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Lord Skelmersdale: As I said earlier, the firms in question clearly had not done their homework. I cannot be described as a cherry if I am not connected to the public gas main.

Baroness Gardner of Parkes: I live in a village which did not have gas but does now. We went through great trauma to get it. We had to prove how many people there

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were. I went through the survey to see how many people in the village had to have it to make it economical to connect it. It has made a tremendous difference to our village life. It is a great advantage. I am grateful to British Gas for doing that.

My noble friend says that the whole purpose of the Bill is to provide choice, but then, as we read it, we find that it is not; it is to provide competition, which he says will lead to choice. But there is no guarantee that it will lead to choice. I would emphasise again that there is a vast difference between "effective"—to use the word that my noble friend Lord Boyd-Carpenter used—competition and effective choice. Surely competition is effective if my business is making more money than your business. I will achieve that by using my gas supply to the greatest profit for my company and not for the people to whom I am supplying the gas. They are an important part of my business and of course I am out to get whatever customers come along who will be profitable for me. However, if it is likely that they will present me with a great loss I shall not go out looking for them.

My noble friend said that we do not want every firm to have an identical group of consumers. No, we do not, and the levy for those who are carrying consumers to their disadvantage will help to offset the problem. The Bill provides for a disadvantaged firm to be helped, and my amendment will clarify that.

The noble Lord said that every successful firm will process applications for supply. That brings me to my point. One cannot apply for a supply if one does not know that it exists. Everyone knows that British Gas exists. Whether or not one has gas in one's village, everyone knows that British Gas exists and supplies gas. It is a household name and has been for as long as I can remember. However, if one does not know that there is an alternative supplier one does not know that one has a choice. That is why the director should have the responsibility of promoting the awareness of choice.

My noble friend Lord Skelmersdale said that you could promote until the cows come home but without result. That is right but if people are not provided with information how will they discover that a choice exists? There must be a process for that and the person with the responsibility should be the director of Ofgas. It is important to differentiate between competition and choice. I hope that my noble friend will read carefully in Hansard what I have said. I believe that later amendments will bring home more clearly the importance of the availability of choice and the fact that that should be written into the Bill. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 5 to 10 not moved.]

5 p.m.

Lord Haskel moved Amendment No. 11:

Page 2, line 4, leave out ("promote") and insert ("secure").

The noble Lord said: We can deal with the amendment quickly because the noble Lord, Lord Skelmersdale, spoke to it most effectively. He told the Committee that you can promote until the cows come home but that you cannot necessarily be sure of the results.

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The amendment is tabled in order to inquire why the word "promote" is used in paragraph (b) "to promote efficiency" and why the word "secure" is used in paragraph (c) "to secure effective competition". I believe that the word "promote" should be removed and that the word "secure" should be inserted because it is a much stronger word for the reasons which the noble Lord, Lord Skelmersdale, explained so eloquently. I beg to move.

Lord Skelmersdale: I cannot resist saying that it is for my noble friend Lord Ferrers to defend the wording of the Bill.

Lord Cochrane of Cults: If the word "secure" is put before the word "efficiency" what will be done if efficiency is not secure? That is the dilemma. Efficiency is capable of being promoted but it is incapable of being secured.

Lord Peston: The noble Lord has put his finger on the drafting problem. If the word "secure" is inserted and that does not happen, what will follow? On the other hand, if the word "promote" is used one is under no obligation for anything to happen, which is what the noble Lord, Lord Skelmersdale, argued. So why are we wasting our time? We want a wording which leads to something happening or we may as well leave the whole thing out. I have sat through many Bills in this Chamber when we have put in all kinds of vague words which make everyone happy but nothing very much follows. I agree that that is the problem.

What we really want is the efficient use of energy. We have a director general, and we would like him or her to do something to achieve that. If we use the word "secure" we run into the logical problem of what will happen if that does not come about. I suppose that the answer is that the person gets fired or has 10 per cent. taken off his salary. I suppose that we could have performance-related pay. If we use the word "promote" all that will happen is that when we ask what is going on the director general will say, "I recently published pamphlets on promoting energy efficiency", and one thinks, "So what?". That is the problem. We have tabled the amendment in order that we can air it.

