House of Commons Hansard Debates for 13 Dec 1988

Mr. Norman Hogg : The hon. Gentleman is making a strong commercial argument. How does he account for the fact that Winston Churchill, when he was Prime Minister, invited one of my illustrious predecessors, Tom Johnston, to set up the North of Scotland Hydro-Electric Board?

Mr. Stewart : I am confused about what the hon. Gentleman is getting at. It is an advantage to have separate boards in Scotland and for the Scottish Office to have an operational overview, but the fundamental point remains that financial control of the electricity industry, as is the case with any other nationalised industry, ultimately derives from the Treasury, and the removal of such control will be a major benefit for those who are trying to run the industry.

My second point is that, since 1979, private shareholding in Scotland has doubled. That is a major achievement and an advance in giving people a stake in industries and businesses, but shareholding in Scotland is at a lower level than elsewhere in the United Kingdom. Surely this is a major opportunity for Scots--for all practical purposes, every Scot is an individual customer of one or other board--to take a real stake in a major Scottish industry.

The hon. Member for Edinburgh, Central (Mr. Darling) has said that there is not enough money in Scotland to take a major stake in industry. He should walk around Charlotte square in his constituency and count the assets of financial institutions such as pension funds and life funds ; he will then agree that a massive amount of

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money is controlled there. I hope that a proportion of it will also go into the new shareholding of the Scottish boards.

I hope that my right hon. and learned Friend will make the share offer favourable. I hope also that he will realise that this is an opportunity to make ownership by the people a reality, not the myth that it is under nationalisation. We hear a great deal from Opposition Members about ownership by the people. They equate ownership by the state with ownership by individual people. It is a myth. The individual has no control over a nationalised industry. Shareholding gives people a real stake.

The hon. Member for Garscadden spoke about the timing of the sale of the new companies. I hope that the Scottish companies will be privatised, if not immediately, which would be ideal, then as quickly as possible. Let us try to take the lead in Scotland. My right hon. and learned Friend has confirmed that there are debt matters and so on to be sorted out. Let that be done quickly, and let Scotland take the lead. This is an opportunity for a major expansion of private enterprise in Scotland and for Scots to have a real stake in a most important industry.

Several Hon. Members rose --

Mr. Deputy Speaker : It might be sensible if I remind the House that Mr. Speaker has announced that, from 6 o'clock to 8 o'clock, the ten-minute limit on speeches will apply.

5.52 pm

Mr. Stanley Orme (Salford, East) : Despite what the Secretary of State says about competition within the proposed privatised industry, we are to turn a public monopoly into a private monopoly. The consumer will have no choice--there is no argument about it ; the point was explored on the Floor of the House yesterday and this afternoon--just as he has no choice in the British gas industry. One aspect of this privatisation makes it different from any other privatisation that has taken place under this Government. The Secretary of State criticised the people who work within the industry. He implied that the industry is not producing as it should and that, under privatisation, it could be dramatically improved. He ignored the fact that it is one of the safest and most efficient electricity supply industries within the developed world. If it had not been for recent price increases, the industry would be providing electricity cheaper than anywhere else in western Europe--certainly cheaper than in the United States or Japan.

Yesterday, the Secretary of State for Energy and I had an exchange on nuclear power. The central issue is the nuclear dilemma that the Government face. It is not a matter of whether one is in favour of or against nuclear power. Whatever the policy, we are to have some nuclear power into the next century. Under the Government's proposals, how is nuclear power to be dealt with and priced? There is no argument. When challenged, the Secretary of State for Scotland refused to respond to the case of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) on the cost and control of nuclear power.

With this Bill, the Secretary of State will put a fence around nuclear power. It will clearly state that it is

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different and will be dealt with and priced differently. Four PWRs are promised by the end of the century. There is also Sizewell B. We shall be faced with the decommissioning of AGRs and Magnox stations, which will cost several billion pounds. We must consider the tiny Calder Hall experiment, which is being decommissioned at the moment, and the problems that it is creating. What will happen when larger AGRs must be decommissioned in the foreseeable future? What about the cost of that?

My hon. Friend the Member for Garscadden referred to Mr. Donald Miller and his trenchant remarks about the saleability of the industry if the cost of nuclear power is not removed from the privatisation. If we were to approach Lord Marshall, we would get a similar argument.

Nobody is more enthusiastic about nuclear power than Lord Marshall.

