| Home Page |
Column 1
T H EP A R L I A M E N T A R Y D E B A T E S
OFFICIAL REPORT
IN THE THIRD SESSION OF THE FIFTIETH PARLIAMENT OF THE
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
[WHICH OPENED 25 JUNE 1987]
THIRTY-NINTH YEAR OF THE REIGN OF
HER MAJESTY QUEEN ELIZABETH II
SIXTH SERIES VOLUME 168
SEVENTH VOLUME OF SESSION 1989-90
House of Commons
Monday 26 February 1990
The House met at half-past Two o'clock
PRAYERS
[ Mr. Speaker-- in the Chair ]
PRIVATE BUSINESS
South Yorkshire Light Rail Transit (No. 2) Bill
(By Order) Read a Second time and committed.
Oral Answers to Questions
ENERGY
Nuclear Levy
1. Mr. Harry Barnes : To ask the Secretary of State for Energy what is his estimate of the earliest year in which the nuclear levy could be abolished ; and if he will make a statement.
The Secretary of State for Energy (Mr. John Wakeham) : I announced on 12 February that the initial non-fossil fuel obligation would be set for the period 1990-91 to 1997-98. The fossil fuel levy will be required for at least the same period, although I expect the rate to decline significantly over that time.
Mr. Barnes : How does the Secretary of State hope to reduce the subsidy, let alone abolish it? How will greater efficiency be introduced into the nuclear energy industry,
Column 2
which is secretive, bureaucratic, technically complex and highly dangerous? Will it be done by reducing safety standards?Mr. Wakeham : First, it will not be achieved by a reduction in safety standards. Secondly, whatever may have been the practice in the past, the arrangements that we are bringing into force will be much more open, allowing for greater public scrutiny. Nuclear electricity is vital to ensure security of supply. As nuclear power still costs more than fossil power, the levy is needed so that the extra costs can be identified and fairly shared out.
Dr. Michael Clark : Does my right hon. Friend agree that critics of the nuclear levy should bear it in mind that in the past, perhaps for very good reasons, coal has been subsidised? If subsidies were beneficial to that industry, is not a subsidy for the nuclear industry appropriate now?
Mr. Wakeham : I have some sympathy with my hon. Friend. The nuclear industry is required, properly, to pay the costs of disposing of its own waste, so it is not quite on a level playing field with other energy producers. It is important to make a proper comparison.
Mr. Dobson : How does it benefit electricity consumers for the right hon. Gentleman to insist that nuclear power stations--the most expensive in the system--must run continually?
Mr. Wakeham : Anyone who knows about the electricity industry, as the hon. Gentleman does, will appreciate that nuclear power stations, being base load capacity, are more economic if run full time. The major part of the cost of a nuclear reactor is its capital cost rather than its running costs.
Mr. Hannam : Will my right hon. Friend confirm that he included the nuclear levy in the price increases that he announced recently? With distribution and transmission costs varying across the country, will boards need to impose a range of electricity price increases in the future?
Mr. Wakeham : Yes, I can confirm that, as I announced recently in the House the average price increases for all customers will be below the rate of inflation and will
Column 3
include customers' contributions to the nuclear levy. My hon. Friend is right that there will be a variation in the prices levied by area boards, but that is a matter for them. Prices will vary from area to area, as they have in the past. Some boards have greater costs because their customers are few and far between and a large cable network is expensive. Other boards have a traditionally low rate of return and have further to catch up.As I said, the precise figure to be charged is a matter for each board, but domestic electricity price increases, which I believe particularly interest my hon. Friend, will range from 8 to 9 per cent. with perhaps two or three boards increasing their charges by a higher percentage. However, I expect that, overall, increases will range from 3 to 8 per cent., with the avarage being less than 6 per cent.
4. Mr. Barron : To ask the Secretary of State for Energy what is his estimate of the fossil fuel or nuclear levy in 1991-92, 1992-93 and 1993-94.
Mr. Wakeham : The rate of the levy will depend on the terms of the nuclear contracts. Those will ensure that the nuclear levy follows a declining profile. I therefore expect the rate of levy to decline significantly over the next eight years.
