Orders read for consideration of Lords amendments.
To be considered on Thursday 27 July.
[Lords] Orders for consideration read.
To be considered tomorrow.
The Secretary of State for Energy (Mr. Cecil Parkinson) : I will be reviewing British Coal's financial prospects with the corporation once its current negotiations with the generating companies are concluded. I cannot anticipate the outcome.
Mr. Mitchell : Does my right hon. Friend accept that the contracts will be inextricably linked to British Coal's ability to break even? Does he agree that it is important to apply both the carrot and the stick to an industry whose productivity has risen by nearly 50 per cent. during the past three years? Did he notice the enthusiasm and dedication of the Nottinghamshire mineworkers when he visited the county last week, and is he aware of the considerable approval of and gratitude for his visit that is felt among mineworkers generally and by the miners of Thoresby?
Mr. Parkinson : I thank my hon. Friend for his kind remarks. I enjoyed my visit to Thoresby. I was impressed with the enthusiasm with which the men there are using the new equipment and the big investment that has been made. They are doing the very thing that is guaranteed to safeguard a good future for them. They are an outstanding example of how the industry can secure its future.
Mr. Parkinson : Of course, one cannot anticipate the Queen's Speech, but I expect proposals to come forward in the very near future--certainly later this year--for the restructuring of British Coal's finances.
Sir Trevor Skeet : May I re-emphasise to my right hon. Friend the need to have a capital restructuring, which is absolutely vital for the industry? Is my right hon. Friend aware that we have been talking about breaking even for the past 20 years, but that we have never been able to achieve it?
Mr. Parkinson : One reason for that is the high interest charges borne by the industry. It has received nearly £10 billion in deficit grant and subsidy in recent years. However, its capital structure is not satisfactory. It has no reserves. Every time a pit closes, the cost is added to the negative reserve. The answer is restructuring and, as I have already said, I expect the Government to come forward with proposals.
Mr. Barron : When the industry is restructured, will the Secretary of State make sure that comparisons of the costs of British coal are not made against the marginal cost of coal on the international markets, in view of the answer that he gave me in 1987--that if the international markets were to supply the Central Electricity Generating Board, it would substantially increase the cost? Will he assure the House that the actual costs of production will not be compared with the marginal costs of international coal?
Mr. Parkinson : The hon. Gentleman is absolutely right. It is a mistake to take the lowest price at which one can buy coal on the spot market and say that that is the world price. As he knows, if the CEGB were to go into the market for 80 million tonnes, it would shift the world price considerably. I am glad that on this occasion he and I can agree.
The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer) : The recent report of the North-Western electricity board and the energy technology support unit estimates the potential for electricity generation from renewable energy sources in the NORWEB area to be equivalent to 400 MW of conventional base load plant at costs up to 3p per kWh, excluding connection costs. The board is currently considering the next steps.
Mr. McCartney : I welcome the NORWEB initiative and report. Is it not astonishing that after privatisation, by the year 2000, only 1 per cent. of capacity will come from renewables, yet the report shows that 10 to 12 per cent. of NORWEB's capacity could come from renewables? As methane gas has one of the worst effects on the greenhouse problem, should not the Department of Energy be promoting a nationwide programme for using rubbish tips and harnessing methane gas as an alternative to the nuclear industry, which is expected to produce 15 to 20 per cent. of electricity. We could then ensure that methane gas was used by NORWEB and other companies so as not to destroy the atmosphere.
Mr. Spicer : I do not know where the hon. Gentleman gets his figure of 1 per cent., but I can tell him that no Government have done as much as this one for renewable energy, not only in sponsoring research, but in providing for the non-fossil fuel obligation, which will give a special chance for renewable energy. Renewable energy has never been so protected as it will be in the future. I hope that the hon. Gentleman will welcome that.
Mr. Jack : Will my right hon. Friend join me in congratulating a company in my constituency, Inenco, which for the past 21 years has been investing in energy management, to the extent of £2.3 million in saving systems, which in turn have saved £1 million worth of energy? Does he agree that that excellent example of a private sector initiative shows what can be done in energy savings?
Mr. Morrison : I am aware of that, not least because my hon. Friend, with another of my hon. Friends, discussed with me the position of the glasshouse industry. She knows that Ofgas is in discussion with British Gas at present about the predicament that she mentioned.
4. Ms. Quin : To ask the Secretary of State for Energy what discussions he has had on the desirability of setting a minimum target for the number of low-income households to be insulated in the current year and next year.
