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Orders of the Day — Utilities Bill

Part of the debate – in the House of Commons at 8:53 pm on 31st January 2000.

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Photo of Christopher Chope Christopher Chope Conservative, Christchurch 8:53 pm, 31st January 2000

Much depends on the way in which that is done. At present, the water regulator has responsibilities to pay attention to those who suffer from disabilities or are otherwise disadvantaged, but even the Director General of Ofwat thinks that what is proposed in the Bill is over the top in imposing rigid new requirements on the regulator. I was going to refer later to the exact words that he used in a recent article. The general proposition is fine. We should ensure that responsible providers of utilities take into account the needs of special groups. However, the Bill is over the top because it imposes on the regulators substantial requirements which can be met only at tremendous expense to other consumers.

What protection exists if the Minister or the Secretary of State acts against consumers' interests? The Secretary of State admitted that there was none, and effectively said that we would have to rely on his political judgment. That is a cause of deep anxiety because the most topical example of his judgment is his imposition of restrictions on new entrants into the electricity market. He has forbidden licences to those who provide gas-fired generation. He justified such anti-competitive intervention on the specious ground of security of supply. He repeated that today. I say that the reason is specious not because of my prejudice, which knows few bounds, against the Secretary of State but because his Department's advisers have criticised it. The current energy report shows that they have rejected the reason as unsustainable. The Director General of Ofgem also told the Select Committee that it has no substance. It shows that the Secretary of State is more interested in trying to prop up the coal industry as part of a muddled energy and climate change policy. That policy has led the Government to decide to restrict the ability of new entrants to compete for electricity generation.

A headline in last week's Utility Week magazine was "DTI advisers said gas ban was unjustified". The accompanying article stated: Independent advisers to the Department of Trade and Industry told Ministers in an unpublished report"— that is the story of this Parliament— that the government's current block on new gas-fired generation was unwarranted and unjustified on either security or diversity grounds. The Secretary of State responds by telling us to trust him. He takes enormous powers to control the regulators, supposedly in consumers' interests, but if the regulators and other independent experts tell him that he is acting against consumers' interests, he claims that they are wrong and refuses to take any notice of them. That is intolerable.

My hon. Friend the Member for Rutland and Melton (Mr. Duncan) challenged the Secretary of State about Ian Byatt's comments on the reform of utility regulation. Ian Byatt has completed a successful period of 10 years as the water regulator. In a lecture entitled "Checks, Balances and Competing Pressures—Looking Forward at the Role of the Regulator" to mark the 10th anniversary of Ofwat in October last year, Ian Byatt made pertinent points about the legitimate role of the regulator and the proposed reform of utility regulation. I shall not quote extensively from the lecture, but I commend it to hon. Members who are interested in an informed view, based on 10 years' experience, from an acknowledged world expert on regulation, who has fallen out with the Government in a big way over recent months because of the changes that they propose to the regulatory regime.

The Secretary of State said, rather disingenuously, that Ian Byatt was the only regulator who had complained. Perhaps that is not unrelated to the fact that Mr. Byatt is giving up his role this summer, and is no longer beholden to the Secretary of State, whereas the other regulators depend for their future livelihoods on keeping in with the Secretary of State. That is another comment on the total lack of independence that the regulatory regime possesses.

In his lecture, Mr. Byatt said, among other things: Ministers recognise the need for proper accountability. They wish to issue statutory guidance on social and environmental matters to which regulators would pay regard. Where, however, social or environmental measures have significant financial implications for consumers or for the regulated companies they recognise that they should be implemented through new, specific legal provision rather than through guidance. Although almost exactly the same words appear on page 5 of the Green Paper "A Fair Deal for Consumers" under the heading "The Social and Environmental Framework", the Bill is totally different. Unlike the Green Paper, it does not say that the Government will implement social and environmental measures which have significant financial implications for consumers or for regulated companies other than by regulations made under it rather than through primary legislation, which is what they promised originally.

Other hon. Members want to participate in the debate, so I shall conclude. I hope it is clear to the House that the fact that I and most Conservative Members think that the Bill is good to a small extent is totally outweighed by many horrendous provisions that will do enormous damage to British industry.