HL Deb 11 May 1989 vol 507 cc751-810
Lord Glenarthur

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.

Moved, That the order of commitment be discharged.—(Lord Glenarthur.)

On Question, Motion agreed to.

3.20 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Baroness Hooper.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 [The Director General of Electricity Supply]:

Lord Williams of Elvel moved Amendment No. 1: Page 1, line 8, after ("appoint") insert ("a person with experience in the electricity supply industry as").

The noble Lord said: Before turning my attention to the particulars of the amendment, it might be appropriate if I make one or two general remarks about our proceedings in Committee. The Opposition intend to conduct themselves in a constructive manner by trying to improve the Bill as we go along. The Opposition will not try to delay proceedings beyond the measure required by our duty to scrutinise the Bill properly suggesting amendments where we feel they are appropriate. That is the spirit in which we set out on this Committee stage. I hope that the Government will respond in kind by recognising that our amendments are seriously meant and are to be seriously debated. We on the Opposition Benches would regard it as the Government's job and not ours to keep house at any particular time during the passage of their Bill.

I turn to Amendment No. 1. Clause 1 deals with the appointment of the director. The director has formidable tasks: these are set out quite clearly in the Bill. He has to supervise an extremely complex industry. The electricity supply industry is much more complex than British Telecom and, in our view, much more complex than British Gas. He has not only to supervise the whole industry but also two parts of the industry operating under completely different regimes. There is the England and Wales section (if I can refer to it as such) and the Scottish section. Therefore he has a formidable task.

The director has to look after the licensing arrangements and make sure that they are properly observed. As we shall find out when we reach that part of the Bill he also has to appoint the consumers' committees, receive the representations that they make and generally look after them. As many Members of the Committee have pointed out, electricity is quite different to other industries in that the product cannot be stored. Gas can be stored and also Mars bars; but electricity cannot. This means that the director has to have the ability to react very quickly to events as they unfold. It seems to us that the person to be charged with this function has to have some experience of the electricity supply industry. It is almost inconceivable that anyone can be appointed director general who is not expert in one form or another; namely, either in the generation of electricity or in the operations of the grid, high voltage transmission or low level transmission and distribution at the area board level.

The director has to monitor the whole nuclear question; therefore he has to know how that operates. I believe the noble Baroness will agree with me when I say that I am sure that both of us have been through the experience of trying to learn about this industry. I am sure she will agree that it is extremely complicated and that a great deal of technical expertise is required to know what the problems are, let alone what the solutions might be. I hope very much that the amendment I am moving will find some welcome from the Government because I believe it is sensible.

I conclude my introduction to the amendment by commenting on what I believe to be a rumour. I hope that it is only a rumour and that the noble Baroness will be able to squash it. The rumour is that an appointment to the post of director general has almost been made but there is a problem because the Treasury will not agree to the remuneration which he or she (I do not know which it is) wants. It would be odd if an appointment were made while the Committee is discussing this clause at this time. I hope very much that the noble Baroness will be able to assure me that what I have said is not the case. I beg to move.

Lord Renton

At first sight the amendment looks as though it might have something to commend it. But one must bear in mind that one of the things it will do is to limit the field of choice of talented people required to fulfil the duties specified in the Bill. When we consider Clause 2, he has to establish consumers' committees. Presumably, one of his talents will have to be that of a watchdog on behalf of consumers. That does not necessarily mean that you have to have someone who is a technical expert in the production of electricity. I agree that there are other duties he will have to perform. Under Clause 3(1) he and the Secretary of State will have, to secure that all reasonable demands for electricity are satisfied". That will mean being met if necessary by the building of new power stations in a particular area. In addition they will have, to secure that licence holders are able to finance the carrying on of the activities". That looks as though the man concerned will have to have some talent for financial matters and not necessarily the technical skills for the production of electricity. In addition they have, subject to subsection (2)... to promote competition in the generation and supply of electricity". It is within the knowledge of all Members of the Committee that from time to time we call on eminent people to perform duties in a section of private or public interest in which they have never performed before because their general ability and experience in other fields makes them likely to be competent to perform. I hope I am not being too historical when I say that in the days when transport was nationalised, the party opposite appointed a retired major-general as chairman of British Road Services. As a staff captain he may occasionally have had to move vehicles about——

Lord Callaghan of Cardiff


Lord Renton

Yes he did, and I remember him well. He was a splendid man and very charming. As well as the job could be done, he did it.

Lord Callaghan of Cardiff

I am grateful to the noble Lord for giving way. Not only do I remember him; at the time I was Parliamentary Secretary to the Ministry of Transport. He was far more than a staff captain; he was the Quartermaster General for a very considerable period and knew a very great deal about transport. That was the reason for his appointment.

Lord Renton

Having been a naval officer and not an army officer, as some of us were, the noble Lord may not have realised that as director general of ordnance he was mainly responsible for ensuring that the army had sufficient arms and ammunition. That was his main purpose. As nearly every army officer had something to do with transport, no doubt he knew something about it. He was to organise the whole of the road services of the country without having had specialised experience in doing so.

I mention that as an example. One could give various others, some of them popular and others less popular. But do not let us have too narrow a view of this matter. I shall be very interested to hear what my noble friend has to say. If she is going to accept the amendment despite what I say, then I shall have stuck my neck out very hard, but it will not be the first time that I have done so.

3.30 p.m.

Lord Hatch of Lusby

There are two points arising from this amendment and both were mentioned by my noble friend Lord Williams of Elvel. The first—the one with which he finished his introduction—seems to be of paramount parliamentary importance. It would surely be a mockery of the parliamentary process if the Government did not listen to the debates in Committee, at Report stage and on Third Reading regarding the requirements of Parliament in respect of the person who is to be appointed to this key role.

I would add to what my noble friend said that the expertise within the electricity industry is vital not just because of its technicalities but also because we are in the midst of a whole series of arguments and discussions about the electricity industry and its impact on society as a whole. On this issue I hope that, experience in the electricity supply industry", is taken to mean a profound knowledge of all aspects of energy production and energy conservation and of the place of energy within our society not just today but over the next 20 to 30 years.

The amendment refers to, a person with experience in the electricity supply industry". I hope that the views which were expressed at Second Reading and those that will be expressed in Committee, on Report and at Third Reading will be taken into account not only in relation to the technicalities of the electricity industry but also in the whole social debate, on which the noble Baroness and I have not exactly crossed swords but exchanged views at Question Time and in debate. I hope that such a person will have a broad enough mind to encompass the debate about nuclear power, energy conservation, the greenhouse effect and the necessity for the reduction of carbon dioxide produced from fossil fuels. Those are the issues that should be taken into consideration when such a person is appointed.

Therefore no even preliminary conception of who should be appointed should be reached before Parliament has finished its full discussion of the whole effect of the Bill. The Government should take into account the views expressed in this Chamber and in another place when they are deciding who should be this supremo figure and what qualities he or she should have.

Lord Peyton of Yeovil

I do not believe that the amendment is necessary for two reasons. First, while I do not entirely exclude the possibility of governments behaving from time to time in a foolish way, I cannot think that any Minister would be so idiotic as to offer this extraordinarily difficult and formidable task to anybody who was not well versed in the affairs of the industry. Secondly, I do not believe that anyone would have the gall to accept such a formidable task unless he were well versed in and well informed about the affairs of the industry.

The task of anybody supervising so complicated and sophisticated an industry would at any time be immense. It will be far greater at a time when the industry is exposed to drastic change with no one quite certain where it will end up.

I should like to make one further point about the amendment. I am considerably surprised and a little dismayed that the Government did not succeed at a very much earlier stage in finding a suitable candidate for this post. There must be a great deal of preparatory work going on now with the outcome of which this unknown character will be deeply involved. I cannot help feeling that it will be a matter of general regret—and perhaps for him as well—that he was not involved at an earlier stage when he could perhaps have had a helpful influence on its formation.

At an earlier stage I asked the Government about the appointment. I was then told that it would be wrong to make such an appointment before the Bill had received the approval of Parliament. I cannot believe that Parliament would not have been very understanding of the position of the Government had they made an appointment earlier on, the reasons for doing so being as cogent as they are. I am not crossing swords with the noble Lord, Lord Williams, on this point but I very much hope that before our proceedings in this Committee are concluded the Government will be able to come forward with a name and a definite appointment.

The rumours that a person has been selected but that as yet a salary has not been agreed are disturbing. The person required will need to possess a knowledge of the industry, be well versed in the law of contract, be competent to steer himself and others through a cobweb of regulations, and have a certain familiarity with the extraordinary ways of government. Those will be essential requirements as regards the person who will take this huge responsibility. If the Government can lay their hands on a person of the necessary genius I hope that they will not lose the opportunity simply because they would not stump up the money.

Lord Lloyd of Kilgerran

In the absence of my noble friend Lord Ezra perhaps I may say a few words in support of the amendment. Since I have had the privilege of being a Member of this Chamber I have noticed a great change in the attitude of noble Lords towards scientific and technical matters and the administration of industry. This has arisen because of the success of committees such as the Science and Technology Committee, of which I had the privilege to be a founder member, and the EC Committees, especially in regard to research and development activities. It has become clear to me that noble Lords have made a great effort to break down the cultural blockage that exists in many areas towards the ideas of scientists, technologists and those experienced in industry.

The noble Lord, Lord Renton, gave us a short history lesson. I think that he admitted he was a little old-fashioned as regards developments. Being the distinguished lawyer that he is he indicated at the beginning of his speech that he was inclined to support the amendment. I hope that by now, having heard the remarks of the noble Lord opposite who intervened, he has changed his mind. It seems to me that it is very opportune that the amendment has come before this Committee and it should therefore have the complete support of all its Members.

Lord Renton

Perhaps I may correct the noble Lord. I opened my speech by saying that at first sight the amendment had something to commend it. I then used the word "but" and that was a prelude to my arguing that it should not be accepted.

Lord Lloyd of Kilgerran

If I may say so, I am very familiar with the techniques of very distinguished lawyers like the noble Lord, Lord Renton. He has been kind enough to correct me, but I think that he is wrong to use the word "correct". He is now trying to explain to Members of the Committee that he has some sympathy with the amendment.

Lord Campbell of Croy

I should like to say very briefly that I do not think that this amendment is necessary, although I do not know whether my noble friend will accept it. However, I am always against including in legislation any provision which is likely to restrict the Government's choice of the most suitable, best and available person for a position. Indeed, one cannot always foresee who the candidates may be. I should be most surprised if the person eventually appointed does not have experience of the electricity industry.

I should like to take up one point made by the noble Lord, Lord Williams. At this very early stage in Committee he said that we cannot store electricity. Of course in general he is right; but I should like to draw attention to the pump storage schemes in the hydro-electric areas of generation of electricity. In effect, in that generation, we have been able to store electricity by pumping up to lochs on hillsides during off-peak periods. It has then been useful to have extra electricity available at peak periods.

Lord Williams of Elvel

I am of course aware of the pump storage facilities; indeed, coming from Wales who could not be aware of such a system. However, that relates to an infinitesimal amount of electricity compared with the general amount which is transmitted through the grid every day.

Lord Campbell of Croy

I had intended to say that. They are only a small part of the generation but, nonetheless, that is an important element for the very reason which the noble Lord gave when he said that it is not otherwise possible to store electricity.

3.45 p.m.

Lord Stoddart of Swindon

The noble Lord, Lord Peyton, said he believed that the Government would be sensible and would appoint a person of the right quality, who had the right qualifications, to this post. I must say that he has a touching faith in the Government which I do not necessarily share. One of the things which we fear is that the Government will appoint the person who will accept the lowest possible salary. That is what worries some of us.

The fact is that this is a complex industry. It is an industry of many parts. It will need someone who has some qualification and who knows something about the operation of the industry so that he will be able to regulate it as it should be regulated. My noble friend Lord Hatch mentioned some of the aspects of importance which will face the person who will regulate the electricity supply industry. For example, the person will need to know if he is to protect the interests of consumers not only as regards security of supply but also as regards price. He will want to know what the planning margin should be. He will be required to know exactly how much excess plant capacity should be available.

When I was a member of the Select Committee on energy there were members of that committee with experience of the industry and we were able to tackle the CEGB and the South of Scotland Electricty Board about this planning margin. We discovered that it was excessive in England and very excessive in Scotland. Indeed, in Scotland there was a planning margin of well over 100 per cent.; in England it was over 33 per cent. Those aspects had an impact not only on price but also on the future building programme of the electricity supply industry. Moreover, because the planning margins were set too high, people both in England and in Scotland were paying too much for their electricity and too much of our engineering capacity was being used to build power stations which we did not need.

The position requires someone with considerable expertise in order to understand such problems. It will also need someone who understands that the electricity supply industry, because of its very nature, will supply electricity rather than go in for conservation. It will be necessary for the regulator to be able to argue the case that it will be far better for public money—or private money—to be spent on conserving energy rather than on building new power stations. It will need to be someone with some expertise in the industry who will know about such matters and who will therefore ask the relevant questions.

The amendment seems to me to be such a simple amendment; but it is a relevant one. It would create a great deal of confidence in the Government if the noble Baroness, when she comes to reply, would say that she understands the points which have been made and that she will accept the amendment. I hope that at the very least she will treat the matter very seriously and say that she will consider it further.

Baroness Phillips

I should like to take up a point made by the noble Lord, Lord Renton. I think that there is a great necessity for the amendment. At present we are discussing another most important Bill in this place. We are taking over another industry from which one should never make a profit. The person who will run that industry has been a Member of another place. Indeed, I believe that the appointment has already been announced before the Bill has passed through Parliament. That seems to me to be a slightly strange way of operating democracy. The assumption is that the Bill will become an Act of Parliament and therefore one should get the whole operation ready before the legislation has passed through Parliament. It smacks slightly of a dictatorship.

It may be that the person appointed to the post of director general in respect of the water industry is very worthy—although I have not checked his curriculum vitae. However, as I understand it, he was a Member of Parliament with a rather diverse background and I do not think that he has any profound knowledge of the great industry which he will be handling.

The analogy of the chairman of British Rail has been used. I am sure that many Members of this place have been chairmen of quite important operations—unpaid as a rule, and honorary—but there has always been a paid officer, the director, who has specialised knowledge of the particular things being handled. I have had the privilege of occupying both offices, although I hasten to say not in an industry the size of the water industry or indeed of the electricity industry, but there is a distinct difference between the two. The paid officer, the director, has to have very specialised knowledge, while the chairman is there as the holder of an office, so to speak, in a situation rather like that which exists in a watchdog operation.

I should like to put in a plea here and say that it is most important that we should have precisely what is requested in the amendment. If Members of the Committee want history, I was a member of the Fulham local authority council many years ago when we took over a private electricity board. We had the cheapest electricity in the whole of Great Britain and the business was very efficiently run. We had a chairman but the man who ran it was what they then called the chief engineer, a man well versed in the understanding of the industry he was running. It was very successful. That was when the next door borough, Wimbledon, had private electricity which was three times as expensive and definitely more inefficient. I know that we have moved on a little from there but the principle remains the same. I plead with the Government to take the amendment to their heart.

Baroness Hooper

Perhaps as a start I should say that I have noted what the noble Lord, Lord Williams of Elvel, has said on the conduct of our proceedings. I am pleased to have his assurances. I am also grateful to the noble Lord for moving the amendment, since it gives me a chance to explain how we see the role of the director and what sort of person is needed to fill this important post.

I can assure the noble Lord, Lord Stoddart of Swindon, that I have listened with interest and care to the suggestions made. I appreciate the concern expressed that the director general should be knowledgeable about the electricity supply industry or at the very least be a technical man or a scientist. I am glad too that the noble Lord explained what he meant by "experience", since to some extent we all have experience of electricity supply as consumers. I can assure the noble Lord that the appointee will be bound to have at least that experience.

Furthermore, under Clause 45 of the Bill the director will have a duty to keep under review activities, connected with the generation, transmission and supply of electricity", and to collect information about those activities so that he can discharge his functions under Part I of the Bill effectively. That will of course enable him or her to broaden and develop his or her experience.

