Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Haskel moved Amendment No. 99:


Page 40, leave out line 48 and insert—
("8. For section 14 of the 1986 Act the following section shall be substituted—
"Obligation to publish prices and other services
14.—(1) The principal prices to be charged to domestic consumers for the supply of gas and the provision of services (hereafter referred to as Terms of Supply) shall be published in such manner as in the opinion of the supplier, after consultation with the Director and the Council, will secure adequate publicity for them.
(2) The manner in which Terms of Supply shall be published will be such as to enable domestic gas consumers or potential consumers, accurately to compare prices and services when choosing a supplier.
(3) Suppliers will send copies of their Terms of Supply to the Director and the Council not later than the time of publication or announcement or implementation.
(4) In this section "services" may be taken to include services the supplier is obliged to provide in accordance with standard licence conditions and such other services as he may choose to provide." ").

The noble Lord said: My Lords, this amendment obliges gas suppliers to publish their prices for gas and other services to domestic consumers or potential consumers with adequate publicity for them. That is so

18 Oct 1995 : Column 791

that domestic consumers can compare prices when choosing a supplier. Many arguments were put in Committee about the fact that if there is no transparency and proper information regarding prices, the consumer is unable to make an informed choice and competition becomes a sham. As we have been reminded several times, the purpose of the Bill is to introduce competition.

The amendment was moved in Committee by my noble friend Lord Clinton-Davis. It was supported by many other noble Lords, and the Minister said that he would consider the points made. Sadly, he has not been moved by our arguments.

One of the advantages of a long summer break is that we have had time to re-read the reasons why the Minister felt that it is not necessary to have an obligation on the face of the Bill for suppliers to publish their prices. I found three errors in his reasoning.

First, at col. 826 of Hansard the Minister, the noble Earl, Lord Ferrers, said that price schedules are provided in draft standard condition 3 of the supply licence. He said that that is just as binding on suppliers as if it were in the Bill. That is incorrect. The Gas Bill can be amended only with parliamentary consent, whereas a licence condition can be amended by the director general with the consent of the Secretary of State. I feel that the requirement to publish price information in a proper manner is so crucial to consumer choice that it should be contained within a document which can be changed only by Parliament and not left to the discretion of the director general.

The second point on which I take issue with the Minister is referred to at col. 827 of Hansard where he says that publishing prices in the long term could work against the benefit of consumers because consumers may wish to negotiate their prices as in the industrial market. To compare the needs of the industrial market with those of the domestic market is disingenuous. Of course industrial users will wish to negotiate prices with suppliers and keep secret the result of those negotiations so that competitors cannot work out their production costs. To suggest that that applies also to domestic consumers is ridiculous.

The third error in the Minister's response is to be found at col. 828. He implies that the published list of prices will not be movable or negotiable. That is totally wrong. Of course suppliers will be able to offer volume discounts, special deals and other offers. That is the nature of competition. But that competition will not exist if the public do not know what are the prices and cannot make comparisons as easily as they can in relation to petrol and other products. We must ensure that the consumer is treated fairly. I beg to move.

Lord Skelmersdale: My Lords, having given the noble Lord, Lord Haskel, what my father would undoubtedly have called a slap in the belly with a cold wet fish on the previous amendment, I offer my unqualified support for his arguments on this occasion.

As I have made clear throughout the Bill, competition in the telecommunications industry would not have happened at all but for total transparency of prices. The domestic telecommunications market is analogous with the domestic gas market. That is the first point.

18 Oct 1995 : Column 792

The second point is that in the early days of the freeing-up of competition in the gas contract market—the largest suppliers—British Gas was operating with what I can only describe as one hand tied behind its back. It alone of all the competitors was obliged by law to publish its prices. Therefore, of course there was unfair competition. There is no earthly justification for that to happen in the domestic market.

Lord Ezra: My Lords, I support the amendment. We had a lengthy debate about this in Committee. The Government said that they would think about this and it is regrettable that they have not tabled an amendment. The fact that under the terms of the licence the suppliers will be obliged to publish prices is not sufficient because, as the noble Lord, Lord Haskel, rightly pointed out, prices may be altered by the regulator without any parliamentary debate.

This is a matter of considerable importance. If we are to have a fair competitive situation in the supply of domestic gas, we must have total price transparency. Individual consumers are not in the position of commercial or industrial enterprises which have skilled negotiators at their disposal who can obtain a list of all the suppliers, summon them to their office and go through with them the terms and conditions under which they are prepared to sell. The individual domestic consumer will not have the time or the skill to do any of that, just as the individual motorist, if the prices of petrol were not visible on the forecourt, would not be able to tell, without wasting a great deal of time, where he should be going for his petrol if he wished to obtain it at the most attractive price.

