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Mr. David Harris (St. Ives) : Does my right hon. Friend accept that fishermen are realistic and know that the only fish that he and his fellow Ministers can conjure up are paper fish, through inflated TACs which bear no relation to fish in the sea? He is to be congratulated in not following that course.
Will my right hon. Friend confirm that the channel cod quota is one of those that will be subject to the mid-term review next year? Will he also confirm that a number of swaps have been made with other countries for other species? That will be of assistance to the south-west fishermen in particular.
Column 661review. My hon. Friend will know that we obtained an increase in the original proposals to assist our fishermen. As for quota swaps, we had one with the Dutch in which we transfered 17,000 tonnes of North sea plaice which we could not fish. In return, we obtained all the Dutch quotas for different stocks in the south-west area as well as others in the Irish sea and elsewhere, including significant quantities of sole and herring in the North Sea. Most of those are highly valued by our fishermen, and I believe that they will be of great benefit to fishermen in the south-west.
The right hon. Gentleman may also be surprised to realise that 15 years ago a Select Committee report on the fishing industry predicted precisely what is happening now. He will recall the first question about the depletion of herring stocks. Had we not pursued the policy that is now being pursued, there would be no herring stocks. The Minister may be further surprised to learn that I am chairman of a Council of Europe committee on the fishing industry. We might learn something about the processing of fishing from the Portuguese and the Spanish, who have gone to warmer waters to find fish to process for commercial use. I refer, of course, to tuna.
The North Shields fishing port on Tyneside, which predicted exactly two weeks ago what the statement would say, may have been correct, that there are lessons to be learned. The primary lesson is that, as the Minister said at the end of his statement, if we do nothing, no fishing will be left.
Mr. MacGregor : The hon. Gentleman, with his great experience, is absolutely right. I can tell him--with far less experience than he has-- that I have taken on board the message that he has put to the House. He is right to draw attention to the risk of repeating the herring fiasco--the near-disaster in the 1970s--and that was very much in all our minds when we accepted the total allowable catch for North sea haddock this year.
The hon. Gentleman's warning is also very pertinent. I have reflected on the advice that we received from the scientists last year for this fishery, and I am surprised now that it was such a high figure. We should therefore be careful and cautious this year on that fishery. I recognise deeply the problems that that creates in one year, but we must also recognise that those fishermen had a 50 per cent. increase in the value of their landings in the three years to 1987, which must be taken into account as well. What they would not forgive us for would be over-fishing now and then running into precisely the problems to which the hon. Gentleman has drawn attention.
Mr. Anthony Steen (South Hams) : I first congratulate my right hon. Friend on achieving a great deal, for which the House must be grateful. I also want to thank my hon. Friend the Parliamentary Secretary for taking the trouble to pay a visit to Brixham fishing port and to talk to trawlermen there. They were very grateful, and they are pleased with the result that has been achieved. However, is
Column 662my right hon. Friend aware that the Dutch and Belgians are notorious for ignoring quotas? Not only do they not have the policing to ensure that their ships do not go over the quota, but their ships have additional concealed fish holds and blinders in their nets? I wonder whether my right hon. Friend is aware of that. What steps will be taken to ensure that the Dutch and Belgians do not completely ignore the quota? Will action be taken to stop them taking more than they should?
Mr. MacGregor : I am grateful for my hon. Friend's opening remarks and, in particular, his tribute to my hon. Friend the Parliamentary Secretary, who has been assiduous in going round all the fishing ports since taking on his responsibilities and in pressing our case with great vigour in the Community. My hon. Friend said that other member states were not properly controlling quotas. He will know the tremendous importance that we attach to that, and the priority that we have given in many Council meetings to ensuring that we have a thoroughly effective inspectorate of inspectors, and that other member states observe the conditions.
I hope that my hon. Friend will recognise the many steps that the Dutch Government have taken recently to put their house in order, which have caused them a great deal of difficulty and controversy. I can assure my hon. Friend that we continue to discuss these matters actively with other member states. I want to stress that the Dutch Government have been very strong in trying to deal with these matters in the past few months.