I believe that if we attempt to set out in the Bill specific requirements which the director should or should not have, we shall effectively be constraining the Secretary of State's choice. I agree with my noble friend Lord Renton in that and also in saying that that would not be right. In appointing the director, the Secretary of State wants—indeed we all want—the best possible person for the job. So, like my noble friend Lord Campbell of Croy, I see no advantage in restricting his choice in advance.

It may be that the person appointed will have direct technical experience of the electricity supply industry. Alternatively he may not. But what he or she will have and will have to have—again as my noble friend Lord Peyton said—will be the best possible combination of qualities required to carry out the job of director effectively. These are the qualities which the Secretary of State is looking for in making his appointment. I may add that, had the appointments to Ofgas and Oftel been similarly restricted, the two appointees who are now in post and who have proved to be extremely successful would have been ineligible.

I can say to the noble Lord, Lord Williams of Elvel, that no appointment is being made at this moment so far as I am aware. We hope, however, that it will be done soon and we have been constantly urged to make it soon because of the size, complexity and importance of the job. My noble friend Lord Peyton and others have reiterated that need. I therefore cannot accept the suggestion of the noble Lord, Lord Hatch of Lusby, that we should delay until the Bill's passage through the House has been completed.

At this time the appointment will of course be a shadow appointment, which is normal in these cases and necessary, for the reasons clearly outlined. So I cannot accept the amendment and I hope that, in the light of what I have said, the noble Lord, Lord Williams, will feel able to withdraw it.

Lord Williams of Elvel

I am grateful to the Minister for her response, which I am bound to say I do not find very satisfactory. My amendment does not seek to impose a constraint on the Secretary of State other than that the gentleman or lady who is to be director should have experience in the electricity supply industry. In my view the noble Lord, Lord Peyton, was quite right to point out that it would be absurd if the Government appointed to the post anybody who did not possess such experience. But I infer from the response of the noble Baroness that he or she may not have such experience, the Government are envisaging such an appointment as a possibility.

My amendment does not rule out people who have experience in other fields. I should not like the noble Lord, Lord Renton, to think that I am concentrating entirely and uniquely on people who had only this experience and no other. The director might be a Fellow of All Souls as well: he could be a Senior Wrangler, but he must have experience in the electricity supply industry. That is the point I make. It is a necessary condition rather than sufficient—I give way to the noble Lord.

Lord Renton

If the noble Lord will allow me to intervene, the amendment is very restrictive because, if noble Lords look at the bottom of page 2 of the Bill, they will see that the director or Secretary of State shall have responsibility, to promote competition in the generation and supply of electricity". Suppose somebody had a lot of experience in generation and had been with the CEGB but not with an area board. The amendment would not cover that point.

Lord Williams of Elvel

I think that the noble Lord has taken a very narrow point, if I may say so. Again, the director can have experience in all kinds of areas of the electricity supply industry. We are talking about the electricity supply industry in the Bill and it is to that that my amendment is addressed.

It is not enough to say, as the noble Baroness said, that the director will be able to develop experience through the operation of Clause 45 and his duties under Clause 45. It is not enough, in our view, to say that the Government wish to choose the most suitable person with the right qualities because we simply do not know what qualities the Secretary of State is looking for. The only quality that I am seeking is that the director should at least know something about the complex industry which he has been appointed to run.

The noble Lord, Lord Lloyd of Kilgerran, made the point quite rightly, I think on behalf of his noble friend Lord Ezra, who has put his name to this amendment with mine. He suggested that it would be of significance to have somebody who was technically qualified to carry out functions of this nature because we need to raise the general appreciation of science and scientists in our society. I agree with the noble Lord, Lord Lloyd, on that.

Finally I come back to what the noble Lord, Lord Peyton, said, which I believe to be absolutely right. It would be absurd for the Government to appoint somebody as director of the industry who did not possess experience of the kind that I mention. As my noble friend Lady Phillips said, I regard a certain appointment in a certain other industry of somebody who has great distinction but no apparent knowledge of the industry to which he has been appointed as being rather odd.

In my view this is a necessary condition but not a sufficient condition. It is a kind of base line from which the Secretary of State should work. At least the director should have some experience, however that is defined, in the electricity supply industry. I am astonished that the Government cannot see that that is a sensible amendment to the Bill.

Lord Peyton of Yeovil

I hope that I may be forgiven if I attempt to make myself absolutely clear to my noble friend. I am grateful to the noble Lord, Lord Williams of Elvel, who has understood what I was trying to say. I said that, while I did not preclude the possibility of governments behaving foolishly from time to time, nevertheless I thought that it was most unlikely that any government would be so foolish as to offer such an appallingly difficult job as this one to someone who did not have wide experience in the supply industry. I then went on to outline other qualities which I thought he would need to possess. My noble friend said just now that it might be that the appointee would have that experience in the supply industry, or it might be that he would not. I have to tell my noble friend that with that comment she made it much more difficult for me to oppose the amendment.

Baroness Hooper

I am sorry that my noble friend should feel that. However, I believe that the comments of both the noble Lord, Lord Williams of Elvel, and my noble friend in no way detract from the argument I put forward that the amendment imposes a restriction upon choice.

4 p.m.

Lord Stoddart of Swindon

To give the Committee some assistance, can the noble Baroness tell us what kind of salary level is contemplated for this post?

Baroness Hooper

No, I cannot.

Lord Stoddart of Swindon

I am sorry to get up again, but does the noble Baroness understand that she has worried some of us on this side of the Chamber? If she does not know the kind of salary level which is offered, how can she be confident that the calibre of person appointed will be suited to the job? I hope the noble Baroness will find out whether her advisers have any further information on that.

Baroness Hooper

I did not say that I do not know it. I said that I cannot tell the noble Lord.

Lord Peston

I am not going to pursue the salary point for the moment. Will the noble Baroness clarify the answer she gave to her noble friend Lord Peyton of Yeovil? I thought the noble Lord was being reasonable. He said that he wanted to know the criteria for the appointment. The noble Baroness said she did not want to be restricted on that. But she did not even go so far as to say that the Government would like to appoint someone who knows something about the industry, even if in the end they do not succeed in that.

However, I think that the noble Lord was hoping to hear from the noble Baroness that, as a minimum, the Government would regard it as a good thing if they could possibly appoint someone with appropriate knowledge. I can just about understand the view that perhaps such a person does not exist, or that such a person may not be willing to accept the salary offered. However, I believe the noble Lord was trying to press the noble Baroness to give at least some reassurance that the Government would desperately like to appoint someone who knew something about what he was doing, if such a person could possibly be obtained.

Lord Stoddart of Swindon

Before the noble Baroness gets up——

Noble Lords


Lord Stoddart of Swindon

This is Committee stage, not Report stage. I am trying to save the time of the Committee, and I am trying to save the noble Baroness from the indignity of getting up and down like a jack-in-the-box at the Dispatch Box. I merely wish to ask the noble Baroness to clarify her answer to me. Is she saying that she actually knows what level of salary is to be made available to the director, but that she is not prepared to come forward and divulge that information to Parliament? Will the noble Baroness clarify that in her reply to my noble friend?

Baroness Hooper

I must say that I should have thought it obvious, as my noble friend Lord Peyton said initially and as others have said, that in looking for a suitable appointee the Government will look to people who have experience of the industry. There can be no question about that. I am simply saying in responding to this amendment that we feel, for the reasons which I believe the noble Lord, Lord Peston, put quite admirably, that it would be a restriction if for some reason such a person is not available. On the question of salary, the important point is, as stated in the Bill, that the salary will be appropriate. I am not in a position to discuss that further.

Lord Stoddart of Swindon

Why is the noble Baroness not in such a position? Is she not aware that that is the kind of information that would be useful to the Committee and relevant to the Bill and to the discussion of the Bill?

Baroness Hooper

That may be so, but nevertheless it is also very relevant in the light of any negotiations that may take place, now or in the future, with any suitably qualified candidate. Therefore, it would be inappropriate to discuss figures at this point.

4.4 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 110.

Addington, L. Carmichael of Kelvingrove, L.
Amherst, E.
Ardwick, L. Carter, L.
Attlee, E. Chelmsford, Bp.
Aylestone, L. Cledwyn of Penrhos, L.
Bonham-Carter, L. Cocks of Hartcliffe, L.
Boston of Faversham, L. Cudlipp, L.
Briginshaw, L. Dean of Beswick, L.
Broadbridge, L. Donaldson of Kingsbridge, L.
Callaghan of Cardiff, L. Dormand of Easington, L.
Elwyn-Jones, L. Lovell-Davis, L.
Ennals, L. Macaulay of Bragar, L.
Ewart-Biggs, B. McNair, L. [Teller.]
Fisher of Rednal, B. Molloy, L.
Galpern, L. Mountevans, L.
Gladwyn, L. Mulley, L.
Graham of Edmonton, L. Nicol, B.
Grey, E, Northfield, L.
Grimond, L. Paget of Northampton, L.
Hampton, L. Peston, L.
Hanworth, V. Phillips, B.
Harris of Greenwich, L. Pitt of Hampstead, L.
Hatch of Lusby, L. Ponsonby of Shulbrede, L.
Hayter, L. [Teller.]
Hirshfield, L. Prys-Davies, L.
Hooson, L. Rathcreedan, L.
Houghton of Sowerby, L. Reilly, L.
Hylton-Foster, B. Rochester, L.
Ilchester, E. Sainsbury, L.
Irving of Dartford, L. Seear, B.
Jenkins of Putney, L. Sefton of Garston, L.
John-Mackie, L. Serota, B.
Kagan, L. Somers, L.
Kearton, L. Stallard, L.
Kennet, L. Stedman, B.
Kilmarnock, L. Stoddart of Swindon, L.
Kings Norton, L. Strabolgi, L.
Leatherland, L. Tordoff, L.
Listowel, E. Turner of Camden, B.
Llewelyn-Davies of Hastoe, B. Underhill, L.
Wallace of Coslany, L.
Lloyd of Kilgerran, L. White, B.
Lockwood, B. Williams of Elvel, L.
Longford, E.
Airey of Abingdon, B. Glenarthur, L.
Alexander of Tunis, E. Gray of Contin, L.
Allenby of Megiddo, V. Gridley, L.
Alport, L. Haig, E.
Annan, L. Hailsham of Saint Marylebone, L.
Arran, E.
Ashbourne, L. Hardinge of Penshurst, L.
Balfour, E. Henley, L.
Bauer, L. Hesketh, L.
Belhaven and Stenton, L. Hives, L.
Belstead, L. Hood, V.
Bessborough, E. Hooper, B.
Blake, L. Jenkin of Roding, L.
Blatch, B. Kimball, L.
Blyth, L. Kitchener, E.
Boyd-Carpenter, L. Long, V.
Brabazon of Tara, L. Luke, L.
Brentford, V. Lytton, E.
Brougham and Vaux, L. McAlpine of West Green, L.
Bruce-Gardyne, L. Mackay of Clashfern, L.
Caithness, E. Macpherson of Drumochter, L.
Campbell of Croy, L.
Carnegy of Lour, B. Mar, C.
Carnock, L. Margadale, L.
Cornwallis, L. Marley, L.
Cottesloe, L. Merrivale, L.
Craigavon, V. Monk Bretton, L.
Cullen of Ashbourne, L. Morris, L.
Davidson, V. [Teller.] Munster, E.
De Freyne, L. MurtÓn of Lindisfarne, L.
De L'Isle, V. Nelson of Stafford, L.
Denham, L. [Teller.] Norrie, L.
Dilhorne, V. Nugent of Guildford, L.
Dundee, E. Oppenheim-Barnes, B.
Effingham, E. Pender, L.
Elibank, L. Pennock, L.
Elles, B. Plummer of St. Marylebone, L.
Elliot of Harwood, B.
Elliott of Morpeth, L. Porritt, L.
Elton, L. Pym, L.
Foley, L. Reay, L.
Fortescue, E. Reigate, L.
Fraser of Kilmorack, L. Renton, L.
Gainford, L. Saltoun of Abernethy, Ly.
Gisborough, L. Sanderson of Bowden, L.
Sandys, L. Terrington, L.
Shrewsbury, E. Thomas of Gwydir, L.
Shuttleworth, L. Thurlow, L.
Skelmersdale, L. Trafford, L.
Southborough, L. Trefgarne, L.
Stodart of Leaston, L. Trumpington, B.
Strange, B. Vaux of Harrowden, L.
Strathcarron, L. Westbury, L.
Strathclyde, L. Windlesham, L.
Strathspey, L. Wolfson, L.
Sudeley, L. Young of Graffham, L.
Swansea, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.12 p.m.

Lord Carmichael of Kelvingrove moved Amendment No. 2: Page 1, line 11, at end insert— ("(1A) The Secretary of State shall appoint an officer to be known as the Deputy Director of Electricity Supply to be resident in post in Scotland responsible to the Secretary of State and the Director for the carrying out in Scotland of the functions assigned to the Director by this Act.").

The noble Lord said: After privatisation there will be distribution, transmission and generation companies in England and Wales which will be separate entities, whereas in Scotland there will be two vertically integrated companies with a wholly-owned subsidiary nuclear company. The director general will be expected to regulate all those different companies. We believe there is a clear need for a deputy in Scotland because of the totally different structure of the industry. He would operate within the organisation and act as deputy to the director general and he would help to create the information base for Scottish electricity regulation.

Such a deputy would ensure that the different structure of the industry in Scotland produced information which would compare adequately with the information produced in England and Wales so that there would be a yardstick of competition. The appointment of a deputy would also provide a clear line of communication from the director general through the deputy director to the Scottish Office and the other Scottish agencies interested in the public electricity supply functions of the new companies. We believe that because of the different structures of the industry in Scotland and in England and Wales and because of the different proposals contained in the Bill specifically for the electricity industry, a deputy is required.

I am sure that the Minister will be aware of the proceedings of the Select Committee on Energy of the other place, which is composed largely of members of his own party. That committee reached a unanimous conclusion on this particular point. It stated: we believe that Scotland's interests will best be served by the establishment of a separate Scottish Regulator, working closely with his English and Welsh counterpart, with regular interchanges of information and staff. The relationship between the Scottish Office and London Departments is an analogy. In this way the distinctive structure of the ESI in industry will be mirrored by a distinctive regulatory structure".—[Office Report, Commons, 5/4/89; col. 248.]

The amendment which I now put forward does not go so far. It does not seek a totally separate regulator for Scotland. We are asking for a deputy director within the UK industry as a whole but with very specific responsibilities for the Scottish industry and responsible to the Secretary of State for Scotland through the director. I expect the Minister will have noted the debate in another place and I am sure that, having read the report, he will respond with more than the Government were able to give at Report stage in the other place. I beg to move.

Baroness Carnegy of Lour

I do not fully understand the amendment. I was unable to attend the Second Reading of the Bill, but from reading the report of the debate it seems to me that the Government intend to do just what the amendment proposes. I see from the speech of my noble friend Lord Sanderson of Bowden that the director general himself is to be appointed by the Secretaries of State for Energy and for Scotland, that the director will have an office in Scotland and will be responsible to the Secretary of State for Scotland in relation to the Scottish industry, and that he will be supported by a deputy director for Scotland who will be appointed by him.

As I understand it that undertaking has already been given by the Government. Is my noble friend saying that my reading of the debate is not correct? However, it does not appear on the face of the Bill and I imagine that the noble Lord, Lord Carmichael, wishes to put it on the face of the Bill. If that is all he is doing I have no objection. We certainly need such a person and we want to make sure that we have this person. Perhaps I may ask the noble Lord to clarify the position.

Lord Carmichael of Kelvingrove

The purpose of the amendment is to provide that there shall be a deputy director appointed by the Secretary of State. Whether or not that appointment was made by the Secretary of State for Scotland, it would certainly be made by the Government. He would be a deputy with powers in Scotland and he would liaise with the Director General of Electricity Supply in the UK. He would have the power of decison-making within Scotland.

Baroness Carnegy of Lour

I thank the noble Lord for that explanation. I shall listen with interest to what my noble friend says on this matter. I should have no objection to such an appointment appearing on the face of the Bill. I shall be interested to hear what my noble friend has to say about who would appoint such a person.

