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Volume 177: debated on Monday 23 July 1990

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Friends Of The Earth


To ask the Secretary of State for Energy when he next expects to meet Friends of the Earth to discuss energy-related issues.

I have no present plans to meet Friends of the Earth.

If my hon. Friend receives a request to meet these friendly and earthy people, will he say yes to it and then do all that he can to reassure them that the Government attach a high priority to the promotion of alternative and renewable forms of energy?

My right hon. Friend has already had a meeting with Friends of the Earth. We shall always be happy to have further meetings because they would enable us to tell them that the Government are stimulating the development and application of all promising renewable energy sources by means of a major research, development and demonstration programme. To date the Department has spent more than £160 million on research, and the budget for this year is about £20 million. A special place has also been set aside for about 600 MW of capacity from renewable sources under the non-fossil fuel obligation—in addition to whatever is contracted for under the initial tranche. I would welcome the opportunity of giving Friends of the Earth this good news.

Is not the reality that there needs to be a substantial change in investment in favour of renewables and away from sources such as nuclear power? Will not the Minister find a positive response from organisations such as Friends of the Earth only when he shows that the Government understand the economics of energy and spend money in the right place?

We pay significant regard to energy efficiency. The hon. Gentleman might like to recall that United Kingdom energy consumption in 1989 is less than it was in 1979, despite a 25 per cent. increase in gross domestic product.

Energy Efficiency


To ask the Secretary of State for Energy what programmes his Energy Efficiency Office operates to disseminate advice on energy efficiency to consumers of electricity.

We promote efficiency in the use of all sources of energy, including electricity.

I am grateful for that reply. What statutory role will there be after privatisation for the electricity companies to give advice on energy efficiency?

The 12 distribution companies have a statutory role now under the Electricity Act 1989. That role will be overlooked by the Office of Electricity Regulation, which already has good contacts with my Energy Efficiency Office.

Is the Minister aware that he is one of the few Ministers who deals with Opposition questions on energy efficiency and other matters with a great deal of courtesy? It makes a change. Is he as fed up as I am at reading in every paper over the weekend of his imminent demise and possible replacement by the Under-Secretary of State for Scotland, the hon. Member for Stirling (Mr. Forsyth)? If that happened would not it speak volumes about the appalling state of the Tory party?

I am most grateful to the hon. Gentleman for his complimentary remarks. Unless I am gravely mistaken I am still standing here.

Gas Prices


To ask the Secretary of State for Energy when he last met the chairman of British Gas to discuss the level of gas prices for industrial consumers.

My right hon. Friend and I meet the chairman of British Gas from time to time to discuss a range of issues of mutual interest, including the fact that industrial gas prices have fallen by 41 per cent. in real terms over the past five years.

I thank my right hon. Friend for that excellent news. Does he agree that that implies that a large part of British industry will now have a major competitive advantage? That, in conjunction with the fact that we have the lowest domestic gas prices in Europe, is a major vindication of our privatisation programme.

I agree with my hon. Friend. He spoke about domestic gas prices. Since privatisation the price of domestic gas has fallen by 14 per cent., so all round British Gas has a very good record.

Can the Minister give any assurances and with any confidence that gas prices will not rise when gas is used as a bulk burn fuel in power stations?

As the hon. Gentleman knows, the price of gas depends on the efficiency of British Gas and the other North sea gas producers. It also depends on supply and demand.

British Coal


To ask the Secretary of State for Energy how much the Government have invested in British Coal since 1979.

We have assisted the corporation in financing over £7 billion of new investment since 1979.

Will my right hon. Friend confirm that the Government have invested far more in the coal industry than did their predecessors? As a consequence, the arrangements between British Coal, National Power and PowerGen for the supply of coal mean a secure future for coal mining in Britain which will play a major part in future developments.

My hon. Friend is absolutely right. The new contracts with the electricity generators provide British Coal with a large market opportunity, a guaranteed income stream over the next three years, and time to adjust to the needs of a competitive electricity market. My hon. Friend is also correct about the support that the Government have given to the coal industry.

Grants made available to British Coal under this Administration exceed in real terms the total assistance given by all previous Governments since nationalisation of the industry was completed.

Will the Secretary of State comment on the paradox that the Government and almost all their supporters have boasted for the past decade or more about record investments in British Coal, but that the market opportunity, although the Secretary of State may describe it as large, is small? Every member of the Government and most of their supporters joyfully trooped through the Lobby to secure the replacement of the investment about which the Government boast.

