Licensing of Gas Suppliers and Gas Shippers

Orders of the Day — Gas Bill – in the House of Commons at 9:15 pm on 15th May 1995.

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Mr. O'Neill:

I beg to move amendment No. 49, in page 8, line 29, at end insert— '(2A) In the period before the relevant date the Director shall:(a) monitor the effect of the granting of a licence under subsections (3) to (5) below on such persons as in his opinion are appropriate; and(b) consult such persons and organisations as appear to him to represent the interests of persons affected by the granting of a licence under those subsections, and such other persons as he considers appropriate, on the effects of granting such a licence. (2B) No licence shall be granted under section 7A(1)(a) of the 1986 Act (other than by virtue of subsections (3) to (5) below) until the Secretary of State has laid a report before both Houses of Parliament indicating—

  1. (i) the results of the monitoring and responses to the consultation referred to in subsection (2A) above;
  2. (ii) the effect, in his opinion and in the opinion of the Director, of the granting of licences under subsections (3) to (5) below and Schedule 5 to this Act in the period before the relevant date; and
  3. (iii) the reasons why, in his opinion, it is in the interests of all persons affected that licences under section 7A(1)(a) of the 1986 Act should be granted.'.

In some respects, the amendment is one of the most pertinent with which we shall deal because it relates to what has become known as the pilot areas—those areas in which the competitive gas market will be tested. The amendment is an attempt to require the director general to monitor the effect of granting a licence and to consult organisations and people who appear to represent the interests of the persons affected by the granting of the licence. The amendment also states that no licence shall be granted until a report has been laid before both Houses of Parliament indicating the result of the monitoring and the responses to the consultation.

The only other example of a deregulated gas market comes from Canada and it must be said that the Canadian experience was not wholly successful. As a consequence, many people are anxious about the exercise, and that is evidenced by the Government's testing the water. We welcome the attempt to choose areas in the south-west of England that are among the most controversial. If the exercise is to have any worth, it is vital not only that the pilot areas are studied properly but that the House has the right to pass judgment on whether the scheme should proceed once the pilot has been completed.

Some of my hon. Friends may take the view that it does not really matter because, by the time the reports are completed, there will be another Government and we will take the decisions about those matters. That is as may be, but we must ensure that proper monitoring techniques are put in place and that the director general is able to take full account of them. As I have said, the experience in other countries has not been wholly satisfactory. The Canadian experience caused great difficulty, but perhaps that will not be replicated here with such ferocity in view of the differing climatic conditions in that country.

Nevertheless, the experience could create anxiety among communities who, even now, are extremely vulnerable. Therefore, we believe it is important to ensure that proper monitoring takes place and that the monitoring is reported correctly. At the end of the day, the House should be able to pass judgment on the findings of the report and decide whether we wish to proceed to grant the rest of the licences across the United Kingdom. That approach has wide support. A number of consumer groups—containing people who are in touch with gas consumers—have heard of and are conscious of the problems that could arise; therefore, it is essential that a proper assessment is made of the monitoring process.

I can do no more than quote paragraph 60 of the Select Committee on Trade and Industry report, which states: It would be pointless to have a transitional period unless there is a full assessment of its consequences and wide consultation, including parliamentary scrutiny, before further steps are taken. That is what the amendment would achieve. We want that in relation to the designated pilot areas. That is why the House should have the right to stop and take stock before it takes this big step for the whole British energy market. For those reasons, we are happy to table amendment No. 49.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Trade and Industry) 9:45 pm, 15th May 1995

I support the amendment. I moved one along similar lines in Committee. The amendment is a welcome, if overdue, innovation in Government practice that the .Government have chosen to run a pilot scheme. If they had done so in relation to many other areas of legislation, it would have saved them and the public a great deal of pain.

