House of Commons Hansard Debates for 23 Jul 1990

Monday 23 July 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 Michael Carr esquire, Member for Bootle, 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.

Hon. Members : Hear, hear.

PRIVATE BUSINESS

British Railways Bill

Order for Consideration of Lords amendments read.

To be considered tomorrow.

City of London (Various Powers) Bill

Lords amendments agreed to.

London Underground (Victoria) Bill

Read the Third time, and passed.

Greater Manchester (Light Rapid Transit System) Bill

[Lords] Considered.

Ordered,

That Standing Order 205 (Notice of Third Reading) be suspended and that the Bill be now read the third time.-- [The First Deputy Chairman of Ways and Means.]

Read the Third time and passed.

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London Docklands Railway Bill

Order for consideration read.

To be considered tomorrow.

Oral Answers to Questions

Mr. Speaker : We now come to questions to the Department of Energy.

Mr. Salmond : On a point of order, Mr. Speaker. Is it in order to ask whether the gross discourtesy shown to members of the Select Committee on Energy and to Scottish Members by making the important announcement about the Britoil golden share on Friday was connected with weekend press reports that the Minister with responsibility for oil is about to be sacked? If that is so--

Mr. Speaker : No, that has nothing to do with energy questions.

Mr. Salmond : I am coming to the point of order--

Mr. Speaker : Order. It takes up time from other hon. Members' questions and it has nothing to do with energy questions today. This matter was raised on Friday, which is a full working day here.

Mr. Salmond : If that is the case, Mr. Speaker, what powers do you have to ensure that the rights of Back-Bench Members are protected from musical chairs on the Government Front Bench?

Mr. Speaker : This matter arose on Friday. I said then that it would have been convenient if we had known of it beforehand, but Friday is a working day in the House of Commons.

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ENERGY

Friends of the Earth

1. Sir George Young : To ask the Secretary of State for Energy when he next expects to meet Friends of the Earth to discuss energy-related issues.

The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry) : I have no present plans to meet Friends of the Earth

Sir George Young : If my hon. Friend receives a request to meet these friendly and earthy people, will he say yes to it and then do all that he can to reassure them that the Government attach a high priority to the promotion of alternative and renewable forms of energy?

Mr. Baldry : My right hon. Friend has already had a meeting with Friends of the Earth. We shall always be happy to have further meetings because they would enable us to tell them that the Government are stimulating the development and application of all promising renewable energy sources by means of a major research, development and demonstration programme. To date the Department has spent more than £160 million on research, and the budget for this year is about £20 million. A special place has also been set aside for about 600 MW of capacity from renewable sources under the non-fossil fuel obligation--in addition to whatever is contracted for under the initial tranche. I would welcome the opportunity of giving Friends of the Earth this good news.

Mr. Simon Hughes : Is not the reality that there needs to be a substantial change in investment in favour of renewables and away from sources such as nuclear power? Will not the Minister find a positive response from organisations such as Friends of the Earth only when he shows that the Government understand the economics of energy and spend money in the right place?

Mr. Baldry : We pay significant regard to energy efficiency. The hon. Gentleman might like to recall that United Kingdom energy consumption in 1989 is less than it was in 1979, despite a 25 per cent. increase in gross domestic product.

Energy Efficiency

2. Mr. Forman : To ask the Secretary of State for Energy what programmes his Energy Efficiency Office operates to disseminate advice on energy efficiency to consumers of electricity.

The Minister of State, Department of Energy (Mr. Peter Morrison) : We promote efficiency in the use of all sources of energy, including electricity.

Mr. Forman : I am grateful for that reply. What statutory role will there be after privatisation for the electricity companies to give advice on energy efficiency?

Mr. Morrison : The 12 distribution companies have a statutory role now under the Electricity Act 1989. That role will be overlooked by the Office of Electricity Regulation, which already has good contacts with my Energy Efficiency Office.

Mr. Foulkes : Is the Minister aware that he is one of the few Ministers who deals with Opposition questions on

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energy efficiency and other matters with a great deal of courtesy? It makes a change. Is he as fed up as I am at reading in every paper over the weekend of his imminent demise and possible replacement by the Under-Secretary of State for Scotland, the hon. Member for Stirling (Mr. Forsyth)? If that happened would not it speak volumes about the appalling state of the Tory party?

Mr. Morrison : I am most grateful to the hon. Gentleman for his complimentary remarks. Unless I am gravely mistaken I am still standing here.

Gas Prices

3. Mr. David Davis : To ask the Secretary of State for Energy when he last met the chairman of British Gas to discuss the level of gas prices for industrial consumers.