The noble Earl earlier mentioned Mike Tyson. Perhaps I may tell him that he has ground me into the dust and, therefore, as regards my Amendment No. 12, which removes the words "and economy" because "efficiency" already covers the point, I am getting fed up with saying, "Let's clean up the Bill and convert it into ordinary English". If I were not ground down I would say that that was the point of Amendment No. 12. The words "and economy" add nothing because "efficiency" covers "and economy". I have accepted defeat and realise that today I shall win no battles on the correct use of language.

Lord Ezra: As someone totally committed to securing energy efficiency, I wish to ask the Minister what is the significance of using different words in paragraphs (b) and (c)? Is securing competition more important in the Government's mind than promoting efficiency and economy? If the two objectives rank similarly why not use the same word in both cases?

Earl Ferrers: It grieves me to think that the noble Lord, Lord Peston, has been ground into the dust but it

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does not seem to have stopped him talking. Neither the director general nor the Secretary of State are in a position to secure the efficiency of a commercial organisation. One cannot do that. They can act in a way such as will promote efficiency but they cannot secure it. Perhaps they can do that by setting a challenging price control but achieving efficiency is a matter for the board of the company concerned. One can secure only what is in one's control; one cannot secure that which is outside it. However, one can promote it.

The Bill is similar to the 1986 Act and uses the word "promote". It provides the basis for a system of regulation which gives companies an incentive to be more efficient. It also requires the director general taking regulatory decisions to take account of those decisions on the company's efficiency. But the director general cannot secure that customers are efficient. She cannot send her staff to turn down people's thermostats and to close their windows. However, she can promote energy efficiency and that is why the new draft supply licence contains provisions designed to promote energy-efficient packages.

As regards "and economy", perhaps I may point out to the noble Lord, Lord Peston, that one cannot be efficient without being economical but one can be economical without being efficient. That is the reason why we believe that it is best to leave the words as they stand.

Lord Haskel: The way in which we measure the effectiveness of the director general is to see how effective he or she is in securing efficiency. I realise that one cannot be sure that the director general will or will not secure it but certainly one can measure how effective he or she is in doing that. However, I do not wish to prolong the discussion and therefore I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 12 and 13 not moved.]

The Earl of Cranbrook moved Amendment No. 14:

Page 2, line 18, after ("functions") insert ("—

The noble Earl said: Amendment No. 14 is one of those parliamentary absurdities: it is apparently devoid of sense, but it is in fact pregnant with implications. It is linked with a set of amendments all of which I should like to speak to; that is to say, Amendments Nos. 15, 17 and 18. It is also linked with Amendment No. 20 which is tabled in the name of my noble friend on the Front Bench and also with Amendment No. 22. I shall want to return to one or two of those amendments because I believe that what I say could become too convoluted and complicated if I try to deal with all of them at once as they pick up different threads.

The way in which energy is produced and supplied—and, in the case of gas, the way in which it is used—can have major impacts on the environment. The Bill seems to seek parity between electricity and gas as there are many similarities in the wording. However, there is a fundamental difference. The burning of fuel by electricity generators is subject to environmental regulation and there is a mechanism to raise the related costs. But, with gas, it is the end user, the consumer, who burns it. So we have to consider that there is also an appropriate place for

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environmental regulation and associated costs on its end use. That is one of the points that I make in Amendment No. 17.

As regards Amendment No. 15, I am glad to see that I am at one with my noble friend in that we leave out the word "physical". I am informed that the term has no actual definition in law and that we would be much better off without it.

Amendment No. 17 deals with two points. First, it deals with the fact that we need to consider the environmental impacts of the use of gas by the consumer which I mentioned just now. Gas is a hydrocarbon and, being burnt, it produces water and carbon dioxide. As Members of the Committee will know, the rising concentration of carbon dioxide in the atmosphere is of major international environmental concern.

Amendment No. 17 also introduces—because of the way that the words fall—the duty on the regulator and on the Minister to have in mind,

    "the objective of achieving sustainable development".

We have had some complicated debates on sustainable development in the Environment Bill. But I believe that the concept, although it may be difficult to define, is broadly understood, widely supported in the country and supported by all political parties.

The basis of sustainable development is to reconcile the dual objective of achieving economic development and, at the same time, providing for effective protection and enhancement of the environment. There is no paramountcy of interests in sustainable development, but there must be real and equivalent consideration of all interests, especially the environment. I believe that this fact was fully recognised in the recent Energy Report, particularly in Chapter 5 which is titled, "Energy and the Environment". Therefore, I believe that the concept needs to be brought into the Bill. I also believe that it is entirely consistent with the Government's intention in seeking the goal of sustainable development to ensure that it is there.

