House of Commons Hansard Debates for 13 Dec 1988

Mr. Michael Colvin (Romsey and Waterside) : Please forgive me, Mr. Deputy Speaker, for jumping in and out of the Chamber so frequently this evening. However, democracy does not prevail only here ; it prevails upstairs in the Committee Rooms where many elections have been taking place. For a moment I confess that I wondered whether I had stepped in on what is essentially a Scottish party, with reels and all. As a three quarter Scot who probably draws electricity from the hydro-electric scheme in Scotland when he switches on an electric switch in his house, I think that I am justified in taking part in the debate.

Mr. John Maxton (Glasgow, Cathcart) : How does the hon. Gentleman work that out?

Mr. Colvin : That is how it works.

I welcome the Bill because many of my constituents work in the power generation industry. They will also welcome this proposal to denationalise one of Britain's biggest businesses, thus honouring the 1987 Conservative party general election manifesto commitment to privatise more state industries, and to increase share ownership for employees and the public at large. Almost one in five of the adult population now own shares directly and more than 1.5 million people own shares in the companies for which they work.

My right hon. Friend the Secretary of State for Energy has shown considerable ingenuity in devising the corporate structure for the electricity industry following privatisation. He and the merchant banks that will advise him will have to show great ingenuity in devising schemes to ensure that shares in the 15 electricity companies with £27 billion -worth of assets are spread as widely as possible. There is probably scope there for creating another 1 million shareholders.

Southern Electricity, my local area distribution board, shares my welcome for the Bill. The board favours becoming a publicly owned company believing, in the words of its chairman, Mr. Duncan Ross, that it can

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"look forward to a more diverse and competitive electricity generation market, in which it can shop around to obtain the best buys for its 2.4 million customers."

That is the answer to those who say that following privatisation there will be no competition. The distributors will be able to shop around for electricity and that competition would be lost if the Labour party regained office and renationalised the industry as Opposition Members told us that they would yesterday. So much for the Opposition's commitment to repeal clause IV--the nationalisation clause in their constitution. That must be double-talk.

I represent a very energy-related constituency. It has the largest oil refinery in Europe--the Esso plant at Fawley--which provides fuel for a major power station which stands on an adjacent site. Fawley used to fuel the Marchwood power station further up the Solent. That power station was made redundant a few years ago but the site also houses the Marchwood research laboratory.

The Bill is doubly welcome to my constituents because the public inquiry into the proposed Fawley B power station has had to be shelved, probably indefinitely. That is proof, if it is needed, that competition has an effect on the industry. When the distributing company-to-be, Southern Electricity, was asked to guarantee that it would buy the energy produced from Fawley B, it refused. Fawley B power station would have cost £1.3 billion and would have produced 1, 800 MW a year. Somebody would have had to buy it, and that provides the key to the Bill.

The Bill shifts the responsibility for ensuring that the juice is there when we turn on the switch in our house from the generating company--the CEGB--to the distributors, and they can shop around. Southern Electricity is considering other sources and because of the trends today and because of research, will find that many smaller power stations are probably better than the mega-power stations that have been built hitherto. Yesterday, we heard hon. Members talk about alternatives such as combined heat and power as more effective ways of making full use of our fossil fuels.

The Bill is certainly welcome in Romsey and Waterside. It is also welcome to Hampshire ratepayers because it will save them about £1 million, which is the cost of fighting the public inquiry into the proposed power station and jetty.

I am sure that my hon. Friend the Minister will forgive me for not going through the ritual back-slapping exercise that usually prevails in these debates. I intend to be quite critical on three aspects, which are raised not only in the Bill itself, but by the proposal to develop Fawley B. The first is the question of the environment. The second, is the question of coal imports and the third that of research.