Mr. Barron : In relation to contracts, is it true that the nominee directors of Nuclear Electric have been advised not to start trading as a plc until they have some guarantee from the Treasury about the costs of reprocessing and decommissioning?
Mr. Wakeham : That is not a correct statement of affairs. Any director of any company has to satisfy himself that the company conforms with all the requirements of the Companies Acts before it starts trading, and the nominee directors of Nuclear Electric are no exception. They will want to see that Nuclear Electric is set up on a proper basis, as I do. All will be revealed in due course.
Mr. Colvin : Does my right hon. Friend agree that in calculating those levies we must compare the cost of generation by nuclear power with the cost of coal or other fossil fuels? Nuclear power generation involves long-term costs, but we shall know the cost of coal generation only at the end of the three-year contracts with British Coal. When my right hon. Friend makes that comparison, will he take into account the cost of flue gas desulphurisation, during the next three years at least, and the possible cost of cheap coal from overseas, which is low in sulphur?
Mr. Wakeham : The question of which fuel the generators use to generate electricity and, in practice, which mix of fuels will be a matter for them at the end of the period. Obviously, there will be competition between British coal, gas and oil and imported coal. The Government are committed to the implementation of the European directive on desulphurisation, and they will ensure that the fossil fuel generators, when they are floated, will be able to meet their obligations under the directive.
Mersey Barrage
6. Mr. Alton : To ask the Secretary of State for Energy when he expects to publish a decision on whether the Mersey barrage will be constructed.
Column 4
The Minister of State, Department of Energy (Mr. Peter Morrison) : The Mersey Barrage Company's application for the non-fossil fuel obligation is under consideration by my Department.
Mr. Alton : I thank the Minister for his personal commitment to the project. Does he intend to include the barrage scheme in the non-fossil fuel obligation? When is a decision likely to be reached? Will he confirm that of all the candidates for barrage schemes, his Department's findings show that the best location would be the River Mersey?
Mr. Morrison : To answer the hon. Gentleman's first point, he and the whole House will be pleased to hear that, under the non-fossil fuel obligation, about 300 applications have been handed by the distribution companies to my Department. A considerable amount of work remains to be done to discover which fit the criteria. The hon. Gentleman knows, because he came to see me in the Department, that I should like progress to be made on the Mersey barrage scheme. As for the difficulties of the scheme--
Mr. Morrison : I am delighted that the hon. Member for Bolsover (Mr. Skinner) is interested in the Mersey barrage. The difficulties are commercial and environmental, and they will have to be considered carefully.
Mr. Butler : Will my hon. Friend confirm that £1 million worth of clear, renewable electricity could be generated each week by the scheme? Would not it be a most valuable and important precursor to a Severn barrage?
Mr. Morrison : I cannot confirm the precise amount to my hon. Friend, but it is certainly considerable. I am sure that, if it went ahead, the Mersey barrage would be a precursor to the Severn barrage.
Oil Platform Fabrication
7. Mr. Kennedy : To ask the Secretary of State for Energy if he will assess the potential for expanding the size of the United Kingdom fabrication capacity ; and if he will make a statement.
Mr. Peter Morrison : Consideration of the potential for expansion of capacity in the fabrication industry is a matter for the private sector, and will depend on the commercial judgment of individual yard owners.
Mr. Kennedy : I thank the Minister for that opaque answer. There has been some discussion, at least in Scotland--as the Minister will know-- about the number of fabrication yards and whether there is any possibility of expanding them. I am thinking in particular of the former Kishorn site in Wester Ross which went into receivership ; there has been talk about its future.
Will the Minister bear it in mind that the private sector is, rightly, still concerned about the European Community draft directive on procurement, and about the knock-on effect that it could have on the oil- related sector in Scotland? Can he give us any idea of the Department's thinking on either subject?
Mr. Morrison : As the hon. Gentleman will remember, it was only two years ago that he and other hon. Members who represent yards in the north and north-east of
Column 5
Scotland were coming to me and asking-- understandably--where the work would come from. Now we are in a different position, with different challenges. It may be opaque to the hon. Gentleman, but it will be the market place that decides.As for the directive, as I have said several times it is important that we continue to play on a level field, and we shall do all that we can to ensure that.
