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Column 724My first concern is with safety. Even before Chernobyl, the public realised that nuclear power stations could go out of control. The nuclear industry used to say that that happened once every million years. There are about 300 reactors worldwide, most of which have been in operation for only 10 or 20 years, yet there have been two major incidents, at Three Mile Island and Chernobyl. That weighs heavily in the public's mind.
There is a fear that, in privatising the nuclear industry, safety standards will be compromised. The Magnox reactors are reaching the end of their lives. In my part of the world, there is anxiety about the safety of the Trawsfynydd nuclear power station, which is 25 years old. Bits of metal dropped into the reactors's coolant circuits, but a test was postponed. When we hear such news, it leads to worries about these power stations remaining in the public sector, but with privatisation those worries will be greatly increased. If there is an accident at one of our nuclear power stations, the owners--the new private utilities--will be liable for only £20 million. Chernobyl has cost £20 billion so far. The Government will be left picking up the tab should anything go wrong here. The nuclear industry is a lame duck. The AGR programme is a disaster financially. Dungeness provided only a 1 per cent. load factor last year, 22 years after construction. Hinkley Point is the only reactor acting properly--the performance of the other three is questionable. We are abandoning the AGR technology. The Government have decided to have the world's largest pressurised water reactor, yet generally countries are moving away from the nuclear industry. In privatising electricity, a £6 billion bill will be passed on because of the Government's dogma about nuclear power.
We have no idea of decommissioning costs. Unfortunately, when the nuclear reactors were designed, the authorities did not plan how to take them apart. The amount of £300 million for Berkeley is no better than a guesstimate. It is not an accurate calculation. Many experts think that the cost will be many times that and may even be up to £2 billion per power station. The Government intend underwriting such costs, but the nuclear waste problem is unquantifiable. A recent report said that it would cost about £4 billion to get rid of high-level waste. When we do not know what the technologies will be, we cannot accurately estimate the costs.
The Government have virtually surrendered the case on nuclear economics. Over the past 40 years, nuclear electricity has never been economic. It amounts to a nuclear tax. If the Government legislate for a minimum of 20 per cent. of non-fossil fuel components, they will leave big bills for the public. Nuclear power should be phased out.
I oppose the Bill, first, on the ground of higher prices. Secondly, there is no question but that this is an anti-coal Bill. It will saddle the public with a nuclear industry that they do not want. 8.34 pm
Dr. Michael Clark (Rochford) : It is interesting that the hon. Member for Carmarthen (Mr. Williams) thinks that this is an anti-coal Bill. In some respects, the nuclear industry does not come out of it too well either. I welcome the Bill in principle and agree with many of its details. I wish it a speedy and safe passage to Royal Assent.
Column 725The nuclear industry is important because fossil fuels are premium fuels and finite. The nuclear industry is the generating industry for the future. Our great-grandchildren will rely upon it. As my right hon. Friend the Secretary of State said, we need the nuclear industry for diversification. It is a stepping stone to the technology of the future--the fast breeder and fusion. The faster breeder at Dounreay is to close in five years. I deplore that, because some of that plant's technology will die with it. It is a shame that we shall lose that facility.
I hope that the Government will agree to give wholehearted and fulsome support to the European project that follows JET, so that fusion becomes the "great white hope" for electricity generation in the future. The nuclear content of generation is important for those many excellent British engineering contractors that provide so many jobs and have project teams with great expertise. It would be a shame if they were disbanded.
Recently, the nuclear industry has been challenged on prices and costs. In most economic assessments carried out by the Organisation for Economic Co- operation and Development, the cost benefit of the nuclear industry has been shown to be doubtful--generally, it is agreed, because of rising costs in the industry associated with commissioning delays, retrospective fitting of safety equipment and poor performance of several nuclear power stations.
There is cheap domestic coal, cheap world coal and cheap oil and gas, although I do not expect that any of the three will stay cheap for long. If the subsidy were taken from coal, the price would increase immediately. The CEGB has confirmed that, with higher interest rates, and particulary with higher rates of return on investment, the coal industry is favoured for generation over the nuclear industry. That is probably because a nuclear power station is more expensive to build than a coal power station. The nuclear power station gets its benefit from cheaper fuel costs. If a greater rate of return is demanded, there will be a disadvantage to the nuclear industry, and we should tend to build more coal than nuclear power stations.
Independent witnesses who gave evidence to the Select Committee on Energy-- on which I have the honour and pleasure to serve--said that, because of "commercial discount rates"--they meant rates of return--and the low price of coal, it was unlikely that unsupported companies would build nuclear power stations.
