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27 Jan 2003 : Column 590—continued
4.52 pm
Mr. Crispin Blunt (Reigate): The Minister has attempted in a rather deflated way, compared with his usual parliamentary standards, to present this sow's ear of a Bill as a silk purse.
I first want to pick up on one of his final remarks: that the energy White Paper will have no financial impact on British Energy. That indicates that the Government will not produce any proposal that will assist those electricity generators that do not contribute to climate change, which is a rather remarkable admission by the Government, but we will wait to see exactly what their proposals are. If there will be no advantage in relation to climate change, the energy White Paper will certainly be a sadly missed opportunity.
The Minister cannot disguise the fact that the Bill would be rather better named, the Electricity "we do not have a clue" Bill. The Executive have come to Parliament to ask us to write them a blank cheque, so that they can spend and do whatever they like to get them out of the mess that is much of their own creation. I will ask my right hon. and hon. Friends to decline to sign that cheque, and I hope that all other hon. Members who want to defend the interests of the taxpayer and the consumer will join us.
Mr. Tom Watson (West Bromwich, East): Does the hon. Gentleman accept any responsibility for part of the mess that British Energy finds itself in now? Does he agree with the comment that appeared in The Guardian that British Energy was one of those
- "businesses where the pitfalls of privatisation stood out in neon lights"?
Mr. Martin O'Neill (Ochil): Does the hon. Gentleman agree that, in large measure, British Energy found itself in difficulties because the pool system was ended? That happened because, when the Conservatives introduced the system, they did not structure it sufficiently well, so the generators were over-charging electricity consumers by vast amounts. The Labour Government sought to change it and introduce the new electricity trading arrangements. The Conservatives got it wrong in the first place, and the Labour Government were protecting consumers, which resulted in part of the difficulties that British Energy faced.
Mr. Blunt: I usually have the utmost respect for the hon. Member for Ochil (Mr. O'Neill), who is Chairman of the Select Committee, but that is an extraordinary set of statements. I happily accept that one of the reasons that British Energy and every other generator of electricity find themselves in difficulty is that a liberalised market is delivering lower prices to consumers. That is one of the aids to assist British manufacturers in comparison to all the other difficulties that this regulating and interfering Government have put in their way. If electricity consumers are enjoying lower prices because of a liberalised market pioneered by the Conservative Government before 1997—a Government whom I did not represent but merely advised—I am happy that the Conservative party should take credit for the benefit to the wider economy.
Richard Ottaway: I do not think that the hon. Member for Ochil (Mr. O'Neill) can be allowed to get away with his remarks scot free. The new electricity trading arrangements were brought in with a target to reduce wholesale electricity prices by 10 per cent. The way in which they were introduced led to an overshoot, and a lowering of prices by about 40 per cent. has led British Energy to be uneconomical. That is the only reason for the mess that it is in today.
Mr. Blunt: My hon. Friend has engaged the hon. Member for Ochil in his own way.
Even the Minister's rhetoric cannot disguise the scale of the personal disaster that this Bill represents. It is surprising that when the going gets tough for the Government, the Secretary of State for Trade and Industry has apparently got going. Where has she gone? Why must the Minister present this wretched brief to the House alone? It is a touching feature of the Government that in times of difficulty they conspicuously fail to rally to each others' support, and a sad irony that the identified champion of nuclear power within Labour's ranks has had to come to the House today to propose a measure that will probably sound the death-knell for the future prospects of new nuclear power generation within the private sector.
The future welfare of the Minister's 450 constituents who work at the Hunterston B power station is also at stake. It is ironic that his actions could help to deny the future success of nuclear generation in the private sector. It is also ironic that Labour's former spokesman on citizens' rights and open government is proposing a
measure to the House that will obscure completely the true cost of nuclear power. As a result of the Bill, those of us who believe that nuclear power, with its costs and benefits understood, deserves its chance to compete fairly for Britain's future electricity generating capacity will have our position hopelessly undermined. The Minister's rhetoric cannot disguise the fact that the Government's management of energy policy has helped to create this shambles. Nor can he disguise the confusion in his Department that has led to this measure, which will have wretched consequences unless Parliament is prepared to do something about it.Anyone who has followed the unfolding story of British Energy will be impressed by the consistent reporting of the panic inside the Minister's department. I am not sure whether "headless chickens" or "rabbits in the headlights" is the most appropriate description, but both serve to give a general idea of the atmosphere in which birth was given to this measure.
Let us first examine the policy framework in which the Government have made British Energy operate. I cannot find from the Labour Party a single unequivocal statement on nuclear energy for 25 years. On coming into office they confiscated £2.1 billion of the assets of the electricity industry through the windfall tax. Then in 2000 they passed a statutory instrument that uniquely rated nuclear reactors, ensuring a business rate regime that discriminated against nuclear power stations. Then they introduced that peerless instrument, the climate change levy, a bureaucratic and regulatory nightmare that discriminates against manufacturing and that they also applied to nuclear-generated electricity.
Then there is the Government's role as owners of BNFL. That company is trading technically insolvently to the tune of a billion pounds or three. So the Government's alibi that that company's commercial interests are nothing to do with them would seem somewhat below the expectation that the taxpayer might have of their accepting their responsibilities.
Mr. Hendrick: Can the hon. Gentleman tell me how the climate change levy could be applied to nuclear electricity, when it applies to consumption of electricity in the grid, not production?
Mr. Blunt: I wonder where the hon. Gentleman thinks that that electricity was generated.
Mr. Blunt: I shall not give way to the hon. Gentleman. It is a ludicrous proposition. Perhaps the hon. Gentleman will resume his seat rather than insist on continuing with this point to his own embarrassment.
Electricity generated by carbon-free sources, of which nuclear is one, is charged to the climate change levy at the point of consumption in exactly the same way as electricity produced from any other source. If the hon. Gentleman has worked out that that discriminates against carbon-free electricity, I hope that he will give the matter a little more attention.
BNFL, the Government's own company, offered British Energy a deal that first drove it onto the rocks in September and then saw the Secretary of State come to the House on 28 November to explain a wholly new deal
from BNFL that was crucial to dragging British Energy off the rocks where BNFL had deposited it two months earlier. That is the Department that comes before us today asking Parliament to give it the authority to do what it likes.
Mr. Wilson: I have not sought to stop the hon. Gentleman's flow, but what he has said is absolute rubbish. The difficulties of British Energy on the scale that we now know them to have been came to our attention as a result of it becoming clear that the deal between BNFL, a commercial entity in its own right, and British Energy would not be enough to solve British Energy's problems. What was on the table afterwards from BNFL was exactly what was on the table before. Therefore, it is an extremely unfair aspersion to cast on BNFL that it acted in any way irresponsibly in driving British Energy into the difficulties that arose.
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