Earlier this year, the White Paper on privatising the electricity industry made no reference to the privatised electricity companies having to have any concern for the environment--nor does the Bill. I have read the Bill from cover to cover and it has little to say on a subject that has been of increasing public and political concern in recent years. It simply repeats, in schedule 9, the limited objectives of the Electricity Act 1957 on the protection of flora and fauna. It relates only to the natural beauty of the countryside and the physical condition of any buildings of special, architectural or historic interest. That is not enough. The Bill does not incorporate other much wider matters of environmental concern that have grown up over the years, such as emissions from power stations,

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atmospheric pollution, the management of radioactive waste and, of course, other audible and visual pollution of the environment. I accept that those matters are covered, in part, by the Control of Pollution Act 1974 and, of course, by the recent European Community agreement which implements the large plant directive to reduce emissions from power stations. However, I still believe that the Bill should specifically contain broader environmental provisions and I am sure that in Committee, additional clauses on the environment will be suggested.

My second point concerns coal. The Fawley B proposal would necessitate the building of a jetty for bringing in coal. That coal would not necessarily come from abroad, but might come round the coast. That would require substantial investment, so once the facility was built, there would be strong economic incentives to maximise its use. That applies to coal jetties generally. It is clear from what Lord Marshall and British Coal have said that the importation of foreign coal is an important option in keeping our coal industry competitive. Opposition Members who represent constituencies with coal interests commented on that in considerable depth yesterday.

I want to point out that it would be wholly wrong to proceed with the Fawley jetty--or any other facility for importing coal--without being certain that the inland infrastructure is there for the movement of that coal to other power stations inland, and that it is adequate. In the case of Waterside, where we fought a public inquiry on the proposal for moving oil from Wych Farm in Dorset to Fawley for processing, was refused simply because the railway line was inadequate. The movement of coal, lime, gypsum and all other power station products, is equally impractical because it would require many more trains than the oil proposal. That is a lesson that we must take on board.

My third point concerns research. Section 7 of the Electricity Act 1957-- which is due to be repealed in its entirety by the Bill--sets out the mandatory and permissive frameworks that have led to the existing high level of research work in the electricity supply industry. The Berkeley, Marchwood and Leatherhead research laboratories spent £224 million in the last financial year, which has helped our electricity industry to lead the world in so many areas.

What do the Government propose as an adequate replacement for section 7 of the 1957 Act? No framework is provided under the Bill. It has been for the CEGB to decide, following discussions with the Department of Energy, that, subject to the enactment of the Bill, Berkeley nuclear laboratories and the Central Electricity research laboratory--except for the part of the CERL site engaged in transmission-related work--will be owned by the new National Power company--big G. Marchwood engineering laboratories, in my constituency, will be owned by the new Power Generation company--little G. That part of the CERL site at Leatherhead that is already engaged in transmission work will be owned by the new National Grid company. I question whether the allocation of these research facilities is the right one, especially in relation to Marchwood where 400 to 450 people work, mainly in nuclear power research--on which they spend 60 per cent.

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to 80 per cent. of their time--and which will be allocated to little G, when it should be to big G. This reorganisation must be considered again because Marchwood faces closure and the loss of 450 jobs. Those research facilities there at present, which are non-nuclear, will probably be moved to Ratcliffe-on-Soar power station, and that could sound the death knell for Marchwood.

Mr. Deputy Speaker (Sir Paul Dean) : Order. I am sorry to interrupt, but I must be fair to other hon. Members and the hon. Gentleman has had a little more than the time allocated.

6.57 pm

Mr. Peter Hardy (Wentworth) : I shall try not to speak for the whole time that is allocated, although I should have very much liked to comment on the speech made by the hon. Member for Romsey and Waterside (Mr. Colvin). I am very pleased that, unlike most of his colleagues, he has realised that the electricity industry has been responsible for significant achievements, and it was good to see some of his hon. Friends wince when he expressed that view. It is not a view that would have been expressed by the hon. Member for Birmingham, Northfield (Mr. King) who, in an aside, summed up the approach of Conservative Members when he talked about getting £20 billion in the kitty to fight the next election. That is what the Bill is about. The Secretary of State, who is rather more polished and urbane, would not say that, but he deliberately, or negligently, misled the House yesterday when he said that the Bill would be achieving something enormously important in breaking new ground and giving the suppliers the duty to supply electricity. He suggested that that goes further than any responsibility placed on the public sector. He told us about that part, but he did not tell the House--and perhaps the Minister of State can explain-- that the absolute promise that the Secretary of State gave to the House yesterday about the duty to supply seems to be remarkably hedged about in clauses 15 and 16. If any supplier does not wish to fulfil the terms of clause 3, to which the Secretary of State was referring, clauses 15 and 16 seem to give it every possible opportunity to evade that mythical responsibility. The Secretary of State may not have read the Bill. I hope that he has an enjoyable Christmas, although he may not like the idea of what is to come. He will still be Secretary of State in January and February during the Committee Stage, and he and his Ministers will have to do much more homework than appeared to have been done yesterday.

