Column 641information adequately will be committing an offence and will be liable to prosecution by a trading standards officer. It will be an additional offence to that of giving a misleading indication of price, which is provided for already in the Consumer Protection Act. The proposals, which have already been circulated in draft, have been welcomed by the Electricity Consumers Council, other consumer bodies and local authority trading standards organisations. We believe that they are the right way forward to deal with a possible abuse of the system. I hope that, in the light of my comments, the hon. Member for Gordon will withdraw the amendment.
Mr. Malcolm Bruce : I am grateful to the Minister for his comments. I accepted in my opening remarks that there are some practical difficulties. I am pleased that the Minister has acknowledged that the abuse that has existed should be removed from the system. It was never defensible when the industry was in the public sector and it would be even less defensible following the transfer of the industry to the private sector.
I am encouraged by what the Minister says about the regulations that are coming forward. I acknowledge that clause 40, even without the amendments, allows the director to fix maximum prices. In a sense, the purpose of tabling the amendments and initiating this short debate is to give to the director a clear sign of the feeling within the House and to highlight the abuses that we are anxious to have removed. I hope, therefore, that the Director General of Electricity Supply, reinforced by the regulations about which the Minister talked, will ensure that, apart from minor adjustments on a technical basis, the practice of selling electricity to sitting tenants at a substantial profit and as a means of supplementing the rent will not continue in any worthwhile commercial sense. That will not happen automatically because of the measures that have been tabled, but there is unanimity on both sides of the House about the desirability of ending that practice. In those circumstances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
(3) The Director General of Fair Trading shall consult the Director before publishing under section 124 of the 1973 Act any information or advice which may be published by the Director under this section.'.
Mr. Lang : This is a group of technical amendments. Amendments Nos. 53 and 55 relate to clauses 44 and 46 respectively and are aimed at preventing the wasteful duplication of effort. Amendment No. 54 relates to clause 45 and adds to the information held on the public register kept by the director general. Amendments Nos. 56 to 63
Column 642relate to clause 53 and provide additional disclosure gateways through which information may be disclosed to specified statutory or public bodies.
Amendment No. 63 arises from an undertaking that I gave in Committee to the hon. Member for Cardiff, West (Mr. Morgan) to consider whether it would be appropriate for environmental health departments to be included in the list of organisations to which information might be disclosed. He believed that councils should have access to information about excessive discharges of dirt and dust. I understand that the legislative plans of the Department of the Environment include giving local authorities greater power over air emissions so that operators will need local authority consent before plants can operate.
We do not think that it is necessary to include environmental health departments in the list now, but I have carefully considered the hon. Gentleman's point. Amendment No. 63 is designed to empower the Secretary of State to make orders creating gateways to such departments or other organisations as appropriate in the future. There is the possibility that not only could we meet the hon. Gentleman's point should the need arise, despite the further powers to be given to local authorities on air emissions, but we could go wider and include other organisations.
Mr. Doran : In introducing amendments Nos. 53 and 55 the Minister mentioned that one of the aims was to prevent the wasteful duplication of effort. I believe that by removing the obligation on the Monopolies and Mergers Commission to include references by the director general under the Bill, additional effort may be required to have an overview of the commission's work. Has the Minister considered that point?
Mr. Lang : The hon. Gentleman's suggestion goes further than the Bill's provisions. The director general will take a close interest in such matters anyway and has adequate powers to keep an eye on them. To suggest that there should be some further change in powers to oversee the activities of the Monopolies and Mergers Commission is to go further than the Bill's provisions.
Mr. Doran : There has been a misunderstanding. My understanding of the amendment is that the Monopolies and Mergers Commission and the Director General of Fair Trading are not required in their reports to mention referrals by the Director General of Electricity Supply under the Bill. I am concerned with the overview of the work of those two other bodies which these clauses affect. The legislation may create extra work.
Mr. Morgan : The Minister said that the Secretary of State may wish to make orders following new legislation about clean air monitoring and the powers of local authorities, so surely the hon. Gentleman recognises that environmental health departments of borough and local authorities in England, Wales and Scotland already have clean air responsibilities. It is peculiar to leave this aspect out of the legislation. Is the hon. Gentleman considering tabling a further amendment in another place?
