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Lord Ezra: My Lords, I thank the Minister for giving way. It was because I knew that the 1989 Act contained a very limited definition of the use to which the levy can be put that I raised the question of legislation. I am aware of what happens in the electricity industry at the moment. It is positive; it does not go far enough in my opinion; and certainly nothing has been done in the gas industry. So I thought that the Government might be tempted to have a look at this whole area, as well as that of non-fossil fuels, and bring in legislation in due course.

Lord Haskel: My Lords, I am sure that the Government will consider these factors as part of the review. The noble Lord asked about combined heat and power. The same answer applies. The application of the proceeds of the levy is closely defined in the Electricity Act and it is not possible to use the levy to support generation from fossil fuel sources. However, it has been possible to provide encouragement through the levy for combined heat and power schemes where the source of their fuel is waste. Seventeen such projects with a combined capacity of 182 megawatts have been given contracts through NFFO arrangements.

So far as concerns the e-factor, which was raised by the noble Lord, Lord Ezra, I shall bring that matter to the attention of my right honourable friend the Minister. I am sure that it will be taken into account during the review.

The noble and learned Lord, Lord Fraser, asked about the savings of £70 million annually. The noble and learned Lord reads the press releases carefully and he is right. If the electricity from nuclear generators were levy-free, the DTI estimates that the generators could benefit by up to around 0.1 pence per kilowatt hour from green ticket payments. That would amount to £70 million annually. But the Bill will prevent this market distortion which could allow nuclear generators supplying the markets of England and Wales to obtain higher prices for their electricity from 1st April. By having this arrangement the levy is spread over a much wider number of companies. The DTI estimates that the levy rate in England and Wales could be about 0.5 per cent. lower than it would have been without the Bill.

The noble and learned Lord asked about Clause 1(2)(c) of the Bill. In relation to that I am happy to confirm that this will allow electricity from those renewables generated outside of NFFO and SRO arrangements to be exempt from the levy. This leaves their situation unchanged. That is the intention of this subsection of the Bill.

The noble and learned Lord asked about clean coal. Again, he was kind enough to give me notice of his question. Since 1993 there has been a programme of support for R&D into clean coal in collaboration with industry and academia, as I am sure the noble and learned Lord knows very well. More than 215 projects

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with a total value of over £200 million have been initiated and part funded by the DTI. The present phase of the programme is due to be completed next year. We are currently considering what further work needs to be undertaken. The review will take into account both the recommendations in the evaluation report and the views of the industry-led Foresight Taskforce, in which I know the noble and learned Lord was involved. As part of the review the Government are considering implementing a scheme in support of clean coal technology similar to that operated under NFFO for renewable energy. At this stage I cannot say what the outcome of the review will be, but I shall bring the points made by the noble and learned Lord to the attention of my right honourable friend.

The Fossil Fuel Levy Bill is a small but necessary step towards achieving a secure, diverse and sustainable supply of electricity. The levy is the main source of support for these renewables and the Bill will ensure that the levy continues to be soundly based. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

Contracting Out (Metropolitan Police and Civil Staffs Pensions) Order 1997

12.44 p.m.

The Parliamentary Under-Secretary of State, Home Office (Lord Williams of Mostyn) rose to move, That the draft order laid before the House on 30th June be approved [6th Report from the Joint Committee].

The noble Lord said: My Lords, the draft order was laid before Parliament on 30th June. It will enable the Home Secretary's functions in respect of pension administration services in the Metropolitan Police to be contracted out. It is necessary for all public services to make the most efficient and effective use of their resources.

From April to August last year the Metropolitan Police, on its own initiative, carried out an efficiency review of all its major central support services, including personnel, finance, property and technology services and transport. The relevant departments cover 5,500 civil staff and spend some £500 million. The review's objectives were to achieve best value for money.

For a range of services, the review recommended that partnership with the private sector would achieve significant improvements in cost while maintaining or improving quality. Four areas fell to be proposed in respect of contracting out: property; technology--including IT and voice communications; transport; and pay and pensions administration and processing. These proposals affect some 2,000 staff and TUPE is expected to apply. Contracts will be let during 1998.

The estimated annual cash savings from contracting out will be about £22 million. The net savings are expected to be some £75 million over seven years or

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£51 million on a net present value basis. The net figure reflects the high up-front costs of transferring pension liabilities.

