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The Lord Chancellor: My Lords, with great respect, it appears to me in the highest degree probable as regards the nature of the officers of the parliament and the assembly who will be in a position to nominate the lay persons that in practice they will be party politicians.

On this aspect of the matter I agree with the short speech made at the outset of this debate by the noble and learned Lord, Lord Fraser of Carmyllie. It is a curious notion that members of the nominating committee should be able to nominate themselves. Surely they must be able to do so because it would be odd in the extreme, as the noble and learned Lord pointed out, if they were to be excluded. It would be even more odd if politicians are sitting with them on the same nominating committee assessing the respective

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merits for appointment to the constitutional court of their judicial colleagues on the nominating committee. I suggest that more considered thought needs to be given to these amendments.

Since we are laying down markers, I do not favour the proposal that the court should be in some sense geographically balanced, so that no fewer than four of the judges shall be from England and Wales, no fewer than two Scottish and no fewer than one Northern Irish. This kind of provision requires careful thought because it suggests that the geographical origins of the judges may affect their judicial decisions--a suggestion that might well be made in a contentious devolution vires case but which must not be accepted. Judges decide according to law, uninfluenced by whether they come from the legal system of England and Wales, Northern Ireland or Scotland.

My view is that, certainly for the present, we stick with the Judicial Committee. The Judicial Committee can draw on eminent judicial figures from those who hold or have held the office of Lords of Appeal in Ordinary or other high judicial office in the United Kingdom. I can confirm that in practice it would be the senior Law Lord who would decide on the composition of the Judicial Committee in these cases; and he would have the broadest range of judicial experience from which to choose. We would expect a convention to develop along the lines of Scottish civil appeals to the House of Lords where there would always be at least one Scottish judge--and in practice perhaps more--sitting on the Judicial Committee for Scottish devolution cases.

I turn to Amendment No. 196. The noble Lord, Lord Lester, is seeking to establish what my role, and that of my predecessors and successors, will be in devolution cases. As regards Amendment No. 206 I emphasise to the noble Lord, Lord Goodhart, that no past or present Lord Chancellor may sit on the proposed constitutional court. When exercising their judicial functions as head of the judiciary, Lord Chancellors are bound by their judicial oath in the same manner as every other judge. Where cases come to the Judicial Committee under the devolution legislation I will exercise my discretion not to sit where I consider it would be inappropriate to do so. I have no doubt that any future Lord Chancellor would decide likewise.

It could perfectly well be that my decision would be that it is inappropriate for me to sit in every such case. But I do not believe that it is desirable to lay down rigid rules. Any Lord Chancellor would follow this sensible course where, for example, there is a dispute between the United Kingdom Government and the Scottish executive.

However, I do not accept in the present state of the debate at any rate that there is a category of case, even if it could be adequately defined, to be called constitutional which should be out of bounds for the Lord Chancellor when he sits as the head of the judiciary. There are many criminal cases which can be said to have a constitutional element, but frequently Lord Chancellors sit on them. Equally, Lord Chancellors often sit in tax appeals which are important disputes

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between the citizen and the state. It is not our way to lay down rigid rules fettering discretion in the decision whether it is appropriate to sit in particular cases. These decisions must be taken case by case.

So I cannot advise your Lordships to accept these amendments. We should stick for the time being with the Judicial Committee. It has a long history of dealing with cases and appeals of a constitutional character from the Commonwealth. I agree, therefore, with the wise words of the noble and learned Lord, Lord Mackay of Drumadoon, that the time for these amendments has certainly not yet come. With the greatest of respect to the proposers of these amendments, I suggest that they need much more considered thought and to be revisited on another occasion. Meanwhile, I encourage the noble Lord, Lord Steel of Aikwood, to seek your Lordships' leave to withdraw Amendment No. 123.

Lord Steel of Aikwood: My Lords, I am most grateful to all who have participated in this debate. I reiterate that our purpose in tabling the amendment was precisely to ensure that we should have for the first time a thorough debate on the proper constitutional and legal arrangements to put in place in our country post the devolution settlements. This debate has admirably achieved its purpose--and I say that without any intention of seeking to press the amendment to a Division.

Indeed, I am heartened by the fact that the noble and learned Lord the Lord Chancellor used the phrase "for the time being". In a strange way, that echoes what the Scottish Constitutional Convention said on the issue. It stated:


    "The Act shall make provision for the settlement of disputes as to the relative powers of the UK and the Scottish Parliaments ... an existing body shall be used in the first instance with options including the Appellate Committee of the House of Lords and the Judicial Committee of the Privy Council".
So even as far back as the deliberations of the Scottish Constitutional Convention, we were imagining that we might well be saddled with the existing arrangements for some time to come. The Lord Chancellor is correct that as the new bodies--the Northern Ireland Assembly, the Welsh assembly and the Scottish parliament--bed down, this subject will have to return to the agenda.