Column 643matter in detail and made clear the limited context in which the clause operated. It was clear that the various gateways provided in the Bill were adequate. I undertook to consider the point further both in the context of the specific point of dust and dirt to which the hon. Gentleman referred and in the general context. We have now come forward with a power to enable the Secretary of State to add names to the schedule by regulation, and I think that that is a desirable way forward. Hon. Members are at one in that purpose and we believe that our amendment meets the practical needs of the situation.
Amendment agreed to.
Amendment made : No. 54 in page 35, line 6 after and', insert every exemption granted to a particular person ;
(aa)'. --[Mr. Lang.]
Amendment made : No. 55, in page 36, line 16 at end insert-- (6) Section 125(1) of the 1973 Act (annual and other reports) shall not apply to activities of the Monopolies Commission on which the Director is required to report by this section.'.-- [Mr. Lang.]
Amendments made : No. 56, in page 38, line 28, after Authority', insert--
(viia) the Insolvency Practitioners Tribunal ;'.
No. 57, in page 38, line 32, after enactments', insert or instruments'.
No. 58, in page 38, line 32, at end insert--
(for the purpose of enabling or assisting the Secretary of State to exercise any powers conferred on him by the Financial Services Act 1986 or by the enactments relating to companies, insurance companies or insolvency or for the purpose of enabling or assisting any inspector appointed by him under the enactments relating to companies to carry out his functions ;)
(for the purpose of enabling or assisting an official receiver to carry out his functions under the enactments relating to insolvency or for the purpose of enabling or assisting a recognised professional body for the purpose of section 391 of the Insolvency Act 1986 to carry out its functions as such ;'.) No. 59, in page 38, line 38, after enactments', insert or instruments'.
No. 60, in page 38, line 41, after enactments', insert and instruments'.
No. 61, in page 39, line 6, at end insert--
(kk) the Insolvency Act 1986 ;'.
No. 62, in page 39, line 7, at end insert--
(m) any subordinate legislation made for the purpose of securing compliance with the Directive of the Council of the European Communities dated 10th September 1984 (No. 84/450/EEC) on the approximation of the laws, regulations and administrative provisions of the member states concerning misleading advertising.'.
No. 63, in page 39, line 7, at end insert--
Column 644(3A) The Secretary of State may by order provide that subsections (2) and (3) above shall have effect subject to such modifications as are specified in the order.'.-- [Mr. Lang.]
Amendments made : No. 64, in page 43, line 41, at end insert-- "generating station" in relation to a generating station wholly or mainly driven by water, includes all structures and works for holding or channelling water for a purpose directly related to the generation of electricity by that station ;'.
No. 65, in page 44, line 13, leave out 7(2)' and insert 16(1)'-- [Mr. Lang.]
(except dwelling houses in the Board's ownership let or leased to Board employees, which such employees have registered a wish to purchase)'.
(except dwelling houses in the Generating Board's ownership let or leased to Board employees which such employees have registered a wish to purchase)'.
Mr. Alison : This probing amendment is designed to elicit information and reassurances from my hon. Friend the Under-Secretary of State affecting the right-to-buy prospects of some CEGB tenants who live at Barlow near Drax in my constituency. Strictly speaking, the CEGB is not subject to the right-to-buy legislation in the Housing Act 1980, but there are a number of other public bodies which likewise are not subject to that legislation which still operate it in practice and in the spirit of the 1980 Act. For example, some police authorities sell surplus police houses to their officers at discounts equivalent to those obtaining under the right-to-buy policy. British Coal sells former National Coal Board houses to tenants at half their market value--at 50 per cent. discounts. I am advised that no less than three-quarters of all former NCB houses have already been sold to their tenants.
I am glad to say that, like the police authorities to which I referred and British Coal, the CEGB has accepted the spirit of the 1980 Act and has announced and, I believe, promulgated to some extent a policy of selling some of its rented properties to its tenants who wish to buy. Of course, nothing like as many houses are involved with the CEGB. I think that the generating board has only about 170 houses and flats in England and Wales. However, in respect of some of the CEGB rented properties at Barlow near Drax, I am not entirely happy that the generating board is measuring up fully to the spirit of the Housing Act 1980 or to the scale of generosity of discounts either as provided for local authority tenants under the Act or as voluntarily operated by, for example, British Coal. My hon. Friend the Under-Secretary of State may be able to reassure me. If so, I shall not press the amendment.
