§ 6.54 p.m.
§ The Minister of State, Department of Energy (Mr. John Smith)
I beg to move,That this House takes note of Commission Documents Nos. R/210/76 and R/253/76 and of the Government's view that Culham is the best site for the Joint European Torus project.
§ Mr. Speaker
I must inform the House that I have selected the amendment in the name of the hon. Member for Oswestry (Mr. Biffen).
§ Mr. Smith
It is appropriate that we should have a debate this evening about the EEC energy policy as it is approximately a year since the House last debated the EEC Commission documents on Community energy policy. As a meeting of the Council of Energy Ministers is to be held on 25th March, it is particularly appropriate that the House has an opportunity to comment on the proposals in the document. I assure the House that the views expressed by hon. Members will be listened to with care and taken into account when the Government express their views at the Council of Energy Ministers.
I thank the Select Committee on European Secondary Legislation for its continued interest in the subject, which has prompted it to draw the attention of the House to the latest Commission document on Community energy policy. There has been a great deal of discussion in Brussels about a possible common policy but little has been done to come to a decision as yet. However, Community policy in such a complex area cannot be evolved in weeks or months. The latest Commission proposals appear to offer a basis for further progress.
By way of introduction, I should like to say something about the Government's general approach to the development of a common energy policy. We believe that we have a twofold task—first, to work constructively within the Community for the development of policies helpful to the Community as a whole and 1198 to the United Kingdom, and, secondly, to safeguard, as all countries do, our national interest so far as possible within that framework. In contributing to the formulation of the common energy policy, the United Kingdom has consistently drawn attention to the need for a realistic approach, in particular to the need for attention to be paid to the different energy positions and policies of member States in seeking common ground as the basis for joint policies.
At the Energy Council on 26th June last year, my right hon. Friend the Secretary of State proposed that better headway might be made in developing a Community energy policy if each member State prepared a paper on its national energy position, from which could be compiled a comprehensive and realistic assessment of the energy needs of the Community as a whole. This approach was taken up by other member States and accepted by the Commission. Part of the results are to be seen in one of the documents, R/210/76, namely, in COM(76) 9. The results of the exercise are far from complete, and further useful data will become available later on the basis of which it should be possible to make further progress.
A number of factors have influenced the development of the EEC energy policy recently. First, during the past year or so much progress has been made in the International Energy Agency, to which eight of the EEC members belong. Common measures include, for example, the scheme for sharing oil and restraining demand in an emergency, the programme for long-term co-operation, developing alternative sources of energy, and a minimum safeguard price for oil. In some cases EEC action is required to implement IEA decisions, but more generally progress in the IEA has acted as a catalyst to progress in the EEC.
Secondly, there is the impetus given to the development of EEC policy by decisions taken in the European Council in Rome last December. Those decisions are relevant because the Commission was asked to put forward proposals as soon as possible for appropriate mechanisms to protect existing supplies, develop alternative sources of energy and encourage conservation of energy.
Thirdly, member countries and the Commission have worked well together 1199 in the Conference on International Economic Co-operation. This work continues in the commissions established at the conference.
Perhaps I should turn to the agenda for the next Council meeting. It has not been finally settled, but it is expected to be built around Document R/210/76, which is in three parts. The first, COM (76) 9, is a Commission report on progress made in the development of Community energy policy objectives for 1985. This is intended mainly as a discussion paper for Ministers to review the Community objectives which the Council set just over a year ago. The report shows that the most ambitious targets set by the Council in 1974, to reduce import dependence to 40 per cent., is not now attainable, because the forecasts proposed by the Commission were unrealistic. I doubt whether member States ever believed that the target was attainable.
However, the Community is on course towards reducing its import dependence to 50 per cent., if conservation efforts succeed. This conclusion has been reached on the basis of the national forecasts deriving from the submission of papers suggested by my right hon. Friend last June. The Commission has posed a number of detailed questions which it hopes the Council will be able to answer. We expect that discussion on the document will be broad, aimed at deciding whether the objectives set in December 1974 are in need of revision. It is our view that we should try to introduce a note of realism into the discussion by suggesting that some of the more optimistic targets originally set should be amended in the light of events.
The second paper, COM (76) 10, is a report on the Community action programme for the rational use of energy, together with draft recommendations. The Government attach great importance to energy conservation which in the Department for Energy is the responsibility of my noble Friend, Lord Lovell-Davis. We are considering our response to recommendations made by the Select Committee on Science and Technology of this House, the Advisory Council on Energy Conservation, and the International Energy Agency, as well as the European Community.
1200 EEC activities have concentrated on the proposal for setting collective saving targets and for the rational use of energy. The target is designed to permit a reduction of energy consumption in 1985 to 15 per cent. below the estimates for that year made in 1973. Among the recommendations are proposals covering thermal insulation, heating systems in existing buildings, better driving habits, urban transport and electrical household appliances.
These recommendations are the product of various working groups on which British experts have played a part, and they are generally acceptable to us, bearing in mind that they are in the form of recommendations rather than directives. We cannot say at present whether we shall be in a position to implement these recommendations, but naturally we shall look at them carefully and sympathetically according to their applicability to British circumstances.
§ Mr. Peter Rost (Derbyshire, South-East)
The hon. Gentleman appears to have omitted from the list one of the main recommendations—the emphasis on more combined heat and electricity production. Would he care to comment on that?
§ Mr. Smith
My hon. Friend will answer hon. Members' observations in detail at the end of the debate. The documents are fairly bulky and it would take some time to go through them, but I have tried to summarise them and I referred to heating systems in existing buildings, which covers the hon. Member's comment. If it does not, if he makes a contribution during the debate, we will of course answer specifically any point he may make.
The third document, COM (76) 20, is the most important and recommends action in a number of fields of energy policy on many of which the Government hope to see some progress made. The core of the proposals is a draft resolution, Annexe 1, calling for a number of actions to be taken. I do not think that it would be helpful to go into the matter in great detail, but it might help if I made specific reference to some of the major recommendations.
First, there is the recognition of a need for Community financing of coal stocks. At this stage Ministers are being asked to agree only that proposals should be 1201 presented, and until details are settled we cannot say how much the United Kingdom would benefit. But we are much in favour of coal-stocking aid because of the short-term difficulties of the coal industry and the need to maintain it for the future when coal will play an absolutely crucial role. Any policy for development of coal resources in the United Kingdom and the EEC as a whole must take into account the fact that coal production cannot be turned on and off like a tap according to the fluctuations of energy demand.
Secondly, there is the acknowledgement of a need to extend existing Community relations for coking coal and coke. The present support plan runs out in 1978 and the proposals made would allow member States to subsidise production now to maintain capacity for the future. They would also provide a subsidy for sales to encourage purchases of Community coking coal against third country supplies. The subsidies are financed jointly by the Commission, member Governments and by the Community's iron and steel industry. It is also suggested that this system be looked at again in the light of experience. There is no benefit for the United Kingdom in this as our coking coal trade is almost 100 per cent. internal and we cannot obtain a subsidy for our own benefit. None the less, we are prepared to participate in the proposed re-examination.
The third proposal relates to the minimum support price of $7 per barrel f.o.b. for imported oil. It is a fact of life that the cost of producing oil in the North Sea and some other parts of the International Energy Agency area is higher than in traditional oil-producing countries. We need to protect it against a fall in price. We believe that $7 a barrel f.o.b. would be sufficient to cover the major North Sea fields recently under development, but the minimum selling price also protects other indigenous energy resources for which the production costs are higher, thus helping our indigenous gas and coal also.
The figure of $7 a barrel plus freight and insurance charges would cover three-quarters of our existing coal pits and new coal developments. But this production can be achieved only if the MSP is maintained by an external levy which is in the EEC area, that is, a Community 1202 measure. Hence, we need a common external levy under Article 113 of the EEC Treaty, as provided for in the draft resolution, to protect the development of energy resources, of which the United Kingdom possesses a large share.
§ Mr. T. H. H. Skeet (Bedford)
Has the right hon. Gentleman the sanction of the French to this? I agree that in the International Agency there is general agreement, but have the French specifically agreed to this proposal?
§ Mr. Frank Hooley (Sheffield, Heeley)
Are the Government saying this external levy will be a levy for the benefit of the home Exchequer, or will it go direct to the Commission?
§ Mr. J. Enoch Powell (Down, South)
Would it be a correct alternative to express the object of the levy as to ensure that we pay more for our oil than we otherwise should?
§ Mr. Smith
The purpose of the levy is to protect investment in our existing North Sea oil and other energy resources. If there were a fall in world price below the cost of production of North Sea oil and other energy resources, that would have a very harmful effect on the development of those resources, which would affect not only the United Kingdom, but other countries which we might supply with energy.
§ Mr. John Biffen (Oswestry)
I sympathise with the Minister of State about the difficulty of finding the actual document at any one moment, but it says in respect of Annexe 1 of the draft resolution that it would enable the Community to obtain its own resources from the application of the system. So is not the answer to the hon. Member for Sheffield, Heeley (Mr. Hooley) that the product of the levy would be to provide Community resources rather than finances for the national country?
§ Mr. Smith
The hon. Gentleman is correct, but I was anxious to establish that the details have to be discussed at the meeting of the Council of Energy Ministers. It is only a proposal in the draft resolution. It calls for agreement in principle, but there will be a need for further discussion on how it will be implemented.
The fourth item is a proposal that the Commission should stimulate a study of ways of increasing electricity coal burn, and paragraph 3c of Com. (76)20 contains a number of proposed methods, including guarantees for new investments, and utilisation of the Community's loan capacity. We shall look at these proposals sympathetically.
The next item we should be discussing is the development of Community solidarity in the event of oil supply difficulties. This is essentially to bring the EEC into line with arrangements already agreed in the International Energy Agency and to avoid conflict with the provisions of the Treaty of Rome. France, which is not a member of the IEA, would be covered by any scheme adopted. These proposals have been extensively discussed in Brussels and are at present in a shape with which we are content.
The Commission has also come forward with plans for increasing support for technological development projects involving a proposal to increase the Community's budget for 1977 from 25 million units of account to 50 million units of account. We are reluctant to see an increase of this magnitude not only because of the implications for public expenditure, but because the technology development of proven off-shore fields is largely established and the need is to get them into production. We believe that it would be sensible to achieve results by projects supported in the first two allocations before going ahead with the third line of support.
We prefer to await an assessment, on the basis of the national energy plans of member States of the overall energy funding needs of the Community so that priorities can be established, rather than committing funds piecemeal from the EEC budget to oil and gas projects which may be less in need of EEC support than, say, 1204 coal or nuclear programmes. We shall be prepared to discuss this proposal, but I thought it right to acquaint the House with our present thoughts on the proposal.
The Commission also suggests that there should be Community aid for exploration projects for oil and gas. The implication of the Commission proposal in late 1974 for giving financial support for oil and gas exploration in order to improve security of supply is that exploration is being or has been delayed by the lack of finance. This is not reflected in our own experience in the North Sea nor, as far as we can see, in other European countries with fewer resources.
The Commission has asked for evidence of the need for EEC subsidies and this evidence has not yet been forthcoming. We have doubts about subsidising oil companies to undertake activity which they would have undertaken in any event. Even if a Community subsidy encouraged exploration in deep and difficult waters, the technology for such exploration is in the early stages and the technology for producing oil from very deep waters does not exist.
To the extent that there may be a need for Community support, it is more for research and development programmes of deep-water exploration and production. But the oil companies themselves are carrying out development work in this area and we doubt whether any case can be made for subsidies. The right approach is to examine the overall energy funding needs of the Community on the basis of the energy programmes of member States and thereby to establish priorities, especially because of the constraints existing throughout the Community on levels of public financing.
The Commission has also suggested that there should be Community aid to increase the loans available for the financing of new nuclear capacity up to 500 million units of account. The Council of Finance Ministers discussed this proposal yesterday and there are still some technical matters to be considered. The matter will be considered further by the Council of Energy Ministers on March 25th. The Government think that the scheme is not likely to be of any major benefit to the United Kingdom, at least not in the short term.
1205 The Commission is also proposing measures to encourage prospecting for uranium, and we think that this is sensible. My hon. Friend the Under-Secretary will deal with the siting of the proposed Joint European/Torus Fusion project when he winds up the debate. The matter was considered by the Research Council on 24th February.
The Government consider that the case for siting it at Culham is very strong, especially in view of Culham's experience in plasma physics, its work on Tokamak Engineering, its long experience in fusion work, the work of the design team, together with the fact that the Community has no scientific projects in the United Kingdom. I am in the happy position of being able to commend the amendment in the name of the hon. Member for Oswestry (Mr. Biffen) and his hon. Friends, as well as the motion, because it underlines the importance of siting the project at Culham. Perhaps on that note of agreement I should sit down.
§ 7.14 p.m.
§ Mr. John Biffen (Oswestry)
I beg to move, to leave out from "R/253/76" to the end of the Question and to add instead thereofand further recognises the outstanding experience and facilities of the Culham Laboratory in the field of thermo-nuclear fusion, considers Culham to be the most appropriate location for the Joint European Torus, and calls on the Government to secure the choice of Culham as the research centre".The Minister of State concluded his remarks by emphasising the measure of agreement in the House on these Documents. He spoke with realism as his theme and that is no bad guide in these matters.
I join with him in extending the area of agreement by saying how much we appreciate the preparatory work done by my right hon. Friend the Member for Knutsford (Mr. Davies) and his Scrutiny Committee in bringing the Documents to the attention of the House. I appreciate that there are other diversions preventing the Secretary of State from being here for the debate. We had hoped that he would be here, because we all enjoyed our last debate on Community energy affairs. Nevertheless, we welcome the Minister of State. I do not know whether he will become the compaign manager for his Secretary of State in the next few days 1206 and weeks, but at the moment we must look at these papers, which are of major significance to the House.
It is important that the House should make clear its view on some fairly profound principles contained within these Documents. The Select Committee on European Community Secondary Legislation under the chairmanship of Sir John Foster included a wide range of opinion, including the present Secretary of State for Prices and Consumer Protection. The Committee commented in its Second Report:time taken in the reference of a Community proposal to Parliament would probably be well spent, for it would be participation by the House of Commons in EEC legislation, not a mere sounding of opinion in Parliament, and it must surely be right that the House should participate at least to that extent.As the Minister of State pointed out, there are two Documents before us. The first deals with the siting of the Joint European Torus and the second with general propositions of co-ordination of national policies in respect of the use of energy within the context of the Community and in relation to the International Energy Agency. I very much agree with the Minister in the emphasis he places on the rôle of the IEA. My hon. Friend the Member for Cheadle (Mr. Normanton) will be happy to deal with the specific issue of the siting of the European Torus and the Minister of State properly said he would leave discussion of this matter to the Under-Secretary who is to reply.
I am delighted to be moving the amendment. It will not be lost on the Minister that it draws its inspiration from Early-Day Motion No. 195 and cannot be construed as showing hostility to EEC membership. The motion carries the names of the hon. Member for Gateshead West (Mr. Horam) and my hon. Friends the Members for Reigate (Mr. Gardiner) and Cambridge (Mr. Lane). It has attracted a galaxy of talent of the friends of Europe. I am happy that there should be such a wide measure of assent for the amendment.
I wish to concentrate on Document No. R/210/76. There is no doubt that in energy matters we are in a position to play a distinctive and preponderant role in determining policy within the Community. I hope that two observations will command reasonably wide support—first, that any policy pursued in respect 1207 of energy should be rooted in an acknowledgement of the underlying realities of politics and, secondly, that the EEC and the IEA should provide an institutional framework which utilises rather than frustrates national and political sentiment. We should be wise and constructive to record our own assessment of some of the political constraints operating in the United Kingdom whenever energy policy is discussed.
When I read the reports of the debate held in the European Parliament on 23rd September, I was fascinated by the contribution made by the hon. Member for Fife, Central (Mr. Hamilton). I told him that I should refer to him in the debate. He explained that he would be on the Continent and therefore unable to acknowledge the blandishments I am about to proffer. I am sure that he would be happy to stand by every word he said.
