Privatised Utilities (Regulation)

Oral Answers to Questions — Trade and Industry – in the House of Commons at 2:22 pm on 12th July 1995.

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Photo of Richard Burden Richard Burden , Birmingham, Northfield 2:22 pm, 12th July 1995

To ask the President of the Board of Trade what plans he has to change the mechanisms for regulating privatised public utilities. [32137]

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

The mechanisms for regulating the privatised utilities have evolved over time, in response to the practical experience of the various directors general. Independent regulation has delivered real benefits to consumers and to wider market development.

Photo of Richard Burden Richard Burden , Birmingham, Northfield

Does not the Minister recognise the frustration among the British people who regularly see more and more excesses in the privatised utilities? Today's news about the water industry and share options is just the latest example, but the Government say that they have nothing at all to do with them. When they were forced to listen, they set up the Greenbury committee which offers no guarantee that anything will be done. When will the Government accept that they have a responsibility to enforce decent standards in this area, and when will they establish a regulatory mechanism that puts the consumer first and does not fudge matters in the way that the Government have done?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I am not sure whether the hon. Gentleman was in the House earlier when we discussed this issue. He should ask his right hon. Friend the Member for Sedgefield (Mr. Blair), who led for the Opposition against electricity privatisation, why he did not raise or identify the whole issue of share options at that time. The hon. Gentleman should ask his right hon. Friend why he failed to pick that up. The overall benefits of privatisation are there for all to see—reduced prices for consumers in real terms. Electricity prices are significantly down. They are sharply down for gas and there will be significant additional price reductions for electricity over the coming months.

Photo of Mr Jacques Arnold Mr Jacques Arnold , Gravesham

My right hon. Friend will be well aware of the considerable success of the public utilities in obtaining international contracts for Britain. For instance, the water industry has obtained £2,000 million-worth of contracts for Britain in the past year alone. How does it help our public utilities to gain such business for Britain if Opposition Members are forever slinging mud at them?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I very much agree with my hon. Friend. British Gas is competing and winning around the world, and a number of our water utilities are doing exactly the same. Our electricity utilities, particularly the generating companies, are investing effectively, and that will bring dividends to the United Kingdom and provide significant employment in supplying companies in the UK and to individuals who are directly employed. That is a good result for Britain, and the Opposition should not drag Britain down in their approach to this important issue.

Mr. O'Neill:

Is the Minister aware that there is widespread concern about the quality of treatment received by the regional electricity companies at the hands of the regulator? Is he aware of the frustration at the lack of transparency and accountability shown by Professor Littlechild and his staff? Will he take steps to ensure a more businesslike and more commercially aware approach to regulation by Offer? Does he not realise that the companies and the consumers require a more balanced approach? At present, the regulator has neither sympathy for the consumers nor understanding of the commercial realities of the business in which he operates. Surely he can get the balance right and try to satisfy them. If he cannot, will the Minister take steps to remove him?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I am surprised at the hon. Gentleman. I thought that he had accepted the case for independent regulators. It does nothing for the independence of regulation and the effective operation of the industry for regulators to be under partisan political attack on a personal basis. That does the hon. Gentleman no credit at all.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

Does my right hon. Friend agree that, when these recently privatised utilities were in the public sector, there was no one acting on behalf of the consumer because there were no regulators? On top of that, those utilities were highly inefficient and were able to invest in their infrastructure only when the Treasury let them do that. Does he further agree that the position is not only better in terms of the money that the public sector has to provide, but better for consumers, who get better value for money?

Photo of Mr Timothy Eggar Mr Timothy Eggar , Enfield North

I completely agree with my hon. Friend, and there is a further point. There is a great deal of transparency in the way in which the regulatory system works. The issues are put on the table for everybody to consider but they were never available for consideration in that way when those industries were nationalised and decisions were taken bilaterally in ministerial offices. The last thing that Labour took account of when it was in government was the interests of consumers. It took account the whole time of its political interests and the interests of the then Labour-run Treasury.