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Volume 24: debated on Monday 17 May 1982

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Energy Conservation


asked the Secretary of State for Energy what estimate his Department has made of the amount of fuel, expressed in million tonnes of coal equivalent, saved during 1981 by the various Government conservation measures.

It is impossible to estimate the savings attributable to conservation measures alone. I estimate that in round terms a combination of energy price movements and conservation policies was responsible for savings of the order of 10 million tonnes of coal equivalent in the two-year period 1979 to 1981.

Is the Minister aware that, on the most optimistic calculation, the Sizewell station will not feed electricity into the grid until 1992 and should cost about £2,000 million? Would not a more vigorous conservation programme over the next 10 years be more beneficial to the nation, both in energy and in jobs?

I cannot confirm the hon. Gentleman's assertions, but whatever conservation policies are pursued there will always be a need for modern equipment capable of generating electricity cheaply.

Will my hon. Friend admit that there must be something wrong with Britain's energy conservation effort when large sections of the insulation industry are working at well below capacity, when millions of buildings are inadequately insulated and when a large number of people are unemployed?

More than three quarters of a million homes had their lofts insulated in 1981, many of them with assistance from the Government's home insulation scheme, and there is continuing progress on insulation projects within industry. Therefore, I do not accept that my hon. Friend's pessimism is justified.

Gas Prices


asked the Secretary of State for Energy how many letters he has received from the general public on matters relating to gas prices.

My Department has received approximately 350 letters relating to gas prices this year.

Has my hon. Friend gathered from that correspondence that there is considerable public concern, particularly among those who have invested in expensive gas central heating equipment, about the extent to which gas prices have increased? Can my hon. Friend therefore give the consumer any hope on gas prices over the next two, three or four years?

It is not an easy adjustment for people to make, and to that extent my hon. Friend is right. Future legislation will increase the potential for additional supply through competition and must be of help to the consumer.

Will the Government impose any more gas price increases on the domestic consumer before the general election?

The Government's attempt to rectify past problems, which were recognised by the right hon. Gentleman the last time we discussed this matter, will be completed this year. To that extent, one would hope to see the consumer benefit from the Government's courage in going through the process of adjustment.

Is my hon. Friend aware that many people in my constituency and elsewhere in Britain live just outside the 25 yds connecting limit and cannot be connected to gas supplies, even if they live on housing estates? Does he agree that that is a result of the instability of supply caused by low gas prices for several years under the Labour Government?

My hon. Friend is right. More than 25 per cent. of the nation cannot receive gas, which is still a decent buy compared with other fuels, but have to pay 40 to 60 per cent. more for oil and electricity to heat their homes.

Will the Minister be less coy and more forthcoming and admit that the vicious increase in gas prices over the past three years has been the direct result of the Government's policy that prices should be increased by the rate of inflation plus 10 per cent?

I must draw the hon. Member's attention to the comments of the right hon. Member for Leeds, South (Mr. Rees) on the Opposition Front Bench the last time we discussed this matter. His only complaint seemed to be that we had not made the radical adjustment to reality fast enough.

Energy Depletion Policy


asked the Secretary of State for Energy if he will make a statement on the energy depletion policy of Her Majesty's Government.

My aim is to help create conditions that will ensure the efficient exploitation of our national energy resources. That way maximum encouragement will be given to prolonged, high levels of economic production.

Surely my hon. Friend must realise that the Department has had eight years in which to think about depletion policy. Bearing in mind the very high rates of taxation, falling oil prices, and the likelihood that by 1984–85 we shall pass the peak of production, will my hon. Friend assure the House that no further provision will be made for depletion policy, as it is not required? The public are entitled to know the Government's policy.

The depletion policy for oil is that which was given in the House by my right hon. Friend the Member for Guildford (Mr. Howell) when he was Secretary of State for Energy.

The Government are constantly aware of the need to consider future depletion policy, but we have no immediate plans to make an announcement.

Is there not a growing jobs crisis in the offshore supply industry, and a crisis in confidence, leading from the Government's incoherent attitude towards depletion and development? Will the Minister assure the House that we shall have a substantive statement on energy depletion policy, as compared with the nonsense that he has just spoken about depletion, so that industry can plan for the future?

It is very easy to make that sort of pronouncement from the Opposition Benches, but the Government have to bear their responsibilities in mind. The Government cannot authorise annex B's for proposed developments if the oil companies do not submit them. The North Sea is an extremely difficult place in which to work, and technical problems constantly arise. We are having discussions with several companies. I have no doubt that in due course annex B's will come forward and that the offshore supply industry will receive its share of orders.

