Previous Section Home Page

Mr. Parkinson : The hon. Gentleman talked about duopoly. He ignored Scotland and the five independent generators that already exist, where there is substantial over-capacity for which English boards are already signing up. He ignored, too, the 2,000 MW French link. I assure him that there are 20 projects, representing 10 GW, which are well on the way to being fully signed up. He will look very foolish in about three years' time when he reads this rubbish.

Mr. Blair : I understand that we shall get an answer to that question in three years' time.

The right hon. Gentleman talked about electricity coming from Scotland or France, but that is electricity coming from public ownership. That has nothing to do with privatisation or the arguments about whether the structure should be changed. Even if we accept that there will be more electrical generation and competition, the critical point will be upon whom this competitive pressure will actually operate. The answer is that it will operate on

Column 684

the generators. However, the customers contract not with the generators, but with the area boards, which are monopolies. If it operates at all, competition must operate through choice. The choice here is given to the monopoly suppliers. They will be able to award contracts to whomever they wish--even to themselves. The truth is that there is no competitive pressure in this structure at the point of consumption, which is the only competitive pressure that matters. In fact, when we analyse what the right hon. Gentleman has said, we see that there is less competition than between British Telecom and Mercury. At least with British Telecom and Mercury, one can pick up the telephone and change the telephone operator so that one contracts with Mercury in that small part of the market. Here, there will be no choice whatever.

In exchange for having no choice, we have the reality of higher prices. That is not something that is in the future, or some vague promise such as the Secretary of State has made, that prices may come down. Indeed, outside of the Conservative party and the Department of Energy, it is barely in issue that prices will rise because of privatisation. The national utility services said that our prices would become among the highest in the world and last week, the CBI called it an inflationary own goal. The National Consumer Council, Cambridge Econometrics, the Electricity Consumers Council and the London Electricity Consultative Council all said that it would mean higher prices.

The Economist said this about what the right hon. Gentleman called our fantasies :

"Nuclear power is the cause of other headaches. Because it is (for now) the costliest way to generate electricity, and because the industry will be allowed to pass on a chunk of that extra cost, consumers will effectively pay a nuclear tax' every time they switch on. On top of that, the taxpayer is to subsidise the cost to National Power of reprocessing and disposing of nuclear fuel, and meet part of its hefty bill for decomissioning nuclear stations. Add all this to a 15 per cent. rise in Britain's electricity bills before the sale and--for consumers--privatisation hardly seems a blessing." Perhaps the most extraordinary statement came from the present Chancellor of the Exchequer--an expert on rising prices--when he was the Secretary of State for Energy. He was asked by one of his hon. Friends whether the best way of holding down electricity prices was not the private generation of electricity, and he said :

"I would not like to promise that private generation of electricity is the best way of holding down prices."--[ Official Report, 8 February 1982; Vol. 17, c. 726.]

Against the right hon. Gentleman's promise of downward pressure on cost, years ahead, we have the fact of the 9 per cent. rise last April, the fact of the 6 per cent. rise this April, and the dividend yield, quite apart form the cost of nuclear power.

Worse than that, because of the mechanism that the right hon. Gentleman has introduced, we will lose the obligation to supply that is presently on the generators. He told us that he is placing that obligation of supply on the area boards--the suppliers. They can only supply what is generated. What determines whether they are planning ahead sufficiently, ensuring that there is enough capacity to meet future demand or ensuring that there is not excess capacity that will cost the industry dear? Who will be given responsibility for planning once generators no longer have that critical obligation of supply? For losing the right of supply from the only people capable of fulfilling it and for competition, if we are lucky,

Column 685

in 6 or 7 per cent. of generation by the year 2000--twice removed from the customer--we must endure rising prices, huge cost dislocation, and the risks of this Bill. If that is the bargain that the right hon. Gentleman offers Britain's 22 million consumers, it is no wonder that every opinion poll shows how massively it is opposed. The truth is that the right hon. Gentleman never asked for a moment whether privatising this industry was in the interests of consumers. The only questions that he was permitted to ask were, how he could privatise and how fast. It is the same with the structure. The right hon. Gentleman never asked what was best for the industry. He was simply haunted by one thing-- after the embarrassment over the monopoly sale of gas and Telecom, he feared that he would be accused of privatising this industry as a monopoly. That is not a good thing to have on the right hon. Gentleman's job application form to be Chancellor, which was his only concern.

