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Volume 21: debated on Monday 5 April 1982

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Standing Charges


asked the Secretary of State for Energy if he is ready to announce the results of his discussions on standing charges; and if he will make a statement


asked the Secretary of State for Energy whether, in his review of standing charges for gas and electricity supplies, he has made any assessment of the fairness of the criteria used to determine such charges

My hon. Friend the Member for Braintree (Mr. Newton) and I are still considering the matter, and the point raised by my hon. Friend the Member for Chipping Barnet (Mr. Chapman) is one of the matters that we have very much in mind. I am having discussions with gas and electricity supply industries, whose sole responsibility it is to fix the level of standing charges. A statement will be made as soon as possible.

I appreciate that my hon. Friend has an indirect role in this matter, but does he accept that standing charges are widely, misunderstood, especially by the elderly, who find it difficult to cope with them? Is there some means which be could press by which standing charges can be consolidated into overall charges so that consumers pay only for what they use? Will he consider removing standing charges when the cost of the energy consumed is less than the standing charge?

I am grateful for my hon. Friend's recognition that the extent of charges is a matter for the industries concerned. We are once again examining the rationale behind standing charges. When an examination was carried out in 1976, it was concluded that standing charges were appropriate. The tariff basis for the gas industry was approved as recently as 1979 in the Price Commission investigation.

I am grateful to my hon. Friend for what I consider to be a most helpful and encouraging reply. While I appreciate that the cost of the standing charge is based on the cost of bringing the energy from its source of supply to the consumer, including the provision and maintenance of supply pipes, will he nevertheless keep in mind, when decisions are being taken, that it seems unfair that the consumer must pay the standing charge when it becomes a substantial proportion of the total bill? Does he agree that in equity there should be some arrangement whereby standing charges are either reduced or transferred to the cost per unit of the energy concerned?

I am grateful to my hon. Friend for raising that point. I am well aware of the type of case to which he refers. If the object of the exercise is, as it was for our predecessors, to find a way of helping poor consumers, the problem is that poor consumers are not necessarily the smaller ones. Any removal of standing charges for one group could only lead to material increases in unit charges for others. That could make the position of some poor consumers worse than it is now.

Is the hon. Gentleman aware that standing charges are not only a substantial part of energy bills, as the hon. Member of Ealing, North (Mr. Greenway) said, but that in many cases they are higher than the cost of consumption? Is he further aware that that is what old-age pensioners and people living on their own resent? Will he take the point made by his hon. Friend the Member for Ealing, North, that some way should be found to sink that cost in the overall cost of energy?

I had hoped that I had made the point clear. We are examining the matter. I am anxious not to raise hopes. It is only fair to say that when an exhaustive investigation was undertaken some years ago, it foundered on the difficulty of finding any form of tariff structure that would help all poor consumers. Not all poor consumers are necessarily small ones. That difficulty stands in the way of assisting people by merely removing standing charges, as standing charges are worth some £500 million in revenue to each supply industry and that money would have to be found in some other way.

Will my right hon. Friend bear two matters in mind? First, will he bear in mind that in the 1976 inquiry the percentage of the bill represented by the standing charge was frequently nothing like so great as it is now and that standing charges have risen considerably in the past six years? Secondly, although one may not be able to help all poor people, will he bear in mind that those with small gas or electricity bills who are trying to keep their costs down are usually the poorest section of society and that it would be better to help some people than to help no one?

I certainly take my hon. Friend's point about the level of standing charges, but both industries have been seeking to make standing charges more truly reflect the underlying costs that they are supposed to represent. My hon. Friend will also be aware that in the past there was a low standing charge with a higher price for the first 52 therms. That has now gone and has been replaced by a higher standing charge.

Is the Minister aware that, in the past two years, the charges have risen by between 300 per cent. and 400 per cent. and that the increase is greatly resented, particularly by pensioners and others on low income? Is he aware that pensioners lobbied certain hon. Members only last week—and pensioners are certainly low paid—asking for a withdrawal of the charges?

I know that the hon. Member wishes to be fair. He will therefore bear in mind the point that I made in answer to my hon. Friend the Member for Honiton (Sir Peter Emery). It is a distortion to refer to increases of 300 per cent. in gas standing charges, because the higher charge for the first 52 therms has now been abolished. Had that system been in place in 1979, the gas standing charge in money terms would have been £6·37 per quarter.