Mr. Beith : The right hon. Gentleman can say that again.

Mr. Orme : The hon. Gentleman says that I can say that again. Lord Marshall's enthusiasm will be tempered when he is answerable to private shareholders, who will ask, "Who will pay for the new power stations and for the present decommissioning?" The Sizewell B inquiry lasted for about four years. The inspector eventually said that, on balance, he thought that nuclear power would be cheaper than coal. What would he say today? The Bill strips away the protection that nuclear power has had in this country over recent years and exposes the fact that, compared with the cost of fossil fuels--coal and oil--nobody argues that nuclear power is cheap. That is the reality we face, but what does the privatised industry, which will be answerable to its shareholders, say about that? It says that it exists to make profits.

That industry will want to use the cheapest coal available. My hon. Friends will be aware that imported cheap coal will be one of the priorities for the privatised industry. Will the British public allow the nuclear part of the industry to be taken out of the Bill, put on one side and completely protected from natural market forces? If that happens, the cost will be borne by the British taxpayer, but not by the shareholders of the privatised companies. They will be excluded. We must face that.

Last week there was an excellent article in the Spectator by Jonathan Davis who spelt out clearly what will happen. He said : "Gone, with the stroke of a Parly draftsman's pen",

is the previous support for nuclear power. The article continues : "Although it does not spell out the message in so many words, Mr. Parkinson's Bill effectively marks the end of that particular hoary game. The prices of oil and coal, nuclear's fossil fuel competitors, have fallen to their lowest level in real terms for many years, and are likely to languish there for some time. In these conditions, even the PWR, the American-designed pressurised water reactor on which so many of the British industry's hopes now rest, cannot expect to compete with coal. No private sector utility would dream of building one in the present climate."

Given that the Government have supported nuclear power, have pushed it down our throats and have used every means possible to encourage its development, we now face an extraordinary situation.

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I am sure that my hon. Friends will agree that, in an economy which uses a mixed-fuel input--coal, oil, nuclear power, and alternative sources--for our electricity supply, the way in which to deal with that industry, upon which everyone depends for light, food, fuel and work, can only be through public control. That is in the best interests of the consumer.

To take nuclear power out of public control is extremely dangerous. The British people want it kept under firm control. I understand that there is a nuclear power station on the edge of the area that was recently hit by an earthquake in the Soviet Union. Fortunately for everyone concerned, it was not damaged ; I am sure that we are all extremely thankful for that.

Mr. Malcolm Bruce (Gordon) : It has been shut down.

Mr. Orme : Yes, that is correct.

The British public need to recognise that this Government, or any Government, will give them proper protection. The industry must be answerable to Ministers and, through them, to Parliament. In that way we can discuss it.

Given that the Bill proposes a separate unit responsible for nuclear power and that it is to be dealt with in a special way, will the Minister give an undertaking that public accountability, through the parliamentary process, will remain? If it does not, our people will realise that they cannot support the Bill.

The Bill contains a nuclear dilemma, which is unique in comparison to any other development. When the Bill is in Committee, we must explore in detail not just the costs, but the overall management policy for the industry.

It is absolutely criminal that a well-run economic industry, which has produced what the nation needs, should now be broken up purely in the cause of profit. It has nothing to do with competition or improvements in the industry. When we have had an opportunity to debate this matter further, and when the argument is taken out to the public I believe that they will begin to see through the Bill and will discover that it is not in their interests.

6.5 pm

Mr. David Harris (St. Ives) : I am sure that the right hon. Member for Salford, East (Mr. Orme) will forgive me if I do not follow his arguments now that the ten-minute speech rule is in play. Unlike the right hon. Gentleman, I support the Bill. My remarks about a particular aspect of it should not be taken as meaning that I intend to oppose the Bill. I am in favour of its general principles. I wish to concentrate on a matter of acute importance to one area of my constituency and I believe that it is important to all constituents in rural areas. I believe that parity of charges between comparable consumers throughout a company's area should be written into the Bill.

My particular interest in this matter stems from the injustice that is suffered by my constituents who live on the Isles of Scilly. For 31 years the Isles of Scilly have had to pay the highest tariff for electricity in the United Kingdom. That stems from the simple fact that, until next year, they must rely on the oil-fired power station on St. Mary's. In April next year all that will change when the submarine cables, which have been laid to the Isles of Scilly, begin to operate. Then, the Isles of Scilly will be connected to the national grid.

