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Volume 180: debated on Monday 12 November 1990

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Offshore Oil Employees


To ask the Secretary of State for Energy if he will make a statement on the blacklisting of offshore oil employees by oil companies and contractors.

During unofficial offshore industrial action by contractors' employees in August a number of men "sat-in" on installations and consistently refused to comply with the offshore installation manager's instructions to return to shore. Some men did not leave until a court interdict was obtained. They were subsequently dismissed by their employers.

Is the Minister aware that that is a wholly unsatisfactory statement? He appears to be entirely in the pocket of the oil companies and the contractors. Can he and the oil companies not yet accept that we are no longer in the era of masters and men when masters could do exactly as they wanted with working people? On this day of all days, which will be known as the Cullen day in Scotland, does he accept that he should talk not to the oil barons in their ivory towers and big limousines, but to the men and women who go out on to the oilfields and risk their lives? Is not it time that he called in the oil companies and told them to listen to the men and women's claim for trade union recognition and safety?

I wholly disagree with the hon. Gentleman's comments. It is vital that the actions of individual short-term or long-term contract workers on rigs should demonstrate that they are prepared to respond to the instructions of offshore installation managers. That they were prepared to ignore those instructions on this occasion does not lead me to the view that the hon. Gentleman reached. Naturally, all of us are concerned about anything that has an effect on the maintenance of good offshore industrial relations. The dispute is for the parties involved to settle.

Is not it a fact that any of us who have been to any of these platforms must recognise that the success of production, research or work at whatever level depends on teamwork? Therefore, the key factor is that every member working on a platform should have confidence in his neighbour and should know that if an instruction is given, everyone will respond to it.

Does the Minister recall the Labour Front Bench getting in touch with him a few weeks ago on this very subject? Does he agree that it is vital to implement Labour's policy on those matters, which is that people should not be blacklisted because of trade union membership or activity, particularly when we think of the immense health and safety problems of the industry? Will the Minister agree to meet members of the anti-blacklisting campaign, which is supported by 80 members of various parties in the House, who are extremely worried about those matters in this industry among others?

The Labour Front Bench has not brought to my attention any details of a specific blacklist, but if it does, of course we shall look into it. The reality is that we have made inquiries of Shell regarding the offshore personnel records information system, which is unique to Shell. The important point, on which I wanted assurance from Shell, was that it would not pass on the names of any men who took part in industrial action on Shell installations to any other operator, and it has given me that undertaking.

May I take up the point raised by my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) and remind the Minister that my hon. Friend the Member for Aberdeen, South (Mr. Doran) has written to him on the specific issue of blacklisting?

My specific question is addressed to the Secretary of State. Will he take the opportunity presented by today's publication of the Cullen report into the Piper Alpha disaster to call together the operators, the contractors and the representatives of people who risk their lives every day working in the North sea to make a fresh start to achieve the good industrial relations that are necessary if those people are to have a safe working environment? Will he insist that the contractors and operators withdraw the sackings and abandon the blacklisting, which is a disgrace to both?

My right hon. Friend the Secretary of State will, of course, make a statement on the Cullen report later this afternoon. No doubt he will bear in mind the issues that the hon. Gentleman raised. If, by implication, he believes that my right hon. Friend, or anyone in the House of whatever political persuasion, does not put safety first, he is wholly misguided and wrong.

Exploration Wells


To ask the Secretary of State for Energy how many exploration wells were drilled in the United Kingdom continental shelf in the six months commencing 1 January 1990.

Fifty-six new exploration wells were started in the United Kingdom continental shelf in the period to which the hon. Gentleman refers. By the end of October the number had increased to 128, already the highest level of exploration drilling in any year since UKCS activity began.

The Minister and the Secretary of State are proud to boast about the level of exploration activity in the North sea. Later we shall have a statement from the Secretary of State on the Cullen report, which will have expenditure implications for the oil industry. The Minister has had that report for three weeks. Has he considered what impact implementation of the Cullen report will have on further exploration activity in the North sea?

