House of Commons Hansard Debates for 5 Apr 1989

Mr. Ashton : The hon. Gentleman can make his point afterwards. I am not giving way all the time. If the hon. Gentleman wants to speak, he can speak later.

Occasionally I have received a complaint from a person with a card that it has run out at the weekend and he cannot get a replacement from the local office. In my constituency the local office might be 10 miles away, at Mansfield or Doncaster. Even if he has the money, there may be no bus to take him there. There are other problems, too. [Interruption.] The hon. Member for Wyre should not be too impatient. We have three days on this Bill so it is no use him getting excited.

The problem will be solved if the person in difficulty can put a 50p piece into a slot. The fuel policy action group can confirm that in some cases, after reconnection of a supply, the meter has been rigged to go at such a speed that the person gets only half what he pays for because he has debts to pay off, so it becomes like a treadmill and the consumer is back to square one.

4.45 pm

There are difficult and complicated methods of paying debts, but none is as effective as the old system under private enterprise. I was a boy before the industry was nationalised. In the poor areas in Sheffield, where I lived, everyone had a slot meter. In many terrace houses not every room had electricity. Often the area board would say to a family, "We think that you can only afford electricity in three rooms." My grandmother did not have electricity upstairs, and in the kitchen she had an old gas lamp,

Column 214

because the area board thought that she would not be able to pay for more electricity. Nobody wants to go back to those days. The private boards will find, like anyone else, that they will suffer bad debts. In the past the rest of us have paid for the bad debts. The authorities stick 2.5 per cent. on everybody's bill and we all pay. It is like the credit card companies which charge 27 per cent. interest because they have to cover for bad debts. With the nationalised industries, if there is a disconnection at least a Member of Parliament may raise the matter locally and exert pressure, or even ask a question in the House about the increasing number of disconnections. When the gas industry was sold off, disconnections rocketed--the people reading the meters were told to adopt a much tougher line--and exactly the same will happen with electricity. There will be a harder attitude to poor consumers who cannot pay their bills at the end of three months.

The Bill is not good enough. There is no protection for the poor one-parent family who cannot pay when suddenly faced with a bill for three months' electricity. The only protection is to give them the right to demand a "pay as you burn" system, but as yet there is no right for anyone to demand such a meter. I hope that the Minister can tell us that the Bill will include a provision to give that right to poor consumers.

Mr. Deputy Speaker : Before the Minister replies a second time, do any other hon. Members wish to take part in the debate? No.

Mr. Michael Spicer : Later amendments will address themselves specifically to the point which the hon. Member for Bassetlaw (Mr. Ashton) has raised. By way of a brief response, there will be a right to ask for prepayment meters if people want them. Far from disconnections going up, they are coming down dramatically. One reason is that people are getting prepayment meters. The hon. Gentleman referred to miscallibration of meters. In those circumstances there can be a direct appeal to the director general. The hon. Gentleman raised the question of using cash rather than tokens. As my hon. Friend the Member for Wyre (Mr. Mans) mentioned, one reason for the move to prepayment systems, using tokens or cards, is precisely because they are more secure and cannot be robbed so easily. We will have a debate on the subject, but I can give the hon. Member for Bassetlaw those assurances on the questions that he raised on behalf of poorer consumers.

Mr. Mans : Does my hon. Friend agree that the hon. Member for Bassetlaw (Mr. Ashton) is living in the past? The type of prepayment meters now being fitted have a button on them to allow consumers £2 or £5 worth of free electricity which they pay for after the event. That gets over the problem that the hon. Gentleman suggested might arise for consumers.

Mr. Ashton : Will the Minister ask the boards to make that fact clear to the public in advertisements? I assure him that few members of the public know about it.

Mr. Spicer : It becomes a right, and with the latest technology the boards would do well to take the hon. Gentleman's advice and advertise it widely.

The hon. Member for Rother Valley (Mr. Barron) raised the question of liability, and one must ask what sort of consumers he had in mind. If the supply companies had

Column 215

all the liability imposed on them, that would mean them having total insurance to cover all eventualities, and that would be extremely expensive. It would have to be paid for by other consumers in higher tariffs.

