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Column 696Will energy conservation or efficiency be pursued within the terms of the Bill? I know that the Secretary of State has a dream for the Department of Energy. He wants it stripped of all its powers. If that happens, it will be merely a Government advertising agency. It will not be concerned with policy, the giving of directions or security of supply.
The Bill will have a considerable effect on employment. I received information this morning from the Coalfield Communities Campaign, and I shall run through it quickly. The electricity supply industry employs about 550,000 people, and privatisation will place at risk at least 80,000 of those jobs by 1992. In the longer term, up to 165,000 will be at risk. Coal mining employment will be most severely hit. It is estimated that 51,500 jobs will be the cost of electricity supply industry privatisation. That is the hidden message that the Secretary of State does not want to reveal when he is arguing his case for privatisation.
Two major concerns for the United Kingdom economy are the switch to foreign supplies for a privatised electricity supply industry and the threat to the current investment programme for new capacity. Both will make the balance of payments position even worse. There are 200, 000 people who depend on electricity supply industry construction and purchasing. The ending of the current "buy British" policy will benefit foreign suppliers and hit United Kingdom equipment and materials firms. There will be a loss of United Kingdom expertise and capability in power station development and heavy electrical engineering. Large-scale coal imports are planned, which will severely hamper British Coal's rapid progress towards competitiveness and profitability. Premature pit closures will mean that the coal industry of the 1990s will have insufficient capacity to supply national demand.
Although electricity supply industry privatisation will not be the sole cause of colliery closures, the deep-mine sector of British Coal will be hit especially. Over the past 30 years, the electricity supply industry has moved from being an important but not dominant customer for United Kingdom coal to being by far the most important. Other markets for coal have declined to such an extent that, in 1987-88, a total of 79 per cent. of British Coal's United Kingdom sales went to power stations.
The joint understandings between the CEGB and British Coal during the 1980s have ensured reliable supplies of coal at prices which have taken into account depressed world-traded prices. Without long-term contracts for coal, such as the 10-year agreement which British Coal is now advocating, it is likely that many economic pits with good reserves will be closed because of future uncertainty.
The impact on coalfield communities of electricity supply industry privatisation is much more severe than the loss of 51,500 British Coal jobs. Local economic multipliers--decline in local spending--and longer- term base multipliers will lead to at least another 50,000 job losses in service sector firms and local economies. These economies are among the most disadvantaged in the country and have yet to recover from the contraction of the coal industry that took place in the 1980s.
That is the real prospectus. That is what is really being presented to us with the Bill's Second Reading. The Bill will lead to more unemployment and misery in coal communities. The Government intend the Bill to lead to more profit and increased prices for consumers. My view
Column 697is that when we come to examine the Bill and demonstrate its deficiencies, sanity will prevail. I believe that the House will reject the Bill and all that it stands for.
Sir Ian Lloyd (Havant) : If I were tempted to follow the hon. Member for Midlothian (Mr. Eadie) down many of the interesting cul-de-sacs that he introduced to the House, I would probably not succeed in making my own speech. I shall deal only with one of his arguments, which was advanced also by the hon. Member for Sedgefield (Mr. Blair). Instead of merely saying that he hoped that an energy policy would unfold in future when a Socialist Government were in office, I hoped that the hon. Member for Sedgefield would give us some idea of what it would be. Over the past nine years, I have listened to an immense amount of evidence from every quarter and throughout the spectrum of opinion on energy. I have not yet heard of one cohesive, convincing and practical energy policy that could be applied to the United Kingdom. Tempting though an energy policy might be, that puts it where it belongs. It is very interesting, but it is very dangerous.
Let me now turn to two or three points made by the hon. Member for Sedgefield. It was a pity that in an interesting if controversial speech he was eventually tempted rather too much by hyperbole and zeal. What a pity that he did not demonstrate with logic what he sought to demonstrate, instead of merely stating that this, that or the other was nonsense.