The Government's support for the coal industry has enabled it to make massive improvements in productivity, which is now about 75 per cent. over the pre-strike level. That is a fine achievement and will enable British Coal to compete in the market at the end of the three-year contracts with the generators. I hope and expect that British Coal will achieve a substantial share of that market.

Given the massive size of investment in the industry, and that much of it is long term, should not we also take steps to ensure that British industry is not held hostage to fluctuations in world prices in coal? I refer in particular to the importation of sulphur-free coal.

It is impossible for any industry to be entirely insulated from world prices or environmental considerations, but the step that we have taken in improving the productivity of British Coal and playing our part in the European directive on emissions will enable British Coal to take advantage of the position in future.

Does the Secretary of State accept that many of the grants that have gone into the coal industry since 1979 were effectively investments in its closure and rundown? Does he agree that where there has been capital investment, to which he correctly referred, we must make sure that it has the long-term effect of producing coal? We must get way from three-year contracts, which are no good whatever to the coal industry. With the chairman of British Coal, will he get together people from National Power and PowerGen and begin discussions about long-term contracts so that investment is not wasted?

I agree with the hon. Gentleman this far: the three-year contracts are only a start and longer contracts are needed for the coal industry. I am sure that he will welcome the fact that a substantial part of the support that British Coal has received from the Government has enabled the necessary changes in manpower levels to be achieved in as humane and reasonable a way as possible.

The bulk of the assets being written down stem from the "Plan for Coal" initiated by the Labour party when it was in office. That was based on a forecast of coal demand that failed to materialise. I do not say that no recent investments will need to be written down as a result of the collapse of energy prices, but the Monopolies and Mergers Commission report on British Coal's capital investment last year noted an improvement in the corporation's investment appraisal procedures. That augurs well for the future.

Does my right hon. Friend agree that the figures demonstrate that the nationalisation of British Coal was an unmitigated disaster? When can the taxpayer look forward to that burden being removed?

If I had been around in 1946 I should not necessarily have agreed with the solution of the then Government. However, that might be controversial. The Government's policy is to privatise the coal industry. Proposals will be put before Parliament, but after the next election.

Energy Efficiency


To ask the Secretary of State for Energy when he next expects to meet Neighbourhood Energy Action to discuss the home energy efficiency scheme.

I meet the director of Neighbourhood Energy Action and representatives of other organisations as necessary to discuss the development of the home energy efficiency scheme.

I thank the Minister for that reply. Is he aware of the promise that the home energy efficiency scheme would be introduced by 1 November? All the people involved in introducing such a scheme, including a rock wool factory in my constituency, continue to state openly that the Government will not introduce the scheme by 1 November. The Government have backtracked on the promises that they made. The House and the nation want some assurance that the Government will get off their backside and do something about introducing the scheme by 1 November as they promised.

I am sure that the hon. Gentleman wanted the consultation that has taken place during the past few months. I hope that he would not have wanted us to go ahead without seeking the views of all groups involved, including Neighbourhood Energy Action. He will be pleased to hear that I hope shortly to come forward with the final details of the scheme. As he will realise, the scheme is a successor to the community insulation projects and, therefore, will flow naturally through.

Will my right hon. Friend confirm that the rate of energy efficiency improvement in this country has been running at more than double that of the European Community average? Is not that largely due to the success of our community insulation programme? What plans does my right hon. Friend have for continuing that success?

I can certainly confirm that we have had a pretty good record during the past 10 years. However, it would be a mistake to be in any sense complacent, which is why I and my officials at the Energy Efficiency Office are visiting every part of the country to promote our message as best we can.

Does not the Minister astonish even himself with his complacency? How can he claim to be so proud of energy efficiency improvements over the years when he is severely cutting funds to voluntary agencies helping to minimise energy loss? Is not that at best inconsistent with the right hon. Gentleman's remarks, and, at worst, hypocritical?

If I give the impression that I am complacent, I assure the hon. Gentleman that I am not. As I said before, the nation's energy spend amounts to about £40,000 million a year, and our target is to reduce that figure by £8,000 million. Substantial new moneys are coming to the Department for the home energy efficiency scheme, which will also help. I suspect that many of the deliverers—the people who do the job—will be voluntary agencies as well as companies in the private sector.

