The Director General of Electricity Supply

Orders of the Day — Electricity Bill – in the House of Commons at 7:45 pm on 24th July 1989.

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Lords amendment: No. 1, in page 1, line 11, at end insert in a manner that protects consumers of electricity without discrimination".

9 pm

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

I beg to move, That this House doth disagree with the Lords in the said amendment.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

With this it will be convenient to take Lords amendment No. 8, and Lords amendments Nos. 23 and 24, with the Government motions to disagree.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Lords amendment No. 1 requires the director to protect consumers without discrimination. This would apply irrespective of who was actually supplying any particular consumer. If this amendment were agreed the director would have no option but to ensure that all licensed suppliers dealt with their customers on exactly the same basis in all respects.

In terms of prices, there could be no differentiation on the basis of the different and disparate requirements and characteristics of the customers and customer groups—industrial, commercial and domestic customers would have to be treated identically under the terms of the amendment. Nor could there be any scope for individual contracts since the terms of these could not be allowed to differ from what was offered to all other customers. The prices charged for electricity would have to be the same for a factory and a flat.

The requirement does not stop with prices. There could be no special protection for groups such as the elderly and the disabled. Nor could there be any aid for those who have difficulty in paying their bills. This would clearly be discriminatory against those who are not elderly or who had paid their bills on time.

In short, this is a wrecking amendment that attacks the central theme of the Bill by preventing the scope for competition in the supply of electricity and by doing so, rather than protecting the interests of consumers a s it purports to do, it damages them by withholding the benefits of reduced costs and hence prices which would flow from competition.

It may be that the proponents of the amendment did not intend these effects but were concerned to ensure that there can be no unjustified discrimination between customers by suppliers. From this point of view, the amendment is unnecessary because, under clause 3, the director and the Secretary of State are already required to exercise their functions so as to protect the interests of all consumers of electricity in respect of prices. There are, in addition, provisions in clause 18 and in the public electricity supply licence preventing the public electricity suppliers from exercising undue preference or undue discrimination. These guarantee that the customer will always be able to get supplies at a fair price and will not be required to subsidise lower prices to others.

Photo of Jim Wallace Jim Wallace , Orkney and Shetland

One of the concerns in remoter rural areas is the high cost of supplying electricity. Quotes of £60,000 have been mentioned. Clause 19 says that expenditure on supply will be recovered from the person requiring the supply … to such extent as is reasonable in all the circumstances. Will the Minister explain or confirm that "all the circumstances" includes the means of the person who is seeking the supply of electricity?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

It certainly would not under the terms of the amendment. I have explained that no class of consumer could be the subject of discrimination—for or against. A fair, proper and reasonable price will be one that reflects directly the cost of providing a service. There are ways in which those who cannot pay are assisted, such as the the pre-payment system. There are other methods through social security legislation in which direct assistance is given.

Will a policy of non-discrimination in a new and competitive environment be in the interests of the rural customers whose interests the hon. Member for Orkney and Shetland (Mr. Wallace) has at heart? I understand that he is making a case for his poor rural constituents. If there is competition and the area companies are not able properly to compete in areas where there is intense competition, with the result that they lose customers in those areas, as in many instances they will have the same overheads they may have to increase prices for their remaining rural customers. That is something which seems to have eluded some of those who are arguing against competitive prices within their areas.

In saying that there will be the ability to charge prices to meet competition, we are talking about a downward pressure on prices. If that ability is denied, everyone, including rural consumers, will be the losers in the end within area boards.

We aim to ensure by the provisions in the Bill—I think that we wish to achieve the same result as the hon. Gentleman—that costs are a consideration. There cannot be cross-subsidisation when cost structures are not reflected in prices. We are trying to ensure also that area boards have the ability to compete for customers. In the process of competition, prices will fall.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

On the basis of the Minister's argument, is he saying that there will be no effective competition in the area of the North of Scotland Hydro-Electric Board? How else can he defend the fact that there will be a common tariff in that area and not in others?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

I am sure that the hon. Gentleman was present in Committee when we debated that. It has been thought that the structure of the industry and the dispersal of the population in the north of Scotland are such that special conditions apply that do not apply in the rest of the country. The hon. Gentleman is as aware of the argument as I am. He may or may not agree with it but it is there and it is the argument that has won the day for giving the north of Scotland special treatment.

The Government believe that Lords amendments Nos. 23 and 24 do not make sense. On the one hand, they would allow the supplier to show due preference in setting tariffs, but on the other they would prevent him from showing any discrimination. In particular, the supplier will not be allowed to show discrimination to rural customers. As no discrimination is to be shown to anyone, it is difficult to see what additional protection could be offered to any particular group. It is clear that any preference to any customer or group of customers must introduce a degree of discrimination. If there is no discrimination there can be no preference, due or undue.

Load management is a major part of any electricity supplier's planning to optimise operations and to reduce costs. If by offering particular terms a supplier can persuade customers to accept limitations on their supply, or to use power in such a way as to help improve load management, that will be of benefit to all customers. That applies equally to the domestic consumer using the economy 7 tariff as to an industrial customer who has agreed load shedding arrangements to have effect at short notice. The amendments would prevent that happening.

