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Commons Chamber

Volume 175: debated on Monday 25 June 1990

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House Of Commons

Monday 25 June 1990

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Death Of A Member

I regret to have to inform the House of the death of Sean Francis Hughes Esquire, Member for Knowsley, South, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.

Oral Answers To Questions


Gas Turbines


To ask the Secretary of State for Energy if he will list the number and location of gas turbine projects for the production of electricity in England and Wales.

There is substantial interest in using gas both by existing generators and by those wishing to enter the generating market. I will arrange for the list to be published in the Official Report.

Is my right hon. Friend aware that because of the low growth in electricity consumption, many of the 10,000 MW projects will not be required, unless there is a massive closure of coal-fired power stations? Is he further aware that a gas generator producing 350 MW will emit 1 million tonnes of CO2 per annum and that coal is even worse? Is not that a good argument why we should now have a further nuclear power station, as nuclear power is the cleanest of the lot and will keep the industry together?

I listen to my hon. Friend with considerable interest because of his expertise. In the new regime, it will be for the owners of power stations to determine what they see as the market. Electricity demand is forecast to rise over the next 10 years. All commentators seem to agree on that, although they differ on the rate of increase. The current surplus of capacity is likely to come to an end within the next few years. Net capacity needs to be ordered soon if it is to meet the forecast increase in demand. Capacity is also needed to replace existing capacity. Power stations may come to the end of their life, they may be less efficient or more costly than new power stations, or the cost of reducing emissions may be too high compared with the cost of a nuclear plant.

Does the Secretary of State agree that to follow the line of his hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), which is to sterilise millions of tonnes of coal by closures in the coal industry, would be a short-sighted medium-term policy? Once gas was not available and the millions of tonnes of coal were sterilised, we should have to rely on competitors. Would that be a wise policy?

The Government's policy is to encourage a diversity of fuels, but combined cycle gas turbine power stations are friendly to the environment. For every unit of CO2 emitted from a coal-fired station, just over half a unit is emitted from a CCGT station.

Following is the information:

The following combined cycle gas turbine generating (CCGT) stations have been given planning consent under section 36 of the Electricity Act 1989:

National Power plcKillingholme, South Humberside
PowerGen plcKillingholme, South Humberside

The following applications for consent for CCGT generating stations are still being considered:

National Power plcLittle Barford, Bedfordshire
PowerGen plcRye House, Hertfordshire

I have also been notified by Deeside Power Development Co. Ltd. of its intention to submit an application for consent for a CCGT generating station at Shotton, north Wales.

The following projects have been given approval under section 14(1) of the Energy Act 1976, that is, to establish an electricity generating station to be fuelled by natural gas, or for the conversion of an electricity generating station with a view to its being so fuelled:

Berisford Bristar plcBrigg, South Humberside
Hawker Siddley/ Eastern Electricity plcPeterborough
John Brown Engineering Ltd.Rugby, Warwickshire
Midlands Electricity plcHereford
National Power plcKillingholme, South Humberside
National Power plcLittle Barford, Bedfordshire
Nat West Bank plcLondon
PowerGen plcRye House, Hertfordshire
Ranger Oil/PowerGenSouth Denes, Great Yarmouth
Shell UK Exploration and ProductionShellhaven, Essex
Thames PowerBarking, London

The following projects have received approval under both sections 14(1) and 14(2) of the Energy Act 1976, that is, to establish an electricity generating station fuelled by natural gas and to enter into contractual arrangements for obtaining a supply of natural gas as fuel for an electricity generating station, or to extend any such arrangements:

British Sugar Ltd.Bury St. Edmunds
British Sugar plcWissington, Suffolk
BP Chemicals Ltd.Baglan Bay, West Glamorgan
The Boots Company plcBeeston, Nottingham
Hawker SiddleyCorby, South Humberside
ICI plcWinnington, Cheshire
ICI plcWilton, Cleveland
Kodak Ltd.Wealdstone, London
Lakeland PowerRoosecote, Cumbria
Leicester EnergyLeicester
London Transport ExecutiveLots road, Chelsea
London Transport ExecutiveGreenwich generating station
PowerGen plcKillingholme, South Humberside
Slough EstatesSlough
Thames Board Ltd.Workington

Electricity Privatisation


To ask the Secretary of State for Energy when he next proposes to meet the chairmen of the area electricity distribution companies to discuss privatisation.

I meet regional electricity company chairmen regularly to discuss a range of matters.

In the light of recent precedents, will the Secretary of State give an undertaking that, should he in the near future find himself out of a job, neither he nor any senior members of his Department will go running to take places on the boards of any distribution companies?

I have two answers to that question, neither of which will be satisfactory to the hon. Gentleman. First, it is a hypothetical question, and secondly, I have nothing to add to what my right hon. Friend the Prime Minister has already said on the subject.

When my right hon. Friend next meets the chairman of East Midlands Electricity, will he ask him how the new project at Bilsthorpe colliery in my constituency for a high-efficiency, mini power station is getting on and when East Midlands Electricity, together with British Coal, will be able to announce a starting date with Government help?

I have met the chairman of that regional electricity company on several occasions, and I have no doubt that he will raise that subject when I next meet him. We are looking at the figures, and it is important to examine the economics in particular.

When the right hon. Gentleman meets electricity company chairmen in the east midlands and elsewhere, will he point out that there is serious concern about the high cost of nuclear power and about the revelation today that Sizewell will cost another £1 billion, making the total cost £2.6 billion? Will the right hon. Gentleman also point out that it would be better to use coal because it is very difficult to get rid of nuclear waste? That is especially true of low-level nuclear waste, as the right hon. Gentleman experienced when he was Patronage Secretary and had to get Tory Members to stand up in protest about nuclear waste being dumped in his own constituency.

The hon. Gentleman's recollection of history is not very accurate. Nor should he believe everything that he reads in the newspapers, even the headlines of some of our better-known journals. I suspect that the question of nuclear costs will come before the House before long.

Does my right hon. Friend accept that privatisation has been a success for many industrial users because it has introduced price competition between distributors and generators? Does he agree that the only reason why Labour opposes privatisation is that it would like to see industrial users pay more for their electricity?

I hope that better reasons will be given in this afternoon's debate for the Opposition being against privatisation, but we shall be able to deal with all that they have to say.

I suppose that the Secretary of State realises that one electricity-rated company now in the state sector from which he cannot expect a job offer is Nirex. Does he agree that if the privatised area distribution boards are compelled to abide by normal stock exchange rules, which say that a company's audited accounts must be available going back five years or more, and which, with restructuring, the new companies do not have, it will be impossible to flog those companies? The only way of persuading the "Sids" to buy shares in them would be by a mass advertising campaign that would make the Albanian dictatorship at its Stalinist height or even Lord Young when at the Manpower Services Commission blush.

There were a lot of words in that question, but getting down to their fundamentals, I assure the hon. Gentleman that all the stock exchange rules necessary for the flotation of the regional electricity companies will be obeyed to the satisfaction of the people who have responsibility for those matters. Of course, there will be an element of advertising, as there has been in all privatisations. That will be beneficial in ensuring that the taxpayer gets value for money.

Mr. Marshall. I call the hon. Member because I thought that I saw him rising to his feet. If he does not want to ask a question, we shall move on.

I am always happy to oblige, Mr. Speaker, by asking a question. Will my right hon. Friend confirm that previous privatisations have been followed by increased investment and effective control of prices than before, and that electricity consumers can look forward to a good future under privatisation of that industry?

My hon. Friend is right. Not only will customers benefit from privatisation but so will taxpayers and those employed in the industry.

I apologise to the hon. Member for Hendon, South (Mr. Marshall) if he was merely taking his place.

Global Warming


To ask the Secretary of State for Energy when he last discussed with his colleagues in the European Community the implications of global warming for energy policy.

I last discussed with Community colleagues the implications of global warming for energy policy at the Energy Council on 21 May.

Does the Secretary of State agree with the statements made last week by Mr. Jim Smith, chairman of Eastern Electricity, the largest of the distribution companies soon to be privatised, that the industry should concentrate less on cutting back and conserving and far more on winning markets from British Gas? Is that any way to contribute to attempts to reduce global warming? Does the right hon. Gentleman agree with that statement as an example of the initiative that is needed in modern Britain?

I am in favour of the chairman of Eastern Electricity looking after the interests of his employees, his customers and his shareholders—

At the moment it happens to be me, as the hon. Gentleman points out, although shortly there will be a lot of shareholders. I approve of the chairman—he is a first-class person.

My right hon. Friend will doubtless be aware that a fortnight ago the House was well represented at a conference in Ottawa of 23 Council of Europe countries, the Soviet Union and Poland, about global warming. However, he is probably not aware that that conference took the decision that the subject is so important and it is so essential to reach a global solution, that every Parliament represented there should, if possible, hold a two-day debate on the papers discussed at the conference with a view to reporting back to a further conference to be organised by the Council of Europe. Will my right hon. Friend lend his considerable influence to support such a request when he receives it?

For a long time I had some responsibility for organising debates in the House. I no longer have it, but I shall pass on my hon. Friend's request to those who do. I agree with my hon. Friend this far—the conference in Ottawa and the conferences that seem to be taking place regularly in all sorts of places around the world at the moment are important if we are to deal with global warming. He is also right to say that it is necessary for us to have international agreement if we are to deal effectively with those problems. That is why the Prime Minister announced on 25 May that, in the context of international agreements, the United Kingdom is prepared to stabilise CO2 emissions at the present level by the year 2005. That target depends on other countries being able to play a full part in an international response.

Is the Secretary of State embarrassed when he meets his European colleagues that we are so half-hearted about our commitment to dealing with the problems of global warming? Why do our Government always say that we shall act if others act first? Is not the reality that we have a problem that we share with the world, which is so urgent that the target of doing a little by 2005 is too little far too late? Is not he embarrassed, and does not he want to be more effective as our Energy Minister?

I am very far from being embarrassed. The Prime Minister has taken the lead, with a demanding target. It is easy for those without responsibility here or in other countries with different problems to make forecasts and targets that they probably will not be able to meet. Our target is realistic, and if we can get international agreement on that level, we shall have done well.

Sizewell B


To ask the Secretary of State for Energy what is the most up-to-date estimate of the final construction cost of the Sizewell B nuclear power station; and if he will make a statement.

Nuclear Electric has undertaken a thorough review of progress with the Sizewell B project, including the estimated cost to completion. The outcome of the review will be announced soon.

The Secretary of State must be aware that recent estimates have put the final cost of Sizewell B at about £3.8 billion, taking into account the cost overruns, delays and lack of economies of scale due to the cancellation of the pressurised water reactor programme. It was also calculated that £2 billion can be saved by cancelling the project now. Does the Secretary of State agree that the time to cancel Sizewell B is right now?

I am not prepared to comment on speculation about the costs of Sizewell B. Nuclear Electric has recently reviewed the cost of Sizewell B, and I understand that it will publish its figure tomorrow. However, I shall seek to give the House an idea of the Government's consideration of Nuclear Electric's review during this afternoon's debate, if I should catch your eye, Mr. Speaker.

If it is true that Sizewell B is costing considerably more than first envisaged, does my right hon. Friend share my disappointment that the nuclear industry, like so many others, cannot get construction costs right? Does he concede that Sizewell B is more than merely one additional power station? It is the forerunner of a series of power stations that are environmentally desirable, and an insurance policy for the future. When fossil fuel declines we shall still need electricity.

I am not prepared to confirm the speculative figures that I read about this morning.

Is the Secretary of State aware that every penny of the overrun will have to be paid by the taxpayer and that it amounts to a subsidy to nuclear power on a scale that the Government have never accepted in respect of the mining industry? Has the Commissioner with responsibility for energy in the European Community, which has taken an interest in the sweeteners that were paid for the purchase of Rover, asked the Government to make a full disclosure in this case?

I have clear responsibility for taxpayers' money, of which I am well aware. That is why I am not prepared to comment on or to accept the speculative figures that appeared in this morning's newspapers. We shall make our comments at the proper time and in the proper way. That will be after Nuclear Electric has published its review. As for the coal industry, the right hon. Gentleman once had the honour to hold the position that I now hold. The financial assistance and grants that have been made available to British Coal under this Administration exceed, in real terms, the total assistance from all previous Governments since the industry was nationalised.

Will the Secretary of State bear it in mind that behind Sizewell B is a nuclear industry that must not be allowed to disintegrate? Will he also bear in mind the long-term view that the nuclear industry will be essential to the United Kingdom when coal and natural gas run out?

Those are some of the many considerations that I have to take properly into account when considering those matters.

Will the Secretary of State make a statement after Nuclear Electric has published its figures and will he confirm now that the figures that he says Nuclear Electric is to publish tomorrow will cover the whole of the extra costs, including those that must fall on Sizewell as a result of the cancellation of the other three pressurised water reactors? Will he also confirm that the costs of the £200 million nuclear research write-off will fall on Sizewell? Finally, can he confirm that if Sizewell is to continue, electricity users will have to pay at least twice as much for their electricity from Sizewell as from any other electricity generating station?

The hon. Gentleman would have been well advised to accept my advice not to press his questions at this time. I do not believe that the answers that he will receive a little later will be entirely to his liking. The best plan is to allow Nuclear Electric to publish its report and then decide what is the best thing to do.

Energy Efficiency


To ask the Secretary of State for Energy when he proposes to review the 90 per cent. upper limit on the grant available under the homes energy efficiency scheme.

A number of representations have been received about the 90 per cent. limit as part of the consultation process. They are being considered.

Does the Minister agree that the 10 per cent. shortfall is a formidable disincentive to the most needy families in Britain to take up this environmentally and socially valuable scheme? How can the Government be so miserly with those people and yet so profligate? Is not it true that there would be enough fuel efficiency grants for almost the entire population if Sizewell B were cancelled? Is not it acknowledged now that Sizewell B and the whole PWR programme was the worst, the most futile and the most wasteful civil investment decision since the Pharaohs decided to build the pyramids?

The 90 per cent. grant is a continuation of the home insulation project. However, the levels of individual grant will be determined in the light of the comments received by means of consultation. I shall make sure that the hon. Gentleman's comments are taken into account as part of the consultation process. The principal aim of the new scheme is to bring about a further increase in the uptake of home insulation measures among low-income households. The scheme will, I believe, be successful in doing just that.