That was not the only point on which the Secretary of State was somewhat misleading. He implied that he was negotiating with the trade unions and that they were quite happy to talk to him about the distribution of shares. As far as I know, the trade unions have had no contact with him at all. They are probably quite interested in the allocation of shares, but they see it as peripheral compared to the future of an industry that is so important to their members and the country.

It is fashionable for Conservative Members to criticise the industry. We should remember that many of them represent rural constituencies and they should understand that two enormously important developments assisted rural Britain in the 1940s and subsequently. One was the Agriculture Act 1947 which brought rural areas a share in urban prosperity--a Labour Government achievement--

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and the other was the nationalisation of the electricity industry, which brought light and power to areas of Britain that would not otherwise have been able to afford them. If the decision were left to the private sector now, I doubt whether it would find some of the areas represented by Conservative Members particularly attractive as markets.

In addition to the future of the rural areas, I am concerned about conservation. The Bill is woefully inadequate in its provision for conservation and the environment. The Government have merely lifted the appropriate part of an Act of 1957, but the fact that throughout their period in office they have ignored its requirements does not give us much hope that the provision will prove satisfactory. The fact that the Nature Conservancy Council has not been consulted and that there is no structure for consultation with public agencies seems to me a woeful omission. The conservation lobby fears that the priority afforded to environment issues will be grossly inadequate. One begins to wonder about Conservative Members' intelligence in that regard. The other day I did a study of what would happen in Britain if we did not take environmental problems seriously enough, and if the sea level rose. I found grounds for satisfaction. The Government are utterly unconcerned about the environment. They are utterly unworried and remarkably negligent when it comes to support for fluidised bed combustion and so on. They are ignoring anything beyond the next balance sheet and the next election, and history will hold them responsible for the rise in the sea level.

Unfortunately, 90 per cent. of our low-lying areas are represented by Conservative Members. When the sea level rises as a result of Conservative negligence, it will be interesting to see what those attached to private affluence and to the eradication of the public sector will do. Perhaps they will come squealing for public sector support, and when they do, some of us may point out that the Conservative Government whom they support are responsible. That Government may well be quite prepared to obliterate the research capacity to which the hon. Member for Romsey and Waterside referred. I hope that Conservative Members will be consistent enough to say to their constituents, "Build your own sea walls, walk about in your own wellington boots and pay your own electricity bills."

There is another question that the Minister must answer. The Secretary of State forced quite unnecessarily high electricity price increases last year, on the ground that the CEGB needed to invest £1 billion. But the CEGB was about to do that ; it was already budgeted for. I ask the Minister to tell the House, therefore, whether the CEGB will be investing an additional £1,000 million in the current financial year--the money that the Secretary of State compelled it to raise. If the CEGB is not to spend that sum, the House and the country will require an explanation.