It would serve the Government's purpose far more comprehensively if, having taken the decision to run a pilot scheme, their assessment criteria went far wider than simply technical aspects, which seem to be the scope of their intention to date. The amendment's proposal of giving both Houses a chance to scrutinise the pilot scheme and to assess it is much to be applauded.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

The Government have previously made it clear that the phased transition to a nationwide competitive system will provide an opportunity to test the necessary technical and administrative systems for the balancing of gas and the transfer of customers. That is essentially a technical operation. That is why we are starting with an area of 500,000 customers in the south-west and moving up to one of 2 million. We want to find out whether additional problems exist as we expand and go nationwide.

The purpose of the pilot scheme and then of the expanded pilot is to allow British Gas TransCo and competing gas suppliers to iron out any problems with their systems while they are still operating on a relatively small scale. That relates particularly to computer and other such systems.

We must be clear, however, that the pilot is not an attempt to test the principle of whether competition will go ahead. That decision has already been made, on Second Reading. An approach that left the question of principle in doubt would cast a shadow of uncertainty over the industry, both onshore and in the North sea. That would be in no one's interests because it might mean that suppliers would not make the investment needed for competition to be a success. The scheme must be planned with a degree of certainty.

In particular, such an approach would make the necessary adjustment of North sea supply positions and contracts impossibly unpredictable. It would be wrong to try to reopen the principle of competition through what I would call the back door, as it would bring in considerable uncertainty, which is the last thing that we need in terms of planning large investments.

Of course, the director general will clearly wish to monitor the progress of competition and expect to seek feedback from consumers and suppliers of their experience of competition during the transitional phase. That was one of the criteria that we asked the areas to comment on when they applied to be pilots. If that monitoring showed that licence conditions were not having the desired effect, the director general could make proposals to change them. The on-going monitoring process will enable Ministers and the director general to report appropriately to the House and to the other place about progress. It is certainly my intention to do just that.

Mr. O'Neill:

That answer was wholly unsatisfactory. The Minister said that ultimately it is all down to computers and a few pipes, and that if the report is disastrous only a little fine tuning will be required and everything can be changed. We are discussing the big step of reconstructing the energy market and a potentially dangerous fuel, using a number of companies untested in the UK, and many untested worldwide, in the selling of gas.

We are told that if the House had the right to veto further developments until it was satisfied that necessary changes and improvements had been made, that would create such a shadow of uncertainty that there would be fear of investing and an adjustment to North sea contracts. I imagine that we will be debating amendments Nos. 40 and 41 to schedule 5 tomorrow, relating to the consequences of changes to North sea contracts. The Minister will be playing a different tune then.

If monitoring is not undertaken effectively, reports are not presented in the appropriate way and the House is not given the opportunity to pass judgment, the deregulation of the gas market could founder. If the proposal is to survive and is to command the respect and support of both sides of the House and, more important, command consumer confidence, it is essential that monitoring in pilot areas assumes greater significance than simply suggesting that the tweaking of a computer or changing a piping system will resolve all problems.

This matter is of the utmost importance and I am not prepared to withdraw the amendment. We will press the amendment to a Division because, in essence, the House has the right to be able to say, in a matter which is in many respects a leap in the dark, that if we get it wrong with the pilot projects, the proposal should not proceed. The amendment is of sufficient significance for the House to have the opportunity to vote on it. I urge my hon. Friends to join me in the Lobby to support it.

Question put, That the amendment be made:—

The House divided: Ayes 229, Noes 269.