The Bill states that each distribution company in England and Wales should purchase a specified amount of electricity from non-fossil fuel sources. What will happen if that non-fossil fuel quota is substantially filled from Scotland and France, or there is a dramatic increase in the amount of hydro -electricity or geothermal electricity, or a major tidal scheme is brought into operation? When those forms of benign electricity generation are expanded, will there be a decline in nuclear capacity? If so, that will be a great shame and a great disadvantage.
What will happen if there is substantial investment in building private nuclear power stations, despite my earlier comment about rate of return? If private nuclear power stations are built, does that mean that big G, National Power, can shut down some of its existing power stations without having to build more? Does it mean that it will be divested of its monoply of nuclear power and will thus tend
Column 726to dispose of its centre of excellence for the nuclear matters that it presently has? If that happens, it will be a great shame. It is suggested that the regulator might allow distribution companies that are obliged to purchase electricity from nuclear sources to pass on the costs of these obligatory purchases. It should not be allowed to do that. The regulator should be there to prevent the passing on of prices. The nuclear industry must be aware of the cost of generating electricity by nuclear means and must not be shielded by the passing on of costs to the consumer. If that happens, the present nuclear power stations will be cossetted, as is much of the coal industry. If we are not careful, it will mean that privately built nuclear power stations may earn excessive profits by operating a cost-plus policy. We must not allow such a policy.
I shall now return to the closure of Magnox stations. When nuclear stations close, how can we be sure that they will be replaced? We know that all the distribution companies will be obliged to buy electricity generated by nuclear power stations. Will there be an obligation to build a power station to match every one that is shut down? I hope that there is, because otherwise we shall see a decline in the nuclear generating industry. The Secretary of State dealt with decommissioning costs. Either the cost falls on big G, National Power, in which case it will depress the selling price when that company comes to the market, or the Government will pick up the bill. The Secretary of State said that all costs will be borne by the private sector unless there is exceptional or retrospective legislation, in which case the Government will consider whether to help with the cost of decommissioning.
Finally, I should like to go through a quick checklist of items that point to the existence of a case for all nuclear power stations being in one separate company. Whether that company is
Government-controlled or private, with the Government having a golden share, can be debated. There is a case for one separate company for the following reasons.
The first is in order to ensure that a percentage of nuclear electricity is purchased by the distribution companies. Secondly, it would guarantee that nuclear-generated electricity is available for purchase. Thirdly, it would undertake the decommissioning and assume its cost and make sure that it is done safely and properly. Fourthly, it would prevent nuclear issues from eroding the selling price of National Power when it comes to the market and prevent the erosion of investors' dividends.
Fifthly, we need to retain a centre of nuclear excellence that is undiluted by the company that owns the nuclear power stations being involved in other forms of generation. That would also enhance the safety aspects of nuclear power. Sixthly, we need to concentrate research and development for the benefit of the nuclear industry, for the scientific training of staff and to ensure Britain's future in the forefront of physics, engineering and chemistry. Seventhly, we need to prevent the true cost of the nuclear industry being concealed. Finally, we need to ensure that public confidence in nuclear electricity continues to develop in the way that it is developing.
Nuclear generation is extremely important for the future of Britain. It is also important that the legislation gets it right, and I hope that the points that I have raised in the short time available to me will be taken carefully into account by the Secretary of State and his Ministers.
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Mr. Thomas McAvoy (Glasgow, Rutherglen) : Since the war, the Conservative party has peddled the line that the Labour party is rigid and dogmatic and unable to comprehend the complex nature of modern society in terms other than simply nationalising everything in sight. It has portrayed us as pursuing nationalisation pure and simple because we regard nationalisation as the only model by which we can manage industry and services in modern Britain. These accusations are nothing but dogmatic assertions and reflect nothing of the developing nature of our approach to the issues of how to run giant enterprises for the benefit of the public without allowing them to become remote.
As a Co-operative Member, I have been particularly pleased at the continuing interest of the Labour party in developing an approach to industry and commerce based on the co-operative model. The principles of co -operation are an important part of the wide-ranging and flexible approach to how Labour is prepared to run the economy. In his speech, the Secretary of State directed a sneering remark at the Co-operative Movement. Apart from the fact that the right hon. Gentleman should be the last person to sneer at anyone, he obviously needs reminding of the dramatic recovery in the trading position of the Co-operative Movement. The Bill contains nothing less than the dogma that says that putting industries and services into the private sector will automatically result in a better-run industry that will provide a better service for the public. I have never taken the view that one type of nationalisation or public ownership is the ultimate answer, but what we are now hearing is the parrot cry of the Conservative party, that private is best.
The Opposition maintain that unfettered private enterprise without public accountability has been responsible for untold misery. The pursuit of profit alone results in industry being run to the detriment of the overwhelming majority of our people. Of course, if privatisation were indeed a successful model, we would need to look at it. Let us look at it and see how the public are being ripped off by the throwaway terms of privatisation. A successful flotation is likely to require either a significant writing down of debts or an increase in charges to consumers.
