ENERGY SAVING (Hansard, 9 December 1974)

§ The Secretary of State for Energy (Mr. Eric G. Varley)
With permission, Mr. Speaker, I would like to make a statement on energy saving.
As the House knows, this year our import bill for oil is likely to exceed £3,500 million. By the end of the present decade we should no longer be net importers of energy. We are almost the only major industrial country in the western world which has this prospect. Nevertheless, the need to reduce our import bill, and at the same time our dependence on imported fuels, is acute. The need to save energy has been widely recognised abroad. Conservation programmes have already been announced by some other countries, and we are co-operating in the International Energy Agency and in the Community in considering different conservation measures.
Progress has already been made. It is estimated, for example, that voluntary conservation measures this year have already saved about 2 per cent. of our normal energy consumption—worth about £150 million at current import prices. These savings are a good beginning. But we need to do much more in the years ahead.
28 My right hon. Friend the Chancellor of the Exchequer made it plain in his Budget Statement that the Government intend to ensure that energy prices are brought as quickly as possible to a level which reflects true costs. The best advice we have is that a move to such prices might save at least £50 million—and perhaps a good deal more—on our import bill in a full year.
To rely on the price mechanism alone however is not enough. The Government have, therefore, considered what further steps they can take to reinforce the pressures of price.
My Advisory Council on Energy Conservation has already produced a number of suggestions for the Government to consider, and its work will grow and develop over the months and years ahead. The measures and proposals I announce today, therefore, must be regarded as an interim package, which we intend to extend and reinforce in the future. The measures the Government have decided to adopt are as follows:
First, to introduce a loan scheme which will provide a source of finance for energy saving investment in industry, to ensure that such investments are not held back by cash flow problems. Loans will be at rates of interest comparable with those under the Industry Act. I expect to make available £3 million a year for this purpose. Full details of the scheme will be announced shortly.
Second, the Government will use their powers to ensure that the next round of oil price increases bears more heavily on motor spirit than on other oil products. This move will seek further to discourage imports of motor spirit and crude oil used to produce motor spirit, which currently cost us about £500 million a year. Details will be announced when the Price Commission has finished its work on the present round of company applications for price increases.
Third, the Government have reviewed the programme for reducing the lead content in petrol. The reduction which took effect on 1st November has added more than £10 million a year to our import bill and further stages of the programme could be very much more expensive than this. We do not intend to go back on what has been done so far, but have decided that a decision on 29 further reductions should not be made before a thorough review of all the medical and economic implications of proceeding with the programme has been undertaken.
Fourth, about three million tons of coal equivalent a year is used in Government civil and defence buildings. The Property Services Agency expects to save 6 per cent. of the energy consumption estimated for the current financial year and is planning to spend, over the next few years, up to £5 million a year on improved control equipment, draught proofing and additional insulation. These and other measures aim to achieve eventually savings of around £20 million a year, or more than 20 per cent. of current expenditure in this area. The Ministry of Defence expects, given normal weather, to achieve its target of saving in the current financial year of 10 per cent. of fuel oil and 6 per cent. of other forms of energy.
Fifth, public authorities other than Government—for example local authorities—use some 17 million tons of coal equivalent a year, and a further 20 million tons is estimated to be used in public sector housing. The Government are opening urgent discussions with local authorities and others concerned to see how far and in what ways savings can be achieved in this important area of our life.
Sixth, speed limits. Excessive speed wastes petrol, as well as costing lives. The Government have, therefore, decided to reduce the maximum speed limits on single carriageway roads to 50 m.p.h. and on dual carriageways other than motorways to 60 m.p.h. Speed limits on motorways will remain unchanged. My right hon. Friend the Minister for Transport will make a further statement on this later today.
Seventh, we shall introduce compulsory limits on heating levels in buildings other than living accommodation and a limited range of further exemptions designed to protect the young, the old, the sick, the disabled and certain types of material and equipment. These standards will involve a maximum heating level of 20 degrees Centigrade or 68 degrees Fahrenheit. Substantial savings can also be made in private households, and these will be just as valuable as those in 30 industry and commerce. I appeal for the maximum voluntary savings.
Eighth, the Government recognise the need for improved insulation in private dwellings. My right hon. Friend the Secretary of State for the Environment has today laid an order which will have the effect of approximately doubling the standards of thermal insulation required in new dwellings.
Ninth, in all areas of our national life greater attention needs to be focused on the careful use of energy. My advisory council has suggested that company annual reports should state the expenditure incurred on fuel and the steps taken to save energy. The possibility of including this provision in future legislation is being considered. Meanwhile boards of directors should voluntarily demonstrate their public spirit and their good stewardship by implementing this suggestion. All boards should make clear within their firms their commitment to energy saving and should make someone specifically responsible for achieving it.
Tenth, both management and employee representatives engaged in joint consultation in industry and commerce should see that energy saving is made a regular subject for practical discussion leading to early and effective action. I have written to the CBI and to the Association of British Chambers of Commerce asking them to draw the attention of their members to these points, and to give them their full support. I have written similarly to the TUC on the important contribution which union representatives can make through joint consultations.
Eleventh, I have decided to restrict the use of electricity for external display and advertising purposes during daylight hours. The necessary orders for this and the proposed heating standards will be laid shortly and will come into effect after the New Year holiday period. I do not propose to ban floodlighting at this time. I would, however, ask those concerned to consider urgently in the new year whether the lights so used are really necessary outside the hours when they have maximum impact.
Twelfth and finally, to promote and reinforce action in all these areas, the Government will, over the months ahead, develop a publicity campaign to inform and advise industry and commerce, 31 motorists and households, on how they can help themselves and the nation by using energy more carefully and efficiently. In addition, the heads of nationalised fuel industries have told me that they will co-ordinate energy saving publicity.
It is not possible to estimate with any precision the energy savings which may emerge from this package, not least because many of the effects are cumulative over time. The Government are directly responsible for only a very small part of the nation's use of energy. Within this area some impressive savings are already being made, as my statement has shown. For the rest, while the Government can, and will, give a lead, and will run a major energy saving campaign, success will depend primarily on the efforts of individual businesses and households. There is no doubt that substantial savings are possible. Indeed, if we were to be able to save, within the next few years, say 10 per cent. of our total energy consumption—an amount which currently costs about £700 million a year to import—we would have made a major contribution to our national well-being and national future.

