'Duties of relevant gas shipper or supplier in relation to gas fittings

Orders of the Day — Gas Bill – in the House of Commons at 5:30 pm on 16th May 1995.

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23. (1) It shall be the duty of any relevant gas shipper or supplier to make arrangements for the supply of spare parts for, or replacements of, any gas fitting or appliance of a type approved under Regulations made under this Act or under any other enactment.
(2) The Secretary of State shall—

  1. (a) make Regulations specifying the nature and extent of the obligations imposed by subsection (1) above upon relevant gas shippers or suppliers; and
  2. (b) monitor the carrying out of those obligations, which may be modified or added to in further Regulations.
(3) Regulations made under subsection (2) above shall be made by statutory instrument which shall be subject to annulment in pursuance of a Resolution of either House of Parliament.'.
We now move to an issue that is also of great importance to the consumers of gas, of whom notionally the Minister is in favour—that is presumably why he has introduced the Bill. I say "notionally", because there is an element of doubt, as we heard during the last debate.
Amendment No. 88, supported by my hon. Friend the Member for Newham, North-East (Mr. Timms), relates to spare parts and the replacement of approved appliances—everything inside the house which is known in the technical jargon as "upstream" of the supply, which means everything the other side of the meter which is the responsibility of the householder who pays for the gas and not of the supplier.
Newham knows all about the production and supply of gas. In Victorian times, and until fairly recently—before North sea gas—we had more than 700 acres of land dedicated to this very purpose. We had Beckton, one of the biggest gas works in the world, 90 miles of railway lines, and a workshop capable of making railway locomotives. So gas skills are indigenous to the area.
The beginnings of the gas industry, from the earliest days of the Gas Light and Coke company, whose works were in Marsham street—those round foundations are reputed to have something to do with original gasholders—were approved in this House. Gas was originally used for lighting; power and heating came later. The rules governing its use were approved in this very House. The interests of the producer were balanced against those of the consumer of a very dangerous but very useful product.
Over the years, all the private gas companies linked the safety of their product with the safety and interests of consumers. If a gas appliance goes wrong, or is faulty, the consequences are much greater than with electricity. If a fuse blows, that is inconvenient; if there is a gas leak, or something is wrong with a gas appliance, it is a very different matter.
The historic link between the obligations on the supplier and the safety of the consumer and the general public was a principle well-known to this House. I understand, however, that this Bill disaggregates the two. There is, necessarily, a well-known set of regulations relating to approved appliances. One cannot just connect any appliance from any manufacturer to any supply of gas. The calorific value has to be right; the appliance has to be adjusted correctly and approved. If not, problems will follow. That is only common sense.
Over the years, the Gas Light and Coke Company, or North Thames Gas as it became—British Gas as it now is—prized that link. Many of my constituents were involved in gas servicing and were proud of it. Now, for the first time, the pattern is to be disrupted and possibly even destroyed. Time and again with privatisation measures, the Government have given us assurances that all is well. As I shall show briefly, however, this time things have begun to go wrong even before the legislation leaves this House.
Some 200 of the 700 acres that I have mentioned were used, first by the North Thames gas board and then by British Gas, as a service centre for the whole of London, originally, and then for the whole of south-east England. Until not long ago, that service centre was being expanded. Workshops and depots were being closed as far away as Letchworth and other parts of the south-east, and the plan was to build a depot at Bromley-by-Bow, to the east of the River Lea—in West Ham, not Tower Hamlets. It was a good service site with plenty of roads, space and good workshops.
That integrated site is now to be broken up, under the legislation, into five or six units run by different firms. Wire fences are even being put up on the site. That does not seem to make sense, but the Government think it a good thing. The main point about the site is the giant store. My hon. Friend the Member for Newham, North-East and I have visited it, so we know that it houses no fewer than 20,000 spare parts. No doubt there are various types of each part; the mind boggles at how many bits and pieces are stored there in total—all in giant stacks, serviced by the latest unmanned electronically guided vehicles.
The parts are sent to service engineers and distribution depots all over south-east England in just a few hours. The parts are packed away in trailers which return to the warehouse and take them away overnight to the depots. Like many Londoners, I have personal experience of British Gas's relatively good efficiency. It had a bad time in the conversion period, but since then I have found the company extra-efficient.
Within the company finances, I suspect that the process may be something of a loss leader. As we know, however, loss leaders produce more profits and turnover: that is what they are there for. If the organisation is split up by the Bill into different businesses—to be known, I believe, as service and sales—one section will be left more vulnerable than the other as the two cease to be integrated and each tries to make a profit for itself without any statutory responsibility for the welfare of the other.

