§ 2. Mr. Warbeyasked the Minister of Power what interest rates on invested capital are assumed in his estimate that the cost of electricity generation by nuclear power will break even with that of generation by conventional means in 1970; and by what year the break-even point would be reached if interest rates were 2½ per cent. and zero, respectively.
§ The Parliamentary Secretary to the Ministry of Power (Mr. J. G. George)The rate of interest assumed is 6 per cent. I would refer the hon. Member to the reply I gave him on 24th April, 1961, from which he will see that, other things being equal, a rate of interest of 2½ per cent. might bring forward the date of parity by about two years. If no interest were paid the date of parity might be advanced by about four years.
§ Mr. WarbeyDoes not that Answer reveal how much this country is losing through the Government making use of old-fashioned capitalist methods of investment accounting? Is it not the case 910 that we could have cheap generation of electricity by nuclear power within five or six years if we were to employ the same financial methods for the construction of power stations as we do for the construction of roads?
§ Mr. GeorgeNo, Sir. If the profitability of the nationalised industries was assessed on easier criteria than for industry generally, too much of the nation's savings might be diverted into these industries. In addition, I cannot accept that high interest rates are necessarily undesirable. They are a reflection of the general pressure of demand, for capital in particuler.
§ Mr. WarbeyIs the hon. Gentleman seriously suggesting that there would not be enormous savings to the nation if we could have the cheap generation of electrical power? What greater saving could we have than that?
§ Mr. GeorgeIf to meet the greatly increasing demand for cheaper electricity greater sums of capital had to be obtained, the nation could be in difficulty.