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Mr. Duncan: Will the hon. Gentleman give way?
Mr. Battle: I have allowed the hon. Gentleman to intervene once already. I want to refer to that other acclaimed success--something to which the hon. Gentleman may wish to refer himself--the opening up of the electricity market to competition. Day by day, we learn that company after company--including GKN and Sainsbury--are refusing to pay the pool for electricity because they believe the pool system to be operated in the interests of its members, rather than its customers.
Of the 9,000 who were brought into the scheme in the industry on the last occasion the Government opened up the electricity market to commercial customers, only 5,000 had meters on the day. Coopers and Lybrand published a report subsequently describing the whole process as chaos. What do we find today? Coopers and Lybrand has published a review of the preparations for the introduction of the 1998 competitive supply market. On the likelihood of delivering that market in 1998, the review states:
Mr. Jacques Arnold:
The hon. Gentleman seems to assume that the value of energy projects is exactly equal to the amount of money invested in them. Is he aware that he is making the same mistake as that made by the Labour Government that invested millions of pounds in the ground nut scheme, which proved to be worthless?
Mr. Battle:
I am always glad of a historical reminder. I am tempted to divert the debate, but you would rule me out of order, Mr. Deputy Speaker. If the INMOS project had been properly supported, half of software production would be in Britain rather than elsewhere. This is a Government who know the price of everything and the value of nothing.
Competition, yes--but not simply for its own sake. We believe that it is vital to get it right. If competition in the electricity market in 1998 fails and falls flat, although the Minister for Industry and Energy will be well out of the way, it will generate a massive crisis of consumer confidence in competitive energy markets. There must be leadership from somewhere to ensure that metering, billing and the settlement of the bills and payments is sorted out in advance and not left to a simmering row between the regulator and the pool.
As the head of Yorkshire Electricity is already warning, the real test of 1998 will be its effect not only on price, as Conservative Members insist, but on our social obligations to the people who find it hardest to pay their bills. Yorkshire Electricity argues that the electricity prices charged to those least able to pay will have to rise in the new market when the new entrants take up their customers. The social obligation to share costs will disappear and companies will remove any cross-subsidies. That will lead, as we have predicted, to cherry picking. Direct debit payers will get the best deal and the cheapest energy at the expense of the poorest. Yorkshire Electricity and other regional electricity companies rightly ask who will address the effects of unbundling the costs before 1998. If price competition is to work, it must be judged by its effect on those least able to pay, whose need for energy is basic.
It is true that this is the great age of transition in energy markets. Coal, gas, electricity and nuclear energy have been privatised by the Government. There has been a shift from coal, the total fuel demand for which has fallen from 40 per cent. in 1970 to some 25 per cent. today. Gas-generated power contributes some 20 per cent. of energy generation; nuclear energy 25 per cent. There has been a dash for gas.
Mr. Duncan:
There is one point about which the House is puzzled. On the sale of nuclear energy, does the hon. Gentleman think that the share price should have been lower because of what he said about the prospectus, or higher because of what he said about the asset value?
Mr. Battle:
We made it clear that we would not have started to sell nuclear energy. We have emphasised that it is a bad deal for the taxpayer and the shareholder alike. [Interruption.] I am sure that shareholders and future generations will not laugh when the Government have been seen off the park because they will have to pick up the tab for the Government's irresponsibility in dealing with the industry.
Mr. Alan W. Williams (Carmarthen):
Does my hon. Friend think that it is a sensible use of taxpayer's money to spend £3 billion on building the world's largest pressurised water reactor at Sizewell and within 12 months of it coming on stream, to sell it for £1 billion and throw seven free advanced gas-cooled reactors into the bargain?
Mr. Battle:
I thank my hon. Friend for his patience in spelling out the arithmetic so that a schoolchild could understand it. The problem is that the Government do not seem to be affected by the arithmetic. They are still prepared to press ahead.
There has been what has been described as the dash for gas--the move to gas as a primary generator of fuel. When we discussed the coal review, the Government said
that they wanted diverse and secure supplies of energy at competitive prices for years to come. We should take that seriously and make sense of it so that we do not end up dependent halfway through the next century on one source of fuel generation--gas--and then run out of it, and so become dependent on importing gas through the gas interconnector. That would be typical of the short-sighted cash-in mentality of this Administration.
The recent report by the 2,000 scientists who came together for the United Nations intergovernmental panel on climate change concluded that the balance of evidence suggested that global warming is a real phenomenon in many parts of the world, even though it may be masked in Britain by pollution from burning fossil fuels. We should take it seriously and plan for it in our energy and environmental strategies. It is not simply about price.
In a written answer to a question that I asked when I was first appointed to my present position, the Minister for Industry and Energy told me that we did not need to worry because there were 53 years of gas reserves in the North sea. I do not know how he arrived at that figure but some oil companies argue that it would need only two hard winters for the gas bubble, as it is called, to disappear. That would put us under pressure and we would have to import gas. If our source of gas imports was the Caspian region, it would be difficult to guarantee secure supplies because of political difficulties.
We believe in a sustainable energy future for Britain. When a previous Secretary of State for Energy, Nigel Lawson, was asked about that, he said that Britain did not need an energy policy because the market would provide one. There would be some regulation for a while and then it would wither away. We do not believe that the market alone will provide for the future energy needs of Britain. The mayhem of the past week is proving that already. We believe that we will need fair, accountable, transparent, depersonalised regulation and we will publish our detailed plans for that shortly.
Mr. Nigel Waterson (Eastbourne):
I do not want to interrupt the hon. Gentleman's flow but can he confirm that industrial gas prices, on average, have fallen by 48 per cent. in real terms since privatisation? To what does he attribute that--the tooth fairy?
Mr. Battle:
I can confirm that gas prices are falling but we should compare them with the beach price. Some people believe that when the gas market is open for full competition in 1998, domestic prices could fall and commercial prices rise. The chimera of the lowest possible gas price is not what Conservative Members claim.
The target that we must aim at is not driving up the price every day for a short-term win or lose competition but to get sustainable, long-term competition in energy markets. We are committed not only to developing cleaner energy supplies, conserving energy and reducing demand but to ensuring that there is sustainable long-term competition in energy markets.
We are committed to increasing the proportion of energy generated by renewables. Lamentably, renewables such as combined heat and power schemes and photovoltaics have not been backed by the Government
and renewables contribute only 3 per cent. of our energy. We shall push harder for a clean fuel levy. We spell out that we would increase targets for cutting emissions.
Mr. Matthew Taylor (Truro):
I am interested in the hon. Gentleman's comment about a clean fuel levy, because, at the weekend, the Financial Times suggested that the Labour party was considering using that levy to subsidise so-called "clean" coal. That clean coal will, however, contribute to global warming. Can the hon. Gentleman clarify what the Labour party's position is on this matter?
"A significant majority felt the likelihood to be well below 50 per cent., while a number felt that the deadline is already unachievable."
The report continued:
"OFFER's contribution is still not sufficient . . . Furthermore, PA Consulting . . . who currently undertake the role of the overall programme manager on behalf of OFFER was seen by many as being 'gagged' by OFFER leading to a lack of trust and credibility in them within 'the industry'."
The report continues:
"By most standards, an industry-wide programme such as 1998 represents a very sizeable project and not one to be managed by loose overall coordination . . . it is inappropriate to allow the various parties free rein with the hope that it will all prove 'all right on the night'. In our view, it requires firm and committed programme management."
That is the view of the Government's own auditors.
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