House of Commons Hansard Debates for 10 Jul 1989

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must be a corollary to that main pillar that substantiates the need for some central place in which to discuss such matters.

As we are talking about energy and the use of it, there must be, above all things, the highest standards of safety. Related to that we must have the infrastructure required to produce the best regulatory conditions, licensing conditions where they apply and planning conditions. It is also necessary to satisfy the consumer, the people who matter, those who pay. I believe that it is difficult to divide consumers from workers because they produce. It is also important to have efficiency of supply. Research and development must play a supportive role and we must have policies to assist such development in the public or private sector.

In the exploration of the North sea we must have a substantial offshore share of the industrial activity. Therefore, we need a central base, a controlling edge, to encourage the highest levels of competition. One important essential objective is the ability to control and monitor. At all times there should be a national register of what is happening and how it is controlled in the nation's interest.

There is also a need for co-ordination in normal and emergency conditions. In the widening sphere of privatisation Parliament should be more concerned about co-ordination at times of natural disasters and other emergencies. The promotion of energy conservation must also spring from the centre. It cannot be left to the tides that flow from profits and deficits. It must be a positive policy so that energy conservation is as essential to our energy requirements as the physical resources. Such objectives should also include a concentrated dynamic and continuous flow of resources and the ingenuity of professional minds directed towards exploiting renewables.

I have followed the Chairman's theme by asserting that there is a need for a central place where such purposes and objectives can be pursued. Three basic elements are required to meet such objectives. First, we want a Department that is efficient and economically effective. Secondly, the role of energy in the economy must be promoted effectively. Thirdly, there must be co-ordination between the Department, industry, commerce and the public utilities to achieve an effective national role and to provide an international lead regarding the policies and resources requirements that will meet the targets of the Toronto agreement and that will reduce the greenhouse effect of present burn technologies.

The national interest is best served by effective national involvement in the use of our energy resources--oil, gas, coal, nuclear and conservational renewables--whatever the conditions of public or private ownership. Once we have considered those overall objectives and purposes the need for a Department of Energy becomes imperative. My experience, as I have suggested already, shows that there is no doubt about that.

Any transfer of subject heads from the Department of Energy to other Departments would invite a disparate condition. Such a transfer would mean that energy policy became ineffective, remote, subservient to the mainstream activities of other Departments and out of touch with the reality that means that energy is paramount in our lives. Energy is at the commanding heights of priorities and urgency given its ability to stimulate the economy and to improve the physical and climatic environment.

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Exuberance about having a Department of Energy must be tempered with a degree of prudence. We have the report of the Energy Select Committee before us, and I am pleased that the Select Committee on the Environment has also produced a report about the way in which the Property Services Agency's estimates for the cost of a new Department of Energy headquarters have stumbled from £4.5 million in 1987 to more than £12.5 million.

We can only assume from that that there have been delays and disruptions. Whatever the excuses, one thing is certain : the original proposal could not have been thoroughly thought out. Perhaps the less we say about that, the better. By using those words, I am not suggesting that something dramatically untoward has happened, merely that the National Audit Office has decided to look into these disparities and, in due course, the House will be able to learn what went wrong, why delays occurred and what the disruptions were. Having made out the case for the Department of Energy with a great deal of enthusiasm, I was wanting only the accommodation it needed, and no more.

There are many issues involving millions of people which relate to energy. However, even now, we have no energy policy, or only a very vague one. In the new fashion of dispersal and the Government's abrogation of their responsibilities, there is a likelihood that there will be no policy at all. In that case, how will Parliament have an effective role to play? Any energy strategy works broadly within the parameters of nuclear and non- nuclear development and promotion. When the expenditure plans are directed towards investment and restructuring, the people are interested in the impact of both and neither is the monopoly of Government or private enterprise. The extent of nuclear development, its location and share in the power programme is a matter for the people. They are directly involved. In the non-nuclear sphere, the coal industry's share in the power programme is of paramount importance to whole communities. The exploration of oil and gas and its impact on the economy concerns the people, and only through Parliament can the people find effective expression of their national interests as workers, consumers and shareholders in the environment. Our report mirrored that fact. We referred to the fast breeder programme and doubted whether the guessing game of commercial opportunity in 40 years' time justified the running down of Dounreay by 1994. The Chairman of the Select Committee has indicated that this issue is of sufficient importance for us to look at it in the timescale which he has described to the House.

We have expressed concern about the levels of research and development and the difficulty of identifying in the estimates its range and nature. We have also expressed concern about the reduction of financial support to the Energy Efficiency Office. We mentioned the ending of the energy efficiency survey scheme, in which we discovered that for every £1 of public money spent there was £13 worth of savings and millions of pounds--in some cases, a 20 per cent. reduction in bills--of the participating organisations were saved. Why that scheme was brought to an end puzzles many members of the Select Committee. These and other examples affect the public and show the need for Parliament to assert and protect its role of questioning and challenging in a Department which is totally involved in the matters we are discussing.

