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Energy

Volume 124: debated on Monday 14 December 1987

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Imported Coal

1.

To ask the Secretary of State for Energy when he last met the chairman of British Coal to discuss the cost of imported coal; and if he will make a statement.

I meet the chairman of British Coal regularly to discuss all aspects of the coal industry.

When the Secretary of State next meets the chairman, will he discuss the current comparison between the price of British and international coal? Will he take into account the present level of international stocks as they reflect the investment in 1973, after the oil crisis, and how that price reflects the current weakness of the dollar, which is causing great concern when compared with European currencies? Will he also consider the fact that if we turned to the international market, international prices would rise immediately as a result? Will the Secretary of State answer the question raised by the chairman of British Coal recently as to whether we are to close more pits against such an uncertain background? Such closures are totally unjustified.

No. The Government have made it clear, through what they have said and in financial support for the industry, that we want a strong, viable, competitive British coal industry. It may surprise the hon. Gentleman to learn that I agree with him that it is misleading to consider the marginal cost of coal in international markets and to state that 80 million tonnes could be purchased at that price. If the Central Electricity Generating Board were to enter the market for that quantity of coal, the price would be bound to rise.

Does my right hon. Friend agree that metallurgical coke is required for the United Kingdom steel industry and should be imported? Considering the true figures for importation prices, does my right hon. Friend agree that the Chinese, the Colombians, the South Africans and the Australians can all undercut us in real prices? We must face that situation.

I have said that we must have a competitive coal industry. Equally, I agree with my hon. Friend that we do not produce enough of certain grades of coal—for example, anthracite and coking coal. That is one reason why British Coal has proposals to invest at Margam. To make that investment pay there must be flexible working and a new approach to working arrangements. Without those we will have to continue to import the coking coal that we could produce in this country.

Has it occurred to the Secretary of State that the policy of importing coal — including some from South Africa—of further pit closures and of the selling of profitable pits confirms almost every forecast made by Arthur Scargill since he became president of the National Union of Mineworkers? He forecast those events with clinical precision. Is it not a fact that that must be set against the problem of hypothermia, which is likely to kill many people this winter because of the lack of cheap fuel?

I am very surprised that the right hon. Gentleman wants to talk about closures. No other Minister has ever approached the right hon. Gentleman's record for closing pits. What is more, under the right hon. Gentleman, miners did not receive the redundancy compensation that they receive under this Government. Coal imports represent about 8 per cent. of total coal consumption in this country. I want to see a strong British coal industry. We are putting up £2 million a day to ensure that the industry receives the investment. We need modern working practices to accompany the investment, and the industry will then have a bright future.

Does my right hon. Friend agree that the best way to beat the attractions of foreign coal is to continue the increase in efficiency and competitiveness that the industry has already seen? In that connection, does my right hon. Friend agree that our congratulations are due to the entire industry on the magnificent figures recently announced by British Coal in respect of productivity per man shift?

I am glad that my hon. Friend has brought that up. The breaking of the "4 tonnes per man shift" barrier is something for which the entire industry deserves credit. It deserves credit also for achieving that during an overtime ban. It just shows what the industry is capable of doing if men and management work together and make use of modern investment.

I have listened to what the right hon. Gentleman has said about the importation of coal. However, he must spell it out more clearly. He is on record as saying different things to different audiences. Does he deny that he has told audiences that if the electricity industry is privatised private industry will be allowed to buy coal in whatever market it chooses? That means another slaughtering of the coal industry, with more pit closures and job losses.

The hon. Gentleman has quoted only half of what I said. I said that we would not bind the privatised industry to buy British. I went on to say that we believe that the British coal industry, if it continues to improve productivity, will become a supplier of choice, not of necessity. The hon. Gentleman should not quote the first part without quoting the second.

Electricity Council

3.

To ask the Secretary of State for Energy what the budget for the Electricity Council has been in each of the last five years.

