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Mr. Blair : We shall hear from the Secretary of State whether the nuclear levy is there to pay for existing nuclear power stations. I have a different recollection of our Committee proceedings. The question was put time and again to Ministers about whether the levy covered new nuclear power stations that he wants the industry to build. The Secretary of State will tell us--and no doubt the hon. Member for Wyre (Mr. Mans) will listen carefully--if it does not cover existing stations. I believe that the tax exists to fund the new nuclear PWRs.
We have learnt from the Hinkley inquiry that once privatisation takes effect, the key element on cost for this new generation of nuclear stations will be the rate of return on capital required by the private sector. The London Business School puts that figure at about 11 per cent., which is wildly uncompetitive with conventional fired stations. The evidence given to the Hinkley inquiry, which was not particularly contradicted even by the electricity board, was that once the generation of four stations which the Government want are up and running, that would add anything from £400 million to £800 million to people's bills.
Is it not fascinating to reflect on the distinction between the Government's case as presented at Sizewell and that presented at Hinkley. The world has finally been stood on its head at Hinkley. Rather than the building of new nuclear power stations being the justification of the nuclear quota, the Central Electricity Generating Board's evidence at Hinkley shows that the nuclear quota is now the justification for building the power station. The prime motive behind the building of Hinkley power station is said to be because they have introduced a quota system.
The question which the Government must answer--I know that my hon. Friend the Member for Midlothian (Mr. Eadie) has raised it--is why the nuclear industry should be singled out for special legislative protection. Why does that industry stand alone to ensure that the Government's beliefs are realised? In addition, the proceeds of sale will be reduced as a result of the inclusion of the nuclear industry--that is probably where the Secretary of State and I share common ground. The CBI says that many of the City analysts believe that the proceeds of sale will not be substantially--if at all--increased by the inclusion of the nuclear industry. All these complex and complicated structures are the result of the Government's insistence on privatisation.
The Government accept that all these difficulties exist but they say that that is the only way to privatise the industry. They have not yet taken on board in this debate the fundamental point that, if the industry cannot be marketed without guaranteeing the risk of investors--which makes a nonsense of the idea of putting it into the market--the answer is not to market it and not to privatise it in any shape or form. That is the logical conclusion of the Secretary of State's proposal, from which the Government run away.
New clause 16 is reasonable. It says that it will be for the director to publish the difference between non-fossil and fossil fuels. That is entirely right for this, if for no other reason. We are told that nuclear power is uneconomic. The Hinkley inquiry is fought on a basis that has nothing to do with the economic case for that nuclear power station. Many of my hon. Friends will remember that for years we were told that the justification for nuclear power was that it was economic, and that nuclear power stations would provide us with cheap electricity. Given that record within
Column 269the industry, surely it is reasonable--as we suggest in new clause 16--that, if anyone should scrutinise the difference between non-fossil and fossil fuels it should be the director rather than the industry.
Will the Secretary of State confirm--I have heard that this is so--that the area boards wish to set up an organisation in order to implement the levy? The boards are thinking along the lines of a purchasing agency contracted to them or run by them in order to collect the nuclear levy. We would find that utterly unacceptable. If this is to be done at all, it must be done subject to the proper independent judgment of the director, who can look after the interests of consumers. His objective eye should be on the proceedings so that consumers can see exactly what is happening. The final amendment in the group deals with diversity. It sets itself modest and, in my view, reasonable objectives. It obliges the area boards to consider the issue of diversity, which is the only case that the Government have left for nuclear power, but gives them freedom of choice as to how they meet that obligation. I believe--and I think that many of my hon. Friends would share my belief--that diversity, the argument now advanced by the Government for the new generation of nuclear power, is merely the latest in a long line of excuses for preferring nuclear at the expense of coal. The amendment accepts diversity, but provides a way of achieving it that is neutral as between different sources of fuel and does not put nuclear in a special, privileged position not occupied by coal, oil, gas and other industries.
Mr. Blair : Exactly the same case could be made about nuclear power. What is interesting about the comments of Mr. Baker in the draft that came- -involuntarily--from his office is his letting the cat out of the bag in disclosing that we are already paying a premium for nuclear power. Whatever money may have been put into the coal industry, the hon. Gentleman's argument applies in spades to what has been put into the nuclear industry.
