House of Commons Hansard Debates for 13 Nov 1989

City of London (Various Powers) Bill

Motion made,

That the Promoters of the City of London (Various Powers) Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid ; That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House ;

That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session ;

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That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time (and shall be recorded in the Journal of this House as having been so read) and, having been amended by the Committee in the present Session, shall be ordered to lie upon the Table ;

That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session ;

That these Orders be Standing Orders of the House.-- [The Chairman of Ways and Means.]

Hon. Members : Object.

To be considered on Tuesday 14 November.

Redbridge London Borough Council Bill

Motion made,

That the Promoters of the Redbridge London Borough Council Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill, if they think fit, in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office not later than the day before the close of the present Session of their intention to suspend further proceedings and that all Fees due on the Bill up to that date be paid ; That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House ;

That the Bill shall be laid upon the Table by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first and second time (and shall be recorded in the Journal of the House as having been so read) and, having been amended by the Committee in the present Session, shall be ordered to lie upon the Table ;

That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session ;

That these Orders be Standing Orders of the House.-- [The Chairman of Ways and Means.]

Hon. Members : Object.

To be considered on Tuesday 14 November.

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Oral Answers to Questions

2.38 pm

Mr. Barry Field (Isle of Wight) : Further to my point of order on Friday, Mr. Speaker. May I draw your attention to the fact that in the conduct of private--

Mr. Speaker : Order. This has nothing to do with questions. I shall take the hon. Gentleman's point of order, if it is connected with private business, at the proper time.

ENERGY

Electricity Privatisation

1. Mr. Macdonald : To ask the Secretary of State for Energy when he plans to set a date for the privatisation of the electricity industry.

18. Mr. Harry Greenway : To ask the Secretary of State for Energy when he expects the restructuring of the electricity supply industry to be implemented ; and if he will make a statement.

The Secretary of State for Energy (Mr. John Wakeham) : The Government intend to implement the new structure of the industry at the end of March 1990 and to complete its privatisation within this Parliament ; the area boards will be offered for sale in autumn 1990 and the two generating companies will be offered for sale in the first half of 1991.

Mr. Macdonald : I congratulate the Secretary of State on his new- found enthusiasm for the mixed economy, but I warn him that he still has some way to go. Does he agree that the decision to abandon the privatisation of nuclear power should have been taken 12 months ago by his predecessor, and that if it had been, he would not have been left with this shambles?

Mr. Wakeham : I agree with the hon. Gentleman this far-- [Interruption.] It is not very far. If the decision had been taken before I would not have been involved in dealing with the matter when I arrived. However, it was not until the late summer and the beginning of autumn that the terms which the private sector wanted for the privatisation of nuclear power became apparent and those terms, as I reported to the House on Thursday, I was unable to recommend.

Mr. Benn : Is the Secretary of State aware that the statute under which he exercises his responsibilities, which was passed by the coalition Government in April 1945, requires him to be personally responsible for promoting economy and efficiency in the supply of energy? Will he now institute a public inquiry into how it was that successive chairmen of the generating board misled successive Secretaries of State on the true costs of nuclear power, at a cost to the taxpayers and electricity consumers of many billions of pounds? In those circumstances does he think it right that Lord Marshall should be compensated when he leaves the generating board?

Mr. Wakeham : I do not believe that an inquiry is necessary. The principal concerns about the price of nuclear power arose because of the high capital charges and the return on investment and not so much, as some

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have suggested, because of the decommissioning costs and fuel service charges. I believe that those concerns arose, as I told the hon. Member for Western Isles (Mr. Macdonald) a few moments ago, in the summer of this year--that was why I was faced with a difficult decision.

I fully accept all my responsibilities as laid down under the statute--as no doubt the right hon. Gentleman did when in my position--and I do not believe that a public inquiry is necessary.