Does my hon. Friend agree that loft insulation is the most cost-effective way of reducing energy consumption, so, when the Government are willing to give low-income households a 90 per cent. grant, that is an extremely good deal, which they should be encouraged to take up?

Energy efficiency in the home extends beyond that scheme, and the promotion of energy efficiency in buildings generally is extremely important. My right hon. Friend the Prime Minister recently presented the first national home energy rating certificate in support of the methodology and principles of energy labelling as endorsed by the Building Research Establishment. It is a welcome step in the development of the voluntary energy labelling of homes. My right hon. Friend the Secretary of State recently spoke at the opening of the one millionth new home to be built with mineral wool cavity wall slab insulation. Such initiatives will greatly help promote energy efficiency and energy savings in Britain's households.

British Coal


To ask the Secretary of State for Energy when he next proposes to meet the chairman of British Coal to discuss the future of the coal industry.


To ask the Secretary of State for Energy when he last met the chairman of British Coal; and what matters were discussed.

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

After meeting the chairman of British Coal, will the Minister be prepared to issue a joint statement with him assuring redundant and retired mineworkers that their concessionary fuel rights will be guaranteed unless they choose another option in future?

I recognise that the hon. Gentleman has raised the matter before with me and certainly with British Coal. It is a matter for British Coal, but I shall certainly ensure that any further representations that he wants to make are put to the chairman of British Coal.

Is the Secretary of State aware that currently nods and winks suggest that even if the country had the unlikely misfortune to have a Conservative Government after the next general election, they would not privatise the coal industry? Will the right hon. Gentleman discuss the matter with Lord Haslam and explain to him whether that change of heart is because the Government are to maintain the policy of contraction so that there will be nothing left to privatise, or because wiser counsels have prevailed?

I think that the whole House would wish me to congratulate Sir Robert Haslam on his recent peerage. He has been a distinguished leader of industry for many years and is a distinguished chairman of British Coal. Certainly I discuss many things with Sir Robert Haslam, but he does not seek to interfere with what is essentially a political decision. The Government's position is clear: we intend to bring proposals before the House for the privatisation of British Coal after the next election.

Does my right hon. Friend agree that the only way to secure a long-term future for the British coal industry is for its prices to be competitive and for it to develop the technologies to burn coal cleanly? Flue gas desulphurisation does not reduce, but increase, greenhouse gases. The development of new technology such as the fluidised bed and coal gasification will alow us to burn coal in the long term and reduce CO2.

My hon. Friend is absolutely right. In the long term, the development of new clean coal technologies will be the future of the British coal industry into the next century, but in the meantime the considerable improvement in productivity and performance in recent years must be maintained for many years to come.

When my right hon. Friend speaks to the chairman of British Coal, will he take up with him the matter of dumping waste on the beaches of the north-east of England? It may be cost effective for the coal industry, but it is extremely expensive on the environment and ultimately will have to be cleaned up. Will my right hon. Friend give notice that licensing for such disposal will cease quickly?

I recognise that there are strong feelings about this matter, for which my right hon. Friend the Minister of Agriculture, Fisheries and Food is responsible. I know that he is currently considering it.

Considering the overrun in the cost of nuclear power at Sizewell B, when the Secretary of State next meets the chairman of British Coal, will he suggest that a fraction of the expenditure on nuclear power should be invested in the Scottish coalfield to reopen the Francis and Monkton Hall collieries? Scottish coal is consumer friendly; it is the green coal of the future. Will he give a lead to the chairman of British Coal by supporting the redevelopment of the Scottish coalfield?

As the hon. Gentleman says, several matters in relation to Scottish coal are encouraging. Scotland has a considerable amount of low-sulphur coal, which is likely to become increasingly valuable, and its quality advantage will provide good opportunities for the future. I was pleased that Monkton Hall and Francis pits were mothballed rather than closed, because it shows that, in the right circumstances, mothballing is a feasible option. I am pleased that British Coal and Scottish Power are close to agreement about coal supplies to Longannet power station. It is not all doom and gloom.

Is my right hon. Friend aware that most miners now own their homes and wish to be able to own shares in the industry in which they work? Why, therefore, did he say that the Bill to privatise the coal industry will be introduced only after the next election? Will he please introduce it in November? It could be quite a short Bill and it would be welcomed, particularly by miners.

My hon. Friend has a formidable reputation for cutting through red tape and getting to the heart of matters, but the Bill to privatise British Coal will be complex, because under the licensing arrangements in the Coal Industry Nationalisation Act 1946 a privatised British Coal could not retain responsibility for licensing our national reserves.

When the Secretary of State next meets the chairman of the coal board will he discuss the most urgent matter in the coal industry—its low morale? Will he join Labour Members in supporting the chairman's efforts to win some long-term contracts for supplying electricity generators? Last year, British Coal was offering 10-year contracts to the new generators but it was stopped by the politics of Whitehall. Will he support the efforts of the chairman of the coal board to get talks going immediately to ensure future stability for the British coal industry after these short-term contracts?

In the friendliest possible way, may I say to the hon. Gentleman that part of the cause for the low morale, which is not as widespread as he suggested, may be some of the statements that he and his hon. Friends have made. British Coal secured a three-year contract with the generators which was benefical to both parties. Negotiations for a further long-term contract are continuing and I hope that satisfactory arrangements will be made.

Flue Gas Desulphurisation


To ask the Secretary of State for Energy if he will make a statement on the progress of the flue gas desulphurisation programme.

Work on retrofitting FGD to the 4 GW Drax power station is proceeding well. In addition, I am considering applications from PowerGen for my consent to it retrofitting FGD to Ratcliffe and Ferrybridge C power stations.

Although Fiddler's Ferry power station was originally considered for flue gas desulphurisation, what progress has been made in reducing sulphur dioxide emissions by burning low-sulphur coal, and does it represent a saving to the ultimate consumer?

The fitting of FGD equipment in general adds to the costs of producing electricity; it does not reduce them. How the power station at Fiddler's Ferry will be run is a matter not for me but for the company. I recognise my hon. Friend's legitimate interest in these matters.

Is the right hon. Gentleman aware of the urgency of installing this equipment at Ferrybridge C power station, where a number of my constituents are employed? Is he aware that any greater delay in agreeing that the equipment should be fitted will mean a significant danger of more coal mines in the area being closed? Will the right hon. Gentleman urgently consider the application from Ferrybridge C power station, so that we can get on with the job and assure the people who work in the mining industry that at least their jobs will be made secure?

I have some sympathy with the hon. Gentleman's question. There certainly will be no delay on my part. If the initial 8 GW of retrofitting is completed, as we hope, it will be sufficient to enable British Coal to produce about 70 million tonnes of coal for the generators. That will meet the provisions of the European directive until, I think, 1998. At the moment, there is a commitment only to 8 GW of retrofitting. It will be some time before we must deal with the problem of extra retrofitting.

Does my right hon. Friend agree that considerable caution is justified in approaching the FGD programme? Does he agree that the plant is large, the cost is great and the efficiency of the burning system is diminished by it? Could not FGD turn out to be an expensive cul-de-sac? Does he agree that it might be more productive to consider more efficient burning systems?

We have told the generators, "You must bring forward your plans"—they are not the Government's plans—"on what you believe to be the most efficient and effective way of dealing with the European directive." The generators must deal with that directive, and that is why we have reached the present position. My hon. Friend is right: it is an expensive and, in some ways, retrograde technology. I believe that it will play an important part in achieving the reductions that are called for, but other measures will be needed too.

National Power


To ask the Secretary of State for Energy when he last met the chairman of National Power to discuss changes in conditions of employment.

Is the Minister aware that part of the terms and conditions of employment in the old electricity industry involved a concessionary purchase scheme whereby members of staff could purchase items sold by the boards? Is he aware that on the Saturday before privatisation, National Power sent a letter to all staff and ex-staff telling them that on the following Monday the scheme would be cancelled? Was not that a deplorable action by National Power? When the hon. Gentleman next meets the chairman of National Power, will he find out when the scheme, which existed for many years, will be reintroduced?

Concessionary sales for National Power staff are not part of the conditions of employment; they are a matter for management. I understand that National Power is investigating alternative arrangements and has undertaken to inform staff, pensioners and trade unions in July about progress.

Offshore Installations


To ask the Secretary of State for Energy what proposals he has to improve safety in the handling of dangerous substances on offshore installations.

My right hon. Friend is currently studying the possible extension of the Control of Substances Hazardous to Health Regulations 1988 to offshore installations.

I appreciate that this matter is not the Minister's direct responsibility, but I am sure that the Minister of State is well aware of the concerns that have been expressed, especially by my constituents who work on offshore installations. Will the hon. Gentleman guarantee to take careful heed of the views that have been expressed by trade unions on the importance of any changes?

Offshore safety is of paramount importance and we have consistently stressed that we will not allow standards to be compromised for any reason. We have been reviewing the important contribution that the Control of Substances Hazardous to Health Regulations have made in improving safety onshore, and it will now be for the Health and Safety Commission to advise my right hon. Friend the Minister of State whether such regulations should be extended offshore. I have no doubt that my right hon. Friend will also have regard to comments and representations made to him by the trade unions and others concerned with safety in the North sea.

Community Insulation


To ask the Secretary of State for Energy how many homes have been insulated by community insulation projects since 1982.

More than 750,000 homes have been treated by the projects since their work began in 1982.

I thank my hon. Friend for that reply and congratulate him and the Government on the good work that has been done through the scheme. May I bring to his attention the problems caused in certain areas by the change in benefit regulations? May I also seek his assurance that the work on the scheme will continue and that his Department will pursue that good work as far as it possibly can and encourage its growth and development? The scheme has assisted a number of homes in my constituency, and I should like its benefits to the rest of the country to continue and prosper in the years to come.

I thank my hon. Friend for his kind comments. We are keen to ensure, wherever possible, that work undertaken by the community insulation projects is not constrained in the run-up to the new home energy efficiency scheme. That new scheme will have about £12 million available in its first half-year of operation, and I am confident that there will be a substantial increase in the rate at which the work is done.

Duchy Of Lancaster

Official Visits


To ask the Chancellor of the Duchy of Lancaster when he next intends to pay an official visit to the Duchy; and if he will make a statement.

I have no plans to visit the Duchy estates in the immediate future.

My right hon. Friend will be aware that several of his tenants have expressed concern to me at the suggestion that one in 15 of them who are standard rate taxpayers may be called upon to pay more tax. They have also said that they might like to hear about the matter in an impartial manner on Independent Television News. Will my right hon. Friend do all that he can to ensure that those tenants will not be called upon to pay more tax and that they will be able to hear impartial reports about the matter on ITN?

To those of my hon. Friend's constituents who are concerned about the possibility of paying more tax, I have to say that it will not be a question of one in 15, two in 15 or even three in 15 paying more: all 15 will pay more tax under the Opposition's proposals. When the Leader of the Opposition talks on television about tax increases, it is a question of, "Watch my slips". I hope that ITN will not be browbeaten by a harassed and embarrassed Labour party.

When the Chancellor visits the Duchy, will he confirm—as I am sure he will—that he meticulously differentiates between his role as a Minister and his fund-raising and publicity roles as chairman of the Conservative party? If he can give that assurance, why did not he observe the same rule when he visited Armenia recently? The Prime Minister told us that he went in his official role as a Minister but, in a response to me, he said that he travelled privately with Sir Jeffrey Sterling, who happens to be the second largest contributor to the Conservative party.

I was invited by a sponsor of the school in Armenia. The right hon. Gentleman cavils too much. Had he seen the school, he would know of the outstanding contribution that the Government and the individual sponsors have made in an area that has suffered a grave tragedy. Moreover, the school is a great tribute to the British workmen who completed the work on time, and I am surprised that the right hon. Gentleman cannot take more pride in that.



To ask the Chancellor of the Duchy of Lancaster what environmental responsibilities his chancellorship involves.

As a member of Her Majesty's Government, I am closely involved in the development of future policy towards the environment.

My right hon. Friend will no doubt remember with pleasure his days in Southport and the times that he played on the beach and made sand castles. He will therefore understand the enormous strength of feeling among Duchy residents in Lancashire about coastal pollution. Can he reassure those left in the county, and some who are still left on the beaches, that the beaches will soon be clean and that the Government are four-square behind those efforts?

My hon. Friend reminds me of my youth which I spent in Southport. That was some time ago. The amount being spent on environmental improvement in Lancashire and the Mersey basin constitutes one of our largest programmes. The Mersey basin programme will involve £4 billion over the next 25 years. North West Water will be investing £400 million next year and £100 million is being dedicated to cleaning beaches in Southport and Blackpool.

Why is it that for millions of people, including holidaymakers as well as residents in the north-west and the Duchy, it is unsafe for them and their children to bathe in coastal waters because the concentrations of coliforms, pathogenic micro-organisms and other harmful entero-viruses in the water present a serious risk to people? Is not it obvious that the Government's timetable for resolving the problems is hopelessly inadequate?

The hon. Gentleman was a member of the previous Labour Government who presided over a cut of 40 per cent. in capital investment for water authorities. The hon. Gentleman should recognise that we are spending about £3 billion to improve and clean water throughout the country and specifically in the north-west. The Labour Government ran the country so badly that they could not provide the funds for such important infrastructure developments.

Does my right hon. Friend agree that beaches in the north-west are cleaner now than they have ever been? When he next visits the Duchy, will he take the opportunity to suggest to the Labour leader of Lancashire county council that she joins other local authorities and pressure groups in the north-west in getting together with North West Water to make the beaches even cleaner?

If I believed that the Labour leader of Lancashire county council would listen to me, I would willingly pass on that advise. However, all the evidence is that she listens to no one, least of all to the Labour party. Lancashire county council is one of the biggest overspenders in the country. Last year its overspending was 17.5 per cent., which amounted to £123 million. That is why the community charge in Lancashire was so high. I re-emphasise what I said earlier. The Government's commitment to cleaning up the estuaries, rivers and beaches in the north-west is absolutely clear. More money will be spent on that over the next few years than has been spent in recent years.

Parliamentary Questions


To ask the Chancellor of the Duchy of Lancaster how many written parliamentary questions he has answered since last replying to oral questions in the House.

I have answered two written parliamentary questions since last replying to oral questions in the House.