The point that is germane to our present consideration of privatisation is why nuclear is being treated differently from coal. Why is one being made subject to the full rigours of the market and the other not? I believe that the argument about diversity exposes a weakness at the heart of the Government's case. The diversity argument is a very particular type of argument. It is a public policy argument. It is not an argument about market forces or about competition ; it is an argument about long-term energy policy. That is what diversity is really about.
On inspection, the only argument for the fossil fuel levy with which the Government are now left is one that refutes the case for privatisation, because it assumes that markets cannot govern energy policy but must yield to the public interest. We may differ on where that public interest lies, but the fact that the Government are now driven to rely on diversity makes us realise that they are driven to accept the impossibility of running an energy policy simply at the behest of the market.
That is the difference between us--not merely on the privatisation of nuclear power or on the question of
Column 270diversity, but on the case for privatisation itself. That is why, like it or not, when we support the new clause we are supporting the case for a long-term energy policy. We are supporting the case for market forces not to rule that policy. Ultimately, we are putting forward the case against privatisation, which is not in the interests of consumers, energy policy or the country as a whole.
It is clear, probably to both sides of the House, that there is a need for a variety of sources of power, not just generation from fossil fuels. I believe that my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) would like an increase, if anything, in the amount of electricity generated by nuclear power, whereas I suspect that Opposition Members would like a reduction and would probably prefer the nuclear industry to wither on the vine as an alternative to fossil fuels in the medium and long term. My hon. Friend gave a number of reasons for feeling that the nuclear sector should be kept public. He mentioned planning. Planning inquiries into nuclear power stations have indeed taken considerable amounts of time ; for all we know, however, if we ever wanted to build a new fossil fuel power station in the future that, too, might result in a long drawn out planning inquiry. One thinks of the preliminary steps taken in relation to Fawley B, a new coal-fired power station which is not yet off the drawing board. Before the plan was scrapped it was already clear that the planning process might take as long as the Sizewell process, judging by the protests from that part of the country.
At present, capital costs are higher for nuclear than for fossil fuel power stations, but the gap is narrowing due to the need to fit environmental devices to fossil fuel stations to meet the increasing demands of the environmental lobby in this country and elsewhere. While there is no doubt that fossil fuel power stations will continue to have an advantage in terms of capital costs, that advantage is bound to lessen in future.
My hon. Friend also made some relevant points about future investment in nuclear power and research and development. Interestingly, since the privatisation proposals were announced a number of new initiatives have been taken by those in the private sector, such as Rolls-Royce, getting together with American concerns such as Combustion Engineering to produce new schemes for nuclear power stations--perhaps, in some instances, smaller power stations. There is no evidence to suggest that, simply because of privatisation, research and development money will no longer be spent on developing nuclear generation of electricity. BNFL is already looking into feasibility studies on replacing the two Magnox stations at Calder Hall and Chapelcross, perhaps with a modified PWR design. That, too, is a private sector initiative and shows that there is a future for nuclear power in the private sector.
It is also worth mentioning that the running costs of nuclear power stations--as opposed to the capital costs--are certainly of the same order as those of fossil fuel power stations, if not cheaper.
Column 271though they had emanated from the private sector rather than from the publicly owned nuclear sector. Will he clarify what he was talking about?
Mr. Mans : I cited Rolls-Royce as one private sector company--a privatised company, indeed--which is very much involved in discussing the production of smaller nuclear power stations, but that is just one example and there is already talk of similar plans in areas outside the CEGB. There is evidence that new initiatives are being taken as a result of the privatisation proposals.
One of the most significant points, mentioned only fleetingly in Committee, is that most of the nuclear power stations are right at the top of the merit order in which power stations are brought on line within the CEGB. That shows, if nothing else, that in purely running cost terms--as distinct from the capital costs of the new process--the generation of power by nuclear means is as cheap as fossil fuel generation. It shows that the nuclear industry has a future as an alternative means of generation in the private as well as the public sector. I therefore see no reason for it to be kept in the public sector.
I submit that in the future, with the increasing environmental restrictions on the generation of electrical power by fossil fuel means, nuclear energy will become a much more viable alternative. For that reason alone development should continue, and should continue in the private sector.
Mr. Malcolm Bruce : This debate is an interesting one, and the hon. Member for Bedfordshire, North (Sir T. Skeet) is to be congratulated on tabling his amendment, which is remarkably similar to one that I tabled at the same time--indicating that there is some common thinking even though, as I freely acknowledge, we approach the problem from totally different directions. [Interruption.] No, I do not disagree totally. That is not the point at all. I think that the hon. Gentleman and I agree on one thing--that the Government have got themselves into the rather ludicrous position of trying to advance the argument of rhetoric--bringing the electricity industry to market and then having to force a rig into the market to distort it. The hon. Member for Bedfordshire, North quite rightly says that this is a piece of nonsense. Why should not the Government operate more honestly, admit that there is a fix, take the nuclear industry out of their rhetoric, and leave the market to operate in the area of the electricity industry where it can more easily do so?