Mr. Rost : Now that nuclear power is excluded from the privatisation is there not an overwhelming case for adjusting the imbalance between National Power and PowerGen to create a more competitive climate among producers?

Mr. Wakeham : I recognise my hon. Friend's point, but I do not believe that that is necessary. I believe that a competitive market is developing and the proposals that I have made will ensure fair competition between the generators, whatever their size, especially the independent generators which will strongly enter the market. To change the allocation of stations at this stage would risk failing to complete privatisation in this Parliament and that would not be in the consumers' interests.

Mr. Dobson: Does the Secretary of State agree that his statement last Thursday, like the 13th chime of the clock, cast doubt on all that had gone before? Is it not true that no one believes any of the figures quoted by his Department in furtherance of privatisation? Does he agree that it would be better, particularly as the Government are blaming the advisers and the generating board for those figures, if the Government published a White Paper spelling out all the advice that they have received on costs and prices and projections of costs and prices for oil, coal and nuclear power stations? Would not that permit rational discussion of what is happening and some rational decisions to be taken? In short, would it not be best if the Government came clean on figures?

Mr. Wakeham : One problem in the past has been that some of these costs have been hidden away and we have not fully realised what they are. We believe that by our creating an electricity generating industry that is highly competitive, the market will determine the best costs, and the Government will welcome the competition that follows.

2. Mr. Beaumont-Dark : To ask the Secretary of State for Energy what progress has been made in the setting up of independent generation companies after the restructuring of the electricity supply industry.

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer) : There are approaching 20 independent projects in prospect,which will provide up to 15 per cent. of present capacity in England and Wales. The first new independent generating company to be established as a result of our privatisation proposals is Lakeland Power, which has just signed a contract with the North Western electricity board for 220 MW of gas-fired generation.

Mr. Beaumont-Dark : Does my hon. Friend accept that without the privatisation programme we might not have heard the true cost of nuclear power and that, therefore, good has come of it? Does he also accept that the rationale behind splitting the CEGB into only two companies--of

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which one, National Power, will produce 70 per cent. of the electricity--was nuclear power? As that rationale has now disappeared, does he agree that competition to keep down the cost of energy is most important and that there should be more than two generation companies, possibly four or five, so that people can see that privatisation is for the good of the consumer?

Mr. Spicer : I agree with about three quarters of that. I agree entirely with my hon. Friend that competition is the force which will bring down costs. Of course, that competition is absent in the present structure in which the monopolist sets up the costs and passes them straight to the consumer. I part company with my hon. Friend when he says that to generate competition it is necessary further to sub-divide the two major companies. There will be a multiplicity of companies and company sizes and, as I said in my initial answer, we know of 20 independent projects coming to the market representing about 15 per cent. of present capacity. That means that there will be a multiplicity of competition.

Mr. Allen McKay : Why is the Minister so confident about the cost of electricity when a document from his Department to the Cabinet said that, on privatisation, electricity prices would rise by 15 per cent. for domestic consumers and by 25 per cent. for industrial comsumers?

Mr. Spicer : I shall not comment on leaked documents, and old documents at that. There is no doubt that the competitive pressures that will exist in the industry as a result of privatisation will put downward pressure on costs. As I said, a multiplicity of new projects have been proposed with cost structures considerably below those of the present industry. New types of generation, for instance gas-fired generation, are coming forward. They have much lower cost structures and that will have an effect on prices.

Mr. Andy Stewart : In view of the statement last week by my right hon. Friend the Secretary of State for Energy on the future of the nuclear generating industry, does my hon. Friend agree that it is time to promote more strongly and quickly the environmentally friendly mini-power stations to take advantage of the cheap coal that is produced in Nottinghamshire?

Mr. Spicer : I agree entirely with my hon. Friend that the Nottinghamshire UDM pits have been increasing their efficiency quite remarkably. They are now among the highest productivity pits in the country. If those pits continue to improve their present rate of productivity and increased efficiency, there will be a great future not only for Nottinghamshire but for the coal industry as a whole.