At the heart of this proposal is a gaping black hole where the interests of the consumers should be. The right hon. Gentleman may have started out with the intention of avoiding the errors of Telecom and gas, but, in the event, he has simply compounded them. He claims that the privatisation of the electrical supply will be in the interests of the nation. He says, especially, that it will guarantee the continuation of the nuclear programme, and he condemns as a figment of our imagination the notion of a nuclear tax. The twists and turns on this aspect have really been extraordinary. I believe that, in its briefing, the National Council for Voluntary Organisations called it outrageous. There have been a series of stories in the press about the existence of a nuclear tax. Mr. John Butterfill (Bournemouth, West) Inspired by the hon. Gentleman.

Mr. Blair : The hon. Gentleman says that they are inspired by me. He pays great tribute to my powers of inspiration, as some of those stories appeared before I became shadow Energy Secretary. There were leaked stories in detail, culminating in a front-page story on Monday 21 November in the Financial Times --

"Nuclear Programme Tax to be Imposed on Electricity Consumers"-- which set out in detail exactly how this tax was to be imposed and levied, and saying, of course, that it was to build the new PWRs. I checked today and there has been no denial of the truth of that story from the Department of Energy or from any Minister.

When I asked the right hon. Gentleman a month ago at Question Time "to deny unequivocally" that any such plans for a nuclear tax existed, I received this unequivocal denial :

"We have a declared policy that 15 to 20 per cent. of our electricity will be supplied from nuclear sources because we believe that diversity of supply is essential to security. There will, therefore, be a nuclear component. The question of nuclear economics is extremely hard to settle."- -[ Official Report, 7 November 1988, Vol. 140, c. 4-5.]

That was the ringing denial on 7 November. The truth is that, until this Bill was published, there was never any serious attempt to deny that there would be this tax.

Column 686

Today, we have been given the astonishing explanation that we have been paying it already, and it is just to assist us that it is being made transparent on electricity bills.

I have two questions that I shall ask the right hon. Gentleman about that. First of all, it is curious that we are supposed to be paying it already, because I had understood Ministers to have been telling us for the past 10 years that nuclear power was cheaper, which was why we should be investing in it.

Secondly, if the simple reason is to make it more transparent, why is nuclear made transparent on our bill, and not coal, gas, oil or any of the other sources of energy? In particular, why do clause 31 and the notes to the Bill specifically make mention of a levy to cover the excess cost of nuclear over conventional? Why is all that in the Bill if it is just a figment of our imagination?

The reason is set out in a memorandum from Mr. John Baker, CEGB managing director, shortly to be the director of the new National Power, which will take over nuclear capacity. That memorandum was marked "confidential", which is a sure sign that it was about to be leaked, and was sent to Mr. John Guinness deputy secretary at the Department of Trade and Industry. Mr. Baker said :

"The only contract which Nuclear Power will be able to agree to sign will be one in which both parties can have full confidence in the recovery of costs from their respective customers."

He said that the CEGB view of the nuclear option was now quite different from its position before privatisation proposals because it would need to become substantially more risk-averse. He then went on to say that that was why the successor company

"can no longer make the national case for pressurised water reactors".

The truth of the matter is that the tax will be imposed to meet the costs not of existing stations, but of the four new nuclear-powered reactors. The Government knew that this tax would be necessary, because otherwise the private sector would not build nuclear power stations. They also know that the notion of a special Tory tax to pay for power plants that the country neither wants nor needs, is publicly offensive and politically suicidal. Therefore, their response is not to be honest about the tax, but to suppress admission of its existence. That is the true explanation of what lies behind the nuclear tax.

