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Utilities Bill

3.12 p.m.

Read a third time.

Clause 5 [Annual and other reports of the Authority]:

Baroness Buscombe moved Amendment No. 1:

("( ) a statement of accounts giving a true and fair view of the state of affairs and the income and expenditure of the Authority for the year;").

The noble Baroness said: My Lords, Amendment No. 1 relates to Clause 5 of the Utilities Bill and would require the authority to include a statement of accounts in its annual report. As the cost of regulation is borne by licence holders and ultimately the consumer, it is important that information about the financial performance of the authority is in the public domain.

A similar amendment was tabled in Committee and discussed alongside other proposed changes to the reporting obligations of the authority. The Minister said:

    "I have sympathy, in principle, with the amendment. It would ensure that readers have in one document an account of the authority's activities alongside a statement of the resources used in delivering those activities. That would be a good thing".

He went on to reject the amendment by saying:

    "I do not believe that we should make it a statutory requirement ... I accept the general principle but should prefer not to be tied down in the way provided in the amendment".--[Official Report, 13/6/00; col. 1545.]

We believe that it is right to press the Government on this point, or at least to ask the Government to give an undertaking that the authority will publish accounts at or near the same time as publication of its annual report. I beg to move.

Lord Borrie: My Lords, this sounds a reasonable amendment to make to the provision relating to the annual report of the new authority. The annual report to the Secretary of State should include a statement of accounts. However, if the reference in the amendment to,

    "a true and fair view",

means that they are audited accounts, it is likely that there will be some delay in the publication of the annual report due to the time needed by the National Audit Office to sign off the accounts.

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Your Lordships may consider that there is an analogy between the requirement in Clause 5 and the requirement in the Fair Trading Act 1973 which requires an annual report of the work of the Director-General of the Office of Fair Trading, but there is no requirement that the annual accounts should be included in the same document. Although, as is wholly desirable, the accounts of the Office of Fair Trading are published and are in the public domain, they are simply not required to be published together with the annual report.

Only this morning I made inquiries about the annual report of the Office of Fair Trading for 1999. It has just been published, but I have not yet received a copy. As with many public authorities, one has to wait quite a long time after the end of the year before one can obtain the annual report. I would not like such reports to be delayed even further, as may be the case if the annual report has to be accompanied by audited accounts.

As I understand it, the accounts of the gas and electricity markets authority have to be presented each year to Parliament--technically the annual report is presented to the Secretary of State--under the new Government Resources and Accounts Bill. Therefore, it seems that this amendment would not only create the possible difficulty that I mentioned earlier of the annual report being delayed but would also create an unnecessary duplication. I would advise the House not to accept the amendment.

Lord McIntosh of Haringey: My Lords, I agree with part of what the noble Baroness, Lady Buscombe, said and all of what my noble friend Lord Borrie said. Indeed, in Committee, in responding to a similar amendment, I said that I had sympathy in principle with the intention underlying it. Readers of annual reports would have in one document an account of the authority's activities alongside a statement of the resources used in delivering those activities. I agree with the noble Baroness that that would be helpful.

I also agree with my noble friend Lord Borrie that the reference in the amendment to giving,

    "a true and fair view",

of the state of affairs implies that the accounts about which we are talking are the audited accounts. The effect of the amendment would be to require the authority to publish its annual audited statement of accounts as part of its annual report.

The Bill already makes it easier to publish the authority's audited accounts with the annual report because the respective reporting periods have been aligned. The Bill now requires the authority to prepare its annual report on a financial year basis, whereas the preceding regulator has been required to produce his annual report on a calendar year basis.

I do not believe that we should make it a statutory requirement to include audited accounts, exactly for the reasons given by my noble friend Lord Borrie because the publication timetable would be tied to the audit timetable. That is too inflexible. There is a risk

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that in some years publication of the annual report would be significantly delayed if the audit took longer than usual to complete.

It may be helpful if I were to illustrate the potential difficulty. The Government Resources and Accounts Bill which will apply, subject to Royal Assent, from the start of the financial year 2001 to 2002, sets out the requirements on government departments relating to the preparation and the audit of resource accounts. Those accounts have to be submitted by departments to the National Audit Office no later than 30th November each year. The Comptroller and Auditor General has to send the audited accounts to the Treasury no later than 15th January the following year and the accounts are to be laid before the House of Commons by 31st January. Those are final deadlines and, in practice, the accounts are likely to be audited before then. However, at worst, an annual report ready for publication in July or August could be delayed until the end of January in the following year if it were to include the audited account.