I should declare an interest ; I am involved with NACODS, the National Association of Colliery Overmen, Deputies and Shotfirers, and with the National and Local Government Officers Association. Some months ago, I asked a question in the House about potential redundancies. Only in two ways can a profit be made : first by reducing labour costs and second by reducing input costs. I feared that many jobs would go, as Mr. Alex Henney suggested. The Secretary of State gave me an absolute assurance, not only that there would be no

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redundancies but that additional jobs would follow privatisation. Can the Minister confirm that pledge? If the Government have retreated from it, he should let us know now. It will be no consolation for the workers in the industry to be given a few crumbs of shares if they then find that the pressure of ruthless privatisation makes them join the ranks of the unemployed. The Secretary of State referred yesterday to imported coal. He clearly has no understanding of the international coal trade, which could not have sustained a sudden switch from domestic to imported coal. He referred to low-sulphur coal. How can the Government talk about low-sulphur coal or high-sulphur coal when we have shown in recent months that they do not even know which country the coal is coming from? That is a serious point. The miners in the constituency of my hon. Friend the Member for Barnsley, East (Mr. Patchett) have their coal washed at the Manvers site in my constituency. In the last three months we have produced coal at 81p a gigajoule on average and last week they were producing it at 68p a gigajoule.

In destroying that achievement, the Government would not merely bring embarrassment and long-term danger to the electricity industry and to the consumer ; they would destroy an important part of the potential for British industrial growth. The damage that they have already inflicted upon high energy users such as United Engineering Steel in my constituency by an unnecessary increase in prices this year shows that a balance of payments deficit of enormous and hitherto unimaginable dimension is of no consequence to them. Those of us who take a longer view would suggest that the achievements that the hon. Member for Romsey and Waterside has just begun to recognise are about to be sacrificed by a bunch of people whose motivation, like that of the hon. Member for Northfield, is pure greed. 7.8 pm

Mr. Michael Irvine (Ipswich) : The hon. Member for Sedgefield (Mr. Blair) is a barrister. His speech yesterday was fluent ; it had a certain polish and it went on rather too long. In other words, it was very much the speech of a barrister. Barristers have clients, and I found myself asking just who the hon. Gentleman's clients were. I decided that they were just about every vested interest and every force against progress that is to be found in the industry. The hon. Gentleman's clients are the National Union of Mineworkers, the anti-nuclear lobby, the state corporatists. They are all those who are against the operation of market forces and competition and who recoil with a shudder from the idea of giving the consumer some clout.

The CEGB has much of which it can be proud, and I acknowledge it. I acknowledge that it has achieved and maintained high technical standards, but it is by no means the creature of perfection that many of its apologists would have us believe. Its record on investment shows that it has over-invested far too often. A look at the way in which its power stations have been constructed and supervised reveals an appalling record.

Look at the time that it took the CEGB to construct Dungeness B. Originally it planned to build the power station in five years ; it took 20. When it put its hands on Hartlepool, the power station there was expected to take six years. It took 18 years. It was not just the AGR power stations that took such a time. The Isle of Grain power

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station was planned to take seven years, but it took 13. Ince B was planned to take five years, but it took 10. In some respects, the CEGB has not served the nation well, although in others I acknowledge that it has.

Yesterday, the hon. Member for Clydesdale (Mr. Hood) spent a great deal of time talking about fat cats. He spat out the words with considerable ferocity and frequency. Looking at him, I was moved to reflect that he had a not inconsiderable waistline himself. Apart from the hon. Member for Clydesdale and the fat cats to whom he referred, there are others. Could it not be that the CEGB is a bit of a fat cat? Could it not be in need of slimming down? Could it not be that it occasionally needs to meet the sharp end of competition? If you will forgive the pun, Mr. Deputy Speaker, that would do it a power of good.

This Bill will open the way for many small-scale generating schemes. We shall see many more power and heat schemes. I am convinced that a great number of small gas-generated power stations will open as a direct result of the Bill. Section 5 of the Energy Act 1983 paved the way for such small gas-generated power stations and the like to generate directly into the national grid.

Unfortunately, that section was not the success that was hoped for. The trouble was that the CEGB was in control of the national grid and it had no desire to see small gas and other generating stations move in on its territory. Things will now be different. Following the Bill, the national grid will be under the control of the distribution companies, which will have an interest in encouraging different sources of supply, in diversifying and in seeing competition brought into the generating industry. That will be a considerable force for good.