What about our invention of the likely cost of the nuclear tax? That figure is supplied from evidence given to the Hinkley inquiry by, among others, the London Business School, hardly a left-wing fantasiser, and Dr. Mark Barrett of the earth resources research unit, and the science policy research unit that advises the Select Committee and which has backed up what Labour has said. The CEGB has also said that if the rate of return proposed by the London Business School is accepted, such a nuclear tax will be introduced. It is not us who need to justify our position, but the Secretary of State who should come clean with us.

We could have a debate out diversity of supply. What on earth does that argument have to do with privatising the industry? I do not believe that the Secretary of State understands that the key contradiction that he must resolve about the nuclear industry is why, if that industry is ripe for the private sector, it is to be given special protected status and set apart. If privatisation is the answer, why is it the answer for the rest of the electrical supply industry but not for the nuclear industry? The Secretary of State must answer that question.

Column 687

The risks that will be borne by the taxpayer will also be borne by the country. The nuclear waste bill now stands at £4.5 billion. The Select Committee has said that the decommissioning of power stations could cost between £250 million and £750 million per station. Schedule 12 makes provision for that to be paid for out of grants and loans.

Mr. Parkinson indicated dissent.

Mr. Blair : Yes it does, I am afraid to say.

The Secretary of State tells us that we are already paying such costs, so what are we worried about? We are worried because we shall keep on paying the costs of nuclear power, but we shall be losing the profit from the industry--we shall lose £1.5 billion a year in profits.

What is outrageous about the Bill is that, for the first time that I remember, it enacts public risk and private profit. The Secretary of State's singular achievement has been to bring forward the only privatisation measure where, in exchange for the public underwriting the risks of privatisation, investors will be free to take monopoly profit from the captive consumers providing that subsidy. Such loss is quite apart from the substantial loss on assets that will arise if the industry is sold as an undervalue.

Discount privatisations have happened before with British Telecom, British Gas, the British Airports flotation and Rolls-Royce. The electricity industry is worth almost £40 billion, and if it is sold at £20 billion or less, it will be the first privatisation that is not just cut- price, but half-price. We will lose the benefits of the assets sold.

All those unresolved contradictions underline the stupidity, indeed the impossibility, of an energy policy determined by the interests of the private sector. The very considerations most critical to securing the long- term future electrical supply are the very ones least suited to the inevitable short-term demands of the market. That is why, at the crux of the right hon. Gentleman's proposals, lies a clash of interests that he cannot conceal between ideology that drags him toward market forces and reality that compels him to recognise the need for a strong public sector.

Mr. Robert Hughes (Aberdeen, North) : When my hon. Friend asked why we should be worried about this, I do not know whether he overheard the aside from the hon. Member for Birmingham, Northfield (Mr. King), who said that the Opposition should be worried that £20 billion will go into the Government coffers just before the next election.

Mr. Blair : There are occasions when Conservative Members lapse into frankness.

The Secretary of State's proposals are now virtually friendless. Mr. Alex Henney, a former supporter, has turned his back on them. Dr. Dieter Helm of Oxford university, a supporter of the privatisation programme, has said :

"If you take the balance of the degree of competition, the amount of regulation, the disruption caused and the need for lots of investment in this industry, in the future then I find it very hard to believe that the consequences are going to be anything other than price rises. The consumer's going to pick up quite a large bill for this privatisation."

Dr. Yarrow, of Oxford university, is another former supporter of privatisation who has deserted the sinking ship.

Column 688

In truth, there is no support left anywhere for the proposals, except from the vested interests that the Government now represent, the vested interests in the City. Hoare Govett, in its recent analysis of the Secretary of State's proposals, which it condemns, rather disarmingly said :

"At least all of this will provide much-needed work for merchant banks and brokers in the City".

That is the only occasion when I have heard privatisation justified as part of a City jobs programmes.

Dr. Michael Clark (Rochford) : The hon. Gentleman has moved on since he accused some Conservative Members of indulging in frankness. Would he care to indulge in some frankness and tell us how his party, when and if it returns to power, will pay for nationalising the electricity supply industry? Will it be through huge tax increases?

Mr. Blair : We will reinstate it as a proper public service under public control.