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There is one outstanding example. I hope that the country and Parliament will join together in finding how best to bring to an end a tendency which brings unnecessary hardship to whole communities--the acceleration of coal mine closures. We should respond with much gratitude to that special kind of man called a miner. He is unique because over the decades he has inculcated in our minds a sense of loyalty, sometimes misplaced, which has brought about a record for which hon. Members should be generously grateful.

In 1985, we had 169 colleries ; this year we have 94. As was suggested earlier, there is only one colliery left in Scotland. This position was brought about by the stupid, silly and irresponsible bickering of two chairmen, one of the electricity board and the other of the coal board, who would not get round a table and act like decent human beings. Instead they used our money for costly litigation, while Shell brought in imported coal, not in bulk carriers, but in small ships through small ports in Scotland. They did that at a loss to themselves, using the loss leader so that when they obtained the contracts they would make more profit, while our miners lost their jobs. As I have said, the number of colleries has been nearly halved.

Mr. Alexander Eadie (Midlothian) : I have listened carefully to the expose and analysis of my hon. Friend. He mentioned the present position in Scotland where we have only one colliery left, Monktonhall, and the difficulties surrounding the litigation which is taking place between the South of Scotland electricity board and British Coal. My hon. Friend said that one aspect of energy policy should be security of supply. The South of Scotland electricity board decided, at the end of last year and the beginning of this, to import 1 million tonnes of Chinese coal. Does my hon. Friend agree that that is hardly a country of political stability and would not necessarily give us security of supply in relation to energy?

Mr. Leadbitter : My hon. Friend has a profound knowledge of the energy industry and was a Front-Bench spokesman on the subject. There can be no doubt about the factual accuracy of his intervention or the serious conclusion which he has drawn.

There were 171,000 people in the industry in 1985, and that figure is down to 89,000. The daily output of tonnes of the long wall face was 845,000 in 1985 and, with a dramatically lower labour force, that figure has gone up by 35 to 45 per cent. to 1,458 tonnes. The operating cost to obtain coal has been reduced from £42.48 per tonne to £38.25 per tonne. That is a graphic, elementary, statistical thumbnail sketch of coal mining performance--fewer coal miners and colleries, but a remarkable increase in productivity. By 1987, productivity had increased by 70 per cent. as against the pre-strike level and this year it has increased by 19 per cent. on last year's level.

Mr. Michael Brown (Brigg and Cleethorpes) : No one can deny the statistics which the hon. Gentleman has adduced in support of his argument, but does he think that the events immediately before 1985 had anything to do with what has happened in the past four years?

Mr. Leadbitter : All activities that impinge on an industry have something to do with it. Whether they are of great magnitude is a matter to arrive at by analysis. There was a strike in the coal industry and that was unfortunate. It brought about an incredible state of affairs--the nearest

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thing I have seen to the creation of a police state. Aggravation was heaped upon aggravation, but that is not relevant to this debate.

The rate of productivity after the strike showed that nothing was in the minds of those who worked in the pits but a desire to make a success of the industry this time. All, including the management, have worked extremely hard to put this unfortunate past behind them.

However, the hon. Member for Brigg and Cleethorpes (Mr. Brown) reminds me that he has been to South Africa. We are all concerned about apartheid--I have never seen such unanimity in the House as there is against it. But there is apartheid in this country. Miners who have never been found guilty of an offence are still refused their jobs back. Such men are deprived of their jobs against the background of their kith and kin increasing productivity by 70 per cent. since the strike and by another 19 per cent. in the past year.

Mr. Martin Redmond (Don Valley) : The strike came about because of the stupidity of the then chairman of the board and of the Conservative Government. If the hon. Member for Brigg and Cleethorpes (Mr. Brown) had spent as much time looking into the situation in this country as he had travelling to South Africa he would probably be better acquainted with the facts.

The miners wanted the dispute to go to the tribunal which was set up between the coal board and the union, but the Government refused to participate in it. I find it rather strange that that same Government are now arguing--

Mr. Michael Brown : On a point of order, Mr. Deputy Speaker. This is very interesting and important but, as a member of the Select Committee, may I say that I have read its report and I can see no connection between what we are supposed to be debating and the hon. Gentleman's remarks of the past few moments--

Mr. Deputy Speaker (Mr. Harold Walker) : Order. The hon. Member for Don Valley (Mr. Redmond) is pushing at the fringes of the subject. Perhaps he will now have regard to the terms of the debate.