We understand that all the amendments are motivated by the objective and desire to ensure in future that due regard is paid to, and adequate protection provided for, rural customers. That is shown most clearly in amendment No. 8 to clause 3. We sympathise with that motivation. The clause already requires the director general and the Secretary of State to exercise their functions to protect the interests of all consumers in regard to prices. Nevertheless, we accept that the amendment will reinforce the requirement in respect of rural consumers. No doubt it would serve to draw to the attention of the Secretary of State and the director general the particular needs of rural consumers. In view of that, we invite the House to accept amendment No. 8.

Mr. Alan Williams:

I wish to speak to Lords amendment No. 1 and the consequential amendments Nos. 23 and 24. As the Minister has pointed out, those amendments are about rural prices and the fears of constituents in rural areas that as a consequence of the Bill they may pay more for their electricity than urban consumers.

One can understand why the costs of distribution are greater in rural areas. Simply reading the meter is more expensive and the length of transmission lines means that the distribution costs are higher. If the privatised distribution companies started imposing economic costs on rural consumers, it could mean substantially increased charges. About 80 per cent. of the cost of electricity is for generation, and distribution accounts for only about 20 per cent. Nevertheless, if the price of electricity is about 6p per unit, in towns and big cities the cost including distribution may be only 5p. Therefore, those areas may be helped. In rural towns the cost of electricity would be 7p or 8p per unit and in rural villages it would be more like 10p. For individual farmsteads or remote cottages the cost may be 15p or 20p per unit. That sort of price structure could emerge if we applied rigorous economic costing. It would hit our rural areas and farmers badly. There are many poor people in rural areas and rural poverty is sometimes as extreme as inner city poverty.

In Committee the hon. Member for Berwick-upon-Tweed (Mr. Beith) pointed out forcefully that people do not realise that this provision is in the Bill. If people in rural areas realised that that was the case there would be outrage. There would be no end of complaints from our constituents and the postbags of Members representing rural areas would be full. Conservative Members would perhaps suffer disproportionately.

In Committee the Government's reply to our argument was that the provision for differential pricing already exists and that our present electricity boards could, if they chose, charge rural consumers more than urban consumers. Under the present structure the industry is in the public sector so there is public accountability. Once it is privatised, the threat of differential pricing would be much greater.

One of the local authorities in my constituency, independently of my work on the Bill, realised that that could be a consequence of the Bill. Dynevor borough council wrote to the Department of Energy expressing its concern. The reply, dated 19 June, stated: The Bill makes it clear that tariffs may relate to different areas. It is obvious that differential pricing is possible. The letter also said that the area boards have given an assurance that they expect to maintain common tariffs for domestic consumers for five years from privatisation. That gives a period of grace of five years. The letter then offers the reassurance that, after that time, should the private companies choose to introduce differential tariffs, the licence also requires that any difference in the price offered to different tariff consumers would only be permitted so far as it reasonably reflected differences in the costs associated with the supply. I represent a constituency second only in size to Brecon and Radnor, and we fear that the remote areas will be adversely affected. Prices will be higher in rural villages in general and could even be doubled or trebled in remote areas.

9.15 pm

The principle of differential pricing is unjustifiable. I speak on behalf of the rural dwellers who already suffer from inadequate services, such as a lack of buses, and who have to face extra costs for rural transport. It is generally accepted that, for most services, urban areas should subsidise rural areas. For example, postal, telephone, gas and water services all operate under standard pricing. The Water Bill, which has paralleled the Electricity Bill, contains a clause that specifically rules out differential pricing.

I hope that the Government will accept the sensible Lords amendments, which would ensure that electricity pricing protects consumers without discrimination.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

Despite the Government seeking refuge through technical objections to the wording of the amendments, their purpose is quite clear. They are about whether the new companies should be allowed to charge more to rural customers than to urban customers. The Minister failed to deal with that issue. The technical defects of the amendments are obvious, but the Government could have tabled amendments to put the objectives of the Lords amendments in the correct form, as they have with other amendments.

The Government have abandoned the case for those who live in the countryside. Should the private companies be allowed to charge their rural customers more than their town customers? The Government answer that crucial question with two voices. For the north of Scotland, the answer is "No"—by statute, there can be no discrimination between urban and rural customers in any part of the hydro board's area. However, in the south of Scotland, in the whole of England and in Wales, discrimination will be allowed between different parts of each area. There is no sense in adopting two such contradictory positions.

The Minister was in some difficulty when trying logically to respond to my intervention. He said that there were special circumstances and difficulties in different areas. Remoteness is remoteness, wherever it is. It is rather less remote on the outskirts of Inverness in the constituency of my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston) than it is at the top of the Cheviots in my constituency, where the privatised company will be allowed to charge different tariffs.

My hon. Friend the Member for Orkney and Shetland (Mr. Wallace), who is present, put it to the Minister at an earlier stage that it would be perfectly practicable to extend the common tariff from the north of Scotland to all areas, thereby confirming the practice of the existing electricity boards. The Minister replied: I did not say that there was no way in which we could do it. I said that there is no way in which we would want to do it."—[Official Report, 6 April 1989; Vol. 150, c.400.] Conservative Members must realise that the Government have no desire to protect rural consumers from tariffs that discriminate against them, which is a ludicrous position to adopt.

