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Energy Bill

Volume 32: debated on Wednesday 24 November 1982

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Order for Second Reading read.

Before the Minister begins, I should say that I have not selected the Instructions.

4.11 pm

I beg to move, That the Bill be now read a Second time.

I understand that the right hon. Member for Leeds, South (Mr. Rees) has been promoted to what I take to be the Labour Party's equivalent of the House of Lords. This is therefore probably the last time that we shall face each other across the Dispatch Boxes. I suspect that he has never felt entirely at home with energy matters. His debating style has alternated somewhat unpredictably between over-excitability and somnolence. Nevertheless, I have nothing but the warmest feelings for him personally and I wish him well in his mysterious new role of shadow overlord.

I shall begin by describing the purpose of part II as an hors d'oeuvres before dealing with part I which contains the meat of the Bill. There is nothing in part II which I suspect even the Opposition at their most ingenious can contrive to find controversial.

No doubt Opposition Members will recall—I am sure that the hon. Member for Midlothian (Mr. Eadie) will—that their Nuclear Installations (Amendment) Act 1965, which was subsequently consolidated into the Nuclear Installations Act 1965, was agreed to by the House on Second Reading without a Division. Part II merely updates that Act. Its main purpose is to restore the real value of the amounts of compensation that the 1965 Act provides for damage caused by nuclear incidents. No other changes of any substance are being made.

The House will know that the safety record of Britain's nuclear power industry is second to none. There has not been one emergency at a nuclear power station in more than 300 reactor years of operating experience. Nevertheless, it is prudent to have a liability and compensation system that ensures that damage or injury that is caused by a nuclear incident is properly compensated. That system is provided in the 1965 Act. It gives the operator no-fault liability for nuclear damage and requires him to insure against it. It limits his liability to £5 million per incident and provides for that sum to be topped up to £50 million, if necessary, from public funds, including funds that are provided by other countries by international agreement.

The 1965 Act gives effect to the two international conventions on third party liability in the field of nuclear energy, to which the United Kingdom is a party. They are known as the Paris and the Brussels conventions. Until now the conventions have provided for figures of 15 million and 120 million European monetary units of account in respect of operator liability and of topping up. They are equivalent to our figures of £5 million and £50 million respectively.

Over the years those figures have lost much of their value through inflation, and two amending protocols have therefore now been agreed by the parties to the convention. Besides making some technical changes, they increase the upper compensation limit to 300 million special drawing rights. This is an increase of about two and a half times, reflecting the weighted average of inflation in the countries concerned since 1963. The protocols did not alter the operator's liability limit in the same way. That was left to member States' discretion.

The Bill gives effect to that correction by substituting 300 million special drawing rights per incident, which is equivalent to about £192 million, for the present £50 million per incident. It also increases the operator's liability limit pro rata to £20 million per incident, except for a new category of small operators, for whom the limit will be £5 million. That new figure of £20 million is a sum for which the operator will be able to insure.

In broad terms, the changes make good the effects of inflation on the United Kingdom's original compensation provisions. Among other minor matters, this part of the Bill allows new compensation figures to be changed by Order.

Will the right hon. Gentleman give an example of the new class of small operator who is referred to here?

We have in mind research institutions and universities which have much smaller types of nuclear installations than a power station.

This part of the Bill contains some useful if inevitably, I regret to say, complex provisions. I shall now deal with part I, which has been welcomed by the CBI and which will be of most interest to the House.

Part I establishes for the first time a statutory framework to govern dealings between private generators of electricity and the public electricity supply system. I should make it clear at the outset—I recognise that this will cause some disappointment in some parts of the House—that the Bill is not concerned with the privatisation of the existing nationalised electricity supply industry.

The Bill entitles private generators of electricity—of whom there are many—to sell their electricity to the local electricity board on fair terms. It gives them a guaranteed market. It also allows them to use the public transmission and distribution system. That is an important innovation. Finally, it repeals the archaic statutory prohibition on private electricity generation as a main business activity. This puts into effect the proposal that was first announced by my right hon. Friend the Member for Guildford (Mr. Howell) more than two years ago.

I shall now describe the key features of part I in a little more detail. Its purpose is to encourage competition in the domestic electricity market by encouraging private generation and supply. It is a long overdue adjustment of the statutory framework for the electricity supply industry which will help to reduce the nationalised industry's monopoly power.

The Bill will allow the private generator to use the public transmission system—the national grid—whether to supply electricity for his own use elsewhere or to supply third parties, on fair terms. This is in line with the common carrier provisions for the gas pipeline network contained in the Oil and Gas (Enterprise) Act 1982.

The right hon. Gentleman talks as if this were an innovation, but it was carefully examined by the Weir committee before the grid of 1926 was established. The idea was rejected as being inappropriate to the working of a grid system.

I did not for a moment mean to say that the idea was an innovation. It is in practice in some other countries. The innovation lies in introducing it into British law.

The Bill will also entitle the private generator to sell part or the whole of his output to the electricity board, again, on fair terms. Therefore, the private generator has the choice of two routes for disposing of any part of his output that he does not consume himself.

In response to the many representations that I have received from industry, the Bill requires tariffs for trading with the boards and for using the public transmission network to be published. The private generator can therefore compare the terms on offer and make a commercial decision. The availability of these two routes will be an important safeguard for the private generator.

In addition, the private generator will be entitled to a standby supply of electricity from the electricity board for himself and for his customers. In that way he will be able to maintain supplies when his plant is unavailable due to servicing or breakdowns. If the Bill is to achieve its object, the terms of trade between private generators and the public supply system must be fair. That means that there will be no subsidy to private generators, but at the same time the electricity board will not be allowed to exploit private generators.

In the past, the area electricity boards have purchased privately generated electricity at prices well below those paid to the alternative source, the Central Electricity Generating Board, and that has discouraged private generation. More recently, the boards have moved towards paying prices that are closer to their own avoidable costs. The Electricity Council has issued guidelines within which negotiations between area boards and private generators take place.

I welcome that as far as it goes, but there have still been widespread complaints from private generators that the terms offered are inadequate. The Bill will, therefore, require electricity boards to offer private generators fair terms. That means, in general, terms that will neither increase nor reduce the prices for electricity paid by other customers of the boards. The same basic approach will apply to charges for use of the board's transmission system.

The electricity supply industry will be obliged to consult me on the principles underlyng its charges. Any dispute between private generators and electricity boards may be referred to me for settlement. As a result of the Bill, private generators should no longer have cause for complaint. These measures will, I am confident, encourage the growth of private electricity generation in the United Kingdom.

Is my right hon. Friend aware that some anxiety has been expressed not only by the Electricity Council but by the private interests involved to the effect that perhaps there should be an independent system of arbitration? One side feels that the Department will lean too heavily in favour of the electricity supply industry, and the other side believes the opposite to be true.

Perhaps that means that the outcome will be fair. However, I hasten to add that I shall normally delegate my role and appoint an independent arbitrator to represent me, instead of doing the job myself. I am sure that that will cause great dismay throughout the House, but it is right that hon. Members should be aware of it.

Will the Secretary of State have the sole right to appoint the independent arbitrator, or will the other parties be involved in that decision?

Of course the right will reside in me as Secretary of State, but I shall obviously want to have an independent arbitrator with whom both sides are content.

At present, private generation supplies 6 per cent. of total electricity supplies in the United Kingdom and about 15 per cent. of industry's requirements. The latter figure has been as high as 17 per cent., but has recently declined. I hope that the Bill will reverse that trend. A guaranteed market at fair prices, complete with guaranteed access to the national grid, should make new private generating plant a more attractive investment than before. That is particularly relevant at a time when some sections of industry are worried about the level of electricity prices that they have to pay.

It is worth noting that in many countries at present private industrial generation contributes more to overall electricity supplies than it does in the United Kingdom. For example, the figure is 18 per cent. in Germany and over 10 per cent. in France and the Netherlands, compared with only 6 per cent. in the United Kingdom.

In practice, the Bill's main impact will be on the development of industrial combined heat and power schemes—a matter that is of particular interest to the Select Committee on Energy, and especially to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost). Indeed, I pay tribute to him for his persistence in championing this cause.

Although the Select Committee has not yet reported on this subject. I have studied very carefully the evidence that it has taken in the course of its inquiry into combined heat and power. The Bill goes a long way towards meeting the justified complaints of many bodies, about which the District Heating Association and the Chemical Industries Association gave evidence to the Committee.

I think that the Secretary of State knows that I am a member of the Select Committee on Energy. Why is there no stipulation in the Bill positively to encourage co-generation?

At this stage, the Bill goes as far as it is right to go. However, the Select Committee will no doubt publish its report in due course and I shall carefully study any recommendations that it makes.

Combined heat and power—that is to say, making use of the waste heat from power stations—is technically efficient. There is no dispute about that. In the right circumstances it can improve the economics of power generation. About two thirds of existing private industrial electricity generation is in the form of CHP schemes. Indeed, CHP has been a well-established practice in industry for decades, but on a relatively modest scale. The Bill will give it a welcome boost.

The use of CHP is clearly very attactive in terms of energy efficiency, and I should like to see CHP projects going ahead wherever they are economic. My Department has already done much to help through grants, advice and demonstrations. The Bill does much to ensure that there are no institutional obstacles working against economic industrial CHP. This aspect of the Bill is of central importance.

The Bill could also have a beneficial impact on private investment in renewable energy sources that generate electricity; in particular, hydro—electric power and wind power. One small company has already applied for my consent to build a private aerogenerator. I do not accept for one moment that increased competition will undermine the nationalised electricity supply industry. On the contrary, it will be a stimulus to the public sector to improve its efficiency so that all consumers benefit. The electricity supply industry has, of course, been fully consulted on the formulation of these proposals.

I shall briefly go through the main clauses in part I. Clause 1 repeals the 1909 prohibition on private generation as a main business. It also removes a requirement dating from 1919 for ministerial consent. Clause 2 requires private generators to notify electricity boards of their intention to construct new stations if they are in excess of 10 MW. The aim is not to inhibit private generation in any way, but rather to enable electricity boards to allow for private plant when planning their own investment. That should avoid wasteful duplication of investment.

The one new constraint introduced in the Bill would apply in the event of a proposal to construct a private nuclear-powered generating station. Contrary to the impression given by the Opposition, at present there is no barrier to that happening provided that the operator satisfies the Nuclear Inspectorate and obtains a licence from it. Clause 3 requires that in future the Secretary of State's consent will also be needed. I trust that the House will welcome that clause.

Clause 4 widens the circumstances under which the consent of my right hon. Friend the Secretary of State for Scotland is needed for the construction or extension of a hydro—electric power station.

Clause 5 is at the heart of the Bill, and requires an electricity board to respond to a specified request from a private generator by making an offer to comply with the request. The request may be to purchase privately generated electricity from him, or to make a standby supply available to him or his customers. The board is obliged to comply with the request unless, on technical grounds, it would not be reasonably practicable to do so. The board's offer to comply may include reasonable terms and be made subject to reasonable conditions.

Clauses 6, 7 and 8 deal with the crucial question of charges and prices for the services provided by electricity boards in response to requests from private generators. Two broad principles underlie them. The first is the need to leave the electricity board's customers generally no better and no worse off in consequence of a board's dealings with a private generator. That is what is meant by "fair terms". The second is the need to publish tariffs of prices and charges wherever possible. That will enable private generators readily to assess the commercial prospects of any new venture and to establish whether they are being treated equitably by electricity boards.

The Bill recognises that published tariffs may not always be appropriate to particular cases, but in these circumstances prices or charges will still have to embody the principles of fair terms.

Clause 9 enables any dispute between a private generator and an electricity board to be referred to me for determination, or to an arbitrator appointed by me.

Will the CEGB be obliged to offer for sale to the private market any power stations that it is considering closing? I imagine that in certain circumstances a profitable company could be put together. For instance, if such a power station were sold, could a private operator in a remote area such as my own in the far South-West import coal to generate electricity at a plant which the CEGB could not run profitably?

Certainly there are precedents for the CEGB selling a power station that it no longer requires, but that is outwith the Bill, which is concerned wholly with the matters that I have described. The hon. Gentleman's second point is correct. There is, and will be, nothing to stop any private generator or indeed any private industrialist from importing coal if he believes that he can do so on better terms than he can obtain from the National Coal Board. I am sure, however, that the NCB will not miss the opportunity to quote highly competitive prices to anyone wishing to operate a coal-fired power station.

Does the Minister accept that coal-fired power stations that have gone out of commission in recent years, or may do so in the near future, are largely old, less efficient and waste a great deal more energy than the new ones? In the interest of conservation, will he discourage the use of plant that is not suitable for modern times?

If plant is uneconomic, it is unlikely to be used. No homilies from me are required to prevent that.

Clause 10 requires the electricity boards to consult me or my right hon. Friend the Secretary of State for Scotland, as appropriate, on the principles underlying the tariffs that apply to dealings with private generators. This will help to ensure fairness of treatment for all concerned, both private generators and customers of the electricity boards.

The Bill carries forward the Government's approach to the nationalised industries and the public sector generally. It is our aim, first, to stimulate the operation of market forces and to encourage competition; secondly, to remove artificial constraints on the private sector; thirdly, to open up the possibility for consumers of a choice of supplier; fourthly, to spur the massive State-owned corporations to greater efficiency; and, fifthly, further to diversify the country's sources of energy supply.

The Oil and Gas (Enterprise) Act has opened up the public gas supply system to competition from the private sector. The pipelines of the British Gas Corporation may now be used on a common carrier basis to transmit other suppliers' gas. The Bill carries the same approach forward to electricity supply.

I am sad, but no longer surprised, that the official Opposition have so little faith in their ability to oppose this relatively modest measure by argument in the proper constitutional way that they are associating themselves with extra-parliamentary activities and threats which, if carried out, would be both wholly irresponsible and probably unlawful. I refer to the statement made earlier by the hon. Member for Midlothian. I very much hope that he will today think better of his initial knee-jerk reaction. [HON. MEMBERS: "What did he say?"] In any case, I know that the Bill will be widely welcomed by those who understand the business of electricity supply and who are not concerned with party political dogma. In that spirit, I commend the Bill to the House.

4.33 pm

I am grateful for the right hon. Gentleman's words on my departure from my present post, as announced today. I knew that he would like the title "overlord" because working men such as he in the Tory Party always love a lord. I do not think that he has seen the last of me in energy debates. I shall explain to him some time our proposals to look at his and other industrial Departments to see whether they meet the needs of a mixed economy. I believe that there is a part for the Opposition to play in that respect.

With regard to the Minister's comments about extra-parliamentary action, neither my hon. Friend the Member for Midlothian (Mr. Eadie) nor I have time for any kind of extra-parliamentary action, so I do not know what the Minister is talking about.

The Bill is divided into two parts. The Minister dealt with the second and then with the first. I shall stick to the normal order. In our view, the Bill is irrelevant to the real issues of electricity supply. It does not deal with the real needs of the industry. A Bill to deal with reorganisation might have led to the necessary discussions on the role and accountability of a monopoly public utility. Questions need to be asked about the CEGB, the Electricity Council and the area boards. The mere fact that the industry is a publicly owned monopoly does not mean that we believe that all is well. Those bodies have existed in various forms for more than 40 years and it is time to ask some questions. The Bill, however, does not provide that opportunity.

The Bill should have dealt with the structural problems of the industry. The Plowden report, for example, seems to have fallen by the wayside. Nothing came out of it from the Labour Government because we did not have the necessary majority, and those with whom we associated prevented any such action.

The Bill is unnecessary. The idea of private sector suppliers breeding competition simply reveals the nakedness of the ideological belief that free market forces engendered by this or any other Bill will somehow improve matters in the public sector.

On part I, I make the same point as I made when we dealt with the Oil and Gas (Enterprise) Bill. I see that the Minister of State, Department of Energy is present. He was extremely helpful at that time and it is no criticism of him that I raise the matter again now.

The Bill deals with highly technical matters. Looking around, I see no more than two or three Members who understand such matters. I certainly do not. We must depend upon the advice of experts in electricity supply. For that reason, the Bill would be ideal material for the new Special Standing Committe procedure whereby expert witnesses may be called before the Bill goes into the normal Standing Committee procedure.

The Government Whip suggests that it would be a waste of time. No doubt he understands the Bill completely. If he does, he is in the minority. That procedure is not a waste of time on a Bill of this kind. It would provide a service to all of us. On many of these matters there is no party political difference. If we could discuss the practical problems with experts, we could help one another to get things right.

For example, I have compared the common carrier and other provisions of the Oil and Gas (Enterprise) Act with those of the Bill now before us. It is understandable that there should be some differences where there are technical differences between gas and electricity to be taken into account. When there is no technical reason, however, why do the provisions of the Gil and Gas (Enterprise) Act relating to common carrier applications provide that the British Gas Corporation must present the case before any mandatory requirement is made, whereas in this Bill the electricity boards are required to comply with such requests unless they have reason to refuse on technical grounds? Those provisions may amount to the same in practice. I do not know. If we had the advice of experts, we could easily discover why the two measures contain different provisions.

The issue is highlighted by the provision in section 17 of the Oil and Gas (Enterprise) Act that a direction may be made only if the Secretary of State is satisfied that it would not prejudice the conveyance of gas required by the BGC and others having the right to use the pipeline. This Bill contains no corresponding safeguards, unless the position is covered by the exemption on technical grounds. I offer that as an example of how we could have dealt with the issue more quickly in Committee if there had previously been the opportunity for evidence to be heard from experts in the electricity supply industry and in the Department of Energy.

There are differences on tariffs. There are differences on the right of the common carrier. There are differences on the minimum amounts to be provided by the private supplier. It is important that these matters should be explained in Committee. I wish that the Special Standing Committee procedure had been implemented. The electricity industry has already supplied hon. Members with information. The Secretary of State, I imagine, agreed. This represents some progress towards meeting my request. I persist, however, in my view that time could be saved if the Special Standing Committee procedure was followed.

The Opposition oppose the main proposal in the Bill on private supply. Is there a demand, and, if so, what is the size of it, from private suppliers who wish to operate under the Bill? It is one thing to allow private suppliers to produce electricity for their own purposes. Already, 15 per cent. of electricity is supplied in that way. If there is a need to alter the tariff provision—the Secretary of State suggests that it has already been done marginally—the matter must be examined fairly. It is a different thing to say that there should be a private supplier on the grid.

Any idea that there will be a rush of entrepreneurs wishing to build power stations is moonshine. I read only recently that two power stations belonging to the London Transport executive are to be shut down because it is cheaper to take supplies from the grid—[Interruption.] The Secretary of State makes an aside that I did not hear. I merely say that this is what seems to have happened.

The Bill attempts to redress the balance in advantages received by the private sector compared with the public sector. The result could be discrimination against the public sector. The Bill cannot be presented as progress towards fair competition between the two sectors. There are more restrictions on the public sector. An area board cannot proceed with development without the Secretary of State's approval whereas the private sector, according to clause 2, can do so. There appears to be no barrier to the private sector gaining access to cheap oil and gas. These sources are denied to public sector generating stations on energy policy grounds.

I gather that the hon. Member for Truro (Mr. Penhaligon) thought that cheap coal from abroad and the chance to pick up oil in the spot market would make electricity cheaper in the South-West. If that need for cheap coal exists, it should be examined on its merits. The energy policy of successive Governments has been that the bulk of supplies should come from the National Coal Board. This will, at the very least, be marginally affected by the Bill.

The private sector will, it seems, be able to discriminate among different types of consumer. It will be able to say that supplies will be directed to certain firms or a certain number of houses. This choice is denied to the public sector which has a duty to supply. An advantage is given to the private sector in that it will be able to pick and choose.

The Secretary of State has explained the legal position behind the change in clause 3. I accept what he says. The change is necessary to preserve the Secretary of State's right to control privately owned nuclear power stations following repeal of section 11 of the Electricity (Supply) Act 1919. Whatever the legal reason, the Opposition are against allowing the private supplier to build a nuclear station. Our record on nuclear stations, as the right hon. Gentleman says, is the best in the world. The housekeeping is good. That is not so in other parts of the world. We believe that clause 3 should be removed and that there should be no private stations generating nuclear power.

Clause 7 says that the price at which a board shall buy electricity
"should be on terms which will neither increase nor reduce the prices payable by customers of the Board for electricity supplied to them by the Board."
This proposal appears worthwhile. It is, however, difficult to see how it will be consistent with other parts of the Bill. If there is to be more generation capacity outside the control of the area boards, this means more unpredictability. It will therefore be necessary for boards to supply more electricity on standby and more marginal excess capacity to ensure no break in supply. More expenditure in the public sector will be involved.

The right hon. Gentleman has got it wrong. The opposite will happen. The availability of alternative supplies on contract from the private sector will allow the evening out of peak loads in the public sector.

I am coming to that point. A number of people involved in the industry made the case strongly to me yesterday along the lines that I have expressed. The hon. Gentleman has one view. I have another. I am aware of his expertise in certain spheres. I would feel happier if a representative of the electricity supply industry had been able to explain the issue to hon. Members. As the Secretary of State says, the Opposition have at least one expert in my hon. Friend the Member for Bristol, North-East (Mr. Palmer).

Private capacity will be available, by and large, at times when the boards have over-capacity anyway. The siting of plants will no longer be planned on the basis of good access to fuel and the ability to deal with relative weaknesses in the grid system. These inefficiencies will lead to increased costs in the public sector.

These points of concern about the Bill were put to me yesterday by those employed in the electricity supply industry. I hope that the Minister in his reply will be able to reassure hon. Members that those working in the industry are talking nonsense. Why are rights of entry abolished under the Bill? Are any rights of entry conferred on the private supplier? Will the private supplier play any role in the repair of lines?

The Secretary of State says that the Bill will encourage combined heat and power. That will be a result of the Bill rather than something that appears in the Bill. I question how it will be achieved. There are better ways to expedite combined heat and power than through the proposals contained in the Bill. There are wider issues associated with CHP such as the lead cities and the choice of the best fuel. I have heard queries about electricity being an ideal product for CHP. It will be interesting to read the report of the Select Committee. The Secretary of State can afford to wait for that report. The right hon. Gentleman claims, however, that an advantage of the Bill will be its effect on CHP. I prefer to await the Select Committee report.

The Opposition have constantly had to tell the Secretary of State that the legislation he proposes is light in its concern for accountability. Why, in clause 17, is the Secretary of State removing the requirement that has existed for some years that a report be presented to Parliament? Perhaps the current procedure here is not very sensible. Perhaps it does not provoke debates or perhaps there are better ways to deal with it. On the Oil and Gas (Enterprise) Bill, we examined carefully the accountability of public corporations and the companies in which there are State shareholdings. Such accountability is important. It is no answer to remove the requirement to lay the annual report. That is a negative approach to what are, I accept, real problems.

I note the reasons for part II of the Bill, and the Secretary of State explained them unexceptionally. However, we are to have at some time the report of the Sizewell inquiry, which will be wide—ranging. There may be need for changes in the legislation underlying part II if and when new aspects of compensation and liability arise from the report. There will be much discussion in Committee about accidents and liability, particularly because—the Secretary of State omitted this point—if clause 3 remains, it links up with part II. When I first looked at the Bill I thought that this point would be simple, but now I think that there will have to be wide-ranging discussions about the nuclear aspect.

The Bill is not about nationalisation or privatisation. It turns the clock back to the time when there was private generation of electricity. At the moment, private electricity comes from firms which use it for their own purposes. Their generating sets are not set up particularly, as the Secretary of State explained, to put electricity into the public grid.

The right hon. Gentleman will be as aware as I am that the private generation of electricity in the Federal Republic of Germany is four times the level in the United Kingdom, and about a quarter of the amount of public generation. Is the right hon. Gentleman suggesting, or would he care to suggest, that the generation of electricity or the cost of electricity is any worse or less favourable in the Federal Republic of Germany than it is here? Is there any disadvantage in the private generation of electricity?

For the past 50 years, going back to the Weir report and all the others since, our way of doing it has been the best. [Laughter.] What strange laughter. Does the Tory Party believe that we do things badly? I believe that our electricity supply industry is good.