Of course, Ministers have considered that point in detail. My right hon. Friend will refer to that when he makes his statement later this afternoon.

I welcome the news that the Minister has given about the increase in the number of exploratory drilling wells. Does he accept that that increased activity, together with the situation in the Gulf, improves prospects for North sea developments? Is he able to give any colour or detail to the House about a report in today's The Times of a further multi-million pound investment at the Sullom Voe terminal in Shetland?

I am not in a position to give further details along the lines requested by the hon. Gentleman. I can assure him, however, that the high level of exploration drilling activity looks set to exceed 200 wells for the first time this year. From the end of October the number of new wells is set to increase from 128, as recorded in my answer, to 181. We shall make an announcement on each new major find as soon as we can.

Oil Imports


To ask the Secretary of State for Energy what was the total volume of oil imports into the United Kingdom for each of the last seven years.

The total volume of oil imports into the United Kingdom for each of the years 1983 to 1989 inclusive, are, in million metric tonnes, 40·1, 53·5, 52·1, 56·4, 53·9, 54·2 and 58·1 respectively. However, for each of those years the volume of oil exports from the United Kingdom exceeded the level of imports.

In so far as the Government have raised £100,000 million in oil revenues in the past 10 years and gained thousands of millions of pounds in terms of benefit to the balance of payments, can they tell us where all that money has gone? Why was not part of it used to ameliorate conditions of exploration and drilling in the North sea?

In answer to the specific question about the North sea, it is clear that the level of activity is as high as it has ever been and that the level of capital investment is steadily going up. There is no lack of investment in the North sea. On the more general point raised, the hon. Gentleman will know that, as a result of many things, not least the revenues from the North sea, we have been able to spend far more on the health service—[HON. MEMBERS: "Oh!"]—and on investment, we now have a higher standard of living and we are spending more on social services than before. Perhaps that is what is upsetting the hon. Gentleman.

Does my right hon. Friend agree that the oil that we get from the North sea is of a high quality and, because of that characteristic, we can trade it at a higher price per barrel than the oil that we bring in? Therefore, is not it true that by trading oil, we can make a profit for this country, not only because we export more than we import, but because we export high-quality oil?

My hon. Friend is right. Crude oil imports account for about half of the United Kingdom's refinery throughput. As my hon. Friend is well aware, a similar proportion of United Kingdom crude oil is exported. The high proportion reflects the price differential—more than £2 a tonne—in favour of the United Kingdom because of the high quality of North sea oil.

Does the Secretary of State think that Scotland has had value for money from the £100,000 million with which it has bankrolled the Government during the past 10 years? The Secretary of State will have noted the effect on the balance of payments of high oil prices and also that Shell and BP, announcing more than £1,000 million of excess profits last week, said that those would contribute to oil taxation. If that is so, why, in his autumn statement, did the Chancellor forecast a £100 million decline in oil revenues for this year? What has happened to the £1,000 million?

First, I do not go to Aberdeen as often as the hon. Gentleman, but I go quite often and it strikes me as a pretty prosperous part of the world. The only thing that baffles me is why anybody should have elected him in that part of the country, but that is a matter for them to decide, not for me. It is a lovely part of the world and pretty prosperous.

The stock adjustments included in the recently announced BP and Shell profits give rise to only paper increases in profits. We should also remember that the greater part of oil companies' stocks are held under Government direction—the companies do not have the discretion to dispose of such stocks and realise the profits in the paper increase.

North Sea


To ask the Secretary of State for Energy by how much he expects the output of the North sea to grow between 1990 and 1995.

The output of North sea oil and gas taken together could hit an all-time peak in the mid-1990s.

May I thank my hon. Friend for that answer, which illustrates one of the Government's many successes? Will he remind the professional pessimists that it can be only good news for Britain and oil-related employment in Scotland?

I totally agree with my hon. Friend. A record number of discoveries, substantial increased investment and the job opportunities that go with it, and the fact that it is a net exporter of oil, all make good news for Britain.