Mr. Peter Morrison : My right hon. Friend and I meet the chairman of British Gas from time to time to discuss a range of issues of mutual interest, including the fact that industrial gas prices have fallen by 41 per cent. in real terms over the past five years.

Mr. Davis : I thank my right hon. Friend for that excellent news. Does he agree that that implies that a large part of British industry will now have a major competitive advantage? That, in conjunction with the fact that we have the lowest domestic gas prices in Europe, is a major vindication of our privatisation programme.

Mr. Morrison : I agree with my hon. Friend. He spoke about domestic gas prices. Since privatisation the price of domestic gas has fallen by 14 per cent., so all round British Gas has a very good record.

Dr. Kim Howells : Can the Minister give any assurances and with any confidence that gas prices will not rise when gas is used as a bulk burn fuel in power stations?

Mr. Morrison : As the hon. Gentleman knows, the price of gas depends on the efficiency of British Gas and the other North sea gas producers. It also depends on supply and demand.

British Coal

4. Mr. Hind : To ask the Secretary of State for Energy how much the Government have invested in British Coal since 1979.

The Secretary of State for Energy (Mr. John Wakeham) : We have assisted the corporation in financing over £7 billion of new investment since 1979.

Mr. Hind : Will my right hon. Friend confirm that the Government have invested far more in the coal industry than did their predecessors? As a consequence, the arrangements between British Coal, National Power and PowerGen for the supply of coal mean a secure future for coal mining in Britain which will play a major part in future developments.

Mr. Wakeham : My hon. Friend is absolutely right. The new contracts with the electricity generators provide British Coal with a large market opportunity, a guaranteed income stream over the next three years, and time to adjust to the needs of a competitive electricity market. My hon. Friend is also correct about the support that the Government have given to the coal industry.

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Grants made available to British Coal under this Administration exceed in real terms the total assistance given by all previous Governments since nationalisation of the industry was completed.

Mr. Hardy : Will the Secretary of State comment on the paradox that the Government and almost all their supporters have boasted for the past decade or more about record investments in British Coal, but that the market opportunity, although the Secretary of State may describe it as large, is small? Every member of the Government and most of their supporters joyfully trooped through the Lobby to secure the replacement of the investment about which the Government boast.

Mr. Wakeham : The Government's support for the coal industry has enabled it to make massive improvements in productivity, which is now about 75 per cent. over the pre-strike level. That is a fine achievement and will enable British Coal to compete in the market at the end of the three-year contracts with the generators. I hope and expect that British Coal will achieve a substantial share of that market.

Mr. Brandon-Bravo : Given the massive size of investment in the industry, and that much of it is long term, should not we also take steps to ensure that British industry is not held hostage to fluctuations in world prices in coal? I refer in particular to the importation of sulphur- free coal.

Mr. Wakeham : It is impossible for any industry to be entirely insulated from world prices or environmental considerations, but the step that we have taken in improving the productivity of British Coal and playing our part in the European directive on emissions will enable British Coal to take advantage of the position in future.

Mr. Barron : Does the Secretary of State accept that many of the grants that have gone into the coal industry since 1979 were effectively investments in its closure and rundown? Does he agree that where there has been capital investment, to which he correctly referred, we must make sure that it has the long-term effect of producing coal? We must get way from three-year contracts, which are no good whatever to the coal industry. With the chairman of British Coal, will he get together people from National Power and PowerGen and begin discussions about long-term contracts so that investment is not wasted?

Mr. Wakeham : I agree with the hon. Gentleman this far : the three- year contracts are only a start and longer contracts are needed for the coal industry. I am sure that he will welcome the fact that a substantial part of the support that British Coal has received from the Government has enabled the necessary changes in manpower levels to be achieved in as humane and reasonable a way as possible. The bulk of the assets being written down stem from the "Plan for Coal" initiated by the Labour party when it was in office. That was based on a forecast of coal demand that failed to materialise. I do not say that no recent investments will need to be written down as a result of the collapse of energy prices, but the Monopolies and Mergers Commission report on British Coal's capital investment last year noted an improvement in the corporation's investment appraisal procedures. That augurs well for the future.

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Mr. John Marshall : Does my right hon. Friend agree that the figures demonstrate that the nationalisation of British Coal was an unmitigated disaster? When can the taxpayer look forward to that burden being removed?

Mr. Wakeham : If I had been around in 1946 I should not necessarily have agreed with the solution of the then Government. However, that might be controversial. The Government's policy is to privatise the coal industry. Proposals will be put before Parliament, but after the next election.

Energy Efficiency

5. Mr. Ray Powell : To ask the Secretary of State for Energy when he next expects to meet Neighbourhood Energy Action to discuss the home energy efficiency scheme.