My attention in that respect has very sharply been focused by the role that I personally have been invited to play in the programme related to the Government's sustainable development goals; that is to say, in the UK Round Table on Sustainable Development. Those things have all happened rather recently, which is why I did not have the opportunity to raise them on Second Reading and why I apologise for introducing such topics now without having, as it were, waved my flag at a previous stage.

As part of my participation in the UK Round Table on Sustainable Development, I was invited to chair a working group on energy policy. In order to shorten what I need to say, I have obtained the permission of the two co-chairmen of the Round Table on Sustainable Development—namely, the Secretary of State for the Environment and Professor Sir Richard Southwood—to place in the Library the report of the energy policy working group which I chaired. I believe it has also been circulated to a number of noble Lords. Very briefly, its conclusions (and such conclusions were reinforced by the consensus of the whole Round Table which met on 15th June) were that market forces and sustainability were not mutually reinforcing because they were not intentionally

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aligned. I hope that this phraseology will appeal to the economist on the Benches opposite, because it seems to me to be a very sensible statement.

In essence, what the Round Table concluded was that an unfettered energy market would not necessarily produce sustainable results because it would not take into account the full range of externalised, environmental costs. Therefore, in the long term—and I believe that this is entirely consistent with everything that I read in the Energy Report—mechanisms will be needed to establish the environmental boundaries within which a free market can operate. The aim of my series of amendments is to do just that.

I should like to point out that there is a very subtle difference between Amendment No. 22, which is tabled in my name, and my noble friend's amendment, Amendment No. 20. With my noble friend's permission, I should like to return later to Amendment No. 20 in particular. However, I hope that I have made clear the intentions of my amendments. It is of fundamental importance because I believe that the issue was overlooked first of all in the original Gas Bill of 1986. Indeed, we must remember that events have moved on very markedly since that time. Many of the ideas that we now have on environmental protection and sustainable development simply had not properly evolved, or did not exist in 1986.

The way that the Bill is constructed means that we are amending a 1986 Bill. However, as we are in 1995, I believe that we ought to do so with the determination and the understanding of environmental issues which now exist almost a decade later. I beg to move.

5.15 p.m.

Lord Ezra: I should like to support the remarks just made by the noble Earl and especially what he said in relation to Amendment No. 17. I am glad to note from Amendment No. 15 that the noble Earl, Lord Ferrers, is likely to agree that the qualification of environment by the word "physical" will be removed. That was a puzzle to everyone who read the Bill as to precisely what was meant by "physical environment"; indeed, what happened to the rest of the environment? However, I take it that that puzzle has now been removed.

I believe that the noble Earl, Lord Cranbrook, was absolutely right in the two points that he made as regards Amendment No. 17. The first point is that, as now drafted, there is a duty to take into account the effect on the environment—that is, if one leaves out the word "physical"—of,

    "activities connected with the conveyance of gas through pipes".

However, I am puzzled as to why that should be limited to the conveyance of gas. Obviously the use of gas is as important, if not more important, than its conveyance. Generally speaking, the conveyance of gas is conducted in ways which are environmentally quite satisfactory. After all, it goes in pipes underground. While we must ensure that it remains environmentally acceptable, what is really important is the use of gas conveyed through the pipes. Therefore, I hope that that will be a non-controversial amendment.

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Secondly, I believe that the reference to,

    "the objective of achieving sustainable development",

is important because we must bear in mind that the satisfaction of consumers is important; that the stimulation of competition is important; but that making that consistent with environmental development is equally important.

I do not believe that any energy industry can now thrive which does not take sufficient account of environmental pressures. We had vivid proof of that the other day in what happened to the Shell oil rig, the company not having taken sufficient account of environmental pressures. Let it be stated in the Bill that that has to be done. I am sure that any self-respecting supplier—I certainly include myself in that—would take environmental considerations seriously. This is not something that any supplier would regard as limiting his freedom of action; on the contrary, it supports the proper supplier in the discharge of his responsibilities. I very much support the noble Earl, Lord Cranbrook, in Amendment No. 17.

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