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Mr. Lang : I am not answerable for what appears in The Scotsman. I am sure that Opposition Members find stories in The Scotsman with which they are familiar, and which they consider as inaccurate as some of the stories that I quote from that paper.

As I have said, the chairmen of the boards are in regular touch with our officials, and from time to time with Ministers. Matters concerning the boards are discussed, clarified and resolved. There has been no separate, secret deal or special arrangement--of the kind suggested by The Scotsman - -in our negotiations. There has been nothing of that sort which is not already known by the House. The hon. Member for East Lothian (Mr. Home Robertson) raised the subject of insurance. The industry makes provision for self-insurance against material damage--for example, to its stations-- through its mutually owned subsidiary. On third party risk cover against accidents, the industry is required to insure itself for liabilities up to a certain level, which could obviously vary in the light of changing circumstances. Beyond that, under the nuclear legislation, the Government are liable up to a further threshold, and beyond that there is the possibility that Parliament could be asked to grant further cover and indemnity if that were considered necessary. The arrangement is similar to those prevailing throughout Europe and in the United States.

The hon. Member for Carrick, Cumnock and Doon Valley referred to Chapeldonan, and I understand his constituency interest in that location. Whether or not the next power station in the SSEB's area will be nuclear and, if so, when it will be built obviously depends on future growth and demand and on the relative costs of nuclear and other fuels. I think that it is a point of universal

agreement--perhaps one of the few points of universal agreement--that at present there is very substantial over-capacity in the industry in Scotland. The building of another nuclear station in the immediate future, or even in the next few years, therefore seems unlikely.


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6.30 pm

Identification of suitable sites for possible future power station development is a matter for the SSEB, and the Government have no power to instruct the board on its holding of land. In fact, the SSEB was unsuccessful in discussions to acquire land at Hunterston from the BSC, and, for the time being at least, that land is ruled out as a possible future site. The board intends to retain the land at Chapeldonan as a strategic option for possible future use. Its judgment is that surrendering the site could prejudice the future provision of economically priced electricity in Scotland. On the other hand, it has made it clear that, given changing circumstances, it would be willing to consider seriously any sympathetic development that might be proposed.

Mr. Foulkes : Surely the Minister agrees that this cannot go on for ever, that at some point the Government must decide whether a power station should be built or whether the land should be released for other purposes. The area is blighted, so no one will come forward with specific suggestions for development. Surely Ministers have an overriding responsibility to say to the electricity board, "Make up your mind--if you do not intend to use the land within the next five years, or even the next decade, you must release it for other purposes." Will the Minister give serious consideration to that suggestion?

Mr. Lang : It would be a mistake to put pressure on the company to make a decision. A decision taken too soon, under pressure of that kind, could be the wrong one. I think that the hon. Gentleman exaggerates the relevance and importance of the site to Girvan. It is an important and useful site, but it is not the only one available for the kind of development that the hon. Gentleman has in mind. Moreover, the board has said that, given changing circumstances, it would look sympathetically at the possibility of considering specific proposals put to it.

I was distinctly puzzled by some of the remarks of the hon. Member for Gordon (Mr. Bruce)--specifically, his reference to the profligate extravagance that had gone into the building and commissioning of Torness. As the decision to go ahead with Torness was one of the few valuable outcomes of the Lib-Lab pact, the hon. Gentleman must be castigating his own party as much as anyone else. I agree with him that Scotland has substantial excess capacity. One might argue about whether it is 110 per cent. or less, but I suggest that it is the result of nationalised industry planning and that once the industry is returned to the private sector we may look forward to a more positive and efficient planning approach and the avoidance of that kind of situation.

Mr. Malcolm Bruce : I wish to refer to a consumer point which was raised earlier. The Minister made no reference either to the Director General of Electricity Supply or to the shareholders of privatised companies. May we have an assurance that in the private sector the industry will take account of legitimate risks taken by the shareholders and that the companies will not be given carte blanche to pass on to the consumer the cost of their mistakes? The director general might well say, "You made a commercial decision and you made a mistake, so your shareholders and not the consumer must take the risk."

Mr. Lang : The hon. Gentleman is complaining of precisely the situation that we have now. Every wrong


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decision taken by every electricity board or company in the past few years has been passed on and is being borne by the consumers, and quite a lot of mistakes have been made. Under the regulation arrangements and the activities of the director general, there will be a far more disciplined and competitively oriented approach, which will lead to a more efficient appraisal of the need for the commissioning of new power stations.