Mr. Doran : The Secretary of State will be aware that the oil industry and the gas producers have invested heavily with a view to entering the electricity generating market with a cleaner fuel--gas. Given the present shambles of electricity privatisation, what are the prospects for that investment proceeding?

Mr. Spicer : That is a non-sequitur. The gas-fired generation proposals are made possible only because of privatisation and because of the competitive pressures that that will place on the industry. Far from its being a shambles, we are setting up a whole new structure that will remarkably increase the pace of competition in the industry and the downward pressure on costs. Those things will benefit the consumer.

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Mr. Favell : My hon. Friend will be aware of the plan to place National Power's headquarters in Swindon and those of PowerGen in Birmingham. That will result in Europa house, a regional headquarters in Stockport, being phased out and 600 or 700 jobs being lost or relocated. When the new nuclear company is formed will my hon. Friend consider basing it in Stockport where there already is a dedicated, experienced and hard working staff--especially of women who cannot move elsewhere and who, if they were in the south, would be worth their weight in gold? The present plan is for a headquarters in the midlands and one in the south, and a headquarters in the north-west would be very welcome.

Mr. Spicer : I know that my hon. Friend has been pressing me hard on behalf of his constituents, whose jobs are at risk. As to whether, under the new arrangements, a headquarters will be placed in his constituency, I cannot give him a definitive answer, but I am sure that his points have been noted.

British Coal

3. Mr. Illsley : To ask the Secretary of State for Energy when he last met the chairman of British Coal ; and what matters were discussed.

Mr. Wakeham : I meet the chairman of British Coal regularly to discuss all aspects of the coal industry.

Mr. Illsley : Did the Secretary of State recently discuss the suggestion which appears to have been put to the Cabinet, that between 12,000 and 30,000 jobs will be lost in the coal industry over the next three or four years? Will he confirm that those job losses will have to be met by compulsory redundancies?

Mr. Wakeham : No, I did not discuss it in those terms. Coal contracts are a matter for commercial negotiations between the parties. Those are still in progress, and it will be for British Coal to decide what manpower it will require in the light of the tonnage that it can profitably produce and sell in competition with other fuels. I hope that it will get a large slice of the market.

Mr. Andrew Mitchell : When my right hon. Friend next talks to the chairman of British Coal, will he point out that although his announcement last week may not have been very good news for the nuclear industry, it is potentially extremely good news for the coal industry and for the future of new coal technologies? Will he point out that the coal industry has everything to gain from increasing its competitiveness and further intensifying its productivity?

Mr. Wakeham : The chairman of British Coal is a wise and experienced person, and I am sure that he has already taken those points on board. I have no doubt that when I see him again shortly, I shall discuss these matters. My hon. Friend is right--there is a good future for British Coal if it can produce coal at prices that meet those of the competition. I have every reason to believe that it can produce a substantial part of our basic fuel requirements.

Mr. Hardy : Is the Minister aware that it would be disadvantageous for Britain if we became dependent on foreign coal supplies? Does he accept that a number of foreign coal suppliers are already prepared to sell coal to Britain at a price cheaper than that at which it is available in Europe? Is that not an extremely dangerous position,

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and one which he would do well to advise the country not to accept, as dependence on foreign coal is strategically unwise, and would become enconomically foolish?

Mr. Wakeham : Dependence upon any form of fuel would be unwise. We require a diversity of supply. As I said in a reply to the right hon. Member for Chesterfield (Mr. Benn) on Thursday, British Coal must make itself competitive against not only imported coal but oil and natural gas. That is the challenge for it, and I am sure that it will rise to the occasion.

Sir Trevor Skeet : As there is likely to be a shortage of electricity in the late 1990s, particularly with the elimination of the three nuclear stations in the programme, how does my right hon. Friend propose to take up the shortfall? Has he discussed this with the chairman of British Coal?

