I beg to move,
That is not the most gripping and exciting paragraph with which to open a debate on these issues. Nevertheless, behind the dull configurations lie major questions on the changing international energy scene and the changing responses which are now needed from us. I am grateful for the chance tonight to hear the views of the House on these EEC documents, all of which, though couched in somewhat complex terms in some cases, to put it mildly, are relevant to the way in which developments have occurred in recent months on international energy. This debate also provides an opportunity to look at and discuss these imporant topics shortly before one of the proposals resulting from recent developments—the regulation establishing a register of imports of crude oil into the Community—comes into effect after weeks of detailed examination in the EEC and in the International Energy Agency. I hope to deal with the mechanics of that regulation shortly, but it may be convenient to the House if, first, I try to set some of these documents in a more general context, and deal with the background against which it may be helpful to judge them. Before doing so, perhaps I could refer to the first of the background documents we have before us tonight, the European Commission's report on the Community and world energy situation. I do not want to dwell on the minutiae of that report. It was presented to the Energy Council in March and obviously preceded many of the significant developments that we have seen unfolding on the world energy scene this year. Instead, in the time that we have available, I want to make a few observations on the response of the industrialised world, including the European Community member States, to the need to provide for a future different from that which was predicted a few years ago—a future in which oil will not be available in sufficient quantities to meet ever-growing demands—and to comment briefly on our nation's role in response to those new needs and prospects. The likelihood—clearly, there are no certainties in this area—is that by the year 2000 oil will be confined to its premium uses, which are mainly transport and feedstock for the petrochemical industry. A smaller proportion of our overall energy needs at the turn of the century will have to be supplied by oil, and a growing proportion of our economic development will be fuelled by coal and nuclear power. I do not expect the less conventional energy sources, ranging from nuclear fusion to wind, wave, tidal and solar power, to be sufficiently advanced to make contributions in the year 2000, although I hope that progress will have been made towards the parts that they too will have to play in the next century 20 years from now. We face a formidable task—how best to ensure the transition from a largely oil-based economy to a broadly energy-based economy. That is the immediate task. That is why the nine member States at Strasbourg and the seven summit countries at Tokyo in June established agreement—and they were right to do so—on certain priorities. Notable amongst them were the need to restrain demand for oil in the medium term and to press ahead with investment in the production and use of alternatives to oil, principally coal and nuclear power, and renewable sources to develop their longer term potential. At those meetings the Governments agreed to seek improved public knowledge of the operations of the oil market. They looked forward to constructive discussions with oil-producing States. They noted with understandable concern the ugly and increasingly difficult problems of the poorer countries without oil of their own. The member States agreed at Strasbourg to keep net oil imports into the Community between 1980 and 1985 at or below their 1978 total level of 472 million tonnes. In line with undertakings made at Tokyo, individual member States accepted in September that national net oil import targets for 1985 would be specified. For the United Kingdom, I accepted a net export target of 5 million tonnes as our part in that overall calculation. I make it clear now, as I did at the 26 September meeting of summit Energy Ministers in Paris, that if in the event United Kingdom net oil exports exceeded that figure in 1985 that would be a matter solely for the United Kingdom and it would not affect the targets of other member States. We welcome the fact that the measures adopted by each member State to achieve savings in oil and their investment patterns in alternative sources will vary to suit national circumstances and demands. That is right. That is the broad pattern. We shall consider the variety of measures for the long term in document 7662/79 on energy objectives for 1990.That this House takes note of EEC Document No. 7577/79 (draft Council regulation to register crude oil or petroleum product purchases in the European Community) and updating Memorandum of 23 October covering the annex to working document No. 9508/79, and of EEC documents Nos. 5666/79 report on the energy situation, 7662/79 on energy objectives for 1990, 7721/79 and 7722/79 on energy saving, and 7855/79 report on coal consumption and policies.
The Secretary of State is forgetting an important ingredient. The targets were conditional upon the behaviour of the United States and Japan.
That is precisely the line of argument taken at the Tokyo summit. The condition was that if the United States and Japan agreed to limit their imports the European Powers would do the same. Those were the conditions made at Tokyo, although not all the Community members were represented. That was why it was possible only to make a statement of intent. However, in September in Paris and in the Energy Council meeting which preceded that, the agreement of all the EEC countries was achieved. It was agreed that the overall target should be met on condition that it was met also by the United States and Japan.
Would it not be more candid for the Secretary of State to tell the House that, as we are the only oil producer in the EEC, by limiting imports he was really committing us to a rate of depletion well above our needs? That issue bears on the exchanges which occurred earlier today That is the key to what the Government agreed. What did they get in return?
With respect to the right hon. Gentleman, who has been involved closely in these issues, there is no commitment for our depletion policy by saying that we shall so organise our affairs, our own import restraint and our production as to arrive at a surplus of 5 million tonnes. No other commitment has been made. The nation's depletion policy is left completely free for us to choose. I must disagree with the right hon. Gentleman on that matter. No commitment of that kind was made at all, and I made that absolutely clear.I turn to the 1990 aspect and the document concerned with it. The Commission's analysis of the world energy situation towards 1990 is generally consistent with our own broad view and with the International Energy Agency's assessment as well. The Commission urges intensified efforts to achieve energy savings, and suggests going for a ratio of energy demand to economic growth of 0·7 for 1990 compared with the Community's 1985 objective of a ratio of 0·8. It stresses the importance of a greater role for coal and nuclear in electricity generation so that these two primary sources together cover 70 per cent. to 75 per cent. of electricity production by 1990. The Commission expects higher oil prices in real terms in 1990 and ever higher prices thereafter, and sees continuing pressure on world oil supplies. It urges continued efforts to reduce the Community's dependence on imported energy to 50 per cent.—that, of course is the figure first mentioned at Bremen and Bonn at previous economic summits—along with efforts to diversify external supplies. The Commission was right to emphasise the uncertainties involved in any exercise of this sort. Its analysis, based on national forecasts which predicted this year's oil supply difficulties and price rises, already needs considerable updating. The accuracy of forecasts of energy demand depend critically and obviously on economic expansion in member States. The overall supply position will be affected by levels of production in Communist countries and by the ability and willingness of OPEC producers to sustain and expand oil production. Of course, the uncertainties are very great indeed and are changing almost from week to week. Obviously, forecasting is not a precise art, but this does not invalidate the need for long-term assessment of the choices available in the energy sector. That is the degree of reality that we should accept in looking at these forecasts, although it is important that we should not place a weight on them which they cannot and will not bear. In my view, it is important not to try to arrive at precise quantified targets for 10 years ahead. No one can say how events will develop. Rather, we should pursue policies that are fully adequate to the needs of the situation. This is the approach that the Government will urge in further discussion of this Commission document, and we shall play a full part in developing the Community's contribution to such policies.