I had a most constructive meeting at the Department with the pensioners' group that organised the petition. I assure the hon. Gentleman that all these matters are being looked into with great care. As I said last time, however, I do not wish the Opposition to go away with the idea that it will be much easier for us to resolve the matter than it was when they were in Government.

Will my right hoh. Friend look again at the percentage increase in standing charges for gas? Does he agree that British Gas is now using this as a disguised form of tariff, which is bearing most unfairly on some small consumers who are genuinelly trying to economise?

I have met the deputy chairmen of both supply industries to discuss these matters. We are concerned to ensure that the charges truly reflect the proper costs to the industry and are in no way a cover for inefficiency, but it appears that the accounting basis for the standing charges is accurate and truly reflects the costs that it is supposed to represent.

As has been made clear by the exchanges today, there is now a widespread demand in all parts of the House for a genuine and radical review, and not just the promise of a half review. Can the Minister tell us the time scale of the review that he and his colleagues are undertaking and when we may expect the result?

The last review, which was very thorough, took the best part of a year. Clearly we wish to take a great deal less time than that. Nevertheless, this involves looking again at the considerable amount of work that was done in 1976. It also involves consultation with the industries and with my hon. Friend at the Department of Health and Social Security. I can only tell the House that these matters are being considered properly and seriously. As soon as we are in a position to make an announcement, one will be made.

Coal Industry (Productivity)


asked the Secretary of State for Energy when he next proposes to meet the chairman of the National Coal Board to discuss productivity in the coal industry.

My right hon. Friend meets the chairman of the board frequently to discuss this and other aspects of the board's business.

When the Minister next meets the chairman, will he congratulate the miners on the increase in productivity, not least on the 6 per cent. increase at the coalface in the past year? In view of the stocks that have arisen as a result of the increase in productivity, will he impress upon the chairman of the NCB that for that reason there should not be pit closures?

Secondly, will the Government do more than they are doing at present to increase the use of coal in industry, as their present efforts can only be described as feeble?

The hon. Gentleman is right to congratulate the miners on the overall increase in productivity of 3·4 per cent. output per man shift. It would be wrong, however, to encourage people to believe the simplistic notion that that is the only reason for the increase in stocks, which relates to the long-term supply and demand position. I am sure that, on reflection, the hon. Gentleman will wish to congratulate the Government on the improvement in the coal boiler conversion scheme announced in the Budget. I am sure that he appreciates the Government's attempts to produce real increases in the use of coal.

Will my hon. Friend confirm that if production is running well ahead of demand, there will have to be cutbacks in uneconomic pits?

My hon. Friend draws attention to the undeniable problem facing the industry and all who support its long-term needs—namely, over-supply relative to current demand. It is no use ignoring that aspect. All who wish the industry well in future must recognise that basic difficulty.

While congratulating the miners on the increase in productivity, may I ask whether the Minister accepts that the best way to increase productivity in the longer term is to sink new, modern pits which are up-to-date in every sense? In that respect, will he take what steps he can to speed up development in areas such as Cannock Chase, where there is the possibility of further coal development?

The hon. Gentleman is assiduous in pursuing his constituency interest in this matter, but I am sure that he and all who are interested in the future of coal will understand the dilemma that we face. We have to develop new economic capacity while recognising the problems of closing uneconomic capacity.

Does my hon. Friend accept the "Plan for Coal" production targets of 135 million tonnes and 170 million tonnes by the end of the century in the light of what has been said about the declining market and increasing subsidies from the State?

We and the industry are concerned to provide coal at competitive prices to meet the needs of the market place. I imagine that that will allow the industry to sell more coal to that market, but it must be competitive and offer security of supply.

How can the Government have any credible conversations or discussions with the NCB about productivity when their own policies are responsible for delaying replacement coal production capacity? Does the Minister recognise that that is the true meaning of the situation in the Vale of Belvoir and the comments of my hon. Friend the Member for Cannock (Mr. Roberts)? Will the hon. Gentleman give a categorical assurance that in the Vale of Belvoir, for example, the pits will be sunk in the lifetime of this Government?

