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Mr. Terry Patchett (Barnsley, East) : I do not propose taking up a great deal of time, as I am anxious to hear the contributions of Conservative Members. This is the second day of debate on the Bill but, as yet, I have heard not one convincing argument from Government Members, including the Secretary of State, for privatising the electricity supply industry. We keep getting a parade of parroting about competition and its benefits to the customer, which, I feel sure, Conservative Members know in their hearts not to be true. Private power companies may be forced into making deals with large industrial users, such as car manufacturers, who may threaten to build their own generating plants as part of their bargaining power in negotiating electricity prices. No such tactic is available to the domestic consumer. Where industrial users take advantage of the new situation, the power companies' shareholders will expect them to find their profits from elsewhere--and they can come from no other source than domestic users.
Much has been said about competition, but there is only likely to be any between the big City corporations, over which of them is prepared to pay more into the Chancellor of the Exchequer's kitty to reap the benefits of the captive market. They are the "fat cats" to whom my hon. Friend the Member for Clydesdale (Mr. Hood) referred yesterday. They can do so safely, in the knowledge that a great deal of the money that they pay to the
Column 832Chancellor will be returned to them personally by way of promised tax cuts. So those people will win twice on the deal.
It is ironic that, while the Government appear to advocate competition, they consider it unfair that the nuclear power industry should compete equally with other energy sources, and they insist on its being guaranteed 20 per cent. of the energy market. Not only that, but the Government are prepared to prop up the nuclear industry, given the unknown costs of decommissioning nuclear power stations in the future. The Government leave the nationalised coal industry to fend for itself in its battle against cheap, subsidised foreign coal that is flooding the world now, but which may not be available at a future date, by which time the Government's policies may have annihilated our domestic coal industry.
The Government are not only deserting our coal industry but openly and actively contributing to its downfall, even to the cynical use of private Bills. The North Killingholme Cargo Terminal Bill and others like it were introduced as private Bills, then openly and avidly supported by the Government payroll vote. The last time that the Killingholme Bill came before the House, there was an open if unofficial Whip on it : the Government had put a two-line Whip on the business that followed it, when they knew that there would be no vote on the matter. The two-line Whip was dropped immediately after the vote had been taken on the private Bill.
I deem that cynical politics, and would expect it to leave a nasty taste in the mouths of Members of Parliament who believe in the parliamentary procedures of the House. The only reason for supporting that Bill was to allow easy access for cheap imported coal and to decimate our own coal industry, which would have considerable difficulty in competing with cheap imports born of subsidies and cheap labour--even, in some instances, child labour.
It has been estimated that unrestricted foreign coal imports by privately owned power stations could lead to the loss of 160,000 jobs, of which 65 per cent. would be in the coal industry. That would decimate constituencies such as mine, which are already reeling under high unemployment because of the Government's earlier pit closure programme. The number of collieries is expected to halve. By 1992, British Coal will be reduced to 48 collieries employing 45,000 people and producing between 73 million and 80 million tonnes of coal a year. That forecast is based on coal imports of 40 million tonnes. The level of import penetration in the electricity industry will ultimately depend on the relative value of sterling. Nevertheless, there are reasons for expecting a massive increase. For example, the coal division of British Petroleum is understood to have held informal talks in Britain about the possibility of buying Australian coal for power generation. Despite the extra transportation costs, BP believes that it could undercut British Coal by quite a margin. While private electricity industry may gain from such deals in the short term, our country will lose. Not only will our balance of payments be affected, but huge numbers of people will be out of work and have to be paid dole rather than contribute from their taxes, as they would much prefer to do.
The Bill has been described by an outside expert on the electricity industry as a
"mixture of political prejudice and technical ignorance." The industry itself cannot easily forecast supply and demand, which can fluctuate daily. In an emergency, when
Column 833demand may shoot up surprisingly in a few days, we are told that the various groups would have to co-operate rather than provisions being included in the Bill to control such an emergency.
We are asking companies to compete to benefit the consumer ; in a crisis, however, they are expected to co-operate with one another. That seems to me a contradiction in terms. The electricity industry is much too serious a matter for this flippant Bill, born out of pure political dogma and with no concern or benefit for the consumer. It is merely yet another example of the Government's selling off the family silver to prop up their economic policy--which, like the Bill, is a complete failure.
Mr. Ian Bruce (Dorset, South) : Many hon. Members have said that they have never believed CEGB statistics before, but suddenly believe them when they suggest that nuclear power is more expensive than coal. Perhaps we should examine that a little more closely. I seem to be the only hon. Member left in the House who believes that nuclear power is the most economic form of fuel, let alone that it is the most environmentally safe.
