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have no real way of judging whether those costs are defensible. It is intrinsic to the system that there are few benchmarks by which we can judge efficiency within the industry as now constituted. Contrary to what has been said by the Opposition, the British electricity supply industry has been operating for several years with expensive excess capacity, with power stations which have not been built to time and cost, and several of which in England and Wales still do not produce electricity efficiently. The Opposition do not appreciate it, but we know that all that is paid for by the customer. The repeated bleat has gone up throughout the debate from the Opposition Benches asking us why we wish to restructure the industry and why we wish to privatise it. It is because, by a process of introducing competition where it most directly affects costs, of regulating the monopoly sectors in support of the consumer, of encouraging employees to own their own shares and of launching great new regional centres of power, we mean radically to improve the system. That is the answer to the question: "Why privatise ?". In a moment I shall answer some of the other questions raised on both sides of the House about how much competition and how much regulation. Let me deal first with some of the specific points which have been touched on in the debate. [Interruption.]

The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked about special shares. Arrangements will be put in place to safeguard the independence of the area boards, National Power, Power Gen, the national grid and the two Scottish companies. The articles of the companies will restrict individuals and companies from building up a shareholding of more than 15 per cent. That will be reinforced by a special share to be held by the Government.

Questions have been asked, in particular by my hon. Friend the Member for Romsey and Waterside, about the effect of the Bill on the conservation of electricity and the environment. A number of hon. Members have raised that issue. The answer is that the Bill is likely to have a highly beneficial effect on conservation and the environment. That is partly because the Director General of Electricity Supply will have a specific statutory duty to promote energy efficiency, partly because access to the system will encourage on to it generators with smaller, less polluting, highly modernised stations--CHP has been mentioned several times in the debate, and of course that will be one source of energy that will be encouraged-- and partly because a special arrangement for non-fossil fuel sources will benefit renewable energy such as the Mersey barrage which has been mentioned by the right hon. Member for Plymouth, Devonport (Dr. Owen), the other barrages, and wind power which has been mentioned on several occasions. I am informed that clause 30 is the first time that wind power has been mentioned specifically in any statute. The effect of privatisation on prices was also raised. The Opposition quite falsely have suggested that the privatisation process will raise prices. Our judgment is the reverse. The presence of competition is bound to create greater efficiency in that part of the industry which currently comprises three quarters of its costs- -in other words, generation.

Mr. Salmond : The Minister keeps referring to the British electricity supply industry, but how on earth can

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the argument he has just made be applied to the Scottish electricity industry, where there is no competition whatsoever in generation?

Mr. Spicer : Nine tenths of the industry is English and Welsh electricity. It is worth making that point in the context of all the barracking by Scottish Members. It is rubbish to say that there will be no competition in Scotland and, if the hon. Gentleman will allow me, I shall tell him precisely why.

It is true that the massive investment programme which lies ahead will have to be paid for. In the present circumstances, the bills for that can be shared only between the consumer and the taxpayer. Someone has to pay for this massive investment. In future, the shareholder will join in the risk and, of course, will expect to receive dividends in return for doing so. We shall certainly not permit the supply companies to pass through into prices all the cost increases that they incur. They will therefore have the incentive to contract as efficiently as possible for future generating capacity. Several hon. Members have argued that we should not have made special provisions for nuclear power. [Interruption.]

Mr. Speaker : Order. Hon. Members should not carry on private conversations in the middle of an important speech.

Mr. Spicer : Some Opposition Members have simply been confused, but I am sure that others have been perverse. The provision that the Government have made for the making of grants, loans and guarantees relates in particular to future costs which the industry could not have been able to forsee, arising, for example, out of changes in Government policy or changes in the policy of the responsible regulator. This would be true, for instance, if a policy were introduced rapidly to speed up the process of decommissioning. The industry will certainly be expected to continue to make full and proper provision for all foreseen decommissioning, reprocessing and waste management costs. It does so at present for England and Wales at a cost of between £2 billion and £3 billion.

We have said that, while the consumer will pay, as he does now, for the benefits of diversity which nuclear-generated electricity provides, in future--the Opposition have consistently failed to understand this point-- he will pay on a transparent basis and not, as now, on the basis of accounts which confuse nuclear and other fuel sources in such a way as to make them unidentifiable.

We expect--unlike the right hon. Member for Devonport--that the introduction of modern and highly efficient PWRs will lead in time to the need for special treatment for the nuclear industry falling away. It is certainly our desire that all forms of power generation should ultimately compete on the same footing. The argument that coal is being unfairly treated compared with nuclear--the theme of the speech of the hon. Member for Rother Valley--is absurd when one considers the £9 billion of taxpayers' money that has been spent in the past nine years and add to that the enormous amounts--currently running at £550 million a year--which consumers of electricity have been paying, over the odds, for British coal.

