ENERGY CONSERVATION

HC Deb 05 December 1974 vol 882 cc2103-14

11.39 p.m.

Mr. Peter Hordern (Horsham and Crawley)

I am glad to have the opportunity to debate energy conservation. I hope that the Minister will set out the Government's proposals on energy conservation and will disregard altogether the rumours that have been put about in the Press that their pronouncement on some of the proposals may be delayed until next week.

There can be no doubt about the importance or the urgency of a comprehensive policy to conserve energy. After all, the Government have been in office for 10 months, and that is surely more than enough time to present a set of proposals to deal with so vital a problem, which is part of our most intractable problem today—the oil crisis, which arose exactly a year ago. The fact that we are now running a balance of payments deficit of about £3,500 million a year, of which the oil part represents about £2,000 million, is bad enough, but what makes the position so much worse is that if we and the other consumer countries continue to use as much energy as we did a year ago we shall be completely in the hands of the producer countries.

I understand that the non-Communist world now consumes 47 million barrels of oil a day, of which the OPEC countries supply 32 million barrels. If the consumer countries together were able to achieve a reduction of about 20 per cent. in their demand for oil it could mean a reduction of 30 per cent. from the OPEC countries and the end of their all-powerful position. We shall not easily see a reduction of 20 per cent., but I think we could see a reduction of about 10 per cent., which would make a substantial difference.

I understand that industry in West Germany is using 18 per cent. less fuel than a year ago and that Holland's consumption of fuel has fallen by as much as 32 per cent. The French are making the most strenuous efforts to reduce consumption, and the United States aims to be self-supporting in fuel within a measure-able period. Dr. Kissinger's proposal is for a 10 per cent. reduction in oil imports by the end of next year.

I think that the Government accept this; indeed, I think that one Minister has quantified what the savings would be if we were to achieve a 10 per cent. reduction. He estimates that it would be about £600 million a year, which is equal to the whole of our annual investment in electricity.

What are the Government themselves doing to achieve this reduction? So far as one can tell, the only measures that have been taken are to allow industrial companies completely to write off against corporation tax expenditure on insulating factories. That is very helpful as far as it goes, but why is there no similar provision for industrial and commercial companies in respect of office accommodation? How can it be less desirable to carry out proper insulation for offices than for factories? There can surely be no division of view about this. If it is of absolute importance to conserve energy by insulation, there can be no artificial division or distinction between offices and factories. I hope that the Minister in replying will not tell us about the difficulties that the Inland Revenue may have in classification, because those difficulties are there to be overcome.

How else do the Government propose to conserve energy? I think that the proposal to allow the nationalised industries to charge more realistic prices is certainly a move in the right direction. I understand that in West Germany the increase in the cost of oil has been passed straight on to the consumer and that this has already had an appreciable effect on consumption.

I do not think it would be possible for us to move at once to this proposition because the nationalised industries have been subsidised for so long, but I think that we can move towards it by sensible and rational means. It should be possible for every consumer, industrial, commercial and domestic, to use up to 90 per cent. of his previous intake of fuel a year ago at the same rate, but to be charged an increasing surcharge on consumption above that level.

What is necessary now is to bring home to every consumer the absolute necessity to conserve fuel. What we should move away from is the position in which large discounts are given by nationalised industries for increasing quantities of fuel consumed. The opposite should be the case. What else are the Government doing to encourage us to use less fuel? They have set up a committee. That is a reflex action of every Government to any difficult problem. Sir William Hawthorne's Committee was set up in the summer but did not meet until October. I understand that the Government are about to announce some proposals. There could certainly be no more fitting time than in this debate, and I am sure that the Minister has come armed with all these proposals, which will be well reported and well received.

The latest information about consumption is not at all encouraging. Actual energy consumption was 1 per cent. higher this September than it was in September a year ago, although I understand that the fact that this September was much colder than a year ago makes a substantial difference. But petrol consumption is only 2 per cent. down on a year ago, and deliveries of heating oil are well up to the levels of last September. This situation cannot continue.

We are entitled to know what the Government propose. Oil prices rose dramatically a year ago. The Government have had responsibility for 10 months and they have done virtually nothing. Let me contrast their inaction with what the French did in September. First, they placed a limit of 51 million francs on the French oil imports in 1975. This represents the tonnage imported in 1973, reduced by 10 per cent., calculated at present oil prices. It means that if prices rise, as they may well do in a few months, French imports next year will have physically to be reduced.