When I last met my Barlow constituents, a number of them had been waiting for an offer for sale for years, sometimes right back to 1981. That is a long time to wait, especially when one realises that the 1980 Act provides
Column 645time limits which local authorities must observe in disposing of houses to tenants who wish to buy. Moreover, all the potential Barlow buyers have been offered discounts only within the modest range of 20 to 30 per cent. When one considers how house prices have risen in Yorkshire recently, that leaves a large mortgage to be raised by a potential purchaser. I am hoping that my hon. Friend can say that better discounts may be forthcoming.
Let me remind my hon. Friend and the House of the going rate of discounts elsewhere. The present discount level for council houses starts at 32 per cent. after two years' occupation, with an additional 1 per cent. discount for each extra year of occupation, and the maximum discount is no less than 60 per cent. reached after 30 years' occupation. The discount for flats starts at 44 per cent. after two years' occupation and increases by 2 per cent. for each extra year of occupation, reaching a maximum of 70 per cent. after 15 years' occupation. One should compare that to the maximum discount offered by the CEGB. I was advised recently--although it may be flexible and my hon. Friend may be able to reassure me--that it is only 30 per cent. Police authorities sell houses surplus to requirements to police officers at discount rates equivalent to those I have I have cited for local authorities. I have already mentioned that British Coal disposes of its properties at a 50 per cent. discount.
Since constituents at Barlow first raised the matter of discounts with me, I have had some correspondence with the CEGB property services manager for the north of England, Mr. K. J. Howes, at Harrogate and with my right hon. Friend the Secretary of State. I am glad to say that Mr. Howes has taken an active interest in the satisfactory disposal of the Barlow houses to the tenants, but I am still not quite clear about the level of discounts that may be offered. That is relevant to the attitude I take towards the amendment. I hope that my hon. Friend can give me some encouragement and belief that discounts closer to those applying in local authorities, or as operated by British Coal or some police authorities, may be under consideration by the CEGB.
It would be of great interest if my hon. Friend could tell me what will become of the right-to-buy prospects of tenants who have not yet decided that they want to buy, but who may decide to buy in the next few years, when the properties move from the ownership of the CEGB to the ownership of the new, big trading body. Will there be any moral--obviously, not legislative--obligation on the new owners to do what the police, British Coal and the outgoing CEGB have all done, which is to accept a moral obligation to match in some respects the local authority rights under the Housing Act 1980? Perhaps my hon. Friend will be kind enough to advise us about those points. 8.15 pm
Mr. Michael Spicer : I must say first to my right hon. Friend, as a matter of generality, that clauses 60 and 61 provide for all property rights and liabilities of the area boards--and of the CEGB in the case of clause 61--to be transferred to the successor companies nominated for the purpose by the Secretary of State. We would not want to change that generality. Secondly, my information is that the Barlow example is the only large group of houses that raises the problem that he has, quite properly, brought
Column 646before the House this evening. There are a handful of other similar properties for which the CEGB does not envisage any problem in negotiating the sale to the occupiers.
I can tell my right hon. Friend that the CEGB is seeking to reach a satisfactory conclusion with the Barlow tenants involved and hopes to be able to complete the sales before the end of 1989. In direct answer to the point raised, should it be impossible for any reason to do that, I would expect National Power, to which the houses in question are expected to be transferred, to honour the intention of the CEGB to sell on terms to be agreed with the incumbent tenants. Although I would not wish to intervene in the matter, should there be any unreasonable difficulties about the terms of the sales, I would want to make inquiries myself of the CEGB to discover what the problem was. However, I am hopeful, as is the CEGB, that the matter can be resolved before the transfer takes place. If that is not the case, I would expect the sale to take place under the successor companies.
Mr. Alison : My hon. Friend was kind enough to suggest that he would keep a watching brief on the matter. Will the watching brief extend specifically to the question of the ultimate discounts offered? I am not asking him to be specific about an acceptable level, although I have described what I feel is a lowish level of discount. If I complain to my hon. Friend that the discounts remain too ungenerous, will my hon. Friend agree to intervene or at least to have a look at the matter?
