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Electricity Supply Industry

Volume 180: debated on Monday 12 November 1990

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To ask the Secretary of State for Energy what provisions govern the operation of the electricity supply industry during an energy crisis, following privatisation.

When an Order in Council has been made under section 3 of the Energy Act 1976, the Secretary of State has power under sections 1 and 2 to control the production, supply, acquisition or use of electricity and to give directions. Under section 34 of the Electricity Act 1989, the Secretary of State may give directions to generators regarding the operation of power stations.

Will the Minister confirm that the electricity privatisation prospectus makes it clear that, in the event of an emergency—such as a war breaking out in the Gulf—the Secretary of State will have power literally to take the industry back into public ownership? Would not it be better, in those circumstances—at least until the problems in the Gulf have been resolved—for the privatisation to be deferred. especially as it could save thousands of small investors from the risk of getting their fingers badly burnt?

The hon. Gentleman is trying to confuse two issues. There have always been plans for dealing with electricity supply emergencies and the Government have clear statutory powers to ensure that the industry operates as effectively as possible in an emergency. There is a comprehensive strategy and framework to cover any such contingency, as my earlier reply made clear.

As for any incidents that may arise in the Gulf, the Government have taken the view that it is not reasonable for investors to be exposed to Gulf war risks. That is why the Government have acted as they have. Let me make it clear, however, that a war clause would not relieve the underwriters of any of the normal risks that they are paid to bear, such as market movements for other reasons. The hon. Gentleman must not confuse two entirely separate issues.

Does my hon. Friend agree that the greatest benefit that the industry can gain at a time of crisis is ready and flexible access to capital? Does he agree that the apparent huge success of the privatisation of the supply industry is in itself a guarantee that the industry will in future be able to meet any conceivable crisis?

The Minister has just told the House what we all learnt from the press on Friday: that the Secretary of State has had to climb down in a most humiliating manner by allowing the underwriters of the issue, not him, to decide whether to pull the issue in the event of a Gulf crisis. It is not normally the function of the Government to give up their role to underwriters from the City. Does the Secretary of State now agree that he has a moral duty to cease the "Frank N. Stein" advertising campaign, which is designed to lure in the financially unsophisticated? Does he accept that what is good for the City must be good for the Sids as well?

The Secretary of State will be retiring at the end of this Parliament: the man who sold tickets for the last trip of the SS Titanic did not get a good press, and nor will the Secretary of State unless he agrees to cancel this disgraceful advertising campaign.

With all respect to the hon. Gentlernan, I must say that his question was a lot of drivel. The campaign for registrations has been outlined, it is going well and a large number of people have registered their interest in buying shares in a privatised electricity supply industry. In due course, they must rely upon their own judgment as to whether it is a sensible investment, having regard to all the information available at that time.

My right hon. Friend's decision on force majeure was sensible and straightforward. It was taken on the advice of the Government's financial advisers, having regard to all the circumstances. It is a poor reflection on the hon. Gentleman and his hon. Friends if they consider such a mature and sensible decision as in some way being a climbdown.