The hon. Gentleman's comparison between Hunterston A and Torness seemed to me to be wholly misplaced. I shall come in a moment to his specific point. At this stage, I should say that the proposition that Hunterston A should somehow have been kept open and that Torness should not have been built is extraordinary. Hunterston A is a very much smaller power station. It is now coming towards the end of its commercial life. It is reaching a stage where the economic considerations are becoming paramount. That is why closure was considered. The loss of generating capacity resulting from the closure of Hunterston A will be taken up by Torness not just on its normal design rating output, but on its higher-than-normal design rating output--in other words, because it is working more efficiently than the original design anticipated. The cost of decommissioning Hunterston A, like all the other foreseeable nuclear costs, is already being provided for within the accounts of the industry. I accept that, from the point of view of the hon. Member for Cunninghame, North (Mr. Wilson), this is a constituency matter of great importance. As the decommissioning process goes ahead, there will clearly be a continuing need for a considerable number of workers. I hope, and expect, that the impact on the unemployment figures in that constituency will not be so substantial as some people fear. Torness, which is coming on stream, will be an efficient, clean and economical way of generating and delivering electricity. The hon. Member for Caithness and Sutherland (Mr. Maclennan) revealed not only the split within the Social and Liberal Democratic party over nuclear matters, but also the inherent inaccuracy of the posture of the hon. Member for Gordon. The most absurd proposition of all to which the Liberal party and the Scottish National party have subscribed is that Torness should be sold. If that were done, we should be looking forward to an English company owning Torness and selling back to Scottish consumers electricity that had been generated in Scotland. That seems to me to be a quite extraordinary proposition.

I have not yet said anything about coal, which to some Members--indeed, to the whole House--is a matter of very considerable interest and concern. It is of particular concern to the hon. Member for Garscadden and to the hon. Member for Midlothian (Mr. Eadie), who raised the issue of coal burn. As the hon. Gentleman knows, the amount of coal burnt in Scotland for electricity generation is very much smaller than the amount burnt in England. Nevertheless, it seemed to my right hon. and learned Friend the Secretary of State for Scotland, and indeed to my right hon. Friend the Secretary of State for Energy, that a solution to the negotiations between the coal board and the South of Scotland electricity board could be achieved--a solution that would secure, in Scotland, the use of coal in substantial quantities for a considerable period.

As a result of the commercial negotiations between those two bodies, agreement has been reached on quantity and duration--2 million tonnes per year--but not yet on


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price. Price is an important component of any agreement, but we have made considerable progress in those negotiations. Of course, the duration of the contract is linked with the interconnector, which we may have an opportunity to debate further on the next group of amendments. I emphasise that the negotiations must be between the two boards, and must be conducted in a commercial manner. Only in that way can the best interests of the consumer be served.

As to whether the coal is to be opencast or deep-mined, that too must be a matter for the boards. At present something like half, or even more than half, of the coal mined in Scotland is open cast. That enables British Coal to sell more coal at a more competitive rate. The interests of the consumer and the interests of the industry in Scotland have to be taken very seriously into account. It would be quite wrong to force on British Coal and on the electricity board a solution based on coal priced higher than was necessary simply because it was all deep mined.

Mr. Eadie : I want to be perfectly clear about what the Minister is telling the House. In the course of his reply, he talked about commercial judgment and a commercial decision between the two parties. He said earlier that he and his right hon. and learned Friend the Secretary of State felt that there should be some sort of agreement and understanding. Is he saying that an agreement has been reached, but that some details have yet to be filled in and that the matter will be settled in the boardroom rather than in the courts? Can the Minister give the House an assurance on that point?

Mr. Lang : I cannot give the hon. Gentleman an assurance that matters will be settled in the boardroom rather than in the courts, since it is essentially a matter for the coal board and the electricity board. I am saying that progress has been made and that agreement has been reached on two important components of any deal. I hope very much--I believe that it is possible--that agreement will be reached on the third component. Certainly the pressure of the deadline of 31 March has now been lifted.

We have had a wide-ranging debate, hung on the peg of a narrow and essentially technical new clause. I was reassured that during the debate there was no criticism of the structure of the new clause, and I commend it to the House.

Question put and agreed to.

