House of Commons Hansard Debates for 20 Jul 1989

The Secretary of State for Energy (Mr. Cecil Parkinson) : I beg to move, That this House doth disagree with the Lords in the said amendment.

Mr. Deputy Speaker : With this it will be convenient to discuss Government amendment (a), a new clause-- Promotion of efficient use of electricity --

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Table file CD890720.000 not available

The following amendments to amendment (a) : (i) in line 1, leave out may' and insert shall'.

(ii) in line 5, leave out

as in his opinion ought to'

and insert which shall'.

(iii) in line 11, at end insert

and

(c) shall set a date by which these standards must be achieved and shall apply such sanctions as appears necessary should these standards not be met.'.

Government amendments (b) to (e).

Mr. Parkinson : At present, the only duty that rests on anyone to promote energy efficiency is the duty on the Secretary of State. As a result of the Bill, the range of responsibilities for promoting energy efficiency will be widened and strengthened considerably. The statutory duty will still remain on the Secretary of State, but, in addition, the new Office of Electricity Supply, which will be a very powerful body, and its regulator will also have a statutory duty to promote energy efficiency and for the first time the area boards will have a duty to publish information about energy efficiency and to make it available to their customers. These duties all deal with the consumption of electricity, and with the saving of electricity and energy by users.

However, there is a fourth important pressure built into the Bill and into the structure created as a result of the Bill. It is a major pressure to produce electricity more efficiently. At present, we have a Central Electricity Generating Board which has monopoly powers and operates on a strictly cost-plus basis. Whatever its costs are, it simply passes them through to the customer.

Under the new structure there will be substantial competition from day one for the business of the area boards in both England and Scotland. The Scots are only

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just finding out that that is a serious possibility.

[Interruption.] If the hon. Member for Glasgow, Cathcart (Mr. Maxton) will listen, he may get a surprise.

PowerGen has just written to every major company in Scotland offering to supply them with electricity. National Power is following suit. For the first time major companies and boards in Scotland are being pursued by generators seeking their business. Therefore, there is competition in generation. As fuel represents 60 per cent. of the cost of all electricity generation, the pressure is on generators to compete by using fuel efficiently.

Mr. John Maxton (Glasgow, Cathcart) : Will the Secretary of State give way?

Mr. Parkinson : I shall not give way because we have agreed to make short speeches as the hon. Member for Sedgefield (Mr. Blair) is under the weather.

People used to say, "Where there's muck there's money", but pollution in electricity production is extremely expensive because the less efficiently fuel is used and the worse the technology, the greater the pollution and expense. Therefore, competition and efficient use of fuel run hand in hand with conserving fuel and reducing pollution. That is an important aspect of the new structure that the Bill creates. The company that uses fuel efficiently will have an advantage over its competitors and there will be real pressure for efficient production of electricity.

Their Lordships felt that more should be done and they amended the Bill. I ask the House to reject their amendments and replace them with our new clause. It is not disputed that their Lordships' proposals are defective. The person who proposed them has accepted that. The subsequent amendments only made matters worse. The

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Select Committee has confirmed that the amendments are unworkable and unsatisfactory, and nobody in the House will be tempted to dispute that.

The amendments are ineffective because they were based on American experience and were designed to discipline a system that we do not have here. They are an attempt to import into this country a set of rules and regulations designed for an over-regulated, vertically integrated industry. Their Lordships' failure to understand that has led them to produce this dog's breakfast of amendments. Everyone accepts that they are ineffective and unworkable.

I wish to give the House some of the reasons why the amendments are ineffective. First, they are built round the concept that the Secretary of State or the director general has the power to approve tariff increases and major capital projects. Nowhere in the Bill do we have that power. Moreover, because it is assumed that it is a vertically integrated monopoly the amendments assume that generation is part of distribution. In fact, they are separate. The generators will build the new capacity. The amendments do not include any arrangements to deal with that, but deal exclusively with public electricity suppliers, who will not produce new capacity. We recognise their Lordships' desire to see the commitment to energy efficiency in the Bill strengthened and we recognise that my hon. Friend the Member for Exeter (Mr. Hannam) and others agree with that. Although they think that least-cost planning would be a mistake, they want the Bill to be more specific about how the new duties will be carried out.

