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Lord Lea of Crondall: My Lords, I am glad to have the confirmation on the record from my noble friend the Minister that that is the position. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 167 [Appeals to the Competition Commission]:

Lord Kingsland moved Amendment No. 23:

The noble Lord said: My Lords, Clause 167 currently provides that persons who are "materially affected" by a decision of the energy regulator will be entitled to appeal against that decision.

In Grand Committee, and on Report, we argued that the concept of material effect should be changed to the wider concept of sufficient interest. This was not because we wish to enable additional parties to be able to appeal against Ofgem's decisions. It was because we were concerned that, on the test of material effect, there was no guarantee in law that all parties to an industry code would be equally entitled to appeal in relation to an Ofgem decision. We agree with the Government's policy, which is set out in the Bill's Explanatory Notes, that those persons who are able to appeal should include the parties to the relevant codes. However, what is unclear is whether, as a matter of law, all code parties would, in fact, qualify as appellants under the "materially affected" test.

The Minister objected to what he called the "dilution" implicit in our proposed change of test. He feared that this would open the floodgates to appeals from persons whose relationship to a particular code might be indirect or purely tangential. This concern

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seems exaggerated to us, given that an indirect interest or a tangential interest is by no means the same as a sufficient interest.

In any event, there is an easy way to resolve this matter. That is to ensure, by express drafting, that the parties to the industry codes—in other words, the market participants who are on the receiving end of Ofgem's decisions—are a distinct category of persons who unambiguously have appeal rights, separately from the test applied to other persons. These two amendments achieve this. They provide beyond any doubt that all parties to the industry codes have a right of appeal, while also bringing in as materially affected persons Energywatch and other representative bodies who are not formally parties to the codes.

These amendments should resolve many of the concerns that we have had about the Bill's approach to the test of the right to appeal, while not putting Ofgem's decisions at risk of appeal by persons who have no substantial relationship to the industry codes. On that basis, I find it hard to conceive of any good reason why the Government would not welcome these amendments. I beg to move.

Lord Whitty: My Lords, while we have made a number of amendments in relation to the appeals procedure, we clearly have not swayed the noble Lord's position on this one. I hope that that is not because of some misunderstanding. I accept that he has adapted his amendment in an attempt to address our concern about the use of a sufficient interest test but nevertheless he is persisting in the view that we have too narrow a basis for parties to appeal.

The Government's view is that parties to the code in question will be able to appeal but only provided that they meet the "materially affected" test in particular circumstances. Not all parties to the code will meet that test in every instance and bodies such as Energywatch may be materially affected in certain respects and, although not party to the code, would therefore also be able to appeal certain decisions on the same basis.

The noble Lord's amendment would seem to lead to a situation where all parties to the codes would be able to appeal every decision. The Government cannot accept that outcome. We cannot accept that any legal persons who do not fall under a "materially affected" definition should be allowed to appeal the decision even if they might be party to the code, or if they are not. There are elements within the industry who believe that such a broad basis of appeal should be allowed, but the Government's view—I think that it will be supported by the majority in the industry—is that this would be disproportionate and contrary to the policy of having a fairly tightly prescribed right of appeal.

In our view, therefore, "materially affected" is the right hurdle. This is an important element of the balanced package that is designed to address the concern of the majority of respondents to last year's consultation and provide a degree of certainty and avoidance of delay, whereas the possibility of having a much broader-based

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threshold of appeal could lead to a flood of appeals which would grind down the whole of the process to no great benefit of the majority of companies involved in the industry. I therefore believe that there is a conflict here, but I am not convinced by the noble Lord's arguments and cannot accept the amendment. I hope that he will not persist with it.

Lord Kingsland: My Lords, at this late hour it is rather difficult for me to persist with it. The only way in which I could take my persistence one stage further would be to seek to divide the House tonight; and at a quarter to eleven in the evening I should like to assure the Minister that I have no intention whatever of doing that.

However, as the Minister rightly surmised, I am disappointed in his reply, especially since I believe that it conflicts with the statement set out in the Bill's Explanatory Notes. We have made substantial moves over the three stages of the Bill in your Lordships' House to try to meet the concerns expressed by the Government about our original suggestion of the sufficient interest test. I shall not accuse the noble Lord of churlishness in this matter. However, I think that the noble Lord's approach to our latest amendments is rather harsh.

I hope that, during the gap between the termination of the stages in your Lordships' House and the commencement of the stages in another place, the Minister and his colleagues will think again about this matter. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 24 not moved.]

Clause 178 [Assistance for areas with high distribution costs]:

Baroness Miller of Hendon moved Amendment No. 25:

    Page 135, line 43, leave out "negative" and insert "affirmative"

The noble Baroness said: My Lords, this amendment is succinct, and the case for making it is also succinct.

On Report, the House agreed to amend Clause 179 to make it subject to the affirmative resolution procedure. Clause 179 enables government to introduce a scheme to subsidise high transmission costs for renewable generation sources in remote areas. The case for this power to be made subject to the affirmative resolution procedure, rather than the weaker negative procedure, was that Clause 179 dealt with more than a narrowly technical matter. On the contrary, Clause 179 is a major departure from normal regulatory practice since it contemplates a new and potentially untransparent subsidy to further the ends of what would otherwise be uneconomic renewable development. Rightly, therefore, this House thought the exercise of such a power should be subject to a level of parliamentary scrutiny higher than that which is available under the negative procedure.

Clause 178 is broadly analogous to Clause 179 in its cross-subsidising effect, as it aims to offset the adverse consequences in Scotland of the abolition of the

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hydro-benefit subsidy. To that end, under the clause the Government will be able to raise a quasi-taxing levy on the general body of electricity consumers. On that basis, I am sure that the House will recognise that the same arguments that justified the subjection of Clause 179 to the affirmative resolution procedure apply with equal, if not greater, force to Clause 178.

In those circumstances, I hope that the Minister can accept this simple amendment. I beg to move.

10.45 p.m.

Lord Davies of Oldham: My Lords, I am going to disappoint the noble Baroness in everything except being as brief and, I hope, precise as she was in moving the amendment. We of course recognise that the application of the affirmative resolution procedure is appropriate in certain circumstances, but we do not think it right under the clause. The Delegated Powers Committee did not raise any issues on the use of the negative resolution procedure with respect to the scheme.

The noble Baroness helpfully referred to the amendment made to Clause 179, but we also have appropriate precedents and parallels. The negative resolution is provided for under Section 72 of the Utilities Act, which amends the Electricity Act 1989. That enables the Secretary of State to lay an order that, for example, requires the holder of a supply licence to charge uniform prices in a specified area of Scotland. In that respect, there are very clear parallels between Section 72 of the Utilities Act and Clause 178 of the Bill, which seeks to protect customers in the north of Scotland.

We think the negative procedure appropriate. I hope that, in consideration of that parallel, the noble Baroness thinks that the Government are right in this instance.

Baroness Miller of Hendon: My Lords, my noble friend Lord Jenkin wrote in the Times on 14 April about the unwillingness of the Government to accept perfectly sensible amendments to the Bill. This is such a case. Clearly, I shall not do anything about it at this late stage, but I hope that my colleagues in the other place have a better response than we have just had. After all, the procedure applies to Clause 179, and Clause 178 is broadly similar. In fact, its provisions go even further and ought to be subject to affirmative resolution; there is no case for negative resolution to be used at all. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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