---

Legislative and Regulatory Reform Bill

moved Amendment No. 47A: "Before Clause 4, insert the following new clause-""““EXEMPTION OF ECONOMIC REGULATORS""An order under this Part may not abolish or modify the regulatory functions conferred on, or exercisable by, any of the following-" (a) the Gas and Electricity Markets Authority; (b) the Office of Communications; (c) the Office of Rail Regulation; (d) the Postal Services Commission; (e) the Water Services Regulation Authority.”” The noble Baroness said: This amendment deals with a significant aspect of Part 1 of the Bill—the protection of the principal economic regulators. As I hope I made abundantly clear at Second Reading, the principal economic regulators have very significant powers over the essentials of our daily life and the operation of the economy. They deal with water, energy, communications and transport. These are networks and supplies that must be maintained and operated on sound and sustainable economic and public interest criteria. It is for that reason and the overwhelming need for private investment to be maintained and encouraged in these essential industries that Parliament has made the principal economic regulators independent of political control, with clear, objective, statutory duties that do not wave in the political wind. It is also why Parliament has given them jurisdiction to establish the demands on the systems that they regulate to determine the condition, capacity and capability of the networks in question and then to set prices that customers must pay. Those two things—independence and jurisdiction—are essential if we are to ensure that private investors will have sufficient confidence in the regulatory system to provide the working and investment capital that these industries will always need on fair and affordable terms. As I said on Second Reading, this is no idle or academic point. I referred at some length to the Government’s behaviour towards the Rail Regulator over the winding up of Railtrack. The Rail Regulator at the time has since explained that it was the rigour and timescales of the legislative process that protected his jurisdiction and independence and caused the Government to back off, with their unconstitutional threat of legislation. The Government admitted that they could not have got the neutralising Bill through in time; they might not have got it through at all. That is why the present chairman of the Office of Rail Regulation has written to the Chancellor of the Duchy of Lancaster protesting at the scope of Part 1 of the Bill. He has warned of the very same real hazards of which the former rail regulator warned: the jeopardy to private investor confidence which is created by a power of a Minister to interfere with the independence or jurisdiction of the principal economic regulators. The Minister may say tonight, ““Of course, the principal economic regulators must be independent. The Government have always accepted that it is important and we would never touch them””. He may say that but as the Committee knows that has not been the reality of hard experience as I have shown now and at Second Reading. Even if we accept that the Government are committed to the independence of the principal economic regulators, we must protect them from any possibility of the Bill being used against them. I have taken the wording for this amendment from the Government’s own drafting in Part 2. There the Government have seen fit to exclude the economic regulators from the principles of good regulation. Why they should do so is perhaps strange. I hope we shall debate this more fully when we come to that part. There does not seem to be much harm in getting the regulators adhering to the principles in Clause 23(2), but I am open to any explanation from the Minister as to why they are so exempt. My colleagues in another place pursued this point and did not receive a satisfactory answer. Leaving Part 2 to one side for the time being, I ask: why are the economic regulators not exempt from Part 1? I can think only that the Government deliberately want to keep the economic regulators within their grasp and we on these Benches believe that that is quite wrong. I beg to move.