We say that there should be a test or reasonableness. We are making a distinction--that is what the new clause is about--between physical loss which is incurred through a breakdown in supply and which is fully insurable, and unreasonable economic loss--vast losses because of a temporary, perhaps few seconds' disruption of supply. For large computer companies or large companies owning computers--the type of consumer the new clause addresses--it would be surprising if they were not properly insured against such eventualities.

Mr. Barron : Will they be insured?

Mr. Spicer : I cannot speak for every company in the land. It would be surprising, first, if they were not properly insured and, secondly, if they did not have back-up systems, such as small generators, as a standby capacity. Most large computer users and manufacturers would have a standby capacity, and that is the type of company we are considering in this context.

Mr. Barron : What liability do the area boards have at present when eventualities of this type occur? Will companies have to insure differently in the future, or will liability be accepted by the boards?

Mr. Spicer : I will obtain the precise answer for the hon. Gentleman because I do not want to mislead him about the exact liability that the companies will have. We are talking about companies going into the private sector, where the issue of insurance will apply in the way I have described. But I will obtain for the hon. Gentleman the details of the precise status of the obligations and liabilities that are covered at present.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 6

Conditions for funding certain companies engaged in nuclear generation in Scotland .--(1) Without prejudice to section 7(1)(a) above, it may be a condition of a licence granted to a company ("the licence holder") that it shall from time to time provide any company to which subsection (2) below applies with such funds as may be determined by or under the condition in respect of such of that company's liabilities as may be so determined.

(2) This subsection applies to any company which--

(a) is deemed for the purposes of the Companies Act 1985 to be a subsidiary of the licence holder ; or

(b) is a related company of the licence holder (as defined in paragraph 92 of Schedule 4 to that Act),

and is, at the time when the condition is imposed, engaged in the operation of a nuclear generating station in Scotland.

(3) Subsection (3) of section 7 above applies in respect of a condition included in a licence by virtue of this section as it applies in respect of a condition so included by virtue of subsection (1)(a) of that section.'.-- [Mr. Lang.]

Brought up, and read the First time.

The Minister of State, Scottish Office (Mr. Ian Lang) : I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker : With this, it will be convenient to discuss Government amendments Nos. 5, 6, 7, 15 and 65.

Mr. Lang : The new clause relates to a technicality in the relationship between Scottish Nuclear Limited and its parent companies. It will enable a licence condition to be

Column 216

included in any licence or licences granted under the Bill requiring the licence holder to meet the liabilities of any subsidiary or related company operating a nuclear generating station in Scotland. The amendment applies only in Scotland, as it is only in Scotland that it is proposed that nuclear operations be conducted through a subsidiary company.

As hon. Members will be aware, it is a central part of the Government's proposals for restructuring the Scottish industry that there should be a separate company. The new clause will enable such a condition to be placed in the licences granted to the two electricity companies as successors to the Scottish boards to ensure that the liabilities of that subsidiary, Scottish Nuclear Limited, are met. The long-term liabilities in question are those associated with the decommissioning of nuclear installations and the disposal of nuclear waste. Following privatisation, the nuclear stations in Scotland will be owned and operated by SNL, which is to be owned by the two electricity companies in proportion to their relative size. SNL will be the nuclear site licensee and, as such, will be responsible for decommissioning the stations once generation has ceased. Such decommissioning is planned to take up to 100 years to complete. Financial provision will be made in the balance sheets of SNL and the parent companies against the long-term liabilities. The fact that financial provision is made in this way should ensure that funds are available to meet the long-term liabilities.

The clause covers a technicality which results from the subsidiary structure. As things stand, SNL, as a subsidiary company of the South of Scotland electricity company or a related company to the North of Scotland electricity company, would be unable to obtain funds from its parents without their agreement. While it is expected that the parents would agree, the Government recognise that it is prudent to ensure that there is a direct route to enforce the long-term liabilities against them.