I readily accept that the Labour Government had no depletion policy either, ever since they entered into the Varley assurances, but will the Minister agree that if the purpose of the Government is to use market conditions to create ideal circumstances for the exploitation of oil, we have the worst of all worlds, with the collapse of oil prices, partly due to over-production, and the very likely starvation of the oil platform yards? Is not the whole matter completely and utterly out of balance?

The hon. Gentleman has got it wrong. With the best will in the world, it is impossible to develop our North Sea resources in a way that will ensure a continuous flow of orders. The Select Committee on Energy will shortly be making known its deliberations on depletion, and it will be interesting to read its comments.

To what extent will my hon. Friend balance a depletion policy against the pressures of normal market forces? Whereas it makes sense to sell oil to our EEC partners and to others, will he consider a cross-channel gas pipeline and link, so that it is possible to buy as well as sell gas, particularly if the EEC countries can obtain cheaper supplies of gas from third countries?

My hon. Friend will be aware that, for example, we buy a substantial quantity of gas from Norway.

My hon. Friend will realise that the demand for gas in Britain at present is not fulfilled. Therefore, it is unlikely that we would consider exporting gas in the meantime. If, however, as a result of our policy—which is to encourage the private sector to explore further for gas—a great deal of gas becomes available, exports will be considered again at that time.

Has the Minister noted that the question refers to energy depletion and not just to oil depletion? Would it not be sensible for the Government to concentrate a little more effort on resources such as sun, wind and wave, which are non-depletable? Will he comment on the absurd recommendations made recently by ACORD, which are contrary to everything that our partners in Western Europe are doing?

It was significant that the hon. Gentleman should have omitted what is probably the most important factor of all, namely, nuclear power, in regard to which we are proceeding with our programme with all haste.

A substantial amount of money is being made available each year for research and development in regard to the other sources of energy that the hon. Gentleman mentioned, but he will appreciate that several of them are not yet at the stage at which they could absorb a massive injection of development funds.

Crude Oil

asked the Secretary of State for Energy what was the total United Kingdom crude oil production and consumption for the last quarter for which figures are available; and how these figures compare with the same quarter a year before.

Provisional figures for total United Kingdom petroleum production and consumption in the three months January to March 1982 are 23·5 million tonnes and 19·8 million tonnes respectively. Corresponding figures for the same period in 1981 are 21·9 million tonnes and 19·9 million tonnes.

In view of those encouraging figures—which again underline the fact that we are now self-sufficient in oil—does my hon. Friend believe that the recent increase in the number of onshore exploration licences which have been granted is justified, particularly in view of the adverse environmental consequences of some of them?

Yes, I would certainly say that the increase is fully justified. My hon. Friend will appreciate that it is essential that we determine the exact extent of our resources for the future.

With regard to the environment, I reiterate that the award of a licence does not exclude the licensee from the normal planning requirements.

Does the Minister agree that our North Sea oil and gas resources are finite? That being so, will he accept that our consumption and production should be level? Is it not a betrayal of future generations of Britons to extract oil so quickly in order to pay for the 3 million unemployed?

I find it very difficult to equate what the hon. Gentleman has just said with the utterances from his own Front Bench a little earlier. He will appreciate that if we were to cut back production substantially, far from increasing the opportunities for our offshore supply industry, we would be removing them.

Does my hon. Friend agree that lower oil prices are bound to lead to reduced activity in the North Sea? Is not the temporary hiccup more than balanced by the enormous advantages, particularly to heavy manufacturing industry, of having lower fuel prices?

"Coal And The Environment"


asked the Secretary of State for Energy when the Government's reply to the report of the Commission on Energy and the Environment, "Coal and the Environment", is now expected to be published.

The Government are still considering the many recommendations in the CENE report on "Coal and the Environment" and our response, which is being prepared jointly with my right hon. Friends the Secretaries of State for the Environment, Scotland and Wales, will be published as soon as possible.

What progress have the Government made in reaching a decision on the recommendation of the commission that applications for opencast coal mining should be determined by the general planning machinery for mineral development, rather than by the Secretary of State for Energy?

I am very concious of the hon. Gentleman's point. That, among the 120 other detailed recommendations, is legitimately taking a considerable amount of time to consider.

Since the environmental objections to opencast mining have been largely removed because the land is usually restored to a much better condition than it was in originally, and since, also, opencast production is cheaper and safer for the miners—they do not have to go underground and risk their lives—why do not the Government go forward with a positive policy of encouraging opencast production by every means possible?