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Mr. Barron : The basis of that figure has been widely disputed, even by the CEGB. How much money will be spent on the nuclear levy which the Bill introduces?

Mr. Spicer : The CEGB's estimate is much higher--the hon. Gentleman is right to say that the figure is disputed. We take a rather modest figure.

Since the war--this matter is not disputed--the equivalent of £19 billion in today's money has been paid by the taxpayer to the coal industry. To say that the coal industry is being unfairly treated in these circumstances is bizarre.

The question has been raised as to why Scotland is being treated differently from England and Wales in the Bill. The answer in part is that the vast majority of the Bill covers Scotland, England and Wales identically. The differences apply where the nature and structure of the two industries are different. In England and Wales, nuclear accounts for only 16 per cent. of the electricity produced

Mr. Douglas : Come on.

Mr. Spicer : The hon. Gentleman may know this, but many people have asked this question.

Mr. Douglas : The Minister, who is a pleasant gentleman, should try to understand that the root of the objection is not that Scotland is being treated differently, but that because it is different it should have a separate Bill.

Mr. Spicer : My right hon. and learned Friend the Secretary of State for Scotland spent a great deal of time explaining that, but perhaps the hon. Member for Dunfermline, West (Mr. Douglas) was not in the Chamber at the time. [Interruption.] I understand that he was. There are some differences. Proportionally, Scotland has four times as much nuclear power as England and Wales, has a vastly greater amount of hydro-electricity and is a different market place. It is clear that we had to cater for some differences north of the border.

The hon. Member for Ashfield (Mr. Haynes), who is sitting on the Opposition Front Bench, raised the question of safety. I can tell him categorically that the industry will be safe in private hands. All hon. Members accept that safety standards, especially in the nuclear industry, are excellent. They will remain precisely the same after privatisation and nuclear safety will continue to be policed after privatisation by the nuclear installations inspectorate. Some hon. Members have argued that in future the industry is to be too heavily regulated.

Mr. Orme : The Minister says that nuclear safety will remain in future as it is at present. Will the commission be answerable to Parliament in the way that it is presently answerable?

Mr. Spicer : Yes, of course it will. I am glad that the right hon. Gentleman reminded me about that specific question.

As I say, some hon. Members have argued that we are to regulate the industry too heavily and other hon. Members have argued just as vehemently that we have put the industry on too loose a rein. The House may therefore feel that we have got it about right. The principle that has guided us has been that those parts of the industry where it is most difficult to inject competition, for instance the grid company and the supply companies, should be the

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most rightly regulated. It is fairly natural for us to do that, but even here the role of regulation will be to bring as much competition into the industry as possible.

For instance, we expect that the Director General of Electricity Supply will particularly have in mind, in his approach for example to the grid company, the need to allow maximum access to new entrants commensurate with the well-being and safety of the system. On the other hand we think that there is little need for economic regulation at the generating end of the industry.

Contrary to what the Opposition have said, we think that we will achieve growing and genuine competition by splitting the CEGB into two companies, by allowing distribution companies up to a maximum of 15 per cent. own generation and by encouraging new companies to come in.

I now turn to the word that the Opposition dare not

speak--renationalisation. In answer to questions yesterday from my hon. Friends the Members for Lewisham, West (Mr. Maples) and for Rochford, the hon. Member for Sedgefield (Mr. Blair) said of the electricity industry :

"When we come to power it will be reinstated as a public service for the people of this country, and will not be run for private profit."

Later, when pressed by my hon. Friend the Member for Rochford, he said :

"We will reinstate it as a proper public service under public control."-- [ Official Report, 12 December 1988 ; Vol. 143, c. 689-696.]

I must ask him what that means. If it is Socialist yuppy-speak for renationalisation, then one day I suspect that he will be bound to have to tell the electorate the terms on which he will buy out the shareholders, particularly those shareholders who are also employees of the industry. If he does not mean renationalisation and is just putting up token opposition, I must tell him that we understand--it is what he is there to do--but I fear that it will not exactly improve his credibility.

I refer next to what has perhaps been the essential thrust of the Opposition's Front Bench attack on the Bill in the past few days. Opposition Members have argued that, under the terms of the Bill, there will be insufficient competition. At least, that is what I understood the hon. Member for Sedgefield to imply. In bringing competition into the forefront of the debate, Opposition Members have taken the debate on to our territory, and for that we must be grateful.