Energy Conservation
8. Mr. Tredinnick : To ask the Secretary of State for Energy what recent initiatives he has taken to encourage energy conservation in the home.
Mr. Peter Morrison : My Energy Efficiency Office continues to promote energy efficiency in the home through a number of programmes.
Mr. Tredinnick : Many of my constituents, especially the residents of Hinckley, will welcome the new scheme for insulation in low-income homes. Will my right hon. Friend give an undertaking to support the proposals when they come before the Standing Committee considering the Social Security Bill, and has he any proposals for advertising to encourage people to be more energy conservation-minded in the home?
Mr. Morrison : Clause 10 of the Social Security Bill, which is being piloted by my right hon. Friend the Secretary of State for Social Security, is part of the grand design of my right hon. Friend the Secretary of State for Energy. I shall give it every support that I can. As the hon. Member for Cardiff, West (Mr. Morgan) knows, last week I issued a consultation paper ; we are waiting to hear any ideas that he and no doubt many others may have.
We have a small advertising campaign--aimed principally at industry and commerce--during the next few weeks, with the aim of targeting the people to whom my hon. Friend refers.
Mr. Dalyell : As vice-chairman of the Conservative party, does the Minister believe that his Energy Efficiency Office is any more efficient than the Prime Minister's Office, whose costs have risen by 20.6 per cent?- -
Mr. Speaker : Order. That is well wide of the question. If the hon. Gentleman will relate his remarks to the question on the Order Paper, I am sure that he will receive an answer.
Mr. Gow : Would not the Government set a much better example to those who should be saving energy in their homes if they were better at saving electricity costs by economising on lighting and heating? Is my right hon. Friend aware that, all over the country in public sector buildings lights are on at noon on bright days and that they are also far too hot? Will he do something about it?
Mr. Morrison : My hon. Friend may not be aware that I chair a committee, at which a Minister from each Department is represented, whose aim is to achieve precisely those objectives. If he visited my Department, my hon. Friend would see energy-efficient lamp bulbs that use only one fifth of the electricity normally used by lights. I am sure that he would like other Departments to be shown that example.
Column 6
Mr. Skinner : As Chairman of the energy conservation committee which oversees all those Departments, will the Minister take a look at the figures relating to central heating in the Houses of Parliament? Every year that I have been a Member of Parliament, the organisations concerned have spent a small fortune every recess trying to get it right, and they have not succeeded yet. I should like to know how much the bills amount to : my guess is that the figure is well over £20 million.
When he has done that, will the Minister go to No. 10 Downing street and, in his capacity as chairman of that committee, find out why the Prime Minister has spent 20.6 per cent. extra on central heating? Is it because of Bernard Ingham and all the others who are stuck up in the attic?
Mr. Morrison : The hon. Gentleman, who is one of the most prominent Members of the House will no doubt realise better than I that the House of Commons (Services) Committee will look into that matter. It is not a matter for a Government Department. Perhaps an approach by the hon. Gentleman and myself to the Committee--although an unholy alliance--might work. I shall consider every aspect of the cost of energy as far as it is within the province of this Department of state.
Mr. Mans : Will my hon. Friend comment on the fact that according to well-informed opinion, PowerGen, National Power and the other generating companies could spend their money better if they subsidised home insulation instead of building more power stations?
Mr. Morrison : My hon. Friend will realise that the electricity and gas industries are required, after privatisation, to provide energy efficiency advice. They were not required to give that advice when they were nationalised.
Electricity Boards
9. Mr. Allen McKay : To ask the Secretary of State for Energy when he next expects to meet the chairmen of the area electricity boards ; and what matters he expects to discuss.
Mr. Wakeham : I meet area board chairmen regularly to discuss various matters.
Mr. McKay : When the Secretary of State next meets the area board chairmen will he ask them whether they agree with John Bailey of National Power that domestic consumers should get through 1990-91 without an increase in domestic electricity rates? Or is it the case, in a newly privatised industry, of "Excused boots" during the fight against inflation?
