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Lord Peston: In speaking to this group of amendments, I shall concentrate on Amendment No. 1, but I shall also have a few words to say on Amendment No. 8. Amendment No. 6 is simply consequential upon Amendment No. 1.

We start from the proposition, with which I am sure the noble Earl will agree, as I hope do all Members of the Committee, that,


That is a quotation, of course, from the greatest of all economists; it is from the Wealth of Nations. I am sure that the noble Earl will agree with that concept.

It looks as though the amendment is merely a drafting measure. Essentially it moves certain words from a few lines into the Bill to the beginning of the Bill. However, as the noble Lord, Lord Ezra, said, it is not a matter of drafting. It is a matter of absolutely fundamental philosophy, both about how all economic activity should be judged—that is why I cited to the Committee the quotation of Adam Smith—and, overwhelmingly, as regards the Bill. The legislation was originally drafted in error by creating a private monopoly. As I pointed out at Second Reading, the purpose of the Bill is to rectify that error—that had been accomplished by some earlier amendments to the law—in order to introduce competition and alternative sources of supply. That is a subject to which I shall return on a later amendment.

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I also echo the comments of the noble Lord, Lord Ezra, in relation to the Minister's right honourable friend in another place. I felt that the Minister's right honourable friend simply misunderstood the points that were being made, and that in particular he did not understand the distinction between means and ends. That, too, is fundamental to the economic analysis of any industry. Essentially what one does—correctly—is to state the ends, in this case the interests of the consumer, and then state the means to achieve them. But the means are justifiable only in so far as they will achieve the ends that one has in mind. To start this Bill, as indeed the 1986 Act was started, with means, with describing methods and not ends, is again simply a logical error. These amendments seek to rectify those earlier mistakes.

A point that is also of interest, and one which I believe noble Lords on the other side will have found puzzling, is that after all the years of privatisation, as the Economist newspaper has pointed out on more than one occasion, the privatised industries are extraordinarily unpopular. People are puzzled as to why they are. We know why they are. It has nothing to do with meeting consumer demands; it has to do with certain other activities that they have been getting up to and which, for the moment at least, we shall not be debating. However, it is a pity, once industries are in the private sector, that they are portrayed as unpopular when, in the case of this Bill, the new private sector has the potential to do something that is very much in the interests of consumers. Therefore, I hope very much that when I sit down the noble Earl will leap to his feet and say, "Let's waste no more time on this particular amendment because naturally enough the Government will accept it". This amendment is extremely important. It is one that we cannot allow just to drift by.

Perhaps I might briefly say a word on Amendment No. 8. One problem with the overall drafting of the Bill—and I have other amendments which endeavour to clarify it—is that it raises a question as to what the draftsman has in mind. Again, the tradition of classical economics is the individualist tradition in which, after all, noble Lords opposite claim to be firm believers. The tradition is not particularly to do with groups. It is not to do merely with the consumer as we have defined him, but with the individual consumer. That is what matters.

Therefore, Amendment No. 8, which adds the words "to the individual", simply emphasises how important the individual is. In particular, it is to ensure that, should an individual consumer have grounds for complaint—which, not surprisingly in a competitive enterprise economy, will happen—the consumer can say, "You have failed to meet my individual interests". It is not a good enough argument for the industry to say, "Well, we've met the interests of consumers in general. You just happen to be the unlucky one". The reason for including "the individual" is very much to clarify what I assume Ministers had in mind when they asked the draftsman to draft the Bill. In other words, the lines on protecting the interests of consumers are essentially to emphasise, not just consumers in the large, but consumers viewed as individuals. I very much hope that the arguments put forward by the noble Lord, Lord Ezra, and myself commend themselves to the Committee; and I hope very

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much that the Minister will take the responsibility for agreeing with them and also for saying that we really must get this part of the Bill right.

Lord Skelmersdale: I am a simple man. I declared my interest in this Bill at Second Reading. I hope that that will suffice for Committee as well. As a simple man, I like to know from the very beginning, from the earliest possible point of a Bill, what that Bill is actually about. This amendment advances words which to all intents and purposes are already in the Bill, in subsection (2) (a) of the proposed new Section 4 to the 1986 Act. But there would be absolutely no purport to the Bill, no force in it whatsoever, unless we started at the very beginning. The very beginning, after all, is to secure that—in so far as it is economical to meet them—all reasonable demands (we can perhaps argue about the word "reasonable" in a moment) in Great Britain for gas conveyed through pipes are met. That is the whole rationale of the Bill. It was the rationale of the 1986 Act, and I should like to see the stipulation remain exactly where it is in the Bill.