In the new clause and in the two revised conditions to the licence we spell out exactly how the director general will carry out his new duties to promote energy efficiency. Each public electricity supplier will have a duty to set performance standards for the promotion of energy efficiency. He will monitor performance and ensure that the standards are met.

Condition 17 supports the new clause and binds the company in the licence to meet the standards set by the director general. Condition 18 spells out clearly how the public electricity supplier will have to carry out his duty to make information available to the customer. In a code of practice which will be part of condition 18 we shall spell out how the public electricity supplier must meet his obligation to provide information. It will be specific and will include the need to maintain a telephone answering service and an office or bureau to supply information. It will give flesh to the commitment that the Bill imposes on the public electricity supplier to provide information.

The new clause spells out clearly the two new specific duties imposed on both the regulator and the public elecricity supplier. Specific action will be taken to set standards, collect information and enforce the standards.

The hon. Member for Sedgefield has conducted a campaign inspired by Mr. Mandelson. He used Mr. Mandelson's Monday morning spot on the "Today" programme to push out his half-thought-out ideas. He made great play of the fact that gas regulators have duties but have not carried them out. We have had discussions with the Director General of Ofgas, who finds his powers too vague and general. He believes that the powers spelt out in our amendments and in the Bill would enable him

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effectively to promote energy efficiency and he intends to seek such powers. He recognises that his present powers are inadequate and need to be strengthened and that the powers set out in this Bill would enormously improve his position.

The hon. Gentleman and some of his hon. Friends have suddenly discovered least-cost planning. They see it as the answer to their predicament of having no energy policy and are suddenly rushing madly towards it. Yesterday the hon. Gentleman gave a series of quotations, all garnered from regulators in America. In America the people who have this overweaning power claim that they use it extremely well. The hon. Gentleman said that that proved conclusively that least-cost planning is widely accepted and admired in America, but it has far more critics than supporters. Its supporters are mainly people who enjoy using the powers and its critics are mainly those who suffer under them. I could give many more quotations than the hon. Gentleman gave yesterday.

I shall read some evidence given by Professor Joskow, who is a highly respected professor of economics at the Massachusetts institute of technology to the House of Representatives sub-committee on energy and power in March 1988. He said :

"My analysis leads me to conclude that the broad implications of this proposal is likely to lead to several undesirable outcomes. In particular, it could result in higher energy prices, inequitable electricity rates and incentives for inefficient conservation investments. My testimony does not argue that there is no role for utilities in encouraging conservation. The main point is that this proposal is the wrong way to identify and implement fair and efficient energy conservation programmes."

Let us hear no more nonsense about that system being universally admired throughout the United States. It has been adopted by only three states that have competition in generation. It has been ignored by more than 40 states and is widely regarded by many people as a disaster and a further strengthening of a deeply over-regulated regime.

5.30 pm

Mr. Tony Blair (Sedgefield) rose --

Mr. Parkinson : The hon. Member for Sedgefield (Mr. Blair) can make his speech in a couple of minutes. This is not the Old Bailey. The hon. Gentleman is not Rumpole and I am not in the dock. He will have an opportunity to make his speech in a moment.

Mr. Alexander Eadie (Midlothian) : On a point of order, Mr. Deputy Speaker. Lords amendment No. 3 is important. The arrogance of the Secretary of State in refusing to give way is almost unknown. The Secretary of State should be informed that he is a servant of the House, not the master of it.

Mr. Parkinson : The hon. Member for Midlothian (Mr. Eadie), not for the first time, is misinformed. I was asked, on behalf of the hon. Member for Sedgefield, to keep my speech short because he was feeling under the weather. He therefore wanted me to make a short speech, which is why I am not giving way. Perhaps the hon. Member for Midlothian should break the habit of a lifetime by thinking before he speaks.