No doubt that gives the right hon. Gentleman even more time to write those endless letters to some of my hon. Friends. Does the Chancellor of the Duchy have any responsibility for the articles that appeared in yesterday's Conservative newspapers to the effect that the deputy Prime Minister is to be dumped, or do those stories originate from No. 10? It seems odd. Perhaps the Chancellor will wish to come to the defence of his right hon. and learned Friend, who seems to be the victim of a vendetta.

Let me say to the hon. Gentleman, who asks me questions of this nature at every opportunity—he asked similar questions of my predecessor—that the last time he asked me a question, we were about 25 points behind in the opinion polls and now we are about 11 points behind. The passage of time has seen an unprecedented decline in support for the Opposition.

My right hon. Friend rightly drew attention to the fact that, at the time of the previous oral questions to the Chancellor of the Duchy of Lancaster, the Conservative party was 28 points behind in the opinion polls, whereas now it is only 11 points behind. Does my right hon. Friend think that, when he next answers oral questions, the Labour party will be decent enough to congratulate him and my right hon. Friend the Prime Minister on putting us ahead in the opinion polls?

I would not like to suggest that the improvement in Conservative party fortunes is entirely due to my appearance at the Dispatch Box. In the past few weeks, the Labour party has been rumbled. When it talks of spending, the country now realises that that means increasing taxes. The great launch of its new manifesto has gone off like a damp squib.

Official Duties


To ask the Chancellor of the Duchy of Lancaster if he will list his official duties for 25 June.

Earlier today I met Duchy of Lancaster officials; later, I shall spend time attending to Duchy business.

When I took over as chairman of the Labour party, it was six points behind in the opinion polls; When I left, it was 15 points in front. You can do anything with statistics.

As part of his official duties, does the Chancellor of the Duchy of Lancaster watch "Spitting Image"? Is he aware that the only puppet that is not human is him and that he is portrayed as a big fat slug? Is he sending a letter of protest or congratulation to the programme makers?

I am indifferent to the various caricatures of me: I find that the more significant one becomes, the more trenchant they become.

When the hon. Member for Bolsover (Mr. Skinner) was leader, or rather chairman—he was never leader—of the Labour party, it was doing better than it is now. I think that he should be chairman again. The Labour party is waiting for Dennis, and I hope that it will welcome him back as its chairman.

House Of Commons

New Parliamentary Building


To ask the Lord President of the Council what representations he has made to London Regional Transport concerning finance for the proposed development of phase II of the new parliamentary buildings over Westminster underground station.

The Lord President of the Council and Leader of the House of Commons
(Sir Geoffrey Howe)

Consultations on this subject with my right hon. Friend the Secretary of State for the Environment have been taken as far as they can be at this stage.

Does the Lord President agree that every hon. Member who wants one should have an office of his own, with adequate space for staff and adequate office facilities—even Conservative Members who turn up only occasionally, and have other jobs in the City and the law courts? Will he re-examine the question of further office space for hon. Members and their staff in phase 2 of the new development? Will he also tell the House what the financial arrangements will be between the Government and London Regional Transport, and explain who will pay what percentage of costs to ensure that those much-needed facilities are made available to all hon. Members?

In answer to the second question, discussions between my ministerial colleagues and London Regional Transport will bear in mind what the Services Committee said about the share that was originally suggested. It remains the objective of the Committee that every hon. Member who so wishes should have an office by 1995.


To ask the Lord President of the Council how much snuff was administered to hon. Members by the doorkeepers in (a) 1969, (b) 1979, and (c) 1989; at what cost; and if he will make a statement.

In 1989 about 1.5 oz of snuff was consumed at a cost of 99p; figures for the earlier years are unknown. Only one hon. and learned Member regularly uses snuff; other hon. Members and Officers of the House do so only occasionally.

Does my right hon. and learned Friend agree that snuff clears the brain and improves the health of those who take it? Will he name the hon. and learned Member who takes snuff from the principal doorkeeper, so that all hon. Members can judge the efficacy of the product that is available to us all?

It would be quite improper for me to disclose the private habits of even an hon. and learned Member in that way. Equally, it would be unwise for me to commend the taking of snuff for any reason. I am advised that, on the whole, its effects are deleterious to health.

Will the Leader of the House confirm that the hon. and learned Member is a male Member of the House and that no hon. Ladies have participated in the taking of snuff over those years? In recognising that the taking of snuff is a male habit, will the Leader of the House say what proposals he has to improve the lives of the hon. Ladies in the House?

That is an ingenious and attractive line of argument. I confirm that the hon. and learned Member is a male Member. I cannot absolutely exclude the possibility that female Members may occasionally partake, but I have no evidence to support it. I am always interested in considering and advancing proposals put forward by Lady Members of the House.

European Parliament


To ask the Lord President of the Council whether he has any proposals to improve liaison between the House and the European Parliament.

The Government agree with the Procedure Committee that there are benefits to be gained from building up informal links between the two Parliaments. The House should be able to discuss this subject later this week. Meanwhile, the Services Committee is investigating the scope for improving Members' telephone and postal contacts with Community institutions.

Will my right hon. and learned Friend undertake to consider the systems that apply in other national Parliaments, such as the Folketing, to encourage liaison between Members of this House and British Members of the European Parliament who, after all, are fighting the same battle as we are?

I am certainly willing to consider any proposals identified by my hon. Friend. He will recall that the Procedure Committee concluded that there was no strong case for the introduction of legislation to establish formal contacts. I am sure that it is in the interests of the House and of the European Parliament to encourage in as many ways as possible the development of informal contacts.

Is the right hon. and learned Gentleman aware that liaison between individual Members of both Parliaments is often very good, not least between the three Labour Members for the city of Leicester and the Labour Member of the European Parliament for Leicestershire, and not least concerning travesties such as the closure of Bewcastle house and De Montfort house old people's homes in our joint constituencies, without informing any of us in advance and without telling the old people, who had to find out for themselves? Is not that a disgrace in either Parliament?

Even for the sake of finding something to say, I shall not commend the constituency interest that was so skilfully and characteristically advanced by the hon. and learned Gentleman.

Will my right hon. and learned Friend say a bit more about telephone call facilities to institutions including the Parliament in Brussels? I know that it means phoning wicked foreigners, which is an inherently dangerous activity, but, as we raised the matter about 18 months ago, it really is time that we made progress, like other Parliaments.

As I said in my earlier answer, that proposal is being considered by the Services Committee. Clearly it makes sense to establish workable arrangements for hon. Members to have ready contact with European institutions. I hope that the Services Committee will report on that matter as soon as possible.



To ask the Lord President of the Council if he will bring forward proposals to extend the Speaker's warrant to cover postage of correspondence with overseas electors.

Mr. Speaker's frank used on some correspondence originating from the House is valid within the United Kingdom only. A proposal to assist hon. Members in sending official correspondence overseas is shortly to be considered by the Accommodation and Administration Sub-Committee.

Will my right hon. and learned Friend bear in mind the fact that we have recently extended the franchise abroad to those who left this country up to 20 years ago? We are now receiving a good deal of correspondence from abroad, and that facility would be very much welcomed.

I understand that that extension of the franchise was undertaken with the support of the Labour party. It may raise the matter suggested by my hon. Friend.

Should not we be careful? Whatever the intention of this question, we are not allowed to use free postage to deal with home electors. We are allowed to deal with constituency matters, but we are not allowed to write with stamped envelopes to electors in our constituencies on the basis of the electoral register. What can be done abroad should be no different from what is done at home.

I understand the right hon. Gentleman's anxiety. I do not think that the matter is defined precisely along the lines that he suggests. One is entitled to use the free postage for parliamentary or constituency duties, but not for party purposes. As that is the position at home, it will be the position overseas, too.

When will something be done about communications with, for example, European Commissioners, which I understand are not covered by the pre-postage arrangement? As we have to write to them on behalf of our constituents from time to time, surely that should be treated in the same way as writing to a constituent or a Minister.

The range of the postal facilities proposed for communications with European institutions may extend that far. I shall consider my hon. Friend's point.

Is not it not just curious, but unacceptable, that the Government are spending more taxpayers' money on advertising to encourage people living abroad to register to vote—[HON. MEMBERS: "Labour supported it."] Welcome though it is, is not it unacceptable that more money is being spent on encouraging a small number of people living abroad to register to vote than is being spent on the programme for all the electors in Great Britain? It is the wrong way round and should be changed.

The hon. Gentleman must understand that most electors already resident in the United Kingdom are registered, and have been for many years. The point about the change is that overseas voters are a new category, so it is perfectly sensible that the information should be brought to their attention as a special innovation. I emphasise that the measure to enfranchise overseas voters was introduced with the support of the Opposition, and it should be commended to voters on that basis.

New Parliamentary Building


To ask the Lord President of the Council when he expects offices to become available for hon. Members' use in the new parliamentary building.

The latest forecast is that hon. Members and their staff will be able to occupy the offices on their return from the 1991 summer Adjournment.

I think that I will still be here.

May I, through the right hon. and learned Gentleman, compliment the architect and the workers who have constructed a most agreeable building on the other side of the road? I think that it will be a good example to other architects in London. As I believe in honesty and in open government, will the right hon. and learned Gentleman give me an assurance that I will have an office in that building?

I cannot offer any long-term assurances on the hon. Gentleman's electoral position in the House.

Is my right hon. and learned Friend aware that in the 20 years that I have been here there have been extensive improvements in office accommodation, but I have noticed no improvements in parliamentary performance? I wonder whether more offices will lead to the Chamber and, above all, the Smoking Room being emptier.

I understand that hon. Members have different views about the importance of office accommodation. I note what my hon. Friend says.

Points Of Order

3.32 pm

On a point of order, Mr. Speaker. I know that the subject of tomorrow's debate is aid to developing countries, but has the Minister for Overseas Development asked to make a statement on the horrific events in Iran? There are millions of people in this country who, whatever they think about the regime in Iran, are deeply concerned about and horrified by what has occurred, and they want the maximum amount of relief to he given. There was a passing statement by a Minister last Friday, but I and many other hon. Members would wish an oral statement to be made by the appropriate Minister.

I have had no indication that the Government propose to make a statement on this matter today. However, as the hon. Gentleman has correctly stated, there will be a debate tomorrow, when these matters will be relevant.

On a point of order, Mr. Speaker. Yesterday there was a near miss between two aircraft over mid-Wales when a British Midland aircraft and a Dan Air aircraft came within four seconds of a collision. It is 'a very serious matter, because there have been a number of near misses over mid-Wales in recent years. Has the Secretary of State for Transport made an application to make a statement to the House because of the serious nature of the incident? If not, what can be done to prevail upon him to do so?

The hon. Gentleman has made his point. I have had no request for a statement, or any indication that the Government propose to make one, on that serious matter.

On a point of order, Mr. Speaker. I raise this matter with some difficulty, because the supplementary question of the hon. Member for Bolsover (Mr. Skinner) was sheer magic and none of us would have missed it for the world. However, in the past, you have declined to take the supplementary questions worded in that way, referring to departmental Minister's duties for a specific day. Is that policy now to be changed because, if so, it may affect the behaviour of other hon. Members when we table our questions?

Normally, matters of that kind would be brought to me by the Table Office. What was the question?

On a point of Order, Mr. Speaker. May I draw your attention to Question 79, which was tabled to the Lord President of the Council by the hon. Member for Ealing, North (Mr. Greenway)? Do you agree that such questions, which cost probably 40 or 50 times more than the snuff in question, are a complete waste of money and of precious parliamentary time?

I had better not give my views publicly about some of the questions on the Order Paper.

Statutory Instruments, &C


That the draft Legal Advice and Assistance (Scope) (Amendment) Regulations 1990 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Lightbown.]

Opposition Day


Electricity Privatisation

3.36 pm

I beg to move,

That this House deplores the privatisation of the electricity industry, which will cost every family in Britain over £1,000, damage the environment and undermine the balance of payments; and believes this too high a price to impose upon the British people.
First, we object to the electricity privatisation because the industry will be sold off for a third of its proper value. Secondly, we believe that measures to prevent acid rain have been reduced and put back. We also believe that the structure of the industry hinders investment in energy efficiency and energy saving. Thirdly, there is a danger of over-rapid depletion of our fuel reserves, especially natural gas. Fourthly, we believe that electricity privatisation is increasing coal imports, thus threatening the balance of payments. Fifthly, we object to the enormous sums of money that are being poured out on advice from City advisers and public relations advertising companies that are intimately involved with the Tory party. Sixthly, we believe that people are being expected to pay a scandalous price for nuclear power under the privatisation arrangements and it is about time that the Government came clean. For all those reasons, we believe that the electricity privatisation amounts to a bad deal for taxpayers and electricity customers.

The Secretary of State has been praised for sorting out the mess that he inherited from his right hon. Friend the Member for Hertsmere (Mr. Parkinson). Although we recognise that it was a terrible mess, and to the extent that it is possible to sort out such a mess, the Secretary of State has sorted it out, I am nevertheless reminded of the dung beetle. We admire the skill and persistence with which the dung beetle moves it ball of dung, but our fascination with the process should not distract us from recognising that, at the end the substance being moved remains a ball of dung—and so it is, with the structure of electricity privatisation.

My hon. Friend should not refer to slugs and the Chancellor of the Duchy of Lancaster in the same breath.

The distribution, transmission and generating parts of the electricity industry in England and those parts of the Scottish boards that are to be sold off are worth at least £38 billion. There are a number of ways of calculating those assets, but the lowest reasonable figure is about £35 billion. I do not know whether the Secretary of State is prepared to challenge that figure. When I asked him whether he could tell me the values of the various boards that were to be sold, he told me:

"Asset values are contained in the relevant annual report and accounts."—[Official Report, 12 February 1990; Vol. 1511 c. 92.]
I checked carefully through those reports and accounts and the highest estimate that I came upon was £38 billion for the industry or £35 billion. That is the net asset value, using current cost accounting. It does not include the merits of taking over an industry with highly trained, highly skilled and highly educated staff who have gone about their job efficiently in the past and who a new owner can reasonably expect will go about it efficiently in future. All we are talking about is the fixed assets.