Mr. Leadbitter : I certainly agree with your advice and ruling, Mr. Deputy Speaker, but it was a bit naughty and cheeky of the hon. Member for Brigg and Cleethorpes to say that, because he raised the point in the first place. However, the House is forgiving and you, Mr. Deputy Speaker, are understanding--

Mr. Brown : If I was responsible for subsequent events I must accept my share of responsibility and you, Mr. Deputy Speaker, might want to reprimand me for my original intervention.

Mr. Leadbitter : As usual, the hon. Gentleman apologises in the nicest possible way.

To return to my analysis, given the indisputable figures showing productivity up, and the pursuit of policies seeking to produce a degree of financial viability, and the hopes based on projections made in 1987 that the industry would have broken even this year, it is not without significance that British Coal showed an operational profit of about £500 million--a figure about which I am willing to be corrected if necessary.

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The hon. Member for Brigg and Cleethorpes asked what other factors lay behind this improvement and pinpointed the strike as a major cause. Increasing competition from other fuels, unstable but lower oil prices than in the 1970s, inflation and high interest rates and the costs of servicing debt--these elements completely wipe out the operational benefits of the policies and productivity of management and men.

Also, a new term has crept into energy vocabulary--restructuring. It means accelerating closures and decreasing investment, which will fall from £650 million to about £500 million in 1992. That will help to make the books look good. But it is important for the House to consider the other costs involved. To pay for the restructuring programme, £311 million will be needed to pay off miners and to close pits--a high price to pay. No one yet has mentioned the social costs and the multiplier costs of a declining industry. No one has mentioned the knock-on costs arising from the closure of companies that supply the industry. Nevertheless, this restructuring will make the books look good.

Finally, imported coal is beginning to impinge on this country. More of it is arriving from some peculiar places and it is more than likely that it is produced by using cheap labour. This country can match the world in mining equipment and technology--we sell it to America, for instance--but we are using less and less of it here. Did we not learn the lessons of 1973, when oil prices hit the roof and everyone proposed not using oil? We did not. Oil prices have fallen to about $18 a barrel, so now everyone suggests using the cheapest fuel that we can get. The national interest should not depend on short-term price oscillations, however. That is a wrong philosophy and a wrong policy.

Let us look at the cost of regenerating industries in communities that have lost their livelihood. For every 2,000 people working in a pit community there is a tradesman to look after the service needs of the families. The social cost of keeping people idle is high. Does the House understand that it costs nearly £8,000 a year to service a man's idleness? My constituency has a high level of unemployment, although, blessedly, it is now falling. Each unemployed person would welcome a job on even £7,000 a year.

What a daft country Britain has become. What a silly, miserable, pettifogging idea it is to squander resources instead of using a lesser amount to promote the ingenuity and adaptability of our work force. Britain is not weak in the way that people abroad have tried to describe it. It is stultified by political blindness. It is more important in Downing street to overcome a peripheral crisis than to get hold of the broader issues in our country and provide a better deal for our people.

Our Select Committee report impinges upon the economy, upon our social well -being. It seeks to try to understand attitudes that are out of place with the modern dynamism that is required to keep this country great, our people at work and our economy healthy. There are a couple of million people out of work at an approximate cost of £8, 000 per person. If we all sit down and do nothing, we will end by having nothing to pay ourselves.

The time has come for a Select Committee report to show that we must maximise the use of our energy resources. We must magnify the importance of the problem and invest in means that conserve energy and promote its better use. We must also provide the kind of

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investment that will exploit to the full our indigenous energy resources--in this case coal. If we let coal die, a little bit of Britain, nay, a pretty big bit of Britain, will die with it. In Britain a disease, a cancer, has stricken the shipbuilding industry, not because it was incapable but because politicians felt that that was the way to go. What has happened to the steel industry? Oh yes, it is making a profit, but once Britain was the largest steelmaker in Europe. Now our steel industry is but a major tiddlywink. One does not have to think twice before saying that, if our shipbuilding and steel industries and the use of coal are built up, Britain will not be the poor neighbour that some people in Europe seek to call it. We need to build up those industries, to invest in them and to put people to work in them. More than that, we must take note of the fine men who worked with fine officers, not only in the Department of Energy but throughout industry, to produce some guidelines about how Britain could make good in a way that will make it the pride of Europe. We will make energy tops if we say yes and keep the Department.

5.25 pm

Mr. Peter Rost (Erewash) : I am grateful for the opportunity to follow the thoughtful, important and constructive contribution by the Chairman of our Select Committee, my hon. Friend the Member for Havant (Sir I. Lloyd). I am also happy to follow the equally thoughtful, important and constructive but somewhat more controversial contribution of the hon. Member for Hartlepool (Mr. Leadbitter).