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

New Clause 2

Depute Director in Scotland

There shall be a depute director general of electricity supply who shall carry out the functions of the Director in Scotland. He shall have his office in Scotland and shall be responsible to the Secretary of State of Scotland.'.-- [Mr. Dewar.]

Brought up, and read the First time.

Mr. Dewar : I beg to move, That the clause be read a Second time.

Madam Deputy Speaker (Miss Betty Boothroyd) : With this it will be convenient to discuss the following : New clause 15-- Director General of Electricity Supply--

There shall be appointed an Officer, to be known as the Scottish Director General of Electricity Supply, who shall be responsible to the Secretary of State for Scotland and shall


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assume all of the functions of the Director as they relate to Scotland and to the activities of the Scottish electricity companies.'.

Amendment No. 153, in clause 62, page 46, line 13, at end add-- (c) one which shall be designated as the Scottish export company which shall be wholly owned by the two Scottish electricity companies in (a) above and which shall have responsibility for selling any surplus electricity generated in Scotland.'.

Amendment No. 150, in clause 62, page 46, line 30, at end add-- (6) The two Scottish Companies shall establish a Scottish Electricity Research Trust. They shall provide funds of not less than 5 per cent. on net profits. The Secretary of State in consultation with the Director shall appoint 10 Trustees who shall have the responsibility of administering the Trust. The Trust shall carry out or commission research into the environmental effects of supplying electricity in Scotland, alternative sources of electricity suitable to the terrain and climate of Scotland and the most economical use of electricity generated.'.

Mr. Dewar : I am aware of the fact that there is a lot of business to be done tonight. Therefore, I shall be extremely brief and I hope that the House will forgive me if I confine my remarks to new clause 2. Some of my hon. Friends may wish to refer to other matters that are dealt with in this group.

I shall deal with the comparatively simple proposition that Scotland should appoint a depute director general of electricity supply whose remit would be to look after Scottish interests. The new clause takes its form from our first preference--exhaustively debated in Committee, thanks to the efforts of my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton)--that Scotland should have a regulator. That was not accepted by the Government. As the matter was exhaustively debated, there is little point in returning to it. However, we invite the House to write into the Bill a safeguard that has been verbally given. It is common ground between me and the Minister that a Scottish official should work within the Director General of Electricity Supply's organisation, that he should be charged with responsibility for Scotland and that he should be based in Scotland. As that has been conceded, a provision ought to be included in the Bill to take account of that point. It is very much in that spirit that the new clause has been tabled.

The protection of the consumer and the proper regulation of the industry are matters of enormous sensitivity and importance. I hardly need to remind the Minister of that fact. We are handing over an industry in which, as Ministers have hurried to tell us, the competition will never be classic. A public utility is to be replaced by a private monopoly. In those circumstances, it is important that adequate protection for consumers should be provided and that the different structure of the Scottish industry should be taken fully into account.

That need has been dramatically highlighted during the last few weeks with the announcement of an 8 per cent. increase in Scottish electricity prices for the next financial year. That has already been heavily criticised. Mr. John Banham, the director general of the Confederation of British Industry, has referred to the Budget strategy being wrecked by the Government scoring inflationary own goals. He went on to say :


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"It is all the more irritating to business when the rises are seen to be totally unnecessary."

He linked that reference particularly to the news about the price rises in Scotland. The case for strong regulation of the public interest is made by these events. I hope that the Minister will comment on the reasons for the increase. Such a comment is relevant since we are considering the kind of regulation that is needed and the need for the new clause.

I remind the Minister that Scotland has always been told that it has low- cost, competitive power, that it has made a big investment in nuclear power, that it is in a strong competitive position and that privatisation is good news for the consumer. There was no question about a non-fossil fuel obligation. That was an academic point in Scotland's case. It could look forward to a very much happier future, by implication, than that to which those south of the border could look forward because of the pressures there.

There is genuine puzzlement on this side of the House and in Scotland generally about that statement. The Minister made a big virtue of the fact that the return on capital expected of the electricity boards in Scotland would be 2.7 per cent., rising in 1988-89 to 2.8 per cent., while in England the return on assets, valued on the current cost basis, would be 4.75 per cent. Given that tremendous gap, it is extraordinary that Scotland should face a far more substantial increase than that which will be imposed south of the border.

