§ 9. Mr. Ridleyasked the Minister of Power what proportion of the 10 per cent. increase in revenue sought by the electricity supply industry was due to the provision of capacity 9 per cent. in excess of 1965–66 for this year, in accordance with the National Plan, instead of the 2.6 per cent. by which the demand actually rose.
§ Mr. MarshAs I said to my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) on 6th June, it is not possible to quantify all the factors involved.—[Vol. 747, c. 178.]
§ Mr. RidleyIn a case like this where faulty national planning has resulted in a very heavy increase of costs, is the Minister prepared to suggest that the Electricity Board should be compensated for this mistake? Can he say who is responsible? Is it the responsibility of the Electricity Council?
§ Mr. MarshThere are a number of factors involved. The increased costs since the last price increases more than outweigh the amount which could be raised by the increased charges. On overcapacity as a result of planning estimates, any over-capacity which arose in the next two or three years will result primarily not from the National Plan but from the 4 per cent. growth assumption of the National Economic Development Council.
§ 12. Mr. Palmerasked the Minister of Power what representations he has received from the Electricity Council proposing borrowing on the market to meet interest charges on temporarily unremunerative capital investment, in order to avoid or modify the proposed 10 per cent. average increase in electricity tariffs; and what answer he has given.
§ Mr. MarshWhen tariff increases for electricity were under consideration, the Electricity Council proposed, as one of a number of possibilities, that the industry might be permitted to raise funds on the market without Government guarantee. It was not considered appropriate at that time to pursue this suggestion.
§ Mr. PalmerDoes my right hon. Friend not agree that an increase of 2s. in the £ in electricity charges is bound to have the most serious repercussions throughout the whole of the country? Should not proposals to spread the cost over longer periods have received much more serious consideration from the Government?
§ Mr. MarshThere has been a lot of consideration on the point which the hon. Gentleman makes. It is a very real possibility, borrowing on the open market, as he knows. [Interruption.] Very well, there are a lot of difficulties and objections to it. I do not think that anyone would believe that this particular device would be sufficient to raise funds of the order that we are talking about here, of £100 million.
§ Mr. RidsdaleThe Minister has just said that there is a very real possibiilty of borrowing on the open market. Will he stop being—[Interruption.] Yes, he said it. Would he stop being so doctrinaire about this and realise that the price of electricity over a long period will be much cheaper? Will he help the consumer by letting the nationalised industry borrow on the open market?
§ Mr. MarshI am sorry if the hon. Gentleman has got the impression that I said that there was a very real possibility of borrowing on the open market. He must have misunderstood me, or I must have misunderstood myself. This particular device has been discussed many times. It is a very and real interesting point, but I do not think that anyone believes that with this sort of borrowing in this industry one could raise money on this scale.
§ Mr. RidsdaleOn a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.
§ 13. Mr. Palmerasked the Miniser of Power what representations he has received from the Electricity Council asking that the expected rate of return on net capital assets should be equalised in respect of the gas and electricity industries; and what answer he has given.
§ 39. Mr. Rowlandasked the Minister of Power why the electricity industry is 1551 required to show a higher return on capital employed than the gas industry; and if he will take steps to reduce it.
§ Mr. MarshThe Electricity Council has from time to time raised the differing levels of the two industries' financial objectives. The Government's policy of progressive alignment of these objectives was announced in the 1965 White Paper on Fuel Policy (Cmnd. 2798). I am currently discussing with the Gas Council the objective towards which the gas industry should work in 1968–69 and I hope to make a statement on this before very long.
§ Mr. PalmerIs my right hon. Friend aware that this matter has been under discussion for a very long time and that until these rates of return are based on a rational basis one cannot talk about a competitive fuel policy?
§ Mr. MarshThere are a lot of factors involved. It is a question of the investment, the gas industry and North Sea gas. The financial objectives of the gas boards for 1962–63 and 1966–67 were agreed for the industry in 1962, by hon. Gentlemen opposite. They were only continued in 1967–68 because of the present prices and incomes policy.