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House of Lords
Thursday, 15 June 2006.
The House met at eleven of the clock: the PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Coventry.
Baroness Thomas of Winchester
Celia Marjorie Thomas, MBE, having been created Baroness Thomas of Winchester, of Winchester in the County of Hampshire, for life—Was, in her robes, introduced between the Lord Tordoff and the Lord Roper.Baroness Kingsmill
Denise Patricia Byrne Kingsmill, CBE, having been created Baroness Kingsmill, of Holland Park in the Royal Borough of Kensington and Chelsea, for life—Was, in her robes, introduced between the Baroness Symons of Vernham Dean and the Baroness Scotland of Asthal.
Fuel and Water: Price Increases
11.19 am
Lord Dubs asked Her Majesty's Government:
Whether there is any action which they are able to take in connection with the recent increases in consumer prices of petrol, gas and water.
Lord Sainsbury of Turville: My Lords, the setting of energy prices is a matter for individual suppliers. However, the Government have encouraged energy suppliers to develop social tariffs and are taking action to tackle fuel poverty. Fuel duty in the UK on petrol and diesel has remained frozen since 1 October 2003 and has not risen in real terms since March 1999. The Government are working with Ofwat, water companies and the Consumer Council for Water to take forward the recommendations of the affordability report produced in December 2004.
Lord Dubs: My Lords, I am grateful to my noble friend. Does he agree that while the retail energy industries are making very small profits and taking steps to tackle fuel poverty, consumers are seeing this as a time of very high prices and occasional supply shortages? Faced with this, consumers simply cannot understand why the companies are making record profits. Has not something gone wrong with the regulatory system?
Lord Sainsbury of Turville: My Lords, as I said, the setting of energy prices is for individual companies. Britain's gas and electricity industries are regulated by Ofgem and the water industry is regulated by Ofwat.
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I have no evidence that those bodies are not doing a good job in controlling prices. It is right for the Government not to direct our efforts there, because there is no evidence that anything is going wrong, but to concentrate instead on encouraging social tariffs and mitigating the impact on vulnerable groups.
Lord Redesdale: My Lords, given that the Government are looking at social tariffs, will they consider introducing a scheme which would keep tariffs low for those who use the least amount of energy, and thereby address fuel poverty, but which would increase tariffs for those who are profligate in their use of energy, water or gas?
Lord Sainsbury of Turville: My Lords, I believe that those issues are being addressed, particularly in the water industry. There is an experiment in the south-west concerned with water efficiency and special tariffs to help the more vulnerable groups and those who use less water.
Baroness Gardner of Parkes: My Lords, on the water industry, can the Government do anything to ensure that leaking pipes are dealt with? It is terrible that we as consumers are told that we cannot even water our gardens with a hose, yet every day at my home in London I hear water running from leaking pipes, even on the hottest and driest days. We are told that the old Victorian pipes account for higher water consumption than ordinary people do. What pressure can be applied to help consumers, because if so much water was not lost, its price would surely not need to rise by so much?
Lord Sainsbury of Turville: My Lords, I am glad to say that leaking pipes are not the responsibility of the DTI—in fact, neither is the water industry, but I thought that I would not be demonstrating joined-up government if I did not answer the Question in relation to water. One problem is that, when the water industry was nationalised, Governments of all parties imposed strict controls on prices, which meant that there was not enough investment in the infrastructure of the industry. Many of today's problems are due to that failure to invest sufficiently in the infrastructure.
Lord Selsdon: My Lords, why is the German company RWE proposing to sell Thames Water, which has the greatest number of leaks?
Lord Sainsbury of Turville: My Lords, there is not necessarily any connection between the level of leaks and what you can get on the market for selling a company. Clearly, leaks affect efficiency and customers, but the company may still be sold for a good price.
Lord Livsey of Talgarth: My Lords, will the Minister consider for Thames Water the same solution as we have to the problem in Wales, where five years ago we enabled a not-for-profit company to come in, so that the profits go into improving the infrastructure. Is that not required in the south-east as well?
Lord Sainsbury of Turville: My Lords, I have always understood that one of the most difficult things is to
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have real competition in the water industry, for the rather obvious reason that it is very difficult to duplicate the whole infrastructure. Therefore, one has to have a system of controlling prices and regulating, rather than trying to increase competitive prices.
Baroness Miller of Hendon: My Lords, as usual wanting to help the Minister, I will move away from water and get back to energy prices. Has there been an increase in the price of wholesale electricity that is obtained from nuclear sources either in this country from our generators or from French power stations?
Lord Sainsbury of Turville: My Lords, I cannot give any facts, but if the point of that question is to suggest that nuclear prices are not affected by oil and gas prices and therefore are likely to be more stable, I would have thought that it is a matter of record that they are not affected by the same forces that affect other prices.
Lord Lawson of Blaby: My Lords, will the Minister explain, in the interests of joined-up government or anything else, how he reconciles his apparent concern about the rise in the prices of oil, gas and so on that has already occurred with the Government's support for a climate change policy that can only possibly work with still higher prices for carbon-based energy of all kinds?
Lord Sainsbury of Turville: My Lords, I do not think that I understand the argument there. Of course we want to deal with climate change, which of course would be affected by other sources of energy being used. If the prices of oil, gas and other carbon-producing fuels go very high and that directs people to other sources of energy, that would be desirable as well. But that does not affect the Government's strategy, which is to put penalties on carbon emissions.
Lord Soley: My Lords, will the Minister tell us about the energy companies that are now making it much easier for people to buy renewable energy within those companies? Although that is a bit more expensive, should we not be encouraging it in every way that we can, as it is also the way in which to get additional investment in renewable energy? It is not only individual companies that put into the grid from purely renewable sources; most of the bigger companies have a renewables side that you can buy into.
Lord Sainsbury of Turville: Yes, my Lords, this is one of the points that is not realised as much as it should be. In fact, the implication of the renewables obligation is that a lot of electricity companies are now buying renewable energy and meeting their renewables obligations not simply by putting money into the general fund but by actually buying renewable energy. I think that the figure is that something like 70 per cent of their renewables obligation comes from buying renewable energy.
Lord Maclennan of Rogart: My Lords, would the Minister be prepared to commend a study of the
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practicality of postal code variation of taxation to take into account the extraordinary additional hardship suffered in the remoter, sparsely populated areas of this country as a result of current petrol price increases?
Lord Sainsbury of Turville: My Lords, to the extent that the Government can affect that, the right way to deal with it is by looking at fuel taxes and keeping them as low as possible. That is better than trying to finesse this too much.
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