Speaking about the resources of the North Sea he said:We have no intention of giving up, without qualification, control and ownership of our North Sea resources. The rate of extraction of the oil and the gas, and their disposal, will remain within the control of the United Kingdom Government. North Sea oil is a national resource and ought to be nationally owned, and we are not prepared readily to relinquish that to Europe. (Cries of 'Hear, hear').He concluded:I just want to issue these warnings as a good European.I wish to speak a little more delicately on this issue. There is no doubt that the rate of depletion is a matter of general political concern in this country, and there is general anxiety that the downstream activities will provide a fair degree of employment in the United Kingdom. These are some of the underlying realities of oil politics in the United Kingdom, and their proclamation in the House will act as a guide for the Minister when he attends the Council meeting, and for the Commission, if it follows our proceedings. A proper regard for those considerations is in no sense inconsistent with—the establishment of solidarity in the event of oil supply difficulties.We need a liberal rather than a protectionist energy policy in respect of the EEC. Above all, we do not wish to build upon the philosophy of the common agricultural policy. I think it well to place 1208 these sentiments on record, and I hope to have them endorsed by the Under-Secretary of State when he winds up the debate.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie) indicated assent.
§ Mr. Biffen
I see that the hon. Gentleman is nodding in agreement even at this early stage, and I am delighted to place that on record.
I come to what I believe will prove to be the heart of the debate other than the legitimate concern over the siting of the Joint European Torus, and that is the question of the minimum safeguard price. The proposed philosophy is contained in the Documents before us. In the draft resolution we are invited to approve:the principle of the adoption by the Community of a system of minimum import prices for oil …come into play at a threshold of $7 per barrel fob for reference crude.The subsequent reference to the Community's obtaining its own resources from the application of the system requires a little more elaboration. The Minister of State acknowledged that it was in the text, but did not reveal to us whether he thought it was a good idea. The House is entitled to hear more from the Treasury Bench on this matter.
The Scrutiny Committee was right to draw our attention to this above all else as being the reason why the House should debate this matter. The Committee's Report concluded:The Committee consider that this instrument raises questions of importance relating to a wide range of energy matters; this is particularly so in the case of the third guideline mentioned in COM(76)20.That is the minimum safeguard provision.
The House would do well to consider this topic under two propositions. The first is that the gesture is symbolic and is not meant to be much more than symbolic. My hon. Friend the Member for Bedford (Mr. Skeet) has hinted that the French may not be at one with other members of the Community in this respect. Therefore, perhaps it should not be taken too seriously.
Perhaps it was a commitment to enable the Foreign Secretary to return with a negotiating triumph from Rome which he shared with Luxembourg, rather like the triumph of the Minister of Agriculture, 1209 Fisheries and Food over the variable beef régime. It is something which seems to be eroded with the passage of time, and perhaps a good deal is conceded for what is not much more than a gesture. Therefore, a note of charitable scepticism is in order in this context because we have to test the gesture against some of the known realities.
Do we see evidence of the Germans resisting the blandishments of cheap coal from Poland? The answer is "Certainly not". There is documented evidence that if cheap energy is available in Eastern Europe, the Germans are perfectly prepared to buy in that market.
What would happen if there were a substantial fall in world energy prices which brought into play the mechanism of the $7 minimum safeguard price? I shall not enter into essentially fruitless speculation about whether OPEC pricing arrangements will be maintained. It is, none the less, legitimate to ask ourselves this question. I was much struck by the observations of Commissioner Simonet in the debate in the European Parliament on 23rd September 1975 in which the hon. Member for Fife, Central spoke. Commissioner Simonet said:After all, it is not enough just to produce oil. When a product is made, there have to be people who want to buy it and if they are offered the same product at lower prices elsewhere it is quite possible that they will end up buying elsewhere, even if that means behaving in a deplorably un-European way.I never thought the day would come when there would be a warm fellow feeling between myself and a member of the European Commission, but in that observation I see a commendable acknowledgment of reality. The Minister of State would be happy to have reality as the theme of his contribution—
§ Mr. Neil Marten (Banbury)
When my hon. Friend goes to the Commission, as he is bound to, will he refer that matter to Commissioner Lardinois and remind him that New Zealand butter is £300 a ton cheaper than Common Market butter and we should therefore import New Zealand butter?
§ Mr. Biffen
Happily, my responsibilities confine me to the Department of Energy, and it would be a gross act of imperialism if I sought to take a much wider-ranging interest, which is presented to me in a tempting form by my hon. 1210 Friend the Member for Banbury (Mr. Marten). I shall not be drawn on that.
I ask the House to take the second proposition, which is that perhaps this gesture is for real. If it is of serious intent, we have already in embryo form the philosophy of a levy. It is a levy where the point of relationship will not necessarily be oil prices but the cost of production of marginal primary energy within the European Community. That is the inherent danger if the minimum safeguard price takes on a protectionist character, of which I believe it is susceptible.
What, then, would be the impact upon the European Community? I suggest that we might seriously lift our eyes from the small print—much of which is valuable and constructive—in this 600 grammes of Document R/210/76 and take a wider view. It seems to me that almost certainly it would have as a harmful and a very onerous consequence a burden upon Denmark, which, according to the Document, would rely upon imports for 98 per cent. of her primary energy by 1985, and Italy, which would rely upon imports for between 70 and 72 per cent. of her primary energy by 1985.
In other words, burdens would be placed upon two of the geographically peripheral members of the Community, and this would have as a consequence an intensification of those forces already operating within the Community which make it increasingly difficult to secure the harmonious resolution of national interests within the EEC. It would be one more point of intense irritation with central authority and central control, but I take the argument one stage further.
There has been extended by the Community a unanimous consent for intended Greek membership. There is a logic which is implicit in the extension of the Community geographically in that part of Europe. I think that logic is that there is reasonably in prospect a possibility of Turkish, Spanish and Portuguese membership also. Each and every one of those countries, according to the OECD report "Energy prospects for 1985", is at this point of time a major importer of primary energy, largely in respect of oil. In other words, we should find ourselves in a position where maybe the extension of Community membership in the direction 1211 in which now seems intended would be frustrated by such a policy as this.
§ Mr. Douglas Jay (Battersea, North)
I agree with the arguments the hon. Gentleman is now advancing, but am I wrong in thinking that his predecessor, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), not many months ago was preaching from the Conservative Benches the desirability of the floor price? Has there been a welcome conversion to liberalism?
§ Mr. Biffen
No, my right hon. Friend on that occasion was putting forward a number of thoughts for consideration by the House, as I am now. Throughout these debates there has mercifully—indeed, predictably—been enough wisdom from these Benches not to be involved in a commitment in a situation which is naturally changing.
This is one reason why I welcomed the theme of realism which was contained in the remarks of the Minister of State, It is one reason why we should like to use this debate as a means of eliciting the reactions of the Treasury Bench. I am not putting the propositions to the House in a spirit of carping assertion, but saying that these are the kind of fundamental questions that ought properly to be debated in this House before a meeting takes place at the Council of Ministers. Indeed, it is the answer at the end of this debate which, it seems to me, is central to the whole success of such a debate, because the Treasury Bench will be revealing to the House its reactions to the very problems that I have been discussing.
I had not expected that so urbane and restrained a figure as the Minister of State would be the main actor in this evening's debate. I had thought that the Secretary of State might be here, but we all understand his absence. He has one political disadvantage: from time to time he gets infected with enthusiasm. Therefore, there was a very real anxiety lest the whole concept of the minimum safeguard price were seized upon by the Secretary of State with enthusiasm, whereas I am suggesting to the House that it merits very considerable scepticism.
I think that the greatest guarantee of a successful development of oil resources will be a flow of trade and investment which underpins the mutual dependence 1212 of the industrial world and the OPEC countries, the kind of community which I believe it is in Britain's national interest that there should be—namely, an open door community. The House has a responsibility to give some sort of message to the Minister which he can take with him to the Council of Ministers' meeting in a few days' time.
First, I suggest that the House will wish to emphasise its support for mutual co-operation to overcome supply difficulties such as were experienced in the autumn of 1973. Secondly, I believe that the House will wish to underline arguments, which I am sure will be deployed by other speakers, about the virtues of Culham, which is rightly prized as a testimony to United Kingdom nuclear technology. Finally, I suggest that the House will be disposed to give the message to the Secretary of State, when he attends that Council of Ministers, to use his undoubted authority to secure a liberal energy policy and to avoid the protectionism of a common agricultural policy philosophy.
§ 7.36 p.m.
§ Dr. Colin Phipps (Dudley, West)
I should like to take up the principal theme—if I can call it that—of the hon. Member for Oswestry (Mr. Biffen), which I think is one of realism. I should like to look at the theme of realism in a specifically United Kingdom context, concerning the realities of our own position in regard to North Sea oil and our membership of the EEC.
It has become rather fashionable in recent months for even strong pro-Europeans, such as my hon. Friend the Member for Fife, Central (Mr. Hamilton), to say that we are very committed Europeans but it is our oil and it cannot be touched by others, despite the fact that we are so very committed to Europe. I do not take that view, first, on the general ground of my Europeanism, but also on the specific ground of the benefits which can accrue to this country from a properly co-ordinated European energy policy for North Sea oil.
It is important for us in the United Kingdom to consider some of the realities affecting North Sea oil. We have heard today that there is concern about depletion policy—that there should be elements of conservation within the depletion 1213 policy which we use in the North Sea. Indeed, the Department of Energy has taken powers which allow a degree of conservation.
But hon. Members ought to appreciate that the North Sea is nothing like an oilfield developed somewhere on land. If a field is developed on land and 30 wells are needed to develop it, the wells can be drilled one by one wherever they are needed. It is possible for these wells to be closed in occasionally, if necessary, in the way in which this is done in the United States. But that is not the case in the North Sea, where a platform has to be put down, and where there is no point in putting down a platform unless it can support the drilling of between 20 and 30 wells. This means being faced with an overall commitment to the complete development immediately the decision to develop is taken. It is not, therefore, like developing a land field.
This means that the enormous capital expenditure has to be made right at the very beginning, and, having made that capital expenditure, with all the best depletion and conservation policies in the world, it is not then possible to say to the company concerned, or to BNOC, "Having funded this vast capital expenditure, we shall not allow you to produce the oil at a rate which will allow you to cover the cost". We are living in cloud-cuckoo-land if we believe that we can run North Sea oil in this way. Once we have developed these massive installations, they will have to produce at full capacity.
If we are to produce the oil at full capacity in the North Sea, a number of other matters arise. The nature of North Sea oil is such that it does not match the product spread which is used in the United Kingdom, from heating oil right up to very light products. We use a preponderance of heavy products in the United Kingdom but slightly less of a preponderance since we have been cutting back and since the "Save It" campaign began. However, the principal reason for using slightly less is the two very mild winters which we have recently experienced. If we have a hard winter we shall revert to using a large percentage of heavy products. Even under the current spread of products, North Sea oil is not a suitable input 1214 crude for producing the product mix which we use, and we shall have a light fraction left over.
It has already been mooted on several occasions that it might be sensible for us to continue to import medium-heavy crude from Kuwait relatively cheaply and either to export our own lighter crudes which are premium crudes on the market and which attract a higher price or perhaps to export products. I emphasise that since we must produce the oil once the installations have been erected in order that the economics make sense, we shall be faced with a surplus willy-nilly. Where will that surplus go? There is only one place where it can go to make any sense—and that is to Europe.
When looking at the minimum support price, we should consider much more seriously the realities of making the European self-interest our self-interest. It is in our self-interest to produce this oil and to keep the price up. The Minister of State has said that the price of seven dollars would be sufficient to allow the present developments to be developed profitably. I assure him that it would not be sufficient to allow some of the newer fields to be developed. As a nation we wish to develop these fields. I suggest that the obvious course is to involve the European countries in the development of those fields. We should make this a European question, a European balance of payments question and a European oil and energy security question by involving the European countries directly in the investment that will be required to produce the oil from the fields which we are now discovering and which we shall continue to discover.
I suggest that there is no better minimum selling price or way of achieving a minimum price than by ensuring that our European colleagues have as much self-interest as we have in seeing the oil produced and sold within Europe. I believe that that is the way we should be going within Europe, as a member of the Community. It is in our self-interest so to do. It is essential realism to see that it is the proper way to go. It is in the EEC's self-interest and certainly fulfils the requirements set out in the document before us.
I commend to my right hon. Friend the Secretary of State that when he or his 1215 right hon. Friend next goes to the EEC, this is the policy that should be propounded and that we should try to get a complete commitment to United Kingdom oil by the European countries. We have been described as the poor man of Europe. I believe that in this instance we could be in the position of a poor man bearing gifts.
§ 7.45 p.m.
§ Mr. John Davies (Knutsford)
The hon. Member for Dudley, West (Dr. Phipps) has introduced a strong note of realism to the debate. His arguments are largely impeccable, and arguments which I would share. Therefore I shall not repeat what he has said but get on with that part of my speech with which he has not dealt.
I should like to concentrate primarily on Document R/210/76, which is extremely important. When I look back over our period of membership of the Community I conclude that during our three years of experience the Community has not cut a proud figure in energy terms. It has often come up to the beginnings of an understanding of its problems but generally has managed to back away for some purely illusory reason.
This Document is important because it is produced in response to a request by the European Council. It sets out a series of rather practical measures to try to attack a major problem. Equally, it also seems to have discarded many theoretical myths and to have attached itself to practical propositions. Therefore, this Document has my support and. I hope, the support of the House. Of course, there is much in it that will need refinement and elaboration, but we must view the Document against a background where the problems of the future have, to a large degree, been relegated to a second level of consideration while political square-dancing has taken place in the Council of Ministers, defending the theoretical positions of the individual countries. It is good to see that phase over.
The primary purpose of the Document is, first, to limit import dependence to the limit possible and, second, to achieve valid degrees of energy economy. I am grateful for the freedom which was accorded by my hon. Friend 1216 the Member for Oswestry (Mr. Biffen) when he sought to express his personal view without undue attachment to the details of consensus of thought, whilst no doubt broadly speaking in the same general direction.
The importance of the limitation of import dependence is an absolute fundamental need of the Community. I do not have the same dispute with the common agricultural policy as some people have. In my view two essentials of life are food and heat. One of the problems which the European Continent must face is the insurance, for the long term, of its food supplies in an uncertain world in terms of food production and food consumption. Therefore, I applaud an arrangement which has, as its basic purpose at least, that very intention, although there may be peripheral details which we could dispute.
As regards energy, there is no chauvinistic intent behind a desire to try to secure the maximum indigenous dependence. It is not there in order to offer an obstruction to liberal trade or to those who wish to export their products to the Continent. Far from it. It is there to exploit to the maximum the resources and the facilities of the Community, which is surely the purpose for which we joined and the purpose which we should now support. I cannot see that it represents an illiberal attitude of mind to the major producers of energy world-wide. They, too, are greatly perplexed. They face enormous dilemmas whether it is wise to move to higher and higher levels of production, perhaps against the optimum exploitation of their fields, and whether it is wise to realise their greatest natural resource at a high immediate rate or to defer the realisation of it until perhaps, as against many of the preoccupations that have been expressed here this evening, the oil price rises much further. Therefore, their problem is not necessarily one in which they see any effort by the Community to secure a greater self-dependence as a threat for themselves.
It seems only fair to discover what steps are needed to secure a greater degree of self-dependence. That, however, exposes the most enormous problems for the Community. The Minister said that the target of 40 per cent. dependence on external sources by 1985 had been abandoned as 1217 unrealistic. But to achieve a 50 per cent. reliance on indigenous resources would require the Community to undertake some quite fantastic operations. On the basis of aggregating individual member countries' estimates, which I believe may be a substantial underestimate, the 1974 level of 950,000 tons of oil equivalent would rise to 1,200 million tons of oil equivalent by 1980, and to 1,400 million tons of oil equivalent by 1985. That means that to reduce our external dependence from the present 60 per cent. to 50 per cent. would require increased oil production in the Community from the current level of 12 million to 15 million tons to about 150 million tons, with all the enormous investment that would require.