Mr. Wakeham : I do not know the Mr. Bailey to whom the hon. Gentleman referred.
I have already stated my views about prices. I believe that domestic and commercial consumers will get a good deal out of privatisation. It will compare well with the price rises that were imposed under the Government whom the hon. Gentleman supported.
Mr. Dickens : When my right hon. Friend next meets the chairman of the electricity boards, will he impress on them that the greatest wish in the nation is for security of supply to keep the lights burning at home and the factories working? Will he also impress upon them that we must go
Column 7
for all options, whether they be coal, oil, gas or nuclear? All those options must be open to us if we are to keep the lights burning and the factories working.Mr. Wakeham : My hon. Friend is right. Under the terms of the privatised electricity industry, there will be a legal obligation on area boards to offer terms to any customer. Under their licence conditions, they must have the capacity to meet any likely requirement. There will be substantial penalties if they do not meet those requirements.
Mr. Hardy : I share the concern that people should be reasonably warm and that the wheels of industry should turn, but does the Secretary of State accept that the price of electricity should command more attention and priority than it seems to? In addition, when he meets the chairmen of the area boards, will he advise them that although the licence under which they will operate after privatisation may allow them to run funeral parlours and second-hand car showrooms, and other activities in the service sector which may be even less attractive, their overwhelming concern must be the maintenance of an electricity supply?
Mr. Wakeham : I have no doubt that the area chairmen require no lectures from me, or even from the hon. Gentleman, about their responsibilities. The area boards will be public limited companies of substantial local significance. They will be big employers in their areas and will have big responsibilities. In my opinion, they will be very well run and will be very good members of the community that they serve.
Mr. Sumberg : When my right hon. Friend meets the chairmen of the boards, will he outline to them some of the plans for allowing employees in the industry to buy shares after privatisation, particularly in the north- west of England? When the water industry was privatised, over 90 per cent. of the employees took shares in it. My right hon. Friend can expect a willing and eager response from the people who live in my constituency. They want to involve themselves in this newly privatised industry.
Mr. Wakeham : Absolutely. We very much hope that a large number of the employees in the privatised companies will take advantage of the opportunity to have shares in their companies. The necessary arrangements will be announced in due course.
Mr. Morgan : When the Secretary of State next meets the chairmen of the area boards, will he ask them whether they agree with John Baker, the chief executive-designate of National Power, that, in economic terms, there is no need for an increase in domestic electricity prices from 1 April? For the third year running, the Government are imposing an increase in domestic electricity prices at least twice what was requested by the industry. Are the Government jacking up electricity prices as a form of taxation, to use the price of fuel to encourage conservation--one might call it an insulated roof tax--or do they simply wish to increase the rate of return, which is not high enough for the Government's friends in the City?
Mr. Wakeham : The hon. Gentleman is quite wrong. The price of electricity must be determined at a price which is accepted and enables the industry to earn a reasonable rate of return.
Mr. Barron : Answer the question.
Column 8
Mr. Wakeham : I will answer the hon. Gentleman. The rate of return that a privatised industry will earn will be slightly less than the 5 per cent. return on assets that would have been required under Labour party policy had the industry remained in the state sector. The deduction that any reasonable person could make is that the price of privatised electricity will be lower than it would have been under a Labour Government.
Mr. John Marshall : Does my right hon. Friend agree that the history of privatised power shows that investment is greater and prices are lower than they would have been had the industry stayed in the public sector?
Mr. Wakeham : The record is there for all to see. The electricity industry will be run more efficiently and I hope that investment will be better directed than it sometimes has been in the past.
National Grid
11. Mr. McFall : To ask the Secretary of State for Energy when he next expects to meet the chairman of the National Grid Company ; and what matters he expects to discuss.
The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry) : My right hon. Friend and I meet and will continue to meet the chairman-designate of the National Grid Company from time to time to discuss a range of matters relevant to the company and the electricity industry as a whole.