Labour Members from time to time during the debate have mocked the special status that the Government are according nuclear power in the Bill. Power generated through nuclear fission is, and should be, treated as a special case. The cost of constructing nuclear power stations is heavy, but the great advantage is that, once those costs have been incurred, the running costs are comparatively cheap. Quite apart from that, there is the issue of security of supply. In his opening speech, my right hon. Friend the Secretary of State said that on several occasions during the past 20 years there had been threats to security of supply. There have been threats to oil and coal supplies to power stations. There has not been the same threat to power supplies from nuclear stations. It is noteworthy that not one Opposition Member has addressed himself to that argument. That shows its force and weight and why it is so important that the Government should have it in mind.

Mr. Deputy Speaker : Order. I must ask the hon. Gentleman to come to his last sentence.

Mr. Irvine : The Government's approach to nuclear power is refreshingly pragmatic. They are going forward not with dogma but with pragmatism. In giving nuclear power a special status, they are not showing favouritism but rather indulging in plain good common sense.

7.14 pm

Mr. Alex Salmond (Banff and Buchan) : I beg to move, to leave out from "That" to the end of the Question and to add instead thereof :

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"That this House declines to give a Second Reading to a Bill which is ill considered spatchcock legislation ; notes that electricity supply, as a basic service, properly belongs in the public sector ; that the Bill fails to introduce effective competition into the privatised structure in England and Wales and particularly in Scotland, leaving consumers to face higher bills to finance the doubling of company rates of return ; further notes the lack of public provision for the strengthening of the electricity interconnector between Scotland and England and the failure to guarantee that the Scottish companies will not be forced to compete to sell electricity to a monopoly buyer at a loss of some tens of millions of pounds, the effective removal of the social clause from the Hydro-Board operations and the failure to appoint a separate Scottish regulator to oversee the distinctive characteristics of the Scottish electricity system, the Government's failure to respond adequately to the Select Committee on Energy's detailed and robust criticisms, and the continued intent to shelter the nuclear industry from competition at the expense of the coal industry ; and considers that Scottish consumers risk being denied the full benefits of the development of hydro power and North Sea Gas, the two cheapest and most environmentally sensitive major sources of electricity generation."

There has been some interest in the use of the word "spatchcock" to describe the Government's proposed legislation. That word was used by the Select Committee on Energy. As all hon. Members will know, it means a chicken that is ill-prepared--slaughtered before its time. The word is derived from the Indian army. I can think of no better word than one used by the Indian Raj to describe what the Scottish Raj is doing to Scotland in the Bill.

I was prepared for the fact that the Secretary of State for Energy would know little about the Scottish side of the legislation when he opened the debate. He knew so little that he refused point blank to answer questions on the Scottish issue. But I was not prepared for the Secretary of State for Scotland to display a similar level of ignorance. If I interpreted him correctly, the Secretary of State for Scotland said that only about 3 per cent. of the issues involved in the Scottish privatisation were different and separate from those involved in the privatisation in England and Wales. There can be no better testimony to the Secretary of State's total ignorance of the measure that he is co-sponsoring through the House.

The Scottish and English privatisations are like chalk and cheese. The issues involved in the vertical integration of the Scottish electricity industry and its privatisation are separate and distinct from the issues involved in the different structure south of the border. Such remarks show why, according to the MORI poll published last Friday, 61 per cent. are now dissatisfied with the Secretary of State's performance. That is only 1 per cent. more than the dissatisfaction accorded to the Leader of the Opposition. The Secretary of State is now chasing hard on the heels of the Prime Minister to be the most unpopular political figure in Scotland. Why are the Scottish public so dissatisfied with the Secretary of State's performance? The major reason is that he persists in imposing policies which have no popular support in Scotland. The Bill is an excellent illustration of that. I defy any Tory Member to tell me where, in Scottish local election results, general election results or opinion polls, there is any sign of convincing support for electricity privatisation in Scotland.

When that point is pursued with the Secretary of State, he says that the companies support privatisation. I can think of nothing more pathetic than being reduced to claiming the support of people whom he appoints or whose future he controls. That displays the Tory party's

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attitude to Scotland. On so many issues, the Tory party has appointed place people in a failed attempt to reinforce its support in Scotland.