When my right hon. Friend next talks about energy efficiency to neighbourhood groups, will he impress upon them the importance of the fluorescent gas-filled bulb, which lasts about five years and costs next to nothing to run, but which the bulb manufacturers of the world are slow to produce because they have a vested interest in the consumer replacing bulbs every five minutes? Will he try to persuade British manufacturers to produce those bulbs, because they can be obtained only from abroad at a cost of about £15 to £20 each? Nevertheless, hotels have caught on to their advantages.

If anything, I am becoming a bit of a bulb bore. I assure my hon. Friend that I promote that message as hard as I can. He may not realise that such bulbs are now being produced in this country, and I hope that we shall find them on supermarket shelves from the autumn this year. Those bulbs are certainly very efficient, and every right hon. and hon. Member could benefit by using them in their homes.

Gas Act 1986


To ask the Secretary of State for Energy what proposals he has to amend the Gas Act 1986.

I have raised before in the House the dilemma confronting Coventry city council, as a consequence of the Gas Act 1986, in relation to the cheaper price of contract rather than tariff supplies. The council has decided to heat 17 schools and old people's homes from now until 30 November with all their windows open, so that 56,000 extra therms will be consumed and the council will qualify for the cheaper contract gas, thus saving the city £30,000. The problem is not unique to Coventry among local authorities. The Minister and his Department responded to paragraph 4 of the Energy Select Committee's report, saying that they are confident that British Gas and the Office of Gas Supply will continue to discuss that aspect until a satisfactory solution is found. To whom is such a solution to be acceptable, and how long will those discussions continue?

The hon. Gentleman perfectly reasonably cites a problem which I accept exists. However, it is fair to say that in Coventry, as in any other part of the country where there is aggregation, there is no need for the city council to burn gas in the way that the hon. Gentleman describes.

That may be so, but in practice, because of aggregation, the total sum that the council will have to pay is no more than it would have paid a year ago. Nevertheless, efforts are being made by Ofgas, British Gas and myself to work out a solution to this complicated problem. It is not a question of the legislation but of how one tapers through its provisions. Genuine efforts are being made to resolve the problem.

Does my right hon. Friend accept that that scandalous waste of gas has been going on too long? It is not only schools and the public sector that are deliberately wasting gas to pay less for it by qualifying for an industrial tariff, but commercial interests such as hotel groups and retail outlets. It pays users having a consumption of about 18,000 therms to burn up to 25,000 therms because they will then pay less for that gas. Is not it time either to allow aggregation below 25,000 therms or to amend the Gas Act 1986 so that that ridiculous anomaly can be removed?

I do not quite agree with my hon. Friend's figures, but it is perfectly fair to say that my hon. Friend, like the hon. Member for Coventry, South-East (Mr. Nellist) points to a problem. Work is going on to see how that problem can be solved.

The privatisation of the utilities has certainly resulted in competition at the industrial and commercial ends of the market. But, as last week's increase in British Telecom's charges shows, there is severe discrimination against domestic consumers. What will the Government do to protect domestic gas consumers?

The hon. Gentleman cannot have been listening to one of my earlier replies when I said that since privatisation the domestic gas consumer is paying 14 per cent. less in real terms for gas.

Alternative Energy Sources


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

Neither my right hon. Friend nor I have any current plans to have discussions with the European Commission. However, alternative sources of energy are likely to be relevant in future Council discussions. The next Energy Council is planned for 29 October.

Is my right hon. Friend satisfied that the balance between United Kingdom national research and European Community research is about right? Does not he think that more of this research should be undertaken on a European basis?

I think that I am satisfied that the balance is about right in terms of the JOULE 2 and THERMIE programmes. As a result of the European Community coming together, the total spend by those nations on research and development is about right.

Will the Minister ensure that at the Council of Ministers meeting on 29 October a clear proposition is laid before the Council that Dounreay, in the north of Scotland, should be developed as a centre of excellence for research into renewable energy sources, instead of the current proposition, which is to turn it into a nuclear dustbin?

I do not agree with the final part of the hon. Lady's question, but I listened carefully to the former part.

If and when my right hon. Friend has discussions with the European Commission on alternative energy sources, will he review with it the possibilities and opportunities for wave power? If he finds that there is potential for wave power, will he reassess the Salter duck, which was designed and developed in this country, but, unfortunately has not yet been exploited?

As my hon. Friend will know, the Department spends a considerable amount of money on research and development into wave power, and currently we are reviewing that research. As for Mr. Salter and his ideas, my hon. Friend might be pleased to hear that he came to my office a few weeks ago where we had a long discussion, and that I intend to visit his laboratories in Edinburgh as soon as I can find the time.