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Those cables are the result of a long campaign in which I have played a part, but which has been spearheaded by the islanders. I should like to pay tribute to three islanders, Colin Daly, John Poat and Tony Dingley. They are the officers of the Isles of Scilly electricity tariff parity action group.

They have won the battle to connect the Isles of Scilly to the mainland grid and they have won the argument for parity between the tariff paid by the islands and the tariff charged by the South Western electricity board. They now fear, however, that that parity might be snatched from them as a result of privatisation. I trust and believe that the Minister of State will assure me that that is not so. I believe that one of the provisions of the European regional development fund grant, which was given for laying the cables, is that parity should not be taken away once it is given. I do not believe that the islanders have anything to fear on that score. Let me draw attention, however, to clause 3(2) which relates to the provisions for Scotland. It gives, as in so many cases, special and privileged treatment to Scotland. That clause makes it clear that the Secretary of State can make an order under which tariffs shall not distinguish, directly or indirectly, between different parts of the area covered by that order. The Isles of Scilly would certainly like such a provision written into the Bill --

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

Mr. Harris : I cannot give way ; I have only 10 minutes. My constituents would certainly like such a provision.

I have been involved in detailed correspondence with my right hon. Friend the Secretary of State for Energy and my hon. Friend the Minister of State on these points while the Bill has been in preparation. I asked my right hon. Friend on 4 July whether he would give an assurance

"that the new privatised electricity companies will have parity of charges within their areas, so that, for example, there will be no disadvantage to consumers on the Isles of Scilly in my constituency or, indeed, consumers who live in rural as opposed to urban areas within that company's supply system".

I am pleased to say that my right hon. Friend replied : "We are extremely conscious of the anxiety that is felt in areas such as the Scilly Isles and the south-west. We recognise that it is a serious problem. We are sure that, when we make our proposals, my hon. Friend will be happy with them."- -[ Official Report, 4 July 1988 ; Vol. 136, c. 713.]

I hope that my hon. Friend the Minister will make my happiness complete and give me the assurances that I seek on this important matter.

At present, my constituents on the Isle of Scilly pay 27 per cent. more for their electricity than the rest of the consumers served by the South Western electricity board. Those with businesses and block tariffs pay 50 per cent. more than those on the mainland. That injustice will be corrected when the cable comes into play, and I hope that this parity will not be snatched away.

This is a point of much wider application than merely to my constituents on the Isles of Scilly. I heartily agree with the Select Committee on Energy; which states :

"We do not think rural customers should be charged more per kilowatt hour consumed than people living in towns".

It is a sad reflection on the Opposition that they have not seized on that point-- [Interruption.] At least, they have not done so in this debate. But it is an important point, about which I want a reassurance from the Minister.

I hope that this fear will not be realised. I appreciate that the legislation on this wider point will be exactly the

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same as the legislation that is now in place. I want something written into the Bill to ensure that there is no discrimination against those who live in rural areas as opposed to those who live in towns, and I confidently expect an assurance from my hon. Friend that the needs of my constituents in the Isles of Scilly will be met. 6.13 pm

Dr. David Owen (Plymouth, Devonport) : Electricity generation, unlike water, is not a natural monopoly, and there is no reason why there should not be genuine competition and private generating companies. Indeed, there would be advantages in that.

The problem with this legislation is that part of the generation of electricity in this country is nuclear. How we should deal with the nuclear power industry raises quite separate questions. At this stage, the Government's intentions, if not the Bill, do not match the genuine public anxieties aroused in this respect.

Two generating companies for England and Wales are not enough. I strongly challenge the idea of including nuclear power in the National Power company, with about 70 per cent. of present CEGB assets. The Scottish precedent should be followed in England and Wales, and there should be a separate nuclear generation company. That would provide much greater transparency, and the true nuclear costs would be easily identified.

The nuclear generating companies should not be taken to the market and privatised at this stage unless one of two solutions is adopted. The first is Government involvement, probably through the UK Atomic Energy Authority, in the nuclear generation companies. Initially, that would involve a majority interest in the companies--one in Scotland and one in England and Wales. If the Government reject that, the other option is to keep the nuclear generation companies as franchise companies that construct and run nuclear plants, but the ownership of the nuclear plant and all the rest of the material for storage that is not with BNFL would be owned by the Atomic Energy Authority.