Can my right hon. Friend tell us his present forecast regarding the net position of the United Kingdom around 1990? I realise that he pours a good deal of cold water on long-term forecasts, with a great deal of reason, but he told us earlier that he expected the United Kingdom to be a net exporter of oil products to the tune of 5 million tonnes a year in 1985. Does he agree with the statement quoted in the Financial Times today that by 1990 we could be net fuel importers again, with the possibility that by the year 2000 we could be importing as much as 35 million to 120 million tonnes a year of coal equivalent?
These are possible forecasts and profiles of the future in line with projections put out by my Department. But, of course, these figures depend very much on the shape of depletion policies that are adopted by the Government, especially if one talks about 1990. The Government have yet to take decisions on depletion policies. However, they are extremely important and I realise the urgency of getting on with them. To a large extent, they would affect the nature of the reply that I would be able to give my hon. Friend.
When will my right hon. Friend make a statement on depletion policy? That is crucial to this debate?
I agree that depletion policy is of vast importance, but I shall not make a statement on it now. It is crucial to the shape of this country's needs and our dependence on the outside world in the 1990s. The high aims of policy of any Government, all common sense, must be to prolong the period in which we avoid returning to dependence on insecure and politically labelled supplies of energy from outside.The report by the Commission on the Community's programme for energy saving is the third progress report on the Community's rational use of energy programme. It reviews progress in Community action since 1975 and points out that five member States, including ourselves, have implemented substantial energy conservation programmes. It highlights areas for community action in energy conservation, including realistic and consistent energy pricing, the need for an identifiable energy conservation industry, to which I attach great importance and the use of some regulations and standards to support conservation. The report sets the background for the second document—New lines of action by the European Community in the field of energy saving. It proposes new measures and contains a draft Council resolution through which these measures might be implemented. The specific proposals of the draft resolution include a commitment by member States to the adoption by 1980 of energy saving programmes with comparable effects, but it recognises that measures in member States will differ, as they clearly will and are doing. It also proposes the adoption of a Community target to reduce the ratio between economic growth and growth in energy requirement to below 0·7 by 1990 against the 0·8 target by 1985, which I mentioned earlier. That target will require great effort from some member States, but our projected ratio for 1990 is already below that proposed target figure. Thirdly, the resolution proposes discussions with the motor industry on a Community-wide system of fuel consumption targets for cars and light vans. I remind the House that in June of this year the Society of Motor Manufacturers and Traders announced a voluntary commitment to a 10 per cent. improvement in petrol consumption of new cars by 1985. We hope that any Community scheme will aim to complement commitments of that kind by the United Kingdom and other member States. Finally, the resolution proposes accelerated action in the work of those bodies concerned with agreeing international standards. There is progress in these bodies, but it is slow. It makes sense for the consumer to be fully and clearly informed on the energy consumption of appliances and we welcome any acceleration in that process. In general, both documents are helpful and, while not accepting every nuance in them, we believe that they should provide a good basis for Community discussion and continuing work on the vital question of conservation.
I refer to page 7 of the document, but the same point occurs on pages 4, 8, 9 and 11. It says:
During the progress of the Finance Bill, attempts were made with regard to such provisions as double glazing to introduce the principle of using the provisions of the finance system to encourage energy saving and energy saving industries. Bluntly, those of us who attempted to do that got a pretty bloody nose from the Treasury. Has there been any change of thought on that, and do the Government accept the general principle running through the EEC view that the finance system ought to be used to help energy saving industries?"financial incentives are required to encourage investment in energy saving in industry."
We must be careful about asking for taxpayers' or public money further to encourage industry to take steps which, in all conscience, with the rising cost of energy, it should already be moving towards. I do not rule out sensible and constructive measures to accelerate conservation methods in manufacturing industry and commerce, but I ask the hon. Member how much taxpayers' money he thinks should be diverted from other things, particularly because as the price of energy rises relaative to other commodities, the incentive of any well-run firm to adopt new techniques and new methods must be greater. I do not rule it out on principle, but before plunging into this we must ask ourselves how much money we want to divert from other areas.
Although I do not wish to be evasive, it is not up to Opposition Back Benchers to quantify such things. However, I must ask the Minister whether the Government accept the principle of financial incentives along these lines, as put forward by the Commission. The answer to that may be "No" or it may be "Yes", but we must ask whether the Secretary of State accepts the proposition under discussion on page 7.
No, not as a blanket principle for proceeding with financial incentives on a large scale. We would have to be very selective and would need to be persuaded about any particular scheme. The greater the incentive for profitable firms to reduce energy, use it more efficiently and introduce energy saving equipment in their premises, the harder it is to make the case that money should be diverted from other vital incentive schemes, particularly schemes for conservation in the domestic sector.
As my hon. Friend the Member for Midlothian (Mr. Eadie) has said, this is conservation by price.
