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Dr. Robert Spink (Castle Point): Does my hon. Friend agree that the liberalisation of the energy market and the privatisations have gone hand in hand with a greater social responsibility and performance in terms of environmental care and control across all the energy companies?
Dr. Clark: My hon. Friend is quite right, because, in the prospectuses for all the privatisations, care was given to environmental matters far exceeding any care that had been given to them before privatisation and before a portfolio and specification were necessary.
Before I leave electricity, I must say one thing to the Minister, to which I hope he will reply. It is not right that we should have a pool system when bidding for electricity, whereby everyone is paid the price that is paid to the highest bid accepted. I give him an over-the-top example.
Let us suppose that, on a cold winter's day, we are desperately short of electricity, and some chap in Castle Point is pedalling his bicycle to generate electricity for the grid. We are so short of electricity that we take the electricity from him and pay him 35p a unit for it, even though the going rate at that time may be only 2.8p a unit, but we have to take it because he is not prepared to generate electricity for anything less than 35p.
Just because we pay 35p for that half-hour period, why should we pay 35p to every single generator in the country, whether the electricity comes from oil, gas or nuclear? I have made an exaggeration to prove my point, but my point is still valid. Every generator should not be paid the equivalent of the highest bid accepted. Payment should be according to the bids made.
The fourth privatisation was coal. Major change had been brought about by the liberalisation of energy. We all know that, at the end of the privatisation process, the coal industry suffered. I do not deny that. Hon. Members will know that I was as assiduous as most in trying to prevent the decline of the coal industry, but it happened. To some extent, it happened because more gas is being used in electricity generation, but there has been a long-term effect on our coalfields and many coal pits have closed and may never reopen.
The good news, however, is that, where the industry has been privatised, whether it be RJB Mining or Celtic Energy, the downsizing and the privatisation have brought about an
upsurge in efficiency in the coal industry, in morale and productivity. There has been a great improvement in employee participation, and the increase in competitiveness is quite spectacular. Those examples can be seen in both RJB Mining and Celtic Energy. I was pleased to be able to meet representatives of both those companies last week and learn how well they are getting on.
Mr. Clapham:
The hon. Gentleman obviously did not discuss the situation with the men who work at the coal face for RJB Mining or Celtic Energy. Does he agree that, of all the pits that have been privatised, the colliery with the best industrial relations and, indeed, the best and most efficient way of using its human resource, is Tower colliery, which was an employee buy-out?
Dr. Clark:
I am delighted with the results from Tower colliery. As the hon. Gentleman has said, it is the only example of an employee buy-out of a colliery in this country. It has been extremely profitable, as indeed have other pits owned by bigger companies. It is just as much a delight to me, my hon. Friends and the Government as it is to the hon. Gentleman that it has been a success. I hope that it will be successful for a long time. Many of its employees staked--I shall not say "gambled", as it was not a gamble--a large amount of personal money on it, and it is a delight that it has succeeded and that they have seen a return on their investment.
In December 1988, my hon. Friend the Member for North Bedfordshire (Sir T. Skeet), who is not present this evening, and I spoke to urge a delay in the privatisation of the nuclear industry, as we thought then that it was not ready for it. The Government thought otherwise, although, a year or so later, my noble Friend Lord Wakeham pulled the nuclear industry out of the privatisation programme. I think that, with the load factor improvements to which we have referred, with public confidence in nuclear energy and with the reprocessing that is available for nuclear fuel, it is the right time to privatise British Energy.
I hope that British Energy in the private sector will remember its core commitment to nuclear energy. Although it will be tempted to go down other paths, it should remember its expertise and its roots. It should be the source of nuclear power for the future, not just nuclear power for the past. I hope that it will remember that. I am sure that it will be profitable and that it will give a good return to shareholders.
Mr. Matthew Taylor (Truro):
I hope that the House is in no doubt about at least one point--that energy policy is important. Indeed, the present lack of a coherent energy policy aptly symbolises a Government who have long since lost their way.