The net operating costs of the Electricity Council borne by electricity boards in England and Wales from 1982–83 to 1986–87 were respectively £28·2 million, £30·8 million, £32·4 million, £35·3 million and £36·5 million.

Will the Minister confirm that the Electricity Council employs more people than the Department of Energy; and will he tell us what they all do?

The answer to the first question is yes. The answer to the second is that those people are responsible for the policy formulation of the industry, including, for instance, industrial relations and financial planning.

Will the Minister tell us what proportion of the budget in each of the years that he mentioned has been spent on research into the efficient use of electricity, renewable sources of electricity and its renewable sources abroad?

I do not have the exact figures, but it is highly unlikely to be very much. All those matters are undertaken by the Central Electricity Generating Board, not the Electricity Council.

Will my hon. Friend confirm that the right hon. Member for Chesterfield (Mr. Benn), when he was Minister for Energy back in the 1970s, did not carry out the recommendations of the Plowden committee for the reorganisation of the electricity industry, and that, as a result, not only has the Electricity Council's staff exceeded that of the Department of Energy, but its spending is far greater than that of the Department?

The Electricity Council's budget is considerably larger than that of the Department of Energy, which this year is £22·9 million. As for the first part of the question, I am sure that, as my hon. Friend has asked it, it must be right.

Will the Minister tell us what subsidy is paid per tonne of South African, Polish and American coal coming into this country to be supplied to the CEGB?

I think that that relates to the last question. However, I believe that the figure—which my right hon. Friend the Secretary of State has given me—is 2·;5 per cent.

Electricity (Privatisation)

4.

To ask the Secretary of State for Energy when he last met the chairmen of the area electricity boards to discuss privatisation of the industry.

I met the area board chairmen collectively on 1 October to discuss various aspects of the privatisation of the electricity supply industry, and I plan to meet them again early in the new year.

Will my right hon. Friend confirm that the area board chairmen are overwhelmingly in favour of privatisation and believe that they will give customers a better deal in the private sector?

My hon. Friend is absolutely right. The area board chairmen are overwhelmingly in favour of the industry's privatisation.

What did the area board chairmen tell the Secretary of State about the future of the national grid, and, secondly, about the maintenance of jobs within their areas and in the industry generally? Would he care to express his own view on those matters?

The area board chairmen and I discussed the question of privatisation. In spite of rumours to the contrary, nobody in the Electricity Council, the area boards, the CEGB, or the Government wants the grid to be broken up. The area board chairmen believe that their industry has a bright future — the consumption of electricity has been increasing—and that in the private sector they can offer their employees a more secure and better-paid future. They all intend to ensure that their work force receives worker-shareholdings at preferential rates.

I am delighted to hear what my right hon. Friend has said about the national grid. Does he agree that the national grid is the jewel in the crown of our electricity industry? Is he prepared to go a little further and give a categorical assurance that, when the legislation comes, the preservation of the national grid will be written into it?

There is not and never has been at any time any question of breaking up the grid. An integrated grid has served the country well and will continue to do so in the future.

Does the Secretary of State intend the ownership of the national grid to be in private or public hands? Did the chairmen of the electricity boards make it clear to him that the 9 per cent. increase in prices was completely unjustified, that the industrial rebate for prices may mean that, yet again, consumers will pay more for electricity, and that it may be illegal?

No. When I talked to the area board chairmen about prices I explained that the industry was entering a period of substantial capital investment and that it had to develop an income base to fund that investment, whether it be in the private or public sector. They saw the sense of that argument, as, I am sure, one of these days the hon. Gentleman will.

Will my right hon. Friend note that the area boards want not only privatisation but that 10 out of the 11 wish to be privatised as individual utilities? They believe that they can compete against one another, and one or two have confirmed that they can produce electricity in their area more economically than they can buy it from the national grid.

My hon. Friend is correct. The area board chairmen all said that they would like to have the right to generate in their areas. At the moment, with the exception of one power station in Hereford, none of the area boards has any generating capacity. They would like such a right to be among the rights that they will acquire when they are privatised.