I am not sure what the Labour party knows about competition. Yesterday, the hon. Member for Sedgefield said :

"The truth is that there is no competitive pressure in this structure at the point of consumption, which is the only competitive pressure that matters."--[ Official Report, 12 December 1988 ; Vol. 143, c. 692.]

When, as in the case of electricity, three quarters of costs are at the point of production, that is manifest nonsense, and the hon. Gentleman knows it. He does not believe it himself--he is grinning. Of course he cannot believe that competition in three quarters of the industry has no effect on the consumer-- [Interruption.]

The hon. Member for Sedgefield says that the consumer does not pay. The consumer ultimately pays the costs. He is saying that, because we cannot have 100 per cent. perfect competition, we should have no competition. That is precisely what he and other Opposition Members have said throughout the debate. The hon. Member for Rother Valley is nodding his head.

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Mr. Barron : The Opposition simply say that, in 1983, the Government brought in an Energy Act that was to introduce the same competition, and it singularly failed, and we are arguing about that here tonight.

Mr. Spicer : Conservative Members would go some way with the hon. Gentleman. It is interesting that we are having this discussion about whether we have given enough competition. That is a perfectly reasonable debating ground, and we are delighted to have it. The 1983 Act, for various reasons--notably that the CEGB was left as a monopoly--did not work. That is why we are bringing in this replacement. I am glad that the hon. Gentleman mentioned the 1983 Act. Of course we were not pleased with it. It was a step in the right direction, but it was not far enough. It left a monopoly in place, and that monopoly, in effect, was able to control the rules. We say that where we cannot have perfect competition, we should regulate to protect the interests of the consumer. The truth is that, philosophically, a member of the Labour party--whether or not he is a member of the new yuppy Labour party--would not know a consumer if he saw one. The Labour party owes its very existence to producer interests. One never hears about common ownership of the means of consumption. Socialism was founded on the unholy alliance between producers and trade unions. The market place simply does not feature in Opposition Members' thinking. The truth is that the interests of the consumer are the essence of the Bill which, for the first time, imposes an obligation on the industry to supply all consumers, unless it is technically impractical to do so.

The consumer will not only benefit directly if some three quarters of his costs are subject to the force of competition, but he will have the chance, if that is what he wishes, to buy his electricity from an alternative supply company. The hon. Member for Rother Valley was wrong about that.

It has been said that the Bill is radical. That is precisely right. It is extremely radical. To change the whole emphasis of an immense utility away from one that is dominated by a single producer towards one that reflects the interests of the customer is an enormously ambitious undertaking. We are under no illusions about that. For the time being it may not appeal to the myopic imagination of the Opposition, bent on driving this country back into the past, but I am sure that it will receive the support of the mass of the country. Question put, That the amendment be made:

The House divided : Ayes 239, Noes 316.

Division No. 12] [10 pm


Abbott, Ms Diane

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Paddy

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barron, Kevin

Beckett, Margaret

Beggs, Roy

Beith, A. J.

Bell, Stuart

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Bruce, Malcolm (Gordon)

Buchan, Norman

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

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Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Coleman, Donald

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Cox, Tom

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Douglas, Dick

Duffy, A. E. P.

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Fatchett, Derek

Fearn, Ronald

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Forsythe, Clifford (Antrim S)

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

George, Bruce

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Golding, Mrs Llin

Gordon, Mildred

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Hattersley, Rt Hon Roy

Haynes, Frank

Healey, Rt Hon Denis

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Sean (Knowsley S)

Hughes, Simon (Southwark)

Illsley, Eric

Ingram, Adam

Johnston, Sir Russell

Jones, Barry (Alyn & Deeside)

Jones, Martyn (Clwyd S W)

Kaufman, Rt Hon Gerald

Kennedy, Charles

Kilfedder, James

Kinnock, Rt Hon Neil

Kirkwood, Archy

Lambie, David

Lamond, James

Leadbitter, Ted

Leighton, Ron

Lestor, Joan (Eccles)

Lewis, Terry

Litherland, Robert

Livingstone, Ken

Livsey, Richard

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

Loyden, Eddie

McAllion, John

McAvoy, Thomas

Macdonald, Calum A.

McFall, John

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McNamara, Kevin

McTaggart, Bob

McWilliam, John

Madden, Max

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Mitchell, Austin (G't Grimsby)

Molyneaux, Rt Hon James

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliott

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mowlam, Marjorie

Mullin, Chris

Murphy, Paul

Nellist, Dave

Oakes, Rt Hon Gordon

O'Brien, William

O'Neill, Martin

Orme, Rt Hon Stanley

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Redmond, Martin

Rees, Rt Hon Merlyn

Reid, Dr John

Richardson, Jo

Roberts, Allan (Bootle)

Robertson, George

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