• Accessibility
• Email alerts
• RSS feeds
• Contact us

16 Jul 1996 : Column 1002

Energy Policy

Mr. Deputy Speaker (Mr. Michael Morris): We now move to the next debate, which is on energy policy. I have to announce that Madam Speaker has selected the amendment in the name of the Prime Minister.

7.16 pm

Mr. John Battle (Leeds, West): I beg to move,

That this House notes that British Energy has been privatised for just £1.4 billion, well below the Government's early estimates and proof that the sale was a bad deal for the taxpayer which was carried through in defiance of basic common sense; notes that there is no sign of a strategy from the Government upon the ad hoc restructuring of the electricity industry in which companies and billions of pounds have changed hands but consumers have become an afterthought; further notes that, as more coal pits close, there is no sign of a strategy on the effect of the renegotiation of the coal contracts in 1998 or of the take-or-pay gas contracts problem and no sign of leadership on the introduction of competition into the domestic gas and electricity supply industries in 1998, risking chaos and a crisis of public confidence in competition; and calls on the Government to establish a framework to promote efficient energy industries delivering a fair deal for consumers.

I understand that on 12 July the right hon. Gentleman delivered a valedictory address subtitled, "Some thoughts on energy policy, past, present and future", in which he helpfully admitted:

"there's still a few things to be sorted out."

One tribute in the Evening Standard report of the Minister's leaving says:

"One major unresolved issue left by the minister is the introduction of competition in the domestic electricity market, in theory due to start in 1998."

In The Times today, under the headline, "Damning report for electricity competition plan", we find an article spelling out Coopers and Lybrand's view that the plans to bring competition to 23 million domestic energy customers

"will fail or be significantly delayed, with the inevitable resultant recriminations and potential harm to the industry and its customers".

In recent months, the Labour party has twice forced the Government to come to the Chamber to debate nuclear privatisation--on 26 March and 18 June. After each debate, our critical questions were left unanswered. Our view--that this fag-end privatisation would prove to be a bad deal for the taxpayer--has proved to be right. Sadly, it is fast proving to be a bad deal for the 606,000 who have bought shares since then. They have seen their shares falling in value, and they do not yet have their share certificates--so they cannot even get themselves out of the privatisation.

We objected to the selling off of the eight nuclear power stations for less than the cost of building a single one--the new Sizewell B. BZW, the Government's advisers--who put the prospectus together--originally suggested a valuation of £2.4 billion. However, the price in the end was £1.4 billion--well below the original estimate. It was a giveaway sale by the Government, who were fixed on a last desperate dash for cash. We argued that the cash-generating profitable part had been sold off too cheaply, while millions of pounds of liabilities would remain with taxpayers for generations to come.

Mr. Jacques Arnold (Gravesham): How can the hon. Gentleman say that it has been sold off too cheaply, as anything only has the value that someone is prepared to pay for it? If the market is now pricing it at below the level at which it was sold, did not the taxpayer get a very good deal?

Mr. Battle: I am delighted by that intervention. We once had monetarism and neo-Reaganomics, but we now have the economics of the car boot sale--it does not matter what we get for it as long as we get something. The point is that the Government have sold off assets at well below their value to the taxpayer, and the taxpayer will carry on paying for those assets for years to come. The sale has proved to be a bad deal for the shareholders as well. The estimates of the productive efficiency of the power stations, which at the time were set at 83 per cent., were well above 75 per cent.--the usual performance of the reactors. In other words, they were grossly optimistic.

When we challenged the Government on reports of faults at Hunterston B power station, we were accused by the Minister of scaremongering. Yet within five hours of the closure of the sale of shares on 10 July, the company publicly revealed that two out of the seven privatised advanced gas-cooled reactors--Hunterston B and Hinkley Point--had been found to have identical steam leak weld faults, and both were taken out of service.

Before the Minister leaves, perhaps he will tell us when he and his Department knew of those faults. Why were the potential investors not told? Why was the problem

16 Jul 1996 : Column 1004

When we challenged the Government on 4 June to publish the Clifford Chance report that made direct references to the steam cracking, we were told that these matters would be dealt with in the forthcoming prospectus. We asked for that Clifford Chance report to be put in the public domain, and I again ask the Minister to do that, so that the details of what went on can be known. I hope that the Minister will confirm that, on 7 June, Hinkley Point B also moved into statutory outage. Yet, for some reason, it took 28 days until 4 July to reveal that a similar fault with steam pipe weld cracks had been discovered on reactor 4 of Hinkley Point B as well. Why did it take 28 days for that fault to be revealed?

The Minister may claim that the problem was announced in advance and that the shareholders ought to have picked it up. But it was published in that well-known and well-read journal, the "British Energy Monthly Output" figures. It appeared on 4 July, but only as a footnote on weld inspections at Hinkley and Hunterston. I do not think that those who have bought shares will think that that is good enough. They will believe that they have been seriously short-changed.

Mr. Alan Duncan (Rutland and Melton): The hon. Gentleman is telling the House that because certain reactor faults were not made public, shareholders have overpaid for the purchase of nuclear energy shares. How does he reconcile that with his earlier comment that the Government did not get a sufficiently high asset price for the sale?

Mr. Battle: We know that the reactors were undersold because of the price of building them, and we have seen today that the cost of the shares is falling through the floor--89p is I believe the price today. [Interruption.] I do not think that the shareholders will be amused by the remarks of the hon. Member for Rutland and Melton (Mr. Duncan). They believe that the Government have short-changed them again. [Interruption.] The hon. Member for Rutland and Melton puts his finger to his head, as if he were an idiot. I would suggest that his economics have proved to be idiotic for the past 15 years, and that it would have been common sense to calculate the cost to future generations of taxpayers of selling off the nuclear industry.

Mr. Jacques Arnold: Will the hon. Gentleman give way?

Mr. Battle: I have given way already to the hon. Gentleman, and I want to make a little progress.

Why were the shareholders not told that there were faults in the reactors? It is not that the structural faults would jeopardise safety--I accept that, despite what some have irresponsibly claimed. But they certainly would affect generating efficiency and capacity. In other words,

16 Jul 1996 : Column 1005

While the Secretary of State was in the dealing room of BZW watching the shares being sold on screens, were the Ministers sitting on that crucial information that we know and they know would have jeopardised the sale even more? That is why this desperate dash for cash is the final betrayal of the ordinary shareholders whom the Government have claimed for years to support.

• A-Z index
• Glossary
• Contact us
• Freedom of Information
• Jobs
• Using this website
• Copyright