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Lord Boyd-Carpenter: That is just the point I was seeking to make. A demand might be economical but it might be unreasonable. If Members of the Committee go to the point of taking out the word "reasonable", the implication is that we are prepared to accept the authorisation of unreasonable demands. I do not accept for a moment what the noble Lord says, that an unreasonable demand may not necessarily be economical.

Lord Hailsham of Saint Marylebone: Let us get on with it!

Earl Ferrers: My noble and learned friend Lord Hailsham is deeply anxious that we should get on. I shall do my best to satisfy my noble and learned friend and the rest of the Committee. The noble Lord, Lord Peston, said that he wants to understand what the Bill is up to and that he is fearful of lawyers. He must not be too fearful. I am terrified of them, but I am terrified of economists, too, so that puts us on an equal footing.

The words,


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have stood the test of time. That was one of the principal duties of the British Gas Corporation under the 1972 legislation; it was made a primary duty of the director in 1986; and we think that those words should be used now. They are sensible and they have stood the test of time. I agree with my noble friend Lord Boyd-Carpenter that to go beyond that and remove the word "reasonable" implies that the director would have a duty to secure that unreasonable demands for gas would be satisfied.

The noble Lord, Lord Peston, asked for an example. I can tell him that there could be cases where practical considerations could mean that extending the gas supply to certain individual premises or groups of premises was not realistic even where it would be theoretically economical to do so. For example, one might have a large consumer who would offer a generous price for a greatly increased supply of gas on condition that the supply should be provided within a few days; or he might request amounts of gas that would be unsafe to convey through the existing pipework even though it might be economical for the gas company to do so; or convey gas which would otherwise have gone to another consumer, thereby diverting that gas from that consumer to the person requesting it.

I do not think that there is anything sinister in this. The wording in the Bill reflects what was in the 1986 Act. I suggest that we ought to keep those words.

Lord Peston: The fact that something is of long standing does not mean that I am convinced that it is other than long-standing rubbish. The fact remains that if someone demands something and it is economical to meet it—namely, that he is willing to pay the costs of meeting it, including a due return to the supplier—that is what one means by a reasonable demand. There can be no other meaning to it. I simply do not understand the noble Earl's example. If someone wants to buy a lot of gas and is willing to pay for that lot of gas, why should that person not be supplied with that gas? If someone wants a lot of gas which might involve risk, essentially what one has to say is, "The risks arising here involve the following costs. Are you willing to meet all those costs?" The answer would, in practice, be no, and then it would be the "economical" test that would be met.

What I am trying to do—and it may be that I am being foolhardy—is to scrutinise the Bill and clean it up. It never occurred to me that there is anything sinister here. It has nothing to do with trying to undermine the Bill. I am trying to remove the tendency, which I have experienced during all my years in your Lordships' House, of the draftsman to put in a lot of extra words and clauses for things which they see but which I cannot. It is my duty as an economist to say, "I know what industry is about and what competition means. It is supposed to be about meeting demand".

Perhaps I may take a typical example. Marks and Spencer meet the demand of people who visit their shops and buy their stuff. It is not said at any time, "Are any of these demands unreasonable?". The stuff is there and you buy it; that is what industry is all about. What is there about this industry so that one adds the word "reasonable?"

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There is another factor which, curiously, even my noble friends forget. I am surprised to discover that noble Lords on the Government side also forget it—that is to say, we are now dealing with a privatised industry and private enterprise. It is no longer a public utility we are dealing with, but a private business. There will be many such private businesses around. Why should legislation include words that would not be applied to any other private business? What is here that is so special?

What is here—I admit it from my side of the Chamber, but I did not expect to face it coming from the other side—is that we are still not quite at one with what is happening in this industry. It is now going to be a competitive private industry. I know that some of my noble friends cannot face that. What staggers me is that noble Lords on the other side of the House cannot face it either. My view is that they still believe they are dealing with the old public corporation when they should not be.

Lord Hailsham of Saint Marylebone: I am not being purely frivolous when I say that if the noble Lord, Lord Peston, who has just spoken for the second or third time this afternoon, had taken as his model the draftsman of the first chapter of Genesis instead of Adam Smith, he might have got on a little better. The Lord said, "Let there be light". The first section of this Bill says, "Let there be gas". The second point is that the Lord,


    "saw the light, that it was good".

Genesis does not say that the Lord saw the light and that it was economical but "that it was good". That is exactly what the Bill says. If the noble Lord would only learn from Genesis instead of from Adam Smith he would get on better.

Lord Howie of Troon: That is a very interesting intervention, as one might expect, from a very senior and experienced war-hardened practitioner in party politics. But the Lord did not say that the light was "reasonably good". Perhaps I may add one further point before we dispose of this important matter. In the course of his earlier comments the noble Earl introduced yet another word. It was not only economical; not only reasonable, but, "realistic". That is what he said. Is he suggesting that instead of taking out the word "reasonable" he would put in the word "realistic"?

Earl Ferrers: The noble Lord, Lord Howie of Troon, is being even more unreasonable to suggest that I remove "reasonable" and put in "realistic".

Lord Howie of Troon: I said "add".

Earl Ferrers: I shall not add it either because I would then get into trouble with the noble Lord, Lord Peston, and have to spend half the night explaining why I put it in. I return to the simple fact. I know that the noble Lord wants to be as economical as possible, but people know what these words mean because they have been used in the past. If one removes "reasonable" those who look at these things will say, "This director or Secretary of State does not have to meet reasonable demands; they can meet unreasonable ones if the only reason it is put in is that the demand should be economical." There may well be occasions when someone might say, "I am prepared to pay for a larger amount of gas and give tremendously

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increased powers." But that would be to the detriment of other people and it would be unreasonable. Everyone knows what the words mean, including the noble Lord. We had better keep them there.

Lord Peston: I despair. I do not want to get into a discussion about Genesis. I believe that Adam Smith made a contribution to our understanding of the way in which economies work. However, for the life of me I cannot recall seeing that in Genesis or in the tablets of the law. That is by the way.

It now seems to boil down to the fact that we all know what the word means except me. It has been there a long time and it will disturb people if it is taken away. Perhaps I may return to my example of Marks and Spencer. No one ever raises the point that if someone buys a particular item someone else may be unable to take it from the shelf. Markets are about buying things and meeting a price. All the arguments being put forward about gas seem to be part and parcel of a reluctance on the Government's side, which surprises me, to accept what they themselves are doing, which is producing a competitive private sector.

I am not going to press the point because there are other matters on which I wish to divide the Committee. I believe that the Government's side have not understood what is being done.

Earl Ferrers: Perhaps I may help the noble Lord. If I had the pleasure of a house next to the noble Lord and he was being supplied, not with gas but with water and we were paying the same amount, let us suppose we had a very hot summer and his garden had dried up. He goes to the water authority and says, "I shall pay you twice as much because I want to water my garden, but poor old Ferrers next door can go without water". That would be unreasonable and the noble Lord would be far better off not being allowed to do that.


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