Fuel Disconnections

5.

To ask the Secretary of State for Energy if he will introduce legislation to require the fuel industries to satisfy themselves about the state of health of consumers who are in arrears with payments, before proceeding to disconnection; and if he will make a statement.

The gas and electricity industries operate a voluntary code of practice on paying electricity and gas bills. Under this code, if the sick or disabled inform the industries of their circumstances, the industries undertake to try to reach an agreement on payment arrangements which would avoid the need for disconnnection.

Does the Minister accept that the position is still far from satisfactory? The number of disconnections in the gas industry in the first six months of this year, compared with last year, increased by 40 per cent. There are currently about 1,200 deaths each year from hypothermia, so, with the winter coming, we must establish a system whereby all vulnerable customers are recorded at the local billing and registration points. If they are behind with their payments, they can be visited and, in every possible case, disconnection avoided. Thus, the numbers of disconnections would be substantially reduced.

Like the hon. Gentleman, I am concerned that the number of gas disconnections has been increasing. The hon. Gentleman may be aware that the National Gas Consumers' Council is looking into this matter, and I discussed with it the manner in which it should do so. With regard to the code of practice, it is important that the points that the hon. Gentleman made in his supplementary question are covered. I believe that, by and large, that is precisely the case.

I commend to my hon. Friend the East Midlands electricity authority, which covers my constituency, which bends over backwards in its efforts to avoid having to cut anybody off. It is very humane in its approach. Perhaps other authorities might copy its example.

Perhaps my hon. Friend is not aware that only two weeks ago I was in part of the East Midlands electricity authority's area and observed what it was doing. The number of disconnections in the electricity industry is on a downward trend. There is an undertaking that no pensioner household will be cut off before the end of March.

Is it not clear that the Government's criterion is that those organisations have to make a commercial profit? Is it not clear, therefore, that the Government are concerned more with profit than with the interests of the people? That is an absolute disgrace. It is about time that the people of this country recognised that the Government are concerned only with private interests and not with the people as a whole.

The hon. Gentleman will not be surprised to hear that I do not agree with what he has said. Somebody has to pay for the fuel consumed, whether it is gas or electricity. The Government have a number of projects, incuding the homes insulation scheme, which help those least able to help themselves. However, as I said, somebody has to pay for the fuel consumed.

Alternative Energy Sources

6.

To ask the Secretary of State for Energy when he next proposes to have discussions with the European Council of Ministers about alternative sources of energy.

I expect alternative sources of energy to be discussed at the Council of Energy Ministers planned for 21 March 1988 under German presidency.

Is my hon. Friend satisfied that the balance between United Kingdom national research and European Community research is about right at present, or' does he think that more should be undertaken on a Community basis?

Over a period of years we have done reasonably well from the EEC on the matter of renewables. Our present renewable programme is valued at about £77 million, of which the Commission pays £5 million. As my hon. Friend probably knows, we have decided to increase our expenditure on renewables next year.

As Government funds available for research into alternative forms of energy have more than quadrupled in the past few years, will my hon. Friend assure the House that at the meeting next March the question of duplication of research into alternative forms of energy will be avoided and that it ought to he part of a co-ordinated European programme to ensure that the extra money is being used in the most cost-effective way?

Part of the agreement that Ministers reached last month was that there would be a common form of information and an improved and enhanced data base, which would overcome some of the worries of duplication that my hon. Friend has rightly stressed.

Electricity Charges

7.

To ask the Secretary of State for Energy what recent estimates he has made of the impact upon (a) pensioners, (b) low-income families and (c) domestic users generally, of increased electricity charges.

There has been no overall increase in electricity tariffs since April 1985, nor will there be any increase this winter. It will be for the Electricity Council to determine the effects on tariffs from next April of the new financial targets that we set for the industry.