Lord Macaulay of Bragar

Perhaps I may make a short contribution in support of my noble friend Lord Carmichael on this particular amendment. It is clear from the approach which has been taken to the privatisation of electricity and from the information that has been supplied and obtained that, while Scotland plays a role in the supply of electricity in the United Kingdom, and will play an expanding role as time goes on, Scottish electricity supply is a self-contained unit for operational purposes. In that context there are different issues to be dealt with and different problems from those affecting England and Wales.

It is clearly recognised in the White Paper Privatisation of the Scottish Electricity Industry that the principle behind privatisation is that: Management will be better able to take decisions in the interests of the business and its customers throughout Scotland The White Paper further states the aim of the privatisation is to remove control from Whitehall to Scotland so that decisions—and note the word "decisions"—can be made by the industry itself in Scotland.

It is in that context that we have moved the amendment to give a deputy director for Scotland the power to make decisions in Scotland as and when they are needed to deal with the particular Scottish problem. What the Bill does is quite the opposite. At the moment, the proposal is that the director shall have an office in Scotland, but only as an appendage lacking the independence that we on this side suggest is necessary to control the industry effectively and efficiently within Scotland.

While at the same time contributing to the United Kingdom context of electricity supply, the amendment is in no way put forward in any spirit of nationalism. However, if the measure is not taken, the complaint will again be raised—it is bound to be raised anyway—that Scotland is being treated as a second-class nation and as an appendage of England and Wales so far as concerns electricity supply. The Government are not facing up to the information in their own White Paper

Scotland's sources of electricity are recognised as being unique in relation to plant, fuel, surplus capacity and access to and use of nuclear power. Perhaps I may also say that Scotland is unique in its climate, a fact which brings us other problems in the winter time. In those circumstances, surely it makes sense to have an independent director in Scotland so that he can be recognised as being the director for Scotland, dealing with the Scottish system, and to whom ready access can be obtained as and when it is required. For example, he will be able to make emergency decisions regarding electricity supply so that matters can be discussed as quickly as possible and decisions made and implemented in the interests of the Scottish consumers. At the end of the day, they are the people who matter.

Perhaps I may say in closing that appointing a Scottish director to recognise the unique character of the Scottish industry might even encourage some people to invest in the electricity industry in Scotland.

Baroness Carnegy of Lour

I am sorry, but I still do not understand. The amendment states that there should be a deputy director who is responsible to the director for the carrying out in Scotland of the functions assigned to the Director by this Act". He is not independent; he is responsible to the director, as described here. It seems to me perfectly sensible to give a Scottish locus to the matter.

Lord Wiliams of Elvel

Perhaps I may answer the noble Baroness. He is responsible to the director and the Secretary of State. That is what the amendment says.

Baroness Carnegy of Lour

But the amendment says that he is responsible to the director.

Lord Williams of Elvel

Clearly, he must in some sense be responsible to or liaise with the director, but it is a joint responsibility with the Secretary of State, so he can bypass him.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

Perhaps I may intervene at this stage in this interesting debate and at the outset ask the noble Lord, Lord Carmichael of Kelvingrove, whether he is also speaking to Amendments Nos. 5, 7 and 8.

Lord Carmichael of Kelvingrove


Lord Sanderson of Bowden

The wording of these amendments suggests that a Deputy Director General of Electricity Supply should be appointed under statute and be directly responsible to the Secretary of State for the regulation of the industry in Scotland. That would effectively result in a separate regulator for Scotland. I believe that that is the point that the noble Lord, Lord Carmichael of Kelvingrove, wishes to make.

It is quite clear to us that this would not be beneficial, since it ignores the fact that the Scottish companies will be competing in the GB market. We are clear that two separate regulators would be inefficient. We would fail adequately to monitor common carriage arrangements and fair trading practices across the border, and lose the opportunity for yardstick comparisons across the whole GB industry to bring out best practices and provide leverage for increased efficiency.

In addition, the structure proposed by the amendments would not be sound in management terms. A Scottish deputy director responsible both to the director and the Secretary of State could cause a conflict of loyalties. In effect, the amendments would provide the Scottish deputy director with a direct link to the Secretary of State which his counterpart, the deputy director for England and Wales, would not have. I should make it clear here that there will in fact be two deputies—one for Scotland and the other for England and Wales.

The purpose of our proposals in the Bill is to give the director general both independence and authority. He would be unable to achieve that position for Scotland if the Scottish deputy director had an in-built right to go over his head to the Secretary of State. Our proposal for a deputy director general for Scotland, reporting direct to the director general, who in turn reports to the Secretary of State, will be achieved by administrative action and ensures that the Scottish industry has the best of both worlds—a representative of the director general based in Scotland, but still part of a single regulatory regime.

We see no need for the detailed structure of the director general's organisation to be set out in the Bill. The Bill rightly restricts itself to describing the functions and responsibilities of the director general, as the regulator of the single GB market. The director general will be appointed jointly by the Secretaries of State for Energy and for Scotland—as has been made clear in another place—and be responsible to both Secretaries of State. Categoric assurances have been given on a number of occasions by the Government that the director general will have reporting to him a deputy director general based in Scotland.

I understand that these amendments may have been put forward as a result of many representations, but particularly one from the Electricity Consultative Council for the North of Scotland. I should like to say to the noble Lord, Lord Carmichael of Kelvingrove, that I met the chairman of the north council only last week and discussed that point. She was reassured by what I had to say about the Government's intentions in this matter and has subsequently written to me endorsing what she said at the meeting.

In the light of what I have said, I hope that both the noble Lord, Lord Carmichael of Kelvingrove, and the noble Lord, Lord Macaulay of Bragar, will understand the thinking behind the Government's proposals in this respect and perhaps seek to withdraw their amendment.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for his reply and for the information that he discussed the matter with the Electricity Consultative Council for the North of Scotland. He is correct in saying that the amendment arose largely because of the council's worries, but he will see from the reference that I made to the Select Committee—it was a unanimous decison of the all-party Select Committee—that it is not something which merely came internally from Scotland. I believe that it arose because the structure of the industry in Scotland is quite different from that south of the border. What is suitable for one would perhaps not be suitable for the other.

Although we are not such a huge country—indeed, although the whole of the United Kingdom is not such a huge country—there will be a great deal of to-ing and fro-ing between the director, the Secretaries of State and the deputy director. The Minister suggested that the director would be answerable to both the Secretary of State for Scotland and the Secretary of State for Energy, which again struck me as a case of there being two masters. I still believe that it might have been better had there been one deputy in Scotland answerable to the Secretary of State. The Minister will realise that I was careful not to say "Secretary of State for Scotland". As far as I understand the matter, a Secretary of State is a Secretary of State. I am a little disappointed. There is still scope because of the difference in structure, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 3: Page 1, line 13, after ("term") insert ("not less than two years but").

The noble Lord said: In moving this amendment, I shall also speak to Amendment No. 4.

These are two relatively small, probing amendments. They concern the term of appointment and the possible re-appointment of the director. As drafted, the Bill says that the person shall hold office as director for a term not exceeding five years, but it does not set any minimum period. It is therefore theoretically possible for there to be an appointment for two days and that would then be the end of the matter. It seems to me that there should be a certain security of employment for the genius who will be the director of the whole industry. I suggest that he should be there for at least two years in order to understand what he is trying to do, as he may be a person of no experience in the electricity supply industry. I do not stick particularly on the period of two years. It could be three years or one year but I think that there should be some minimum time.

As regards reappointment, I wonder whether this phrase is necessary. I am aware that it has occurred in previous legislation but if it were knocked out—and I am all in favour of knocking out otiose legislation—I wonder whether it would make any difference whatever. It seems to me to be absolutely axiomatic that if a person is appointed for one period he can be reappointed for another period. However, perhaps the noble Baroness can tell me why it is essential to have this provision in the legislation.

I have said that these amendments were of a probing nature. I shall not ask the Committee to decide now on the matter. I should be grateful however to hear the Government's views. I beg to move.

Baroness Hooper

I recognise that these are probing amendments so I shall attempt to respond to the points raised by the noble Lord. With respect to Amendment No. 3, as he said, Clause 1(2) of the Bill provides for the appointment of the director to be: for a term not exceeding five years". That of course does not rule out appointments for periods of less than five years. I hope that the mover of the amendment will appreciate that we should not wish to rule out of the Bill the possibility of the appointment of a director for a period of less than two years.

Given the important nature of the office of the director, which will require skills of a high order. I personally would regard this as a very remote contingency. But there may be circumstances in the future—for example, in the event of a sudden vacancy in the office with a consequent need for a short-term stop-gap appointment while a long-term successor was found—in which a short-term appointment might be appropriate. I would not wish to close the door on this possibility—remote though I believe it is—by amending a well precedented provision, as the noble Lord recognised.

Nevertheless, I can assure the Committee that my right honourable friend the Secretary of State certainly intends that the term of the first director to be appointed will be for a full five years.

Turning to Amendment No. 4, which the noble Lord was not in fact against but simply felt was otiose, we feel that it is important for it to be clear that a person may be reappointed, since an effective director who has spent a term in office and built up his experience would obviously be a very suitable person to be reappointed. As the noble Lord has already said, this is again a precedented provision. We feel that it is necessary to make the position absolutely clear in view of those other precedents.

4.30 p.m.

Lord Williams of Elvel

I wonder whether the noble Baroness could elaborate on that last point. For the life of me I cannot see why those words should be there. I can see why the provision has been included in previous legislation but that is not a very good argument for putting it in this Bill. Let me put the question to her very quickly. What would happen to a director whose term of office expired if this sentence were not in the final Act? Would he be ineligible for reappointment?

Baroness Hooper

I take the noble Lord's point. However, I simply reiterate that in view of the precedents for this provision in other forms of legislation, its omission may leave doubt in certain people's minds. We feel therefore that it is preferable to follow the precedent.

Lord Peyton of Yeovil

If it is to be argued that the aim of some legislative provisions is to remove doubts from the minds of certain people, then legislation will be very lengthy indeed. Even by present standards it will be lengthened.

I find the present amendment proposed by the noble Lord not at all to be desired. I am sure that he would not wish to press it since it may be that the first appointee to this extraordinary post will not have all the qualities that experience will prove to be necessary. In my view it would be unfortunate from the point of view of the industry and the customer, and particularly the unfortunate individual who with difficulty may be bearing that burden of office, to be saddled with a two-year minimum.

I am much more sympathetic to the second amendment. The mere fact that the words accord with precedent does not weigh very much with me. In fact I believe that the time has come when such precedents could, with convenience, be blown out of the water.

Lord Williams of Elvel

I endorse entirely what the noble Lord, Lord Peyton, said about my second amendment, Amendment No. 4. It seems to me that the Government are unable to answer my question: if those words were not in the legislation, would the gentleman or lady in question be ineligible for reappointment? So far as I can see the answer is no, and he or she would be perfectly eligible for reappointment. I do not therefore see why we need those words.

The term of office, however, is an important point. As the noble Lord, Lord Peyton, said, I shall not press this amendment to any kind of conclusion or a Division. I simply wish to probe the Government's intentions. Indeed the noble Baroness has been kind enough to say that it is the Government's intention to make an appointment for the full five-year term. That is all very well and I understand that the Government wish to retain flexibility. If a vacancy occurs at short notice—perhaps the person in question dies or is rendered incapable or, subject to the provisions of the Act, is dismissed from office—I understand that there may have to be a temporary appointment. So I certainly would not press my proposed two-year limit.

On the other hand, I have a certain sympathy with the remarks of the noble Lord, Lord Peyton, that if one starts off with a five-year term and after, say, six months it is generally accepted, not least by the individual who holds the appointment, that the job is quite beyond him, then there seems to be no other possibility than for him to survive through the remaining four and-half years of his term of office.

So in a sense perhaps we should have a one-year renewable arrangement so that there could be a term of probation, as it were, to decide whether or not the person in question is suitable for the job; and indeed, he or she might wish to take a view on that. However, as I said, I shall not prolong the discussion in the Committee. I think it has been useful to find out the Government's attitude. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 and 5 not moved.]

Lord Williams of Elvel moved Amendment No. 6: Page 2, line 2, at end insert ("in connection with the performance of the functions as Director or if the Director otherwise conducts himself in a manner which, in the opinion of the Secretary of State makes it inappropriate that he should continue to hold the office of Director.").

The noble Lord said: The continued appointment of the director and his holding office is of course conditional upon his both being capable and not misbehaving. In the words of Clause 1(3): The Secretary of State may remove any person from office as the Director on the ground of incapacity or misbehaviour".

My amendment goes wider than that. In a sense it tries to explore the meaning of "misbehaviour" in the eyes of the Government. It is a rather odd expression and perhaps the noble Baroness will be able to tell the Committee of precedents and indicate where they have ocurred in previous legislation, advising us how it has been interpreted by Secretaries of State when they wished to remove from office directors or holders of similar posts.

It is clear that there are certain circumstances under which a director could not continue to hold office. I do not wish to go into details. There are obvious circumstances, as I am sure the Committee would recognise, which would require that the director should be sacked. I look forward to hearing from the noble Baroness whether or not those circumstances can be summed up in the word "misbehaviour", or what the definition of misbehaviour is. If not, it seems to me that it is wise to put the onus on to the Secretary of State to form an opinion. It is his duty to form an opinion. His opinion would be that it is inappropriate for the director to continue to hold office.

That seems a somewhat more elegant formula than that suggested by Clause 1(3) of the Bill. I beg to move.

Lord Renton

I see no need for this amendment. The simple words "incapacity or misbehaviour" have been used on previous occasions. So far as I know, they have given rise to no difficulty. Believe it or not, the courts interpret the words used by Parliament in a spirit of reasonableness and common sense. For example, if somebody proved himself to have an incapacity for playing contract bridge, obviously that would not be held by the courts to be a ground for removal in these circumstances. It clearly means a relevant incapacity.

Lord Williams of Elvel

Will the noble Lord say what a relevant misbehaviour is?

Lord Renton

I was coming to that. The noble Lord is too impatient this afternoon! Misbehaviour means, I should have thought, negligence in the performance of duties, or notorious misconduct which comes to the notice of a wide circle of people. Alas, it might be thought that extreme, incurable and irremediable deafness might be another form of incapacity. However, on misbehaviour, I mentioned negligence, but neglect of duties is clearly a form of misbehaviour which would also justify the Secretary of State removing anybody.

We surely need not labour this point. A criminal offence of any serious character—not a minor driving offence, obviously—would amount to misbehaviour. People holding such important public positions must be people of integrity who are respected. If in circumstances which prevail they fail to behave as required, that is misbehaviour. I have studied the words in these four lines of the amendment. They do not seem to me to add anything of importance, or that is required, to the simple and well-established expression already in the Bill.

Lord Williams of Elvel

Perhaps I may enlighten the noble Lord, Lord Renton. I am sorry if I failed to make myself wholly clear. They place the onus on the Secretary of State to form an opinion. That is what the words add.

Lord Renton

Obviously if the Secretary of State is given power to remove somebody he has to form an opinion about them first.

Lord Williams of Elvel

The noble Lord said that the words did not add anything. I was trying to clarify what they added.

4.45 p.m.

Baroness Hooper

As the noble Lord, Lord Williams, has explained, the amendment seeks to establish poor performance of his functions as a criterion for the director's removal from office by the Secretary of State. In our view—which concurs with that of my noble friend Lord Renton—adequate provision is already made for this in the present wording of subsection (3). That subsection enables the Secretary of State to remove any person from office as the director on the ground of incapacity or misbehaviour. Persistent or significant failure to act in accordance with his or her duties under the Bill would constitute misbehaviour. I can happily accept those examples put forward by my noble friend Lord Renton.

In my view, the effect of this amendment is to introduce a somewhat unwelcome subjective element. It gives the Secretary of State potentially wide-ranging and unjustified powers of dismissal vis-à-vis the director. Most important of all, it could compromise the director's independence.

The present formulation is a well-precedented provision which has appeared in the Gas Act, the Telecommunications Act and the Fair Trading Act. Again, we do not have any examples of any problems having arisen as a result of those appointments under those provisions. Therefore I cannot accept the noble Lord's amendment and I trust that he will feel able to withdraw it.

Lord Williams of Elvel

Clearly there have been no problems because nobody has been sacked under any of those Acts. The Director General of Fair Trading has never been sacked. The Director General of Oftel has never been sacked. These are very recent events.