Mr. Robert Hughes : Given that we must take scientific advice seriously, what explanation can the Minister give for the sudden mood of optimism last year and the catastrophic drop in forecasts this year, which has led to savage cuts in the quotas? Why did the scientists get it so wrong? Surely they should have spotted the age profile earlier. How can the matter possibly be changed in June next year? Is that offered as a sop to fishermen for keeping quiet at the moment? If the Minister introduces some form of compensation scheme, will he repeat the errors of the past and give the money only to the boat owners and not to the working fishermen, the processors and those working in fish processing, who will lose their jobs as a result of the changes?
Mr. MacGregor : On the scientific advice, the problem on stocks-- particularly in the haddock stock--is that annual fisheries have become dependent on single-year classes and those fluctuate widely for many reasons. That is one reason for receiving advice from one year to another. Single-year classes are an issue that gives us cause for concern because it implies that the remedy lies in increasing the spawning stock biomass, and that is the purpose of the current low level of TACs.
The review in May is not a sop. It is important to continue to review the scientific evidence and to change the TAC in mid-year, if the scientific evidence justifies that. That is important. However, I do not want the House to be under any misapprehension : I am not putting that forward as a way out of the problem. We shall have to wait and see what the scientific evidence is in May. There is no precedent for paying compensation to fishermen when stocks decline or disappear.
Column 663western mackerel, which is good news for Fleetwood in my constituency, I also want to welcome the technical and conservation measures that my right hon Friend has taken. May I urge on him the importance in future of trying to ensure that quotas are more stable, which is the best long-term means to ensure a profitable and stable industry?
Mr. MacGregor : I agree. We have been focussing this afternoon on the one quota that has given is the greatest difficulty. It is important to stress that we have stability in many other stocks, and we have seen increases in some cases.
Mr. Alex Salmond (Banff and Buchan) : Has the Minister made an estimate of the number of jobs at risk from the cut in the North sea haddock quota, which is the mainstay of the Scottish fleet in volume and value? Does not the Minister's acceptance of the discard argument wholly invalidate the case for setting impossibly low TACs? Does it not show that one cannot manage a fishery by quotas alone? When will the Minister take effective action against Icelandic imports, some of which are coming in below reference prices? The Minister quoted the mildly favourable reaction from fishermen, as opposed to the welter of criticism that he has received from them. Does he not accept that the view among fishermen is that a haddock deal of 54,000 tonnes should have been accompanied by the resignation of the Minister, his hon. Friend the Parliamentary Secretary and his noble Friend the Minister of State, Scottish Office?
Mr. MacGregor : I have quoted the point about the reaction of fishermen to contrast that responsible attitude with the ludicrous response from the hon. Gentleman and his party this morning. The hon. Gentleman has taken the matter out of all perspective. I hope that he does not mean that he was hoping for a far bigger increase in the TAC this year. If he was asking for that, he was endangering the future of the fisheries. I suspect that that was a short-term reaction. It is easy for the hon. Gentleman, who has no responsibility for carrying out decisions--and never will have it-- to call for that. Such a call would have the worst possible effect on the long-term future of the fishermen.
Mr. Toby Jessel (Twickenham) : My right hon. Friend mentioned the interests of producers several times. Will he bear in mind equally the interests of consumers, as fish is the one form of protein that everyone agrees is thoroughly healthy? Is my right hon. Friend aware that, in Twickenham this Saturday, the price of cod was three times the price of mackerel? If there is a glut of mackerel, cannot more be done to promote its consumption--perhaps by the industry itself? Is my right hon. Friend aware that more fishmongers are opening? What are the Government going to do to meet the increasing demand for fish? Perhaps there should be more fish farms and other methods.
Mr. MacGregor : We do not actually have a glut of mackerel at present, although I agree entirely with my hon. Friend about the nutritious and other values of fish as food. That is why, through the Sea Fish Industry Authority, we have been carrying out a major marketing programme to increase the consumption of fish. I am delighted that there are now more retail shops and that the supermarkets are expanding their provision of fish.
Column 664It is very important to ensure that stocks do not disappear altogether. We find it very difficult to re-encourage the young consumer to consume herring because, given its disappearance, she has not been used to handling it. Ensuring the future viability of stocks is an important factor in ensuring that more people have more fish to eat.