Photo of Stephen Timms Stephen Timms , Newham North East

On the basis of our visit, does my hon. Friend agree that the facility at Bromley-by-Bow is an impressive operation which has been the beneficiary of substantial investment by British Gas in the recent past? Does he further agree that there is a link between the uncertainty which now hangs over that operation, and perhaps others like it, which the amendment addresses, and the marked fall in customer confidence in British Gas as reported by the Gas Consumers Council in its 1994 annual report?

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The fact of rising complaints about the gas industry is well known. I think that I can satisfy my hon. Friend because even before the legislation has completed its passage through the House changes are being made in plans for servicing in particular. Spare parts and servicing go together. If one has an annual inspection of gas appliances—I am not declaring an interest, but all consumers do—if there is something wrong, the service engineer promises to come back the next day or the next week with a spare part. He has got to get it, so it is all part of one thing.

We were told that that giant depot, which I believe is efficient and could have coped with an area larger than south-east England, would be closed—just like that—and 200 or 300 people were to be made redundant, despite their skills and their pride in their work. Pride in service is the sort of thing that Conservative Members are keen on. Those people were not to be made compulsorily redundant: they could have had a job in Derby or Nottingham or somewhere like that. The whole gubbins, the whole bang shoot, was to be dissipated.

I wrote to British Gas to ask what it was all about. I wrote a thesis several pages long, which I will not bore the House with, analysing the Gas Bill. I received a reply from Mr. Norman Blacker, one of the directors of British Gas, who had been allocated the task by Mr. Giordano, who also sent me a short reply. Mr. Blacker said: Your letter also asks about our Service and Retail operations. Our new Service Business Unit already operates in a highly competitive market. Our reorganisation is designed to allow us to compete effectively with the other 40,000 or so companies operating in this field. At the same time we will maintain our aim of providing high standards of service throughout the country. Note that he says "maintain our aim", not "maintain the standards". The letter continued: Service will be introducing home-based working for its engineers to help increase our competitiveness by removing the need for expensive depots which are only used for a short period every day. Customers will not notice any adverse effect as a result of the service they receive from our engineers, who will obtain their work information and parts directly, rather than having to make a special journey to a depot … This should save time during the working day and make for more efficient operations … Details of how this home-based working pattern will be implemented are being discussed with the relevant trade unions. In other words, men in vans, parked outside their homes, having delivered in all sorts of curious places, would cut out the distribution depots.

Photo of Mr Ted Rowlands Mr Ted Rowlands , Merthyr Tydfil and Rhymney

I draw my hon. Friend's attention to an illustration of exactly that. With a fanfare of trumpets, the noble Lord Walker opened a major depot as part of his valleys initiative. It has now been closed. Instead, the engineers go to a green box at the side of a petrol filling station to pick up their bags and instructions. It may be efficient, but it is completely contradictory to the policy adopted only recently by the noble Lord Walker.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

I am not surprised to hear what my hon. Friend says. My recollection is that, other than being very successful in public relations as Secretary of State for Wales—

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

—and Secretary of State for Energy, when I think he was very much concerned with gas, he is some functionary in the gas world. I suppose that he must have come under the scrutiny of another noble Lord in a recent report about which we all know—an interesting link.

5.45 pm

I am grateful to my hon. Friend but, unknown to him, I was coming to same topic. In the Observer on 22 January 1995, an article headed British Gas engineers go to church for spares said: British Gas service engineers are using motorway flyovers, pub car parks and church halls as collection points for spare parts, as the company struggles to introduce a new service infrastructure.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

And petrol filling stations, as my hon. Friend says. I do not think that the Government can deny that. Is that unconnected with what my hon. Friend the Member for Newham, North-East reminded us of, if we needed reminding—the downturn in service standards and upturn in complaints? Does the Minister deny that the one follows the other? That is before the appointed day and before the 40,000 competing service engineers get going.

I wonder what sort of cut-throat competition there will now be in the industry. Is competition really required? We may disagree with double gas pipes in the ground—that may seem stupid enough—or gas from different suppliers going into one house on a take-it-or-leave-it basis, but is it necessary to have people other than suppliers competing? The Minister must either deny that that is going on or accept it and, I hope, support the amendment.