I am happy to change, but I am not happy to move away from the general policy that we have followed for the past 50 or 60 years.

Does that make the right hon. Gentleman a representative of a party of conservators? It seems to me, from his last remarks, that he is not inclined to accept any change.

As to change, I should remove certain parties from the House, although not by extra-parliamentary activities.

The Bill should have been concerned about structures and the Plowden report. We shall have a constructive Committee stage in which, unhappily, I shall not participate. Overall, this is an unnecessary Bill. We shall oppose it, particularly on the grounds of clause 3 on nuclear provision. I ask my right hon. and hon. Friends to vote against it.

4.54 pm

I have great pleasure in supporting the Bill, which my right hon. Friend the Secretary of State introduced so ably. However, I disagree with his description of part II of the Bill—the nuclear part—as the hors d'oeuvre. It seems to be rather more a delicious savoury.

The right hon. Member for Leeds, South (Mr. Rees) suggested that the Bill might be a satisfactory candidate for the Special Standing Committee procedure. I was fortunate enough to sit on one of those Committees, which dealt with the Education Bill. It was an effective method of dealing with a Bill that contained no great party political controversy. This Bill should not contain any party political controversy, which would make it suitable to go through the Special Standing Committee procedure.

I read in a newspaper the comment of the hon. Member for Midlothian (Mr. Eadie) at the General and Municipal Workers Union conference that the Bill would lead to the destruction of the indigenous coal industry. That shows that the Labour Party does not regard the Bill as non-controversial. However, he went on to contradict himself when he said that the Bill would have very little impact on electricity generation. The Bill is thus not suitable for Special Standing Committee procedure because there is party political controversy in it. The evidence being given by outside parties could easily degenerate into a scoring of points rather than a receiving of evidence. Even with the Education Bill, on certain aspects of the evidence presented, there was a danger of that.

Thus, although I favour the system of Special Standing Committees and should like to see it applied to all legislation, I feel that we do not have the system quite right yet to deal with this type of legislation. However, if the Official Opposition make it clear that they are not opposing the Bill, I should support it going through the Special Standing Committee procedure.

I support the Bill because over some 10 years of involvement with energy I have become increasingly concerned at the rigidity built into our monopoly energy supply industry. With regard to electricity, the Bill represents an important step forward in removing some of that rigidity and introducing new powers for private generation and distribution of electricity. This is not a new development—about 16 per cent. of our industrial electricity is provided through private generation, as is 6 per cent. of our total electricity. This is nothing new, but rather a development of an existing system.

Neither is the Bill, as the right hon. Member for Leeds, South admitted, a privatisation measure. It is rather a means of stimulating independent schemes, such as combined heat and power schemes, which have never got off the ground properly, given the cool reception over the years by the CEGB. I note that the Labour Party in its 1982 programme argues strongly for the combined heat and power schemes as
"part of an attack on the chronic fuel poverty, cold conditions and condensation problems faced in urban areas".
I do not quite see combined heat and power schemes in that context, but nevertheless, I welcome the support of the Labour Party for the Bill, which fulfils that part of its 1982 document.

I also welcome the support that the SDP has given the Bill. In its energy policy document it states:
"it is also important to ensure that the CEGB pays a fair price for privately generated electricity".
That is what the Bill aims to achieve. With the support of both Labour and the SDP, the Bill should not run into difficulties in Committee, although the danger is that, with the SDP supporting it, the Liberals will no doubt feel that they have to oppose it on the grounds that, on energy policy, never the twain shall meet.

The present organisation of the British electricity supply industry combines the worst of all possible worlds. On the one hand it is highly centralised and top-heavy, and dominated by the powerful bureaucracy of the CEGB with its responsibility for the generation of electricity throughout England and Wales. On the other hand, its functions are curiously fragmented, with responsibility for sales and marketing separated from power generation and lying with 12 statutory area boards that are relatively autonomous. Floating nebulously above the CEGB and the area boards is the Electricity Council, a body with a general advisory role, but also charged with the two specific functions of finance and industrial relations. Altogether the electricity supply industry consists of a grand total of about 14 statutory bodies. It is neither truly centralised, nor truly decentralised. It manages to effect a complete split between the two major functions of any commercial enterprise—production and sales.

That top-heavy structure was introduced by the hon. Gentleman's party in the 1957 Act, and it was strongly opposed by the Labour Party.

I am pleased that the Labour Party is now arguing strongly that it should be changed, modernised and brought up to date with the changing scene.

The present structure makes the measurement of performance extremely difficult, because no individual unit can be held fully accountable. I am glad to have the support of the hon. Member for Bristol, North-East (Mr. Palmer) for the changes which clearly need to be made, and in the Bill we are embarking on that change in a gradual way.

I shall say a few words about how I see the future as a result of the Bill. The area boards sell a product to their customers, but have no control over the greater part of its costs—the CEGB's bulk supplies. There are question marks over the way in which the price of the CEGB's bulk supplies is arrived at. Although the CEGB is required to consult the Electricity Council about its commercial policy, the board has complete control over the bulk supply tariff, which is designed to maximise its own financial performance, rather than to enable the area boards to meet the needs of the market place.

It is inconceivable that anyone starting from scratch would design such a muddled organisational structure. Nothing resembling it exists anywhere else in the world, and with good reason. The deficiencies in the structure of the electricity industry are accentuated by the complete absence of competition. The existing organisation has a near-monopoly, for which there is no logical justification of the generation, transmission and sale of electricity.

The chairman of the Midlands electricity board, Mr. Shepherd, faced the problem squarely, when he said in evidence to the Select Committee on 24 November 1981:
"If you get huge monolithic corporations, and basically the electricity supply industry is such an organisation, it does not exactly lead to innovation unless it has competition … at least in comparison of performance if not in fact of actual supplies".

I therefore wish that we were going further in this legislation. I wish that we were legislating for changes in the structure of the industry. I should like to see eight new all-purpose power boards generating and distributing electricity. Then, I believe, we should have a more responsive and flexible structure which, together with the use of the grid as a "common carrier", would stimulate greater innovation and efficiency.

If we had had this Bill early in the 1970s, together with a much more decentralised structure of all-purpose boards, by now, instead of a handful of CHP schemes in this country, we would have something nearer the several thousands of CHP schemes that exist in other European countries. We would also have better utilisation of existing plant and much lower costs for British industry which has faced—and, in some cases, still faces—adverse price comparisons with rival firms on the Continent, although I congratulate the Government on the steps that are now being taken to try to hold down the costs of industrial energy here.

The hon. Gentleman said that if there had been all-purpose electricity boards in England and Wales there would be plenty of CHP stations. Does he not know that all-purpose boards are to be found in Scotland, and there are no CHP schemes there?

The all-purpose board in Scotland is not the best example, because there is no comparison between that board and any other all-purpose board. It has isolated itself and has been used as an instrument in the production of power stations to use up coal and to try out nuclear power. If we had more than one all-purpose board, by now we would have seen innovative developments of many kinds which would have led to the use of alternative systems for producing electricity.

In this Bill we are taking the right steps. I accept that it will be a slow process of developing private generation, and I know that some difficult technical problems will have to be overcome. I am sure that it is right to open up the electricity supply system in this way, especially if by so doing we support the various alternative schemes of CHP, wind, wave and hydro power.

I shall not go into the details of all the complaints that have been made over the years about the resistance of the industry to private generation and the sale of surplus electricity to the area boards. Anyone who wants to see the evidence only has to read the Select Committee's evidence in 1981.

I see no reason why the Bill should take long to pass through Committee, although I agree with the right hon. Member for Leeds, South (Mr. Rees) that it is important to ensure that the sophisticated system of electricity and its distribution is not impaired in any way. I imagine that the clauses dealing with the method of charging and measuring the electricity supplied and purchased through the grid system will need careful scrutiny. The present system involves the division of electricity transmission into different voltages, and clearly it is not a simple matter of measuring so many units into and so many units out of the grid.

The Electricity Council has provided right hon. and hon. Members who are interested in energy with an excellent brief on the Bill. It states that the consultations that have taken place between the Department of Energy and the Department of Industry have resulted in the incorporation of a number of safeguards in the Bill. That process is therefore taking place, and I believe that it will continue during the passage of the Bill. I am sure that Parliament can provide the necessary safeguards which are felt necessary to protect the general body of consumers.

Finally, on the clauses in part II dealing with nuclear power, I wish only to mention the PWR programme and the design proposals for Sizewell B. If the design is approved at the inquiry, if the first PWR can be constructed at a lower cost than the AGR, but with equal safety, and if the foreign components of the PWR can be kept down to 15 per cent. to 20 per cent., our future nuclear programme, assuming that the inquiry is in favour of the PWR, will be based on PWR technology.

I am disturbed, therefore, to hear that British firms engaged in the manufacture of boilers and generators are now being told that the contract for the four steam generators in the PWR at Sizewell will be placed with Westinghouse in the United States. That is most disappointing and conflicts with the assurances that were given earlier this summer that, although the pressure vessel order would have to be placed with Framatone in France, the generators and pipework orders would be placed with United Kingdom firms.

I appreciate that costs will be higher in the United Kingdom than in the United States, and that there might be a slightly longer construction period, but if British firms are to be able to provide the necessary technologies in subsequent PWRs, surely they should be involved in as much of the first PWR as possible. If the CEGB plan for the manufacture of these generators in the United States goes ahead, thousands of jobs could be lost in United Kingdom firms such as Babcock.

I support what my hon. Friend says about British orders for the PWR programme, but does he not agree that we are paying the price for the tentative and delayed agreement to go ahead with PWRs in this country? It is difficult to understand how we can expect British industry to compete with a one-off PWR, instead of a proper programme.

I agree with my hon. Friend that delay inevitably results in loss of jobs at some stage. Babcock, for example, will face serious problems in the coming year or two, once it has finished the construction of the coal-fired station in Hong Kong. Orders need to come at the right time if major firms such as Babcock are to retain their work forces.

I am more disturbed about the longer-term implications of not having British firms involved in learning the technology at the first stage, with the first PWR. I therefore ask the Minister, in winding up, to pay particular regard to this matter and, if possible, to give us an assurance that these vital orders will go to British firms wherever possible, because of the long-term interests of United Kingdom manufacturing technology.

One of the projects that would be of considerable help to Babcock would be the combined heat and power scheme being developed in Glasgow. I hope that the Minister takes note of that.

I agree with the hon. Gentleman. I deplore the plans of the General and Municipal Workers Union to block any increase in private generation. It amazes me that again and again powerful unions, obsessed with some kind of political dogma about interference with State-owned industries, insist on taking steps which prevent growth and flexibility in their own industries, with the result that there is a massive loss of jobs in the industries that they are trying to protect.

The Bill contains new limitations on the extent to which generating plant can be built. As my right hon. Friend the Secretary of State pointed out, anyone at present can technically build a nuclear power station or a hydro plant provided they obtain the necessary safety and planning approval. After the passage of the Bill, ministerial consent will be needed. If one is discussing whether nuclear power stations should be privately or publicly owned, it is worth pointing out that the majority of nuclear power stations in the West—there are now a large number of them—are privately owned. The fact that at some stage in the future a nuclear power station could be privately owned should not be a frightening concept. However, I do not foresee that developing for many years.

I support the Bill as a welcome move towards taking the electricity industry successfully into the twenty-first century.

5.11 pm

I am pleased to follow the hon. Member for Exeter (Mr. Hannam), partly because he made a vigorous attack on his party's past. For some time I have held the theory that the present Conservative Administration is as much at war with its own past as it is with the Opposition. I hope that the hon. Member for Exeter will send a copy of his speech to Mr. Aubrey Jones, who was the Minister at the time. I do not know whether he is still a member of the Conservative Party.

He was a curious type of Conservative, I always thought. Mr. Aubrey Jones was responsible for the 1957 Act whose great defect, in my view, was, and remains, that it separated the generating side from the area boards and in so doing removed generation and its costs from the pressure of the consumer. That point was made strongly by the Labour Opposition at the time.

The hon. Member for Exeter said that the Bill was a simple, easy one, but I believe he will find that the more he examines its implications, the more he will see how complicated the matter is in practice. That is evident from the schedules to the Bill, because changes are to be made and enactments repealed not only in the nationalisation statute of 1947 and the post-nationalisation statute of 1957, for which the Conservative Party was responsible, but in the Acts of 1919, 1922, 1926 and even 1888. From a legislative point of view, the Bill is complicated.

I believe that the House knows my connections with the electricity supply industry, and I should declare my interest as a member of the executive of the Electrical Power Engineers Association. It is a peaceful but knowledgeable union. Hence, I am aware that, historically, nearly all major changes of principle within the British electricity supply industry have been preceded by a public inquiry.

The Weir committee of 1925 produced a great reforming report, which preceded the setting up of the national grid and the standardisation of frequency and voltage. The McGowan committee went before the changes brought about by the 1947 Act. While the industry was nationalised, it was also rationalised largely in line with the McGowan committee's proposals. The 1957 Act was preceded by the Herbert committee's report, although unfortunately Mr. Aubrey Jones did not pay full attention to that report.

A few years ago we had the Plowden committee report, which my right hon. Friend the Member for Leeds, South (Mr. Rees) mentioned. That committee worked hard and I had the honour of giving evidence to it. Everyone assumed that Plowden would be followed by a major reorganisation of the electricity supply industry. The report dealt with the problem of the remoteness of the CEGB, amongst other things, but nothing was done. The Labour Government made a brave attempt but was frustrated by the Liberal Party, on whose Members' votes the Labour Government depended.

All that we have now is this rather ill-thought-out measure which is a clumsy attempt to apply the Government's beloved privatisation principle to the electricity supply industry. That principle has been used for oil, gas, the airways and so on.

When I was trained as an engineer I heard about a rather mythical creature known as the "five-eighths" fitter. It was a joke term for a botcher who had just one tool— a ⅝in. spanner—which he applied under all circumstances and at all times. Privatisation is the Government's botching remedy for everything, but it does not easily fit the electricity supply industry. I believe, therefore, that the Bill will need the closest attention and will need to be substantially modified in Committee if it is to work at all. If it becomes law in its present form it will create confusion.

Electricity is a unique product. It cannot be seen. Modern transmission is by alternating current, which means that electricity cannot be stored and must be consumed at the moment that it is produced. That is a peculiar feature of electricity supply and dominates its economics. We have attempted over the years to deal efficiently with its nature in the United Kingdom by having a single national interconnected system which is the largest of its type in the world. It is difficult to compare costs with those in, say, Germany, because it does not have interconnection on our scale. It has given a remarkable security of supply to the people of this country which is not found in other countries. If one compares like with like, British electricity is probably in real terms still the cheapest supply available for the domestic consumer, if not always for the industrial consumer.

If private generation is to be allowed into the grid by the methods proposed without proper control—control is just as important as ownership—the immediate concept of the merit order of the working of power stations could easily be put at risk, because unless one can control the time when stations come on to the line, the overloading of transmission lines can throw out the merit order of power stations. In these days of sophisticated computer techniques load dispatching is calculated not just week by week, day by day, or hour by hour but occasionally almost minute by minute. If that problem is not considered, it will put up the costs to the electricity consumer.

The Secretary of State was coy on that. He said that the Electricity Council had been consulted. I am sure that it was consulted, but the precaution was taken of changing its chairman at the appropriate time—bringing in an experienced ex-civil servant—so there was no danger of a Sir Denis Rooke emerging. I have read some of the documents issued by the council. It takes a cold attitude towards this legislation. It does not like it at all. If it had a more militant spokesman, it would say so publicly.

There is nothing in the Bill about the control of the hoped for private power stations that will be fed into the interconnected grid, which is a very sophisticated system of electricity supply. That matter must be dealt with in Committee first, and perhaps in the long term through regulations introduced by the Minister. Apart from the day to day operation, we must consider the siting of privately owned power stations. At present all new power stations are subject to the Minister's consent. The Minister is shaking his head. He will find that that provision goes back to 1919, I think.

Under the legislation before us, a private operator needs only to notify the local area electricity boards of his intention to erect a power station. He must obtain ordinary planning consent, and away he goes. A small, publicly owned power station could be subjected to an expensive public inquiry, ordered by the Minister, while a private station—perhaps 10 times the size—would be free of the need to obtain permission. That cannot be right, and the Committee must pay attention to the point.

The 1926 Act, which came into force before nationalisation, introduced the concept of selected stations. When the 1926 Central Electricity Board was established, it operated the grid and had the right to select certain stations for connection to it. Some stations could be operated as part of an interconnected system, while others could not. The current legislation makes little provision for that aspect. If the Government were to read some of the reports, they would not make these mistakes.

What about the obligation to supply electricity? From its beginning, in the days of the municipalities and companies, the electricity supply industry could not pick and choose its customers. It had a legal obligation, as a public utility, not to discriminate among consumers. The gas industry has been freed of that obligation, which has helped it to become an effective competitor with the electricity supply industry. The Secretary of State, who laughs, is such a knave in these matters. The gas industry has more freedom. The grievances of the electricity supply industry about that have been represented to Ministers on many occasions, but nothing has been done. The private generators, with their own customers, will show far better financial results it is said. That will not be because of technical merit, but because they do not have the public utility obligation that is placed upon the electricity boards.

The Bill appears to revive the almost forgotten idea of the use of the national grid as a common carrier. That theory was considered by the Weir committee in 1925, which produced the report that led to the coming of the national grid. It was rejected as being incompatible with the concept of a technically integrated grid receiving and supplying electricity as a tank does water. When the kilowatt hours are on the grid, they will not wear little jackets saying "private enterprise units" or "public ownership units." They will simply be units of electricity. It will be impossible on the grid to discriminate between the public and private producers. If the proposal is carried to extremes, there could conceivably be a private generator of electricity in Scotland making a contract with a user in Torquay to supply electricity via the national grid. I do not know how the exact costs would be apportioned. Does anybody?

The hon. Gentleman referred to the recommendation of the Weir committee not to allow the grid to be a joint carrier. That was in 1925, when we did not have a proper national grid. Circumstances then must have been completely different from the circumstances today. Surely the hon. Gentleman is not suggesting that because that view applied then it must apply for ever more and not be reviewed.

Principles must be examined on their merits. Sometimes they are good, sometimes they are bad. Some people say that virtue is out of date, but that is not everyone's view. That aspect of the Bill is so absurd in my view that it crosses the border of farce. Other provisions are more serious, as they will turn back the clock of electricity supply advance.

The Secretary of State gave a weak answer to me about combined heat and power. If we are to encourage that—I am in favour, as it gives greater overall thermal efficiency—it must be included in the Bill. If the Plowden report had been implemented, it would have been included. The committee wanted power to be given to the electricity boards to sell heat as well as power. We could have made it mandatory had we wished to do so. The Secretary of State is smuggling private enterprise contraband by putting it into the respectable attache case of combined heat and power.

Who wants the Bill? Does the CBI want it? It wants all sorts of things. What it wants depends on the day of the month. The CBI has given no guarantee—how could it?—that there will be a great willingness by private enterprise to find capital that will give a return on what is invested.

If the Government were sensible, they would withdraw the measure, have a fresh look at the Plowden report, and introduce a comprehensive Bill which would bring about the overdue reorganisation of this great industry.

5.30 pm

I am glad to speak after the hon. Member for Bristol, North-East (Mr. Palmer) who was my colleague on the Select Committee on Energy. However, I must express surprise at his concluding remarks. He is apparently seeking to ease his conscience and vote against the legislation when all the work that he has done in Committee must point him in the direction of supporting the Bill.

The hon. Gentleman asks who wants the legislation and suggests that there is no evidence that the legislation is needed. Yet he has taken a leading part in the lengthy inquiry on combined heat and power in Britain which we are now concluding. He chaired most of the sittings and must have heard the vast evidence, which was accumulated from all sectors of the economy, of the obstacles and institutional restraints that have prevented combined heat and power from developing in Britain.

Those are the people who want cheaper heat and electricity. The consumer who freezes in his home because he cannot afford enough heat wants it. Industry desperately needs it because it is being priced out of world markets with energy that is not as cheap as it might be.

Surely I dealt with that point. If that is the case, why is not there something in the Bill about it? I know that the hon. Gentleman would welcome that.

I do not dispute that. However, we must make our stand on the argument, put forward by the right hon. Member for Leeds. South (Mr. Rees), that the legislation will not lead to much more private generation of electricity. The answer to that is that the right hon. Gentleman does not know. The private generation of electricity in Britain has not had a fair opportunity to show that it can be competitive with the public sector because the public sector has been given monopoly and statutory powers by Parliament. One cannot blame it. If one is given monopoly and statutory powers they should be used, perhaps even abused if that can be got away with. That is precisely what has happened. We have not had the economic climate where fair competition has been able to show itself.

That is what so much of industry and, increasingly, the consumer are complaining about. The consumer is becoming aware that in other parts of the world cheap heat that has been denied to him in Britain by the institutional structures that have been allowed to develop is made available to people in their homes.

I welcome the legislation as long overdue, and I congratulate the Government on having introduced it. It will go a long way—not all the way—towards introducing competition in the electricity supply industry. It will provide an incentive for efficiency in the public sector, which will remain predominant, but it will also increase competition and provide a spur to greater efficiency because the private sector will be able to show that it can produce cheaper electricity by selling heat now that it is being given a fair opportunity.

The combined production of heat and electricity will be cheaper than electricity now produced in the public sector where two thirds of the fuel is thrown away to warm the rivers and the atmosphere. It will also give consumers a choice. The British consumer has never had the choice, except in a few isolated cases, of heat from power stations produced in combination with electricity. As in Europe, he will have that choice and will find it highly desirable because it will offer him heat which now he does not get and cannot afford. Moreover—an argument which should appeal to all hon. Members—it is a natural development towards the more rational use of British energy. If the legislation encourages more private generation and district heating among local authorities, it will ensure that British energy is far more efficiently used and conserved for the longer term.

Many of those aspects appeal to Labour Members, and that is why we are so surprised that the recommendations of the Plowden report, that there should be a complete change in the statutory duties of the electricity boards in that respect, are not implemented in the Bill. I am surprised that the hon. Gentleman is not drawing attention to that.

I assure the hon. Gentleman that I intend to draw attention to that later.

I must emphasise why I believe the legislation is so desirable and beneficial. The main reason is that it will encourage more private generation of combined heat and power. I regret that the British electricity supply industry has opted out of district healing combined with electricity production. It has not promoted it; it has tried to stop it. That is regrettable because such a course is not in the best interests of the nation or the consumer, or indeed of the electricity supply industry. It will come to discover that before long if it turns its back on the inevitable developments that must take place as a result of the recent dramatic changes in fuel economics.

The electricity supply industry has turned its hack on those developments. It offers the heat from the power stations only if people go and get it. That is a negative attitude. That must be compared with the utilities in other countries which are actively promoting the sale of heat because it is profitable. They find that they can undercut other forms of heating by selling their surplus heat and in doing so can produce their electricity more cheaply.

The legislation is valuable and will help to promote more combined heat and industrial heat with electricity production. There is the major scandal of wasted energy in Britain. We cannot afford to waste it now, and we shall be unable to afford to do so in generations to come. The method of producing electricity in Britain has been justifiable in the past when energy was relatively cheap and when there was plenty of it. That is changing and will change even more in the future. We cannot possibly justify the production of almost all our electricity at a thermal efficiency of 33 per cent. or 34 per cent. It has been proved not just technically but economically that one can achieve 70 per cent. to 80 per cent. thermal efficiency if one uses the heat for heating instead of throwing it away. The fuel poverty that results from this inefficient use of energy can no longer be justified. Within a short distance of the homes of many of my constituents in the Trent valley— homes which are inadequately heated and badly insulated—heat that is being thrown away from major power stations could be piped to cities such as Derby. People are beginning to ask, "Why can we not have this heat? Why does it have to be thrown away when other countries are increasingly building up heat grids and getting the benefit of cheap heat?" Why is this cheap heat being denied to so many millions in the United Kingdom?

It is important that we remove the institutional obstacles and the statutory restrictions that have prevented private generation and the development of CHP in the public sector. The arguments that have been thrown up against the private generation of heat and electricity over the years have gradually been discredited one by one. It was argued that our climate was not as cold as that on the Continent. It is true that our winters are not quite as cold as those of Continental countries, but it has been shown that we have more days than most Continental countries when background heat is required. That is because of our damper springs and autumns.