I wish to concentrate on the energy efficiency budget that is exposed in the report. I readily declare an interest, which is well known to the House, as a consultant to a major energy management company. The energy efficiency budget, which was never a large percentage of the total Department budget, has been cut from £20 million last year to £15 million in the current year, and it is planned to reduce it further. I make no special point about that, as I accept that spending more money does not necessarily achieve more results. However, I wish to question, and not for the first time, the Government's priorities in their energy efficiency programme, and those are not necessarily reflected in a reduced budget.

The Government admit that there is still huge potential for improving energy efficiency, but they appear to believe that consumers are now well aware of that and will make their own decisions. In other words, the Government believe that investment in energy efficiency will go ahead because it is cost effective and because consumers realise that they will benefit by saving money. The Government are saying that market forces will do the trick. Nobody believes more in the market economy than I do, but I also believe that the market needs the right consumer signals. The Government's energy efficiency policy now needs a much higher overall priority in Government strategy. Much can and should be done which does not necessarily require increased expenditure but, rather, policy decisions. Let us look at regulation as one example. All my hon. Friends are reluctant to accept unnecessary regulation, and I share their philosophy. However, we need stronger guidance on building regulations and on energy labelling of appliances, as other countries have found. It is not good enough to try for 10 years to get voluntary agreement and progress in those areas.

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Some years ago we saw the introduction of energy labelling for car efficiency. Nobody objects to that and it has worked as an important yardstick for the consumer. We accept regulation-- perhaps reluctantly at first--in every other area of life. We accepted regulations for seat belts and we accept safety regulations wherever we regard them as necessary and in our own best interests.

It is time that we imposed a little more regulation in order to provide stronger signals to the consumer and to encourage the promotion of energy efficiency. I base that argument on the belief that energy efficiency is much more important than it was some years ago. The main thrust of the debate used to be that we must conserve energy because it is a finite resource, we are short of it, and it will run out. The main argument in support of greater energy efficiency today and tomorrow will surely relate to environmental factors.

If, within a few years, scientists reach a consensus that global warming is the greatest threat to future existence on this planet, further action will have to be taken. The consensus of opinion to the Committee, to the Government and to the Downing street conference is that in the meantime energy efficiency should be promoted, where it is cost effective, as an insurance policy if the day shortly comes when scientists agree that we have to take further and major international action to reduce the levels of carbon dioxide. Regulation must, therefore, play some part, but it is only a partial contribution.

What is needed, in addition to a little more regulation, is a priority programme of incentives. Again, however, we are faced with a Conservative philosophy dilemma. We do not believe that the free market needs to be motivated, but it does. If market forces are to operate, they need incentives. The Government have applied that policy in every other area. We believe that it is right to provide incentives to people to buy their own homes. That is why we give huge tax offsets to people with mortgages. We also believe that it is right that people should make provision for their own pensions, so we give them tax incentives. We believe, too, that the market signals are not strong enough to encourage home-produced food, so we give huge subsidies to agriculture. That is not challenged. We give all sorts of strong market signals by using the fiscal system to promote objectives that we regard as desirable. Why else do we spend taxpayers' money on urban renewal, job creation, huge training programmes and regional grants? We provide tax incentives to promote objectives that we regard as economically or socially desirable. I believe that energy efficiency should also be regarded as a priority. If the market were achieving the energy efficiency objectives that the Government seek, my argument would be irrelevant, but it is not. My hon. Friend the Member for Havant reminded us that the energy bill for the buildings and other places controlled by Government, such as the National Health Service, is £1.8 billion a year. It is conceded that we could achieve a 20 per cent. saving by means of cost-effective investment in energy efficiency which would have a short pay-back period, yet that is not happening. Despite the Government's initiative, announced last January, to promote that investment, we have still not been given any answers about when the programme will start, what is to be spent on it, what monitoring there will be and what the pay-back period will be.

Furthermore, energy efficiency is not happening adequately enough and fast enough in the rest of the

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economy. We all know that there is a short pay-back period for much of the investment in industry and in domestic areas, but it is not happening because the market signals are not strong enough. One might argue that the Government did not need to reduce the tax on lead-free petrol to encourage people to buy it because there was already a differential. However, the Government reduced the tax and widened the differential. They intervened directly in the free market to provide a stronger signal. The same argument applies to energy efficiency, but it must now be regarded as a priority.

There is a major inconsistency in the Government's strategy. We apply one rule to energy efficiency--that the market will sort it out and we do not need to interfere--and we apply a completely different rule to all other areas of Government policy--the tax incentives in all sorts of areas, to which I have already referred.

There is even greater inconsistency and illogicality about the Government's overall energy strategy. Huge subsidies have been provided to the coal industry. We have allocated a special slot to the nuclear industry ; we have protected it by means of extra subsidy. Now, for the first time, we are encouraging renewables by means of the special protection that is provided in the Electricity Bill. Coal has always been protected and the nuclear industry is now being subsidised. We are providing protection because we believe it right to keep those two major sources of energy alive and flourishing and able to compete, in case we cannot do without them in the future.