The first course of action would imply that private investors would gain control of public assets at less than their book cost. Moreover, in the South of Scotland electricity board case, £17 million of these assets have been directly paid for by consumers through their electricity bills. The balance has been funded through borrowing, which again has been serviced by charges to consumers. Since, therefore, there is a direct relationship between the board's existing capital structure and its present charges, the corollary of any debt write-off to asist privatisation is that, if the industry were retained in public ownership, such a write-off would permit a significant reduction in charges to consumers.
The second course of action, increasing charges simply in order to increase the financial rate of return to facilitate privatisation, would clearly be against the interests of consumers. Both the process of privatisation itself and the structure proposed for the privatised industry appear to carry the risk of increased charges for consumers in Scotland. Experience of the gas and telecommunications
Column 728industries also suggest that there might be changes in the relative weight of charges borne by different categories of consumers following privatisation.
The Government lay great stress on the opportunities created by privatisation for consumers and staff to obtain a stake in the electricity industry. However, the Government have not said what steps they propose to take to ensure that ownership of this key strategic industry remains in domestic hands, and doubts must remain about the attainability of this objective.
Future ownership of the industry is also of relevance in assessing the electricity industry's role in wider energy policy. The Government justify the requirement for the English distribution companies to take a proportion of their power from non-fossil-fuelled generating capacity in terms of the need to ensure diversity of supply and to meet strategic objectives. However, the same tension between short-run considerations and long-term security of fuel supplies is also present in the fossil fuel sector, and is likely to be exacerbated if the electricity generating companies pass into the hands of shareholders and managements who are more concerned with maximising profits in the short run by purchasing fuel from the cheapest sources than with balancing immediate price advantage against wider economic interests and the safeguarding of the long-term availability of supplies.
The recent dispute between the South of Scotland electricity board and British Coal is not an encouraging precedent, since it clearly shows how short-term pressures can conflict with other considerations and how a free market solution to sectoral interests may lead to inefficiencies and external diseconomies. Purchases of foreign coal may offer advantages in the short term to the electricity industry, but apart from the transitional costs resulting from the loss of domestic employment in the mining industry, such a policy could well impose immediate costs on others. For example, increased road haulage of coal from ports in the Strathclyde region to power stations in the east of Scotland would have a quantifiable effect in terms of the costs of extra road damage as well as consequences for other road users and for communities on the routes affected.
In the longer term, by affecting the viability of the indigenous coal industry, such action may also leave final consumers unnecessarily exposed to fluctuations in exchange rates and in world energy markets, where there is a strong link between the prices at which coal and oil are traded internationally, and endanger the balance of fuel sourcing that the Government maintain they are seeking to preserve. The dogma from Government Members of "public bad, private good" is but a parrot cry. I have not heard a good case for privatisation tonight, and I doubt whether anybody else has heard one. I am opposed to the Bill.
Mr. Michael Stern (Bristol, North-West) : The Bill addresses iself to the basic organisation of the electricity supply industry and the challenges that will face the industry for perhaps the next 100 years. Therefore, in looking at the Bill as a whole, it is important that we define the challenges against which we should measure it. We have heard a lot tonight about the challenges to the industry purely within the United Kingdom. There is the challenge of providing cheap electricity. I do not think that
Column 729any of my hon. Friends needs any more convincing that to build in any element of competition must, in the long run, provide cheaper electricity. The history of the past 100 years shows us that our civilisation is based largely on the provision of cheap power. However, we also have to look at the Bill to see whether it will encourage the provision of electricity by environmentally benign methods, and this point has become increasingly important recently. We can point straight away to the non-fossil fuel requirement in the Bill as a sign of the extent to which the Conservative party regards it as important that we should try to pump less poison gas into the atmosphere.
When we measure the Bill against the challenges outside this place, its importance is increased-- [Interruption.] If I can be heard over the continuous muttering and yowling from those seated on the Opposition Front Bench, I should point out that we must measure the Bill against the extent to which it will allow us to prevent the production of acid rain and permit us to slow down the warming effect of pumping ever-increasing amounts of hot and non-benign gases into the atmosphere.
In addition--something that dwarfs every other consideration--we have to look at the extent to which the Bill provides an opportunity for the country to play its part in meeting not just our energy needs--those of a developed country with a high standard of living--but those of the developing world. [Interruption.] I am aware that those on the Opposition Front Bench are not interested in this, but I believe that the rest of the House is.
In the free market economies of the world, the average per capita consumption of fuel is 4,452 kg of oil equivalent a year. In the command economies such as the USSR, the figure is almost identical--4, 472 kg. However, fuel consumption, which determines the standard of living, is very different in the developing world. In Africa, the per capita consumption is 297 kg oil equivalent, which is less than one fifteenth of the power needs that we regard as normal. In Asia, the average is 387 kg--again, a minute percentage of what we regard as essential.