Division No. 147][9.53 pm
Abbott, Ms DianeCarlile, Alexander (Montgomery)
Ainsworth, Robert (Cov'try NE)Chisholm, Malcolm
Allen, GrahamClapham, Michael
Alton, DavidClark, Dr David (South Shields)
Anderson, Donald (Swansea E)Clarke, Eric (Midlothian)
Anderson, Ms Janet (Ros'dale)Clarke, Tom (Monklands W)
Armstrong, HilaryClelland, David
Austin-Walker, JohnClwyd, Mrs Ann
Banks, Tony (Newham NW)Coffey, Ann
Barnes, HarryCohen, Harry
Barron, KevinConnarty, Michael
Battle, JohnCook, Frank (Stockton N)
Beckett, Rt Hon MargaretCook, Robin (Livingston)
Bell, StuartCorbett, Robin
Benn, Rt Hon TonyCousins, Jim
Bennett, Andrew FCummings, John
Benton, JoeCunliffe, Lawrence
Bermingham, GeraldCunningham, Jim (Covy SE)
Berry, RogerCunningham, Rt Hon Dr John
Betts, CliveDafis, Cynog
Blunkett, DavidDalyell, Tam
Boateng, PaulDavidson, Ian
Bradley, KeithDavies, Bryan (Oldham C'tral)
Bray, Dr JeremyDavies, Ron (Caerphilly)
Brown, Gordon (Dunfermline E)Denham, John
Brown, N (N'c'tle upon Tyne E)Dewar, Donald
Burden, RichardDixon, Don
Byers, StephenDobson, Frank
Caborn, RichardDonohoe, Brian H
Callaghan, JimDowd, Jim
Campbell, Mrs Anne (C'bridge)Dunnachie, Jimmy
Campbell, Menzies (Fife NE)Dunwoody, Mrs Gwyneth
Cann, JamieEagle, Ms Angela
Eastham, KenMcNamara, Kevin
Enright, DerekMacShane, Denis
Etherington, BillMadden, Max
Fatchett DerekMahon, Alice
Faulds, AndrewMandelson, Peter
Field, Frank (Birkenhead)Marek, Dr John
Fisher, MarkMartlew, Eric
Flynn, PaulMeacher, Michael
Foster, Rt Hon DerekMeale, Alan
Foster, Don (Bath)Michael, Alun
Fraser, JohnMichie, Bill (Sheffield Heeley)
Fyfe, MariaMilburn, Alan
Galbraith, SamMiller, Andrew
Galloway, GeorgeMitchell, Austin (Gt Grimsby)
Gapes, MikeMoonie, Dr Lewis
Garrett, JohnMorgan, Rhodri
Gerrard, NeilMorley, Elliot
Gilbert, Rt Hon Dr JohnMorris, Rt Hon Alfred
Godman, Dr Norman AMorris, Estelle (B'ham Yardley)
Godsiff, RogerMowlam, Marjorie
Gdding, Mrs LlinMudie, George
Gordon, MildredMullin, Chris
Graham, ThomasMurphy, Paul
Grant, Bernie (Tottenham)Oakes, Rt Hon Gordon
Griffiths, Nigel (Edinburgh S)O'Brien, Mike (N W'kshire)
Griffiths, Win (Bridgend)O'Brien, William (Normanton)
Grocott, BruceO'Hara, Edward
Gunnell, JohnOlner, Bill
Hain, PeterO'Neill, Martin
Hall, MikeOrme, Rt Hon Stanley
Harman, Ms HarrietPaisley, The Reverend Ian
Harvey, NickPatchett, Terry
Heppell, JohnPearson, Ian
Hill, Keith (Streatham)Pendry, Tom
Hinchliffe, DavidPike, Peter L
Hodge, MargaretPope, Greg
Hoey, KatePowell, Ray (Ogmore)
Hogg, Norman (Cumbernauld)Prentice, Bridget (Lew'm E)
Hood, JimmyPrentice, Gordon (Pendle)
Hoon, GeoffreyPrimarolo, Dawn
Howarth, George (Knowsley North)Purchase, Ken
Howells, Dr. Kim (Pontypridd)Quin, Ms Joyce
Hoyle, DougRadice, Giles
Hughes, Kevin (Doncaster N)Randall, Stuart
Hughes, Robert (Aberdeen N)Raynsford, Nick
Hughes, Roy (Newport E)Reid, Dr John
Hutton, JohnRendel, David
Illsley, EricRobertson, George (Hamilton)
Ingram, AdamRobinson, Geoffrey (Co'try NW)
Jackson, Glenda (H'stead)Robinson, Peter (Belfast E)
Jackson, Helen (Shef'ld, H)Rooker, Jeff
Jamieson, DavidRooney, Terry
Janner, GrevilleRoss, Ernie (Dundee W)
Jones, Barry (Alyn and D'side)Rowlands, Ted
Jones, Lynne (B'ham S O)Ruddock, Joan
Jones, Martyn (Clwyd, SW)Sedgemore, Brian
