Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Stoddart of Swindon: My Lords, I am obliged to the Minister for giving way. On the question of security of supply, a matter which I have questioned before, is it not true—according to the newspapers—that over the weekend during this cold snap the supply reached within a hair's breadth of about one megawatt the figure of 54,000 megawatts? That really is not security of supply. I think that the noble Lord should look at it.

Lord Sainsbury of Turville: My Lords, as I understand the position, we have this quite considerable margin of supply of 17.5 per cent. That is on the assumption that a certain capacity is mothballed, which of course it may not be. So in fact the figure is very close to 20 per cent, which is usually given as being the correct or ball park figure within which it should be. I shall however check those figures and write to the noble Lord if they are wrong.

I was going to say that I was glad that the noble Baroness, Lady Miller of Hendon, reminded the House that liberalisation of markets is not in conflict with diversity and security. On the contrary, markets give the security that we seek.

8 Jan 2003 : Column 1050

I hope that, overall, noble Lords will take comfort from the fact that we continue to address the strategic issues that face the electricity industry. Strategic analysis continues to be carried out, and the Government, the regulators and the industry are all fully engaged. We also need to prepare policies for the coming century. The Government's energy White Paper will outline the key energy policy issues for the future. It will be published in the spring.

We must address the long-term future security of energy supplies. Fuel diversity requires that we enhance international relations, especially with producer countries. We must deal with nuclear waste and the future of nuclear energy. We must move to a low-carbon economy. Deeper emission cuts will be necessary in the longer term. If we grasp the opportunities in time, innovation and technology will help us to address that and provide export and inward investment opportunities. We must remain competitive and—last but by no means least—we must protect the most vulnerable by working in partnership with industry to address fuel poverty through low prices and energy efficiency measures.

The Government have the strategic capability to deliver on our objectives. However, the measures that we need to take can and should be implemented against a background of liberalised markets operating over regulated networks that are required to apply non-discrimination towards their customers. In that way, we can use the benefits of the innovative and investment skills of good industry management to deliver service to our customers and the policies that we need to see brought in over coming years.

5.11 p.m.

Lord Tombs: My Lords, I have enjoyed the discussion that has taken place. It was almost always well informed, and I am grateful for that.

The noble Lord, Lord Jenkin of Roding, raised the question of the meaning of "decision" in my Motion. I can see how it could easily be misconstrued, so I shall explain it further. Decisions must be taken at various levels. The executive decision to build a power station rests with the company building it; the decision to create a climate in which that is legal, possible or desirable rests with the Government; and the decision to provide the finance rests with the market. There are a lot of decisions.

In proposing the expert committee to which the Minister takes such exception, my intention is that its decision would create a climate in which the other decisions could be made. That does not exist at present. The fragmentation of an industry is the antithesis of long-term planning. It results in the adoption of narrow-minded, short-term views that relate to the welfare of an individual company, and that is exacerbated by the short-term view of the markets, which require performance this year in an industry that requires long-term commitment.

An example that struck me at the time as coming high up the stupidity scale was the combination of electricity and gas in Ofgem: they are different industries. The gas industry, like the water industry, is

8 Jan 2003 : Column 1051

concerned with the exploitation and distribution of a natural resource. The electricity industry is a conversion industry that takes a series of feedstocks and converts them using complex and capital intensive mechanisms. The investment and planning requirements of each industry are different. It is tempting, as Ofgem has done, to bring to the job the retailing of the product. I understand that the Minister is in sympathy with his own background, but that does not address the problems of the industry. The problems of the industry are safeguarding investment and supply in 15 to 20 or 30 years' time.

The White Paper is no substitute. It should do the Government's job and should set out a sensible strategy for the country. However, for the reasons that I gave, it cannot decide or, at least, achieve the building of individual plants. It should recognise its responsibilities.