Lord Peston: Perhaps I may interrupt for a moment as I believe it will help us with our procedures. I do not have any interests to declare, but, so far as I personally am concerned, a declaration of interest once throughout our proceedings will be enough. Otherwise they will become even more tedious. I accept that several noble Lords may have interests. Once they have mentioned them, that is good enough for me at least.

Lord Skelmersdale: I am most grateful to the noble Lord.

Lord Haskel: Perhaps I may speak to Amendment No. 7, which adds a few words to the Bill. On these Benches we are concerned about the interests of the consumer. But we are also concerned that the interests of people who are potential consumers should also be looked after. We are anxious that the consumer should have sufficient information, in an easily comparable and comprehensible form, from the gas suppliers about prices and services. That should enable consumers to make an informed choice, and should therefore secure the most effective competition possible. We are concerned that we should cover the interests of consumers before they enter into contracts with the gas suppliers as well as after.

Lord Cochrane of Cults: I, too, declared an interest at Second Reading, and I am grateful to the noble Lord, Lord Peston, for his indulgence. It seems to me that noble Lords opposite suspect that potential gas suppliers will behave like foot-in-the-door vacuum cleaner salesmen, or other unscrupulous salesmen, of which there seems to be plenty about. Perhaps they ought to give a measure of credit and accord some common sense to potential suppliers. I do not see that that is the case.

3.45 p.m.

Earl Ferrers: I do not think that there is very much between us on this matter. The noble Lord, Lord Ezra, said that he was concerned about the interests of consumers. Of course, we all are. My noble friend Lord Skelmersdale mentioned his "simple mind". All that the noble Lord opposite is doing, as my noble friend correctly said, is advancing subsection (2) (a) higher in the Bill.

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Therefore, the noble Lord, Lord Ezra, is concerned about the fact that consumers appear to be a secondary consideration, and he wishes to make them a primary consideration. I can understand his reason for wanting to do that.

The noble Lord, Lord Peston, said that people do not like privatised industries. Perhaps they do not. But I remind the noble Lord that they did not like nationalised industries. This is the political point. The fact is, they are utilities; nobody likes them; people thought that they ought to be doing better by them, and so on. I hate to remind noble Lords opposite of one of the advantages of privatised industries, but the fact is that British Telecom's prices have gone down by 35 per cent. and British Gas prices have gone down by 20 per cent. That is of real interest and benefit to the consumer.

The real problem is that it is difficult to put the requirements of the consumer on the same basis as the requirement to supply gas in the first place. The priority for the regulator must be to create a framework in which it is possible for companies to compete, so that they can satisfy the demands for gas. The secondary duties relate to the manner in which that competitive framework operates. It would obviously not make sense if we were to place duties relating to the quality of service on the same level as securing that there are actually companies there to provide the service in the first place.

To give an example, the effect of this amendment could be to require the regulator so to enforce the cutting of prices that it would prejudice the ability of the regulated company to finance its activities. Of course, it would not be of much use to consumers if they were to get a price cut which resulted in the supplier being unable to provide the finance for his business. It would not make economic sense. Therefore, while I understand the concerns of the noble Lord, Lord Ezra, it is right that first of all the main duty of the regulator should be to ensure that gas is supplied. Having ensured that, then the regulator can say that he or she has the interests of the consumer at heart.

The noble Lord, Lord Peston, referred to Amendment No. 8, which would add to the existing duty in respect of the prices charged, and the other terms of the supply, the words "to the individual". It is an accepted drafting convention in Acts of Parliament that the singular includes the plural, and vice versa. I remember once pointing out that in Civil Service terms the male embraces the female. It occurred to me that we did not have to join the Civil Service to do that. But the principle applies: when the singular is used it covers the plural and vice versa. On some occasions, the interests of consumers will conflict and the director will need to balance those interests as a whole. At other times, individual consumers will have particular difficulties and interpretation as the singular will be apt. I do not feel that it is necessary to include the words which the noble Lord, Lord Peston, has in mind, simply because they are covered.

The noble Lord, Lord Haskel, referred to Amendment No. 7. I appreciate that he feels that the Bill ought in some ways to provide for the interests of those who would like to become gas consumers as well as those who already are consumers. That is why the Bill includes a duty on the Secretary of State and the director in relation to meeting reasonable demands for gas.

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The Bill and the licences contain a number of other provisions which are designed to stimulate competition in building extensions to the pipeline network so that new areas can receive a gas supply. The duty to protect the interests of consumers is carefully framed in terms of matters which are specifically of interest to those who in fact consume the gas. It is difficult to see how the director, when he considers prices and other terms of supply, should take into account the interests of people who are not consumers of gas at the moment and might never be consumers. Obviously the principle of allowing freedom and competition is that more people will be brought in. But it is difficult to take account of what such people may be doing or what their interests may be until they become consumers. When they becomes consumers, those interests are taken into account.


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