Mr. Wakeham : I have satisfied myself that there will not be a capacity shortfall. Already, a substantial number of independent projects are coming forward. There is potential for life extension of some plant, and I am wholly confident that our privatisation proposals will ensure that capacity demands are met.

Mr. Barron : Given that, last week, the Secretary of State announced that the Government would protect the nuclear industry via the British taxpayer, is it fair that the British coal industry, which over the past four years has cut costs by 30 per cent., improved productivity by over 90 per cent. and suffered job losses of 140,000, should lose jobs because of the importation of foreign coal?

Mr. Wakeham : We are not protecting the nuclear industry in the sense that it will be cash-positive from the day that it is set up. The hon. Gentleman, who knows a great deal about the industry, was less than fair in the way in which he put his supplementary question. He did not mention that the taxpayer has financed over £6.5 billion of investment and provided over £10 billion of grant since 1979. That shows an unrivalled commitment to the coal industry by the Government.

Mr. Roger King : Did my right hon. Friend discuss with the chairman the environmental impact of fossil fuel power stations on our ecological system? Did he see "The Money Programme" on BBC2 last night, during which we were told that an American power station has been set up which is energy efficient and, as far as possible, emission proof? The cost of taking out the CO has been passed over to a South American country in the form of a grant to plant millions of trees to remove CO from the atmosphere. Does my right hon. Friend agree that that is a sensitive approach and one which should interest British Coal?

Mr. Wakeham : British Coal is well aware of the need to improve the environmental acceptability of coal as a fuel, as are the generating companies that will use the fuel. I have no doubt that British Coal will take note of what my hon. Friend said. I do not watch television very often. I feel like my right hon. and noble Friend Lord St. John of Fawsley : I seem to appear on television more than watch it these days.

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East Midlands Electricity Board

8. Mr. Haynes : To ask the Secretary of State for Energy when he last met the chairman of the East Midlands electricity board ; and what matters they discussed.

Mr. Michael Spicer : My right hon. Friend and I meet the chairman of the East Midlands electricity board regularly and discuss a range of issues of mutual interest.

Mr. Haynes : Is the Minister aware that the chairman of the East Midlands electricity board, Mr. Harris, and the local manager for the area, Mr. Huddleston, are open, honest and above board? Why has a scandalous document been leaked from the Cabinet? It is all right for the Minister to say that everything is lovely in Nottinghamshire, but we want some honesty, not flannel. The document has the name of the right hon. Member for Hertsmere (Mr. Parkinson) written all over it. We want some honesty at the Dispatch Box. What jobs will be protected in the Nottinghamshire area--the area that I represent?

Mr. Spicer : The hon. Gentleman had a good week last week and I hope that he will not push his luck by going completely over the top this week. The substance of the hon. Gentleman's supplementary question is why did the document leak. The answer is that I have no idea.

Mr. Michael Morris : Is it not a fact that the East Midlands electricity board, under the chairmanship of Mr. Harris, is one of our most efficient electricity boards? Is that not because of its dependence primarily on coal? Can my hon. Friend reassure the board's members that it will be given every encouragement to produce a diversified electricity supply?

Mr. Spicer : I agree with my hon. Friend and with the hon. Member for Ashfield (Mr. Haynes). The East Midlands electricity board is extremely efficient and a very good board. It relies largely on coal for its electricity. So far this year we have allowed £55 million worth of investment in the Nottinghamshire coal pits. Last year we allowed £73 million worth. With that investment and the increased productivity that the pits are showing, there should be a great future for coal from Nottinghamshire.

South of Scotland Electricity Board

9. Mr. Hood : To ask the Secretary of State for Energy when he last met the chairman the South of Scotland electricity board ; and what matters were discussed.

Mr. Wakeham : I have met Mr. Miller informally.