Quite the reverse of what the hon. Gentleman says has actually occurred. The Government have made it clear that the North-East Leicestershire prospect will be developed in an environmentally acceptable manner. That combination of policies will suit not just the coal industry but the wider interests that the Government have to bear in mind

Gas Prices


asked the Secretary of State for Energy how domestic gas prices currently compare with those in European Economic Community member States.


asked the Secretary of State for Energy how prices for domestic gas paid by consumers in France and Germany compare with prices in Great Britain.

Making adjustments for the change in exchange rates since the latest available information was given to my hon. Friend in answer to his similar question in February, prices in France and Germany are typically about 100 per cent. and 70 per cent. higher than in the United Kingdom.

Does my hon. Friend's reply mean that, when taking British pay and pension levels into account, the British domestic gas consumer is now paying a more realistic price, which his European counterparts have always had to pay, and that it was grossly irresponsible of the Labour Government to force British Gas to sell at a loss?

My hon. Friend is right in the sense that the price is more realistic, but it is only right to point out to people in the United Kingdom that the relative price change between domestic and industrial prices on the Continent still shows a far wider disparity than in Britain.

As there is a very large lobby outside the House, and quite a strong lobby within it, for the export of British gas to Europe and therefore the establishment of a European price for domestic gas, are not the increases that the hon. Gentleman mentioned what the British domestic consumer could expect if such a lobby were successful?

First, it would be better if the hon. Gentleman recognised that we are still not self-sufficient in gas. We import more than 23 per cent. of our gas from across the median line. He should also understand the nature of competition in producing new supplies. Competition always offers the consumer a better deal than monopoly pricing of supplies.

Cross-Channel Energy Links


asked the Secretary of State for Energy what progress has been made in developing cross-Channel energy links; and if he will make a statement.

The CEGB has signed agreements with Electricité de France, approved by both Governments, to install cables of 2,000 MW capacity, which will allow electricity to be transmitted in both directions. A hydrosearch survey of the route is presently being undertaken, and it is expected that the link will be fully operational by 1985.

Does not the Minister accept that this news will be widely welcomed in the coal industry, where this is regarded as a method of exporting coal-generated electricity? When this project is considered, will the Minister assure the House that the Government will not shut their eyes to possible further developments of this kind between ourselves and the Continent?

We would not want to shut our eyes to further developments, although this was the most promising. The hon. Gentleman is right to welcome it. It will be of benefit to both France and Britain, and it means that for about a quarter of the cost of building a 2,000 MW power station in Britain, we have the advantage of being able to tap in to the French electricity system at the peak as, indeed, France can also do with British electricity when its marginal rates are high.

Has my hon. Friend noticed the support coming from the Opposition for a gas pipeline between England and the Continent? Will he confirm that the Government will not stand in the way of any such pipeline?

As I think my hon. Friend knows, the problem in Britain at present is not that we have so much gas that we need to consider exporting it, but that we do not have enough to meet home demand. Our present concern is to liberate the gas market so that proper home demand, particularly from industry, can be met.

When does the Minister expect the United Kingdom to be self-sufficient in gas? Will he assure the House that, unless and until we are self-sufficient, there will be no probability or possibility of exporting gas to anywhere on the Continent?

It is the Government's wish—as the hon. Gentleman knows, having served on the Oil and Gas (Enterprise) Bill Committee—that the liberation of the market that will take place when that measure becomes law will lead to an increased incentive to bring the gas cut of the North Sea to satisfy British demands. I again reiterate that our concern is with unsatisfied British demand, and at this stage we are not contemplating exports.

Does my hon. Friend accept that, while at present we are not self-sufficient in gas, there is every possibility that we could acquire from other sectors of the North Sea—for example, the Norwegians—future gas supplies that would make a cross-Channel link extremely valuable for the re-export of gas?

I am grateful to my hon. Friend for raising that matter. The House should know that we have told the Norwegians that we are willing to consider projects for the transmission of Norwegian gas through Britain for onward sale to the Continent.

Coal Industry (Discussions)


asked the Secretary of State for Energy, if he will arrange a meeting with the new chairman of the National Coal Board and the new president of the National Union of Mineworkers to discuss the future of the coal industry.