The Government's only other defence is that the chairmen designate of the electricity companies that do not yet exist have said that for five years they will maintain common tariffs. That statement is not enforceable in the courts and is without authority. It is, by their own definition, a transitional arrangement, at the end of which the companies may launch a programme of higher charges to rural consumers.

Any right hon. or hon. Member who doubts that possibility should consider the case of British Gas. Only two weeks ago, British Gas warned that it will introduce variable tariffs for domestic consumers in different regions if a price war develops with privatised electricity distribution companies. The new chairman of British Gas warned that he would have to meet the competition to hold the load", which means that consumers in some areas might enjoy price reductions, but that there would be compensatory increases in others. That will happen also in the privatised electricity industry beyond the north of Scotland area, unless the Government accept the Lords amendment or make comparable provision. The Government expect it to be that way and even want it to be that way. I doubt whether many Conservative Members who normally sit on the Back Benches but who are not present tonight realise that they voted for such an arrangement.

The concept of higher charging will take one of two forms, or both. The electricity companies may pick out some of the smallest communities that are the most expensive to serve and penalise them, or they may operate adverse tariffs over a wider area, against larger sections of the rural community. I take the example of a small area, Holy Island, in my constituency. It is served by a special cable, and when the south of Scotland electricity company is established, it would be open to it to impose a higher tariff.

The same could apply to a comparable area, the Isles of Scilly, but for one factor—the Prime Minister's bête noire of Europe. The Isles of Scilly laid a new cable so that they could be served by mains electricity, which is cheaper than the high-cost, locally-generated electricity that they used before. However, the European regional development fund made it a condition of the grant that made that scheme possible that for the life of that cable—a period of 40 or 50 years—the Isles of Scilly would be charged only the same tariff as that imposed on the board's other areas.

The hon. Member for St. Ives (Mr. Harris), who is also present, was involved in that process and will know of that decision. He must appreciate that only his constituents in the Isles of Scilly are protected, but others of his rural constituents could be charged higher tariffs. The company may say, "We shall have to look after the consumers on the Isles of Scilly because of the terms of the ERDF grant, but we can put up the prices in other parts of the St. Ives constituency as we can do, in Cornwall, Northumberland in mid-Wales."

The electricity companies' alternative approach could be to operate a higher price structure outside the major urban areas, where they would want to compete more aggressively. Higher tariffs would apply not just to one or two remote rural communities but across a broad band of rural areas outside the major conurbations. Either way, a penalty will be exacted from rural consumers who have no choice of other fuel and who are the victims of the monopolistic character of energy supply.

In most cases, rural customers will not have access to gas, which is why the electricity companies will he able to milk them for higher tariffs. The only alternatives for consumers are Calor gas and oil, and they will not have access to the major competitor to electicity—gas—that will be the cause of such price wars as arise in urban communities. Consumers who are unable to make the switch to another fuel, and to benefit from the competition between those other fuels and electricity, will be penalised.

Farming, the small business sector, tourism and all the other activities on which rural communities depend will face higher electricity charges. And the small industries which have been developed in rural areas and which are the cornerstone of any strategy for rural Britain will be among those most adversely affected by higher tariff differentials. That has been been recognised by the National Farmers Union, which has written to hon. Members protesting vehemently at the possibility of differential tariffs against rural areas. The electricity consultative council for the south of Scotland area has written in similar terms, saying: Our concern relates particularly to rural electricity consumers whether Domestic, Commercial or Industrial, in the South of Scotland who may be involved in higher electricity charges resulting, for example, from additional expenditure on refurbishing transmission or distribution systems which are subject to more severe weather conditions than those in urban areas. It is the view of the Council that remote rural areas in the South of Scotland require no less protection than what is proposed for the North of Scotland area and there should be no possibility of discrimination between tariffs for the same class of consumer living in different areas of the South of Scotland. Incidentally, the same applies to consumers of the South of Scotland board who live in my constituency in England, because they also will be served by the company that replaces it. The same will apply throughout England and Wales.

The other place did an excellent job when it defeated the Government on this part of the Bill. The Government, in their reference to and discussion of the amendments before us tonight, have simply taken refuge in technicalities and referred to the one amendment which would give the director general an obligation to take into account the needs of consumers in rural areas. That amendment alone would impose no obligation on the companies not to discriminate against rural areas. It is not sufficiently strong to protect the rural consumer from adverse tariffs which may already be planned for them by some of the people who will run those companies.

In the absence of anything better, I ask the House to stand by the judgment of the other place. There are a great many people in the other place who know a great deal more about the countryside than most members of the Government and most of the people who devised the Bill. The Government's defeat in the other place was the result of a recognition of rural problems, which is still not apparent in the actions of Ministers.

The Government still have time tonight to accept more of the Lords amendments and not seek to overturn them. I believe that the Government's attitude is a slap in the face for country dwellers throughout England, Wales and the south of Scotland. The House should not allow them to do it.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

I agree emphatically with the hon. Member for Berwick-upon-Tweed (Mr. Beith), and I underline the powerful arguments advanced by my hon. Friend the Member for Carmarthen (Mr. Williams), who represents a large rural constituency.

