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Orders of the Day — Utilities Bill

Part of the debate – in the House of Commons at 3:31 pm on 31st January 2000.

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Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry 3:31 pm, 31st January 2000

I hope that I shall be able to do so later, when I have made some progress.

The Bill will fill an important gap by allowing regulators to impose financial penalties for breaches of licence conditions, other obligations and service standards. Those penalties will be used to address company failures such as the mis-selling mentioned by my hon. Friend the Member for Chorley, interruption of supply, and delays in reconnection.

Several Members raised directors' pay. I want price-regulated utility companies to make a clearer link between directors' pay and the achievement of service standards. The Bill will apply pressure on utility companies to link directors' pay with the level of service provided, by requiring price-regulated utilities to publish the links—if they exist—between directors' pay and the service level achieved. Such transparency is necessary if the regulatory system is to be seen to serve the consumer interest, and, in the long term, it is also in the interests of the companies themselves. If consumers see directors awarding themselves high salaries when service is inadequate, that will not benefit utility companies.

The Bill, however, is about more than "naming and shaming". It provides real incentives for directors to give customer service standards the priority that they deserve. We have already urged the regulators to take account of levels of consumer service and satisfaction when setting new price caps, and the new powers to impose financial penalties will focus minds yet further. Shareholders will see that it is in the interests of the company to demonstrate a clear link between directors' pay and the achievement of service standards.

Hon. Members on both sides of the House have raised the importance of a voice for consumers being effective. Consumers need powerful champions to articulate their needs and interests. Under the current regime, which was established by the Conservatives, consumer bodies are too closely related and connected to the regulator. They have few rights and no guaranteed access to information to discharge their powers fully.

The Bill will establish independent consumer councils for each sector to act as effective consumer champions. More important, they will be independent of the regulator. They will have rights of direct access to the information that they need from the regulator and the utilities to carry out their functions effectively. They will be charged with investigating and resolving complaints. They will provide a single point of contact for consumers. That will end the uncertainty about who consumers should turn to for assistance and advice.