Certainly. Any attempt at conservation without prices is a complete waste of public money and effort. The two must support each other. The Government's intervention, which is bound to be a part of the scheme, must be supported by prices. Any attempt to do otherwise would be like trying to stand a chair on two legs.Finally, I turn to the question of coal, which is covered in document 7855/79—a factual Commission report in three parts. I understand that during the debate hon. Members will wish to discuss the coal issue and it is possible that the hon. Member for Midlothian (Mr. Eadie) will concentrate on these matters when he replies for the Opposition. Therefore, there may be a number of questions on the details that I or my hon. Friend will be glad to answer. I want to set out the way in which we are attempting to take the issue of coal in the Community. We hope that we will have the agreement, support and understanding of the House in this matter. The document does three things. It sets out measures that have been taken in the Community to promote coal consumption; it sets out coal production policies of the individual member States; and it details national policies of coal imports as well as information about the world coal market. There is nothing strikingly new in this. It brings together all the existing information on Community coal policy in a single text. The report results from a request by the Energy Council made at a time when negotiations on coal proposals had been particularly bogged down, with little prospect of any conclusion and with no fresh proposals in sight. It was this atmosphere of non-progress that was very much in my mind when I felt that it was time to make a firm stand for genuine Community support for coal. Therefore, I wrote a letter to Commissioner Brunner and sent copies to other Energy Ministers within the Community setting out my views. I have arranged for a copy to be placed in the Library of the House. In my letter I explained that, while not ruling out other aspects of support for coal, the United Kingdom regarded support for investment in coal production to be of great importance and suggested a Community fund of 250 million units of account a year—about £160 million—and proposed that this be used to aid pro rata all investment in coal production by way of a grant. It has been clearly recognised by the Community and by successive Governments in this country that massive investment in coal must take place. I said in the House this afternoon that our task must be to build a new coal industry out of the old one. The National Coal Board's programme is witness to that. It is necessary if we are to have an efficient and competitive industry in future years. The industries throughout the Community need all the encouragement that they can get. If the Community is to provide aid for investment, it should be directed at all investment, irrespective of the source of funds. My hon. Friend the Under-Secretary of State will be happy to fill out the details of the project and the ways in which, with the help and advice of the House, the matter can be carried forward. Therefore, I hope that it will be understood if I do not go into further details. Time is getting on and I do not wish to take more than my fair share of the debate. I return to the question of the register on which we are moving the question of the draft regulation. The reason for calling for detailed information on a cargo-by-cargo basis is that oil markets have become fragmented and volatile. The OPEC countries have been increasingly ready to raise their prices at intervals more frequently than quarterly and to charge different prices to different customers instead of using the old general fixing pattern. There has been great concern about reports of high prices that are being paid on the spot market. My colleagues and I on the Energy Council of Ministers are satisfied that the volume moving at those high prices is extremely small. However, it is important that if the market is to work without abuse more should be known precisely about how much crude oil is moving and at what prices. That is why national Governments need cargo-by-cargo information. Other hon. Members may not recognise the fact, but I believe that better information by itself has little or no direct impact upon the international level of price. To believe that the oil register can be used as a means for holding down prices of imported oil is wishful thinking. If we or the EEC tried to prevent oil above a certain price from entering our borders, the effect would be to divert supplies elsewhere. That is not the purpose of the register. The register will be useful in providing us and our fellow members of the EEC and the International Energy Agency with the facts better to understand the pressure points in the market. We shall then be able to appreciate in a spirit of co-operation and mutual trust the difficulties that are faced by other countries. I have given an introduction to the complex documents that are before us. I realise that all the points that are made are not the simplest. If I have not given a clear exposition of them, my hon. Friend the Under-Secretary of State will seek to do so later.
On a point of order, Mr. Deputy Speaker. I apologise to the House for raising this matter, because I know that the choice of speakers rests in your hands, but in a debate of an hour and a half, is it not preposterous to have four Front Bench speakers?
That is not a matter for the Chair. [HON. MEMBERS: "It is".] Order. This is an hour and a half's debate and I hope that the speeches will be brief.
It is regrettable that when the House is debating seven documents, two or three of which are of great importance, we are confined to an hour and a half's debate. I understood that, because the Opposition had no intention of dividing, it would be possible to agree to continue the debate until a reasonable hour to provide an opportunity for many more Members to speak. However, as that it not the case, I intend to confine my remarks to a length of no more than 10 minutes. I know that my hon. Friend the Member for Midlothian (Mr. Eadie) will confine himself to a short speech at the end of the debate. Representations were made to the Leader of the House about the shortness of the debate, and it is deeply degrettable, especially in view of the fact that there is to be no Division, that the debate is not to be longer.The Secretary of State has lifted the veil a little on the Government's energy policy. In particular, he has indicated some of the commitments that have been entered into for as far ahead as 1985. The right hon. Gentleman conceded that depletion was one of the crucial issues to be discussed and decided, but he said that he was not in a position to make a commitment on depletion policy at this stage. It is therefore all the more surprising that the right hon. Gentleman felt it necessary to make a commitment on behalf of the Government to an export target figure of 5 million tonnes for 1985. I concede at once that that is a much lower figure than, on current projections, we would be tending to export in 1985 and I hope that as part of an active depletion policy we shall not allow those substantial amounts of oil to be exported. It is a matter of grave urgency that the Government should enter negotiations with the oil industry on the interpretation of what are called the Varley assurances and to try to reach an accommodation with the companies, since it is in many of the interests of many of them to retain oil in the ground. One of the dangerous policies adopted by the Government is that in their zealousness to get more exploration—which I support, because the sooner we know the exact extent of oil in the North Sea the better—we may enter commitments for production that will result in our getting the oil out too fast. The danger is that we shall have over-supply in this country in the middle 1980s and shall run into shortages later—I had thought in the early 1990s. It appeared from what the Secretary of State said that he does not deny the figures that have appeared in the Financial Times. The sooner the Government come forward with those new projections the better, because there appears to be a change from the 1976 Brown Book which projected the total amount of oil that we should expect as 