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T H E

P A R L I A M E N T A R Y D E B A T E S

OFFICIAL REPORT

IN THE THIRD SESSION OF THE FIFTIETH PARLIAMENT OF THE

UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

[WHICH OPENED 25 JUNE 1987]

THIRTY-NINTH YEAR OF THE REIGN OF

HER MAJESTY QUEEN ELIZABETH II

SIXTH SERIES VOLUME 175

FOURTEENTH VOLUME OF SESSION 1989-90

House of Commons

Monday 25 June 1990

The House met at half-past Two o'clock

PRAYERS

[ Mr. Speaker-- in the Chair ]

DEATH OF A MEMBER

Mr. Speaker : I regret to have to inform the House of the death of Sean Francis Hughes Esquire, Member for Knowsley, South, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

Oral Answers to Questions

ENERGY

Gas Turbines

1. Sir Trevor Skeet : To ask the Secretary of State for Energy if he will list the number and location of gas turbine projects for the production of electricity in England and Wales.

The Secretary of State for Energy (Mr. John Wakeham) : There is substantial interest in using gas both by existing generators and by those wishing to enter the generating market. I will arrange for the list to be published in the Official Report.

Sir Trevor Skeet : Is my right hon. Friend aware that because of the low growth in electricity consumption, many of the 10,000 MW projects will not be required, unless there is a massive closure of coal-fired power

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stations? Is he further aware that a gas generator producing 350 MW will emit 1 million tonnes of CO per annum and that coal is even worse? Is not that a good argument why we should now have a further nuclear power station, as nuclear power is the cleanest of the lot and will keep the industry together?

Mr. Wakeham : I listen to my hon. Friend with considerable interest because of his expertise. In the new regime, it will be for the owners of power stations to determine what they see as the market. Electricity demand is forecast to rise over the next 10 years. All commentators seem to agree on that, although they differ on the rate of increase. The current surplus of capacity is likely to come to an end within the next few years. Net capacity needs to be ordered soon if it is to meet the forecast increase in demand. Capacity is also needed to replace existing capacity. Power stations may come to the end of their life, they may be less efficient or more costly than new power stations, or the cost of reducing emissions may be too high compared with the cost of a nuclear plant.

Mr. Lofthouse : Does the Secretary of State agree that to follow the line of his hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), which is to sterilise millions of tonnes of coal by closures in the coal industry, would be a short-sighted medium-term policy? Once gas was not available and the millions of tonnes of coal were sterilised, we should have to rely on competitors. Would that be a wise policy?

Mr. Wakeham : The Government's policy is to encourage a diversity of fuels, but combined cycle gas turbine power stations are friendly to the environment. For every unit of CO emitted from a coal-fired station, just over half a unit is emitted from a CCGT station. Following is the information :

The following combined cycle gas turbine generating (CCGT) stations have been given planning consent under section 36 of the Electricity Act 1989 :

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National Power plc Killingholme, South Humberside

PowerGen plc Killingholme, South Humberside

The following applications for consent for CCGT generating stations are still being considered :

National Power plc Little Barford, Bedfordshire

PowerGen plc Rye House, Hertfordshire

I have also been notified by Deeside Power Development Co. Ltd. of its intention to submit an application for consent for a CCGT generating station at Shotton, north Wales.

The following projects have been given approval under section 14(1) of the Energy Act 1976, that is, to establish an electricity generating station to be fuelled by natural gas, or for the conversion of an electricity generating station with a view to its being so fuelled :

Berisford Bristar plc Brigg, South Humberside

Hawker Siddey/ Peterborough

Eastern Electricity plc

John Brown Engineering Ltd. Rugby, Warwickshire

Midlands Electricity plc Hereford

National Power plc Killingholme, South Humberside

National Power plc Little Barford, Bedfordshire

Nat West Bank plc London

PowerGen plc Rye House, Hertfordshire

Ranger Oil/PowerGen South Denes, Great Yarmouth

Shell UK Exploration and Shellhaven, Essex

Production

Thames Power Barking, London

The following projects have received approval under both sections 14(1) and 14(2) of the Energy Act 1976, that is, to establish an electricity generating station fuelled by natural gas and to enter into contractual arrangements for obtaining a supply of natural gas as fuel for an electricity generating station, or to extend any such arrangements :