My hon. Friend will know that there is a difference between increases in opencast production since the Government came to office and the particular question at issue in the CENE report concerning the method of controlling the ultimate decision on opencast licences,

Does the Minister recall that in that report it states that because of coal pollution the Durham beaches are the worst in the country? Is he aware that the National Coal Board has made strenuous efforts to improve the position, including spending a lot of money, but now it rightly says that it has reached the end of its resources? Will the Government urgently provide the little extra that is needed?

The hon. Gentleman will be conscious, because of his long and legitimate pursuit of the matter for a constituency interest, that the "little extra" is rather more substantial than he seemed to indicate. The financial implications of the CENE report are a factor in the joint Ministeries' discussions on the matter.

Will the Minister think again about his answer to my hon. Friend? Is he aware that in my constituency about 780 acres of opencast mining is proposed, which involves 15 to 20 years of working, far in excess of any time that any individual Secretary of State or Minister, on either side, will be in office? Therefore, it is essential that, for example, local government, which is permanent, should take this matter in hand and look after the planning permission for these matters.

All of us who participated in the 19 March debate on the subject will be aware of the consequences and difficulties that are involved in the question. Today we are being asked specifically about the changing of the inquiry process, which, to some extent, is under consideration.

Domestic Supplies (Standing Charges)


asked the Secretary of State for Energy whether he will make a statement on his review of standing charges for gas and electricity for those on low incomes.


asked the Secretary of State for Energy if he is yet in a position to announce the results of his review of fuel standing charges.

With my hon. Friend the Under-Secretary of State for Health and Social Security, I am making progress in a thorough review of the effects of standing charges on poor consumers, and ways of alleviating any difficulties. We shall announce the results as soon as possible.

Will my hon. Friend bear in mind that many pensioners pay more in standing charges than they do for fuel? Is that not terribly unfair?

I know of my hon. Friend's tireless work on behalf of pensioners. We are examining carefully the effect on pensioners of standing charges. However, preliminary indications are that while there are people in the plight that my hon. Friend describes, for the average pensioner, and for poor consumers generally, the standing charges represent only about 20 per cent. of fuel bills. In other words, elderly and poor consumers are not necessarily small consumers, and that 20 per cent. compares with 15 per cent. for the average consumer.

Will the Minister confirm that the increase in standing charges for gas has in some cases been over 300 per cent. over the past four years? Will he also confirm that this is part of a trend that is in danger of continuing, whereby the authorities are trying to recoup all the fixed costs from standing charges? If that is the case, it is thoroughly regressive and should be avoided.

The standing charge reflects a genuine distinction in the industry's costs, as was endorsed by the 1979 Price Commission report. On the hon. Gentleman's figures about gas standing charges, I must ask him to bear in mind that before the election of this Government there was a triple tariff in that, as well as the standing charge for gas, there was an enhanced charge for the first 52 therms. If at the time of the last election that enhanced charge had been removed, as it now has been, the standing charge for gas would have been about £6·37 a quarter, not dramatically below what it is today.

Is this not the third Question Time when the hon. Gentleman has been pressed from both sides—there is no party argument about this—on the whole question of standing charges and the imbalance that has arisen between the increases in those charges and the increases in charges for consumption? Will the Minister take into account the impatience that has been expressed by both sides of the House for a review and changes in what has been proposed?

I am aware of the concern, which I share. My hon. Friend the then Under-Secretary of State for Health and Social Security announced the review early this year, showing that the Government had anticipated some of the concern. We shall not take a moment longer than we need to complete the review properly.

I am sure that the hon. Gentleman will be aware that the last thorough and proper review was in 1976 under the Government of which he was a member. It took about 12 months to carry through. The hon. Gentleman should not feel that these issues are easy or that we can deal with them in just a few weeks.

I refer my hon. Friend to the letter to me from the Under-Secretary of State on 18 March, in which I was told that an increase in the unit costs of electricity and gas of about 15 to 20 per cent. could wipe out the standing charge system. Would that not be of tremendous help to people on low incomes?

I am glad that my hon. Friend has made the point. Standing charges bring into each industry about £500 million a year. We are exploring, as the 1976 study did, the impact of adding to the unit costs. It was found then that an increase of that kind, given that many poor consumers are not small consumers, would have borne more heavily upon them than standing charges now do.