As has been said, we are seriously proposing a major series of constitutional reforms at the tail end of the 21st century and yet overlaying them with a system of appeal established well before the end of the last century. That seems a strange way to proceed. So, I have no doubt that this House and other organisations will return to this issue.

It is the case--I have experienced this on my travels in some parts of the Commonwealth--that some countries question the continuing role of the Judicial Committee of the Privy Council in dealing with appeals from sovereign jurisdictions elsewhere. I believe that even the Judicial Committee will probably want to consider its own future in the longer term.

I said in my opening speech that I had never met the Judicial Committee of the Privy Council. I should have made it clear that I have met many members of the Judicial Committee. Indeed, we were glad to hear from

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some in this debate. In particular, like others, I pay tribute to the maiden speech of the noble and learned Lord, Lord Hutton, who is among the several who have made criticisms of the proposals for the nominating committee. It was an initial attempt to put forward proposals to form the basis of discussions, but we must take on board the criticisms that have been made of the nominating procedure. We shall give further thought to that before resurrecting these proposals on any future occasion.

The noble and learned Lord, Lord Clyde, mentioned lack of premises, but I see no reason why the new constitutional court could not simply use the facilities which already exist for the Judicial Committee of the Privy Council.

Perhaps I may make three final points. The noble and learned Lord the Lord Chancellor will have noticed that I did not append my name to Amendment No. 196. That was because, like the noble Lord, Lord Hogg, I believe in keeping in with the Lord Chancellor! Nevertheless, my noble friend Lord Lester put forward a perfectly good argument for further discussion of the role of the Lord Chancellor in these proceedings.

Perhaps I may make a more serious point. One point that has not really been answered was that made by the noble and learned Lord, Lord Cooke, who asked why, in continuing to use the existing procedures, we should exclude judges from the Commonwealth, as the Bill suggests. I believe that we should revisit that point later. It may be helpful if I indicate to the House that we have already decided to table an amendment to Clause 96 to allow us to concentrate on that issue, perhaps next week when we reach that point in the Bill.

Finally, I only hope that as the noble and learned Lord the Lord Chancellor used the phrase "for the time being", he might agree that the time has come when perhaps he and others involved should consult senior judges and representatives of the profession in all four parts of the United Kingdom about long-term constitutional developments. This debate should be seen simply as a curtain-raiser to what should be a serious ongoing debate about the future nature of our constitutional arrangements. The debate has amply served its purpose. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Farrington of Ribbleton: My Lords, I beg to move that further consideration on Report be now adjourned until not before 8.45 p.m.

Moved accordingly, and, on Question, Motion agreed to.

The Utilities

7.45 p.m.

Lord Borrie rose to ask Her Majesty's Government what plans they have to modernise the regulation of the utility industries so as to provide a fair deal for consumers in general and vulnerable consumers in particular.

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The noble Lord said: My Lords, perhaps I may first express my delight at the fact that so many of my noble friends have agreed to take part in this debate. In addition to welcoming them, I welcome also the maiden speech that we are to hear shortly from the noble Baroness, Lady Sharp of Guildford. We look forward to hearing her with great interest. I should add that I must declare an interest in that I am a non-executive director of Three Valleys Water.

In my party's 1997 election manifesto we said in relation to the utility industries:


    "we will promote competition wherever possible. Where competition is not an effective discipline ... we will pursue tough effective regulation in the interests of customers".

Within a year of the election the Government published a comprehensive consultation paper directed at modernising the framework of utility regulation and enhanced the ability of regulators to promote competition along with the Director-General of Fair Trading through the Competition Bill, which is about to receive Royal Assent.

The Green Paper on utility regulation, which was published in March, and the White Paper, which was published in July, took as a starting point the competition that has been developing in the gas and electricity industries in particular. To a large extent, customers of both industries will in future be protected by competition from any exploitation rather than by regulation, although trading standards officers and others will need to be vigilant in various parts of our country to ensure that firms compete fairly and do not engage in misleading or confusing consumers. There have been some examples of that. I expect that we can all agree that firms should give customers clear information so that they can make sensible, intelligent choices as to supplier.

Moreover, there are certain parts of the industries to which I refer, particularly in what perhaps I may call "pipes and transmission", that will remain natural monopolies. They will require price regulation. Regulation will also be needed to ensure adequacy and certainty of supply, matters which a whole succession of consumer surveys have shown are high priorities among consumers. Regulation is also needed to ensure adequate long-term investment for the consumers of the future and for such other objectives as energy conservation and equity between different categories of customer. Domestic customers, for example, should not have to pay the costs of discounts given to attract the custom of large industrial concerns.