The same must apply to energy efficiency. Even if it is cost effective, it still needs to be given a stronger market signal. The nuclear industry would die tomorrow without Government support and the coal industry would have dwindled long ago without it. Energy efficiency has been struggling along because it has not been accorded the same priority by the Government. We must rethink our strategy and give greater priority to the promotion of energy efficiency. The Minister will appreciate the analogy that it is rather like suggesting that the Treasury should maximise revenue by imposing more and more taxes without ever considering whether expenditure should be cut, thus making more revenue unnecessary. The Government's economic success and our prosperity during the last 10 years have been built on the opposite policy of cutting taxes because we have been able to reduce expenditure. We are providing the supply side of the energy equation with all the incentives, but we are not giving the same priority to the consumption side. If we realised how cost effective energy efficiency is and how well it could be promoted if we gave stronger market signals, my case would be accepted and adopted. Even more serious than holding back the energy efficiency investment that we so desperately need and which a little more encouragement would provide is the disincentive to energy efficiency. What has happened to the neighbourhood energy action home insulation programme? It is dying on its feet, yet it was promoted by Ministers as the most cost-effective way in which to improve energy efficiency in low-income homes. There are other examples. Why are third-party financing arrangements for the public sector still so slow to get off the ground? Energy management companies that have offered to finance investment in the National Health Service on a

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shared energy basis have still not been given the go-ahead, even though they could save the taxpayer huge sums of money by reducing energy consumption, while reducing environmental pollution. Another example is the Government's deliberate encouragement of the industry to waste energy through their decision to privatise British Gas. The Select Committee on Energy and the major energy users council have received evidence that the 25,000 therm cut-off point and the tariffs now applied by British Gas as a result of the Monopolies and Mergers Commission report encourage consumers deliberately to waste gas. If a large commercial consumer uses just below 25,000 therms, it has to pay the domestic tariff, but if it wastes enough gas to use more than 25,000 therms its gas bill goes down although its energy consumption goes up. What is worse, firms that employed energy management consultants to reduce their consumption found that by reducing their consumption to below 25,000 therms they were increasing their energy bills because they had to pay the domestic tariff. That absurdity should be remedied ; it is one specific example of how, far from promoting energy efficiency, we are encouraging energy waste.

I conclude with a note to the Government, and I hope that Opposition Members will shut their ears for a moment. I suggest to my right hon. and hon. Friends that green politics are here to stay and will intensify when scientists internationally persuade us that we have to take action on global warming. Green politics are not a protest vote, they are not relevant only to the United Kingdom, nor are green voters only Guardian readers. They are mostly articulate, well educated, informed, represent an ever-widening section of the public and are mostly Conservative supporters. If we are to remain in government, we have to respond more convincingly to those views or our opponents will take the initiative from us.

The rhetoric of improving energy efficiency and reducing fossil fuel consumption to reduce the greenhouse effect and global warming has to be accompanied by action. Government priorities and strategies for greater energy efficiency have to be adjusted. We should start next week by accepting the spirit of the Lords amendments to the Electricity Bill on energy efficiency and encouraging the promotion of combined heat and power which is a major way in which we can reduce fossil fuel burn and improve the efficiency of electricity production. We should make a start by accepting the arguments of the Select Committee on Energy over many years and in many reports that energy efficiency is cost effective, but needs a little more encouragement. In the next Session we should follow that up with an energy conservation Bill promoting what is cost effective to address environmental problems.

The Government should take the initiative positively to promote investment in energy efficiency because it will improve our productivity, reduce our energy bills and, above all, will give consumers stronger market signals to make the investments that the environment and our future survival will soon demand.

5.43 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye) : I am grateful for the opportunity to speak briefly in the debate on the Select Committee on Energy's report. I add my

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voice to those who have paid tribute to the work of the Select Committee and its Chairman, the hon. Member for Havant (Sir I. Lloyd).

I should like to touch on one or two specific points, the first of which is the future of the Department of Energy to which the hon. Member for Havant referred. I represent Ross, Cromarty and Skye in the Scottish Highlands which is dependent for much of its economic well-being and activity on the health of the oil industry, not least the oil fabrication yards. The work force, and the people whose livelihoods depend on that work force, would view any thought, discussion or serious proposition that the Department of Energy should be wound up as extreme foolishness. It would be foolhardy indeed if we were to go down that track, despite the privatisations in the electricity industry which one can assume will be completed in the next few months. It is absolutely critical, and the report was correct to stress that we should maintain a Department of Energy into the future.