It was argued that we did not need district heating because we did not live in rabbit hutches such as were to be found on the Continent. That, too, has been discredited by statistics. There was the red herring that district heating meant that the public no longer had a choice. It was said, "You have your hot water or you have nothing. With district heating one has to accept an East European type of planning." That, too, is nonsense.

What choice do millions of our people have today? They do not have the choice of obtaining district heating. Those who have district heating in Denmark, for example, do not regard it as a deprivation of choice. The problem in Denmark and in other countries, such as Germany, is that politicians locally and nationally are besieged by electors who complain that they have not had the opportunity to enjoy district heating, whereas others have. The advantages in terms of price and convenience are so clearly seen by those who have it that the choice comes automatically.

There is also the "disruption" argument. It is claimed that district heating and private generation of CHP schemes would mean tearing up our roads. I can only say that British Gas makes a good job of that already. CHP schemes are being installed this very day in other parts of Europe, and it has been proved that the disruption is minimal.

Above all, we have thrown at us the argument that there is no need for a heat grid because we have plenty of other energy, such as gas and electricity, for heating and other purposes. That is an unacceptable argument. I invite those who say that we do not need district heating to ask those who cannot afford the higher heating bills that they are required to pay whether they would like an alternative source of heat.

Most of the arguments that have been advanced against district heating have been discredited. The one that remained until recently was that such schemes were uneconomic. We have been told that the thousands of district heating schemes in the rest of Europe are all uneconomic. That argument, too, has been thoroughly discredited by a series of independent reports commissioned by the Department of Energy and others. We have had the Dr. Walter Marshall inquiry, and the W. S. Atkins investigation, for example, proved that the economic viability of large-scale district heating is even more advantageous than original inquiries showed.

The Select Committee on Energy is working towards the end that the hon. Gentleman is advocating, but what does it have to do with the Bill?

I have every intention of making clear the relationship of that issue with the Bill. The Bill, when enacted, will liberate the market for the private generation of electricity. That generation will be more economic than that carried out in the public sector because it will lead to the production of heat. It will also encourage the private utility, in partnership with municipal authorities and industry, to develop lead city large-scale district heating.

The hon. Member for Bristol, North-East (Mr. Palmer) has been on the Continent with me and he has seen large-scale district heating in countries such as Denmark, where it is within the private sector. In Denmark district heating is organised not by a nationalised utility but by a private utility that produces and sells heat and electricity in partnership with a local authority. It is for that reason that I regard the Bill as vital.

The electricity supply industry has made it clear to the Select Committee on Energy and to other groups that it is not interested in selling heat. It does not want to sell heat, and we cannot blame it for taking that view because such sales will compete with the electricity that it is trying to persuade us to buy for space heating.

The electricity supply industry does not want to lay pipes and sell heat. It looks increasingly likely that district heating will be developed more in the private sector in partnership with municipal authorities and industry. This is already happening. If we wait for the electricity supply industry to provide heat for our homes, we shall probably have to wait for ever. The Bill is important because it will encourage industrial CHP and allow industry to obtain its energy at more competitive prices. It will also allow the development of domestic district heating.

The reason that has caused Britain to lag behind in district heating has led to the introduction of the Bill. We have monopoly industries in gas and electricity and we have statutory obstacles which have prevented private generation and the emergence of a more economic form of heating. For those reasons the Government have introduced the Bill. The evidence that has been accumulated over recent years is now so overwhelming in support of removing the obstacles that it can no longer be ignored by the Government.

When the Select Committee produces its report it will confirm, unless the evidence has already been published, that there has been a vast volume of complaints from many sources about the unfair practices that have prevented CHP developing in Britain. I shall refer to one or two of them because they are crucial to the proposed legislation and explain why the Government have moved in the direction that is signalled by the Bill. The Midlands electricity board has produced evidence that when it tried to introduce a district heating scheme for the new town of Telford—it wanted to use gas—the British Gas Corporation refused to supply the town. It said that gas should be reserved for premium use rather than burned for combined heat and power production. The result was that the scheme did not go ahead, and now homes are being supplied individually by British Gas, which is a far less efficient way of consuming that fuel than by combined heat and power.

The Midlands electricity board produced evidence of the Hereford scheme which has shown that it is cheaper to produce electricity combined with heat than it is to buy the electricity from the grid at the grid price. Industry in Hereford is receiving its heat more economically than it would have done in any other way. The result of that scheme is that many other industries are queuing up for similar CHP plants. Others are going ahead—for example at Fort Dunlop. Tremendous interest has been shown and the Midlands board has broken ranks with the electricity supply industry and has gone its own way and proved that CHP is the most efficient way of producing heat and electricity for industry.

The Select Committee heard the evidence of the Walter Marshall committee, which was commissioned by the Government. It took five years to report but it did so, finally, in 1979. It showed conclusively that district heating and CHP is cost effective, and recommended that it should go ahead. Above all, the evidence of the Walter Marshall committee and the evidence given by Sir Walter Marshall, who is now the chairman of the CEGB but was not at that time, was revealing. He told the Select Committee that the electricity supply industry should move towards CHP, and that if it did not, the statutory obstacle should be removed to allow it to happen in the private sector.

We have heard a great deal of other evidence in recent months about the institutional obstacles that prevent a most cost- effective use of energy in Britain. What has emerged particularly is the unfair operation of the tariff system whereby those who have the nerve to try to produce their own electricity are penalised—they have been for many years—by the electricity monopoly which has refused to pay a fair price for that electricity and, moreover, has charged an unfair price for standby facilities. Many examples of that are on the record.

If hon. Members wish to consider this point in more detail they should examine Slough Estates, a major CHP plant in Britain, which supplies a large number of local industries. Slough Estates has shown that its peak load is not in line with the CEGB's peak load and that it could have offered its surplus electricity to the grid system at a time when the grid needed it most, yet it was not able to do so because it was not offered a fair price. That is an interesting example of how co-operation between the private sector and a nationalised utility could have benefited the consumer and the nation as a whole, but that was prevented by the institutional obstacles.

I welcome the clauses that will ensure that a fair price is offered for electricity produced in the private sector. Consumers will welcome it, too, particularly those industries that have been virtually squeezed out of existence because they cannot afford the energy that they need. Consumers in the domestic sector will also benefit because the extra competition will lead to more efficient energy production.

In view of what happens abroad one wonders why we have to reinvent the wheel in Britain. We have only to study what is happening in Denmark, France, Germany and elsewhere to realise that there must be something wrong in Britain. If district heating is increasingly being supplied and is already serving 2,000 to 3,000 cities in Europe, there must be reasons why it is not happening in Britain. We have discovered the reasons. The Government have accepted the reasons and are now legislating to remove some of those obstacles. The unfair tariff system, the restrictions on using the grid as a joint carrier, the fact that there has been no independent arbitration when there has been a dispute between private generators and the public sector, have all been major obstacles which are now on their way out.

I should have liked to see us go further, and I hope we shall do so before long. In this, I support my hon. Friend the Member for Exeter (Mr. Hannam) most strongly. I should have liked to see the Government tackling the organisation of the electricity supply industry a little more courageously. Perhaps we shall, but we must accept that we cannot do everything at once.

I should like to see area boards given far greater autonomy to produce as well as to sell electricity, which would encourage them to produce and sell more heat. I should like to scrap the Electriciy Council and convert it into an energy council, so that it could have more overriding responsibility for ensuring that our energy is produced more effectively. That is one of the recommendations of the Walter Marshall committee. I support that recommendation and it must be the next stage. There should be a decentralisation with the area boards being able to compete with one another as a yardstick of efficiency so that the consumer can judge why one area is not as good as another—perhaps because it is not doing things as well as it ought. That would achieve a great deal to improve the effectiveness of our public sector electricity industry.

Taking a longer term view, we can no longer afford the colossal waste of fuel that our present system of electricity production allows. Not only can we not afford it, but we as a country cannot afford the higher cost of energy that results from that system. Our industry has already been handicapped by high electricity costs and because it has not had a fair opportunity to produce its electricity in competition with the public supply. It will now have that opportunity.

The legislation is important because it will open up for the consumer not only an additional choice of another fuel for heating, but the opportunity to have the cheapest fuel available for heating—hot water, which is a byproduct of electricity production. The legislation is important because it will begin to tackle the institutional structure of the monopoly industries which have been so reluctant to adapt to the present economics of fuel and have been reluctant to accept where the future lies in our energy patterns in Britain. If the public sector is not prepared to market heat, as happens in other countries, it is because it is a cheaper and a more economical system, the Government are right to ensure that the market is set free for the private sector to move in and show how it can be done and, by competition, jog the public sector to do things more efficiently.

The legislation removes some of the obstacles that have inhibited a more rational use of energy. It removes some of the obstacles that have prevented the consumer from gaining the benefit of the more economical energy to which he is entitled and from which consumers in other countries already benefit. For those reasons, I welcome the legislation and congratulate the Government on introducing it.

6 pm

The hon. Member for Derbyshire, South-East (Mr. Rost) padded out his speech. It was a good speech at the beginning, but it became a bit dreary towards the end. I did not understand the hon. Gentleman's logic when he said that the meritorious concept of combined heat and power, being introduced in Britain at long last would be favourably affected by the Bill. He and the hon. Member for Exeter (Mr. Hannam) reserved their position and said that not all the obstacles were to be removed. They both said that the Bill should be something else or do something in addition. They want a Bill to reform the structure of the industry. Is the absence of that reforming structure a reason why combined heat and power will not succeed? Is that their argument? Do they say that the Bill should be perfected in that way?

I do not think that it is possible to reform the industry, using this Bill as a vehicle. That would probably be beyond the scope of the long title. Are the hon. Members saying that it is a pity that the Bill does only a limited amount and that it would be better if it were broader and more general? I do not understand how they can welcome the Bill and have such reservations.

I disagree with the hon. Member for Exeter about the procedure that we could have adopted. I hope that the Under-Secretary will respond to that. Why cannot the new Committee procedure be used? I do not agree with the hon. Member for Exeter that we can use the new procedure only when a Bill involves non-party issues and is noncontroversial. I think that the new procedure is ideal for issues that are controversial, though not necessarily in a party sense.

We are expecting to consider soon a Bill on mental health in Scotland. The legislation involves controversial issues and doctors might want to argue with us and among themselves about contentious legal matters and restrictions. The new procedure lends itself to dealing with such complex matters. I have in mind the excellent statements by representatives from the electricity industry. Some of them are complex and difficult to comprehend. The new procedure should be used so that we may have a fair balance between the public and private sectors.

The Secretary of State talked about having an arbiter. The arbiter would be appointed by him and the choice might be influenced by the contesting parties. I am sure that the hon. Member for Exeter has read the submission by the Electricity Council of the comparison between the common carrier provisions in the Oil and Gas (Enterprise) Act and the common carrier provisions in the Bill. If we believe in fairness between the public and private sectors, we should ensure that the issues are investigated in full in this new type of Committee.

We all know about the drawbacks of the old system of Committee work. Third parties are not allowed to participate. It is not always easy for a Minister to respond to the arguments, because he cannot always be adequately briefed. In the interests of creating good legislation, the Minister should consider using the new procedure.

I agree that here a party conflict is involved. There seems to be an unwillingness by Labour Members to change the present system, but no system can be perfect after so many years. Private generation already exists within the system. No purity of argument is involved.

I am not convinced that the 15 or 17 per cent. of private generation in industry will increase by much—discounting combined heat and power, which I cannot quantify. Why should we get excited? Why think that the Bill will be a death blow to the public power industry? I do not think that it will. There is no reason why we should not give the Bill a fair wind, so long as there is fair treatment for both the public and private sectors.

Naturally, I hope that the Bill does not contain an inbuilt Conservative cheat in favour of private industry. I hope that the Government are not trying to make a success of the provisions to counter Labour Party prejudices. The official Opposition do not want private enterprise to succeed, because it does not suit their book. Fortunately only few in the old Labour Party take that view. Like Members of the SDP and the Liberal Party, the majority want the best system in a pragmatic economy. We want a symbiosis of private and public sectors. One sector should not be the parasite of the other. The private sector must not sponge on the public sector. That is why we must get the balance right. The two sectors can live without feeding on each other but by complementing each other. That is the way in which the Bill should be drafted.

The SDP does not wish to oppose the Bill on Second Reading. We accept its merits. Part II is unexceptionable, apart from some of the consequences for Sizewell. We have serious reservations about privately-owned nuclear power stations. We tabled an Instruction, which Mr. Speaker said he would not call.

We cannot see our way to supporting the Bill on Third Reading, however much it is improved, unless the Government abandon the clauses which allow, even in theory, privately owned nuclear power stations to operate in Britain. The provision is unnecessary. In a recent broadcast the Under-Secretary confessed that no one was knocking at the door asking for a licence for a privately owned nuclear power station. He implied that the nature of the Bill made it necessary to express these provisions in a certain limited way. If there is no chance of, and no case for, privately owned nuclear power stations, why allow them in the Bill?

The right hon. Gentleman must appreciate that, under the previous Act, there is no prohibition on anyone owning a private nuclear power station. If a body generates for its own use, it does not need permission, but of course it has to go through certain procedures and it requires a licence under the 1965 Act. We are not making that easier, but erecting a further barrier.

The Under-Secretary is being charming to me if he is implying that I was responsible for the legislation in 1964, when in fact I was the Minister in charge of housing and local government in Scotland. The fact that he claims that permission exists and that private nuclear stations do not proves my point that there is no demand. Who is now knocking at the door? Why must we have private nuclear power stations at all? Public anxiety has existed since 1965, despite our excellent record on atomic energy, our splendid public authorities, our record in the industry and our ability to run a nuclear power industry.

I shall have another crack at the right hon. Gentleman to make him see that it is no part or purpose of the Bill to permit private nuclear ownership. It is impossible for anyone, however malevolently inclined, to read clause 3 as suggesting that the Government intend to promote private nuclear power stations. We are adding a further barrier to their construction. Ever since the regulations have been around—that is throughout the course of the legislation, going back to 1919—it has been possible and permissible for people to buy and construct power stations. We are making it no more or less likely for that to happen today. It should come as no surprise to the right hon. Gentleman to learn that we have no wish to encourage private nuclear power stations.

The purpose of the bill is quite different. Only others in the alliance, such as the hon. Member for Truro (Mr. Penhaligon), who lives in a fantasy world, will try to stir up this matter. I hope that the right hon. Gentleman takes a different view.

The Under-Secretary of State is being unfair. Many British people support a nuclear energy programme, but are still seriously worried about safety, including the disposal of radioactive waste. They know that we must constantly stress safety and satisfactory disposal if we wish to sustain the creation of more nuclear energy plants. The case for nuclear energy plants would be disastrously weakened if a private individual could promote the construction of a privately owned nuclear power station.

I am not so much distressed about clause 3(1) as about clause 2(1). I do not wish to turn the debate into a Committee stage by discussing clause 2(1), but it is fundamental to the Bill. It allows:
"any person other than an Electricity Board … who proposes—
(a) to construct or extend an electricity generating station having plant with a rating exceeding 10 megawatts, or" and so on. That paragraph could be amended to read "but not a nuclear generating station."
Any other type of power station could be permitted. By amending clause 2(1) clause 3(1) would be unnecessary. It could remain in the Bill, but it would be redundant.

I, or my hon. Friend the Member for Truro (Mr. Penhaligon), or any hon. Member who represents us in Committee, will seek to make that amendment. If none of us is appointed to the Committee, we shall try to persuade hon. Members of like mind to promote the amendment, because it is extremely important. If that amendment, or something equivalent to it, is not made, admirable though the Bill is, we could not support it on Third Reading.

If the clause allows the present position to continue, as the Minister says it will, we cannot support the Bill, despite the addition of the new provision in clause 3(1). I hope that I am making this speech and not the Under-Secretary of State, but I shall give way again.

The right hon. Gentleman is making an awful fuss. He sat in the Department of Energy for five years. Throughout that time it was possible for someone, without his consent, to apply to build a nuclear power station privately. We are adding a further obstacle to private construction by making consent from the Secretary of State necessary. I do not understand why the right hon. Gentleman is getting uptight, since he had to live with that possibility for the 20 years during which he held office and has been involved in such matters. Why should he get excited now?

I should have been in office for 20 years. Alas, I held office for only nine years, six of which were spent in the Scottish Office. During that time I never once saw an application, or even a proposal, however remote, to build a nucleur generating station privately in Scotland. Nor did my English colleagues hear of such an application in their domain.

Does my right hon. Friend agree that the Bill will mean a change for nuclear power stations? If the generation of electricity by nuclear power is as cheap as some argue, and if private generators of electricity will receive a fair price for their commodity, which is a welcome part of the Bill, private electricity generation using nuclear power could be viable economically, but it could not have been during the 20 years about which my right hon. Friend and the Minister were talking.

Yes. Our two arguments are entirely sustainable in defiance of the Minister's obstinacy. He is not the most malleable of Ministers and it will be difficult to persuade him in Committee. The Minister cannot dismiss these two propositions, the first of which is that historically the position on safety has changed. The second is the complete absence of demand. I also wish to mention the future of the nuclear power industry, especially in relation to Dounreay, because that affects the theoretical wish to have private nuclear generating stations running in tandem with the public sector.

The Minister cannot dismiss the argument of public anxiety. The proposed reprocessing plant at Windscale caused the longest-ever public inquiry. The reason for such a long inquiry was the immense public desire to ensure that we got it right. By holding such inquiries, Britain has done more than any other country to reassure the general public. There were two debates in the House of Commons and two free votes in Parliament, and everyone who wished to make representations was allowed to attend the public inquiry.

The Sizewell inquiry will also be lengthy, because the Government wish to hear every case. There is genuine public anxiety, not so much about our existing nuclear power stations, as about foreign stations that have suffered a series of alarming accidents. The new system proposed at Sizewell caused considerable public anxiety when operated in America, where it was privately owned, to such an extent that a lobby—not always rational—has grown up against nuclear energy in principle.

I support those who wish to see the safe extension of nuclear energy in Britain, but I do not wish the ace card to be given away—that a nuclear power station could be privately owned. There may be a case for that in 20 years' time, but there is no case for it today. No private contractor has asked for permission to construct a nuclear power station, so why should we include it in the Bill? If someone had asked, I could see the logic of saying to the House, "Perhaps we should amend when we bring in the long-overdue Bill to reform the structure of the industry," but there is no need for it now.

There will soon be a statement about the future of the prototype fast reactor at Dounreay. We are all worried about what will happen there, because it affects the nuclear component of electricity generation in the United Kingdom. The private licensing of nuclear power stations adds an alarming dimension and is allied to this situation. The Secretary of State said nothing about the future of nuclear energy.

We heard an alarming report about Sizewell. We were told not by an Opposition Member, but by a Conservative Back-Bench Member, that the main purpose of going ahead with Sizewell, although our present electricity generation exceeds our present needs, was to maintain the home industry's ability to build nuclear power stations. Yet the hon. Member for Exeter told us today that the main orders for the projected building at Sizewell will go to the United States of America. That cuts the ground completely from under the British nuclear power industry.

The hon. Gentleman said, in the hearing of many hon. Members—it can be read in Hansard—that the CEGB would send orders for four steam boilers at the Sizewell development to Westinghouse in the United States of America. That will affect seriously the Babcock plant in Renfrew, which now is struggling hard to attract foreign orders. In addition to taking part in the general combined heat and power exercise in Britain, Babcock's wish to contribute towards the development at Sizewell. I do not have to itemise all the other great firms in Britain that are also anxious to help to build the power station at Sizewell.

Those are all important matters. We want to give the Bill a fair wind and a fair chance. We do not want to be partisan, but we warn the Minister that we have a genuine anxiety which it is his duty to seek to assuage.

6.20 pm

I shall not follow the four points made by the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) except to say that I agree with him that we would welcome an examination of the Bill, small though it may be, by a Special Standing Committee.

It has always been well known that if we constructed PWRs in this country large orders would have to go abroad. It is well known that vested interests are involved in the construction of PWRs. Influence has been brought to bear on the Prime Minister and others by Lord Weinstock. He has interests in the General Electric Company and there is a tie-up there with Westinghouse. The right hon. Gentleman will know that as well as I.

As an argument in favour of combined heat and power, the speech by the hon. Member for Derbyshire, South-East (Mr. Rost) was extremely good. There is no question but that he put his arguments well. I agreed with many, if not most, of the arguments. However, as arguments for the Bill, they stank. The hon. Gentleman had no argument for the Bill. The Bill has nothing to do with CHP. If it did, I would have hoped that the hon. Gentleman would persuade his right hon. Friend the Secretary of State to delay publication of the Bill and its Second Reading until the Select Committee on Energy, on which we both serve, had reported its findings on the CHP inquiry. It would have been sensible of the hon. Gentleman to advise his right hon. Friend to do that, if the Bill is all about combined heat and power.

The hon. Gentleman will know that similar legislation has been enacted in other countries, deliberately designed along the same lines to help to promote the private generation of combined heat and power so that it can compete fairly in the market place with the public utilities. One has only to look at America, Germany and other countries, to see that that has already happened.

The hon. Gentleman knows that the electricity supply industry, which is integrated in this country, differs substantially from the electricity supply industry in Germany and the United States, where there is already a great deal of private investment and generation.

The hon. Gentleman also referred to private generation. He asked why we were opposed to doing something new. It is not something new. Until the electricity supply industry was nationalised under the Electricity Act 1947, we had precisely that—private generation. There were private electricity companies together with the municipal undertakings. They sold to individual areas and also to the national grid, which was built up by the Central Electricity Generating Board because it was necessary for security of supply and cheapness to have an integrated electricity system.

The Government of the day, who were backed by all sorts of eminent people and reports, decided that if we were to have a good and proper integrated service, in which all consumers were equal and electricity would be supplied not only in urban areas, but in rural areas at roughly the same cost, we needed an integrated supply system. That is precisely what we created. Up till now it has been highly successful. The fact that it has had some failures has been due to the attitudes and actions of various Governments to the electricity supply industry. We must take that into account.

This is a mouldy, silly, spiteful little Bill. I am sorry that it has been introduced. It does nothing for consumers or for the industry. It is positively harmful to the stability and good management of the electricity supply industry.

The Secretary of State is an amusing fellow at times. He said that the Bill was introducing competition. He knows that the Bill does not introduce competition. As my right hon. Friend the Member for Leeds, East (Mr. Rees) and others of my hon. Friends have said, it is difficult to introduce competition when one is merely providing the same product in the same distribution system. One cannot distinguish the electricity that one is getting. One cannot have red electricity and green electricity. If the Secretary of State wanted to go along the lines of his own bigotry and ideology he could provide competition. In various ways, he could provide the consumer with choice.

Electricity travels at 186,000 miles a second. That is a constant. We cannot interfere with it. However, we can interfere with the supply of electricity and the manner in which it is supplied in many other ways.

For example, if we wanted to give consumers a choice we could say to them: "If you go on the private system, you could have a supply at 110 volts. If you go on a public system you could have it at 240 volts." That is a real choice because some people think that 240 volts is too dangerous and that 110 volts is safe.

One can also provide electricity either through direct current or, as we do at present, by alternating current. Perhaps a direct supply, although it is more dangerous, would, because it does not have the same losses in transmission, be much more suitable to certain consumers. However, that is not what is proposed. The Government are not proposing to give the consumer a choice. It is misleading and pulling the wool over the people's eyes to say that this little piece of privatisation or the giving of access to the national grid will assist consumers. It will not do so. It will not lead to large-scale CHP.

The Bill will injure the electricity supply industry, which is an integrated system. The industry stands or falls by being integrated and by being able to do its own planning on a day-to-day basis for the supply of electricity and for the capital programme. The effect of allowing private generators into the transmission system without let or hindrance is bound to injure the stability of the industry and make its planning much more difficult.

As my hon. Friend the Member for Bristol, North-East (Mr. Palmer) has said, the system gives a security of supply that is second to none in the world. That is an absolute. It provides security of supply. Through private generation, and if too much reliance is placed on private generation, that security of supply could be undermined as the safeguards will not be the same. Nor will the efficiency of maintenance be the same as it is in the CEGB.