I noticed with interest that the hon. Gentleman was impressed, as many hon. Members are from time to time, by what he described as technology-driven industries or situations. I am not very impressed by them. It could be said that the whole AGR programme in this country was technology-driven, and the same could be said of the steam-generating heavy water reactor. It could indeed be argued that the whole French PWR programme, which has landed Electricite de France with a total bill of £20,000 million, was a technology-driven project. It could be said of Concorde, and it could be said that joint European torus is and remains such a project, although it is a very exciting and probably important project that we should continue. The point is that, for every technology-driven project, which is usually a loss-maker, we require about 100 market-driven projects which make the profit to pay for it. Opposition Members tend to forget that.
The hon. Member for Sedgefield also made a point based on international comparisons of energy costs. He will not be the first hon. Member--or, I suggest, the last--to have an intellectual arm or leg blown off after entering that minefield. It is prodigiously dangerous. An hon. Member can prove virtually anything he likes. The record of Select Committee inquiries over many years shows that this is a sphere that we, with all our advisers and expertise, enter with the greatest care because it is so difficult to draw firm and provable conclusions.
My remarks are based not on the Select Committee report but on the Bill. Nevertheless, the report will doubtless continue to be quoted in the argument that has already started and will continue over the next few months, and for that we are grateful. We hope to raise the level of the debate, if we do not reduce its intensity.
Column 698The Committee has contributed on three fronts. The first is in the 919 pages of memoranda and evidence that we have received. The Committee has provided a wide variety of expert and committed opinion to be aired. If the expert opinion is not always committed, it could equally be said that the committed opinion is not always expert, but the whole spectrum of opinion is there. Secondly, we have contributed a considered, if controversial, judgment about the post- privatisation regime, which we formed in a fairly heated crucible of argument. That it was largely unanimous is a tribute to the Committee and to those who advised us. Thirdly, we have managed to stimulate a comprehensive, considered and valuable response from the Government, which has itself broadened the foundations of the debate and contributed valuable information. I am most grateful to all our witnesses, including Ministers, colleagues and staff, who have laboured with such exceptional diligence to produce these documents. If there are gaps in the analysis, it will not be for want of effort on their part.
I should like to comment on a specific recommendation by the Committee. So impressed were we by the wide spectrum of views on the structure, philosophy and operation of various systems employed to regulate public utilities in the private sector throughout the world that we believed it would be immensely rewarding if a Special Standing Committee was established to consider the issue under Standing Order No. 91. I understand that that will be moved formally after Second Reading, but unfortunately there will be no argument then. There is no time for argument now, but I would not wish the House to have the impression that this was a mere afterthought. The procedure has been used five times since 1980, and in our judgment this is another occasion that fully justifies it.
An American friend of mine who is eminent in the field suggested to me recently that all legislation should be followed by a statement setting out clearly and precisely the intended consequences of the policy enshrined in the Bill. It is worth speculating on what such an addendum might have contained had it been prepared for the Electricity Acts 1947 or 1957. I imagine that it would certainly have embraced the following aims, stating perhaps :
"We will achieve greater economics of scale. We will improve the efficiency of production and distribution. We will lower the cost per unit of energy produced in real terms. We will achieve greater security of supply. We will integrate and enhance research and development throughout the industry. We will improve the ability of the nation to formulate and implement an improved national energy policy, particularly where this involves electricity."
It is easy to assert without much fear of contradiction that most of those objectives have to an extent been achieved. What cannot be asserted is that they would not have been better or more quickly achieved by some alternative form of organisation. A strong impression that I formed from all our evidence was that, despite wide-ranging and detailed comparisons with other systems and countries, the proof remains elusive and tentative. If an attempt was made to provide a similar list of intended consequences of this Bill, it might run rather as follows :
"We will inject effective competition throughout the structure of the industry"--
this is the linchpin of the Government's case.
"We will disaggregate the various parts of a monolithic industrial structure that has become cumbersome and sluggish"--
for there is much evidence to support that.
Column 699"We will lower the real costs and prices per unit for all classes of consumer, yet again. We will maintain the nuclear option and if possible develop it. We will improve the responsiveness of the whole system to the consumer interest. We will maintain security of supply. We will transfer the citizen's stake in a major national asset from the notional ownership of the taxpayer-citizen to the direct ownership of the shareholder-consumer."