I hope that the noble Baroness was listening carefully when the noble Lord, Lord Renton, said that misbehaviour included notorious conduct. The noble Lord said that if there were notorious conduct of one form or another it might not be possible for someone holding the high office of a director to continue. Is that view endorsed by the Government? Is that right?

Baroness Hooper

There is no question but that the main emphasis of this provision would bear on the failure of the individual to act in accordance with his duties under the Bill. However, it is possible to envisage other circumstances where individuals, through a course of conduct, may cause a question to be raised as to suitability for continuing in office.

Lord Williams of Elvel

Perhaps I may ask the noble Baroness to be more precise. Does she accept the view put forward, as I understand it, by the noble Lord, Lord Renton, that somebody guilty of notorious conduct—I think that was the expression——

Lord Renton

Notorious misconduct.

Lord Williams of Elvel

Notorious misconduct. Would such a person be guilty of misbehaviour as interpreted and therefore be subject to dismissal?

Lord Peyton of Yeovil

I am not the most enthusiastic supporter of this Bill, as I think my noble friend is aware. However, I do not think that the noble Lord opposite is helping his case, or indeed mine or anybody else's, by insisting on adding to the Bill the words contained in this amendment. If Parliament is always going to seek to add definition after definition in order to make clear its meaning, the result will not be clarity but obscurity.

Lord Williams of Elvel

I am very grateful to the noble Lord. If the Bill were perfectly clear to me at the outset, I should be very happy. I am seeking a government view on what they think they are writing into the legislation. I am not trying to prolong the debate.

Baroness Hooper

I believe that I have already explained that. I also pointed out that this is a precedented provision. While I fully recognise that that does not make everything perfect in everyone's view, we can say from experience that it is a provision that has proved satisfactory.

Lord Williams of Elvel

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 7 and 8 not moved.]

Lord Williams of Elvel moved Amendment No. 9: Page 2, line 6, at end insert— ["(6) The Secretary of State in appointing the Director, and the Director in carrying out his functions, shall have as their prime objective the efficient supply of electricity including a programme of energy conservation.").

The noble Lord said: We are embarking here on what may become a continuing theme, which is the efficiency of supply. In begging to move this amendment I would have accepted a grouping with the amendment tabled by my noble friend Lord Shepherd and others, Amendment No. 62, had my noble friend Lord Shepherd been in this Chamber today. Unfortunately, he is unavoidably absent. He obviously wishes to have his say, so I shall speak only to Amendment No. 9.

The general theme of efficiency of electricity supply and of energy conservation has been one which has occupied another place and, indeed, your Lordships on Second Reading, when a number of noble Lords spoke to the matter; and there were many debates in another place on it. It seems to me appropriate that at an early stage in the Committee's proceedings we should have a discussion about both the efficient supply of electricity and a programme of energy conservation.

The amendment which I am moving seeks to lay down as a primary duty on the Secretary of State in appointing a director the objective of the efficient supply of electricity, including a programme of energy conservation. Our purpose is to make this prime objective stand right up front in the Bill. In its report on the efficient use of electricity, the committee of my noble friend Lord Shepherd pointed out that more efficient use of electricity could reduce significantly both future investment in electrical power generation and the demand for primary energy, which in turn would have an environmental benefit. The amendment would bring both cost and environmental benefits, so we are dealing both with efficiency of supply and, by energy conservation, improving the efficiency of supply and bringing other benefits.

I said in introducing the amendment that the background had been quite well rehearsed. Obviously, in environmental terms the serious threat of the greenhouse effect and global warming has been recognised. The electricity supply industry is Britain's biggest polluter in that sense, producing some 39 per cent. of our carbon dioxide emissions. We are also aware of the European obligations that we are under to improve the efficiency of final demand and reduce emissions. If we try hard and if this is placed as a prime objective, we can do things which are not being done at present. Indeed, the Secretary of State for Energy himself said—I am looking at an article in the National Builder of February 1989—that he regards that as being top of the political bill, so I am not trying to achieve objectives which are not in the Government's mind. I am trying to make sure that what he and the Government think is actually written in as a prime objective of the Secretary of State. He said: A staggering £8 billion a year could be saved through the wider use of energy efficiency measures".

In Clause 3 of the Bill there is a duty on the Secretary of State and the director to promote efficiency and economy on the part of such firms as public electricity suppliers. However, that is only a secondary duty and not a primary duty of the Secretary of State when appointing the director. We believe that there is merit in making it a prime objective. In our view, it is the first essential step.

The Government have taken a lot of trouble to persuade us that both efficiency and, by extension, energy conservation are objectives of theirs, but we are not yet persuaded that that is an overriding aim because we are not yet persuaded that the Bill is strong enough to ensure that the discrepancy which we perceive between what the Government say and what they actually do is removed. We should not like to see the Energy Efficiency Office cut back; we should like to see that body properly funded. We should like to see more direct action taken by the Government in connection with those two important matters. Above all, we should like to lay on the Secretary of State himself in the appointment of a director the duty to make sure that that is really what the whole Bill is about.

In pursuing the duties that the amendment would impose, the director and the Secretary of State could look again at home installation grants and surveys to help industrialists save energy, which this Government have apparently abandoned. They could inform consumers about more efficient domestic appliances. There are all sorts of things that the Government could do if they were really serious about the matter. The object of this amendment is to ensure that the Government are as serious in deed as in word. We should like to impose a duty to achieve environmental and cost benefits for the industry and for the consumer. It is time that the Government translated their words into action.

I very much hope that the Committee and the Government will support the thrust of the amendment and I look for a positive statement from the noble Baroness.

Viscount Hanworth

I should like to support this amendment very strongly. I do not think there is anybody, including the Government, who does not support energy conservation, in theory at least. The Government have signally failed to do very much about it, however. As has been pointed out already, they have even cut the money allowed to the Energy Efficiency Office.

This is the only quick way in which we can try to reduce the carbon dioxide emissions, which I think amount to 39 per cent., from our power stations. There are many other advantages as well, because, if we can get energy conservation and energy efficient appliances, we can reduce the amount of money spent, particularly by those who are ill able to pay their bills.

An additional concern in this regard is the area boards. They have no real incentive to reduce or to help their clients reduce energy consumption. There should be something in the Bill to make them do so. Commercially, of course, the more electricity they sell the better it is for them. I hope that the Government will take this seriously, and I should have thought that the amendment was one of the essential moves forward in dealing with the matter.

The EC has said that a 20 to 30 per cent. reduction in electricity consumption is possible. When the Friends of the Earth gave evidence to EC Panel B, they talked about 70 per cent. We looked through their case very carefully, and in theory that is possible, but not in practice—people are not going to abandon their existing refrigerators and buy new ones to save a little current. However, it does show that there is a vast opportunity for saving energy. It would save the capital required for building one or more new power stations.

It is possible to promote the insulation of houses. Until consumers realise the importance of this matter and the fact that they can get their money back in perhaps two or three years, they are naturally unwilling to pay an extra couple of hundred pounds—or it may be more today—on the price of a house. Again, the Government say that it should be left to the market-place. It is no good leaving it to the market-place if the market-place does not understand the issues involved. I hope that at last the Government will take this matter seriously and will agree to this amendment and others that promote the concept of energy efficiency and conservation.

5 p.m.

Lord Peyton of Yeovil

My attitude to this amendment will depend very much upon what my noble friend says in reply. The one thing that can be said with absolute certainty is that the time will come when energy conservation once again becomes fashionable. It will become a password again. We shall all be warm supporters of it in principle and in practice. And we shall be sorry that we did not do it before. I do not see any argument at the moment against my noble friend agreeing at least to include in this clause a reference to energy conservation. She may not like the exact wording of the noble Lord's amendment. I hope however that she will be able to assure those of use who are anxious about this subject that the Government will take it away, if they cannot accept what is in front of them now, and come back saying that the principle of energy conservation can be enshrined in this clause.

Lord Stoddart of Swindon

I hope that the noble Baroness will listen to what the noble Lord, Lord Peyton, has said. It is quite true that over the last few years, since oil prices have been reduced and there has been something of a glut of oil, which is coming to an end, we have become less conservation conscious. Nevertheless, this is probably one of the most important amendments that will be moved.

I know that the noble Baroness is concerned about conservation because I recently attended, as she did, a reception which concerned cavity wall insulation. She will be aware that only about 20 per cent. of houses capable of having cavity wall insulation inserted are so insulated. In that area alone there is scope for. enormous saving.

The greatest saving could be made by the electricity industry. I may be touching on other amendments, but the greatest wasters of energy are the power stations. In order to produce power, three times as much energy is used than is required. The rest of it is thrown either into rivers, into the sea or into the air. I am talking here about electricity which is generated simply for the sake of producing electricity. However, if coal, oil or other fuel were used to produce heat as well as power, we would certainly use our fuels, fossil or otherwise, to the very best advantage.

At most power stations in this country the overall thermal efficiency is about 38 per cent. If the power industry was obliged to provide heat, the overall efficiency could be as high as 80 per cent. Therefore the greatest waster of energy is the power industry, and that is why it is important to have this amendment in the Bill at this stage. A duty would be imposed upon the Secretary of State and the director to tell the electricity industry that it must stop wasting heat through chimneys and through cooling waters, either into rivers or seas. By that very action the amount of carbon dioxide going into the atmosphere would be enormously reduced. If that was combined with the other matters mentioned by my noble friend Lord Williams of Elvel and by the noble Viscount, Lord Hanworth, then the contribution of this country to the problem of reducing global warming would be significant.

I urge the noble Baroness and the Government to take this amendment very seriously. It would not hurt to have it in the Bill and I am sure that the Government would get the green vote well behind them. By heaven, if for no other reason, they should take that to heart because, after the Vale of Glamorgan, they badly need those votes.

Lord Renton

I go along with my noble friend Lord Peyton of Yeovil in asking my noble friend on the Front Bench to reconsider this matter. I have paid close attention to the arguments made in support of the amendment and I think that there is a good deal in some of them. I could not support the amendment as it stands, but I should like to make a general comment.

There is an enormous advantage in Parliament declaring its intention, sometimes by means of what is called a purpose clause. I know that I am predisposed in favour of purpose clauses because they were recommended by a committee, the first of its kind for 100 years, of which I had the honour to be chairman. I think that in a Bill of this kind, which has several very important objectives, those objectives need to be clearly stated as well as the responsibilities of the people fulfilling those objectives.

The noble Lord, as I understand him, was referring to the Long Title. That is very interesting. It includes the words: to make new provision with respect to the supply of electricity through electric lines and the generation and transmission of electricity for such supply". I hope that I have now convinced the noble Lord, Lord Williams of Elvel, that, in the context of this Bill, supply does not include generation. They are separate processes. They need to be separately treated and always have been in our legislation. I speak with some distant experience because I had the responsibility, along with the late Reginald Maudling, of piloting the Electricity Act 1957 through another place. That Act is to be totally repealed, as I see from the repeal schedule to the Bill.

The Long Title, alas, does not include any reference to energy conservation. But the amendment does. The noble Lord, Lord Williams, suggested that pollution should somehow be brought in. I rely again on past experience; I helped to pilot the Clean Air Act 1956. That is to remain on the statute book except for one section. The Clean Air Act 1968 is to remain except for parts of two sections. The Control of Pollution Act 1974 is to remain except for two minor amendments. Therefore, we do not need to deal, as the noble Lord suggested, with control of pollution because those who are responsible for operating the provisions of this Bill will be bound by those other statutes and will have to do that anyway. There is no need for them to be repeated.

Dealing with the amendment itself, it refers to the efficient supply of electricity and omits generation. It refers to: including a programme of energy conservation". I should have thought that it should not just include "a programme" but should have among the prime objectives, among others, energy conservation, just like that.

There is another prime objective: that is, the protection of the environment. Section 57 of the 1957 Act specifically dealt rather fully with that. We have a partial repetition of that section in Clause 37 of this Bill, which deals with preservation of amenity and fisheries. We shall come to that in detail later. I would have thought that that is also a prime objective.

Therefore, my conclusion is that, although I do not think that the noble Lord has got this amendment quite right, something on these lines is desirable. The question—and I am not pressing for an answer this afternoon because I do not think that that is fair to my noble friend Lady Hooper—is whether it should be in the form, as the noble Lord, Lord Williams of Elvel, suggested, of a subsection of Clause 1 or whether it should be a purpose clause on its own at the very start of the Bill.

Lord Somers

Perhaps I may interrupt the noble Lord. He said that this amendment mentions supply but does not say anything about generation. One cannot supply electricity unless it is generated.

Lord Renton

That is perfectly obvious. However, if the noble Lord will bear with me, I do not want to have to enlighten him about the whole history of the matter, but there was a time when the Central Electricity Authority was responsible for generation and supply and was monolithic. In the 1957 Act we split that up and made the CEGB responsible for generation and partly for transmission, but the area boards were responsible only for supply and without any powers as to generation. Therefore, the two things have been separately treated. They are separate functions. I hope that I have convinced the noble Lord.

Instead of having a new subsection to Clause 1, it might be better if we had, at the start, before Clause 1 a new purpose clause on its own. It would not be effective to say, "Oh, but the Long Title is something akin to a purpose clause". Yes, it can be made so but it does not have to be so, and it would be much better, bearing in mind the limits of the technique with regard to Long Titles and the limits of the terms of this Long Title, if what we are really getting at is covered by a purpose clause.

5.15 p.m.

Lord Hatch of Lusby

The noble Baroness will recall that yesterday in part of an answer to a Question of mine she stated that it was the Government's intention to include energy conservation, when I had referred to the protection which is given in this Bill to the nuclear industry.

Ever since last September when the Prime Minister spoke at the Royal Society, it has been the accepted view in rhetoric of the Government that they have at last recognised the importance of what is generally called the greenhouse effect. However, some of your Lordships who have been pressing this for many years are worried about their response to what they have learnt from their scientific advisers. In particular, in the recent seminar held at No. 10 it appears that there was a distortion of some of the evidence given by one of the scientists, distortion to lead to the conclusion that nuclear energy was the main answer to offset the greenhouse effect on our production of energy.

That was corrected by the scientist involved, who had not intended to give that impression and did not believe that he had done so. What is worrying some of us is that the Prime Minister and the Government who follow her have suddenly had their eyes opened to this question of the greenhouse effect and have then come to the immediate conclusion that the solution is to increase the nuclear energy production of electricity.

I have given the noble Baroness on three occasions now the evidence produced in the United States that as regards the greenhouse effect, energy conservation is seven times as efficient as the use of nuclear power. Do the Government really intend to be serious about this issue which concerns every member of society? If they do, then surely this kind of amendment should be welcomed by them and accepted, even if they say that it needs redrafting.

What is essential in this amendment is that energy conservation is included as one of the prime objectives. Do the Government believe that? If they do, then are they prepared to state that as one of the obligations on the Secretary of State when he appoints the director? We have seen how much money the Government are spending on publicity on the poll tax and on the Water Bill. What publicity are they funding to let the public of this country know the ways in which they can reduce their energy demand, and, as will inevitably follow, then reduce the danger to the atmosphere which any form of energy production includes? Will the Government give the same kind of funding to the importance of energy conservation, which my noble friend Lord Williams of Elvel has already pointed out spreads over a wide area of domestic use and which, it has been pointed out, includes the new kind of electric light bulb?

Will the Government put their money where their mouth is? Will they use the opportunity which they have to give the public information on the way in which energy can be conserved? If they will do that and if they really mean what they say about their concern for the greenhouse effect, they will welcome the opportunity of putting that into legislation in this Bill. That will be the test of the Government's sincerity, as we proceed with this Bill and the various amendments that have been proposed, on the crucial importance to our planet of energy conservation. Will the Government show their sincerity both by using their power in publicity and by including as a requisite for the appointment of a director the recognition that energy conservation is one of the prime objectives of this Bill?

Lord Ezra

I apologise to the Committee for arriving late, but I have come back from abroad at breakneck speed to be here. As my name is attached to this amendment and I feel strongly on the subject, I should like to say a few words at the risk of perhaps repeating what others have said.