It is not merely the City vested interests who support the Government. They also have the support of senior managers within the electricity industry who expect to be enjoying the same 78 per cent. average increase in the salary enjoyed by the top management of other privatised industries in the year after privatisation. Apart from that, however, what support can the right hon. Gentleman claim for the proposals?

Perhaps the most interesting desertion from the ranks of previous privatisers is that of Mr. Andrew Cooper, self-confessed admirer of the Prime Minister and former head of the Institution of Electrical Engineers. In a letter to the Financial Times on 12 September, he said :

"I have just returned from a one-week biennial conference of more than 2,000 leading electrical engineers from 79 countries. Having been a member of this organisation for more than 40 years, and its world president for the maximum term of six years, many people talk to me. What seemed to dominate everyone's thinking was the privatisation of the United Kingdom electrical supply industry. Their views could be encapsulated in a single phrase : You must be mad.'."

That is what is thought elsewhere of the Government's proposals. Yet it is even worse than that. Take the major issue of energy conservation. We are the worst insulated nation in Europe. The Department of Energy's budget has been slashed by more than a half. Schemes to promote energy conservation, which are cost-effective and of huge environmental benefit, have been scrapped. Consider the major problems and environmental difficulties that we face with coal and nuclear power. Consider the exciting developments in research and technology that the public sector has undertaken, but which the private sector will often find incompatible with its short-term profits. Consider the crippling fuel poverty of the poorest in our society who heat their homes most inefficiently and spend four times the average on heating.

When we consider these new issues on the horizon and appreciate what a real agenda for a modern energy policy for Britain will contain, we see that it is not just the cost that the consumer will pay ; it is not just the burden that the country will bear ; it is the sheer, breathtaking irrelevance of these proposals to modern issues of today.

I shall tell the House why the Bill comes before us. It staggers on, uncertain in its reasons, untested in its consequences and rejected even by those who gave it intellectual birth, because it is still sustained and propped

Column 689

up by the two most ancient principles of the Tory party, prejudice and greed--greed for profits which are neither earned nor deserved, greed of a Treasury that has for so long paid the country's bills by selling the country's assets that it now knows no other way ; and the simple and sinister prejudice that what is private is always right and what is public is always wrong. It is on that slender stem of dogma that the future of our electricity supply industry now rests. The Conservative party can speak for the vested interests of City speculators and the irrational crusades of the ideologues. The Opposition will speak for the 22 million electricity consumers. We will speak out for industry that needs access to cheap electricity at reasonable prices. We will speak up for a country that knows the good sense of a public industry in public hands.

6.1 pm

Mr. David Howell (Guildford) : I listened during the speech of the hon. Member for Sedgefield (Mr. Blair) to find out whether the new generation of Labour whizz kids was striking a different pose from their elders who can no longer whizz. I must conclude from what I have heard that there is no change. The Labour party is still firmly locked, despite the eloquence of the hon. Member for Sedgefield, in its Albanian mood. It is ignoring the new thinking about electricity supply organisation around the planet, in countries as diverse as Malaysia and the Soviet Union. It is ignoring the private pattern of electricity supply in the United States, Germany, Belgium, Spain and Japan. In all those areas, private enterprise is permitting new technology and innovation without the dead hand of the state upon them. All that is ignored, even by the younger generation of the Labour party. Those who thought that in the Labour party there were sprouts of hope and some vague understanding of the more fragmented, less centralised, state-dominated world, would have been utterly disillusioned.

The dramatic move towards privatisation and the injection of competition into the electricity supply industry is welcome, and no one should underrate the difficulties which have been faced by my right hon. Friend the Secretary of State. We are moving towards some competition on the generating side. The new system will include a large generating company, National Power, and a slightly smaller company, Power Gen. Supplies will be available from Scotland and France. The switching station at Sellindge provides 2 GW at full capacity, and I have no doubt that another switching station could be constructed. They are good value. The one which I authorised in 1981 cost £360 million and brought into the British system2 GW of electricity at competitive prices, which were negotiated by the CEGB. I hope that such ideas will be developed further as the choices of sources of electricity supply open out.