Mr. Peter Morrison : I meet the director of Neighbourhood Energy Action and representatives of other organisations as necessary to discuss the development of the home energy efficiency scheme.

Mr. Powell : I thank the Minister for that reply. Is he aware of the promise that the home energy efficiency scheme would be introduced by 1 November? All the people involved in introducing such a scheme, including a rock wool factory in my constituency, continue to state openly that the Government will not introduce the scheme by 1 November. The Government have backtracked on the promises that they made. The House and the nation want some assurance that the Government will get off their backside and do something about introducing the scheme by 1 November as they promised.

Mr. Morrison : I am sure that the hon. Gentleman wanted the consultation that has taken place during the past few months. I hope that he would not have wanted us to go ahead without seeking the views of all groups involved, including Neighbourhood Energy Action. He will be pleased to hear that I hope shortly to come forward with the final details of the scheme. As he will realise, the scheme is a successor to the community insulation projects and, therefore, will flow naturally through.

Mr. Hannam : Will my right hon. Friend confirm that the rate of energy efficiency improvement in this country has been running at more than double that of the European Community average? Is not that largely due to the success of our community insulation programme? What plans does my right hon. Friend have for continuing that success?

Mr. Morrison : I can certainly confirm that we have had a pretty good record during the past 10 years. However, it would be a mistake to be in any sense complacent, which is why I and my officials at the Energy Efficiency Office are visiting every part of the country to promote our message as best we can.

Mr. Robert Hughes : Does not the Minister astonish even himself with his complacency? How can he claim to be so proud of energy efficiency improvements over the years when he is severely cutting funds to voluntary agencies helping to minimise energy loss? Is not that at best inconsistent with the right hon. Gentleman's remarks, and, at worst, hypocritical?

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Mr. Morrison : If I give the impression that I am complacent, I assure the hon. Gentleman that I am not. As I said before, the nation's energy spend amounts to about £40,000 million a year, and our target is to reduce that figure by £8,000 million. Substantial new moneys are coming to the Department for the home energy efficiency scheme, which will also help. I suspect that many of the deliverers--the people who do the job --will be voluntary agencies as well as companies in the private sector.

Mr. Dickens : When my right hon. Friend next talks about energy efficiency to neighbourhood groups, will he impress upon them the importance of the fluorescent gas-filled bulb, which lasts about five years and costs next to nothing to run, but which the bulb manufacturers of the world are slow to produce because they have a vested interest in the consumer replacing bulbs every five minutes? Will he try to persuade British manufacturers to produce those bulbs, because they can be obtained only from abroad at a cost of about £15 to £20 each? Nevertheless, hotels have caught on to their advantages.

Mr. Morrison : If anything, I am becoming a bit of a bulb bore. I assure my hon. Friend that I promote that message as hard as I can. He may not realise that such bulbs are now being produced in this country, and I hope that we shall find them on supermarket shelves from the autumn this year. Those bulbs are certainly very efficient, and every right hon. and hon. Member could benefit by using them in their homes.

Gas Act 1986

6. Mr. Nellist : To ask the Secretary of State for Energy what proposals he has to amend the Gas Act 1986.

Mr. Peter Morrison : None, Sir.

Mr. Nellist : I have raised before in the House the dilemma confronting Coventry city council, as a consequence of the Gas Act 1986, in relation to the cheaper price of contract rather than tariff supplies. The council has decided to heat 17 schools and old people's homes from now until 30 November with all their windows open, so that 56,000 extra therms will be consumed and the council will qualify for the cheaper contract gas, thus saving the city £30,000. The problem is not unique to Coventry among local authorities. The Minister and his Department responded to paragraph 4 of the Energy Select Committee's report, saying that they are confident that British Gas and the Office of Gas Supply will continue to discuss that aspect until a satisfactory solution is found. To whom is such a solution to be acceptable, and how long will those discussions continue?

Mr. Morrison : The hon. Gentleman perfectly reasonably cites a problem which I accept exists. However, it is fair to say that in Coventry, as in any other part of the country where there is aggregation, there is no need for the city council to burn gas in the way that the hon. Gentleman describes.

Mr. Nellist : It is cheaper.

Mr. Morrison : That may be so, but in practice, because of aggregation, the total sum that the council will have to pay is no more than it would have paid a year ago. Nevertheless, efforts are being made by Ofgas, British Gas and myself to work out a solution to this complicated

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problem. It is not a question of the legislation but of how one tapers through its provisions. Genuine efforts are being made to resolve the problem.