Mr. Allan Rogers (Rhondda) : The hon. Gentleman's argument is that there is no proof that certain criteria that need to be met could not be fulfilled under a different organisation. Will he cast his mind back to when the coal industry was in private hands and the Sankey commission-- whose chairman, later Lord Justice Sankey, was certainly no raving Left winger--suggested that the coal industry was too important to the nation's security to be left in private hands, and that the profit motive was taking precedence over the country's interests? There is indeed proof that energy in private hands does not work in the way that the hon. Gentleman says that it will.
Sir Ian Lloyd : I am interested in the hon. Gentleman's argument. It could be said that, in view of the development of coal under national ownership since then, such assertions did not necessarily prove Lord Sankey's arguments.
The list of intended consequences might continue thus : "We will extract the state from the need to consider and promote a national energy policy for electricity supply. We will reduce the Government's public sector borrowing requirement."
I have no doubt that my right hon. Friend the Secretary of State will be able in 10 years' time to say that most of those intended consequences have been achieved, but I am not entirely sure that he will have effectively maintained the nuclear option or extracted the state from its wide-ranging involvement in industry, let alone its obligation to think about and respond to the consequences of alternative energy policies.
I say "in 10 years' time" because I think it important to stress that, such is the massive inertia inherent in this industry under any ownership, control or structure, that it will be at least 10 years before significant changes can or will emerge. The lead times are too long, the commitments too great and the energy supply systems too slow to respond for it to be otherwise. There will be many attempts to prove merit, but none in my judgment will be, or deserve to be, convincing.
I count it as one of my greatest privileges that many years ago I sat at the feet of one of the great authorities on welfare economics, Professor A. C. Pigou. If his feet were generally clad in carpet slippers, his mind could only be compared with the Finisterre light, which can be seen for 43 miles on a clear night. Pigou's intellect cast a similar beam over the tormented and confused sea of political judgments. His analysis, which I re -examined only yesterday, remains valid nearly 60 years after it was produced. The House need not fear a long-distance lecture from me or Professor Pigou on welfare economics. I propose to burden the House with only one conclusion, which provides an appropriate preface to my own brief analysis of the Bill.
The problem of the national economy is no longer to effect an instantaneous transformation from one scheme of production to another, but to maintain the best scheme permanently. That is a view that we could have emblazoned on the top of any Bill on energy. My analysis is directed towards an answer to that question. The essence
Column 700of this measure is not the transfer of ownership or
control--important though that may be--but the unique disaggregation or disconnection which it brings about between the major components of the industry. It is significant that, among the 28 organisations on the privatisation list, about 23 have been sold as integrated organisations, one has been brought under private management and only two have been sold off with their component parts or companies. Electricity will be the third and it will completely overshadow all the rest in scale and consequences.
It is clearly the Government's intention, which they have sought to justify by many arguments with and outside the Central Electricity Generating Board, that the replacement of an integrated control and command system by a loosely defined series of contracts between the parts is a worthwhile endeavour. That area caused the greatest disquiet to many witnesses and I share their apprehension that there is a high element of artificiality in the arrangements that no amount of careful legislative drafting can possibly reduce or eliminate. It can work and it might work, given good judgment, great imagination and good will. It is the sort of achievement that we so often seem to pull off rather well against all the odds. However, we would not be wise to underestimate the odds or minimise the unprecedented scale and complexity of the challenge. My verdict is that there will be many unforeseen consequences and I should not like to predict their character or their influence on the outcome.
The Bill provides a well-structured and carefully organised slipway to launch the post-1990 electricity supply industry, but I am not sure that we know much about the shape, speed or efficiency of the ship. I have several fundamental reservations about the Bill. It makes an insufficient distinction between the procedures and consequences of privatisation and the procedures and consequences of liberalisation. I should expect to have the greatest difficulty in judging the contributions made towards any reduction in real costs by reorganisation and by the free access to the whole range of European equipment manufacturers in 1992. I should have even greater difficulty in judging the contribution made by an alteration in the energy production mix and the contribution made by free access to all international sources of fuel supply.