I believe that we are in a state of development, environmentally, when we should not be passing any legislation concerned with energy which does not refer to energy conservation. Energy conservation is of such vital importance not only in economic terms but now in fundamental environmental terms that it is essential that right at the early stages of this important Bill the obligations on the part of the director who is to regulate this great industry should include clear reference to the need to secure efficiency in the generation and supply of electricity and in the conservation of energy. Therefore, I plead with the Government that even if they cannot accept the wording in the amendment they will at least take it away in the knowledge that the nation expects that these issues should be absolutely in the forefront of any legislation from now on that deals with energy.

Baroness Hooper

I can begin by agreeing with the noble Lord, Lord Williams of Elvel, that this is in all probability the first of a number of debates during the Bill's progress that we will be having on the subject of energy efficiency and pollution. It is an important subject. The Government are fully committed to energy efficiency and to the effects that electricity generation have on our environment. Nevertheless, in responding to this debate I will concentrate on energy efficiency rather than the general environmental aspect, and I think that was the lead given by the noble Lord, Lord Williams.

Referring to the amendment, the general duties of the Secretary of State and of the director are set out in Clause 3 of the Bill. That clause gives the Secretary of State and the director each the duty, when exercising their functions under Part I of the Bill, to secure that all reasonable demands for electricity are satisfied; the duty to secure that licence holders are able to finance the carrying on of the activities which they are authorised by their licences to carry on; and, subject to subsection (2) of that clause, the duty to promote competition on the generation and supply of electricity.

The clause also includes duties in respect of efficiency and economy. Subsection (3)(b) of that clause places a duty on the Secretary of State and on the director to exercise their functions under Part I of the Bill to promote efficiency and economy on the part of persons authorised by licences to supply electricity and the efficient use of electricity supplied by them. I have tabled an amendment extending this provision to cover persons authorised by licences to transmit electricity. The Secretary of State and the director will have to take these and other duties into account when exercising their functions under Part I of the Bill.

However important the subject, I do not believe it would be right to single out one duty as a paramount duty to which all others are subsidiary. We believe that energy efficiency is important but we also believe that the duty to consumers is important, that security of supply is important, and so on. Therefore, in my view it is likely to make for a more sensible arrangement for the Secretary of State and the director to have regard to their duties as a whole, as set out in Clause 3, when exercising their functions under Part I.

The Committee may also wish to note that efficiency is included within the general duties of the holder of a public electricity supply licence and of the holder of a transmission licence. Clause 9 of the Bill makes it a duty of a public electricity supplier to develop and maintain an efficient, co-ordinated and economical system of electrical supply. It also places a general obligation on the holder of a transmission licence to develop and maintain an efficient, co-ordinated and economical system of electricity transmission. This wording, to develop and maintain an efficient, co-ordinated and economical system", of electricity supply and of transmission is of course well precedented. It appears in Section 3(2) of the Elecricity (Scotland) Act 1979, in Section 2(5) of the Electricity Act 1957 and in Section 1(2) of the Electricity Act 1947, the last of which was passed by the post-war Labour Administration.

The Government have recognised that all forms of energy production have some environmental consequences and that energy efficiency can help to minimise these. An ETSU study on the impact of energy efficiency on emissions of carbon dioxide and other pollutants is now under way. Other government action includes economic pricing of fuels, the proposed non-fossil obligation for the supply industry and the continued development of commercially viable alternative and renewable energy sources.

However, we believe that there is no single solution and we will be working on the development of policies across the spectrum and working internationally to improve understanding of the problem and of the action needed. As regards the Energy Efficiency Office, which has been referred to in this context, the programmes to date have achieved considerable savings and success. The office is continuing to carry out its mandate by encouraging increased energy efficiency by special targeting, by best practice programmes and concentrating a little more effort on the regions.

Perhaps I may pick up some of the points that have been made about energy efficiency as opposed to energy conservation. Both terms have been used in the course of our debate; indeed, the amendment refers to both. These are, of course, two quite different concepts. Energy conservation is simply about using less energy. Increased energy efficiency, to which this Government are committed, is quite different. It is about using energy or electricity more efficiently. It was to promote energy efficiency that the Government established the Energy Efficiency Office in 1983. More efficient use of electricity does not necessarily lead to lower use of electricity. It might, for instance, lead to higher levels of comfort or to increased production. In some cases it could encourage a switch to an electrical process from another fuel.

Electricity demand is growing, and is likely to continue to grow, in all major industrialised countries, as consumers install new electrical processes and equipment. Major international organisations such as the International Energy Agency and the European Commission are forecasting continuing growth in electricity demand, even after taking account of prospective efficiency gains, on which we are all working. So investment in electricity supply involves quite a diffèrent set of decisions to investment in efficiency in electricity use. We believe that decisions on the efficient use of electricity are for individual consumers to take. Decisions on the amount of electricity that needs to be generated will, on the other hand, be for suppliers, based on their estimates of demand including their estimates of consumers' decisions on energy efficiency.

Some reference has been made to the notion of least-cost planning. That would involve the electricity supplier or the regulator deciding that a particular conservation measure was preferable to contracting for electricity supply. A planning process like this takes decisions away from customers and it is only relevant in the cases of heavily-regulated monopolies as seen in parts of the United States. Least-cost planning is in fact currently used in three states in the United States of America and it has been criticised on two grounds. First, if the anticipated reductions in electricity supply do not occur there is likely to be a shortage of electricity leading to reductions in the security of supply. Secondly, there is a continuing debate on how the cost of conservation measures should be passed on to customers since they would have to pay more to repay the suppliers for the cost of the conservation measures while using less electricity.

As I have said, the Government's view is that in general customers can and should decide which energy efficiency measures are appropriate and should pay for the measures and take the benefits from any savings. This makes decisions more relevant to customers' wishes and needs as well as ensuring that the best energy efficiency measures are taken. That is why the Government's programme concentrates on energy efficiency. We see our role as providing information and advice to energy users. As I have said, the Energy Efficiency Office has focused its attentions on raising general awareness of energy efficiency. It is currently targeting its activities on key areas of energy use and offering specific advice backed by technical support. We are directing measures in other areas as my right honourable friend the Secretary of State has announced. He will be leading a campaign—the details of which are currently being worked out—to increase the efficiency of energy use in the public sector where the energy bill is around £1.8 billion a year and where clearly more can be done.

Also in the domestic sector, we are continuing to devote attention to the problem of pensioners and low-income households through the community insulation programme and the homes' insulation scheme. As regards the Electricity Bill itself, our proposals as they stand in Clause 3 break new gound in promoting energy efficiency both within the industry and by those who use electricity. Having made a fairly general reply as well as responding to the specific points raised by the amendment I emphasise again that while having some sympathy and interest in encouraging energy efficiency, we do not believe that it would be right to single out one duty as paramount to which all others are subsidiary as proposed by this amendment.

5.30 p.m.

Lord Stoddart of Swindon

I believe that we are all grateful to the noble Baroness for the very full reply that she has given. However, she has not really dealt with some of the salient points. I do not believe that she has dealt with the point that I made that one of the most inefficient organisations in electricity supply is the suppliers themselves. The noble Baroness quoted Clause 9(2)(a) which says, to develop and maintain an efficient, co-ordinated and economical system of electricity transmission". She added that this duty was contained in the 1947 Act and, I believe, also in the 1957 Act. That is the problem. The electricity industry has used that provision in order to provide simply electricity. It has said that the duty placed on it is not to supply power and heat efficiently, but simply to provide electricity efficiently. For that it has gone in for very large power stations with very large generating sets producing electricity at its most economical cost. A 660 megawatt power station will produce electricity at 38 per cent. overall efficiency whereas a 200 megawatt power station will produce it at perhaps only 32 per cent. If the duty on the industry was to use the input of energy efficiently, the overall thermal efficiency could be doubled to about 76 per cent.

That could be done by the use of combined heat and power. By the use and sale of heat the industry could first of all reduce the amount of primary energy used—coal, oil or nuclear what-have-you—and could also reduce the price of electricity to the consumer because two commodities would be sold instead of one. If all our coal-fired power stations at the present time were operating on the basis of combined heat and power and district heating and that were done efficiency, instead of using 80 million tonnes of coal a year, we could be using only 40 million tonnes. Consider what effect that would have on the overall warming effect and CO2 emissions. That is why this amendment is so important.

In the future it should be prohibited for any electricity supplier to build a power station without using the input energy to the utmost efficiency. That is why this amendment is so important and why we are fearful that the Government are not taking energy efficiency as seriously as they should. This is a complicated matter. I hope that I have been able in simple terms to illustrate how much more efficiently electricity, power and heat can be generated. If we had done this right from the start we could now be using only 40 million tonnes of coal instead of 80 million tonnes of coal each year. That is what this amendment is about, and that is what my noble friend Lord Williams of Elvel and others on this side of the Committee have been talking about. It is so essential to the future of the globe, and not only the energy industry, that this matter is taken seriously. I hope the noble Baroness and the Government will think again about the reply that has been given.

Baroness Phillips

I wish to make a comment that has nothing to do with the amendment. After listening to my noble friend on two occasions while discussing this amendment, I suggest to the Minister that since the office of director appears to be very open, including the salary, we have here a potential candidate who would be absolutely splendid.

Lord Renton

I agree that we should be most. grateful to my noble friend for her interesting and full reply to this debate. It was very detailed, and all of us would benefit by studying it in detail when we see it in Hansard. However, it is quite clear from what she said that the amendment would not be right. I hope I am not labouring the point too much, but it helps to get these things right. If the noble Lord, Lord Williams, will turn to Clause 4 of the Bill on page 3 he will see three expressions used separately. It reads: A person who...generates electricity". A little later there are the words "transmits electricity" and after that the words, supplies electricity to any premises". Those are three quite separate concepts and only one of them is mentioned in the noble Lord's amendment. To reinforce this, on page 4, starting at line 12, we see the definition of "supply" and after that the definition of "transmit". I am sure that the noble Lord would not wish to press an amendment which is clearly technically not right, and after this interesting and open-minded discussion it would be as well for us to consider the matter further when we see Hansard.

Lord Howie of Troon

The problem with combined heat and power is that while more hot water is produced one gets less electricity. That is fine if one wants only hot water, but it is not quite so good if one wants electricity. The argument about combined heat and power is rather more complicated than my noble friend suggested. The elegant power station at Pembroke could supply combined heat and power for Milford Haven, but 2,000 megawatts of electricity supplying a marginal amount of hot water in Milford Haven is not such a wonderful idea.

I shall tell the Committee what I do not like about the amendment. I am sorry to say this to my noble friends because I am quite sure that their hearts are entirely in the right place. What is wrong is that it asks the director to interfere with matters which are not essentially his business. He is supposed to supply electricity. He should supply electricity in the most admirable manner, conserving all kinds of things. However, in this amendment we are asking him to provide a programme of energy conservation. This goes far beyond the remit of electricity supply. It governs all kinds of energy—windmills, watermills and donkeys walking around in circles, and so on. The amendment is honest in its intention but is fundamentally misconceived.

It is as though we are seeking to pass a Bill about the supply of potatoes. We might rightly say that they should be the best potatoes and healthy potatoes and preferably Ayreshire potatoes, but then we might go further and cover matters which are not to do with potatoes and are not the business of the potato merchant. The proposal is a good idea which has overreached itself. My noble friend on the Front Bench should withdraw the amendment, rethink it and then bring it back at Report stage when I am perfectly sure it will be in a condition acceptable to the Chamber as a whole.

Lord Peyton of Yeovil

Perhaps I may say with great respect to the noble Lord opposite that he recalls to my mind a remark which I believe was once made by the late Will Rogers, a shrewd observer of the United States Congress. He said that there are two things you never want to see being made—the first, sausages, and the second, laws. This is a moment when I feel inclined to endorse that comment with some warmth.

I accept to a degree what my noble friend said about Clause 3 but I have reservations, as is apparent from the amendment, as to whether it is sensible that duties should be jointly performed by two people. That might be a shortcut to conflict rather than to ensuring the proper performance of those duties. Therefore, despite what the Minister said, I am still somewhat in favour of a reference in this clause to the importance of energy conservation. I do not go along too much with those who see a clear division between energy efficiency and energy conservation. To my mind, they are closely involved with one another. My noble friend said that energy saving is something which customers could and should decide for themselves. That is all right, but in a complicated industry customers need clear advice. That is why both the Secretary of State in appointing the director and the director in performing his duties should have energy efficiency very much in mind.

5.45 p.m.

Lord Ezra

I should like to support what the noble Lords, Lord Stoddart and Lord Peyton, have just said. The director should have a responsibility for energy conservation because that strikes at the root of what we are talking about. This should be stated somewhere, unequivocally.

Secondly, I agree entirely with what the noble Lord, Lord Peyton, said about the efficient use of electricity. If the noble Baroness has read the report recently issued by Sub-Committee B she will have seen that there is serious concern about the lack of continuity in the work that the Electricity Council is currently carrying out, and which in the Bill we cannot see being carried out by anybody else, to stimulate the efficient use of electricity. These two issues—energy conservation and the efficient use of electricity—should be set out clearly and should be related to the task of the director right at the beginning.

Lord Stoddart of Swindon

My noble friend Lord Howie of Troon took me up on my previous remarks. I obviously did not explain them properly. I said that because of the duty on the electricity industry to provide electricity as cheaply and as efficiently as possible the industry, instead of supplying both electricity and heat, had gone in for these huge 2,000-megawatt power stations and 660-megawatt sets so that it could produce electricity more cheaply. Had it been required to make the most efficient use of the total input of energy it would not have built the 2,000-megawatt power stations. It would probably have built 200-megawatt power stations near towns and factory complexes to supply both heat and power efficiently.

Lord Howie of Troon

One would get less electricity. We are both agreed about that.

Lord Stoddart of Swindon

Yes, but one would in fact achieve an overall thermal efficiency of between 76 per cent. and 80 per cent. instead of 38 per cent., which is the maximum one achieves from a 660-megawatt set.

Lord Hatch of Lusby

I should like the noble Baroness to answer two questions when she comes to reply. In her first speech she made a great deal of the Government's concern about energy efficiency. If that concern is sincere, how is it that the size of the energy efficiency unit has been cut by about 50 per cent? Secondly, I wish to take up a point which was made by the noble Lord, Lord Peyton.

The noble Baroness stressed in part of her speech the Government's belief that it is the responsibility of the consumer to choose what kind of electrical appliances are used. Does that mean that the Government abdicate all responsibility for giving guidance and information? Further, will she answer this question which I asked before she spoke. If the Government are sincere in their concern regarding the greenhouse effect, and if they are sincere in their concern for energy efficiency, will they use the power of publicity which they have to let people know and thereby give a lead to customers?

It has been shown by what has been said by Members on all sides of the Committee that there is a great deal of concern about the importance of energy conservation. Can the noble Baroness say, as regards the proposal laid down in the amendment, that it is the Government's view that energy conservation is one of their prime objectives? If that is so, can she at least tell the Committee that, although she does not perhaps agree with the wording of the amendment, she will take it back and ensure that it is spelt out quite clearly somewhere in the Bill that the Government consider energy conservation to be of prime importance? Further, can she confirm that they will ensure, by means of clauses in the Bill, that this objective is given as a directive to the Secretary of State and to the director whom he appoints?

Lord Williams of Elvel

I very much hope that the noble Baroness has listened carefully to our debate this afternoon. I also hope that she will read what has been said in Hansard. There is support from all sides of the Committee for the generality of the proposal which I have put forward. I entirely accept what the noble Lord, Lord Renton, said. I accept that my drafting is far from perfect and I believe that the amendment could be reconstructed in a much more satisfactory manner. I also agree that, as suggested by the noble Lord, Lord Renton, it would perhaps be better to have a purpose clause rather than inserting the provision in Clause 1. It does not concern me which way the Government go on that issue.

I believe that in the noble Baroness's reply to the debate—that is, her initial reply; although she may now have further things to say—she somewhat missed the point. She recited the various provisions in the Bill which in her view go to meet the problem I have raised. However, she did not point out that in Clause 3 the duty to promote efficiency and economy, which is laid on the Secretary of State and the director, is subordinate to the duty to promote competition. Therefore, the first duty under Clause 3 is to promote competition, and only after that, and subject to that, to promote efficiency and economy. That argument does not seem to us to be strong enough. Many noble Lords have stressed that view.