We must consider like for like. This country has opted for 20 per cent. nuclear power and 80 per cent. other forms of power. Across the Channel, France, a country of similar size, has invested heavily in nuclear power. I must take my hon. Friend the Member for Wyre (Mr. Mans) to task for referring to a £20 billion debt ; I wish that we had made as large an investment in our nuclear industry. With its 80 per cent. nuclear power, France can boast the cheapest electricity in Europe--far cheaper than ours.
I am also extraordinarily surprised to hear Scottish Members claim that the SSEB will be so terribly disadvantaged. Perhaps they should have gone and listened to its chairman when he was in London a few weeks ago, speaking of the enormous success of its AGRs and Magnox stations. They have demonstrated how even a small nuclear programme can be extremely effective and profitable.
It is strange that the CEGB should tell us that it is having its costing re -examined, particularly on reprocessing. Reprocessing was always very safe when done at Sellafield. We are all flown up to look at the wonderful THORP reprocessing plant and to be told how many extra billions of pounds will be spent on it, but all that is being back-end-loaded on the Magnox stations and the reprocessing. Of course that suddenly looks bad according to the economics of a "tailing off" industry. The CEGB has made a hash of running its AGRs : two of its stations are a disaster. Yet a few months ago, if asked what its AGR stations were doing, the CEGB would have produced the story that they would come right next year or the year after. Now the chairman of big G, finding that he is the only member of the English generating industry who must have nuclear power on his side, is trying to talk down the value of his assets, like any sensible man wanting to demonstrate in the future what wonderful profits he is making. Yet in the Hinkley inquiry, the CEGB is putting forward the case today that Hinkley C would have even cheaper electricity
Column 834than the most modern coal-fired stations. We must look carefully at the statistics that are thrown at us, and ask why the CEGB is suddenly producing such a mish-mash.
Many hon. Members are keen to tell us about the alternatives--wind power, barrage power, oil and gas turbines. I say, "Great : this is what privatisation will allow us to prove." It will not be for the CEGB to say, "Wind power is not an efficient way to generate electricity." Opposition Members, or Mr. Porritt from Friends of the Earth, can go out and invest their own money--or other shareholders' money--to create alternative power sources. They know that they will be able to sell their electricity on to the grid and to any number of people who want to use it. If it is economic, we shall see such development very quickly.
The United States has had the same problem of consumers worrying about nuclear power stations on their doorstep, with the scaling down of electricity generation by that method. Much of that has been brought about by the combined heat and power method. It has proved economic for the present, while being produced in small packages. Industrial companies that wish to use the heat that they are creating on site and can also generate electricity. Unlike the CEGB, which says that, as it is the only customer who can buy it, it will pay next to nothing, they can sell it at a competitive price on to the grid.
We must, however, talk about the environment. It is easy to form a view of a nuclear industry that we have constantly loaded with costs to ensure that it is ultra-ultra-safe. Unfortunately, the coal industry has been creating an enormous amount of pollution, and the chickens are now coming home to roost. The amount of CO , NOX and sulphur being put into the atmosphere has been a constant environmental problem. I was most grateful to the hon. Member for Wentworth (Mr. Hardy), who stated that the Conservative Government would still be in power in the year 2020, and therefore should be worrying about the possible greenhouse effect and any floods in hon. Members' constituencies when considering the Bill. As I live only 50 ft above sea level, I am most concerned about that.
We must look extremely carefully at research, particularly research into nuclear electricity as well as other forms of electricity. Money has been spent on the possibilities of fusion rather than fission reactors. Opposition Members, who seem to be so against nuclear power, are keen to preserve the jobs of fast breeder reactor workers in Scotland. We must also consider the smaller nuclear reactors. I heard a very good presentation about the economics of small nuclear power stations, the speed at which they can be produced and the fact that economically they can be much more effective than very large stations. We will be considering an enormous number of questions in Committee. I certainly welcome the light and fresh air coming into the industry. Clearly, without the privatisation of this enormous monopoly, we should not have had such a sensible and sane debate. 7.51 pm
Mr. A. J. Beith (Berwick-upon-Tweed) : If the hon. Member for Dorset, South (Mr. Bruce) believes passionately in the economic case of nuclear power, why does he not let it take its chance in the free market, which
Column 835the Government are not prepared to do? The Bill is designed to ensure that the disciplines of the free market never apply to nuclear power.