Mr. Spicer : As my right hon. Friend no doubt senses, I am extremely anxious not to become involved myself as it would not be appropriate. However, if I felt that any action taken was totally unreasonable or was a wrecking proposition, I would want to know about it. There is no compulsion on discount rates, but it is the board's intention that the houses should be sold. I would want to be reassured that there was nothing unreasonable in the proposals, but I cannot give my right hon. Friend any guarantees about the precise rate of discounts, nor would he expect me to do so.
Mr. Barron : This is a fascinating scenario. Will the Minister take into account that coal miners who supplied the old Drax power station and the new one have, since the mid-1970s, received a 50 per cent. discount on their public body houses from the former National Coal Board? It seems grossly unfair that another public body is thinking of selling its properties with lower discounts than that.
Mr. Spicer : That is a rather helpful intervention. It is interesting to know that the official Opposition support my right hon. Friend. I repeat that I would want to be sure that no unreasonable proposition had been made. It is helpful to have the Opposition's views on record in a positive and helpful way.
Mr. Lofthouse : The Minister mentioned that the purchase of the houses would take place before privatisation--if possible. Surely it must be possible. Those people to whom the right hon. Member for Selby (Mr. Alison) referred have been waiting for years and we are talking about only a small batch of houses. It should be possible to tie up such a deal before privatisation with the goodwill of the CEGB. The CEGB is morally obliged to give similar discounts to those given by local authorities.
Mr. Spicer : I shall ensure that as soon as Hansard comes off the presses tomorrow morning, we shall run hot foot to the CEGB and explain that the Opposition are now enthusiastic about the sale of public sector houses to the private sector with appropriate discounts. It is extremely good news and I shall ensure that the Opposition's views are drawn to the attention of the CEGB as soon as Hansard comes off the presses tomorrow.
Mr. Alison : On the basis of the assurance that my hon. Friend has kindly given--particularly in his commitment to the concept of reasonableness as a trigger, now also adumbrated by Opposition Members having regard to local authority and National Coal Board discounts--I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
(2A)(1) Six months after the date of transfer of all property rights and liabilities of each Area Board, the company nominated in accordance with this section shall publish a valuation of (a) Those capital assets of the Area Board utilised for the transmission of electricity ; and
(b) Those capital assets of the Area Board not so utilised. (2) Such valuations shall be based on the open market value of said assets at the date appointed by the Secretary of State under subsection (1) above.'
(bb) the Secretary of State shall make proper and reasonable provision for retention of the transmission system in public ownership.'.
Mr. Morgan : I read with interest in this morning's Financial Times that a double Olympic gold medal had been awarded to a Conservative Back Bencher, the hon. Member for Stamford and Spalding (Mr. Davies), and a junior Minister, the Under-Secretary of State for Industry and Consumer Affairs. They had been the hon. Members to vote most consistently in accordance with the views of the Adam Smith Institute and were deemed to be the most freedom-oriented hon. Members. I note that the hon. Member for Darlington (Mr. Fallon) is looking surprised that he did not win it. I understand that the Under-Secretary of State for Industry and Consumer Affairs had been taking steroids in an attempt to achieve an outright win, but he did not make it.
Hon. Members may be mystified as to the relevance of my remarks. It is that, given their views on the national grid, the Secretary of State and the Parliamentary Under-Secretary of State will not win such an award. They must have thought about selling the national grid as a private company, but they funked it. This is the appropriate stage at which to consider why they decided that the national grid should remain at one remove from the market. They have not kept it in the public sector, as we ask them to do in amendment No. 161, but they are not committing it to the furnace of the free market either. It will have semi-privatised status. Nobody will be able to touch it. Market forces will not be able to touch it and, although it will be owned by the 12 area boards, they will not be able to mess about with it much either. They cannot make a commercial asset out of it. It will be a separate plc
Column 648with its own capital budget and non- executive directors and the area boards will not be able to determine what happens to it. Why is that? Is it a curious omission of the Government, or is it a recognition by them that certain aspects of the electricity industry constitute public infrastructure rather than business? There are business aspects to all infrastructure provision and many businesses are also infrastructure. Part of the electricity industry is a heating business, as is British Gas, but only 25 per cent. or less of the electricity industry is a competitor for British Gas, which has already been part privatised, with 51 per cent. of the shares being sold. The Government seem to recognise that electricity and the national grid are part of the infrastructure. There are security of supply and national security arguments at stake, and the national grid thus falls clearly within the definition of infrastructure. The importance of the Government's funking the issue and their willingness to give up their Adam Smith Institute gold medals for another year or so lies in the fact that they recognise that problems arise when one permits full risk-bearing equity participation in certain types of businesses. Those are businesses from which the public has a right to expect something. The fact that the demands of the Government and the public can be expected to weigh heavily on such businesses makes them totally inappropriate for full risk-bearing equity participation which allows a company to go bust or to make an absolute fortune. The Opposition believe that that is unacceptable for the electricity industry as a whole, and even the Government recognise that it is not acceptable to submit the national grid to those conditions--to the risk of going bust or to the opportunity of exploiting its monopoly position to make a fortune. The Government are now telling us, "The industry is not that kind of industry". In that case, why not go the whole hog and leave it in the public sector, where we believe it belongs? We hope that we shall see a flicker of recognition--even if there is no cross- voting on the issue--of the fact that, although the Minister's American guru recommended that the national grid should become a private sector transmission company, the Government have had to concede that, although that may be possible in the United States, we cannot do it in Britain. If they concede that, amendment No. 161 represents the obvious solution.