The noble Lord, Lord Peyton, made a point about consumers, as did my noble friend Lord Hatch. My noble friend also made a point about the EEU and its underfunding. My noble friend Lord Stoddart made a most important point about the construction of power stations and the need for a proper and efficient construction process in that respect. I do not wish to repeat all the arguments which have been put forward but I thought that they should be mentioned.

If it is true—as I believe it is—that the Bill is not strong enough on the whole issue of efficiency and energy conservation, that is not really the point which I seek to make. The point I am trying to make, which was accepted by the noble Lords, Lord Renton and Lord Peyton, is that if this is the prime objective of the Bill we should spell it out in Clause 1; that is, right at the beginning in a purpose clause, or as a particular point in Clause l. It is not good enough to say, "Well, the provision is somewhere around in Clause 3, Clause 45, Clause 96 or Clause 130". We want it spelt out as a matter of prime importance, as a prime objective, in Clause 1. That is why I tabled this amendment.

I very much hope that the noble Baroness, having listened to all that has been said by Members from all sides of the Committee, will be able to give us a little more comfort and perhaps indicate to us that she may be prepared to consider an amendment along the lines of the one I have put forward. I give her that opportunity.

Baroness Hooper

It is very kind of the noble Lord to give me such an opportunity. I too do not intend to repeat any of the arguments which I made in response to the initial debate. However, I should perhaps return to the issue raised by the noble Lord, Lord Stoddart of Swindon, about the efficiency of the generators. We believe that that point will be covered by the competition in generation to which our proposals will give rise. Clearly the efficiency with which a generator uses fuel will significantly affect its costs and therefore its ability to compete successfully. That may also answer the concerns expressed by the noble Lord, Lord Williams, about the duty to promote competition provided in Clause 3(1). I think that that is the main new area which has arisen at this point in Committee.

I should like to take the opportunity to say again to my noble friend Lord Peyton that customers will be receiving advice on energy efficiency as a direct result of the provisions under Clause 3(b). If I understood him correctly, he was most anxious on that score. I think that the director general would not be in a position to fulfil his duty to promote energy efficiency if he did not ensure that customers received such advice.

Lord Williams of Elvel

I must say that I am again most disappointed in the noble Baroness's refusal to accept that we should have a provision at the beginning of the Bill to show in very clear terms what the Bill is really meant to be about. As the noble Lord, Lord Peyton, said, it is meant to be about efficiency and energy conservation.

We have been discussing this amendment for 68 minutes, and I do not wish to detain the Committee any further. However, I hope that we shall return to this issue—I am sure we will—at a later stage of the Bill's proceedings. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Schedule 1 [The Director General of Electricity Supply]:

[Amendments Nos. 10 and 11 not moved.]

Lord Carmichael of Kelvingrove moved Amendment No. 12: Page 72, line 12, after ["State") insert ("after consultation with the consumer committees").

The noble Lord said: I feel almost apologetic in raising an amendment which, compared to the amendment on conservation, seems rather less important. With hindsight, it would perhaps have been better if this amendment had been grouped with one of the earlier amendments. It could then have been included in a similar type of debate. I shall try to be as brief as possible in what I have to say.

The amendment refers to the provision in Schedule 1 which states that if any person ceases to hold the office of director the Secretary of State shall determine whether there are special circumstances. It proposes that the Secretary of State should only determine after consultation with the consumers' committees whether there are special circumstances which make it right for the director to receive compensation for leaving the job.

The reason for what is proposed is that since the consumers' committees will almost certainly on a daily, ongoing basis be more in touch with the director than the Secretary of State is ever likely to be they should have an opinion as to whether or not he has done the job properly or with the enthusiasm that they would wish.

Grouped with Amendment No. 12 is Amendment No. 13 which applies to the same circumstances-that compensation may be paid to the director should he leave his job. The compensation would be determined by the Secretary of State. In that case I readily accept that there is a flaw in the amendment because it suggests that the powers to make any compensation award will not be available to the Secretary of State under Clause 1(3) should he, remove any person from office as the Director on the ground of incapacity or misbehaviour".

Obviously if someone were dismissed or removed from office because of incapacity, that is a quite different matter from someone removed because of misbehaviour. We have no desire to make it impossible for someone to be given compensation because of incapacity. Misbehaviour is a much more serious matter. I do not wish to go into great detail; we have discussed it before. It has been suggested that sometimes people, following misbehaviour, are allowed to plead that they are retiring on grounds of illness before they can be brought before the body which will decide on the misbehaviour. I realise that the amendment is possibly faulty. I believe however that the Minister knows the purport of it and can therefore perhaps reply. It is a matter we can bring back on Report. I beg to move.

6 p.m.

Baroness Hooper

Our proposals give consumers' committees many powers but none of them relates to the appointment or dismissal of the director general. I do not think it would be right to place a statutory requirement on the Secretary of State to consult the consumers' committees before determining whether special circumstances exist which make it right to pay compensation to the director when he ceases to hold office. To require the Secretary of State to consult all the consumers' committees on the matter seems to me to be a somewhat bureaucratic, intrusive and time-consuming way of proceeding which I believe we should seek to avoid. I therefore trust that the noble Lord will feel able to withdraw Amendment No. 12.

On Amendment No. 13, I must say that I can see the case for not paying compensation to a director where he has been removed on the ground of misbehaviour. But I am not entirely convinced that it would be wrong in all the circumstances to which the noble Lord himself drew our attention where the director had been removed on the grounds, for example, of incapacity. I do not wish to speculate on hypothetical situations but it may be that in such a case there could be humanitarian reasons where the payment of some sort of compensation might be appropriate. I am not sure that we would want to rule that out. I am sure that the noble Lord himself would not either.

I shall of course consider the amendment in the light of what the noble Lord has said, and I therefore hope that he will feel able to withdraw it at this stage.

Lord Carmichael of Kelvingrove

I am grateful to the Minister for having given the assurance particularly on the second amendment, that she will look at it perhaps with a view to bringing the matter back.

As regards the first amendment I agree with her that it may appear bureaucratic that the Secretary of State should consult all the consumers' committees. It may be impossible to make the amendment any less bureaucratic or clumsy, given our intentions when we put it down. The purpose was that the consumers should have some input as to whether someone had been a good director or not. Presumably that is the basis on which the director would be given some sort of compensation. Those consumers would have been working extremely closely with him and therefore in some ways the Secretary of State should be able to take advice from them. Again, I accept that rather than asking all consumers' committees for their opinions it might have been better to suggest asking the chairman. I shall look at that before Report stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

Lord Williams of Elvel moved Amendment No. 14: Page 72, line 15, leave out sub-paragraph (4). The noble Lord said: This amendment relates to a discussion we had earlier. Under the Bill as drafted the Treasury is required to approve any determination made in respect of remuneration of the director. That seems to me a recipe for disaster. I believe that the Secretary of State ought to have the power to appoint a director whom he wants without having to go to the Treasury for approval of such a determination. Indeed, if he wishes to give him a pension, a gratuity, make him an allowance, pay his expenses or pay any sort of compensation, I believe that he should be free to do so without having to seek the approval of the Treasury. I beg to move.

Lord Peyton of Yeovil

My name appears on the amendment. I wish to make clear that the noble Lord, Lord Williams, put down his amendment of his own volition and choice. Without any consultation with him or anyone else, I put down an exactly similar amendment for similar reasons. The fact that we reached the same conclusion without any previous discussion must add greatly to the strength of the arguments which the noble Lord has adduced and with which I broadly agree.

There would be no purpose in repeating at length the arguments put forward at an earlier stage. I hope that my noble friend will appreciate the very real anxiety which some of us feel about the possibility of the Government even finding someone with the immense gifts which will be necessary for the satisfactory performance of the huge task laid upon him. I very much question the contribution of the Treasury to the matter of assessing the salary of this being with almost supernatural powers. I wonder whether the intervention of the Treasury on the salary will be altogether helpful.

I put them so mildly and with such restraint that I hope my arguments will commend themselves to my noble friend on that count alone. I feel that the Treasury's contribution on the matter might not be totally helpful. It could be that if the Government have the great good fortune to identify a person qualified to do the job, the intervention of the Treasury could be effective in removing the prize from the Government's grasp. I hope that my noble friend will look with great sympathy on the amendment.

Lord Ezra

I wish to suport what the noble Lords, Lord Williams and Lord Peyton, have said. I very much fear that the Treasury, whose main task is zealously to guard the public purse and to say "No" on every conceivable occasion may not be the right people to ensure that the person who is selected by the Secretary of State for the job will receive the remuneration and conditions consistent with the responsibility and status involved. While no doubt we shall be told that this has always been put into legislation, we are after all approaching the 21st century. It is about time that a few changes were made. One of the changes that I believe we should make is to try to restrict the Treasury to those things which are important for it to do, and not to enable it to spread its tentacles into every other conceivable activity.

Baroness Carnegy of Lour

I have enormous sympathy for my noble friend in replying to this discussion. As someone who has served for some time and is still serving on bodies which the Government are busy freeing from governmental control and are asking to be totally independent and to act independently, I know that it is increasingly difficult to run an independent body when Treasury agreement has to be given to such measures. I think we are moving into an age when it is wrong for the Treasury to do things in that way. I agree with that idea, but I do not think we can expect my noble friend to propose to do something different on this Bill to what is being done in all other directions, as the noble Lord, Lord Ezra, said. He understands better than any of us the difficulties of working within this restraint.

I do not know what my noble friend will say in reply, but I believe that he should seriously draw the attention of the Secretary of State to what has been said, not just in relation to this post but to others of this kind. Everyone seems to accept that the Treasury has to control these things in order to run the economy: However, that control makes it very difficult for the organisation concerned. The kind of organisations I am involved in operate on a very much smaller scale than the electricity industry. In fact those organisations are minute by comparison. But I can say that Treasury constraints make life very difficult. Treasury controls on such big concerns as the electricity industry pose a very great constraint. However, I do not think that we can expect to get this amendment accepted in these circumstances.

Baroness Oppenheim-Barnes

When my noble friend replies, can he confirm that at the end of the day it will not be the Treasury which pays the salary but the industry? Therefore, it seems all the more of an anomaly that the Treasury should have to be consulted.

The Earl of Dundee

Picking up the point of my noble friend first, I should say that the more successful the industry is, and indeed the more successful every aspect of the economy is, the more money the Treasury has to spend. From listening to some of the remarks made about the Treasury, I slightly got the impression that it is not considered to be on our side as regards energy efficiency, or might not be as keen as everybody else is on the general aims to which we aspire. Perish the thought.

However, I point out that this provision is well precedented. There are similar provisions in Schedule 1 to the Gas Act 1986, Schedule 1 to the Telecommunications Act 1984 and Schedule 1 to the Fair Trading Act 1973. The director general, although not a civil servant, will be a Crown appointee. He will be responsible as accounting officer for the costs of the Office of Electricity Regulation which will be a government department funded by vote. It is therefore entirely fitting and usual for the payment of remuneration, pensions and other matters to require Treasury approval. This amendment would remove an essential element of proper financial control, and I hope that the noble Lord, Lord Williams of Elvel, may therefore feel able to withdraw it. I can assure the noble Lord and other Members of the Committee that these conditions will in no way inhibit the Secretary of State's choice of the best candidate for the job.

6.15 p.m.

Lord Stoddart of Swindon

Surely the conditions must inhibit the choice. After all, the level of salary and the level of conditions of service which are offered must have something to do with the choice. If the salary and conditions of service are set at a given level, they may preclude a particular person at any given time. Surely the point was aptly made by the noble Baroness, Lady Oppenheim-Barnes, that the industry itself will pay the remuneration and expenses. I should have thought that the remuneration and the expenses should not be related to the Civil Service. In order to get the calibre of staff required—this is no reflection on the Civil Service but on the relationship of salaries and conditions of service in the industry—the salaries and conditions of the director and his staff should be related to salaries within the industry itself. Otherwise the calibre and type of staff that are needed will not be attracted to the regulating authority. If the regulating authority is to be efficient, and if it is to do the job, we need that type of staff. That is what this argument is all about.

Lord Williams of Elvel

I welcome the noble Earl, Lord Dundee, to the Government Dispatch Box for the first time in the Committee. However, I am afraid I disagree with him on almost every point he made. The Treasury is not on his side. I should like the noble Earl to recognise that. The job of the Treasury is to ensure comparability among various grades in the Civil Service. That is why these measures are made.

The fact that there is a precedent for the provision in other Acts is, as the noble Lord, Lord Ezra, and I have already pointed out, no reason at all for putting it in this Bill. We must get away from the idea that just because something is written into previous legislation it must automatically be written into every new piece of legislation that comes before the Chamber.

My noble friend Lord Stoddart of Swindon must be right when he says that the calibre of person required as director, even if such a genius exists in the first place, will only be attracted by the same kind of salaries that are paid in the industry itself. He will not be attracted by an ordinary Civil Service salary. Finally, the fact that we are talking about a government department, and therefore the Treasury must intervene in some way just because the director is an accounting officer in charge of a government department, seems to me to reiterate the same fallacy that the noble Lord, Lord Ezra, pointed out. There is no need for this measure, and I do not see why the Government persist in it.

What is surprising about this Committee is that the Government spokesman, whether it is the noble Baroness or the noble Earl, seems to be faced on all sides of the Committee by hostile interventions. That is the case even where their own Benches are concerned. We have not heard many Members of the Committee stand up and support the Government on many of the issues that we have been discussing. That is very interesting. I hope very much that the noble Earl will agree to look at this provision to see whether the Department of Energy can consult the Treasury to see whether in this new departure we may try to arrive at a formula which does not inhibit the Secretary of State from recruiting the right person for the job. I believe if this sub-paragraph remains in the schedule, the Secretary of State will be so inhibited.

The Earl of Dundee

As I said earlier, I do not believe that the Secretary of State's choice will be inhibited. However, I hear what the noble Lord says. Indeed I listened very carefully to what other Members of the Committee said. I shall of course pass on those remarks to my right honourable friend the Secretary of State. I am sure that my right honourable friend will bear in mind that what we want to do, and what we will do, is to get the salary right. I have absolute confidence that the right man for the job will be attracted and that he will not be put off by what is on offer. As I have said, I have listened carefully to what has been said and I shall pass on the remarks to my right honourable friend.

Lord Williams of Elvel

I do not think that we are getting much further, but I am grateful to the noble Earl for at least passing on our remarks to his right honourable friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 15: Page 72, line 18, leave out from "may" to "appoint" in line 19.

The noble Lord said: This is an extremely important amendment because it concerns the ability of the director to apoint such staff as he may determine. The question of the staffing of the director's office is a matter of enormous importance.

As I understand the position, the current government proposals envisage a regulatory body for the whole of the electricity supply industry of approximately 115 staff. That complement will have to regulate 12 separate area boards which will become public electricity suppliers, the grid, the generating companies, private generators, the Scottish companies and possibly other new entrants such as major manufacturers who wish to have a licence for generating or to feed electricity into the grid. According to estimates, they will probably have to deal with approximately 30,000 complaints or representations from the public. The number may turn out to be higher: I believe that the Gas Consumers' Council has to deal with many more than 30,000 complaints.

The director must be free to appoint such staff as he may determine. He must not be subject to the Treasury in this matter. He must be allowed to say, "I really do not think, after a certain amount of experience, that I can operate with the allocation that the Treasury has given me and therefore I want to raise the number of my staff".

Rather like the noble Baroness, Lady Carnegy, on the previous amendment, I speak from bitter personal experience. I have been in charge of a commission and I have tried to raise the number of staff, very modestly, to the level which I thought appropriate. I was sat on by the Treasury. It is almost certain that the poor director—assuming that we can find somebody at the salary that the Treasury approves—will be sat on by the Treasury if he says that he wants more than 115 people in his office to perform the vast task with which he is charged.

Therefore I hope very much that the Government will look with favour on the amendment and allow the director to appoint such staff as he may determine. He should have the power to appoint the people he wants to the positions that he wants in the numbers that he wants. He should not be subject to outside interference in that task. I beg to move.