Why are the old and the cold being asked next year and the year after to pay big increases which are wholly unnecessary and unjustified and will simply give City slickers a big profit when electricity is privatised? Does the Minister understand that it will not wash for Ministers to make comparisons between United Kingdom and Common Market electricity prices, when pensions in the Common Market are substantially higher than here? Does he further understand that it is deeply shameful for pensioners and low-income families to be ripped off in that way by Ministers whose entire lives are cosseted and who are protected against the cold at a time when there is great anxiety about the plight of pensioners and low-income families?

The precise increases will depend upon what further success the industry has in reducing costs. We expect the average householder's expenditure to increase by 40p a week and the average pensioner's expenditure by 30p or 35p a week. I should stress that any increase next April will be the first effective increase since April 1985. Since that time single pensions have increased by £5·25 a week and are due to rise by a further £1·65 a week next April.

Does my hon. Friend agree that it does not lie in the mouth of any Labour Member to express concern about rising prices when the previous Labour Government presided over record increases in inflation and record increases in prices, to the detriment of the poor and the pensioners?

My hon. Friend is correct. Under Labour, electricity tariffs rose by 30 per cent. in real terms; under us, electricity tariffs have fallen by 15 per cent. in real terms.

Does the Minister intend after April next year to continue lower tariffs for industries such as ICI? If he does, will that continue to be to the detriment of, and cause increased handicap to, pensioners and people on low incomes?

My right hon. Friend the Secretary of State has just said that the Opposition have rather changed their tune, having learnt what is happening—[Interruption.] Last week the Opposition were complaining about heavy increases in industrial costs, so their tune has changed. It is for the industry to determine exactly how the prices will be distributed. Our understanding is that the bulk and intensive discounts will remain.

Can my hon. Friend tell us how much higher electricity prices would be now if we had given in to Scargill in 1984–85, as the Opposition urged us to do?

I do not have the calculations with me, I am afraid, but that is a very good question. Prices would undoubtedly be much higher.

Cegb

8.

To ask the Secretary of State for Energy when he next expects to meet the chairman of the Central Electricity Generating Board; and what subjects he expects to discuss.

I meet Lord Marshall regularly to discuss a range of issues concerning the electricity supply industry.

When the Secretary of State next meets the chairman, will he say that the public liability insurance in respect of each nuclear plant of only £20 million is woefully inadequate? Will he tell him that, if the industry is privatised, it should make proper provision for this risk and not rely on the state to underwrite the risk, thereby giving a generous public subsidy to cover one of the major running costs of the industry?

The hon. Gentleman has raised an important point. There is a great deal of additional expenditure — far in excess of £20 million — to ensure that accidents do not take place. We set high standards of design, construction and operation. We have a Nuclear Inspectorate, which is wholly independent and has the right to license, or refuse to license, plants. We set a great deal of store by safety. The £20 million cover is cover of last resort. The real effort goes into making sure that it is never necessary.

When my right hon. Friend next speaks to the chairman, will he remind him, as the provider of cheap off-peak electricity, that that electricity is being taken up in Lancashire by only 6·2 per cent. of the population and that further promotion of cheap-rate electricity would assist those low-income categories who will have to bear the extra charges to which reference has been made in earlier questions?

I shall make sure that I make that point and that the area boards press hard the opportunities for taking off-peak electricity at very keen prices. I shall make sure also, as I have already done, that my Department runs a campaign to make elderly people aware of the possibilities that are available for saving energy and for using energy efficiently at little cost to themselves.

Before the Secretary of State meets the chairman, will he give a guarantee to the House that, unlike what happened with British Telecom—when both industries were fattened up before privatisation—if the electricity industry is privatised, the fattening-up process will not allow any Tory Member of Parliament or ex-Cabinet Minister to take on the job of non-executive or executive director of the privatised industry?

I note what the hon. Gentleman says, but I cannot give him that undertaking.