Some other aspects of the national grid are worth thinking about. The Government have structured the National Grid Company so that it can transmit, and has the obligation to try to transmit, cheap electricity economically and efficiently to comply with security of supply regulations and facilitate competition in the generating industry. One thing that it cannot do is to buy and sell electricity. Why is that? Why are not the Government willing to make the national grid the wholesaler of electricity- -as it is now for all practical purposes? Why have they removed that capability? The reason is that it would make it far more difficult for private generators to enter the industry if the nation grid could buy and retail on to the area boards or big industrial consumers.
The Government have made a serious mistake--which will cost the consumer hundreds of millions of pounds every year--by denying the national grid its natural role in the wholesale purchase and retail distribution of electricity to the area boards. The reason for that is simple. Under the
Column 649new system, if a major supplier such as National Power suffers from a major technical problem, it will be more difficult to deal with it. Ludicrous though it may seem, large and small power stations at the edge of the sea sometimes suffer when sea water covers their cooling water intake screens. If that happens, the power station has to be knocked off and thousands of megawatts have to come off line. Under the present system, the national grid says, "Drax cannot be used for the next hour, or until the sea water is cleaned off the screens. We shall use the next cheapest power station that we have in reserve and bring it on line". Will that happen in the future? It would happen if the Government agreed to making the national grid the wholesaler. But under the new system National Power will have the obligation to bring its next cheapest power station on line, and that power station may not be the cheapest power station that is off line and waiting in reserve.
We are given to understand by electricity industry experts that that could mean an additional cost of £200 million a year to the consumer, all because the contracting generator will have the obligation to provide the next best power station that he has available rather than the national grid's being able to use the lowest unit cost alternative generator in the event of a major generating station or major transmission line breakdown. The Government should seriously think about the penalty to the consumer of not allowing the national grid to buy and sell power but merely allowing it to act as an inert and passive common carrier. The national grid should also carry the obligation to supply. It makes no sense for the area boards to have the obligation to supply to the consumer. The national grid will be a plc owned by the 12 area boards, but it will nevertheless be an entirely separate operation. If it had the obligation to supply, major savings to the consumer would accrue.
Look at the lawyers' paradise that will be created by placing the obligation to supply on the area boards. Suppose that a major customer--say the steel industry in Yorkshire--finds that as a result of a voltage fault its steel is solidifying in its electric arc furnaces. The problem has nothing to do with the industry, which may have provided all the necessary contracts and a 10 per cent. margin over and above the highest winter demand. A generating or national grid fault may result in a sudden loss of power sufficient to wreck the induction furnaces or electric arc furnaces. The customer sues the area board ; he cannot sue anyone else. The area board then has to sue the national grid or the generating board for the failure. Two or possibly more legal actions could be taking place at the same time.
If the national grid had the obligation to supply, that would simplify the whole system because it would have the obligation to provide the power, the alternatives to the power and the insurance on the alternatives through the national grid system.
The Under-Secretary of State has already referred today to the fact that his aim in life is to stop decisions being made behind what he called the "baize doors" in Whitehall and to have them made in the market place. I imagine that he does not want to see all the decisions being made in the High Court. However, he has devised a system
Column 650that will undoubtedly prove to be a lawyers' paradise. In our opinion, these problems will have to be solved in another place, if not in this place.