At the same time the French announced a massive increase in their nuclear power programme and their run-down of the coal industry was first halted and then reversed. To save energy the French have limited heating in offices, shops and homes to 68 degrees Fahrenheit. I do not know how effective this measure will be, but at the least every Frenchman is physically aware of the acute energy position.

The same cannot be said of our people, nor I suspect of Government offices, nor even of our own homes. I do not know about you, Mr. Deputy Speaker, but walking towards the Tea Room for a coffee I find that it is most comfortable and I am not inconvenienced by the temperature of this place. It would cause us no great difficulty if we were somewhat more inconvenienced and the temperature were reduced a little.

The great majority of people can scarcely be aware that there is an energy crisis. They see shops and offices ablaze with light and advertising signs flickering every night. How can they be expected to take the situation seriously? The fault is entirely that of the Government, and they must take action soon if we are to achieve worthwhile savings of energy.

The steps that need to be taken should be constructive, rational and effective if they are to gain the support of the country, without which they will not succeed. Perhaps I can suggest two areas for action which would have an effect soon. The first concerns transport. While it consumes only 14 per cent. of our total energy, it nevertheless consumes 25 per cent of our oil. The Central Policy Review Staff said that if our motorway speed limit were reduced from 70 miles an hour to 50 miles an hour there would be a saving in petrol of about 25 per cent. The Central Policy Review Staff called this a Draconian measure. If the limit were reduced to 60 miles an hour everywhere else, or even 50 miles an hour on some minor roads, this too would result in a great saving. This is something that the Government should consider.

Would not it be worth while also to consider abolishing altogether the road tax licence, which must be administratively very expensive, I understand that it would save about £12 million if the staff and the administration on the road tax licence were abolished altogether. I do not know what would be the compensating effect of the increase in the price of petrol which would have to be incurred instead. Perhaps the Minister can supply some information for us. I do not know what the effect would be, but this is something which I hope the Minister will be able to tell us.

In 1857 a Committee of this House produced a report entitled "Warming and Ventilation of Dwellings", which recommended the double-glazing of windows. We do not seem to have made very much progress since the House reported on this so many years ago. We use about 34 per cent. of our total energy in our homes, and a considerable part escapes at once through roofs, walls and windows.

I believe that we have the worst record in insulation of our homes of any country in Europe, with the possible exception of Spain, which has a much more enviable climate, anyway. Clearly, the scope for saving energy lies far more in insulating our homes than in any other way.

Apart from the waste of energy in resource terms, I understand that if all buildings constructed during the course of one year had been built and insulated to continental standards, the extra costs of construction would have added another £8 million but the fuels bills would have been reduced, on an annual basis, by some £2 million every year. As we use 34 per cent. of all our energy in our homes, the scope for saving here must be very considerable.

There is a further consideration. So much of our national stock of houses was built before the war, a great deal of it in the last century. It is in these homes that there is such inadequate insulation. The cost of repairs and maintenance, falling as it does on local councils, must be enormous, and it must make sense, therefore, to encourage councils and private landlords and householders to instal proper and effective insulation.

In an admirable speech on 19th November, my hon. Friend the Member for Sevenoaks (Sir J. Rodgers) drew attention to the deplorable standards of insulation in our houses. He said that we were wasting energy at the rate of £2,000 million a year and that we were building houses, even now, to the worst standard of thermal insulation of any country in Western Europe.

We cannot accept that the improvement grants under the Housing Act 1974 are adequate to the challenge that we have to meet. Grants specifically for insulation are available in both France and Western Germany, and this is one method which must be considered here. After so many years of inadequate building standards, it is high time that we put our house in order, quite literally, instead of allowing scarce energy to be squandered. It calls for a major revision of building standards by the Department of the Environment and by architects throughout the country.

So much else also needs to be done. The waste of power from power stations, from steel works and from transport is simply alarming. They all operate as if we were in a time of cheap and abundant energy. All these processes call for the most urgent attention from our scientific advisers.

Above all, the country needs an effective lead from the Government and firm proposals to deal with this pressing problem. Let these proposals come soon, before another week goes by.

