Lord Oxburgh
Main Page: Lord Oxburgh (Crossbench - Life peer)
Lord Deben
My Lords, I am very clear in my desire to have maximum competition. I have been fascinated to hear the various versions of history of privatisation, the like that we have now been given. It is rather like listening to the history of the Battle of the Boyne in the north of Ireland. You would not expect to find that people were talking about the same event. Happily, we have not come to blows about it but perhaps I may suggest that there were few industries as incompetent, useless and pathetic as the British electricity industry before it was privatised. This industry hid the cost of nuclear power in a way which was possible only because it was totally and utterly opaque.
I remember having discussions with the head of the Central Electricity Generating Board and it was quite impossible ever to get any information of any kind that anyone would need if they were to make any assessment. I sat in a Cabinet meeting when the noble Lord, Lord Wakeham, had to come in and explain that we could not privatise the nuclear power industry because the finances had been so incompetently run that there was no way whatever that it could be presented in a manner which anyone properly could buy. Do not tell us this story about the electricity industry. On top of that, we have had a pretty miserable time since privatisation. It would be better to do what one should do in the north of Ireland; that is, to say that there are very considerable histories on both sides and that we had better just face that, and not try to fight old battles again.
The issue is that we do not have as good a degree of competition as we would like. We do not forward that by lauding either the failed system of state ownership or the not-very-efficient system which we happen to have now, so would it help to take the amendment of the noble Lord, Lord Berkeley? When reading this amendment last night, I started by thinking it sounded rather good—or perhaps it was this morning; it is out of my memory now. Then I thought, “This is exactly the kind of prescription that does not work”. We need to make sure that every time we make a decision, we do so in a way that ensures the maximum likelihood of competition.
One of the helpful comments made reminded the Government of the end of the ROC scheme in 2017. That is an area where we could look very carefully at ensuring that the move into the new structures encourages competition, and enables the companies that have made real advances in the present structure to transfer to a new structure. Maybe we will have to alter the new structure to make that more likely. If I may say so to my noble friend the Minister, my problem is that I am not sure whether the Government are entirely with it, or moving fast enough and with enough sensitivity, to do their best here.
The noble Lord who has been promoting a concept of bringing expert advice into DECC has graphically illustrated the concerns we all have about constantly changing Ministers and, above all, constantly changing civil servants. One of my worries is that unless we get some better stability in the structure, we will not recognise early enough—or long enough ahead—the changes we have to make to protect what competition we have and to encourage more. Having said that, I must say to the noble Lord, Lord Berkeley, that I am not at all sure that the kind of shake-up he proposes here would be a satisfactory means of delivering it. Indeed, it certainly would be a satisfactory means of delivering total incomprehension and utter difficulty at a point when it is most necessary that we keep the lights on.
Therefore I hope that the Minister will not accept this, and in a robust way—meaning that she will tell us that she will act in a way that is a bit more than merely taking on board the need for competition. I hope, rather, that she will find a whole range of areas where the Government can promote that competition.
Lord Oxburgh
My Lords, I will make two quick points. First, I point out that many Governments would salivate at the thought of having six roughly equipotent competitors or participants in a regulated industry in competition with each other. For my information, I am not clear how you decide when you have enough competition, because six participants is quite a lot. It is popular to bash the big six, probably because they do not handle their consumers very well and they have all been associated with unpopular price rises. However, I would like to hear this aspect explored a little more.
My second point is quite separate, which is to draw attention to the second subsection of the amendment of the noble Lord, Lord Berkeley. Regardless of whether the amendment is accepted by the Government, it is very important that the Government take note of that second subsection. It covers a lot of small businesses—I declare an interest as a director of 2OC, which does this—that use renewable energy on a particular site and deliver it to a particular business or a very small range of customers locally. They generally combine generation and transmission to one or a limited number of customers. The Government should make sure that that is protected in the Bill, whatever the final outcome.
Viscount Hanworth
Perhaps I may make a few more comments, some of them addressed to things that have just been said. A great deal of negative propaganda accompanied the privatisation of the electricity industry in the UK, but many studies indicate that the industry was far more efficient than another national industry with which we should compare it, the American industry. There is no question about that. Yet many people tendentiously denied these realities.
If we are to have a nuclear industry, it will be in the hands of a state-owned foreign monopoly. That is a reality that sits very ill beside the fantasy of perfect competition. If we are to have a competitive environment or, indeed, any competition in this environment, perhaps the competition should come from a British state-owned nuclear industry. We have to think somewhat outside the box and not revert to the paradigms of perfect competition versus state industry, which seems still to dominate people’s thinking in this respect. The only countervailing force that I can imagine that could really survive in the British electricity industry to induce competition is if a fraction of it lay in the hands of the state.