Does not the Minister recognise that much of the increased activity and the high volume of production is the result of a dedicated work force in the North sea? Therefore, will he ask his officials to brief him a bit more carefully about industrial relations, as his earlier answers showed that he has been signally ill advised? Is not he aware that the companies have said that industrial relations involve primarily contractors and unions and that when they got together and were on the point of signing an agreement to allow the reinstatement of almost all those sacked, the oil companies vetoed it and said that they would not accept it? Is not that secondary action of the worst kind and is not the Minister ashamed that the companies should do that?

I agree with the hon. Gentleman's opening remark. Anyone analysing and assessing North sea successes should recognise that it is due to the outstanding competence of the work force. I disagree with the hon. Gentleman that, be it on safety or any other consideration, it is necessarily better to be unionised than non-unionised, which is not a relevant consideration. What is relevant is that the training and contribution to the development of the UKCS output is based on a high level of quality manpower and womanpower—with an increasing number of women working offshore. I am sorry, but I disagree with the hon. Gentleman and believe that the issue bears no relation to union recognition.

In an earlier reply, the Minister referred to the good news for Britain. What proposals does he have to make good news for the United Kingdom?

The right hon. Gentleman is right to point that out. What is good news for Britain in this case is good news for the United Kingdom as well.

Mining Subsidence


To ask the Secretary of State for Energy when he next expects to meet the chairman of British Coal to discuss compensation for mining subsidence.

My right hon. Friend and I meet the chairman of British Coal regularly to discuss all aspects of the coal industry.

Why do the Government keep kicking this ball around and doing nothing about it? It took a question to the Prime Minister last week to get some movement—she gave me half a promise. I want to know whether the Minister will tell the chairman of British Coal in no uncertain terms that he must pull his finger out. I want a settlement of this business before he retires and before I retire—because we are both retiring.

The fact that a coal subsidence Bill was not mentioned in the Queen's Speech does not rule out such a Bill being introduced this Session. We are determined and ready to bring forward such legislation as soon as parliamentary time can be found. My right hon. Friend the Prime Minister observed to the hon. Gentleman only last week that last year 15 Bills were specifically mentioned in the Queen's Speech but by the end of the Session Parliament had passed 45. We look forward to the co-operation of the hon. Gentleman and of the Opposition in expediting the passage of those Bills in the Queen's Speech so that we shall have more parliamentary time in which to deal with this measure.

I and my colleagues care just as much about the subsidence problems of our constituents as does the hon. Member for Ashfield (Mr. Haynes)—although perhaps with fewer histrionics—but he raises a perfectly valid point. I seek the Minister's reassurance that the delay in presenting a Bill to the House is merely because the Government want to consider exactly what British Coal plans to do over the next couple of months. If its plans are satisfactory, so be it. If not, I trust that a Bill will be brought before the House.

I must make it clear that we are determined and ready to bring forward legislation as soon as parliamentary time can be made available, but I should also make it clear that we are making steady progress in advance of legislation. British Coal is shortly to introduce a scheme administered by the Chartered Institute of Arbitrators. The scheme will provide quicker, cheaper and simpler ways of resolving subsidence disputes. British Coal is determined henceforth to notify householders individually of its mining plans, which should alert householders to the possibility of subsidence damage and enable them to make claims earlier. The time limit for making claims has been clarified, and that clarification has been amplified by a new leaflet from the Department, 20,000 copies of which have been distributed since May. So much is being done to improve arrangements for compensation in advance of the legislation.

Why does not the Minister acknowledge that there is support from the Opposition to get legislation on mining subsidence through, and that there are even Conservative Members who are only too happy to get it through? We shall give him a guarantee to get it through by March with no problem, so why does not he have the guts to give a guarantee that legislation will be introduced even though it was not included in the Queen's Speech?

The hon. Gentleman will have heard my earlier comments; I have no doubt that the business managers will have heard his.