I have some sympathy with the views of the noble Lord, Lord Ezra, although I recall that our relations were not always cordial. Occasionally, we disagreed on the price and quantity of coal. I was particularly taken with his description of micro-generation and his alarming suggestion that the whole electricity system might be re-wired. It is an incontrovertible fact that an electron does not mind whether it travels from right to left or left to right along a conductor. I do not see why such mythical micro-electricity exportation should create any more problems for the conductor than its importation. I would be glad of an explanation of that at some stage.

Lord Ezra: My Lords, I shall explain. It requires regulatory changes.

Lord Tombs: My Lords, that is not the same thing as re-wiring the country. It may be re-wiring the brain of the regulator, which may be more difficult.

We had some discussion on nuclear power, and I went out of my way not to get drawn into that subject. It is a subset of what I am trying to discuss today. Nuclear power, wind power, wave power, solar power or coal require important decisions within the electricity industry, but the framework for the electricity industry to work and make such conclusions does not exist. That is the burden of what I said today. If I have not made that clear, I do not know how to make it clearer.

I was greatly impressed by the noble Earl, Lord Mar and Kellie. He over-responded to my request for non-partisanship. Perhaps, it was the noble Lord, Lord Patten, and not the noble Earl. I apologise.

Lord Patten: My Lords, I am the one without the beard.

Lord Tombs: My Lords, I was greatly impressed by the contribution made by the noble Lord, Lord Patten, although I thought that he overdid his response to my request for non-partisanship. I am delighted to see that there can be compliments from one side of the House

8 Jan 2003 : Column 1052

to the other, but I did not want it overdone to the point at which they agreed all the time. That would be depressing for the rest of us.

The noble Earl, Lord Mar and Kellie, displayed a sensible approach to the balanced use of renewables and other forms of power, including nuclear power. However, he fell into a trap: I had not made clear what I meant by "decision". The noble Earl was in favour of government decision making, I am in favour of governments making decisions in the areas in which they can make decisions but not pretending that they can make what I would call macro decisions—those that are strategic in the sense that they are long-term but individual in the sense that they are short-term.

I was disappointed by the Minister's reply. It struck a new low in my experience of government responses to new ideas. It is not possible to say, for example, that I saw nothing wrong in nationalised industries. I agree that the nationalised industry was supply-driven and that it incurred costs. However, I mentioned that I had resigned because the Government would not allow the industry to be organised efficiently, and I would have thought that that was sufficient indication that I did not think that nationalised industry was perfect. That was a substantial error.

The Minister made reference—flippantly, I hope—to some competition for the chairmanship of the expert committee. I rule myself out of serving on any such mythical body, desirable though it may be. I rule myself out partly on age and partly because I have spent far too much of my life trying to advise governments who do not listen. I have no ambition to extend that career. It needs to be done, but I would rather that somebody else did it.

There is a pressing need that was not evident in the Minister's reply. I do not know how I can get the Minister to recognise it. I hope that he will think more deeply about the arguments. There is a need for a consistent framework in a fragmented industry that is subjected to short-term impulses. By its nature, such a structure cannot produce coherent decisions, and it is not fair to expect the Government to make such decisions. The Government have an important strategic role, but they must see, receive and evaluate a view from an industry that, in its present framework, is not capable of producing it.

I shall not withdraw the term "chaos". It is there, and it will increase. I note the Minister's confidence that we will not have power interruptions in the next few years. I do not share that confidence. I am not surprised that he has withdrawn the existing 17.5 per cent margin of supply. He was right to do that.

I did not intend to be unduly critical of the Minister. I know how difficult it is for a Minister to come to a debate in this House with no real notion of what it will be about and deal with a subject that is not primarily his. The Minister did that well and did it bravely, and my critical comments were not critical in an overall sense.

8 Jan 2003 : Column 1053

I thank your Lordships for allowing me to ventilate the topic. The House, in general, has appreciated the debate, and I hope that the Government will think more deeply about the matter. With some pleasure, I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Next Section Back to Table of Contents Lords Hansard Home Page