According to the Commission's view of the matter, it would require an increase in nuclear energy capability from about 14 million tons of oil equivalent to about 200 million tons of oil equivalent by 1985. The implications of that for research, for developing adequate uranium supplies, for reprocessing capabilities, for enrichment capabilities for existing types of plant, for mastering the technology and for bringing on stream generating plants to the extent needed are a fantastic demand on the resources, the effort and the research capability of all the member countries. We are talking therefore, even within this relatively modest shift in the balance of dependance, of a formidable programme by any standard for the Community. That 10 per cent. shift is a threat to no one and it cannot be construed as such. It involves procuring for investment sums of the order of 22 billion units of account between now and 1985. That is a problem which should not be left to individual countries.
Against that must be considered that in the longer term alternative and non-conventional sources of energy may be of some help, but they are far from making any significant contribution to our total energy needs. We cannot rely upon solar systems, tidal systems, or deep-sea wave systems to provide any significant mitigation of the figures I have given.
Economies in the use of fuel have been valuable in the last couple of years, but in Community terms their benefit tends to be illusionary. They resulted first from the shock effect of a large price increase, but that is diminishing as time passes. 1218 Community papers show that the overall energy pricing system between 1970 and 1975 did little more than keep pace with other regular price developments in the Community. We are not therefore faced with an on-going pricing system which will act as a continuing deterrent. In addition there have been two warm winters and the deepest recession this Continent has experienced since the war—and perhaps ever in real terms.
On a reasonably practical view it is likely that between now and 1985 the rate of energy absorption in Europe will return to a relatively high level in terms of its normal gearing against the development of gross national products. We would therefore be fooling ourselves if we imagined that there would be any enormous benefit from economies. They will make a valid but not a big contribution to solving the problem.
Community interests demand common action. The Community faces in this subject the biggest single challenge to its industrialisation—bigger than the challenge over aircraft or shipbuilding. If we are serious in seeking harmonisation of the varying conditions in the different parts of the Community, it is unrealistic to believe that these solutions can be achieved by national initiative. The poorer countries would inevitably find themselves left seriously behind in the race and would then face enormous technology purchase requirements in order to make good their own energy deficiencies.
Britain's quite exceptional situation on energy in the Community presents a choice. We could take the risk of saying that we shall hold back from the Community, that we shall accept the principle of no obstacles to the movement of goods and trade in everything except oil, and that we shall claw back oil to ourselves hoping for the day when crisis strikes and our oil will enable us to make a killing in the Community. May I suggest that that is not much in our character, and that was not our purpose in joining the Community. I hope that we shall not take that view. We have to give and take in the Community. One of the things we can give is the access to our quite remarkable and unique energy capability which will be of enormous importance to the future of our Continent. I deeply hope that we shall
§ 7.59 p.m.
§ Mr. Albert Roberts (Normanton)
I am glad that the right hon. Member for Knutsford (Mr. Davies) referred to harmony within the Community. Many of us have been trying to achieve some harmony on energy policy in Britain. Over the last 20 years I have heard that theory expounded, but we have never secured the results we have wanted.
I must declare my interest in the mining industry. Civilisation depends upon energy. Without energy there is no civilisation. This country has an abundance of the material which makes energy. Of course, we have our problems too.
Reference has been made to Polish coal and the dangers of over-production. It is said that we require production guarantees as well as price guarantees. We must give consideration to these matters as they are of especial importance.
I hope that we can achieve harmony within the coal industry. We must remember that the coal industries in France and Belgium are being run down. The coal industries within Great Britain and West Germany are, to some extent, being expanded. That is to offset the decline in France and Belgium.
If Britain can take the right sort of initiative and obtain the right sort of guarantees, we can produce the coal. However, unless action is taken within the near future, I am afraid that we shall have some unemployment in the mining industry. We are stocking coal at a rapid rate, and the miners in some of the less abundant fields are very anxious. At the same time, we are contemplating spending millions of pounds on the development of the Selby coalfield.
There is no doubt that the miner at the coalface is becoming an expert technician. We cannot throw these people aside and then bring them back into the industry later and expect to get immediate production. The consumption of coal by the power stations continues at quite a high level but it has not been possible to obtain a guarantee from the Chairman of the CEGB.
I know that the electricity industry has its worries. It takes the view that it must have the cheapest fuel. The miners take the view that if they produce the coal, there should be long-term guarantees. We must be prepared to give those 1220 guarantees. The coal is being produced and the power stations are taking it, and we must ensure that the pits keep going. If we are to produce the coal, there must be guarantees within the Common Market. We must have some guarantee of sales within Western Europe.
I take exception to what has been said about cheap Polish coal. I do not say that the Polish coalminer will not be paid an equitable rate, but we know perfectly well that the coal he produces will be subsidised. That arrangement must be opposed if we intend to keep our own men at work. We must provide the right conditions and wages. That means that coal must be sold at the right price.
I have often said that industry requires a cheap fuel if it is to be competitive. If we can provide only expensive fuels, our industry will be uncompetitive. However, we do not want cheap fuel and cheap miners. We can obtain cheap fuel by concentrating on increased efficiency. We must have the full cooperation of the National Coal Board and the National Union of Mineworkers.
At present the EEC is importing about 61 per cent. of its energy requirements. That is far too high a level of imports. It is hoped to reduce it within the next 10 years to about 50 per cent., but that is too slow a rate of reduction.
If we intend the Common Market to be a world force—and it could do a tremendous amount of good in other parts of the world—we need a cheap energy. We can supply that energy, thus reducing unemployment. I do not believe that we are undertaking sufficient research. Are we as progressive in our approach to research as the South Africans, who have undertaken considerable research into the production of oil from coal?
I appreciate that we have spent millions of pounds in other areas of research but I should like to see more being done in energy research. I know that we can produce oil but it is expensive. There is no reason for money to be poured into research with no consideration being given to the benefits that may accrue, but I am given to understand from the papers I have read that South Africa is more advanced in some respects in its energy research than Great Britain is.
1221 I hope that we shall be able to take advantage of anything that we can gain from the South Africans. I have no bias on that score. It is essential that we bear in mind what is taking place in other parts of the world if we intend to keep in the vanguard of progress.
We can play a tremendous part in the Common Market's energy policy. I know that there are those who vilify the Common Market, but now we are a member State we must make every effort to make progress within it. I insist that if we produce the coal from our fields, there must be some guarantee from Europe that the Community will not take the coal produced in Poland.
A section of the draft resolution reads:The minimum possible degree of dependence by the Community on imported energy remains a fundamental and permanent objective of the Community energy policy".We must allow a little time, but there is no reason for our not achieving a watertight energy policy within the next 10 years. I hope that every effort will be made in that direction with those connected with the energy industries.
I have been a Member since 1951 and on many occasions I have read and heard about energy policies coming under one umbrella. So far we have failed to achieve that objective. Successive Governments have failed. I do not blame one Government more than another. The fact is that we have never had a concerted energy policy.
I remember the millions of pounds that were poured into nuclear energy. I remember those who walked into the Chamber 20 years ago and said that nuclear energy would be the salvation of the human race. They said within a few decades we should be using nothing but electricity derived from nuclear energy. Look where we are today. Nothing of the sort has happened. I feel that there are far better hopes for the research now being undertaken. Our salvation does not depend on nuclear energy alone. It will play a part, but only a small part.
The right hon. Member for Knutsford spoke about oil. I know that his knowledge of oil far exceeds mine. There were those who used to talk of taking up the slack in the coalmining industry. They said that what coal could not do, oil 1222 could deliver. But what has happened within the past 18 months or two years? Britain took advantage of cheap oil and neglected other sources of energy.
I hope that it will be realised that now we are in the Common Market we must have a common energy policy. The workers in the energy industries must be told exactly what the situation is. If we intend to develop technology inside the mines and to keep our young men coming into the mines, we have to guarantee them a future. My hon. Friend the Minister of State spoke about oil and said that when we started to produce it at maximum capacity, there must be a market for it and there must be a price for it. This is exactly the situation applying to coal.
There is a great deal of unanimity in the Chamber on this subject. I hope that a real energy policy can be worked out in the interests of not only Western Europe, but the whole world.
§ 8.10 p.m.
§ Mr. John Hannam (Exeter)
The hon. Member for Normanton (Mr. Roberts) spoke with great experience and knowledge of the coal industry and of the vital importance of coal in the triangle of energy supply that this country has. I agree very much with many of his points. I agree especially about the need to spend very much more on research in the coal industry, principally on the development of the production of oil from coal, mechanised methods of extraction, fluidised combustion, and other very important new systems which could be developed to the country's great advantage.
This is a very important and wide-ranging debate, and we are grateful to the Select Committee for recommending that these EEC Documents should be debated on the Floor of the House. Our attention today has been somewhat distracted. Nevertheless the scope of Document R/210/76 pulls us back to the realities of the energy situation. This is so important that the House needed time to be made available for a discussion of the proposals.
I want first briefly to deal with the Joint Torus proposal which is dealt with in Document R/253/76. As a supporter of the European concept of sharing the costs of the higher technology involved now in nuclear power, obviously I accept a Community 1223 decision if it is the correct decision.
The proposal to select Ispra as the site for the JET project stands up as long as we do not place high priority on the availability of scientific expertise in fusion and plasma physics. Yet, if this important thermal fusion nuclear research programme is to be successful and if we are to retain our lead over Russia and the United States, I believe that the experience in plasma physics that we possess at Culham is as important as the social and financial grounds on which the Community decision seems to have been based.
Culham appears to be the best site from the point of view of the team of scientists that we have established there, and the Document confirms that there will be some savings of costs in this respect since otherwise they will have to be moved from this country to whatever site in Europe is selected. I am convinced from the announcement made by the Minister that the Government will maintain their pressure to establish this research programme at Culham.
This is especially important now that we have precipitately withdrawn from the Dragon project at Winfrith. I think that that decision was a mistake. We are still standing at a nuclear crossroads in Britain, and to abandon at this stage the prospects of high-temperature gas-cooled nuclear reactors when there is increasing evidence from outside this country—from the world as a whole—of interest developing once again in these high-temperature reactors, seems to be a mistake. The costs of the Dragon project were not very large, being shared with the Germans. If we find ourselves running into problems in the not-too-distant future with our SGHWR programme, and if the light-water reactors are not available for safety or financial reasons, we could find ourselves facing a serious nuclear power shortage in the late 1980s and 1990s.
I do not hide the fact that I did not favour completely the choice of the heavy-water reactor as our sole "banker" for the medium-term nuclear prospects. I should have preferred a mixed programme and a larger programme than the 4,000 megawatts that we have embarked upon. From all the current evidence brought out in the Community Documents, we are facing delays in producing 1224 nuclear energy throughout Europe and in this country. We are facing a delay in making this jump from the 100 mW prototype at Winfrith to the 10 times larger reactors at Sizewell and Torness.
If we were in a position to be ordering a fast-breeder reactor at the moment, I should be quite happy that our construction industry would be able to gear up and prepare itself for a long-term nuclear programme. But no indication of such an order is yet in sight.
However, the medium-term nuclear situation bothers me. I fear that Britain could in the 1980s be lagging behind our rivals in the production of cheaper nuclear power. If that happened and if we had snags and delays in the SGHWR programme, basic electricity costs in this country could be substantially higher than in other European countries which have gone in for bigger nuclear programmes. It is important to think in terms of basic industrial costs in the battle to regain industrial productivity in the future.
At the moment, we lie second behind the United States in our use of nuclear power. By the mid-1980s, we shall have dropped to fifth or sixth place with our present programme. It should also be realised that a substantial amount of our nuclear capacity would be, from a technological point of view, becoming largely obsolete. The Magnox reactors and the AGRs will be bearing the brunt of our nuclear production, and they cannot possibly be considered as longer-term candidates for future construction programmes for the late 1980s and 1990s.
As the technical construction problems of the AGRs are being overcome, gas-cooled technology may come back into its own as a possible mid-term forerunner to the fast breeder. Certainly, the Germans, the Americans and the Japanese are showing increasing evidence of their interest in high-temperature gas-cooled reactors, and they are showing all the indications that this type of reactor will obtain a fair share of the world's nuclear market in the 1990s.
We cannot be specific or make forecasts. This is an area of activity in which, from day to day, we find new evidence coming to light about nuclear development. But I am not optimistic that our SGHWR will be a world seller, 1225 though now that we are on that road I wish it every success in the United Kingdom. I hope that the Minister will tell us a little about this project and give us the latest state of play on the nuclear front.
I believe in a multi-energy policy for the United Kingdom. We are extremely fortunate to have an abundance of coal, a lot of gas and a massive field of oil under the North Sea. But there are limitations on the amount of coal that we can produce each year, our gas supplies will last 10 or 15 years, and our oil will peak out in the early 1980s. If we achieve just half of the Government's White Paper "guesstimate" of our growth in the next few years and average just 2 per cent. expansion per year, demand will obviously be increasing again and consumption of energy will be increasing so that in the year 2000 we shall require 75,000 mW of electricity capacity, which is 50 per cent. more than we have now. Furthermore, a great deal of our existing plant will need to be replaced. Therefore, even at this low growth rate of only 2 per cent. a year, we shall need to build some 50,000 mW total energy capacity in the period between 1985 and the year 2000. Of this, about 50 per cent. might be considered to be nuclear power. Therefore, we shall be talking in terms of providing 25,000 mW of nuclear power. But on what system or systems shall we provide that type of nuclear capacity?
We can see that some clear-cut political, commercial, and economic decisions will have to be made in that area alone. A sound project and construction management team will need to be built up. It is in this context that the EEC Document is important. It is trying to instil a sense of urgency into member States to begin to build up this type of expertise, research construction teams and collaboration in an attempt to achieve what seems an unattainable objective.
The potential for solving the medium-term financing and development problems of nuclear power must lie in European collaboration. My right hon. Friend the Member for Knutsford (Mr. Davies) underlined the fact that it is important that in this area we look to the future of the Community. The proposals for Euratom loans for financing nuclear installations, the need to maintain joint 1226 research projects, such as Dragon and Jet, are vital if we are not to find ourselves left far behind 15 years from now with our industrial energy costs higher than those of our competitors. The latest forecasts of uranium shortages make it all the more important to finance uranium exloration in the Community.
I have dealt in some depth with the nuclear situation, because it is put on one side from our discussions about oil and coal, which are the other two important legs of our energy stool. I recognise, as the Commission makes clear that it recognises, that it is impossible to forecast accurately the absolute energy requirements of the Community in 10 to 15 years, but the general parameters of demand can be estimated. These point to a resumption of increased energy consumption as Western economies begin to pick up in a year or two years. Therefore, I accept in general terms the Commission's proposals on nuclear matters and objectives.
However, as a nation which unfortunately seems hell-bent on pricing its energy resources to the limit—some fraction below Middle East or OPEC oil prices—we must pay some regard to the consequences of a sudden lowering of world oil prices. I do not believe, as my hon. Friend the Member for Oswestry (Mr. Biffen) indicated he did not believe, that there will be such a dramatic drop which will affect the situation. But I am convinced that the price of oil in real terms in the short term will steadily fall, especially if demand does not pick up during the next year or two years. Therefore, our inflation rate is important if we are not to find ourselves producing coal and oil at too high a cost in relative world terms.
If, under the International Energy Agency, we find ourselves agreeing to a lower limit on oil prices, so much the better. But I share the healthy scepticism displayed by my hon. Friend the Member for Oswestry in saying that I do not see it working effectively if, for example, Russia and Saudi Arabia start to offload oil at a low price to energy hungry countries such as Japan.
A Community pricing structure might have a better chance of working, although in the end we should set out to conserve our resources as much as possible whilst producing coal, oil, gas and other energy 1227 sources at a good competitive cost rather than relying on artificial pricing stratagems.
The Commission's proposals for support for coal stocking are to be welcomed. I share the worries and fears expressed by hon. Members representing coalmining constituencies, but I believe that this is a sound policy to adopt at this recessionary time. We must prepared for the growth and expansion of coal demand through the growth of our economy in future. The expense is large, and any help that the Community can give towards coal stocking is to be welcomed.
I hope that the coal industry, which I fully support as one of the three legs of our energy stool, will produce a successful productivity deal this year. It was much regretted that the last deal fell through. It is essential that coal should retain its price edge over other fuels. But, in any foreseeable event, we must accept that the output of coal will not watch in an expanding economy the generating demand which will be made. We must look at the picture as a whole.