Mr. Austin Mitchell (Great Grimsby) : The cut in the North sea cod quota will be a serious body blow to a Grimsby industry, which is already struggling with catch difficulties with no help from the Government. Does the Minister accept that there is a disparity of treatment between farmers who, faced with the loss of earnings through natural disasters, usually receive some compensation and fishermen, who should, in this instance, receive compensation either from the Commission, which is awash with money, or from the Government, for the consequences of these decisions?
Does the Minister accept that quotas and TACs are a partial method of sustaining conservation? Is it not better to use technical measures such as the seasonal closure of grounds, the closure of spawning grounds and, most important of all, a real and substantial increase in mesh size--properly and effectively policed--to ensure proper conservation? Would that not have been a better step to take?
Mr. MacGregor : The hon. Gentleman will know that farmers have been going through a very difficult period because of the impact of the weather on their harvests, which has considerably reduced many of their incomes, and there is no compensation for that.
I agree with the hon. Gentleman that conservation measures represent just as important a part of the overall approach to the common fisheries policy. In particular, we have placed a heavy emphasis on the need to protect the juvenile cod--a stock that is of particular interest to the hon. Gentleman. This year, some member states attempted to remove the box in the Bight on which we have insisted, which helps to protect the juvenile cod. I am sure that the hon. Gentleman will be glad to observe that that has continued in place. I agree with the hon. Gentleman that it is important continually to examine conservation measures--including mesh size--and that is what we have been doing.
Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : Those of us who represent fishing constituencies are genuinely worried about the effect of the decision. What will be done to ensure that non-Community countries do not come in and over-fish the stocks as well?
My second question follows on from that of my hon. Friend the Member for Great Grimsby (Mr. Mitchell). Fishermen in my constituency believe that the reason why the Government are so generous in giving compensation to farmers --I do not quarrel with that--is that there are so many farmers on the Conservative Benches. They point out to me that there are no fishermen on the Conservative Benches--and by that I mean not rod fishermen but net fishermen. Will the Minister do something to show my constituents that their attitude is just a little cynical?
Mr. MacGregor : We are looking at the position in regard to Iceland. We need evidence that the rules are not being observed. The hon. Gentleman referred to the contrast with farming. I would point out to him that in recent years we have been spending considerable sums on capital grants to ease the problem of the size of the fleet. We have spent sums on general marketing and have been giving the utmost attention to ensuring that we achieve the best possible outcome from each Council negotiation to protect our fishermen.
Mr. Calum Macdonald (Western Isles) : I apologise to the Minister for not having been here for the early part of his statement. My question relates not so much to the quotas that he has announced as to their knock- on effect upon the prawn fisheries off the west coast. Does the Minister realise that my constituents are scared that fishermen affected by the quotas may transfer their attentions to the prawn fisheries off the west coast and that, in two or three years' time, quotas such as those now being imposed on haddock will be imposed on the prawn fisheries? Will the Minister undertake to consider that question carefully ; and, if he envisages such a transfer taking place, will he introduce measures to correct the position?
Mr. MacGregor : I note that the hon. Gentleman fairly referred to what might happen in two or three years' time, so let me put the question in context. It is difficult to predict the effects on fishermen's incomes of the package agreed on white fish in the North sea and the west of Scotland, as it will depend on the market. With less fish coming on to the market, prices may well rise, although one cannot predict that with certainty. In addition to overall values, it is also important to consider the totality of North sea and west of Scotland white fish quotas.
As I said, those quotas represent 90 per cent. of our estimated catches this year. That is the context in which we must set the possible implication that the hon. Gentleman fears. We also have a review coming up mid-year, and we shall watch very carefully what happens in the fishery as a whole. I am sure that the hon. Gentleman will agree that at the same time we must ensure that the long-term future of the stocks is assured.
Mrs. Margaret Ewing (Moray) : Will the Minister now answer three specific and important questions that he has so far avoided? First, what assessment has been made of the impact of the agreement on jobs-- particularly for the Scottish fishing fleet as a result of the haddock TAC- -given that many reports suggest that several thousand jobs could be affected directly or indirectly? Secondly, what action does he propose to take to try to stop imports from non-EEC countries at below reference prices, which are undercutting our fishermen? Thirdly, will the Minister come and make the statements that he has made today not in the cosy confines of an office in Scotland but at one of the ports along the north east fishing coast?