Column 718availability locally of unemployed people requiring training in those occupational or skill areas which the projects can provide. Against that background, it would not be appropriate to set a minimum target.
Ms. Quin : Will the Minister confirm that there has been a 50 per cent. reduction in the number of low-income households that have been insulated during the past year since the introduction of employment training? Will he urgently consider ways of expanding such schemes and urge his colleagues to increase the funding to local authorities, so that they can increase the number of schemes that they operate?
Mr. Morrison : I confirm that there was a reduction during the transition from the community programme to employment training. However, the hon. Lady will be aware that my right hon. Friend the Secretary of State for Employment considered this matter carefully and increased the grant by £40. Since that time it appears that the take-up of the scheme under employment training has been good, and I know that my right hon. Friend is looking carefully at continuing that grant.
Mr. Morgan : May I re-emphasise to the Minister how important it is to insulate low-income households because of the likelihood that, during the period before privatisation and afterwards, their electricity bills will increase by about 50 per cent. or more? I draw to the Minister's attention the case of my constituent, Mr. John O'Connor of Ashcroft crescent, Fairwater, Cardiff, which was brought to my attention on Saturday. He was told in his most recent electricity bill that his monthly payment on or after 25 September will be £27.50. That is a 55 per cent. increase on Mr. O'Connor's previous quarterly bill and on the average of the four previous quarterly bills that he has received.
When I received my quarterly bill at the same time I was told that if I changed to a monthly budget account my bill "would be" £91.50 per month. That is a larger increase than that faced by Mr. O'Connor, but at least I was given the option by being told what my bill "would be" if I switched to a monthly budget account, whereas pensioner households on council estates are being told, "Your bill will be going up by 55 per cent. from September". Does the Minister agree that it is absolutely urgent that low-income households are fully insulated and that the practices of the South Wales electricity board are reviewed?
The hon. Gentleman will appreciate that this is the first time that he has mentioned the case of his constituent, Mr. O'Connor, but I shall be perfectly happy to look into the matter. Perhaps he would like to write to me or come to see me about it. He will appreciate, however, that electricity bills have not increased by anything like 50 per cent.
The Government are committed to reducing acid emissions from the burning of fossil fuel and, for example, a £2 billion investment programme is planned by the electricity supply industry to meet new standards agreed with the European Community.
Mr. Lofthouse : Does the Secretary of State agree with the recent report of the Select Committee on Energy on the greenhouse effect which concluded that the nuclear industry would not have the advantage in reducing the greenhouse effect and that the Government should not overstate the nuclear argument? Does he agree that the best way forward is to find the most efficient method of burning fossil fuel? Methods are being investigated, but because of the underfunding of plants such as Grimethorpe, that investigation is unable to progress. On Thursday, the Under-Secretary of State refused to give a definite assurance that that plant would be financed. Will the Secretary of State assure the House that Grimethorpe will continue to be funded by Government money?
Mr. Parkinson : As the hon. Gentleman knows, we are trying to put together a package--I am extremely optimistic that we will succeed--of finance to keep the project active and to bring it to a successful conclusion. I cannot anticipate the outcome of my arguments and discussions with the Treasury, but I am optimistic.
We will, of course, reply to the Select Committee report, but we do not take the view that there is one answer to the greenhouse effect. We believe that the answer will be found in a variety of ways through cleaner coal burn, nuclear power and the extension of renewables--the hon. Member for Makerfield (Mr. McCartney) mentioned the burning of waste gas. We have 45 projects on the stocks and we should be producing nearly 50 MW of electricity from waste gas next year. In a variety of ways, therefore, we shall tackle the problem of the greenhouse effect. I agree with the hon. Gentleman that one such solution is cleaner coal burn.
Mr. Hannam : Does my right hon. Friend agree that one of the important future methods of reducing pollution from coal burn will be gasification? How is gasification developing and how near are we to its use?
Mr. Parkinson : We are backing research into this matter because my Department takes the view--I have said this many times--that coal is one of our most important indigenous resources. We must find cleaner ways in which to use it, and gasification is one of them.
Mr. Malcolm Bruce : Does the Secretary of State accept that when more stringent sulphur controls are imposed on nuclear power stations--the sooner it happens the better--that will encourage the burning of low sulphur coal? In those circumstances, and given the pressure on British Coal as the Minister pushes it towards privatisation, does he agree that the forced closure of many coalfields in Scotland that produced low sulphur coal has been a mistake? Will he respond, even now, to my suggestion that he should review the likely premium for low sulphur coal when full restrictions are in force? That review might, at least, salvage some of the Scottish coalfields.