What I find interesting is that for 10 years of Conservative Government successive Secretaries of State have said, in effect, that the Government's policy on energy is not to have a policy. While the industry has been substantially in the public sector, there has been no policy, but now that it is to be privatised the Government have suddenly produced an energy policy--a policy which applies only to nuclear power. Nuclear power, we are told, is required for strategic reasons, but it is not fitted into a grand debate--we are not let into the inside thinking as to exactly what the Government's judgment of the strategy was. Certainly, it does not appear to have been produced by a radical reassessment of all energy options-- weighing them up honestly and objectively, and then coming to a conclusion as to exactly where they might fit into a planned, or free market, or hybrid scenario.
We know perfectly well that from the outset the Government have begged every question, determined to
Column 272have nuclear power. They knew that once they were committed to privatisation there was no possibility of making nuclear power stand up in the market place on its own merits, so they introduced this extraordinary Bill, which creates this distortion. Among means of generating electricity, nuclear power is given a unique, distorted and privileged position, which will disadvantage the consumer and other players in the electricity supply industry. That is why, on the question of nuclear power, the hon. Member for Bedfordshire, North came up with a view similar to that of my colleagues and myself. I think that it was last year, when the privatisation process was put in motion, that the Secretary of State said that the case for nuclear power would have to make itself. However, it could not make itself and it has not made itself, so the Secretary of State has had to introduce a fix in the Bill to take account of the inability of nuclear power to make a case for itself.
A number of factors need to be addressed. First, those of us who have a different view of energy priorities are at least entitled to argue that if we were allowed to determine which particular sector should be given a specific advantage it would not be the nuclear sector. It might be conservation. Certainly conservation ought to be the highest priority of this country, and it is one issue on which the Government can take positive action and make things happen. There could have been a decision to increase the use of natural gas--a much cleaner fuel, of which there is a great deal in the North sea. We could have made a very useful bargain with our Scandinavian neighbours. That would have been of substantial benefit for our medium to long-term energy requirements are concerned. Those options could have been pursued, but the Government did not even allow them to be explored because they had their own priorities.
Mr. Hardy : The hon. Gentleman is making a very interesting point. Does he agree that the Department of Energy was in favour of the Sleipner deal but that, for reasons of international finance, and because of the need to avoid the sort of trade deficits to which we are becoming accustomed, the Treasury opposed it?
Mr. Bruce : I do not accept that. Perhaps the Treasury knew something then that has only come home to roost now. There is no doubt at all that British Gas and the Department of Energy, left to operate freely, would have gone for that system. Indeed, if we had gone in early enough, when BP first mooted it, there could have been substantial benefits to the whole United Kingdom, both economically and in terms of energy.
It is interesting that the Government have decided that in one part of the United Kingdom--Scotland--there will be a separate nuclear company. Admittedly, it will not be an independent company but a subsidiary of the Scottish electricity companies. Nevertheless, the separation of the nuclear industry has been acknowledged as something that is tidy, at least in Scotland. The Government are therefore being somewhat inconsistent in not accepting that England and Wales, or indeed the whole United Kingdom, might benefit from having a single nuclear company.
As the hon. Member for Bedfordshire, North indicated, the nuclear industry is facing a very uncertain future. It was quite interesting that the hon. Member, who is as strong and enthusiastic a supporter of nuclear power as I am an opponent of it, gave us a very substantial list of
Column 273uncertainties, escalating costs, drawbacks and disadvantages. That that was from somebody who is in favour of the industry is an indication that serious questions have to be faced which the Government's Bill simply fails to address.
Certainly the cost has escalated. It has already been said today, and was said many times in Committee, that it is extraordinary that up to about two years ago we were told, in spite of the obvious information to the contrary, that nuclear power was the cheapest form of electricity available. Now we have been told that those of us who said that it was dear were right all along--that it was, and has been, the dearest form of electricity available. Throughout that time, those of us who said that it was expensive were told that we were entirely wrong. The consumer, in the Secretary of State's words, has been paying a nuclear levy--the high cost of nuclear power--all that time.