I cannot see why the Government are reluctant on the point. They said that they would look again at the matter. I hope that we have persuaded the noble and learned Lord, who has been so helpful in the discussions so far, and that, in this matter too, he will see the force of the argument from all sides of the House.

6 p.m.

Lord Fraser of Carmyllie: My Lords, if the only issue here was that of publishing prices I could see some of the force of the argument that has just been put forward by the noble Lord, Lord Ezra. However, it is not just a question of a consumer's freedom to negotiate. The licence conditions require suppliers not only to publish prices but also to supply according to them. They can only supply according to the published terms; for example, they could not offer consumers a special deal to suit their circumstances or to meet a competitor's approach.

Clearly I take the point that the individual domestic consumer is not like a single large industrial user; indeed, their negotiating muscle is not to be equated. However, your Lordships will be aware of the type of special arrangement that such firms as John Lewis adopt. They say that, if you can find a competitor who provides the goods at a price lower than the one they charge, then they will adjust their price to meet it. Under the existing condition arrangements, that would not be possible. Even if the company wished to do so, it could not offer a special deal; in other words, it could not

18 Oct 1995 : Column 793

make such a special arrangement. I believe that that simple example demonstrates that there is a potential risk that, far from operating to the benefit of the consumer, if there is no prospect of loosening up the provision at some time it could operate against the interests of the consumer.

Therefore, we want to avoid ruling out the possibility that at some point in the future it might be desirable for consumers to negotiate a deal with a supplier suited to their particular needs. I am not yet confident that that will definitely happen. However, I do not believe that it would be prudent to rule out the possibility now before we have seen how the market will develop.

I should like to reiterate the fact that the Government consider it important—and we are in agreement on this—that at least at the early stages of the market there should be published prices. That is why price schedules are provided for in the draft standard condition 3 of the supply licence. That would be quite as binding on suppliers as if it were in the Bill. I see that the noble Lord wishes to intervene. I give way.

Lord Clinton-Davis: My Lords, I am much obliged. I believe that we should welcome what the Minister has just said, but I am rather confused on the matter. The noble and learned Lord says that the situation would be inflexible if we were to import the provision into the Bill, but if in fact prices are published so that a comparison can be made along the lines mentioned by my noble friend and the noble Lord, Lord Ezra, surely there is nothing to stop negotiation taking place thereafter. Would it not be possible for someone to say, "I know that I can get a better deal from someone else"? Indeed, one could negotiate on that basis.

Lord Fraser of Carmyllie: No, my Lords; that is not the way that it is arranged at present. That is why we want to allow for the potential of greater flexibility in the future. There is not much point in having a duty simply to publish a set of prices if one is not actually under an obligation to supply at that price. That is where the difficulty arises. We want to allow for some flexibility in the future if the market develops in that way. I have indicated that I accept that there is no direct and wholly apt comparison to be drawn with the industrial gas market. Nevertheless, where that requirement is not in place, gas prices are very much lower.

As I understand it, the principal concern of the noble Lord, Lord Haskel, is that he understood that we were at the outset requiring that the provision of a price schedule should indeed appear within the standard conditions. However, the noble Lord was concerned that, because it would not be on the face of the Bill, it might be removed by the director without Parliament having had the opportunity to have its say. I should tell the noble Lord that any proposal by the director to remove the standard condition requiring publication of prices would be subject to the Secretary of State's veto and could only be carried out after public consultation.

If the noble Lord does not like my argument and does not believe that the opportunity for greater flexibility at some indefinite point in the future is one to which we

18 Oct 1995 : Column 794

ought to have regard, he can be reassured that, as such changes take place, the price will be published. It will be there in the standard conditions and it could be vetoed by the Secretary of State. However, I believe that the noble Lord's particular concern is that such a change might taken place during a Recess without Parliament knowing anything about it. I hope that I can reassure the noble Lord by confirming that we believe that Parliament ought to have the opportunity to consider if it wishes any proposal to remove the obligation to publish prices. In practice, that means the Secretary of State would wish to inform Parliament of any such proposal and that his veto would be used so as to prevent such a change being made when Parliament was not sitting. With that explanation of the arrangement in the standard condition as the changes take place, and also with the statement on behalf of the Secretary of State, I hope that the noble Lord will feel reassured.


Next Section Back to Table of Contents Lords Hansard Home Page