Jowell, TessaSheerman, Barry
Kaufman, Rt Hon GeraldSheldon, Rt Hon Robert
Kennedy, Charles (Ross.C&S)Shore, Rt Hon Peter
Kennedy, Jane (Lpool Brdgn)Short, Clare
Khabra, Piara SSimpson, Alan
Kilfoyle, PeterSkinner, Dennis
Lestor, Joan (Eccles)Smith, Chris (Isl'ton S & F'sbury)
Lewis, TerrySmith, Llew (Blaenau Gwent)
Litherland, RobertSnape, Peter
Livingstone, KenSoley, Clive
Lloyd, Tony (Stretford)Spearing, Nigel
Lynne, Ms LizSquire, Rachel (Dunfermline W)
McAvoy, ThomasSteinberg, Gerry
McCartney, IanStevenson, George
McCrea, The Reverend WilliamSutcliffe, Gerry
Macdonald, CalumTaylor, Mrs Ann (Dewsbury)
McFall, JohnTaylor, Matthew (Truro)
Mackinlay, AndrewTimms, Stephen
McLeish, HenryTipping, Paddy
McMaster, GordonTouhig, Don
Vaz, KeithWorthington, Tony
Walker, Rt Hon Sir HaroldWray, Jimmy
Watson, MikeWright, Dr Tony
Wigley, DafyddYoung, David (Bolton SE)
Williams, Rt Hon Alan (SW'n W)
Williams, Alan W (Carmarthen)Tellers for the Ayes:
Winnick, DavidMr. Dennis Turner and
Wise, AudreyMr. Jon Owen Jones.
Ainsworth, Peter (East Surrey)Dunn, Bob
Aitken, Rt Hon JonathanDurant, Sir Anthony
Alison, Rt Hon Michael (Selby)Dykes, Hugh
Allason, Rupert (Torbay)Eggar, Rt Hon Tim
Amess, DavidEmery, Rt Hon Sir Peter
Arbuthnot, JamesEvans, David (Welwyn Hatfield)
Arnold, Jacques (Gravesham)Evans, Jonathan (Brecon)
Arnold, Sir Thomas (Hazel Grv)Evans, Nigel (Ribble Valley)
Ashby, DavidEvans, Roger (Monmouth)
Atkins, RobertEvennett, David
Atkinson, David (Bour'mouth E)Faber, David
Atkinson, Peter (Hexham)Fabricant, Michael
Baker, Rt Hon Kenneth (Mole V)Fenner, Dame Peggy
Baker, Nicholas (North Dorset)Field, Barry (Isle of Wight)
Baldry, TonyFishburn, Dudley
Banks, Matthew (Southport)Forman, Nigel
Banks, Robert (Harrogate)Forsyth, Rt Hon Michael (Stirling)
Bates, MichaelForth, Eric
Batiste, SpencerFowler, Rt Hon Sir Norman
Bellingham, HenryFox, Sir Marcus (Shipley)
Bendall, VivianFreeman, Rt Hon Roger
Beresford, Sir PaulFrench, Douglas
Biffen, Rt Hon JohnGale, Roger
Booth, HartleyGardiner, Sir George
Boswell, TimGarel-Jones, Rt Hon Tristan
Bottomley, Peter (Eltham)Garnier, Edward
Bottomley, Rt Hon VirginiaGill, Christopher
Bowis, JohnGillan, Cheryl
Boyson, Rt Hon Sir RhodesGoodlad, Rt Hon Alastair
Brandreth, GylesGorman, Mrs Teresa
Brazier, JulianGorst, Sir John
Bright Sir GrahamGrant,Sir A (SW Cambs)
Brooke, Rt Hon PeterGreenway, Harry (Ealing N)
Brown, M (Brigg & Cl'thorpes)Greenway, John (Ryedale)
Browning, Mrs AngelaGriffiths, Peter (Portsmouth, N)
Bruce, Ian (Dorset)Grylls, Sir Michael
Budgen, NicholasGummer, Rt Hon John Selwyn
Burns, SimonHague, William
Burt, AlistairHamilton, Neil (Tatton)
Butcher, JohnHampson, Dr Keith
Butler, PeterHannam, Sir John
Butterfill, JohnHargreaves, Andrew
Carlisle, Sir Kenneth (Lincoln)Harris, David
Carrington, MatthewHaselhurst, Alan
Carttiss, MichaelHawkins, Nick
Cash, WilliamHayes, Jerry
Channon, Rt Hon PaulHeald, Oliver
Clappison, JamesHeath, Rt Hon Sir Edward
Clark, Dr Michael (Rochford)Heathcoat-Amory, David
Clifton-Brown, GeoffreyHendry, Charles
Coe, SebastianHicks, Robert
Conway, DerekHill, James (Southampton Test)
Coombs, Simon (Swindon)Hogg, Rt Hon Douglas (G'tham)
Cope, Rt Hon Sir JohnHoram, John
Cormack, Sir PatrickHordern, Rt Hon Sir Peter