A strategic and comprehensive energy policy is essential if we are successfully to contain global warming by reducing the environmental impact of energy use. It is essential if we are to end the scandal of fuel poverty that
affects 8 million families in this country and ensure adequate supplies of energy for future generations. Let me briefly review what we have instead of such a policy.
We have a Government who choose to sell the profitable parts of nuclear energy for less than the cost of building Sizewell B, while leaving the taxpayer to pick up the bill--a bill that will be paid by future generations many decades hence. The recent news that, just before its flotation, British Energy shut down Hunterston B and Hinkley Point B but did not release that information until after the flotation, has sparked a stock exchange inquiry.
We have always said--I have spelt out our position in detail in two debates, and do not plan to do so again now--that the sell-off was bad for the taxpayer. It now appears that small shareholders have also paid the price. Only the Government are laughing all the way to the bank, with another £1.4 billion in their coffers for pre-election tax cut bribes at the expense of saddling the taxpayer with huge long-term liabilities and shareholders with at least short-term liabilities.
This is a Government who have pushed privatisation on the gas and electricity industries but ignored the problems of fuel poverty and energy inefficiency; a Government with no interest in or understanding of the problems that their approach to every sector of the energy industry has wrought.
I might add that the Government have not even recognised the countervailing impact on their usual regional development policies of the increasing encroachment of regional pricing differentials. That means--you know this as well as I do, Madam Deputy Speaker--that, in the south-west, in addition to the highest water bills in the country, we shall soon face the highest electricity and gas bills, too. That impacts not only on individuals but on business and on the Government's so-called regional policy, but the Government seem wholly unable to co-ordinate their policy position.
The lack of any strategy is evident in the Government's amendment to the Labour party's motion. For example, the environmental problems associated with energy use are not even touched on. The Secretary of State for the Environment is fond of saying that his party cares about the environment; unfortunately, the rest of his party does not appear to be listening--certainly not his colleagues at the Department of Trade and Industry. However, the Government are not alone.
In the very week that national Governments are meeting to discuss climate change, the Labour party manages to table a motion entitled "Energy Policy" which makes no mention of the environment or sustainability, let alone global warming and its relationship to the use of energy. Indeed, the motion contains no indication of what the party's energy policy might be. Was the party not aware of the problems of global warming? Did it simply decide that it was not sufficiently important to warrant a mention? Or, to judge by the brief comments that we have heard tonight, perhaps it simply does not understand the issue.
Each and every one of us needs energy, but no one consumes energy for the sake of it. Businesses and consumers need energy services such as heat, light and power, but the key question is whether those energy services can be delivered satisfactorily simply through the
free operation of the market in energy supply. Unlike the Government, the Liberal Democrats think not. I should like to take a few minutes to explain why, and say what needs to be done.
First, let us consider the facts. Pollution associated with energy use accounts for the majority of the most serious current environmental problems we face. It is true that the substitution of gas for coal in recent years has contributed to a significant fall in CO 2 emissions in this country, as has the recession, but the failure to incorporate environmental costs and benefits into economic decisions has meant that energy efficiency levels over the whole economy have hardly improved since the late 1980s.
The gains from the dash for gas were a one-off--they cannot be repeated. As, we hope, the economy comes out of recession, they will not even be sustained unless we get back to the important long-term business of improving the efficiency of our energy use.
As fuel prices have declined in real terms over the past 15 years, the motivation to invest in energy conservation projects has been largely non-existent, while the regulatory regime has promoted and encouraged suppliers to increase sales rather than improve efficiency.
Gas competition will bring further cuts in prices. Businesses that once employed business efficiency managers are now employing contract managers, realising faster savings by changing suppliers, but gaining no environmental benefits. That situation has been exacerbated by the inadequate funding of the Energy Saving Trust, due to the decision of the gas regulator to rule out the levy, by the lack of action by the Government to restore their original pledges on it, and by Government cuts in the home energy efficiency scheme.
