My Lords, I support this amendment. When I read it I thought that it was a breath of fresh air, which, from my small experience of some of these regulatory bodies, is very necessary and probably should have come earlier. The noble Lord, Lord Jenkin of Roding, talked about the importance of competition, which we discussed under the Energy Bill. An awful lot of the regulators, which he rightfully lists, under Section 7, are by definition monopolies, because that is the way they are.
I certainly believe that monopolies are generally inefficient because they are not subject to competition. One role of the regulators should be to make them more efficient and make sure that they reduce their costs as much possible and increase their efficiency. On the rail side, the Office of Rail Regulation has a duty to look at Network Rail’s costs and to make a
decision on whether it is efficient. If it is not, the ORR has a duty to reduce its requirement and to reduce its costs while not affecting the efficiency of the operation. As I said in a recent speech in your Lordships’ House, the ORR has already reduced Network Rail’s costs by about 40% in 10 years. It is rightly intent to continue that trend with another 20% or 25%.
That is designed to make sure that the company is efficient and that, therefore, the customers, who largely are the train operators, get the services at the least cost and look after the interests of the customers. The other thing that the regulator has to do is make sure that the company is properly financed so that it can deliver on its objectives.
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One has to compare that with what Ofwat is or is not doing, in particular with the Thames tunnel, on which I had an Oral Question today. Ofwat’s job should be not only to make sure that the water companies are efficient and have the right financial structure and assets to do the jobs that they are supposed to do but to look after the effect on consumers. In terms of Thames Water, I have to say that Ofwat has probably failed on both counts. In my view, it has not ensured that Thames Water has the necessary assets to fund enhancements on its own. That is why it has gone through the convoluted process of getting another infrastructure provider and has ended up having it financed in Luxembourg with a government guarantee. Ofwat also seems to be quite happy with all 12 million Thames Water customers having to pay £80 a year extra for 40, 50 or 60 years to fund the tunnel. This is regardless of whether we think the tunnel is the right solution. I do not think that it has looked after the interests of its customers particularly well because it should also have looked at whether it was the right solution, and it should continue to do that as possible new alternatives are developed. Therefore, I think that there are some pretty good failures there.
If the amendment were adopted, it would increase the transparency of all these activities to a pretty dramatic extent. It would be a real benefit for consumers to see that these six industries are acting in their interests while making sure that the company has the right structure to undertake its work. Therefore, I congratulate the noble Lord, Lord Jenkin, and fully support his amendment.