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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 think that for the vast majority of consumers there will be any competition worth talking about. The advantages being advertised simply do not exist, and the Government should face up to that.

The Government have been caught in complete confusion over their arguments. On the one hand they boast that privatisation will be an enormous asset: they have to do that to bolster the competition case. On the other hand they boast that regulation will stop or at least limit the damage that would result if competition actually existed.

The major point that the Secretary of State is making again and again—he made it, fairly, during this debate—is that Government interference in the electricity industry is a bad thing, as are inhibitions placed on managerial judgment; that they should be done away with, and would be at least diminished by privatisation.

On 7 March, the right hon. and learned Gentleman referred to the inevitability that any industry controlled by Government is subject to interference from Government."—[Official Report, 7 March 1988; Vol. 129, c. 116.] There is some truth is that, although interference is a pejorative way of putting it, yet in almost every speech the Minister will be spiriting up as a reassurance the all-embracing omnicompetent registrar, suggesting that he will protect us against the dangers and the damage that could result from competition and from handing over an essential service to a company that is run on the basis of profit and the interests of the shareholders.

Paragraph 29 of the Select Committee report states: There will be a price control formula which will limit the price to be charged to consumers.

We are being reassured that there will be someone to limit the price rises that we would have expected if we merely handed over a natural monopoly to a group of directors with a legal duty to maximise profits for the shareholders. That is the essence of our case. The Government are asking a group of directors, a private company, a profit engine to act in a way not normal to such an animal. On one hand the Government are saying, "That is what we are creating," and on the other hand they are rushing to stop it acting in the way for which it was built by appointing an all-powerful registrar.

Non-classic competition simply will not do. As the Secretary of State for Energy said, it is a natural monopoly, and natural monopolies force up profit margins and prices and have to be regulated. That is the catch 22, the inconsistency in the Government's case which has not been answered properly.