It is a sad comment on this Government's bona fides that, during the last year, the electricity consultative councils have protested in the strongest possible terms about a wage settlement--which, in their view, is both inflationary and unnecessary--that is being inflicted on the Scottish people.

6.45 pm

The electricity consultative council for the north of Scotland has expressed "deep disappointment" over the rise. It said :

"Members have valiantly tried to persuade the board"--

that is the North of Scotland Hydro-Electric Board--

"to limit any increase on the standard domestic tariff." However, they were unable to do so. I have in my hand the press release by the electricity consultative council for the south of Scotland. It refers to its disappointment about

"the continuing deterioration in comparative electricity prices in the area of the SSEB compared with those in England and Wales where the proposed increases average 6.5 per cent."

It goes on to say :

"The council was concerned about the possible effect of privatisation on SSEB costs and their impact on tariffs. There is continuing worry about interest charges associated with Torness and with the very substantial nuclear generating capacity in Scotland and concern about future nuclear charges in terms of fuel reprocessing and decommissioning."

The general pattern emerges of a substantial increase in charges--much higher than those in England--at a time when the preliminary advertisements for privatisation suggested the very opposite. It has been carried through in the teeth of strong opposition from the Government's own appointed consumer watchdogs. That makes the case for the new clause.

The Minister referred to the fact that, with the chairmen of the two boards, he took part in a little ceremony on 31 March when he commended the progress towards privatisation and witnessed the endorsement of certain operational agreements by the two boards. As I


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look through the pious expressions of satisfaction that the Minister published in his Scottish Office press release, I cannot help but reflect on the fact that on 30 March--the day before--the 8 per cent. price increase had been announced. The Minister did not see fit to comment on or to explain why Scotland had to face such an increase. On the evidence that is available to us, we believe that the increase is unjustified. It is part of the price that we are being asked to pay for privatisation.

The Minister's performance has been completely unsatisfactory. He has let down his own consumer bodies--as they have made very clear. In those circumstances, consumer protection must be placed at the top of our agenda. We ought to insist on the new clause. It is not what we wanted originally, but it would provide some protection. The need for such a clause has been made doubly relevant by the sad news about prices during the past few weeks and also by the clearly perceived danger that standards will be allowed to slip and that vigilance will be dropped, given the potential for abuse that privatisation will provide.

Mr. Malcolm Bruce : Although I support new clause 2, I prefer new clause 15. The character of the Scottish industry is such that there ought to be a separate director for Scotland. However, the thrust of both new clauses suggests that Scotland's distinctive character should be recognised within the new arrangements.

As for the 8.5 per cent. price increase, I believe that Scotland has fallen down the crack as between the responsibility of a nationalised industry and an about-to-be-privatised industry. Any Minister who was doing his job properly by defending consumer interests--he is the only person with the power to do so--would have refused to allow an increase of that kind in advance of privatisation. The economic criteria do not justify it.

He should have been so embarrassed by it as to recognise that he must either resist the increase or explain it. He has done neither. We are worse served with no Scottish director and with such a Minister than we might have been had the situation been reversed. I cannot believe that if a Scottish director had been in place he would have allowed the increase to go through. He would certainly have investigated the matter thoroughly and, unless there was a legitimate reason for the increase, he would have told the electricity companies to think again.

The Minister knows perfectly well that I am not opposed to privatisation in principle. The structure of the industry as it stands is both uncompetitive and unresponsive to the consumer--these increases prove it--but all this reinforces my belief that we should restructure the industry in the public sector and prove that we can open it up to effective competition before we move it out of the public sector. The Minister has completely failed either to accept his responsibility to defend the consumers' interest or to ensure that, in privatisation, we are creating a structure in which the distinctive and different character of the Scottish industry is taken fully into account.

I know that other hon. Members wish to speak and I do not want to delay the House. I feel that the clauses are both appropriate and relevant, and I shall certainly support them.

Mr. Hood : In my speech on Second Reading I forecast that this Bill, along with the poll tax and the privatisation


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of health care and the water industry, would be one of the large nails in the Government's coffin at the next general election. I am pleased to say tonight, having sat through almost all the 156 hours of the Committee, that experience confirms my view that this is indeed the case. I am particularly pleased to see the Secretary of State in his place today.