Mr. MacGregor : The hon. Lady is a fair person. If she examines the answers that I have given, she will find that I have clarified the position on the assessment of jobs. One simply cannot tell today what the outcome will be. We have to consider the value of the fish that are landed, and we do not know how the market will react to that. We need
Column 666to take into account the fact that the white fish quotas represent 90 per cent. of this year's catches and that last year the value of United Kingdom landings in haddock was nearly 50 per cent. up on 1984. We are therefore considering peak years. We must consider all those factors, and the possibility of a review mid-year. For those reasons, it is not possible for anyone to say what the outcome is likely to be.
On the hon. Lady's second point, I have already said that we are monitoring developments in relation to reference prices. On her third point, I strongly believe in getting out and about whenever I can, subject to the commitments of the diary. My hon. Friend the Parliamentary Secretary certainly travels a great deal, and I do so whenever I can.
Mr. Frank Doran (Aberdeen, South) : It is not only the fish catchers who are dismayed at the Minister's announcement ; it is also those in the fish processing industry, a large part of which is situated in my constituency. The Minister will remember that the total ban on herring catching a few years ago lasted three or four years. By the time herring quotas were reintroduced, we had completely destroyed our capacity to exploit the stocks. What steps does the Minister propose to take to ensure that that does not happen again?
Mr. Archy Kirkwood (Roxburgh and Berwickshire) : Will the Minister accept it from me that the announcement on TACs will be greeted with dismay in towns such as Eyemouth in my constituency, where, only this weekend, the Allscot factory summarily laid off 57 employees, partly as a result of uncertainty about the supply of white fish? I understand that the Minister has difficulties in quantifying the value and volume changes implicit in the announcement, but will he next year consider giving special assistance both to the catching and to the processing sectors, if evidence is produced that the worst fears of some Opposition Members are confirmed? Will the Minister or one of his colleagues come to Eyemouth and explain the consequence of the announcement?
Mr. MacGregor : I shall certainly pass on the hon. Gentleman's request to my noble Friend the Minister of State, Scottish Office. The hon. Gentleman referred to the processing industry. As I said in answer to an earlier question, I fully understand the impact of the lack of fish and of the uncertainty to which the hon. Gentleman fairly referred. That is precisely the problem ; we cannot just create fish. We must ensure that the spawning is protected if we are to have a proper supply of fish. That is precisely why we had to act as we did over the weekend, and we shall be reviewing the position throughout the year.
I hope that the hon. Gentleman will consider haddock in a wider context. I have already said that the white fish quotas are 90 per cent. of our estimated catch this year. Haddock quotas for the United Kingdom in the North sea and off the west coast of Scotland are 73 per cent. of our estimated catches this year. The fact that the catches this year are well below our quotas suggests that the main problem is a lack of fish.
Column 667Kingdom white fish quota, any protection will be given to vessels having a low catching power? If no such protection is provided, will there not be a danger that quotas will be gobbled up by the extremely powerful vessels that sail from some ports?
As the Minister has responsibility for food, will he deal again with the impact of this development on consumers? Can he given any estimate of the effect on shop prices that it will have?
Finally, given the clear warning that has evolved over many years that supplies of familiar species of fish are increasingly under pressure, and with the market looking to new species all the time, will the Minister give an assurance that the short-sighted nonsense of cutting fisheries research and of threatening the existence of establishments such as Torry will be abandoned once and for all? Let there be more research and recognition of future needs, not less.
Mr. MacGregor : As to the hon. Gentleman's question concerning prices to the consumer, that is not something that one can estimate now, because it will depend on the market place. On the hon. Gentleman's first point concerning quota allocation, the way in which we do that is something that we must now decide. As to research and development, the key aspect in respect of management of the stocks to ensure long-term supplies--this is the key issue for the consumer--is the research work undertaken by our fisheries people at Lowestoft--
Column 668Inmos (Sale)
Mr. Doug Hoyle (Warrington, North) : I beg to ask leave to move the Adjournment of the House, under Standing Order No. 20, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the proposed sale of Inmos by Thorn-EMI to Thomson-SGS, the Franco-Italian semiconductor manufacturer."