Electricity Privatisation


To ask the Secretary of State for Energy when he next expects to meet the chairman of the area distribution companies to discuss privatisation.

I meet regional electricity company chairmen regularly to discuss a range of matters and have recently set the debt levels of the 12 regional electricity companies and the National Grid Company. The total debt will be £2,843·5 million. I have arranged for the company-by-company figures to be published in the Official Report.

As 10 of those 12 companies have already failed to meet Government profit targets—it has not stopped the chairmen from taking substantial pay increases—how does the Secretary of State expect shareholders to make informed decisions if the only information that they will have is the knowledge of that failure to meet profit targets?

That is not the only information that they will have. A proper prospectus, as required by law, will be published and the information will be available there. That is the right time to assess those companies. The results to which the hon. Lady referred reflect the unusually mild winter and the recent storms, but also—and much more important—they are, to an extent, irrelevant under the new competitive regime that we have created.

Has my right hon. Friend yet had a chance to assess how the bidding system for electricity is working? Does he believe, as I do that it is already having the effect of bringing down the price of electricity to the distribution companies, which will be passed on to the consumer in the fullness of time?

Obviously, I am interested in looking at the information which comes in, but it is too early yet to form any firm conclusions about how the pool price will settle down. However, I agree with my hon. Friend that the arrangements that came into effect on 1 April mean that a great many of our larger electricity consumers have had the price of their electricity significantly reduced.

Is the Secretary of State aware that if members of any Labour local authority had handled the public assets entrusted to it in the way in which the Government have handled the assets built up by public money and the labour of those in the industry, they would have been charged with wilful misconduct, brought before the courts and barred from public office and that they would have been lucky to escape the charge of absolute political corruption?

Only the right hon. Gentleman could have put his question in that way. The Government dealt with the problem of the publicly owned electricity supply industry by vesting it on 31 March in the plcs, all of which are still owned by the Government. The Government will proceed to the privatisation of the majority of them, though not of Nuclear Electric. We shall see to it that we get a proper price for the sale of shares in those companies.

When the Secretary of State last met the bosses of the distribution companies, did he tell them what steps he was taking to protect the independence of the privatised electricity companies? Does he recall that the House was promised on 13 December 1988 that no individual or company would be allowed to take more than a 15 per cent. stake in any of the electricity companies? Is that promise another victim of his desperation over privatisation? Is the Hanson solution intended only for PowerGen?

I shall be making a statement about the wider issues at a later date, but the competitive nature of the electricity supply industry that we have created also bears importantly on the position of the regulator. He received complaints some time after 1 April, as a result of which he made some very marginal changes in the way the arrangements work.

Following is the information:

Regional electricity companies: debt

£ million

Eastern Electricity plc263·0
East Midlands Electricity plc127·0
London Electricity plc338·5
MANWEB plc63·0
Midlands Electricity plc120·0
Northern Electricity plc164·0
NORWEB plc153·0
Southern Electricity plc295·0
SEEBOARD plc125·0
South Wales Electricity plc25·0
South Western Electricity plc80·0
Yorkshire Electricity Group plc189·0
The National Grid Company plc901·0

Flue Gas Desulphurisation


To ask the Secretary of State for Energy what is his most up-to-date estimate of the United Kingdom requirement for flue gas desulphurisation in (a) National Power and (b) PowerGen coal-fired power stations in 1998 and 2003.

I expect flue gas desulphurisation to be retrofitted to 8 GW of power stations as part of measures to meet the sulphur dioxide reductions required by 1998.

Mr. Speaker, Sir, I want to know what the Department is playing at. Is the Minister aware that only last year the Prime Minister promised that there would be no increase in imports of low-sulphur coal? Yet the Department is jigging around with FGD reductions in our power stations. It is obviously selling out the environment and the mining industry. The Government have clearly sacrificed the environment and the mining industry on the altar of privatisation, so the Minister should get up there and come off it.

I intend to say this quietly because I want to be sure that the hon. Gentleman hears it. This year, under the contract between British Coal and the generators, the generators will be taking 70 million tonnes of British coal. In evidence to the Select Committee, British Coal estimated that, with 8 GW of flue gas desulphurisation installed, the generators could burn 70 million tonnes of British coal in 1998. In other words, on British Coal's own evidence it will be perfectly feasible in 1998 for the generators, with 8 GW of FGD fitted, to burn exactly the same volume of British coal as they are burning today, if they so choose. More FGD could be retrofitted to meet the target for the year 2003, 13 years away, if the generators felt it appropriate nearer the time.