Is the Minister aware that there is increasing concern at the Government's complacency about this matter? Does he understand that a single pensioner can spend up to 8 per cent. of his or her pension on standing charges alone, before having delivery of any of the services involved? Will the Government deal with this as a matter of urgency?

I fear that the hon. Gentleman is trying to make a party point, when none is appropriate. We are building on the foundations of the 1976 review, looking at the matter thoroughly. The review was announced less than three months ago. I hope that it will be only a matter of weeks before we are able to say something more substantial to the House. I ask the hon. Gentleman to understand that these matters cannot be dealt with overnight and that we are treating them as seriously as I am well aware both sides of the House would wish us to.



asked the Secretary of State for Energy what effect he expects the differential in price movements of gas supplied to industrial and domestic consumers to have on the future relative demand for gas from these sectors.

The rises in gas prices to domestic consumers have enabled the British Gas Corporation to hold down the price of gas to industry. To the extent that this curbs demand in the domestic market, it will make increased supplies of gas available to industry.

Is it not a fact that, for the first time for many years, the relative prices of gas for different categories of users are rationally and economically defensible? Does not the history of gas prices over the past few years show how unwise it is for Governments artifically to hold down the price of gas and other fuels for political or electoral reasons?

My hon. Friend is right. By the end of this year, at long last, gas prices to both the domestic and the industrial market will be more or less appropriately related to costs. It was grossly irresponsible of the previous Administration to hold down domestic prices for gas as they did. That was a penalty for industry both in making less gas available for industry and forcing industrial prices higher than they should have been. I hope that now we have the relativities on a sensible basis we shall be able to go ahead, to the benefit of the industry and the consumer alike.

Did not the Government freeze gas prices in the autumn of 1979 shortly after they came to power? That being the case, the Minister's comments are political clap-trap.

They are far from being political claptrap. What the right hon. Gentleman is saying is that we did not straight away put right the follies of his Government. I concede that. We have now taken action, and done so.

Do domestic gas prices in the United Kingdom compare with domestic gas prices on the Continent?

Domestic gas prices in this country, despite recent rises, are substantially lower than domestic gas prices in France, Germany and most Continental countries. In some cases they are only half what they are on the Continent.

Electricity Demand


asked the Secretary of State for Energy whether he will make a statement on future electricity demand.

My Department is currently updating its detailed projections of the demand for electricity and the forms of energy. These will be published later in the year in good time for the public inquiry at Sizewell.

Will my hon. Friend assure me that if his figures and those produced by the CEGB show a smaller rate of increase in demand than previously—say over the past decade—he will, nevertheless, concentrate extensively on the nuclear power programme, notwithstanding the higher production costs, in the longer-term interests of the country as a whole?

Will the Minister ensure that, rather than build oil-burning power stations, we shall increasingly go over to coal-burning units? Can the Minister make a statement on the future of the Aberthaw coal-burning plant in South Wales, where there have been certain difficulties in recent months?

The hon. Gentleman will be aware that over 80 per cent. of our electricity is now generated from coal, and it is inevitable and right that by far the largest proportion of our electricity will come from coal. Most oil-fired stations are now used only to cover peak periods. Plainly, the economics of running oil stations now make it impossible to use them for base load functions.

Will not the future demand for electricity be strongly influenced by its competitiveness against other fuels? Is it not therefore most important to continue with the nuclear programme, which will relatively reduce the cost of electricity compared with what it would otherwise be?

I have to agree with my hon. Friend. I remind the House that the CEGB states that of all the power stations on the national grid, that at Hinckley B—one of our AGRs—produces the cheapest electricity. We should bear that in mind. We should also bear in mind that all our operative nuclear power stations are on base load function—in other words, they are producing electricity all the time.

Lead-Free Petrol


asked the Secretary of State for Energy what representations he has received about the provision of lead-free petrol.

I have received a number of representations about this from hon. Members and from the public. My right hon. Friend the Minister for Local Government and Environmental Services is responsible for policy on environmental lead generally, but I can confirm the Government will keep the question of lead in petrol under careful review, along with all the other aspects.

Does the Minister agree with the recent American evidence that lead in petrol could account for as much as 67 per cent. of the lead level in human blood—evidence which contradicts the assessment of British Government experts? In view of the damage caused to children's mental health by the Government's refusal to move more quickly towards lower statutory maximum levels of lead in petrol, will the Government at least consider requiring all petrol stations to have lead-free petrol available for sale to the public as soon as possible?

