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Gas And Electricity Industries

Volume 929: debated on Monday 28 March 1977

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13.

asked the Secretary of State for Energy if he has any plans to meet the Chairmen of the British Gas Corporation and the Electricity Council, respectively.

I meet the chairmen as and when the occasion requires but have no immediate plans to do so.

Last time the Secretary of State met the Chairman of the Gas Corporation, did he not find that gentleman rather resentful of the fact that the prices of the product of his industry were to be increased as a result of Government policy while the prices of other fuels produced by nationalised industries were to remain static? Will the Secretary of State tell us, even now, why that distinction should have been made when the Government were forced to cut back on their expenditure?

I have answered that question several times today, but I will deal with it again. Given the requirement to reduce the public sector borrowing requirement, given the necessity to require a contribution from the nationalised industries to that end, and, in the energy field, given the choice between cutting investment, which would mean cutting back on the future or increasing prices, and making a change in the differential in prices for electricity, coal and coke, the Government decided that it would be right to require a contribution from the gas industry. The Chairman of the Gas Corporation did not particularly like it—that is obvious—but at the same time the capacity to finance more of the investment himself by increasing prices provided him with some security.

As my right hon. Friend has said, the public sector borrowing requirement is really a Treasury decision. We are expecting a statement from the Chancellor tomorrow. As the public sector borrowing requirement has improved greatly in recent months, could my right hon. Friend ask the Chancellor to look at the matter again and make a statement tomorrow on gas price increases?

I never thought that I should have to say that I cannot anticipate my right hon. Friend's Budget Statement, but I am dealing with a Question about gas prices falling directly within my responsibility.

As a Cabinet Minister, will the Secretary of State say why, if the public sector borrowing requirement is the object of the exercise, it was not applied to public corporations outside the energy industries? Secondly, in view of the great importance of these Questions and of some of the things said by Ministers today, may we be assured that all these views have been cleared with the Liberal Party? Does that explain the total absence of the Liberals from the Chamber during this important Question Time?

I am not responsible for the absence of the Liberal Party from the Chamber—at least, I assume that I am not responsible. But the hon. Gentleman must recognise—his memory will not be that short—that his colleagues have been demanding much more savage cuts in public expenditure, which would have hit people much more harshly. Cabinets have to make a judgment between alternative ways of reducing the public sector borrowing requirement.

Does not my right hon. Friend agree that different aspects of Government economic strategy contradict each other? Does he not accept that the increase in gas prices will stimulate inflation? How does he reconcile those two considerations?

I think it was right, and I hope that my hon. Friend thinks it was right, to safeguard investment and jobs. After all, one possible reduction in the PSBR might have come from cuts in, say, coal investment or might have affected the possibility of building Drax B power station. My hon. Friend will also recognise that the Gas Corporation, which has an indebtedness of £2·2 billion in this sense, hopes to finance more of it directly.

Can the right hon. Gentleman confirm the widely-circulated report that it was he himself who in Cabinet volunteered the idea of the increase?