Subsection (1) of the new clause provides for the inclusion of an appropriately drafted licence condition requiring the licence holder to provide such funds as may be determined by, or under the condition in respect of, the liabilities of a company specified in subsection (2). Subsection (2)(a) applies the clause to any company which, in terms of the Companies Act 1985, is a subsidiary of the licence holder ; SNL will be a subsidiary of the south company by virtue of the fact that the south company holds more than half its equity share capital. Subsection (2)(b) applies the clause to any company which is a related company of the licence holder, defined in the Companies Act 1985 as meaning any body corporate in which the parent company holds, on a long-term basis, a qualifying capital interest for the purposes of securing a contribution to that company's own activities by the exercise of any control or influence arising from that interest.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : The Minister is speaking at a rapid pace about an issue which, in his initial remarks, he implied was merely technical but which is in fact of monumental importance.

He skipped rapidly over the point about SNL having responsibility for including in its accounts the costs of decommissioning any nuclear power stations that are closed. Will he explain precisely the position of Hunterston

Column 217

A? The decision to decommission having been made prior to privatisation, will the responsibility for decommissioning that station be inherited by SNL?

Mr. Lang : I said that the new clause was concerned with a technicality because, in essence, it is. The relationship between Scottish Nuclear Limited and its parent companies and the respective roles of the parents and SNL are important and major issues, but the clause is not directly concerned with that. It is concerned with the technical possibility that the parent companies might escape a liability incurred by their subsidiaries. The matter was raised in Committee and I am sure that Opposition Members will welcome this additional provision, which is made in case such a situation should arise.

The nuclear assets of Hunterston A will be transferred to SNL and my expectation--I will seek confirmation of this and if I am wrong I will write to the hon. Gentleman, or if the opportunity arises, correct myself later--is that Hunterston A would also form part of those nuclear assets and be transferred, notwithstanding that the decommissioning process, which may take 100 years, will already be under way.

Mr. Foulkes : The Minister is being helpful and has stated precisely that the nuclear assets of Hunterston A will be transferred to SNL. Do I assume that his reference to "assets" includes liabilities? In other words, may we assume that all aspects of Hunterston A--I am particularly concerned with the major liability of the cost of decommissioning--will be included in the liabilities of SNL and that all of that will be transferred to SNL? Perhaps the Minister has received a note on that by now.

Mr. Lang : I have indeed, and it confirms that I was correct in my assessment in reply to the hon. Gentleman's earlier intervention. Assets and liabilities will be transferred to SNL. The new clause is concerned with a technicality to ensure that the parent companies to SNL cannot escape their contribution to those liabilities. As I said, SNL is related to the north company on the basis described by the Companies Act 1985 from which I have quoted. In both cases, the new clause applies only to a company which, when the condition is imposed, is engaged in the operation of a nuclear generating station in Scotland.

Subsection (3) ensures that clause 7(3), which relates to the role of the director in relation to licence conditions, applies to any condition imposed by virtue of the new clause. The other amendments in the group are technical and I shall say something about them if the House wishes.

5 pm

Mr. Donald Dewar (Glasgow, Garscadden) : The Minister has described new clause 6 as technical. I recognise that it builds in a safeguard to ensure that the parent company does not slough off some of its responsibilities in the sensitive subject with which the clause deals. However, it raises a number of interesting matters on which we are entitled to inquire, relating to the scale of funds which might be involved and which can be transferred under certain conditions of the licence if new clause 6 reaches the statute book.

There is no area where public interest and sensitivity is more marked than the nuclear subsidiary of the two

Column 218

privatised companies in Scotland. While I imagine that it will be common ground that it is unlikely that any new capacity will be provided and that any nuclear or non-nuclear power stations will be built in Scotland for a considerable time, as my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has pointed out, there are on the horizon very substantial liabilities and charges which will be the subject of some of the financial transfers in the new clause. Perhaps it would be fair for the Minister to provide some details of the exact scale of the transfers, the size of the liabilities and how the nuclear subsidiary will operate. I do not want to speak at great length about the accumulated debt, but the Minister will have heard the exchanges between my hon. Friend the Member for Rother Valley (Mr. Barron) and the Under-Secretary of State for Energy in the past hour or so. We are all aware of the fact that there is something like £2.7 billion of accumulated debt between the two Scottish boards. I was interested to hear the Under-Secretary of State giving a breakdown of that debt between the national loan fund and more than £1,000 million of foreign debt included in that overall total.