Couchman, JamesHoward, Rt Hon Michael
Cran, JamesHowarth, Alan (Strat'rd-on-A)
Currie, Mrs Edwina (S D'by'ire)Howell, Rt Hon David (G'dford)
Curry, David (Skipton & Ripon)Howell, Sir Ralph (N Norfolk)
Day, StephenHughes, Robert G (Harrow W)
Deva, Nirj JosephHunt, Sir John (Ravensbourne)
Dorrell, Rt Hon StephenHunter, Andrew
Douglas-Hamilton, Lord JamesHurd, Rt Hon Douglas
Dover, DenJack, Michael
Duncan, AlanJackson, Robert (Wantage)
Duncan-Smith, IainJenkin, Bernard
Jessel, TobyRobinson, Mark (Somerton)
Johnson Smith, Sir GeoffreyRoe, Mrs Marion (Broxbourne)
Jones, Gwilym (Cardiff N)Rowe, Andrew (Mid Kent)
Jones, Robert B (W Hertfdshr)Rumbold, Rt Hon Dame Angela
Jopling, Rt Hon MichaelRyder, Rt Hon Richard
Kellett-Bowman, Dame ElaineSackville, Tom
Kirkhope, TimothySainsbury, Rt Hon Sir Timothy
Knapman, RogerScott, Rt Hon Sir Nicholas
Knight, Mrs Angela (Erewash)Shaw, David (Dover)
Knight, Greg (Derby N)Shephard, Rt Hon Gillian
Kynoch, George (Kincardine)Shepherd, Colin (Hereford)
Lait, Mrs JacquiShepherd, Richard (Aldridge)
Lamont, Rt Hon NormanShersby, Michael
Lang, Rt Hon IanSims, Roger
Lawrence, Sir IvanSkeet, Sir Trevor
Legg, BarrySmith, Tim (Beaconsfield)
Leigh, EdwardSoames, Nicholas
Lennox-Boyd, Sir MarkSpeed, Sir Keith
Lester, Jim (Broxtowe)Spencer, Sir Derek
Lidington, DavidSpicer, Michael (S Worcs)
Lightbown, DavidSpink, Dr Robert
Lilley, Rt Hon PeterSpring, Richard
Lloyd, Rt Hon Sir Peter (Fareham)Sproat, Iain
Lord, MichaelSquire, Robin (Hornchurch)
Lyell, Rt Hon Sir NicholasStanley, Rt Hon Sir John
MacGregor, Rt Hon JohnSteen, Anthony
MacKay, AndrewStephen, Michael
Maclean, DavidStern, Michael
McLoughlin, PatrickStewart, Allan
McNair-Wilson, Sir PatrickStreeter, Gary
Madel, Sir DavidSumberg, David
Maitland, Lady OlgaSykes, John
Major, Rt Hon JohnTapsell, Sir Peter
Malone, GeraldTaylor, Ian (Esher)
Mans, KeithTaylor, John M (Solihull)
Marlow, TonyTaylor, Sir Teddy (Southend, E)
Marshall, Sir Michael (Arundel)Temple-Morris, Peter
Martin, David (Portsmouth S)Thomason, Roy
Mates, MichaelThompson, Sir Donald (C'er V)
Mawhinney, Rt Hon Dr BrianThompson, Patrick (Norwich N)
Mellor, Rt Hon DavidThornton, Sir Malcolm
Merchant, PiersThurnham, Peter
Mills, IainTownend, John (Bridlington)
Mitchell, Andrew (Gedling)Townsend, Cyril D (Bexl'yh'th)
Mitchell, Sir David (NW Hants)Tracey, Richard
Moate, Sir RogerTrend, Michael
Monro, Sir HectorTwinn, Dr Ian
Montgomery, Sir FergusVaughan, Sir Gerard
Moss, MalcolmViggers, Peter
Needham, Rt Hon RichardWaldegrave, Rt Hon William
Nelson, AnthonyWalden, George
Newton, Rt Hon TonyWalker, Bill
Nicholls, PatrickWaller, Gary
Nicholson, David (Taunton)Ward, John
Nicholson, Emma (Devon West)Wardle, Charles (Bexhill)
Norris, SteveWaterson, Nigel
Onslow, Rt Hon Sir CranleyWatts, John
Ottaway, RichardWells, Bowen
Patnick, Sir IrvineWhitney, Ray
Pattie, Rt Hon Sir GeoffreyWhittingdale, John
Pawsey, JamesWiddecombe, Ann
Peacock, Mrs ElizabethWilletts, David
Pickles, EricWinterton, Nicholas (Macc'fld)
Porter, Barry (Wirral S)Wolfson, Mark
Porter, David (Waveney)Wood, Timothy
Portillo, Rt Hon MichaelYeo, Tim
Powell, William (Corby)Young, Rt Hon Sir George
Redwood, Rt Hon JohnTellers for the Noes:
Renton, Rt Hon TimMr. Sydney Chapman and
Robathan, AndrewDr. Liam Fox.