British Sugar Ltd. Bury St. Edmunds

British Sugar plc Wissington, Suffolk

BP Chemicals Ltd. Baglan Bay, West Glamorgan

The Boots Company plc Beeston, Nottingham

Hawker Sidley Corby, South Humberside

ICI plc Winnington, Cheshire

ICI plc Wilton, Cleveland

Kodak Ltd. Wealdstone, London

Lakeland Power Roosecote, Cumbria

Leicester Energy Leicester

London Transport Executive Lots Road, Chelsea

London Transport Executive Greenwich Generating Station PowerGen plc Killingholme, South humberside

Slough Estates Slough

Thames Board plc Workington

Electricity Privatisation

4. Mr. Mullin : To ask the Secretary of State for Energy when he next proposes to meet the chairmen of the area electricity distribution companies to discuss privatisation.

Mr. Wakeham : I meet regional electricity company chairmen regularly to discuss a range of matters.

Mr. Mullin : In the light of recent precedents, will the Secretary of State give an undertaking that, should he in the near future find himself out of a job, neither he nor any senior members of his Department will go running to take places on the boards of any distribution companies?

Mr. Wakeham : I have two answers to that question, neither of which will be satisfactory to the hon.

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Gentleman. First, it is a hypothetical question, and secondly, I have nothing to add to what my right hon. Friend the Prime Minister has already said on the subject.

Mr. Andy Stewart : When my right hon. Friend next meets the chairman of East Midlands Electricity, will he ask him how the new project at Bilsthorpe colliery in my constituency for a high-efficiency, mini power station is getting on and when East Midlands Electricity, together with British Coal, will be able to announce a starting date with Government help?

Mr. Wakeham : I have met the chairman of that regional electricity company on several occasions, and I have no doubt that he will raise that subject when I next meet him. We are looking at the figures, and it is important to examine the economics in particular.

Mr. Skinner : When the right hon. Gentleman meets electricity company chairmen in the east midlands and elsewhere, will he point out that there is serious concern about the high cost of nuclear power and about the revelation today that Sizewell will cost another £1 billion, making the total cost £2.6 billion? Will the right hon. Gentleman also point out that it would be better to use coal because it is very difficult to get rid of nuclear waste? That is especially true of low-level nuclear waste, as the right hon. Gentleman experienced when he was Patronage Secretary and had to get Tory Members to stand up in protest about nuclear waste being dumped in his own constituency.

Mr. Wakeham : The hon. Gentleman's recollection of history is not very accurate. Nor should he believe everything that he reads in the newspapers, even the headlines of some of our better-known journals. I suspect that the question of nuclear costs will come before the House before long.

Mr. Moss : Does my right hon. Friend accept that privatisation has been a success for many industrial users because it has introduced price competition between distributors and generators? Does he agree that the only reason why Labour opposes privatisation is that it would like to see industrial users pay more for their electricity?

Mr. Wakeham : I hope that better reasons will be given in this afternoon's debate for the Opposition being against privatisation, but we shall be able to deal with all that they have to say.

Mr. Morgan : I suppose that the Secretary of State realises that one electricity-rated company now in the state sector from which he cannot expect a job offer is Nirex. Does he agree that if the privatised area distribution boards are compelled to abide by normal stock exchange rules, which say that a company's audited accounts must be available going back five years or more, and which, with restructuring, the new companies do not have, it will be impossible to flog those companies? The only way of persuading the "Sids" to buy shares in them would be by a mass advertising campaign that would make the Albanian dictatorship at its Stalinist height or even Lord Young when at the Manpower Services Commission blush.