There is also the merit order list. It is a significant part of keeping down the costs of electricity to consumers. As my hon. Friend the Member for Bristol, North-East said, it is done almost minute to minute. As I worked in a power station once, I know the amazing way in which the national grid can bring power stations onto load in the order of merit and so provide a cheap and secure supply to consumers.

Without the control of the power stations, I do not believe that the electricity supply industry will be able to cope with that merit order list as it does now. It will not have the same power or control. Private generators may not have the same will as the CEGB has now.

If the industry does not have control of the merit order, costs are bound to rise. That applies as much to transmission controls as to power stations.

My hon. Friend is absolutely right. That is why he and I oppose the Bill. We believe that the existing electricity consumer must pay the cost in the form of higher prices and the lowered efficiency of the electricity supply industry.

The clause that provides for the compulsory use of the board's transmission system has been likened to clauses in the Petroleum and Submarine Pipe-lines Act 1975, about which I know little. However, I know that this is a completely different issue. Although I opposed that Act, I know that it is one thing to give suppliers of gas access to the pipeline and quite another to give private suppliers of electricity access to the transmission lines. Electricity cannot be stored. It must be used the second, or rather less than the second, that it is produced. Gas, however, can be stored. What the gas corporation does not pull out of the ground today it can use 20 years hence. The same is not true for electricity. That is why compulsory use of the board's transmission lines will upset its day-to-day and long-term planning.

What is more, because private generators will also have the right to demand a supply from the electricity industry, the two combined will make it essential for the CEGB to keep plant that it otherwise would not keep. Moreover, that plant will probably be idle and therefore be a burden on taxpayers.

The hon. Member for Derbyshire, South-East dealt at length with combined heat and power. I agree with him. It is a disgrace that we should throw 35 per cent. of the heat that could be used for other purposes—heating homes, for example—out of chimneys and cooling towers. It is a crying shame that we have done nothing about that. It is absolutely necessary —I am sure that the Select Committee will make its recommendations accordingly—that we get on with CHP as soon as we can. The Bill will not help that in any way.

The Atkins report said clearly that CHP was viable and would produce a return on capital, not merely in line with the Government's strictures but, in some cases, above that figure. The report said that CHP in the lead cities should be provided by private generators. It continued:
"The Government should initiate as part of a further CHP/DH programme the preparation of full project plans for two or preferably three CHP/DH schemes in the shortlisted locations showing the higher rates of return on investment. The local authorities concerned should be required to give support to and actively participate in the preparation of the plans. The plans should be in sufficient detail to enable phased implementation of the schemes. The ESI must at an early date review their future new power station policy to identify the most appropriate medium and long term operating role of CHP stations based upon CHP/DH development up to the national potential predicted in this study."

Mr. Atkins and his partners envisaged CHP being carried out by the electricity supply industry, the Government and local authorities in partnership. He saw no role for private generation in those lead city schemes.

The Bill should be about the reorganisation of the electricity supply industry and the removal of the barriers to its providing heat and power. We have come up against that barrier time and again. That was contained in the evidence that was given to the Select Committee. That is what the Bill should be about, not the silly little clauses that we have. It should be a real Bill that will help CHP. The hon. Member for Derbyshire, South-East and I are in agreement on that.

I agree with the hon. Gentleman to a considerable extent. Does he agree that the present legislation, by introducing some competition to the nationalised sector, will force the nationalised electricity supply industry, if it wishes to stay in business, to become more competitive? Does he also agree that the only way to do that is to market its heat?

I understand the hon. Gentleman's commitment to CHP and respect the work that he has done on it. Nevertheless, with respect, I do not believe that private industry will be able to find the necessary capital to provide the type of CHP that both he and I want. I mean the CHP district heating schemes, not industrial CHP.

I shall tell the hon. Gentleman why not. In relation to sources of heat, Atkins said:

"The Stage 1 feasibility studies have demonstrated that, at the present time, only CHP power station units with an electrical rating of 150 MW(E) and above can provide the thermodynamic efficiency which is likely to result in a viable cost for heat from power stations to serve large city schemes."
No private firm would put up risk capital for a power station with an electrical rating as high as 150 MW. It costs hundreds and millions of pounds to construct such a power station and I do not believe that there are any takers in the market to provide a CHP scheme together with a local authority and the Government. That is why the Bill is completely irrelevant to the important subject of CHP. CHP is Labour Party policy, so there is no political difference between the Opposition and the hon. Member for Derbyshire, South-East (Mr. Rost).

I heard the arguments about clause 3 and the exchanges between the Government Front Bench and the right hon. Member for Greenock and Port Glasgow. If the Government are serious, I cannot see why clause 3 cannot be prohibitive. I do not understand why it does not simply prohibit private firms or individuals from building nuclear power stations. There would then be no arguments between the Government and the right hon. Member for Greenock and Port Glasgow and others. I deplore the idea of nuclear power stations being built and managed by private firms.

I am sure that the hon. Member for Derbyshire, South-East, with whom I had the privilege of visiting the United States of America, will agree that there is clearly a difference between the housekeeping, safety methods and management of our nuclear power stations and those in the United States of America, which are in private hands. The Government will have nothing but trouble unless they make it clear—as they can do in the Bill—that it is contrary to Government policy to allow private nuclear generation.

I want to help the Government; the Under-Secretary of State should not laugh. Sometimes his expressions and words offend. When people try to help him, he should not do that. He is a little young, but as he gets older he will understand that even Labour Members want to help. I have not yet forgiven him for the garbage in, garbage out, gibe that he made about a distinguished scientific adviser to the Department of Energy, Sir Kelvin Spencer. The Under-Secretary of State and the Government will save themselves a lot of trouble from the anti-nuclear lobby if they make it clear that there will be a ban on private nuclear generation. I hope that the hon. Gentleman will introduce an amendment to clarify that.

I shall conclude as I began, by saying that this is a piddling, silly little Bill and that I shall certainly vote against it tonight.

6.43 pm

I disagree, in particular, with the final remarks of the hon. Member for Swindon (Mr. Stoddart). The Bill may be modest, but it certainly does not fit his description. In turn, I hope to make a modest but short speech. This is not the time for making grandiose, earth-shattering, parliamentary reputation-making speeches. After all, it is always easy to ruin a reputation.

This modest Bill opens up a new prospect for electricity generation in this country. That is what it is all about. Subject to safeguards, it allows the generation of electricity as the main rather than the subsidiary part of one's business. With respect to the Government Whip, I agree with the earlier remarks of the right hon. Member for Leeds, South (Mr. Rees). In this highly technical Bill, there is some scope for the Special Standing Committee procedure. Some of the points raised by the hon. Member for Swindon could well be tested through that procedure. I may now have fallen out with the Whips for agreeing with that suggestion, but the procedure is nothing new.

The right hon. Member for Leeds, South said that we could leave things as they were. He said that we should leave things as they had been for the past 50 years. That might be the conservative way, but it is not the innovative Tory way of dealing with exciting prospects such as the generation of energy. Unlike the hon. Member for Swindon, I believe that the introduction of competition into the CEGB's monopoly will not damage the industry. Nor is there any reason for it to damage the CEGB.

There is already some partnership between private and State generation. At present, private business can generate electricity for its own use and sell the surplus to the national grid. Therefore, there will be no vast change. I am surprised that Opposition Members should feel obliged to vote against the Bill. Privately generated electricity already accounts for 16 per cent. of industrial electricity and 6 per cent. of national needs as a whole. It is largely confined to the chemical, food processing and paper industries, but the Bill would enable the idea to spread to other suitable industries. The whole concept may be attractive to smaller local electricity demands, such as those of industrial estates in medium-sized towns.

Privately generated electricity might just mean that we can at last do away with the wretched business of standing charges. It will be more difficult to argue the need for standing charges if electricity is privately generated. That suggestion may give rise to some controversy, but I am sure that my hon. Friend the Under-Secretary realises that standing charges are greatly resented.

My main point is that our European friends do not operate under our monopolistic system for obtaining their electricity. Why should we be the only ones to be always out on a limb? Local suppliers, both public and private, supply local electricity needs to Europe. That is what the Bill envisages. This is a high technology industry. The CEGB rightly prides itself on its efficiency; whether it is efficient is another matter, but it believes itself to be efficient and I accept that belief. If we bring some competition into the industry, we shall bring in access to private high technology and research. I believe that the private entrepreneur as well as the State has a part to play and that this could be a healthy development.

Nationalised fuel in this country is far more expensive than fuel in other EC countries with similar industrial capacity. Why should it not be as cheap here? Perhaps a little competition would make it so. The Bill is bound to stimulate competition and efficiency. It should result in smaller price increases and both sides of the House should welcome it.

It has been suggested that the scheme would put prices up. I cannot see how competition could have that effect because consumer resistance would result in some competitive pricing. Competition is competition for a market; one cannot say, "Buy my product, which is more expensive than the others," and expect to do business. One has to prove that one's product is cheaper than the next man's, yet competitive in quality. Under these proposals, prices are bound to increase more slowly and to be more responsive to market needs.

The CEGB will remain the main supplier. It costs about £750 million to build a power station. Not many power stations will be built as a result of the Bill, especially as the lead-in time from planning to fruition is about 10 years. No one will be obliged to enter the field and there will therefore be no damaging inroads into the position of the CEGB. There will be no scope either for cowboys to make quick profits and run away. The private supplier will have to operate under the same strict safeguards and controls and the same licensing rules as the CEGB.

Nothing revolutionary is proposed in the Bill—nothing that does not apply to almost every Western country. The Bill will not harm the existing industry and it should benefit the consumer, who after all is supposed to be the customer for whom the whole industry is working.

I welcome the Bill. I believe that it will bring fresh thinking and competition to the industry. Once again, the Conservative Government are letting a fresh breeze blow into an area of the nation's life.

6.53 pm

Three aspects of the Bill please me most. First, it will allow and encourage innovation. Indeed, I believe that it will encourage innovation rather more than it will encourage competition. Many possible alternative sources of energy are being independently explored by scientists and engineers of considerable calibre. The Bill is the most practical encouragement that they could receive. It will give them the opportunity to sell their wares. Having taken a great interest in alternative energy for some years, one is aware of the claims made for various alternative sources. The Bill will allow the people involved to test their ideas and to put their efforts up against fair competition. The Bill will make that far more possible and likely.

Secondly, although many of us sometimes make too many judgments on the basis of our own constituencies, I know that in my constituency there is a substantial amount of privately owned plant capable of starting operations tomorrow. According to the owners, only the tariff arrangement between themselves and the CEGB prevents them from switching the plant on. The capital has been invested and the plant is there. I have said many times that in the present economic situation Britain should take more advantage of the capital already invested in our economy. It seems crazy that a long-standing argument about tariffs should prevent that.

Despite recent movements by the CEGB, I have no doubt at all that it has fixed outrageous tariffs in a deliberate attempt to prevent the private generation of electricity. As a trained engineer, I know enough about these matters not to be silly enough to try to predict whether those plants will be economic. Given the pricing policy outlined in the Bill, it will be for the owners to judge, and what better judgment can there be than that of the person who owns the plant as to whether the project is worth while?

Thirdly, as the hon. Member for Derbyshire, South-East (Mr. Rost) has said, the Bill will encourage combined heat and power schemes. Over the years he must have found it frustrating to attend so many energy debates in which everyone supported heat and power schemes but no one did anything about them. I do not know whether the Bill will encourage such schemes to the extent that the hon. Gentleman would wish, but it must certainly encourage them to some extent; that is greatly to be welcomed.

It is worth emphasising to those who are doubtful about heat and power schemes the sheer limitation in the efficiency that can possibly be achieved by present methods of transforming heat into electricity. Average thermal efficiency is 33 per cent., although I believe that sufficient capital investment could raise it to 37 or 38 per cent., but anyone trained in engineering knows that there is no chance of achieving greater thermal efficiency than that until we have developed a whole new generation of materials capable of maintaining their shape and size at temperatures, pressures and stresses beyond the fantasies of anyone currently in materials engineering. It is worth stressing that we are stuck with that limiting factor to show that the argument for heat and power generation does not derive from a temporary inability to build efficient power stations. It is a basic fact of thermodynamics. The Bill will encourage heat and power schemes and we should all welcome that.

I should be interested to hear how the Minister envisages the development of private power stations. The most obvious source of private power generation is unused plant and I appreciate and welcome the possibility of its use. Some hon. Members have talked as though private entrepreneurs will be building 150 MW power stations. One never knows—the world is full of surprises—but I doubt whether anyone will be starting such a project next week. As I suggested in my short intervention in I he Minister's speech, however, many existing power stations are—unfortunately, in my view—gradually being closed down by the CEGB. In my part of the world, the power station at Hayle has completely gone, a power station at Plymouth is to be closed and I understand that another at Yelland on the north Devon coast, is also scheduled for closure.

What is the Government's view on these power stations? The most rational approach for someone entering private generation would seem to be to buy one of these sites with equipment already installed and planning permission already in existence. The station will also be connected to the national grid, which means an enormous saving.

Private ownership of these power stations represents an interesting possibility. The CEGB is knocking them down and abandoning them. The price that it puts on the assets must be virtually zero. Hardly any of the equipment is taken away to be used elsewhere. It is sent to the scrap yard. We are talking of a scrap yard price for the stations.

With those power stations in private hands and the opportunity that exists in my area to import coal from world markets, a private enterprise takeover of a redundant site is the only real possibility of a privately owned power station producing electricity for the national grid. Is that considered by the Government to be a good idea? Will they encourage the Central Electricity Generating Board to sell stations in such circumstances? If they do not agree that my proposal is the most likely means by which large-scale private electricity will result from the Bill, I hope that they will explain their own approach.

The Minister will not be surprised to know that I have a basic and fundamental objection to clause 3. My party will vote for the Bill on Second Reading. It contains some proposals for which we have argued and which we welcome. I shall not, however, be going through the Lobby in support of the Third Reading of a Bill that does not make it absolutely clear that there will be no private generation of electricity by means of nuclear power within the United Kingdom.

If technology in 40 years' time is so competent and well-proven that these stations can be allowed to go into private hands, another Bill can be introduced to change the situation. With existing technology, the idea that any rational Government would seriously say that it welcomed and wished to encourage the private nuclear generation of electricity is beyond belief. Any Government that believed this to be a political or rational possibility in Britain would show that they were not aware of public opinion or arguments. The reason for the clause is the Government's obsession with the technology of nuclear power for generating electricity. They will not admit that it is different from all other forms of steam-raising available for generating electricity. To allow private generation of electricity but to make nuclear power a separate Government monopoly would be an admission by the Government that there is a difference.

I have no doubt that a case can be made. Given that, for the first time, a private generator of electricity will get a fair price for his product, there is a greater likelihood than before of someone wishing to build a private nuclear power station.

If the Government reply that no one has asked to build a nuclear power station, I invite the Minister to answer one simple question. If the economics were favourable, would he welcome and approve an application from a private individual or a privately owned company to build a nuclear power station? That is the fundamental question. It should not simply be asserted that no one has applied, that such a proposal is not economic and that therefore no one will apply. Would the Government welcome such an application? If the answer is yes, we will know where we stand. There is a fundamental disagreement. If the answer is no, as I suspect, why has the clause been allowed to remain in the Bill?

I welcome the Bill for its new ideas, which could lead to considerable entrepreneurial and new technology investment in energy production. However, the inclusion of the clause to which I have referred means that the Bill will cause great political controversy. I suspect that a significant part of the Committee stage will be spent discussing this issue.

It is clear that the Social Democratic and Liberal Parties are united. We are in favour of the Bill but opposed fundamentally to clause 3 as it exists. We shall vote for the Second Reading but we shall not vote for the Third Reading unless that aspect of the Bill is changed.

7.5 pm

I cannot agree with some of the comments of the hon. Member for Truro (Mr. Penhaligon), especially on the generation of electricity from nuclear power. It is recognised that there is dreadful waste in the generation of power. The manner in which a finite fuel like oil is used for the generation of electricity must be viewed with deep concern. There are highly emotional and often rational arguments against the use of nuclear fuel or nuclear power, but it has to be remembered that nuclear technology exists. The arguments against its use are the arguments that were employed against using aeroplanes to fly.

When cars first appeared on roads, individuals walked in front of them with a red flag. It is not unusual that man should be apprehensive and worried about new technology. Man has always been upset and worried about new technology, but it exists, and it will continue to exist and to develop. If other nations develop the technology and use it and we do not, we shall be put at a disadvantage. We cannot allow that to happen. Our manufacturing industries will find themselves in competition with those that depend on fuel generated in different ways and probably at cheaper cost.

The hon. Member for Truro (Mr. Penhaligon) said that he would never agree to an application to build a private nuclear power station. Does my hon. Friend agree that such an application would prove that a private firm had the technology, the knowledge and the ability to go ahead? No amount of wishful thinking will eliminate the fact that the firm possesses that knowledge and ability. It it not nonsense to suggest that to prevent a firm from buidling a nuclear power station would take away that ability?

I thank my hon. Friend for his interesting intervention. He has pinched part of my speech. I hope to deal with the matter in more detail. My hon. Friend is correct.

I say to those opposed to the use of nuclear energy for the generation of electricity that we are using fossil fuels and that these are finite. We have a duty and responsibility to those who follow us to ensure that we leave behind what they can use.

There are areas where oil has not been replaced by technology. I refer to aviation fuel for aircraft. One cannot in the present state of technology use anything but oil derivatives to fly aircraft. Therefore, we must continue to keep sufficient of that finite fuel as long as we do not have the technology to use other means of propulsion for aircraft. Motor vehicles and many ships also run on oil derivatives. We must continue to husband these resources, and that, if nothing else, puts a duty on us to make use of the technology that exists for the generation of electricity from nuclear fuel.

I welcome the Bill, because it removes the monopoly powers of the electricity boards in the supply of electricty. Anyone who has listened to me speak recognises that I do not care for monopolies, whether they are public or private. I believe that competition in everything is in the best interests of the consumer. As in all other matters of supply, it is always better to have flexibility and competition. The Bill will give the private sector companies a chance to generate and to rationalise their generating capabilities.

The Bill will assist the CEGB to make the decisions that otherwise it may not make, or may defer making. There is nothing like a little bit of competition to sharpen a company. We see that all around us, and perhaps the best example is British Airways. Those who use British Airways' services to Scotland will know what I mean. British Airways, full marks to them, have sharpened their operations as a result of competition and a changing market.

It is important that we supply customers with electricity in the most effective, efficient and competitive way for the customer. It is the customer whom we should always keep in mind. The Bill will give the private generator the ability to obtain supplies from an electricity board for his own and for his customers' use. This is essential, because one cannot store electricity. There are peaks and troughs in demand and when they occur one must be able to iron them out. That can be done through the grid system.

In Scotland we have understood for a long time how the grid system works. With our capacity to store water in our dams, we are able to store it in such a way that we can generate electricity when the demand requires it. One cannot do that in any other way. The water is there, given to us by nature and by God. Hydro-generating is a vital part of the Scottish economy. The provision to refer disputes in this matter to the Secretary of State and for the Secretary of State to determine the matter finally is welcome. I welcome it, and I only wish that it had been contained in the Civil Aviation Acts that we have passed in the past two years. It would have saved myself and many other hon. Members hours of work and removed the need to write hundreds of letters, to place an early-day motion on the Order Paper and to call for an Adjournment debate. If we had had this referral to the Secretary of State to determine matters of dispute, we should not have been faced with the problem of the proposed airway in Scotland and the effect that it will have on gliding.

I welcome the provision to which I have referred, and I trust that my right hon. Friends on the Front Bench will bear in mind the fact that when one is exposing the private sector to possible disputes it is always wise to have a referee somewhere and some provision in Bills so that the referee can act in the best interests of everyone. Consequently, I can be said to be less than impartial when I say that it is wise to have a type of long stop such as the Secretary of State determining disputes.

I welcome the new system, which will be of benefit to customers and the economy because it will ensure that the assets that we have are more effectively and fully used.

The relationship between monopoly purchasers, whether in the public or private sector, and the people who supply them with their products, can often develop in such a way that it is unhealthy and unhelpful for the supplier of the goods. For example, the manufacturer of equipment who is supplying it to the electricity boards can, with the passage of time, find that if the relationship is not good he is faced with the problem of not being given a good opportunity either to tender or to supply, and this could lead to the demise of a number of companies. Therefore, the wider the options and the greater the number of people who are making decisions, the more opportunities there will be for companies in the business of supplying goods to what are, at the moment, monopoly purchasers.

If one removes the monopoly, one removes the cosy relationship that can develop between purchaser and supplier. In some instances there may be only one supplier to a monopoly purchaser. That cannot be healthy either for the price of the product or for the parties concerned. We should be thankful that the relationship will now change and that the viability of manufacturers in the business of supplying equipment and plant to electricity generating sources will be increased because they will have an opportunity to supply more than one source.

Hydro power is an important and vital sector of electric power generation in Scotland. As anyone who lives in the north of Scotland knows, for years we have exported electricity. Therefore, anything that we can do to make better and more use of our natural resources can only be to the benefit of the people in Scotland. One of the advantages of generating electricity privately in this way is that some of the benefits will remain in the area where it is generated. That is vital, because, sadly, the grand ideas that were talked about when the scheme was first developed have long since faded away. Now, each of the areas is just part of the total set-up. The new provisions will be beneficial.

I welcome the raising of the lower capacity limit from 50 kW to 1,000 kW because that will be beneficial to those who wish to develop in the Highlands. I am at a loss to understand why anyone should object to the construction of a private sector power station. If individuals are prepared to invest their capital and take the risks that the market presents, we should welcome it. We should welcome anything that increases competition. I can envisage circumstances in which a nuclear power station could be financed, constructed and operated by private money. If we can accept the generation of electricity from nuclear elements, what is important is the safety regulations and how tightly they are operated.

I make what I consider to be a valid comparison. I cannot believe that those who regularly fly between Scotland and England believe that it is safer to fly in a publicly owned aircraft than in a privately owned one. I cannot see how that case can be made. That is as good an example to use as any, because there is no difference between the public and private sectors. What is important is that both aircraft are operating under the same safety regulations. Of those of us who fly regularly from Scotland to England, some fly British Caledonian and some fly British Airways. I defy any of them to suggest that British Caledonian is less safe than British Airways. Nobody could argue that, because we know that both operate to the same safety standards. That is what matters. Therefore, it should and must be possible for private sector generation of electricity from nuclear sources provided that all producers operate within the same safety parameters.

If the hon. Gentleman compares the State monopoly in Britain for nuclear power and its superb safety record with the industry in the United States, does he believe that it is sheer chance that one is a Slate monopoly and the other is run in the somewhat laissez-faire manner of the American nuclear industry?

I am probably the wrong person to answer that question, because I shall be simplistic about it. I know that many more power stations are operated by nuclear power in the United States than is the case here and, being an airman, I know that the risks are greater the more one flies. The risk element changes. There are inevitably problems that do not exist with a smaller number. That is the simple approach of an airman.

Yes. Airways are a prime example. The more hours one flies, the more chance there is of involving the human element. Normally, it is the human element that fails. Rarely does technology fail completely, but when it does, there is a major disaster. There are, of course, often major disasters when the human element is involved. That is true both in generating electricity and in flying aeroplanes. One cannot legislate for the human element.

In replying to the hon. Member for Truro (Mr. Penhaligon), would it not be more sensible to compare the federal and state safety regulations that apply in the United States with those that apply in this country, rather than draw a false contrast between State-owned and private enterprise?

I thank my hon. Friend for his intervention, because I said that I was not knowledgeable enough to answer the question. I do not know the differences between the different states on safety regulations. I should not wish to enter into a discussion of that depth without first making sure that I knew the differences. As I do not know those differences, I tried to relate the question to a common factor, which is that the more one does something, the greater the risk ratio.

I do not believe that it is chance, as the hon. Member for Truro said, that has led to our splendid record. His argument, as I understood it, is that we have a good record because we have tight safety regulations. If those tight safety regulations are carried into the private sector, the analogy that I gave between private and public sector aeroplanes applies. If both operate to the same criteria, both have the same risk ratio.