The national grid is the right body to have the obligation to supply, and it is the right body to have the obligation to buy and sell power at the minimum unit cost to the consumer.
I turn now to the contract system that will be devised around which the national grid will have to operate and which refers to the area boards, as does amendment No. 223. The Government's rhetoric says that an area board will have the right to place a contract with a generating station that can provide it with the cheapest power. The south Wales area board will in future buy from whichever is the cheapest station, which could be Aberthaw, its local big station. Yorkshire will buy from Drax and the East Midlands will buy from High Marnham or Ratcliffe-on-Soar, and the southern area boards will buy mainly nuclear, with a bit of oil and a bit of Didcot or whatever coal-fired power stations are nearby. We can see the problem immediately. A southern area board does not have cheap fossil fuel nearby. The South Western area board has only nuclear power nearby at Didcot, Aberthaw and at Fawley, on the fringes. Therefore, the power is much more expensive than is the power for the area boards in south Wales or in the north.
What is the Government's solution? Is it the free market? I was going to use a non-parliamentary expression to answer that, but I shall not. It certainly is not the free market. It is a "Sir Humphrey" solution. The Government have devised the nuclear quota by which the South Western area board will buy, say, 15 or 20 per cent. of its power from nuclear sources instead of the 80 or 90 per cent. that one might have expected. Once one has allocated for the nuclear quota around the 12 area boards, those area boards can have a maximum of only 80 per cent. fossil power. The southern area boards must then buy fossil fuel long distance, a little bit from Didcot obviously, but mostly from Yorkshire and Nottinghamshire.
When that is replicated over the country, it has to be spread out so that the 12 area boards will be doing something remarkably like what they do today. Once one has redistributed the 15 to 20 per cent. nuclear quota around the 12 area boards, one must then redistribute around the 12 area boards the 80 or 85 per cent. fossil quota. Because of the nuclear quota, one cannot have a wonderful system of local identification between south Wales and Aberthaw, Yorkshire and Drax, and East Midlands and Ratcliffe-on- Soar. Therefore, there will not be any way of minimising one's transmission costs and identifying with the local generating station or of being able to get some real buzz in the business whereby everybody realises, "If we produce cheaper power, it will be good for our local industries" or anything like that because this is a "Sir Humphrey", a "Mad Hatter's tea party" system.
Finally, I remind the Minister that the new system of contracts is supposed to be operational by 1 October in shadow form and be in its full commercial form by 1 January 1990. The Minister already knows that that cannot be done either by 1 October or by 1 January next year, except in some attenuated, "weak tea" transitional form which is remarkably like the present bulk supply tariff system. The Minister will not admit it, but he knows
Column 651that that is what the area board chairmen are saying and that that is what those who are trying to devise the computer programme that will supply the despatch system and the settlement system for the contracts are saying. I am fairly sure that his own more local advisers are telling him, "If you want it by 1 January, you can have it, but it will look very much like the present system. If you want what it says in the rhetoric of the speech that you gave at last year's Tory party conference and more importantly what you want to say in the one that you hope to give at the next two Tory party conferences, you won't get it by 1 January." I hope that the Minister will be politically mature enough to admit that tonight.
Mr. Hardy : I shall be relatively brief because my hon. Friend the Member for Cardiff, West (Mr. Morgan) has already put forward exceedingly powerful arguments. Unfortunately, our experience of the Bill does not give us cause for great optimism that the Minister will respond to his entirely sensible views.
The Government are confused. The Minister dare not retreat from the market force attachment, or the medals from the Adam Smith Institute to which my hon. Friend referred will be at risk. However, the fact is that the Minister is in a preposterous position. He has said that the Government will retain the best elements of the merit order system. The best element-- the only element--of the merit order system is that the consumer obtains the cheapest possible available electricity. If the Minister departs from that principle, he cannot retain elements of it.
My hon. Friend the Member for Cardiff, West spelt out in detail that if National Power's cheap power station goes off line, it will not be the next cheapest power station that will supply the supplier with electricity ; it will be National Power's next cheapest or perhaps its next nomination. That is not satisfactory. Rather than act with good sense and serve the consumer well, the Government have clung to their dogma.