I shall return to that later, but I wish to register a small matter, which is important in my constituency and which is still not clarified--the question whether the south of Scotland company will be allowed to be a retail electricity company in England. If it is not, that will represent a change in the arrangements under which a large part of my constituency is supplied by the South of Scotland electricity board. It would be useful to know whether we are to continue to be provided with electricity by the SSEB, and if so, whether or not it can expand beyond the areas it currently supplies in England.
I shall concentrate on three reasons why my right hon. and hon. Friends are right to oppose the Bill. First, it gives no priority to energy conservation. Why is there no obligation on the face of the Bill to make energy conservation, and the efficient use of energy, a priority? Why is it not recognised as part of the non-fossil fuel quota? Why are the energy efficiency improvements which could be achieved in other ways not recognised as part of the non-fossil fule quota? If the object of the non- fossil fuel quota is to make the country less dependent on fossil fuels, any measure which makes it less dependent should count towards that quota. Increases in energy efficiency must come into that category, and that should be put right.
The notion of the non-fossil fuel quota is misleading, as it is couched only in terms of nuclear power, particularly in the financial provisions which back it up. There is no mention of dual firing, or any other means by which dependency on any one fuel could be reduced. No priority is given to energy conservation.
Secondly, nuclear power has a protected status. The consumer is taxed so that he shall have nuclear power. The taxpayer is taxed so that nuclear power shall be provided. Companies are placed under an obligation to buy it. It is the most blatant piece of market distortion since the direction of industry in the second world war. It is such a blatant distortion of the free market that it would qualify the Secretary of State to be Energy Secretary in Albania--the country so often used by Conservative Members to describe the attitude of the Labour party. The Secretary of State deserves that categorisation for his incredible departure from the principles that he is supposed to espouse.
The Secretary of State intervened in the speech of my hon. Friend the Member for Gordon (Mr. Bruce) to suggest that one of the advantages of the Bill was that in future there would be a more open debate on nuclear power. Tonight, there has been some focus on the figures for nuclear power and some justified criticism of the CEGB for its grotesque nuclear power figures in the past. We have heard some rather surprising praise of the SSEB from the Labour Front Bench for its record on nuclear power, of which I am extremely critical. It has grossly over-invested in nuclear power recently. How can there be a more open debate on nuclear power if it is no longer possible at a public inquiry on nuclear power stations, such as the one planned at Druridge bay in my constituency, to argue that there is no proven need for the power that that station will generate?
The answer to that challenge will be that Parliament has decided that, whether or not it is needed, we are obliged to have it. That rigs future public inquiries into nuclear power stations. Unless the Minister can demonstrate that
Column 836there will be a different approach, the argument will be adduced that it is not a question of need, Parliament has decided and the law says that we have to have it whether or not it is needed. It will cease to be possible to argue at a public inquiry that the environmental damage caused by building a nuclear power station is not justified by any overwhelming need for the power that it would generate.
In the context of the Druridge bay power station which the CEGB wishes to build in my constituency, how can the Department of Energy issue fact sheet 11 at the time of the publication of the Bill, which lists a Druridge bay power station as one of those to be allocated to the National Power Company? There is no Druridge bay power station ; nobody has applied for planning permission for that power station, no planning permission has been granted and no licence has been issued for it. It is simply a malevolent gleam in the eye of the chairman of the CEGB. Even he recognises that it is well down the track of his own plans, given the overriding need for more power in the south rather than in the north of England.
Will the Minister explain how that power station is listed as an assett to be transferred to National Power when it does not exist? His ministerial colleagues may refuse planning permission for it. Is the Minister prejudicing a later decision on the planning permission for that station by listing it in a fact sheet as if it were a foregone conclusion? My constituents have the feeling that it is all cut and dried and that Ministers have given some behind-the-scenes promise that the CEGB and National Power will be able to build at Druridge bay and that the planning arrangements will be a foregone conclusion. That must not be so. We shall fight it, and we are entitled to know why it was listed in that way.
One consequence of the protected status of nuclear power is that those who object to the building of particular nuclear power stations will have their arguments ruled out by the Bill.
My third reason for being so strongly opposed to the Bill is that it lacks any acceptance of vital social obligations. The Bill allows the vicious penalty of standing charges on pensioners to continue. The SSEB goes one further : it imposes six standing charges a year on its customer. They are quarterly for most of England, but six a year in Scotland. They are very much resented, and the Bill does nothing to remove them.