Gas is another valuable resource which will continue to be found in increasing quantities around this island of ours. There is some controversy over the low price of the gas being provided under the original Southern Basin contracts. I agree that it is not in British interests to make the same mistake as the Americans and the Dutch have made in under-pricing gas to such an extent that we use up our limited resources too quickly.
Having said that, I am also against establishing artificial thermal heat pricing levels by taxation or other methods. I would support a rise in the price of gas of lp a therm, which would allow the British Gas Corporation to achieve a 4 per cent. return on turnover and give the industry an opportunity to be financially viable to a certain extent. But I would not support a VAT or other tax which would not benefit the industry and, indeed, would add to the cost of living without helping the Gas Corporation to achieve a reasonable return on its activities.
Finally, I turn briefly to energy conservation. My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) is expert on these matters and has consistently 1228 pressed the Government to adopt a real and effective strategy for energy saving rather than the half-effective "Save it" campaign which, if it had not coincided with a downturn in demand, would not have produced the results to justify the expense of the campaign.
We have lost time in failing to carry out research into energy conservation—insulation, solar heat, the use of methane, wind and wave power and district heating. Only now are we beginning to get pressure building up to spend more on research in these areas.
I welcome the Commission's recommendations on these conservation matters, especially with regard to the thermal insulation of buildings. I am positive that we are not doing enough to improve insulation in existing buildings or in the construction of new buildings.
I opened a new housing estate in my constituency last weekend. I asked the site manager what heat saving insulation improvements had been incorporated in these new houses. There was a frighteningly blank look on his face. It was obvious that, in keeping construction costs down to a level which would allow first-time buyers to purchase these houses, insulation and thermal efficiency had literally, like the heat, gone out of the window. It reminded me of a poster I saw recently in an electricity showroom which saidIf your wife is being killed by work Let electricity do it.That is the kind of contradiction in terms that one can see in the whole of the insulation system. When householders get some of these bills for increased electricity and fuel costs, they will be literally frightened to death. We must accept higher energy costs, but, as a nation, we shall be mad if we do not pursue the maximum research and development of energy saving measures, such as in the construction of new houses.
I welcome the impetus which the Documents give to our thinking and actions on energy. I reject the proposal to site the Joint Torus project at Ispra. I am confident that the Government will stick to their guns on this matter and will stick to Culham as the site for this proposal.
I hope that the Minister will respond to some of the points that I have made 1229 concerning our medium-term nuclear programme. I am worried about this programme and its development. I hope that he will be able to enlighten the House on some of the latest developments in our reactor programme.
I welcome the proposals on collaborative financing of research and for coal stocks, and I hope that the House will share that view.
§ 8.28 p.m.
§ Mr. Frank Hooley (Sheffield, Heeley)
The hon. Member for Oswestry (Mr. Biffen) put his finger on the significance of these Documents when he said, in effect, that the thinking behind them is virtually a replica of the philosophy of the common agricultural policy, that the techniques and ideas proposed are a close parallel to that disastrous policy, which even the most enthusiastic Europeans are now beginning to call in question.
Annex 1 lays it down as an essential principle that… the minimum possible dependence by the Community on imported energy remains a fundamental and permanent objective of Community energy policy.In other words, we have the same autarchist and mercantilist attitude on energy which has given us the CAP. If we accept it without question and examination there is a danger that we shall head for the same difficulties that we have already had with agriculture.
The key to this fundamental permanent objective is set out on the next page through the idea of a minimum import price for oil. By this means, if, by any disaster, energy supplies in the rest of the world become cheap and plentiful, we shall safeguard ourselves by keeping out supplies from elsewhere. Just as now that world food prices are well below Community prices, the policy forbids us to import beef, butter and other commodities from efficient and long-standing producers, so this Document suggests that we should be careful not to import cheap and plentiful supplies of oil if they should become available, as they may in the next few years. Import levies will be imposed to bring the price of outside supplies up to the highest price for supplies from internal sources.
The purpose of these levies will not be merely to prevent the Community from importing cheap and abundant oil from 1230 elsewhere if that is the trend of world production. It will also…enable the Community to obtain own resources from the application of the system".In other words, the Commission is shrewdly moving along the lines that it has laid down to get within its own grasp and control important sources of funds which it can no doubt deploy for its future social or political objectives.
The hon. Member for Oswestry is right to draw attention to the possible dangers of this policy and to warn the Government against accepting it.
§ Dr. Phipps
I do not want to dampen my hon. Friend's free trade ardour, but if we could apply the levy support for oil solely in the United Kingdom as opposed to applying it within the whole of the EEC, would he regard that as sensible? If it were sensible for this country, why would it not be sensible for the EEC?
§ Mr. Hooley
We have in the past taxed oil to suit our own internal economy—in particular, to try to protect coal—but the product of that taxation came to the British Exchequer and benefited the British taxpayer. It was not handed over to a central European bureaucracy for it to deal with. I agree that taxation existed, but its purpose was not to keep our cheap and abundant supplies from the world market but to raise revenues for our internal social purposes. That is a very different kettle of fish.
§ Dr. Phipps
Now, we as a country will soon be producing expensive oil. Would my hon. Friend therefore support our not producting our expensive oil but instead importing cheap oil?
§ Mr. Hooley
We shall have to see how prices vary. We have in the past, I agree, pursued a policy of subsidising coal production when it suited us for internal purposes. There is no reason why we should not do that on a limited scale for oil.
However, if we accept that on a European basis we shall drift into exactly the same position as we are in as regards 1231 agriculture. We shall find ourselves discriminating against abundant and possibly cheaper sources of power from the rest of the world in order to maintain an artificial fuel economy within the Community at large. That is exactly how the CAP has developed and the principles of these documents are identical.
§ Mr. Hooley
Up to a certain point we have supported the coal industry by subsidy controls and by taxation on oil. That taxation accrued to our Treasury and was redeployed for the benefit of our people. It was not handed over to a central bureaucracy for its purposes, which is quite a different matter.
§ Mr. Hooley
They may or may not be. I do not believe that the CAP is proving that.
The other problem is that this policy is not likely to benefit the consumer. As the Document frankly points out, the workings of the minimum import price mechanism—assuming it comes into effect—would pass on to the consumer the burden of protection if the price of imported oil was to fall drastically. In other words, we should have a parallel situation to that of agriculture where the consumer would be compelled to pay continually a high energy prices, whatever the general level of prices in the world. The Document continues in the same vein to advocate an intervention system for coal. It says:The Commission considers that the Community should allocate annually a maximum sum of 50 million u.a."——about £30 million——for intervention purposes.There again, we could face the danger, which is already partly apparent, that we could have an intervention system under which surpluses of coal were continuously built up, not because they were required on any rational fuel policy within the Community, but simply because the inter- 1232 vention system had been established, had got out of hand and the vested interests therein were too powerful to prevent it from being reversed. That is exactly what has happened as regards dairy products. In other words, this Document proposes a high-cost energy system on top of a high cost food system.
We should carefully examine whether we want this pattern of energy pricing within the Community to be imposed on this country. The hon. Member for Oswestry said it was a gesture and that it was symbolic. There is some force in that because for the moment the world price of oil is above the price of the import levy price suggested in this Document. However, we do not know how these prices will vary. We could easily find ourselves in very much the same position as we are now in as regards agriculture and food products.
In terms of investment the Document lays out certain proportions which it considers should be applied to different types of fuel. It suggests a 5 per cent. investment for coal, a 27 per cent. investment in nuclear power and a 35 per cent. investment in oil and gas. I am not sure that those would be the proportions that this country would wish to spend. After all, we are extremely rich in coal, oil and gas and it may be that in the shorter term a better policy would be to exploit those resources than to spend enormous sums on the development of nuclear power. That is a matter that the Government should examine very carefully before getting lost in the obsessive approach of the Commission to the possibilities of nuclear power.
The essence of the Commission's thinking is clearly that it wants the Community to be totally independent, or as independent as it possibly can be, and the Commission sees a short cut to that in a massive nuclear programme. The nuclear programme is coming under increasing attack on environmental and other grounds, not merely in Britain but in the United States and elsewhere. We should be somewhat wary of committing ourselves entirely in that direction.
That brings me on to the other Document and the question of the fusion work and whether it should be based on Culsham, Ispra, or elsewhere. It seems to be a matter of common sense that in this 1233 field it would not be reasonable for Britain to try to go it alone and that a co-operative programme with other Western European countries is sensible and, in fact, indispensable if we want to go for energy from this source. Therefore, I have no objection in principle to the idea of collaborative work through the European Community on power from fusion.
However, this gives rise to questions, which the Government should consider, as to what our programme should be in the overall field of nuclear power. After all, we have the Magnox stations. We have the AGR reactors. We have committed ourselves to the heavy-water reactors. There is also, way up in the North, the fast-breeder reactor. Are we to add to our commitments—admittedly joint commitments with other countries—a highly expensive and very uncertain fusion programme, in addition to all these other different types of nuclear power producers?
If the Government want to go for the fusion programme because they consider it sensible, I should have thought that there was a good case for considering whether, in addition, they need to persist with the fast-breeder reactor, which is coming in for increasing criticism on safety and scientific grounds. We have three systems already—Magnox, AGR and SGHWR. We are looking at the long term, and I understand that it could be at least three decades before we get an effective power system from fusion. Is it sensible to have yet another system, the fast breeder, which will clearly cost a great deal in terms of energy, manpower and so on?
I should have thought that the argument about the siting of the Joint European Torus was a good opportunity for us to take stock of our different nuclear systems and to see whether some slight rationalisation of what we are doing is possible. In that sense this Document is useful to the House and it has been useful to debate it. However, I remain of the view that in many of these highly technical matters relating to energy and different energy sources, the House would be well advised either to create a specific committee to study them in more depth than can be done in a single evening's debate or to refer some of the matters which are arising to the excellent Com- 1234 mittee that already exists—the Select Committee on Science and Technology.
§ 8.45 p.m.
§ Mr. Gordon Wilson (Dundee, East)
This has been an interesting debate, conducted in a thoughtful way. Since we are dealing with matters related to the EEC, I cannot take a distinctively Scottish line on the tug of war which is taking place between Italy and England.
There are two benefits that flow from research projects of this kind. The first relates to research activities, the work they create and the advantages that accrue to communities in areas in which those activities are housed. It has been said that there is no major EEC research centre within the United Kingdom. The second benefit flows from the fact that the results of any research will be of advantage to those who fund the research.
I have examined the list of pluses and minuses of the various sites which have been proposed. On first reading it would appear that the Italian site produces the best factors. I take the point that the existence of research workers specialising in this technology is an important matter. However, our experience in Scotland is that, unless a sufficient amount of research is carried out, there is a danger of a brain drain. That brain drain could occur on a European basis and affect England in the same way as Scotland has been adversely affected in many ways in the past.
We must be careful about the danger of centralisation of research within the Common Market. The prospect of centralisation was a major factor that affected many people's mind at the pre-referendum debate and indeed it caused them to regard the activities of the Common Market with some suspicion.
In examining the siting of the new research project, it is important to realise that the research capability will be important for the EEC and for the world. Some hon. Members have mentioned the energy gap that could occur by the end of the century. The worry is that existing construction of nuclear reactors in the United Kingdom could be outdated or obsolescent by the time other kinds of reactors are available. If a country has built up a nuclear-generating capacity on the basis of existing technology and misses out on the next stage of development, it is 1235 no easy matter in terms of development to meet the exist of replacing that technology.
It is interesting to note that in the targets set for the consumption of electricity produced by nuclear generation Scotland will be high up in the league. The situation in Scotland will be different from that in England.
We see from Document R210/76 that by 1985 it is estimated that 60 per cent. of electricity generated in Belgium will be produced by nuclear means. In France and Luxembourg the figure could be as high as 70 per cent., in Germany and Italy 40 to 45 per cent., and in the United Kingdom, Denmark and the Netherlands 25 per cent. That United Kingdom figure of 25 per cent. has a high Scottish content.
The plans of the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board show that there is to be a great increase in capacity. At 31st March last year the installed megawatt capacity of those boards came to a total of 8,263, but the ultimate capacity envisaged by 1985, allowing for completion time, will give a megawatt capacity of 18,163. That would take in the full 5,280 MW capacity envisaged at Torness. It seems that Scotland will move ahead substantially in nuclear generation and that if one adds Hunterston C to the Torness project, we shall have a capacity of 20,803 megawatts by the late 1980s, to be set against the figure of 38 per cent. of estimated growth in consumption over that period.
The figures are interesting. They will take Scotland into the European league in terms of percentage production by nuclear means. But that also must be set against the fact that Scotland has alternative sources of fuel, although some of that would not be suitable. Oil, for instance, is not suitable for burning in power stations. When looking at envisaged investment in existing nuclear technology one must question whether we might be going for over-production and perhaps resting our production on obsolescent technology if the other forms of energy mentioned in the debate today become available.
It is a difficult problem, because as energy becomes available more cheaply than that produced by existing nuclear 1236 reactors, we could end up in the unfortunate situation of over-expensive production. There should, therefore, be some scrutiny of the energy policies of the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board. I am sorry that no Scottish Minister is present in the Chamber. Although two of the Ministers are of Scottish extraction, they do not have responsibility for the generating policies of the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board.
One of the factors which must be taken into account when dealing with nuclear generation was referred to by the hon. Member for Exeter (Mr. Hannam) when he spoke of the future scarcity of uranium supplies. The point was made very timeously is an article in The Times today. Nevertheless, unless one can make better use of uranium than at present, one must regard it as a finite fuel. One hopes that breeder reactors and methods of fusion will develop so that our supplies of fuels for nuclear generation can be used more effectively.
The EEC Commission deserves to be congratulated on its proposals to encourage exploration for further supplies of uranium in Europe. Hon. Members from Scottish constituencies will know that low-grade ores have been discovered in Orkney and Caithness, but at present they are not worth exploiting. As uranium becomes progressively more expensive, these deposits could be a useful stop-gap.
The subject of energy saving is also mentioned in the Commission Documents. Much common sense is talked about the need for thermal insulation. Hon. Members will be aware of complaints from their constituents who live in modern houses, particularly local authority houses, which have poor insulation.
I receive many complaints about condensation, or, as my constituents prefer to call it, dampness. The only advice that they can obtain from the housing department, which does not agree that it is dampness, is that they should open the windows to ventilate the house and burn electric fires. It seems to them that that advice is akin to the description by Sir Thomas Lipton of ocean racing, which, he thought, was like standing in a cold shower and ripping up £5 1237 notes. Certainly, those who have to open windows and see the heat go out of a house to cure condensation would consider that to be a similar experience.
We have left the development of insulation very late. Much modern housing is deficient in this respect and I am not yet sure that standards of public housing in particular are up to what one would expect. On a visit to Norway last year I found that one of the claims made by the builders of prefabricated houses was that they could cut fuel bills by 50 per cent. if the same houses were erected in Scotland, taking the expenditure and the consumption in a given area. They have tested their own houses against what others had to face.
That may have been part of a sales technique, but I was not there with the aim of buying houses, so I see no reason for that belief. I believe that it is agreed that houses with good insulation standards can make the best use of fuel and therefore there is a saving, not only to those who live in the houses, but to the country concerned.
A support price has been mentioned. If the price of oil were to drop to $7 per barrel, the effect would be cataclysmic, not only in relation to oil over the world, but to coal, because as a result of the increase in oil costs, other energy prices have been adjusted accordingly. It would be a bad thing for the world in another way if the price were to fall, for it would lose the incentive to search for alternative sources of energy, but I do not see and have not been able to find any real evidence that the price of oil would be likely to drop back to the $7 figure.
It is possible, should consumption decline, for there to be an easing of the price, but I am sure that once the world recession is over and the effects of increased cost have been tuned in, there will be a rising demand and with that rising demand will come a hardening of price. This view is borne out by the World Bank forecast that oil prices could rise to about $15 a barrel eventually before stabilising.
Again, even if this day of judgment came and the price fell to $7, one would have to deal with two specific situations, because in relation to those oil fields which have been developed in the North Sea there are two factors. One is the 1238 capital cost; the other is the running cost. In both respects North Sea oil is more expensive than Middle East oil. But it would take about three and a half years in some cases to repay from production the original capital costs, and the main factor would then be running costs. As we should be dealing with lower prices and profits, the main effect would be to reduce the revenue available to Government.