Is not the key dimension the total amount of sulphur dioxide emissions across the whole of the generating industry and not just a particular sector of it?

Everyone is determined that we should play our full part in reducing sulphur dioxide emissions. We are determined to meet the European Community's large combustion plant directive and to ensure that power stations play their part in meeting the requirement of the reduction of sulphur dioxide emissions, which is what the directive is all about. We shall ensure that the United Kingdom meets the terms of that directive. The Environmental Protection Bill now before Parliament provides statutory powers to ensure compliance with the legislation and the directive.

Now that the Government have chickened out of their commitment to fit flue gas desulphurisation to 12,000 MW of power stations and their privatisation programme is looking like the charge of the electric light brigade, will the Minister say what discussions are taking place with Hanson about the acquisition of PowerGen? What part will chickening out of their environmental commitment play in the Government's discussions with Hanson, which acts as a scrap-metal merchant for large parts of the British economy? Does the Minister accept that privatisation is not so much a holy grail for the Government as the Turin shroud?

The hon. Gentleman was clearly so busy polishing up his phrases for the benefit of parliamentary sketch writers that he did not listen to what I was saying. The Government are determined to meet the European Community's large combustion plant directive, under which certain targets are to be met in certain years. One of the target years is 1998. As I have made clear, on British Coal's own evidence to the Select Committee on Energy, with 8 GW of FGD retrofitted it will be perfectly possible for the generators, if they so choose, to burn exactly the same volume of British coal in 1998 as they do today.

Energy Conservation


To ask the Secretary of State for Energy what resources his Department devotes to improved energy conservation; what recent measures he has introduced to improve energy conservation; and if he will make a statement.

Our initiatives include the best practice programme, an increased role for the regional energy efficiency officers, and the public sector campaign. In addition, a new home energy efficiency scheme for low-income households is being prepared.

Does my right hon. Friend agree that energy conservation is as important as energy creation, and that every household in Britain can play its part? Is he aware that in Leicestershire, the average three-bedroomed, semi-detached house could make £50 savings per year for an investment of £100 on roof insulation or £30 per year for a £10 investment on lagging the tank?

I agree with my hon. Friend that households in Leicestershire, Lincolnshire or wherever could nearly all make a major contribution to their household bills and thus to the economy.

There must be some way of converting all the energy that we use bobbing up and down in the House to provide energy for the House of Commons. More importantly, has the Minister noticed the high concentrations of photochemical smog in London during the hot spells in the past week or so? How do the Government intend to monitor the pollution levels and what do they intend to do about the causes of that major health hazard to Londoners?

I have noticed every now and then a scudding cloud, as it were. I will refer the hon. Gentleman's question to my right hon. Friend the Secretary of State for the Environment.

Does my right hon. Friend agree that one of the most energy conservation-conscious industries is the glasshouse industry? Will he consider introducing a green tariff for those industries that recycle their flue gas and carbon dioxide as the glasshouse industry does? I know that my right hon. Friend is a defender of the environment, even in his own greenhouse.

It is kind of my hon. Friend to refer to my propensity to enjoy my garden and, indeed, my greenhouse. I agree that people who use greenhouses do so most efficiently and effectively and to the enhancement of the environment. The question of taxation implications with which my hon. Friend is trying to tempt me would be better put to my right hon. Friend the Chancellor of the Exchequer.

Sizewell B


To ask the Secretary of State for Energy how much public money has been spent on Sizewell B to date, how much is committed currently, and if he will make a statement.

A total of £1,510 million has been committed, of which £920 million has already been spent. both figures are at 1987 prices.

Does the Secretary of State recall the statement made at the Hinkley inquiry by Mr. Brian George, chief executive of the PWR group of Nuclear Electric, that if we did not build a family of PWRs, expenditure on Sizewell B would be extremely doubtful? Is not the reality that the nuclear industry will not only fail to make a profit but will not break even and that if it were in the private sector it would have gone bust long ago? What prevents the Government, when they are casting around for money to save the public purse, from considering the most obvious candidate—Sizewell and the nuclear industry?

Much of the answer to the hon. Gentleman's question will be contained in the response that I shall shortly be making to the Select Committee report and from which it would not be right to quote at the moment. I have made a thorough review of the costs of Sizewell B. On an avoidable cost basis—the only basis which matters for my decision—Sizewell B output is comparable with that from a combined cycle gas turbine, on central assumptions, and cheaper than that from a coal-fired plant. That is the essential decision that I have to take.