The Bill does nothing to help those who are not on mains electricity. Many of my constituents and many people in other rural areas do not have mains electricity. The Government are not continuing the present Hydro Board obligation to help people in rural areas, and they are certainly doing nothing like that to help consumers in other parts of the country. It is simply not good enough for the industry to pass out of public ownership with no provision for the remaining people who do not have the benefit of mains electricity.
I and my right hon. and hon. Friends are no enthusiasts for the present structure of the electricity industry. Ministers have quite rightly quoted my hon. Friend the Member for Gordon, who suggested that it would be possible to consider ways of privatising the generation of electricity so as to ensure there was some real competition. But that requires continued public maintenance of the national grid, which is conspicuously lacking in the Bill. It would require much more real competition than the Government are introducing. The Government are putting the electricity industry in turmoil without any hope of
Column 837increasing competition, without any hope of promoting conservation, without any hope of maintaining the social obligations of the industry and with the express purpose of subsidising, feather-bedding and protecting nuclear power.
I agree with the comments by the right hon. Member for Plymouth, Devonport (Dr. Owen) about the electricity industry. The point of difference between us is that I do not share his apparent belief that the Government have any intentions of putting the Bill right and turning it into the kind of legislation that could reasonably attract wider support. The Bill will throw the electricity industry into turmoil without achieving the objectives which I have set out, and it deserves to be opposed.
Mr. Tim Janman (Thurrock) : I have great pleasure in supporting the latest element of the Government's denationalisation programme. It will be the most successful element of that programme because there will be more competition than with telecommunications and gas. I refute the Opposition's absurd allegations that Conservative Members are ideological and dogmatic. In 1947, when electricity was centralised and nationalised under the then Labour Government, the industry was not technically inefficient. There had been no labour disputes between 1926 and 1947. Over a 20-year period, output increased by a factor of 10. The industry had modern, not dilapidated plant and there was within it no high unemployment. There was no case for the electricity industry being taken from private companies and local authorities other than that of spiteful Socialist dogma. That was why the industry was put into the nationalised sector in 1947.
It is worth examining the merits of nationalisation which the Opposition would put forward. There is the so-called merit that we all own the electricity industry because it is nationalised. What utter nonsense. If we asked the majority of people in this country whether they own electricity, they would look at us in blank amazement. The state owns it, and it is run by politicians and bureaucrats with their own interests at heart, not those of consumers. Citizens may not own the electricity industry, but we are all consumers, whether at home or because people work for companies which use electricity for industrial purposes. Because of the competition element in the legislation, the entire population, as consumers, will benefit from the downward price pressure that will be brought about in the medium and long term once denationalisation has taken place.
Another myth of nationalisation is that it leads to improved industrial relations. Between 1945 and 1987, 1.928 million man days were lost in the three nationalised industries--gas, electricity and water. That is hardly proof that nationalisation brings about a calmer atmosphere and fewer days lost through strikes. The devil of nationalisation has two heads, of course --that of the monopoly of
Column 838capital which it brings about and that of the monopoly of labour with its power over consumers, the economy and the nation. We are told that nationalisation is a guarantee of lower energy prices. Since 1963, there have been seven price increases in a given 12- month period of about double or more than double the inflation rate. The worst two examples occurred under Labour Administrations--in 1974, there was a one-off price increase of 33 per cent., against inflation of 17.9 per cent., and a year later, an increase of 47.1 per cent., against inflation of 24.6 per cent. I am not scoring points off the Opposition but wish to show that nationalisation is no guarantee of low prices. In 1963, under a Conservative Administration, when inflation was running at 1.6 per cent., the price of electricity increased by 8.7 per cent.--more than five times the inflation rate. The issue is not the political hue of the Government of the day but whether the consumer is best served by choice and competition or by a monopoly which the Opposition would wish to impose.
There are two coal-fired power stations in my constituency. Over the past few months, I have taken it upon myself to talk to management and officials of the Transport and General Workers Union. I assure my hon. Friend the Minister that the managements of those power stations are enthusiastic and optimistic about the future of the stations. I should, however, like him to respond to some of the worries that members of the TGWU have expressed to me. They would like information on the likely level of foreign investment in the electricity industry, post-denationalisation.
Given the changes that will occur in the industry, it would be useful to get a commitment that the changes will be handled sensitively. The TGWU officials in my constituency talk about the many existing industry traditions. That is a euphemism for too much demarcation and therefore too much overmanning. If the industry is to become more efficient, as it will after denationalisation, there may have to be some reductions in the work force. I do not, of course, know the circumstances of any one plant. Are there likely to be reductions? If so, I should like a commitment that it will be sensitively handled by generous voluntary redundancies.