We have to judge the Bill in terms of whether it will aid or hinder us in helping the developed world to meet this huge energy gap which has opened up between our civilised societies and the fuel-poor societies that occupy most of the rest of the world. The Opposition have come up with some nostrums on energy conservation, but energy conservation in the context of the problem that I have just described is like offering a diet sheet to a starving man.
If we are to meet the energy needs of the developing world and to do so without poisoning the atmosphere, we have to make sure that, in organising our electricity industry, we provide the maximum opportunity for the development of benign, non-poisonous technologies, and get those on board as quickly as possible, so that we can make sure that the rest of the world does not have to go through the same process as we did. We went from wood burning, which is their principal source of energy, through the fossil fuel cycle, to arrive at nuclear and renewable technologies. If we force them to go through that same cycle, we shall end up with a poisoned globe. We cannot afford to see the limited supply of fossil fuels left in the world used in this way.
Column 730Will the Bill enable our industry to meet the challenges that I have outlined? The Bill will promote competition, and cheapness flows directly from competition. Perhaps more importantly, the Bill will free the industry from the dead hand that it has on it because the Government always have to have a say. The Bill will allow our power engineers and fuel and environmental scientists the opportunity to sell the known expertise of our industry to the rest of the world. [Laughter.]
I am sure that the laughter from the Opposition Benches stems from the fact that Opposition Members do not represent constituencies which contain the more developed sections of the industry. In other words, they have no concept of what the industry is capable of achieving. My right hon. and hon. Friends know that the industry has been conspicuously unsuccessful, with its present organisation, in selling British technology to the rest of the world. It has not succeeded in selling the developments of that technology that have taken place here. The Bill will free our industry by providing an incentive to go out and sell. That is a profit motive, which is the best available incentive for the industry.
The Bill will provide and demand new challenges for and of the industry, rather than allow it to relax within the same old mould in which we have allowed things to run for the past 40 years. As such, it deserves the support of the House.
Mr. Eric Illsley (Barnsley, Central) : The proposals in the Bill are another example of the Government's obsession with selling industries into private hands. Once again, public interests will become secondary to the interests of the City and investors. We shall witness again a cheap-rate sell-off. The assets of the electricity supply industry will be sold at well below their value, at about£20 billion.
The supply of electricity is vital to the nation. There are 22 million consumers, both private and within industry, including hospitals and schools. It should not be floated around the stock exchange to speculators and profiteers. Instead, it should be protected. Plans should be made for the future, and the industry should be kept in public ownership so that the United Kingdom can retain a safe and economic supply of electricity.
The Bill will not increase competition. Instead, it will threaten security of supply. It will increase cost to the consumer through the nuclear tax and the nuclear levy. It seems that the taxpayer will have to bail out the nuclear industry, bearing in mind the proposed grants for decommissioning costs.
The idea that the Bill will increase competition is misguided. The CEGB recently told the public inquiry into the Hinkley power station that a minimum of 6 GW of generation will be required over the next 10 years, but we have heard during the debate that that figure could be as high as 15 GW. If there is such a shortage of capacity, or shortfall, there can be no competition. Any new generator will merely be included within the existing capacity. Even if there is sufficient capacity to ensure competition, the Government will ensure that the nuclear industry is not exposed to it. The nuclear tax and nuclear levy will lead to funding for nuclear power stations, and that is unlikely to come from private investment.
Column 731The Government will give grants to generators to cover the cost of decommissioning. This will cosset the nuclear industry against its unpopularity and the likelihood that it will be shunned by investors who will not take on the inherent risks.
We have heard this evening that there can be no competition at the point of consumption. Area boards cannot be duplicated. As members of the Select Committee on Energy heard, there cannot be two switches in every home. Where is the alleged competition going to come from? There will be only limited competition in generation. There will merely be a duopoly. We have heard of the mysterious 20 companies that are ready and willing to set up within the industry, but they have not yet been identified. We are told, however, that they are there. Even if that is so, there will still be only the duopoly at the outset. There will be the French link, but as we have seen in the past, that is likely to be cut off at any time by the French when their power requirements demand.
The main benefit from competition should be choice for the consumer, but there is no choice in the Bill for the United Kingdom consumer. We have heard that there cannot be competition or choice at the point of consumption. The only benefit that could come from privatisation is lower prices. The Secretary of State has only recently increased prices, and we are likely to see further price increases as a result of the nuclear levy. As I have said, competition cannot be introduced, and it is unlikely that we shall enjoy lower prices.
It is apparent that the cost of nuclear power is far in excess of the cost of coal generation. In evidence to the Hinkley inquiry, the CEGB has admitted that nuclear power could be up to one and a half times as expensive as coal generation. With public sector rates of return of about 5 per cent., coal and nuclear power are neck and neck. Given a private sector rate of return of more than 8 per cent., or perhaps as much as 15 per cent., the balance swings dramatically in favour of coal.