Mr. Blair : I am happy for the debate to continue. It is absurd for the Secretary of State to say that he will not give way in a debate on a Lords amendment. I ask him to give way on the point that he is making.

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Mr. Parkinson : I thought that I was helping the hon. Member for Sedgefield. I hope that the hon. Gentleman will not forget that I shall be replying to the debate and shall therefore be able to answer his questions. I am happy to give way to the hon. Gentleman ; I thought that I was being helpful.

Mr. Blair : The Secretary of State said that the view in the United States is that least-cost planning does not work. Regulators in 29 different states apply least-cost planning, including California, which is the largest state. The only effect of Lords amendment No. 3 is to allow the regulator, if he wishes, to introduce such a concept. It does not oblige him to introduce such a concept ; therefore, the regulator can act accordingly.

Mr. Parkinson : Lords amendment No. 3 assumes a power that the regulator and I do not have. If the regulator decided to intervene in tariffs and stop capital development he would be exercising a power that does not exist in the Bill. Therefore, the amendment is fundamentally misconceived. The hon. Member for Sedgefield will recognise that Ministers only have the powers that Parliament gives them.

I am saying not that least-cost planning does not have supporters but that it has many critics and is designed for vertically integrated monopolies, which we are determined to avoid. It is a by-product of the over-regulated and vertically integrated American system. Ironically, because the American system is so strong and based mainly on the rate of return, an incentive is built into it to create over-capacity. Least-cost planning was introduced to correct a distortion that was built into its over-regulated system. Our competitive system of generation and the Government's powerful amendments and new clauses offer a better opportunity of providing worthwhile energy conservation.

Throughout our debates, security of supply has been taken for granted. Conservationists ignore the need to maintain security of supply. The Government do not deny that conservation has a role to play, but we believe that the Bill creates more powers for more people to promote energy efficiency than have existed hitherto. We are not prepared to put the security of the system at risk. Conservation must be balanced with the need to maintain security of supply, which is what the Bill aims to do. Evidence from America shows that one of the by-products of least-cost planning is an increase in the danger of blackouts. We believe that our policy offers a much more balanced and sensible approach.

I ask my right hon. and hon. Friends to reject Lords amendment No. 3 and accept the Government amendments, which recognise the vital importance of energy efficiency and provide the people who can do something about it with the specific powers to do so.

Mr. Blair : I shall begin by setting out the matters on which, apart from the Government, we all agree. We agree that the greenhouse effect and global warming is a serious environmental problem--perhaps the most serious that we face. We agree that energy efficiency is the best method of combating it. The question is whether Lords amendment No. 3 or the Government's amendment is the most effective to promote energy efficiency.

There can be no more stark contrast than between the two amendments. Lords amendment No. 3 would impose energy efficiency duties on suppliers and regulators. It

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would give the regulator freedom to direct suppliers to do whatever is necessary to carry out their duties, and it backs that up with tough new penalties. By contrast, the Government's amendment does not even impose an obligation on the director general ; it merely leaves it to his discretion. That power must be exercised from time to time, but no specific penalties are attached to the Government's amendment. The difference in the protection that the two amendments offer is the difference between wrought iron and writing paper. The argument that the Government's amendment is going half or quarter way to meeting the arguments advanced in the other place is absurd. It would surely require powerful arguments for rejecting Lords amendment No. 3 in favour of the weak Government amendment.

The Secretary of State said that everyone concedes that Lords amendment No. 3 is technically unworkable. I do not concede that it is unworkable. It has been changed slightly, and I believe that it could work. If the Secretary of State's only objection to it is that it gives him a power to increase tariffs--the Secretary of State does not have such power under the Bill--it could simply be amended. The idea that the Lords amendment can be entirely ruled out on that basis is absurd. It probably has broader support than any amendment that has come from the other place in recent times. It has the support of almost all the environmental groups, such as the Council for the Protection of Rural England, Friends of the Earth and the World Wildlife Fund. It was supported by the House of Lords Select Committee on Energy, which moved it in the other place. The House of Commons Select Committee, in paragraph 5 of its short but valuable report on the Lords amendment, said :

"There are a number of basic principles in the Lords Amendment which we believe that the Government should now ensure are inserted into the Electricity Bill. These are :

(a) Public Electricity Suppliers must be under a statutory obligation to promote more efficient electricity use.