There are increasing problems for the nuclear power industry. First, the cost of reprocessing is rising at an unpredictable and rapid rate. Sellafield has been faced with threats of closure by the nuclear inspectorate because of its inability to meet acceptable safety and operating standards. A private industry which is dependent on reprocessing- -that is bad enough, because it is expensive--also has to face the possibility of being totally paralysed if the only reprocessing facility in the country were closed down on safety grounds. The commercial risk of being bound into that system is clear. If I were asked to take that risk-- as, indeed, I and all other members of the public are being asked--I should not want anything to do with it.
The problem of decommissioning is also creating uncertainty. That, too, is coming home to roost. The first nuclear power station is moving into its decommissioning phase. When we look back five years from now, I shall be interested to see what the actual cost of that decommissioning to date proved to be. The amount that we are told has been estimated and put aside is £300 million, but those who have been involved in decommissioning experiments in Canada have found that it costs many times that amount. Estimates suggest that the decommissioning of a significant nuclear power station may cost £2 billion--more than the cost, at current prices, of building one. I accept that these are only ball park estimates by people who may not be totally unbiased, although the Canadians have had experience of decommissioning a nuclear power station. Nevertheless, it may prove to be substantially more expensive than has been budgeted for. The Bill provides for a substantial sum of money to be set aside for decommissioning, but the industry may find that the substantial amount of money to be advanced by the Government is inadequate. The industry faces considerable uncertainties, all of which could add substantially to the cost.
The biggest problem of all that the industry will have to face is that of waste disposal. The costs and the practicalities of waste disposal cannot be fully quantified because no acceptable system for waste disposal has yet been devised. We must not take short cuts when dealing with waste disposal. It would be much better to store the waste on site in an area where it could be safely monitored than to transfer it to another site for reprocessing. The
Column 274problem with nuclear energy is that, the more material one handles, the greater the volume of waste one creates. The industry must confront the problem, and the consumer and taxpayer will also have to face up to it. So must the shareholder. I hope that the Secretary of State acknowledges that.
We are told that the private sector is to be given the opportunity to exercise its commercial judgment in an uncertain market, and the Secretary of State tells us that it will do so far more efficiently than the public sector. However, shareholders are to be told that they will not have to take a risk. The Secretary of State should acknowledge that the shareholders will have to take a risk. The hon. Member for Bedfordshire, North referred to the fact that the regulatory system is likely to be changed. It will almost certainly be changed. It will have to be modified in the light of experience. As and when the political complexion of the Government changes, the regulatory system will undoubtedly be changed. At that point, taxpayers are unlikely to be interested in providing substantial compensation for electricity industry shareholders.
The hon. Member for Bedfordshire, North believes that at some unspecified time flotation may take place, but my proposal is the more honest way to deal with the industry. The Secretary of State's criticism of the over- centralisation of the Central Electricity Generating Board is legitimate, but it has been blurred by the need to create the fossil fuel levy, the non -fossil fuel quota and the nuclear levy. That has distorted the framework of the Bill. It would be in much better shape if at the outset the Government had taken the advice of the hon. Member for Bedfordshire, North, kept nuclear power in the public sector, argued that there were strategic reasons for keeping it there and considered how to privatise the rest of the industry, which I accept is much more open to normal market forces and competition.
Furthermore, I would not privatise the industry until I had proved that a genuinely competitive industry could be created. That would be possible in other parts of the electricity supply industry, but the Government are privatising an industry that has built into it a substantial financial drag --the nuclear power industry. The Government have tried to ring fence it against risk and the foreseeable escalating costs that the industry faces, but they have been unable to take all the uncertainties fully into account. They will therefore find the City and the market less than enthusiastic about privatisation because it has not been thought through and properly worked out. The Government have created a monster which will return to haunt them.
The Secretary of State for Energy (Mr. Cecil Parkinson) : I hope that the House will not object if I intervene now to reply to the debate on the new clause and to speak to a number of Government amendments. After I have dealt with the new clause and spoken to the Government amendments, I shall listen to what is said about them and then reply to those comments.
The reasons for Government amendments Nos. 31 to 34 are straightforward. Under the present proposals, the nuclear obligation will be set once by order. We believe that that is too rigid. During the next 12 years, Magnox stations will be going off stream and PWRs will be coming on stream. However, it may not be possible to synchronise it so that, at any given moment, the amount of capacity
Column 275that is needed to meet the obligations is available. Therefore, we are amending clause 30 so that we place before the House orders that will recognise the practicalities. That does not represent any change of policy. Our intention is still to fix the obligation at 15 to 20 per cent., but we need flexibility for the reason that I mentioned. Power stations will be going out of commission while new ones are being built.
