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The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie): My Lords, I am grateful to the noble Earl for giving us a further opportunity to discuss this matter. In our previous debate at an earlier stage, I made it clear that the Government continue to offer their strong support for the concept of sustainable development. Without repeating myself, I should like to refer back to what the Prime Minister said in the White Paper. We have particular support to offer for the building of environmental and economic factors into the consideration and development of government policy.

The provisions of the Bill will help promote sustainable development by setting the forces of the market to work in favour of energy efficiency. We believe that, by breaking down the artificial constraints of monopoly, we shall be taking an important step towards the optimum and efficient use of resources in the sector. Apart from that general observation, the Bill

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has specific provisions which will help promote sustainable development. These include the duty to promote energy efficiency and new duties in respect of the environment—that word is specifically used. The licences under the Bill will take those provisions further and will, for example, extend a duty to provide energy efficiency advice to all suppliers.

Those are tangible results from the legislation which will support sustainable development and the work of the Round Table, about which my noble friend made a number of remarks. Without wishing to rebuff the Round Table in any way on the importance of taking forward questions of sustainable development and government policy, I must say that we are still in some difficulty in using that phrase in this legislation. That is an important point. I hope that noble Lords will bear with me if I rehearse some of the points that I made previously.

This amendment would have the effect of conferring wide powers on the director to set his own agenda because of the wide meaning of the term "sustainable development". As I said previously, it is an extremely widely used term. If we turn to the Agenda 21, following the Rio Summit, we see that, as I pointed out at an earlier stage, when sustainable development is discussed there it runs to no less than 470 pages. If a broad power were given, because of the broad nature of the director's powers in relation to the onshore gas industry, that could give the director a very real opportunity to take forward an agenda entirely of his or her own.

I understand the argument advanced by my noble friend. He too understands that it would give an extraordinarily wide power to the director to set a particular agenda. In a sense, because there is that clear appreciation of the difficulty, he seeks to restrict it by suggesting in his amendment that the director should have regard to guidance given by the Secretary of State on sustainable development, in some way bringing it in a little. However, in our view it remains the position that such a provision would have the effect of involving the Secretary of State in the policy of the director across a wide range of issues. In other words, the provision would breach the independence of the regulator, a policy which lies at the very heart of utility regulatory policy.

What is different about the utility regulators is that they do not report to the Secretary of State. They are accountable only in respect of their statutory duties. As my noble friend pointed out in relation to the gas industry, these are clearly set out in statute. Their accountability means that they may be subject to judicial review. They are also accountable to Parliament through their reports and to Select Committees. The model, therefore, requires clear statutory duties which are not subject to ministerial adjustment.

I understand very clearly what my noble friend said. The way in which he has drafted his amendment allows the director to "have regard to" the guidance and in that sense to accept or reject it. If that is the case and the director can accept or reject it without explanation or being subject to any particular duty in that regard, we are back to the first problem; namely, that the director would have very wide powers indeed. On the other

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hand, if it becomes more restrictive, then we introduce the interference of a Minister in a way that we have sought to avoid throughout the changes that we have introduced.

The ability of the Secretary of State to influence the regulator by guidance—or, for that matter, as I said, for the regulator to take his or her own view on sustainable development—could be used as a platform to promote a wide range of policies, such as seeking to promote certain uses of gas over others or to reduce the rate at which reserves are used. I accept that those are very important issues; but, with respect, it seems to me that they are matters which ought only to be embarked on formally by government and not be introduced in this way. I believe that it would run counter to the principle of regulating these industries at arm's length from government with the minimum of interference if we were to build in proposals of that kind.

In conclusion, I am afraid that my response to the amendment will be a disappointment to the noble Earl. I regret that, because I entirely share his very worthy preoccupation with the principles of sustainable development. However, I hope that he will recognise the strong endorsement that I have given to the principles of sustainable development and their inclusion in government policy.

I had anticipated that the noble Lord, Lord Peston, might respond on this matter. Certainly, as I understood his arguments when he contributed to our last discussion on this matter, he seemed to appreciate that that was a fundamental point. If sustainable development and a duty to look to it were to be introduced on one regulator, we ought to look at it across the whole board of regulatory policy.

Finally, while I regret that I cannot agree to a change in such a key principle of regulatory policy on the scale which would be imposed by this amendment, I hope that my noble friend will appreciate our approval of his commitment to sustainable development.

The Earl of Cranbrook: My Lords, I do greatly appreciate the struggle that my noble friend had in presenting those arguments. I believe that they were answered from all around the Chamber before he spoke. With regard to the definition, I am grateful to the noble Lord, Lord Desai, for his academic intervention. But it seems to me that we can equally say that, while a definition may take up so many pages, we still know perfectly well what would not be sustainable as, in the same way, we probably know what is not "effective competition". That kind of approach is actually a very useful and practical one to take towards definitions. The key thing I should like to emphasise is that I have proposed this amendment so that if the Secretary of State so decided, because he adhered firmly to the principles that my noble and learned friend has laid before us, he would not have to give any guidance. It is entirely optional.

Secondly, if the director and the Secretary of State, both of whom would be bound by this amendment, do take actions in terms of sustainability, since my noble and learned friend has already assured us that this is in

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fact the principle which lies behind the Bill, they would therefore be acting in accordance with the intentions of the Bill. Moreover, were they to use this basis to go any wider, they would be doing so in a totally benign sense, since sustainable development is entirely in accordance with stated Government policy at a major policy level.