Time is short and, because other colleagues wish to speak, I shall summarise my arguments. It is clear that the legislation will mean major changes in the electricity industry. It will mean a change in the way that investment decisions are made. Instead of being producer-led, they will be consumer-led. Investment will be led by the way in which the new distribution companies choose to buy their source of energy. The investment decisions of the new generating companies--there will definitely be more than two such companies--will be affected by market conditions and not by political priorities in Whitehall. There will be much more competition and consumer choice, which will lead to a downward pressure on prices. There will be a long-term future for the energy industry and, in particular the electricity industry. There will be increased flexibility for all concerned on the generating and the consumer sides, with the industry being accountable directly to the industrial consumer and to the domestic consumer via the 12 distribution companies.
This is an excellent Bill, which is long overdue. We should have introduced this measure in the 1950s. I am pleased to support it.
Column 8398.9 pm
Mr. Allen McKay (Barnsley, West and Penistone) : I wish that we had more time to develop the arguments advanced by the hon. Member for Thurrock (Mr. Janman) because we could show the House how wrong he is. I shall deal with two of the matters that he raised, the first of which is consumer choice. There is no such thing in the Bill, and the consumer cannot do a thing about it. He has to take the electricity that is supplied to him. The domestic consumer does not have a row of switches enabling him to take his supply from a Scottish board, a Yorkshire board or a board in the south. He must take the electricity from wherever it is distributed. He has no choice in the matter and it is time that we got away from that argument.
I should like to nail the lie about price increases in 1963, 1964 and 1965. I worked for British Coal from the 1950s up to the 1960s, and we said at that time that the Labour Government were wrong in their policies towards the coal industry. We told them that the Arabs would not always live in tents. That proved to be right, because in the 1960s the price of oil was increased not two or three times, but four times. That was the reason for higher prices to industry. The Government were warned then, and we are warning the Government now, to be careful how they treat the electricity industry. In the Army there used to be a saying, "If it moves, salute it, and if it doesn't, whitewash it." That is the Government's idea of privatisation. Everything goes and they are whitewashing the costs of nuclear generation.
The generation and supply of electricity are not marketable commodities. This is a key strategic industry, but what is wrong with it? It is clearly efficient and provides an excellent service and the customer trusts it. I am not convinced by the argument about competition. Perhaps later the Minister will explain where the competition will come from and how it will arise. Perhaps he will also give us an estimate of how much prices will fall. We have been told that prices will continue to fall, but the Minister should say when that will happen.
Electricity is a marvellous commodity. One cannot hear it, touch it, taste it or smell it and it cannot be stored. It must be used at the point of production. The Government are selling something that we cannot hear, smell or touch. This is competition in the industry, because the merit system used by the distribution boards ensures that electricity is supplied at the cheapest possible price. Anybody who goes to the distribution boards to see how they work will see that, if a small pump breaks down and causes an increase in the generation price, it is stopped and the next cheapest one is used. That goes on throughout 24 hours.
The Magnox nuclear power station is nearing the end of its life, and will probably finish in about 10 years. We have five AGRs and three of them are not working properly. Millions of pounds have been poured into those three AGRs to try to get them working before privatisation. The generating boards will tell any hon. Member who wants to ask that Magnox electricity is far dearer than that produced by a coal-fired power station, that AGR electricity is marginally dearer than coal-fired electricity and that the PWR electricity is the only one that is cheaper. However, we have only one of those. It is said that we need four more and that they will cost £6 billion.
Column 840Who will pay £6 billion without an assurance that at the end of the investment there will be a sale? That is what it comes down to. Clause 4 of the Bill makes it an offence to
"(a) generate electricity for the purpose of giving a supply to any premises or enabling a supply to be so given ;
(b) transmit electricity for that purpose ; or
(c) supply electricity to any premises"
unless the Secretary of State gives a licence.
People who talk about small power stations being allowed to operate are fooling themselves. The Secretary of State will not allow small power stations. He wants to ensure that they do not compete with nuclear power stations so that they can be kept. That is what the clause is all about. If that is what the Government intend to do, they should say so. Of course we shall continue to oppose them, but there is far more of a quarrel when they try to cover things up. Who will bring in small generating plants and feed the electricity into the grid? If such small generating stations are allowed, what will happen to the large boys and to the £6 billion that is to be invested? They will not allow small generating stations to depress their profit margins. The domestic customer, not the industrial customer, will suffer.