One set of scales has not yet been invented. It is the set of scales in which one attempts to weigh the well-known merits of an integrated, public utility type of organisation--making due allowances for its disadvantages of inertia and manpower--with the merits of a disintegrated system of generators and an independent grid serving a dozen independent distributors. Such a judgment, as Professor Pigou would have advised, were he still alive, would impose an insuperable burden on the apparatus of economic logic and administrative prediction. I remain firmly convinced that only events and experience can indicate the philosophy and judgment that underline the Bill. I say that as a firm believer in the general merits of privatisation and the proven success of much that has gone before in the legislative calendar.
I am also particularly concerned at the extent to which my right hon. Friend the Secretary of State and his successors will remain enmeshed in the affairs of the industry. I made a careful analysis of the Bill at the weekend and discovered that my right hon. Friend will be involved in detailed obligations in no fewer than 67
Column 701distinct and separate areas of the Bill. Although many may be merely formal, that is a considerable amount. His responsibilities under the clauses concerned with nuclear energy and the innocent-sounding "Miscellaneous" clause 87, seem to negate, if only in theory, one of the principal intended consequences, which I suggested earlier.
I am reminded of the distinguished peer who received a questionnaire from an American sociologist asking whether his family had a suit of armour. He proposed to say no, but his secretary suggested that he should say that he had two--one on and one at the blacksmith's. My right hon. Friend may be shedding one set of responsibilities only to assume another, which is even more arduous. His second suit is at the wordsmith's.
What emerges clearly is that, in numerous and significant areas of the industry, my right hon. Friend, embodying the state, is retaining, and will undoubtedly have to exercise, powers requiring him to formulate and apply what can only be described as a national energy policy for the electricity industry. That is clearly understood and accepted in the area of nuclear energy. I wonder whether the implications are so clearly understood outside that important, if contentious, area. Moreover, I accept the conclusions of Richard Bailey about the regulator. He said that that official
"will be responsible for everything and anything not left to market forces."
It is important, moreover, to emphasise that, for the nation as a whole, there will be no sudden or dramatic escape from the yoke--if that is the right word--that it has created for itself over the past few decades. The real costs, as my right hon. Friend the Secretary of State has emphasised, are whether the industry is nuclear or non-nuclear and they will have to be borne, however they are distributed. Change can only take place on the margin--old systems abandoned and new systems introduced--but by its very nature, it will be slow and almost imperceptible. The costs of new excess capacity and of any new errors of technical judgment may be far more narrowly focused, but those that have already been made--and they are many- -will be borne by much the same combination of consumer, taxpayer and shareholder. I refer, of course, to the great mass of shareholders in British industry, for whom energy costs are so significant. Regrettably, I do not expect the problems that have required Government intervention in the past in this industry to disappear permanently on vesting day. I fear that they will return to plague us in greater or lesser measure and because of the importance of energy, transferring that portfolio to the Department of Trade and Industry, as I understand has been mooted, would not only confer immense burdens on that Department, but would be a grave mistake. We are left with great hopes but with no proof. We hope that the overall quality of management will be improved and that the productivity of labour will increase more rapidly, as it has in other privatised industries. We hope that the freedom to purchase energy fuels in the world market will reduce net fuel costs per kilowatt generated and we hope that there will be a welcome surge of new initiatives, new methods and new technology, but we have no proof. I hope that those judgments are proved by events to be unduly pessimistic, but I would be failing in my duty if I did not give the House the benefit of the
Column 702frankest judgment that I could make, having enjoyed, over the best part of the past two years, the great privilege of listening to all the arguments on this subject.
Mr. Malcolm Bruce (Gordon) : The hon. Member for Havant (Sir. I. Lloyd), who is the Chairman of the Select Committee on Energy, has told us that the Committee has hopes, but he also expressed a number of doubts. The Secretary of State made it clear that, essentially, the Bill is an enabling Bill, which gives him a great deal of power. We do not know what he will do with that power. No doubt, we shall learn some of the answers during the passage of the Bill, but we shall not learn many of them until privatisation takes place and is up and--we hope--running.
The hon. Member for Sedgefield (Mr. Blair) made an interesting and eloquent contribution. He was right to concentrate on the implications for charges, but in other ways, he missed an important opportunity to address the Government and the House on the real issue of how we deal with energy when we have grave concern for the environment and when there is a great deal of waste, especially in this country. That should be the central concern of any energy Bill brought before the House. Regrettably, however, the polarisation of ideologies precludes such an issue becoming dominant.