The matter is urgent because the sale is imminent, so right hon. and hon. Members require an immediate opportunity to discuss it. It is important because Inmos, which was set up in public ownership by the last Labour Government, is the only British company that designs, develops and mass- produces microchips. It is facing a foreign takeover, purely because it was dumped by the present Government into the private sector.
A successful information technology industry is as essential to a modern industrial nation as the steel industry was to a manufacturing country in the last century. Inmos is no lame duck, but is right at the frontier of the information technology industry. Its transputer is unique, and is a world leader in microprocesors. Transputer sales are soaring, especially in Japan. Few British companies can say that of their products. More than 200 Japanese companies are incorporating transputers into the design of their new products.
It is a matter of national interest that a successful, strategically important technology company remains in British hands and does not become a foreign subsidiary that will be dependent upon the whims of a foreign owner. We cannot allow Thorn-EMI's short-term market needs to decide Inmos's long-term future. To allow Inmos to pass into foreign hands will be a body blow to the whole of Britain's information technology industry. I ask for an emergency debate in order that we may discuss that important matter in greater detail.
Mr. Speaker : The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, "the proposed sale of Inmos by Thorn-EMI to Thomson-SGS, the Franco-Italian semiconductor manufacturer."
As the House knows, Standing Order No. 20 requires me to give no reasons for the rulings that I make on these matters. I have listened carefully to what the hon. Member has said, but I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 20. I therefore cannot submit his application to the House.
Order for Second Reading read.
[Relevant documents : Third report of the Energy Committee of Session 1987-88 on the Structure, Regulation and Economic Consequences of Electricity Supply in the Private Sector (House of Commons Paper 307), and the third special report of the Committee of the same Session containing the Government's observations on the third report (House of Commons Paper 701).]
Mr. Speaker : I must announce to the House that I have selected the reasoned amendment in the name of the hon. Member for Banff and Buchan (Mr. Salmond), and that I propose limiting speeches to 10 minutes between seven and nine o'clock this evening. I hope that right hon. and hon. Members called before seven o'clock will have regard to that limit when they are making their contributions. 4.45 pm
The Bill sets out the Government's proposals for the restructuring and privatisation of the electricity supply industry throughout Great Britain. Today sees an important turning point in the history of that important industry.
Virtually no one now bothers to pretend that if we were starting from scratch, we would choose to recreate the public sector monoliths that dominated key areas of the national economy in the post-war period. They are the tower blocks of our economy, the monuments to the public sector planning that lost sight of the customers' needs. The right hon. Member for Islwyn (Mr. Kinnock) said that if his party came to power, they would try to make the market economy work better than this Government have made it work. The hon. Member for Kingston upon Hull, East (Mr. Prescott) showed signs of understanding the shortcomings of a monopoly supplier when he said that he wanted to change the electricity industry and make improvements. Perhaps that is the other reason why he was moved on. For the sad truth is that nationalisation has fulfilled neither the hopes nor the promises of his supporters.
Mr. Norman Hogg (Cumbernauld and Kilsyth) : How can the right hon. Gentleman make such an assertion about the North of Scotland Hydro-Electric Board, which provided electricity to people who would not have received a supply had the industry been left in private hands? In the context of the hydro-electric board, the right hon. Gentleman's comments are utter nonsense.
Mr. Parkinson : That may be the hon. Gentleman's view but it is not ours, and when the hydro-electric board finds its way into the private sector he and his constituents will be very pleased. It was Labour's own leading post-war theorist, Tony Crosland, who first gave the game away when he likened nationalisation to "making Marks and Spencer as efficient as the Co-op."
Column 670Some of his contemporaries, and some right hon. and hon. Members seated on the Opposition Benches today, still believe that he was paying the Co-op a compliment.
Those working in the electricity industry have always recognised the concept of public service that the nationalised industries were intended to embody, but for them, the practice has been very different from the theory. There has been insufficient pressure on costs, efficiency or prices. With the encouragement of past Governments, the industry has over-invested in plant that has not been needed and which, in some cases, has not worked. By restructuring the electricity supply industry and returning it to the private sector, we will improve its efficiency, promote competition and give customers a better deal.
Our proposals will open up a genuine market in electricity. They will remove the present institutional barriers to competition and provide a new climate that fosters competition. By giving locally based supply companies a duty to provide a supply to all their customers, they will move the key decisions from a remote monopoly producer towards the customer and the supplier.