Turning to the oil fabrication sector, let me give the House one example of the dangers, or potential dangers, that confront the country and the oil industry. After 1992 and the Single European Act, it is extremely difficult to envisage how the Department of Energy will maintain the Offshore Supplies Office in its present form without its being counter to the provisions of the Single European Act. Yet time and again concern is expressed in the oil industry and the fabrication sector about unfair competition from other EC member states that are able to offer more advantageous power contracts or, through their system of local rating or local taxation, more advantageous property overheads for firms bidding for work against United Kingdom-based construction and fabrication companies. Therefore, there is a clear need to ensure as high a United Kingdom content as possible in the fabrication work carried out in domestic yards. Clearly, if the OSO cannot be maintained, a similar body would have a role to play.

A considerable worry is that Ministers acknowledge that it is likely that the OSO will run counter to the provisions of the Single European Act. They offer the industry a bland reassurance that some supervisory body or watchdog function will be maintained, but it has never been spelt out to those of us who are interested in what the Government propose to do in the next few years. I should be grateful if the Minister would pass my comments on to the Minister of State who takes specific responsibility for the oil sector, as there is growing concern about what will happen.

The problems that are fast approaching represent a strong argument, in addition to the many excellent arguments that the Chairman of the Select Committee set out, for maintaining a Department of Energy presence in the oil sector, and in all our energy reserves and production concerns.

I shall not follow in depth the excellent speech by the hon. Member for Erewash (Mr. Rost) about energy conservation, but it is worth putting on record the points about energy efficiency which the Select Committee set out in very fine fashion in the report. The amount of waste in the economy caused by a lack of attention to or emphasis on energy efficiency is marked. The Energy Efficiency Office, having had its budget reduced from £24.5 million to £15 million, will not be as effective as it should be. Speaking in another place, Baroness Hooper said that the proposed reduction was a direct result of the successes

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achieved in the earlier campaign. Does that mean that the Department of Energy believes that the programme's work is complete? Baroness Hooper said that the Government will be "targeting our activities", but what does that mean? It is ill defined--

Mr. Alex Salmond (Banff and Buchan) : Less money.

Mr. Kennedy : I agree with the hon. Gentleman.

Is energy efficiency still one of the Department's prime concerns? Government rhetoric about energy efficiency and the contribution that it can make to the economy and broader environment concerns is completely let down by the reality of the reduction in the budget for energy efficiency and conservation.

I was pleased that the Select Committee on Energy drew specific attention to research and development and industrial support. We have heard about the future of the coal industry, energy efficiency and the future of the Department. It is clear that within the evolving European Community and further afield, Britain will be left at the starting post if more is not done and more emphasis is not placed on industrial research and development and general support for the energy industry.

Welcome investment is being made in Britain, but all too often it is of an assembly nature and the conception, marketing and production is done in other countries, most notably Japan. In other sectors, conceptual work is done in Britain, but all too often, because of the lack of a coherent industrial strategy on research and development, manufacturing and production are located elsewhere in the European Community, frequently on other continents. That spells death for a nation that is seeking a long- term future but is an island economy. I was therefore pleased that the Select Committee's report drew attention specifically to the importance of research and development in energy. That point should be underscored.

I hope that the Government will offer an assurance, first and foremost from a local point of view, about the future of the Department of Energy and, more specifically, what will happen to the OSO as 1992 as the reality of the European single market approaches. The report is timely and welcome in drawing attention to the importance of energy efficiency and a considerably enhanced role for research and development in this crucial sector of the British economy.

5.53 pm

Mr. Michael Brown (Brigg and Cleethorpes) : A number of hon. Members have supported the recommendations made in paragraphs 24 and 25 of the Select Committee's report. I did not share the views of the rest of the Committee. In the private deliberations that we held last week it was incumbent on me to explain why I differed from the rest of the Committee, so it is incumbent on me to explain why I sought to divide the Committee on the future of the Department of Energy and on another matter regarding the coal industry.

I commend the speech of my hon. Friend the Member for Havant (Sir I. Lloyd). He has done an excellent job over the years as Chairman of the Committee. I pay tribute to the hon. Member for Hartlepool (Mr. Leadbitter). I disagreed profoundly with almost everything that he said, but he has a way of captivating the House and hon. Members enjoy listening to his speeches. I suspect that if

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I were to pick up on one or two of the points that he made I should be in danger of being out of order, as I was half an hour ago. I did not agree with other members of the Select Committee that the Department of Energy should continue because I believed that the Committee's remit was to investigate the spending plans of the Department over the past year and for the ensuing summer. The decision about whether we have a Department of Trade, a Department of Industry, a Department of Trade and Industry, a Department of Health, a Department of Social Security, a Department of Health and Social Security or a green department with responsibilities that are currently held by the Department of the Environment--in my humble view it should share certain responsibilities with the Department of Energy--is not one for a Select Committee or the House. We all know that one person has always decided the formulation of Departments. We should do better to wait until that person has made his decision. We have an excellent Secretary of State for Energy and team of Ministers, but they need not worry about any changes being made to the Department because none of them will be out of a job. However, those who are members of the Select Committee on Energy will be out of a job. If there is no Department of Energy, there is no Select Committee. If there is a good reason for retaining the Department of Energy, it is because members of the Committee will be able to retain their status and because I shall be able to continue to enjoy my weekly audience at the feet of the hon. Member for Hartlepool as we engage in the rough and tumble of lively debate, which I should certainly miss.