Another effect would be to rule out any fresh production and investment decisions until such time as oil prices recovered to meet the cost of production. The hon. Member for Oswestry (Mr. Biffen), who was a bit coy about expressing the views of his own party about energy, had a good point when he mentioned the need for the Common Market to take cognisance of national points of view. This is a sensible argument and I understand that the Government accept it. If an EEC energy policy is developed, it should try to meet the main aims of both the producing and the consuming countries.
The Government must bear in mind the Scottish dimension. If one has to take cognisance of national aims and policies in the EEC, it is essential within the United Kingdom to pay heed to the Scottish needs in depletion and development policy. If that is not done, difficulties may be caused later. The original production figure of 180 million tons a year which the Commission had in mind would be unacceptable, if the major proportion were expected to come from the Scottish sector of the North Sea.
I assume that one of the reasons for this debate is that the Government want to know the opinion of the House on these energy Documents. Scottish independence is becoming a reality and the Government are beginning to break up, with the vote in the House last week and the loss of the Prime Minister today. It is essential that over the next few months, or years if the election is delayed until the Government have tried to recover, full account should be taken of the Scottish position.
§ 9.2 p.m.
§ Mr. J. M. Craigen (Glasgow, Maryhill)
I take it from the remarks of the hon. Member for Dundee, East (Mr. Wilson) that he accepts the concept of a 1239 minimum selling price. He dwelt at length on other uncertainties, both in political and in energy matters.
One of the problems in these uncertain days is allowing oil, gas or electricity industries to operate on the basis of known demand over a number of years. I hope that my hon. Friend the Under-Secretary will say a little more about the minimum selling price and why it should be $7 a barrel.
Document No. R/210/76 is highly important and has enormous implications for everyday life at home and in our cities and rural areas. From the section dealing with proposals for transport structures it is obvious that the Government are proposing to accept a switch of resources between private and public transport. Various measures are outlined in the guidelines which suggest that member Governments will now have to encourage public transport at the expense of private transport.
I do not take exception to that, but it does surely suggest there should be much more interdepartmental activity within the United Kingdom Government. I wonder how much liaison there has been between the Department of Energy and the Ministry for Transport on some of these proposals.
In his opening remarks, my hon. Friend the Minister of State did not say much about the "Save it" campaign. Many of us have the impression that more money is spent on public relations than on achieving savings in energy consumption. If we are to make an impact on the consumption of energy we must apply ourselves to the problem more realistically than by merely conducting an advertising campaign, as we have over the last year.
We all realise the need to reduce the extent to which we are dependent on other countries for our energy requirements. Some of the suggestions made in the Community Document about how far we can go in reducing our dependence over the next two or three years on the OPEC countries are unrealistic.
§ 9.6 p.m.
§ Mr. Evelyn King (Dorset, South)
I was glad to hear the concluding remarks of the hon. Member for Glasgow, Maryhill (Mr. Craigen). The hon. Member for Sheffield, Heeley (Mr. Hooley) spoke 1240 as an economic libertarian, and to that extent I am in sympathy with him, but the weakness in his speech was that he seemed to wish North Sea and other oil to be available in this country as cheaply as possible and to think that that was all that mattered. I cannot share that view. I might share it in any other context, but not in the context of energy.
As the hon. Member for Maryhill said, far too little attention is paid to security. It is intolerable for Britain to be dependent for a moment longer than necessary upon the Arabs and others on whom we have too little influence. That is the major aspect which overrides economic and price considerations.
We must also have regard to the security of other sources of fuel, including coal. In recent decades we have more than once been threatened by the cessation of coal production. We have three major sources of energy and we should see that at least two of those sources of energy are under our control so that if there is any problem with the third we can survive on those two sources. In considering the three main sources of energy that consideration should have high priority.
The motion and the amendment call for the House to take the view that Culham is the best site for the JET project. I do not doubt that Culham is the best site, and we should use all our influence in Europe to secure that end.
I mention my constituency only incidentally. There the Minister does not have a very good record. We had the Dragon project at Winfrith, but it was closed down at very short notice. The gravest economic harm was done to Dorset. I do not only complain about the dissatisfaction of the staff. I complain also about the letter from the Department of Energy dated 3rd March giving the reasons for the closure of the Dragon project. Above all, I question the accuracy of the events which led up to that closure.
No one not actually in the centre of negotiations can speak with certainty, and I do not claim to do so, but I say with emphasis that in Europe this country has a bad reputation—and it is growing—for its attitude to European projects. I accept the Minister's good faith in believing otherwise and in saying that he wants to be a good co-operator. 1241 I am sure he does, but he starts with a bad record, and I hope he understands that.
The Dragon project at Winfrith started out with the highest hopes. We employed in Dorset large numbers of foreign scientists, engineers and administrators, to all of whom I give the highest praise. They contributed much to Dorset socially and technically. They feel—this is not in dispute—that they were treated extremely badly. They settled in the county, they bought houses, they sent their children to English schools, and then, as it seemed to them, at the shortest of notice their jobs were terminated. They have gone, or are going, I know not where.
On top of that we have the Minister's letter which was sent, I believe unwisely, to Mr. Springorum, Chairman of the Committee on Energy, Research and Technology in the European Parliament, setting out an account of the events which led up to the termination. I would not say that it was false in any factual sense, but it conveyed an impression to Europeans living in Brussels, and serving in Dorset, that they were entitled to resent. They resent it very much.
We want Culham and we want the sympathy of Europe. We shall get the sympathy of Europe, but only when we are shown to be sympathetic to Europe. We have not yet reached that position.
§ 9.12 p.m.
§ Mr. Peter Hardy (Rother Valley)
The note struck by the hon. Member for Dorset, South (Mr. King) in his speech is a little unfortunate, because there seems to have been a real degree of agreement between both sides of the House. It is rather regrettable that the hon. Gentleman was so busy showing sympathy for foreign scientists that he did not properly acknowledge that it would be quite wrong for the Government to finance a very large part—almost half—of what was supposed to be a multi-nation endeavour.
If we are to be the host for multi-nation co-operation in this field, we are entitled to expect our partners to pay a fair share of the bill. The other Europeans were very interested in the project at Winfrith, but not so much in the financing of it. That is not an attitude which my right hon. and hon. Friends on the Treasury Bench could support.
1242 Apart from this aspect, the debate has proved to be very interesting. I am sorry to note that the hon. Member for Dundee, East (Mr. Wilson), who spoke about oil, is not in his place, because I wanted to make the point that he and his party seem, despite what he said this evening, still be to geared to the belief that they can have high growth in industry in Western Europe and high energy prices, and therefore a high standard of living in Scotland.
If we are to see high energy prices, we are in danger of not securing the high level of growth which one or two hon. Members have been forecasting this evening. If energy prices soar to a higher rate than we have experienced on average in the last three years, or in the three years which preceeded the Yom Kippur war, it seems to me that that is a factor which may well take off the peak of the next international boom. That may well mean that the affluence which Scotland expects will not be achieved.
There are also very serious dangers in a low price, which is why I think it would be foolish for the Commission or for my right hon. Friends to rule out entirely the temporary use of a pricing floor mechanism for oil. However, that matter lies ahead. My hon. friend the Minister and the hon. Member for Oswestry (Mr. Biffen) were perfectly entitled to say that a glib assumption that our oil can cure all the problems would be mistaken. There needs to be a good deal more careful thought and a greater degree of realism inside the Commission and amongst all those responsible for the determination of Community energy policy before we accept that as an easy solution.
I wish to underline the point made by my hon. Friend the Member for Normanton (Mr. Roberts). I must express a personal difficulty. I have a great deal of sympathy with the comment made by the hon. Member for Oswestry that liberal trade is desirable. However, it is also desirable to sustain the British coal industry. It is entirely foolish for Europe to be looking towards the North Sea as a supply of energy for itself and not merely for Britain and at the same time to endanger the permanent continuity of the major coal industry inside the Community.
1243 Polish coal prices today are ridiculously low. It has been suggested that they were below the level of costs of production. The people responsible—this basically concerns electricity generation in North Germany—are taking a shortsighted view. If Europe is at present flirting with the establishment of a common energy policy it cannot afford to endorse short-sighted activities of that kind.
I hope that my hon. Friend the Minister and his right hon. Friend the Secretary of State will bear in mind the point which has been made quite properly by my hon. Friend the Member for Normanton—a point which has certainly been seized upon by the National Coal Board, which has commented about it quite recently, although it is a fact that some of my hon. Friends and I were commenting on it three, four and perhaps even five years ago. The present pricing of Polish coal in Germany is so ludicrously low that the Germans themselves should wonder what gifts are being borne.
I wish to refer to the comments of my hon. Friend the Member for Dudley, West (Dr. Phipps). The hon. Member for Oswestry said that my hon. Friend the Member for Fife, Central, (Mr. Hamilton) commented that as a good European he was quite confident that Britain should use all its indigenous oil. My hon. Friend the Member for Dudley, West added the qualification that the British people should be aware that much of the oil we shall soon be extracting from the North Sea will be of such a high quality that it would be foolish to waste it on basic purposes. I see no objection in not serving the national interest by adding £120 million or £150 million—
§ Mr. Biffen
I find myself in the most extraordinary and unsought rôle of defending the hon. Member for Fife, Central (Mr. Hamilton). The hon. Gentleman did not say that Britain should use all the oil lifted from the North Sea, but that it should retain control of its destination, which is a rather different proposition.
§ Mr. Hardy
I have not fully recovered from gastric influenza and I hope that the House will forgive me if I have misinterpreted the report of what my hon. Friend the Member for Fife, Central 1244 said. The fact remains that my hon. Friends the Members for Fife, Central and Dudley, West can march together in continued unanimity. There is a good deal of profit to be made, and we can make it without surrendering control.
§ Mr. Biffen
I do not want to labour the point, but I am sure that the hon. Member for Dudley, West (Dr. Phipps) would be the first to agree that this matter touches upon a point which needs to be given further attention. It concerns the amount of downstream activities and refining which one might expect to take place in this country. That is the point at issue between the hon. Member for Dudley, West and the hon. Member for Fife, Central. However, there will be sufficient divisions on the Treasury Bench and Back Benches over the next few weeks, and therefore perhaps this is a luxury we can postpone for a little while—but we cannot postpone it for ever.
§ Mr. Hardy
We have at present a surplus of refining capacity. The latest planning approval of a refinery has ensured that any conflict of interest or any clash of personalities in that sphere will be avoided for a little longer.
In spite of my disagreement with the hon. Member for Dorset, South, I am sure that we agree about the need for the fusion project to be sited in the United Kingdom. That is entirely justified. The point has already been made that we are the only member State without a major European research project under way. We are pioneers in the whole subject of nuclear research and technology, and Europe could recognise that and pay tribute to it by siting the project in this country.
We should be careful, however, not to get into the situation in which European financial resources are so over-committed to research into nuclear capacity that the need to continue research into proper and effective use of solid fuel is overlooked. We have begun to make strides there, and it would be appropriate for the Minister to remind the House of some of the achievements and potential achievements of that research.
§ 9.22 p.m.
§ Mr. T. H. H. Skeet (Bedford)
One hon. Member asked why the floor price 1245 for oil had been set at $7 a barrel. Document 210/76 says that if the priceshould fall in real value to $7 then 25–30 per cent. of the energy production forecast for the Community in 1985 would no longer be economic. If the price fell to $5 around 50 per cent. would be uneconomic.But, surely the point is that even if it were possible to secure that price agreement amongst the European States, with the exception of France, if the price fell as low as $5, those countries would go for the cheapest source they could secure and it would be unreasonable to expect any of them to adhere to that price. I accept the liberal moves which have been expounded by my hon. Friend the Member for Oswestry (Mr. Biffen). I have often been misreported in this House as saying that I support the floor price system.
I wish to confine my attention to the document relating to the Joint European Torus. Perhaps I may put three questions to the Government. What is the future of national research programmes on thermonuclear research now that there is the prospect of a central site with a budget allocated, deriving 80 per cent. from the Commission and 20 per cent. participation from member States? Does it mean that if the project did not go to Culham, the laboratory would have to be dismantled? Does it mean that we should have no research centre for this extremely important subject?
Is it appropriate to create a Community fusion centre at this stage in view of the interrelated activities and collaboration between the member states? Or are we to continue with a centralised body making the finance available? That is another problem that must be resolved.
Thirdly, since the United States, measured by its target expenditure, is likely to have a considerable lead over the EEC, would it not be commercially more prudent eventually to license United States technology at a later date? After all, Continental Europe pursued this course with fission by licensing Westing-house light-water reactors.
The EEC programme, which is for a 15-year period, is costed at about £70 million. The United States project is a rolling five-year programme involving expenditure of £100 million in 1976 and of £150 million in 1977. After five years the total will be £1,000 million.
1246 Naturally, it could be said that the USA has a 25-year lead time. It may be said that we could save the considerable sum which is to be spent on a research centre, wherever it is to be in Europe, by obtaining a licence at a later date. I proffer those three suggestions for the Government to consider more carefully before moving on to the next stage of deciding the exact location.
I am bound to suggest that the research centre should be Culham. I approach the matter by asking whether the Commission is asking itself the wrong questions and whether it is giving sufficient weight to the issues that really matter, the issues vital to the success of the project. The siting committee posed the point concerningthe possible importance of putting the project in a centre possessing an environment of people competent in plasma physics.It noted thatThe sites of Culham and Garching have a large environment of professionals and technicians specialised in plasma physics, closely followed by Julich.To my surprise it concluded:As far as the scientific aspects are concerned, for the reasons set out, the Commission does not consider that the presence or the absence on the site of previous experience in plasma physics is determinant".How can it conceivably reach that conclusion bearing in mind that it is prepared to invest £70 million over 15 years? How can it put scientific value at the bottom of its considerations and place matters such as social facilities in a very much higher context?
I think that it will be generally agreed that Dr. Marshall, the Chief Scientific Adviser of the AEA, is a fairly independent witness. On 27th February 1976 he was reported in the Financial Times as saying:Plasma physics is really tough—much tougher than building an accelerator which is a well-defined engineering task. Plasmas are a whole new state of matter, the science of which is not understood. Any machine you build in plasma physics is intrinsically surrounded by uncertainty. Therefore to have a very powerful scientific and technological background is a pre-eminent factor to determine success, and Culham is the site in all Europe giving the maximum chance of success.I hope that the Government will endorse that view. That is the view of their own scientist, an independent man and fair in his judgment.
1247 I should say that in this phase the United Kingdom has an excellent track record. The JET project derives from a Russian invention—namely, Tokamak—which itself derives from a United Kingdom experiment in the 1950s, then described as Zeta. Furthermore, JET has been designed by an international team of 57, 40 per cent. of whom are British. The team was lead by a French fusion physicist by the name of Dr. P. H. Rebut. The team worked at the Culham laboratories of the AEA. Work was commenced in 1974. It involved a large United Kingdom study.
The Commission's plan would involve transferring the Community's international fusion research from Culham to one of its own JRCs in Italy—namely, Ispra. It would be transferred from the United Kingdom but that does not necessarily mean the selection of a French site.
It is only right to say that Ispra has had virtually no experience in plasma physics and that only a modest programme was begun in 1974 on fusion technology. Its revised 1973 programme is based primarily on reactor safety and new sources of energy and includes nuclear safety, radioactive waste, hydrogen production and development, and solar energy. If the Commission were to draft in fusion, environmental resources and service activities, the total staff required would work out at between 630 and 930 scientists, and between 70 per cent. and 74 per cent. of all research workers in JRC establishments would be located at Ispra.
What is really significant and what the House should bear in mind is that the Community's only major project, Orgel, which was based at Ispra, failed. Essor, at Ispra, is a heavy-water moderated organic liquid-cooled test reactor. It is linked to the Orgel project, developed by the six Community countries in the 1960s. The project failed following the Community's decision to opt for United States reactor systems. It represents the Community's only experience of handling a major project. I think, therefore, that I have outlined to the House—and I hope that I have succeeded in convincing the Minister—that Culham is the first priority on the ground that it has the environ- 1248 Mental facilities and the skilled people available to make a success of the project.