(b) That statutory obligation must be reinforced by penalties to ensure that it is met.

(c) The most effective penalty is for tariff increases to be refused, especially where such increases, caused by additional supply investment, could have been avoided by investment in energy efficiency."

At that infamous No. 10 seminar on global warming, energy efficiency was given as the most effective way to combat the greenhouse effect. If the test for the amendment were either public support or scientific support, it would be carried overwhelmingly. The Government's position has been characterised by a malign reluctance to have anything to do with the notion of energy conservation. When this was first raised months ago, the Government's response was to rubbish it. We were told that conservation was all about turning the lights off and that, in so far as it was relevant, it would be left to market forces, leavened with a little persuasion. The Government were then hoist with their own petard. Having made a big issue of the greenhouse effect, as concern about it grew and it became clear that energy efficiency was the best way to deal with it, and as the inadequacy of mere persuasion of the market forces became self-evident, the Government were forced more and more into having to concede something to salvage their credibility.

In other words, this long tale of Committee stage, Report stage and passage through the other place with amendments from it is not a tale of a Government who are

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desperate to carry out the common will and anxious to get first in the field with energy efficiency. They have had to be dragged, kicking and screaming into this position. Driven to it, disbelieving and reluctant, acting from expediency rather than commitment, they have come up with their amendment today.

The Government's amendment imposes no obligation on the regulator--it simply gives him a power. He may use it if he wishes, but he need not if he does not. If the regulator were so minded, he need never use the power. The idea that this amendment matches the seriousness of the problem is absurd. The regulator can do much if he is so minded. He can determine standards of performance in connection with the promotion of the efficient use of electricity by consumers. In other words, he can intervene, but only to set standards by which suppliers must promote the efficient use of electricity by consumers. There is no direct power to make the suppliers do anything. Would the regulator, under the Government's amendment, be able to set targets for the reduction in energy demand? Would he be able to direct suppliers to use more energy efficient power generation? Would he even be able to order suppliers to provide incentives for customers to purchase more energy efficient equipment? If, as I believe, it is doubtful that he can do any of these things, then we do not have a brand new amendment and new clause designed to put energy conservation and energy efficiency on the energy map ; we have simply a round-about way of saying that more and better information should be disseminated, with bigger and better leaflets and more of them. In other words, we shall not have the teeth that the Lords amendment assumes is necessary to promote energy conservation and efficiency. We shall simply have a publicity campaign that may be better than the publicity campaigns that we have had before, but still one that falls woefully short of what is required to do the job.

Many Conservative Members have signed the early-day motion supporting the Lords amendment. They should be aware that the idea that the Government amendment embodies the spirit of the Lords amendment and is almost a redrafting of it--the same spirit but in different words--is fatuous. If we compare it with the Lords amendment, we see immediately that the latter carries an obligation. That is the first difference. It allows interference with tariff increases and hard and harsh penalties. That is the second difference. It allows interference with new capacity, which is the building of new power stations. The Secretary of State may say that least-cost planning does not work in the United States, but many think that it works extremely well. However, the question is whether we should allow the regulator, if he believes that it is right, to interfere with the planning of new capacity if energy conservation would yield better results.

It cannot seriously be said that the Government do not mind taking powers where they are necessary. For example, clause 36 gives the Secretary of State wide powers to manage power stocks at power stations. Clause 38 obliges him to give consent to the new power stations. Clause 41 sets out standards of performance generally. The nuclear levy is the most direct interference with the market that could be imagined. Whatever other reason the

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Government have for saying that the Lords amendment should not be accepted, it cannot be because they are opposed to intervention. 5.45 pm

The Chairman of the Select Committee said that he believed that we were hanging on by our fingertips in relation to the problems of global warming. If the problem is that serious, should we be afraid of taking powers such as those in the Lords amendment? If it is that serious, can those powers be said to be of a lower order of significance than fuel stocks or the need that the Government see to protect nuclear power, with which they agree although we may not? It is absurd to say that these things are of tremendous importance whereas global warming, which is acknowledged to be the most serious environmental problem that we face, is not.