The hon. Gentleman should bear in mind that Government decisions on this matter were taken only after the advice that we received from our own chief medical officer. The Government decision to reduce lead in petrol to 0·15 grams per litre will reduce vehicle emissions by two-thirds by 1985. That is by far the quickest and most effective way to achieve such an improvement.

I welcome the steps that the Government have announced on lead in petrol. Will my hon. Friend begin discussions with the motor car industry—which is the key to the matter—about how long it will take to change the motor car system to deal with lead-free petrol?

Discussions of course take place between my right hon. and hon. Friends at the Department of Industry and the motor car industry, but lead-free petrol would necessarily be low octane, and thus will not rally be an option for the vast bulk of cars that will be on our roads into the 1990s. Indeed, probably no more than 10 per cent. of the 15 million petrol-driven vehicles currently on our roads could use it.

Will the Minister now answer the question that was asked by my hon. Friend the Member for West Stirlingshire (Mr. Canavan) about the American studies? Have the Government looked at those studies, and do they believe that they are correct? Will the Minister say whether there is any mechanical reason why petrol refineries should not be adjusted before the date that he mentioned?

The hon. Member will recall that in my initial answer I said that the Department of the Environment is in the lead on this subject. Examination of figures such as those presented by the hon. Member for West Stirlingshire (Mr. Canavan), will of course be looked at by that Department.

I am pleased to accept my hon. Friend's comments on this issue, but will be bear in mind that the advice is very conflicting, that many high compression engines in this country will have extreme difficulty in operating on lower octane fuels, and that in any event such a move will lead to much greater fuel consumption for the majority of cars?

My hon. Friend is absolutely correct. What he has said will be noted by those who are in the lead on this subject.

Central Electricity Generating Board


asked the Secretary of State for Energy if he will make a statement on his decision not to reappoint Mr. Glyn England as chairman of the Central Electricity Generating Board.


asked the Secretary of State for Energy when he expects to announce the appointment of the chairman of the Central Electricity Generating Board.

I have written to Mr. England expressing my appreciation of his long and distinguished service to the electricity supply industry. I have decided, however, that it is time for a change. I hope to announce the appointment of a new chairman fairly shortly.

Is the right hon. Gentleman aware that the virtual dismissal of this eminent engineer, who probably knows more about the public electricity supply business than all the race of politicians put together, has caused great resentment within the electricity supply industry? Secondly, is not the the real reason for the virtual dismissal of Mr. Glyn England that he dared to oppose the doctrinaire policies of the Government?

First, the policies of the Government are in no way doctrinaire. Secondly, Mr. England was not dismissed. His five-year appointment simply came to an end. Thirdly, to suggest by implication, as the hon. Gentleman does, that Mr. England is the only man in the electricity supply industry who knows anything about electrical engineering or the industry as a whole——

is to abuse the whole electricity supply industry. I am sure that the hon. Gentleman would be the last person to wish to do that.

Does my right hon. Friend accept the desirability of finding a chairman who will be sympathetic towards improving the efficiency of the industry, giving the area boards far greater independence to produce as well as to distribute, and, above all, seeing that the fuel in our power stations is burnt more efficiently, and raising thermal efficiency by doing more to try to market some of the wasted heat?

I am sure that one of the advantages of having a new chairman with a fresh viewpoint—quite possibly from outside the electricity supply industry altogether—will be that it will allow a fresh impetus, to make the industry more efficient for the benefit of domestic and industrial consumers alike. However, it is premature at this stage to judge the means of achieving that greater efficiency.

Does the Secretary of State accept that the going of the chairman of the CEGB has been rather offensively handled, and that other people who may be attracted to the public service may now draw back in view of the way in which it was done? Now that the Secretary of State says that someone may be appointed from outside the electricity generating service, or the professional side, will he assure the House that, whoever is appointed, it will not be a narrow political appointment?

I assure the right hon. Gentleman that whoever is appointed will be the best man for the job and that it will not be what the right hon. Gentleman calls a "narrow political appointment".

Will my right hon. Friend consider requiring that any future chairman of the Central Electricity Generating Board should be under a contractual obligation to place his resignation before any new incoming Government?

My hon. Friend raises a major question of nationalised industry policy in general, which goes far beyond the limited confines of the question.

Does the Secretary of State realise that Governments come and go, as do Secretaries of State? If the chairmen of the various nationalised industries are to suffer because they happen to disagree with the right hon. Gentleman, and are therefore not reappointed, does that not create the impression that it is not the welfare of the country as a whole that matters, and that any Government will look at the problem simply from their political standpoint, not that of the future of the industry?