While it would be premature to talk about the new chairman of the National Coal Board, I shall be meeting the new president of the National Union of Mineworkers later this month. Meanwhile, I am sure the whole House will join me in wishing Mr. Gormley well in his retirement, which starts today, and in paying tribute to his able and effective leadership of the NUM for the past 11 years. The coal industry and its prospects have undergone major changes while he has been president of the NUM, and I am sure the whole industry and, indeed, the whole House recognise the important role he has played.

I am sure that the House sends its good wishes to Joe Gormley and Derek Ezra. When will there be a Government statement about the appointment of the new chairman? Will the right hon. Gentleman consider calling the board and the union together to try to reach tripartite agreement for the future so that this successful, publicly owned industry can continue the level of production and productivity that it has enjoyed in the past, due to the investment of the Labour Government, which has been continued by this Government?

This Government have made available more substantial funds to the coal board for investment, and it is our intention that the coal industry, provided it plays its part, should be a success as, indeed, it can. An announcement about the new chairman of the NCB will be made in due course.

When my right hon. Friend meets the new president of the NUM, will he remind him of the sterling work done by Mr. Joe Gormley and point out that, if the new president looks after the interests of the mineworkers as well and stops playing politics, that will be to the benefit of both the mineworkers and the country?

I believe that the new president of the NUM has already received certain advice from his predecessor, upon which I do not think I could improve.

When the right hon. Gentleman meets the new president of the NUM, Mr. Arthur Scargill—as I have already said, he is a grand lad—will he bear in mind that he was president of the Yorkshire area for 10 years and never had a strike in that area? Will he discuss both productivity and production? It is no good having productivity if we decrease production. We are discussing both an increase in production and productivity, which in turn will mean an increase in sales. Will the right hon. Gentleman assure the new president and chairman that the Government will consider other aspects of selling coal, both in this country and outside? For example, many schools could now change from gas to coal, but they do not seem to be able to. Equally, many clubs, such as working men's clubs, could change to coal, and the coal board could sell a vast amount of coal as a result. Will the right hon. Gentleman look into that possibility?

The chairman of the coal board is well aware of the various different avenues for coal sales and is already exploring them actively, both in this country and overseas, where exports have risen substantially. As my hon. Friend the Under-Secretary has already said, while the possibilites in this regard have improved as a result of the improved coal-fired boiler conversion scheme in this year's Budget, nevertheless the paramount need for the industry to become competitve remains.

When the Secretary of State meets the next chairman of the coal board, will he persuade him to get rid of the board's assets in the private sector, especially those firms not engaged in mining activities that are competing unfairly with private businesses?

I believe that my hon. Friend recently raised this matter in an Adjournment debate, to which the Under-Secretary replied. I have nothing to add to what he said then.

Does the right hon. Gentleman accept that the president of the NUM does not need any advice from the Tory Governmet—the sworn opponent of the miners and, indeed, of all workers? If the Secretary of State is so anxious about maintaining a future coal mining industry, why is he so anxious to pour millions of pounds into the nuclear power industry and to go ahead with the PWR system? Why does he not abandon that, put the money into the coal industry and use our indigenous coal reserves rather than attacking the coal industry through the nuclear power industry?

Like their predecessors, this Government believe that our interests will be served both by a strong and competitve coal industry and an increasing share of electricity generation supplied by nuclear power, which is cheaper than any other form of power with the exception of hydro-power, which is limited. However, the hon. Gentleman's cheap jibes reflect more on him than on the matters that we are discussing.

Does the right hon, Gentleman not agree that it would be better for all concerned if a successor to Sir Derek Ezra were announced rapidly? Can the Secretary of State assure the Opposition that the new successor will not be a Tory Party political appointment?

I am grateful to the hon. Gentleman for his advice, which, of course, I shall bear in mind.

Household Costs


asked the Secretary of State for Energy if he will compare the percentage of household costs for a couple on retirement pension with gas as a sole means of energy (a) at the present time and (b) 10 years previously.

For a married couple whose only source of income is the flat rate retirement pension, the cost of enough gas for a cooker and main living room fire—280 therms—has fallen from as much as 8 per cent. of household costs in 1972 to just under 5 per cent. of household costs today.