The argument for nuclear power is based on the need for diversity of fuels and security of supply. Both fuels can be achieved without privatisation. The cost of diversity in the form of the pressurised water reactor programme, according to the Council for the Protection of Rural England, would be £432 million a year, and that cost would be passed on to the consumer. The same study showed that simply increasing coal stocks by 2 million tonnes would give the same security of supply as investing in PWRs. The costs of nuclear energy are far in excess of those of coal generation, as the Government have more or less admitted by their support for private Bills to increase coal importing facilities, yet they will still not expose the nuclear industry to even limited competition.
Many other costs will become apparent. For instance, large industrial customers will be able to contract directly with generators : some large industries, indeed, may themselves become generators. The successors to the area boards could lose out on large industrial contracts. Industrial customers account for some 52 per cent. of the total consumption on my area board, the Yorkshire electricity board. If it were to lose those customers, the adverse effect on the board would be huge. Twelve area
Column 732boards will become public energy suppliers. What of the risk of takeovers, reductions or foreign involvement? Again, the costs will be passed on to ordinary consumers.
A major consideration will be the effect on the British coal industry. It is apparent that one of the Bill's sidelines is to kick the industry again. The Government have never lost an opportunity to try to restrict the industry as far as possible ; now there will be further pressure on British Coal, further colliery closures and job losses, although British Coal has increased its productivity by some 70 per cent. over the past three years-- a massive contribution. Only recently, British Coal's half-yearly account announced an operating profit of £119 million, yet at the same time its chairman announced further redundancies. Profits would have been higher had British Coal not been obliged to pay £700 million to the CEGB in price reductions based on the international coal price. Those reductions were forced on British Coal because world prices were artificially low and could not be sustained. Prices would have been increased had the CEGB delved into the international market. At present, the country cannot import enough coal to satisfy its total energy needs. The £700 million was a subsidy to the CEGB to ensure its profitability in the run-up to the Bill. The Government have taken every opportunity to attack and dismantle the British coal industry over the past 10 years, and they have not lost the opportunity provided by the Bill.
The Select Committee on Energy recommended in its report, which has been referred to several times, that long-term coal contracts be placed before privatisation to ensure the stability of the British coal industry and to give some stability to the industry before privatisation. Those contracts should be for British coal, not for South African, Colombian, Australian or Korean coal. The coal-fired power stations that were proposed for Kingsnorth, West Burton and Fawley have been postponed because of the uncertainty that hangs over their future. The CEGB believes that there would be difficulty in selling output from those stations. The costs of nuclear power are ever increasing, because of decommissioning and construction costs, so there will be a long-term future for coal and it would be short-sighted of the Government to allow the British coal industry to be overtaken and run down in favour of foreign suppliers. On the Order Paper is a motion in the names of myself and four other hon. Members who were members of the Select Committee on Energy. Members of that Committee recommended in the report that the Bill should be referred to a Special Standing Committee. We have heard this evening that certain members of the Committee declined to put their names to that motion on the basis, perhaps, that they were already aware that the Department of Energy had expressed an opinion that it did not want the Bill to go before a Special Standing Committee. Those hon. Members did not presumably, want to be associated with a motion that went against the opinions of the Department. I ask hon. Members to support the motion when it comes before the House, thereby supporting the idea that this important Bill should go to a Special Standing Committee.
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Mr. Roger King (Birmingham, Northfield) : Twice during the course of the debate, the hon. Member for Aberdeen, North (Mr. Hughes)--who is not in his place at the moment, which I fully understand--has referred to an aside that I might have made about the fact that, in effect, I thought that the proceeds from the privatisation of an industry such as the electricity industry would be put to very good use by the Government. The Opposition have again illustrated their Luddite attitude towards the new economic regime that most of the world is entering and of which we, as a country, are one of the leaders. We cannot go back to 1947 when we had a war-ravaged economy, in which there was no personal wealth to be distributed in the community and no pension funds or bank balances with which people could invest choice in industry and commerce.
Times have changed since then. We have a substantial amount of economic growth and we have large amounts of investment, which have been accrued by pension funds. We have the opportunity, therefore, for the state to divest itself of many of the undertakings that it has taken upon itself over the past 40 years. It is right and proper to consider electricity as a basis for further implementation of the programme.
I am not surprised that the Opposition are concerned about the future because, with the announcement of further privatisation--in water and electricity--in the Gracious Speech, we are now well on the way to fulfilling our objective of handing back to the people and to the community the operation of all those industries that the state has decided that it could do better than anybody else, at some stage over the past 50 years or so.