I have mentioned "vulnerable consumers"--one might say "disadvantaged consumers"--specifically in my Unstarred Question because if we were to follow the pure model of competition, prices would simply reflect costs--and it often costs more to supply disadvantaged consumers. I welcome the proposed new duty on regulators, which is set out in the White Paper, to have regard to ministerial guidance on social and environmental objectives.

The utilities provide essential services to the public, so it is surely a clear requirement of social justice that the Government should redress the balance when, as

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they admit in paragraph 58 of the White Paper is happening, wide tariff differentials may mean that the benefits of competition may not be being enjoyed fairly by all.

I expect that my noble friend Lord Islwyn will refer to the way in which standing charges can impinge unfairly on small users.

Since the White Paper was published the proposal to merge Ofgas and the electricity regulator Offer has been taken further with the announcement of the appointment of Mr. Callum McArthy to head the new body. That is an imaginative appointment with someone of substantial and relevant experience in the public and private sectors.

The structural change which many of us have argued for is a change to get away from the situation in which the one man or one woman regulator faces the chairman or chief executive of a powerful company. Sometimes there has been undue personal confrontation between individuals. I am glad, therefore, that the energy and telecommunications regulators are, in each case, to comprise in future a small board of three--a chair and two others. Decision making will then be shared, the regulator will have greater authority and there will be a check on the waywardness or awkwardness of individuals.

I am left in the dark as to what is to happen to the water regulator Ofwat. I know that that is not the responsibility of my noble friend the Minister and his department and that he may not be able to say what is to happen to Ofwat.

One utility company that currently embraces both electricity and water called Hyder had the bright idea during the consultation period of asking the former Master of the Rolls, the noble and learned Lord, Lord Donaldson of Lymington, to give an independent view on the Green Paper and on the structural matters. He made the point that shared decision-making, as he had known it in the Court of Appeal and industrial tribunals, was a good deal better than having to make a decision oneself when the only people you could discuss them with were staff and not with equals.

Putting another hat on for a moment, as a vice-president of the Institute of Trading Standards Administration, I feel that there ought to be a positive role in the regulatory process for the local authority trading standards officers. They are professionals in detecting trading malpractice and market failures and could be very useful as the eyes and ears of the national regulatory bodies which only have centralised offices. They also have the advantage of democratic legitimacy, being responsible and accountable to local councils.

In the main, I welcome what is said in the White Paper about consumer councils and the special remit they are to be given in the interests of disadvantaged consumers. As the White Paper says, they should be "powerful consumer advocates" at the heart of the regulatory system but, nonetheless, to one side or independent of it.

I have one doubt that I must put to my noble friend the Minister. I do not think that the role of consumer councils as consumer advocates sits frightfully well with the handling of individual consumer complaints. As the

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DTI has just issued a further consultation paper specifically on consumer councils, may I seek to influence Government thinking and propose that provision be made in the forthcoming Bill for the possibility of introducing an ombudsman system, organised to be independent of both suppliers and consumers. It would be helpful to set up an independent ombudsman scheme to handle the more intractable consumer complaints, with power to award compensation. Ombudsman schemes in the private sector have been very successful in recent years in providing low-cost and trusted dispute settlement machinery. That view is accepted by the noble and learned Lord, Lord Woolf, in the civil justice review, and accepted by the Treasury in its recently published draft Financial Services and Markets Bill.

It would be unfortunate if the matter is left out from the forthcoming legislation on utilities regulation. It is very unlikely that amending legislation would ever be a high priority. Why not provide for it in the Bill, with the timing of implementation left to Ministers?

7.55 p.m.

Baroness Sharp of Guildford: My Lords, I should like to begin by saying how I, as a newcomer to your Lordships' House, have appreciated the warmth and kindness that has been shown to me by everyone during this last week. Your Lordships and the Officers of the House have made me feel most welcome. I am most grateful to you all and honoured to be speaking for the first time in this great Chamber.

Two years ago I was a member of the commission set up by the Hansard Society to look into the regulation of public utilities. Its report was debated in this House in February 1997. I am delighted that it has been followed by a Green Paper and a White Paper. I am pleased that those two documents have followed so closely the recommendations made by the Hansard Society.

In particular, I welcome the Government's commitment to issue separate guidance on social and environmental objectives, and that they propose to introduce a new primary objective for regulators of protecting the interests of consumers.

I would also like to thank the noble Lord, Lord Borrie, for introducing the subject this evening. It is a most important subject. We ought to give greater consideration to the interests of consumers, particularly vulnerable consumers. I would make three points on that subject.

First, as the noble Lord, Lord Borrie, has suggested, in current legislation and Government thinking there is the notion that when competition is fully developed there is less need for the regulator, that the consumer will be adequately protected by general competition law. Certainly the consumer is benefiting at the moment from the lower prices that, generally speaking, competition is bringing. But competition is also bringing, by every post, a plethora of offers, claims and counter claims from the utilities. It is the well-informed consumer who benefits, but at present it is quite difficult to be well informed.

