| Previous Section | Index | Home Page |
27 Jan 2003 : Column 616—continued
Mr. O'Neill: Does the hon. Gentleman concede that in relation to the specifics of the company whose financial plight we are trying to address this evening, something like 20 to 25 per cent. of its generating capacity is not affected by NETA in so far as it is under a private agreement with Scottish Power and Scottish and Southern Energy? There will be an opportunity before too long, when the new British electricity trading arrangements are introduced, to recast the whole equation and to see it if it can be done better. That does not need a White Paper, as we will be dealing with market situations that will prevail for perhaps seven to 10 years. A White Paper will deal with new build that will probably barely have started within that time scale.
Mr. Horam: I take the hon. Gentleman's point, but, none the less, the operation of the NETA system has been a contributory factor to the current plight, and we are having to spend millions and billions of pounds to get out of it. It would have been better if, from the start, the Government had instituted a market system that was within a logical framework of a clear energy policy. As was pointed out, although the details of the situation can vary, that would at least ensure the right trajectory. In that respect, the measure is flawed, as, first, the NETA arrangements take no account of the need to encourage renewables. A renewables obligation exists, as the hon. Member for Ochil mentioned, but it is a very weak instrument. The hon. Member for South Thanet said that he knew of no engineer who would say that the Government could achieve 20 per cent. of our energy
from renewables by 2020. In Denmark, however, 25 to 28 per cent. of the energy supply is from renewables, and that has been achieved in less than 17 years—the period between now and 2020. I confess that I cannot name an engineer who would support my case, but, if it has been done in Denmark, I cannot see why it cannot be done here.I agree with the hon. Member for South Thanet, however, that we must have a balanced approach, and I concede that nuclear has a role to play as well as renewables. I am not one of those people who believe that we should have renewables at all costs and that we can do without nuclear altogether. Clearly, that is not sustainable in the current situation.
Madam Deputy Speaker: Order. I wonder whether the hon. Gentleman could start to address some of his remarks to the specifics of the Bill.
Mr. Horam: Thank you, Madam Deputy Speaker, for that sensible reminder.
Nuclear energy has a role to play, but we cannot say currently what will happen: whether administration or the solvent restructuring about which the Government are talking will be pursued. We do not know how much money the taxpayer will have to fork out. The Government must consider the NETA arrangements fairly soon. I agree that we must not talk too much about the White Paper, which we hope that we will debate in the next couple of months, but one thing that the Government can do is talk to the regulator about how he is operating. I notice that the Minister is laughing rather extensively about that. He may regard talking to the regulator as impossible. Certainly, when we interviewed him while discussing these matters in the Select Committee, we found him resistant to suggestions that even the Government could talk to him. The fact is that as a result of the way in which he has operated the arrangements, nuclear energy has faced the problems that the Minister is trying to address today.
Mr. Simon Thomas: Does the hon. Gentleman agree that one of the problems with the regulator, which we examined in the Select Committee, was that the environmental and social guidance promised in the Utilities Bill had not been delivered to the regulator at exactly the time when the debates about NETA and British Energy were taking place? In fact, the House only approved them a few weeks ago. That has also been a failure in the NETA arrangements.
Mr. Horam: That is why I am afraid that the Government, although they have a crisis agenda with regard to British Energy—they must handle it one way or another, and they have come forward with a solution this evening—have gone about their policy in the wrong way. The cart is being put before the horse, as we do not know where we are going, and we do not know the priorities of the Government in relation to the various alternatives. We are discussing today a Bill that puts billions of pounds in the hands of a particular organisation whose future role we cannot yet envisage.
Sir Robert Smith: Does not the hon. Gentleman think that the last remarks of the Minister in relation to the
White Paper having no effect on the financial situation of British Energy tend to suggest that its proposals will not be exciting or radical?
Mr. Horam: Again, that point has been made repeatedly. The fact is that the Government have addressed these issues often. A performance and innovation unit report has been published, we are expecting a White Paper, and papers have been published previously. All of them, however, are expressed in bland generalities that do not grasp the nettles that must be grasped. That is why the Minister must now grasp in the short-term a particular nettle, as a consequence of not facing up to the difficult choices that a sensible Government would have made years ago. This Government have been in power for five and a half years.
We have reached a stage at which we have no sensible energy policy. Such a policy has a major contribution to make, not only to manufacturing industrial strength—which it has done, because prices have been very low; I fully concede that that has been of great benefit—but also to environmental policy, to Kyoto and to social questions. None of that has been forthcoming. So the Government have put the cart before the horse, which is one reason why I shall vote against the Bill.