It is the duty of each Secretary of State of whichever party and whichever Government to do what he thinks is best for the industry and for the nation. That may occasionally involve a change in the chairman of a nationalised industry. That is a fact of life.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of all those replies, I wish to give notice that I will raise this matter on the Adjournment next Monday, 24 May, to be precise.

Coal Industry


asked the Secretary of State for Energy if he will make a statement on the phasing of investment in the coal industry.

The phasing of investment in the coal industry, within the annual capital approval set by Government, is a matter for the National Coal Board.

Will the Minister comment on the decision by British Petroleum to withdraw its promised investment in the coal liquefaction scheme at Point of Ayr? Will the Minister give an absolute assurance that the decision will not prevent further Government investment in the scheme? Does he agree that Britain could lead the world in this technology and that a shortage of further investment, at least to replace the BP withdrawal, would be nothing short of criminal?

There is a later question on the Order Paper on this issue. To the extent that the Government might not invest, may I make it clear that the Government offer of £5 million aid is still open and is still contingent upon the National Coal Board securing a significant contribution from private industry? It would be premature to comment further.

Is my hon. Friend aware that that reply, and his reply to my written question last week, entirely fail to explain why the Government do not approach the EEC for an increased stake in this vital enterprise which may be marginal for the United Kingdom but is vital for Europe as a whole?

I accept and understand my hon. Friend's constituency interest in the matter, but, as I explained to him, two points should be made. First, of course, the EEC is already putting up the maximum proportion of aid available from the coal gasification and liquefaction programme of the Community's alternative energy demonstration scheme. Secondly, the Government set great store, as does the whole of the industry—which wishes to see such projects succeed—on a substantial private sector participation. That is a crucial feature of the success of this long-term project.

Coal Industry


asked the Secretary of State for Energy what has been the increase in labour productivity in the coal mining industry over the most recent 12-month period for which figures are available.

National Coal Board productivity last year, as measured by overall revenue output per manshift, was 3·4 per cent. higher than in 1980–81.

Does my hon. Friend agree that this is a satisfactory situation and a great tribute to the miners and all those connected with the mining industry? Does he expect productivity to continue to rise in the current year?

My hon. Friend is right. I took the opportunity at the British Association of Colliery Management conference on Friday to congratulate mining management and the miners on the excellent increase in productivity. We trust that it will continue, as we need such productivity improvements to make up for the sad lack of productivity improvements in past years. That will help the mining industry to retain its markets and obtain new ones.

Will the Minister join me in expressing regret that only one Conservative Member has risen with a supplementary question on this issue, since over the past 10 years Conservative Members have consistently demanded better attendance in the pits? Is it not clear that attendance in the pits is a good deal better than that normally seen on the Conservative Benches?

I am sure that the hon. Gentleman does not want a head count to illustrate the consistent number of hon. Members on the Conservative Benches during Energy Questions. Absenteeism in the pits is down. The hon. Gentleman knows that attendance is the best for 40 years. However, that significant improvement should not mask the fact that between 1974–75 and 1978–79 output per manshift declined.

The figures announced by my hon. Friend are no doubt encouraging, but would they not have been better if the uneconomic pits had been closed in accordance with "Plan for Coal"?

Clearly we are in a period of over-supply, and the inability of the industry to close all of its uneconomic pits has added to the problems of over-supply and made the costing much more difficult for the industry in seeking new markets.

Is the Minister aware that, in communities such as mine, where miners have been breaking production records every week in the past year or two, it is not only their efforts but the capital investment in those pits that has made the difference? It was capital investment derived from "Plan for Coal", established in 1974 and 1979, that got things going. Is it not worrying that there has been a large-scale cut in capital investment in places such as South Wales?

The hon. Gentleman is inaccurate. There has not been a massive cut. Capital investment for this year will be about £886 million. Capital investment totalling £3 billion has been put into the industry since 1974–75. Beyond investment, good management and excellent work by the workers are the important changes in the productivity payment scheme since 1978. Those are crucial factors in improving productivity in the industry.

Combined Heat And Power


asked the Secretary of State for Energy if he will make a statement concerning the progress of schemes for combined heat and power.

The present stage of the feasibility programme is nearing completion. Although some inputs to the consultants' work have been delayed, we n3w expect their report to be completed within about six weeks.

I am grateful for that information. Can the Minister assure the House that between now and the time when those reports are published the Central Electricity Generating Board will take no steps either to dismantle or decommission power stations which, as a result of these studies, might conceivably be used for these schemes? Has the hon. Gentleman asked this question and received such assurances?