I welcome the Bill. It is innovative and imaginative and I am sure that it will prove to be effective. Those people who say that there are problems are the self-same people who said that we could not privatise the airports. They said that we could not make public companies out of municipal airports and that they would not work, they would go out of business and would be of no use to the community. We have seen what a success the British Airports Authority has been and what a success Manchester, Birmingham and Newcastle airports have been under the new regime. It is nonsense to suggest that privatisation and a more rigid discipline in running some of our ex- municipal assets cannot prove effective.
My hon. Friend the Under-Secretary of State played a leading part in presenting to Parliament the Bill that deregulated buses. Opposition Members argued, "No one else in the Western world has privatised their buses. It cannot and will not work for the community. No one will want to buy the services ; there will be no investment and no competition." [Hon. Members :-- "Claptrap."] It was the same old claptrap, as my hon. Friends so clearly say. Two years later, we know what nonsense that argument was, as bus deregulation has proved a substantial success. It has brought with it competition and new services at far less cost to the user. Yet according to the Opposition it could not be done.
There is clearly an analogy between buses and electricity. Take the west midlands, for example. The deregulation of bus services has resulted in one prime operator--West Midlands Travel--retaining about 96 per cent. of the service. The new operators have not proved very successful in wresting routes away from the original
Column 734operator. Why is that? It is not because anyone has regulated the system or prohibited new operators from coming in but because the prime operator fears the possibility of competition. The law says that competition is allowed but competition has not shown itself because the original operator has become so efficient and effective in providing what the community wants that it has scared off new operators. I believe that the self-same policy will work for electricity.
Mr. King : The hon. Gentleman will soon realise that costs will come down dramatically as a result of the opening up of the market for power station generation. As a result of privatisation, the industry, which has already committed itself to substantial power creation, will be able to sell its electricity on to the area boards, which it has not been able to do easily until now.
The regime that my right hon. Friend the Secretary of State proposes is eminently workable. Naturally, I should have preferred more of a break-up of some of the operating companies. For example, I should have liked Birmingham to have bought its power from Trent Valley Power and Light, providing an opportunity for the coal stations in the Trent valley to operate as one unit and to sell electricity to anyone who wanted it. I understand the principle of creating the little and big generators as two organisations, which will attract investment from private sector and trade union funds and, inevitably, from elsewhere in Europe. The system that my right hon. Friend proposes will work, and it will work well.
Perhaps one question mark hangs over the proposals, in the form of the nuclear element. One way forward might have been for nuclear energy to be taken on one side, allowing the big and little generators to come to the market free from the nuclear legacy that they are to inherit. That is not to say that nuclear energy could not at some stage have come back into the market place under a reconstituted regime, and once its problems had been solved. From the investors' point of view, however, the little or big generator may not prove so exciting with the nuclear industry attached to it as it would without. Time will tell. Great strides are being made in the nuclear industry and it will account for a substantial part of energy creation in the future.
The White Paper states that the object of privatisation is to eliminate a large amount of interference in day-to-day management over the running of the industry. I am a little unhappy that there appears to be more regulation than, ideally, I personally would like. However, I feel sure that, in Committee, my right hon. and hon. Friends in the Department will spell out in detail just how little is that regulation. To succeed, we must encourage as much freedom of development as we can.
My right hon. Friend said that the obligation to supply will remain. However, although clause 15(1) states:
"a public electricity supplier shall, upon being required to do so by the owner or occupier of any premises",
clause 16(2)(c) says that an exception is when
"it is not reasonable in all the circumstances for him to be required to do so."
We would welcome clarification of that point. It should be a right to be supplied with electricity in as many cases as possible, although I am sure that there are circumstances, even today, that make that impossible.
Column 735The hon. Member for Barnsley, Central (Mr. Illsey) mentioned direct contracts between generators and customers. There are opportunities for large car plants, blast furnace industries, smelting, aluminium and other foundry industries to do a deal with generators, which will be welcome. I applaud that proposal, but we must ensure that in taking such sales out of the area boards, arrangements for compensation are made so that the boards' remaining users will not be penalised too heavily by the removal of a substantial element of business.
However, I suspect that taking certain users out of the board and allowing them to make direct deals will concern only a small percentage--those depending to an enormous extent on electricity for their processes, such as aluminium smelting, where electricity can be their highest single cost factor. I am sure that opting out will be widely welcomed by many industries in the west midlands and elsewhere.
With those few small reservations, I congratulate my right hon. Friend and look forward to the Bill reaching the statute book as soon as possible.
Mr. Jimmy Hood (Clydesdale) : In my usual polite way, I have given thought to the best way of describing the Bill. The most polite expression I can think of is that it is a treacherous Bill. My view has been reinforced by comments made by the hon. Member for Rochford (Dr. Clark) who, in referring to the mining industry, spoke of it as cossetted and protected. That comment is insulting to an industry that has improved its productivity by 50 per cent. in the last four years, and says more about the Government's dogma against the mining industry. The Electricity Bill is very much an anti-mining industry Bill.