11.55 p.m.

The Under-Secretary of State for Energy (Mr. John Smith)

The hon. Member for Horsham and Crawley (Mr. Hordern) has raised a most important topic An accident of events means that I am unable to deal fully with his constructive speech. Rumours which are often not well-founded happen on this occasion to be well-founded, and on Monday my right hon. Friend the Secretary of State for Energy will be making a full statement on the Government's plans for the conservation of energy. I am sure the hon. Gentleman will recognise that that places certain inhibitions upon the frankness with which I shall be able to deal with his suggestions. The debate should, perhaps, be regarded as the hors d'oeuvre to the main meal, which will take place, I hope, on Monday and thereafter.

The hon. Gentleman is right to draw to the attention of the House and the country the urgent need for the nation to adopt and sustain measures for the conservation of energy. The theme which my right hon. Friend will adopt when he makes his statement is that there is little point in indulging in a short-term campaign for the conservation of energy because the country needs a long-term campaign, and our measures must be geared to that end.

The hon. Gentleman was right to refer to the need for the insulation of dwellings. He quoted an example of how an initial cost which is fairly high is recouped over a period of years by the annual saving in energy. That indicates that the approach we adopt must be a long-term one, because the energy crisis will not disappear in the short term. It is a feature that we shall have to live with. We shall have to accustom our style of life to the energy resources available.

The constructive suggestions made by the hon. Gentleman on policies which the Government might adopt will be extremely carefully considered by my right hon. Friend and other Government Departments. The responsibility for energy conservation does not rest solely with the Department of Energy. It involves every Department of government and every individual in the country. The public at large recognise the difficulties which the country faces in its energy resources, and understand the urgent need for a comprehensive set of proposals such as those which my right hon. Friend will announce on Monday.

When the Government came into office last March they were well aware of the great importance which the efficient use of fuel would have in this new era of expensive energy. They also realised that mounting a campaign on energy conservation could not be done overnight. It needs careful planning and preparation because it requires to be both realistic and effective. It cannot be just a nine days' wonder—it has to be sustained over a longer period of time. Our aim, therefore, is to mount a campaign which will build up steadily over the months, taking account of the energy situation as it develops and not trying to do everything at once.

I will gently take issue with the hon. Gentleman on one matter. It is not entirely fair to the Government to say that nothing has been done until now. He referred to the setting up of the Advisory Council on the Conservation of Energy and suggested that that was the reflex attitude of Government to any problem. It would not be unfair for me to point out that the reflex attitude of the House of Commons to any committee that is appointed is to think that it is set up to take minutes and waste years, as my right hon. Friend the Prime Minister once observed. That is not a fair assessment of the advisory council. It is a high-powered council. We do not expect it to make recommendations in the immediate future, although it has already produced a number of suggestions for consideration by my right hon. Friend the Secretary of State. We envisage that its work will grow and develop over the months ahead. There cannot be much serious dispute about the necessity for a high-powered advisory council to consider and evaluate, outwith the mainstream of activity of a Government Department, the various suggestions that will be put forward for the conservation of energy.

The hon. Gentleman referred to the increases in prices which were the result of the recent Budget Statement. One must take account of them. Value added tax on petrol has been increased to 25 per cent. In addition, the initial tax allowance for expenditure on the insulation of industrial buildings has been raised to 100 per cent.

Mr. Hordern

Will the hon. Gentleman consider the point I raised about the allowance made in respect of factories but not of offices for relief against corporation tax?

Mr. Smith

I think that is a matter for my right hon. Friend the Chancellor of the Exchequer, but I undertake to draw it to his attention and ask him to consider it. I am afraid that I cannot do more than that at the moment. It would be well beyond my responsibility to commit the Treasury, but I agree that the point merits investigation.

As I was saying, hire-purchase controls on space heating installations were relaxed to a 10 per cent. minimum down payment with repayment over a maximum of five years. It is hoped that this measure will contribute to the long-term improvement in efficiency of heating in the home, to which the hon. Gentleman drew attention.

There has been a series of Government leaflets and pamphlets, issued by the Department of the Environment, which gave advice to domestic consumers on ways of achieving the more efficient use of their fuels. There is to be a sustained Government campaign to draw the attention of individuals to ways in which they can help both themselves and the nation by economy in the use of fuel.