The Minister should understand that some Labour Members represent county seats in England. My constituency is a county seat because I argued at the Boundary Commission hearing that it should be. Even in my constituency, which is in a metropolitan area, I have small settlements and cottages here and there, off the beaten track, and I am extremely worried about the people who live there. After the five-year transition period—the hon. Member for Berwick-upon-Tweed reminded the House that there is no guarantee that we will have to wait until the five years is over—there could be serious developments. When people want to make a profit out of the electricity supply industry, those who live some distance away from a conurbation will be at risk.

I am surprised that the Government have decided to treat the other place with contempt. As the hon. Member for Berwick-upon-Tweed said, the noble Lords who took part in that debate know what they are talking about. They understand the anxieties in rural and not-so-rural areas of Britain.

The Minister should have taken the time to watch television this weekend. They were burning an effigy of one of his right hon. Friends.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

I felt sorry for the Minister concerned, whose effigy was burnt in one of Britain's most true-blue areas. The hon. Member for Southampton, Test (Mr. Hill) is not paying much attention, but it happened not far from his constituency. I had not expected to read that Conservative Ministers' effigies had been burnt in counties such as Hampshire, but it happened, and with good reason. The people responsible know that their areas are not being served well by an Administration who have hitherto pretended to care about rural Britain.

9.30 pm

Only a week or two ago, I took part in a debate in the House about a problem related to this—the housing problem. In huge parts of rural Britain, the cost of housing is now such that people who were born in a certain village, perhaps descended from generations of forebears who have lived there, can no longer afford to live there themselves. Now, even if they can afford the rent, they will not be able to afford the fuel. The Government are disregarding the yeomen to look after the yuppies, and the Bill is an example of their shifting priorities.

I am worried about people living in such places as Lea Brook and Street in the parish of Wentworth, from which my constituency takes its name. I am also worried about slightly larger communities such as Hooton Roberts, which has 80 or 90 electors. I am worried about communities a little larger than that as well. As the squeeze for profit develops in the electricity supply industry, the community at risk may become larger and larger. The industry will certainly be eager to supply London; I do not know whether it will be eager to supply Wentworth, and I certainly do not think that in five years' time the people of Wentworth—the village and perhaps the constituency—should feel entirely confident that they will pay no more than those living in Sheffield, Manchester, Birmingham or London.

If the Government begin to panic—there seems to be a good deal of panic in the air at present—to make sure that the people of Hampshire will not continue to burn effigies, they may decide to make electricity cheaper in the south than in the north. It is all very well for the hon. Member for Test to welcome such a prospect; I heard him shout, "Hear, hear," when I suggested that there was a serious risk. The fact remains that we have been subsidising the south of England for a long time in any case, because we have been bearing the cost of loss of transmission.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth

My hon. Friend is right.

Because it is a national service, we have been prepared to accept the burden, but now that we see the real risk—as a result of all the effigies being burnt all over the south of England—Nye are entitled to be a little worried, fearing that additional burdens may be imposed on us. I hope that the Minister will reassure us, first, that the boards will be told emphatically that the five-year transition period constitutes a pledge that will not be broken, and, secondly, that the electricity supply industry will be asked as a matter of urgency to ensure that that period is extended to at least 10 years—long enough, at any rate, to cover the political life of every Conservative Member.

Thirdly, we should like an assurance that the Government are beginning to understand that the rural areas already face serious problems—problems of access, cost, housing and transport. Some of the older inhabitants of such areas may rapidly develop an inclination to take up witchcraft; the Secretary of State may wish to ponder the fact that, before long, the broomstick may be the only viable form of transport in some parts of Britain hitherto regarded as salubrious.

I recognise that the Government face serious problems in relation to country dwellers. More farmers are going bankrupt in this year of grace, under this Administration, than ever before.

The Government must recognise that the priorities that the other place embraced a few weeks ago have more political wisdom than the criticism that the Minister offered on the amendments when he said that they were wrecking amendments. I wish they were. Above all, I should like the Government to recognise that they may be wrecking but they are wise, and it would be wise of the Government to accept them.

Photo of Jim Wallace Jim Wallace , Orkney and Shetland

I had not intended taking part in the debate, because my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) argued cogently and effectively the reasons why the House should agree with the amendment proposed by the other place to protect the interests of rural consumers. However, the Minister's response to my intervention was so unsatisfactory that it is necessary for me to put some points on the record and to seek a further response from him.

I welcome the fact that a special provision on common tariffs has been made for the North of Scotland Hydro-Electric Board area. This has been granted by the Government because they no longer see fit to include in the legislation a clause imposing a statutory duty on the company supplying electricity to the Highlands and Islands to take account of social and economic factors affecting that area. I accept that that makes this area different from others, but my hon. Friend the Member for Berwick-upon-Tweed and other hon. Members argued compellingly that rural consumers and those in other areas should be treated equally. I ask the Minister to consider their argument.