6.40 pm
Mr. Kevin Barron (Rother Valley): I first apologise to the House and my hon. Friend the Minister for not being here at the beginning of the debate. I wrote to Mr. Speaker and said that I had problems getting here.
I want to address a number of issues in relation to the Bill. I found it amusing to listen to the end of my hon. Friend's speech and to the speech of the Opposition Front-Bench spokesman. I have been in the House for nearly 20 years. I came here from an energy industry and had energy interests for many of those years, to the extent that I served on the Opposition Front Bench considering the Bill that became the Electricity Act 1989. I remember very well sitting through many months of consideration, with my right hon. Friend who is now the Prime Minister, who was then leading for the Opposition in the shadow Cabinet.
If anything could have been predicted, it was the state that British Energy finds itself in today. During that Committee stage we had a plethora of leaks of letters, draft letters, speeches and draft speeches from people who were then members of the Central Electricity Generating Board but who were about to be senior participants in the new privatised companies that were to come into being when the industry was put into the private sector.
The nuclear industry was to be with a company, National Power, which would take over 70 per cent. of electricity generation. That did not happen. The arrangement was withdrawn in 1990 because it did not stack up. Nobody could answer the question that the hon. Member for Twickenham (Dr. Cable) attempted to ask today, when he said that we should have an independent assessment of the costs of the nuclear industry. Twenty years ago nobody knew the costs of the full nuclear fuel cycle, and I suspect that nobody knows them now. The back-end nuclear liabilities can to some extent be predicted, and in the Electricity Act there was an attempt to do that. I shall address a couple of comments to that a little later.
At that time the Government were convinced that the nuclear industry could stand up in the private sector and that it would be profitable. The hon. Member for West Worcestershire (Sir Michael Spicer) was Under-Secretary when we considered the Act in Committee. He was adamant that
- "The Government believe that the non-fossil fuel obligation"—
- "will result in four PWRs being built. PWRs are an efficient way of producing nuclear electricity."
- "His second question was whether I accept that nuclear electricity will necessarily be more expensive. I do not accept that, for at least two reasons." —[Official Report, Standing Committee E, 19 January 1989; c. 262-263.]
Mr. Hendrick: Does not my right hon. Friend accept that at the time he is speaking about, in the 1980s, there was not the same degree of liberalised market, under pressure from the European Commission, as there is now? The single market was not around, and there was not the same pressure from the environmental lobby, with the knowledge of the greenhouse effect.
Mr. Barron: We shall not have a debate on the greenhouse effect now, but it is right to say that those other two points did not apply at that time. But the Opposition argued in Committee about the horizontal privatisation of the electricity industry, which meant that generators could not own supply companies. I and many others went to America to see the privatised electricity industry. Ministers also went to America, where many of the companies concerned owned the energy source, the generation plant and the supply companies. They were supplying into homes. It was that type of vertical privatisation that we should have had in this country. But we do not have it, so I want to move on.
There were the seeds of the problems before us today. The Government are right to act by introducing this Bill to ensure the safety and security of supply and to deal with nuclear liabilities. British Energy is currently attempting to restructure. If it fails, it is highly likely that no private company will want it. What we are doing in the Bill is to make sure that the Government could be a purchaser of last resort. That is something that we should vote for.
It is the height of irresponsibility for the hon. Member for Reigate (Mr. Blunt) to say that the market should operate, that if the company cannot be reconfigured and goes into administration, and if there are no takers, it is as well that it should go out of business. That shows a complete misunderstanding of the nuclear industry and the life cycle of nuclear plants.
I should like to ask my hon. Friend the Minister about the likely effect of repealing sections 72 and 74 of the original Act, which restricted the Government's powers
to acquire shares in companies that were formed before privatisation. The relevant clause will give the Government power to acquire shares. How does my hon. Friend see this operating?In a debate in Westminster Hall on 3 December 2002, my hon. Friend gave the reasons why the Government are taking this action, stating that there were two main reasons and three subsidiary ones. The first of the subsidiary reasons was
- "to maintain an indigenous energy source".
- "it would cost more to shut nuclear power stations than it does to keep them open."—[Official Report, Westminster Hall, 3 December 2002; Vol. 385, c. 198WH.]
| Next Section
| Index | Home Page |