In our view, the top priority should be to promote energy conservation. I have tried to elicit from the Secretary of State what role he might give to energy conservation as part of the contribution to the acquisition of non- fuel sources. In other words, will he accept the assertion that energy conservation constitutes a fuel source and that investment in it can reduce the requirements of a generator to buy in extra capacity from elsewhere? I regret to say that I was given no answer of which I could make any sense. The Government are cutting the budget of the energy efficiency office. Their declared objective is to reduce energy waste by 20 per cent. by 1990, yet the CEGB is planning for a net reduction through energy efficiency of only 4 per cent. by the end of the century. Clearly the objectives are only pious declarations ; they are backed up by no real policy and by no practical ideas or measures. Our future planning should be based on the least cost principle. It has been clearly identified that where that principle is required, energy conservation ceases to be a side issue--a pious declaration and a few leaflets circulated to the customer--and becomes central to the thinking of the supply industry.
As the Chairman of the Select Committee said, the problem is that the electricity supply industry is so conservative and so entrenched in its attitudes that the only way that it can respond to an actual or predicted rise in demand is to contract to build more generating capacity. It cannot apply its mind to the idea that money might be better invested using more efficiently the electricity that we have. American experience shows that where public utility commissions have imposed on energy suppliers a requirement to work towards energy conservation, they have done so because they have had no choice. In some cases, they have actually improved their profitability in the process. If the industry is left to its own devices, it says, "Let us build another power station. It cannot possibly be
Column 703sensible to discourage people from using energy or to encourage them to use it more efficiently." It has been proved, however, that every pound invested in saving energy and increasing energy efficiency using existing technology can achieve a return several times greater than the same pound invested in building new power stations. It is remarkable that we are not addressing ourselves to that principle.
So far, the debate has been characterised largely by talk about capacity, over-capacity and under-capacity. Those are important issues, but energy conservation represents the best way of dealing wih the pressure in the environment and giving it space to develop a wide variety of options. A simple 10 per cent. reduction in electricity demand over the next 10 years would reduce the output of sulphur dioxide by 125,000 tonnes a year, of nitrogen oxides by 200, 000 tonnes a year and carbon dioxide by 160,000 tonnes a year. That is well within the declared objectives and the technically achievable objective, yet we have not done it because we have no coherent framework in which to pursue such a policy.
We could have space to deal directly with some of the other problems such as reducing sulphur emissions and stepping up research into more efficient ways of burning fossil fuels to reduce the amount of noxious fumes that they put out. We could find out the cost of, and the technical capacity for, decommissioning nuclear power stations to give us some idea of what is involved--to replace the guesstimates that are passed back and forth--and we could discover how to deal with the nuclear waste that we continue to produce. So far, the Bill has not addressed itself seriously to any of those things. Although we would give top priority to conservation and the environment, we accept that the industry needs restructuring. We accept that it has become overcentralised and monolithic. I am not sure that the colleagues of the Secretary of State will give him credit for pointing it out, but we acknowledge that the Government have learnt from the mistakes of previous privatisations--of gas and telecommunications. Having served on the Committee on the Gas Bill and sought to promote amendments that would have prevented the referral to the Monopolies and Mergers Commission I am tempted to say, "We told you so."
It is a pity that the Secretary of State had to inherit a Bill that is not of his making and that he finds that the complaints that we suggested would be forthcoming have emerged and have been substantiated. I understand why the Secretary of State is anxious to avoid mistakes, but I find his proposals unconvincing and they certainly do not amount to a massive injection of real competition. I do not doubt that the proposals represent a major restructuring, but it is a moot point whether they are beneficial and will achieve their objective.
There is no evidence that the Secretary of State's proposals will increase efficiency and in my view they will distort the market in a number of ways. I do not believe that a duopoly is a convincing mechanism for competition. It will create tension between the two generating boards and between the regional boards which have the option of buying in power and perhaps seeking to promote private generating agencies to build smaller power stations or contracting to build their own.