Another reason, which I believe the House will accept, is that we are aware that although we have set a non-fossil fuel obligation and wish to see renewables come on stream, at the moment there are no sources of renewable energy that could meet a significant part of that obligation. The distributors will be signing up to meet their obligations for non-fossil fuel.
We want to create a new tranche of capacity that is reserved exclusively for renewable sources of energy. We do not expect it to be very large between now and the year 2000. It will be between 200 and 600 MW. It is important to develop renewables. We want to have the right, therefore, to vary the order. There is no point in creating a non-fossil fuel obligation to be met by renewables if they do not exist. We want to have the right to modify the non-fossil fuel obligation to take into account the development of renewables and we shall be reserving a special tranche for that purpose. That is what the four amendments are designed to achieve.
I have listened with great interest to the debate. I mean no offence when I say that the arguments had a certain familiarity about them. We have been debating the subject at regular intervals for about three months. I shall repeat the Government's position. In particular, the hon. Member for Gordon (Mr. Bruce) grossly misrepresented the Government's position. The Government were elected on a commitment to maintain the nuclear power programme and to privatise the electricity supply industry. I have made it clear in every speech that I have made that we recognise that the non- fossil fuel obligation is a distortion of the market, but we believe that it is a worthwhile distortion, for these reasons.
We believe that security of supply is absolutely vital. We believe that diversity is the basis of security, and that has been my argument since the day I took office. I believe passionately that diversity of sources of energy is a vital part of ensuring the security of supply. In case there are hon. Members with short memories, may I say that we have had at least three major incidents in the past two decades which have underlined the value of nuclear--the two oil price explosions and the miners' strike. Without nuclear during those three major incidents, this country's supplies of electricity would have been put at risk. I have said this before and I will repeat it because, although it annoys Opposition Members it is true : without nuclear during the miners' strike, Mr. Scargill would have won. So we believe that the case for diversity has been made three times and that it would be an irresponsible Government who did not learn from those experiences.
Mr. Parkinson : The hon. Member for Sedgefield (Mr. Blair) asks me to talk about oil and that is precisely the point that I am going to make now--the volatility of fossil fuel prices, even since this Bill was introduced. In the past six months the price of oil has moved from $12 a barrel to $20 a barrel, and there is no one who does not believe that
Column 276in future oil prices will move gradually, inexorably and inevitably in one direction--upwards. So we need diversity of sources of supply to give us the necessary security.
We were elected on a promise to privatise and a promise to maintain a nuclear programme. We are determined to honour both those promises and also to make sure that those who benefit from diversity contribute to the cost ; that is the reason for the non-fossil fuel obligation, which will enable us to meet both our commitments. It will enable us to privatise and it will maintain the nuclear programme.
Let me repeat once again a remark that I have made over and over again but which the hon. Member for Sedgefield simply cannot or will not understand. The non-fossil fuel obligation does not increase or decrease costs ; it opens them up for public inspection. Now, for the first time, as a result of our proposals, the public is being told what nuclear costs are and it will have set out for it every year the difference, if there is one, between fossil fuel prices and prices of nuclear. So the Government are not in any way hiding the costs of nuclear. For the first time the public is being told what the costs of nuclear are.
Mr. Blair : The hon. Member for Bedfordshire, North (Sir T. Skeet) asserted that it was no part of the function of the nuclear levy or tax to cover the cost of the new pressurised water reactors. Does the Secretary of State agree with that?
Mr. Parkinson : I will deal with that point in my own good time. The point that I wish to make now is that nuclear costs are being incurred at present and that if, God forbid, we had a Labour Government tomorrow, the nuclear costs would continue to be incurred because we need the capacity that the present nuclear stations give us. So there would be no change with a change of Government, and the costs of nuclear would continue to be what they are--the costs. What we are arranging to do is to expose those costs. So in 80 to 85 per cent., of the market we will have competition in the supply of electricity and in the 15 to 20 per cent. met by nuclear we will, for the first time, have transparency : people will know what they are paying for.
What I find particularly puzzling about Opposition Members is that they continue to attack us for exposing the costs of nuclear and to defend a system which conceals them. At present, the cost of nuclear is wrapped up in the bulk supply tariff, and nobody knows precisely what it is.