The depot at Bromley-by-Bow, with the skills and loyalty of its staff who are working all the time, is a symbol of service to the public throughout the nation. The knock-on effect of its closure and its replacement by the church hall, motorway flyover and filling station, about which we have just heard from my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), is a symbol of the downturn in the standards of maintenance.

What about the skills in the gas service industry? Many years ago in my other job, I helped to place school pupils—experience outside the House, as Lord Nolan calls it, and very useful—and I found that British Gas apprenticeships were not only the most sought after but were often the start of lifelong careers. Many people from my part of the world and that of my hon. Friend the Member for Newham, North-East served the gas industry for most of their lives and were pleased to do so under the relatively benign regime of the Gas Light and Coke Company and the even better regime of British Gas and the publicly owned sector of it. Their skills and those of the private contractors under some sort of licence which some think is not good enough, were built up on the apprenticeships of the gas industry. What will happen to those skills?

This is part of so-called privatisation. This commodity, which is of great value to us, is not produced privately. It is publicly owned gas in the middle of the North sea, or thereabouts, piped to us. The gas in the North sea cannot be owned other than by the British people. I see that the Minister nods. Under this legislation, it is being privately distributed by a curious system of competition under the regulator. The obligations on the supplier should be to maintain those services that we have had from private and public gas suppliers alike. I believe that that is incorporated in the amendment.

Even if we do not get very far tonight, I am looking to the Minister to deny any of the facts that I have presented and to say why the obligation in the amendment, perhaps in another form, should not be incorporated in this important Bill, which for the first time disaggregates the obligation of the supplier to supply, maintain and provide—at a reasonable cost, of course—for the safety of the equipment upstream of the meter.

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I do not want to be unnecessarily unkind to the hon. Member for Newham, South (Mr. Spearing), but at least some of his obiter dicta suggest that he has not read the Bill in its entirety and does not understand the full implications of what is proposed. In fairness to him, however, I concede that he was concentrating on a constituency point.

The hon. Gentleman failed to appreciate that the 40,000 competitors to whom he and, I believe, Mr. Blacker referred have been around for a long time. For years, they—the so-called Corgi-approved operators—have competed with British Gas, including the element of British Gas that looks after appliances "upstream of the meter", as the hon. Gentleman put it. There has never been any obligation on those operators to stock limitless spare parts; like garages, they have developed a system that has allowed them access to warehouses. I believe that they have sometimes had direct access to British Gas warehouses.

The amendment proposes that new suppliers should be obliged to keep a stock of spares for which, in fact, they would have no use. Many of those suppliers supply only gas, and have no desire to supply appliances. They recognise not only that British Gas will continue—presumably—to provide an effective spares service, but that those 40,000 competitors will do the same. The hon. Gentleman's proposal constitutes an imposition on potential suppliers: it is rather like requiring water companies to supply washers to repair leaking taps, which no one has ever suggested.

I entirely understand the hon. Gentleman's concern about employment in his constituency, and appreciate that, as a constituency Member, he must support the interests of his constituents. I must say, however, that the logic of his amendment is fundamentally flawed. The competitive marketplace has provided many sources of servicing and spares, and I have no doubt that it will continue to do so without the need for legislative intervention.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

My hon. Friend the Member for Newham, South (Mr. Spearing) has done the House a service in highlighting the problems that now face gas consumers. They are of recent making. British Gas is fearful of the opening of a competitive market, and the impact on the public is clear to my hon. Friend and to me—and, I think, to 8 million gas consumers. It is a good prelude to what will happen when the Bill is enacted.

Before 1 January, British Gas service engineers held a range of spares in their vans. Those spares were held in depots throughout the country, in case engineers were called out in an emergency to cut off cookers or heaters because they contained defective parts. That was part of the service for which customers paid, and it enabled engineers to reconnect many appliances because their vans contained standard stock from the depots.

In Committee, the Minister argued forcefully for an end to that practice. He failed to take on board not just the fact that members of the public might be left without a working cooker or heater—which, of course, is a tremendous imposition on the elderly and disabled—but the fact that an irresponsible or, indeed, criminally negligent person might reconnect the appliance without having it fixed. That would mean a cost to the community: not merely the person concerned, but his or her family and neighbours, might be blown up. In his creditable amendment, my hon. Friend the Member for Newham, South seeks to ensure that gas suppliers supply more than just gas itself.