It is important to know as soon as possible exactly what will happen to that debt and how much will be written off as it is a matter of such pressing importance to the electricity industry. I recall the briefing given in December 1988 by Mr. Donald Miller, the chairman of the SSEB at Torness in which he made a statement that I am sure the Minister recalls. He said that the company could not be privatised

"unless the Government writes off a large part of the £2.2 billion debts it incurred in building them."

He was referring to the nuclear power stations.

I heard the Under-Secretary of State making it clear that he was a man of experience with many previous convictions in the privatisation campaign and that he did not think that it was yet time to reveal all, although he promised that sinister happening--a full disclosure--at some point. It is important that the Minister says something on the subject, particularly as I understand that a good deal of the foreign debt is with the European Investment bank. I am relying upon the expertise of some of my colleagues, but I understand that it is backed by Treasury exchange cover and by guarantees.

If I am right, the European Investment bank debt will be at a considerably lower rate of exchange than the going rate. If the European Investment bank debt is transferred to the Treasury before the transfer date, can we be sure that it will be at the same rate of interest and that there will be no disadvantage in terms of the new rates of interest to be charged on the substitute debt, as that will clearly affect the transfer of funds or the call upon those funds which we are discussing in new clause 6? Perhaps the Minister might quickly and simply deal with that when he replies.

Another aspect of that briefing--I almost said that notorious briefing because it was certainly much noticed--at Torness given by Mr. Donald Miller was that he made it clear that he had considerable doubts about the way in which the Government were approaching possible changes in Government policy, the variations in BNFL pricing policy and the impact that that could have on the balance sheet of the privatised companies. That will have a direct effect on new clause 6 and upon the calls on the parent company which it covers.

Column 219

The House will be familiar with the fact that in the financial year 1987-88 the South of Scotland electricity board had a trading profit of £13 million which was dramatically transferred into a loss of £70 million simply because of the cost of transferring the Chapelcross power station--a very old, minor power station--to the Cumbria board. Of course a great deal will emerge about future possible transactions which must affect the extent to which new clause 6 is used and whether it is necessary at all and are therefore relevant to the debate.

The House will recall that the chairman of the SSEB made it very clear in December 1988 that in his view the company would be, "unsellable" unless he received "the ultimate insurance" on the possible costs and the escalating expense of decommissioning. He said that the assurances

"will have to besigned and sealed before one writes a prospectus--otherwise it will not be worth writing."

That was a very serious point to be made by someone who was about to become chairman of a private company approaching flotation. It is clear that the solution to that problem will have a very far-reaching effect on the use that is made of new clause 6. I hope that the Minister will say something about that. A favourite jargon term often found in European debates is "transparency". I am in favour of transparency and knowing a little more about how the machinery will operate and what the implications will be. I say that in the light of what Mr. Miller said. I draw the Minister's attention to a story which appeared in The Scotsman on 8 March 1989 under the headline :

"Nuclear costs deal eases SSEB's sell-off doubts".

It went on :

"A secret agreement has been reached between Ministers and the South of Scotland Electricity Board which has removed one of the biggest question marks over the proposed privatisation of the Scottish power industry."

I cannot think of anything that will have a more direct effect upon the operation of new clause 6, and the amount of funding that will have to come from parent companies. We have an excellent opportunity relevant to the debate to get some information about that secret deal. It is particularly appropriate that the Minister of State should be at the Dispatch Box. It appears that he was the principal partner, together with Mr. Donald Miller, in the private discussions that the press tell us led to the deal.