Question accordingly negatived.

Further consideration adjourned.—[Mr. Conway]

Bill, as amended (in the Standing Committee), to be further considered tomorrow.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

On a point of order, Mr. Deputy Speaker. Some days ago, I tabled a series of questions to the Home Secretary about a contract issued in respect of a computer for the probation service. Those questions were duly accepted, and are listed as Nos. 186, 198, 209 and 231 on the Order Paper today.

It is now after 10 o'clock and, in accordance with the normal conventions, those questions which were due for answer today should have been notified to me either by way of a written answer or by being tabled for the press. Neither has happened. It is clear that the answers to those questions will be in Hansard tomorrow, and it is also clear that the Home Office—officials of which I have been trying to contact all night—has deliberately avoided answering the questions on the named day. The reason it has done so is undoubtedly suspicious. We are talking here about a £20 million computer contract which may well be—

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I think that I can help the hon. Gentleman. He must take the matter up with the Minister concerned, as it is not a matter for the Chair at this stage.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

Further to that point of order, Mr. Deputy Speaker.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I have ruled on the hon. Gentleman's point of order.

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. I have ruled on it, and there can be no further points of order on that matter.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

No. Several times in the past, the Chair has ruled that it is the convention that Members—

Photo of Mr Geoffrey Lofthouse Mr Geoffrey Lofthouse , Pontefract and Castleford

Order. The Chair has just ruled, and there can be no further points of order on that subject.