The hon. Member is talking about technology, and I am worried about what he is saying. What he says about aeroplanes is largely true. Because of the many hours of experience that had been gained in flying that aircraft around the world we thought that we had solved all the problems, but then we find out the hard way about stress-induced failures and fatigue in aeroplane components. Aeroplanes crashed, not because the regulations were wrong or improper or because they were not rightly enforced, but because of a new technology, and all the problems had not been overcome. We discovered the hard way about laminar flow changes when an aeroplane goes through the sonic barrier. That was not due to a lack of safety regulations. Nor was it the fault of Ministers or anything else. It was simply because it was a new technology which was not fully understood. It is understood now, and it is well regulated. Some of us have doubts—not paralytic fears, as the Minister suggested I have—about whether we have resolved all the technology barriers in the nuclear industry. That, in our opinion, makes a difference.

I thank the hon. Gentleman for his intervention, because, if anything, he continues to make my case more solid. He spoke about laminar flow and the problems of high-speed flight. We must look at the time scale from the introduction of the prototype models, and the knowledge and experience that have been gained between the end of 1945 and today. One can now fly across the Atlantic in Concorde at Mach 2. One could not do that 15 or 20 years ago.

With the advances in technology, the experiments that have been conducted, and the safety record in the generation of nuclear power in this country, we must acknowledge that we have gone beyond the experimental stage. We are now in the development and use stage. Thus, the hon. Gentleman's arguments are not valid and cannot be sustained.

Does the hon. Gentleman accept that his analogy with aircraft, although interesting in many respects, is not entirely appropriate? The life of a nuclear power station will be more than 25 years. The life of an aircraft in service, unless it is going to its third or fourth owner in the wilder areas of South America or Africa, is much less. The cost of a nuclear power station is greater than the cost of an individual aircraft, if it is a successful model, but if we embark on a nuclear programme such as the hon. Gentleman seeks to support it will mean that we shall freeze our energy technology and not be in a position to provide the capital for the new technology, nuclear or otherwise, that would otherwise be available. The hon. Gentleman is likely to support his Government in the position of an economic or energy ostrich.

I am sure that all hon. Members will pass their own judgment on the matter. If the hon. Member for Rother Valley (Mr. Hardy) believes that an aircraft is no longer in use after 25 years, he should visit Heathrow. Indeed, if he visits any Royal Air Force station he will see many aircraft over 25 years of age. With modern technology and knowledge, we have a duty and a responsibility to ensure that those who follow us have the advantages of our knowledge and technology and the use of the equipment that we have today.

When I spoke earlier about the use of nuclear power in generating electricity, I said that one of the finite fuels that we have in abundant supply in this country is coal. We should make the maximum and most effective use of that fuel. However, the generation of electricity by coal should be considered in terms of the pits that are being closed. When pits are no longer considered viable by the National Coal Board and are closed, it does not mean that they contain no more coal. There is coal there. Why do we not give these pits to anyone in the private sector who wishes to operate them and who is prepared to work them? Why not give them the pits for nothing? After all, they are only holes in the ground after the NCB ceases to use them. In that condition they provide nothing for the local community.

If private sector companies or individuals are prepared to take on the risks, both financial and otherwise, of operating those pits, I think that we should consider that course. It might make a small contribution to those communities which suddenly find, when the National Coal Board makes its decision, that there are no longer any jobs in the area. By giving those pits to the private sector, jobs and fuel might be provided for the local community, and possibly also a little competition, which would be healthy for the NCB.

Does my hon. Friend agree that pits are closed because they are uneconomic and that those decisions are based on the present cost of production and demand? Those considerations may alter. Would it not be worth considering keeping those pits on a care-and-maintenance footing to see whether costs and demand change? They would then have some value. It does not seem necessary for the NCB to give them away as worthless.

I did not make that suggestion flippantly. I believe that we should look at ways and means to continue employment opportunities for all those who, through no fault of their own, find themselves living in an area where working conditions have changed. In addition, I believe that competition is healthy and that anything that one can do to stimulate change and help individuals to do something themselves can only be healthy for the community.

If pits are deemed to be uneconomic by the NCB because of present technology, the private sector may be able to introduce that new technology in a way that the public sector cannot. The private sector may be able to extract coal at prices that would make the pit viable. There would be no risk to the State, as no State funds would be involved. It would be quite straightforward. The National Coal Board would say "Here you are, here is a pit that is no longer considered viable. If you want to set up a company to operate it, you may do so." Certain limitations could be laid down. I make that suggestion because of the anxiety in some parts of Scotland when pits close because they are no longer considered to be economic. There might be some individuals who are prepared to take them on as a private sector venture. I believe that the Bill will help the generation of electricity, the customers and in the end will help to make our companies more viable.

7.33 pm

I shall return the House from the world of aviation back to the Bill. One or two Conservative Members have addressed themselves, often with good arguments, to the Bill that the Government should have introduced to reorganise the electricity supply industry in accordance wih the recommendations of the Plowden committee report of 1976.

The Employees National Committee for the Electricity Supply Industry issued a statement about the Government's proposals. It said:
"It will be better in our opinion if any legislative proposals affecting the industry would concentrate on changes in its organisation and powers, which a sucession of Inquiries have recommended over the last decade or so and which successive Governments have so far ignored."

My right hon. Friend the Member for Leeds, South (Mr. Rees) drew attention to the problem that prevented the previous Government from bringing forward such necessary legislation. They lacked both a majority and support from their coalition partners. Such constraints do not apply to this Government, nor does the constraint of parliamentary time apply, because they have found time to introduce a Bill relating to the energy industry.

I have to declare an interest in the industry as a national officer of the Electrical, Electronic, Telecommunication and Plumbing Union which is the major union in the industry, and part of the employees national committee, whose report I quoted. In the industry's opinion, the Government would have done better to bring forward reorganisation as recommended by the Plowden committee.

The Secretary of State and the hon. Member for Derbyshire, South-East (Mr. Rost) have made great play with the advantages of combined heat-and-power schemes. They argue that the Bill enables a much greater use to be made of the calorific potential in fuels that combine heat and power. The hon. Member for Derbyshire, South-East did not reply to my intervention and say why the Government did not introduce legislation, as proposed in paragraph 4.23 of the Plowden report, to change the industry's statutory duties and make it clear that it had a prime duty to provide for the economical and efficient supply of electricity, but also to provide heat through the use of combined heat and power schemes.

If the Government were not using combined heat and power as window-dressing for other purposes and were genuine in their commitment to CHP, they would have included clauses to free the generating board or area boards from those statutory restraints. The Government should say whether they will be making changes in the Bill later to bring that about.

We must consider whether the Bill is compatible with sensible planning of energy and electricity policy. The CEGB has a statutory duty to plan for the future, as does the Secretary of State for Energy. In its evidence to the Sizewell B inquiry, the Department of Energy made clear the CEGB's responsibility to develop and maintain an efficient, co-ordinated and economical system of supply of electricity in bulk for all parts of England and Wales. There are separate boards for Scotland. The CEGB has to take account of limitations in its planning, as do the Government when considering the industry's capital programme.

If the electricity supply industry, the generating board and the Department of Energy are taking account of both supply and demand to create a proper plan for energy supply, what is their position with regard to private operators who come to them with their plans for development? If the plan is inconsistent with the Central Electricity Generating Board's plan as agreed with the Department of Energy, will the Department say, "Your plan is inconsistent with that plan either in fuel use or location, and we shall therefore refuse you permission to operate the station"? If the Department does not do that, what happens to the efficient planning of Central Electricity Generating Board and the Department of Energy? If the Department of Energy allows it, planning becomes highly unnecessary.

We have had a number of examples of the need for long-term planning in a major industry and a major Department such as the Department of Energy. Is that consistent with random individual decisions unless they are made only within the overall scope of the national plan?

The balance of fuel mix must also be considered—not just the amount of electricity that is needed but the means by which it will be generated. Here I take issue with the hon. Member for Perth and East Perthshire (Mr. Walker). The main reason that the CEGB has more effective safety provisions at its nuclear installations than those in the United States was mentioned earlier. It has over 300 reactor years' experience of operating nuclear power stations. The CEGB has experience of many stations. The training of the work force can benefit from the experience of a much wider range of nuclear installations. The individual power station in the United States has only a limited experience of operating difficulties. That can lead to more accidents and difficulties than would occur if there were wider experience. That is the critical difference which makes individual operators of nuclear power stations in Britain inappropriate. That is why clause 3 is detrimental on safety grounds.

Equally inappropriate is the overall energy planning of the fuel mix between different fuels. The Government have obviously taken a view on the balance between coal and nuclear power in the generation of electricity. They put that view to the Sizewell inquiry. Whether to have a PWR or an AGR is not the issue. They have made a decision whether to have nuclear power of fossil fuels. The balance is largely being made up at the expense of oil because oil has far more uses, as the hon. Member for Perth and East Perthshire mentioned.

If the private generation of nuclear power is inappropriate, there must be a shift in balance towards coal within that strategy. Where does that leave the Government's plan for the balance between fuels in generation? Where does it leave their objective on a steady ordering programme for the nuclear industry, particularly within currently established industrial demand The Government must address themselves seriously to that question.

There is an equally worrying aspect about the coal industry which has been mentioned several times, among others by the hon. Member for Truro (Mr. Penhaligon). The current relationship between the CEGB and the National Coal Board, and the Department of Energy and the Government is regulated by the relationship between the generating authority and the National Coal Board. A substantial expansion of imports of cheap coal on the open market may be an attractive option in the short term, but in the long run it will be detrimental to our security of supply and our fuel industry. Is allowing the introduction of private operators an attempt to import coal by the back door rather than having a head-on confrontation between the CEGB and the National Coal Board?

The employees and the management in the NCB will be interested in the Government's reply as to the implications of that policy on their relationship with the generating authority. Many of my hon. Friends have mentioned the national grid structure and the operation of the merit system. Hon. Members would be well served if they were to see the CEGB's sophisticated operation at Bankside. That could not be based simply on the willingness or intention of an operator to sell into the grid. It must be based on high level instructions and rapid responses based on a sophisticated planning system. If that system is not being operated, and if the proposals are detrimental to it, stations would be operating out of sequence in their merit order at a far greater ultimate expense to the consumer.

We must also be concerned about security of supply. The Bill tries to ensure a security of supply to the private operators and those who are dependent upon them. That requires a surplus capacity which must be paid for out of the national system. We saw a failure of Britain's supply last winter. France has also seen a major breakdown. Industry would have to bear a major cost of such unprecedented and uncatered for breakdowns in supply. They would also be a major inconvenience to consumers.

I am much impressed by the hon. Gentleman's grasp of the detail of the industry. However, the Bill was earlier described as a "modest measure". I agree with that. Will the hon. Gentleman address his mind to a question which has not been answered so far. Why, if safety and planning factors are so important, has no other country in the Western world deemed it necessary to exclude the private sector?

A problem that has arisen in the debate is that people confuse a national monopoly with a natural monopoly. It is not proposed to run grid lines from two different companies down the same street. Nor does that happen in any other country. Although in the United States different companies operate in different areas, the same companies do not operate for the benefit of the same consumers in similar areas. Yet that is the direction in which the Bill is moving, although not entirely adequately. We are talking about parallel systems of supply which do not have an equal basis. They are based on the private supplier being able to sell electricity into the system when he so chooses, and to take electricity from it when he so chooses. Will that be based on average or marginal pricing, and will the national system bear a greater share—a disproportionate share—of the cost within the system? Those are the questions that arise out of the proposals.

Hon. Members have referred to the price currently being paid to private suppliers. About 4,000 million units are being sold to the electricity boards out of the 18,000 million generated each year, according to the CEGB. Are the Government interested in new generation or primarily in upping the price of the units which they already sell to the CEGB, perhaps feeling that they will get a better deal under the new arrangement?

The hon. Gentleman is making an interesting point and I do not want him to develop a line of argument that is unintentionally misleading. Of the 4,000 million units that are sold to the industry, 90 per cent. are generated by British Nuclear Fuels Ltd. and the Atomic Energy Authority, which are not part of the private sector at all.

Others may still benefit from that. However, others are also selling into the system. Conservative Members have said that they are concerned at the price and who will benefit from any change.

It also appears that one of the difficulties of private suppliers, because of the present economic recession, is that they are selling less electricity to their existing customers than they were previously, and that perhaps selling into the national grid would therefore be an attractive option for them.

I make one further point about nuclear power and the possible erratic development of private industry. The issue was raised by the hon. Member for Exeter (Mr. Hannam) when he asked for assurances from the Minister that the equipment for the new power station would be supplied by British manufacturers. The Secretary of State would be faced with difficulties in giving such assurances under the Central Electricity Generating Board's system. If he is asked to give such assurances for a private operator who is seeking to create generating capacity, the difficulties will be far greater and may be impossible to overcome.

The power engineering industry, the boilermaking industry and other industries that rely on power generation are dependent on consistency and observable ordering patterns because they have to work on long lead times. They look to planned development rather than what they have experienced in the past, even under the Central Electricity Generating Board. They want planned development rather than massive bursts of investment followed by a complete drought of the sort that they are now experiencing. The life of these industries would be much harder within the haphazard system that is proposed than under the system that the generating board is currently operating.

Many hon. Members have described the Bill as a modest measure. At best it is irrelevant and at worst it will undermine the electricity supply industry. It will be destructive of good planning and good organisation in the industry and it does not address itself to the problems of the electricity supply industry. It is to those problems that the Secretary of State for Energy and the Department should have addressed themselves.

7.53 pm

I am pleased to be able to participate in this debate, especially as I sat through all the stages of the Oil and Gas (Enterprise) Bill, which I enjoyed thoroughly. I have an added enjoyment in participating in the debate because I have recently discovered that I am not to be a member of the Committee which considers the Bill. I understand that I am to be a member of the Committee that is to consider the Agricultural Marketing Bill. That means that I shall be able to make some of the comments that I might have made in Committee if I had been a member of it. I shall be able to do so on Second Reading instead of in Committee.

I am pleased that I shall be able to take up some of the remarks of the hon. Member for Birmingham, Northfield (Mr. Spellar). I listened to the hon. Gentleman's maiden speech, on which he should be congratulated. I congratulate him on the constructive and thoughtful contributions that he has made since becoming a Member of this place. They have been the sort of speeches that we expected from Jocelyn Cadbury's successor. Perhaps I should say that Jocelyn Cadbury inherited my secretary. He did so after I fell out with her, I regret to say.

I welcome clause 1, which repeals section 23 of the Electric Lighting Act 1909. It repeals also part of the Electricity (Supply) Act 1919. This shows how necessary it is to update electricity supply and generating legislation. The 1909 and 1919 Acts stood on the statute book unaltered for an extremely long time. The Government are continually showing initiative in updating legislation that is necessary for our well-being.

Energy is one of the most interesting and necessary requirements for the well-being of the nation and the people. There are far too many monopolies in the energy business. I welcome the Oil and Gas (Enterprise) Act because it moves away from monopolies to more competitive business. The Central Electricity Generating Board, the National Coal Board, the British Gas Corporation and the British National Oil Corporation have all been huge monopolies. Those who are elected to this place seem always to want to grasp power although they do not always have much knowledge. In this case, they want to grasp power literally. I welcome the freedom that the Bill will give private entrepreneurs, who will look to ways of producing electricity and other forms of energy from electricity.

The hon. Member for Truro (Mr. Penhaligon) talked about thermal efficiencies and other concepts which I, as a simple farmer, cannot talk about. Only the competition of private enterprise and entrepreneurs will produce efficient electricity generation and power-producing industries in future.

I live in an area dominated by small business and rural industries. Sometimes the rural communities are remote. The national grid has been extended and in my constituency only two or three people are now waiting for it to be extended to them. I understand their desire for that to happen. I am old enough to remember when we used to light farmhouses with Tilley lamps. We then moved on to self-generating plants. I remember the electricity generating plant that my family had. It was a Kohler D 110 volt system that went on with the first switch and went off with the last one. It used to catch alight regularly. Luckily our farm was remote and we did not set fire to other properties.

We then progressed to a diesel generating engine and were able to put away the Tilley lamps. That plant produced some heat generating power and we were able to get some of the modern comforts that many urban dwellers seem to think are essential nowadays. We then joined the grid.

When we had our own generating equipment we felt independent. We saved energy and ensured that there was no unnecessary waste. We live in a world of waste. The amount of waste in this material world is almost unmentionable, which leads me on to some almost unmentionable matters.

The waste from agriculture is the dung or excreta from farm animals. Its energy potential was demonstrated to me on a visit last year to America to a farm called Mason-Dixon, which was right on the Mason-Dixon line. The farm was making use of methane which could be produced from the animal waste. It was an 800-cow dairy farm but I was assured that the process could be viable with only 50 cows. It was a fascinating experience. The fanner was having great problems because he could not control the amount of gas that was produced from the waste material, nor the amount of electricity then produced from the gas. The farm had a surplus of electricity and gas. It was interesting to see how private enterprise developed that technology to utilise the waste. The farm was eventually able to produce all the electricity it needed and far more from the waste which is normally spread on the land.

Indeed, the waste is still spread on the land and electricity is generated as well. The solid waste material was dried and the liquid material was pumped into an irrigation system driven by the electricity produced. The cows were even bedded with the dried solid material so the circle continued. The system was as good as perpetual motion.

That is the type of recycling that we must look for in future energy production. Only by privatising—that is a horrible word—and throwing open energy production to those who have the wit, the wisdom, the ability and the capital to experiment will future energy needs be met.

Private enterprise does not always experiment purely for gain. The profit motive is not the only consideration in the private sector. If it were, I would not have continued as a hill farmer all of my life because that is more a way of life than an economic business. Interest is generated as well as new enterprises when we allow the private sector its full head. Therefore, I greatly welcome such private enterprise.

I should like to mention the scheme at Robroyston. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) mentioned the great advances that were made at the beginning of hydro-electric production. They fell off when the grid was connected and supplies could be drawn from electricity produced more easily by coal or nuclear power. The Robroyston idea is delightful and could be used in a smaller enterprise. The idea is that water is pumped to the top of the dam and stored when demand for electricity is not as great and power is produced at peak periods when the water is allowed to fall to the lower level.

That is a great idea which could be better developed not on a grand scale by pumping the water of Loch Lomond up into the shady glen in the shadow of Ben Lomond but in far smaller private enterprises. Only private enterprise has the motivation and interest to try new methods.

Dounreay in the North of Scotland is a leader in the production of electricity by nuclear means and in new technologies. About 14 per cent. of our electricity supply is produced by nuclear means.

The hon. Gentleman is wrong. In Scotland 30 per cent. of electricity is supplied by nuclear means.

I am pleased to bow to the hon. Gentleman's superior knowledge. I know that the Scottish National Party is looking desperately for ways to make Scotland self-sufficient in energy.

Scotland has all the facilities for producing energy. It has plenty of cattle, wind, water, peat and nuclear resources. Energy will not be produced as a result of SNP philosophy. The SNP is moving away from the type of philosophy that I expect from the right hon. Member for Western Isles (Mr. Stewart) and towards creating an urban society with the authority to control everything. Freedom of the individual is important, not the freedom that the SNP so hypocritically espouses. Man must have the freedom to develop his talents for producing energy.

I have been diverted by the hon. Member for Dundee, East (Mr. Wilson). In the United Kingdom as a whole 14 per cent. of electricity is produced by nuclear means. Nuclear production has grown gradually over 25 years. In that time how many deaths were directly attributable to the production of electricity by nuclear power? I believe that not one death can be pinned directly to such production.

The fishing industry is seven times more dangerous than the coal industry, but the coal industry is dangerous. The development of nuclear energy would allow the majority of our electricity to be supplied by nuclear means and if wind, water and peat are utilised along with wastes we could develop many alternative means of producing energy. I hope that the Bill is the first step on that road.

I hope that it will not take 60 years to update this measure. The snowball is probably rolling faster than that. I hope that this Government will continue for another 20 years—I am sure that they will continue for another five. We can continue down the path of generating new electricity and new ideas as well as stimulating the economy—the path on which the Government have started so well.

8.9 pm

I can hardly follow the argument of the hon. Member for Banff (Mr. Myles) for cow-watt hours taking the place of kW hours. His lengthy point about the opportunities for creating energy from waste products is probably worthy of development in some other countries.

The Bill does not follow the usual privatisation pattern that we have come to expect from the Government. Although I have reservations about clause 3 and some other parts of the Bill, it is interesting and on balance, my right hon. Friend the Member for Western Isles (Mr. Stewart) and I have decided to support it on Second Reading. There are no assets to be sold off to the private sector. The Bill does not wish to give away State assets to those who have not participated in building them up. Clause 1 breaks the State monopoly, but—as is provided elsewhere in the Bill—the national transmission system is retained and is allowed to be used, at a cost, by private generators. Monoply that is in the public interest is frequenty good if the monopoly is sensitive and protective. However, if freedom of choice is to be removed, public sector monopoly must be justified.

Other hon. Members concentrated on the merits and demerits of the English system, but I shall concentrate on Scotland. Although once good, the Scottish electricity system is now a scandal. The reasons are clear-cut. The Scottish boards have proved utterly inefficient in their planning. They created colossal blunders and they were savaged by the Select Committee on Energy when evidence was produced that the capacity of the Scottish boards was 70 per cent. above the needs of the economy. They wasted hundreds, if not thousands, of millions of pounds by having unnecessary plant that has resulted in higher costs to the consumer. Over the years, the boards were warned of a drop in demand, but they refused to accept that the pattern of all-electric housing was changing in Scotland. They failed to recognise the impact of gas on industrial and domestic markets and they also failed to realise that the economy was not growing as fast as many of us would wish.

Apart from their inefficiency, the Scottish boards have been dominated by nuclear mania. They decided to progress with Torness despite the evidence that the cost of the power station would be astronomical and that there was no market for the electricity that it produced. Despite engineering difficulties—especially those experienced at the Hunterston B power station—they decided to go ahead with the AGR system. The boards produced a secret corporate plan, which said that the South of Scotland electricity board intended to reduce its use of coal. That policy would have caused great problems for the Scottish coal board, which relied upon the SSEB as its major customer.

If the reasons that I have given in justifying the need to break the State monopoly were not enough, both the southern and northern boards have acted badly in their social obligations. The North of Scotland hydro-electric board has long since lost the social duty required of it b0y the original legislation. The board went ahead with the proposal to increase the cost of electricity produced by diesel generation for the island communities. Instead of helping those communities by spreading the additional cost to consumers throughout Scotland, the board took the antisocial step of increasing power. They were forced to drop the proposal only by substantial public objections and eventually the instruction from the Scottish Office Minister who dealt with the matter.

However, that is not to suggest that the North of Scotland hydro-electric board inspires great confidence. Indeed, its previous chairman was an ex-Labour Minister—an amiable man—who was appointed under political patronage. Today he was replaced by Mr. Michael Joughan, a former Conservative candidate and former president of the Scottish National Farmers Union. The political patronage system seems to work effectively, but not to the aid of the consumer. We should have better than amateur management of such a large board.

The South of Scotland electricity board has the worst record of disconnections in the United Kingdom and had to be rebuked publicly by the Secretary of State for Social Services before relenting on its programme of cutting off poorer consumers. It could also be criticised for its slowness in introducing aid to industry.

I have many criticisms of the actions of those boards and I have no confidence in them. That brings me to the point where the Bill may help. The hydro-electric board was established for the North of Scotland originally to use hydro power, although most of its power is now imported from the SSEB. However, it has several stations that generate electricity, one from oil at Carolina Port B—it is being closed down—and a new station at Peterhead, which is now running on gas but will eventually switch to oil.

The hydro-electric board lost interest in the production of power by hydro electricity. When cheap oil came in, the board switched to oil-powered stations and also bowed to the SSEB, which produced power by nuclear generation. The board has been slow to develop wind and wave power. Any developments during the past few months or years came as much from the urgings of the Department of Energy as from the hydro-electric board, which is deeply conservative and did not wish to become involved in those areas.