Eight million families remain afflicted by fuel poverty, the inability to afford adequate warmth in the home and an absence of capital to make efficiency improvements that would cut their bills while creating a warmer home. The impoverished in society live in the worst insulated houses, suffer most when fuel prices rise, cannot afford new and energy-efficient appliances, and therefore waste more of their money and contribute disproportionately to environmental damage by wasting more of the energy they buy. Policies for sustainability must therefore ensure that those who are already worse off are not made more so, and that the prosperity and employment that can be generated by the right economic programme is spread evenly throughout society.
A reduction in overall energy use is an essential component of any serious attempt to combat pollution, and should also be part of any serious policy to combat fuel poverty. Such a reduction is not a hair-shirt option: about going without warmth or light or about businesses closing. It is about saving waste, not cutting essentials. Government figures show that 50 per cent. of energy used in the United Kingdom could be saved with existing technology alone. Even at current prices, energy use is at least 20 per cent. higher than would be economically optimal, and represents an economic loss of about 3 per cent. of gross domestic product.
Liberal Democrats believe that there is enormous scope in this approach. First, we would introduce mandatory standards and information to ensure that new buildings, machinery, vehicles and appliances were more energy efficient, and we would encourage consumers to take
efficiency into account when making purchasing decisions, by providing advice, information and education.
Secondly, we would give more support to renewable sources of energy through requirements on energy generators, and redirected research and development support. We would stop the ludicrous cost of subsidising a nuclear industry that has proved uncompetitive and--internationally--a threat to the environment. By cutting energy use and investing in development of alternative energy, we will show, as I have always believed, that the nuclear industry is unnecessary as well as uneconomic.
We read in last weekend's Financial Times that the Labour party is considering boosting the United Kingdom coal industry by subsidising electricity generated by clean-coal technology, as it is called, with money earmarked for renewable energy. So-called clean-coal technology may be cleaner than conventional coal power stations in terms of some pollutants, but it still has a direct impact on increasing global warming.
That Labour party proposal makes a nonsense of its claim to understand the threats to the environment--let alone tackle them--especially given that comments tonight have made it clear that the renewable energy levy, of all things, should pay for the coal industry subsidy. Such a subsidy would make it impossible for this country to meet the reduction in carbon dioxide emissions that are needed to combat global warming, which other Labour spokespeople have suggested they want to achieve.
Thirdly, we would introduce a major programme of investment in energy conservation, organised and funded through the Energy Saving Trust. About £1 billion a year will be released for that by removing--by legislation if necessary--the regulators' block on the Energy Saving Trust levy. We will implement a policy that the Government pledged, but on which they have failed to take action.
Since the policy will come in as the nuclear levy goes out, it need not add to the cost of electricity. Householders will have access to a range of loans and incentives to invest in energy efficiency improvements, especially the poorest, who face the misery of cold, draughty homes and huge fuel bills. Moreover, it will provide a huge boost to employment in this labour-intensive industry.
Finally, and most important, we will reform the tax system--switching the burden of taxation away from employment and income towards pollution and resource use. In all the countries of the Organisation for Economic Co-operation and Development over the past 20 years, the tax burden on labour has greatly increased; yet, on the use of environmental resources, it has fallen. That distribution of the tax burden has led to increased unemployment and environmental degradation. It has made sense for business to invest in low-tax, energy-consuming capital equipment instead of in labour. Businesses that need to invest heavily in people are disadvantaged by the tax system, whereas for decades Governments have helped energy-intensive capital investment, which often replaces jobs with machines.
By shifting the tax burden from good things such as jobs to bad things such as pollution and the excessive use of limited natural resources, we shall protect the environment, create new jobs and encourage new, green industries that tend to be more labour intensive. Recycling, for example, is 10 times more labour-intensive
than landfill, and our proposed programme of insulating low-income homes in the United Kingdom could create 50,000 jobs.
However, our key policy will be the phased introduction of a carbon tax. We can create a long-term incentive to save energy and switch to less polluting fuels only if there is a long-term incentive to do so and the polluter genuinely pays. The revenue generated will be recycled into the economy through cuts in other taxes with an overall positive economic impact.
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