Mr. Parkinson : As the hon. Gentleman knows, closures are a matter for British Coal, which examines each case in detail before arriving at its decision whether to close. I agree that low sulphur coal has a role to play, but since the vast majority of our reserves are high sulphur coal we see the flue gas desulphurisation equipment as a way of guaranteeing a continuing market for the main body of British coal.
Mr. Redmond : The Secretary of State mentioned the financial package for Grimethorpe. If that package fails, will he stand guarantor so that, irrespective of whether the package is put together, the Government will continue to ensure adequate finance?
Mr. Parkinson : I do not personally have the means to stand guarantor, but I am extremely optimistic : I find that the Treasury is inclined to listen if one has a good case and puts it sensibly. I am extremely optimistic that we shall be successful in our negotiations.
Mr. Dickens : Does my right hon. Friend agree that the power of the wind is perhaps that most ozone-friendly of all means of creating power? Although wind farms and large offshore windmills may seem commercially very unattractive at the moment, in years to come when the coal has run out, and gas oil wells have dried up, windmills may prove one of the big sources for the future.
Mr. Parkinson : My hon. Friend makes an important point. The problem with windmills is that people who are enthusiastic about the prospects of producing electricity from them hate having them anywhere near their homes. One reason why we are sponsoring three projects with the CEGB is to find out whether the public will accept large wind farms, because they are undoubtedly environmentally intrusive, even though the electricity that they produce is welcome.
Mr. Blair : Will the Secretary of State comment on the reported collapse of the Leicester combined heat and power scheme because, as the chairman of the consortium said, there would be no effective competition in electricity generation after privatisation? If that is right, is it not a fairly damning indictment not merely of the Government's environmental policy but of their privatisation proposals.?
Mr. Parkinson : It looks as though the Leicester project is not going to happen, simply because of the economics. The plain fact is that it cannot produce a project that will provide electricity at any sort of economic price. But there are many other projects with good economic prospects. I am sorry to disappoint the hon. Gentleman : there will be substantial independent generation in the future.
7. Mr. Speller : To ask the Secretary of State for Energy if he will list those forms of additional assistance with energy efficiency work made available since 1 July 1988, listing those which have been discontinued since that date.
Mr. Peter Morrison : My right hon. Friend the Secretary of State announced on 7 March a new best practice programme which aims to spread and advance best practice in energy efficiency. This programme began on 1 April and replaced the energy efficiency demonstration and research and development schemes.
Mr. Speller : My right hon. Friend has not precisely answered the question, which was whether he would list forms of additional assistance. I am well aware of the packages. Does he accept that there are two predominant forms of energy efficiency which we should seek to encourage : first, energy audit in the home and the workplace, to save some fuel ; and, secondly, energy labelling on all machinery and appliances, to save energy and costs and, in the long term, to reduce the need for new generation?
Mr. Morrison : I agree with my hon. Friend in this respect : it is up to the individual, company or commercial organisation to see to their own energy efficiency, and that is where our programmes are directed. However, I would not go the whole way with my hon. Friend's suggestion. It would entail unnecessary bureaucracy which could prove tedious and turn people against energy efficiency.
Mr. Gow : Does my right hon. Friend agree that the public sector is setting the most appalling example of the economic use of energy? If he will look above him, he will see 150 powerful lights burning to keep this Chamber illuminated to a degree which is quite unnecessary. If my right hon. Friend goes round Government Departments in London and outside it, he will find, on the brightest day of the year at 12 noon, lights on in almost every building. Will he do something serious about this appalling waste?
Mr. Morrison : I always try to follow my hon. Friend's example. I know that when he was a Minister he assiduously used to go round his Department turning out unnecessary lights. We should all follow that example. I hope that he was pleased with the announcement on 20 July by my right hon. Friend the Secretary of State for Energy. In answer to my hon. Friend the Member for Exeter (Mr. Hannam), who asked whether he would make a statement on the campaign to promote energy efficiency in the public sector, my right hon. Friend gave a long answer which promoted precisely what he, I and my hon. Friend the Member for Eastbourne (Mr. Gow) would want.