Prices will not decrease--they will increase. My hon. Friend the Member for Sedgefield (Mr. Blair) was right when he spoke about a 25 per cent. increase in prices. The figures have been worked out and I am sure that my hon. Friend is correct. There will be no competition and no consumer choice and there is no need for the Bill.
Mr. Andrew Hargreaves (Birmingham, Hall Green) : I am grateful for the opportunity to speak in the debate because I have had experience of dealing with foreign power-generating companies and their experience is relevant to some of the proposals in the Bill. In contrast to what has been said by some Opposition Members, I shall begin by saying that the Bill is long overdue. That is because there are no longer any valid reasons for the provision of power being in the state's hands alone, other than because of a threat to continuity of supply, strategic national interests on security. In peace time and with an increasingly sophisticated generating and distribution system, none of the reasons that I have mentioned is valid.
If one looks to America or nearer home to Finland or Socialist Sweden, one sees excellent examples of private, non state-owned generation and distribution companies providing a superbly reliable service to the customer. I remind Opposition Members that in both those Scandinavian countries even nuclear power generation is in private or non state hands and has a magnificent safety record. They should look at the relationship and shareholding structures of OKG and Forsmarks Kraftgrupp of Sweden and at Teollisuuden Voima Oy and Imatran Voima Oy of Finland. So much for the argument about whether the industry should be state-owned or private.
In welcoming the move to the private sector, I am relieved to see that efforts have been made to ensure that the progress which has been made by the CEGB on the sophistication of the national grid will not be lost in the division and transfer into private hands. I welcome the considerable emphasis on regulation and supervision when normally I would be suspicious of those things. I am
Column 841relieved that the merit order dispatch system will be preserved, but I know that many hon. Members will want to question the Minister about contracts between generators. They will want to be sure that take or pay contracts, or contracts direct to customers or between supply companies and other generators, will not harm this system or make difficult the concept of a pool of generators. That is important and I am sure that hon. Members will elaborate on it in Committee. I have already had discussions with one major consumer near my constituency who has been approached with a direct supply contract from EDF of France. The impact of this type of competition, while beneficial to customers in cost terms, should not be allowed to destroy a sophisticated system that benefits all customers, especially domestic customers, and which has taken a long time to evolve. It may place the new supply companies in a less than competitive position, and that might result in higher rather than lower costs to the domestic user.
I support my hon. Friend's contention that competition should be the best guarantee of customers' interests. I am pleased to see that the Bill lays a framework for the industry in which decisions about the industry's future and the supply of electricity should be driven by the needs of all customers and, above all, will give the industry's managers more scope to use their initiative in the interests of their customers. This is, of course, reinforced by the measures in the Bill for giving customers new rights rather than just safeguards. That is important and I hope that it will be expanded in Committee.
This is an exciting opportunity for those working in the industry and I am pleased that my right hon. Friend will ensure, when it comes to the flotation, that those who work in the industry as well as customers will be offered a direct stake in their industry. I hope that my right hon. Friend will make these proposals clear in Committee. Although the Bill leaves open some technical and operating questions which I spoke about earlier and which will need to be clarified in Committee, it is radical yet structured and deserves the support of the House.
Mr. Harry Barnes (Derbyshire, North-East) : When he opened today's debate, the Secretary of State for Scotland said that there is no such thing as perfect competition in the electricity supply industry. That is a simple truism. He should also have added that there is no such thing as what might be termed imperfect competition in the electricity supply industry, for the notion of imperfect competition is itself an economic theoretical concept. Very little competition is possible within the electricity supply industry. Neither perfect nor imperfect competition possible because masses of competing producers and competing consumers are required. The electricity supply industry's production is termed a natural monopoly. That term has been used by the Minister and it has been used in connection with the water privatisation Bill--that public utilities are natural monopolies. That means that they cannot help but be monopolies. The idea of natural monopolies was introduced near the end of the 19th century by essentially Conservative theorists to explain certain changes that were occurring in society, so they said that utilities such as the railways were
Column 842natural monopolies and therefore had to be regulated. That old-fashioned notion is now re-emerging in connection with how the electricity and water industry privatisations are to take place. It is not just that competition is impossible among electricity producers: it is difficult to have anything that amounts to competition among consumers. We cannot easily opt--except at great capital or consumer cost--for oil, gas, coal or electric heating, thereby turning away from the method that we previously used in the home or industry. Theoretically we can do so, and, sometimes, people will.