Where does that leave big G and little G if they have inherited a massive overcapacity that they have to offload? The problem arises that the scope for effective competition
Column 704is limited and the potential for introducing new methods of generation on any significant scale is simply not there. Those who are anxious to achieve the promotion of benign renewable alternatives, which are getting to the point at which they are significant and could be competitive, given a little more investment in research and development, feel that the Bill is not creating a climate in which expansion is likely to be possible. They feel that quite the reverse is happening.
Mr. Parkinson : Does not the hon. Gentleman agree that the existing system allowed a Government to embark without consultation on a AGR programme and to preside over a power station being built 16 years late and at several times the estimated cost? I hope that the hon. Gentleman will concede that, under the system that we propose, such matters will at least have to be opened up to debate, and Parliament will have to be consulted.
Mr. Bruce : That problem has been evident all over the United States where people have invested and subsequently found that, because the regulatory mechanism is effective or because city investors are suspicious, power companies have gone broke and some power stations have not come on stream despite the best endeavours of the private sector. Neither mechanism will produce a guaranteed result.
We could be moving towards dangerous uncertainty, which could lead either to substantial over-provision or to circumstances in which no one is willing to invest even though there is clearly a requirement to replace. We could then knock up against the margins and face a series of blackouts and power cuts. We do not know what direction we are moving in.
The Bill proposes different mechanisms for privatisation--one for Scotland and one for England and Wales. Apparently, vertical integration is desirable for Scotland, but completely unacceptable for England and Wales. It is not for me to argue their relative merits, but it would help if Ministers could tell us how they justify the existence of two different mechanisms. I think that we know that they have chosen the easiest way of working matters out.
The problem in Scotland is that there is such massive over-capacity-- particularly in nuclear power stations--that it is impossible to imagine how alternative technologies can develop to any significant extent. That is a pity, because Scotland has great potential for developing wind and wave power and so on. There is also the potential to create employment within Scotland because the technology has been developed there. It is unfortunate that the Bill will reduce rather than increase the possibility of that application and of creating jobs that otherwise could exist.
Mention has already been made of the nuclear tax. It is interesting to note that the Bill's provision for the liquidation, transfer or conversion of borrowings is different for Scotland. For England and Wales, it is £400 million to £600 million, but for Scottish boards it is £3,000 million. One can only assume that that difference has something to do with the substantial component of nuclear power stations built in Scotland and rather confirms the view of those critics, myself included, who argued that they should not all have been built in the first place.
When one adds the £2.5 billion earmarked in the Bill for the nuclear power industry, in excess of £5 billion of taxpayers' money is being earmarked to cushion the risk of
Column 705the nuclear power industry. The Secretary of State may say, "But the consumers are already paying." The hon. Member for Sedgefield (Mr. Blair) is wrong ; there is not one nuclear tax but two.
Mr. James Wallace (Orkney and Shetland) : On a point of order, Madam Deputy Speaker. Standing Order No. 45A states that Mr. Speaker "will call Members either between six o'clock and ten minutes before eight o'clock or between seven o'clock and ten minutes before nine o'clock on Monday to Thursday sittings to speak for not more than ten minutes."
My hon. Friend was called at two minutes before 7 o'clock and therefore I submit that Standing Order No. 45A does not apply in this instance.
Mr. Wallace : With respect, Madam Deputy Speaker, it is a question of when my hon. Friend was called. He was called before 7 o'clock, and my understanding of Standing Order No. 45A is that the rule should not apply to him.
Madam Deputy Speaker : The rule does apply to right hon. or hon. Members speaking before 7 o'clock, and that is the ruling I shall now apply. I have looked again at Standing Order No. 45A, and I have it on good authority that it applies to right hon. or hon. Members called shortly before 7 o'clock.
Mr. A. J. Beith (Berwick-upon-Tweed) : Further to that point of order, Madam Deputy Speaker. When the 10- minute speech rule was the subject of widespread discussion in the House after we received the recommendation of the Select Committee on Procedure, assurances were sought that the rule would not be used in such a way as to prevent, as the Procedure Committee described it, representatives of minority parties having substantial support from deploying a case when a major case is deployed by the two main parties.
The fact that it would be possible to call a right hon. or hon. Member before the 10-minute speech rule came into effect, and for him then to be permitted to speak for a reasonable length of time, was one of the ways in which we assumed--
Madam Deputy Speaker : Order. I take the hon. Gentleman's point, but it is not the responsibility of the Chair but that of right hon. or hon. Members who make long speeches before the rule comes into effect.