Amendments to the existing building regulations which will broadly double present thermal insulation requirements for new domestic dwellings are in hand. In addition, the Health and Safety at Work Act, which received the Royal Assent in July, extends the purpose for which building regulations can be made to include the conservation of energy in buildings of all kinds. There are also regulations which will normally require homes to meet the current standards of insulation before qualifying for improvement grants.

Of course, we recognise that the Government must set an example. It is reasonable to ask what has been done about energy efficiency in central Government when the annual bill for heating and lighting in Government establishments alone is about £90 million a year. Action to conserve energy is being taken by enforcing authorised standards and by a programme of installation of better control equipment to eliminate heating during unoccupied periods. It is estimated that these measures will result in a saving of up to 6 per cent. in the financial year 1974–75 and of up to 7 per cent. in 1975–76.

Of course, while it is an obligation on the Government to set a good example it is also an obligation on everyone else. There is a tendency for the public to write to the Press and Government Departments about lights blazing in Departments throughout the night. There is a slightly lesser tendency for the public to write to private companies about lights blazing in their offices throughout the night. If fairness to be observed, both the public and the Government must take action on both fronts. If the Government set the example. I hope that it will be followed by private individuals, local authorities and private companies.

Another area which is of significance in the context of energy conservation is transport. The transport sector accounts for about 16 per cent. of our total energy consumption and almost a quarter of our total demand for oil. The scope for saving is considerable, because it is almost exclusively dependent on oil, our most scarce resource.

It is possible to envisage a variety of measures which might reduce the total demand for energy in this area, varying from restraint on parking in the centre of large cities to changes in vehicle engineering technology, but any changes need to be viewed against the wider background of resource costs, including their possible impact on the environment.

There are some quite simple steps which can be taken voluntarily by individuals. Amongst them, I would include ensuring that cars are properly maintained and driven at speeds which are economical in terms of fuel consumption. A great deal has occurred in the last few months to bring the public to a much greater appreciation of the savings which can be made, in terms not only of energy consumption but of the reduction of accidents on the roads. Considerable savings can be made by actions by private individuals in addition to the activities undertaken by the Government.

The hon. Gentleman rightly drew attention to the serious problem facing the nation because of the increase in the price of oil. We shall be paying £2,500 million more this year for 5 per cent. less oil than we imported last year. This represents money and real resources which could be better employed elsewhere.

Therefore, we all have a vital interest in diminishing this burden as quickly as possible.

The Government's approach is to adopt two main lines of attack—first, to develop our substantial indigenous resources as quickly as possible, which is the prime responsibility of the Department of Energy, and, secondly, to promote energy conservation and the more efficient use of fuel, the subject with which we are concerned tonight. These two aspects of the policy must be carried out simultaneously.

On the first factor, the public must understand that although we have discovered great new wealth in the North Sea it will not be immediately available to solve the problems now facing us. The Government have adopted an energetic policy towards the exploitation of the resources of gas and oil which lie beneath the North Sea, but it will be some years before we reach self-sufficiency of our energy resources from that area. The hon. Gentlemen no doubt knows that it will be the early 1980s before we reach that target.

As a nation, we are fortunate in having these new-found resources. Our principal task must be to make sure that in the years before we become self-sufficient we waste as little of our precious fuel resources as possible.

I do not think that I can go much further than I have gone in response to the hon. Gentleman's Adjournment debate. I think that he was wise to raise this topic. Indeed, he has approached this matter in a very constructive way. I hope that the fuller debates that the House will have on this topic will be conducted in the same spirit as this short debate has been carried on.

I do not believe that energy conservation is a topic on which we need have unnecessary divisions. The nation as a whole—both Government and people acting together—must achieve the highest possible rate of energy conservation. I am sure that this tone will be adopted by the House when it consider more fully the wide-ranging measures that my right hon. Friend will mention on Monday.

Returning to my opening remarks, if, indeed, this is an hors d'oeuvre to the main meal, we could not have had a more constructive hors d'oeuvre. I hope that we shall have an even more constructive main meal.

Question put and agreed to.

Adjourned accordingly at eight minutes past Twelve o'clock.