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Lord Taylor of Blackburn: My Lords, in view of what the Minister has said, does he not believe that there is a case for the take-over bid for North West Water by Norweb to be considered by the Monopolies and Mergers Commission?

Lord Fraser of Carmyllie: My Lords, I am dealing with a question about the transparency of the electricity industry. However, I have indicated a broad general

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policy and, clearly, many aspects of that policy would also be applicable if there were to be mergers with water companies.

Lord Taylor of Gryfe: My Lords, will the Minister comment on the bids and the prices that are being offered in those take-overs? Will he talk to his merchant bank advisers who gave the original substantial undervaluation of those public assets?

Lord Fraser of Carmyllie: My Lords, there may be an argument to say that at the time at which the privatisations took place, there were those who had a particular interest in trying to talk down the value of those companies. I certainly do not think that that is correct. As the noble Lord will appreciate, I must resist commenting on any one of the proposals for take-over or merger because there are proper procedures to be followed. The Director General of Fair Trading, following on the advice that he receives from the electricity regulator, gives independent and impartial advice to the President of the Board of Trade who then takes the decision whether or not to make a referral.

Lord Haskel: My Lords, does the Minister agree that the main effort of the Government to introduce competition into the electricity market was by introducing the spot market; and that has failed? Instead of driving down the price of electricity, as the Government promised, it has increased it to such an extent that the regulator has been forced to cap it. Does the Minister agree that, had the regulator not capped that pool market for electricity, the price would have risen to such a level as to make the energy costs of British industry uncompetitive?

Lord Fraser of Carmyllie: My Lords, it is rather extraordinary to put the matter that way round. Of course we recognise that there is a role for the regulator to play, and one of those roles is in relation to price. But the noble Lord should have drawn attention to the fact that domestic electricity prices have fallen by some 7 per cent. in the past two years and are expected to drop by a further 3 per cent. in real terms over the next year. Industrial prices have fallen by some 6 per cent. Furthermore, next year, once the National Grid has been floated, every consumer will receive a £50 rebate.

Transport Research Laboratory

3.2 p.m.

Baroness Castle of Blackburn asked Her Majesty's Government:

    Which organisations or companies have expressed an interest in taking over the Transport Research Laboratory when it is privatised and how many of them would be non-profit-distributing concerns.

Viscount Goschen: My Lords, in response to their sale memorandum issued this summer the Government received expressions of interest and indicative bids for the laboratory from a range of bodies. We have asked certain of those bodies to submit confirmed or revised bids by the end of October. The bids are confidential at this stage of the sale process.

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Baroness Castle of Blackburn: Is it not a fact that of those expressions of interest the only offer of a non-profit-distributing company take-over comes from the Transport Research Foundation, an in-house staff management consortium of the Transport Research Laboratory? In view of the fact that the Government's own consultants, Peat Marwick, said that the best way to preserve the reputation for impartiality which the Transport Research Laboratory enjoys worldwide would be the choice of a non-profit-distributing company, will the Minister for once accept his consultants' advice?

Viscount Goschen: My Lords, in view of the fact that the chief executive has made clear that a management staff bid to form the TRL as a non-profit-distributing company, to be known as the Transport Research Foundation, is being mounted, I can confirm that. However, I cannot confirm what are the other bids and what stage they have reached. I cannot follow the noble Baroness in her supposition that only a non-profit-distributing company can be impartial and put forward impartial advice. The Government commission expert advice from a wide range of bodies in both the public and private sectors and we receive very good impartial advice from all of them.

Viscount Chelmsford: My Lords, are the Government aware that a number of organisations are supporting the Transport Research Foundation, including my own, ITS Focus, which deals with transport telematics? I understand from the foundation that we are one of over 100 organisations representing universities, consultants, the construction and supply industry, infrastructure owners, transport operators and professional institutions which are supporting the bid. The strength of that support was demonstrated when 38 of them attended a meeting called at very short notice to try to set out the position. Will the Government give special consideration to the bid by the Transport Research Foundation?

Viscount Goschen: My Lords, all I can say at this stage of the bidding process is that full consideration will be given to all the details of all the bids.

Lord Dean of Beswick: My Lords, that was a special, individual plea from a Member of this House, which is quite unusual. I believe that the Minister mentioned that four bids are in. Are they based on a uniform basis of specification? Which criteria will the Government use when making the award? Will the final decision be based on straight price and projected performance or will there be a whittling down and negotiations taking place, as has happened previously?

Viscount Goschen: My Lords, I mentioned that we had gone back to a number of the bidders to ask them to clarify certain points. This will be a fair competition. We shall take into account all the relevant details including price, ability to perform, what sort of work the organisation can put forward and its record. Those will be the important criteria on which we shall consider the bids.

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Lord Taylor of Blackburn: My Lords, will the Minister answer the question put to him? There may be a difference as regards definition of the word "fairness". Is each bidder making the same bid on the same contract?

Viscount Goschen: My Lords, people are bidding in response to the sale memorandum issued by the Government.

Lord Clinton-Davis: My Lords, will the Minister be kind enough to answer the question put by my noble friend Lady Castle? She asked whether or not it is a fact that Peat Marwick recommended very strongly to the Government that if they were to proceed with the privatisation a non-profit-distributing concern would be the best avenue by which to pursue it. Will he answer that question which was put twice by my noble friend and not answered by the Minister?

Viscount Goschen: My Lords, I am very glad that the Opposition place such great store on the advice given by an independent company in the commercial sector. That rather goes against the thrust of the questions which have been coming from the Opposition. We recognise the advice given to us by Peat Marwick. Nevertheless, we are considering a wide range of bids from a wide range of companies. We believe that that is the best way to ensure the future provision of high quality work by the transport laboratory.

Lord Clinton-Davis: My Lords, the Minister has not answered the question. Was clear advice given by Peat Marwick that that form of organisation was the one which the Government were very strongly recommended to follow—yes or no?

Viscount Goschen: My Lords, the simple answer to that is that advisers provide us with advice which we take fully into consideration. We then look at all the other relevant factors involved. The company which the noble Lord mentions does not run the country and is not the elected government. The Government have a duty to provide the best value for money for their taxpayers taking fully into account the advice which they have received and commissioned in order to produce the best possible transport research laboratory and the best future for that laboratory.

Baroness Seear: My Lords, from that answer we can surely assume that the answer the Minister has not given us is yes.

Viscount Goschen: My Lords, the other answer I have not given the House is no. I believe that we have rehearsed fully these arguments. There will be a fair competitive process to see which company will end up running the TRL. I am sure that in view of the Government's guarantees of future work we shall end up with a strong organisation that is able to provide good quality, impartial advice to the Department of Transport and other customers.

Lord Ewing of Kirkford: My Lords, has the noble Viscount noticed that three of the four Questions today deal with public industries that have been sold off by the Conservative Government—railways, electricity and

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now the Road Transport Laboratory? Will the Minister read out a list of those public interests which the Government are not prepared to sell?


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