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Lord Mackay of Ardbrecknish: My Lords, the Question relates to the gas and electricity industries. However, as regards the water industry, no one can deny that water prices have increased. They were increased for a good reason; that a huge amount of investment was required to improve the quality not only of our drinking water but of the disposal of our waste water. In the five years since privatisation, water companies have invested £15 billion in various capital projects. That is a 75 per cent. real increase over the five years prior to privatisation.
Lord Ezra: My Lords, does the Minister agree that the issue goes even deeper than that raised by the noble Lord, Lord Taylor of Gryfe? The privatised utilities are no longer in the public sector but are they really in the private sector? They provide basic services and in many cases they exert monopolistic characteristics. Is it not time that this important sector of British industry was looked at again?
Lord Mackay of Ardbrecknish: My Lords, I am not entirely sure whether the noble Lord is pinning the Liberal Democrat Party's colours to renationalisation, but never mind. Looking again at the question of privatisation seems to invite that kind of conclusion.
The regulatory system has been set up to provide a two-pronged approach: first, to promote competition where that is possible; and secondly, to ensure that consumers are protected by a strong economic regulator. If one looks at the industries involved, the results in terms of lower prices, improved services and performance speak for themselves.
Lord Barnett: My Lords, I am sorry that the noble Lord has not read the speech of Clare Spottiswoode, and I urge him to do so. The noble Lord referred to the fact that she has appeared before Select Committees. In fact, she said in that speech that she had appeared before four and they all had diametrically opposed views. That means, as she indicated, that there is not a proper accountability of regulators. Of course, the Government are not responsible because, quite rightly, the regulators
Lord Mackay of Ardbrecknish: My Lords, obviously I should not like to trespass on the affairs of another place by commenting on whether or not the regulator should appear before one Select Committee rather than before four Select Committees which, if the noble Lord is to be believedand I am sure he is, as he always ishave all reached diametrically opposed conclusions. I suppose that that is north, south, east and west. I shall certainly look at that point and draw it to the attention of my right honourable and honourable friends in the Treasury.
Lord Marlesford: My Lords, I declare an interest as a director of Eastern Electricity. Does my noble friend agree that the fact that in the five years since privatisation in 1990 the price of electricity to the domestic consumer from Eastern Electricity, at any rate, has actually fallen by 7 per cent. in real terms is itself a measure of the success of privatisation?
Does my noble friend further agree that as the non-domestic customers, the commercial customers, have done even better it would be desirable for the regulator to focus his attention on achieving a still better deal for the domestic consumer? The way to do that is not, as has been suggested in some places, to try to claw back large sums of money because that was tried some years ago by the Government on Ferranti after Bloodhound and was catastrophic for everyone concerned.
My noble friend is absolutely right that the greater efficiency of the electricity industry since privatisation has already produced enormous benefits for the consumer, in total contradiction to the words of a certain Mr. Tony Blair who said before privatisation that:
The Lord Privy Seal (Viscount Cranborne): My Lords, I hesitate to intervene between two such prominent Members of different parties but perhaps it would be appropriate to hear from the Opposition Front Bench, and I am sure that the noble Lord, Lord Mackie, will have an opportunity to ask his question after that.
Lord Eatwell: My Lords, is the noble Lord aware that the 7 per cent. fall in electricity prices referred to by the noble Lord, Lord Marlesford, is considerably lower than the fall in the real cost of fuel, which has been about 12 per cent. over that period? Therefore, Eastern Electricity's performance looks rather poor. Surely the key question concerning those industries is why the Government have created a structure of cosy,
Lord Mackay of Ardbrecknish: My Lords, as I mentioned in my second reply to the noble Lord, Lord Taylor of Gryfe, there is a two-pronged approach by the regulators and one of the prongs is to encourage competition where that is possible. It ill behoves the noble Lord from the Benches opposite to talk about increasing prices when, during the time of the last Labour Government, electricity prices rose by 2 per cent. every six weeks.
Lord Mackie of Benshie: My Lords, I was merely asking why the Minister was being so modest in detailing the benefits to consumers, and everyone else, but missing out the benefits to those at the top of the industry.
Lord Mackay of Ardbrecknish: My Lords, the Government have made their position clear on excessive and unjustified salary increases at whatever level they take place, including boardrooms. My right honourable friend the Prime Minister made clear in another place that he looks forward to Sir Richard Greenbury's report and that the Government are prepared to consider whether legislative changes are required.
Baroness O'Cathain: My Lords, discussions on this Question have emphasised certain aspects of the privatised monopolies, so to speak. From the point of view of the consumer, things have never been better. Ask working women.
Baroness O'Cathain: My Lords, I am afraid that the groans coming from your Lordships' House all come from the males. In the past, working women lost days of work because they had to stay at home to deal with the electrician or the gas man. Now they can make an appointment. Is that not an improvement and should that not be acknowledged?
Lord Mackay of Ardbrecknish: My Lords, my noble friend is absolutely right. A number of improvements have taken place since privatisation. As far as I understand it, that improvement is now accepted by the party opposite, whose leader is at this very moment going round the country advocating the abolition of the policy of nationalisation.
Lord Mackay of Ardbrecknish: My Lords, as I explained, we believe that the regulatory system in those important industriesand I noticed the throwback from yesteryear with the mention of "commanding heights"are doing a good job. They are working within the rules laid down by Parliament. Those were improved in a recent Act which updated the powers of the regulators to the level of the most powerful of the regulators. What the consumer is now receiving shows not only the success of the regulator but, in my view much more important, the success of privatisation.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, as members of both the Commonwealth and the EU, the UK is in a unique position in this affair. Therefore, we are actively working with all parties to reduce tension, to avoid further confrontation and to encourage sensible negotiation.
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