Even the special treatment given to the hydro board falls short because of the cost of connection for new consumers of that board. Lords amendment No. 8 provides some protection for consumers in my constituency and elsewhere who face high connection costs. In my intervention and on Report, I instanced the case of a constituent who had been faced with a bill of over £60,000 for connection. He lives in an area which, for historical and archaeological reasons, is designated a conservation area, so the wires and lines must be placed underground, adding to the cost. On Report, the hon. Member for Western Isles (Mr. Macdonald) instanced other cases of consumers who were asked to pay £60,000. Since then, one of my constituents from the island of Stronsay has told me of a bill of more than £13,000. By no stretch of the imagination can people on modest incomes and pensioners readily find such amounts. In reply to my intervention, the Minister said that other means of help would be available.

When pressed, he mumbled something about social security assistance. I do not think that he intended that to be a full answer.

I took up with the Minister of State, Scottish Office the case of my constituent with the £60,000 bill, and the hon. Gentleman took some time to reply. I do not complain about that, because the time was undoubtedly spent by him and his officials in trying to find what assistance might be available. The best that they could come up with was a £600 grant and £600 loan from the Crofters Commission. That is inadequate. It can be argued that this is an inadequacy of the present system, but there is nothing in the Bill to give consumers in the north of Scotland and elsewhere any confidence that under the new system connection charges will be reasonable and within the scope of most ordinary people.

I found one ray of hope, which I hope that the Minister will consider. Clause 19 (1) refers to the power to recover expenditure and states: Where any electric line or electrical plant is provided by a public electricity supplier in pursuance of section 16(1) above, the supplier may require any expenses reasonably incurred in providing it to be defrayed by the person requiring the supply of electricity to such extent as is reasonable in all the circumstances. The implication of "to such extent" is that the whole amount does not necessarily have to be recovered from the consumer. I should like to elicit from the Minister the circumstances in which he would consider it unreasonable for the cost to be defrayed by the consumer. Will the Minister consider that seriously? The present prices are prohibitive. Many people cannot afford to be connected to the mains electricity supply. They cannot benefit from facilities such as off-peak heating, and have to depend on generators, which can be unsatisfactory.

Undoubtedly, the Minister will ask the House to vote against Lords amendment No. 8, which would provide the only protection for rural consumers. In his reply, will he give some hope to those faced with substantial bills for connection charges?

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

It falls to me to make the last contribution from the Opposition on this amendment. It is an old principle of Damon Runyon's New York that, "The opera ain't over until the fat lady sings." I say that without disrespect to the Prime Minister.

It is clear from the debate that the Government's treatment of shareholders and consumers is different. By rejecting Lords amendment No. 1, the Government are saying that they cannot discriminate in favour of any group of consumers, yet they made it clear earlier that they would do anything to discriminate in favour of shareholders. That is the problem and that is why the Bill will redound to the Government's disadvantage at the next general election.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

The amendments highlight a difference between the philosophies of the Government and the Opposition parties. Either one agrees that competition will benefit the consumer and will put a downward pressure on prices or one does not.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

What about the northern board?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

I have answered the hon. Gentleman about the northern board. It has been decided that it merits special treatment.

If one accepts that competition between the area boards will bring benefits to consumers—who can contract elsewhere for their electricity—it stands to reason that they should be able to charge prices to combat the effect of that competition. So long as the prices bear a relationship to cost, that will have the effect of bringing prices down in urban areas. We have talked about deprivation in rural areas, and in other circumstances the Opposition would talk about deprivation in urban areas, too. There will be a general downward pressure.

I must answer the hon. Member for Wentworth (Mr. Hardy) about the policy of common tariffs. I assure him that the period will be five years. Thereafter, the policy of allowing the area boards to charge prices which relate to costs and allow them to compete will apply. That will be to everyone's benefit, because prices will come down. [Interruption.] No. I gave the hon. Member for Berwick-upon-Tweed (Mr. Beith) the answer, that the converse is possible. If we allow cherry-picking—where the best customer areas are taken away—the area boards will be left with rural customers and much the same overheads. The effect of that on rural customers would be increased prices. There would be a narrower customer base associated with much the same overheads. That would be bad for rural customers.

I accept that there is a philosophical difference. We believe that competition will be in the direct interest of consumers. It will place a downward pressure on prices which will be a good thing for rural, as well as for urban, customers.

The hon. Member for Orkney and Shetland (Mr. Wallace) assumed that the Government would invite the House to reject Lords amendment No. 8. In fact, we suggest that the House should accept that amendment. That is an important concession to the hon. Gentleman's argument and to the argument made in another place. In direct answer to the proposition made in respect of the regulator, I remind the hon. Gentleman that that amendment will require the regulator in carrying out his duties to take into account the interests of rural customers. That enormous concession on the Government's part directly meets some of the anxieties that have recently been expressed.

I hope that hon. Members will think again on the basis of that major concession, although I agree that it does not completely meet the philosophical argument voiced by Opposition Members about competition, because the Government believe in competition, and competition runs right through the Bill.