I hope that the North of Scotland hydro-electric board can be revamped. It should become a renewable energy board and should use the renewable energy resources that abound in the North of Scotland. The Government should consider giving the hydro-electric board the lead in the development and usage of renewable energy. That will come from hydro power. It is estimated that only between 30 per cent. and 50 per cent., given the different calculations, of Scotland's potential for hydro power has been utilised. It is the cheapest form of power available and programmes should be set in motion to go ahead with it as quickly as possible. In view of the uncertainties that hang over the Dounreay research establishment, the Government should steer some additional research in renewable energy resources that way. Perhaps the Minister can tell us about Dounreay, because there is much uncertainty and anxiety about that research station.

The Bill provides an opportunity to develop renewable energy. If the hydro-electric board will not do it, the Bill allows the private sector to become involved. Except perhaps in wave generation development 10, 15 or 20 years in the future, only small producers will be involved in private generation. Power will come from low-fall hydro generation with small units or from small aerogenerators, but surplus power can be incorporated into the grid more fairly and effectively than at present. The board is prepared to accept small amounts of power. The rate that it is prepared to pay at present is judged to discourage anyone who wants to offer additional sources of power.

I do not think that there will be any new large power stations in Scotland. There is a huge over-capacity. That is an indictment of the overall management of the industry. The Bill will not make over-capacity worse than have the existing boards. There is an argument that, had the Invergordon smelter been equipped with its own power generating facilities it would have been less likely to opt out of its bargain with the Scottish electricity boards in relation to the use of power from Hunterston B.

Once the figures were issued, it was shown that the bargain was less generous than the offer to the smelting industry in north Wales and the North-East of England. That is one reason why the Invergordon smelter went. There is a prospect that many small users and producers will use the grid. I do not think that there will be the problems that other hon. Members have mentioned.

Private nuclear plants are covered in clause 3, to which I strongly object. I do not agree that they would be desirable. Safety must be paramount. Many of us have worries about the safety of nuclear power stations in the public sector. With all the training that is given to the work force, the precautions that are laid down, the regulations and the inspectorate, we still have worries. If clause 3 were to remain in the Bill, that would be unacceptable to me and my party. We would have to change our vote on Third Reading, as other parties have said they will.

I suggest to the Minister that there is a preferable way of dealing with the proposal for private nuclear power stations, in the unlikely event that they would be built. We could use the Private Member's Bill procedure. If there were a proposal to build a private nuclear-powered generating station, it would be possible for the consortium concerned to bring forward a Private Member's Bill, subject to the procedures of the House. One would have to make sure that both Houses were fully consulted on that issue and had a voice. Such an important matter should not be left to go ahead with just the consent of the Secretary of State for Energy. If the Minister were to take on board my suggestion of a Private Member's Bill procedure, that is a solution that he and his Department might consider in Committee.

On balance, I welcome the first part of the Bill. It is a useful development. It allows a small innovation, which will be helpful to the renewable technologies at which the big electricity boards have so far shrugged their shoulders. If we encourage those matters, we will have made some progress. For that reason my right hon. Friend the Member for Western Isles and I will vote for the Second Reading of the Bill.

8.24 pm

It is a welcome change to hear the hon. Member for Dundee, East (Mr. Wilson) supporting us on energy. As he said, the Bill is interesting. It contains dimensions that have not been examined already. I apologise to my right hon. Friend the Secretary of State and to the right hon. Member for Leeds, South (Mr. Rees) for not having heard their speeches. I confess that I was involved in trying to sort out the impact of the Oxford regional health authority on Northampton.

Privately generated electricity supplies 6 per cent. of today's overall needs and, what is more relevant to the Bill, 15 per cent. of industry's needs. It is fair for the Opposition to ask whether the Bill is necessary as an extension of that element. I shall take up that point.

First, I hope that the Opposition accept what the hon. Member for Dundee, East said—that the Bill is not a privatisation measure. It is an extension of the private sector, but we are not overturning anything. It is a modest Bill. No Conservative Member would claim that it is a major campaigning Bill. How far it will encourage CHP is open to debate but no one will deny that it will be of some benefit.

Secondly, the Bill will help alternative energy schemes. As I understand the official Opposition's stance, we have a common interest in those matters. I understand that the Labour Party favours both the exension of CHP and alternative energy schemes. It would be helpful if that was confirmed in the Opposition's winding-up speech.

I shall discuss clauses 1 to 15. Other hon. Members have covered the nuclear dimension more than adequately. I especially welcome clause 1. It is part of the guts of the Bill in that it removes the statutory prohibition on private generation of electricity as a main business and enables the private generator to produce electricity for supply, wholly or mainly to others, without having to obtain the Secretary of State's consent. Clauses 2 to 4 are consequential upon that. The other key dimension of the Bill is contained in clauses 5 to 15. That group of clauses enables a private company to use the CEGB's grid system for transmitting electricity to customers and electricity boards. It also provides for standby and buy-back terms.

Some of the most interesting debate in Committee will be on the common carrier provisions. That is certainly the case if discussions on the Oil and Gas (Enterprise) Bill are anything to go by. It is important to recognise the contents of the common carrier provisions. Electricity boards will have new duties to offer to purchase electricity from private generators and to allow them to use the grid. Moreover, private generators will enjoy extended rights to obtain supplies from the electricity board either for their own use or for their customers. That is the so-called standby facility.

It has been said that tariffs and the provision for pricing alternative supplies should be dealt with openly. There is also provision to safeguard the area boards so that they may obtain a satisfactory return on their assets.

There is also an apparently controversial provision—I do not see it as such—that if there is a dispute between the parties, the Secretary of State shall have the final say. No doubt there will be endless argument in Committee about whether the Secretary of State is the right person to act as arbitrator, or whether the arbitrator should be an independent body or person. On my reading of the Bill, things seem satisfactory as they are. The key point of clauses 1 to 15—I suppose that this is where the Labour Party departs from the philosophy behind the Bill—is that they introduce competition into electricity supply. "Competition" seems to be a word that the Opposition find it difficult to accept.

The hon. Member for Birmingham, Northfield (Mr. Spellar) spoke about central planning. The official Opposition have not yet got round to thinking about the role of competition. They think only that if something is centrally planned, it is good, and that competition makes it seemingly impossible to plan anything. However, competition is the key for the consumer. If the Bill is left relatively unamended, a private generator will be able to use the public supply system to reach his customers. That is the nub of the Bill. A major manufacturer such as ICI or GEC will be able to have a plant in one part of the country and to supply electricity to other outposts. In its representations to hon. Members, the CEGB is clearly worried about how it will control and meter output transmitted through the grid system to somewhere else in the country. However, that is not such a difficult problem.

In September, I had the privilege of visiting Sullom Voe. I spent four days looking at platforms and listening to representatives of the oil industry. The whole of the North Shetland base is pumping oil into Sullom Voe. However, there is no particular problem about metering the oil of firms such as Shell, Conoco, Amoco or any of the other producers in that part of the North Sea. Meterings are undertaken and there is verification of the meterings. An operating company such as BP acts on behalf, I think, of 32 different oil companies on a scale that is probably unprecedented anywhere in the world. I have never before seen such a complicated area managed with such great ease and with so little difficulty. The so-called problem of whether different factory units are taking out more than they put in really is no problem.

It has been said that additional private generation will help the area boards, particularly during winters such as the last one. We all know that electricity demand was greatly stretched on several occasions. A standby facility in the private sector will be a great help to the area boards. The whole system will benefit the economy. It will, I hope, ensure that the supply industry's assets are fully used and that we shall not witness the enormous duplication of investment mentioned by the hon. Member for Dundee, East (Mr. Wilson). It is fair to ask whether there is any benefit for British industry. In the days and weeks ahead, I hope that my hon. Friend the Under-Secretary will consider such points carefully.

There is an opportunity here for the Department of Energy to take an initiative which, sadly, the Department of Industry seems not yet to have taken. I think that all hon. Members will agree that the Bill will produce an increased interest in small-scale electricity generation. Whether the official Opposition like it or not, that will happen. The Department of Energy has the opportunity to turn that to the benefit of British industry.

If there is an increased interest in small-scale electricity generation, as sure as eggs are eggs the developing world will also take a great interest. In a previous incarnation, I worked in India. I well recall touring eastern India, where I was responsible for Bihar, Orissa, Uttar Pradesh and Bengal. In those areas of the developing world and throughout Sri Lanka, which I know well, one of the greatest problems is electricity generation. Indeed, this country has invested more than £100 million in the Mahawehli Ganja hydro-electric project in Sri Lanka to provide that developing country with electricity. Even when that project is completed, it is unlikely that the resources of Sri Lanka, let alone those of smaller developing countries, will be adequate to meet the demand for electricity.

As the Bill will create an incentive for small-scale electricity generation, this country should take that golden opportunity to invest in research and development in the potential for major exports of off-the-peg units of a scale attractive to developing countries. If we take that on board at the outset, we can produce units adaptable to the needs of different parts of the world.

On the domestic side, we know of recent successful research into multi-fuel firing. Work may also have been done on multi-fuel firing for small-scale electricity generation, but I rather doubt it. Again, if we feed in that requirement at an early stage it could lead to major export developments.

I hope that at the planning stage we shall bring in not just the Department of Industry, which is highly relevant in terms of research grants, but also the Overseas Development Administration, because it must know where such units are required. I can imagine no better form of aid programme than one which includes the provision of power generation, which is fundamental to the economic growth of so many developing countries. In other words, I see major merits in what is almost a spin-off effect of the Bill.

Finally, the Minister should not worry too much about criticisms of the Bill. The hon. Member for Northfield made an interesting speech. He said that the Plowden report should have been implemented. In other words, we should have produced a major Bill. Perhaps he is unaware of the effort that we put into the Oil and Gas (Enterprise) Bill, as he was not a Member at the time. He mentioned one interesting dimension, however. If we genuinely believe in combined heat and power, the restriction on the CEGB should be lifted. I should certainly be interested to hear whether any development is likely in that respect. The hon. Gentleman also said that he did not see for the private sector a role that was compatible with central planning. He is right. With outright central planning, one cannot have a private sector. My hon. Friend the Minister should be reassured that the industry and the consumer do not want total central planning. They want competition and a vibrant industry. That is what the Bill will begin to give the customers.

8.40 pm

Parts of the speech of the hon. Member for Northampton, South (Mr. Morris) would have justified the Secretary of State's attendance. I preferred the hon. Gentleman's approach to that of his right hon. Friend. If the Secretary of State had sought to sell the Bill as the hon. Gentleman did, the temperature on the Opposition Benches earlier today would have been lower. Both the hon. Member for Derbyshire, South-East (Mr. Rost) and the hon. Member for Northampton, South appeared to put a modest gloss on the Bill and seemed also to support the proposal that a Special Standing Committee should hear expert evidence. I trust that they will support the representations that have been made. Given the conflict of interpretation about the character of the Bill, it seems to me that the suggestion should be accepted.

The Bill is excessive in some respects and inadequate in others. It is an inadequate contribution to any wise consideration of energy policy. It is excessive because it seems likely to stimulate an unwise surplus of electrical generating capacity. If it is the intention, as the hon. Member for Northampton, South suggested, to create trading development, there is something to be said for a surplus. The speech of the Secretary of State did not offer that opportunity. The right hon. Gentleman's speech should serve as a warning to customers to beware of the right hon. Gentleman when he appears to be bearing gifts.

The Secretary of State seems to have condescended to agree that any nuclear power proposals should be subject to his permission but seems prepared to allow any kind of alternative generation to go forward. That is dangerous. I hope that the Under-Secretary of State will amplify the point made by the Secretary of State, in reply to the hon. Member for Truro (Mr. Penhaligon), who suggested that old power stations which are out of date and due to be closed under the CEGB programme, should be sold off to the private sector and used to burn imported coal. I am not an expert in thermal efficiency, but we would be talking about reviving out-of-date plant with a thermal efficiency 10 or 12 per cent. or more below that which might be obtained by new plant.

I spent part of today at a function in London involving a firm from my constituency which has devoted energy and expertise to the proper use of energy and has received a national award. On the same day, I have heard the Secretary of State say that he wants us to continue to use plant that is 30 or 40 years old. That is tragic. It is ill-advised of the Secretary of State, in a throw-away style, to agree with the alliance spokesman, the hon. Member for Truro, that we should move to a reliance on imported coal. My hon. Friend the Member for Midlothian (Mr. Eadie) will not wish me to spend too long on that matter. I am sure that he looks forward to saying a great deal about it himself.

This year is a far one year than many hon. Members appear to recognise. It is the year when this country, for the first time in its history, imported more manufactured goods than it exported. The Government seem unperturbed by that sad fact. I suppose that the Government feel that the offshore oil resources are unlimited and will go on for ever more, and that we can continue to export billions of dollars worth of our oil. However, one day the reckoning will come. Either the price of oil will fall—there must be fears about that—or the reserves will have so diminished that oil cannot sustain us any longer. Where shall we be then? Our industrial base will be eroded even with the commendable vision of the hon. Member for Northampton, South with his desire to export small generating kits to the Third world. Our industrial base will have been eroded and the country will have been brought to a pretty pass. That is the logical development of the sort of policies that the Government are pursuing.

I hope that the Minister will respond to these points, because the nation is entitled to be advised on this matter. I hope that the Under-Secretary will say whether the Secretary of State was being serious in wishing to see power stations which should be demolished being kept open for a quick pound by some entrepreneur who feels that he can use imported coal that may be subsidised. The future of this country cannot be left to people who will take such an irresponsible position.

I am concerned because from 1979 until recently, the Government on the whole handled the coal industry with some intelligence and sensitivity. Perhaps as a result of short-sighted calculations, the events of the past few months suggest that that intelligence has not been maintained. The reference to imported coal was relevant to this.

My hon. Friend is making an important point about imported coal. However, he must be reasonably fair to the House. It is not only the Government who say that they are in favour of imported coal. The Liberals and the SNP also say it. There is a united front about imported coal.

I take my hon. Friend's point, which he is right to emphasise. The Minister should clarify the position. The alliance spokesman urged, and unfortunately the Secretary of State responded, that the old out-of-date power stations should be used well beyond their sensible life to burn imported coal from countries that have the wit to subsidise coal.

I think that the hon. Gentleman has slightly misunderstood the argument about converting the older central city power stations. The purpose would be to modernise the equipment to burn coal with a fluidised bed that is environmentally acceptable, and to increase the thermal efficiency from below average, as at present, to above average by converting the stations to heat production as well.

As an alternative to Sizewell, that will appeal to many people. However, the point made earlier had nothing to do with central power stations. The hon. Member for Truro comes from the far South-West, where there are not many city power stations. I think that he is talking about providing electricity for the south-western peninsula and the Secretary of State should not have been lured along that path, which is so dear to the hearts of the alliance. There will be a risk of a substantial surplus, which will have implications for prices. There has not been adequate consideration or consultation with the industry.

The Minister will have seen the statement by the Electricity Council and the reference on page 2 to safeguards. The Secretary of State's speech did not fully cover the major and important safeguards that are referred to in that document. I should be grateful if the Under-Secretary of State would pay some attention to the safeguards mentioned by the Electricity Council. No doubt we shall return to the matter in Committee, but it would be appropriate now for the Government's position to be clarified.

Will the Government assure us that the proposals in the Bill will put no additional burden on the board's customers? Industrial energy prices in this country are already far too high. It is no good saying that it is because of the inefficiency of the energy industries. It is because our principal competitors make sure that their energy prices are below ours. If the Minister wishes to consult people in the steel industry, whether in the public or private sector, he will find that they are well aware of that vicious competition.

I also ask the Minister to ensure that the electricity undertakings are given adequate notice of the plans of the private sector. If they are to provide a back-up service in emergencies, they are entitled to know how much electricity they will have to provide. Planning is necessary, even though central planning did not appeal to the hon. Member for Northampton, South.

The safeguards to which the Electricity Council referred, including the proposal that the ground rules should be the same for both the public and private sectors, are perfectly fair. I hope that the Government are not so obsessed with doctrine that they will be particularly favourably disposed to the private sector—the essence of their view being that the private sector is capable of looking after itself. I hope that the same ground rules will apply to both the public and private sectors.

The Electricity Council said that the regulations governing both private and public sectors should be the same, with the same access to fuel supplies, and the same grants and allowances from the Government. I believe that the rights granted, including the right granted to the private sector to use the board's transmission and distribution system, will be regarded as practical by the electricity supply industry. The Minister should assure the industry that there is no ground for concern in that regard. If the Bill justifies that concern, I trust that the Minister will agree to its being amended.

The main reason for my intervention this evening is the problem of energy prices. The major function of the Department is to ensure that British Industry is no longer crippled. If the line suggested by the Secretary of State results in increased energy prices to industry or to some of my poorer constituents, including a lady constituent of mine who is trying to bring up children aged 1½, 2½ and 3½ without electricity, I hope that he will realise that energy prices need a higher priority than they have so far been given. I hope, therefore, that the Minister, in winding up, will respond more constructively than the Secretary of State seemed to suggest was likely when he introduced the Bill.

8.52 pm

In a brief speech I shall pick up one or two points that have been mentioned by other hon. Members.

I start with the final theme of the hon. Member for Rother Valley (Mr. Hardy). He spoke in favour of lowering electricity prices. On that I wholly agree. However, He seemed to think that a monopoly—that is what the CEGB and the area boards are—will somehow produce cheaper electricity than the Bill will produce. The aim of the Bill is to introduce competition with the area boards, to allow private generation, and in particular, to assist industry. One of the great complaints made by industry is that some firms have the capacity and the ability to generate electricity, yet cannot take it 100 yd to a neighbouring plant. They have to get permission, and all too often the relevant area board will not give it. To claim that the Bill will raise prices simply does not stand up to analysis.

The most important provision in the Bill is the one that allows for a common carrier grid, because it gives teeth to permitting private generation. I hope that it will lead eventually and slowly to a complete reorganisation of the electricity industry. In that way, we shall gradually move away from the present centralised system of one generating board and area boards to a series of area boards which both generate and market.

A common carrier grid system would facilitate such a move. That is important because, if we move to an area generating board system, as I hope we shall, it is vital that area boards have the ability and are permitted to sell in other areas if they can compete with the customer's particular area board. That is important because otherwise all one does by moving to area generating boards is to create smaller public monopolies, or, I hope, eventually, private monopolies, rather than the present national monopoly.

The hon. Gentleman talks about an area board moving into another board's area and duplicating capital resources. He is surely changing a principle that existed in the electricity supply industry long before nationalisation—of each undertaking, whether private or public, having its own territory.

I always listen with great care to the hon. Gentleman, whose experience I recognise. If one moved to a common carrier grid system, as under the Bill, if the south-western area which has a generating capacity can compete with the north-western area, after taking into account the additional tariff that it will have to pay because there is a common carrier grid, there is no reason why it should not be free to do so. Competition between area boards will reduce inefficiency.

The stifling and enveloping impact that the present electricity organisation has on heat and power is appalling. There are two schemes only in this country at the moment compared with many thousands in Europe. If we allow private generation of electricity, combined heat and power would be given a considerable fillip. That is another reason why I welcome the Bill.

The headlines that we have seen about the Bill suddenly permitting private nuclear generation for the first time are not correct. Anyone has been allowed to build a nuclear power station, but it has not been feasible. The fact that we are now producing a common carrier grid means that it will make sense for private industry, if it wishes, to invest in nuclear power stations. That must be to the country's advantage in the long term.

8.58 pm

I intervene briefly to refer to one background matter—the current crisis in the coal mining industry. Whenever I have approached Ministers with problems on the industry I have had a great deal of help. I do not believe that the urgency of the crisis is appreciated. There was an announcement in the national press this morning that about 60 pits are to be closed by 1991 with a consequential loss of between 30,000 and 45,000 jobs. That information was contained in the memorandum issued by the National Coal Board to the Monopolies and Mergers Commission. It is very serious and it is worth looking at the precise circumstances for a moment or two.

The crux of the matter is that the NCB is acting under the provisions of the Coal Industry Act 1980, passed by this Government, which imposes upon it strict cash limits. As a result of that, it has embarked upon a ferocious programme of pit closures throughout Britain.

The hour is late and I want to deal with this point before the Minister replies.

The NCB has embarked upon a ferocious programme of pit closures—

Order. It is clear that the hon. Gentleman will not give way. However, it is not the end of the debate yet.

I am speaking on behalf of a constituency in the North-East of England which has suffered programmes of pit closures from Governments of all political complexions.

On a point of order, Mr. Speaker. I seek your guidance. I was under the impression that the Bill was about electricity generation. I do not think that it has anything to do with the NCB or pit closures.

The hon. Gentleman knows that there is always wide debate on Second Reading.

I can well understand why the Government are so sensitive about the massive pit closures.

The matter is serious. I am not taking a liberty. The lives and jobs of thousands of men in Britain depend upon the coal industry. The hon. Member for Enfield, North (Mr. Eggar) obviously does not know that there have been secret discussions between members of the NCB as to which pits are to be closed in the coming few years.

The position of the NCB at the moment is delicate because the present chairman, who is a mining engineer, as are the majority of the directors, is due to complete his term of office next June, he having been put there for an interim period of one year only upon the retirement of Sir Derek Ezra last summer.

It is plain as a pikestaff that there is a power struggle in the NCB. There is serious competition as to who will succeed the chairman when the appointment is made by the Secretary of State, presumably in consultation with others, next summer.

As a result of that and the meetings that have taken place with the National Union of Mineworkers recently about the future of the coal industry, will the Minister state the Government's intentions for the NCB? "Plan for Coal" was reaffirmed in the House by a junior Minister as recently as 15 November this year.

No, I have already said that I shall not give way.

The Government must come clean. If they are embarking on a massive programme of pit closures they should say so. If they are coercing the NCB to pursue such policies they should come clean. They are not entitled to play cat and mouse with the lives of the men in the coal mining industry. They must not mislead mining areas in Britain and embark on a policy which led to the resignation of the previous Secretary of State for Energy, who was transferred to another position in the Government at short notice because he could not handle the negotiations with the NUM.

That, and the problem of cheap imported coal, has produced a crisis in the mining industry. It is all very well for Conservative Members to laugh and guffaw, but this is a serious matter for Britain's economy and for the mining industry. By not making a statement on the current issues the Government are doing nothing to allay fears.

The reports in the press today came not from an announcement by the NCB but from a leak from the NUM. A statement of the Government's intentions towards the mining industry would be welcome. Are they serious about "Plan for Coal"? Are they serious when they say that they propose to invest in the coal mining industry?

No, I shall not give way. I will not be intimidated by the guffaws of Conservative Members when making a serious contribution at a late hour in the debate. It ill becomes Conservative Members to guffaw in a blimpish manner while I am talking about the lives and work of 40,000 coal miners. It is a serious matter which deserves the consideration of the House, and I ask to be allowed to speak. I hope that I shall be listened to quietly and sensibly for a short while. If Conservative Members pay me that courtesy, they will appreciate the argument.

As a background to this important measure, the wellbeing and viable future of the mining industry is vital. That is the point that I am seeking to make.

What are the Government's intentions and do they stand by the statement that was made by the Under-Secretary of State for Energy on 15 November? Do they still intend to support "Plan for Coal"? Will they support a programme of investment in the coal mining industry and use their influence with Mr. Norman Siddall and the other directors of the National Coal Board to prevent the wholesale slaughter of pits throughout the country? I hope that the Minister will be good enough to deal with my question when he replies.

9.7 pm

We are approaching the end of the Second Reading of this 33-clause and two-schedule Bill, which I think the Secretary of State described as falling into two separate parts. I shall qualify that by saying that it falls into almost two separate parts. Part I deals with the private generation of electricity as a main activity of business. Part II deals with amendments to international conventions on civil liability for nuclear incidents. The link between the two parts is that a private operator under part I who uses nuclear technology will be bound by the provisions of part II.

I was surprised by the interruptions that my hon. Friend the Member for Blyth (Mr. Ryman) experienced, especially from the hon. Member for Enfield, North (Mr. Eggar), who entered the Chamber at 8.45 pm and wanted to raise points of order about the arguments that my hon. Friend was advancing. If he had been in his place earlier, he would have known that it had been a fairly wide-ranging and good-natured debate.