The Government will have great difficulty in floating the nuclear generating company in Scotland. What Mr. Miller has said about that is true. National Power, the big company in England and Wales, will also be difficult to float. The market will be far more sceptical about the true economic costs of nuclear generation.

On environmental grounds, one of the advantages of this legislation and the impetus from it is that we are now beginning to discover the true cost of nuclear generation. I suspect that not a single hon. Member believes that we shall in our lifetime again hear nuclear generation justified on economic or commercial grounds. Yet when one thinks of the continual lies that have been told by the CEGB about the costs of electricity generation, I cannot understand how anyone can defend the status quo. I know of no public body that has distorted the truth over decades more than the CEGB. I experienced that in my own constituency when the board wanted to put an oil -fired power station at Millbrook on the Tamar estuary. The board's "facts" were shown to be incorrect, again and again.

I have no real confidence, either, in the continuation of the existing system of electricity supply. It was vital that the Secretary of State won the battle with Lord Marshall for the separation of the grid from the generation of

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power, but the Secretary of State was wrong to create a company for transmission which was wholly in private hands. There is a public interest in transmission and I would have preferred the company to be publicly held. However, I must admit that a powerful argument against that can be adduced. Successive Governments have interfered in the pricing of electricity and overridden the market. The last Labour Government, of which I was a member--I take my share of collective responsibility for this--caused a massive increase in electricity charges, but that Government were not the only sinners ; Conservative Governments have also used prices as a means of raising revenue from the country.

There is something to be said for the grid being taken out of Government control, but the problem of leaving it to the 12 supply companies is that there may be collusion between them over their pricing mechanisms. That is why even a 10 per cent. public stake in the transmission company would be an adequate safeguard against collusion. The Government should examine that carefully and consider either a Treasury or an Atomic Energy Authority involvement. Either way, the public interest should be reflected by an involvement in the transmission company. That would go a long way to alleviate anxieties about the dangers of the solution that the Government have adopted. There would be no objection in principle to such a move, and I recommend it to the Secretary of State.

The other advantage of taking the Government out of electricity generation in its widest sense is that they can then start to do what successive Governments have failed to do--apply stringent environmental standards to it. Those standards must be applied, first, to the nuclear generation element and, secondly, to the coal-fired and oil-fired generation element. This country has been a massive polluter in terms of sulphur emissions and many people do not yet believe that the environmental standards in nuclear generation are sufficiently tough. If the Government are outside the system, adding those costs to the industry, on the basis of "the polluter pays", that will add to the overall cost of generation, but we will then have a clear view of the exact costs of generation.

The real criticism of the Government is that they have gone against their own basic principles. They have not been prepared to trust the market or commercial judgment and they have rigged the market in favour of nuclear power. If nuclear power is as uneconomic as I suspect most people now believe it to be, the only case for providing nuclear power is strategic. We might not wish to be totally dependent on fossil fuels, but we have not yet built up sufficient alternative sources, through wind power, wave power or, as I should far prefer, barriers. There is far more economic sense in heavy initial capital investment in such projects as the Severn barrier and I hope that they will come through on economic grounds.

However, if we decide, for strategic purposes, that we do not want to be totally dependent on fossil fuels, we should not believe that the only option is nuclear power. The Government also have the option of backing barrage power. We need to hear about that. Let us have a little less talk about a preserved nuclear element. Some of us would like a preserved barrage element. We must bear that in mind.

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There is then the question of how we deal with a strategic element. If the Government decide that they need diversity --I do not deny any Government that power since it is a prudent power to hold--it should be justified in this House on every occasion. The Minister should come to the House for separate authority for a nuclear power station to be built, if the Government believe that there is a strategic need, and justify that decision against commercial costings and market forces. Such an installation should not be put entirely within the private sector. It would be better to put it under the overall authority of the Atomic Energy Authority, with its construction and running franchised to commercial companies.

Time is short, and I do not wish to detain the House. We are not opposed in principle to the Bill. We see its merits, but we do not believe that it is yet right, particularly in respect of the nuclear and grid aspects. There should be a greater element of public interest in the decision-making, albeit perhaps in a commercial undertaking. We hear a great deal from the Government about public-private partnerships for the inner city. Why cannot there be public-private partnership for this most important strategic element, the generation of electricity? We have nothing against the structure of the Bill because it allows for three or more generating companies in England and Wales and would thus allow for nuclear generation. There would be no need to privatise nuclear generation and we would have an evolutionary approach to this complex subject that might command a surprising consensus throughout the country.