The Secretary of State is unpopular because of the contempt with which he allows Scottish business to be treated. The distinctive nature of the Scottish electricity industry was recognised by the Select Committee on Energy. In the absence of a Select Committee on Scottish Affairs, the Energy Select Committee went into the Bill's Scottish aspect, although it recognised that it could not do the thorough job or do the matter the justice that a Scottish Affairs Select Committee would have done. Now we find that there is to be no Scottish Bill, no Scottish debate and no Scottish Standing Committee, all because the Government lack the troops to man their Scottish Benches. We see another perfect illustration of that this evening.

Mr. Bill Walker (Tayside, North) : Will the hon. Member give way?

Mr. Salmond : No. I am restricted to 10 minutes, so I am not prepared to take information from the hon. Gentleman who has just arrived.

The Government are trying to disguise their lack of a Scottish mandate and to call the English battalions to their rescue by keeping the two Bills together.

The Minister of State, who has just arrived, will remember that one reason why, according to the MORI poll, 61 per cent. were dissatisfied with the Secretary of State was due to the Government's lack of backbone in defending Scottish interests. It was incredible to hear the argument for a separate Scottish regulator described as "foolish" by the Secretary of State earlier. The Select Committee on Energy, which has a majority of English Back Benchers, concluded that the distinctive nature of the Scottish electricity system justified a separate Scottish regulator. There can be no better illustration of the lack of backbone of the Secretary of State for Scotland. He is unwilling to demand for Scotland even that which was recommended by a majority of English Tory Back Benchers.

There are many reasons for opposing the Bill, and many are detailed in the amendment. Because of the shortage of time, I shall concentrate on two of them. First, inevitably, electricity privatisation in Scotland will result in higher prices. There is an argument on the English and Welsh legislation. On one side it is argued that higher rates of return and increased costs through separating the generators from the grid will result in higher prices. On the other side it is argued that pressure and competition in generation will bring prices down. That is an argument, although it is one in which the hon. Member for Sedgefield (Mr. Blair) has the initiative over the Secretary of State for Energy.

In Scotland there is no argument. There is no competition in the Scottish measure and no downward pressure on prices. Rather than relying on the opinion of the Secretary of State for Scotland, we should turn to people who know about the industry. The chairmen of the two companies in Scotland that are to be privatised gave evidence to the Select Committee. Mr. Joughin, the chairman of the Hydro-Electric Board, was not an unimpressive witness but when pressed as to whether competition would be promoted by the Scottish measures, he was unable to give an answer.

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The succession of questions ran as follows : he was asked what a consumer was to do when he was dissatisfied with the privatised Hydro Board's cost of electricity. He said :

"He can come to the Annual General Meeting and chase us." I then asked him :

"Say he is not a shareholder, but just a customer?"

Mr. Joughin replied :

"I would hope he would soon become a shareholder, the same as you would in any other company in which you wanted to take a challenging interest."

He was then asked :

"You are surely not saying that the customers who are not shareholders will not be uppermost in your mind when you move into the private sector?"

Mr. Joughin replied :

"Customers will, as they are now, be uppermost in our minds, yes." He was then asked :

"However, they will not be able to do anything about it if your performance is not very good?"

Mr. Joughin's last word on the subject was :

"With due respect, Sir, this is not our debate. We are the Management, we have a Government which has said that it wishes to privatise, and it is our responsibility to be sure that we make the best decisions possible to enable that privatisation to be as effective as we can for our consumers."

In the final analysis, when asked to explain where the competition was in the Scottish measures, the best that the chairman of the Hydro Board could say was, "We are doing what we are telt." In that, he was similar to the chairman of the South of Scotland Electricity Board who completely destroyed the argument that there was competition in supplying to industrial consumers in Scotland when he told the Select Committee :

"the nuclear company will own, as I have indicated, 80 per cent. of the generation assets, in Scotland and produce 60 per cent. of the electricity, and so a very high degree of co-operation is required between the partners. At the same time, we are enjoined by the White Paper to compete. That is an unusual situation. To our knowledge, it has no precedent anywhere in the world."