Mr. Barnes : The Minister will be aware that the Employment Act 1989 means that many women may be obliged to work down the pit or lose benefit. In that event, should there not be adequate toilet facilities in the pits? It is clear from the Minister's answer that such facilities are often primitive, inadequate or some considerable distance from the work face.
Mr. Spicer : I am aware of the hon. Gentleman's interest in this matter because of his membership of the Standing Committee that discussed the Employment Bill. I have read the Committee's reports. I assure him that the two to six lavatories per pit could easily be converted for use by women. As to why existing ones are not used, I invite the
Column 722hon. Gentleman to accompany me on my next visit to the pits and we can endeavour to find out why more miners do not use the lavatories that are provided for them.
12. Mr. Sedgemore : To ask the Secretary of State for Energy if he will accept the recommendation of the Energy Select Committee that the terms of remuneration of each adviser he has employed on electricity privatisation should be provided to the Select Committee.
15. Mrs. Clwyd : To ask the Secretary of State for Energy whether he will publish a statement on the responsibilities, selection, basis of remuneration and method of contract appraisal of the advisers he is currently employing on work related to the privatisation of the electricity supply industry.
Mr. Parkinson : As the hon. Member knows, we give careful consideration to all recommendations made by the Select Committee on Energy. The Government will give their considered response in due course.
Mr. Sedgemore : Bearing in mind the fact that last year the Government spent £6 million on advisers' fees--the equivalent of employing 220 people--and that this year they intend to spend the equivalent of employing 870 advisers, it is not scandalous that Parliament is not given the information that it needs to decide whether it is getting value for money? Vast sums are being paid to Kleinwort Benson and Slaughter and May for doing God knows what and for God knows how much.
Mr. Parkinson : We are embarking on the huge enterprise of privatising and restructuring this massive industry. Although that information is not made available in detail to the Select Committee on Energy, it is of course available in total to the National Audit Office, which has the right and the duty to examine every item of public expenditure and say whether the Government are getting good value for money. Parliament is being accounted to, in the way that it requests, through the National Audit Office and the Public Accounts Committee.
Mr. Parkinson : I have received several letters from hon. Members, on behalf of their constituents, on this matter. In my replies, I have assured them that the Government have no plans for such a tax.
Mr. Thurnham : Has my right hon. Friend had any discussions with other countries? Clearly it would be uncompetitive for our energy-using industries to pay a tax on carbon fuels if industries in competitor countries did not do the same.
Mr. Parkinson : We are active members of the intergovernmental panel on climate change which is due to report on these matters by the middle of next year and will be taking a view about whether international initiatives can be taken. My hon. Friend is right ; for us to put ourselves at a disadvantage by making a totally individual
Column 723gesture would be pointless. We are active supporters of the IPCC and will work hard to make sure that it comes up with some worthwhile schemes.
Mr. Ashby : There is a local tax in the form of a tonnage extraction rate. Will my right hon. Friend undertake to publish, for each coalfield and each opencast mining operation, the amount of tonnage rate that is paid?
14. Ms. Mowlam : To ask the Secretary of State for Energy if he will publish the most up-to-date figures available from the United States Department of Energy Oak Ridge laboratories on carbon dioxide emission levels in the United Kingdom, France and West Germany for the two most recent years available.
Mr. Michael Spicer : According to the Oak Ridge laboratory report the United Kingdom, West Germany and France are responsible for about 2.8 per cent., 3.3 per cent. and 1.7 per cent. respectively of the world's non- biogenic emissions of CO . I will circulate a fuller answer, including a table of figures, in the Official Report.
Ms. Mowlam : That selective use of the figures does not give us a true picture of the comparative level of carbon dioxide emissions by Britain, France and West Germany. Will the Minister tell us clearly whether Britain's emissions of carbon dioxide are higher than those of West Germany or France? A straight yes or no answer will be sufficient.
Mr. Harry Greenway : Does my hon. Friend believe that his Department has responsibility for collaborating with other Departments to plant more trees, which alone can take in carbon dioxide and breath out oxygen, and so overcome the problem that we all fear so much?
Mr. Spicer : As my hon. Friend has implied, my Department is not responsible for planting trees, but various aspects of our policies are aimed at reducing the increase in CO emissions, in particular our policy on the nuclear power industry. Some arguments suggest that the nuclear industry produces some CO , but even the Friends of the Earth cannot present figures that show that it produces more than 4 per cent., far less than that produced by the coal industry. The following is the information : The Oak Ridge national laboratory maintains a computer database of global CO emissions, including estimates for individual countries, covering the period from 1950 onward. A report on this database was published earlier this year and I will arrange for a copy to be deposited in the Library of the House. Since publication of the report, however, the database has been updated to include 1987 data and revisions to earlier data.
