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The Earl of Caithness: My Lords, I thank my noble and learned friend on the Front Bench for bringing forward the government amendment. Clearly, he listened to the concerns that we all expressed in Committee. Although there are undoubtedly anxieties about the proposed government amendment, I look forward to hearing what my noble and learned friend Lord Fraser has to say and thank him for having moved forward between the last stage and this stage of the Bill's progress.

Lord Peston: My Lords, I should like to make just a few remarks. First, my noble friend Lady Nicol is entirely right about the principle, which is that the privatised utilities should not be in a position to impose costs on other private enterprises just because they were once nationalised industries. That is the central theoretical proposition which must guide all of us.

Secondly, as the noble Lord, Lord Skelmersdale, pointed out, this question does not arise only in relation to British Gas. The problem arises with all the former nationalised utilities, but we are dealing with gas today. My judgment is that everything revolves around the meaning of the government amendment and what will happen in practice. The noble Earl, Lord Caithness, made that point very clearly.

If we get the regulations, I think that sub-paragraph (4) will be fine. My noble friend's concern is whether we shall have those regulations. I hope that when I sit down in a moment the noble and learned Lord, Lord Fraser of Carmyllie, will say that, although we shall not get the regulations this very minute, we shall certainly get them. I must advise my noble friend that I do not have any difficulty with sub-paragraph (5) because, assuming that we get suitable regulations under the provisions of sub-paragraph (4), sub-paragraph (5) is minor in that it states that having got a set of good regulations, it should take a good deal to change them. Perhaps the Minister will tell me whether my interpretation is correct. That is why I am less worried about sub-paragraph (5), but I want to be told that we shall get the regulations under the provisions of sub-paragraph (4) along the lines that my noble friend has suggested. I think that that is the beginning and the end of it and I look forward to hearing what the Minister has to say.

Lord Boyd-Carpenter: My Lords, as has been said, this issue arises in respect of all the former nationalised industries. It is therefore important that the Government should make clear at this stage and on this Bill their attitude to the whole matter.

5.15 p.m.

Lord Fraser of Carmyllie: My Lords, I hope that I can do just that in responding to the amendment tabled by the noble Baroness and in indicating where I stand on the Government's amendments.

The question of compensation in respect of street works is a complicated issue with both practical and theoretical considerations. These mean that it would not be appropriate, despite the anomalous case of the water industry, to provide an unqualified obligation to pay compensation.

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Businesses do not have a legal right to a given level of passing trade. For example, if a competing shop opens and takes many of the customers away causing the original shop severe losses, there is no right to take action against the competing shop for the damage done. There are many factors which affect the level of passing trade which a business might have, including the taking of planning decisions which may affect the character of the neighbourhood and it would clearly be a wrong principle for compensation to be available as a general rule.

In the more particular case of street works, the generally accepted principle is that all users of a street must accept the risk of delays or disruption caused by other lawful users of the street. There is no right to claim compensation from the other members of a traffic jam, or from local authorities which close a road to resurface it, or when—this could be most damaging of all—the traffic management in a road is changed in a manner in which affects passing trade.

That does not mean that street works should be executed with no thought as to the inconvenience for other users of the street. The New Roads and Street Works Act 1991 regulates in some detail the manner in which street works are to be undertaken. This includes obligations to provide advance notice of planned works to the street authority and to abide by any requirements imposed by that authority; to secure that any part of the street which is open or obstructed is adequately guarded and lit; and to carry on and complete the works, and the reinstatement of the street, with all such despatch as is reasonably practicable.

Additional standards relating to the carrying out of street works have been agreed between British Gas and Ofgas. These include providing an alternative safe route if the footway is obstructed and ensuring that there is pedestrian access to all premises while work is in progress.

There is also the question of cost. Any requirement on public gas transporters to pay compensation in large amounts would inevitably find its way back through charges to the customer. That is because it is necessary to consider the costs of a utility in setting its price control. The Government are not convinced of the need for a general transfer of money from gas consumers to business in this way.

I have taken some time to make those general points because it is important that they are placed on the record. However, I should say that the Government have decided to review the position, especially as regards small businesses, where the costs arising from prolonged street works by utilities could fall very heavily. Clearly, a number of my noble friends are aware of particular circumstances where that has happened. Our conclusion is that, notwithstanding the position in logic as I have outlined it, some change to deal with exceptional cases is required.

For that reason, the Government welcomed the voluntary compensation scheme proposed by British Gas this May. That scheme represented, in our view, a fair and reasonable balance between the interests of the various parties. The scheme has, however, been criticised on the basis that public gas transporters other

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than British Gas are not bound by it, and that payments were a matter of sympathetic consideration rather than a strict obligation to pay in the appropriate circumstances.

We believe that those concerns have some weight. Therefore, I invite the noble Baroness to withdraw her amendment on the basis that I propose to move Amendments Nos. 150 and 151 which empower the Secretary of State to make regulations in this area.

I understand your Lordships' concern about the use of the word "if". Perhaps I may make this statement: it would be our intention to frame the regulations to replicate, as closely as may be, the provisions of the British Gas scheme, but on a compulsory basis and applicable to all public gas transporters. I hope that that indication is broad enough, but if your Lordships remain uncomfortable, I shall look at the provisions again to see whether the word "if" could be removed. I believe that it is, in effect, technical given the undertaking that I have given at the Dispatch Box, but if it would reassure your Lordships I shall certainly consider doing so at a later stage. At this stage, I should like to be able to move my amendments so that there can be a clear understanding of what we have in mind. That will allow interested parties to reflect upon the matter before we return to this on Third Reading.

I was asked specifically about when the regulations would be made. We expect to make them by the appointed day, when the new regime comes into effect. We shall be consulting on the regulations. We want to see whether we can usefully discuss the regulations with the relevant associations before they are made. However, I believe that it will be appreciated that if we are to ensure that they can come into effect by the appointed day, that does not allow for the most leisurely period of consultation.

I hope that what I have said is sufficient to satisfy my noble friend, the noble Baroness and those on the Opposition Benches. I apologise for the fact that there has not been a great deal of time for those who are interested in this matter to consider the government amendment. Nevertheless, I hope that the noble Baroness will withdraw her amendment. If necessary, we can return to this on Third Reading.

Baroness Nicol: My Lords, before the noble and learned Lord sits down, he did not deal with the question about sub-paragraph (5). May we hear a little about the Government's thinking on that?

Lord Fraser of Carmyllie: My Lords, I think that it relates in large measure to the timetable and drafting arrangements. We proposed a very broad regulation-making power and did not include all the full details in the amendment. Having adopted that approach, it was considered that this was the appropriate way forward. The noble Baroness may wish to reflect upon that matter, and if she wishes to communicate with me before Third Reading I shall be happy to discuss it with her.

Baroness Nicol: My Lords, I am grateful to the Minister for his full answer, which I will have to consider in detail.

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As to the question of the costs to the consumer, if the businesses about which we speak fail there will be costs to the consumer by another route. Many consumers will pay not only the financial costs of the businesses that are affected but possibly the social costs of losing them. I do not believe it is relevant to compare the difficulties caused by fair competition with the difficulties caused by road works. Any business worth its salt can meet fair competition by various means open to it, but it cannot do anything about road works.

I am encouraged by the Minister's attitude, and I shall study carefully what he has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 [Acquisition of rights to use gas processing facilities]:

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