The hon. Member for Perth and East Perthshire (Mr. Walker) told us that he was an airman. He told us also that he wanted to sell off the pits. He took us into the highways and byways. I think that my hon. Friend the Member for Blyth was in order, because the Secretary of State said in replying to a question that foreign coal would be imported if the Bill were enacted. Surely my hon. Friend's remarks were pertinent and relevant to the Bill.

I see that the Liberal spokesman on energy, the hon. Member for Truro (Mr. Penhaligon), is in his place. He endorses the importation of foreign coal. I note that the energy spokesman of the Social Democratic Party, the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), is present. He, too, endorses the importation of foreign coal. Presumably he will endorse the importation of South African coal and coal from anywhere else. My hon. Friend was right to draw attention to the impact that the importation will have on the coal mining industry. The Minister has a responsibility to respond to my hon. Friend's comments and questions, because they are relevant to the debate.

We believe that the Bill has been flung at the House. I understand that there has been some discussion with the public utilities about the Bill. They were aware of its existence, but they did not know that it was to be presented to Parliament with such rapidity. The unions, too, have a point of view, with which I shall deal later.

Few measures have been presented with such indecent haste as the Bill. The Government appear to be hell-bent on riding roughshod over every decency that is generally associated with legislation. The Opposition have had little time to study the Bill between its publication and the debate today. I suggest to the Secretary of State that the Government injured not only the House, but themselves, by the indecent haste with which they presented the Bill.

The Government have said that this is a timely and important Bill, so we are entitled to ask the Under-Secretary of State, "Why the hurry in introducing the Bill?" The Opposition will come to the conclusion that the Government's eyes are probably focused on a possible early general election and that they want the decks cleared of legislation to give them the so-called political advantage in that election. [Interruption.]

The Secretary of State can mutter as much as he likes, but the political dogma of privatisation is more important to the Government than the well-being of the electricity supply industry and its workers.

It has become clear that the Bill has been quickly cobbled together to meet the needs of a possible early general election and is not concerned with the well-being of the electricity supply industry. I shall substantiate that later. We are entitled to ask whether there is a need or a call for the private generation of electricity. As far as we can see, there is little evidence to support any such claim. It is not surprising that when Government spokesmen and Government supporters are challenged on that they say that perhaps in 10 years' time an urgent need will emerge. A Government spokesman said that on the radio.

Hon. Members who have listened to the debate will know that there is not unanimity between the Government Front Bench and the Back Benches. The Back Benchers are enthusiastic about the Bill. They consider that it is one of the best things to happen since sliced bread. They tell us about all the wonderful things the Bill will do, but Ministers say that the Bill does not mean very much. It is hardly surprising to hear such comments in the light of the over-capacity in the electricity supply industry, which has come about largely as a result of the economic recession into which our country is locked, and not least because of the high capital costs and construction times in building nuclear power stations.

When the Government speak of 10 years, they are being a little optimistic. I have news for the Government: they will not be in power in 10 years' time. We will sweep aside the nonsense in the Bill. I shall continue to say that during the rest of my speech and in Committee.

The hon. Member for Perth and East Perthshire commented on the rural parts of our land, particularly the areas which he and I represent in Scotland. It is nonsense to imagine that in those areas it will be possible to create the need for the private generation of electricity. Population dimensions dictate that.

The Bill is segregating in its concept and activation. The Government are putting a doctrinaire proposition to the House. A wealth of information is available on the structure and reorganisation of the electricity industry. Did the Government examine the Plowden report, for example, when framing the Bill? All the area boards submitted their views about the reorganisation of the industry. The power supply unions had positive views about Plowden. Did the Government canvass them?

An interesting issue was flung into the debate when the hon. Member for Northampton, South (Mr. Morris) said that perhaps we should do something about Plowden. He added that he did not want to be bothered with too much trouble, because of what had happened during the passage of what is now the Oil and Gas (Enterprise) Act. The Government are more concerned with the politics of legislation than with the administrative efficiency of industries. That is why they decided not to consider Plowden, which deals with the reorganisation and structure of the industry, and which was mentioned by my hon. Friends the Members for Birmingham, Northfield (Mr. Spellar) and Bristol, North-East (Mr. Palmer). We could have a more efficient electricity industry to serve the nation.

The Under-Secretary may talk about confidentialitly between Governments. I am a former Energy Minister. When in office I knew that talks were held with the then shadow spokesman for energy with a view to putting through Parliament agreed measures for the reorganisation of the industry. There was a consensus in the industry about its reorganisation. The Government must know what happened then. The hon. Member for Truro was one of the niggers in the woodpile during the discussions on reorganisation. He attended all the meetings. I am not revealing any secrets.

The Opposition believe that the Bill is a miserable, masquerading effort. It is a disgrace that the Government should introduce such a Bill after three and a half years in office. I am sure that the Minister will concede that the Electricity Council is representative of the electricity supply industry in England and Wales. The South of Scotland electricity board and the North of Scotland hydro-electric board are responsible for the generation and supply of electricity in Scotland. We have all received the Electricity Council's statement, which was issued with the approval of the SSEB and the North of Scotland hydroelectric board.

So far the debate has been tidy and cosy on the Government side of the House. The Minister must reply to some of the comments in the report from the Electricity Council. I refer especially to paragraphs (b) and (c) on page 1 of the report. Paragraph (b) states:
"The purchase of 'surplus' electricity by a Board at a fair price. The purchases will be made on a basis which will neither increase nor decrease prices charged by Boards to their own consumers. This means that any financial advantage will go to the private generator/supplier and his consumers."

Paragraph (c) states:
"The use of the Board's transmission and distribution systems for which the cost will be chargeable. The 'right' is novel. The present system is a fully integrated one under single operational control which evolved from developments early this century, and at present gives substantial financial benefits to consumers."
Those two statements are either facts or assessments. If they are not facts, the Secretary of State must tell us.

The industry asked for seven safeguards, and they are important to the electricity industry. They dealt with the burden on the consumer, adequate notice to the private sector, the proposals for private generation, rights granted to the boards, the present integrated system and the undue preference shown to private consumers. Time prevents my speaking at length about the safeguards, but I put them on record.

The Secretary of State is aware of the document. It is captioned:
"The safeguards that the Industry are seeking are principally"
and they are set out. As the Bill was flung at us with such indecent haste, the Secretary of State has a responsibility to comment on the request for safeguards. It is a gross deception to claim, as a Minister did, that the Bill will activate the installation of combined heat and power. There are several reasons for the delay in starting combined heat and power schemes and it is bogus to claim that the Bill will activate and accelerate privatisation.

We know that the Government believe in the economics theory—the Secretary of State believes that Adam Smith is not dead—of the invisible hand that guides market forces. The right hon. Gentleman often tells us with pleasure that they will operate. We have taken soundings among City financial institutions to see whether capital would be made available for combined heat and power schemes and for private power stations. The reply was a firm no.

The parts of the Bill relating to access to the national grid and the selling of electricity to public utility are very woolly and will require not only clarification but substantial amendment. It is nonsense to suppose that the general consumer will be willing to pay for such grid system features as the standby arrangement—the provision that private consumers can switch into the grid on a wet and windy day.

Clause 3 deals with nuclear power generation. If ever a Bill opened a Pandora's box, this is the example. Someone else said in another context:
"Father forgive them: for they know not what they do."
The Government are committed to nuclear power and have tried to convince the public that they can handle all the environmental consequences of thermonuclear power generation. The Prime Minister had her photograph taken sitting on top of a reactor to show how safe it was. I shall refrain from commenting on that. The Government argue that it is in our best interests to have more nuclear power stations, but at a stroke they have given a gift to every anti-thermonuclear power lobby in Britain.

The Bill has a screaming caption—"Privatisation of power stations." The Government's defence is strange. They say that it makes no difference that, in the past. nuclear power could be generated privately provided that all the conditions were met. They may be right—I do not know—but they have triggered off another nuclear power station debate. That may not be bad, but it will have started for the wrong reasons.

I do not have time to deal with the folly of encouraging private nuclear power stations, but I shall pursue the logic of the Government's claims for the Bill. They say that it is unlikely that private users who wish to generate electricity will build their own nuclear power stations, but that other fuels will be used, with coal being the most likely. The Government do not seem to have realised that to the extent to which new privately operated capacity will be introduced, the electricity boards' markets will be reduced. If capacity must increase, they will find it more difficult to justify the building of new nuclear power stations. If the Government believe in their Bill, they should not go ahead with the pressurised water reactor at Sizewell.

Every objector in Britain will examine the Government's proposition, and they will certainly read the speeches by Conservative Back-Bench Members today, who went over the top and claimed far more than the Government have claimed. The objectors are aware of electricity demand. The Government have destroyed their own case for going ahead with the project. Electricity sales are still falling, because of the Government's economic folly, and the boards have more than enough electricity to meet present demand.

It is not too expensive. If the hon. Member for Derbyshire, South-East (Mr. Rost) does not realise that we are in the throes of an economic recession, he should not be a member of this honourable House. The Bill is a poor attempt to convince Right-wing Conservative Members that the Government intend to reduce the nationalised sector. It is a good example of the political ineptitude at the Department of Energy, which does not have a good record. The Department's only defence of the Bill is that apparently it has received the Government's seal of approval.

My time is up. I shall keep my promise to the Under-Secretary of State. Perhaps he is relieved, but perhaps he is not. All Governments whose eyes become glazed with visions of election ballot boxes deserve the contempt of the House. The Government should not have introduced this measure. It is a miserable Bill. It is a pirate of a Bill. Whether the Scottish National Party, the Liberals or the Social Democratic Party decide to go into the Lobby with the Government, my right hon. Friends and I will be in the Opposition Lobby, because we believe that the Bill is a miserable measure.

9.31 pm

In a spirit of camaraderie, I shall raise the one point made by the hon. Member for Midlothian (Mr. Eadie) with which I agree. The debate has been wide-ranging and interesting. In the time available I shall try to respond to as many points as possible. Some points need a response tonight but there are others that perhaps can more conveniently be left to the Committee. If I inadvertently blur the lines of a fairly clear distinction and any Opposition Member or any of my hon. Friends is aggrieved that I have not dealt with a point that he thinks I should have dealt with, I shall be only too happy to write to him.

My right hon. Friend the Secretary of State carefully introduced the provisions of part II of the Bill. He said that he hoped that it would be generally accepted. As no Back-Bench Member has adverted to it I assume that the silence implies consent to the common sense of the proposed measures. After 25 years of diminishing monetary values, it is no surprise that an uprating should be necessary. It would have been wrong not to take action to revalidate the Paris and Brussels conventions. That is what the protocols, which have been recently negotiated, do. I am glad that we have been able to find an early legislative opportunity to amend the Nuclear Installations Act 1965 so that we can formally ratify those protocols. I am equally glad that that seems to be the will of the House.

Part I of the Bill is more controversial territory. Contrary to what the hon. Member for Midlothian thinks, this is a carefully set out and interlinked set of provisions, which will encourage sensible progress towards the better use of our energy resources. The provisions encourage private generation without adversely affecting the interests of other electricity consumers. They establish a framework that is both fair and reasonable and provides for fair and reasonable dealings for the first time between the electricity supply industry on the one hand and the private generator on the other hand. They meet a need that is recognised by industry. They have been welcomed by the CBI. They will achieve a result that is beneficial, I am sure, to the national interest.

I am sorry that it should be a matter of controversy that we should seek to encourage private generation. As the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) said, there is no great Rubicon to cross. We have had private generation in this country for some time. However, the problem is that the amount has been declining owing to older uneconomic oil-fired plant being withdrawn from service. Private generation in the United Kingdom is well below the levels in other Western European countries. It is right that that should be reversed because most private plant will be combined heat and power plant, which achieves much higher conversion efficiencies, as my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) so pertinently said, than can conventional generating plant.

The close integration of CHP plant with manufacturing process is generally best achieved by private industry, not the public supply industry, although I pay tribute to the Midlands Electricity Board for developing two CHP projects in close association with the industry. However, in doing so, it has perhaps exposed the reluctance of the overwhelming majority in the industry to show the same interest and commitment.

The scope to reverse that downward trend exists but that will only happen if it makes good commercial sense to invest in generating plant. The Bill offers encouragement by establishing a statutory framework for fair dealing between the private generator and the ESI. The ultimate decision whether to become involved in private generation or whether to expand existing private generation must rest with the private generator and his perception of the market. It is his judgment of the commercial realities that matter. That will determine what effect the Bill will have in the end.

There are three novel key proposals that I commend to the House. First, there is the right to sell privately generated electricity to electricity boards on fair terms. For the first time, that will be clear and above board and the duty will be established. Secondly, there is the right to use the public transmission and distribution system on fair terms and, thirdly, there is the important right to appeal to an independent figure—the Secretary of State—in case of disputes.

There is no intention to leave the public supply industry or its customers worse off. Those Opposition Members who made that point have not studied the Bill as carefully as they might. The aim is that electricity boards should offer private generators the best possible deal consistent with protecting their customers' interests. That is what fair terms mean. The regime is in no way tilted towards the private generator. It is neutral. The changes are significant because the regime has not been neutral for a long time but has been biased against the private generator. That is the only reason.

If the new private generating units come about, will they be authorised undertakings with the right to give supplies generally and the right to break up streets? Will they be subject, therefore, to the electricity supply regulations, the overhead line regulations and others?

They will be fully integrated in every material particular into the existing regulations. We shall have plenty of opportunity to go through that matter with care in Committee. I am glad that the hon. Gentleman will no doubt be a member of that Committee.

I should like to continue. Private industry will be able to contemplate investment in electricity generation in the knowledge that a secure market exists and that a fair price will be offered. Such investment should make good sense if the cost can be kept below that of electricity supply industry or if revenues can be boosted by utilising the heat that is produced as a byproduct when electricity is generated by plant that uses fossil fuel.

The Bill should encourage private investment but whether it does so is up to the state of the market. It is up to us to create the right climate so that the market can develop if that is the wish of those who are involved in industry and commerce.

The Bill should encourage—we already have evidence that it will encourage— private investment in alternative energy sources such as wind-powered and hydro-electric plant. My hon. Friends the Members for Banff (Mr. Myles) and for Perth and East Perthshire (Mr. Walker) made valid points in favour of hydro-electric power.

The Bill breaks new ground and is at its most imaginative and significant in permitting private generators to send their electricity through the public transmission system. It will give the private generator an alternative outlet, apart from his own use, or sale to the electricity boards. That is one of the most encouraging new features of the Bill with regard to stimulating private generation.

One of the first questions that we asked the Minister was whether, if he is to be evenhanded between the public and private sectors in this matter, we are to have the special Standing Committee procedures so that we can take evidence, at least in some sittings, to get the matter clear. It is extremely complicated.

That is a matter for the Leader of the House, not for me, and for representations through the usual channels.

I shall now deal with the allegation that the hon. Member for Midlothian made about the indecent haste in the preparation of the Bill. I cannot understand where he has got that idea from. Our intention to introduce such a Bill was first announced by the former Secretary of State for Energy, now Secretary of State for Transport, in July 1980. In April 1982 the areas that the Bill would cover were the subject of a consultative document that was sent to nearly 50 groups. The Bill has been introduced for Second Reading at the end of November. If that is the hon. Gentleman's idea of indecent haste, I would love to know his definition of delay. Perhaps his definition would be sufficient to entitle him to become a member of my old profession, the legal profession, because his attitude must be very similar to that which we are often alleged to have.

The hon. Member for Midlothian was labouring hard to establish that the Electricity Council saw the Bill as controversial. That theme was taken up by at least two Opposition Members. The truth is that it is not controversial. The Electricity Council has been consulted at every stage. As a result of some of its detailed submissions, its ideas have been incorporated in many parts of the Bill. Our contact with the council is continuing. I do not rule out the possibility that further changes may be made in Committee to one or two of the more detailed provisions. However, any idea that there will be a re-run of the Oil and Gas (Enterprise) Bill and the British Gas Corporation's attitude is wholly misconceived. The Electricity Council loyally accepts that the Government are fully entitled—against any of the principles of the nationalised industries—to introduce this measure. It knows only too well that we listen with care to what it says and that we have taken account of its comments.

The Bill is not a source of trouble between the Government and the Electricity Council. However, the hon. Member for Midlothian has a great interest in stirring up trouble, although he is tilling pretty infertile ground. The wide-ranging consultations, involving nearly 50 bodies ranging from the Advisory Council on Energy Conservation to the GLC, the Association of County Councils, the Association of Metropolitan Authorities, the chambers of commerce, the British Electrical and Allied Manufacturers Association, British Rail, the Institution of Mechanical Engineers, the electricity trade unions, the TUC and even the Friends of the Earth were sent a consultation paper, although the last did not reply.

The right hon. Member for Leeds, South (Mr. Rees) asked whether there was any demand for the provisions. We undertook the consultation exercise to find that out and we are quite sure that there is a demand. It is easy to say that there is a demand and that people are interested, but it is not easy to quantify that demand and say how it will materialise. I concede that I cannot say which company will make a further investment and which will not. However, I can say that there is a demand and that a welcome has been given.

There is a point that should be considered. To what extent does a step towards greater freedom need to be justified in terms of a proven demand? It almost speaks for itself. The creation, for the first time, of a fair regime between the electricity supply industry and the private generator will stimulate the interest that undoubtedly exists into practical applications.

To the astonishment of those of us involved in preparing the Bill, the inoffensive clause 3, which deals with private nuclear generating stations, has caused most concern. When I first heard on the radio that the main aim of the Bill was to privatise nuclear power, I thought that it was either the work of people who had not bothered to read the Bill, the work of those who deliberately sought to distort it, or both. It surprised me that the right hon. Member for Leeds, South, for whom—although I do not want to embarrass him—I have the greatest respect, should be under a genuine misapprehension. However, it behoves me to take the issue more seriously than I was initially inclined to do. It staggered me even more that the right hon. Member for Greenock and Port Glasgow who defended the Government during the passage of the Nuclear Installations Act 1965–

Indeed, but the right hon. Gentleman, as a great exponent of the new politics, knows so much better than we elderly exponents of the old politics. After five years at the Department of Energy, he is also concerned about that point. Not surprisingly, the hon. Member for Truro (Mr. Penhaligon) is also concerned because he is always concerned about such issues. What is the truth of the matter?

The truth is that as I now stand here—or you, Mr. Speaker, sit there—there is no legal bar to anyone's applying to construct a private nuclear power station if he intends to use the electricity in his own factory premises, as so many private industrial generation projects now do. What is all the scaremongering about when that has been the situation since the 1919 Act introduced an arbitrary and indefensible distinction between those who generate for their own use and those who generate substantially for the use of others?

We are told that, unless we do something about the notorious clause 3, the support of no fewer than three parties will be withheld. The inducement is overwhelming, but what can we do about it? What is so objectionable about it? Clause 2 provides that private generators should not require the consent of the Secretary of State to run conventional power stations, although they will have to comply with all other relevant provisions. Clause 3, however, puts nuclear generation in a different category and makes it subject to the consent of the Secretary of State. In other words, far from being a Dr. Strangelove' s charter for private nuclear generators, the clause inserts a further barrier.

As the Secretary of State will be the sole arbiter, may we be assured that private nuclear generation will be subject to all the safeguards and safety provisions that now apply to the nuclear power industry?

Anyone undertaking private nuclear generation will have to comply with all the safeguards that the Labour Government in their infinite wisdom laid down in the 1965 Act—not one jot or tittle more or less. In addition—if the measure does not bite the dust due to the withdrawal of support by three parties—private generators will have to obtain the consent of the Secretary of State.

When I heard that these provisions caused such concern to the hon. Member for Truro as well as to the right hon. Member for Greenock and Port Glasgow, I wondered what it could all be about. When I saw their little motion on the Order Paper, I thought that it was typical of the alliance to focus attention on the most spurious point, thus avoiding the need to do any harder and more determined work. Nevertheless, I was mollified—I know that the hon. Member for Truro regards me as unmollifiable—by the supportive comments not only of the hon. Member for Truro but of the right hon. Member for Greenock and Port Glasgow. I congratulate the hon. Member for Truro on the way in which he restrained himself from making any comment on part II of the Bill and focused on his welcome support for part I.

The last time that the hon. Member for Truro and I crossed horns on this matter, as long ago as November last year, the hon. Gentleman assured me that these matters were being sorted out in the alliance. The Guardian, however, is clearly unaware of that. As recently as September, it referred to fission within the alliance on energy policy, with one group supporting nuclear power and the other opposing it. Fission becoming fusion is a very dangerous process, so I advise the alliance to beware.

To avoid laying themselves open to the charge of seeking to oppose for the sake of opposing —we expect that of the official Opposition—or seeking the lowest common denominator of agreement, I urge alliance Members to find it in their hearts to realise that clause 3 is not a sinister threat to safety but an additional barrier to private nuclear generation. It is no part of the Government's intention in the Bill to do anything to encourage private nuclear generation, which is no more or less likely as a result of the Bill than it has been throughout the 20 years during which the right hon. Member for Greenock and Port Glasgow has been concerned with these matters.

I know that we do not agree. I wish to ask a simple question. If someone made an application to build a nuclear power station of approved design to current safety regulations, would the Government say yes to the application?

It would be improper for those who have to carry out a quasi-judicial function to give a blanket yes or no at this stage. The application would have to be judged on its merits. No one standing at this Dispatch Box could give any different answer.

I want to agree with the hon. Gentleman. There is no statutory obligation upon the Central Electricity Generating Board to sell surplus power stations, but if the offer was right, it would seem to the Government a sensible thing to do. The CEGB arrived at that conclusion in the case of the Spondon H power station which it sold to Courtaulds, who were the purchasers of the heat. There is a precedent. The Government wish that kind of arrangement the same fair wind as the hon. Gentleman does.

One of the first beneficiaries of the part of the Bill that abolishes the spurious distinction of generation for own use and generation for sale might be the hon. Gentleman's part of the country, although just outside his constituency. We have an application from someone who wants to set up an aerogenerator, who has the permission of the local authority and who has persuaded the South-Western electricity board to buy his power. If the law remained as it now is, he would not be able to set up this sensible and reasonable business of promoting alternative energy; he could not sell his electricity as a main business to the SWEB because it is against the law and he could not run his business without selling the electricity. This is one tangible example of the utility of the Bill.

I have given way several times. I wish now to conclude my remarks.

My hon. Friend the Member for Derbyshire, South-East made a distinguished and interesting speech on combined heat and power. When he praises us for taking a real interest in combined heat and power, we know that he would not say it unless he thought it was the case, such is his interest in the matter. My right hon. Friend the Secretary of State has made clear his commitment to combined heat and power before the Select Committee. Real progress is being made. This measure will stimulate industrial combined heat and power and could also have benefits for district heating. We are considering with the utmost seriousness the Atkins report on district heating. We await the Select Committee report on combined heat and power with interest. It will be a guiding factor in our future plans.

There is dissatisfaction, as my hon. Friend the Member for Derbyshire, South-East made clear, among those involved in combined heat and power schemes about the state of their relations with the nationalised industry. There is no question but that the fair regime that we now establish for the first time will be of inestimable value in ensuring that those resentments disappear.

I have been asked about PWR procurement for Sizewell. There is no particularly helpful comment that I can make at this stage because the matter is subject to a public inquiry. If Sizewell was to proceed, procurement arrangements would be a matter for the Central Electricity Generating Board. The Government have made it clear that we would wish to see orders go to United Kingdom firms wherever possible.

The Government have been attacked by the hon. Member for Midlothian about the Bill. The hon. Gentleman has not stated what he finds so objectionable about a measure designed to introduced much-needed competition into electricity supply, to widen choice and to stimulate the development of combined heat and power as an efficient way of supplying industry with reasonably priced electricity. Above all, the hon. Gentleman has not said what would be the Opposition's alternative if they had this responsibility instead of us.

Much has been said about reorganisation. Labour's 1982 programme, on the subject of reorganisation, said:
"The electricity supply industry is in need of reorganisation. There is, in the present structure, insufficient central control of the separate boards".
What is the Opposition's answer to the many problems that so many people, from individuals in their own homes to industry, bring forward about the electricity supply industry? It is to make a monolith even more monolithic. What a typically Socialist, typically irrelevant answer to a major problem. Has the Labour Party learnt nothing in the 35 years since the industry was set up?