I do not wish to be presumptuous, but this may be the last occasion on which I shall have the honour of addressing the House on this matter, and it gives me great pleasure to reiterate the importance of competition. The abolition of the common tariff assumption is fundamental to our restructuring of the industry. We believe that that is fundamentally good and in the interests of consumers.

I ask the House to reject the Lords amendments with the exception of Lords amendment No. 8.

Question put, That this House doth disagree with the Lords in the said amendment:—

The House divided: Ayes 291, Noes 194.

Division No. 319][9.46 pm
AYES
Adley, RobertForth, Eric
Alexander, RichardFowler, Rt Hon Norman
Alison, Rt Hon MichaelFox, Sir Marcus
Allason, RupertFranks, Cecil
Amess, DavidFreeman, Roger
Amos, AlanFrench, Douglas
Arbuthnot, JamesGale, Roger
Arnold, Jacques (Gravesham)Gardiner, George
Arnold, Tom (Hazel Grove)Garel-Jones, Tristan
Ashby, DavidGill, Christopher
Atkins, RobertGlyn, Dr Alan
Atkinson, DavidGoodlad, Alastair
Baker, Nicholas (Dorset N)Goodson-Wickes, Dr Charles
Banks, Robert (Harrogate)Gorman, Mrs Teresa
Batiste, SpencerGorst, John
Beaumont-Dark, AnthonyGow, Ian
Bellingham, HenryGrant, Sir Anthony (CambsSW)
Bendall, VivianGreenway, Harry (Eating N)
Bennett, Nicholas (Pembroke)Greenway, John (Ryedale)
Benyon, W.Gregory, Conal
Bevan, David GilroyGriffiths, Sir Eldon (Bury St E')
Biffen, Rt Hon JohnGriffiths, Peter (Portsmouth N)
Blackburn, Dr John G.Ground, Patrick
Blaker, Rt Hon Sir PeterGummer, Rt Hon John Selwyn
Bonsor, Sir NicholasHague, William
Boscawen, Hon RobertHamilton, Neil (Tatton)
Boswell, TimHampson, Dr Keith
Bottomley, Mrs VirginiaHanley, Jeremy
Bowden, A (Brighton K'pto'n)Hannam, John
Bowis, JohnHargreaves, A. (B'ham H'll Gr')
Boyson, Rt Hon Dr Sir RhodesHargreaves, Ken (Hyndburn)
Braine, Rt Hon Sir BernardHayes, Jerry
Brandon-Bravo, MartinHeathcoat-Amory, David
Brazier, JulianHeddle, John
Bright, GrahamHicks, Mrs Maureen (Wolv' NE)
Brooke, Rt Hon PeterHiggins, Rt Hon Terence L.
Brown, Michael (Brigg & Cl't's)Hill, James
Browne, John (Winchester)Hind, Kenneth
Bruce, Ian (Dorset South)Hogg, Hon Douglas (Gr'th'm)
Budgen, NicholasHolt, Richard
Burns, SimonHordern, Sir Peter
Burt, AlistairHoward, Michael
Butler, ChrisHowarth, Alan (Strat'd-on-A)
Butterfill, JohnHowarth, G. (Cannock & B'wd)
Carrington, MatthewHughes, Robert G. (Harrow W)
Cash, WilliamHunt, David (Wirral W)
Chapman, SydneyHunt, Sir John (Ravensbourne)
Chope, ChristopherHunter, Andrew
Clark, Hon Alan (Plym'th S'n)Hurd, Rt Hon Douglas
Clark, Dr Michael (Rochford)Irvine, Michael
Clarke, Rt Hon K. (Rushcliffe)Irving, Charles
Conway, DerekJack, Michael
Coombs, Anthony (Wyre F'rest)Jackson, Robert
Coombs, Simon (Swindon)Janman, Tim
Cope, Rt Hon JohnJessel, Toby
Couchman, JamesJohnson Smith, Sir Geoffrey
Cran, JamesJones, Gwilym (Cardiff N)
Currie, Mrs EdwinaJones, Robert B (Herts W)
Curry, DavidJopling, Rt Hon Michael
Davies, Q. (Stamf'd & Spald'g)Kellett-Bowman, Dame Elaine
Davis, David (Boothferry)Key, Robert
Day, StephenKilfedder, James
Dorrell, StephenKing, Roger (B'ham N'thfield)
Douglas-Hamilton, Lord JamesKirkhope, Timothy
Dover, DenKnapman, Roger
Dunn, BobKnight, Greg (Derby North)
Durant, TonyKnight, Dame Jill (Edgbaston)
Evans, David (Welwyn Hatf'd)Knowles, Michael
Fairbairn, Sir NicholasLamont, Rt Hon Norman
Fallon, MichaelLang, Ian
Favell, TonyLatham, Michael
Fenner, Dame PeggyLawrence, Ivan
Field, Barry (Isle of Wight)Lawson, Rt Hon Nigel