The Receiver of the Metropolitan Police District has written three times to London MPs about the review. My honourable friend Mr. Michael, the Minister of State, wrote to all MPs in the Metropolitan Police District on 27th June explaining the purpose of the order. He arranged three meetings in the House of Commons and invited all London MPs to attend if they wished to discuss matters further. He has fully discussed the matter with the receiver and with representatives of the trade unions involved in a very constructive atmosphere. The decision to manage services in-house or to contract them out was based on a number of criteria. These included cost, quality, internal constraints, market opportunity, potential risk and flexibility.

I fully appreciate the commitment of the trade union interests to the service provided to the Metropolitan Police by their members and their concern about the quality of the policing service. I entirely agree with them that it is essential to make a proper comparison of contract costs against the in-house service before final decisions are taken to outsource any services. I understand that the Metropolitan Police is committed to doing this and has undertaken to make available to the trade union side the full details of the proposed model for financial comparison.

I am satisfied that the contracting out proposals are in the long-term interest of policing in London. I beg to move.

Moved, That the draft order laid before the House on 30th June be approved [6th Report from the Joint Committee].--(Lord Williams of Mostyn.)

Baroness Byford: My Lords, we welcome this report. The review identified pay and pensions administration as one aspect of the arrangements that was capable of improved efficiency through partnership with the private sector. The order is in line with the previous government's policy, and that policy has not changed under our new leader. Savings of up to £75 million can be made by contracting out provisions and other arrangements. This will be beneficial both to the taxpayer and to the rate payer. We on this side of the House welcome the order and I am grateful to have the opportunity to support it.

Lord Williams of Mostyn: My Lords, I am grateful for that support.

On Question, Motion agreed to.

Supply of Beer (Tied Estate) (Amendment) Order 1997

12.49 p.m.

Lord Haskel rose to move, That the draft order laid before the House on 26th June be approved [5th Report from the Joint Committee].

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The noble Lord said: My Lords, confusingly, this order deals with bottled beer. The order amends the Supply of Beer (Tied Estate) Order 1989, which was introduced following the Monopolies and Mergers Commission report on the supply of beer. Article 7 of the Tied Estate Order applies to the United Kingdom's national brewers, that is, those with over 2,000 pubs. It requires the national brewers to allow their tied tenants to buy one cask-conditioned beer outside the tie. This article is commonly called the guest beer provision.

The purpose of the provision was to address two concerns identified by the MMC--the limited independence that tied tenants enjoy in their choice of beers, and the restricted choice for consumers in those pubs. The provision turned out to be a great success and continues to be so. It has encouraged the production of a diverse range of beers, and increased competition in the market. The provision has been so effective in increasing the consumer's expectations that guest beers are now offered in many pubs in addition to those owned by the nationals.

Beer drinkers will be pleased to know that this order will further enhance the benefits of the guest beer provision. It will extend it to allow the nationals' tied tenants to buy at least one bottle-conditioned beer outside the tie. This will bring benefits to small brewers, tenants and consumers. Small brewers will have the opportunity to get their beers into the tied pubs of the national brewers. The tenants will also benefit because they will be able to respond to consumers' demands, and thereby better able to compete with one another. Some tenants in smaller pubs were previously reluctant to use the guest beer provision for fear that they would not sell a whole barrel of beer before it went off. This provision should overcome the practical difficulties. Consumers will benefit. There will be a larger range of beers and they will be able to try beers such as Bishop's Finger, Spitfire, and even Worthington White Shield.

The popularity of this measure is clear. A statutory consultation on a similar order to that which I am proposing here was carried out by the then Minister of Corporate and Consumer Affairs. The result of this consultation showed how strongly the extension to the provision would be welcomed by beer drinkers and brewers alike. This order will come into effect on 1st April 1998 in order to give brewers and tenants time to alter their licences.

Lastly, I should like to mention the co-operation that has existed between the Government and Europe on this issue. Both the European Commission and the European Parliament, have been of great help in checking that this new provision will accord with the relevant strictures of European law. In this regard, the Commission recently confirmed that it would not challenge the amended provision under European law. I have tried to keep this opening statement as brief as possible. I beg to move.

Moved, That the draft order laid before the House on 26th June be approved [5th Report from the Joint Committee].--(Lord Haskel.)


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