I do not know whether the director general quite understands the effect of the Government amendments. However, the record of British Gas is an appalling indictment of the power that the Government have given that company. The regulator has not made a single directive concerning British Gas over the years since privatisation. Only four people, although they are good people, work in the marketing division of British Gas, which has a turnover of £7.5 billion, but spends only £4 million on energy conservation.

Mr. David Clelland (Tyne Bridge) : Is not privatisation of energy industries incompatible with energy conservation and efficiency, as we are now seeing with British Gas? The simple fact is that people will not be interested in investing in a private company that has a statutory duty to encourage its customers not to use the product that it is trying to sell. That is why the Secretary of State will not introduce such statutory duties and the amendment that he has tabled will not work.

Mr. Blair : My hon. Friend is right. The Secretary of State seems to believe that the commercial impetus of a privatised electricity system will be to promote energy efficiency and conservation. That is a curious idea. I should have thought that the commercial impetus would be to sell as much electricity as it could. What has happened with British Gas over the past few years makes it difficult to sustain the notion that it sees such a policy as being to its commercial advantage.

The issue of the environment and the central role of energy efficiency in its conservation will not disappear. People will ask why the Government are opposing the Lords amendment when there is so much support for it. The answer is simple. The Government's agenda is privatisation, but the agenda of the British people is the environment. Faced with a choice between the environment and privatisation, the Government have chosen to put privatisation first. There is no more important environmental test of this Parliament than the acceptance of the Lords amendment.

Many of the Conservative Members who have put their names to the early-day motion support the concept of privatisation, whereas Opposition Members believe that the privatisation proposals are one great unedifying shambles. They have already caused higher prices and chaos within the industry, and the provisions on nuclear power have met with condemnation from every quarter. But even if one accepts the principle of privatisation, what possible rational argument can there be for adding to the

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litany of failure to which the Bill has already given rise by refusing the most coherent and effective method of fighting our common single greatest environmental problem?

I therefore call upon all Conservative Members who acknowledge the seriousness of the problem to support the Lords amendment in the Lobby. It is one thing to sign early-day motions, but they will not bring home to the Government the credibility and seriousness of the threat unless they are prepared to put their votes where their mouths are. The Government may win the vote tonight, but if they do it will be on the basis of arguments that have been universally discredited. They have been given the single most significant environmental test of this Parliament. They have sat that test and they have failed.

Sir Ian Lloyd (Havant) : I felt that it would probably be less than principled of me if I did not take part in this debate because of the strong position that the Committee of which I am Chairman has taken on the amendment and the views expressed in the report that we published to which the hon. Member for Sedgefield (Mr. Blair) referred.

Before I get down to the nuts and bolts of the argument, let me put one thing straight. The hon. Member for Sedgefield referred very generously to the simile that I had used about global warming--that we were clinging by our fingernails to the cliff. As I explained at the press conference, the simile, though a great one, was not mine. It was the fine British historian Arnold Toynbee who said that all civilisations cling to the cliff for one reason or another, and ours is clinging to the cliff because of the complex and dangerous technological fix in which we find ourselves.

The Secretary of State said that the Select Committee had confirmed in its report that the amendment was defective. I must point out that, having accepted that, we said that the objectives that the amendment sought to achieve were most powerful and deserved careful consideration by the Secretary of State and his Department. I adhere to that view, although, broadly speaking, I welcome much that the Secretary of State has done during the passage of the Bill to reflect the Government's concern for energy efficiency and conservation. In the letter that the Secretary of State sent to us this morning, he spelt out several respects in which the Government have developed a very effective approach to the question.

We endorse and accept, for example, the idea of having an independent regulator with a duty to promote the efficient use of energy. We also endorse and accept the fact that the Secretary of State will be required to promote the efficient use of energy. The Secretary of State said in his letter :

"The licences for electricity distribution companies will require them to advise their customers on the efficient use of energy." But what happens if they neglect that advice? That is a question to which I shall return.