When my right hon. Friend meets the chairman, will he discuss the CEGB's ability to import coal freely? Will my right hon. Friend confirm that, if the CEGB were able to import coal freely, it would be able to meet the real rate of return on assets which he requires of it and that there would be no need for a price increase next April?

I should tell my hon. Friend that we dealt with this question a little earlier. I made the point that although it is possible to buy coal more cheaply from overseas, I doubt whether one could buy the quantities necessary to replace the coal produced by British Coal. We are approaching the problem the other way round. We are trying to help British Coal to make itself a modern, efficient and competitive supplier. We think that our coal reserves are a very important asset, which should be used properly.

Will the Secretary of State confirm that the members of the Central Electricity Generating Board are unanimously agreed that the transmission grid should not be separated from the generation of electricity? What does the right hon. Gentleman think of Lord Marshall's view that if the two were separated—whether in public or private ownership — the security of our electricity supply would be lowered and there would be a greater risk of blackouts?

It is true that the CEGB thinks that the grid should be retained by it and that we need an integrated system, whereby the CEGB controls the power stations and the grid. However, others in the industry do not think that that is essential. There is a strong body of opinion that argues that transmission should be separated from generation if one is to encourage private generators to come into transmission and competition in generation. We have not yet made a decision about those two arguments.

Insulation

9.

To ask the Secretary of State for Energy how many homes occupied by (i) pensioners and (ii) others, have been given financial assistance for insulation since 1983.

From 1983 to 1986 some 1,540,000 grants were paid under the homes insulation scheme, of which 312,000 were 90 per cent. grants to low income households, and some 267,000 low-income households were assisted by the community insulation projects. Many of the beneficiaries have been pensioners.

I thank my hon. Friend for that most encouraging reply. Does he envisage any changes in the homes insulation scheme or the community insulation project?

On the homes insulation scheme, the Government have already announced that the 90 per cent. grant will be extended to all households claiming supplementary benefit or housing benefit. That will mean that more than half as many homes again will be eligible. On the community insulation projects, all low-income households claiming income support, housing benefit or family credit will be eligible for the service from next April. That will more than double the number of eligible households, from fewer than 3 million to about 7 million.

Will the Minister confirm that yesterday British Coal agreed to sell 1,400 homes in Nottinghamshire to an organisation called the Lancashire Housing Association, which has assets worth less than £500,000? British Coal has agreed to sell them at a figure of £9·2 million.

I am sorry that I took so long to get to the question. Mr. Speaker. These houses are very badly insulated. They house more than 2,500 pensioners, most of whom have given their lives to the coal industry, and now British Coal in Nottinghamshire is selling them and their homes down the river.

If the households to which the hon. Gentleman referred have a case for help under the homes insulation scheme or the community insulation projects, I shall ensure that those householders have the right to find out what might be available for them. I am not in a position to say more than that.

My hon. Friend should be congratulated on the amount of insulation that has been installed, but what is the Government's thinking on windows? Windows allow the greatest heat loss from houses. Why is double glazing not an automatic feature of new house build? Why is it not put into the specifications, and what encouragement are the Government giving to the building industry to ensure that double glazing is installed to prevent heat loss and help with energy problems?

On housing and building regulations, I assure my hon. Friend that my right hon. Friend the Secretary of State for the Environment has recently issued a directive that draws attention to the need for double glazing as well as many other ways of insulating people's houses.

Nuclear Power Plants (Working Practices)

12.

To ask the Secretary of State for Energy what plans he has to introduce legislation relating to working practices in nuclear power plants; and if he will make a statement.

Existing legislation provides the basis for effective control of working practices in nuclear power plants. These practices are regulated by the Nuclear Installations Inspectorate.

I am disappointed that the Minister has not seen fit to answer my question. As there is increasing evidence, especially from investigations into the results of the explosions at Hiroshima and Nagasaki, that levels of radioactivity formerly considered safe are no longer acceptable, will the Department thoroughly review its attitude and introduce far more stringent safety standards at British nuclear plants?