My right hon. Friend the Secretary of State referred to the possibility, which the new area electricity companies will vigorously explore, of developing a range of much smaller gas turbines, supplied by dedicated North sea gas fields. There will also be coastal power stations that depend on coal--I hope that it will be British coal, but it must be the cheapest, which may be imported. There are

Column 690

opportunities for electricity to be brought into the system at highly competitive rates and sold to industrial and domestic consumers.

Over the years, the process of competition and the diversity of sources are bound to lead us away from the hideous pattern of the past, when we depended on a higher cost, coal-dominated electricity system which was not even reliable. The new system will be a vast improvement. Those who cannot see that are still obsessed by views of state ownership and state domination which have been undermined by not only modern economics but modern technology. Economies of scale are being substantially reversed by electronic technology, not least in power generation and distribution.

The remaining monopolies--the area boards which will be turned into 12 new companies--must be regulated. My right hon. Friend the Secretary of State has set out the pattern of regulation under which they will operate. It is eminently sensible and is a vast improvement on the so-called regulation that has occurred in nationalised industries, with "breakfast table" directives and instructions behind closed doors. The Opposition extol that as a system, but it never was a system. It was a miserable mixture of politics and pressure whereby one group of people--the customers and consumers--always came last while wheeling and dealing went on in Whitehall as to how those industries should operate and invest.

I freely confess that I speak as an old lag on this subject. I have been involved, and I know that that system is not good for the allocation of resources or for democracy, because the deals are not transparent. Above all, they are not good for the customer and consumer, or for the future strength and innovative capacity of the industry. My right hon. Friend the Secretary of State has moved boldly and sensibly. This must be the way forward.

I cannot understand why those in the Labour party who have thought about this subject and come to it with fresh minds still cling to the absurd idea of a huge, state-dominated, nationalised electricity supply industry. That is out of date. I urge the hon. Member for Sedgefield, if he wants to influence his party, to move away from that nonsense. I do not know who insisted that he put in his speech all the talk of renationalisation. If he wants to be given a hearing, he must get away from that kind of rubbish.

The most difficult problem to face my right hon. Friend the Secretary of State is covered by clause 30 onwards--how to deal with nuclear power generation under privatisation. It is not my right hon. Friend's fault that the problem has been made more tricky. The cost of nuclear power has increased a little, because of the cost of capital and of increasingly elaborate safety measures--which I welcome--and is said to be about 2.2p per kilowatt hour, whereas the price of electricity supplied from oil, natural gas and, to some extent, coal has been decreasing. That leaves us with an unavoidable dilemma. Even if there were no Bill before us, we would be facing a dilemma. Nuclear power at present, even before we think of new build and the programme after Sizewell, is probably uncompetitive in terms of oil, gas or coal.

Thanks to my right hon. Friend's proposals for greater transparency about the costs of all these fuels and about generating activities, we are beginning to see the very high costs that we have paid for coal. There is no doubt that, as society becomes more concerned about pollution costs and moves towards insisting that there should be emission

Column 691

controls and desulphurisation and so on, the cost of coal-fired electricity will rise. That is inevitable, even if the coal is drawn from the cheapest world sources, let alone drawn from some of the higher cost pits in Britain.

On the whole, it is obvious that, even with those extra costs, coal will continue to play an important part in generation. I hope that United Kingdom coal will be highly competitive. I think that it will. British coal producers, who I hope in due course will also be in the private sector, will be entitled to say that, whatever happened in the past and despite the total unreliability of the coal industry and its betrayal by trade union activity, in future it will be worth paying a premium for what should be a reliable national provision of coal from our superb coalfields.

There is a place for coal, but when all is said and done and the costs are put together, we are left with the difficulty that, for the moment, the existing nuclear power programme looks as if it costs more. That is because one must add the costs of fuel reprocessing, waste disposal and decommissioning.

Mr. Parkinson : Does my right hon. Friend agree that, had the industry stayed in the public sector and had Lord Marshall retained the obligation to supply, he has made it quite clear that the four PWRs would have been built and that, whatever they cost, the customer would have paid for them? It is this change in the structure that is opening up the debate.