However, it is much less easy for consumers to opt for other utilities. We cannot have nuclear-powered microwaves--except in the sense that nuclear power can be fed into the electricity industry and used in microwaves. Nowadays, we do not opt for gas street lighting as distinct from electric lighting. We do not opt for oil-driven television sets as distinct from electrically powered ones. We do not opt for coal-fired computers. It is nonsense to claim that there is competition in those utilities.
As utilities are privatised, what is to happen to those who will control and own them? Are we to have special legislation to prevent interlocking directorships when the barons of the energy industry grow up to control what is being done? The little people might initially get their hands on a few shares that give them no control over the industry, apart from being able to ensure that it operates according to what are considered to be market principles, which means that the work force and others will suffer considerably.
In such circumstances, monopolies, duopolies, cartels, or whatever, display considerable similarities. They restrict output to raise prices, control their labour forces by their power, and manipulate demand by advertising. The Government are privatising and doctrinaire. They solidly believe in controlling people by advertising. That is exactly the technique that they use to persuade the electorate to co-operate and to sell off public assets and hand them over to small groups in society.
The only answer to natural monopolies in public utilities is public ownership, but, by itself, public ownership is not sufficient. We also require public regulation to control how the public industry is run. That means that restraint should be exercised upon any monopoly. The only possible restraints that can be operated upon the monopolies that we are talking about--natural monopolies--are those of a democratic nature. That means producer democracy in which workers operate self-management techniques, and it means consumer democracy in which consumers operate, influence and control.
One aspect of consumer democracy should be parliamentary democracy. It should be possible, through the operation of parliamentary democracy, civil liberties and rights, and parliamentary and council elections in this country, to influence what takes place. We have an elected dictatorship, rather than a democratic system. The Government are destroying the possibility of producer democracy and consumer democracy, which are the answers to any problems that have emerged. The use of private monopoly, duopoly, cartels or whatever we like to call them in the electricity supply industry will lead to massive coal imports from South Africa and Colombia, and the destruction of the remnants of most of the remaining coal industry in this country, especially in north Derbyshire. The north Derbyshire
Column 843coalfield will be under considerable threat. To try to defend its interest, the Coal Board will react by closures and the development of super-pits and opencast mining techniques. The heart of the constituency of Derbyshire, North-East can be ripped out by opencast mining techniques.
I have a map from the Opencast Executive, which shows that in the rural and Conservative areas of my constituency, which are considerable, there is massive opencast potential. In the working-class areas, where there was a great number of pits, even existing pits will be closed and coal will be mined by opencast methods. That is the approach that the Government will take. There will also be an attack upon supply industries that have many export markets. They will be destroyed by the import of coal into this country. Shops and services and the local business rateable values will collapse. There are also social implications. In Derbyshire, for instance, 9,700 jobs are estimated by the Coalfield Communities Campaign to be put at risk because the measures that are associated with this development will produce problems. There is also the development of nuclear power and the nuclear nonsense, and the considerable environmental and social dangers that will be created by it. The Government are introducing a dangerous system of private monopoly power to be used against the interests of people. 8.27 pm
The Bill is an exciting concept. It opens the electricity industry to a new dynamic. It sets the management of the electricity industry free from Government control for the first time in its life. I can remember, during my days at university, studying economics and, time after time, realising that investment plans for the electricity supply industry had been sacrificed by various post-war Governments on the altar of economic efficiency. That is why we have some of the problems with our electricity supply industry today. The Bill removes obstacles to investment in that vital industry.
In the document "The Generating Game", published by the Central Electricity Generating Board, there are three statements. They are, that electricity is the power behind modern civilised life ; that convenient electricity binds together the fabric of 20th century society; and that with this comes the responsibility to ensure reliable electricity supplies. The Bill responds to those three statements.
I shall address the main part of my remarks to the point about reliable supplies. From the conversations that I have had with the chairman of the North-Western electricity board, NORWEB, I sense that he and his staff are excited about how the Bill will open up new forms and new sources of electricity generation in the north-west. New sources of energy will be available from the industrial sector, the proponents of combined heat and light production. New sources of nuclear electricity will also be possible. All those opportunities will be available, as well as giving that management the ability to run its company in the interests of its consumers.
The hon. Member for Banff and Buchan (Mr. Salmond) is unclear about the powers of consumers who are
Column 844shareholders. Many of those people will beat a path to the annual general meetings of electricity supply companies that fail to deliver.