Mr. Wakeham : There were a lot of words in that question, but getting down to their fundamentals, I assure the hon. Gentleman that all the stock exchange rules

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necessary for the flotation of the regional electricity companies will be obeyed to the satisfaction of the people who have responsibility for those matters. Of course, there will be an element of advertising, as there has been in all privatisations. That will be beneficial in ensuring that the taxpayer gets value for money.

Mr. Speaker : Mr. Marshall. I call the hon. Member because I thought that I saw him rising to his feet. If he does not want to ask a question, we shall move on.

Mr. John Marshall : I am always happy to oblige, Mr. Speaker, by asking a question. Will my right hon. Friend confirm that previous privatisations have been followed by increased investment and effective control of prices than before, and that electricity consumers can look forward to a good future under privatisation of that industry?

Mr. Wakeham : My hon. Friend is right. Not only will customers benefit from privatisation but so will taxpayers and those employed in the industry.

Mr. Speaker : I apologise to the hon. Member for Hendon, South (Mr. Marshall) if he was merely taking his place.

Global Warming

5. Dr. Kim Howells : To ask the Secretary of State for Energy when he last discussed with his colleagues in the European Community the implications of global warming for energy policy.

Mr. Wakeham : I last discussed with Community colleagues the implications of global warming for energy policy at the Energy Council on 21 May.

Dr. Howells : Does the Secretary of State agree with the statements made last week by Mr. Jim Smith, chairman of Eastern Electricity, the largest of the distribution companies soon to be privatised, that the industry should concentrate less on cutting back and conserving and far more on winning markets from British Gas? Is that any way to contribute to attempts to reduce global warming? Does the right hon. Gentleman agree with that statement as an example of the initiative that is needed in modern Britain?

Mr. Wakeham : I am in favour of the chairman of Eastern Electricity looking after the interests of his employees, his customers and his shareholders--

Mr. Dobson : You are the only shareholder.

Mr. Wakeham : At the moment it happens to be me, as the hon. Gentleman points out, although shortly there will be a lot of shareholders. I approve of the chairman--he is a first-class person.

Sir Ian Lloyd : My right hon. Friend will doubtless be aware that a fortnight ago the House was well represented at a conference in Ottawa of 23 Council of Europe countries, the Soviet Union and Poland, about global warming. However, he is probably not aware that that conference took the decision that the subject is so important and it is so essential to reach a global solution, that every Parliament represented there should, if possible, hold a two-day debate on the papers discussed at the conference with a view to reporting back to a further

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conference to be organised by the Council of Europe. Will my right hon. Friend lend his considerable influence to support such a request when he receives it?

Mr. Wakeham : For a long time I had some responsibility for organising debates in the House. I no longer have it, but I shall pass on my hon. Friend's request to those who do. I agree with my hon. Friend this far--the conference in Ottawa and the conferences that seem to be taking place regularly in all sorts of places around the world at the moment are important if we are to deal with global warming. He is also right to say that it is necessary for us to have international agreement if we are to deal effectively with those problems. That is why the Prime Minister announced on 25 May that, in the context of international agreements, the United Kingdom is prepared to stabilise CO emissions at the present level by the year 2005. That target depends on other countries being able to play a full part in an international response.

Mr. Simon Hughes : Is the Secretary of State embarrassed when he meets his European colleagues that we are so half-hearted about our commitment to dealing with the problems of global warming? Why do our Government always say that we shall act if others act first? Is not the reality that we have a problem that we share with the world, which is so urgent that the target of doing a little by 2005 is too little far too late? Is not he embarrassed, and does not he want to be more effective as our Energy Minister?

Mr. Wakeham : I am very far from being embarrassed. The Prime Minister has taken the lead, with a demanding target. It is easy for those without responsibility here or in other countries with different problems to make forecasts and targets that they probably will not be able to meet. Our target is realistic, and if we can get international agreement on that level, we shall have done well.