Lord Renton

I have often complained when we find in a statute the words "with the consent of the Treasury" or "with the approval of the Treasury". I have complained when those words have been used in relation to duties to be performed by Ministers. But when we have duties to be performed by somebody who is not a Minister although appointed by a Minister and who is not going to remain on the staff of the Minister, then it is different. I think that in these particular circumstances it may be necessary to make the position abundantly clear that the approval of the Treasury is required.

I say that on the assumption that the director general will have his own budget, his own separate funds and so on, and that they will not be carried merely on the staff of the department of the Secretary of State. If they are to be carried on the staff of the department of the Secretary of State then it is rather different. I shall be interested to hear what my noble friend has to say.

Lord Ezra

To follow up that last point, I do not see where the Treasury comes into this. If, as the noble Baroness, Lady Oppenheim-Barnes, made clear, the consumer of electricity will pay for this regulatory body in the end it is in the interests of the consumer of electricity that there should be as effective a body as possible to regulate the industry.

The most that I should say is feasible in this clause is to state that the director should consult with the Secretary of State and then make his own determination as to what he needs in order to do the job. The locus of the Treasury seems to me to be quite unnecessary. I do not see how the Treasury comes into the matter. The staff will not be funded out of government money and this body has nothing to do with any other appointments in the government service. It is specifically related to the direction and relation of the electricity industry under privatisation. Therefore it is an entirely new body and has to be looked at on its merits.

Lord Trafford

I am a little puzzled by the amendment, because if one reads on to the following line one sees that the money shall be paid by Parliament, not by the consumer. It states that: There shall be paid out of money provided by Parliament—

  1. (a) the remuneration of, and any travelling or other allowances payable under this Act to, the Director and any staff of the Director".
This is therefore a grant by Parliament. It is not the case that consumers will be paying the salary of the director, or of his staff. If I am right in that assumption that makes some difference because there is then some public accountability.

I do not think that I can go along with comments made on this amendment or on the previous amendment. They seem to me to be unnatural in the sense that we all must know that the director general, whoever he is, will have negotiated a package with the Secretary of State. It is just not true that governments do not employ people, in nationalised industries or other concerns, and do not break their own regulations in order to get who they think is the right man. I see frowns on the Front Bench opposite. Perhaps I may remind them of one particular name—MacGregor. I seem to remember that the deal made in that case through the Treasury by the Government was quite exceptional.

If the director is so exceptional, and we have heard this afternoon how exceptional he will have to be, perhaps some similar deal will have to be reached. However, I recognise that that is not relevant to the immediate amendment, which concerns his staff. I should have thought that any director of such quality would foresee this issue. He would say, "I want the following terms", and those terms would include his staff. He would not be a very good regulator if he did not foresee such questions. If he did not think ahead, that would suggest to me that the wrong chap had been chosen.

Having said that, far more potent are the words under paragraph 3: There shall be paid out of money provided by Parliament". That suggests to me that such accountability, in one way or another, must come back to the Treasury. I shall be very interested to hear whether my interpretation of that position is correct when my noble friend comes to answer. If it is, then the Treasury it is. That is why I say to the noble Lord, Lord Ezra, that that is why the Treasury has its finger in this too.

Lord Stoddart of Swindon

I cannot understand why this provision is included in the Bill. I understood that one of the reasons for the privatisation of the electricity supply industry was to remove the dead hand of the Treasury. I understood that it was the dead hand of the Treasury which was making the industry inefficient. Therefore one of the reasons for the Bill is to remove the dead hand of the Treasury so that the industry will be more efficient. But there we find that the dead hand of the Treasury is to be placed on the regulator. That is the last place where we want the dead hand of the Treasury to be.

If we believe that the privatised electricity industry should be properly regulated, the director should be of sufficient calibre to regulate it and he should have sufficient staff with good conditions of service and remuneration. He should be allowed to get on with the job and to appoint those staff without the dead hand of the Treasury which has been referred to on so many occasions by Ministers from the Treasury Bench. I cannot for the life of me see why the Treasury need come into the equation at all. If we believe that there should be proper regulation by a person competent, able, willing and eager to regulate the privatised electricity industry, we want no dead hand upon them at all. I shall therefore support the amendment.

6.30 p.m.

Baroness Hooper

The Office of Electricity Regulation will be a non-ministerial government department. It is entirely customary for all Civil Service manpower issues to be cleared with the Treasury. It would be completely wrong to ignore past precedents and seek to establish a new policy in that area.

However, I should like to assure noble Lords that the director will be given all the resources that he needs to perform his function effectively and efficiently, and that OFFER will have fully adequate staff and resources to carry out its very important job. We currently anticipate a need for a staff complement of around 220. That is the number that we have quoted. That represents a net increase of 115—which is, I believe the figure quoted by the noble Lord, Lord Williams of Elvel—public sector posts.

Lord Williams of Elvel

I am sorry to interrupt the noble Baroness. She referred to a net increase. What does that mean? What is the base line?

Baroness Hooper

We currently have staff carrying out functions which will be carried out by the staff of the regulator; for example, meter examiners, certain staff of the existing consumer bodies and so on. They add up to about 105, so the net increase——

Lord Williams of Elvel

Am I right in thinking that all that is pre-privatisation? Is it right to say that the effect of privatisation—in other words, the transfer of responsibility from the Department of Energy to the director which will take place as a result of the Bill—will lead to a net increase of 115 staff? Does privatisation therefore equal 115?

Baroness Hooper

Yes, one could put it like that. We should not like to be tied to any figure at this stage because, obviously, once the appointment of the director has taken place, he may himself wish to take a view on the likely size and shape of the new organisation. But, at this stage, those are the sort of numbers that we envisage.

Perhaps I may now turn to the question of who pays for OFFER. It is in fact funded by vote of Parliament—my noble friend is quite correct about that point—with the normal parliamentary controls, so in that sense it is right to involve the Treasury. But the costs will be recovered by licence fees, so there will be no net cost to public funds and customers will ultimately pay the cost, as my noble friend Lady Oppenheim-Barnes pointed out.

Lord Peyton of Yeovil

I should like to say briefly that I accept what my noble friend said just now; namely, that if moneys have to be found by Parliament, then the Treasury must come into the matter somewhere. However, what concerns me again and again about the passage of legislation is that Parliament increasingly puts forward the arguments and they are thrown back by Ministers. Very little movement takes place. One must therefore take the opportunity of voicing anxieties under the aegis of an amendment which one knows very well does not have a chance of being accepted.

My anxiety here—this is the point that divides me from the Government, whom I ordinarily support—is that they have greatly underrated the complexity of the changes that they are putting in motion. If they are convinced that 115 extra staff is all that will be required by the Director General of Electricity Supply, and if they are right in that, most of the arguments that I shall put forward during the Committee stage are quite unfounded. I believe that they will find that the tasks that they have put into the Bill for the director general are so mixed and complicated that the numbers of staff needed will make the figure of 115 look absolutely laughable. I very much hope that I am wrong and they are right.

Lord Stoddart of Swindon

In her reply, the noble Baroness said that the director will be given all the resources needed to do the job. Does that mean that, if the director says to the Treasury, "You're giving me £x million, but I want £y million", he will get his £y million? Who decides if there is a dispute? Does the director merely have to ask and he will be given?

Baroness Hooper

The procedures for reimbursement or a payment which is voted by Parliament can involve parliamentary debate, so there is opportunity for discussion in that sense. However, I hope that I have made it clear that, although the costs will initially be voted by Parliament, they will not give rise to any expenditure because there will be reimbursement through the licence fees, which will be set at such a level as to avoid expenditure. It is therefore intended that the director general will be given all the resources that he needs to perform his duties.

Lord Stoddart of Swindon

Is that an absolute assurance that the director general will get all the resources that he or she needs—that is, in the view of the director general, not in the view of the Treasury? Will he get everything that he wants?

Baroness Hooper


Lord Renton

I wonder whether my noble friend would be so kind as to answer the question that I raised about the director general's estimates. Of course, one must refer to his accounts as well. Will they be carried separately and presented to Parliament separately, or as part of the estimates and accounts of the Secretary of State?

Baroness Hooper

I am so sorry. Would my noble friend mind repeating what he said?

Lord Renten

The director general is obviously going to have to have estimates of expenditure; otherwise he will not be able to get the approval of the Treasury. Also, when he has spent the money, he will have to present accounts to Parliament. The Public Accounts Committee may call for his accounts. What I want to know is: are his estimates and his accounts going to be something entirely separate from the estimates and accounts of the department of the Secretary of State, or are they going to be part of those? I think we ought to know because it is relevant.

Lord Williams of Elvel

Perhaps I may comment on that point. The director general is the accounting officer. Therefore, if he is the accounting officer, the accounts are separate from the department, which has a separate accounting officer who is the permanent secretary. As I understand it, that is the position, subject to any correction by the noble Baroness.

However, having answered on behalf of the noble Baroness, I must tell her how grateful we are for her assurance that the director will get all that he wants in the way of resources. We think that that is a major advance. We regard that assurance as being absolutely critical to a proper functioning of the office. As the noble Lord, Lord Peyton of Yeovil, said, privatisation will involve problems of a very complex nature, the extent of which no incoming director can immediately appreciate. I agree with the noble Lord that, as he learns how complicated it all is, he will need quite a number of extra staff. I am grateful to the noble Baroness for her assurance. I beg leave to withdraw the amendment.

Baroness Hooper

Perhaps I may just confirm that the point raised by my noble friend Lord Renton is correct. There will be separate presentation of the accounts, as the noble Lord, Lord Williams of Elvel, indicated. I should also like to say that the reason for the provision and the requirement of Treasury approval is that we believe it is necessary for normal public accountability procedures to be applied in view of the fact that the consumer is paying the ultimate bill.

Lord Trafford

Before my noble friend sits down——

Baroness Hooper

Perhaps I may continue for a moment. I should like to make clear, in relation to the assurance that I gave to the noble Lord, Lord Stoddart, that the director general will get all he needs, not necessarily all he wants.

Lord Trafford

I was about to ask the noble Baroness to make some qualification to her statement. It seemed to me that her assurance had been misinterpreted or massaged a little. I know perfectly well, as does the noble Lord, Lord Stoddart, from many years in another place as well as in this Chamber that governments do not make that kind of commitment. As it was massaged very ably by the noble Lord, Lord Williams, I am glad to hear that my noble friend has been able to clarify that point.

Lord Dormand of Easington

There is, however, a question that has to be asked; namely, who decides how much he needs?

Lord Stoddart of Swindon

The noble Lord, Lord Trafford, will know that Members of Parliament in either House are always looking for good precedents. Perhaps we could have some clarification about who is to decide this point. We need to have this on the record. Who will decide what those needs are? Is it to be the director general or, ultimately, the Treasury?

Baroness Hooper

My understanding is that it will be for the director general, who is doing the job and is the best person to know his needs, to set the levels that he thinks he will need. The Secretary of State, through the public accountability procedures that we envisage, with Treasury consent, will be available to ensure that those are truly his needs rather than his wants.

Lord Williams of Elvel

Those noble Lords who read Hansard tomorrow will know that I begged leave to withdraw this amendment before the noble Baroness was able to rise and somewhat modify the assurance that she gave to the Committee. However, I was impeded by the noble Lord, Lord Trafford, and had to accept that the noble Baroness wished to qualify somewhat what I thought she had said earlier. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved.]

Lord Peyton of Yeovil had given notice of his intention to move Amendment No. 17: Page 72, line 28, leave out paragraph 4. The noble Lord said: I am bowed down with disappointment by the reaction to previous amendments. I think that I should probably be wasting the Committee's time if I were to move this amendment. However, before I say formally that I do not intend to move it, perhaps I may observe how much I admire the sense of sportsmanship shown by the noble Lord, Lord Williams, on being deprived of his prize, which he very nearly obtained. It is not my intention to move this amendment.

[Amendment No. 17 not moved.]

[Amendment No. 18 not moved.]

Schedule 1 agreed to.

6.45 p.m.

Clause 2 [Consumers' committees]:

Lord Peyton of Yeovil moved Amendment No. 19: Page 2, line 7, leave out ("Director") and insert ("Secretary of State").

The noble Lord said: I think it may be convenient if with this amendment we also consider Amendments Nos. 25, 63 and 64. My point is very simple. Clause 2(1) lays down that, The Director shall establish committees, to be known as consumers' committees".

I believe that it would be wise if, instead of being appointed by the director, who will be deeply involved in the organisation and government of this industry, the members of the consumers' committees, which are there to represent the customers and no one else, were appointed from as far outside the industry as possible.

I do not think that I need expand at all on the argument. I just hope that the Government will accept that this course would be sensible. I do not always want to add to the powers of Ministers, but I hope the Government will accept that it would be sensible for customers to feel that they are represented and that their interests are the responsibility of people appointed by the Secretary of State rather than the director, who will be deeply enmeshed in the affairs of the industry. In moving this amendment I hope that my noble friend will not make the mistake of thinking that the brevity with which I do it indicates any lack of conviction that this will be the right course for the Government to take. I beg to move.

Lord Peston

I am bound to say that I have very much been looking forward to discussing this amendment, not simply because it is the first amendment with which 1 am dealing. Although the noble Lord, Lord Peyton, referred to it as simple, I think that it is an amendment of fundamental importance. Having said that, I am not certain that I agree with it. I am glad that the amendment has been tabled because I believe that the subject is worthy of very serious consideration by this Committee.

Let me put it this way. When I first saw the Bill I thought that this kind of amendment was precisely what would be needed. My thinking went along the following lines—and it relates to other amendments to do with consumers which we shall deal with in due course. First, so far as I am concerned the central criterion in discussing this Bill is whether any or all parts of it are in the interests of consumers. I have argued ad nauseam in this Chamber that industry exists for the sake of consumers, which is the original Adam Smith point: consumers do not exist for the sake of industry. I repeat that yet again. We must judge the matter in terms of what is in the interests of the consumers.

Looking at the Bill, it is clear that although arguments have been put forward in terms of competition there will not be much competition arising from this Bill. Therefore the consumer will be protected in two main ways: he will be protected by the regulator—the director; and he will be somewhat protected by these committees.

The question arises as to how these committees will be appointed and the kind of committee that we want. We shall be debating that issue during our discussions on several other amendments. But it seems to me that above all we want these consumers' committees to be independent. We want the committees to be independent of the industry. We do not want them to be in the pocket of the industry. In my view, we certainly want them to be independent of politics and such matters.

The question then is: how can they best be appointed to give that kind of independence? I have racked my brains to find the reason why I say that I do not know whether I support the amendment in its entirety, and I look forward to hearing the arguments that will be put forward. In one sense I should like neither the director nor the Secretary of State to appoint the Committees. I should like to find some way in which the whole structure would emerge as independent of either body, but I cannot think of any solution.

Lord Stoddart of Swindon

What about the local authorities?

Lord Peston

I had intended to raise that point. On the one hand, my worry is that I do not want these committees to be in the pocket of the regulator—and this relates to many other amendments as they will come up. Much as I want to see the regulator succeed, a number of consumer matters may involve conflict with the director himself or herself. I do not want the consumer committees to be in the pocket of the Secretary of State.

The noble Lord said that it was a simple question. However, I do not see it as quite that simple. Who would be more likely to appoint the kind of independent consumers who would be difficult, who would represent the consumers' interest and who would be largely independent of all other bodies, not least political ones? I stand second to none in believing that politics are important, but not in this area.

In a way I am not being terribly helpful to the noble Lord. I am intervening at this stage in the hope of prompting the Minister to say something on these matters. In particular I should like to know a little more about what the Government have in mind about the way that the appointments will take place.

My noble friend Lord Stoddart raised the point that I was going to raise. The Government in their antipathy to the local authorities seem to have left them out altogether, even though the committees are local committees. It is an oddity that there is a local focus on them, but yet that notion of locale does not extend to the one democratic body left at local level.

Those are the considerations that I raise. It is not like me to be shilly-shallying about saying yes or no in this Chamber. Perhaps I had better leave the matter there. I should like to know why the provision is for the director rather than the Secretary of State to establish these committees. I should like to hear some argument from the Government side on independence and how people will be appointed if it is done in the way that the Government lay down. I should like to hear why the Secretary of State would not do a better job. The noble Lord, Lord Peyton, is inserting the words "Secretary of State" in his amendment.

