Draft Electricity and Gas (Determination of Turnover for Penalties) Order 2002

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Andrew Mackinlay (Thurrock): I will not detain the Committee more than a minute. Putting aside all the levity earlier, which made it worth coming, there is a serious point that you, Miss Begg, could address in your long career on the Chairmen's Panel. The explanatory note at the back of the instrument is wholly inadequate. Hon. Members should not have to lie awake at night thinking about the order when they get the original summons. I went to the Vote Office an hour ago to pick up the order and to look at the explanatory note. I suspect all hon. Members would put up their hand to admit that it tells us absolutely nothing. The hon. Member for Salisbury has an advantage over us because he grew up with some of this legislation as a Minister. The Minister read his brief skilfully and I suspect that he really does know what it is all about.

It turns Parliament into a charade when we get these wholly inadequate explanatory notes. I am not sure whether it would be through the Speaker's good offices or those of the Clerk of the House, but if you have discussions in the Chairmen's Panel, Miss Begg, you might flag up the view that Government Departments should put together a few paragraphs explaining in plain language what the devil the instrument that we are suppose to approve is about.

The Chairman: The hon. Member will be pleased that his words have been heeded already. I understand that there are moves afoot to clarify the explanatory notes and make them more like those that accompany Bills. That will come into play after the Easter recess. I hope that that satisfies the hon. Gentleman.

4.49 pm

Mr. John Smith (Vale of Glamorgan): I wish you well, Miss Begg, in your career on the Chairmen's Panel. I, too, want to speak only briefly. I found the debate fascinating. It is clearly about the mechanism to be used for penalties placed on companies that do not adopt satisfactory practices within the existing energy markets. But what would happen if there were a dramatic change to the markets in the UK? One example that immediately comes to mind is: what if the Minister decided to review the Severn tidal barrage?. That would have a dramatic effect on the energy market by supplying 6 per cent. of the country's entire energy needs through renewable energy. It would also help us to meet our Kyoto objectives and to control

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flooding throughout the Severn estuary. Will the Minister say whether that would affect the regulations?

4.50 pm

Mr. Wilson: I am grateful to members of the Committee, who raised some interesting points. I was disappointed that my hon. Friend the Member for West Ham (Mr. Banks) was outside the parameters of the debate. I would have been happy to have such a discussion and I cannot help thinking that, given his talents, there must be the makings of a game show in there somewhere, in which we get things into order. My hon. Friend and the leader of the Liberal Democrats could doubtless participate under a suitably distinguished chairmanship.

Although my hon. Friend has gone, I asked if I could discuss within the scope of the debate the issue that he raised about mis-selling. I was told that it would be legitimate to point out that the penalties would be significant deterrents to the conduct that we are not permitted to discuss. I hope that that is helpful and I will send my hon. Friend a copy of the record of the debate.

The hon. Member for Salisbury asked whether the authority or the individual who is usually described as the regulator takes the decisions about penalties at Ofgem. I confirm that it is the authority that takes those decisions, not just the chairman. Where a licence holder has exercised his option to have an oral hearing, only those members of the authority who are present at the oral hearing will be involved in the authority's final decision.

The hon. Member for Hazel Grove (Mr. Stunell) asked about the financial penalties regime. The regime will be a significant deterrent against malpractice. The Utilities Act 2000 provides that any sums that the authority receives will be paid to the consolidated fund. We will reconsider the penalties regime if the authority considers it necessary, perhaps for the reasons of circumvention that the hon. Gentleman mentioned and in the light of experience. We must, of course, start from the premise that the measures will operate as intended. I imagine that if companies went to too great lengths to avoid the penalties, that in turn would carry its own penalties of some kind.

The legislation provides that the authority may impose a penalty for contravention of a relevant condition or requirement, or for failure to achieve a standard of performance. It also provides that the authority will not impose a penalty where it is satisfied that the most appropriate way of proceeding is under the Competition Act 1998. Last year, Ofgem consulted on a draft statement of policy and published its final version in April. It must have regard to that statement of policy when it considers imposing a penalty. The legislation will operate within that framework.

I would have been happy to have a longer debate on the issues that flowed from our discussions, but we must respect the Chairman's ruling, especially on her first outing in the role.

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Question put and agreed to.


    That the Committee has considered the draft Electricity and Gas (Determination of Turnover for Penalties) Order 2002.

Committee rose at six minutes to Five o'clock.

The following Members attended the Committee:
Begg, Miss Anne (Chairman)
Banks, Mr.
Brown, Mr. Russell
Buck, Ms
Hendry, Mr.
Key, Mr.
Mackinlay, Andrew

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Pearson, Mr.
Robertson, Hugh
Smith, Mr. John
Squire, Rachel
Stewart, Ian
Stunell, Mr.
Wilson, Mr.

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