Some 3,500 of my constituents are, however, concerned about the provisions of the Bill. They work for British Nuclear Fuels plc and make the fuel rods for all our existing nuclear power stations. They want to make the fuel pellets for the PWRs. They strongly believe that what they contribute to the electricity supply of this country is concentrated, reliable energy.
In my hand I have the equivalent of 1 tonnes of coal. It is a small pellet from an advanced gas-cooled reactor. It provides a vivid picture of the nature of nuclear electricity. [Interruption.] The hon. Member for Cardiff, West (Mr. Morgan), who has just pretended to faint, demonstrates one of the problems we face--the total irrationality about, and lack of understanding of, the intrinsic safety of nuclear electricity.
Those 3,500 workers strongly believe that they made the contribution that kept the lights burning when the miners deserted those who needed electricity supplies. They want to be given the chance to make their contribution to our supply of electricity through a newer, slimmed-down, more efficient BNFL.
When the Bill is considered in Committee, I hope that Ministers will remember the obligations we have to those workers in the nuclear industry in my constituency, at Sellafield and at the other power stations. They must ensure that those parts of the Bill that refer to continuity in the supply of electricity reflect the contribution that nuclear power makes.
On 20 April 1988, the Under-Secretary of State for Energy, my hon. Friend the Member for Worcestershire, South (Mr. Spicer), spoke at the annual luncheon of the British Nuclear Forum. He said : "Nuclear power makes a valuable, indeed vital, contribution to diversity in electricity generation and so to the security of supply. It would be folly to rely on a closely related narrow group of fuels for electricity generation. Fossil fuels historically have shown that they are all, in one way or another, highly volatile in both price and availability."
Mr. Morgan rose --
Mr. Jack : I will decline the offer of further information as I still have some to give and little time in which to do so. In 1972 there were rota disconnections to the electricity supply. None of us needs reminding of the events during the miners' strike. To put our dependence on nuclear sources of energy into perspective, it should be noted that only 5 per cent. of the total energy usage in this country--not electricity usage- -comes from nuclear sources. I believe that that is almost too low a percentage in a world where our hydrocarbon fuel supplies are always at risk.
I am attempting to advocate the part that nuclear electricity can play in the future of our energy supplies. I am concerned about the Bill because, although, quite rightly, in its later clauses, it reflects the problems of decommissioning our existing Magnox and other nuclear power stations, as drafted, it does not give the same strength of commitment to addressing some of the technical problems particularly associated with the AGRs.
In Committee, it would be good if Ministers could give some consideration to the cost legacy that will be passed on to the large power generating company that tries to bring the Magnox stations and the older AGRs up to
Column 845power. If we intend to cater for problems at the back end of the industry, it is logical to cater for the problems at the front end of the industry.
In early December on "This Week", a programme on ITV, it was pointed out that Hinkley Point power station generated electricity at 2.64 per kilowatt hour ; Drax power station generates electricity at 2.46p. That is a narrow difference, but it does not take into account the environmental consequences of fossil fuel burning to which my hon. Friend the Member for Wyre (Mr. Mans) ably referred. On 11 December an article in the Sunday Telegraph magazine contained the sentence :
"The lessons for Earth are frightening. Unless we switch radically from the burning of fossil fuels to nuclear power, temperatures on Earth could double by the 22nd century."
We will not be around then, but we have an important responsibility to lay the foundations for an energy policy that is environmentally safe. Nuclear electricity is a safe form of power generation. My constituents who work for British Nuclear Fuels plc want a chance to play their part. Their company has shown a willingness to modify its procedures and to become efficient. It can also tackle the problems of reprocessing, which is vital to maintaining the security of supply of our uranium assets. It can tackle the problem of decommissioning power stations in an efficient way. It is on record as saying that it welcomes electricity privatisation as it will sharpen up its act. British Nuclear Fuels even has the potential to become a nuclear generator in its own right. That is an exciting prospect, and the Bill affords that chance.
It has been estimated that the cost of removing the oil platforms from the North sea when the oil runs out--nuclear energy can delay that inevitable occurrence--is £6 billion, which is twice the estimated cost of decommissioning our Magnox power stations. In making a commitment to the role that nuclear power can play in producing electricity for our country, I plead with Ministers to ensure, for the sake of the public, that there is no compromise on safety within the nuclear industry. That would be a folly for which the public would not easily forgive us.
I wholeheartedly support the Bill and the role that nuclear power can play in its objectives.