3 billion to 4·5 billion tonnes. The total seems to have come down to 2·4 billion to 4·4 billion tonnes, with a probability of only 3 billion tonnes. That is a substantial reduction in the amount of oil that we thought was exploitable, and it will have serious implications for the year 2000 and even for 1990. The article in the Financial Times also casts doubt on our ability to reach 170 million tonnes of coal production by 2000 and estimates are given of 137 million to 155 million tonnes, which is also a marked fall-off. There is also a projection of a gap since indigenous production is estimated at between 390 million and 410 million tonne coal equivalents by 2000 and demand is forecast at between 445 million and 510 million tonnes. If those are the figures, the sooner they are given to the House the better. If those are the true figures, it is much more urgent to look at flattening out the curve of oil production projected from the North Sea. There can be no higher priority than stretching our self-sufficiency as far as possible into the 1990s. That means taking action now, otherwise we shall find that in 1982, 1983 and 1984 we shall have production far above internal demand. The Secretary of State was unwise to give a commitment even to 5 million tonnes as an export target figure for 1985. He made clear that there was no commitment beyond that, but he would have been wiser to confine himself to what other EEC countries committed themselves to, namely, oil import targets. The right hon. Gentleman may live to regret that commitment. I urge the Secretary of State to bring forward a depletion policy as soon as possible and to enter into negotiations. That is particularly important in light of the exchanges at Question Time today that revealed that we are flaring considerable amounts of gas in the North Sea. That has a severe impact on depletion policy. My main disappointment as regards demand is that the Secretary of State has announced no new measures to restrict demand and save energy. He has made a great deal of the need to reflect in our energy pricing structure the increase in basic oil price which may come from OPEC. No one can deny that this will be pushing up all the time. If he expects support for what are variously termed realistic energy prices, he has to face the fact that the pricing within this country must be seen to be fair. I come to the problem that is immediately upon us as a result of the suspension of the electricity discount scheme. In the Community countries, it is understood that there should be some help for those who are hardest hit. We now have a decision which replaces a scheme that helped many millions of people with a scheme that helps only 345,000 people. Over half the people shown to be at risk in the 1972 survey were not receiving supplementary benefit and most—some 58 per cent.—were under 75 years of age. The Government scheme will miss the majority of people who are known to be at risk. The figure for 1979 is probably much higher. I had hoped that the Secretary of State would propose at least a change in the home insulation grant. The maximum is still fixed at £50. This is totally inadequate if someone means to make a serious attempt to insulate a home. With all the revenues coming to the Exchequer as a result of the substantial increase in energy prices, the least we can ask is a substantial improvement in the home insulation grant. I also believe that the coverage of the grant has to be increased. One way to repair some of the damage that will be caused as a result of the decision on the electricity discount scheme would have been to introduce a 100 per cent. grant for all old-age pensioners, for all people on family income supplement, for people drawing disability pensions and those on supplementary benefit. The cost would be small, but it would help the Government's conservation policy and, at the same time, alleviate the worst hardship for the elderly. There is also a need to extend the home insulation grant scheme to those people who have installed insulation that is below the Department's considered minimum requirement. Much insulation is well below the 80 mm minimum proposed by the Department of Energy. An extension of the grant in that area could be introduced immediately. With winter approaching, it is essential to put back some of the money that is coming as a result of very high energy prices to shield those who will suffer most and to redress some of the wrong that has been done by the abolition of the electricity discount scheme. The right hon. Gentleman said nothing about the need, following the Marshall report, to examine combined heat and power. We intend to press him strongly on this matter. The report has taken a long time. It is a good report and there is now a need for a Government decision on support for some major cities that will have to be pioneers and invest in combined heat and power over two or three decades. We will strongly support a Government push on combined heat and power. We have waited far too long for it. I hope that the Under-Secretary will give some idea of Government policy on small, coal-fired power stations, which are meant to be phasing out. Refurbishment or re-planting of coal-fired power stations is an effective way of helping the power generating industry. It is also the key to a serious policy of combined heat and power. It would be an effective way of investing in coal generation in a smaller direction than the large power stations. A significant political fact is that the right hon. Gentleman has taken office at a time when there is in this country, unlike any other in the European Community, a great understanding of and public knowledge and acquiescence in the need for a nuclear power building programme. It is a precious asset which could easily be thrown away. The way in which the Government have conducted their press statements and puffs for the nuclear power industry have made me anxious that they may dissipate that public understanding. That understanding has not come easily: it has come from openness and frankness, from a recognition that there are genuine concerns about safety. A rapid expansion of the nuclear power programme, decisions about changing a nuclear reactor design, or about a fast breeder reactor, will need to be judged very carefully. I say to the Government, and particularly to the Prime Minister, that in two or three months they could wake up to find the same angry, frustrated and suspicious public attitudes to nuclear power as are found in other countries. I therefore urge them to act prudently and only after the fullest public discussion. I return finally to the subject on which we touched at Question Time today. The right hon. Gentleman spends his time talking about market prices and saying that the market should operate. If the market is operating effectively—I do not believe that that is possible in energy, which is a managed market, with cartels and considerable vested interests—he must urgently consider the fact that our petrol prices are far higher than those in the rest of the Community when one takes out tax. It is no use the right hon. Gentleman saying that tax must be considered. That is one issue, but what is unjustified is a difference of 27 per cent. on regular petrol prices between Italy and ourselves, or of 12 per cent. on average for premium grade. Someone is getting a substantial profit. In a few months there will be another OPEC oil price rise. Then there will no doubt be further demands for a further increase in petrol prices. It will be indefensible to have an increase in petrol prices while such a substantial profit margin exists on the price charged to the car driver at the pump. Wherever those profits are going—whether the oil companies or the dealers—it is the responsibility of the Secretary of State. He is arguing for market forces, so let him explain why market forces operating in this country have produced such a major distortion compared with Italy or Germany, neither of which has any controls at all. I urge him to consider this. We shall not be content to listen to the argument about market forces and realistic pricing until the Government come forward with the basic human decency of a serious policy for alleviating the effect of high oil prices on the poor, the elderly and the sick and disabled.