We shall judge the Bill in that spirit. I hope that it will not be yet more legislation in which the Government resist any fundamental amendment. The Select Committee has already seriously criticised the provisions and the House has the right to influence the legislation, for the good. I hope that the Secretary of State will not close his mind to some significant amendments along the lines that I have suggested.

6.23 pm

Mr. Malcolm Moss (Cambridgeshire, North-East) : It is a rare privilege to follow the right hon. Member for Plymouth, Devonport (Dr. Owen) and I agree with a great deal of what he said. The House should accept his comments, which have been made in a forthright way.

The right hon. Gentleman is right to say that the electricity supply industry has suffered, as have many nationalised industries, from a combination of Government interference, poor accountability and a lack of market discipline. That has led to inefficient investment decisions being taken, for which the customer has had to pay. This Bill is driven by the needs of customers; we must thank the Secretary of State for underlining that fact when drafting the Bill. There are three essential benefits to the customer. First, there will be competition in generation. As that generation accounts for some 80 per cent. of the price of electricity, any competition introduced at this level must exert a downward pressure on prices. Secondly, for the first time in this industry, proper regulation will ensure that the benefits from competition will be passed down to customers.

Thirdly, the consumer will be given a new legal status with legal rights and safeguards that will ensure a better service.

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While I was researching for this debate, I came across an article written by the hon. Member for Gordon (Mr. Bruce). He was here a moment ago, but has now disappeared. I was pleased to see him return today after having disappeared in high dudgeon last night. The problem was that he did not have time to say everything that he wanted to say. Perhaps I might help him. He wrote in the Liberal News in October of last year :

"It is impossible to defend the status quo in the electricity industry. The CEGB has become a centralised monopoly which is closed, secretive and accountable to no-one. The economics of generation and conservation are neither being properly examined nor subjected to market forces."

The title of the article was

"Why I shall be buying electricity shares."

I could not put it better myself. I agree with everything that the hon. Gentleman has written. I hope that he will come back to make a further contribution tonight.

We have heard from Labour Members more peddling of the myths and misrepresentations that surround the industry. They would have us believe that the electricity supply industry, under its present organisation, has done the best possible job over the past 30 years. They tell us that there is no alternative to a monopoly and to a vertically integrated generation and distribution system and they claim that it gives the best deal to customers. There is nothing to suggest that an industry under national ownership, such as we have had for many years, will keep a downward pressure on prices. In the years between February 1974 and May 1979, the average annual increase in electricity prices was 22 per cent., a total of 180 per cent. in that period. To tell us that the present nationalised system will give us the best deal is totally unfounded.

Opposition Members tell us that the management of the present system cannot be better. Why, then, does it take 18 years to construct an AGR station? How can we justify a pricing structure of the bulk supply tariff which has led to increased prices to customers? The Energy Act 1983 was designed to open up competition in the industry. It has been a total failure because the percentage of independent generation has gone down since then. The CEGB has protected its monopoly by redefining those "unavoidable costs". In other words, it has upped the fixed price content, which has increased from 1 per cent. in 1983 to about 30 per cent. today. That means that no independent generator can get into the market. Then, of course, there is the mystique about nuclear power. I find it strange that, at the Sizewell inquiry, the CEGB told us that nuclear power was cheaper than coal. Now, at the Hinkley C inquiry, it appears that that is not correct and that there has been a 180 deg turnaround in that period. I wonder whether that is simply to muddy the water and sway public opinion about privatisation or whether it is a destabilising ploy for the contract negotiations that it is presently undertaking with the area boards.

As the right hon. Member for Devonport said, for the first time nuclear costs will be exposed to scrutiny. They will be clearly identifiable, as they never have been before. It is not true, however, that nuclear power is intrinsically expensive. We must look to better management to reduce costs within the industry. Schedule 12 will bring into the clear light of day the costs of waste, reprocessing and disposal. Any grants will require parliamentary scrutiny

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and approval. That is hardly the way to keep information from the public. It is hardly the way to fudge the nuclear issue.

There has always been a nuclear cost component to the CEGB's electricity prices. The cost or levy would continue in future irrespective of whether the industry was privatised, and the so-called nuclear tax is not a new tax. Had the industry continued under the present organisation, the levy would be part of the cost component.