Sir Trevor Skeet rose--
Mr. Parkinson : Whatever it is, every electricity user in this country pays it. It is being paid now and the fact that it becomes known and identified will neither increase nor decrease it. Again, privatisation will not increase the nuclear component. In fact, ironically, for the first time the public is being consulted through Parliament about the level of nuclear provision. Were we not to have come forward with this Bill, it would have been declared CEGB policy to build four PWRS initially, with another five by 2003 ; so privatisation is not producing more nuclear power ; it is exposing the costs of nuclear power and ensuring that the public, through Parliament, is consulted about the level of the nuclear obligation.
Column 277Sir Trevor Skeet rose--
Mr. Parkinson : The hon. Member for Sedgefield gives the impression that somehow or other privatisation has put nuclear in a privileged position. Privatisation has put the first four PWRS in a privileged position, but the rest of the programme will have to be settled on is own merits by Parliament. The system that the hon. Member for Sedgefield and the hon. Member for Gordon defend would have imposed on the country a huge nuclear programme, would have wrapped up the costs in the bulk supply tariff--the plans are already made--and the public would have had to accept them on its own cost-plus basis. Mr. Blair rose--
So here we have a position in which the Government are prepared to declare their commitment to nuclear, prepared to reveal and justify the costs and prepared for the first time to tell the public what they are. Opposition Members defend a system which imposes these things on the public without consultation.
Sir Trevor Skeet : The Secretary of State makes some very astute observations. May I ask him a simple question on costs? What is the difference in cost to the state with the nuclear industry inside and with the nuclear industry outside the state system?
Mr. Parkinson : I will explain in a moment why I believe that, although there are difficulties with nuclear--and I do not deny them--even with those difficulties the nuclear component is far better in the private sector and that the country will be far better off having it in the private sector.
Mr. Blair : I want to correct the Secretary of State on one point. It is the most extraordinary drivel to say that the electricity generating board would have insisted on the nuclear reactors and that somehow the things are now up for choice. The Government have already made the decision anyway ; the inconsistency is having made the decision by giving the ring fence of nuclear power and then putting it in the private sector. The Secretary of State has said that the nuclear tax covers these four PWRs. Supposing that the hopes on cost are wrong and that we find that those PWRs are considerably more expensive than conventional plant. Is it not the case that under his proposals the consumer will pay the difference?
Mr. Parkinson : The consumer always pays the difference, as he does under the present system. The difference is that those costs will be exposed and the cost of the electricity will be exposed, and if the public does not like those costs it will have a choice about whether it will pursue a nuclear policy. I believe that it will. I believe that the arguments for nuclear will become stronger and are becoming stronger day by day.
I mentioned the volatility of fuel prices. We are now seeing a growing world awareness of the dangers of being over-reliant on fossil fuels. We know about the greenhouse effect, the acid rain effect, the generally polluting effect of fossil fuel-produced electricity. I believe that the arguments will move firmly in the direction of more nuclear in the years ahead. But nuclear will not be imposed on an unwilling country as it has been in the past, by
Column 278Labour Governments in particular. In future, it will have to justify its existence, after the four PWRs that we are committed to helping the industry to build.
I repeat that it is not privatisation that is ring-fencing the nuclear programme for the first time. The nuclear programme has been imposed on the country by successive Governments and we are maintaining the existing level. We are not increasing that level and we are not reducing it ; we are simply maintaining it.
My hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), who wanted to keep the industry in the public sector, and the hon. Member for Sedgefield disagreed on just about everything else ; there was not a single word in my hon. Friend's speech that the hon. Gentleman could really support. My hon. Friend suggested that keeping the industry in the public sector would help. I believe that that would be fundamentally wrong, and we have the experience of the past to prove it. The history of the British nuclear programme--a history in which the Labour party played a prominent part--is littered with appallingly wrong and bad decisions.
The AGR programme has been mentioned in the debate. We have heard a list of stations which were 18, 17 or 16 years late. That programme was imposed on the country by a Labour Government. They chose the wrong technology. They imposed it on industry. The programme was carried through in an appallingly incompetent fashion. There was a total lack of financial discipline and management.