I regret that we do not have a Committee—perhaps a European Grand Committee—to spend more time on this important subject and that this debate is limited to one and a half hours. Time is short, and I hope that my hon. Friends will pull me down in seven or eight minutes.I attended this debate because I wanted to know the views of the incoming Government after the international discussions on energy of the past three months. I welcome the indications of a realistic pricing policy given by the Secretary of State. I have also listened with interest to the spokesman of the last Administration. But the Foreign Secretary in the previous Government seems to have donned some of the clothes of the last Secretary of State for Energy. His comments on combined heat and power and even on the nuclear programme—advising the Secretary of State not to rush—amused me, because it was a key decision by Harold Macmillan's Government 20 years ago which has given us our present excellent Magnox and AGR programme. A number of these documents were debated in Strasbourg in May, when I was the Conservative spokesman. On 26 September there was a long debate on many of the documents. Madron Seligman, the leader of the Conservative energy group, then pointed out that there were still three proposals on energy awaiting decision by the Council of Ministers—subsidies on coal stocks, finance for conversion from oil-fired to coal-fired power stations, and encouragement of intra-Community trade. I understand from my friends in the European Parliament that there looks like being some advance, but that other countries have resisted what we in this country would like to see. We have also had many debates in Strasbourg on reducing our dependence on imported oil. To what extent are all these issues the problems of individual Governments and to what extent are they the problems of the Community as a whole? In its various guidelines for 1985–90, the Community has been sensitive to the fact that it has depended on imported oil for 60 per cent. of its energy. This figure has been reduced to percentages in the fifties, and there was a target of 45 per cent., though it is not now thought possible to achieve it. When the Community is enlarged, the position will be considerably worse. The debate in Strasbourg dealt with a figure of 500 million tonnes of imported oil instead of 472 million tonnes referred to by the Secretary of State and with the resulting shortfall in the reduction of imports. My right hon. Friend the Prime Minister has emphasised that our contribution of £1,000 million to the Community budget is out of proportion, and that we want something to be done about it. This week my right hon. Friend the Minister of Agriculture, Fisheries and Food is discussing agriculture and fisheries policy and the fact that the CAP is also out of proportion. In the Community committees I tended to look at agricultural and other problems from a European point of view, but we are learning that the French, Germans and others tend to look at them from their national point of view. Those of us who met politicians from South Dakota in Westminster Hall last week found that Dakota and Wyoming think of their point of view in contrast to that of New York and the north-east of the United States. Now I want to look at the advantages and disadvantages for Britain. In food, France is in surplus. In energy, Germany may be able to contribute. France is relying on a nuclear programme. Britain has various choices—nuclear power, coal, oil and gas. If Community oil imports are to be kept down, it is necessary to take advantage of the other opportunities. North Sea oil could see us through the next 10–15 years. Once the price of gas goes up, additional exploration will be worth while, and there will be more gas available. We must be realistic. That is the one lesson that has been learnt in the United States. The right hon. Member for Bristol, South-East (Mr. Benn), who was Secretary of State for Energy, raised the whole question of depletion. But as prices rise it is worth while extending exploration and extracting from less remunerative fields. Reference has been math to forecasts in the Financial Times that we could be net importers of energy by 1990, but there are other sources. There is enough energy in wave power. Admittedly, it will cost more, but when the price of energy rises it may be more worth while to harness the wave power off the Hebrides—possibly enough to meet all this country's electricity needs. There could be one or two advantages—for example, tidal power from the Severn and elsewhere. Sir John Hill has this evening been talking to a group in the House. He states that we should carry out all the options. Should this country not be more aggressive and slightly less defensive? This country could obtain energy from all sources over the next 15 years to 25 years to export to the Community. If this country were to be a net importer, other EEC countries could be in a considerably worse position. To return to market prices, when I was in Washington last month with the Department of Energy there I met several Congressmen. Perhaps they have learnt most about the price at which gas and oil can come in from Mexico. By raising the level of prices in the United States, the United States is likely to be able to keep to the import quotas that were talked about in Tokyo. There is a shortage of energy in the USA, whether extra supplies are to come from Alaska or Mexico as a short-term policy. Already, internally, exploration in fields that were not thought worth while is becoming worth while. That is one of the hard facts of life that even the United States has had to realise. If this country thought that our problem could contribute to Europe's problem, we might be able to assist not only Europe but ourselves. For example, France has the food. It is selling to us and making it expensive for us to buy. Germany might be in a better position than Britain, but we have something that the rest of the Community wants, namely, energy. Can we harness that and develop an aggressive policy so that we can supply if others will pay the price? I suggest that this is a policy that will help Britain, and be to the advantage of the Community.
I refer to paragraph 9 in Commissioner Vouel's letter to the President of the Council in document 7662/79. It deals with nuclear power. Part of the paragraph states:
I want to consider a matter to which the Secretary of State never referred. What is the impact of his policy towards the Community's energy policy going to be in terms of nuclear power? That is of crucial importance. The Community is going flat out for nuclear power. It has used the American PWR technology. There is a massive lobby in Britain as well as in Europe in favour of the American reactor. The member States, which are nervous of their own public opinion because they do not keep the public informed and they are frightened of them, use the Commission as a shield against public criticism at home. Some member States—Denmark in particular—would not mind nuclear power provided that other countries—possibly Britain—would take their nuclear waste. Is the right hon. Gentleman's attitude to the EEC to be used as a cover for a shift to a nuclear policy? Britain was the first country to develop nuclear power. We had the gas cooled stations, Magnox and the AGRs. Indeed, we ordered two more AGRs last year. We agreed to test the PWR designs without committing ourselves to build them. It is a modest programme. There is full publication of information with full public inquiries before any decisions are taken. It enjoys the confidence of the British public. We have been able to go slow. We have not shelved decisions because we have oil, gas and coal. However, are the Government shifting to a crash nuclear problem based on the PWR, as has been widely hinted in the Press, a £10 billion programme, plus the fast breeder reactor, which would cost an additional £2 billion or £3 billion? Is the right hon. Gentleman going to say that that is required by membership of the Community? That is what the House is entitled to know. One of the tragedies about the right hon. Gentleman's Administration is that he has wound up the Energy Commission, so that we have no public debate about this energy policy. He said today that he would not issue a Green Paper but would make relevant statements at appropriate moments. It must have taken hours of work in his Department to draft that. He must face the fact—if he does not know it, everybody else knows it—that there is very heavy pressure from the Community for Britain to adopt the PWR. The EEC would like to standardise. The nuclear companies—Westinghouse, Kraftwerke Union, Babcock and GEC—have waged a long campaign to persuade the United Kingdom Government to abandon the AGR in favour of