The article says :

"Both the SSEB and the Scottish Office yesterday confirmed however, that an understanding has been reached in which Mr. Miller's doubts have been satisfied the key element is understood to be assurances on the contracts which fix ceiling levels on the amount of any unforeseen rise in nuclear costs and in the contracts which will govern the relationship after privatisation with British Nuclear Fuels Limited."

It goes on to say :

"A senior Scottish Office source"--

I am always suspicious when I read those words. However, that senior Scottish Office figure said that there was

"still some way to go in the discussions before a firm announcement could be made but that the process involved dotting the Is and crossing the Ts.' "

I should like to hear from the Minister a little about the deal and what has happened. Clearly, it will have an important and direct impact upon the way in which new clause 6 will operate.

A particularly good example of the calls that may be made on new clause 6 is the issue to which my hon. Friend the Member for Carrick, Cumnock and Doon Valley

Column 220

referred in his intervention--the decommissioning of Hunterston A Magnox station. I do not want to debate the merits of that decision because it would be going wide of the new clause. However, we are entitled to ask for some information about the implications of the decision in terms of the calls that may be made on the parent company under the licence agreements that will presumably be written in if the new clause is placed on the statute book.

I do not know what the cost will be but an article dated 30 March 1989 in Power in Europe, which is published by the Financial Times and is a reputable and informed trade paper, points out : "Hunterston A is the most efficient of the United Kingdom's Magnox stations, and is one of the most efficient nuclear units in the world, with a lifetime load factor of 82 per cent."

It goes on to point out :

"only minimum expenditure is expected to be required at Hunterston A in order to receive the Nuclear Installations Inspectorate's approval for continued operation in the 1990s."

There is little dispute about that as the background to what has now happened.

The view of the author of that article is particularly relevant and interesting in terms of new clause 6. He believes that the real reason for the closure is that the operating costs of all Magnox stations in the United Kingdom have increased markedly in recent years, particularly because of higher BNFL charges for the reprocessing of spent fuel. If that is so, and the arrangements between BNFL and the privatised companies continue unaltered, the implications for the transfer of funds to the nuclear subsidiary company, which are envisaged in the new clause, are bound to be significant.

Mr. Foulkes : I agree with my hon. Friend's suspicions about the words, "senior Scottish Office sources". When one reads the words, "senior Labour MP" one knows that if someone is quoted in that way, one is about to be stabbed in the back-- [Interruption.] Well, anyone would give their name if they had something good to say.

My hon. Friend mentioned BNFL and its costs to the SSEB in relation to Hunterston A. BNFL has a private monopoly on the ability to provide reprocessing. Does that not illustrate beautifully the way in which the private monopolies, which have total control over the costs they charge, can have a grip on the consumer? That is the way the privatised electricity companies will have a grip on the consumer in relation to pricing.

Mr. Dewar : That is a fair comment. I do not want to follow my hon. Friend down that line but there are dangers and concerns. My hon. Friend's health seems to be remarkably good in view of the dangers he described of life in Parliament.

Mr. Foulkes : I was thinking about my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Dewar : As always, I am touched.

I shall return to the thread of my argument. I was making an important point. It is an open secret and was the subject of specific comment when the Select Committee on Energy considered the matter. Evidence was given by Mr. Christopher Harding, chairman of BNFL. According to the article in Power in Europe he told the Select Committee that the "contract was unbreakable". That is the contract between the nuclear subsidiary whose fate we are discussing and BNFL. He said :

Column 221

"the contract was unbreakable ; should the two utilities attempt to avoid reprocessing by long-term storage, for example, they would be obliged to pay BNFL the price of reprocessing anyway. It is, in effect, one of the biggest take-or-pay contracts in history." Clearly, that will have a direct influence on what we are discussing now.

5.15 pm

I am entitled to ask the Minister if he can say whether that contract, in that remarkably inflexible state--almost a Leonine bargain--is still in place. If it is, the House should consider it in relation to the calls that are likely to be made under new clause 6. Another point worth mentioning is that we are talking about the calls on funds to supply the nuclear subsidiary. No doubt nuclear expenditure will be linked to other types of generation and its availability. I do not want to transgress on your tolerance, Mr. Deputy Speaker, but it is important that the Minister mentions the SSEB's arrangements on coal burn. I say that because the state of coal burn and whether the agreement that has been negotiated over many years has been brought to a successful conclusion will inevitably affect the calls made under the new clause.