I take as an example the generating board's last annual report. Peat, Marwick, McLintock, the distinguished city accountants, said:
"We have audited the accounts in accordance with approved Auditing Standards. In our opinion the accounts which have been prepared under the current cost convention give a true and fair view of the state of affairs of the board and its subsidiaries."
The auditors of the other boards signed similar certificates. Pear, Marwick, McLintock also said that the fixed assets of the generating board alone amounted to £26 billion. If we take an average estimate of the total assets of the industry, we can reckon that it is worth £35 billion. Then we must ask: what price are the companies to be sold for? James Capel, the Government broker, is advising energy correspondents that they will be sold for about £10 billion. That is £5 billion for the distribution companies, £4 billion for the generating companies and just £1 billion for all the assets of the electricity boards in Scotland.

In a parliamentary answer, the Minister denied that James Capel is saying that. Because I usually believe the Minister and we expect honesty in parliamentary answers, I checked with the journalists who produced those articles. At my request, they have gone through their shorthand notes of the briefings from James Capel, and in some cases they cross-checked with the other broker, Warburg, and both brokers said that £10 billion is the sum for which they expect the industry to be sold.

If the industry is to be sold for only £10 billion, that is a shortfall of £28 billion or £25 billion, which works out at more than £1,000 per family. The Chancellor of the Duchy of Lancaster, the chairman of the Tory party, last week had the brass-faced cheek to talk about Labour spending and Labour waste. There will be no Labour waste like this. This is Tory waste with a vengeance. The sum of £1,000 per family—£20 a week per family for a whole year—is too much to lose on this shabby transaction.

British people and our European partners will be asked to pay a big price by way of increased or not reduced environmental damage. Measures against acid rain will be postponed and reduced. Until the Prime Minister made her speech at the United Nations, which the Evening Standard modestly described as
"Maggie's plan to save the world",
we were going to have flue gas desulphurisation equipment on 12,000 MW of coal-fired plant. Now that figure has suddenly been reduced to 8,000 MW, and there is no real commitment to it—there is a firm commitment only to 4,000 MW.

The reason is that the Secretary of State has been informed by his fancy-pants City advisers that, if he goes through with flue gas desulphurisation on this scale, it will be hard to sell the electricity industry. In other words, his friends in the City are interested not in an environmentally friendly industry but only in a dirty one.

So, if right hon. and hon. Members will excuse the expression, flue gas desulphurisation has been put on the back burner and the Government have gone for cheap options. They say that there will be a big increase instead in the burning of natural gas, but even British Gas has doubts that there are sufficient reserves on the British continental shelf to meet the demand for gas from the electricity generating sector on the scale envisaged. In any case, there are better uses for that gas. It should be used for direct heating or industrial purposes, or for chemical feedstocks, long before it is used for generating electricity.

What would the Opposition do about flue gas desulphurisation? Would they meet the cost from higher electricity prices or by a higher subvention from the taxpayer?

I do not know whether the hon. Gentleman has attended previous debates, when we have made our view clear. We believe that Britain is under an obligation to meet its international agreements, which currently means fitting 12,000 MW of plants with flue gas desulphurisation equipment. We have also said that in so far as the generating companies persuaded the Government to postpone implementing that obligation, so that they will incur additional costs when it is eventually installed, the companies themselves—not their customers—will have to meet that cost. [HON. MEMBERS: "How?"] They will have to meet that cost out of the money that they would otherwise have paid their shareholders. It is entirely up to them.

If we do not have sufficient supplies of British natural gas to feed all the gas-fired power stations that are envisaged, the question arises of natural gas imports. We import too much of it already, which damages our balance of payments, and it would be absurd to harm it further. In any case, what would be the source of any additional supplies? The Soviet Union is entering a period of instability, as is the middle east. In the past, Algeria has been one of our major suppliers, but the recent local elections there can scarcely make anyone feel that there will be stability in that country in future and that it will be a continuing stable source of natural gas. We might find ourselves in the lunatic situation in which our gas supplies were vulnerable and we had no influence on their cost. Instead of going for flue gas desulphurisation, the Government are going for depletion of gas reserves and reliance on insecure foreign sources. We believe that that is too high a price to pay for electricity privatisation.

The Government propose switching instead to burning low-sulphur coal. It is a pity that they did not think of that over the past 10 years, when they permitted British Coal to close no fewer than 49 low-sulphur pits. That wiped out the Kent coalfield and, reduced the Scottish coalfields to one pit and the Welsh coalfields to five—and they were the coalfields that produced low-sulphur coal.

What will be the effect on our balance of payments if we have to import low-sulphur coal? I imagine that the Chancellor of the Exchequer would have a few views about that. A very cavalier attitude is taken by the Department of Energy and the big generating companies. What about the security of coal supplies and their price? We have been told that Department officials and the generating companies believe that supplies of low-sulphur coal will be secure and that the price will be all right. They are the very people who said in the past that we could rely on imported oil from the middle east, but then OPEC hit them and they were taken by surprise.

They are the self-same people—they continue in the same manner—who said that nuclear electricity would provide us all with cheap power, that it might be so cheap that it would be given away. The only giveaway now is that the truth is out at last about the cost of nuclear power, and it is costing electricity consumers a fortune. We believe that all that would be too high a price to pay for electricity privatisation.

One of our major objectives at the moment should be energy saving. Everything we do should be geared to promote that, but the new structure of the electricity industry will hinder energy saving, because it has been set up to promote sales. As my hon. Friend the Member for Pontypridd (Dr. Howells) pointed out, the chairman of the biggest electricity board in the country was talking in grandiose terms last week in Scotland about the job of the electricity industry being to compete with British Gas and to get as big a share of the market as possible. There was no talk about restriction, energy conservation or anything else. All he wants is more sales and more profit from them.

The problem is that, due to the ramshackle Parkinsonian regime that the Secretary of State has inherited, there is an unnatural break between electricity distribution and generation. If there were all-purpose electricity boards in various parts of the country, they could face an easy question. They could ask themselves how to cope with an extra 1,000 MW of demand, and could calculate whether it was better to invest money in reducing demand by 1,000 MW by improving energy conservation, or whether it would be cheaper to build new generating capacity.

In the present circumstances, we all know that the boards would opt to invest money in energy conservation, because it would be cheaper than buying new generating plant. However, under the new separated regime that the Government are wishing on the country, the decision would not be reached in such a way, because generating and distributing companies would make more money the more electricity they sell. That is why we are saying that, when Labour comes to power, we will impose an obligation on distributing companies to invest money in energy conservation and efficiency.

While it is true that energy companies will make more money the more electricity they sell, is it not also true that consumers will want to buy less electricity because the less they buy the less money they will pay? Therefore, consumers will be interested in energy conservation.

The hon. Gentleman's logic is that we should double the price of electricity and so double the consumer's interest in energy conservation. That seems to be a perverse way to go about things.

Another enormous cost that the Government are imposing on the taxpayer and the electricity user is the cost of advice on privatisation which they are obtaining from the City, allegedly to the benefit of all. Unless the score has increased—I rather think it has and he has got his 50—at the moment, according to official figures, the Secretary of State has 47 companies advising him on privatisation, including 13 estate agents—which is unlucky for some, or indeed for all of us, as they are estate agents—and 10 firms of accountants. The electricity boards are employing many more companies. More than 130 City companies are employed by the Secretary of State and the electricity boards to advise them on electricity privatisation.

There is probably the odd MP here and there—I am not sure—but I trust that they are not Opposition Members.

The Secretary of State is spending more than £50 million on those 47 companies, but the boards say that they will not tell me how much they are spending, and I have written to all of them. Two boards told local newspapers who inquired that they did not know how much they were spending on City advisers. I got the journalists to ring back and ask how the boards were going to pass the cost on to the customer. They said, "We are working it out and it will probably be set out in our annual reports."

Yes, they could. I was struck by the thought the other day that the Tory party was once going on about a famous book called "Jenny lives with Eric and Martin." On the Tory side now, it is "Nigel lives with Barclays and Money" and "David lives with Cable and Wireless." There are quite a few of them around. It is a pity that the Secretary of State has not said that he will not take a job with any of these privatised companies. My hon. Friends are not given to cynicism, but we do not need to be cynics to ask whether the Secretary of State is fixing himself up with a cushy number in Eastern Electricity, or whether he is trying to protect the interests of the electricity consumer. We know what the answer to that question is.

My hon. Friend has probably read in the press, as I have, that the Secretary of State for Energy may be the Prime Minister's adviser on the date of the next election. When the Tory party loses the next election, perhaps the cause of our cynicism will be confirmed when the Secretary of State for Energy takes up a job with a privatised company, just as the Secretary of State for Wales took a job with British Gas.

The Secretary of State for Wales did not just take a job with British Gas; he took a job with two firms of City advisers that advised on the sale of British Gas, both of which are also giving advice to this Secretary of State. It is a question of "double your money". I cannot understand why the electricity boards will not tell their customers how much they are paying for their advisers. What do they have to hide?

A more basic question is whether the Secretary of State needs all this advice. He proposes to sell the electricity industry for a third of its real value—for what, in a street market, might be described as two thirds off the list price. At that price, the shares could be sold on a stall in Petticoat lane. The Secretary of State should remember the old slogan, derived from the founder of Tesco: "Pile 'em high and sell 'em cheap." That is what the Secretary of State intends to do. He does not need 50 million quid's worth of advice to tell him how to do it.

As for the question whether the advisers are giving value for money, I commend all hon. Members to look at the evidence, when the full details are published on Wednesday, that Kleinwort Benson gave to the Select Committee on Energy about its advice on the privatisation of the nuclear part of the electricity industry. During that public session, the company made it crystal clear, in answer to questions from my hon. Friends and, to be fair from Conservative Members that it did not have the faintest idea about anything to do with nuclear power. It said that all the information on which it had based its advice came from the Central Electricity Generating Board and that, if the CEGB's advice was wrong, there was nothing that Kleinwort's could do about it, because it did not know enough about the industry to challenge and question that information. What contribution did Kleinwort's make to the proceedings? It continued to advise the previous Secretary of State for Energy that it could sell off the industry, which proved to be impossible.

I have made inquiries as to whether Kleinwort's received its fee in full. By and large, the Government are in favour of payment by results. I gather that Kleinwort's got every penny of the fee that was due to it—not every penny of what it deserved, because in that event, it would have had to pay us. On the only occasion when evidence has been given about the question of this advice, those people gave bum advice that has damaged the interests of the country and even the interests of Conservative Members of Parliament.

Before my hon. Friend leaves that interesting line of inquiry and revelation, has he discovered whether any of these well-paid advisers are contributing to Tory party funds, thereby squaring the circle?

I have not had time to go through them, but suspicions occasionally spring to mind, and I shall come to them in a moment.

The way in which the public relations firms are involved is best described by several American political phrases such as "gravy train", "pork barrel", "sleaze bucket"—you name it, they are in it. Let us consider first the public relations and marketing advisers.

The Secretary of State is not usually portrayed as an arrogant or puffed up person, but apparently he is not content with one public relations and marketing adviser to the Energy Department and the electricity supply industry, so he has appointed two—one from the Energy Department and the electricity supply industry and one for himself. Dewe Rogerson has been appointed public relations and marketing adviser to the Energy Department and Lowe Bell Communications has been appointed special public relations and marketing adviser to the Secretary of State. A director of Dewe Rogerson is a Tory Member of Parliament and Lowe Bell Communications is chaired by Tim Bell who, if rumour is correct, is scarcely ever out of 10 Downing street.

How were those people appointed? Another company called Valin Pollen International previously had the job of advising the Department and the industry. Tenders were then invited for the new separate jobs. I am told that three companies applied for each job and that Valin Pollen did not proceed with its application. Dewe Rogerson got one contract and Lowe Bell got the other. So I inquired a bit further and asked who was the unsuccessful applicant for the Dewe Rogerson job—and lo and behold, it was Lowe Bell, and when I asked who the unsuccessful applicant was for the Lowe Bell job, lo and behold it was Dewe Rogerson.

In theory, there are rules governing such appointments, laid down and reinforced by the Prime Minister. Those appointments break four rules. There was no proper tendering procedure. Appointing a personal public relations adviser is contrary to those rules which also lay down that no public relations advisers may have direct contact with the press or the news media. We now know that Lowe Bell and Dewe Rogerson have contacts with the news media. The appointments involved intimate friends of the Tory party. The whole thing stinks, and the Secretary of State knows it.

Perhaps the hon. Gentleman is not aware that almost every major company in the country has direct interests in the Conservative party, because they are determined to keep the Labour party out.

I should have thought that the last way to commend the propriety of those appointments was to say that the people concerned were determined to seek a return of a Tory Government rather than a Labour Government. That is not usually a basic criterion on which public contracts are awarded. The hon. Gentleman, who is an old Etonian, has let the cat out of the bag.

May I correct the record in one particular? The biggest contributor to the Tory party, British and Commonwealth Holdings, no longer contributes to the Conservative party as it went bust a fortnight ago.

That organisation was probably doing something useful, whereas these people just have their snouts in the trough.

Does my hon. Friend realise that he is raising very serious issues which have real implications for the quality and integrity of British public life? Does he recognise that, if those in local government—the Prime Minister and her colleagues are always calling for prudence and good behaviour in local government—conducted themselves in the way in which my hon. Friend is describing to the House, any qualified and respectable chief executive of a local authority would tell those local representatives that, if they maintained that course, or if it could be proven that they had pursued such a course, they could look forward to a considerable period of imprisonment?

I follow my hon. Friend's point. Indeed, because of my concern about the propriety of these appointments, I wrote to the person responsible for judging the propriety of anything done by the civil service—its head, Sir Robin Butler. After immense delay, I received a reply from the Secretary of State saying that he took responsibility. At least Sir Robin Butler did not say that he agreed with it.

Another aspect of the privatisation was still to come—the award of the privatisation advertising contract. A panel was established to choose who should receive that lucrative contract. One member of it was—surprise, surprise—Mr. Tim Bell. Hon. Members will be aware that he was one of the three Tory party PR friends that the chairman of the Tory party wanted to appoint as special advisers to the Home Secretary, the Secretary of State for Education and Science and Secretary of State for Health, on the grounds that they were boring or were damaging the Conservative party's interest. That idea was so improper that even Mr. Bernard Ingham—a man not noted for his fastidiousness about the propriety of public behaviour—objected to it.