From both the Hydro Board chairman and the South of Scotland electricity board chairman there is an admission that there is no real competition in the Scottish measures. That is why the Select Committee on Energy concluded that the claims of competition by emulation were "largely meaningless".

In the absence of competition and downward pressure on prices, it is inevitable that an increase in rates of return--a doubling is estimated by the Hydro Board--will lead to higher prices for Scottish consumers in the private sector.

There is one area of competition in the Scottish measures, and that is that the two boards will be involved in the cut-throat competition of selling electricity to England and Wales. As yet, we have no absolute guarantee that the English and Welsh distribution companies will not combine to form a monopoly buyer to force down the price at an estimated cost to Scotland of tens of millions of pounds. I am asking for that guarantee now. The one achievement, in competition terms, of the Secretary of State for Scotland is to see that competition between the two Scottish boards forces down costs for consumers in England and Wales. What a triumph for the Secretary of State for Scotland!

I shall deal with the fallacy of Conservative Members' claims of control in Scotland. The Secretary of State for Scotland refused to say how much of the Scottish private

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sector had disappeared into external ownership during his tenure of office. The estimate from Scottish Business Insider is about two thirds. He also refused to tell us why he did not argue for a Scottish Telecom, Scottish Gas or Scottish Steel.

When the right hon. and learned Gentleman argues that the two major companies will enliven and bring rebirth to the Scottish private sector, we should remember that it was only a year before the elimination of Britoil as Scotland's major private sector company that the Secretary of State for Scotland, at the opening of its new offices in Glasgow, was saying what an asset it was to Scotland. The claim of the Scottish Conservatives that there is something distinctly Scottish in the measures they are suggesting is as bogusly Scottish as the hon. Member for Tayside, North (Mr. Walker) dressed in his latest kilt.

I want to turn--

Mr. Deputy Speaker : Order. I must ask the hon. Gentleman to come to his last sentence.

Mr. Salmond : The measure before us betrays the interest of the Scottish people. The enormous generation assets and potential of Scotland in terms of coal, hydro power, and cheap gas are being wasted. We are further than ever from an energy policy for Scotland that would allow those assets to be used for the benefit of Scottish industry and Scottish consumers.

7.26 pm

Mr. Keith Mans (Wyre) : I should like to make a few comments about the transfer of the electricity industry into the private sector and the need to rely upon a variety of generation systems.

I was struck by the inconsistency of the arguments by the hon. Member for Sedgefield (Mr. Blair) yesterday and his colleague, the hon. Member for Glasgow, Garscadden (Mr. Dewar) today. Yesterday, we discussed the so- called nuclear levy and we were told that prices would rise if the electricity industry was privatised. Today we were told that Scottish coal is a special case and that the Scottish electricity industry should not be allowed to import coal, despite the fact that it might be cheaper. At the same time, it was suggested that prices would still rise in Scotland. That is the sort of inconsistency that has coloured many of the Opposition's arguments over the past two days.

I want to concentrate on the reasons why the industry should be moved into the private sector. Yesterday we heard a great deal about the conditions pertaining many decades ago when much of the industry was in the private sector. It was suggested that the problems of the 1920s and 1930s were good reasons for not moving the industry into the private sector. I am afraid that that argument, like so many others put forward by Opposition Members, looks to the past, not to the future.

I am the first to admit that the creation of the national grid in the 1930s was a good idea. However, I am the last to admit that the nationalisation process that took place after the last war was a good idea. Our generation industry would have been just as efficient, if not more so, with a national grid had we not had that nationalisation measure.

In the public sector, the solutions to the problems of the electricity industry, like in so many other industries, are of a general nature. Quite often the Treasury decides the

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amount of money that an industry should borrow to fund its investment. In the electricity industry in particular, we can see the effects of that over many decades. Prosperity or the need for the Treasury to spend or save more money has often dictated the investment plans of the industry rather than the needs of the consumer and the needs of the industry itself.