I do not want to strike a discordant note and I welcome the fact that the Minister intervened in the long-running negotiations and recognised that public interest was involved. However, I was saddened that we had to beat on his door for a couple of years without success and that an enormous amount of damage was done as a result of the delay and the Minister's refusal to do his duty.

We know that in principle an agreement for five years has been reached. Under the agreement the SSEB will take 2 million tonnes of coal a year. However, I understand that the last two years of the agreement are dependent on the use of the interconnector. That is a matter for speculation and concern. We do not know much about the details or whether Ministers are still completely satisfied that the deal will hold at this point. The Minister may wish to correct me and I would be glad to receive any details but there is nothing clear about the price. We have heard mention of 150p per gigajoule but we were told by the SSEB that it would have to receive 130p per gigajoule if it were to sell effectively into the interconnector. British Coal is said to be holding out for 180p per gigajoule. Those are enormous variations. I unreservedly welcome the agreement in principle but I am concerned about the current state of play. I would be interested to know how much of the two million tonnes will be deep mined and how much will be opencast or whether there is any agreement on that. Those are all matters which, inevitably, affect the nuclear subsidiary and, therefore, the calls on the parent company's financial resources which may be made under new clause 6. Another point, which is connected by the same logic to this debate, is what is happening about the interconnector. I raise this matter because I now read repeatedly in articles by well-informed journalists a suggestion that any sales by the Scottish private boards to the English distribution companies will come from nuclear base load electricity. The logic is that that is likely to find favour in the first-call system and may be more attractive and cheaper for clients south of the border. There is a real fear that the consumer will have to pay a price for that and that domestic costs

Column 222

will spiral. It is important for the Minister to say a few words about that. I am anxious to see the interconnector working and sales increasing, which might do something to reduce the calls on the parent companies' finances under the mechanism envisaged in new clause 6. We are entitled to some information from the Minister on those points.

I am conscious of the fact that several of my hon. Friends wish to catch your eye, Mr. Deputy Speaker, and I am also aware that there will be another debate on Scottish matters when we come to the next group of amendments, which are concerned with the regulatory machinery. I give fair notice to the Minister that we shall raise such matters as the 8 per cent. increase in prices. I hoped that such rises could have been prevented under a proper regulatory system. The electricity consultative councils have been left bravely, but vainly, trying to hold the line for the consumer interest in the dying days of this Government's stewardship. However, we shall be discussing that in our later debate and I do not wish to transgress at present. I ask the Minister to address some of the important points. If he is asking us to endorse new clause 6, he cannot do so on the basis that it is simply a technical matter to be nodded onto the statute book in a perfunctory manner. He must give us some idea of the shape and scale of the calls likely to be made under the new machinery and he must try to deal with the important points I have raised, not because of a peculiar and idiosyncratic interest of my own, but because they are of fundamental importance to the industry and the consumer.

Mr. Malcolm Bruce (Gordon) : It was interesting that the Minister tried to pass off new clause 6 as a technicality, when the very fact that it is necessary suggests that there is a rather more deep-seated problem, which has been touched on already by hon. Members and about which the Minister must come clean. The Minister has said, in effect, that the successor companies to the existing boards in Scotland will, under the Bill, inherit a liability--the requirement to own any nuclear subsidiary to which they are committed to provide funding, on a fairly open-ended basis. That means that the commercial judgment of the successor companies will be compromised by new clause 6. They would have some reason, if they are coming in with a fresh approach, to believe that the SSEB in particular has a record of profligate extravagance. It would not have been able to get away with such extravagance if it had been in the private sector.