I now turn to Ispra, because I want to advance some of the arguments. It has a poor international image and has been described in the national Press as beinga cross between a geriatric centre for obsolete scientists and a revolutionary cell for Italian unionists.It has chronic labour problems, and these have abated only pending a decision on the JET site. No Community member can rejoice at the prospect of a vital research function being placed in Italy, particularly when this may represent an area where the Communists are growing in strength in the Government.
If Ispra had a good track record, there would be argument in its favour. But since its initial budget in 1973, which was designed for a four-year term, Ispra has been compelled to operate virtually on a year-to-year basis. Due to the parsimony of the member States, it was granted quite insufficient money. Therefore, virtually the whole sum has been spent on operating expenses, and little money has gone into research.
The International Energy Agency has allocated thermonuclear research to the Commission, and indisputably it is for the lead authority—that is, the Commission—to shape the course of development of this aspect of research. I confess that the Commission will select, and has the right to select, one of its four JRC sites—Ispra, Karlsruhe, Patten and Geel—and it must take into account whether any one of these is unsuitable and, indeed, whether any site inside the Community has superior amenities. I suggest that on this occasion it should be here in the United Kingdom.
There is a very important argument which we should consider. Italy has claimed that its share of allocations internationally and in a European context has not been as favourable as those received by other member States. If this is true, it might be argued that the Italians should be considered as first claimants for thermonuclear research.
But let us for a moment examine the claims. In terms of enriching uranium, the tripartite gas centrifuge treaty was concluded between the United Kingdom, the Federal Republic and the Netherlands. It was felt that the Italians had been excluded from this arrangement. However, 1249 this is not necessarily the case. The Italians appear as members of the French EUROD1F project, which is the gas diffusion plant, and this associates France, Belgium, Italy and Spain. Therefore, the Italians are not eliminated from that association.
Then there is the reprocessing of irradiated fuels. In 1971, United Reprocessors Gmbh was formed associating British Nuclear Fuels Limited, CEA of France and KEWA of Germany. This was not expected to include the Italians, as their nuclear programme was then much smaller than those of the remainder of the people inside the Community, especially those of the United Kingdom, France and the Federal Republic.
The United Kingdom has a net capacity in operation of 5,563 MW. Under construction, there is another 6,200 MW. France has 3,901 MW in operation, with another 11,000 MW under construction. The Federal Republic has operating 2,973 MW and under construction approximately 15,000 MW. Italy has operating only 597 MW of nuclear capacity and under construction well under 1,000 MW. Therefore, it is obvious that Italy would not figure in the reprocessing of irradiated fuels on an international basis, although it has a reprocessing plant.
It is argued that the International Energy Agency did not give Italy satisfactory allocations. The National Coal Board is a beneficiary of one of its ideas. Nuclear safety has been referred to another organism inside the OECD, but the Commission has referred nuclear safety study to Ispra. Hydrogen development has also been allocated by the IEA to Ispra. Geothermal research and development has been awarded to Italy. Therefore, Italy has done remarkably well on that score.
It is only right to indicate that Italy has done remarkably well in the allocation of international and other European high temperature reactors. Novatome, which was recently brought into being, associates France and the Federal Republic in high-temperature reactor development following the collapse of the international facilities at Winfrith Heath. Italy was associated through the Commission—Euratom—in the Dragon project and probably maintains an interest through the European Nuclear Steel- 1250 making Club which has joined Euro-HKG, created to serve the potential customers of the high-temperature reactor. The Italians have not been left out on that score.
On fast-breeder reactors, while there is a link between Kraftewerke Union of the Federal Republic and the United Kingdom, there is nevertheless a tripartite agreement between the State-owned electricity utilities of France, Italy and the Federal Republic to share the cost of the construction and power output of Superphenix to be built on the Rhone and likely to be Europe's first commercial fast-breeder reactor. I think that has demolished the argument that Italy has not been adequately served.
I should like to deal with some miscellaneous factors and bring them together. In scientific and technical competence in the area of plasma physics Ispra's experience is virtually nil. Regarding electricity availability, Ispra is rated as excellent, but Culham and Julick are rated as very good.
Concerning tritium, materials and safety, Ispra is inferior to Cadarache in France and only marginally better than Culham. High-temperature materials are handled by a separate JRC establishment at Petten in the Netherlands.
Regarding industrial support facilities, the ability to handle large-scale plant activities will depend on large engineering manufacturing capacity in the Milan area. That fact is recognised.
I now come to the accommodation available for research. The Commission, in Document R 2627/75, at page 8—this lets the cat out of the bag—states:
The introduction of new activities of significant magnitude on the Ispra site, alongside even a reduced JRC programme, should bring more rational utilisation of the existing infrastructure. Thus, in addition to the numerous technical advantages offered by the site for accommodating the Jet project, the presence of this machine at Ispra should permit this rationalisation and allow significant savings through the combination of two programmes.I dare say that the Commission, for political expediency, to utilise the facilities a little better and ignoring all the technical and scientific qualifications which may be necessary, earnestly recommends that the new research programme should go to Ispra.
1251 Finally, there are two points which the Commission puts at the top of its list but which come at the bottom of mine. On the general support position, Ispra is less favourable than Julick but on a par with Culham, Cadarache and Garching. On infrastructure of social facilities, Ispra is rated excellent. This, of course, includes the presence of a European school, which the Ambassador referred to in a letter to the Financial Times the other day, housing and buildings to accommodate research.
It would not be right to take up any more time, but I think it was only right to set out at some length the argument why research facilities should come to the United Kingdom. This matter has been considered by the Scrutiny Committee, but it is only right that we should debate it here. I hope that the Commission will note our arguments.
There could be arguments on other important points, like the floor price, the coal industry, how far we should expand our nuclear industry and whether we should have a larger programme. I hope that the Government will bear in mind that other aspects of the Documents should be considered. To suggest that we can adequately canvass the arguments on the Documents before us in the Chamber is quite unrealistic.
§ 9.42 p.m.
§ Mr. David Penhaligon (Truro)
I have tried to gauge the feeling of hon. Members during this debate and I fear that I am nearly on my own in believing that the basic premise of the Documents is wrong—the commitment to generate about 50 per cent. of Europe's electricity by nuclear power by 1985. That is only nine years away and physically it cannot be done.
We have learned today that there is a real risk of uranium fuel shortages in the next few years because of this programme and a real possibility that in a few years nuclear energy will face the same problem as other methods of generating power. Basic fuel will be in short supply and people will begin to worry about the long-term prospects.
But it is safety which worries me most. I am by training an engineer. Experience of running a research department dealing with something very different from 1252 nuclear power has convinced me that one is always tripped up by the unknown. Despite our recent debate on nuclear safety, I am not happy. As well as the unknown, there is the obvious possibility of terrorism. But what struck me most in that debate was the inadequacy of our procedures for discussing something of this technical complexity.
I know just enough about nuclear power to know that I know nothing about it. That did not seem to be the general feeling of the debate. All I can do, given the opposing arguments, is ask half-intelligent, or even quarter-intelligent, questions and to try to decide which is likely to be the safest course. A debate here will not achieve that.
§ Mr. Albert Roberts
The experts have been giving opinions about nuclear power for 30 years and have been proved entirely wrong.
§ Mr. Penhaligon
We have not had nuclear power for 2,000 years. Perhaps if we had we should be much better informed than we are now.
All the politicians can do about something as technical and dangerous as nuclear power is to sit down and let the experts present the arguments as they see them. The unenviable task of the politician is to back one horse or another, or perhaps in some circumstances to say "We shall try no horses at all". The experts have been wrong, which is the very point I tried to make. The transfer to nuclear energy is the result of the chronic shortage of fuel and energy that hit this country two or three years ago.
The fact is that we have oil, enormous quantities of coal and substantial quantities of gas. Although I do not want to see the nuclear power adventure stopped, 50 per cent. of Europe's power by 1985 is quite a ludicrous target—one which we shall not achieve and to achieve which we may take real risks with the community in which we live, risks that are not acceptable.
§ Mr. Penhaligon
The hon. Gentleman speaks with tremendous knowledge. I have spoken to eminent physicists who have Ph.Ds and various other qualifications. I do not know the hon. Gentleman's qualifications, but I can present well-qualified people who would argue that the risk is there. We do not know the percentage but the risk is there. Those people say that we take great risks.
Most of the remainder of the Document includes a magnificent diatribe on thermodynamic efficiencies, most of which even I know from my knowledge of thermodynamics. The Document points out interesting and exciting innovations For example, if one does not put the brakes on so often when driving, if the car is in better shape or if one insulates a building one will use less fuel. If six people are in a car instead of two, in terms of passenger miles one will, again, use less fuel. It tells us that we could improve our efficiency of power and heat generation. It says that district heating schemes could make a real contribution to energy conservation. All that is true and I criticise it only for its obviousness.
The Document also reveals that this country leads the world in at least one area, namely, advertising. This is illustrated on every page which sets out a list of the things that various member countries have done. There can be little doubt that the United Kingdom is top of the league when it comes to advertising. There is very little else for which we are top of the league. We have introduced some compulsory regulations on insulating buildings. I recommend the reading of these revealing eight pages. However, on many pages the United Kingdom is shown to have done nothing other than advertise some fairly obvious energy-saving methods.
As we are conducting our discussion of energy at the "obvious" level, I want to give an example where energy savings could be made. This week I visited a constituent in an old Cornish house. He showed me a window which even when closed left a gap large enough to drop a packet of 20 cigarettes through. During the past few months I hoped that the Government's great job creation activity would have performed a useful service. Certainly my constituent's window could have been modified so that a packet of 1254 cigarettes would not fall out when the window was closed.
The unemployed could make a real contribution in work of this nature by using labour-intensive, elementary insulation practices in ordinary private homes. To date, at least, I see very little of that being done.
The third and last thing to which I want to refer is the very good piece in the Document about solidarity in the event of oil supply interruption. I think that it is obvious to the House that we all want to avoid another crisis along the lines of that which occurred in 1973–74. When Holland appeared to be the only country to have the courage to hold to its anti-Arab position—whether or not that was justified, at least Holland held its political opposition—I did not find it a very edifying spectacle to see the rest of the European countries scurrying for cover and adopting any sort of posture to get oil.
The EEC is right to talk about reducing our dependence on external primary sources of energy. We would, thereby, reduce the EEC's vulnerability while at the same time increasing ways of mutual support and trade in crude oil and petroleum products.
My main point is that the crisis of 1973 strengthened the need in the EEC for a common foreign policy. On that occasion we nearly landed up with the worst of all worlds. The need for a strong, clear and principled EEC foreign policy has never been clearer.
§ 9.52 p.m.
§ Mr. Edwin Wainwright (Dearne Valley)
I have listened very intently to the last two speeches. In their own way, both of them were extremely good. I think that I was probably dreaming a little during the speech of the hon. Member for Bedford (Mr. Skeet), as though I might have been listening to someone in the Italian Parliament giving a different version of why the JET should go to Ispra and not to Culham.
One thing about our nation is that we have always been very generous. Although we came into the European Community late on, we shall have to make certain that the EEC countries do not use us and the massive power that we have within our boundaries.
1255 As I read the Document, I am afraid that Culham will have a very hard fight, in spite of what the hon. Member for Bedford said, to make certain that it is the centre for the JET. It is quite plain from the Document that every argument has been put in favour of its not being in this country. It is also plain that, unless we put up a strong and bitter fight against them, the European representatives will ensure that Culham will not be the site for this new fusion programme and that it will most likely be in Italy, which, as has been stated, is probably the least efficient European nuclear power nation.
From reading the Document, I feel that the EEC countries are determined not merely to have the centre in Italy, but to take from this country our highly efficient nuclear technologists and scientists. We have a wonderful team at Culham with tremendous experience of nuclear power. If we allow the EEC to split up those scientific teams with all their technological knowledge our Government will not be doing their job. They must be firm on this subject, because it is obvious that the EEC countries will try to take advantage of our generous nature.
Although we talk a great deal about fusion, we must appreciate that there is not yet in the EEC countries the amount of fusion we as Europeans should like to ensure. Each country still possesses its own national spirit and is determined to look after its own interest first. Therefore, the other EEC countries are not entitled to demand of the United Kingdom that we should pass to them our scientists in order that those other countries may progress in this new technology.
On the other hand, we must not be selfish. On the information I have received, I am certain that Culham is the best base for this new fusion programme in the EEC. I hope that our representatives in the forthcoming bitter fight will ensure that we are successful in any negotiations.
The hon. Member for Bedford mentioned safety. It is a worrying situation. I understand that the effects of radioactive materials can last for as long as 20,000 years. Therefore, safety questions must be predominant in our minds in this useful, but obviously dangerous, 1256 industry. We must admit that we do not yet know enough about these materials. Although the United Kingdom must never lose advantage in any progress made in this respect, we must also maintain a high level of safety. It is undoubtedly known throughout the world that the safety of the United Kingdom industry is far superior to that of any other European country. It was rumoured in the United States not so long ago that some nuclear reactors were showing signs of becoming unsafe. This is a very important development and we must pay due attention to it.
It is well known in all the other EEC countries that the United Kingdom has large oil resources, and those other countries want their share. We sometimes talk glibly about the tremendous financial gains that will flow from North Sea oil. I hope that they will, but that financial gain is based on the fact that oil supplies from OPEC countries are being kept at a high cost level. In a future situation we could find those prices falling and therefore our own North Sea oil may not be worth obtaining.
I cannot believe that Germany, Italy and France would not take advantage of cheap oil supplies from OPEC countries, regardless of the policies laid down in the EEC. If those cheap supplies were available, we might be put at a disadvantage in respect of our own oil resources. I might be thought to be taking a gloomy view of the situation, but I believe that we must be realistic.
If we do not prepare for that, we could be at a disadvantage. We must ensure the United Kingdom has first claim on North Sea oil. When my hon. Friend the Member for Fife, Central (Mr. Hamilton) made the statement which was related to the House by the hon. Member for Oswestry (Mr. Biffen), he was talking about being a good European. He is probably a better European than many other Europeans from other countries, but he knows the sort of attitude which still exists. Until there is a greater understanding and acceptance of European countries being moulder together, we must ensure that we look after our own supplies of energy.
Although, as hon. Members have said, nuclear power is new and we do not know enough about it, I believe that it 1257 will eventually become the world's greatest source of power. It is anybody's guess what will happen after that. I suspect that there is a danger in the supply of uranium, although the fast breeder reactor will help to make certain that uranium lasts longer. But we must find other sources. There is probably plenty of uranium in the world, but we do not know where it is. We must go on searching for it. Uranium will be in short supply and will be a finite fuel for some time.
There is more coal in this country than we shall need for the next 200 years at the present rate of consumption, but there are still those hon. Members who believe that the coal industry should be run down still further. When I first came to the House, I looked forward to the day when I could say that there was no need for anyone to work in the mines. I worked in the pits in the bad old days and I know what it means. I could not make such a statement today, because friends in my constituency would lose their jobs.
We must ensure that the coal industry becomes more efficient and appreciated by the nation until we can provide other work for the miners. We shall realise the value of our coal more in 50 years than we do today, because if we are not careful by that time more pits will have closed, there will be fewer miners and demand will be greater than supply. Once we lose the miners, it will be difficult to persuade others to work in the pits. The more young people are educated, the less inclined they are to go into the mines to earn a living, and we understand that. We must ensure that the number of men in the mining industry is kept up to a reasonable level.
The level of imports is having an effect on morale in the industry. Although we have stocks of coal totalling 30 million tons, we are importing all kinds of coal. It is difficult to argue about anthracite, which is in short supply, but which we hope will recover. Other coking coal is also in short supply but not enough is said about blending.
Cheap supplies of coal are being imported from Poland and other countries. But sometimes we find that its price is far greater than that of coal produced in this country. Other coals are being imported into this country and 1258 into the EEC while we have stocks of coal and coal in the ground.
What kind of European relationship is this when Europeans do not say to the National Coal Board "You have coal which we want and we will take it from you"? They say "We can get it a bit cheaper from an Eastern European country", regardless of the fact that it is being subsidised by that country, and they take it. This is a lack of understanding between nations.