Does my hon. Friend agree with me that this is very good news and not the sort of news that Labour Members are inclined to let people realise? Will he further say that the Government's policy to free the monopoly in the provision and supply of gas will probably lead to even further reductions in the real costs of pensioners in heating and looking after their houses?

My hon. Friend is entirely right. It is new competition that produces new supply, and competition is always better for the consumer.

Combined Heat And Power (Report)


asked the Secretary of State for Energy when he intends to respond to the Atkins committee report on combined heat and power.

We expect to receive this report later this month and we shall then consult widely among interested parties.

Does my hon. Friend recognise that combined heat and power district heating can develop only if it offers heat at a competitive and attractive price to the consumer, as happens on the Continent, and that this can happen only if the electricity produced by combined heat and power is sold at a fair price and bought at a fair price by the electricity industry? What criteria are the Atkins committee using in considering the cost-effectiveness of a large city scheme on the basis of the price that the nationalised monopoly will pay for the electricity?

I pay tribute to my hon. Friend's enthusiasm for combined heat and power and his expertise on it, which has been most useful and which will be even more useful when we receive the report. The question at issue is not whether combined heat and power district heating schemes can save energy, but whether they can do so economically. I cannot comment on these matters now, for obvious reasons. As my hon. Friend knows, we do not have the report. However, we shall study it and welcome his suggestions at the right time.

Is the Minister aware that, according to a reply given to me by his Department, power stations disperse the equivalent of 67 million tonnes of coal per year in waste heat? Surely this indicates that there should be a far greater sense of urgency in developing combined heat and power schemes.

We are following the recommendations of the Marshall report in setting up the Atkins committee. When we receive the report we shall examine it and act upon it as quickly as circumstances allow. I take the hon. Gentleman's point about electricity generation. However, he will know that it has been the policy of the electricity supply industry and of successive Governments to locate the large 2,000 mw power stations away from centres of population, for sound environmental reasons. These power stations are not the ideal accompaniment to civilised home life. The fact that the power stations do not have a district nearby to heat poses certain problems in making all our electricity generation available for district heating schemes.

I claim no responsibility for the report. Is my hon. Friend satisfied that the lead city concept is still valid?

That concept is at the heart of our considerations. The Marshall report made it clear that 80 per cent. of the potential heat load from a CHP district heating scheme would be in the five major conurbations. We await with interest the report on the nine cities. We shall have to see whether the report recommends further studies.

Is it not already clear that CHP will be more efficient than the present system, will save scarce fuel resources and will provide additional employment opportunities for the 3 million who are unemployed? Would it not be better if the Government were to reexamine their nuclear power programme with a view to building smaller power stations of about 200 mw in various areas, combined with heat systems? Would not that be the best route forward?

I am sure that the hon. Gentleman will not underestimate the good work that the Atkins committee is doing. He knows that the Select Committee on which he serves was able to visit the Atkins committee while it was at work—I do not think that he was able to go—and was left in no doubt about the good and solid work that it is doing. Without that sort of advice it would not be possible for the Government to go ahead sensibly. Everything that I have said, and everything that has been said to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), indicates that within the Department there is a great deal of interest in the possibilities of CHP. The central issue is whether we can make use of existing power stations in urban areas or whether it will be of the essence of the scheme to build new small power stations economically in such areas. We cannot pass judgment on that issue until we have the report to hand.

When does the Minister think that we might see the first district combined heat and power scheme in operation? Will it be this side of 1990?

The time scale will not be a short one. No one should underestimate the problems that are involved. First, there will be a need to re-equip power stations and, secondly, it will be necessary to establish tine infrastructure. We shall have to grapple with major issues, including the choice that will be presented to the public in certain areas, of accepting the district heating scheme or opting not to do so. These are difficulties that will have to be faced. The Marshall inquiry was dealing with the year 2000 and it calculated that we could save 5 per cent. to 10 per cent. of primary fuel consumption if the economics were right. In looking towards that time scale it is difficult to see a scheme coming into play much before the 1990s.

Industrial Gas Prices


asked the Secretary of State for Energy by how much he expects the price of industrial gas to increase in 1983.