On page XV of the report, I proposed that the following words should be deleted :

"Furthermore, even at the risk of slightly affecting the value of the privatised companies at flotation"--

the electricity companies--

"we believe that the Government should make it plain to National Power, PowerGen and the Scottish electricity industry that the strategic national case for an indigenous coal industry means that they must pay what the SSEB described to us in 1987 as a modest premium' over international prices to ensure that British electricity supplies remain secure. BC should not be forced to reduce its prices to the lowest prices available on an unstable and unpredictable international market, however useful these prices may be to all concerned in the United Kingdom as an indicator of the energy costs of our competitors and hence the real cost of energy."

It was not in the interests of my constituents or of our economy to go along with that part of the paragraph. After a lively debate, I sought to divide the Committee. Although I lost the vote, I was grateful to my hon. Friend the Member for Cambridgeshire, North-East (Mr. Moss) for taking the same view. It is absolutely essential that every pressure is put on the British coal industry to respond to competition because that is the only way to wean it off the unending subsidy which this report criticises.

Mr. Redmond : Will the hon. Gentleman expound his views on subsidised coal imported into this country, sometimes from countries where child labour is used in producing it? Does he want subsidised coal from various

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parts of the world to continue to be imported? Is he in favour of that unfair practice and of bumping the coal industry in that way?

Mr. Brown : Will you advise me, Madam Deputy Speaker, whether it would be in order for me to respond to that question? I am happy to respond, but I fear that the question goes wide of the terms of the debate.

Madam Deputy Speaker (Miss Betty Boothroyd) : This is a reasonably wide debate which covers policy. If the hon. Member wishes to respond, he is at liberty to do so.

Mr. Brown : I shall respond most happily. I do not care who subsidises what, so long as it is not my constituents as British taxpayers. So long as the subsidies continue to come from my constituents and those of other hon. Members, I have a major objection to them. I have no views whatever on other countries subsidising their products and giving British consumers the opportunity of a better deal.

Mr. Redmond rose--

Mr. Brown : I shall gladly give way again in a moment. Any country that subsidises its industries will do as much harm to its economy as Government subsidies to our industries have done to our economy.

Mr. Redmond : The hon. Gentleman is right to worry about taxpayers footing the bills. Is he aware of the cost to his constituents, paid in tax, of subsidising the devastation brought about by his Government's policies?

Mr. Brown : I do not agree with that. The hon. Gentleman was not a Member of the House in the early 1980s when I represented the British Steel plant at Scunthorpe. You will recall, Madam Deputy Speaker, that I often sought to catch your predecessor's eye. During the first four years of my membership of the House, the BSC work force of 19, 000 was reduced to 6,000 or 7,000. I never once suggested that taxpayers should subsidise my constituents and keep them in jobs producing a commodity that customers did not want to buy. On every occasion that the Secretary of State for Trade and Industry came to the House to support Mr. Ian MacGregor, the chairman of the British Steel Corporation, I publicly gave my full support to their policies. I can report to you, Madam Deputy Speaker, that as a result of the decisions taken in the early 1980s, supported by me, today the BSC does not ask the taxpayer for one ha'penny.

Mr. Rhodri Morgan (Cardiff, West) : Rubbish. Mr. Brown : It contributes as a taxpayer, paying corporation tax because it makes profits. It now manufactures a product which is sold because people want to buy it in preference to foreign steel. That is the position in which I want the coal industry to be.

I have been through what Opposition Members fear. In my constituency, 19,000 people worked in the steel industry one year and only 6,000 people four years later. I know that it is painful, but I ask the hon. Gentlemen to face that pain because the recovery afterwards is a joy to behold. I understand their legitimate concern for their miners and constituents, but it is misplaced. Those miners would be left on an unending diet of subsidies, and it is those subsidies that the report criticises.

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Mr. Allen McKay (Barnsley, West and Penistone) : The hon. Gentleman seems to forget that I, too, had a steelworks in my constituency where the work force was reduced from about 16,000 to about 6,000. I, too, went through the pain. I acknowledge that there is a difference between the histories of the steel and coal industries. If the hon. Gentleman will consider the history of coal rather than talk about market forces, he will realise how wrong he is.