Fishburn, John DudleyLee, John (Pendle)
Fookes, Dame JanetLennox-Boyd, Hon Mark
Forman, NigelLester, Jim (Broxtowe)
Forsyth, Michael (Stirling)Lightbown, David
Lloyd, Sir Ian (Havant)Shaw, David (Dover)
Lord, MichaelShaw, Sir Giles (Pudsey)
Luce, Rt Hon RichardShaw, Sir Michael (Scarb')
Lyell, Sir NicholasShelton, Sir William
McCrindle, RobertShephard, Mrs G. (Norfolk SW)
MacKay, Andrew (E Berkshire)Shepherd, Colin (Hereford)
Maclean, DavidShersby, Michael
McLoughlin, PatrickSkeet, Sir Trevor
McNair-Wilson, Sir MichaelSmith, Sir Dudley (Warwick)
McNair-Wilson, Sir PatrickSoames, Hon Nicholas
Malins, HumfreySpeed, Keith
Maples, JohnSpeller, Tony
Marlow, TonySpicer, Sir Jim (Dorset W)
Marshall, John (Hendon S)Spicer, Michael (S Worcs)
Marshall, Michael (Arundel)Squire, Robin
Martin, David (Portsmouth S)Stanbrook, Ivor
Mates, MichaelStanley, Rt Hon Sir John
Mawhinney, Dr BrianStern, Michael
Maxwell-Hyslop, RobinStevens, Lewis
Meyer, Sir AnthonyStewart, Allan (Eastwood)
Miller, Sir HalStewart, Andy (Sherwood)
Mills, IainStewart, Rt Hon Ian (Herts N)
Miscampbell, NormanStokes, Sir John
Mitchell, Sir DavidStradling Thomas, Sir John
Moate, RogerSumberg, David
Monro, Sir HectorSummerson, Hugo
Montgomery, Sir FergusTapsell, Sir Peter
Moore, Rt Hon JohnTaylor, Ian (Esher)
Morris, M (N'hampton S)Taylor, John M (Solihull)
Morrison, Rt Hon P (Chester)Taylor, Teddy (S'end E)
Moss, MalcolmTebbit, Rt Hon Norman
Moynihan, Hon ColinTemple-Morris, Peter
Mudd, DavidThompson, D. (Calder Valley)
Neale, GerrardThompson, Patrick (Norwich N)
Needham, RichardThorne, Neil
Nelson, AnthonyThornton, Malcolm
Newton, Rt Hon TonyThurnham, Peter
Nicholls, PatrickTownend, John (Brldlington)
Nicholson, David (Taunton)Townsend, Cyril D. (B'heath)
Nicholson, Emma (Devon West)Tracey, Richard
Norris, SteveTredinnick, David
Onslow, Rt Hon CranleyTrippier, David
Oppenheim, PhillipTrotter, Neville
Page, RichardTwinn, Dr Ian
Paice, JamesVaughan, Sir Gerard
Parkinson, Rt Hon CecilViggers, Peter
Patnick, IrvineWaddington, Rt Hon David
Patten, Rt Hon Chris (Bath)Waldegrave, Hon William
Patten, John (Oxford W)Walden, George
Pawsey, JamesWalker, Bill (T'side North)
Peacock, Mrs ElizabethWaller, Gary
Porter, Barry (Wirral S)Ward, John
Portillo, MichaelWardle, Charles (Bexhill)
Powell, William (Corby)Warren, Kenneth
Price, Sir DavidWells, Bowen
Raffan, KeithWheeler, John
Raison, Rt Hon TimothyWhitney, Ray
Redwood, JohnWiddecombe, Ann
Renton, TimWiggin, Jerry
Rhodes James, RobertWinterton, Mrs Ann
Riddick, GrahamWinterton, Nicholas
Ridsdale, Sir JulianWolfson, Mark
Rifkind, Rt Hon MalcolmWood, Timothy
Roberts, Wyn (Conwy)Woodcock, Dr. Mike
Roe, Mrs MarionYeo, Tim
Rossi, Sir HughYoung, Sir George (Acton)
Rost, Peter
Rowe, Andrew Tellers for the Ayes:
Rumbold, Mrs Angela Mr. Kenneth Carlisle and Mr. Tom Sackville.
Sayeed, Jonathan
Scott, Rt Hon Nicholas
NOES
Abbott, Ms DianeAshdown, Rt Hon Paddy
Adams, Allen (Paisley N)Ashley, Rt Hon Jack
Allen, GrahamAshton, Joe
Alton, DavidBanks, Tony (Newham NW)
Anderson, DonaldBarnes, Harry (Derbyshire NE)
Archer, Rt Hon PeterBarnes, Mrs Rosie (Greenwich)
Armstrong, HilaryBarron, Kevin
Battle, JohnHood, Jimmy
Beckett, MargaretHowarth, George (Knowsley N)
Beith, A. J.Howell, Rt Hon D. (S'heath)
Benn, Rt Hon TonyHoyle, Doug
Bennett, A. F. (D'nt'n & R'dish)Hughes, John (Coventry NE)
Bermingham, GeraldHughes, Robert (Aberdeen N)
Bidwell, SydneyHughes, Roy (Newport E)
Blair, TonyHughes, Simon (Southwark)
Boateng, PaulIllsley, Eric
Boyes, RolandIngram, Adam