My hon. Friend the Member for Ashfield (Mr. Haynes) counted the number of hours that the Secretary of State managed to put into the Committee ; I am sure that the Secretary of State knows this but, in case he does not, he was there for 23 of the 156 hours. Never once, however, when he was there, or when the Under-Secretary of State--who looked so unconvincing throughout the whole of the Committee stage--was there, did he justify in any way the privatisation of the electricity supply industry.

The whole case is based on myths--the myths of the market, the choice of the consumer and, the one that takes the biscuit, the fact that electricity will be cheaper. At all these three hurdles the Government's argument fell flat on its face. When it came to Scotland, not only did the Government not have a case, not only were they weak, but they were pathetic.

In Committee we had five Scottish hon. Members, my hon. Friends the Members for Glasgow, Cathcart (Mr. Maxton) and for Glasgow, Rutherglen (Mr. McAvoy) and myself, representing Labour, and two from the Liberal Democrats, the hon. Member for Gordon (Mr. Bruce) and the hon. Member for Berwick-upon- Tweed (Mr. Beith). Some of us were interested to note that the Scottish National party was not represented on the Committee. We are informed that its members were offered a position on the Committee and refused it. That says a lot about their so-called rhetoric on the matter of their interest in the Scottish coal industry.

Mr. Salmond : The hon. Member for Clydesdale (Mr. Hood) has trailed his coat, but he does me less than justice. He must be aware that I spent a year on this matter in the Select Committee on Energy. After reading his speeches, and those by his hon. Friends in the Standing Committee, and seeing all the ammunition with which they were provided, I just wish that they had utilised the time a little better.

Mr. Hood : I am as little impressed by the absence of the hon. Member for Banff and Buchan (Mr. Salmond) from the Committee as by the comments that he has just made. His party is coming to be known as the "walk out, throw out or abstention" party.

The fear of hon. Members on the Opposition Benches is that privatisation of the electricity supply industry will spell the death of the Scottish coal industry, a fear which has not been dissipated by the news that we have heard tonight, when last week we were under the impression that an agreement had been made with the South of Scotland electricity board. That so-called agreement seems flimsier than ever. I am sorry that the Secretary of State for Scotland is not here. Certainly, the Secretary of State for Energy is here. The Minister took some of the credit--if that is the word for it--for getting the parties round the table. I do not believe that for one moment. I do not believe that the Secretary of State for Scotland did anything to get the parties round the table.

Far be it from me to cast any praise in the direction of the Secretary of State for Energy, but some of us on the Opposition Benches firmly believe that the impetus came


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from the Secretary of State for Energy and not from the Secretary of State for Scotland. When the latter was criticised for his lack of action in Scotland, it was even worse than that- -he should be criticised for his collaboration, because some of us believe that he was collaborating with the SSEB from day one of the dispute. This is no credit to him at all. He is becoming known as an enemy of Scotland and as a traitor to Scotland. Our history has seen many of those but the Secretary of State seems to be competing for the mantle of arch traitor to Scotland.

He is not on his own in competing for that mantle. I had occasion to intervene during a speech in Committee by his hon. Friend the Member for Tayside, North (Mr. Walker), who unfortunately is not with us tonight.

Mr. John Maxton (Glasgow, Cathcart) : He is in Australia.

Mr. Hood : I do not know where he is. He was nick-named "Bill from Brazil" earlier, but he is not here tonight.

In Committee the hon. Member for Tayside, North said :

"It is essential that the United Kingdom takes advantage of all its natural resources, including the supply of energy. It is therefore in the best interests of the whole of the United Kingdom that Scotland's ability to pass its surplus energy resources to England where there is a demand, is an essential part of our future energy policy. Energy policy has to be United Kingdom policy, and--this is the point that I have been trying to make--as a Scot I find it disturbing when we hear language that is wrapping tartan round the Scots and asking for special privileges."

The hon. Member then went on to say :

"England has an unsatisfied demand. It is therefore in the best interests of the whole of the United Kingdom to have an adequate ability to transfer."

At this stage I intervened to point out to him :

"I am tempted to be impressed by the hon. Gentleman's desire to look after the interests of the United Kingdom. But is he aware that the Secretary of State has been negotiating with the French Government to import French energy into this country and that it will work against a United Kingdom country--Scotland?"

To this the hon. Gentleman responded : "We have been negotiating with the French and anyone else who wants to buy our electricity. I am a believer in the market place. It makes sense to be able to transfer electricity both ways."

