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Lords amendment: No. 12, in page 6, line 24, at end insert
("or the Utilities Act 2000")
Mrs. Liddell: I do not want to delay the House unduly. Amendment No. 12, together with amendments Nos. 14, 15 and 17, clarify what is meant by the functions of the authority and the Secretary of State for the purposes of clauses 9 to 11 and 13 to 15. They also clarify what is meant by activities subject to obligations for the purposes of the finance duty in sub-paragraph (2)(b) of clauses 9 and 13.
Clauses 9 to 11 and 13 to 15 contain obligations that relate to the functions of the authority and Secretary of State. Clauses 9 and 13 set out their principal objective and general duties; clauses 10 and 14 oblige the authority to have regard to social and environmental guidance, and clauses 11 and 15 contain important obligations concerned with health and safety.
Following Royal Assent, the functions of the authority and the Secretary of State will be largely contained in the amended Gas Act 1986 and Electricity Act 1989, but both will also have functions under stand-alone provisions of the Utilities Bill--that is, provisions that do not simply amend the existing Gas and Electricity Acts. For example, clause 4 requires the authority to prepare, consult on and publish a forward work programme, and clause 26 empowers the authority to publish a notice issued by the consumer council setting out its reasons for refusing to supply information.
The amendments make it clear that references to the functions of the authority or the Secretary of State in clauses 9 to 11 and 13 to 15 relate to their functions under the provisions of the Bill, as well as to their functions under the amended Gas Act 1986 and Electricity Act 1989.
Amendments Nos. 13 and 16, which were divided on in another place, would place the authority and the Secretary of State under a duty to exercise their functions in the manner that they consider best calculated to secure a diverse and viable long-term energy strategy. The authority and the Secretary of State must, as part of their primary duty, consider the needs of future, as well as existing, consumers. That requirement necessarily imports longer-term thinking about security of supply into their processes.
Let me deal briefly with amendments Nos. 228 and 235, to assist the House. Each of those repeal provisions of the Gas Act 1986, which are replaced by equivalent provisions contained in the Bill. Amendment No. 228 repeals the latter half of section 47(7) of the Gas Act, which is the equivalent of paragraph 10 of schedule 1 to the Bill. Amendment No. 235 repeals paragraph 15(2) of schedule 7 of the Gas Act, which is the equivalent of clause 5(9) of the Bill.
Mr. Gibb: The Bill started life as the Department of Trade and Industry's great flagship Bill, with 134 clauses and a new regulatory regime for all four utilities--gas, electricity, telecommunications and water. On Second Reading, the Secretary of State introduced the Bill in glowing, almost adulatory terms. He said:
The Bill puts utilities regulation on a sure footing for the 21st century, and is good for consumers, good for competition and good for the utilities.--[Official Report, 31 January 2000; Vol. 343, c. 795.]
I warned the Minister in Committee that there would be 900 amendments, not 1,000, as she said. In the event, there were more than 600. If I exaggerated, I did so only slightly. The Government made strenuous efforts to reduce the number of amendments by merging some of them to get the number down to 600.
Mr. Gibb: The hon. Gentleman makes a good point, especially as those 600-odd amendments were to a Bill of 134 clauses. The Government could almost have started again with more efficiency than just accepting 600 amendments, the vast majority of which dealt with poor drafting and poor policy analysis. I do not wish to be unkind, but it became abundantly clear in Committee that the Ministers were not up to speed with what was going on; they were certainly not driving the policy forward.
This flagship Bill, which was part and parcel of the Government's so-called modernisation programme, has become a huge embarrassment to them, and the House even considered referring it back to Committee. It started as one of those eye-catching initiatives with which the Prime Minister likes to be personally associated, but it has finished up as an example of how not to legislate. Even the Secretary of State, who is absent today, is trying to avoid being associated with it.
The essence of the Bill is to change the role of the regulator from that of an economic regulator to one of regulating for the sake of it. The gas and electricity regulators were put in place when the industries were privatised in 1986 and 1989 to deal with the fact that they were effectively monopolies and to ensure that those monopolies did not exploit their position. They were also charged with promoting competition--a role that they have carried out in an exemplary fashion during the past 11 or 14 years. The retail prices index minus X formula applied by the regulators has given the industries huge incentives to cut costs, increase efficiency and become more customer focused. Electricity and gas prices have fallen by 30 per cent. in real terms since privatisation and huge competition exists in the gas and electricity industries.
Under the Bill, the Government are changing the role and obligations of the regulators. That role would also be amended under the Lords amendments. It is important to understand the philosophy behind the Bill. It is set out in a pamphlet, entitled "Regulating in the Public Interest", written by Dan Corry in 1994. Some hon. Members might not be aware that Dan Corry is one of the Government's huge army of special advisers. He said that his pamphlet