I did answer the hon. Gentleman's question directly. The implication was that there were no plans for further legislation because existing legislation is adequate at present. In direct response to his question about risk levels, the industry complies with and works entirely within the limits implied in the National Radiological Protection Board's new risk assessments.

Does my hon. Friend agree that drawing the legislation more tightly might be counterproductive, in that tightly drawn legislation provides loopholes, whereas the present broad legislation indicates more widely what the Government intend?

That is a fair point. Under the present legislation a great deal is left to the wisdom and discretion of the Nuclear Installations Inspectorate. The inspectorate, with the operator, ensures that the plant is safe. That is the important point. My hon. Friend is quite right. Very detailed legislation and rules might actually lead to a decline in safety standards.

The Minister will be aware that in December last year the Nuclear Installations Inspectorate expressed great concern about safety standards at Sellafield and, indeed, suggested that if standards were not improved within 12 months it would have to consider closing the plant down. Now that that period has expired, has the Minister received any information from the inspectorate as to whether its recommendations have been carried out and whether it is satisfied with safety standards at Sellafield?

That is not exactly how it was. The Nil laid down certain conditions for Sellafield and a time scale within which they must be carried out. They have, indeed, been carried out—and within the time scale laid down.

As it takes three years to train an inspector, and as the nuclear industry is being considerably expanded and may be affected by privatisation, does the Minister recognise the need to increase the inspectorate beyond the level currently proposed? Does he agree that he should be putting plans into action to ensure that more inspectors can be trained than is currently possible?

The hon. Gentleman is right. There is a time lag between advertising for new inspectors and recruiting them. He will be aware, I am sure, that we have engaged in a substantial recruitment programme for the NII. I understand that the programme is going extremely well and it is planned to have 120 inspectors by the early part of next year. We are therefore well on target, including the provision of the training required.

Electricity Charges

11.

To ask the Secretary of State For Energy what representations he has received from (a) district or regional health authorities or (b) other centrally funded public service employers relating to the proposed increases in electricity charges.

Nevertheless, in view of the serious financial crisis facing the hospital service, which according to the Daily Telegraph is recognised by the vast majority of people in this country, does the Minister agree that the Department should either give concessions to health authorities or press the Secretary of State for Social Services to provide added budget allocations for health authorities to cover the quite unnecessary increases in electricity charges?

I do not accept the hon. Gentleman's view that the increases are unnecessary. On present assessments, electricity accounts for slightly less than 1 per cent. of health services costs. The expected increases will thus be less than one tenth of 1 per cent. How that increased cost —estimated at about £8 million in a total budget of £22 billion next year—is finally accommodated is a matter for my right hon. Friend the Secretary of State for Social Services.

As I understand it, the Government want to increase the rate of return by increasing the charges because the rate of return is under 2·5 per cent., which is only one quarter of the rate of return in private industry. Once that rate of return has been increased and attracts private investors into the electricity generating industry, competition will drive down prices. Obviously, there is in the Government's policy a subtle point that has escaped my attention, but does that make sense?

That is pretty good. The only additional point is that it was the Labour Government who introduced the concept of a 5 per cent. rate of return on new investment in the public sector. The Government are trying to edge the rate of return in the electricity industry towards that 5 per cent.

The Minister has just confirmed an answer given by one of his colleagues in the DHSS in a written answer on 24 November, in which the hon. Lady said that the increased cost of electricity would add about £8 million to the annual costs of the National Health Service. The Prime Minister frequently makes great play about giving extra funds of far less than that to the Health Service. Given the underfunding of the National Health Service and the great public concern about that, is it not right that hospitals should have some exemption from these electricity charges?

I do not know whether it is my place to engage in the question of the funding of the Health Service. If it is, I have to say that the Government have raised expenditure on the Health Service by almost 30 per cent. in real terms since we came to office. Let us get the context in which these things are being discussed. It is that expenditure of £22 billion is planned for next year, out of which this £8 million looks a rather small item.