The CEGB has a programme of closing power stations that are thought to be no longer economic. I do not believe that that is in any way connected with the report. I know the point that the hon. Gentleman makes. One of the issues that the consultants have to consider is whether existing power stations can be used in the districts under consideration. I do not believe that the point about which the hon. Gentleman expressed anxiety will affect the outcome.

North Sea Oil


asked the Secretary of State for Energy when he expects to announce a new series of licence applications for North Sea exploration.

I am today circulating in the Official Report proposals for a new eighth round of offshore licensing. The formal invitation to apply will follow in a few months' time.

I thank my right hon. Friend for that preliminary answer. Is he confident that small British companies will have a fair chance of making successful applications when the round is promulgated?

In today's climate some small companies may find it difficult to raise the finance needed to participate. However, I hope that a fair smattering of licences will be granted to small companies if, as I hope, they apply. Although some of the blocks will be offered by the auction method, for the first time since the fourth round over 10 years ago, the majority will be offered in the same discretionary way as in most previous rounds. That provides a balance between the interests of the larger and smaller companies.

Does not auctioning mean putting the new North Sea licences, and no doubt the prize licences, into the hands of the multinationals once more? Does not auctioning mean going against the concept of development by small, independent British companies? Auctioning gives power to the big boys, but not to the small companies. How large is the licensed area likely to be in the eighth round? The right hon. Gentleman has not mentioned any acreage.

The hon. Gentleman cannot have been listening with his customary attentiveness. I said that only a minority of the blocks would be offered for auction. I expect about 85 blocks to be awarded.

Will the Secretary of State consider the suggestion of dropping the option of 51 per cent. for BNOC in this round?

The arrangements will be precisely the same, for the reasons discussed in our numerous debates on the Oil and Gas (Enterprise) Bill.

Is the Secretary of State aware that there is considerable anxiety that some marginal fields may not be exploited? If there is not a good response, will the right hon. Gentleman consider reducing the incidence of taxation to ensure that all marginal fields are exploited?

That question has nothing whatever to do with the licensing round, although the hon. Gentleman may be interested to know that the majority of blocks on offer will be in the frontier areas of previously undrilled areas of sea round our shores.

Following are the proposals:

The main objectives are to open up areas in which exploratory drilling has not yet taken place and to provide further opportunities to explore in the established gas province.
I have in mind licensing in total about 85 blocks drawn from the following:
  • (i) a wide selection of blocks in the previously undrilled areas of Unst, Fair Isle and West Orkney Basins, East Shetlands Platform, Forth Approaches, Southern Sub-basin—entrance to Bristol Channel—and the mid-North Sea High—an area between latitudes 55° and 56° North;
  • (ii) a number of blocks between 53° 10' North and 54° 20' North in the southern basin of the North Sea; and
  • (iii) a small selection of blocks in the mature oil province of the central North Sea.
  • I shall be inviting cash tender bids for the blocks in (iii) above; all other licences in the round will be awarded purely on the basis of assessment against published criteria. These criteria will be broadly similar to those for the seventh round. An undertaking along the lines of that attaching to seventh round licences, to allow BNOC an option to acquire up to 51 per cent. of any petroleum produced, will be required.
    I expect the closing date for the eighth round to be towards the end of the year. In the coming weeks I intend to discuss my detailed proposals with those involved. I shall welcome any views or comments from interested parties on the plans I have outlined, with particular reference to areas where they believe special care and attention in the conduct of exploration and development may be needed for environmental, fishing or other reasons.


    asked the Secretary of State for Energy what representations he has received concerning the effects of lower oil prices on exploration and development in the North Sea.

    There is no doubt that lower oil prices have had an effect on licensees' plans for future North Sea developments.

    Does my hon. Friend agree that lower oil prices, higher levels of taxation, and the increased cost of development combine to make marginal fields much more difficult to develop? Given the importance of our marginal oilfields for self-sufficiency in the 1990s, will my hon. Friend consult his colleagues in the Treasury to ensure that some changes are made in the tax regime to help the development of those marginal fields?

    My hon. Friend has devoted much time to this subject and he will appreciate that taxation is only one of the issues involved in any discussion of developments within the North Sea. The postponement of certain developments in recent months has been due more to technical problems and the weak oil price than to the tax regime. However, I accept that the companies have always included the tax regime in their reasons. That is only natural, because they wish to focus attention on their problem with tax.