Mr. Howell : My right hon. Friend is right : the debate is indeed opening up. The decision to put nuclear power in the private sector raises quite separate and crucial issues. First, it still leaves us with one extremely large generating company, one of the largest in the world. I wish that my right hon. Friend could have found a way round that. That company will carry the nuclear programme. Some of us would have liked to see a way to have four or five generating boards, all somewhat smaller, rather than an extremely large one and a very large one. I have said that to my right hon. Friend, so it is nothing new.

As I said earlier, I accept that electricity will come from other sources-- from Scotland and France and from gas turbines and so on--but the pattern falls a little short of what one hoped for in a competitive electricity supply industry. My right hon. Friend had to grapple with this problem and it raised two issues. First of all, there is the point that we have now reached in the existing nuclear programme and the cost of that. If it had previously cost more to produce electricity from existing nuclear capacity than from oil, coal and gas, that was all lost in the accounts.

My right hon. Friend has had the courage to make changes to ensure that that cost will now be visible. If it is visible and if there are other electricity sources which my right hon. Friend has taken steps to open up and from which distributors of electricity can buy, to what extent does the 20 per cent. non-fossil obligation mean that lower prices from the other competitive sources will not be allowed to work through? That presents a difficulty and we must look carefully at it as we measure the cost of the existing nuclear programme.

My right hon. Friend has said that the CEGB has made a provision of over £3 billion for the existing programe--I thought that it was a little less than that--with associated special tax reliefs for the accumulated provision

Column 692

to meet all these additional costs. Investors will be glad to have had my right hon. Friend's reassurance that powers will be there for the Government to step in to meet the additional costs, if they arise, for reprocessing, waste disposal, and decommissioning and so on in the existing programme to be inherited by National Power. That is the problem for the existing nuclear programme, and I hope that what my right hon. Friend has said resolves it for people who will invest in the industry.

I now come to the completely different question of the cost of new build. My right hon. Friend has put us on exactly the right path. If we had gone on with new build lost in the public sector, we would also have lost any proper measure of competitive costs or of the right pace at which to build. I shall put aside for the moment the question whether we keep open a nuclear programme. My personal view is that it would be crazy to close it, but if we keep it open it must be at a cost that we know. My right hon. Friend's proposals will identify the cost of new build and, more important, will create pressures to reduce those costs.

Such benefits would have been lacking in the state industry proposed by the hon. Member for Sedgefield, although I do not know whether he has the courage to say that he would close the nuclear programme. If he proposes to keep the nuclear programme, he would have to justify the pattern of losing costs in the endless add-on cost system that we have experienced. That pushes on to the consumers the non-transparent costs of nuclear power. He did not justify that at all, but shirked the issue. The issue has now been brought into the light of day by my right hon. Friend and we shall now be able to see the pressures on the industry to ensure that nuclear new build from Sizewell on is conducted on competitive lines and not just on a subsidised pattern.

I should like my right hon. Friend to reassure us that there will be constant and maximum pressure on National Power to ensure that it proceeds with its new build programme and on terms that are as near as possible to those that are settled by the market. I would go further and say that, when it comes to financing new build, we shall be dealing with a company that will have very little debt. That is an attractive proposition for some investors and means that the company can go into the market and raise money. It will be able to do that provided that it does not intend to pursue uneconomic activities. Oil costs are low and likely to stay low for a long time. Coal costs are also low and, I hope, likely to remain so. Natural gas prices are low. That means that the pressure is on to follow the market solution, and that should be a requirement. It may be that this is a different scene from the one that we faced almost a decade ago when OPEC was alleged to have a grip on oil supplies and when there was a panic among countries to procure oil and prices were shooting through the roof. We are now in a totally different situation and the world's chief oil supplier, Saudi Arabia, is trying to establish a situation in which there will not be another oil shock. Saudi Arabia wants to re-establish oil as a low-cost reliable fuel producing and selling at about $15 US at 1987 prices indefinitely. The more successful it is with that programme the more challenging it will be to the nuclear power builders to show that they can build nuclear power stations--especially with capital at its current cost-- at competitive levels.