I welcome my hon. Friend's reply to my hon. Friend the Member for Nottingham, South (M r. Brandon-Bravo), and point out that there is still considerable concern in Leicestershire, particularly in my constituency, about subsidence. Roads regularly subside there. So the prospect of a Bill is exciting for my constituents. In the meantime the continuing process of improvements to the existing arrangements that he has outlined.

I am grateful to my hon. Friend. I have no doubt that there is support for a coal subsidence Bill right throughout the House, as evidenced by the comments of the hon. Members for Bolsover (Mr. Skinner) and for Ashfield (Mr. Haynes) and others, for which I am grateful. As I said, we are determined and ready to bring forward that legislation as soon as parliamentary time is made available. In the meantime we shall continue to make steady progress in advance of legislation on improving the situation with regard to coal mining subsidence.

The Government recently published their observations on the recent report on mining subsidence by the Select Committee on Energy. In their observations the Government reject a subsidence advice centre, recommended by the Committee, because they say that they are quite happy with the British Coal scheme that the Minister has just announced. Is the Minister happy about the way in which British Coal has been running its mining subsidence estate offices, especially in the midlands coal area? If those offices continue to be run in the same way, will the Minister introduce an advice centre that is independent of British Coal to which people can go for what they believe to be accurate and independent advice rather than having to seek advice from someone who has been the principal participant in the damage?

We were grateful to the Select Committee on Energy for its report on coal mining subsidence, to which the Government have responded positively. The hon. Gentleman should distinguish between the statutory and non-statutory remedies that might be available. We take issue about whether an advice centre should be part of a statutory framework. I hope that I have shown in my earlier answers that in some areas we think that we can make non-statutory progress as well.

Coal Mining Industry


To ask the Secretary of State for Energy what has been the increase in labour productivity in the coal mining industry sinbce 1983–84.

British Coal is making good progress with productivity, which is up by over 80 per cent. from pre-strike levels. British Coal is again recruiting apprentices. In the week before last, British Coal and its work force achieved a best-ever productivity record of over 5 tonnes per man shift. Continuing productivity gains are essential and I belive that the industry has the technology, the investment and the will to succeed.

Does my right hon. Friend agree that that is an impressive increase in productivity? Can he say how productivity in British coal mining compares with that of our major competitors?

The answer, as I have said, is that British Coal has enormously increased its productivity which is now as high as the productivity of any of our competitors. However, we must bear it in mind that geological differences have a considerable effect, as does opencast mining. Opencast mining is vital for British Coal's success, but, of course, countries with a substantial amount of opencast mining have better productivity than us.

In the light of the magnificent increases in productivity, will the Minister look carefully at the large tonnages of imported coal to make sure that the prices are not subsidised by the Governments of the exporting countries, because such subsidies nullify the tremendous achievements of British coal miners?

I agree that we should be right to be concerned if there were evidence of highly subsidised imports of coal. Of course, as the hon. Gentleman knows, the matter is primarily for the European Commission and, from time to time, British Coal has lodged complaints. So far I have not seen a substantiated case of a large amount of coal from subsidised sources.

Electricity Privatisation


To ask the Secretary of State for Energy when he next expects to meet the chairmen of the 12 area electricity companies to discuss the effects of privatisation on less well-off consumers.

The Government believe that all consumers will benefit from the privatisation of the electricity industry.

The Minister will recall that the Secretary of State has devised a system whereby domestic electricity consumers will face price increases of at least 11 per cent. next year. That increase is based on the October retail prices index plus 1 or 2 per cent. Does he also recall that those who buy electricity shares will be protected from those increases by the award of vouchers that can be used to offset their electricity bills? Will he undertake for this year only to extend the voucher system to all less well-off consumers so that electricity privatisation does not further deepen the divisions in our society?

The price controls on the industry are designed to protect customers against increases over and above the rate of inflation subject to unforeseen circumstances until 31 March 1993. In the past five years, domestic prices have fallen by about 5 per cent. in real terms.

I think that the hon. Gentleman is slightly confused about the electricity vouchers. The incentives that include electricity vouchers are part of the Government's marketing campaign for the share offers. The cost of those incentives is met by the Government, from the proceeds of the sales, and not by the regional electricity companies or the consumer. The price of electricity is set by the companies and will be the same whether or not incentives are offered.

