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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 5:08 pm on 13th December 1988.

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Photo of Donald Dewar Donald Dewar , Glasgow Garscadden 5:08 pm, 13th December 1988

I do not know which communities the hon. Gentleman means, but I hold to my general point that the electricity industry has served the communities well in the broader sense. I will not be put off by the hon. Gentleman, who is very much in the second division of the Scottish league.

Let us look at the arguments on competition which the Secretary of State has used, and to which he has very fairly referred today. On 2 March he said: I do not consider that it would be acceptable to create a single monopoly which would place the ownership and control of the entire Scottish industry in a single set of hands, whether or not involving a regional sub-structure."—[Official Report, 2 March 1988; Vol 128, c. 977.] That was a rejection of the case argued by the SSEB, which wished for one company in Scotland with two wholly owned operating subsidiaries. The right hon. and learned Gentleman invited us to assume that, while a monopoly supplier and generator would not do, if by some sleight of hand or alchemy that single monopoly were split into two monopolies, complete in their own right, Scottish consumers would be given the necessary advantages. As an argument, that is rather lame, as I think the right hon. and learned Gentleman recognises.

The Secretary of State returned to the argument on 7 March, however. On that occasion he unveiled for the first time the argument to which he referred today, the argument about non-classical competition. He said: I must advise those hon. Members"—that is, those who had made a mockery of his arguments— "that they start from a false premise, so it is not surprising that they reach a wrong conclusion. They start from the false premise that the Government are somehow maintaining that it is possible to achieve classical standards of competition in the electricity industry… my right hon. Friend the Secretary of State for Energy made it clear that, in transmission and distribution, we are dealing with natural monopolies."—[Official Report, 7 March 1988; Vol. 129, c. 117] I am sure that he did make it clear, and for once he got it right: we are dealing with natural monopolies. Now, with great tenacity but no conviction, Ministers maintain that we are not dealing with natural monopolies, and that a form of useful competition is being achieved. That was given very short shrift by the House and by the Select Committee.

On 2 March the Secretary of State went on to say: The two-company structure will provide competitive pressures within the industry in Scotland. In the short term, there will be potential for competition by comparison—". At that point he was interrupted by laughter, an unusual accolade for one of his efforts. He continued: —by which means customers will have a basis for comparing and assessing the prices and service they receive. By helping to ensure effective regulation of prices, this will be an important gain for the consumer."—[0fficial Report, 2 March 1988; Vol. 128, c. 977.] If the Secretary of State believes that, he is the only person who does. The Select Committee on Energy, chaired by the hon. Member for Havant (Sir I. Lloyd) and with a Conservative majority, pointed out that yardstick competition was largely meaningless. That was a pretty fair and balanced summation.

I am prepared to concede that in theory there may be some marginal advantages for large industrial consumers, but only for a small handful, certainly in Scotland. Almost all other industrial consumers, and certainly all domestic consumers, will see the "competition by comparison" argument as empty and rather cruel nonsense. I believe that even in Government circles there is a lack of confidence about it. In their response to the Energy Committee report, at paragraph 62, the Government refer to Indirect competitive pressures… The key role of the Director in analysing and publicising the performances of the two companies"— here they strike a rather anti-climactic and unconfident note— should not be under-estimated. It probably should not be underestimated; it would certainly be very difficult to overestimate it. I should have thought that if it exists at all it is at the margin of the edge of any reasonable argument.

Let us suppose that I am a domestic consumer in the city of Glasgow—part of which I happen to represent—and, following the advice of the Secretary of State, do a comparative study in depth. I get hold of all the regulatory tables and figures and come to the conclusion that the privatised monopoly that services me is not doing the job that it should be doing. What can I do? I challenge the Secretary of State for Scotland to tell me what I can do except continue to take the electricity and nurse my anger to keep it warm.