.

However, there is a problem in that there could be multiple fines. As my hon. Friend the Member for Bognor Regis and Littlehampton pointed out, a limit of 10 per cent. applies to fines made under the Competition Act 1998, but there is no limit to the fines made under the Bill. It is important to set limits, so that people know how to react. It is perfectly possible for us in the Chamber to frame legislation on the basis that everyone is reasonable. However, unreasonable people sometimes operate reasonable legislation in an unreasonable way. That could disrupt the market and have a dire effect on a business, with consequences for those who invest in it and those who work for it.

The amendments are well worth considering. I hope that the Government will listen to the force of our arguments and accept them.

Mr. Ian Bruce: This is a crucial element in the Bill.

Mrs. Liddell: Sit down.

Mr. Bruce: The Minister picks me up immediately, but I think that this is a crucial part of the Bill, and that is the reason for the amendments.

Conservative Members have been concerned by the interventionist aspects of the Bill that will enable the Secretary of State to issue reams of regulations directing the regulator to have regard to a whole host of political imperatives and social policy aims that are more properly the role of government. We are concerned that the detail of these measures is not contained in the Bill and we have learned from past experience of this Government to be cautious of the detail that appears in secondary legislation. [Interruption.] The Minister for Competition and Consumer Affairs wants to know where my remarks come from. I have a speech writer; I use them occasionally to keep them in work. He will be pleased to know that there are many pages of this.

The Bill will give the Government a raft of new powers, such as those that will enable fuel poverty to be tackled and there to promote energy efficiency and the

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use of electricity from renewable resources. The regulators will have the power to impose tough fines on companies guilty of bad practice or poor performance, such as mis-selling, interruption to supplies and the time it takes to reconnect customers. There will be no upper limit on the fines that the regulators can impose.

On behalf of Her Majesty's Opposition, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) tabled amendments Nos. 26 and 27, which would limit fines to 5 per cent. of the turnover of the licence holder. That is crucial because of the provisions of the Competition Act 1998, in which the Government argued there should be a limit. We believe that not only should the fines levied under this Bill be reasonable, but there should be certainty about the maximum amount.

Utility groups are wary about the extent to which the new powers allow public bodies to interfere in the affairs of the privatised utilities. The Electricity Association, to which I know the Minister for Competition and Consumer Affairs listens carefully, states:

The Government is giving itself considerable new powers to direct regulation. We want to see these used judiciously and transparently, with proper consultation, avoiding regulatory shocks which have the effect of increasing uncertainty, which in turn leads to increased costs. However, ministers have acknowledged this, and we take heart from their declared commitment to regulatory stability.

The association said that before it had been consulted by Ministers. Having given that public warning, it believed privately that it would get from the Government the assurances that it wanted. Clearly, those assurances have not been made, and the association is concerned about that, as are Opposition Members.

The Times reports that competition experts have been shocked by the proposal for unlimited fines, stating:

Competition experts were astounded the Bill imposes no limit on the fines the regulator could impose on companies. The regulator has carte blanche to determine a tariff of fines which he must publish and companies will have a right of appeal. But the failure to impose a limit means fines could exceed the maximum level under the Competition Act of 10 per cent. of turnover.

Although the water industry is no longer included in the Bill, it is significant that the outgoing Director General of Ofwat, Ian Wyatt, has criticised the Bill for its over-regulatory approach, saying:

I find the bill over-complicated because it is over-prescriptive. Nothing is left to good sense.

Those words of condemnation come from a man who has been a regulator.

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