Mr. McFall : Does not the incident at Hinkley B power station two weeks ago demonstrate that nuclear power stations are more vulnerable than conventional power stations because when storms affect the nearby grid lines, the entire station has to be tripped out? In the light of that, how can the Minister keep asserting that nuclear power stations guarantee security of supply?
Mr. Baldry : Nothing happened at Hinkley B which was in any way untoward, and it is highly irresponsible to suggest otherwise. Nuclear electricity makes a significant contribution to diversity of power supplies in Britain and will continue to do so.
Sir Trevor Skeet : Will the Minister look into a matter that causes me some anxiety--the transmission of electricity across the country by high transmission lines on pylons which create an electric charge? Current research in the United States shows that when they go past housing estates they could be a hazard to people who live beneath them. I should like to think that there is no hazard, but I should be grateful if the Department would look into the matter.
Mr. Baldry : If my hon. Friend will write to me on that I shall make sure that his anxieties are thoroughly investigated.
Mr. Doran : The Minister will be aware of the increasing concern at the number of gas burn generating schemes that have recently been announced. Will he raise the matter when he next meets the chairman, and in particular will he let us know whether the Government welcome the explosion in gas burn schemes? Is it part of a planned policy and has consideration been given to the effect that it is likely to have on other forms of electricity generation?
Column 9
Mr. Baldry : It is and always has been the policy of this Government --and, I think, of the Labour party when it was in government--that there should be diversity of electricity generation based on coal, gas and nuclear sources. I find it a little difficult to reconcile the hon. Gentleman's question with my meetings with the chairman of National Grid.
Energy Efficiency
13. Mr. Boswell : To ask the Secretary of State for Energy what has been the rate of improvement in energy efficiency since 1979 (a) in the United Kingdom and (b) in other European countries.
Mr. Peter Morrison : Energy consumption in the United Kingdom is virtually unchanged since 1979, although our gross domestic product has risen by 20 per cent. The average reduction in the United Kingdom's energy intensity between 1979 and 1987 was 2.5 per cent., comparing favourably with the European average of 1.6 per cent.
Mr. Boswell : I thank my right hon. Friend for those encouraging figures, but does he accept that continuing improvements in energy efficiency are the best means, if not the only means, of reconciling the needs of economic growth and of the maintenance and protection of our environment? Will he assure the House that, if possible, our relative improvement compared with other countries will be sustained in future years?
Mr. Morrison : The simple answer is yes and yes. We believe that energy efficiency remains important, and we shall do all that we can to strive to ensure that we out-perform other countries.
Ms. Armstrong : In the light of that reply, will the Minister reconsider the regulations, under which assistance for district heating schemes can be obtained only by users of more than 25,000 therms of gas per year? Derwentside district council has made representations to the Minister on that because, having managed through energy conservation to reduce its consumption to less than 22,000 therms a year, it is losing grant aid and support for its schemes. Is that not a scandal, and does it not go against everything that the Government preach?
Mr. Morrison : No, it is not a scandal. I am prepared to look at any scheme according to the rules laid down, but it certainly is not a scandal and it does not go against the need to continue our efforts to achieve energy efficiency, as demonstrated by the 300 applications under the non- fossil fuel obligation.
Mr. Stern : Does my right hon. Friend agree that one of the greatest spurs to energy efficiency is an increase in the cost of energy? Does he agree that it is not entirely realistic to compare our energy efficiency record with that of our continental neighbours without also comparing the average cost of electricity? Does he further agree that the greatest barrier to energy efficiency is the low cost of electricity in this country?
Mr. Morrison : I agree with my hon. Friend that international comparisons must take many factors into account, but neither he nor I would be popular with hon. Members if we advocated a policy of high energy costs.
Column 10
Pipelines
14. Dr. Moonie : To ask the Secretary of State for Energy what is the number of oil and gas pipelines constructed in the United Kingdom continental shelf in each of the last five years.
Mr. Peter Morrison : In the years 1985 to 1989, the numbers of oil pipelines authorised for construction on the United Kingdom continental shelf were 28, 16, 10, 37 and 30. The corresponding figures for gas pipelines were 29, 18, 15, 24 and 30.
| Next Section
| Home Page |