As a general principle, I agree that the report and accounts should be published together and as quickly as possible. Where the audited accounts are not available, I believe that the authority should, as Ofgem currently does, include basic unaudited information about income and expenditure and staffing levels in the report. But if there is a significant delay with the audited accounts, I do not think the annual report should be held back.

Baroness Buscombe: My Lords, I thank the Minister for his response to the amendment. I can reassure the noble Lord, Lord Borrie, that we do not intend this to be a delaying tactic. Rather, we are looking for proper accountability of the workings of the authority. That is why we said we would look to the Government for an undertaking that the authority would publish accounts at or near the same time as publication of the annual report.

I am pleased that the Minister stated today that audited accounts should be published as quickly as possible. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 [Objectives and duties under 1986 Act]:

Lord Jenkin of Roding moved Amendment No. 2:

    Page 7, line 26, at end insert--

("(c) to secure a diverse and viable long-term energy supply;").

The noble Lord said: My Lords, in debating Amendment No. 2, I suggest that we discuss also Amendment No. 3. I am delighted to note the Liberal Democrat names added to the amendment.

I make no apology for returning to this issue, which was covered extensively in earlier debates. I want to make two introductory remarks. With regard to the offshore oil and gas industry, about which I spoke at earlier stages, I understand that the day after Report stage last week there was a fruitful meeting between

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that industry and the DTI--its regulator--at which the industry made it clear that it supported the Government's Vision for Gas to 2010 scheme. Part of the presentation included discussion of some of the perceived obstacles to the vision and the industry raised its concerns about regulation by Ofgem (or GEMA, as we now call it).

The important point that emerged from that meeting was that the DTI has now agreed to facilitate tripartite meetings with the regulator at which the industry can highlight its concerns. That is a welcome development and meets many of the points which I and others made in earlier debates in relation to the difference between the onshore regulation by GEMA and the offshore regulation by the DTI.

My only other point is that I am sorry I was unable to be present for the Report stage debates. I was not able to be in London but I did read them in Hansard. I am grateful to my noble friend Lady Byford for the way in which she moved the amendments which, had I been here, I would have been happy to move. I saw from the debates that a number of useful government concessions were made to points raised from these Benches.

However, we are still left with an unsatisfactory omission from Clauses 9 and 13 of any reference to the need to secure a diverse and viable long-term energy supply. I accept that at each stage the noble Lord, Lord McIntosh, made valiant efforts to try to convince the House that it is right that that omission should apply. In the debate on 5th July he said,

    "I am sorry that I do not seem to have convinced the House that security of supply is properly dealt with in the framework of the Bill as it currently stands".

I read the rest of his speech and have to say that I remain totally unconvinced. I detected four arguments in his speech at that time. One referred to the fact that Clauses 9 and 13,

    "are amendments to the Gas Act and Electricity Act, they are in the context of the Long Title of those Acts".

With respect to the Minister, I cannot see what that has to do with the matter. It is a question of whether or not the regulator will have regard to the overall obligation to secure diverse and viable supplies.

His second argument was that,

    "security of supply is indeed the responsibility of government as a whole".

And nobody would quarrel with that. But we are here setting up an instrument of government--a regulator--and it is perverse that in the course of that regulator's duties there should not be a duty to have regard to diversity and viability of supply. After all, the regulator is enjoined in these two clauses to have regard to many other things and it seems to me to go to the heart of the argument.

The Minister's third reason was that,

    "The bulk of these issues falls far outside the scope of utilities legislation".

I wondered whether that should be "regulation". But the Minister shakes his head and therefore I do not understand that point. It is at the heart of utilities legislation that there should be built in a clear

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obligation on the part of all concerned, including the regulator, to have regard to the long-term diversity and viability of supply. I therefore find it difficult to accept that argument.

Finally, the Minister said that,

    "it follows that amendments such as this are a distraction and would serve to confuse rather than enhance the framework of obligations and duties under the legislation".--[Official Report, 5/7/00; col. 1497.]

I find it difficult to take that argument seriously. The holders of those offices will be men and women of immense ability. Part of their task will be to balance the various demands which will be made upon them, expressly in the interests of consumers, but also in regard to the environment and so forth. I cannot see why it should be a distraction for them to have to have regard to the question of long-term diversity and viability.

I say with regret to the Minister that I do not find those arguments any more convincing than his earlier attempts to persuade the House that these amendments should be excluded. The Minister took some comfort from the fact that the word "consumers" was defined to mean "future consumers" and that therefore it must imply long-term diversity and viability. But that is to build a substantial structure on a slender foundation. I find it unconvincing. I still believe that the words of the amendment should appear on the face of the Bill. I beg to move.

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