Then we have the vexed question of the generation pattern, which has been referred to. The 1982 Labour programme says:
"We believe that a great deal of new plant should be coal-fired to ensure that the electricity generating board maintains its present high level of coal use and to encourage the continuing growth of the coal industry."
It is an extremely interesting concept of the production of the most fundamental energy in this country—electricity—that the Labour Party should regard it merely as a way of stimulating the coal industry. Some of us think that the job of the electricity industry is to provide electricity as efficiently as possible, and to be consumer-related in the sense that it is related to the demands and needs of the consumer. It should not be an adjunct, a consumer, to another industry with which Labour Members seem to have far too slavish a relationship for the national good if they were ever to regain power.

We have had a sensible discussion about the combined heat and power scheme. However, when I read the Labour 1982 document or listen to what the right hon. Member for Leeds, South has to say about combined heat and power, I find no mention of the scheme's industrial application. Everything is about district heating. The combined heat and power scheme is extremely relevant to industry because industry is concerned about the cost and the way in which it can get energy. It is an indictment of the Opposition that they seem to be unable to address their mind to combined heat and power in industrial use—a major factor in some heavy process industries and their recovery.

I congratulate the hon. Member for Birmingham, Northfield (Mr. Spellar) on the lucidity of his speech. However, before he starts speaking to us about the future of the power plant industry, he should, as a member of a highly persecuted breed—a true forceful Labour Rightwinger—say something to the National Executive Committee about its threat to nationalise the power plant industry. Nothing would he more calculated to ruin some of our best companies, such as GEC, Northern Engineering Industries and Babcock than nationalisation.

The right hon. Member for Leeds, South seemed surprised when my right hon. Friend the Secretary of State talked about irresponsibility and about extra-parliamentary objections to the Bill. The actions of the hon. Member for Midlothian came as a shock to us, following as hard as they did on the disgraceful speech by the right hon. Member for Chesterfield (Mr. Varley). That speech, in tandem with that of Mr. Arthur Scargill, tried to induce the miners to come out on strike and threw the full weight of the Labour Party behind that. No sooner was that done than the hon. Member for Midlothian went into a conclave with members of the General and Municipal Workers Union—

The hon. Gentleman says that that is not true. I should be interested to know whether he has asked the Press Association to correct this. I shall read the full story:

"Power workers' leaders today threatened to pull the switches on private generators if Government plans undermine the nationalised electricity supply industry.
Representatives of more than 30,000 General and Municipal Workers' members, many operating strategic sub-stations, today pledged their 'determination lo protect the industry against privatisation.' Meeting in Lor don, they supported MP Alex Eadie, a former Labour energy Minister, who told them he would speak against the Government privatisation Bill.
Afterwards he said: 'These workers probably have more power to disrupt than any others in the country."'

If it is a lie, it is a matter for the hon. Gentleman and the Press Association.

Order. We have had a quiet debate so far, I understand. We must use parliamentary language, however strong our feelings.

Now that the hon. Gentleman has that off his chest, I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 304, Noes 201.

Division No. 16]

[10 pm

AYES

Adley, RobertBest, Keith
Aitken, JonathanBevan, David Gilroy
Alexander, RichardBiffen, Rt Hon John
Alison, Rt Hon MichaelBiggs-Davison, Sir John
Arnold, TomBlackburn, John
Aspinwall, JackBlaker, Peter
Atkins, Rt Hon H.(S'thorne)Body, Richard
Atkins, Robert(Preston N)Bonsor, Sir Nicholas
Atkinson, David (B'm'th,E)Boscawen, Hon Robert
Baker, Kenneth(St.M'bone)Bottomley, Peter (W'wich W)
Baker, Nicholas (N Dorset)Bowden, Andrew
Banks, RobertBoyson, Dr Rhodes
Beith, A. J.Bright, Graham
Bendall, VivianBrinton, Tim
Benyon, Thomas (A'don)Brittan, Rt. Hon. Leon
Benyon, W. (Buckingham)Brooke, Hon Peter

Brotherton, MichaelHamilton, Hon A.
Brown, Michael(Brigg & Sc'n)Hamilton, Michael (Salisbury)
Brown, Ronald W. (H'ckn'y S)Hampson, Dr Keith
Browne, John (Winchester)Hannam, John
Bruce-Gardyne, JohnHaselhurst, Alan
Bryan, Sir PaulHastings, Stephen
Buchanan-Smith, Rt. Hon. A.Havers, Rt Hon Sir Michael
Buck, AntonyHawkins, Sir Paul
Budgen, NickHawksley, Warren
Bulmer, EsmondHeath, Rt Hon Edward
Burden, Sir FrederickHeddle, John
Butcher, JohnHenderson, Barry
Butler, Hon AdamHeseltine, Rt Hon Michael
Carlisle, John (Luton West)Hicks, Robert
Carlisle, Kenneth (Lincoln)Higgins, Rt Hon Terence L.
Cartwright, JohnHogg, Hon Douglas (Gr'th'm)
Chalker, Mrs. LyndaHolland, Philip (Carlton)
Channon, Rt. Hon. PaulHooson, Tom
Chapman, SydneyHoram, John
Churchill, W. S.Hordern, Peter
Clark, Hon A. (Plym'th, S'n)Howe, Rt Hon Sir Geoffrey
Clark, Sir W. (Croydon S)Howell, Rt Hon D. (G'ldf'd)
Clarke, Kenneth (Rushcliffe)Howell, Ralph (N Norfolk)
Clegg, Sir WalterHudson Davies, Gwilym E.
Colvin, MichaelHunt, David (Wirral)
Cope, JohnHunt, John (Ravensbourne)
Cormack, PatrickHurd, Rt Hon Douglas
Corrie, JohnIrvine, Rt Hon Bryant Godman
Costain, Sir AlbertIrving, Charles (Cheltenham)
Crawshaw, RichardJenkin, Rt Hon Patrick
Crouch, DavidJohnson Smith, Sir Geoffrey
Dickens, GeoffreyJopling, Rt Hon Michael
Dorrell, StephenJoseph, Rt Hon Sir Keith
Dover, DenshoreKellett-Bowman, Mrs Elaine
du Cann, Rt Hon EdwardKing, Rt Hon Tom
Dunn, Robert (Dartford)Kitson, Sir Timothy
Durant, TonyKnight, Mrs Jill
Dykes, HughKnox, David
Eden, Rt Hon Sir JohnLang, Ian
Edwards, Rt Hon N. (P'broke)Latham, Michael
Eggar, TimLawrence, Ivan
Elliott, Sir WilliamLawson, Rt Hon Nigel
Ellis, Tom (Wrexham)Lee, John
Eyre, ReginaldLennox-Boyd, Hon Mark
Fairbairn, NicholasLester, Jim (Beeston)
Fairgrieve, Sir RussellLewis, Kenneth (Rutland)
Faith, Mrs SheilaLloyd, Ian (Havant & W'loo)
Fell, Sir AnthonyLloyd, Peter (Fareham)
Fenner, Mrs PeggyLoveridge, John
Finsberg, GeoffreyLuce, Richard
Fisher, Sir NigelLyell, Nicholas
Fletcher, A. (Ed'nb'gh N)Lyons, Edward (Bradf'd W)
Fletcher-Cooke, Sir CharlesMabon, Rt Hon Dr J. Dickson
Fookes, Miss JanetMc Crindle, Robert
Forman, NigelMacGregor, John
Fowler, Rt Hon NormanMacKay, John (Argyll)
Fox, MarcusMaclennan, Robert
Fraser, Rt Hon Sir HughMacmillan, Rt Hon M.
Fraser, Peter (South Angus)McNair-Wilson, M. (N'bury)
Freud, ClementMcNair-Wilson, P. (New F'st)
Fry, PeterMc Quarrie, Albert
Gardiner, George (Reigate)Madel, David
Gardner, Edward (S Fylde)Major, John
Garel-Jones, TristanMarland, Paul
Gilmour, Rt Hon Sir IanMarlow, Antony
Glyn, Dr AlanMarshall, Michael (Arundel)
Goodhart, Sir PhilipMarten, Rt Hon Neil
Goodhew, Sir VictorMates, Michael
Goodlad, AlastairMawby, Ray
Gorst, JohnMawhinney, Dr Brian
Gow, IanMayhew, Patrick
Gower, Sir RaymondMellor, David
Grant, Anthony (Harrow C)Meyer, Sir Anthony
Gray, HamishMiller, Hal (B'grove)
Greenway, HarryMills, Iain (Meriden)
Grieve, PercyMills, Sir Peter (West Devon)
Griffiths, E.(B'y St. Edm'ds)Miscampbell, Norman
Griffiths, Peter (Portsm'th N)Mitchell, David (Basingstoke)
Grist, IanMitchell, R. C. (Soton Itchen)
Gummer, John SelwynMoate, Roger

Montgomery, FergusSmith, Tim (Beaconsfield)
Moore, JohnSpence, John
Morris, M. (N'hampton S)Spicer, Jim (West Dorset)
Morrison, Hon C. (Devizes)Spicer, Michael (S Worcs)
Morrison, Hon P. (Chester)Sproat, Iain
Mudd, DavidSquire, Robin
Murphy, ChristopherStainton, Keith
Myles, DavidStanbrook, Ivor
Neale, GerrardStanley, John
Needham, RichardSteen, Anthony
Nelson, AnthonyStevens, Martin
Neubert, MichaelStewart, A.(E Renfrewshire)
Newton, TonyStewart, Rt Hon D. (W Isles)
Nott, Rt Hon JohnStewart, Ian (Hitchin)
Ogden, EricStradling Thomas, J.
Onslow, CranleyTapsell, Peter
Oppenheim, Rt Hon Mrs S.Taylor, Teddy (S'end E)
Osborn, JohnTemple-Morris, Peter
Page, John (Harrow, West)Thatcher, Rt Hon Mrs M.
Page, Richard (SW Herts)Thompson, Donald
Parris, MatthewThorne, Neil (Ilford South)
Patten, Christopher (Bath)Thornton, Malcolm
Patten, John (Oxford)Townend, John (Bridlington)
Pattie, GeoffreyTownsend, Cyril D, (B'heath)
Pawsey, JamesTrippier, David
Penhaligon, DavidTrotter, Neville
Percival, Sir Ianvan Straubenzee, Sir W.
Peyton, Rt Hon JohnVaughan, Dr Gerard
Pink, R. BonnerViggers, Peter
Porter, BarryWaddington, David
Prentice, Rt Hon RegWainwright, R.(Colne V)
Price, Sir David (Eastleigh)Wakeham, John
Prior, Rt Hon JamesWaldegrave, Hon William
Proctor, K. HarveyWalker, Rt Hon P.(W'cester)
Raison, Rt Hon TimothyWalker, B. (Perth )
Rathbone, TimWalker-Smith, Rt Hon Sir D.
Renton, TimWall, Sir Patrick
Rhodes James, RobertWalters, Dennis
Rhys Williams, Sir BrandonWard, John
Ridley, Hon NicholasWarren, Kenneth
Rippon, Rt Hon GeoffreyWatson, John
Roberts, M. (Cardiff NW)Wells, Bowen
Roberts, Wyn (Conway)Wells, John (Maidstone)
Roper, JohnWheeler, John
Ross, Stephen (Isle of Wight)Whitelaw, Rt Hon William
Rossi, HughWhitney, Raymond
Rost, PeterWiggin, Jerry
Royle, Sir AnthonyWilkinson, John
Rumbold, Mrs A. C. R.Williams, D.(Montgomery)
Sainsbury, Hon TimothyWilson, Gordon (Dundee E)
Shaw, Giles (Pudsey)Winterton, Nicholas
Shaw, Sir Michael (Scarb')Wolfson, Mark
Shelton, William (Streatham)Wrigglesworth, Ian
Shepherd, Colin (Hereford)Young, Sir George (Acton)
Shepherd, Richard
Shersby, MichaelTellers for the Ayes:
Silvester, FredMr. Carol Mather and
Smith, DudleyMr. Anthony Berry.

NOES

Abse, LeoCampbell, Ian
Adams, AllenCampbell-Savours, Dale
Allaun, FrankCant, R. B.
Anderson, DonaldCarmichael, Neil
Archer, Rt Hon PeterCarter-Jones, Lewis
Ashley, Rt Hon JackClark, Dr David (S Shields)
Ashton, JoeClarke, Thomas(C'b'dge, A'rie)
Atkinson, N.(H'gey,)Cocks, Rt Hon M. (B'stol S)
Bagier, Gordon A.T.Cohen, Stanley
Barnett, Rt Hon Joel (H'wd)Concannon, Rt Hon J. D.
Benn, Rt Hon TonyCowans, Harry
Bennett, Andrew(St'kp't N)Cox, T. (W'dsw'th, Toot'g)
Bidwell, SydneyCraigen, J. M. (G'gow, M'hill)
Booth, Rt Hon AlbertCryer, Bob
Bottomley, Rt Hon A.(M'b'ro)Cunliffe, Lawrence
Bray, Dr JeremyCunningham, Dr J. (W'h'n)
Brown, R. C. (N'castle W)Dalyell, Tam
Buchan, NormanDavies, Rt Hon Denzil (L'lli)
Callaghan, Rt Hon J.Davis, Clinton (Hackney C)
Callaghan, Jim (Midd't'n & P)Davis, Terry (B'ham, Stechf'd)

Dean, Joseph (Leeds West)Marshall, Jim (Leicester S)
Dewar, DonaldMason, Rt Hon Roy
Dixon, DonaldMaynard, Miss Joan
Dobson, FrankMeacher, Michael
Dormand, JackMiller, Dr M. S. (E Kilbride)
Dubs, AlfredMitchell, Austin (Grimsby)
Duffy, A. E. P.Morris, Rt Hon A. (W'shawe)
Dunwoody, Hon Mrs G.Morris, Rt Hon C. (O'shaw)
Eadie, AlexMorris, Rt Hon J. (Aberavon)
Eastham, KenMoyle, Rt Hon Roland
Edwards, R. (W'hampt'n S E)Mulley, Rt Hon Frederick
Ellis, R. (NE D'bysh're)Newens, Stanley
English, MichaelO'Neill, Martin
Ennals, Rt Hon DavidOrme, Rt Hon Stanley
Evans, Ioan (Aberdare)Palmer, Arthur
Evans, John (Newton)Park, George
Ewing, HarryParker, John
Faulds, AndrewParry, Robert
Field, FrankPavitt, Laurie
Fitch, AlanPendry, Tom
Flannery, MartinPowell, Raymond (Ogmore)
Foot, Rt Hon MichaelPrescott, John
Ford, BenRace, Reg
Foster, DerekRadice, Giles
Foulkes, GeorgeRees, Rt Hon M (Leeds S)
Fraser, J. (Lamb'th, N'w'd)Richardson, Jo
Freeson, Rt Hon ReginaldRoberts, Albert (Normanton)
Garrett, John (Norwich S)Roberts, Allan (Bootle)
Garrett, W. E. (Wallsend)Roberts, Ernest (Hackney N)
George, BruceRoberts, Gwilym (Cannock)
Gilbert, Rt Hon Dr JohnRobertson, George
Golding, JohnRobinson, G. (Coventry NW)
Graham, TedRooker, J. W.
Hamilton, James (Bothwell)Ross, Ernest (Dundee West)
Hamilton, W. W. (C'tral Fife)Rowlands, Ted
Hardy, PeterRyman, John
Harman, Harriet (Peckham)Sever, John
Harrison, Rt Hon WalterSheerman, Barry
Hart, Rt Hon Dame JudithSheldon, Rt Hon R.
Hattersley, Rt Hon RoyShore, Rt Hon Peter
Haynes, FrankShort, Mrs Renée
Heffer, Eric S.Silkin, Rt Hon J. (Deptford)
Hogg, N. (E Dunb't'nshire)Silkin, Rt Hon S. C. (Dulwich)
Holland, S. (L'b'th, Vauxh'll)Silverman, Julius
Home Robertson, JohnSkinner, Dennis
Homewood, WilliamSnape, Peter
Hooley, FrankSoley, Clive
Howell, Rt Hon D.Spearing, Nigel
Hoyle, DouglasSpellar, John Francis (B'ham)
Huckfield, LesSpriggs, Leslie
Hughes, Mark (Durham)Stallard, A. W.
Hughes, Robert (Aberdeen N)Stoddart, David
Hughes, Roy (Newport)Stott, Roger
Janner, Hon GrevilleStrang, Gavin
Jay, Rt Hon DouglasStraw, Jack
John, BrynmorSummerskill, Hon Dr Shirley
Johnson, James (Hull West)Taylor, Mrs Ann (Bolton W)
Johnson, Walter (Derby S)Thomas, Dr R.(Carmarthen)
Jones, Rt Hon Alec (Rh'dda)Thorne, Stan (Preston South)
Jones, Barry (East Flint)Tilley, John
Kerr, RussellTinn, James
Kilroy-Silk, RobertTorney, Tom
Lambie, DavidUrwin, Rt Hon Tom
Lamond, JamesVarley, Rt Hon Eric G.
Leadbitter, TedWainwright, E.(Dearne V)
Leighton, RonaldWalker, Rt Hon H.(D'caster)
Lewis, Arthur (N'ham NW)Wardell, Gareth
Lewis, Ron (Carlisle)Watkins, David
Litherland, RobertWeetch, Ken
Lofthouse, GeoffreyWelsh, Michael
Lyon, Alexander (York)White, Frank R.
McCartney, HughWhite, J. (G'gow Pollok)
McDonald, Dr OonaghWhitehead, Phillip
McGuire, Michael (Ince)Willey, Rt Hon Frederick
McKelvey, WilliamWilliams, Rt Hon A.(S'sea W)
McNamara, KevinWilson, Rt Hon Sir H.(H'ton)
McWilliam, JohnWinnick, David
Marks, KennethWoodall, Alec
Marshall, D(G'gow S'ton)Woolmer, Kenneth
Marshall, Dr Edmund (Goole)Wright, Sheila

Young, David (Bolton E)Mr. George Morton and
Mr. Allen MacKay.
Tellers for the Noes:

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

On a point of order, Mr. Speaker. It is a serious offence in the House when a Minister knowingly—I know that it is unparliamentary to allege a lie—utters an untruth. Many more difficulties arise when a Minister, having told an untruth, promises to give way so that the allegation can be refuted and then refuses to do so. The Under-Secretary alleged that I was present at a meeting that I did not attend. I cannot accept responsibility for what he reads elsewhere. I was not present at the meeting and I was not privy to the decision that was taken, to which he referred. In accordance with the traditions of the House, the Minister should have the decency to apologise.

Further to that point of order, Mr. Speaker. The suggestion of extra-parliamentary action was raised by my right hon. Friend the Secretary of State when he opened the Second Reading of the Bill—

The Minister must take responsibility for his own statements.

—and that seemed to lead to some surprise on the part of the right hon. Member for Leeds, South (Mr. Rees). I thought it right to expand on my right hon. Friend's suggestion when I replied to the debate. In doing so I read out what I had before me, which was a news item on the Press Association tape that was dated 18 November. I read it as reported and read all but the last two paragraphs. If the hon. Member for Midlothian (Mr. Eadie) says that he is misreported in the news item, I will, of course, accept that, and I do accept that. I have not the slightest interest in unnecessary bad blood with the hon. Gentleman or any other hon. Member. However, we all rely on what appears on the tape. I read out an item that appeared on the tape, which has been widely reported in the press. I had no knowledge that the story that appeared on the tape or the reports that appeared in the press were in any sense controversial. However, if the hon. Gentleman says that the Press Association report is wrong, I shall accept entirely what he says. It is the first time—[Interruption.]

Order. May I just appeal to the hon. Gentleman? I know that he feels strongly, but the Minister has—

Further to the point of order, Mr. Speaker. The Minister's words were within the hearing of the House. If he was conveying to the House an apology for what he said earlier, it was the worst apology that I have ever heard. I repeat that I was not present at the meeting and nor was I privy to any decision that was taken at it. I learnt about the decision only when listening to a radio broadcast. The hon. Gentleman should have the decency to apologise without qualification.

Order. I think that the hon. Member for Blackburn (Mr. Straw) may take it that his hon. Friend the Member for Midlothian (Mr. Eadie) can look after himself. The money resolution—

Further to that point of order, Mr. Speaker. I am sure that my hon. Friend can look after himself, but there is a further important point. A double dishonour was committed this evening. Not only was a charge of untruth made against my hon. Friend, but, within the hearing of the House, the Minister said that he would give way to my hon. Friend in order that my hon. Friend could refute the charge. The Minister refused to do that. We want a double apology from the Minister tonight.

Order. Like all hon. Members, I have a vested interest in good will in this Chamber. As I understood it, the Minister was withdrawing that remark.

I sought to explain, Mr. Speaker, but it was difficult against the barrage of what hon. Members were saying. The unchallenged story was on the tapes and I used it in good faith. If the hon. Gentleman says—[Hors. MEMBERS: "Withdraw."]—that he was inaccurately reported I entirely accept that, but the first I knew of that was after I used the story.

Further to that point of order, Mr. Speaker. Hon. Members have rights. I repeat again that if the Minister is making an apology at the Dispatch Box, it is the worst apology that I have ever heard in this honourable House. I am asking the Minister to withdraw without qualification. I repeat that I was not present at or privy to the meeting that was discussed and I had no knowledge of the decision until I heard of it on the radio. I am asking the hon. Gentleman to withdraw without qualification.

Further to that point of order, Mr. Speaker. The whole House has a vested interest in proceeding to the next item on this evening's agenda. May I suggest, with respect to you, Mr. Speaker, and to the Minister, that the best way for us all to accomplish that task is for him simply to say "I withdraw".

I have made it as clear as I can, Mr. Speaker, that I have acted in good faith on press reports—[HON. MEMBERS: "Withdraw."] If the hon. Gentleman says that he was inaccurately reported, I entirely accept that. In that case—[Horn. MEMBERS: "Withdraw."]—I regret the fact that there was an inaccurate press statement of what he said. I cannot say more than that.

Order. I am on my feet at the moment. It is my point of order at the moment. I thought I heard the Minister say that he was sorry if there had been a mistake.

I apologise, Mr. Speaker, I did not realise that I had called you for your point of order.

The Minister has an opportunity to gain for himself the respect of the House of Commons or to lose all respect during the whole of his parliamentary career. He has made before the House an inaccurate statement for which he is responsible. Although he read it from a press report the Minister is responsible for his own words. He has written that into the record of the House and he should have the decency to come before the House to withdraw that statement without qualification.

I have no wish to perpetuate this exchange. If the hon. Gentleman says that there was a misrepresentation and a slur in that story, I unreservedly accept that. I regret very much that this was not challenged before—[Horn. MEMBERS: "Withdraw."] The hon. Gentleman says that he was not there. I unreservedly accept that and I regret that I did not end my speech in some other way now that he has told me that.

Further to that point of order, Mr. Speaker. I regret the necessity to pursue the issue, but you will understand, as the House and the Leader of the House understand, that every time that the Minister qualifies his withdrawal he makes it not a withdrawal. I ask those who sit beside him to advise him simply to say what is clearly required. My hon. Friend says that he was quoted as saying something that he did not say. No one suggests that my hon. Friend is deceiving the House. The Minister's clear obligation is, therefore, to utter the two words "I withdraw". I ask his right hon. and hon. Friends to persuade him to do the sensible thing and allow us to proceed.

I think that I have sat in the House longer than any right hon. or hon. Member now sitting on the Opposition Front Bench. Having listened to the exchanges I think that my hon. Friend the Minister has been extremely courteous to the House. He has made his position plain. In the best traditions of the House the Opposition would be wise to leave the matter there.

Further to that point of order, Mr. Speaker. Press reports are sometimes inaccurate. The best thing to do is to recognise that they can be untruthful. The Minister should withdraw and apologise.

Order. There is no point in continuing to listen to points which are not points of order, but points of indignation. [Interruption.] Order.