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Lord McIntosh of Haringey: I am grateful to the noble Lord, Lord Jenkin, for the way in which he introduced these amendments. I well understand the concerns of the offshore industry. I was pleased that the noble Lord gave me and my officials an opportunity to talk to those concerned. I also well understand that the concerns of the industry are rather wider than the amendments that the noble Lord has placed before the Committee. I say that because a cost-benefit analysis can be carried out, but that does not necessarily mean that it is taken note of and that the concerns of the offshore industry are actually accounted for. I shall, therefore, take the amendments literally, together with the cost-benefit analysis of them, and then say a few words about the wider concerns of the offshore industry.
Amendment No. 12 would require both the authority and the council to include in their forward work programmes an assessment of the impact on businesses in the energy supply chain of each project that they propose to carry out. Indeed, as the noble Lord, Lord Jenkin made clear, the energy supply chain includes upstream as well as downstream.
Amendment No. 15 would require, where necessary, a further impact assessment to be included in the annual report of the authority. Amendment No. 17 is similar. It would require the authority to include a regulatory impact assessment in its annual report in respect of additional costs imposed on licence holders as a result of the activities of the authority, the Secretary of State and the council. The noble Baroness, Lady Buscombe, made that clear.
Such assessments carry a cost in themselves. But it is not clear that they would result in any substantive benefit. When it comes to the cost of regulation, the forward work programme clause already contains a requirement to include an estimate of the overall expenditure of the authority and the council respectively for the year. Where the projects lead to the
I shall, first, take the authority. Many of the projects outlined in its forward work programme will involve the modification of licences. Licence modification procedures are, quite rightly, subject to proper due process. The authority is required to consult interested parties before new licence conditions or modifications can be made. The effect of the modification and the reasons have to be set out. Once decisions have been taken, the Bill will require the authority to provide a full explanation for them.
Where a licensed company disagrees--or, in the case of a standard licence condition, enough licensees disagree--with the licence change, the change has to be dropped or the matter referred to the Competition Commission for a ruling on where the public interest lies. That is a fundamental safeguard for licensed companies. Where other interested parties like offshore companies raise concerns, the authority, like other public bodies, will be bound by the normal principles of administrative law in considering those concerns.
However, we must remember that this is a Utilities Bill directed at the regulation of electricity and gas companies in the UK. It is not an energy Bill or an energy policy Bill. We acknowledge that regulation can affect other sectors. But the authority's direct powers extend only to licensed companies. If we were to add an explicit reference to the offshore industry on the face of the Bill--as we would if we were, in effect, talking about the energy supply chain--there would, for example, be a legitimate case for a similar reference to the coal industry or to manufacturers of generating plant. Indeed, the list could be endless.
If the offshore industry or another interested party had concerns that a particular measure, while having short-term attractions, would operate against the long-term interests of consumers, the authority would be bound to have regard to those concerns in the light of its principal objective; namely, to protect the interests of consumers. Indeed, as the noble Lord, Lord Jenkin, rightly reminded us, that means not just current but also future consumers. After all, they are the ones who will benefit from offshore investment. We are clear that the definition of the "interests of consumers" includes both short-term and long-term interests.
Although the authority's principal objective is to protect the interests of consumers, that does not diminish the importance attached to the interests of the offshore industry. The long-term interest of consumers demands a steady supply at reasonable prices. As such, the interests of consumers and those of the offshore industry converge. There will be occasions when a full regulatory impact assessment is appropriate. But the authority should continue to have discretion to apply the procedures most suited to the gas and electricity sectors within the transparent decision-making framework that the Bill puts in place.
The amendments extend to the council. The council's only direct power in relation to companies, however, is concerned with access to information. The Bill tackles this matter separately and we shall be debating Clause 24, which contains the relevant power, in due course.
In addition, the Bill gives the Secretary of State a power to define the information which companies and the authority need not supply to the councils. The Government have published a consultation document setting out some proposals for the areas which such regulations may cover. These include a proposal covering information where the compliance burden of supplying it would be excessive.
I turn to the Secretary of State. It is already the Government's position that proposals for new primary or secondary legislation should be subject to their own regulatory impact assessment. Our intention to produce impact assessments when Ministers use the secondary powers in the legislation was set out in the regulatory impact assessment on the Bill which was published in January and updated in April.
Taken together, the existing arrangements and proposals amount to a satisfactory means of keeping the regulatory burden to a minimum. I know that that is a general opposition concern, which I appreciate, and with which I sympathise. These amendments have been motivated by a desire to minimise regulatory burdens. But I fear that the opposite would be the outcome. The authority and the council would be saddled with an unnecessary bureaucratic chore.
Amendment No. 19 would have the effect of making it a statutory requirement for the authority to include its statement of accounts as a part of its annual report. I have sympathy, in principle, with the amendment. It would ensure that readers have in one document an account of the authority's activities alongside a statement of the resources used in delivering those activities. That would be a good thing. The Bill will make it easier to publish the authority's annual accounts with the annual report by aligning the respective reporting periods. Hitherto, the regulator has been required to produce an annual report on a calendar year basis. The Bill, however, will change that. It will require the authority to prepare its annual report on a financial year basis.
However, I do not believe that we should make it a statutory requirement. There is always a risk of delay in completing the audit which may lead to delays in producing the annual accounts, and it would certainly be undesirable for the annual report to be delayed for that reason. I accept the general principle but I should prefer not to be tied down in the way provided in the amendment.
Amendments Nos. 26 and 27 in Clause 8 give the authority powers to modify conditions in licences to ensure that the expenses of the Secretary of State in setting up the authority and the council, and the ongoing expenses of the council, can be recovered. We are working on the basis that there is widespread support for the establishment of the authority and the council. There must be recognition, therefore, that
The amendment refers also to the recovery of the Secretary of State's costs in establishing the authority and the council. There are costs associated with the establishment of the authority and the council. In the case of the authority, those are primarily the costs of merging Offer and Ofgas. We do not currently anticipate that the Secretary of State will incur any significant expenses in relation to the establishment of the authority. Of course, there will be some transitional costs but there is provision in the clause for recovering those legitimate costs.
Finally, I turn to Amendments Nos. 37 and 49. The Bill gives the authority a new principal objective to protect the interests of consumers. Amendments Nos. 37 and 49 would require the authority and the Secretary of State to have regard to ensuring that, in pursuing the new objective, the obligations imposed on licensees are the minimum needed. They would also seek to ensure that licence holders are able to meet the costs of their obligations and to recover them where that is reasonable.
I believe that the amendments misunderstand the significance of the new consumer objective. It is understandable that the Opposition are concerned about the risk of over-regulation. Of course, it is true, as the noble Baroness, Lady Buscombe, said, that the regulatory costs are ultimately borne by consumers. But that is why the first part of the amendment is unnecessary. If the authority has a duty to protect the interests of consumers, it will not be doing its job if it imposes unnecessary regulation on licensees.
Again, these are serious, important amendments. I am sorry that I have spoken for so long about them but I hope it will be recognised that they deserve the attention which the Government have given to them.
Lord Jenkin of Roding: Before the noble Lord sits down, in introducing his speech, he said that he would say rather more about the offshore industry. Have we had that?
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