§ Mr. Patrick Jenkin
The House will be grateful to the Secretary of State for his very full statement. Is he aware that he will have the full support of the Opposition for all sensible measures in the national interest to save energy in both the long and the short term, to save oil imports and to protect our slender coal resources? I have only one other comment. The country will want to know why all these measures were not announced months ago.

§ Mr. Varley
The right hon. Gentleman knows that work has been going ahead and has already been done on this package. For example, voluntary savings have already saved £150 million. These are complex measures and this is a complex problem. The only way to bring about a dramatic and immediate reduction in energy consumption is by rationing, rota cuts of electricity supply and strict allocation schemes for fuel— in short, misery. If we were to do that, the impact would do great harm to industry, industrial activity and exports.

§ Mr. Palmer
I have two questions to put to my right hon. Friend. First, is 32 not the time scale rather too long? Should we not be aiming at achieving, say, a 10 per cent. to 15 per cent. saving in about three years, which is the estimate that many experts make for an advanced industrial country? Secondly, will the reports of the Advisory Council on Energy Conservation be published?

§ Mr. Varley
On the last point, I shall see what I can do to make available as much information as possible on the work coming from the advisory council. On the first point, I want to see savings as quickly as possible, provided that they do not inflict unnecessary misery and cause great harm to our industrial activity and export potential. If we can achieve a 15 per cent. saving in three years, nobody will be more delighted than me.

§ Mr. Grimond
When the Government put further taxes on petrol, will they bear in mind the needs of rural areas, which are far greater than continuing flood lighting? Secondly, is the right hon. Gentleman satisfied with the proposed reductions by public authorities, on which he has only just begun to talk to local authorities, which are to be only 6 per cent. to 10 per cent. in Government offices, and so forth? Many people feel that all public buildings, including this one, are overheated. Thirdly, as there will obviously be a continuing shortage, is the right hon. Gentleman looking at the future size of the aircraft and motor industries, which no doubt will have to be reduced in the long run?

§ Mr. Varley
We have very much in mind the problems of the rural areas. We shall look at whatever measures are available to see whether we can cushion people who are affected. I agree with the right hon. Gentleman that public buildings are overheated. I do not know about the Palace of Westminster. I do not seem to spend as much time here as the right hon. Gentleman and others, but on occasion it seems too hot.