the PWR. As he no doubt knows, his own officials in the Department of Energy, as recently as last year, were unanimously in favour of cancelling the AGR and going for the PWR. So was the Central Policy Review Staff at No. 10. I put it to the right hon. Gentleman that he has an obligation to the House of Commons to defend the policy that has been adopted by successive Governments in the nuclear field. First, we have other resources to develop that will involve a great deal of investment and make a massive investment in nuclear power inappropriate. Secondly, the energy forecasts that have to be made now must take account of the downturn in economic activity; of the low-energy scenarios, now being taken very seriously; of the possibilities of conservation, by no means exhausted; and of the fact that alternative sources may not be available now. If we commit £10 billion now, when the alternative sources come along we shall not have the money to develop them when they are practicable. I say to the right hon. Gentleman—I put it at Question Time and I repeat it now—that he would be very unwise to jump over the anxieties about the safety of the PWR. As he knows very well—if he does not, his Department will tell him—Sir Alan Cottrell was the one whose anxieties prevented an earlier decision in favour of the PWR being followed. The Three Mile Island accident has never been fully reported upon, and there is no doubt that there is anxiety about the cracks in the French PWR reactors. The right hon. Gentleman said today that he could not find out about that and that it was a matter for the French. But if we are to have a full exchange in the Community about the monthly import figures of oil, he is entitled to ask the French Minister to tell him the truth about the French PWR programme. It would be lunatic for a country as small as ours to run four nuclear systems at once. The Magnox stations still have many years to run. The AGRs are still being ordered. If we then bring in PWR and add a fast breeder reactor, it will mean that a country with a necessarily small nuclear programme will be running four systems. There are unsolved problems about the disposal of the toxic wastes. I referred today—I will not go into it because other hon. Members want to speak—to the very serious leak that occurred at Windscale. The boreholes made in November and analysed in March revealed that 2,000 gallons of unconcentrated high toxic waste had leaked into the subsoil. It is the first time it has ever happened in this country. This, coupled with the silo leak, leads people to demand that before a major nuclear programme is launched there should be proper public reporting on this matter. I finish, as my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) did, by giving a solemn warning to the Secretary of State. We cannot proceed with the nuclear programme that is now the subject of his leaks and hints until we have had the full Windscale report and the Harrisburg report and until the waste disposal problem is solved. Parliament, and not the Commission or the Council, must determine our nuclear policy. We have the retreat from openness to secrecy by winding up the Energy Commission. Hon. Members may laugh, but every word of the Energy Commission's proceedings was published verbatim. Everybody knew what was the view of every ingredient in British energy policy. We cannot dismantle our safeguards or subordinate our planning inquiries to the diktats of the EEC on the speed with which nuclear power must be introduced. I reinforce what my right hon. Friend said. The nuclear industry in this country has benefited greatly from the fact that we have not tried to rush public opinion. We have been candid, open and frank, and the nuclear industry has benefited greatly from this. I believe that the Secretary of State will unleash substantial public protest, not from a minority easily to be dismissed, but from the majority of people in this country who want to be absolutely sure that in areas of high technology, such as this, democratic control remains through Parliament and is not quietly shifted away to the EEC. I hope that the right hon. Gentleman will not think me inconsistent, because in the last debate, when I held the office that he now occupies, I said:"In order to reach this 140 gigawatt target, capacity of between 60 and 80 GW will have to be installed between 1985 and 1990. This represents some twelve to fifteen plants a year. In other words, at least twelve new nuclear power stations will have to be ordered each year from 1979 onwards."
I urge the right hon. Gentleman not to allow the creeping competence of the Commission to extend into nuclear power and undo so much that has been done by so many of his predecessors over the 20 years that we have had it."What is happening is that important shifts of power are taking place from London to Brussels, from Parliament to Ministers and from Ministers to officials … Either we go for a fully federal control of our energy resources, under the Commission, or we work on the basis of co-operation between member States, each basing itself on national policies approved by the House of Commons."—[Official Report, 26 March 1979; Vol. 965, c. 174.]
It is easy to be tempted to pursue some of the hares raised by the right hon. Member for Bristol, South-East (Mr. Benn). There is only one that I would pursue shortly. The right hon. Gentleman, when in office, was perhaps candid and frank, but he took no decisions. No action resulted. Surely we come to a point in any major policy matter—and we have reached it with atomic reactors—when decisions have to be taken if that degree of nuclear energy which the right hon. Gentleman consistently said would be necessary by the end of the century is to be provided.As many other hon. Members wish to speak, I propose to ask my right hon. Friend or the Under-Secretary of State only three questions. First, I must declare an interest in this matter as a consultant to a firm of stockbrokers and as a director of an oil exploration company which, unfortunately, has no licences in the North Sea. The right hon. Member for Plymouth, Devonport (Dr. Owen) referred, as I have done in my questions, to the figures quoted in the Financial Times today. It seems that the most worrying of those figures is the downgrading of the United Kingdom's recoverable reserves from the 3 billion to 4·5 billion tonnes in the Green Paper 20 months ago to 2·4 billion to 4·4 billion tonnes now. At a time when oil prices have gone up substantially and further technical improvements have been made, we would expect to see the United Kingdom's recoverable reserves moving upwards. Therefore, it would be helpful if the Minister would tell the House as soon as possible why recoverable reserves from our portion of the North Sea appear to be moving in the opposite direction. Clearly that has a bearing on questions regarding depletion policy asked by hon. Members on both sides of the House. Secondly, the right hon. Member for Devonport referred to home insulation grants. This matter is relevant to the EEC documents. I agree that home insulation grants need to be improved in the sense of being made more rational. They were introduced by the Labour Government only 18 months ago and we can now see how they are working in practice. I should like to quote my own experience in this matter. In my fairly old house there are two lofts. I insulated one some time before the grant was available. I then applied to my local council for the grant for insulating the other loft. I was told that my application could not be accepted because I had already partially insulated the loft without going to the council for a grant. I had already spent some of my own money. Yet, when I wanted to insulate the rest of the loft, I could not apply for a grant for the balance. That is nonsense. A system which precludes anyone who has partially insulated a loft from being able to obtain the grant of £50 to complete the job must run counter to the purpose for which the grant was introduced by the Labour Government. My last question is about the spot market. The Secretary of State said that the spot market dealt only in limited quantities and that he therefore dismissed its importance, in a sense. Is there not a danger that via the spot market consumers will set the level of oil prices because the marginal amounts available on that market will be bid up? When an exporter such as Iraq sees prices in excess of 30 dollars on the spot Rotterdam market it will be tempted to raise its prices accordingly. Should not BNOC, as exporter, try to make substantial quantities available on the spot market to bring down prices on that market? We do not wish the company which is bidding for small amounts to bid up oil prices to the detriment of average consumers of electricity and gas.