We had to remind the hon. Gentleman that the French were interested not in buying electricity but in selling it.

I am sorry to bore the House with these quotations but this will be the last. The hon. Member for Tayside, North went on to say : "Opposition Members should study carefully what I have said"-- I can assure the House that we have done that--

"and they will see that my view is we must have a flat playing field so that throughout the United Kingdom there is an opportunity for all consumers to share in the strengths or weaknesses of the whole."--[ Official Report, Standing Committee E, 23 February 1989 ; c. 1227.]

There we have it : the hon. Member from the Flat Earth Society, the hon. Member for Tayside, North.

Following on an albeit modest contribution from myself, the hon. Member later accused me of special pleading for the Scottish coal industry. He even accused


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me of using intemperate language, believe it or not. Hon. Members here, with perhaps one exception, would certainly not agree with such an accusation.

I certainly make a plea for common sense and not dogma, for compassion and not hostility, and for consensus not dictatorship. This Bill is all about the dogma of extremism, hostility to miners in mining communities and dictatorship over the Scottish people who do not want and will never want Toryism.

The case for the Scottish coal industry is set in concrete ; it is sound on all grounds. We hear much about the problems of the environment. Scottish coal is low in sulphur--far lower than the coal that we are importing from South Africa, Columbia and China. We have vast untapped reserves. Scottish coal is cost-effective when compared with the high cost of power generated by nuclear energy.

7 pm

I have a particular interest in opencast mining because in my constituency I have the largest opencast development in the whole of Europe. Opencast has to be seen in Scotland for what it is and not as it is seen in England. Opencast and deep mining are under the same management in Scotland--British Coal (Scotland). Opencast must not be seen as a replacement for deep-mined coal, as the hon. Member for Bedfordshire, North (Sir T. Skeet) suggested in Committee, but as complementary to it.

May I anticipate the hostility to deep-mined coal by those who favour the expansion of opencast mining? The prices of deep-mined coal and opencast coal are aggregated. There is cross-subsidy, which I accept. One important ingredient is forgotten by the people who are hostile to deep-mined coal and who favour the expansion of opencast mining--the co-operation of local authorities in giving permission to develop opencast mines in areas where there would normally be hostility to it. There is a strong relationship between mining communities and local authorities which leads to support for opencast mining.

We have 400 years of coal reserves in Scotland. We prefer to develop those coal reserves rather than rely on importing coal or highly expensive nuclear power. We do not want privatisation of electricity in Scotland. It is obscene, nonsense and irrelevant to our power generation requirements. Amendment No. 153, tabled by myself and hon. Friends, would ensure an export market for Scottish-generated power. That is necessary for the future of Scotland as a country and an energy producer. We sat for almost 156 hours in Committee addressing that and many other issues. On Second Reading I referred to the disgraceful spectacle of the Prime Minister tripping through the Lobbies in support of private ports Bills with what I termed as the "Botha boot boys" behind her. I forecast then the demise of Tory Members in constituencies including mining communities, especially in places like Nottingham. The Government are going down the spout with the privatisation of water. Electricity privatisation is another nail in their coffin. That is one funeral that I look forward to attending.

Mr. Salmond : I support new clause 15, which would lead to the establishment of a specific Scottish director general of electricity supply. I am disappointed at the retreat of the Labour party from the position that was


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established by the Select Committee on Energy in favour of a Scottish director general which it supported in Committee. I do not think that a depute director general is adequate to serve the real needs of Scotland.

Mr. Maxton : In some way the hon. Gentleman is remarkably naive in the workings of the House. If the Labour party had put down exactly that new clause, I think I can give him the assurance, even if you would not, Madam Deputy Speaker, that it would not have been called.

Madam Deputy Speaker : Order. I give an assurance to all hon. Members that there is no new clause or amendment on the Amendment Paper that is not perfectly proper.

Mr. Salmond : I think that you have answered the point for me, Madam Deputy Speaker. May I point out to the hon. Member for Glasgow, Cathcart (Mr. Maxton) that new clause 15, which proposes exactly that, is on the Amendment Paper. In the absence of new clause 2, it would have been possible to vote on it. If the hon. Gentleman's argument is that we should propose only amendments or new clauses that are acceptable to the Government, that would limit substantially the ability of the Opposition to put forward amendments.