Lord Peyton of Yeovil

Perhaps I may make one observation. Regrettably, I made a mistake. The grouping is wrong. Amendments Nos. 63 and 64 relate to Clause 3 and not to Clause 2.. They deal with a totally different point. I hope therefore that I may make it clear that I am not speaking to Amendments Nos. 63 and 64 as the grouping suggests that I would.

Lord Ezra

I support this amendment. I agree that the consumer committees should be distinct from the director. Safeguarding the interests of consumers may come within the scope of the director's responsibilities, but he has an overall responsibility. He has a responsibility towards the enterprises. He has a responsibility towards the consumer. He will have many other responsibilities, as we shall find as we go through this Bill. However, the consumers need to be safeguarded in as independent a way as can be devised. In the present state of play I do not believe that we can think of a more independent way of their being appointed than by the Secretary of State. He represents the Government. He should be seeing all sides of the issue. It is therefore right to have this simple amendment at this stage, making it clear that the consumer committees are appointed by the Secretary of State, so that they can talk on equal terms to the director.

In many cases they will no doubt see eye to eye with the director, but there may be cases when they do not. If they are appointed by him and under his direct control, I do not understand what will happen when there is a clear clash of interests. It is for that reason that I support this amendment.

Lord Stoddart of Swindon

Like my noble friend Lord Peston I am a little worried about this amendment. I do not know whether the Secretary of State would be a better person than the director to appoint these members of the committee. Secretaries of State are by nature political animals. They are members of political parties. They are subject to both local and national pressures. A Secretary of State could therefore be under pressure to remove a member of a committee who was proving awkward.

Lord Dormand of Easington

It happens.

Lord Stoddart of Swindon

As my noble friend says, it happens. It has happened before and no doubt will happen in the future. Someone who is doing the job well might be considered a nuisance by one of the new companies and perhaps dropped from the local committee. On the other hand, the director is likely to replace someone who is being ineffective. He would want the local committees to be effective. Therefore he would remove people who were ineffective since their ineffectiveness would reflect upon him because he had appointed them.

I urge the noble Lord, Lord Peyton, to think about this a little more closely. I do not know whether he intends to press the amendment or not. If he were to press the amendment today, I might have some difficulty in supporting him. I am almost ashamed to be supporting the Government. Nevertheless, on this issue they may perhaps be more right than the noble Lord. However, I should like to consider it first.

Baroness Carnegy of Lour

I agree with what the noble Lord has just said about the difficulties of the Secretary of State making appointments. However, do not all the arguments that he has used also apply to local authorities? I do not understand why he thought that local authorities might be involved in this matter.

Lord Peston

Perhaps I may come back on this issue. The noble Baroness may recall that I was seeking independence from both the Secretary of State and the director general. One obvious body that might have rights to nominate such bodies would be local authorities. This Government have clearly set their hearts against that concept. They do not like local authorities appointing people to all kinds of committees. I am not seeking to persuade the Government on that view. My point was this. One can achieve independence of either of the other two only through the local authorities.

Perhaps the noble Baroness has further ideas on how to achieve independence. I was making the hypothetical point that, if we could find a formula that achieved independent representation it would be better than having either the director general or the Secretary of State.

Baroness Carnegy of Lour

I was simply referring to the argument used by the noble Lord, Lord Stoddart, that the Secretary of State belonged to a political party. So also do many members of local authorities. The same arguments apply.

Lord Stoddart of Swindon

I understand the point that the noble Baroness is making.

Baroness Oppenheim-Barnes

I had not intended to intervene but I have been provoked. I have a good deal of sympathy with the amendment of my local friend Lord Peyton. I am a little alarmed to hear some of the views expressed by the noble Lord, Lord Stoddart, and others about the undesirability of the role of the Secretary of State in these matters. I have to declare an interest as chairman of a public body to which the Secretary of State makes appointments. I have also been the Minister who had made these appointments. I can tell the noble Lord that one of the great problems is to find the people to do these jobs, in particular in the regional areas. It is not easy for the Secretary of State. He does not have the freedom that the noble Lord attributes to him in finding the right people.

However, the question of independence is beyond doubt. If there is any dissatisfaction with a member of any of these public bodies, it is the normal practice for the chairman of these bodies to bring this to the attention of the Secretary of State on the basis of poor performance. It happens very rarely indeed in my experience and usually it would occur only at the time of re-appointment. The noble Lord, Lord Stoddart, is quite wrong in attributing improper motives to any Secretary of State under any government.

7 p.m.

Lord Stoddart of Swindon

Naturally, I accept what the noble Baroness has said, but I am sure she will agree that, particularly during the lifetime of the present Government, there have often been considerable arguments about appointments to various public bodies—for example the health authorities. There has been some worry among members of the public that perhaps appointments are being made on political grounds. But, as I said during my earlier remarks, I should like to think about this much more deeply. I should not like to have to vote upon it this afternoon, one of my reasons being the one which the noble Baroness gave—that one really has to weigh up and balance the various issues involved. But I understand, and I accept exactly what she has said.

Lord Campbell of Alloway

It is a rather curious problem that it appears to be agreed on all sides of the Committee that one is really concerned with the protection of the consumer, and yet if one looks at the drafting of the clause there is no form of legal protection available. If this lies within the remit of the Secretary of State, he is answerable to Parliament: there is some protection. If it lies within the remit of the director, the director is not answerable to the Secretary of State in any effective way and is assuredly not answerable to Parliament. Therefore, purely on the aspect of what is the better protection for the public, I would not know which way this should be resolved. On the issue of independence, I should not have thought there was very much in it either way, but then I am not competent to judge.

It appears that a lot more thought may have to be given to the matter, but there is something to be said, if the noble Lord, Lord Stoddart, will concede the point, for choosing the Secretary of State as proposed of the amendment.

Lord Glenarthur

We have embarked now upon a new aspect of the Bill, that which deals with consumer committees in Clause 2. It might be therefore be helpful to the Committee if, before we deal with the substance of the amendment of my noble friend Lord Peyton, I outline the issues rather more fully. My noble friend hoped that brevity on his part would not indicate any lack of enthusiasm for his own amendment. I fear that my brevity may not be quite equal to his if I have to explain the matter as fully as I think I should, because so much of what has been said in this short debate has encompassed the wider issues relating to consumer committees which are important when we look at this amendment.

The new regional consumers' committees which the director will establish under this clause lie at the heart of our proposals for consumer protection in the privatised electricity supply industry. They will be fully integrated with the director's office and will provide him with an essential element of lay advice. The existing national consumers' body, the Electricity Consumers Council, whose annual report is published today, have themselves welcomed this as a major step forward. That is something for which we must be grateful.

The staff of the existing Area Electricity Consultative Councils have made an important contribution to consumer protection in the existing electricity industry, but we need a new sort of consumer representation body to reflect the new structure of the industry.

The new committees will be made up of lay representatives who will be vital to the committees' ability to handle complaints and other matters effectively at grass roots level. The committees will be able to appoint local representatives and other sub-committees with the approval of the director, which means that even in sparsely populated areas, consumers can benefit from effective local representation. The committees will monitor the area boards' successor companies in the first instance, but will also be able to look into the activities of any second-tier suppliers who may be granted licences in the future.

The Bill gives the committees a radical new set of powers and duties. They will have their own specific role in complaint handling. The director will have a duty to investigate any complaint which deals with any of the supply companies' duties or obligations under the Bill or the licences and which is made directly to him or referred to him by the consumers' committees, and the committees will have a duty to investigate any other complaint made to them or referred to them by the director.

Under the terms of the public electricity suppliers' licences, the committees will also have the automatic right to be consulted by the supply companies on complaint handling procedures, which will then have to be approved by the director. They will be able to demand meetings with the senior management of the local supply companies and, in addition, the committees will play a major role in helping the supply companies to formulate codes of practice, which will be published and made available to anyone who wants them, on the payment of bills and on the special needs of the elderly and the disabled.

One of the most radical and widely welcomed features of our proposals is that, when the director sets out the standards of service which the supply companies will have to achieve in supplying domestic customers, he can ask the committees to determine any disputes arising over failures to meet those standards or over-compensation.

Above all, the committees will be the director's eyes and ears in their own areas, and will report to him on any matter they think should be brought to his attention which affects consumers interests in the area they serve.

That is the background upon which to base discussion of my noble friend's amendments. I hope it will be helpful to the Committee. I now turn to those amendments. Of course I accept what my noble friend said about the last two, Amendments Nos. 63 and 64, being taken separately. We can do that.

The source of the committees' effectiveness will be the fact that they are part of the director's organisation, rather than, as is the case at present, pressure groups, albeit sometimes very effective ones, acting from the sidelines. It is precisely this aspect of our proposals which has been most warmly welcomed by the existing Electricity Consumers Council.

The first two amendments proposed by the noble Lord would strike at the foundations of this new approach which has been so widely welcomed. The ultimate responsibility—indeed, the noble Lord, Lord Peston, used those very words—for protecting the interests of consumers in the electricity industry will lie with the director general. It is therefore clearly right that he, and not the Secretary of State, should be the person who establishes and appoints the new committees. However, it is right that the Secretary of State should have an interest in the appointment of the chairman of the committees, given his duty under Clause 3 of the Bill of protecting the interests of the consumer. I thought that was the point that my noble friend Lady Oppenheim-Barnes was making when she intervened.

That is why this clause as presently drafted provides that in making his choice of chairman the director must consult the Secretary of State and then consult the chairman in appointing the rest of the committee. This provides for an appropriate degree of involvement by the Secretary of State. It will also go some way towards preventing any suspicion of impropriety, however unfounded, over any of the director's appointments. However, to go further and do what my noble friend would have us do—that is, to remove the director entirely from the appointments process—would materially undermine his ability to carry out his statutory duty to protect consumers' interests. Therefore I do not think that there is any worry about incestuous appointments, which may be one of the concerns behind this amendment. This aspect has been given a great deal of thought and we have come to the conclusion that the proposals outlined in the Bill are the right ones and they they strike the right balance. I hope that my noble friend is reassured.

Lord Peston

I should like to thank the noble Lord for his interesting reply. He has clarified for me at least the Government's thinking, although that does not mean to say that I agree with it. However, it throws light on precisely why this amendment is so important. The noble Lord said that the consumers' committees will be fully integrated into the director general's office. He referred to them as being part of the director's organisation. The interesting point raised by this amendment is why this should be so. I was quite astounded by the Electricity Consumer Council's welcome for this aspect of the matter.

One situation that I have in mind is where the consumers' committees may be unhappy with the director general. There is nothing here that gives them any access. That seems to be one of the reasons why one is extremely interested in this amendment. I agree with my noble friend Lord Stoddart that this is a matter that is well worth further investigation. I hope that the noble Lord will not press this to a Division, and I hope that the Government will accept that this is an interesting matter.

The noble Lord, Lord Campbell of Alloway, raised an interesting question about the Secretary of State's responsibility. It must be the case that ultimately the Secretary of State is responsible. There must be some way in which one can get via the director general to the Secretary of State if there is a problem. I do not mean the normal things that noble Lords do in order to find a way of querying some matter; I am speaking more generally. The Secretary of State is not mentioned explicitly here. I should like an assurance that the fact that at the beginning of the Bill it is stated that the Secretary of State does the appointing means that the Secretary of State ends up as the responsible person. I was hoping for some comment on that matter in elucidation.

Lord Glenarthur

Perhaps I can give the noble Lord the reassurance which he seeks. It is certainly the case that consumers' committees will have a right of access to the Secretary of State, and that the Secretary of State ultimately has the responsibility which the noble Lord and my noble friend ascribed to him. There should be no difficulty whatever in the consumers' committees getting to that point.

Lord Ezra

If the noble Lord, Lord Glenarthur, says that if the consumers' committees, in a hypothetical situation, disagree with the director's decision, they will be able to go to the Secretary of State, that relieves my mind.

I am worried about one other point. In subsection (2)(b), in relation to which there is an amendment later on, the Secretary of State seems to come into the matter again. There seems to be an uneasy Boxing and Coxing between the two. The director will appoint these committees but the Secretary of State can decide what areas they are responsible for. There should be some recognition that either one or the other is responsible. This slight untidiness is another cause for concern.

Baroness Oppenheim-Barnes

Perhaps my noble friend can tell me this. If the consumers' committees appointed by the director and the director comes cosily together and decide that something is in the consumers' interest, and consumers do not think that it is in their interests, who is going to mediate on their behalf?

Lord Glenarthur

That is an interesting hypothetical situation, but nevertheless I suspect that, with my noble friend's experience, it may be a real one. If that sort of situation arises, it is a matter in the first instance for the director to sort out. Ultimately, as I have said in answer to the noble Lord, Lord Peston, if access is required by these committees to the Secretary of State, that access is available. That presumably shifts the burden from the director to the Secretary of State.

The noble Lord, Lord Ezra, referred to subsection (2) and said that he thought we were bringing in the Secretary of State one minute and keeping him out the next. That is something which raises a particular aspect so far as concerns paragraph (b). We shall be debating an amendment on that aspect in due course when I think the matter will become clear to the noble Lord.

7.15 p.m.

Lord Peyton of Yeovil

At least this amendment has done one good thing: it has provoked the noble Lord, Lord Stoddart of Swindon, to support the Government, or at least to be neutral in their cause. I very much need the affection and regard of my noble friends and I hope that they will score that up as a point in my favour on a day when I am not likely to score many others.

I believe that the amendment which I moved very briefly has given an airing to a point on which no one has a clear mind except perhaps the Government. I hope that the Government will do a little further exploration in the light of the doubts that have been expressed. I have to summon up all my resources of fortitude to combat the disappointment that I feel that in the event of my going into the Lobby, which I was not going to do anyhow, I would have the noble Lord, Lord Stoddart, with me. However, my recovery abilities, even at my great age, enable me to get over such disappointments.

My noble friend made it clear that the consumers' committees will be fully integrated with the director's office. I am not sure that that is a good thing. He has a fairly substantial patronage and I think that one always needs to look carefully at that kind of thing. The director general will have an awful lot on his hands, and he is only going to have 115 extra staff with whom to perform this function. They are going to be supermen and superwomen. They will have quite a lot to do. I am worried about saddling them with a lot of other tasks. I mean this seriously.

Therefore I hope very much that my noble friend will not come back with an amendment, but that he will have the courtesy or even the good sense to reflect upon the anxieties which have been expressed here. I am not at all sure that I am happy that consumers' affairs should be integrated into the director's office. I say that because I very much hope that the director general will be somebody knowledgeable in the electricity supply industry. That being the case, if he is well advised he will gather around him some other people who are well versed in the electricity supply industry. I am not sure that a whole host of specialists of that kind would be the people one would want to represent customers. An expert knowledge of the electricity supply industry is not necessary. However, it is necessary to ask questions and insist on intelligible answers. Experts are not always the right people to do that.

In the circumstances, if my noble friend will be good enough to give me an undertaking that he will reflect, I shall withdraw the amendment.

Lord Glenarthur

I shall always reflect upon my noble friend's amendments and the advice which he puts forward. I used the word "incestuous" in its colloquial sense when I spoke earlier, but I think that that is not a real concern. Here we have a balance which is right. It is one which I understand is comparable to those in other pieces of legislation currently before the Chamber. I am thinking of the Water Bill.

Therefore, I go so far as to say that this is something for which there is precedence and which, if we were to follow my noble friend's advice, would strike at the foundations of what has been accepted as a new approach having considerable merit. I cannot promise that after reflecting on my noble friend's words I would feel able to make any change.

Lord Peyton of Yeovil

I hesitate to trespass on the patience of the Committee. The consumer committee for the South West has particularly put it to me that it is unhappy with the position. I am not always profoundly moved by the Government's assertion that conclusions at which they had arrived before the debate are necessarily right. All I ask is that my noble friend should reflect on the idea that it may be necessary to move the consumer committees a distance away from the director general's office. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee

I believe that this may be a convenient moment at which to break. I beg to move that the House do now resume and that we do not return to the Committee stage of this Bill before twenty minutes past eight.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.