Mr. Hood : Is the Secretary of State aware that Mr. Miller, almost single handedly, has attempted over the past two years to destroy the Scottish coal industry on the altar of buying cheap imported coal from South Africa, Colombia and elsewhere? Given his fetish for nuclear power, will the right hon. Gentleman tell us what discussions he intends to have with Mr. Miller on who is to buy expensive ring-fenced nuclear power?

Mr. Wakeham : These are matters for discussion with my right hon. and learned Friend the Secretary of State for Scotland. However, Mr. Miller is a very successful

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chairman of the South of Scotland electricity board. The nuclear industry in Scotland does not suffer from the same disadvantages of cost that were apparent in England.

Mr. Wallace : While I am sure that Mr. Miller did not welcome the Secretary of State's announcement last week, I certainly welcome his rather belated rendezvous with reality. Will he be discussing with Mr. Miller and others responsible for the generation of electricity how the Government intend to plug the hole which must now appear in the Government's energy policy, having predicted 10 nuclear power stations in their 1979 manifesto? Will the right hon. Gentleman be increasing resources for the development of alternative fields, renewable resources and energy efficiency, and in particular reversing the cuts in his own energy efficiency office?

Mr. Wakeham : The biggest single step that any Government could take to improve energy efficiency is to complete the privatisation of the electricity supply industry because the efficient use of energy and the pressure on costs which that will produce will be the most beneficial effects of all. I am perfectly satisfied that there is sufficient capacity for the present and for the future. Substantial numbers of independent projects are coming forward and I believe that they will be highly competitive.

Energy Sources

10. Mr. Gerald Bowden : To ask the Secretary of State for Energy what incentives there will be to develop renewable sources of energy after the reconstruction of the electricity industry.

Mr. Michael Spicer : Renewables will benefit from the non-fossil fuel obligation in general and in particular from the 600 MW of capacity that we have reserved exclusively for them. There are already clear signs that the obligation has provided a considerable encouragement to the development of renewables.

Mr. Bowden : What steps are my hon. Friend and his Department taking to encourage the exploitation of landfill gas?

Mr. Spicer : A lot is going on with regard to landfill gas. At the moment 30 landfill gas schemes are operational and a further 30 in the pipeline. Thirteen are generating electricity with a capacity of 16 MW. We expect them to generate 50 MW by 1992 and 150 to 175 MW by the year 2000. We are spending £1 million a year, and we have just produced a video explaining the considerable economic and environmental benefits of landfill gas.

Dr. Thomas : Will the Minister report progress on the plans for the construction of wind generation stations, particularly in Wales? Do the Government intend to increase the megawatt reserve for renewable sources of energy?

Mr. Spicer : So far as the non-fossil fuel obligation is concerned, we consider that the 600 MW special tranche is adequate at the moment. In future, the Secretary of State will have the power to increase that, should the need arise. Research into wind generation is a major item of expenditure. We are spending £4.5 million on wind development. We expect the wind farm in south Wales to be completed by 1990. There will be one in Cornwall in

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1991 and one in the north-east by 1992. Those three experimental wind farms should be operational by those dates.

Mr. Allen : Is the Minister aware that the discovery of the cost of nuclear power did not happen last week or in the past year but has been pointed out at public inquiries into Sizewell B and elsewhere by environmentalists and those who are committed to renewable energy sources for at least a decade? Will the Minister invest the same amount of money in renewable energy sources as the Government and their predecessors have invested in their obsession with nuclear energy?

Mr. Spicer : The two are totally non-comparable and are two different items of expenditure on research. We have said quite categorically that we shall spend on renewable research what is appropriate to developing that programme as fast as is practicable in terms of market application. We are spending more than ever before on renewables and the budget is rising.

Mr. Stern : Does my hon. Friend agree that one of the principal reasons for the privatisation programme was to enable different sources of energy to have the freedom to raise the capital that they needed in the market? Does he agree that the greatest incentive for renewable energy sources is that as a result of last Thursday's announcement they will find it much easier to raise money in the market?