Mr. Rost : Does my right hon. Friend accept that that scandalous waste of gas has been going on too long? It is not only schools and the public sector that are deliberately wasting gas to pay less for it by qualifying for an industrial tariff, but commercial interests such as hotel groups and retail outlets. It pays users having a consumption of about 18,000 therms to burn up to 25,000 therms because they will then pay less for that gas. Is not it time either to allow aggregation below 25,000 therms or to amend the Gas Act 1986 so that that ridiculous anomaly can be removed?

Mr. Morrison : I do not quite agree with my hon. Friend's figures, but it is perfectly fair to say that my hon. Friend, like the hon. Member for Coventry, South-East (Mr. Nellist) points to a problem. Work is going on to see how that problem can be solved.

Mr. Doran : The privatisation of the utilities has certainly resulted in competition at the industrial and commercial ends of the market. But, as last week's increase in British Telecom's charges shows, there is severe discrimination against domestic consumers. What will the Government do to protect domestic gas consumers?

Mr. Morrison : The hon. Gentleman cannot have been listening to one of my earlier replies when I said that since privatisation the domestic gas consumer is paying 14 per cent. less in real terms for gas.

Alternative Energy Sources

7. Mr. Knox : To ask the Secretary of State for Energy when he proposes to have discussions with the European Commission about alternative sources of energy.

Mr. Peter Morrison : Neither my right hon. Friend nor I have any current plans to have discussions with the European Commission. However, alternative sources of energy are likely to be relevant in future Council discussions. The next Energy Council is planned for 29 October.

Mr. Knox : Is my right hon. Friend satisfied that the balance between United Kingdom national research and European Community research is about right? Does not he think that more of this research should be undertaken on a European basis?

Mr. Morrison : I think that I am satisfied that the balance is about right in terms of the JOULE 2 and THERMIE programmes. As a result of the European Community coming together, the total spend by those nations on research and development is about right.

Mrs. Margaret Ewing : Will the Minister ensure that at the Council of Ministers meeting on 29 October a clear proposition is laid before the Council that Dounreay, in the north of Scotland, should be developed as a centre of excellence for research into renewable energy sources, instead of the current proposition, which is to turn it into a nuclear dustbin?

Mr. Morrison : I do not agree with the final part of the hon. Lady's question, but I listened carefully to the former part.

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Dr. Michael Clark : If and when my right hon. Friend has discussions with the European Commission on alternative energy sources, will he review with it the possibilities and opportunities for wave power? If he finds that there is potential for wave power, will he reassess the Salter duck, which was designed and developed in this country, but, unfortunately has not yet been exploited?

Mr. Morrison : As my hon. Friend will know, the Department spends a considerable amount of money on research and development into wave power, and currently we are reviewing that research. As for Mr. Salter and his ideas, my hon. Friend might be pleased to hear that he came to my office a few weeks ago where we had a long discussion, and that I intend to visit his laboratories in Edinburgh as soon as I can find the time.

Electricity Privatisation

8. Ms. Mowlam : To ask the Secretary of State for Energy when he next expects to meet the chairman of the area distribution companies to discuss privatisation.

Mr. Wakeham : I meet regional electricity company chairmen regularly to discuss a range of matters and have recently set the debt levels of the 12 regional electricity companies and the National Grid Company. The total debt will be £2,843.5 million. I have arranged for the company-by- company figures to be published in the Official Report.

Ms. Mowlam : As 10 of those 12 companies have already failed to meet Government profit targets--it has not stopped the chairmen from taking substantial pay increases--how does the Secretary of State expect shareholders to make informed decisions if the only information that they will have is the knowledge of that failure to meet profit targets?

Mr. Wakeham : That is not the only information that they will have. A proper prospectus, as required by law, will be published and the information will be available there. That is the right time to assess those companies. The results to which the hon. Lady referred reflect the unusually mild winter and the recent storms, but also--and much more important--they are, to an extent, irrelevant under the new competitive regime that we have created.

Mr. Ian Bruce : Has my right hon. Friend yet had a chance to assess how the bidding system for electricity is working? Does he believe, as I do , that it is already having the effect of bringing down the price of electricity to the distribution companies, which will be passed on to the consumer in the fullness of time?

Mr. Wakeham : Obviously, I am interested in looking at the information which comes in, but it is too early yet to form any firm conclusions about how the pool price will settle down. However, I agree with my hon. Friend that the arrangements that came into effect on 1 April mean that a great many of our larger electricity consumers have had the price of their electricity significantly reduced.

Mr. Benn : Is the Secretary of State aware that if members of any Labour local authority had handled the public assets entrusted to it in the way in which the Government have handled the assets built up by public money and the labour of those in the industry, they would

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