Who did the panel, including Mr. Tim Bell, choose for the advertising contract? It chose the firm Wight, Collins, Rutherford, Scott, Mathews, Marcantionio, whose chairman is Mr. Robin Wight, the man originally selected by the chairman of the Tory party to provide personal public relations advice to the Secretary of State for Education. What a racket! All those friends of the Tory party scrambled to get their snouts in the trough of electricity privatisation. The people of this country are paying a high price for those people.

I am not being unfair; I am not raising new standards of behaviour that are required of Governments. I shall judge the Government by the standards that they set, not for themselves, of course, but for local government. The new national code of conduct for councillors says:
"It is not enough to avoid actual impropriety. You should at all times avoid any occasion for suspicion"
The Government are guilty on all counts. They are guilty of double standards: others must live up to those standards, but not the Government. What is the result of all this?—National Power adverts in between the halves of world cup matches. I was going to say that, if that is a good use of public money, I am a Dutchman, but as Holland did not do too well last night, perhaps I am not.

I have had passed to me proposals for electric privatisation road shows. I have the document submitted by the people who won the contract. They will receive over £2 million for giving presentations to opinion leaders in Britain, North America, Japan and Europe. It is a good sign of Government priorities that they are prepared to spend £2 million on that, but, as my hon. Friend the Member for Copeland (Dr. Cunningham) said earlier, less than £500,000 on urging people to register to vote. Registering to buy cheap shares in electricity is a top priority, but registering to exercise democratic rights is a low priority. That has always been the Tory way.

That programme, which has been drawn up by Imagination Design and Communications, will lay on 41 road shows—26 in Britain and 13 abroad, in north America, Europe and Japan—at a cost of more than £2 million. That excludes the cost of the time of people in the electricity industry who will be taking part in it or helping to prepare it. The proposal will give presentations in major cities, and we have some wonderful sample menus of these events. People in Bristol will get lamb kebab, and in Paris they will get rack of lamb, if the French farmers will allow it in. In the United States one does not do too well; one gets spinach salad. In Japan, one gets an amazing concoction called roast duckling chipolata.

The document refers to "all-important institutional lunches". The company promises attention to detail, so much so that it will prescribe the folds that are to be made in the table napkins at these lunches. The Government proposed having a presentation in Northampton, but the company thinks that the Northampton presentation should be transferred to Leicester because there are more "high net worth individuals" in Leicester. I do not know what the people of Northampton will think of the idea that they are low net worth individuals. The company promises that there will be an "Executive Mothercare" service for people doing the presentations. As those people go around the country, they will all get "Executive King Size bedrooms". The company further proposes to cater for all their "personal idiosyncrasies"—the mind boggles.

I was going to talk about the chaos over nuclear power, but it is impossible to make a sensible contribution until we know the estimates of the costs of Sizewell B. The Secretary of State said that he will talk about them. There is not much that we can say about them until we hear him. The right hon. Gentleman should come clean on the figures now and for the future. He should come clean also on something that he has refused to do and disclose the price that the electricity companies will pay Nuclear Electric for the electricity that they are buying from the existing nuclear power stations.

The Secretary of State will be praised, rightly, by the Energy Select Committee for letting it all hang out on the old nuclear costs, but I am afraid that, if he let the information out on the old nuclear costs and will not do so on the new nuclear costs, people will just think that he had got it in for Cecil. I cannot believe, even from the right hon. Gentleman's smile, that that could possibly have been his main motivation. People are entitled to know as much about the costs of nuclear power as the Cabinet. We are all entitled to know those figures, so that rational discussion can take place and rational decisions can be reached.

Is my hon. Friend aware that the Secretary of State might find himself in some difficulty in providing the costs? Every expert witness, without exception, who appeared before the Energy Select Committee conceded that it was not possible to calculate the true costs of nuclear power. The fact that the Government are shoving forward with their non-fossil fuel requirement—a percentage being for nuclear—shows that they are going ahead with that programme whatever the costs. No one knows those costs.

My hon. Friend is right to caution anyone about making guesstimates about the long-term costs and the time taken to construct nuclear power stations. Remember Dungeness B—construction started in 1965; it is still not working properly; and it is costing between eight and 10 times as much as was originally intended. I do not want to become involved in guesswork, and no one else should. The facts should come out, and we should have a debate in due course, with all the facts before us.

For a number of years, we have known that the cost of nuclear electricity generation has increased. Would it not be reasonable to suggest that Nuclear Power should sell some of its land assets to pay for some of the highly expensive electricity from nuclear power—for example, the site at Druridge bay in Northumberland?

I entirely agree with my hon. Friend. So long as either the electricity industry or the nuclear industry possesses land at Druridge bay, at Denver in Norfolk or in Pembroke in south Wales, there is always a danger that someone will want to build a nuclear power station on one of those sites. It will not be a Labour Government, but it would be better if the sites were sold or used for some other purpose.

Electricity privatisation will cost the people of Britain a fortune. It will damage the environment, it is damaging the reputation of the conduct of public business by the sleazy nature of the public relations exercise and advertising contracts connected with it, and it ought to be stopped.

4.14 pm

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:

'welcomes the privatisation of the electricity industry and the internationally recognised benefits which the Government's policies are already achieving through the introduction of real competition, the introduction of new and enhanced rights for the consumer, the emergence of new, cleaner, more efficient and cost-effective generating plant, through the Government's commitment to the protection of the environment and by ensuring that the needs of the customers drive the decisions of the electricity industry.'.
The hon. Member for Holborn and St. Pancras (Mr. Dobson) has had his fun and I hope to deal with the matters that he has raised. But there is one point with which I should deal straight away. I was somewhat surprised to hear the hon. Gentleman's comments about the book value of the electricity industry's assets. His assertion that the cost of privatisation would be more than £1,000 per family does not stand up to a minute's scrutiny.

The historic net value of the industry's fixed assets in its last audited accounts—leaving aside nuclear assets—was 10 billion. The economic value of any particular company is derived not from the asset value that may appear in its book but from a calculation of what the assets are capable of earning. The current cost balance sheets of each electricity company seek to reflect individual assets at their net replacement cost and hence involve a considerable number of subjective judgments. Net replacement cost is not the same as the net cost of the asset to the taxpayer—the actual amount paid, less the amounts written off to date. The latter cost is reflected in the historic cost balance sheets of the companies, which, as I said, amount to about £10 billion.

There appears to be another mistake in the hon. Gentleman's calculations. He appears to have included the current cost of nuclear fixed assets—some £9 billion in the current cost accounts—even though the nuclear stations are to remain in the public sector. But what is £9 billion between friends? We know that to the Labour party it is an insignificant sum.

Would not the right hon. Gentleman agree that the historic cost method of valuation is absurd in relation to the electricity industry? And he is surely not suggesting that the grid companies' assets, which will all be necessary, could be replaced at the historic costs at which they were bought. They would have to be replaced at current costs. That is why the assets are given that value.

I included nuclear assets deliberately. The right hon. Gentleman should remember that the nuclear assets were in fact liabilities. If one takes from the industry the nuclear assets and the nuclear liabilities, its value must increase. It was because the nuclear assets were liabilities that they could not be sold.

I agree with the hon. Gentleman that historic values are not the only values to bear in mind, but nor are current cost balance sheets. My point was that the asset values represent the values that those assets are capable of earning. On that basis, we shall see to it that the industry is sold at its proper value.

It is a little over four months ago that I stood here listening to the Opposition voicing their misconceptions about privatisation. From what has been said today, it is clear that they have learnt little since then. Once again, I am pleased to have the opportunity to put the record straight.

The Labour party talks about the price of privatisation; the rest of the world talks about its benefits. While the eastern bloc moves to privatise whole economies and we advise them how to do it, the Labour party talks about central planning and state intervention. For all the Labour party's glossy pamphlets, it still lives in the past.

It is now more than 50 years since Herbert Morrison set out what he saw as the major benefits that would result from nationalisation. They were as follows:
"The quality of service will tend to advance and the prices charged will tend to fall … The industries would be more efficiently and economically conducted and their boards and officers would regard themselves as the high custodians of the public interest."
That all sounded far too good to be true then, and so it has proved. Few of the anticipated economies of scale have materialised, and major new bureaucracies developed. Without competition, the state sector monopolies quickly became inefficient and overmanned, with low productivity, dissatisfied customers and frequent financial losses.

Privatisation is one of the great success stories. During the past 10 years, no fewer than 29 major businesses have been returned to the private sector. British Airways, British Gas, British Telecom, British Aerospace, British Steel, the water companies and many others have been exposed to new commercial and regulatory disciplines and they have thrived. Profits, investment and productivity have risen and customer service has improved.

Does my right hon. Friend agree that the conditions for those working in those industries have improved materially, to their great advantage?

I quite agree: my hon. Friend adds to the list of successes in the privatised industries.

Because of those successes, politicians, officials, business men and others from around the world come to London to talk to us and to learn how to privatise their industries. Only at the end of March was the electricity industry reconstructed, when the new statutory and regulatory regimes came into force. However, we have already seen the effects of our policies on the electricity industry. The past few months have seen the emergence of fierce competition to sign up large industrial customers; that is competition not just between the generators and the generators and the regional electricity companies, but also between the regional electricity companies themselves.

New entrants are emerging into the generation market. The Lakeland Power project is a fine example of that, and 22 other projects have sought consents of one kind or another from the Department. In turn, National Power and PowerGen are responding by reviewing their plans and cutting their costs. As a result, the proposals coming forward for new generating plant are increasingly focusing on the development of new, cleaner and more efficient technologies. That will benefit the consumer by lowering costs. It will also minimise the impact on the environment. The special provision that we have made for power from renewable energy sources as part of the non-fossil fuel obligation has given renewable technology the greatest boost that it has ever received in this country.

There is also competition in supply. Large customers now have real choice. They can enter negotiations not just with their regional electricity company but with any regional electricity company or any generator connected to the system. They are also showing interest in generating their own electricity. The benefits can be clearly seen in the lower prices that have resulted from those fierce negotiations. For the longer term, the regional electricity companies and generators are responding to that competition by actively promoting schemes tailored to customers' needs—schemes such as co-generation and combined heat and power.

We have introduced a spot market for trade in electricity, which determines the price of about £15 million-worth of electricity every day. We are the only country with a market that sets a price for electricity every half an hour, and that has real advantages. It puts pressure on generators to be cost-effective, because they must bid prices to be called on to run and it gives suppliers and customers the right signals about the cost of electricity. They can then plan much more effectively to meet their requirements at the least cost. Our policy is working. Competition has started and it is already having an effect on prices and efficiency.

What is the Opposition's policy? Well, it is rather difficult to answer that. As usual, their policy is full of contradictions, because half the Opposition Members believe in central planning and state intervention while the others realise that privatisation, competition and free markets are popular, even if they do not believe in them.

The first contradiction that I want to highlight in the Opposition's policy is a perfect example of that. The Opposition say that they want a single organisation to be responsible for ensuring security of supply. At the same time, they say that they want more competition. That is a complete contradiction. A single organisation responsible for supply is what I call a monopoly. Generators and suppliers cannot compete if they are controlled by one organisation. Clearly the Labour party does not know what it wants. It thinks that competition is popular, and it cannot give up the desire to interfere and plan the economy.

Will the right hon. Gentleman tell the House why, if it is such a contradiction to have security of supply as an objective, that was the Government's objective for the privatisation of the electricity supply industry throughout the progress of the White Paper and the legislation, and our proceedings in the House? It was dropped only when they were advised by merchant banks that it would make the area distribution companies far more difficult to sell.

I believe that the Government have maintained a better security of supply through the position that they have created. By virtue of their licence, the regional electricity companies will have to contract for sufficient electricity to meet the demands of their areas. That will be a matter for the regulator to settle. How those demands are satisfied within a competitive position is for them to determine, by competition. We believe that we have improved the position by providing a licence system and a competitive market with substantial financial penalties for any company that does not contract for enough supply in the market.

The second contradiction is evident in the Labour party's policies for coal and the environment. It wants to be green; it also wants to be clean. However, it cannot face up to what that might mean for British Coal. Flue gas desulphurisation is not the simple answer. Although it reduces acid rain, it increases carbon dioxide emissions, whereas combined cycle gas turbine plant tackles both problems. Let me point out again that that is exactly the type of plant that is coming forward as a result of our policies.

Of course we need to make British Coal competitive in the new world, and that is why we are restructuring its finances. FGD is not the simple answer, however, and the Opposition cannot avoid the problems.

Will the right hon. Gentleman concede that, if FGD is not the whole answer, it is certainly the main answer to the problem of reducing emissions of sulphur dioxide from power stations?

It is certainly an important part of the answer for coal-burning power stations. I welcome the fact that, under the present plans, 8 GW are likely to be fitted as a minimum; that will enable the industry to compete in the market for a substantial volume of coal up to 1988. From then onwards—and it is a good few years away yet it must be competitive. In that case, the generators will no doubt fit further FGD by choice.

That is not the end of the list of contradictions in Labour party thinking. Labour is muddled on the question of nuclear power: it wants to close nuclear power stations, but it is outraged that privatisation should have shown the true costs and benefits. Nationalisation buried the costs of generation. Monopolies ensure that customers are paid. The Opposition may complain, but privatisation has now helped to bring into the open some of the issues surrounding nuclear costs. The need to assess nuclear power in terms acceptable to the market obliged all concerned—including the Government—to take a long hard look at the costs of the business.

In the end, it proved impossible to privatise nuclear power without giving the private sector unprecedented guarantees. The increased fuel diversity available from other sources also meant that it was right to postpone the three PWRs beyond Sizewell. Obviously, those decisions had an impact on the Sizewell project. Immediately after my decision on nuclear power last November, I asked Nuclear Electric, the public-sector company set up to operate our nuclear stations, to institute a thorough review of the costs of Sizewell B. A number of questions needed to be addressed.

If one of the right hon. Gentleman's criticisms of the Labour party is that it does not quantify the cost of nuclear power —I accept that it was hidden under a nationalised industry —why does he not allow the cost of nuclear power to be separately quantified for the consumer? The right hon. Gentleman and his colleagues have been asked to ensure that that be done, but they have refused.

Under the privatisation proposals, when Nuclear Electric becomes a plc, although the shares will remain in Government hands, unprecedented amounts of information about the cost of nuclear power will be available as a result of our proposals. I hope that the hon. Gentleman will welcome that as a move in the right direction.