Bradley, KeithJanner, Greville
Bray, Dr JeremyJohnston, Sir Russell
Brown, Nicholas (Newcastle E)Jones, Barry (Alyn & Deeside)
Bruce, Malcolm (Gordon)Jones, Martyn (Clwyd S W)
Buckley, George J.Kennedy, Charles
Caborn, RichardKinnock, Rt Hon Neil
Callaghan, JimKirkwood, Archy
Campbell, Menzies (Fife NE)Lamond, James
Campbell, Ron (Blyth Valley)Leighton, Ron
Campbell-Savours, D. N.Lewis, Terry
Canavan, DennisLitherland, Robert
Cartwright, JohnLloyd, Tony (Stretford)
Clark, Dr David (S Shields)Lofthouse, Geoffrey
Clarke, Tom (Monklands W)McAllion, John
Clay, BobMcAvoy, Thomas
Clelland, DavidMcCartney, Ian
Clwyd, Mrs AnnMacdonald, Calum A.
Cohen, HarryMcKelvey, William
Coleman, DonaldMcLeish, Henry
Cook, Robin (Livingston)Maclennan, Robert
Corbett, RobinMcWilliam, John
Corbyn, JeremyMadden, Max
Cousins, JimMahon, Mrs Alice
Cox, TomMartin, Michael J. (Springburn)
Cryer, BobMeacher, Michael
Cummings, JohnMeale, Alan
Cunliffe, LawrenceMichael, Alun
Darling, AlistairMichie, Bill (Sheffield Heeley)
Davies, Rt Hon Denzil (Llanelli)Michie, Mrs Ray (Arg'l & Bute)
Davies, Ron (Caerphilly)Mitchell, Austin (G't Grimsby)
Davis, Terry (B'ham Hodge H'l)Morgan, Rhodri
Dewar, DonaldMorris, Rt Hon A. (W'shawe)
Dixon, DonMorris, Rt Hon J. (Aberavon)
Dobson, FrankMowlam, Marjorie
Doran, FrankMullin, Chris
Duffy, A. E. P.Murphy, Paul
Dunnachie, JimmyNellist, Dave
Dunwoody, Hon Mrs GwynethOakes, Rt Hon Gordon
Eadie, AlexanderO'Brien, William
Eastham, KenPatchett, Terry
Ewing, Harry (Falkirk E)Pendry, Tom
Ewing, Mrs Margaret (Moray)Pike, Peter L.
Fatchett, DerekPowell, Ray (Ogmore)
Fearn, RonaldPrimarolo, Dawn
Fisher, MarkQuin, Ms Joyce
Flannery, MartinRadice, Giles
Flynn, PaulRandall, Stuart
Foot, Rt Hon MichaelRedmond, Martin
Foster, DerekRichardson, Jo
Fraser, JohnRoberts, Allan (Bootle)
Galloway, GeorgeRobinson, Geoffrey
Garrett, John (Norwich South)Rogers, Allan
Garrett, Ted (Wallsend)Ross, Ernie (Dundee W)
Gilbert, Rt Hon Dr JohnRowlands, Ted
Godman, Dr Norman A.Ruddock, Joan
Golding, Mrs LlinSalmond, Alex
Gordon, MildredSedgemore, Brian
Gould, BryanSheldon, Rt Hon Robert
Graham, ThomasShore, Rt Hon Peter
Grant, Bernie (Tottenham)Short, Clare
Griffiths, Nigel (Edinburgh S)Skinner, Dennis
Griffiths, Win (Bridgend)Smith, Andrew (Oxford E)
Grocott, BruceSmith, C. (Isl'ton & F'bury)
Hardy, PeterSmith, Rt Hon J. (Monk'ds E)
Haynes, FrankSmith, J. P. (Vale of Glam)
Henderson, DougSoley, Clive
Hinchliffe, DavidSpearing, Nigel
Hoey, Ms Kate (Vauxhall)Steinberg, Gerry
Hogg, N. (C'nauld & Kilsyth)Stott, Roger
Home Robertson, JohnStraw, Jack
Taylor, Mrs Ann (Dewsbury)Welsh, Michael (Doncaster N)
Taylor, Matthew (Truro)Williams, Rt Hon Alan
Thompson, Jack (Wansbeck)Williams, Alan W. (Carm'then)
Turner, DennisWilson, Brian
Vaz, KeithWinnick, David
Wall, PatWise, Mrs Audrey
Wallace, JamesWorthington, Tony
Walley, JoanYoung, David (Bolton SE)
Warden, Gareth (Gower)
Wareing, Robert N.Tellers for the Noes:
Watson, Mike (Glasgow, C)Mr. Frank Cook and Mr. Allen McKay.
Welsh, Andrew (Angus E)

Question accordingly agreed to.

Lords amendment No. 8 agreed to.

Lords amendments Nos. 23 and 24 disagreed to.

Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 1, 21, 23, 24 and 81 to 89: Mr. Kevin Barron, Mr. David Heathcoat-Amory, Mr. Ian Lang, Mr. John Maxton and Mr. Michael Spicer. Three to be the quorum—[Mr. Heathcoat-Amory.]

To withdraw immediately.

Reasons for disagreeing to certain of the Lords amendments reported, and agreed to: to be communicated to the Lords.