The price of industrial gas in 1983 will be influenced by the British Gas financial target and prevailing market conditions. The November NEDC report showed clearly that the majority of industrial gas consumers in the United Kingdom enjoyed prices that were at or below those paid by their European competitors. Following the action announced in the Budget to freeze industrial gas prices for the rest of this year, I have no reason to believe that United Kingdom prices will not remain competitive in 1983.

May I congratulate my hon. Friend on the help that is being given to British industry through the freezing of gas prices this year? Does he accept that this will give a welcome boost to jobs as our industry will have a competitive edge over our Continental rivals' prices? Will he confirm that, apart from basic cost increases, there will be no general increase in gas prices over the next few years?

It is difficult for me to prejudge the future. Suffice it to say that this area of activity is profitable. In such a profitable area one sees no reason for any radical change in pricing policies.

Will the Minister take into account the fact that some industries have great difficulty in converting from the use of coal? Does he realise that the glass industry is finding it difficult to use oil because of the huge costs involved and would like to transfer to gas if the Government offered it a grant? Will the Government consider doing that? Instead of reducing the price of oil from $34 a barrel to $31 should we not continue to sell at $34 so that we can help industries that are present unable to use coal efficiently?

I am sure that the hon. Gentleman will be pleased to know that his advice, and that of others, was taken into account by the Chancellor and that we have added to the oil boiler conversion scheme those who are converting from gas to coal.

Will my hon. Friend either confirm or deny that the recent increase in domestic gas prices now means that British Gas will make a small profit in the domestic sector while its vast profits will come from industry?

After this year's increases we expect to see a return to profit in the domestic sector. The profits are not excessive. We are talking about a post tax profit of £156 million, which is a 1·6 per cent. return, in the current financial year. That will come from the industrial and commercial sector.

Is the Minister aware that the Confederation of British Industry in the Northern region is publishing a report that proves that the majority of manufacturers are having to cut their prices to retain their markets? How does he expect those same manufacturers to manage in 1983 when it is obviously the Government's policy to increase energy charges?

It is the height of cheek and absurdity for Labour Members to make such absurd comments. Industrial gas prices are about 24½ per cent. cheaper than they would have been if the policies of the Labour Government had been followed. This has been achieved by the Government's actions.

When does my hon. Friend expect private supplies of gas to be available to industry? Does he imagine that the price of this gas will be higher or lower than that which is offered by the British Gas Corporation?

There is a happy prospect of competition in supply, and the opportunity for the consumer to receive more than one offer of gas, I hope that that will come in the not too distant future following the successful completion of the Oil and Gas (Enterprise) Bill. My hon. Friend is right to draw attention to the opportunities that competition will offer to those in industry who seek competitive supplies.

Whatever the supply and demand influences, is it not likely that in a pre-election year there will be no increase in energy prices under the control of the Government?

I made it clear in the debate on this subject that these policies were introduced to the House in January 1980. That seems considerably in advance of an election.

Wave Power


asked the Secretary of State for Energy when a decision will be made on the preferred system for wave power and the scale of Government funding for it.

When I have had the opportunity fully to study a report and the advice on the renewables programme from the advisory council on research and development for fuel and power.

Is the Minister aware that there is a suspicion in some quarters that the Government would like to sink the wave power experiments? Is he aware that this is an enormously important renewable source of energy, especially for this country, and that there are possible world markets? Will he get a move on with his study into which system to fund and give an assurance that there will be generous funding for it?

I utterly repudiate the implication of the hon. Gentleman's comment that we have somehow been marking time on the matter. In cash terms, the Government are spending this year four times as much on research and development into the renewables programme as did the Labour Government. I do not know how impatient the hon. Gentleman was with the Government that he supported. After £12 million of public money has been spent on the wave programme, the advisory council is examining the whole renewables programme to see where we go from here. This is a sensible step, being undertaken by accomplished scientists and engineers. I await their advice with interest.

Does my hon. Friend agree that, on current costing of wave power, this is an energy option for the medium rather than the short term? If he does agree, will he consider, before taking his decision, such schemes as Salter's bobbing ducks, which are being developed in my constituency and which, for a small investment, show great potential for the medium term?

There is enormous admiration within my Department for the work that Dr. Salter is doing on a very accomplished piece of engineering.

