Richard Caborn the Labour chairman of the trade and industry select committee is18/08/10

 

Richard Caborn, the Labour chairman of the trade and industry select committee, is more blunt: “Littlechild is responsible for electricity and Spottiswoode for gas. And we’ve never actually been given ...


Richard Caborn, the Labour chairman of the trade and industry select committee, is more blunt: “Littlechild is responsible for electricity and Spottiswoode for gas. And we’ve never actually been given one.”Some feel that the Government should be intervening more. In practice, the former is perfunctory and the latter infrequent; Ian Byatt of Ofwat has been before the environment select committee only once in five years.”There’s something called a `direction’ which the secretary of state can give to the regulator,” says a spokeswoman for Ofwat, “but it’s not clear how it works The legislation is incredibly vague and loosely worded. “Ministers and civil servants were used for 40 years to interfering with everything these industries did and old habits die hard.”If they are interfering now it is not official. Under the privatisation acts, there is provision for limited communication. Regulators report to the secretary of state on an annual basis and they can be called before select committees. They demanded “full disclosure of all the advice given to her concerning the funding of energy-saving initiatives, including the legal advice she alleges has led to her current stance and the private advice she has been receiving from senior Conservative politicians”.This was never disclosed But the allegation did not surprise Professor Robinson.

Stephen Littlechild, the electricity regulator, took a similar line.Angry Labour MPs complained that this would force the Government to abandon pledges it had made at the Rio Earth Summit. A subsidy from British Gas to insulate private homes was, she said, in effect, a tax on those who did not receive it. “Effectively, the two generators, National Power and PowerGen, told them to get lost.”Something similar happened last year when the gas regulator, Claire Spottiswoode, stood out against an attempt to make her impose energy- efficiency objectives on British Gas. Mrs Spottiswoode annoyed MPs on the environment select committee by scupperingthe new energy-saving trust, aimed at using money raised from household bills. In 1993, ministers tried to persuade the recently privatised coal generators to burn more British coal than they wanted to.

“Ministers saw it as a way of supporting the British coal industry – just as under nationalisation the CEGB would burn more in return for compensation,” says Robinson. “Under the new system,” says Professor Robinson, “the regulators are supposed to be independent and distanced from the ministers, but clearly there’s a hangover from the old days and ministers do try to lean on the regulators.”Much of this is backroom activity but occasionally the attempts become public. They seldom did, instead they just leant on the board members, informally but extremely effectively. And others still are not convinced that complete detachment is desirable.When these basic domestic utilities were nationalised industries, ministers had the statutory power to give directives. “In electricity, for example, the minister and regulator have joint responsibility to issue new licences to anyone who wants to generate electricity. But, basically, one of the prime purposes of privatisation was to get politics out of decision-making in these industries.”There are those who are optimistic that it will. Stephen Glaister, a transport economist from the London School of Economics, predicted that one of the principal conflicts in railway regulation would come from the Government’s ambitions to manage the onset of the market.


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