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It seems to me that two steps need to be taken. First, the regulator should ensure that the data provided by competing utilities can be easily compared and understood, just as, for example, car manufacturers are required to produce a common set of performance data for motor cars. Secondly, the statutory consumer bodies which are to be set up need to make sure that the data are widely available and in an understandable form.

My second point is to reiterate that to date, while competition has brought great benefit, the benefits are greater to the better off than to the less well off. As the noble Lord, Lord Borrie, has already stressed, the financial disadvantages imposed on those who cannot pay by direct debit are fairly considerable. For example, with a pre-payment meter you are paying £25 a year more for your electricity and £50 a year more for your gas than others. There are 3.5 million households paying for their gas and electricity by pre-payment meter. That is approximately 20 per cent. of the households in this country.

It is not merely the extra costs that we should be concerned about but the inconvenience. I know of several elderly people who live in villages around Guildford, where I live, who have to come into Guildford by bus in order to top up their "smart card" for their pre-payment meters. Recently the in-town electricity showroom was closed down. That meant an additional bus journey to the out-of-town showroom in order to top up their cards. Fortunately, additional payment points have been opened in the middle of town, but the message is clear. If you do not have a car, the bus journey alone will cost £3 or £4. Who do the companies expect to make these journeys? Disproportionately, it is the old, the infirm and the young mums with kids. I do not think it is right and I hope that the Minister can assure us that something will be done.

Finally, I should like to say a word about the situation in relation to water, which to date has been expressly excluded from the Government's proposals. Although it has been privatised, the domestic water industry remains, and is likely to remain, a monopoly utility. As consumers, we have little choice but to accept and pay the bills we receive. The situation in this industry is very unsatisfactory. There have been relatively few meters installed and most bills are still based on the old, outdated rateable values. Most bills have increased very considerably. The average bill before privatisation was about £2 a week. It is now £5 a week on average and in the south west consumers pay more than £7 a week. There are many elderly people, living on their own, taking few baths, not running washing machines or dishwashers and not using garden hoses, who just cannot understand why their bills are so high. The notional sum allowed in income support is only £3 a week. Once again, it is those who can least afford it who have been hit hardest.

As I have said, I welcome the new emphasis to be given by the utility regulators to the interests of consumers. I believe it is a move in the right direction. But I believe that there are still many unanswered questions as to how, in the utilities sector, we can square competition with compassion.

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8.1 p.m.

Lord Haskel: My Lords, on behalf of the whole House I should like to congratulate the noble Baroness, Lady Sharp of Guildford, on her maiden speech. One of the strengths of your Lordships' House is its pool of special knowledge. The noble Baroness will considerably add to it. She is an eminent teacher and researcher in economics, specialising in science, technology and innovation policy, subjects central to our competitiveness. From her concern for the vulnerable, we can see that she obviously knows about practical matters, too, so we certainly look forward to hearing her on many other occasions.

I congratulate my noble friend Lord Borrie on his timing. He has introduced this debate during the consultation period on the Government's proposals for setting up independent consumer councils for the different utilities. I hope the Minister will consider that this debate is part of that consultation. Quite rightly, my noble friend is concerned about a fair deal for consumers. He has a distinguished record of concern for consumers. But I believe that when consumers become valued customers, the balance swings in the consumer's favour. It is then that consumers will get the fair deal that my noble friend calls for.

The answer of course lies in competition because competition changes the way companies behave. It changes consumers into customers. However, competition in energy is still at an early stage and for the small consumer competition is non-existent in water and sewerage. So while competition is developing, there must be a modern regulator to look after the consumer, to see that prices are reasonable, to see that the service is reliable and that supply is consistent.

Of course, price used to be very simple, but it is now much more complicated, as the noble Baroness, Lady Sharp, explained. I suspect that the first task of the proposed consumer councils will be to inform consumers on matters of price and to sort out the competing claims, of which the noble Baroness spoke.

My noble friend Lord Borrie is concerned about vulnerable consumers. He is right. The vast majority of vulnerable consumers are on low incomes, yet they seem to pay the highest price, as the noble Baroness, Lady Sharp, told us. It is usually because they have pre-payment meters. This has always been a mystery to me. In every other business, customers who pay in advance pay the lowest price because there is no credit risk. So instead of paying more, those with pre-payment meters should be paying less. We do not know why they pay more as the whole matter is shrouded in commercial secrecy. Contrast that with the transparency in the United States where an organisation looking after the interests of consumers would be able to see the financial data justifying the higher costs. That does not seem to have harmed competition in America. I hope that the consumer councils will have the same facilities.


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