There are problems, but I do not think that my right hon. Friend has sought to disguise them. On the contrary,

Column 693

he has sought to expose them, whereas the mish-mash of Socialist Whitehall planning would have lost those costs and ensured that in the end they finished up on the backs of customers, taxpayers and society and, worse, on the back of industry, in an intolerable way that undermined our competitive strength. My right hon. Friend has been true to his principles in seeking to identify where resources ae going and where they should go. That will enable us to debate the matter. I applaud his courage in doing that. He has faced many difficulties in bringing forward the scheme and there could well be more to come. I applaud his courage in bringing the whole scheme and the costs into the light of day.

6.19 pm

Mr. Alex Eadie (Midlothian) : Now on the Back Benches after 16 years as a Front Bench energy spokesman, I warmly congratulate my hon. Friend the Member for Sedgefield (Mr. Blair) on his speech. He gave the Secretary of State for Energy a bit of a roasting and a bit of an examination, and I expect that all objective commentators will report that tomorrow. It is well known that the Secretary of State for Energy does not like to be examined. He is always available for the "Today" radio car or for television, but he does not like either to be challenged or to have his propositions examined. My hon. Friend's excellent contribution examined the Secretary of State's propositions. We shall hear more of my hon. Friend.

To some extent, the speech of the Secretary of State--we may even hear from the Chairman of the Select Committee on Energy--bore out the uncertainty and confusion that are in the Bill. The Government's proposals for privatisation have already been criticised by the Select Committee, which alleged that the Government have not got their Bill right. On the Order Paper is a motion, in the name of the hon. Member for Havant (Sir I. Lloyd), that the Bill should be committed to a Special Standing Committee. That speaks volumes in support of my assertion that the Secretary of State has not got his proposals right, with resulting confusion in the Bill.

Dr. Michael Clark : That motion was signed by about half of the members of the Select Committee. The other half refused to sign it.

Mr. Eadie : I can understand that. There is a certain aspect of what one might call loyalty to one's party.

Mr. Geoffrey Lofthouse (Pontefract and Castleford) : Is my hon. Friend aware that the report was agreed to unanimously, by all the members of the Committee, including the hon. Member for Rochford (Dr. Clark)?

Mr. Eadie : The members of the Select Committee can fight this one out themselves. There is tremendous loyalty in the Select Committee, which is Tory-dominated, and this aspect has come to the fore. However, members of the Select Committee can make their own speeches and answer for themselves. If one reads the Bill, one can see that the Select Committee's conclusions are, in general, a criticism of the Bill.

The Secretary of State has never made any secret of his view that electricity prices had to increase to make the industry more attractive to investors. He is on the record

Column 694

as having said that earlier in the year. When he was challenged on that, he said that the industry must be profitable if it is to be privatised. How does he expect private capital to buy the industry unless it is profitable? He cannot deny that, because it is on the record.

Mr. Parkinson : The hon. Gentleman's party has recently made a great thing of the fact that Government assets have been sold off too cheaply. What he is saying, is "Depress the profits--don't get a fair or excessive rate of return." Then he is turning round and, because I am getting a fair return, saying that I am helping the investors. I would help the investors by keeping profits down so that they get a bargain. I want a fair return and a fair price for the taxpayer. The taxpayer receives and the investor pays.

Mr. Eadie : I had better start to claim injury time. The Secretary of State has made another speech. I am sticking to what I said. The right hon. Gentleman said in the House that, if the electricity industry was privatised, electricity prices would go up to make it a favourable buy. He can wriggle as much as he likes, but he has said it and the House must bear that in mind as we debate the Bill. The Government's aim is profit first, with the lot of the consumer second. Only a Government with such a large majority would have the audacity to tell users of electricity that increased prices are good for them. They say that competition will be introduced and that that will benefit the consumer. However, when they are trapped, as they were during energy questions today, Ministers imply that prices will not increase as much as they would have without privatisation. Here we have some aspects of the inconsistency and doublespeak of the Government and their spokesmen.