Will the Minister confirm that while he is studying the report, experiments are still continuing? Can he give an idea when he expects that some electricity developed by wave power will be going into the grid?

I cannot do that in respect of wave power. It is too early to say. The right hon. Gentleman will be more aware than most hon. Members of what the Government are doing on renewables. It is in his constituency, on the Orkneys, that we have moved to demonstration by supporting to the tune of £4½ million the construction of an aero-generator to produce electricity from the wind, of which I gather, in his part of the country, there is quite a lot.



asked the Secretary of State for Energy on what basis he will assess the most advantageous time to put the shares of Britoil on the market.


asked the Secretary of State for Energy if he will arrange, at the appropriate time, for British National Oil Corporation shares to be available for purchase by individual members of the public through the Post Office network.


asked the Secretary of State for Energy if he will make a statement on the criteria by which he will assess the most opportune time to put the shares of Britoil on to the market.

Britoil will be sold to the public this year unless market conditions in the autumn are such that there is a convincing case for delaying until next year. Whenever the flotation takes place, I shall be seeking to secure a wide spread of ownership.

Is not the best way of obtaining wider share ownership the distribution of shares through the Post Office network, to be purchased by individual members of the public? Is it not possible for the national savings certificate system to be used in this regard?

I am grateful to my hon. Friend and also to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) for putting forward some helpful suggestions. All these ways and means of getting a wider spread of share ownership than is customary are being examined carefully. There are certain practical difficulties, but we are taking the suggestions seriously.

The hon. Member for Dunfermline (Mr. Douglas) will be aware that the Government that he supported made a large offer of BP shares in 1977. That offer was underwritten.

Will the Secretary of State inform the House of, and discuss with it, the actual method of sale before he proceeds?

I am not sure that it is sensible—I cannot think of any precedent—to discuss with the House anything so technical and complicated as the precise methods of sale. If the right hon. Gentleman and his hon. Friends want to put forward any proposals, I shall be happy to consider them.

On a point of order, Mr. Deputy Speaker. In view of the unsatisfactory nature of the reply I beg to give notice that I shall seek to raise the matter on the Adjournment.

North Sea Oil And Gas (Exploration)


asked the Secretary of State for Energy if he will estimate the effect of the fall in oil prices and the changes in the tax regime on the level of exploration for oil and gas in the North Sea.

I do not expect these factors to have a significant effect on the level of offshore exploration.

Surely the Secretary of State must bear in mind that, with spot prices down to $28 a barrel, and with the announcement that the Government expect the same yield from the North Sea, this will deter anyone looking for commercial profit from going ahead with the exploration programme that was envisaged by the Government?

It is true that these are uncertain times in the oil market and that this is making all oil companies review their investment plans and assumptions throughout the world. That is inevitable. However, the level of exploration in the North Sea is higher than it has been for many years and there is no sign of any slackening, despite the tax changes that were announced a little over a year ago.

If it is the case that there is a pullback in investment in the North Sea—and the oil companies say when they meet hon. Members that this is the fault of the tax regime—has the Secretary of State discussed this with them to disprove the point that they are making?

I see representatives of the oil companies both in concert and singly on many occasions, as the right hon. Gentleman will imagine. There is no doubt that the oil companies would like to see a lighter tax regime. My right hon. and learned Friend the Chancellor of the Exchequer examined the matter carefully and reviewed it in the light of all the evidence, including investment plans, and came out with a new tax system that, with regard to structure, went a long way towards meeting the points made by the oil companies. With regard to the level of taxation, there was only a slight amelioration, but there was some. My right hon. and learned Friend is satisfied that that is a tax system that is fair both to the oil companies and to the general body of taxpayers.

Is not the rate of oil exploration a long-term matter? Therefore, is it not correct that it is as much the general state of the economic situation across the Western world as the immediate tax regime that affects the oil companies' business plans for the future? To that end, is it not a fact that when my right hon. Friend successfully launches Britoil in the current financial year it will show the Western oil companies that we believe in a successful and forceful policy in the North Sea''

I entirely agree with my hon. Friend. He may have read the article in the Sunday Telegraph yesterday, which pointed out the considerable attractions of Britoil for the investor.