What is happening as a result is that the mineworkers of this country, who are fully aware of this situation, are embittered. A fear is now going through the coal industry that further pit closures are to take place in areas where there is a very high level of unemployment. When the facts are as I have put them this evening, one can appreciate that the miners have grounds for their anxiety.
I hope that when my hon. Friend on the Front Bench and others who might be involved hold discussions with representatives from EEC countries on the subject of energy they will take into account what has been said this evening, because this country has to build up its stocks. It has to revive. Not only mining but every industry in this country has to be encouraged to feel that in this bitter fight for survival in this competitive world we want to ensure that we stand on our own feet when it comes to battling with countries in the EEC for what is fair and just. I hope, therefore, that when these discussions take place my hon. Friends will be successful in bringing back to this country the results for which we are all hoping.
§ Mr. Speaker
Order. There are 33 minutes before the winding-up speeches and there are still three hon. Gentlemen who wish to be called.
§ 10.8 p.m.
§ Mr. Peter Rost (Derbyshire, South-East)
A number of speakers, and particularly my right hon. Friend the Member for Knutsford (Mr. Davies) and my hon. Friend the Member for Exeter (Mr. Hannam), have referred to the energy crisis that will face us unless we take appropriate action. There are two ways in which we can do so. One is to provide additional alternative resources. The other is to use less wastefully the resources that we have now and will 1259 have between now and the next two or three decades.
It is for this reason that I welcome the initiative from the EEC in these Documents on proposals for a more rational use of energy. I hope particularly that these proposals will act as a spur to this Government to shake them out of their rather complacent attitude of believing that by launching a "Save it" advertising campaign they have solved conservation problems. In my few minutes I shall attempt to indicate that, far from any complacency being justified, their contribution to a more rational use of energy in this country is just about bottom of the league and that we need to do a great deal more about it. We can less afford to waste energy than can other European countries because we are relatively poorer and our economy is relatively more sluggish.
It has been estimated that the provision of energy in this country absorbs about 15 per cent. of our gross national product. That figure has been rising in recent years, it is higher than our competitors and is too high because we waste too much. If we could reduce that proportion, we would be benefiting the economy, reducing production costs, improving our competitive position, contributing to a better standard of living, helping the balance of payments and putting ourselves in a position to reduce public expenditure. Above all, we could free the resources going into the GNP for other, more useful, purposes.
What does our conservation campaign look like compared with the campaigns run by our European partners? We have had an advertising campaign. It has been very effective and I do not wish to denigrate it, but every other European country has had advertising which has been just as effective. On the Department of Energy's own figures, the campaign has reduced energy consumption by about 2 per cent. The rest of the reduced consumption has been caused by the mild winter, the economic recession, and the economic pricing of energy. We have also had a small loans scheme to industry, which has been a flop, and some restrictions on lighting and speed limits.
Before we get too complacent, we should look at what has been done elsewhere, and the Documents show what 1260 other countries are doing in addition to their advertising campaigns.
Buildings and building services take about 40 per cent. of the energy in this country. Although our revised building regulations apply to new buildings, that is also the case in the rest of Europe. We are only now beginning to move up to their standards. On existing buildings, there is tax relief available for approved insulation work in Germany, France, and Italy, but not in the United Kingdom. Grants for approved insulation work are available in Germany, Belgium, Denmark, France, and the Netherlands, but not in the United Kingdom. Yet we need these incentives more because we are bottom of the league table of insulation standards in Europe. We should be doing more, not less, than our EEC partners in order to catch them up.
Grants are available for approved work on approved heating systems in Germany, Denmark, France and the Netherlands, but not in the United Kingdom. In Denmark, Germany and Italy, there are specific policies for the promotion of district heating, but not in the United Kingdom. Yet these countries already have more district heating than we have, and, one would imagine, need less promotion and incentive.
There is a tax régime which provides incentive for switching to diesel engines in Belgium, Italy and the Netherlands, but not in the United Kingdom. The combined production of electricity and heat for industry and district heating is positively encouraged in Germany, Denmark and Italy, but not in the United Kingdom.
In Belgium, Germany, France and Italy—which comprise virtually the entire European nuclear programme—nuclear stations will be sited only where they can be associated with industrial complexes for the provision of the processed heat to industry. But that does not happen in the United Kingdom.
From those few examples it is clear that our conservation programme is not coming up to requirements, although we are in more desperate need to promote a more rational use of energy than are our European competitors. An investment programme would be cost effective, would be in the national interest and would benefit the economy.
1261 The EEC report which we are debating tells us what others are doing and emphasises what we are not doing. The two main areas where we lag behind are thermal insulation and the application of combined electricity and heat to improve thermal efficiency, particularly in the electrical industry.
There are valuable pointers in the Documents, which I have not the time to go into now. Within the EEC 15 per cent. of electricity production is combined with the production of heat in power stations. That is done mostly by the process of removing steam by back-pressure boilers and the removal of steam by blowing off. Some is from exhaust heat from gas turbines and diesel engines. That figure of 15 per cent. is going up fairly quickly, particularly in industry. It is advancing in France, Germany and the Netherlands.
I shall draw my main theme to a conclusion by quoting two sets of figures which are very disturbing. The first table gives the percentage of electricity produced in European countries in the public and private sectors in a combined heat and electricity power unit. The figures for individual countries are revealing. The figures come from the Documents before us and they are for 1972. There may have been marginal improvements since. In Denmark over 35 per cent. of electricity is now produced as combined heat and electricity. In Germany the figure is 20 per cent., in Italy 18 per cent., in France nearly 17 per cent., in the Netherlands 10 per cent. and in the United Kingdom only 7 per cent. The table is relevant because it goes on to explain why our electricity prices are so high and why electricity is pricing itself out of the market. I maintain that it also goes some way to explaining why our economy is relatively less efficient and why we are having to spend more in GNP on providing the energy we need and more than we should need to spend.
When we compare that table with the second table to which I wish to draw the House's attention, the picture will be complete. The second table is tucked away in the small print of the Plowden Report, just published. It is a comparative table of the thermal efficiency of electricity generation in this country and other European countries. The figures are for 1973, and they are for the public 1262 sector electricity industry. The thermal efficiency of electricity generation in France is 35.4 per cent., in Italy 34.2 per cent., in Belgium 33.8 per cent., in Germany 30.6 per cent. and in the CEGB 29.6 per cent. Admittedly, the latest figure for the CEGB is about 31 per cent., but over the past three years the other European countries have also marginally improved their thermal efficiency.
The difference between our performance in thermal efficiency of electricity generation and that of the best European country represents, in my estimation, approximately £300 million a year that could be saved, that we are now wasting, and that the consumer is paying in extra electricity prices. No wonder electricity is expensive and uncompetitive.
The Plowden Report has been critical of this, as have other reports, including the EEC Documents now before us. The Select Committee on Science and Technology has taken evidence and made a number of points in the same direction. Even the Chief Scientist, Dr. Walter Marshall, who has been investigating the need to get information moving in this country, has made critical noises from time to time.
I maintain that if this EEC Document does nothing more than highlight that we have no justification for complacency in this country about our programme for the more rational use of energy, it will have done something useful. By comparing the performance, particularly in the one sector—the application of combined electricity and heat and of thermal efficiency in our electricity generating system—we could, I believe, find many answers to what is wrong with our economy.
So far the 2 per cent. real saving that we have had in energy consumption through the Government's programme is doing nothing to change the longer-term pattern of production, or to bring about the longer-term reduction in wasteful consumption that is needed. We could be saving very substantial sums on the gross national product by reducing this waste. We could be helping the economy, the balance of payments, our standard of living, and our competitiveness abroad. Therefore, I urge the Government to study what is going on in Europe and to take seriously the recommendations of the experts who are advising us on what we should be doing, rather than just talk about it.
§ 10.22 p.m.
§ Mr. Ted Leadbitter (Hartlepool)
I am gravely concerned about several aspects of the developments relating to energy policy in Europe, the manner in which it is being dealt with, and the extent to which the House of Commons is unable to have an opportunity to examine papers and documents in such a way that a useful contribution can be made. We need this facility if we are to bring some easement into what is becoming a critical situation as energy policy evolves.
It is a complex matter, and I do not seek to deal with it in either anti-Common Market or pro-Common Market terms. We need to examine the reality of the present situation and to ask ourselves a very simple question. In a highly industrialised world in which energy is ultimately the only effective yardstick of economic survival and in which competition is running apace in America and Russia, particularly in fusion experiment, there must be a warning from the House of Commons that the Western world cannot afford to suffer the procrastinations of protracted talks in Europe on a matter such as this.
I attribute to the Minister who will be winding up the debate that kind of concern. Therefore what I say will not be critical of him. Having, as a member of the Select Committee on Science and Technology, met Dr. Walter Marshall, it would be quite wrong for me to be critical of him, for the obvious reason that as a civil servant he cannot answer. On the contrary, both my hon. Friend and Dr. Walter Marshall have approached this serious problem with vigilance and, indeed, with care.
I am no, therefore, critical in that respect. I am saying that both are prisoners of a disconcerting, angry and worrying situation. There is no question about it. As we are members of the EEC, we must meet the realities of the situation, seek to improve it and to warn the Community that what is going on must be brought to an end. I do not want to discuss the Document referring to the other general matters, but I wish to refer to those which concern us most in connection with the JET programme—normally referred to as the Joint European 1264 Torus—its siting and the vexing situation of Ispra.
First, I point out that we are talking about papers which are out of date. The first paper is datelined "Brussels 2nd February 1976". The explanatory note to the Document, which I presume the Government have prepared for us, is dated 12th February 1976. However, talks took place in Brussels on 24th February. On that date at about 2.30 a.m. the discussions were in such a state of deadlock that not only did they end without any answers to the problems, but those taking part stupidly even forgot to vote moneys to keep the design team working.
At Culham there are people of the highest professional standing in research and development work. They have made advances through the various stages of fission and fusion research, an achievement which Ispra cannot come anywhere near equalling. They have passed through what might be called the popular exposition for the general reader. The success of Zeta was in itself a great British achievement. However, that is only one of the phases leading up to the Tokamak route in the fusion programme. The work at Culham is the most exciting I have heard about as a member of the Select Committee on Science and Technology. By every test we have the best record of any of the countries in the Nine.
The explanatory note from the Government dated 12th February says:JET is the most expensive single experiment ever contemplated by the Community. It is also one of the most difficult. It is, therefore, essential that it should be sited where it has the best possible chance of success. In Her Majesty's Governments view the most essential pre-requisite is a background of fusion technology and plasma physics on which the JET team could draw in tackling the problems of construction and initial operation which must be expected with an advanced project of this kind. Culham, whose fusion work has been particularly directed at the Tokamak route, is the best qualified site in this respect; Ispra has no relevant experience.The Government motion says that in the Government's viewCulham is the best site for the Joint European Torus project.But we know that. We do not need a motion to tell us it is the best The 1265 Opposition amendment is couched in much more attractive terms. It says that the Government shouldsecure the choice of Culham as the research centre.Since Europe has had a great deal of the research and development gravy, and since this country has a balance of payments deficit with Europe—without it we should be in surplus of—it is time our friends in Europe dropped this silly assertion that because we are challenging a European location and are defending our interests, we are being poor partners.
Culham's claim, based on technical achievement, research know-how and the availability of all the necessary facilities, is far superior to that of Ispra. The talks of 24th February were not only disappointing they were disgraceful Italy stood out against the other eight States. It was obdurate and inflexible. It would not negotiate.
The meeting was of the Council of Ministers Research Committee. In a bid to break the impasse the chairman suggested that the matter might go to the Commission. That would be a dreadful move, because the Commission believes, without a shadow of doubt, that the project should go to Ispra. The House of Commons has not been told that. I have had a quiet word with my right hon. Friend the Secretary of State and I know that he is doing his best. I hope that this report will be either denied or confirmed tonight.
But let us not forget the procrastination. Such was the stalemate on 24th February that it was decided to have the next meeting on 18th June. Apart from the fact that the 18th is my birthday, I find that a terrible disappointment. I ask my hon. Friends on the Front Bench to note that I shall be asking them to give me a birthday present for my constituency before 18th June.
The Common Market still has to go through its teething troubles. It exists and we must help it to become more efficient. Let us have no more of the anti-Common Market approach. But let the House reassert itself. Let us tell our Ministers that we must not allow America or Russia to get ahead in the fusion development race. If the hopes and aspirations of Europe mean anything, we should be the leaders in energy, not dragging our feet.
§ 10.36 p.m.
§ Mr. Anthony Nelson (Chichester)
I listened with interest to the hon. Member for Hartlepool (Mr. Leadbitter). He made a defence of Culham that was as spirited as his condemnation of the way in which this whole affair has been discussed before the Commission. I am a member of the Select Committee on Science and Technology, although I bring a slightly different view to bear, being a member of the Science Sub-Committee rather than the Energy Sub-Committee, of which the hon. Member for Hartlepool is a member.
I make one brief comment before coming on to the substance of what I have to say. I am concerned about the overall allocation of moneys on a European level to research and development. I feel that energy swallows up far too large a share. I regret that insufficient allocation is made to areas of scientific endeavour which are just as close to the needs and welfare of mankind in Europe, areas which have a more immediate and as pressing a claim as the fruition and development of new forms of energy.
As the hon. Member for Hartlepool pointed out, it is more important for Europe to develop new forms of fusion energy than it is for the United States or the Soviet Union. Western Europe imports some 65 per cent. of energy in the form of fossil fuel. There is a possibility that future energy demands cannot be met by fossil fuels, benign and renewable energy resources, or conventional reactor systems. That imposes upon us a special obligation to give priority to new forms of energy development and research. The EEC estimates that in about 50 years it will be necessary to have 24,000 large nuclear reactors to supply its projected energy needs. As the eminent observer Sir Alan Cottrell has pointed out, that will be an impossibility. The first priority, therefore, for long-term energy research must be the development of nuclear fusion.
The energy research and development programme of the European Community should take account of depletion estimates for fossil fuels, updated demand projections and the need for independent nations or alliances of nations to run parallel development programmes. The latter point is of especial importance so 1267 as to ensure that they run competitive technology. It is important also from the security point of view that individual countries, or alliances of countries, have independent sources of fuel.
I see the fast breeder reactor as the bridge between fission reactors of today and fusion reactors of the next century. No one can fail to be impressed by the progress that the French have made with the Phenix prototype and the new Superphenix. This has superseded the progress being made in Britain, even though the AEA is applying almost half its research and development budget to fast reactors.
I do not believe that we can rely on the super-Powers, or on other alliances, to develop fusion reactors. The United States, California in particular, is considering cutting back on the construction of new reactors. We have yet to see what are the prospects for the General Atomic Company in developing high-temperature reactors and whether that, too, will have to come into public ownership because of the lack of commercial funds for the development of these futuristic forms of energy.
With regard to the European fusion programme, first of all, it is important, whatever the decision is, that JET goes ahead. Fusion technology is vital to supply the energy demands of the next century. Therefore, Europe has an obligation to ensure that JET goes ahead on some site or another. However, the best chances of obtaining success will be made through applying the best minds to the project, and those undoubtedly exist at Culham.
The site committee report found that, although Ispra was among those offering good facilities and equipment, Culham was better placed for fine and specific aspects of fusion technology. I agree very much with the comments made earlier that it is central to the viability of the project that we have adequate reserves of experience and technology, and these matters should not be derogated to criteria which the site committee was not able to consider or did not consider.
The Tokamak route which the Culham laboratory has followed in its quest undoubtedly offers the best chance of reaching the objective of 100 million degrees for one second and the best technical 1268 prospects of obtaining the right compression of plasma and the confinement of electromagnetic fields. But, apart from the technical reasons, the more impressive and immediate reasons must be the financial ones. Here I place on record my questioning of the conclusions and the bases of some of the matters considered by the site committee.
The cost of the first phase is projected at 135 mua, 80 per cent. of which would be paid for out of the Community budget and 20 per cent. by the partners. Of this cost, some 24 per cent. is comprised of staff, yet this was not a separate matter considered in the table which the site committee formulated. United Kingdom salaries are obviously lower, and I believe—this is a view shared by the director of the Culham laboratory—that we are competitive in staffing costs. The Commission found that a saving of some 8 mua could be made at Ispra. However, I feel that the staff could be used wherever the JET project was sited, so the saving in this respect, in my view, is hypothetical.