A very old hand—a former director of British Gas, now retired—told me, "The problem with the gas market now is that you do not have to know anything about it; you just have to have a phone, a desk and a sympathetic bank manager. You order the gas on the phone, at beach-head prices, and agree to supply it somewhere—and British Gas TransCo has to put it down its pipes. You have no social obligations; you have no obligations to hold spares that the public might want."

My hon. Friend the Member for Newham, South focused perceptively on my main fear, eliciting a hopelessly inadequate response from the Minister. I fear that the new gas competitors will merely supply gas, and that people who have problems with their gas appliances—regardless of whether they have been supplied by British Gas—will be left to lump it, no matter how old, poor or crippled they may be. I fear that the new competitors, as private contractors, will be able to walk away from the problem.

My hon. Friend rightly sought to pin the Minister down, and he did so with a degree of cleverness which belied the Minister's own clever view of himself. He pinned the Minister down to saying, "Why should people who are simply supplying gas—for that is what competition is about—supply any additional services? Why should they keep spare parts at all?"

Having discussed the amendment with my hon. Friend, I can say that he knows that this excellent measure is likely to receive a sympathetic hearing from people more thoughtful than the Government.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

With the leave of the House, Mr. Deputy Speaker

Photo of Mr Michael Morris Mr Michael Morris , Northampton South

Order. The hon. Gentleman usually knows the rules of the House in great detail, but I must point out to him that on this occasion he does not need the leave of the House to speak.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

I am grateful to you, Mr. Deputy Speaker, but I believe in good insurance policies.

I shall, I hope, find it not too difficult to demolish the logic of the Minister, who claims that I am illogical. He began by saying that I had not read the Bill—I confess that I have not read all of it—and that something in the Bill rendered the amendment redundant. Having implied that the evidence was there, however, he did not produce it. He also said, "Of course I forgive the hon. Gentleman, and pat him on the head: he was making a constituency point, which he had to make. We all know about that, ho ho."

In fact, my point applies to 8 million consumers. It is illustrated by what is happening in a depot in West Ham, which is three times the size of a football pitch and which, according to the accountants, will be too costly to maintain. "Oh," says the Minister, "There will be 40,000 contractors, all ready and waiting. Indeed, they are there now." He means the CORGI contractors.

I shall not go into the details, because we must make progress, but there is considerable worry about the standards to which those so-called CORGI contractors operate. That may have been dealt with in other parts of the Bill. Those contractors have been riding on the backs of the gas suppliers, especially in my part of the world, which is covered by North Thames Gas.

The Minister says, "Well, the contractors will be able to provide spares from somewhere else." Owing to various factors and the involvement of other people, however, the cost of the operation will escalate. Showrooms have been mentioned. I recall that someone in another place about which we are not supposed to know wrote a wonderful article about how he tried to obtain a new electric stove.

It was possible to go to a one-stop shop for electrical appliances, which provided advice and a variety of products, but will that be possible in future? Will it be possible to pay bills, obtain advice, examine appliances and secure spare parts? I very much doubt it. There will not be such a service. The Minister said that there would be an imposition on new suppliers, and therein lies the rub. He is defending the new suppliers but is there not an obligation on all public gas suppliers, whether old or new, to make the supply safe for the consumer?

6 pm

The Minister used water supply as an analogy. Perhaps he does not know that many years ago I had a slight connection with the water industry—not, I hasten to add, in terms of income but as a decorative vice-president of the British Waterworks Association. There is all the difference in the world between a leaking tap and a gas leak. A water leak is visible and the supply can be turned off at the main or other action taken. Perhaps the Minister does not know that water companies readily supplied free washers. A consumer could telephone the supplier, who fitted the washer free. It was covered by the water rates, in the old days when we paid water rates and not water charges. The Minister's analogy with the water industry and water taps is therefore wrong.

It is clear that people want gas and are willing to pay for it, but they want it supplied in a safe manner and they want to be assured that equipment and spare parts are available. The Bill will not maintain the standards to which people in this country have been accustomed from the gas industry for perhaps more than a century. I hope that at some later stage in the progress of the Bill that will be understood and rectified. As I know where the Bill goes next, and as the Government may have second thoughts, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.