This is the Government who preach against monopolies, but their Bill proposes creating a most dangerous private cartel. While preaching the gospel according to the consumer, the Government are creating a situation in which the consumer will have to foot the Bill for the fat cats of the City. The Bill is not about the best way to supply energy or the efficiency of power supplies : it is more of the same poison from the politics of dogma. The Government's whole approach to the public sector is one of hostility. Regardless of the service provided, the Government say, "If it is provided by the State, we shall sell it off to our fat cats in the City."
Right hon. and hon. Members will recall the late Viscount Stockton, a former Conservative Prime Minister, condemning the present Government for selling off the family silver. The present Government are the "spiv brokers of the century". There are three balls hanging outside 10 Downing street, the home of the supreme pawnbroker. Bad as that is, even more offensive is the effect this Bill will have on the consumer, the electricity industry and the workers within the energy industry. Its effects will devastate the mining industry. As a Member representing a Scottish constituency, I say that it will be especially devastating to the Scottish mining industry.
The Bill spells the death of the Scottish mining industry. In 1964, I joined the mining industry in Scotland as an apprentice engineer and I was promised a long future. Within four years, I had to get on the proverbial "Tebbit bike" to go down to continue my career in the Nottinghamshire coalfield. Again, I was told that there was a safe and secure future for coal there.
Column 736Then cheap oil flooded the oil markets. When miners' leaders warned Governments of the dangers of closing pits and giving the energy monopoly to the oil sheikhs, they were laughed at. In the early 1970s, the Arabs cornered the market and quadrupled oil prices. The effect on Western economies was devastating, and we are still feeling the pinch of selling our energy industry to the oil sheikhs.
Sadly, we are going down the same road again. We are closing our mines and allowing the foreign producers of coal to corner our markets. At the same time, we are expanding the nuclear power industry, with its high costs and shady safety record. Nuclear power is the great "That Was" for the Government.
The one thing that we know about the Government is that they will buy coal from anywhere--South Africa, Colombia or China. They will buy coal from anywhere, but they will not support the British mining industry.
Perhaps the Minister of State, Scottish Office will tell us who will foot the bill for the £2.5 billion owed by the SSEB and the Hydro Board. We are interested to know that.
Much has been said in the debate about efficiency and costs. When British Airways was privatised, we were told that writing off debts was an incentive to the private sector. It would be good if the Government had the same faith in the public sector. If they wrote off the debts of the mining industry, which are more than £4 per tonne, that would create incentives for public industry. But the Government are not interested in public industry. They do not consider the public good ; they are interested only in private good, monopolies and fat cats in the City.
It is ironic that we are having the Second Reading of the Bill in the same week as the miners in the Nottingham coalfields have finally rumbled the stiletto gang, the leaders of the Union of Democratic Mineworkers in Nottingham. We are told today that 56 per cent. of them voted against the latest pay offer. Last week, there were allegations of ballot rigging, and the word in the Nottingham coalfields today is that the vote would have been 80 per cent. were it not for that. Even in Nottingham, the miners have woken up to this Government. It gives me no joy to say to the Nottingham miners, "I told you so," but we certainly did. The hon. Member for Sherwood (Mr. Stewart) is not in his place. I remember him sneaking through picket lines during the miners' strike, going to hotels, buying dinner for UDM leaders and saying, "We are the party that supports you." As a result of the Bill, pits will close in the Nottinghamshire coalfields, as well as the Scottish, Welsh and peripheral coalfields. Pits in and around the Gentleman's constituency, including Bilsthorpe, Sherwood, Annesley, Ollerton and Bevercotes, are threatened by the Bill. We are not talking now about economic pits ; we are talking about power stations that can be fed from ports that are supported by the high priestess herself, the Prime Minister. She voted for the closure motion in respect of the North Killingholme Cargo Terminal Bill to build a coal terminal on Humberside.
The message to the hon. Member for Sherwood is that he was promised West Burton as a gimmick, but nobody believes that it will be built. Coal and coal miners' jobs will go sailing down the Humber, at the same time as Tory Members in the midlands are selling the miners down the river. The Bill will cost the hon. Member for Sherwood his seat, and when the electorate realise what the Government have done, the Bill will cost them their office.
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Mr. John Maxton (Glasgow, Cathcart) : During his opening speech, the Secretary of State suggested that tomorrow would be Scottish day-- presumably implying that today was English day. He was wrong, because four Scottish Members have already spoken, I am replying on behalf of the Opposition and a Scottish Minister is replying on behalf of the Government.