In the public sector, too little regard is paid to alternative methods of generating electricity. Again, we tend to be blinkered. The fashion may be, perhaps according to the Government of the day or to the philosophy of the chairman running the Central Electricity Generating Board at the time, to go for a nuclear, coal or oil option. Little regard is paid to smaller systems of generating electricity that are becoming more popular abroad, and which I suggest will become more popular in this country once the industry is privatised.

It is necessary for the electricity industry's long-term interests, and for those of its consumers, for there to be a number of different systems of generating electricity. More specifically, it is important to retain the nuclear option. One can see what happens when there is no variety of generating systems in a country such as France, where, because of high oil prices, they went overboard in terms of nuclear-powered electricity. The French have saddled themselves with a £20 billion debt as a result.

I was interested in the remarks made yesterday by the hon. Member for Sedgefield (Mr. Blair), although I did not quite understand his logic. I gather that his suggestion was that, whereas electricity costs in France are higher, that country can still sell electricity to the CEGB at a lower price than that at which it can be produced in this country, so the French Government are subsidising our domestic electricity industry.

One element of consistency in the debate on the electricity industry is the inconsistency in estimates of the cheapest source of electricity over a long period. Twenty years ago, oil was in vogue and undoubtedly provided the cheapest source. As a result of oil price increases, coal became the cheapest 10 years ago, but two years ago, when oil prices fell, there was doubt as to whether it would not be feasible to generate electricity from oil again. Today, perhaps coal has the slight advantage.

Throughout all of that, there was the nuclear option as well. Even today it is, in terms of running costs, a cheap way of generating electricity. The drawback is the cost of building nuclear stations. Factors such as interest rates play a large part in decisions on the best way to proceed.

Another important factor is the decisions made by

Governments--specifically Labour Governments--over many years, about the nuclear industry. Yesterday, my hon. Friend the Member for Havant (Sir I. Lloyd) rightly observed that, in the past, Britain's nuclear industry has largely been technology-led, which has often taken us up blind alleys in terms of the cost of Magnox stations and, more specifically, the delays suffered as a result of advanced gas-cooled reactors. Today, I believe that, as a result of our decision to change to pressurised water reactors, there is less likelihood of any kind of nuclear levy being applied in future, based on the experience of other countries running PWR stations rather than on our own experience in respect of Magnox and AGR stations.

The relationship between electricity generation and the environment is becoming more important. There is a good case to be made for retaining the nuclear option because, with nuclear power, many of the environmental problems

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associated with it were taken into account when its cost was calculated. [ Hon. Members :-- "Oh!"] There remains the cost of shutdowns, clearing the sites, and waste storage. I can understand Opposition Members encouraging me to make that point. What we do not yet know are the full environmental implications of having a generating system that is largely or totally based on coal or other fossil fuels.

A coal-fired power station, for example, generating 1,800 MW, in the category into which Drax B falls, produces 11 billion tonnes of carbon dioxide and 16,000 tonnes of sulphur dioxide annually. That can be overcome by fitting fluid gas desulphurisation devices, but that will add to the costs--which is not taken into account when the equation is done. It does not end there. If one has fluid gas desulphurisation, one must also get rid of the gypsum, which amounts to 500,000 tonnes a year, and of 1 million tonnes of ash annually. None of those factors was taken into account in arriving at the cost of coal-fired, as compared with nuclear, power stations. When such costs are taken into account in future, the so-called nuclear levy may not arise.

For too long, many people in this country have believed that the best way of running large public utilities such as electricity was by retaining them in the public sector. In an age in which the interests of the consumers and of the environment are of increasing importance, such a view is no longer appropriate. We need to free the industry from the Treasury's purse strings, and to give both industrial users and regional boards freedom of choice. We must allow the industry to rely on a variety of sources of supply for the generation of electricity throughout the country.

For all those reasons, and because I believe that environmental and consumer interests will be better protected if the electricity industry is in private hands and the regulator in public hands, I welcome the Bill and shall vote for it tonight.

7.36 pm

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