The essential questions are, first, who is paying for the back-end cost of nuclear generation? Secondly, who is paying for future unforeseen costs? Thirdly, who covers the cost risk for new nuclear station construction? The consumer has already paid for the back-end costs. I understand that about £3 billion is already in the kitty for the decommissioning of the Magnox stations and to help with the decommissioning of the AGRs. The Government state categorically in the Bill that they will set aside between £1 billion and £2.5 billion to meet unforeseen costs. For the first time, construction risks for new stations will have three-pronged support, from the taxpayer, the consumer through the nuclear levy, and the shareholders.

Nuclear generation is essential from a strategic point of view. Without it, the lights would have gone out during the coal strike and the oil price hike. It is essential for other reasons as well. With Third-world development, there is a tendency to generate electricity from fossil fuels. That technology is easier for Third-world countries to adapt. If we in the developed countries put pressure on fossil fuels, we either price Third- world countries out of generating electricity altogether or drive them to nuclear generation, which we might not want.

There are environmental considerations which, for the first time, begin to make nuclear generation much more attractive than CO -emitting fossil fuel power stations. Further, the world energy market is shifting towards electricity. Between 1970 and 1984, energy usage overall increased by only 1 per cent. whereas electricity usage increased by 36 per cent. Surely this means that nuclear-generated electricity will move more into its own, and diversity of generation gives balance and security of price and supply.

Nuclear generation is important, but it is not the overriding consideration in the Bill. We heard from the hon. Member for Sedgefield (Mr. Blair) that prices would automatically increase with privatisation, and Opposition Members made light of the fact that new generating capacity is coming forward. We are told that about 20 major companies are making serious approaches to area boards, but I shall give just two specific examples. In the Eastern Electricity region, which covers my constituency, there are five significant new plant proposals, three of which are close to determination. These are combined cycle gas turbine plants of 500 MW capacity, which will be helpful in the further development of North sea gas resources and new fields. In the east midlands area, British Coal is already negotiating with the area board to build fluid gas desulphurisation plants at the pit heads. These plants will produce electricity at a lower price than some of the medium-sized coal stations. The price of coal is already beginning to come down.

The key to the Bill is competition. We must introduce a third force into generation, and the Government must ensure that, in the critical period of negotiation of

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contracts, the CEGB, with its duopoly inheritance, does not tie up the market and prevent new generators from entering it.

6.35 pm

Mr. Dick Douglas (Dunfermline, West) : I do not propose to take up the remarks of the hon. Member for Cambridgeshire, North-East (Mr. Moss).

It seems that the argument in favour of having two Bills, and not the one that is before us, has been advanced during the debate. We seem to have been talking about two Bills. Arguments that have been adduced on behalf of England and Wales have had little bearing on Scotland. This afternoon, the Secretary of State talked about the Scottish coal industry and its relationship to the privatisation of electricity, but before referring to his remarks I shall draw the attention of the House to what was said by Mr. Donald Miller, the chairman of the South of Scotland electricity board, in answer to questions put to him by members of the Select Committee on Energy. On 23 March, my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) raised the issue of the relationship of the SSEB to British Coal, and Mr. Miller's reply to question 555 was illuminating :

"First of all, we cannot be in the business of conniving with British Coal to charge the Scottish electricity customer on the basis of dear coal and subsidising other users ; that is not what our board is paid for."

I am sure that his words were carefully chosen. He has said that he is not to "connive" with British Coal. My hon. Friend pressed him further, and he said :

"On the first point, whether I have discussed with the Secretary of State for Scotland the implications of the Scottish coalfield being wiped out : the answer is no', because it does not arise, there is no need for it to arise."

Eight or nine months on, we have news for the Secretary of State and Mr. Miller. We are witnessing the possibility of deep-mined coal being wiped out in Scotland because of a slavish, doctrinaire approach to market forces. I have known Mr. Miller for a long time--I do not like talking about personalities in this way--and previously he was an eminently sensible gentleman. It seems, however, that he is being pushed by privatisation into adopting the following posture and statement--this is the effect of what he said--"I am not conniving with British Coal."

Let us not say that Mr. Miller should connive, but let us suggest to the Secretary of State that he should show an interest in the future of a vital Scottish industry. Let him do what his hon. Friend the Under-Secretary of State for Energy did recently and visit the site of a vital investment of about £60 million in the constituency of my hon. Friend the Member for Clackmannan (Mr. O'Neill), just outside the borders of my constituency. The Under-Secretary visited the Longannet complex, and yesterday, in answer to my question, said :

"Under privatisation, and with our plans to expand the interconnector between Scotland and the rest of the United Kingdom, the coal can produce electricity which can be sold freely into the British system."--[ Official Report, 12 December 1988 ; Vol. 143, c. 639.]