As I was saying, a number of questions needed to be addressed. First, what direct effect did our decision have on the capital costs of the station? I recognise that some programme costs that would have been spread over the follow-on stations would have to fall on Sizewell alone and that a single station project faced an increased risk of delay and contractual difficulties. Secondly, could Nuclear Electric still keep to the CEGB's timetable?

Thirdly, given that the capital cost was expected to rise, was the station still a worthwhile public investment? How much would it cost, in terms of pence per unit, to produce Sizewell electricity? In answering that point, it is necessary to take account of the avoidable costs of power from Sizewell. It would be ridiculous to revisit the economics of the station as though no concrete had been laid on the site over the past three years.

Those, then, are the questions. As to the answers, I can confirm that Nuclear Electric's report is a comprehensive piece of work that deals with all the searching briefs of last year. It is for Nuclear Electric to announce the results of its review, and I understand that it will do so tomorrow. However, it has told me that the selective misquotation of some figure is highly misleading. Presumably that is what was intended. I shall therefore arrange for the published material to be made available in the Library of the House.

It may be helpful if I indicate the conclusions of the report that I am likely to make. First, the project is not behind schedule. Rather, it is well in advance of the announced 72-month timetable. Secondly, all the new extra costs revealed by the report are attributed to the decision of 9 November and, in particular, the decision on the remaining three PWRs, which resulted in a saving of public expenditure of about £5 billion. They are not due to cost overruns at Sizewell B.

Thirdly, at the time of the original decision to proceed with Sizewell B, and using the rate of return then applicable, the cost of nuclear-generated electricity was comparable with that from newly constructed coal-fired stations. The new costs do not undermine the original comparison. Fourthly, the important investment decision now, however, is to compare the avoidable costs of completing Sizewell B with the costs of obtaining the same amount of electricity with the most cost-effective alternative, gas. The economics of the two are broadly comparable on the basis of the 8 per cent. public sector rate of return, and there are, of course, other benefits from completing Sizewell in terms of its contribution to the reduction of fossil fuel emissions and diversity.

Does my right hon. Friend agree that the completion of Sizewell B is vital if we are to retain the option of having power in the future that will be more environmentally desirable, and also that we have power stations in future that give us insurance against declining fossil fuels?

My hon. Friend is absolutely right. I confirm that the Government attach the greatest importance to the timely completion of Sizewell B, as a direct contribution to the reduction of carbon dioxide emissions and as an essential part of maintaining the nuclear option in the United Kingdom.

I say to my hon. Friend, who is Chairman of the Select Committee, that, as well as putting the Nuclear Electric report into the Library of the House tomorrow, I shall write to him with an amplification of the points that I have just made.

If the Minister is prepared to accept strategic arguments for the retention of the nuclear industry in Britain, why were not the Government prepared to accept strategic arguments for the retention of the coal industry in 1984, when they took only a very short-term view on whether pits were economic or uneconomic at that time?

Of course we want a thriving coal industry in this country. The Government's strategic view is that there should be a diversity of supply of fuels. That diversity means a thriving coal industry and a quantity of electricity generated by gas, by nuclear and by oil. It is a question of creating the right environment in which those different competing fuels can find their place. I believe that all of them can.

As Nuclear Elecric is publishing its figures tomorrow, will the Secretary of State publish the figures for alternative sources of the same supply? Will he give us the gas and coal figures, or will we still be whistling in the dark on the comparisons?

I shall give the hon. Gentleman all the figures I can. I recognise that I must give him sufficient figures. Initially, I shall give details of the figures in my response to the Select Committee. No doubt the hon. Gentleman will have an opportunity to study the information also.

Contradictions again appear when the Opposition consider the costs of privatisation. The hon. Member for Holborn and St. Pancras is addicted to sensationalism, and uses phrases such as "rip-offs" and "scandalous rip-offs". He makes misleading or misconceived comments about estate agents and "friends in the City".

Almost in the same breath, he accuses the Government of giving away the industry. He also accuses us of raising prices to the consumers. Most people recognise that that would enhance the value of the industry. The hon. Gentleman does not realise that, in the market, the scope for manipulating prices at the whim of politicians and bureaucrats is less than in the centrally planned world of the Labour party. What does he mean? Surely he accepts that, to gain proper value for the assests, advice is needed on their value and how to market them. The Labour Government used advisers for similar reasons when the were in power. Perhaps the hon. Gentleman is bringing forward another new policy for the Labour party—that it will seek to buy and sell public assets, if it should ever have the chance, without proper professional advice.

The estate agents that the hon. Gentleman derides are property valuers, whose task is to ensure that the industry's land and buildings are properly valued when the companies are sold. Imagination—a stolen copy of whose presentation document the hon. Gentleman seems to have received—is responsible for staging the presentation of the companies to investors in Britain and overseas. The budget for that has not been finalised, but my Department and the industry will ensure that we get value for money.

The right hon. Gentleman says that the cost has not been decided. Can he confirm that the contract has been let? If so, why is he letting a contract when he does not know how much it will cost?

The budget has not been finalised. We know that the firm is doing some work for us. It is riot the practice of the Government—or, indeed, of a Labour Government—to give individual details of individual contracts. I shall go no further than that, except to say that we shall get value for money.

It is clearly essential that the presentations are made; otherwise, the effort of marketing the industry will be weakened, with clear consequences for the price that the Government will get for it. Opposition Members seem to have their own friends in the City. If, as the hon. Member for Holborn and St. Pancras has suggested, we did not market the industry, we would risk selling it for less than its proper value.

The hon. Gentleman made much of the accountants who are employed by the Government and the industry. Is it too much to expect him to understand that reporting acountants are a legal and regulatory requirement for a public flotation? I fear that it is.

Perhaps that is another example of the contradictions that appear in everything that the Opposition say. I suppose that I should not be surprised at the Opposition, because their policies are full of contradictions. They make lots of commitments, while claiming that they would cost no money. They want lots of competition in electricity, but they also want central planning by a monopoly. They want lots of coal, but no carbon dioxide. Their only consistency is to say what they think people want, and to hope that no one notices the contradiction.

Will the right hon. Gentleman confirm that, of the 47 firms advising him on the sale, costing the taxpayer £52 million, I believe, not one is advising him on the interests of the consumers?

If he understood these things, the hon. Gentleman would recognise that, through the Electricity Act 1989, the Government have given the consumer the strongest ever protection. We have set up a regulator to look after consumers' interests. We have given him statutory powers with which to conduct his work. That is infinitely better protection than has ever existed before. I should have thought that the hon. Gentleman would give us credit for that, rather than criticism.

The Labour party talks about the price of privatisation. The rest of the world talks about its benefits. What about the price of nationalisation, the price of state control? the eastern bloc knows the price. It is difficult to quantify just how much Great Britain has lost in terms of skills, profits and opportunities for industries in the public sector. Being divorced from the disciplines of the free market weakens incentives. It means a loss of the necessity to control costs, to relate earnings to productivity and to remain competitive.

I shall give a simple example. Under the last Labour Government, the price of electricity to domestic consumers rose to 22 per cent., whereas, in five years of this Government, it fell by 7 per cent. The competitive pressures that we have placed on the industry are designed to ensure that prices continue to fall. The Labour party says that it has cost £1,000 per family to privatise the industry. That is nonsense—

That is nonsense. The industry is worth what it can earn—not necessarily the book value of the assets or some number that has been dreamt up by the Labour party. On the contrary, it is clear that privatisation has brought benefits, and it will go on bringing benefits. The rest of the world knows that. Central planning is discredited everywhere, except by the Labour party. It is well known that the Opposition have no policies. Our policies are sound and successful. I urge the House to reject a return to the past, and to vote for our amendment.

4.42 pm

Having listened to the Secretary of State, spent many hours in the Select Committee on Energy investigating the privatisation of the electricity supply industry, and read the subsequent reports, one thing is obvious to me. If all the members of the Select Committee could agree with me openly, I am sure that they would when I say that the Secretary of State and his Department have refused to take note of some excellent advice. I refer to the Select Committee's report of July 1988 on the privatisation of electricity. That excellent report advised—I shall not say that it warned—that the Secretary of State and his Department were moving far too rapidly if they were hoping to produce legislation that would be worth while and efficient and would ultimately benefit the British taxpayer.

The Government stand charged with refusing to take the advice of their own Select Committee on Energy, on which their own supporters formed the majority. I believe that I have advised the House before that it is worth noting that that document saw the light of day only because—unfortunately for some people—Conservative Members formed the minority at one Committee sitting, at which we were to decide whether to investigate the privatisation. It was rumoured—I put it no stronger than that—that the then Secretary of State was not very keen on the investigation taking place and that pressure had been put on certain hon. Members.

Is the hon. Gentleman suggesting that all the Conservative Members who served on the Select Committee were opposed to the inquiry?

I am certainly not suggesting that. I am simply saying that, if the Conservative members of the Committee had been present in force that day, it is doubtful whether the investigation would have taken place. However, it did, and the Committee produced an excellent document, which was eventually ignored.

Although the debate is about the price of electricity privatisation, I am sure that the House will not be surprised if I highlight the effect of the electricity privatisation on the mining industry. I have spoken on this subject many times, without having achieved much, but I am as convinced as I always have been of the devastating effect that it will have on the mining industry. I hope that I shall also expose the folly of coal imports, as I have repeatedly done in the House over many years.

Britain has traditionally been self-sufficient in the supply of coal to power stations. However, in the run-up to the privatisation, the electricity generators, backed by the Government, are planning to import large quantities of coal. All current evidence is that that will not only lead to massive job losses in the coal industry, but will increase the trade deficit by up to £1,500 million per year.

A recent report by the Oxford economist, Dr. Terry O'Shaughnessy, for the Coalfield Communities Campaign, shows that, because of balance of payments constraints, every 10 jobs lost in the coal industry could lead to a loss of 30 jobs in the United Kingdom economy as a whole. The question is, should the United Kingdom retain sufficient capacity in its coal industry to meet the needs of the electricity generators, or should it switch to relying on imported coal?

I noticed that, at Question Time this afternoon, the Secretary of State said that maintaining 8 GW of flue gas desulphurisation would be equivalent to 70 million tonnes of coal. If that is the case, and the coal industry is to be run down even to the extent that Sir Robert Haslam has mentioned—I believe that it will be far worse than that—by the time the FGD plants are available and working, this country's coal industry will be unable to meet demand, because we will have closed the pits and sterilised millions of tonnes of coal.

I know of the hon. Gentleman's deep interest in this matter, and I want to be sure that his recollection of what I said is correct. I said that my understanding is that, with 8 GW of FGD fitted, the coal industry would be enabled to sell up to a maximum of 70 million tonnes of coal per year and to meet the terms of the European directive, which would enable the industry do so for years to come. That does not deal with the CO2 question or with that of competitive prices, but on the straightforward question of acid rain, 8 GW would, with other measures, enable a target to be achieved. That is what I said.

I am grateful to the Secretary of State. Is it not a fact that, if the coal industry is run down, even to the extent suggested by Sir Robert Haslam, by the time the flue gas desulphurisation plants are available for British Coal, our mining capacity will not be sufficient to meet the demand? That will cause a major problem. If, in the short term, we import coal at the expense of the British coal industry, we shall run down our industry to the extent that we cannot meet demand. We shall sterilise millions of tonnes of coal which we shall never be able to mine.

Short-term price considerations suggest a switch to imports. At present, foreign coal at United Kingdom ports costs about £35 a tonne, compared with £42 a tonne for British coal. Only about half of British pits can compete with imports at today's prices. However, there are wider micro-economic considerations.

In his report, Dr. O'Shaughnessy draws on his exhaustive study of the current account balance rate of unemployment, or CABRU as it is referred to. That is the trade-off between the balance of payments deficit and the levels of income and employment. The report shows that, during the past 30 years, there has been a marked deterioration in the United Kindom CABRU. That means that, to eliminate the trade deficit, unemployment must be much higher than before. The scrapping of capacity in an industry which produces a tradeable commodity, such as coal, has an adverse effect on the country's ability to pay its way internationally. In the long run, Britain can afford to import goods only to the extent that it can sell home-produced goods abroad. If we import coal, it means that we must import fewer other goods and, in turn, domestic demand must be kept in check.

Unless there is a corresponding expansion in capacity in some sectors producing tradeables, the impact of additional coal imports is that unemployment through the economy must be maintained at a higher level than previously. The United Kingdom surplus from trade in energy is already disappearing fast because of a decline in North sea oil and an increase in gas imports Additional coal imports would worsen the position significantly. So far, manufacturing exports have singularly failed to plug the gap.

Dr. O'Shaughnessy examines four scenarios, involving coal imports to power stations of 10 million, 20 million, 30 million, and 43 million tonnes a year. The last is the level to which imports might rise if United Kingdom coal was forced to compete on price alone. The scenario shows that 43 million tonnes of coal a year would lead to 47,000 redundancies in British Coal, a £1,500 million increase in the United Kingdom's annual import bill and an £85,000 increase in CABRU—the increase in unemployment necessary to hold back the trade deficit. Those calculations are based on current coal prices and exchange rates. If, after scrapping United Kingdom capacity, world coal prices rise or the exchange rate weakens, the unemployment cost to the economy as a whole could be 30 jobs for every 10 jobs lost in the coal industry.

The main technical barrier to increasing coal imports is the limited capacity of the ports suitable for use by the power generators—I am sure that we shall hear more about that later in the debate—although proposals for new facilities on the Humber, Tees and Thames and at Milford Haven are at various stages. The report argues that the Government should take advantage of the temporary limits on ports capacity. If Britain is faced with paying more for energy imports, it will be difficult to resist a fall in the exchange rate and further inflationary pressures. The sensible step is to reassess the consequences of the headlong rush into coal imports.

References have been made to the flue gas desulphurisation programme. FGD is a process by which sulphur dioxide is removed from the waste gases produced by burning fossil fuels. Unless it is removed, large quantities of SO2 cause acid rain. The United Kingdom is the largest emitter of SO2 in western Europe and one of the largest exporters of SO2 emissions to other countries. In 1987, 86 per cent. of the United Kingdom's SO2 emissions resulted from electricity generation. FGD removes about 90 per cent. of the sulphur from the waste gases.