Mr. Brown : I am not sure that the histories of those two great industries are so different. They were both starved of investment in the early part of this century and both were nationalised. One has been nationalised for 40 years and is in a worse state than the one which has been nationalised, thankfully, only for 20 years. There is a clear parallel between them.

I have explained to the House why I and my hon. Friend the Member for Cambridgeshire, North-East felt it necessary to divide the Committee on the paragraphs that I mentioned. I did not write them ; they were presented to me for my approval, as was the rest of the report. It may be out of order to say this, but Back-Bench Members of Select Committees should have a greater opportunity to be involved in drafting reports before they are presented with them for final approval. That would help us when we consider Select Committee proceedings on estimates days and in other debates of this nature. There is much in the report to commend it to Ministers. The detailed work of all involved provides food for thought which, I am sure, my right hon. and hon. Friends at the Department of Energy will consider carefully.

6.6 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford) : The hon. Member for Brigg and Cleethorpes (Mr. Brown) will understand why I do not follow him down that road. It is fortunate that the majority of the Select Committee Members rarely follow his suggestions. The House will not be surprised if my speech mainly relates to the effect of the estimates on British Coal. Over many years the Select Committee has highlighted the problems that would face British Coal if the Government took certain actions. Unfortunately, the Government have rarely taken much notice of our reports. If they had taken notice of the 1987 report on coal and the report on electricity, they would not have taken the action that they did.

Three quarters of the money made available in the estimate through the vote is to assist British Coal. It is right and proper that a large slice of the report dwells on that industry. I am sure that the Chairman and members of the Select Committee will agree that it has not always been too impressed with the reliability of the estimates and the value to be placed on them. This year's estimates seem to have been treated with some scepticism for that reason.

Paragraph 5 of the report tells us that the uncertainties for British Coal are enormous. That is true. For many years it seems that we have never managed to get the Government to come clean. From time to time we have used our crystal ball and mostly the Select Committee and the House have been correct. The Government have ignored many of the Committee's recommendations and suggestions and on most occasions the Committee has been proved right.

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We are aware that £250 million is a lot of money, but, as the Select Committee recognised, it is being used simply to run down the coal industry, as the Government have planned to do since 1984. The Government are on their way. We must ask, "Do we need a coal mining industry?" If the answer is yes, what size of industry is required? I should have thought that it should be the size required to meet the demand to generate energy and to mine for coal on these shores. It is obvious from the evidence to the Select Committee that that is not the Government's view.

Recently, in evidence to the Select Committee, Sir Peter Gregson made it clear that he expected the contract agreements between British Coal and the Central Electricity Generating Board to be completed in a few months' time. He said that his Department had been keeping in touch with developments. One can take that as one wants, but these decisions will be based purely and simply on conditions in the marketplace. The Government have had to provide £311 million in the estimates to bring about the loss of a further 15,000 jobs in the mining industry this financial year. The spin- off from the last financial year is about 5,000 jobs. This means, as Sir Peter Gregson told us, that by March next year the estimates will cover some 20,000 miners' jobs.

In 1987, the Select Committee suggested that there might be only 69,000 underground workers in the mining industry by 1990. The Government denied that. It is now obvious that by 1990 that number could fall to 50,000, which means that the mining communities will be in a more traumatic position than they have been in since 1984, when there were about 200,000 men on the colliery books. We have seen the industry run down rapidly. Although in the past there were tragic circumstances in many mining communities, at least the men over 50 were provided with a weekly income to cushion the blow. I have made these points several times in the House and in Committee and I do not apologise for repeating them. The 20,000 miners about whom we are talking in this financial year are not over 50 ; their average age is 34. They have no weekly income to cushion the blow. There is no alternative employment in the mining communities that these young men can take. There has been no action by the Government since 1984 to provide them with alternatives.

What is the Government's answer? What should these men do? What are the plans for them if 20,000 jobs are lost? It is not sufficient for the Government to argue that the coal industry must stand on its feet and fight the competition. If one accepts that--I never will--the Government have an obligation to the mining communities not to wipe them out for reasons of political dogma and to provide employment to take the place of the staple industries in these communities. There are no signs of that happening.

We hear about the marketplace. Does anyone, from the Secretary of State, to civil servants, to British Coal, believe that British coal can compete with coal from other countries? We hear about all the records and wonderful achievements since 1984. The majority of coal mines are making a working profit--£500 million in the last financial year. Through technology and the hard work of miners, these wonderful achievements have been made, which hon. Members on both sides of the House and Sir Robert Haslam praise. However, we can only produce coal for power stations at a price of £46 to £48 a tonne and it is possible to import coal for between £20 and £28 a tonne, because of subsidies and slave labour in other countries.

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