Mr. Alex Salmond (Banff and Buchan) : Will the Minister specify how he detected the demand for privatisation of the Scottish electricity industry? Did he do so from election results, or by some other means that we do not know about?
Mr. Parkinson : I know that the hon. Gentleman resents it, but we have national elections in this country. We have suffered for many years under Labour Governments elected by Scottish and Welsh majorities. He is a member of the national Parliament. The Conservative party won the election on the basis of a promise to privatise the electricity supply industry.
Suppliers will have a direct incentive to seek the cheapest sources of supply from a wide variety of generators. Private generators will benefit from access to transmission on the same terms as everyone else. In that way we shall change the whole culture of the industry from one of cost-plus and take it or leave it, to one of consumer choice and real service to the customer. At the same time, our proposals will ensure that security of supply is maintained, by preserving the integrity of the national grid system and by encouraging diversity in electricity supply.
One of the most surprising allegations is that I am taking excess regulatory powers over the electricity industry. The same people say that we took insufficient regulatory powers in previous privatisations. Perhaps they could make up their minds and decide what they really want. Presumably they want to promote competition. Regulation can help there for instance, by obliging the industry to allow newcomers to use its wires. Presumably they want customers to be protected against exploitation. Presumably they want the industry to plan for emergencies and interruptions in fuel supply. Presumably they want the industries to meet specified standards of service. Presumably they want the industry to observe safety standards. Presumably they want the Scottish industry to be regulated from Scotland.
If that is what they want, that is what the Bill gives them. If they think that is excessive regulation, perhaps they would say what clauses should be dropped. I suspect that we shall hear nothing about that.
Mr. Alfred Morris (Manchester, Wythenshawe) : The drafting of the Bill recognises that competition and the interests of consumers are not necessarily synonymous. It is also clear that where they are not, competition will have priority over consumers' interests. Since the Secretary of State has so often implied that the interests of consumers must come first, is he prepared to amend the Bill and especially clause 3(3)(a)?
Mr. Parkinson : The customer's position will be improved in two ways. First, the person who supplies the customer will have access to a market in electricity. Secondly, he will have a regulator with strong powers whose job it will be to ensure that the customer gets a fair deal. The Bill makes possible those two improvements and puts the customer in a much better position. The Electricity Consumers Council agrees wholeheartedly with that, and believes that the customer will be in a far better position under the Bill.
Mr. Tony Blair (Sedgefield) : The other point made by the Electricity Consumers Council was that, if competition is to mean anything, it must mean choice for the consumer. Will the Secretary of State tell us precisely what choice will be available to a consumer who does not like his area board and wants to change? What choice is there at the point of consumption?
Mr. Parkinson : The hon. Gentleman is being wholly disingenuous and he knows it. We have made it clear that the cost of duplicating the low voltage distribution system--that is what he is asking for--would not be in the customer's interests but would increase costs enormously. We are saying that, in the 80 per cent. of consumers' bills not represented by those costs, there will be competition, and in the remaining 20 per cent. there will be regulation.
Mr. Blair : The Secretary of State has told us why it is not practically possible to provide competition for the consumer. That may be right. He claimed that he was not proposing the same for electricity as for British Telecom but was introducing something different. What choice does the consumer--not the monopoly supplier--have?
Mr. Parkinson : If the hon. Gentleman will allow me to proceed with my speech, I shall explain to him, as I explained at the Conservative party conference, which seemed to find it easier to understand, that taking two wires to every house would be wasteful and no consumer wants it. That is precisely the point that the hon. Gentleman seems unable to comprehend. The price of what is supplied will be subject to competition. The cost of supplying it will be regulated, and that cost is a small part of the overall bill.
The Bill provides a clear statutory framework for our proposals. The detailed regulatory arrangements for the industry will be contained in licences issued under the Bill, which we shall table when the Bill goes into Committee. The regulatory framework, like the Bill, will enable the six principles set out in the White Paper "Privatising Electricity" to become reality.