The Secretary of State continues :

"The Bill introduces competition in electricity generation". I share his faith that under the new structure competition will be rigorous and effective, but we do not yet know quite how effective it will be. In the context of the greenhouse effect, unless it is completely effective many other things will have to be done to secure the overall objective.

The Secretary of State said in his letter that the Government have made special provision to encourage the development of renewable sources of energy. I welcome

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that, but I would argue, as I did the other day, that the scope of renewables is limited. Even with almost zero interest capital investment on the largest scale, we can expect the contribution from that quarter to be comparatively small. I welcome what the Government have done about combined heat and power.

Let us now consider the four specific arguments that my right hon. Friend the Secretary of State advanced in his case for rejecting the amendment. The Secretary of State said in his letter that the amendment

"gives a duty to both the Secretary of State and the Director General of Electricity Supply to promote energy efficiency but does not indicate what should happen in the event of disagreement between them, how they should consult, or what should be the basis of evidence necessary to satisfy their duties".

Surely those are not insuperable problems. A formal quarterly report from the director general to my right hon. Friend would certainly cover the question of how they should consult and of what should be the basis of evidence. The degree of observance of standards could also be incorporated in such a report. Conspicuous failures could also be incorporated, as could applications for new and existing generators in areas where, in the director general's opinion, there is massive scope for increased efficiency in energy use or conservation. I am not terribly convinced by my right hon. Friend's first argument, therefore.

My right hon. Friend then argues that the Bill

"removes from the Secretary of State the power to fix prices or decide"--

that is the key word--

"on new capital investment it would be quite wrong for electricity prices to be subject to political interference once the industry is in the private sector."

I do not really believe that we are talking about a decision, though. As I understand it, under the new system, the decision to invest in new generating capacity will be made by existing major companies, by new companies moving in to the industry or by the area boards. The decision to invest will be theirs. What we ask--perhaps we are seeking to transfer American experience here--is that the Secretary of State should retain the power to examine and, if necessary, to reject that decision to invest. As far as I have been able to judge the American experience, the fact that that power has been retained by the public utility commissions has occasionally resulted in a restriction of investment, but it has certainly not resulted in the disappearance of investment in electricity generating capacity in the United States, so I am not altogether impressed by that argument either.

My right hon. Friend then refers to the need to balance energy efficiency against the need for security of supply. That judgment is made repeatedly in arguments between public utility commissions--in the various states of the United States where the structure remains--and those seeking to invest. My right hon. Friend referred to the danger of brownouts, but I do not believe the United States has experienced persistent and threatening brownouts during the past two or three decades. That is not the record in the United States, and it would not necessarily happen here.

Finally, my right hon. Friend argues :

"the Amendment is illogical since it inhibits the construction of new capacity by the distribution companies".

I found myself unable to understand what my right hon. Friend was driving at there ; perhaps he will explain later.

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I come now to what I believe to be the key statement underlining the Government's position--the statement made by my noble Friend Baroness Hooper in the other place :

"It is in the consumer's own interest to use electricity efficiently."-- [ Official Report, House of Lords, 16 May 1989 ; Vol. 507, c. 1053.]

Of course it is in the consumer's interest to use energy efficiently. Against that fact, however, we must consider the evidence given to the Committee in the other place, which I found extraordinarily impressive, that, whereas in 1976 the Commission decided that by 1985 we should have endeavoured to achieve a 20 per cent. improvement in energy efficiency, the perceptible improvement eight years later was a mere 3 per cent.

We have now reached a stage at which the difference between the 3 per cent. that has been attained and is demonstrable and the 20 per cent. or more that the Commission thought desirable--the Toronto conference looked at that figure and even bigger figures--has become much more crucial in the light of our enlarged understanding of the fact that our civilisation relies on massive burning of hydrocarbon fuels and that that contributes to global warming and the greenhouse effect.

