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2.15 pm
Richard Ottaway (Croydon, South): We all listen to the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) with respect. I admire the way in which she conducts herself. Although I often disagree with her, I agreed with every word that she said on this occasion.
She made important points—I shall talk about the underground later—and I acknowledge the strength of her contribution.The debate is timely; it is the first time that we have discussed the subject since the publication of the White Paper. Of course, it has fallen to the Opposition to introduce the matter, as the Government, having got it out of the way, seem keen to avoid it.
I am sorry that the Minister for Energy, E-Commerce and Postal Services is no longer in the Chamber as he gave a good reply to the speech of my hon. Friend the Member for South Suffolk (Mr. Yeo), although it was tragically deficient in answers to the questions posed so admirably by my hon. Friend. The questions were fundamental and went to the heart of the way in which we run our society and our country. The Minister gave constructive replies to those questions that he actually answered, but all my hon. Friend's questions were serious and constructive, as was our motion, so I hope that the Minister of State, Department for Transport, who has a good track record, will respond equally positively in his reply to the debate.
The Opposition and Government opening speeches were in stark contrast to the contribution from the Liberal Democrat energy spokesman, the hon. Member for Hazel Grove (Mr. Stunell). I confess that although I listened to the hon. Gentleman carefully and he generously gave way a few times—once to me—I still have no idea what his policy is and how he would implement it if ever he had the chance to do so.
The Liberal Democrat amendment, apart from being unnecessarily personal about a competent Minister, is wholly contradictory. It states that the Queen's Speech should announce
- "a full-time Minister who is charged with mitigating the negative impacts of privatisation",
- "an integrated UK Energy Policy",
- "the protection of the security of electricity supply",
Mr. Stunell: I enjoyed that passage of the hon. Gentleman's speech. It was our wish that our amendment be the motion that the House debated; had that been so, I would have spoken in more detail on those points. I assure the hon. Gentleman that the book is relatively modestly priced and I shall put him in touch with the publisher after the debate.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I think that there should be an end to advertising. May I also mention that the Library is usually well stocked?
Richard Ottaway: You make a valid point, Mr. Deputy Speaker. It would be a tragedy to have to pay for such a contribution.
The hon. Member for Hazel Grove said that he wished that the debate could have been conducted according to the terms of the Liberal Democrat amendment. It was certainly all things to all people, so anything that he said would have been both in order and in line with his policy. Such is the nature of most Liberal Democrat policies.
Returning to the core of the debate, there were tragic, difficult circumstances on the underground. I am heartened by a letter that I received from London Underground—I am sure that other hon. Members will have also received a copy—saying that it is taking the matter very seriously, reviewing the situation and looking into how such things can be avoided in the future. I wish London Underground well in that endeavour, but the answer is not clear to me. In confirming something said in an intervention by the hon. Member for Leyton and Wanstead (Harry Cohen), the Minister said that there was a back-up supply in Greenwich, but what happened to that back-up supply?
The Minister of State, Department for Transport (Dr. Kim Howells): I thank the hon. Gentleman for giving way. I, too, await the inquiry's results, but I believe that the management considered that there was no need to use the back-up supply at Greenwich when they discovered that they could get electricity supplies from the grid rather more quickly and that sufficient reserves were left in the batteries on vehicles and in stations to ensure that the most basic safety levels, such as providing lighting, were maintained.
Richard Ottaway: I am grateful to the Minister for that response, but it sounds as though the back-up is of an emergency nature, designed just to get through the day, rather than to restore supplies, which was the impression given previously. None the less, London Underground is considering the back-up safety systems, and I am comforted by its letter in which it says that only eight trains had to be evacuated via the tracks—as was confirmed by the hon. Member for Crewe and Nantwich—and that all the evacuation procedures worked.
For many years, London Underground has been treated as a political football—in some cases, justifiably so—but everyone would wish it now to have a period of stability, so that the new senior management have a chance to get to grips with the public-private partnership, even though we may disagree with it, and we wish them well in their review and in the future conduct of their operations.
On the security of supply, the central question is whether we have enough supplies in this country now and in the future. What is the problem that we are facing? Why are we concerned about supplies? One of the fundamental and radical changes that the Government made after taking office in 1997 was to introduce a pure market in the electricity generating sector, but, having introduced it, they immediately started to distort it to the extent that it is not a true market. They distorted it by effectively subsidising the nuclear industry, partly through their ownership of
BNFL, which contains the most inefficient and ageing parts of the electricity generating sector that are hopelessly uneconomic, and their continued support for British Energy, despite many of us saying that such support probably contravened European Union rules. That subsidy means that the market is not operating properly. Under any normal circumstance, the most inefficient plant would have been shut down, prices would then have risen and the remaining plants could have operated economically.The result is that, notwithstanding the price rises of the past few months, prices have been at absolute rock bottom for the past several years. There has been no scope for investment. Most generators have operated on a break-even basis. Those operators with large debts have shut down or been sold at heavily discounted prices. As my hon. Friend the Member for South Suffolk said in his opening remarks, the fall in the price of electricity from the generators has not been wholly passed on to the public. Prices paid by consumers have fallen, but there is no comparison with the generators' receipts. In truth, the Government have to explain why. Several rules and the operation of the competition policy are relevant, and there may be cross-subsidies for those companies that are distributors as well as generators.
We have to consider whether it is satisfactory for supplies to be wholly dependent on gas alone. The Government's policies clash. They want to introduce lower prices through market forces, but that desire clashes with their environmental targets, and the Government are storing up trouble for the future. We have never had a genuine, true market in energy, except in the past five years. Previous Government's have always maintained close control over energy, with close intervention, but we now have a free market that has long-term consequences, particularly for future investment—something to which I shall return.
The situation has been transformed over the past 12 years. In 1990, just three companies produced 80 per cent. of this country's electricity. Today, a significant number of companies do so, all of which introduce fresh problems. The heart of any good energy policy should be diversity of supply, and coal cannot be totally ignored in the way that the Government have intended. They have protected the nuclear industry, but coal-fired plants are the next most inefficient, and they have been struggling of late to make ends meet.
The Government want to phase out coal as it is currently used—I am not talking about clean coal—because it represents a challenge to the environment. CO2 emissions from coal-fired generators are unacceptable in a modern society. However, introducing a free market policy clashes with such environmental objectives. That is undermining the energy policy, and it is why we are beginning to experience price shocks and interruptions in supply. I am talking not about the events of 28 August, but about the regular price spikes that are occurring as we get perilously close to capacity.
A great deal of the generating plant is not economic, so many of the maintenance schedules have been reduced and many plants are becoming increasingly unreliable. However, like my hon. Friend the Member for South Suffolk, I welcome the introduction of NETA and the liberalisation of the markets that that has
produced. NETA quickly produced falls in prices but, as with any volatile market, it has overshot its target. The Government set a target that represented an aspiration for the level to which they hoped prices would fall, but I understand that prices have fallen considerably below that level and, as a result, the industry is in crisis—instead of investment, there are closures and cuts in maintenance.Of course, we have to consider what to do with British Energy. I recognise the difficulties that the Government will face in trying to close the nuclear plants if they run the company on an economic basis. I also recognise the difficulties that they have with the European Union, but many of us warned the Government that those difficulties would arise. The Government claimed that they had the answers to those questions, but many of us are still waiting to hear them.
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