The SSEB has been able to invest in providing 110 per cent. excess capacity in the Scottish generating system, which is way above any possible strategic or commercial requirement. That has been brought home in the past couple of weeks, as the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) remarked, by the announcement that the board is closing Hunterston A, the most efficient and consistently successful Magnox station, which still has a substantial effective life left. It is to be closed down for one reason--that the board cannot find, or foresee the possibility of finding, a market for the electricity that it produces.

That seems extraordinary, given that in the past couple of years a brand new nuclear power station has been opened on the other coast of Scotland. For a company to build a new power station and then to close down a smaller power station of a similar type and of proven efficiency suggests a complete lack of good commercial judgment

Column 223

and an incredible degree of appalling forecasting. One must also consider that the massive Peterhead power station is operating consistently under capacity and the Inverkip was mothballed almost before it came on stream.

It is no wonder that the Scottish electricity industry is apprehensive about being exposed to market forces--if that were the Government's intention. It is not, and new clause 6 is a further indication of how ridiculous the Government's policy is on nuclear power and the operation of the market. It is, perhaps, appropriate to quote from Energy Economics, which, summarising Government policy on nuclear power, said :

"Privatisation has meant that the UK has discovered it does not after all need an active fast breeder research programme, nor pour vast sums into nuclear fusion ; that nuclear power is not as economic as viable alternatives ; that reprocessing is an expensive waste of time ; that decommissioning is a vast problem."

That is the state of the nuclear industry, and all those factors specifically affect the industry in Scotland.

Consumers may ask how much cheaper electricity in Scotland might have been had we had an efficient electricity board producing close to the required capacity, rather than servicing the debt for a massive over-capacity. The Bill has already provided the SSEB with a £2.5 billion nuclear debt write-off. Mr. Donald Miller has said that that is not enough. Presumably, this "technical amendment" is designed to ensure that not only will the taxpayer have to contribute to the massive excess of nuclear capacity in Scotland, but that the consumer will continue thereafter to fund it through electricity prices.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) made passing reference to the recent increase of 8.5 per cent. It is interesting to make the point that that increase is higher than that in England and Wales and higher than the rate of inflation--at least for this week, although inflation will no doubt catch up fairly soon. The point which has not been fully realised is that Scotland is now beginning the fairly rapid march from being the area of the United Kingdom that has enjoyed the cheapest electricity to being the area of the United Kingdom that will face the most expensive electricity as a direct result of this Bill. The electricity boards, while still in public ownership, are like the Welsh forwards, getting in their retaliation first. They are softening up the Scottish public to the idea that price increases in Scotland will move faster than in the rest of the United Kingdom.

Mr. Robert Maclennan : (Caithness and Sutherland) : Can my hon. Friend explain the relationship between his earlier remarks about the over- investment by the SSEB in the nuclear industry and the fact that Scotland, as he has rightly described, has enjoyed much cheaper electricity than our neighbours south of the border?

Mr. Bruce : The answer to that is that Scotland has had the advantage of access to hydro power. I made the point on Hunterston A about the success of the SSEB's engineering capability compared to that of the Central Electricity Generating Board. I acknowledge freely that the SSEB has been more successful technically than the CEGB in the development of nuclear power. However, I repeat that there was no justification for building Torness. If that money had not been invested, we would not have had to close Hunterston A and electricity prices in Scotland could have been even lower than we have

Column 224

enjoyed. There is a combination of factors and I freely accept that the earlier efficiency of the nuclear industry, coupled with hydro prices, are the main explanation.

5.30 pm

However, having reached that position, the way forward that the SSEB is now pursuing should be questioned. I suggested in Committee that the Scottish electricity boards should at least consider selling Torness to an English user, lock stock and barrel--in other words, transfer the capacity. I accept that that is a contentious statement and that the South of Scotland electricity board is hardly likely to be keen on selling something of which it feels so technically proud. I am sure that hon. Members of all parties will recognise that it is legitimate to ask why we are closing an economic and apparently safe nuclear power station only two years after opening a new one. Surely the argument must be that we should never have built Torness in the first place but, having built it, might it not have been more sensible to have tried to sell Hunterston A so that its capacity could be used--

Next Section

Home Page