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Economy: Regulators (Regulators Committee Report)

My Lords, it is just as well to remind ourselves of the history of the development of regulation. It was a result of the privatisation of the industries. Most of the industries were transferred from the public sector to the private sector, almost debt-free. The companies who bought them borrowed huge sums of money, geared up their balance sheets, gave the money away to shareholders and then came back to the Government and said, ““You want us to do all this; give us some more money or let us put the price up””. In the case of water, for example, people’s supplies were being taxed in order to pay these big companies. In my view, it is quite staggeringly bad economics. I have never supported the privatisation and I still think it was wrong. A company like Railtrack went bust because a) it was incompetent and b) it had paid out too much money—not very different in some ways from Northern Rock. But you need to have in place regulators who are thoroughly professional and able to take information, both from here and abroad—benchmarking information to which the noble Lord, Lord Berkeley, referred. That is very important and it becomes more important as the number of companies supplying power has dropped from 20 to six. The more concentration you get, the more important it is to get benchmarking from overseas. The regulators are gaining experience and are more professional, and some companies such as Network Rail do not like it very much when they are told that the services that they are giving are being given elsewhere more cheaply and efficiently and with less impact on the customer. Obviously there is a need for the Government to keep abreast of what is going on, but the quoted paragraph 6.56 shows that they are not. I endorse the comments made here that there is a definite need for a specialist or sessional Select Committee. I do not have the confidence that has been expressed here about the National Audit Office. We were until recently almost inundated with great thick reports from it full of pictures and not much substance. The NAO is not highly professional. Members of this House probably bring more focus to the issue than a National Audit Office person who moves from job to job looking at the health service one day, education the next and transport two or three weeks later. Politicians should not hide behind regulators. It is the regulators’ job to evaluate business plans and to determine how much it should cost to fulfil them. If there is any public money involved, it is for the Government to decide what they want to buy and how much should be picked up by the customer. That is an explicitly political decision, and I do not applaud the idea of the Government somehow blaming regulators when many of the things go wrong. The noble Lord, Lord MacGregor, referred to the comment by the Railways Minister that Ministers are so busy that they simply have no time to get around to this. If Ministers are that busy, they are not doing their job properly, which means that they must delegate away from themselves the trivia that many of them deal with so that they can get their minds around the principles as they are paid to do. It came to our notice last week through the trade press that the Department for Transport has now decided that any variation in the Great Western Trains franchise is a red box item. Quite honestly, if Ministers have the time to deal with the variations in the Great Western timetables but not with serious regulatory issues, I am sorry but they have got their priorities wrong and need to be put right about them. Promotion of competition is important, but it will come as no surprise to Members of this House that the train company of the person who is lauded by the general public as being at the forefront of competition—I will give noble Lords a few guesses, but Richard Branson might be one of them—is invoking the agreement, which was made a long time ago when the west coast main line was opened, to moderate competition between the Midlands and London, which in fact means shutting out the new train operator operating from Wrexham and Shrewsbury to London so that it cannot call at Wolverhampton or Birmingham. What a competitive attitude to take. Even worse, the company has now announced that it is running a service from Wrexham. Lo and behold, Mr Branson is now running a faster train from Wrexham via Chester. He is, I think, receiving £250 million a year in compensation from the taxpayer to undermine someone else who is providing a service to the people of the Borders which people in Wrexham, Shrewsbury and Telford do not have. It is important that we promote real competition and challenge the people who would prevent it. The noble Lord, Lord Berkeley, has mentioned the need for independence of regulation. It is most important that there is a clear dividing line between what the regulator is supposed to do and what people can expect from the regulator, and what Ministers are supposed to do and what people can expect of them. When a quinquennial—meaning every five years—review, is made by a regulator, it has to be done in that time, whereas with Ministers, I am afraid that often the decision will be made in the summer, at the end of the year, early next year, or later on. It really does drag on and on. I have Answers at home with all that sort of information from Questions I have asked. The Competition Commission is cumbersome and expensive. It is expensive to go to and very slow to answer. I urge people not to send more things there than are really necessary. I believe that our regulators are doing a good job. This is a good report and it is right that Parliament should focus on it. I look forward to what the Minister has to say.