The energy crisis in the Western world is worse than has been suggested in tonight's debate. Unfortunately, most of my constituents tend to think that if, when they draw into the petrol station there is petrol in the tanks, there is no energy crisis and that when there is no petrol there is a crisis. The problem is not as simple as that.I hope that the Saudi Arabian Government do not take note of what the right hon. Member for Plymouth, Devonport (Dr. Owen) said about internal depletion programmes. If they did the whole of the West's economy would collapse. The 1929 economic collapse would be nothing in comparison. The whole of Europe is playing around with creating a conservation society. We must produce such a society quickly. The issue involves far more than insulating lofts and draught-proofing windows, although we could be more enthusiastic about that. We must change the whole style of our lives. People talk of the miles per gallon consumed by their motor cars when it costs as much fuel to make a motor car as a car uses throughout its life. We must make motor cars last longer. Much effort is spent on collecting bottles. I applaud the voluntary spirit involved, but it is crazy to smash up collected bottles and melt them down in order to make new ones. The beaches in Cornwall can supply the rest of the world with enough silicon to manufacture glass bottles for as long as one cares to imagine. I am an opponent of nuclear power and have expressed my view in the House on several occasions. Only two events could persuade Britain to join the rest of the world in its opposition to nuclear power. The first is an internal accident. Let us hope that does not occur. There is no reason why it should not happen here since it has happened elsewhere. Let us hope that the brilliant safety record of the British nuclear industry is maintained. The second possibility is a sudden panic programme massively to increase our nuclear programme. The Government who do that will not know what has hit them. The protest movement which is now only smouldering will fire into flame. We must stop building giant power stations. We must build small power stations nearer our towns and communities so that we can use their waste heat. It is the 60 per cent. waste heat from power stations that we must utilise, and we can do so only if the power stations are put near towns. No one in his right mind would build a nuclear power station near to a town. Therefore, we must build much smaller coal-fired stations near to the towns.
I fail to understand the argument put forward by the hon. Member for Truro (Mr. Penhaligon) and, indeed, the argument of the former Secretary of State, the right hon. Member for Bristol, South-East (Mr. Benn). The nearest French nuclear power station will be at Dunkirk. If the French go ahead with their facilities, if there is any insecurity it will extend to the United Kingdom. What both hon. Members have failed to recognise is that most nuclear stations throughout the world—BWR or PWR—have been a great success. Indeed, such is the nuclear inspectorate of the United Kingdom that we have not experienced a death yet, although the death record in the mines has been very considerable indeed.I should point out to the right hon. Member for Bristol, South-East that in 1978 the net installed nuclear capacity in France and the United Kingdom was virtually even pegging. If one takes the 1985 projections for gigawatts, one will see that it is 9 for the United Kingdom and 42·3 for France. In 1990, it is 13 for the United Kingdom and 65·3 for France. If one follows the sequence of this argument, one must recognise that, if nuclear power is cheaper to produce than coal-fired or oil-fired power, there will be considerable economic benefit to the French in future years. This may have some bearing on the argument that if we are conscientious in looking after the interests of the United Kingdom people, and if we want to maintain their standard of living, we must adhere to a policy that is one of the only routes out. One of my hon. Friends referred to the possibility of wave power. There are too many technical problems there for it to make any large contribution by the end of the century. Therefore, we must turn either to nuclear power or to coal. On coal, it will be very difficult to work any arrangement with Europe. If the Minister is prepared to say that United Kingdom coal is competitive with that of Europe, we might have a good export trade. However, if one looks at coking coal one will find that in Australia the price is £27 to £32 per tonne, compared with a National Coal Board price of £37·50 per tonne. Obviously, the NCB has outpriced itself in Europe. Therefore, it is unlikely that the French or Italians will be prepared to accept any arrangement. Will the French accept British coal if they can import it more cheaply from the United States, Australia or South Africa? I should like to make one final point about the registration of oil purchases. Document No. 7577/79 states that:
Will my right hon. Friend maintain the participation arrangements? If oil companies are precluded from securing from BNOC what they regard as their entitlements from their own oil, they are forced on to the spot market to obtain oil at the prevailing price. On the other hand, Iran is placing most of its oil on the spot markets and Dubai and Libya half their oil supplies. If one is to have a register that is compulsory in EEC States, all that one will secure is a tabulation of the number of deals that are transacted. It is not the oil companies which are responsible for the high prices. It is the Arab States and the other members of OPEC. Therefore, I should like my right hon. Friend to explain in some detail, perhaps on a later occasion, what will be to the benefit of the United Kingdom."Governments should give strong guidace to oil companies not to buy oil on spot markets at excessive prices".
At Question Time today I asked the Secretary of State if he would prepare a White or Green Paper—I do not mind the colour of the cover—setting out the Government's energy policy. He replied that if I was asking for a whole series of growth target figures he was not in favour. However, that was not what was in my mind.As I tried to make clear to the previous Administration, the Department of Energy is not doing its job effectively in my view unless it defines its pricing policy. Its central task is to decide on a rational pricing policy for one fuel relative 10 another. I admired much of the work done by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) when he was Secretary of State for Energy, but the greatest failure of his time was not developing a sensible pricing policy. I say to the new Secretary of State that this country will fail in energy efficiency unless it has such a relative pricing policy for fuels. In the past three or four years natural gas has been allowed into the country in vast quantities and much too cheaply, and that has to a great extent wrecked the electricity supply industry's market. It has left that vital industry with a large capital investment that is eating its head off in interest charges and with much surplus capacity. Gas has moved into the domestic market with such success that we cannot now supply our industrial consumers with the gas that they require. If we are to talk realistically to Europe on these energy matters, we must put our own house in order on pricing at home.
On a point of order, Mr. Deputy Speaker. Standing Order 3(b) states:
May I ask you to reflect, Mr. Deputy Speaker, on whether this is an occasion for the use of Standing Order 3?"Provided that, if Mr. Speaker shall be of opinion that, because of the importance of the subject matter of the motion, the time for debate has not been adequate, he shall, instead of putting the question as aforesaid, interrupt the business, and the debate shall stand adjourned till the next sitting (other than a Friday)".
If it is of any comfort to the hon. Member, I have the document and I have been reflecting. We must continue with the debate.