§ Mr. Urwin
What consultations and degree of co-operation have there been between my right hon. Friend, local authorities and Ministers in other Departments with a view to increasing the number of district heating schemes and trying to conserve energy at an even faster rate?

§ Mr. Varley
Studies have been undertaken to see whether waste heat from 33 power stations can be used in domestic circumstances. I hope in due course to report on the results of that research. Co-operation between myself and my right hon. Friends is, and has been, very close in working through the measures that I have announced today.

§ Mr. Wood
I strongly support the plea made by the right hon. Member for Orkney and Shetland (Mr. Grimond). Does the right hon. Gentleman agree that if the temperature in this place were lowered by three or four degrees we should all feel very much better for it?

§ Mr. Varley
The heating in this House is not my responsibility. However, I am sure that the authorities of the House will have noted what the right hon. Gentleman said.

§ Mr. Conlan
Referring to the proposals for assisting industry to conserve fuel, may I ask whether my right hon. Friend is aware that a large amount of fuel oil is used for domestic central heating systems? Will he consider making suitable loans or grants available to enable people to convert their systems?

§ Mr. Varley
I have already indicated that this is an interim statement. I hope in due course to bring further measures before the House. The point made by my hon. Friend will be kept in mind. I am advised that the cost of providing loans for thermal insulation in domestic circumstances is tremendously expensive. Therefore, we think that it will be better to direct our limited resources to helping industry first, because the real savings will come from industry.

§ Mr. Emery
Does the right hon. Gentleman realise that, although his statement contains 12 suggestions, the package is a very small squeak indeed? Does he consider that the work on home insulation that was available to him when he took office ought by now to have been carried through to deal with existing, not just new, houses?

§ Mr. Varley
I have not seen that work. Perhaps I ought to go and look for it.

§ Mr. Emery
The right hon. Gentleman should.

§ Mr. Varley
I do not want to make cheap cracks as a result of these measures, 34 because the situation is extremely serious. However, as the hon. Gentleman knows, very little work was done in either the Department of Energy or the Department of Trade and Industry on energy conservation before we took over in March.

§ Mr. Emery
That is not true.

§ Mr. Douglas-Mann
Will my right hon. Friend note that, in view of the scale of our economic problems, many people will feel that the proposals are inadequate? Will he assure the House that his Department recognises that this is not just a short-term problem but is the first ripple of a very long-term problem? Are studies being undertaken into alternatives, such as solar and tidal energy, to help meet the problem?

§ Mr. Varley
One of my first actions when I went into the Department of Energy in March was to set up an energy support technology unit at Harwell to look at other forms of energy. I emphasise again that the only dramatic and immediate way to reduce energy consumption is by short-time working, rota cuts and strict rationing and allocation schemes. We are not so proud as to turn down any practicable suggestions that might be made. If my hon. Friend has any practical suggestions to put to us about energy conservation we shall listen to him.

§ Mr. John H. Osborn
Will the Secretary of State arrange not to make statements in December and January but to make long-term statements so that we can conserve energy during the summer when it causes less discomfort? Is the right hon. Gentleman satisfied that we are tackling this problem as energetically as the Americans who have, for example, Project Independence? The Americans have set up an Energy Research and Development Agency. Is the right hon. Gentleman satisfied that British as well as European dynamism is sufficient?

§ Mr. Varley
I am not sure whether the hon. Gentleman is suggesting that I have made my statement too early. If so, it conflicts with what has been suggested by his right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). We shall bring forward measures as we feel necessary after appropriate 35 research into all the implications has been undertaken.
We have a unit in the Department monitoring what other countries are doing. Of course what is done in one country differs from what is done in another. The hon. Gentleman suggested that a great deal was being done in the United States. We are watching carefully what the Americans are doing, and if their measures have an application to Britain we shall implement them.

§ Mr. Kinnock
My right hon. Friend deserves the congratulations of the whole House on his statement and on embarking on this kind of policy. I acknowledge that it is an interim statement and is concerned exclusively with conservation. However, does he not acknowledge the need, in order to prevent large imports of fuel, to have a new policy aimed at the full-scale exploitation of our own mineral energy resources so that we may have a firm assurance about the future of the country's coalfields?

§ Mr. Varley
I agree with my hon. Friend that we want to work to what I have described elsewhere as an integrated energy policy for Britain. I think that the investment programme for the coal industry is worth while and will pay dividends. I want the coal industry not just to produce 120 million tons a year— that is only a jumping-off point—but as quickly as possible to get to about 150 million tons a year.