The first principle was that decisions about the supply of electricity should be driven by the needs of customers. Our Bill will give every owner or occupier of premises not, as now, those within 50 yards of an existing main--a right to a supply of electricity on reasonable terms. That will extend the customers' rights. Suppliers will be able to contract for electricity from a wide range of
Column 672sources with incentives to do so in the most cost-effective manner. Customers will have the right to contract directly with the generators of their choice.
We shall oblige public electricity suppliers and the national grid company to offer fair terms for carrying the electricity generated. That will give the heavy user a more direct choice in who supplies his electricity and will give those who supply the domestic customer a choice in who supplies them--something that they do not have now. At present, we have a monopoly producer compounding a monopoly distributor. That is wrong. All those provisions will exert downward pressure on costs by enabling decisions about electricity supply to be driven by customer needs.
The second principle was that competition was the best guarantee of customers' interests. To promote competition, the Bill will enable the industry to be restructured so that the generating capacity of the Central Electricity Generating Board can be split into two new companies : one, Power Gen, would own about 30 per cent. of the CEGB's existing generating capacity, all of it non-nuclear, and the other, National Power, would own the remainder. The national grid will be transferred to the joint ownership of the area boards' successors.
Privatisation will open an exciting new opportunity for independent power generators. We know already of nearly 20 proposed independent power generation projects that would amount to more than 10 per cent. of our national needs. I give the House two examples. The first, and the closest to the House--just nine miles from here--is Thames Power's proposed 1,000 MW plant at Barking Reach, which will form an important part of the overall plan to revitalise that area. Secondly, in the midlands, Hawker Siddeley is planning a 350 MW station that could produce enough electricity to supply Corby, Kettering and Northampton. There are almost 20 other major projects in the pipeline.
The third principle was that regulation should be designed to promote competition, oversee prices and protect customers' interests where natural monopolies will remain. The hon. Member for Sedgefield (Mr. Blair) seems to have discovered natural monopolies for the first time, but a great deal of the White Paper related to precisely how we should regulate them.
The Bill enables us to appoint a Director General of Electricity Supply and to staff his office. It sets out his duties, the most important of which will be to promote competition and protect the customers' interests. It allows him to issue licences to generate, transmit and supply electricity. He will regulate the industry by granting, modifying and enforcing the licences.
Opposition Members have the strange idea that regulation is a substitute for competition, but it will ensure that competition develops. It will do so in at least five ways. It will require the 12 public electricity suppliers to contract with the most competitive generators ; it will penalise them through price control if they contract inefficiently ; it will require the public electricity suppliers and the national grid company to allow others to use their network on terms that may be settled by the director ; it will prevent the 12 public electricity suppliers and the two large generators from using their position in the market to stifle competition ; and it will give new rights to independent generators and suppliers, so putting them on an equal footing with the successors to the CEGB and the area boards.
Column 673There will be more than just two generators. I have mentioned the independent generation projects being considered; there will also be opportunities to buy from Scotland, from France, from the established independent generators and even from the generating projects in the process of being launched by the area suppliers-- [Interruption.] In theory, that could have happened after the 1983 Act. In practice, it did not, because the monopoly generator dominates the market and throws out the independent generator.
The fourth principle was that security and safety of supplies must be maintained. The integrity of the national grid will be preserved with a merit order system building on the benefits of existing arrangements. The national grid company will have a statutory duty to develop and maintain an efficient, co-ordinated and economical system of electricity transmission.
We believe that security of supply is best based on diversity in sources of supply. We believe that nuclear power is a vital part of that diversity. On at least two occasions in the past 10 years, Britain would have faced enormous difficulties but for our nuclear power stations. The oil price explosion and the miners' strike would have caused us almost insuperable problems. The original case for nuclear power remains strong, and fossil fuels remain finite. No major new alternatives to nuclear power have yet been discovered. As the environmental arguments develop, nuclear power will increasingly be seen as the least polluting major source of electricity. Nobody knows what the price of fossil fuels will be in the decades ahead, but we can all be reasonably certain that they will be a great deal higher than they are now.
To encourage diversity of supply, a statutory obligation will be placed on each public electricity supplier to purchase a minimum amount of non-fossil -fuelled generating capacity, and that includes renewables. It will ensure that any costs associated with this requirement are shared by all electricity users. That obligation will not therefore affect the overall level of prices, but it will enable customers to identify the cost of diversity.