As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) asked, what are the plans for the interconnector? Is it the Department of Energy, the South of Scotland electricity board or some other body that will facilitate its expansion and strengthening? My constituents

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and those of other hon. Members are entitled to know what will happen to the future of a vital industry in Scotland, and they are entitled to know tonight.

If the issue is to be left to market forces, and if Mr. Miller is to be allowed to import 2 million to 3 million tonnes of coal, he may be able to proceed without necessarily influencing and jacking up world prices, although I have doubts about that. Lord Marshall of the CEGB could not import 65 million tonnes of coal without having an effect on world prices. It would seem that my hon. Friend the Member for Garscadden is correct : the interests of the nation lie in security of supply, not the short-run equilibrium of supply and demand.

Mr. Miller, who does not now desire to connive with British Coal, had previously to sit down and reach long-term contractural agreements with British Coal to safeguard the supply. If that is not a vital responsibility for people with the national interest of all Scotland and the United Kingdom at heart, I do not know what is. I have heard a lot of rubbish about what happened in the miners' strike and how we broke the miners' strike because we had nuclear power. Unfortunately, the breaking of the miners had a lot to do with the public sector. A major reason for the miners being broken in the strike--they were not humiliated, because they preserved their dignity--was the imposition and unification of what was tantamount to a national police force. When it suits them, the Government can misuse the public sector. We are interested in using the public sector for the long-term benefit of the people of this country. The Secretary of State defended his new desire to introduce to us his views about perfect competition. We know that there is no such thing as perfect competition in the real world--page 1 of Cairncross taught us that. I notice graduates from St. Andrew's university on the Conservative Benches ; I am always willing to educate St. Andrew's graduates.

Under the Scottish proposals, two companies will own the nuclear sector. That will create a company with 80 per cent. of the assets and 60 per cent. of the generating capacity. How on earth can that be called competition of any magnitude? That is prostituting competition and duopoly. The Secretary of State cannot defend that on the basis of the consumer. However, we are told that the Scottish board will have the magnificent possibility of selling surplus capacity over the wires. There will be no new capacity in Scotland before the year 2000, but the Scottish board can export it, provided that it goes to the market at a price that will bear the costs.

If the price of the Scottish assets is high, it will be difficult to sell the electricity over the wires. Conversely, that will relate to the low price of the English assets. There is a conundrum. The only way to solve it is to cook the books in pricing terms. We can suggest that here, but that does not mean to say that investors in Charlotte square would be daft enough to be taken in by such action. We have heard about the criteria for public or private ownership. I am no slavish adherent to the public sector. The public sector should deliver facilities efficiently. I do not believe in feather-bedding any public sector employee. However, there is duplicity on the Conservative Benches.

People in the public sector are sick and tired of being praised when there is an emergency in the North sea, on the railways, or in the Soviet Union. At the Dispatch Box last week, the Prime Minister was pleased to say that the public sector would be the first to respond because London

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firemen were to fly out. She was cutting those firemen's facilities, but she had the cheek and audacity to praise them. We have a responsibility to the public sector to ensure that the employees are adequately rewarded.

Yesterday, the Minister of State, Scottish Office said that the Labour Government brought the organisations into the public sector with one Bill. Unfortunately, he omitted the North of Scotland Hydro-Electric Board. The test of private versus public is an extreme test when one is in difficulty. In the dark days of the war, Churchill went to Tom Johnston to argue for the creation of a public sector board for the Highlands. I am not going to quote Tom Johnston. Instead, I will quote Lord Airlie. On 9 June 1943, he said : "I believe that what will happen is that in certain areas which are at present supplied by private companies, would-be consumers will be unable to get electricity on account of the fact that they will be unable to afford, after this war, to pay the charges which the private companies have to impose There is only one way it can be done,"--

he was talking about the Hydro Board--

"and that is for the State to do it."--[ Official Report, House of Lords, 9 June 1943 ; Vol. 127, c. 973, 974.]

That is what a traditional Tory anxious to preserve the rights of Scotland and the Scottish Highlands said. Today, we see the Tories reneging on Scottish responsibility.

6.45 pm

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