§ Sir D. Walker-Smith
Does the right hon. Gentleman possess statutory and legal powers for all the 12 steps, other than those that are purely exhortatory, or do the further steps suggested by the Advisory Council on Energy Conservation require fresh powers? Can he also say from where the figure of 68°F comes? Much medical opinion would probably think it too high for health.

§ Mr. Varley
The temperature will vary from place to place, but I hope that people do not exceed 68°F. I very much agree with the right hon. and learned Gentleman that in most circumstances it is possible for people to be comfortably warm with temperatures lower than 68°F. The necessary regulations will be laid under the Fuel and Electricity Control 36 Act, a measure introduced by the last Conservative administration.

§ Mr. Faulds
In the pattern of these measures, would it not be logical for my right hon. Friend to require that wherever central heating has been installed, wall and roofing thermal insulation should be mandatory, and that wherever central heating is to be installed in future, before the provision is made wall and roofing insulation should be insisted on by legislation?

§ Mr. Varley
I am not sure that we can compel people in domestic circumstances in the way suggested by my hon. Friend, but in the advertising and publicity campaigns on which we are embarking we shall give as much advice as possible. My hon. Friend is right, and it makes sense for people to insulate their homes much more than they do. In addition, they can save money by doing so.

§ Mr. Gordon Wilson
On behalf of the Scottish National Party, I should like to congratulate the Minister on his initiative in taking these first steps in energy conservation, particularly in the energyshort world in which we now live. However, will he consider the level of finance required for improvements in energy saving in industry? Is it sufficient? Secondly, will he consider the effect of the valuation system on domestic improvements, such as double glazing or central heating, which may give rise to an increase in the valuation of a house, for it therefore acts as a disincentive to the steps necessary to save energy?

§ Mr. Varley
The last matter is a subject for my right hon. Friends the Secretary of State for the Environment and the Secretary of State for Scotland. The figure of £3 million for loans for industry is a start. If more is required, the Government will have to consider the matter.

§ Mr. Tinn
I should like to support what was said by my hon. Friend the Member for Warley, East (Mr. Faulds) about the thermal insulation of walls. Is my right hon. Friend aware that one method is to inject polyurethane foam into cavity walls, and that this is already being done by many people at their own expense, thus saving energy? However, in some areas the work is being hindered 37 and delayed by the requirement of local authorities under existing building regulations that separate applications must be made in each case. Will my right hon. Friend consider supporting the representations that I am making to his colleagues in the Department of the Environment for a simplification of the procedure?

§ Mr. Varley
My right hon. Friend will have taken note of what my hon. Friend says. We hope to cover the matters that he has mentioned in the advice that we shall be able to give to householders and others in the months and years ahead.

§ Mr. Powell
Is the right hon. Gentleman aware that many of the items in the package will result in more bureaucracy than economy and that the only way of securing a pervasive and genuine economy is for people to have to face the consequences of their own actions and decisions in terms of price?

§ Mr. Varley
I do not think that we can do it all by price alone. As I said in my statement, we intend to carry through the proposals that my right hon. Friend the Chancellor of the Exchequer announced in his Budget. There will be more realistic energy pricing. The prospective deficits for the nationalised fuel industries for 1974–75 are quite frightening and something will have to be done about them, but, in addition, we shall have to see how far we can protect poor households.

§ Mr. Dalyell
How long should it take to establish the medical and environmental implications of the reductions of the lead content of petrol?

§ Mr. Varley
I do not know. We have resisted the temptation to reverse the proposals on which we embarked on 1st November and which were costly, but to move to the next stage would cost about £50 million in additional oil imports. Medical research is to go ahead, and in due course the conclusions will be reported.

§ Sir J. Rodgers
I welcome the doubling of the statutory insulation standards for domestic houses. However, does not the right hon. Gentleman agree that even so our insulation standards will be among the lowest in 38 Europe? Is there a possibility of giving tax rebates to those householders who undertake insulation themselves? Would not that take care of the points made by the hon. Member for Warley, East (Mr. Faulds)? Should not some encouragement be given to householders who undertake this work themselves?

§ Mr. Varley
Insulation can save a great deal of money, but I am sure that the hon. Member appreciates that taxes and tax allowances are matters not for me but for my right hon. Friend the Chancellor of the Exchequer, to whose attention I shall draw the hon. Gentleman's comments.