I cannot see any sensible reason why the national grid should not remain in public hands or as an impartial wholesaler. An impartial wholesaler could act with good sense to ensure that there is encouragement for proper, sensible and wise developments in electricity generation. It could deter the insidious trader who may well be eagerly cheering the Government in their preposterous position. An impartial wholesaler could discourage those who are more concerned with financial massaging and manipulation than about the generation of electricity. People who can see through this muddled hotch potch see an opportunity for profit from the "take or pay" principle.
I do not suppose that any words from Opposition Members will persuade the Minister that good sense is necessary, but they should at least be on the record and that is why I am making this brief speech. I want to make it clear that on 10 April 1989 when the Bill was in its final stages there were those who said that the national interest suggested that a different arrangement would be sensible. The Government are putting an enormous obligation on the director general. When one looks at the relatively meagre resources that the director general and the regulator will enjoy, one can see that it may later be regretted that the national grid was not given a more powerful and independent role in the industry. If the national grid were to remain in the role that we have been urging, the job of the regulator would be more effective.
Column 652As I have said, we cannot expect the Minister to accept our suggestions, because he will not have been given permission to do so before the Secretary of State flew off to Red Square. However, at least the Minister should explain to the House the elements of the merit order system that he will retain. We need to know that. I also want to know what steps he will take to ensure that the national grid has a capacity to apply a little wisdom in differentiating between the nearly crooked and the commendable in terms of generation development.
Finally--I am sure that you, Mr. Deputy Speaker, will appreciate this brief point--while we are talking about transmission, does the Minister recognise that Yorkshire consumers, and perhaps east midlands consumers also, have, because of their acceptance of the national interest, borne the fact that they have been subsidising some of the wealthier areas of this country because they have been paying rather more for their electricity than they would have done if they had not been contributing to the loss in transmission of a significant amount of electricity?
Once we have gone to market forces--once the market force application, and so on, imbues the whole electricity industry, as the Government intend-- what concession, what assistance, what recognition of past sacrifice will be afforded to the consumers, certainly the consumers of the Yorkshire area? I do not believe that the Government, having decided to pursue the course of selfishness, could then turn round and say to the Yorkshire electricity consumers, "You will carry on exactly as you have been doing." If they do, we will take a rather more serious and rather more caustic view.
I hope that the Minister will be able to answer those questions. In particular, I implore him to explain to me how he can retain anything like the merit order system in the muddled and foolish confusion that the Government have created by this route.
Dr. Kim Howells : How does the Minister think the grid will offer choice for the consumer? It will be one grid, after all, and, with the best will in the world--I am trying to be as generous as possible to the Minister, because I know that he has a very difficult task to explain this- -there will be a national grid company. Consider Sunday lunch time. Will we plug in to "On the Record" from PowerGen, and, when we decide to cook the Sunday lunch, will we plug in to National Power? Of course not. Will we watch "The Big Match" via ICI's sales to the grid? Of course not. It will be a national grid company, controlled by the area boards, that controls prices. It will, of course, be a cartel manifested in a single company. As our industry becomes more and more dependent upon electricity--and it will- -we will find that this most vital of supply grids is controlled by the very people who are selling the stuff. They will do as I imagine all commercial companies do--try to get from the British public the highest possible profit. Of course, they will favour long-term "sweetheart" agreements with generating companies.
Dr. Howells : Of course they will be looking to the French. Incidentally, I hope that the next time there is a strong wind from the Channel--one that does not originate in this House--the Minister will not allow the French suppliers to switch off the juice before the wind hits
Column 653Britain. I hope that we will not be stuck trying to find 2,000 MW in the south of England because the French have decided to protect their own supplies.
The companies will favour comfortable long-term "sweetheart" agreements with generating companies. It will not be competition. It will not be a question of looking around for generators that are ready to supply the cheapest electricity. It will be a series of private monopolies. They will be looking for trouble-free supplies--and so they should--but there are so many inconsistencies in this Bill, and we will be so increasingly dependent upon electricity, that they will have to look around for trouble-free supplies and "sweetheart" agreements.
But what about price? What will happen to price? We will have a series of cartels and a company that is a mouthpiece for those cartels, and prices will be increased so that profit levels may be cranked up as much as possible.