As many less well-off people rely wholly on electricity for their heating, may I ask my hon. Friend what steps have been taken to guarantee the supply of electricity and to discourage disconnections under the new privatised regime?

I am glad to say that disconnections for debt now represent only 0·33 per cent. of all customers. That is the lowest-ever level, and is less than half that in 1976. Indeed, previous protections against disconnections are being not only retained but enhanced, because licences require each regional electricity company to produce a code of practice to help those finding difficulty in paying bills and to draw up procedures to deal with customers who fall into debt.

Electricity Supply Industry


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.

Energy Efficiency


To ask the Secretary of State for Energy if he will make a statement on the rate of improvement in energy efficiency in the United Kingdom and other European countries.

Between 1983 and 1988, the United Kingdom reduced its energy intensity—the ratio of energy consumption to GDP—by an average of 2 per cent. per year. This is more than twice the rate of improvement in the European Community as a whole over the same period.

My hon. Friend's answer is excellent news for British industry in a European context. However., in the wider context, how has the United Kingdom compared with our better international competitors, such as Japan? To what extent has the Government's Energy Efficiency Office contributed to that development? Will he assure the House that the Government's commitment to energy efficiency will continue?

I am glad to say that according to the OECD—its figures, not ours—since 1983 United Kingdom energy intensity has fallen faster than that of most of our competitors, including Japan, which is regarded as the world's most efficient nation. I am also glad to say that the Energy Efficiency Office programme alone has, to date, achieved recurring annual savings now worth more than £500 million a year.

If one destroys large parts of industry, inevitably a great deal is achieved in energy conservation. Some countries have not pursued that option.

Will the Minister explain the latest inconsistency in the Government's position on energy conservation? How can the Prime Minister make some extremely fine remarks at the world climate conference, emphasising the Government's commitment to energy conservation, while in Brussels, the Minister's Department seeks to be obstructive and to oppose sensible and effective energy conservation measures that appear to be required by the very European countries that the hon. Gentleman criticises?

Gross domestic product in the United Kingdom has increased by 25 per cent. in real terms since 1979, while energy consumption has remained almost unchanged. We are producing substantially more national wealth with virtually no additional energy consumption.

On the hon. Gentleman's second point, I imagine that he is relying on a somewhat tendentious article in The Observer yesterday. The facts contained in that article are untrue. We are carrying forward the White Paper commitments on appliance labelling, not retreating from them. We are consulting the industry and consumer organisations about a voluntary scheme. We are arguing the case in Brussels for a voluntary scheme across the Community and I am glad to say that Britain's proposals were well received at last week's meeting. We believe that minimum standards should be the basis of a labelling scheme.

At a recent meeting that I convened in the Department, it was made clear that the Department's proposals for a labelling scheme were similar to those put forward by organisations such as Friends of the Earth. I am glad to tell the hon. Gentleman that we are determined to take forward an effective appliance labelling scheme as soon as possible.

Renewable Energy


To ask the Secretary of State for Energy what recent initiatives he has taken to encourage the development of renewable energy sources.

The Government are establishing an equitable legislative and administrative framework for renewables to compete with other sources of energy. The main focus is the non-fossil fuel obligation under the Electricity Act 1989. Seventy-five renewables projects comprise the initial order laid in September, which will bring to 250 MW the level of renewables-sourced electricity generating capacity in England and Wales.

Will my hon. Friend update the position regarding the Mersey barrage, which has the potential to generate £1 million worth of clean renewable energy every week?

The Government are supporting a two-phase programme of studies that is being carried out by the Mersey Barrage Company. The cost of phases 1 and 2 is £2 million, to which the Department of Energy is contributing 50 per cent. We are giving all the support possible to the Mersey Barrage Company to ensure that its officials have an opportunity to consult officials from a range of Departments to consider effective cost-benefit analysis. I hope that the project will be economically viable and technically feasible.