Mr. Wallace : Further to that point of order, Madam Deputy Speaker. I refer to the debate on short speeches on 13 July 1988, when the Leader of the House addressed that particular matter. Referring to an amendment that had been moved by the hon. Member for Newham, North-West (Mr. Banks) to restrict all speeches after those made from the Government and Opposition Front Benches to 10 minutes, the right hon. Gentleman said of the rule :
Column 706"If it were to extend to all Back-Bench speeches, along the lines of the amendment I would not be proposing it. I consider it essential that Back Benchers should continue to be able to speak for longer than 10 minutes, if they wish to do so, perhaps because they are spokesmen of other parties."--[ Official Report, 13 July 1988 ; Vol. 137, c. 505.]
That was what was indicated by the Leader of the House as being the intention. It was indicated also by the Chairman of the Procedure Committee --and Mr. Speaker, who was in the Chair, heard those remarks.
Madam Deputy Speaker : I understand the points that have been made by members of minority parties. Mr. Speaker and anyone else in the Chair is keen to safeguard the rights of minority parties. Nevertheless, I refer the hon. Gentleman to pages 423-424 of "Erskine May" :
"Speeches which began shortly before 7 pm must not continue for more than ten minutes after 7 pm."
I have applied the rule. To err is human, but "Erskine May" is divine.
Madam Deputy Speaker : Order. I have made the point that I am attempting to safeguard the speeches of Back Benchers and the rights of minority parties. Time has already been taken up, but, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) is a long-standing Member of the House, I shall take his further point of order.
Mr. Beith : I suspect that the edition of "Erskine May" from which you, Madam Deputy Speaker, quoted was written, edited, printed and published before Standing Order No. 45A appeared in its present form in July of this year. When in doubt, a Standing Order should surely prevail over "Erskine May", and Standing Order No. 54A states : "he will call Members either between six o'clock and ten minutes before eight o'clock or between seven o'clock and ten minutes before nine o'clock to speak for not more than ten minutes."
You, Madam Deputy Speaker, did not call my hon. Friend between 7 o'clock and 10 o'clock. You called him before 7 o'clock, without any such limitation being placed upon him.
Madam Deputy Speaker : The hon. Gentleman is right, in that the permanent Standing Order to which he refers came into operation after that appeared in "Erskine May". I believe that this is the first occasion on which that point has been raised since the Standing Order came in, and I shall take it up with Mr. Speaker. I give the hon. Gentleman my assurance that I shall do so at the earliest opportunity.
Mr. Wallace : Further to that point of order, Madam Deputy Speaker. I accept your ruling, but raising the matter with Mr. Speaker does not alter the fact that my hon. Friend the Member for Gordon (Mr. Bruce) has been interrupted in mid-flow, and it does not guarantee that our official spokesman will have an opportunity properly to deploy the case--
Madam Deputy Speaker : Order. There will be two days of debate on this Bill. I shall do my utmost, as will Mr. Speaker, to safeguard the rights of minority parties. That is the role of the Chair. I shall discuss the point in question with Mr. Speaker at the earliest opportunity, to ensure
Column 707that minority parties are provided with proper opportunities to contribute to the debate. We must now continue.
Sir Trevor Skeet : I am much obliged to you, Madam Deputy Speaker. One lesson to be learned from the speech of the hon. Member for Sedgefield (Mr. Blair) was that if the Labour party were to resume power at a later date, they would renationalise the power industry by the time-honoured method of paying compensation, simply by adding to the national debt as they did in 1948--when the present Government are doing their best, through the Cabinet, to pay off part of the national debt, to the tune of £10 billion last year.
As to charges, one can be very wrong. Today's domestic electricity prices are in real terms 8 per cent. lower than five years ago, and charges to industrial customers are 10 per cent. less. Householders in England and Wales pay 6.81p per kilowatt hour, which is less than in any other state in the Community, with the exception of Netherlands and Greece. In Italy, the charge is 9.94p. I am correcting a point made by the hon. Member for Sedgefield, when he argued that electricity prices will rise drastically. Thanks to a Conservative Government, prices have tended to go the other way.