Already, simply as a result of the threat of privatisation, we see a change in attitude. The CEGB is starting to drive hard bargains with its suppliers. Now that it is aware that it is no longer in a cost-plus position, the CEGB is talking to BNFL about not getting fixed price contracts and no longer being at the mercy of BNFL's cost-plus mentality. Why is the industry coming to see me to argue the case for help and protection? It is because it recognises for the first time that it will not be in a cost-plus position and that it will not be in the position, in which Labour Governments would leave it, and which it would be in if it were in the public sector, of being able to spend whatever it likes and passing the cost through. There is the beginning of financial discipline in an area where there has been none, and where there would be none if the programme stayed in the public sector.
Mr. Morgan : In the light of the disparaging remarks that the Secretary of State has just made about the AGR programme, if the CEGB and its successor company, National Power, were to propose not to operate the AGR stations that are coming on stream this year--Dungeness B, Heysham 2 and Hartlepool--and merely kept them in reserve so that they qualified under clause 30 as capacity available--if the nuclear levy could be reduced by not operating them but merely having them as reserve capacity--would the Secretary of State agree to that suggestion?
Mr. Parkinson : A very large sum of money has been spent on the AGR programme and we are now at the point of seeing improved performance from those stations. A substantial part of the expenditure has had to be written off, but it is now producing results, albeit 10 to 15 years late. Opposition Members ducked sharply when we pointed out that in one of those leaked documents, which were the only research that they seemed to do in Committee, the industry had announced that it would
Column 279have to write off £1,600 million of taxpayers' money because of the bad decisions taken exclusively by Labour Governments on the AGR programme.
We want to get the whole of the industry into the private sector. We want to get away from political influence and political impositions. We want to put the industry in the hands of commercial management. Even though there will be less competition in nuclear than we would wish, we believe that it will still be better managed, better off and more accountable if it is in the private sector. We have heard some remarks about what the CBI wants. We have been told that the CBI wants a nuclear programme, that it wants it to stay in the public sector and then that it wants it to be floated off to create a competitive third force. My view is simple : what the CBI wants is the benefit of the security that comes from nuclear, but it does not want to make its contribution to the cost. Not only is the non-fossil fuel obligation a useful means of encouraging the development of the next generation of nuclear power stations but it is a way of ensuring that everybody who benefits from that diversity and security makes a contribution.
The hon. Member for Sedgefield asked how the system would work. I explained in Committee that there will be collective purchasing, through a company set up for that purpose, by all the area boards of the production from the nuclear stations. That production will be sold at the fossil fuel price to the area boards. If there is a difference and if the cost is higher than the selling price, that will become the levy, and that levy will be paid by all who use electricity. It will not be possible just to impose it on the domestic customer, which is what some people in industry argue for. The non -fossil fuel obligation will encourage the development of nuclear power stations but it will also ensure that the cost of those stations is fairly borne.
We believe that new clause 16 is unnecessary. It will be the director general who will compute the levy. It will be his job to decide the correct level of the levy and to publish it. It will also be the job of National Power separately to account for its nuclear production. That also for the first time will become transparent and people will know what they are paying for, but the director general will be part of the process of setting the levy ; he will oversee it.
Amendment No. 148 proposes an interesting development. For the first time on behalf of the Opposition the hon. Member for Sedgefield recognised tonight the importance of diversity as a source of security, but in classic muddled Labour fashion. Having identified it as something desirable, they then make arrangements for it not to happen. They make a proposal for a vague system that encourages people to think about the possible benefits of diversity. We are not mealy-mouthed. We believe strongly that nuclear is the main source of diversity. As a result we are prepared to commit ourselves to justify our policies.
We noticed in Committee that the hon. Member for Sedgefield becomes remarkably coy if questions are addressed to him. When we ask him if he would close down the nuclear stations we get no answer. We point out to him that Cleveland Bridge is on the edge of his constituency and is very dependent on the nuclear programme ; when we ask him if we may tell people there on his behalf that they will be out of a job, he looks coy, rushes off and talks to his journalist friends.
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When we got to questions of coal and Mr. Scargill, the hon. Member for Sedgefield handed over to his hon. Friend the Member for Rother Valley (Mr. Barron) and made arrangements not to be in the Committee Room, so he was not there while the arguments about coal took place. I was there, and I witnessed the hon. Member for Sedgefield achieve the impossible--of being present, but not in the Committee Room, for most of the time. [Interruption.] The hon. Gentleman is happy with his rhetoric and heated speeches, but we never find out in what he believes. We only know that he is opposed to privatisation, although we read in The Times that privatisation will stay and that the structure which we are putting in the private sector will remain for many years, because it will be a long time before there is a Labour Government. In any case, they would only tighten up the regulatory system. In other words, we hear a great deal about what is wrong with our proposals, but Opposition Members have no real plans for changing them. They would only regulate them a little, should they ever get the chance to do so.