The latest estimates of carbon dioxide emissions in France (including Monaco), West Germany, the United Kingdom and the world as a whole, produced by Oak Ridge national laboratory, are given in the table for the two most recent years available. These emissions relate only to the combustion of fossil fuels and to emissions
Column 724from cement manufacture and are expressed in million tonnes of carbon. The individual country estimates also exclude some emission sources such as bunker fuels.
All such estimates are of course subject to some uncertainty and Oak Ridge has estimated that even the global annual totals are subject to an uncertainty of 6 to 10 per cent. Figures for individual countries will be subject to even greater uncertainty because, for example, the estimates are based on global average carbon emission factors.
I have therefore provided a table giving the latest official estimates of United Kingdom emissions which are compiled by Warren Spring laboratory. These are compiled using a more detailed methodology and should therefore provide a truer picture of the United Kingdom situation. They also include emissions due to gas flaring at oilfields and other sources such as bunker fuels and incineration, which are not included in the Oak Ridge data.
CO2 Emission estimates compiled by Oak Ridge laboratory |1986 |1987 ----------------------------------------- West Germany |184.9|181.5 France |98.2 |94.7 United Kingdom |152.5|156.1 Global Total |5512 |5599 United Kingdom CO2 Emission estimates com |1986 |1987 Total United Kingdom |165.5|166.3 Notes: 1. All figures expressed as million tonnes of carbon. 2. All figures for individual countries rounded to one decimal place and the global total rounded to the nearest million tonnes but this does not necessarily reflect the precision of the data. 3. Oak Ridge figures include emissions from fossil fuels and cement manufacture only and individual country estimates exclude bunker fuels. Warren Spring figures include emissions from additional sources such as gas flaring at oil fields, incineration and bunker fuels. 4. Figures for France include Monaco.
Mr. Pike : When the Secretary of State next meets the chairmen of regional boards, will he discuss why boards such as NORWEB have reduced the number of inspectors that they employ and, for example, no longer inspect empty properties before they are reconnected to the electricity supply? Is that not an example of how, as the industry moves towards privatisation, profit becomes more important than safety?
Mr. Parkinson : I do not accept that. I have visited NORWEB on a number of occasions and I think that the improvement in its standards of service to its customers is remarkable. For instance, it has improved the level of disconnections, and that is again remarkable. It is preparing itself to give better service and is not doing so by taking any risks with safety.
Mr. Favell : When my right hon. Friend next meets the chairman of NORWEB, will he discuss the proposal to phase out Europa house in Stockport, where 600 or 700 people are employed? Does this new proposal arise out of privatisation? Are the rumours true that jobs are to be moved from Stockport, where unemployment is relatively high, to Swindon, where there is virtually none?
Mr. Parkinson : I cannot give my hon. Friend an answer to that. It has not been raised with me before and as he knows, I am not responsible for the day-to-day running of area boards. That is why there are boards of directors. However, I shall find out the answer and write to my hon. Friend.
Mr. Hardy : Will the Secretary of State discuss with the chairman of regional boards who is to pay for the scandalous waste that is about to be experienced, as all Wellington boots, donkey jackets, overalls, crockery, crested paper and so on bearing the emblem of the CEGB are replaced by goods bearing the logo of the new companies? Does the Secretary of State expect the customer to pay for that in advance of privatisation?
Mr. Parkinson : It has always been the practice in the electricity industry to promote the corporate identity of the industry. The idea that something new is being done is wrong. As a small example, in the last year of Labour Government, the equivalent of £57 million was spent on advertising, the object of which was to steal business from another national industry, the gas industry.
Mr. Douglas : Does the Secretary of State concede that when he can meet the chairmen of the electricity boards of England and Wales, he can discuss problems of mutual interest between them and British Coal? That, however, does not apply to Scotland. Nonetheless, there is a matter of considerable interest involving the South of Scotland electricity board and British Coal. When will the Secretary of State be able to resolve the important coal contract between that board and British Coal?
Mr. Parkinson : As the hon. Gentleman knows, that is very much a matter for the two parties. The Government have used their good offices to some effect--I think that the hon. Gentleman will agree with that--to maintain coal production in Scotland. We hope to see an agreement between the two parties in the near future.