Under the European Community large combustion plants directive, which was agreed in June 1988, the United Kingdom is committed to reducing its SO2 emissions from existing plants by 20, 40 and 60 per cent. of its 1980 emissions by 1993, 1998 and 2003 respectively. The CEGB estimated that compliance with the directive would require a 12 GW programme of FGD retrofits, costing £1.8 billion at 1989 prices. If we are to get anywhere near meeting the directive by the agreed years, we need a programme of 12 GW. If we fail to do that and if we are to meet our electricity demands, we cannot avoid importing a large amount of low-sulphur coal. That is the decision facing the Government.

Are the Government prepared not to further encourage investment in FGD by the private electricity companies? The chief executives of both National Power and PowerGen told the Energy Select Committee that they will make a purely commercial judgment, whatever the effect on our own natural energy resources. They suggest that it will be necessary for British Coal to reduce its prices by £5 or £6 a tonne less than imported coal to finance the retrofitting. That is an impossible task for British Coal. Despite all its recent achievements, it could never achieve that.

The Government must make the decision. Are they prepared to extend their programme to run down the natural resources of coal to the extent that millions of tonnes of coal will never be mined, so that eventually we have to rely on our foreign competitors to meet our demands? That is not a wise policy.

On 7 June 1990, the Energy Select Committee, on which I have the privilege to serve, produced a report entitled, "The Flue Gas Desulphurisation Programme". I do not want to detain the House too long, but the report is up to date and the House should have it brought to its attention. Paragraph 56 of that report, headed "The Coal Industry" says:
"The major issue arising from this Report is clearly the impact of the generators' plans on British Coal and the coalfield communities. Even if, as the Government states, it is entirely a matter for the generators how much British coal they use, a substantial decline in their purchases would have important consequences which would be matters for Government, including both the financial costs and the social costs of pit closures and the future security of energy supplies."
Paragraph 57 states:
"A balance will need to be struck between, on the one hand, the interest of consumers in cheap electricity prices and of the Treasury in the maximum possible proceeds from privatising the ESI and, on the other hand, the long-term interests of the coal industry and the coalfield communities. In particular, private sector generators cannot be expected to take account of national interests, and pit closures are irreversible: deep-mined coal capacity cannot be turned on and off like a tap. We are not convinced that the Government has yet faced up to the dilemma which confronts it over the future of Britain's coal industry."
Emphasised in bold is the observation:
"It is essential that these issues are not side-stepped. As a priority the percentage of electricity that will be generated using British coal in 2003 should be appraised. In the light of this, of the increased use of gas and of the freeze in the nuclear programme, the effect of limiting FGD to the 8 GW proposed should be evaluated with regard to the possibility of tightening up limits on emissions; the restrictions it will place on British coal in the absence of other clean-burn technology."
I hope that the Secretary of State will, unlike his predecessor, give serious consideration to that report.

The Government should reassess their policy on the production of electricity by nuclear power. The privatisation of electricity has highlighted the unknown costs of nuclear power. No one who has given the matter recent study would disagree. We know that research and development expenditure on the fast breeder reactor programme alone totalled £4 billion at 1988 prices. The disastrous decision was made to order four different AGR devices from different consortia when there was scarely sufficient expertise to justify one.

For many years, the public have been told that the cheapest form of electricity generation is nuclear power, but we all know that that claim has gone out of the window. Either there has been a disastrous mistake or it is deliberate policy to market nuclear. I hope that it is the second, and that, in making the case for nuclear, the Government have kept its true cost from the public and from the House.

All the expert evidence given to the Energy Select Committee's recent inquiry confirmed that the true cost of muclear, including decommissioning, is unknown. I believe that no one can honestly come along and say—no one has yet—"Yes, including decommissioning costs, this is what electricity generation by nuclear power will cost."

I am well aware that the hon. Gentleman follows such matters very closely. He always presses the case for the coal industry with great conviction, but can he really sustain his argument about the non-availability of information on nuclear costs? I have a copy of a document entitled, "Projected Costs of Generating Electricity from Power Stations for Commissioning in the Period 1995–2000" published by the Organisation for Economic Co-operation and Development, based on 18 countries in the OECD. The report contains a mass of information on nuclear generating costs.

Although it does not necesarily come out unequivocally in favour of nuclear power, its most significant conclusion is:
"The nuclear advantage in the reference case persists, for most countries, at common load factors for coal-fired and nuclear plants well below those assumed. However, the expectation which was shared by a number of countries in 1985, that the total cost of nuclear generation would be less than the fuel costs of coal-fired generation, no longer exists in any country covered in this study."
The report concludes that assumptions about nuclear and conventional generating costs depend entirely on predictions made about load factors, discount rates and fuel costs. As the report points out, it is difficult to arrive at any general conclusions on that issue.

That was the point I was making—that no one really knows the true costs. I notice that the report does not mention decommissioning costs.

If so, I apologise. Nevertheless, the hon. Gentleman's points do not differ in any way from those that I made. The experts who presented evidence to the Select Committee all agree that it was not possible to estimate the true costs.

If the Government fail to take action on flue gas desulphurisation and to support the British coal industry over the next few years while FGD plants are installed—which I believe should be to the extent of 12 GW—a further 41 collieries, employing more than 35,000 men, will be lost. If one adds others involved, such as those in workshops and administration, total job losses could reach 50,000. If one then allows for the knock-on effect on other industries and services, the final job losses in coalfield areas could number 100,000 between 1995 and 2003. If mining communities are to be destroyed in that way, the Government will have a major obligation to prepare and encourage alternative industries in those communities, before they are wiped out.

5.7 pm

It is a pleasure to follow the hon. Member for Pontefract and Castleford (Mr. Lofthouse), because he always defends the coal industry sincerely and effectively. I agree with much of what he said, but I shall take a different tack on another aspect of energy in the few words that I say.

The Government have a proud record on privatisation, starting with that of council houses. Although that was opposed when first suggested by the Government, it is now accepted by the majority of people and is now the official policy of Opposition parties.

As my right hon. Friend the Secretary of State said, the Government also privatised British Airways and the British Airports Authority, both of which subsequently expanded. The Government privatised British Steel, British Telecom and British Gas, and all three have become more profitable and found more money for investment. Those industries have grown, offer more secure jobs, and are in a better state than they were in public ownership.

Despite all the controversy surrounding the privatisation of the water industry, it too is gearing itself up for the investment that is demanded by those having an interest in the environment. Those and many more privatised industries will not be returned to social ownership under a Labour Government, if there should be one, because the Opposition know that to return them to public sector ownership would be neither desirable, popular nor economic good sense. Nor would it win votes or elections.

In all the areas that have been privatised, there has been initial opposition, yet as soon as the privatisation process is over and the arguments have settled down, in every case private companies have been accepted and it has also been accepted that they are more effective and efficient than before. The same will be true of electricity privatisation when it is completed.

We know that privatised industries work better. The staff are better motivated, they have better rewards, and they are more ambitious for the success of their industry that they were before. The privatisation of electricity is a major undertaking. It is a strategic industry—the base for so many other industries. If we do not have a proper power industry, we cannot have manufacturing and many of the other industries on which we rely.

Electricity will be the largest of all the privatisations and the most complex. It has many constituent parts, all of which have to go into the private sector. So far, progress has been remarkable. Staff have been allocated to their now companies. Assets have been divided and allocated and new plcs have been created and are working: generators, a grid company and distribution companies.

Most remarkable of all, the privatisation programme is going ahead on schedule. I pay tribute to the Secretary of State, the other Ministers and staff at the Department of Energy for keeping to a tight schedule, despite the many squalls that would attempt to blow them off course.

The morale of staff in the electricity industry is high, contrary to predictions and expectations, and I know from my personal contacts with them that they are looking forward to having greater freedom to operate the companies and the industry in a way that they can predetermine. I have confidence that when the stock of the privatised electricity companies is sold off, there will be a successful launch. I am sure that most, if not all, Conservative Members will become shareholders, and I have a shrewd suspicion that many Opposition Members will become shareholders, too.

What about the benefits of privatisation? We should pay tribute to my right hon. Friend the Member for Hertsmere (Mr. Parkinson) for the way in which he contrived to bring competition into the privatisation of the electricity industry in a variety of ways. Competition was the catchword, and he was determined not to privatise the electricity industry as one giant monolith, as had been done with gas. It is a credit to him that the electricity industry was broken down into so many constituent parts, and that competition was encouraged in that way.

There will be many alternative sources of supply. There will be a non-fossil fuel quota, which will admittedly be protective for the nuclear industry, but it will also encourage alternative energy sources—renewable and benign—to generate and put their share of electricity into the grid.

I believe that the greatest benefit of privatisation is cost transparency, which the Secretary of State and the hon. Members for Pontefract and Castleford and for Holborn and St. Pancras (Mr. Dobson) mentioned. As a known supporter of nuclear industry, I still welcome cost transparency, which has shown that nuclear costs are high. I support the nuclear industry, not only because I used to think that it was a form of cheap electricity, but because I thought that we had—and I still think this—an obligation to find sources of electricity for future generations, apart from burning fossil fuels, which are declining every year and some of which will be needed in years to come as premium fuel for aviation and road transport.

Therefore, as a scientist, I saw the need to develop a new energy source, and I thought that nuclear electricity was that new source. Twenty years ago—and until 20 months ago—we were told that nuclear energy was cheap and we believed it. I do not think that I am making myself appear to be the only gullible person in the House or in the country by saying that I believed it. There was so much propaganda telling us that nuclear was cheap, from so many different sources, that many people thought that it must be true. Now we know that nuclear is not cheap, but I am delighted—I share equal delight with the hon. Member for Pontefract and Castleford—to find out a cost that is closer to the truth, even though we do not know the 100 per cent. truth. The cost that we are now being given is closer to the truth.

I must tell the hon. Member for Pontefract and Castleford and other hon. Members in the so-called coal lobby that it is not appropriate for them to rejoice at the nuclear industry's discomfort and to complain that the effects of privatisation on the coal industry are unfair or undesirable. We must have not only equality of cost transparency, but equality of consequence.

What are the effects of privatisation on costs? We know that in the nuclear industry high costs are associated with decommissioning and the back end of the fuel cycle. The inclusion of such costs in the prospectus for the sale of the nuclear industry, along with other generating stations, under the umbrella of National Power, was known to depress the price of that grouping, and was thought to make it unsaleable at a price that would benefit the taxpayer. Therefore, the Secretary of State made the right decision to withdraw nuclear electricity from National Power.

Of course, there were consequences for the nuclear industry. It meant that the family of PWRs that were to be built would no longer be built, because the nuclear industry stayed in the public sector and public funds were not available for that development. For the sake of the taxpayer it was right that the nuclear element was taken out of National Power, because that way we shall get the best price for National Power and we shall satisfy the hon. Member for Holborn and St. Pancras by ensuring that taxpayers get a good deal.

The coal industry will suffer under privatisation to some extent, but it will suffer anyway for environmental reasons. The suffering caused to the coal industry by the present environmental regime is exacerbated by the fact that privatisation is taking place at the same time. Privatisation will put pressure on costs. As the electricity industry is privatised and competition introduced, the generators will want to buy coal at cheaper prices and obtain contracts at keen prices. The price will be forced down, as the hon. Member for Pontefract and Castleford said. One consequence of trying to buy coal at cheap prices may well be the importation of coal. I do not welcome that any more than the hon. Gentleman did, but there has been a massive increase in productivity within the coal industry in the past four years and there is every reason to believe that during the next three or four years productivity will continue to increase until British coal can compete quite effectively with imported coal.

As regards sulphur dioxide, of course, burning British coal, which has a higher sulphur content than some imported coals, means that sulphur dioxide will go into the atmosphere, and flue gas desulphurisation is essential to bring that under control. If the electricity industry had not been privatised, the nationalised industry mught have put in more flue gas desulphurisation and might have put in the 12 GW that the hon. Member for Pontefract and Castleford called for. It seems that the privatised industry will put in only 8 GW, which will have an adverse effect on burning British coal.

As the Secretary of State mentioned, while it has been decided to burn more gas and while coal/gas price ratios remain at the preset level, the use of coal will probably decline at the expense of gas. Gas, however, will not stay at its present volume or price for long. Gas prices will rise and gas reserves will be depleted. We shall need to burn more coal. At that time coal will be cheaper. I share the concern of the hon. Member for Pontefract and Castleford that if we are to see a dip in the demand for coal now and if we are to anticipate a rise in the demand for coal in future, it is essential not to allow our coal reserves to be sterilised so that we cannot get at them when we need them.

As for carbon dioxide—the greenhouse gas that creates the blanket in the upper atmosphere that is responsible for global warming—we cannot get rid of it, whatever we do. We could scrub it out in the flues, but the cost would be enormous. We have to accept that coal produces greenhouse gases. If we are to burn more coal, we must try to get the maximum amount of energy out of the coal that we burn, thus producing less carbon dioxide per megawatt of electricity produced. To do so, we have to continue to invest in coal-burn technology and in combined cycles. We must also, as my hon. Friend the Member for Erewash (Mr. Rost) constantly tells us, invest more in combined heat and power. If we want to burn more British coal yet stay within the European directives on acid rain, we must have coal-burn technology—perhaps fluidised bed, or the process that is being developed at Grimethorpe.

For the sake of both the British coal industry and the environment, I call upon the Secretary of State for Energy and his Ministers to consider carefully how much money should be expended on coal-burn technology. It would be a two-sided reward. We could protect both our indigenous coal industry and our environment by investing in coal-burn technology.

In due course I shall propose—I believe that my proposal will be well received—that the Select Committee on Energy holds an inquiry into coal-burning technology and recommends what technology should receive priority and the type and volume of funding that would be necessary. I have every reason to believe that the Select Committee will agree unanimously to hold such an inquiry.

As gas volumes decline and as gas finds in the North sea become rarer, market forces will push up the price of gas. Eventually, coal and nuclear will come back into their own. The market forces that will allow the nuclear industry to make a comeback in due course will, before then, give a boost to indigenous British coal. Both fuels have a future, but it is right that both fuels should determine their own future within a proper financial environment that takes account of price, markets and competition.

5.23 pm

It is interesting to follow the hon. Member for Rochford (Dr. Clark), given his professional background and his present responsibilities. I pause to reflect on the link between a pair of his statements. The hon. Gentleman said that he was a late convert to the view that the nuclear industry was expensive, both relatively and absolutely. He knows that my colleagues and I have advanced that argument for a long time and that one of the industry's greatest defects is that practical one, as well as the other ethical defects.

