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Lord Skelmersdale: I live in the south west of England. It may surprise noble Lords to know that even before the ink is dry on this Bill I have received offers to supply me with gas. Regretfully, they have gone straight into the wastepaper basket because I am not connected to

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gas, and I cannot see any immediate likelihood of being so connected. Nonetheless, the opportunity of choice has already been presented to me. I have no doubt that it will continue to be presented not only to me but to others, first in the trial areas and then more widely when the whole country is opened up to competition in 1998.

As far as the individual amendments are concerned, I am slightly worried by the idea of asking either the Secretary of State or the director of Ofgas to promote effective choice. One can promote until the cows come home, but one may not necessarily get a result. I have been trying to promote myself into well-paying jobs for the past four or five years since I left the position beside my noble friend Earl Ferrers. I have failed, but not for lack of trying. If there is any benefit in this set of amendments, I am sure that what is needed is a duty to secure choice rather than promote it.

Earl Ferrers: I believe that the noble Lord, Lord Peston, wishes me to speak first. It is very odd that we all wish to speak on this simple matter. My noble friend has moved a series of amendments. I have a great deal of sympathy with what she intends. She wishes to provide all consumers with choice. That is exactly what lies behind the whole purpose of the Bill. The intention of the Government's proposals is to introduce competition in the gas market.

What the amendments say is covered by the Bill's existing provisions. Under Clause 1, the director will have a duty to secure effective competition between suppliers. That will be a primary duty which will guide her in the exercise of her functions. It seems to me that if a case should ever arise where there was an area or a class of customer for whom suppliers were not competing effectively, it would be the director's duty to seek to exercise her functions in such a way as to resolve the lack of competition.

It is not practicable to go further. Although the director is required to seek to create the most favourable circumstances for competition, she cannot make people compete, as my noble friend Lord Skelmersdale said. It is like saying that you can take a horse to water, but you cannot make it drink.

To cast the duty in terms of promoting rather than securing choice would of course help deal with the question of whether the duty went too far, but it would leave very little that is not already provided for. Once the director has secured effective competition in respect of a class of consumers, it is difficult to see what more she could do to promote choice for them. The provisions in the Bill cover the point that my noble friend Lady Gardner is trying to make. I thought we had had this, but she referred to that horrible expression "cherry picking". I would respond to her only in this way, that we believe a competitive market is the best method of ensuring consumer choice.

To begin with suppliers will be keen to establish their market share, and that will provide a strong incentive for them to take on customers rather than to turn them away. That will militate against a selective approach to attracting customers. I do not believe that there should be a legislative obligation on all suppliers to develop an

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identical portfolio of consumers. It would be absurd to set supply companies any form of quota for a certain number of different customers.

We intend to discourage suppliers from "cherry picking". The director general will have a duty to refuse applicants for licences which artificially exclude an undue proportion of pensioners and the disabled or those likely to default on payments. That is found in Clause 6 on page 8. That is an important provision which will ensure that licence areas do not, for example, exclude areas or estates within a town or city which might be considered to contain an undue proportion of such customers.

All suppliers will have an obligation to supply to all customers in their licence area, irrespective of the customer's income, how much gas they use, or whether they are elderly or disabled. Suppliers will also be obliged to process all applications for supply without undue preference and offer a range of payment methods, including cash, cheque or postal order, so that customers who wish or are able to pay only by those methods can, in practice, go to any supplier.

While I understand what my noble friend is saying, it is difficult to expect the director general to promote competition in that way. Her job is to ensure that competition exists. The results will promote themselves.

Lord Peston: I am sorry to say that the Minister has somewhat lost me on this. The Bill as drafted uses the word "secure" in line 19. It states, "to secure effective competition". So there can be no worry about the word "secure". The Bill uses the word "secure". When I was complaining and moaning to the Minister about what that meant, he told me that it meant essentially what the noble Baroness, Lady Gardner of Parkes, said: it will secure choice. That is the point of it. Now when she asks why we do not write into the Bill "to secure choice", the Minister seems to argue that that cannot be done because the director general cannot do that. I feel that there is a contradiction here.

The point of the Bill is precisely what the noble Baroness says. I say it is the essence of the Bill. It is not all that was involved. I would fully accept that the regulated monopoly that constitutes British Gas led to a fall in the real price of gas—a point that the Minister has made several times; in other words, a regulated monopoly did lead to an outcome, but it was not an outcome that allowed choice to the ordinary household.

The Bill now introduces competition. Why does it do it? It presumably does it because the Government believe that this structural outcome will be better than a regulated monopoly; otherwise we would leave well alone. We are not going through all this just to occupy the Committee's time; we are doing it because we now believe that the structure of the industry, subject to competition, will be better. What do we mean by "better"? We mean offering choice to consumers, exactly as the noble Baroness says. What are our means? Our means of getting there is competition.

The noble Lord, Lord Ezra, and I wanted the matter set out in that order, with the means coming after the end, but we have lost that battle, at least for this afternoon. Therefore I am at a loss as to why the Minister—other

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than that he is obviously in no mood to accept any amendment or even to go away and think again—will not say not merely that he welcomes the amendment but that it is his duty to accept it because it is the point of the Bill. That is what I would press him on. Why would he not want to include it, given the arguments that he has put to us this afternoon? May I at least ask him to think again?

Lord Boyd-Carpenter: Will the noble Lord explain why, having spent a good deal of time on the previous amendment to try to take out the word "effective" before the word "competition", he supports an amendment which inserts the adjective "effective" in front of "choice"?

Lord Peston: That is easily done. That in fact is to cede the argument to me. The point is to have competition. If you ask me why I want competition, it is to produce effective choice. It is not effective competition that interests me; it is effective choice. I said that at the time, I might add. I want competition—meaning firms competing with one another. But if you ask me whether I want it for its own sake, the answer is no. I want it because it leads to consumer choice. I regard that as absolutely fundamental to the working of the kind of economic system in which we live. I do not use the word "fundamental" lightly. I have spent my life lecturing on this stuff. I regard competition—I can find some counter examples where it will not work—broadly speaking, as of the essence. And the reason it is of the essence is that it meets consumer demands. Why does it meet consumer demands? Because it offers them choice.

Lord Boyd-Carpenter: The noble Lord cannot get away with that. If there is not effective competition, there will not be effective choice. What is apparent is that he is prepared to swallow the word "effective" in an amendment against the Government, but not to accept the word "effective" in the Bill.

Earl Ferrers: I believe that the noble Lord, Lord Peston, answered the very problem that he put. He said that competition leads to consumer choice. That is so. We agree with him over that. The very first clause says that the purpose is "to secure effective competition". What you cannot do is to secure choice. You cannot "promote choice" which are the words in my noble friend's amendment. What you can do is to secure competition, and competition will lead to choice.

Baroness Gardner of Parkes: I have listened with great interest to what has been said. I do not accept the arguments that my noble friend came back with. My noble friend Lord Skelmersdale said that he had already been offered gas supplies. That is interesting, because it must mean that he is a cherry, and that his area is one that may attract people in the future, even though he does not have a supply now.


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