There used to be a saying, "If you go first, I'll go afore you." This is what the Government are saying about prices. If ever the consumers were being offered a pig in the poke, this is it. The Government suggest that the Bill will give more choice, but consumers will not have alternative sources of electricity supply. The Secretary of State made the ridiculous suggestion that consumers would have two plugs. The reality of the Bill is that private monopoly will be the supplier and the consumer will have to like it or lump it.

As a result of the Bill, blatant preference will be given to nuclear power, and tagged on to that is the suggestion that there will be opportunities to develop benign sources of power. No one in the power industry believes that. The arguments in favour of blatant preference for, or even compulsion on, the use of nuclear power are the most unconvincing in the Bill. It cannot be argued on price, and the right hon. Member for Guildford (Mr. Howell) conceded that to some extent. Lord Marshall himself has confessed that nuclear power is more expensive than coal. As we have our debate, the Hinkley Point inquiry is getting the same evidence on prices. This is despite the fact that the argument about favourable prices for the consumer was introduced by Government spokesmen.

It is all very well for the Government to argue their case, but I resent their attempts to build up the case for nuclear power by attacking the coal industry. That is the most unconvincing one of all. We had at energy questions again today the suggestion that coal-generated power is much more polluting than nuclear power, and that it is dangerous for men to work in that industry. That has not

Column 695

stopped British Coal from suggesting, with full Government approval, that miners should now work 10 hours a day underground.

What about the pollution argument? We should all be concerned about the greenhouse effect on our environment, but the coal industry can plead not guilty' to being a major pollutant on that. Coal consumption contributes to only a small part of global emissions of greenhouse gases. Other sources of emission include oil, gas, chemical and other industrial processes.

Mr. Rhodri Morgan (Cardiff, West) : And farming.

Mr. Eadie : Indeed. Coal, however, has been singled out as the major source of the emission that is thought to cause acid rain, but all fossil fuels contribute to the global emission. It is a bit rich when we are told by the Secretary of State that we must have nuclear power because fossil fuels are wasting assets. Of course they are wasting assets. The word that many use is finite. Coal, however, is a fossil fuel which could last the nation for 300 years. There is nothing very finite about that, especially when a comparison is made between coal and oil and gas. The consequence of the Government's policy on oil is that we are probably seeing now the best years of oil from the North sea.

Mr. Mans : Will the hon. Gentleman give way?

Mr. Eadie : No. I want to continue my speech.

It is generally agreed that carbon dioxide is responsible for nearly half of the greenhouse effect, and research shows that the worldwide burning of coal accounts for 15 per cent. of that effect. The British coal industry can plead not guilty because it is responsible for about 0.5 per cent. of the worldwide emission. The new, clean coal technologies will further reduce emissions from coal-fired plants.

We are to have blatant preference for nuclear power, and that will be based on misinformation about coal. There is to be protection for nuclear power for so-called strategic reasons. Coal is to be a sort of sop to the privatisers. Nuclear power is to be protected while coal power is not. Coal can be purchased in many countries at less than the cost of production. One can purchase in Columbia coal that has been mined by 10 or 11-year-old kids. One can purchase in South Africa coal that has been mined by slave labour. Coal is sold by Poland at a price that is below the cost of production. It is the price that counts, however, for British indigenous coal. We are prepared to give blatant preference to nuclear power, which means that we are prepared to sell the coal industry down the river. There is a strategic reason for maintaining the coal industry, for we have more coal in Britain than any other fossil fuel.

This privatisation measure represents the Government's attempt to bury an energy policy for all time. It is a scandal. If we bury an energy policy, we tamper with the future of our kids. We should be planning the use of our energy resources. It is all very well to say that we have a number of energy resources available to us, but it cannot be said at the same time that they are wasting assets and should be burnt away.

I predict that the Bill will lead to gas-fired power stations. In later years we shall probably say how foolish we were to take that course. Similarly, the Government's attitude to coal has been foolish. If we are serious about an energy policy, we should be pursuing energy conservation.

Next Section

  Home Page