The argument against a deputy director general and against new clause 2 was made in Committee by the hon. Member for Cathcart. He said :

"I do not see how a dispute between a Scottish board and an English generating board or an area board or company about supply, generation and price will be settled. Will a deputy in Edinburgh, who is responsible to the Secretary of State for Scotland, be more responsible to the Secretary of State for Scotland than to his immediate boss, the director general sitting in London, whose primary responsibility will be to the licences that he has granted to the various English companies? To which one will he be responsible? Nothing in the Bill explains this."--[ Official Report, Standing Committee E, 12 January 1989 ; c. 72.]

That is right. Nothing in the Bill explains it ; of course, nothing in new clause 2 explains it either. I much prefer the position established in the Select Committee on Energy.

Mr. Thomas McAvoy (Glasgow, Rutherglen) : Will the hon. Gentleman make it clear to the House whether the Scottish National party was offered a place on the Electricity Bill Committee and whether it refused to take that place--yes or no?

Mr. Salmond : As I have already pointed out in reply to the hon. Member for Clydesdale (Mr. Hood) a few moments ago, I spent a year on the Select Committee on Energy considering these very issues. I was surprised at the suggestion that the SNP was not interested in deep coal mining in Scotland. Yesterday I received a letter from the general secretary of the National Union of Mineworkers in Scotland thanking me for my efforts on its behalf in the Select Committee. The fact that there is no Scottish Labour Member on the Select Committee on Energy does not lead me to the conclusion that Scottish Labour Members are not interested in the coal mining industry or in energy issues in general.

I was making the point that I much prefer the position established by the Select Committee on Energy on the need for a Scottish director general of electricity supply. I am the only Scottish Member on the Select Committee on Energy. The majority of members are English


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Conservative Members, yet we reached a unanimous conclusion after a good deal of debate. In the report we said :

"we believe that Scotland's interests will best be served by the establishment of a separate Scottish Regulator, working closely with his English and Welsh counterpart, with regular interchanges of information and staff. The relationship between the Scottish Office and London Departments is an analogy. In this way the distinctive structure of the ESI in Scotland will be mirrored by a distinctive regulatory structure."

It is a remarkable feature of the position of the Scottish Office on the issue that it is not even willing to propose, for the benefit of the Scottish consumer, a level of protection that was insisted upon by English Conservatives on the Select Committee on Energy. It is remarkable that Scottish Office Ministers were not willing to make that point.

The arguments that the Select Committee considered in coming to our conclusion in favour of a separate Scottish director general were, first, that we recognised that within the Scottish structure of the proposed privatisation of electricity there would be no effective competition. Indeed, many would argue that within the English and Welsh structure there will be no effective competition. Certainly, with the duopoly that is proposed for Scotland--with territorial monopolies at any rate for tariff customers--there will be no genuine competition.

Hence the need for protection for Scottish consumers, who otherwise will be exploited by the private electricity companies which will succeed the SSEB and the Hydro Board. Our first point was to recognise the distinctive nature of the Scottish privatisation and of the Scottish electricity system, and the need for special protection for the Scottish consumer.

Secondly, we concluded that there would be occasions when the Scottish exporters of electricity would be in conflict with their English customers. Early on in the Select Committee deliberations, we received evidence from Mr. Harris of the east midlands board. He said that his board would prefer that the grid bought electricity collectively from the Scottish electricity companies because that would lower the price at which electricity would be bought. When we took evidence from Mr. Miller of the SSEB, he argued that tens of millions of pounds could be involved in that issue alone. Indeed, the Secretary of State for Scotland agreed, when giving evidence to the Select Committee that this was an important pricing issue. If there is a conflict of interest between the Scottish producers of electricity and the English supply companies--the consumers of that electricity--how will a single director general divide his loyalties? Will he be in favour of Scottish producers or English consumers? Hence the importance of having, for the protection of Scottish consumers and Scottish producers of electricity, someone who will not owe his loyalty to a Director General of Electricity Supply located in London.

The third argument which impressed the Select Committee was in relation to the needs of the north of Scotland. We argued strongly in our report that it was not just a matter of a common tariff throughout the Hydro Board area ; we had to consider also the need for subsidies for future connections. I see the hon. Member for the Western Isles (Mr. Macdonald) in his place. A pensioner couple in his constituency proved to be an excellent example of the need for protection in terms of connection charges for consumers in remote areas.


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