Sizewell B

7. Mr. Illsley : To ask the Secretary of State for Energy what is the most up-to-date estimate of the final construction cost of the Sizewell B nuclear power station ; and if he will make a statement.

Mr. Wakeham : Nuclear Electric has undertaken a thorough review of progress with the Sizewell B project, including the estimated cost to completion. The outcome of the review will be announced soon.

Mr. Illsley : The Secretary of State must be aware that recent estimates have put the final cost of Sizewell B at about £3.8 billion, taking into account the cost overruns, delays and lack of economies of scale due to the cancellation of the pressurised water reactor programme. It was also calculated that £2 billion can be saved by cancelling the project now. Does the Secretary of State agree that the time to cancel Sizewell B is right now?

Mr. Wakeham : I am not prepared to comment on speculation about the costs of Sizewell B. Nuclear Electric has recently reviewed the cost of Sizewell B, and I understand that it will publish its figure tomorrow. However, I shall seek to give the House an idea of the Government's consideration of Nuclear Electric's review during this afternoon's debate, if I should catch your eye, Mr. Speaker.

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Dr. Michael Clark : If it is true that Sizewell B is costing considerably more than first envisaged, does my right hon. Friend share my disappointment that the nuclear industry, like so many others, cannot get construction costs right? Does he concede that Sizewell B is more than merely one additional power station? It is the forerunner of a series of power stations that are environmentally desirable, and an insurance policy for the future. When fossil fuel declines we shall still need electricity.

Mr. Wakeham : I am not prepared to confirm the speculative figures that I read about this morning.

Mr. Benn : Is the Secretary of State aware that every penny of the overrun will have to be paid by the taxpayer and that it amounts to a subsidy to nuclear power on a scale that the Government have never accepted in respect of the mining industry? Has the Commissioner with responsibility for energy in the European Community, which has taken an interest in the sweeteners that were paid for the purchase of Rover, asked the Government to make a full disclosure in this case?

Mr. Wakeham : I have clear responsibility for taxpayers' money, of which I am well aware. That is why I am not prepared to comment on or to accept the speculative figures that appeared in this morning's newspapers. We shall make our comments at the proper time and in the proper way. That will be after Nuclear Electric has published its review. As for the coal industry, the right hon. Gentleman once had the honour to hold the position that I now hold. The financial assistance and grants that have been made available to British Coal under this Administration exceed, in real terms, the total assistance from all previous Governments since the industry was nationalised.

Sir Trevor Skeet : Will the Secretary of State bear it in mind that behind Sizewell B is a nuclear industry that must not be allowed to disintegrate? Will he also bear in mind the long-term view that the nuclear industry will be essential to the United Kingdom when coal and natural gas run out?

Mr. Wakeham : Those are some of the many considerations that I have to take properly into account when considering those matters.

Mr. Dobson : Will the Secretary of State make a statement after Nuclear Electric has published its figures and will he confirm now that the figures that he says Nuclear Electric is to publish tomorrow will cover the whole of the extra costs, including those that must fall on Sizewell as a result of the cancellation of the other three pressurised water reactors? Will he also confirm that the costs of the £200 million nuclear research write-off will fall on Sizewell? Finally, can he confirm that if Sizewell is to continue, electricity users will have to pay at least twice as much for their electricity from Sizewell as from any other electricity generating station?

Mr. Wakeham : The hon. Gentleman would have been well advised to accept my advice not to press his questions at this time. I do not believe that the answers that he will receive a little later will be entirely to his liking. The best plan is to allow Nuclear Electric to publish its report and then decide what is the best thing to do.

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Energy Efficiency

9. Mr. Flynn : To ask the Secretary of State for Energy when he proposes to review the 90 per cent. upper limit on the grant available under the homes energy efficiency scheme.

The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry) : A number of representations have been received about the 9per cent. limit as part of the consultation process. They are being considered.

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