Nevertheless, I hope that tomorrow will indeed prove to be a Scottish day because that will mean very few contributions from the Conservative Benches. During today's discussion on the privatisation of the Scottish electricity supply industry, not a single Scottish Tory Back Bencher has been in the Chamber. The Minister has been here most of the time, but the Secretary of State for Scotland has not bothered to be here for most of the debate. Of course, there are few Scottish Tory Members. Indeed, following a walk-out, neither has any Scottish Democrat been here to listen to the debate.
There should have been a separate Scottish Bill dealing with privatisation in Scotland because the Scottish industry is different and separate. It is organised differently, it will be privatised differently and different problems will arise for Scotland. In response to my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), the Secretary of State said that, because the various areas of the industry were nationalised under one Bill, they should be privatised under one Bill. In fact, they were nationalised under the control of the then Minister for Fuel and Power ; they were only separated and the Scottish boards put under the responsibility of the Secretary of State for Scotland by a Tory Government in 1955. The Secretary of State should have got that little fact right-- [ Hon. Members-- : "He did."] He did not ; he was wrong.
The Secretary of State is, as usual, dodging his responsibilities and refusing to be accountable to the Scottish Members of Parliament. He is allowing his junior Minister to take the Bill through Parliament because he knows that he cannot man a Standing Committee to deal with a separate Scottish Bill. He simply does not have enough Back Benchers. It is insulting to the House and to Scottish Members that our business should be conducted in that way. It has nothing to do with nationalism or devolution ; it has everything to do with how this House treats its Scottish Members and Scottish business. If there is to be separate Scottish legislation and separate Scottish administration, the House must learn to deal with that properly. The Secretary of State for Scotland said that the reason for having just one Bill was that its regulatory powers would be common to England, Scotland and Wales. However, as soon as the Scottish press suggested that the regulatory powers would come under the Secretary of State for Energy, the Secretary of State for Scotland quickly denied that and said that the regulatory powers for Scotland would come under his Department. I hope that the Minister will clarify that.
As I understand it, the Bill provides for a director for the regulatory board. Presumably, there will be a deputy director seated in Edinburgh looking after Scottish matters. It will be an odd set-up if the deputy of the board is responsible not to his boss, but to a different Secretary of State. I hope that the Minister will take the opportunity to explain it, but that is the way it appears at present. We
Column 738shall have the odd separation of regulation between Scotland and England as a result of what the Secretary of State is doing. Why should we privatise the Scottish boards? What arguments can there possibly be for privatising? The Secretary of State for Energy tries to suggest that the reason for privatising the English boards was to introduce an element of competition and to put into the boards the idea at least that local companies could compete where they get their generation supplies. In an eloquent and logical speech, my hon. Friend the Member for Sedgefield (Mr. Blair) successfully demolished that argument. Even if the arguments of the Secretary of State for Energy stand up in England and Wales--in my view, they do not--they certainly do not stand up in Scotland, where two vertically integrated companies, both generating and distributing companies, are to be established.
There is to be no competition for the consumer. There will not even be competition for generation. Each company will have its own defined areas and its own defined generators. There is to be a split-up between the two companies about which is to get which piece of generating capacity and which is not. The Cruachan power station is to be given to the South of Scotland electricity board. Half the capacity of the Peterhead station is to be given to the South of Scotland electricity board. The Hydro Board is to get so much from the SSEB in return. It is all to be carved up before privatisation even takes place. There is to be no competition.
The hon. Member for Birmingham, Northfield (Mr. King) gave the game away. He said that one area in which there could just possibly be competition in England, Wales and Scotland is among the big industrial users of electricity, and that they might compete and try to get a better deal from another generating board. He said that, if that happens, we must ensure that the company that was supplying before remains viable. He wants regulation and control and some way in which competition is stopped. He does not regard competition as beneficial in the longer term to the companies that are operating. What on earth is the argument in Scotland? What argument can the Minister of State, Scottish Office provide to show what competitive element will be introduced in Scotland to justify privatising an industry that the people of Scotland have clearly said that they do not wish to be privatised?
I refer not just to the average consumer but to political parties in Scotland, with the sole exception of the Tory party, which, according to the last opinion poll, had 19 per cent. support in Scotland. Even the CBI in Scotland, major industries and the Hydro Board do not want the industry to be privatised. Perhaps the only people who want it to be privatised are members of the SSEB board, presumably because they see themselves getting much larger salaries as a result of privatisation. There is no logical argument for this privatisation taking place.
In his evidence to the Committee, the Secretary of State--I have also heard the Minister speaking on television, certainly within the past fortnight and several times before that--said that the reason for the privatisation of Scottish boards was to transfer control of the Scottish electricity industry from the Treasury in London to Scotland.
It is a remarkable indictment of the Secretary of State and the Minister if they are now saying that they do not control the Scottish electricity industry, have no power over it at present, and do not wish to control it. That is