Some of the interesting facts on coal that emerge from these documents should be clearly spelt out. We give less aid per tonne to our coal industry than any other EEC country, our investment in coal is the highest in the EEC and our indigenous coal is the cheapest in the EEC.Attempts have been made to denigrate our coal industry, and that is an old-fashioned pastime. At Question Time today the lifespan of coal was given as a thousand years and doubt was expressed about that period. However, it is more like 1,500 years. The figure of 300 years is based on existing production and mining technology, but when that technology improves the period will be extended to 1,500 years—[SEVERAL HON. MEMBERS: "Speak up."] The attitude to coal that I am speaking of is typified by the interruptions during this serious discussion. The National Coal Board has forward plans to develop coal for 50 years, and no other energy industry in the United Kingdom or the EEC has such plans. The Secretary of State for Energy said that the long-term future of this country and of Europe was dependent on coal. If he pursues the logic of that policy he should call in the National Coal Board and all the scientists and technologists and tell them to accelerate the technology of electrofraction of coal. Indeed, we should have that sort of situation now. We should not wait until our oil runs out. We should have joint processing between oil and coal in this country, in order to give some assurance to our people. In the course of his remarks the Secretary of State said that he had put forward a plan to other Energy Ministers in a letter. In this he had suggested £160 million grant aid for coal within the EEC. We are entitled to question, or at least scrutinise, that position. We must be realistic. Within the EEC at present there are only two countries with a coal industry of any size—the United Kingdom and West Germany. If such a policy as he suggested were approved, the bulk of the moneys would go to the United Kingdom and West Germany. It is not surprising that his proposal met with immediate objections from a number of countries, notably France. That is not remarkable since France has decided to pursue a policy of nuclear power, which means that that country is contracting its coal industry. Italy, Denmark and the Netherlands were also less than enthusiastic. The whole matter has now been referred to a working party. We must understand that schemes to get European finance into coal are not new. All the schemes drawn up and laid before the Council of Ministers have always ended up with little benefit to us. For example, one scheme dreamed up in 1978 resulted in this country discovering that it would be cheaper to finance its own coal industry and our own coal-burning power stations rather than take up the EEC plans. We know that Brussels works on the wheeling and dealing principle, masked by the jargon "You give a little and we will give a little". The EEC has become better known for its optimistic forecasts about how we should expand and develop coal production. But the enthusiasm wavers after each oil crisis. The reality is that in Europe at present there is a shift towards nuclear power. The vast capital sums involved make it difficult to move in this direction. I hope that our Energy Minister will not finance nuclear power in Europe under the smokescreen of some help for our own coal industry. My hon. Friends and I shall watch this working party very carefully. We shall also watch carefully the attitude of the Secretary of State, especially as he announced today that he was likely to be at an Energy Ministers conference in December.
On a point of order, Mr. Deputy Speaker. You quite properly rejected the point of order raised by my hon. Friend the Member for West Lothian (Mr. Dalyell). Mine is a different, but related, point of order. In view of the fact that the Minister will be conscious of the tremendous demands upon time, and conscious of the fact that his right hon. Friend took more than one-third of the debate in opening it, it would be reasonable for you to advise him on the steps he should take in order to remedy this outrageous and unsatisfactory position.
The best way to remedy the position is to let the Minister start his speech.
I should like to apologise through you, Mr. Deputy Speaker, to those hon. Members whose points I cannot pick up. Like the hon. Member for Midlothian (Mr. Eadie) I recognise the crucial and keen importance of one of our prime national assets—coal. It would be retrogressive of me not to look at the issue and to try to answer in the five brief minutes remaining to me one or two points on the subject.I shall take up one point only from the remarks of the right hon. Member for Bristol, South-East (Mr. Benn). It is pure fantasy to believe that this Government would have a nuclear programme imposed on them by the Community or any Commission, in Whitehall or elsewhere. The Government's policy on the matter will be presented to this House. The hon. Member for Midlothian recognised the difficulties that had arisen over the years within the Community when an attempt had been made to start initiatives on the matter. Although there is recognition of the need for an enhanced role for coal, all four key initiatives that have been proposed by the Commission to the Council over the past few years have been of modest if negligible importance to our nation's coal industry. Few offered potential enhancement. The potential aid for excess stocks was clearly of little importtance with stocks now declining. There was a proposed scheme for aid for the construction of new coal-fired power stations. Within the United Kingdom only Drax B was likely to have qualified for aid under that scheme. The aid for intra-Community trade in power station coal was of no benefit to us because we no longer have sufficient coal for increased exports. If we did we would not have the sort of subsidy structure that would be viable for our domestic coal industry. The final proposal that the Community spent time considering over the last two years was the increased aid proposal for intra-Community trade in coking coal. The hon. Member for Midlothian quite legitimately examined the new initiative proposed by the Secretary of State. That initiative should be put within the context of the recognition that the Community has given to the need for an enhanced role for coal. If we look back over the last four or five years we can see that the Community has increased its coal consumption between 1974 and 1978 by about 28 per cent., while the consumption of oil in the Community has decreased by about 5 per cent. Not only that, but if we look further forward and try to think in terms of a longer-term energy policy within the Community, we can see that, although the Community today consumes about 280 million tons of coal, of that amount 46 million tons is imported. I do not have the time to go into the details. Clearly, if we look forward to the end of the century we see that the figures might be somewhere in the neighbourhood of 20 million to 300 million tons being imported into the Community. We have to get to grips with the problem. Past Commission proposals have touched at the periphery of the problem only. To that extent, it seemed crucial for the Secretary of State to attempt to aim for the much more essential—how we seek to aid and increase production. We are not now talking in terms of excess stocks. The Commission recently produced a discussion paper, prior to my right hon. Friend's proposal. My right hon. Friend made the proposal in the letter which has been referred to already. That was presented at the meeting of the Community on 9 October.
On a point of order, Mr. Deputy Speaker. May we ask whether you have come to a conclusion on Standing Order No. 3(b).
In a moment, perhaps, I will announce my conclusion.
The crucial new initiative that my right hon. Friend introduced was aimed at the heart and not at the periphery of the problem—to try to move, through growing coal production, towards a Community that is self-sufficient in indigenous energy. That has the interests of the country and the great—potentially great—coal industry at heart. On that basis, I commend these documents to the House.
The Question is as on the Order Paper—
On a point of order, Mr. Deputy Speaker. Are you intending to rule on the point of order raised by my hon. Friend the Member for West Lothian (Mr. Dalyell)? May I put it to you that is is quite exceptional to have so many hon. Members, on both sides of the House, present throughout the debate? They have come here because of the importance of the subject and because of the quality of the debate. I hope that it will be possible to use Standing Orders in a constructive way.
Under the Standing Order, unless I have exercised my discretion, which I have not, I am bound to put the Question.
Question put and agreed to.
That this House takes note of EEC Document No. 7577/79 (draft Council regulation to register crude oil or petroleum product purchases in the European Community) and updating Memorandum of 23rd October covering the annex to working document No. 9508/79, and of EEC documents Nos. 5666/79 report on the energy situation, 7662/79 on energy objectives for 1990, 7721/79 and 7722/79 on energy saving, and 7855/79 report on coal consumption and policies.