We are asked, in connection with amendment No. 147, whether it would be appropriate for consumer committees to be involved in making the order setting the non-fossil fuel obligation. We believe that that is a matter for Government and Parliament--that it is for Government to make their proposals to the House, and we intend to do that. We do not think that local consumer committees would have a great deal to contribute to the setting of the non-fossil fuel obligation. That job is better done here in Parliament.
The House has had from the Opposition, and in particular from Labour Members, a typical piece of Labour escapism. They know full well that, in the nuclear programme we have, the nuclear stations owe much to policy decisions taken by them ; they know that they cannot be closed ; they know that we need them to ensure the security of the system ; and they know the cost and object to the fact that we will expose the cost and argue the case for diversity instead of imposing it on an unwilling country. Nuclear has a great contribution to make. We are prepared to argue the case, to expose the cost and to have a transparent system.
I hope that my hon. Friend the Member for Bedfordshire, North will change his mind about pressing his new clause and that my hon. Friends will join me in exposing Opposition Members as a bunch of bogus no-hopers who have nothing to offer but criticism.
Mr. Ashton : We have just heard a remarkable speech from the Secretary of State. He began by saying that the Bill was designed to take the decisions out of politics and allow costings to be made without regard to political issues, but immediately went on to make a political speech, using the need for nuclear power to slap down the National Union of Mineworkers. Nothing has been said in the debate so far about the part played by gas turbines or about the new EEC regulations concerning the surplus of gas in the North sea and its use for generating electricity. That issue has immense ramifications for my constituency and in particular for West Burton B, the proposed coal-fired power station.
About two years ago the right hon. Gentleman who is now the Secretary of State for Wales, then Secretary of State for Energy, astonished the House one Question Time
Column 281by saying that he would approve the building of a new coal-fired power station, West Burton B, close to West Burton A, in my constituency. The CEGB, which we had been lobbying for at least two years, said that it was keen to have that power station because planning permission for it had been agreed and it could be built quickly. It was pointed out that West Burton A already existed, that the roads and railway lines were there, that it would be handy for the river and that it would be close to the rich coalfields of Nottinghamshire. Indeed, the CEGB said in a publicity handout that it
"would be planned to be in operation by 1995. It would be a large station with a generating capacity of 1,800 megawatts. Decisions have to be made soon because it takes about five years to build a coal-fired power station."
The then Secretary of State for Energy made his announcement a month before the general election. There were marginal seats in Nottinghamshire, there had just been a coal strike and there was much conflict between the NUM and the Union of Democratic Mineworkers. Today, more than two years later, not a sod has been turned or a brick laid. We continue to have only promises.
That power station was expected to create 2,500 construction jobs during the five years that it would take to build it. In my constituency there is 17 per cent. male unemployment in Worksop. A further 600 jobs were to be created in running the power station and many more running the railways, building a new road and even supplying fish and chips to the canteen. It was said that West Burton B would be given priority by the CEGB. It would have preferred Fawley in Southampton, but there were objections there because of property values. As there were no objections to West Burton B, it was agreed that the plan should go full steam ahead. All the councils agreed to the planning regulations.
Every time I have tabled questions to the Secretary of State for Energy about why he has not given his approval, he has said that there have been delays with the local councils on planning regulations, but the local councils agreed 41 out of 42 planning regulations very rapidly. The remaining one was whether a minor road should be straightened out before or after the power station was built. There has been no delay in deciding planning conditions for the power station, but we are still awaiting a decision.
The power station would keep five pits open. It would burn anything up to 5 million tonnes of coal a year. In Nottinghamshire, where the UDM supported the Conservatives throughout the miners' strike, the Conservative majority for the hon. Member for Sherwood (Mr. Stewart), who is not in his place tonight, went up from 600 to 4,500 and the majority of my hon. Friend the Member for Mansfield (Mr. Meale) fell to 56. UDM members were promised continually that they would be looked after by the Conservative Government, and the promises continued until the last general election, but when it came to delivering those promises nothing happened. Since then there has been nothing but delay.
In desperation, I turned to the CEGB and asked Lord Marshall of Goring, "Do you intend to build the power station? Where do we go from here?" He wrote me a very friendly letter :
"Dear Joe It is no longer our decision whether or not to go ahead with West Burton. There is excess gas in the North Sea and the EEC Regulations have now changed so