    "Nuclear Energy—The Real Costs"


    asked the Secretary of State for energy what is his policy towards the conclusions of the report of the Committee for the Study of the Economics of Nuclear Electricity entitled "Nuclear Energy—The Real Costs".

    All contributions to this important debate are assessed on their merits.

    In that case I feel sure that great weight will be given to the report, particularly as the committee is under the chairmanship of Sir Kelvin Spencer, a former chief scientific adviser to the Ministry of Power. Is the hon. Gentleman aware that the report clearly shows that there is a great discrepancy between the findings of the report, the CEGB and the Minister's thinking on electricity prices? Is he further aware that it clearly shows that the production of electricity by fossil fuels will be much cheaper than production by nuclear energy? The hon. Gentleman should take that report into consideration when contemplating his future policy——

    I hesitate to draw the hon. Gentleman's attention to the classic computer concept of "garbage in, garbage out." Obviously, I would not suggest that that applied to the report. However, the assumptions fed into the report will produce results. I should have thought that the CEGB's thorough and full statement of the case merited considerable attention, particularly as the CEGB has an obligation to concern itself with securing an economic supply for the consumer.

    Will my hon. Friend bear in mind that in Sheffield the high cost of electricity is putting steelworks out of production because such costs make them uncompetitive with those supplied with cheaper electricity, whether that electricity is nuclear-generated from France, hydro-generated from France and Norway, or a mixture of both from the New World? Will my hon. Friend ensure that that is considered?

    My hon. Friend is quite right to draw attention to the problems of industry pricing. It is important to remind the House of the CEGB's cost estimates for power stations in 1980–81. Hinkley Point B nuclear power station ran at a cost 22 per cent. lower than Drax, which is one of our best coal-fired stations.

    Does not the Minister agree that this somewhat pretentious report may make doubtful assumptions and, not surprisingly, reach wrong conclusions?

    I very much appreciate the comments made by the hon. Gentleman, who has great experience in this area. Assumptions about coal prices, nuclear capital costs and very interesting assumptions about nuclear fuel cycle costs have been added together to produce what the report seemed to suggest was the required result.

    When considering the costs of nuclear power, will my hon. Friend bear in mind that the cost of building a nuclear power station will be greatly increased if construction work begins before it has been properly designed? Will my hon. Friend ensure that designs are properly prepared before construction work is started, thus making the building costs economic?

    My hon. Friend is quite right. The pre-design work is a key factor in successful construction. Governments of both parties have always said that the building of any form of power station to cost and time is crucial to its economic success.

    Alternative Energy


    asked the Secretary of State for Energy if he proposes to maintain current levels of support for research and development in the field of alternative energy provision.

    As my hon. Friend told the hon. Member for Sheffield, Heeley (Mr. Hooley) on 31 March, I hope that in the current financial year my Department will be able to devote between £11 million and £12 million to research and development into renewable energy sources.

    Is not that serious and disturbing reduction in investment in research and development likely to cause grave anxiety and disappointment? Is the decision to reduce that investment based on the summary of advice from the advisory council dealing with such matters? If so, is the hon. Gentleman aware that it is suggested that there are serious irregularities surrounding that summary of advice, which should command urgent and serious Departmental attention?

    The hon. Gentleman seems to be implying that I have said something new today. On the contrary, I am saying what was said in a parliamentary answer nearly two months ago. While I accept that it is likely that the 1981–82 figures will show that we spent somewhat more that year than this year, I remind the hon. Gentleman that in 1977–78, during the period of the Government of whom he was a supporter, only £1 million was spent on renewables. During the last year in which the Government that he supported were in office, only £2·5 million was spent. He must consider the matter in that context.

    Is my hon. Friend aware that what the Government propose to do in support of research and development of renewables must be about right at this stage? Can he assure the House that the Government will do everything possible to back wind energy, which is one of the more promising renewables, both onshore and offshore?

    I am grateful for my hon. Friend's question. I know of his interest in such matters. We had the benefit of advice from our advisory council on research and development. That advice was in clear terms, copies of which I have placed in the Library, and it is acceptable to the Department. The advisory council placed much emphasis on wind and we are financing, at a cost of about £7 million, a development windmill in the Orkneys to produce electricity.

    Why is the alternative energy research unit at Harwell being run clown?

    I have no reason to believe that it is. We spent about £4 million last year on our energy development support unit and its work is highly valued. I assume that the hon. Gentleman is referring to that unit. I know of no such plans.