Sir Trevor Skeet : I cannot give way in a 10-minute speech. The allocation of payments under clause 88 and schedule 12 totalling £2.5 billion are purely supplementary, if required for additional costs, and are not part of those items that are already added to the Bill. I thought that I should make that perfectly clear. On the other hand, if one carefully examines the coal industry, it will be seen that coal subsidies, grants, subsidies, social payments, capital write-offs and finance deficit payments total, in my estimation, about £9 billion cumulatively over the years. That is a very large sum. If one is to play one industry off against another, the real costs involved should first be clearly understood. The Government have incorporated nuclear generation into National Power. One suspects that there may be a more satisfactory method of coping with the problem, with less distortion of the market and less injury to the industry concerned.
Nuclear generation should remain within a Crown company and be closely associated with, and even incorporate, British Nuclear Fuels plc, the United Kingdom Atomic Energy Authority and British Electricity International Ltd. In answer to several parliamentary questions that I put, the Parliamentary Under-Secretary of State said that the Government have no intention of taking those out of public ownership. An additional precedent for that has been provided by the National Rivers Authority which, in the Water Bill, remains a state function.
Column 708The reasons for that are, first, that the fuel cycle, from power generation and reprocessing to the recycling of plutonium and uranium and waste disposal, would be contained in one company. The obligations contained in clause 88 and schedule 12--which comprise subsidies from the Revenue for nuclear storage, reprocessing, waste disposal and decommissioning--should be monitored and closely scrutinished within the state system. Secondly, civil liability for serious accidents will remain the responsibility of the Government since it is unassignable to the private sector.
Thirdly, the economics of BNFL requires orders from the generator to underpin funding for expensive plant and equipment and that a sympathetic approach be maintained towards the potential of fast reactors for recycling reprocessed products and depleted uranium. Fourthly, with the eventual rundown of fossil fuels, either fusion or fission will be inevitable, which the Government should be able to direct as a long-term project, undisturbed by short-term considerations and the caprice of the market.
Those reasons show that there are alternatives that the Government could adopt to get themselves off the limb where they are now placed, and where they find it embarrassing to have to go against market trends. An additional reason is that the broader basis of competition would be provided at once, with the emergence of at least three competing companies, plus the two in Scotland. This development would not have to await the fruits of a decade of growth in the private sector. A British nuclear company could become the "swing producer" to help to determine the amounts of surplus capacity needed to be retained to operate effectively a privatised system of electricity. I hope that the Secretary of State will bear in mind the fact that he could remedy at one stroke the major flaw in the Bill. Of course I support the Bill--it is the right way forward--but it could be improved. There is nothing in the Bill about reserve capacity. Which of the 12 supply companies are responsible for the national interest and assessment of current reserve capacity, since the obligation to supply has been moved away from the generators to the distributors? Will they be able to devise attractive incentives for the generators to build more plant without making industry, commerce and domestic consumers shoulder the risk? In an integrated system such as that in the United Kingdom, the present capacity is about 23 per cent. Privatisation requires a much broader margin of capacity to operate the system. The United States' capacity is 33 per cent., West Germany's is 50 per cent. and Japan's is 49 per cent.
The trouble with contractual arrangements is that, although they may be litigated, they cannot guarantee instant response, especially if the lights are going out and industry's appetite for power remains unsated. New stations take about eight years to build. Although gas turbines are relatively cheaper to build, their running costs are high, and they may have have difficulty operating under the merit order system.
While the price of oil is depressed by a world surplus and the price of coal is forced down by world prices at about £24 per tonne, it is doubtful whether it will be possible in the next two or three years to have any positive modifications, although the economy is expanding at a rate of between 3 and 4 per cent. a year. I stress that point. Perhaps the Government will link into the European grid with the establishment of a second line to the continent
Column 709and thus provide an essential reserve capacity, not in the United Kingdom but directly through further links with nuclear electricity in France. The Government should make their position prefectly clear during this debate.
My time is rapidly coming to an end, so I conclude by saying that I support the Bill. Details of the grid and of research and development will have to be considered carefully in Committee, and I hope that the Secretary of State will agree to modify the Bill where grave weaknesses appear.