Common Energy Policy


asked the Secretary of State for Energy what progress was made at the last meeting of the European Energy Council in agreeing a common energy policy.

The Council of Energy Ministers on 16 March renewed its commitment to reduce dependence on imported oil and to the more efficient use of energy. Commission papers on coal, nuclear power, gas and investment in the efficient use of energy were considered, but were not ready for decisions by this Council.

Will my hon. Friend ensure that we, as the leading energy producer in Europe, lead any discussions on a common energy policy and not opt out, as would the Labour Party?

While I recognise the necessity of working towards a common energy policy within the EEC, I should point out to my hon. Friend that priorities are not always the same for every member country. Considerable progress has been made on such things as energy pricing and conservation and the reduced dependence on oil, as well as the fusion programmes. Progress is being made, if not perhaps as quickly as my hon. Friend would wish.

Will the Minister assure the House that no common energy policy will mean the loss of national control over all our energy resources?

That would be the wish of every hon. Member and the objective of the Government.

Will the Energy Ministers in Europe make sure that the reserves of oil are not reduced below the levels recommended by the International Energy Agency just because there happens to be a surplus and lower prices now? Would this not be a dangerous development in view of the possible strategic advantages that can accrue from the maintenance of those reserves at a reasonable level?

My hon. Friend will be aware that the maintenance of adequate reserves need not necessarily conflict with the economic use of oil, which is the objective of the Community.

Can the Minister of State give us any good reason why he believes that there should be a common energy policy in Europe?

I am sure that the majority of hon. Members would agree that there are vast areas in energy where a common energy policy is advantageous. However, I pointed out at the outset that the priorities of countries are different, and therefore, across-the-board energy policies may be much more difficult to achieve than seems likely now.

When the Minister says that there are vast areas in energy where a common energy policy is advantageous, could he give us just one example to help us?

There is little doubt that, as I suggested at the outset, a common form of energy pricing would be advantageous for energy conservation. Realistic energy pricing is essential.

Combined Heat And Power Projects


asked the Secretary of State for Energy when he expects to announce the results of consultants' reports on projects for combined heat and power systems.

The results of our consultant's investigations on combined heat and power will be announced after consultation with interested parties.

While I thank the Minister for that reply, may I ask him whether he would agree that the results of the investigations are taking rather a long time? Does he agree that there are a number of power stations in the country that would be suitable for active experiments on a large scale with this sort of project? Cannot the hon. Gentleman hurry up the programme?

The Atkins committee, which was set up following Dr. Marshall's inquiry, was originally due to report in January. There has been a small slippage to April, which those who follow these matters will understand, having regard to the complexity of the issues that are involved. I assure the hon. Gentleman that we are interested in the whole idea of heat and power district heating schemes and we shall be studying the report with great interest when it arrives shortly.

Meanwhile, are not local power stations being closed in rapid succession? They are the very sorts of power stations that would be ideal for combined heat and energy schemes. Why do not the Government hurry up the process and stop the closure of these power stations, because some people are suspicious that this is being done to create capacity to be filled with nuclear power generation?

If the electricity supply industry, whose decisions these are, were to fail to close small and uneconomic power stations and that led to an increase in the price of electricity, the first person to complain would be the hon. Member for Keighley (Mr. Cryer).

Can my hon. Friend confirm that when the Oil and Gas (Enterprise) Bill becomes an Act it will provide an important stimulus to the development of combined heat and power, because the gas monopoly has restricted the use of gas to industrial CHP?

It is right that we have shown some concern at the apparent difficulty of combined heat and power schemes using gas getting off the ground because of supply difficulties. There is no doubt in the mind of the Government that the effect of the Oil and Gas (Enterprise) Bill will be to make more supplies of gas available to a domestic market that is currently underprovided for.

Will the Minister confirm that the only power stations that are being closed are the old, small, clapped-out ones that would cost an absolute fortune to modernise and put back into commission?

I am very grateful for the robust common sense of the hon. Member for Newton (Mr. Evans). According to the merit table that the electricity supply industry has to use, the difference in the costs of generation in a large, efficient power station compared with some of the smaller ones is so marked that we cannot allow sentimentality to intrude on what is a case of hard economics, as I think the hon. Gentleman recognises.