I feel that this amendment clarifies and lays down a sound basis for this whole Bill at an early point in the Bill. It does not in any way act contrary to the aspirations of the Government as they were expressed by my noble and learned friend. Therefore, I wish to seek the opinion of the House.

4.1 p.m.

On Question, Whether the said amendment (No. 1 ) shall be agreed to?

Their Lordships divided: Contents, 76; Not-Contents, 133.

Division No. 1


Airedale, L.
Archer of Sandwell, L.
Bruce of Donington, L.
Caldecote, V. [Teller.]
Callaghan of Cardiff, L.
Carmichael of Kelvingrove, L.
Cledwyn of Penrhos, L.
Clinton-Davis, L.
Cocks of Hartcliffe, L.
Cranbrook, E. [Teller.]
David, B.
Dean of Beswick, L.
Desai, L.
Donaldson of Kingsbridge, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Ewing of Kirkford, L.
Ezra, L.
Farrington of Ribbleton, B.
Fitt, L.
Gallacher, L.
Geraint, L.
Gibson, L.
Glasgow, E.
Glenamara, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grey, E.
Hanworth, V.
Harris of Greenwich, L.
Haskel, L.
Headfort, M.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Hooson, L.
Howie of Troon, L.
Hughes, L.
Hylton, L.
Ilchester, E.
Jay of Paddington, B.
Jeger, B.
Jenkins of Hillhead, L.
Judd, L.
Kinloss, Ly.
Kintore, E.
Kirkhill, L.
Listowel, E.
Lockwood, B.
Longford, E.
McIntosh of Haringey, L.
Mackie of Benshie, L.
McNair, L.
Mar and Kellie, E.
Masham of Ilton, B.
Mason of Barnsley, L.
Merlyn-Rees, L.
Monkswell, L.
Monson, L.
Morris of Castle Morris, L.
Nathan, L.
Nicol, B.
Prys-Davies, L.
Raglan, L.
Robson of Kiddington, B.
Rochester, L.
Sainsbury, L.
Sandwich, E.
Sefton of Garston, L.
Stoddart of Swindon, L.
Strabolgi, L.
Thomson of Monifieth, L.
Tope, L.
Wharton, B.
White, B.
Winchilsea and Nottingham, E.


Aberdare, L.
Addison, V.
Ailsa, M.
Alexander of Tunis, E.
Allenby of Megiddo, V.
Alport, L.
Ampthill, L.
Archer of Weston-Super-Mare, L.
Ashbourne, L.
Astor of Hever, L.
Balfour, E.
Barber, L.
Belhaven and Stenton, L.
Bethell, L.
Birdwood, L.
Blatch, B.
Boardman, L.
Boyd-Carpenter, L.
Brentford, V.
Bridgeman, V.
Burnham, L.
Butterworth, L.
Cadman, L.
Campbell of Alloway, L.
Campbell of Croy, L.
Carnegy of Lour, B.
Carnock, L.
Carr of Hadley, L.
Chalker of Wallasey, B.
Charteris of Amisfield, L.
Chelmsford, V.
Chesham, L. [Teller.]
Clark of Kempston, L.
Cochrane of Cults, L.
Coleraine, L.
Courtown, E.
Cross, V.
Cullen of Ashbourne, L.
Davidson, V.
Dean of Harptree, L.
Denham, L.
Dilhorne, V.
Dixon-Smith, L.
Downshire, M.
Ellenborough, L.
Elles, B.
Elliott of Morpeth, L.
Elton, L.
Faithfull, B.
Ferrers, E.
Finsberg, L.
Flather, B.
Fraser of Carmyllie, L.
Fraser of Kilmorack, L.
Gainford, L.
Geddes, L.
Goschen, V.
Gray of Contin, L.
Gridley, L.
Grimston of Westbury, L.
Harding of Petherton, L.
Harmar-Nicholls, L.
Harrowby, E.
Hayhoe, L.
Hemphill, L.
Henley, L.
Holderness, L.
Hood, V.
Howe, E.
Hylton-Foster, B.
Inglewood, L.
Killearn, L.
Kimball, L.
Lauderdale, E.
Lawson of Blaby, L.
Liverpool, E.
Lucas, L.
Lucas of Chilworth, L.
Lyell, L.
McConnell, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. [Lord Chancellor.]
Macleod of Borve, B.
Malmesbury, E.
Marlesford, L.
Merrivale, L.
Mersey, V.
Miller of Hendon, B.
Milverton, L.
Monteagle of Brandon, L.
Montgomery of Alamein, V.
Mottistone, L.
Mountevans, L.
Mowbray and Stourton, L.
Munster, E.
Newall, L.
Noel-Buxton, L.
Norrie, L.
Northesk, E.
O'Cathain, B.
Onslow, E.
Orkney, E.
Orr-Ewing, L.
Parkinson, L.
Pearson of Rannoch, L.
Pender, L.
Pym, L.
Rankeillour, L.
Rawlings, B.
Rippon of Hexham, L.
Rodger of Earlsferry, L.
Romney, E.
St. Davids, V.
Seccombe, B.
Simon of Glaisdale, L.
Skelmersdale, L.
Stanley of Alderley, L.
Stodart of Leaston, L.
Stokes, L.
Strathclyde, L. [Teller.]
Strathcona and Mount Royal, L.
Swansea, L.
Swinton, E.
Tebbit, L.
Terrington, L.
Teviot, L.
Thomas of Gwydir, L.
Torphichen, L.
Ullswater, V.
Vivian, L.
Westbury, L.
Wyatt of Weeford, L.
Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

25 Oct 1995 : Column 1123

4.10 p.m.

Lord Fraser of Carmyllie moved Amendment No. 2:

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