Mr. Spicer : I agree with all that my hon. Friend says. He rightly says that one of the advantages of privatisation and of the structure that we have set up for the industry is that it encourages renewable and other sources of energy. We have given renewable resources special protection. As there will no longer be 3 GW of PWR capacity, it will be filled by other sources, including renewables.

Severn Barrage

11. Mr. Colvin : To ask the Secretary of State for Energy what response he will make to the general report on the Severn barrage project by the Severn barrage study group ; and if he will make a statement.

The Minister of State, Department of Energy (Mr. Peter Morrison) : Over the next two years, further work on the Severn barrage will be undertaken. This will include some site-specific environmental work and a study of the organisation and financing issues for a barrage.

Mr. Colvin : Does my right hon. Friend accept that, at an estimated 5.5p per KW hour, tidal power electricity is not yet competitive, at least in the short-term, but is environmentally much more acceptable than electricity from coal, gas, oil or nuclear sources? As it has infinite life and no decommissioning costs, it could become much more competitive. Does he therefore agree that it is the sort of project that should attract public and private funds?

Mr Morrison : I half agree with my hon. Friend. I wholeheartedly agree with him about the greenhouse effect, but I hope that he will agree that further inquiries into the environmental impact of a project of this magnitude--it would be vast--should be made. An environmental impact statement, which would cost another £5 million or £10 million, would be necessary before any further decision to go ahead could be taken.

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Mr. Flynn : Does the Minister agree that if the CEGB and the Government had not successively deceived the public about the true cost of nuclear power we would already have a range of tidal barrages around our coast producing the cheapest electricity in the world, in the same way as the power station at La Rance in France is now doing? That distortion was described in the latest statement from National Power, which said that the only reason why it planned to invest in nuclear power was the Government's privatisation proposal and the obligations under that? Will he give an assurence that local authorities in Gwent and other areas will be compensated by the Government for the money that they spent opposing the PWRs at Hinckley point and Wylfa B, because it was entirely the Government's fault that they spent it?

Mr. Morrison : No, I do not agree with the hon. Gentleman. I imagine that he heard what my right hon. Friend the Secretary of State said earlier in Question Time about nuclear power.

Energy Conservation

12. Mr. Shersby : To ask the Secretary of State for Energy what plans he has to encourage further the insulation of homes, offices and factories to promote the conservation of energy.

Mr. Peter Morrison : The energy efficiency office will continue to encourage the adoption of improved insulation and other energy efficiency measures through its best practice programme and other initiatives.

The promotion of energy efficiency will remain a high priority over the coming period.

Mr. Shersby : Will my right hon. Friend give fresh consideration to the need to conserve energy by better insulation of local authority housing? Will he discuss that matter with our right hon. Friend the Secretary of State for the Environment? Is my right hon. Friend aware that many tenants living in cold, damp homes would benefit considerably from better insulation and better conservation of energy? Does he agree that this matter should be kept under review and discussed by his Department and the Department of the Environment?

Mr. Morrison : I assure my hon. Friend that discussions take place between the Secretaries of State for Energy and for the Environment about precisely the point that he raises. I refer my hon. Friend to the fact that community insulation projects have managed to do precisely what my hon. Friend would like for several hundred thousands households, most of which are in the public sector.

Mr. Morgan : Does the Minister agree that his reply seeks to hide the total hypocrisy of the Government on energy efficiency? Does he agree that today's news that sales of energy efficiency products have fallen by 12 per cent. in the past year compared with the previous year shows how mistaken the Government's policy is on energy efficiency? Does he agree that it is similar to the divide in the Government's policy on nuclear power, which was praised to the skies by the Prime Minister last Wednesday, buried by the Secretary of State on Thursday and resurrected by the Under- Secretary of State for the Environment on Friday in the debate on global warming? Nobody knows what the Government's policy is any more.

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