I ask the hon. Gentleman to reflect whether he might similarly be wrong about his present absolutist view that privatisation will benefit industry. An issue that most appeared to affect his constituents in recent years was the sale of local authority homes in Rochford. The proposal that they should be moved out of local authority control met great opposition from his constituents when his Conservative colleagues on Rochford district council put it forward. I wonder whether in time the hon. Gentleman may come to realise that some of the Government's privatisation measures are not as popular or as justified as he may now think.

I welcome the hon. Gentleman's intention to ask the Energy Select Committee to examine the implications of coal-burn technology. Such a report will be well worth while. I also share his view that we are likely to invest far too little in flue gas desulphurisation. One consequence of the direction that the electricity industry is taking is that we may do too little about FGD, which is greatly to be regretted.

The hon. Gentleman knows that my colleagues and I have approached previous debates on this subject from the point of view that we do not oppose privatisation per se. We do not oppose the change of ownership, but question the practice of it and the motivation for it. We have consistently argued that the Government's intention to privatise the electricity industry was more for dogmatic reasons than for benefit to customer reasons—more for private good than because it was publicly bad. As we watch the advertisements on our television screens, aimed in particular at peak time viewing during the World Cup, but also at other times, we see that the Government have created a new industry in the private sector that already appears to spend money in a most unjustified way which undermines many of the Government's arguments that the industry will be more effective in the private sector.

This is an odd debate because it takes place in the knowledge that tomorrow Nuclear Electric will make an announcement about the cost of Sizewell B. I intend nonetheless to spend a few moments now on the nuclear industry in the context of the privatisation of electricity, since more important questions will have to be answered about the nuclear industry in the near future. Will the Under-Secretary of State for Energy tell the House when he winds up the debate whether the Secretary of State is to make a statement on behalf of the Government in response to Nuclear Electric's announcement tomorrow? Will he also ask his colleagues, in particular the Secretary of State, whether there is to be a formal request from his Department for a debate on the cost of Sizewell B to be held in Government time? It is a matter of significant public expenditure, on which there should be a proper debate.

We do not need to debate the matter this week; I should prefer the debate to be held after we have had an opportunity to consider the report. I welcome the announcement that the report will be made public. However, the Government should make a statement tomorrow, announcing that there will be a debate in Government time about Sizewell B and the implications for the nuclear industry.

The nuclear industry was the only matter that was allowed to interfere with the privatisation of the electricity industry. Originally, all the stations were to be privatised; then it was decided to keep the Magnox reactors in the public sector. That decision was attacked at the time by the chairman of the United Kingdom Atomic Energy Authority as "terribly, terribly messy". When nuclear plants were withdrawn from the privatisation programme, it became possible that we might see the real cost of nuclear power. Nuclear plants were withdrawn from the privatisation proposals when it was realised that they would become a financial albatross round the neck of an industry that the Government wished to privatise.

My colleagues and I argued in Committee and at the time of the announcement that it would have been better if the Government had said, "For heaven's sake, stop now," rather than commit the mistake that Governments of both parties have made since the war, on various issues, of continuing to spend and spend instead of being brave and pulling the plug early on. Nuclear plants are essentially uneconomic, as the French are now discovering. To build one plant of one type is even worse madness, because economies of scale are lost. We know all about the delays at Dungeness. There may be costs of delay at Sizewell, too. If the figures are right, in 1987 the cost of Sizewell B was £1,691 million. Now we could be talking about £2.5 billion. Some estimates put the cost of Sizewell B at well over £3.5 billion.

There will be additional costs. The loss of the rest of the family of four reactors which was originally proposed is calculated to add about £350 million. Although I have not read it extensively, the clear evidence of people such as the chief executive of the PWR project group of Nuclear Electric at the Hinkley inquiry was that, if the company did not proceed with building a family of PWRs, the investment in Sizewell B would become extremely doubtful.

The hon. Member for Rochford will confirm that the Select Committee has been extremely critical of the Department of Energy for allowing the cost of the nuclear industry to get out of control. There is no cross-party dispute about that. The already sharply increased costs call into question whether construction is any more justified.

Only last month the Secretary of State said two things about Sizewell B—that the future of nuclear power in Britain depended on Sizewell B being completed "successfully" and "on time". No doubt tomorrow he will respond more particularly as to whether it will be on time. He said that, so far, his understanding is that it will be. We shall see. But I wonder whether it is not already possible to say whether it will be completed successfully, and, more importantly, I wonder whether it will not be an increasing and haemorrhaging cost on the public sector which makes it economically unjustifiable by any criterion.

It almost goes without saying that if Sizewell B has failed economically, it is continuing to fail environmentally. The environmental danger and criticisms, in addition to the economic criticisms, are making Sizewell B a public sector white elephant the like of which we have not seen for a long time.

The other questions which the Government must answer concern the new structure of the area boards. They have been given the duty of keeping the lights on—a front-line responsibility but it appears that PowerGen and National Power are now negotiating with big customers behind their backs and behind the scenes. It is quite clear that the area boards are under pressure to sell as much as possible instead of encouraging energy efficiency.

One of our underlying criticisms of Government policy is that it is all geared to selling energy. Why else are we sitting at home and seeing on our television screens adverts for electricity in between World Cup matches? Why is there so much promotion of the use of something that we should be trying to conserve? If we are aiming for across-Government environmental policy, we should consider whether it is justifiable to spend so much money on advertising, in addition to the money that is being spent on other matters outlined by the hon. Member for Holborn and St. Pancras (Mr. Dobson).

The Minister may remember that in Committee my colleagues tabled an amendment calling for least cost planning, but it was rejected. It is still perfectly proper to suggest that generators should have to show that extra demand could not be met through efficiency measures before they should be allowed to expand.

Much more recent press cuttings from only last month show that National Power has failed to satisfy a Department of Energy investigation into complaints from the distribution companies that it has engaged in unfair pricing tactics to win industrial power business. I wonder whether the area electricity boards' complaints should not be dealt with much more properly by the Government, not simply by being investigated by the Department of Energy but by the Department saying what it proposes to do about those entirely justified complaints.

I am not sure whether the Government can yet be satisfied that National Power and PowerGen will be able to resist the threatened Monopolies and Mergers Commission inquiry. They are at risk because, had the Government been committed to really privatising them they would not have been allowed to achieve such a dominant position. The privatisation of electricity is not a real privatisation; it is an expensive privatisation, but it is also a falsified and distorted one and no one should try to delude the public about that.

We have a substantial concern that the Government are directing energy at the expansion of one sector of the industry rather than taking measures to which they are publicly committed but on which we have seen no action.

Last year the Secretary of State told the world energy conference:
"Energy efficiency is the single most cost-effective response to the efforts to limit carbon dioxide emissions from fossil fuels.".
Although the Government's evidence to the Intergovernmental Panel on Climate Change suggests that it is possible to reduce spending by 60 per cent. through cuts in fuel use, in written answers they still quote a reduction of only 20 per cent. Energy efficiency is still not a sufficiently high priority.

When one compares the money spent on research and development in the nuclear industry with that spent on renewables, the proportions are incredibly distorted. More than 80 per cent. of money spent on energy research and development is spent on the nuclear industry and less than 10 per cent. is spent on renewables. One consequence of that distortion is that we are developing inadequate use of the most environmentally acceptable energy opportunities.

The victims of the privatised electricity industry will be those who are most vulnerable and find it most difficult to pay. People who live in rural areas will lose all protection after five years and it looks as though the costs will then escalate so as to discriminate against and harm many of our most remote and threatened communities.

Finally, a large proportion of our elderly citizens rely most on electricity. They are threatened with ever-increasing electricity prices. The Minister will know that I regularly table questions reflecting the concern of many peope about the difficulties encountered by elderly people in paying for protection from cold and illness in the winter. We have to assess privatisation by its benefits or disbenefits to the consumer. It seems that a great deal of money is being spent on feather-bedding the nuclear industry which is no longer economic and giving big profits to the private sector in a distorted free market without any great benefit to the consumer. It is an enormously wasted opportunity.

5.38 pm

I am particularly pleased to follow the hon. Member for Southwark and Bermondsey (Mr. Hughes) because I suspect that he may agree with much of what I have to say.

Although I welcome the debate, I am rather surprised that the Opposition seem too eager to shoot themselves in the foot yet again. I declare an interest as an energy consultant. Those of us who are aware of what is happening in the real world can report two particularly exciting developments in recent weeks. Even during the transitional period when the electricity industry has not yet been privatised, these two major events are evolving before our eyes—at least for those of us who wish to see.

First, real competition has broken out and is resulting in lower-price contracts for those who need them most—the large energy users. For too many years, our industries have been penalised with far too high electricity prices compared with our competitors abroad. Competition is working. Lower-price contracts are being signed and all the fears that were expressed by Opposition Members, industry and the CBI only a few months ago have disappeared. We are not hearing a word about the suggestion that energy prices to large users would rise; on the contrary, the silence is deafening. Some of us know that the first contracts in the competitive market have resulted in lower energy prices for heavy energy users, who will benefit most and whose lower energy costs will benefit the British economy most.

The second exciting development is that, for the first time, our electricity industry has suddenly become aware of the new technologies that are available, which produce electricity not only more cheaply but more cleanly and more efficiently, with less environmental destruction.

Those are two most significant changes. I am disappointed that the Labour party still appears to be stuck in a socialist rut with the dogma of nationalisation, whereas the contrast is already emerging. Instead of trying to pretend that it is not happening, Labour Members should have the courage to admit that the state monopoly of electricity led to the high-cost nuclear option. They tried to hide that high cost and only privatisation brought it to the surface. The state monopoly of electricity led to wasteful planning, the mismanagement of national assets and dirty, inefficient coal burn. Flue gas desulphurisation was fitted not by the nationalised CEGB but because of privatisation. It may not be enough for Labour Members, but it is happening now, whereas it did not happen before.

The national electricity monopoly rejected energy efficiency options such as combined heat and power. It rejected the combined cycle and the gas turbine, which at least would have given diversity of supply, cleaner energy production and lower-cost electricity. It rejected the fluidised bed, which would allow us to burn British coal cleanly. The private sector, preparing for privatisation, and the distribution companies such as East Midlands Electricity are proposing to build smaller coal-fired power stations, which will burn coal more cleanly and efficiently.

The nationalised industry was not interested in that. It did not start promoting renewable energy such as wind power. That is now happening thanks to the Government's renewable energy tranche, to which they are giving special encouragement, and partly thanks to the distribution companies and the producers, PowerGen and National Power, which are interested in investing in and promoting renewable energy. It certainly did not happen before.

The nationalised industry did not lead to lower and more competitive prices to British industry, but prices are lower now. It certainly did not do much to provide consumer protection. That is the contrast. We are now beginning to see the increased application of energy efficiency in the production of electricity.

I return to the important contribution that cogeneration, combined heat and power, can make. The nationalised CEGB rejected that option. In a few days' time, I shall visit yet another of the new combined heat and power installations at Heathrow airport. It is saving a huge amount of energy for the BAA and is therefore helping the environment. That installation will have a good rate of return. I have visited other industrial combined heat and power installations, as has my hon. Friend the Minister, at British Sugar and Tunnel Refineries. There has been a surge in interest in co-generation in industry. Every day, one reads in the technical press announcements of new plants being constructed by industry, which will save energy, reduce fuel costs and save the environment. If he has not already done so, my hon. Friend the Minister should visit Trust House Forte, which is installing small combined heat and power plants at its motorway service stations and hotels. It is getting a three-year pay back on its investment and halving the amount of fuel consumed. That is all happening under privatisation; it certainly did not happen before.

The increased use of municipal waste in energy production will improve energy efficiency and reduce environmental pollution. The House may be aware that we are still bottom of the league for turning waste into useful energy. We still dump our waste in holes, pollute the water supply and create the risk of pollution and danger from methane explosions instead of doing what other European countries have done for many years—using municipal refuse as a valuable and cheap fuel. We convert only 3 per cent. of our huge volume of industrial and municipal waste into useful energy. France converts 25 per cent. and Denmark, the Netherlands and West Germany convert 30 per cent. at clean incineration plants, which produce electricity and hot water for district heating. In Sweden, the figure is 40 per cent. The figure in Britain is still 3 per cent., but projects are coming forward, thanks to privatisation and to the Government making refuse a renewable energy source. Those projects will produce useful energy such as electricity and hot water from refuse instead of polluting the environment with it.

I remind my hon. Friend the Minister—I am sure that he is aware of this—that converting refuse into energy is the only technology that produces a net reduction in global greenhouse gases. Although burning refuse produces carbon dioxide, it also burns the methane—a far more damaging greenhouse gas—that would otherwise be released from landfill for the next 20 or 30 years. Even if the methane from landfill is tapped for energy production, as it is on some sites, only 10 per cent. of it can be used. The remainder goes into the atmosphere, and it is a far more damaging greenhouse gas than carbon dioxide. If that refuse is burnt, other fossil fuels are displaced that would otherwise have to be burnt to create that electricity.

I entirely endorse the hon. Gentleman's view about the environmental importance of burning refuse to create energy, but does he accept that one of the problems is that we have not converted the public to the view that that process is not environmentally harmful? Work must be done to win the argument so that we can change the balance of resource use.

I am grateful to the hon. Gentleman for making that intervention, because it helps me to make my next point. My colleagues in the Department of Energy and the Department of the Environment have an important role to play. A helpful new clause in the Environmental Protection Bill obliges local authorities to find sensible ways of disposing of their refuse, rather than dumping it in holes, and to promote waste recycling. I hope that we shall ensure that that happens. I look forward to seeing progress in that important direction.

I have referred to the way in which more efficient energy production is taking over. Of course, we can meet our global greenhouse targets by the year 2005, and freeze the amount of emissions that will be released, but we can do much more. We can bring about a net reduction of global greenhouse gases by encouraging greater efficiency of use and of energy production. By increasing thermal efficiency in the way in which fuel is used in our power stations, we can make a much bigger contribution than in any other way to reducing global greenhouse gases. To meet, as we must, the targets that the world will demand—they are stricter than the targets so far announced by my right hon. Friend the Prime Minister—we shall have to