We must now go further. However important and significant voluntary contributions may be, and however important market forces may be--I do not for one moment underestimate their importance ; as I have said elsewhere, I regard them as a necessary condition of our salvation--we must go further than we have gone so far if we are even to begin to achieve the massive shifts in the patterns of energy consumption that we may be asked to undergo in the next five or 10 years.

If such massive shifts are required, the whole ethos of energy conservation and efficiency will have to be looked at, in my humble judgment, in a much more fundamental sense. That is the priority that has dominated my thinking on the matter for some considerable time. 6 pm

I am sure that my right hon. Friend's amendment recognises the problem, as I know that he does from our many formal and informal discussions on the matter. However, I do not believe in my heart of hearts--if I did I would not be standing here--that it contributes significantly to the solution. If I use the word "significantly", that is where I would like the emphasis to lie. I believe it to be anodyne and exhortatory, but I do not believe it to be effective. When hon. Members suggest that this kind of measure produces very little in the way of significant results, I call to mind the experience of California, where we know that the California commission, as a result of measures taken some time ago, managed to achieve savings of $350 million in energy conservation and efficiency. That was the agreed measurement of the Utility Commission.

Bearing in mind the roughly similar scale of the Californian and United Kingdom economies, can my right hon. Friend tell us that we can look forward in the next one, two or three years to energy efficiency savings of the order of $350 million? If we cannot so look forward, why can we not? If we can, why do we not adopt similar measures?

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That summarises my position. I shall end with an analogy which this time is completely mine, but is none the less valid. It concerns global warning. We know that some time ago a small capsule known as Challenger exploded on its way into space because of the failure of an O ring. We know that our civilisation is on a somewhat larger capsule in space. We know that the O ring round it is the atmosphere and the ozone layer. When the Challenger exploded, the President of the United States set up an investigatory commission which produced a fine report saying why the O ring had failed and its consequences. If the O ring round this planet fails, there will be no presidential commission ; there will be no follow up ; there will be no civilisation.

Mr. Malcolm Bruce (Gordon) : I congratulate the Chairman of the Select Committee on Energy for his two forthright and timely reports on the subject. They have given unequivocal guidance which the Government would be foolish not to accept. After all, that guidance was based not just on the opinion of the Committee, but on universal testimony from a wide variety of sources. It was testimony that I would regard as overwhelming and I find it depressing that the Government seek to dismiss it.

I have a special interest in the clause. Like all hon. Members who recognise the importance, especially, of tackling the greenhouse effect, I believe that the clause is our last chance to convert the Bill from what is effectively a commercial interest measure to an environmental Bill. Although the Government have insisted all the way through that that is not what the Bill is about, they should accept even now that that is what the Bill should be about.

The wording of the Lords amendment, which the Secretary of State criticised so fulsomely, does not fail the test that he suggests. I am a little biased because I had a substantial hand in drafting the amendment. It is based partly on an amendment that I moved in Committee, especially the enforcement element of the clause. For the Government to say that there is a technical deficiency in the amendment and, therefore, reject the whole concept is not very convincing, because the Government could modify the amendment to make it work if they wanted to and were prepared to put the political will behind it.

I and my colleagues have tabled an amendment to the Government's own pathetically weak pusillanimous amendment, which seeks to ensure that enforcement is built into the requirement to promote energy efficiency. Pious declarations of good intent are not good enough. As the hon. Member for Havant (Sir I. Lloyd) said, we have had consistent statements from the Department of Energy, through the Energy Efficiency Office, about the objective of achieving 20 per cent. savings per year. That has been recommended for years, but we have not come anywhere near it. Clearly, publicising the benefits of energy efficiency and advertising the fact that it is in the commercial interest of consumers to take account of energy efficiency are not enough. We are dealing, after all, not just with economics, but with the environment of our planet and ecosystem.

I admit, as have other hon. Members, that the amendment is based on American experience, but I do not accept the Secretary of State's rejection of that experience. I have had discussions with people involved in utilities on both sides of the fence in many states in America, and I do not believe that his statistical rebuttal stands up to examination.

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