The question of electricity supply, which again was a critical factor in the siting and which was used to show that the costs would be substantially greater at other sites than Ispra, in my view should be considered with caution as the specific design which has been investigated at Culham has not yet been allocated exact electricity requirements. I understand that the existing design requirements are the subject of negotiations with the CEGB at the moment. It is difficult to accept the Commission's figure of a saving of 1.7 mua at Ispra.
The emphasis on the poor handling facilities for radioactive materials at Culham compared with Ispra is a very important emotive factor which may be taken into account before June. It is worth pointing out that Culham has an advantage in its proximity to Harwell, which establishment has great experience in handling such materials. I wonder whether this was a matter considered by the site committee when suggesting that the handling facilities at Ispra were substantially better.
The worst reason for siting JET at Ispra would be solely to give employment to the Joint Research Centre staff. This would not necessarily be the way to develop European scientific collaboration. 1269 When the multi-annual research programme of the Joint Research Centre was being discussed, I was very critical of the way in which the centre, because of its existing facilities, was having work pushed into it rather than work being undertaken elsewhere in order to obtain the best chances of success.
We must recognise that the choice of site for JET has been taken out of the realms of technical analysis and put more into politics. It is a political question now, and we shall not get much joy from discussions between consultative committees or, indeed, between Energy Ministers. I believe that the only way to get the matter resolved quickly is by the Heads of State and our Prime Minister—or our future Prime Minister—meeting in Europe. I share the disappointment expressed by some hon. Members at the inconclusive result of the meeting on 24th February and the suggestion that a further consultative committee be set up in addition to the Group de Liaison.
Criticisms have been made about the termination of the Dragon project. I share some of the concern which has been expressed that we may put ourselves in a future risk situation by not having available sufficient options for the development of nuclear energy, but the reasons set out by the Secretary of State and enunciated in his letter to the chairman of the Energy Research and Technology Committee should not derogate from the possibility of the site for JET being at Culham.
The facts that some of our European partners did not consider it possible to apply the same contribution to Dragon as the United Kingdom share and that the permanent representatives in Brussels turned down the proposal for a nine months' extension programme are no reason for Culham not being considered favourably for JET. We should not be considered as a nation which is likely to draw out of such an important subject as the future of fusion technology in Europe.
These are somewhat technical matters, but I hope that they will be considered in detail and that an early opportunity will be taken to encourage the Heads of State to resolve them. I hope that we shall see some satisfactory solution—based at Culham—before June.
§ 10.47 p.m.
§ Mr. Tom Normanton (Cheadle)
The Fact that we are against the clock is conclusive evidence that there has and enthusiastic welcome for the debate.
First, I want to make the point that this debate is at last catching up with the log jam of the past in the sense that it takes place in advance of consideration by the Council of Ministers of the Documents before the House tonight.
Secondly, those Documents were tabled before the Energy Committee of the European Parliament as recently as yesterday, and four hon. Members from this House are about to take part in a deep and intensive study of their contents. I am sure that they will be greatly encouraged both by way of guidance and information from reading Hansard and that that study will be a major advance in the consideration of European legislation.
After three years in the European Parliament, I declare that I am even more convinced now than I have ever been of basically three fundamental truths.
The first is that there is no possibility whatever of any individual member country of the European Economic Community being able to go it alone, except to poverty and impotence, in all areas.
The second truth is that the problems which face Britain are in no way different in principle—only in degree—from the problems which face each member State of the Community and, indeed, all areas in the industrialised Western world, whether those problems be monetary, industrial, social, energy, or research. It follows that common problems require common solutions, and that is precisely what I see these Commission Documents telling us. If we failed to recognise this truth, we should be deceiving ourselves and we should be deceiving the electorate. The former is not unknown and may be forgiven, but the second is surely un-forgiveable.
The main point therefore is how we should implement these proposals, not whether we should do so. The Documents repeatedly use the term "guidelines". They are not directives, but are intended to guide us towards the object which must command support on both 1271 sides of the House—an increase in economic security and independence—for lack of which all member States are paying a high and continuing price.
We all noted the Minister of State's assurance that the Government's policy is to be constructive. I hope that that will continue to be his stance and that it will be seen to be so by his opposite numbers in the Council of Ministers. We want no repetition of the game of musical chairs at the high table recently which resulted in nothing constructive or positive but only in red faces. That is bad for diplomacy, bad for energy and bad for Britain.
As my right hon. Friend the Member for Knutsford (Mr. Davies) said, we must recognise that we are members of the Community. We have much to gain, but we have a responsibility to give as well as to take if we are to prosper as a nation. We cannot go it alone, except to the poorhouse.
The Minister of State regarded the targets set for the production of energy as ambitious. Nothing could be further from the truth. It is not the targets which are wrong but our determination to achieve them. We are falling short of them all the time. We can accept no excuses for that, from wherever they come, particularly at a time of low energy demand. My right hon. Friend the Member for Knutsford highlighted the real targets in nuclear generating capacity which we should be striving to attain.
I agree in principle with the policy on minimum safeguard prices, but believe that in practice it may prove an academic exercise. I hope that it does, in the sense that it may be academic on a long walk to take one's umbrella. That is how I regard the minimum safeguard price—as an umbrella against an unexpected but possible eventuality. But what is not academic is the effect of low oil prices on coal, the source of our historic, basic, indigenous energy.
The hon. Member for Sheffield, Heeley (Mr. Hooley) tried to draw a parallel between the principle of the minimum safeguard price and the common agricultural policy. However critical we may be—many of us are critical—of the 1272 CAP, at least it produces a surplus. So far the energy policies of Europe and this country have succeeded only in producing a shortage.
I want to comment on a number of matters in connection with the JET project. Much of what I shall say has already been covered, but a number of points must be repeated. The Commission and the European Parliament have constantly demanded from the Community urgent action inside the Community on energy. It takes three forms. They want action to stimulate new sources, that is, additional sources of existing energy material such as oil, coal and nuclear energy. They have demanded action to stimulate research into even newer sources of energy. That is what the JET project is partly about. Above all, bearing in mind the importance attached to it even tonight and consistently mentioned in this House, they want action to stimulate research into new and cleaner sources of energy. That is precisely what we hope JET will eventually lead us to discover.
Although the Commission and the European Parliament propose the formulae, eventually it is the Council of Ministers or the Heads of Government who dispose. With deep reluctance I endorse everything that my right hon. Friend the Member for Knutsford said when he expressed great disappointment at the rate and pace of progress of an energy policy for the Community.
All this time has passed while Europe's very existence as a society and as an industrial entity is and continues to remain at risk. The situation is rather analogous to that of the body politic of each State being kept alive through an umbilical cord connecting us to a remote and separate body or heart. If it is cut, as occurred during the oil crisis and as nearly occurred during the last war, life itself will collapse.
My hon. Friend the Member for Oswestry (Mr. Biffen) wants a liberal view to be taken of an energy policy. I am prepared to support that so long as we recognise that that view must be realistic. We must believe in an expansion of world trade but defend and preserve the integrity of the base from which we take part in that trade. No individual country and certainly not the United Kingdom 1273 can ever go it alone again in relation to major developments in energy because of the unbelievable and unprecedented size of the investment required and the amount of research resources required if we are to make advances in high technology. Above all, major advances in research and investment demand a massive industrial capacity behind them. That is why this House recognises the need for the United Kingdom to be an active and positive member of the European Economic Community.
The JET project is only the first of a series of steps. Therefore, because of its size, cost and nature, it must be a cooperative or a Community venture. Therefore, the House must decide tonight whether fusion is a desirable goal in itself, that is, a goal for the twenty-first century. On the best scientific advice which seems to be available in large measure, we have to reach the answer "Yes, it is a desirable goal, and we must move in that direction."
The House also has to give a lead tonight on where the fusion research activities have to be established. We all know that the list of places is long. It is headed by Ispra. Here we come to the real crunch. If we in this House cannot agree and agreement cannot be found at the European Council, with my modest and humble knowledge of the political currents in Europe, I must record the view that there could very well be no progress on fusion research and development. If that were to be so, we should have to face the prospect of seeing the United States of America and the USSR, and possibly even Japan, leaving Britain like a helpless whale stranded high and dry on the beach of high nuclear technology.
On technical and scientific grounds Culham undoubtedly ranks high. That point is made in the Commission Document. But the decision, as my hon. Friend the Member for Chichester (Mr. Nelson) stressed very strongly, will be made by politicians, and Culham ranks very low in their minds. The reason for this is undoubtedly the experience of the Community concerning British involvement in Community actions and proposals. In that context I can only cite in evidence Dragon. Even with the Concorde there has been great anxiety and speculation about whether we would withdraw. The 1274 Channel Tunnel project is not to be ignored, but I would not rate that too highly. However, there is this scepticism among many politicians in the EEC. It must be faced and the problem has to be resolved.
Ispra is undoubtedly the favourite in the minds of the EEC, if for no better reason than that it is already a Community research establishment. It is in business. It was established under the Euratom Agreement. In various ways it has involved itself in nuclear energy research.
§ Mr. Normanton
I hope that my hon. Friend will wait for just another minute—not more than that—when he will realise that I am not plugging, as the Opposition are not plugging, the concept of Ispra being the base for the JET. All that I am saying is that we should be blinding ourselves if we were to ignore the fairly extensive and considerable support which exists for Ispra.
We believe—hence our amendment—that the location should be at Culham. I also believe that we are now facing the Secretary of State with a great challenge. We earnestly hope that in the interests of British technology and this considerable amount of experience that Britain has by way of a lead over the rest of Europe, the Secretary of State will take up the challenge to sell Culham's case strongly and convincingly on its merits, and do so not as a political package.
The whole history of Community research has been bedevilled by political considerations. This House will judge the Secretary of State by his own judgment in this context, not by his traditional rhetoric. When he speaks in the Council of Ministers or elsewhere, I hope that he will bear in mind the Dragon affair. If he does not, others will. My hon. Friend the Member for Dorset, South (Mr. King) made a powerful point here and deserves a reply. The Energy Committee of the European Parliament is still awaiting a reply from the Secretary of State to its invitation to visit it and discuss this among other matters.
§ Mr. Normanton
I am delighted to hear it. The hon. Gentleman's statement will be on the record and will no doubt be raised in the Energy Committee in due course.
§ Mr. John Smith
I am listening with amazement and concern to the hon. Gentleman talking about the siting of the put his name to an amendment which talks about… the outstanding experience and facilities of the Culham Laboratory …which is a matter of agreement between us. Anyone could put up a better case than he has for siting it at Culham. Will he come clean and say whether he is enthusiastic in believing that the project should be sited at Culham?
§ Mr. Normanton
My colleagues and I unreservedly support the concept of Culham being the right place for the project, but it would be misleading and irresponsible to underplay the political pressures faced by the Secretary of State when he tries to press the point with his fellow Energy Ministers. We shall give him such support as we can.
The hon. Member for Normanton (Mr. Roberts) did a great service to the coal industry in stressing the importance of coal within the framework of the Commission's target for energy production, but we are still falling short of those targets. My hon. Friend the Member for Exeter (Mr. Hannam) voiced concern about the United Kingdom nuclear programme. He was critical of certain aspects but his biggest criticism was that it was not big enough or being pursued with sufficient energy. My hon. Friend the Member for Dorset, South made a very sound case, and it is also appropriate to say that my hon. Friend the Member for Dorset, West (Mr. Spicer) has been extremely active in the European Parliament in pressing and promoting the interests of those who are and have been engaged in the Dragon project.
My hon. Friend the Member for Bedford (Mr. Skeet) commands the respect of the House whenever he discusses energy. He deserves a comprehensive reply. His questions about Ispra were 1276 searching and relevant. They reminded me of a visit I paid there two years ago. I hate to be offensive to my good friends in Italy and in the Commission, but my impression was much more that of a circus than a research centre. Fortunately, it has changed since then, thanks to the new director, but it has a long way to go before it comes within sighting distance of the technical and scientific expertise which is characteristic of Culham. The House has had a useful, valuable and constructive debate and we look forward to assurances and answers from the Minister on the many points raised by hon. Members from both sides on vital aspects of the subject.
§ 11.10 p.m.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie)
Before I deal with the matters that have arisen in this debate I should like first to make clear the nature of the Community fusion programme and the place of JET within it. If a fusion reactor can be made to work, it holds the promise of almost unlimited power supplies from fuels which are in abundant supply. Broadly, these are deuterium, or heavy hydrogen, which is present in vast quantities in sea water, and lithium, an element which exists in millions of tons in relatively accessible deposits, some of them in this country.
So we have the incentive to do the research which will tell us whether a fusion reactor is feasible. But it will be a long, difficult road to follow; fusion power stations belong to the twenty-first century.
As the experiments become more and more sophisticated, they put more and more demands upon finance and skilled manpower. Already we are at the point where we cannot afford to do some of these experiments except in the context of international co-operation. We have been doing fusion research in the United Kingdom since the 1950s and at Culham since the early 1960s. Our expenditure on this research currently amounts to about £7 million a year, of which some £2 million is paid for by the Community.
The Americans spend 10 times as much as we do, and the Russians even more than that. So it can be seen that to stay abreast of research in the world we must regard our programme as part of the European effort, which is more nearly of 1277 a size with the American and Russian activity.
The Community programme in this field is perhaps the most successful example of co-ordination of research that we have. By a Council decision, before we joined the Community, all fusion research in member countries is part of the Community programme and is eligible for Community funding to the extent of about 25 per cent. of its cost. The sharing out of the research work is done by a liaison group and by a Committee of Directors of Fusion Laboratories, who agree among themselves and with the Commission the work that needs to be done and who should undertake it. In order to ensure that the whole programme remains aligned with its central objectives, certain selected projects qualify for a higher proportion of Community funding. This has been about 45 per cent. of their total cost.
The Community fusion budget has been running at about 22 million units of account a year, and the Council of Research Ministers, which I attended on 24th February, agreed that the programme for the next five years, excluding JET, must in present economic circumstances be limited to 124 million units of account, or £52 million. We released 20.8 million units of account for 1976, pending a decision on JET.
I turn now to JET. This is the most expensive single experiment the Community has ever contemplated, and one of the most difficult.
In order to ensure a real Community character for the experiment, the Commission has proposed that 80 per cent. of its cost should be met from the Community budget. The balance of 20 per cent. will be shared between the national fusion laboratories, all of which have contracts of association with Euratom and all of whose fusion work forms part of the Euratom programme. We support this method of funding JET. The Commission has estimated that the construction phase of JET will cost 135 million units of account—£56 million but we think that it will be more than that, nearly £70 million.
Once it is constructed, experiments with JET may go on for 10 to 15 years. It has the potential, if it is successful, to be extended to the point where the energy 1278 produced inside the device is equal to the energy put into it. If JET achieves this it will be a significant step forward on the way to a prototype fusion reactor.
So far, there have been no decisions on JET. If the Community cannot agree on the site, we shall not be able to go ahead with the project. This will mean re-thinking the fusion programme as a whole, much of which has been designed in support of JET. But unless the Community can agree to carry out large experiments jointly it is hard to see how Europe can continue to make its proper contribution to fusion research.
Of course, this would not rule out extending the United Kingdom's cooperation with the United States of America, and this is being done to some extent through the mechanism of the International Energy Agency. But without major experiments like JET the co-operation would gradually become one-sided. The United Kingdom Atomic Energy Authority also has an information exchange agreement on fusion with the Russians, and benefits from that. But there has been no suggestion of joint funding of projects.
No one suggests that the United Kingdom could go it alone down the road to fusion power. This is a goal which must be pursued internationally. For us, as members of the Community, the Euratom fusion programme is the most obvious way in which to proceed.
The Commission also proposes a new body, which was referred to rather scathingly in the debate, the Consultative Committee on Fusion, to advise the Commission on the broader aspects of the fusion programme. The committee would be composed of high-level officials, from Member States, from the other States which have signed co-operation agreements with the Community, and from the Commission itself. The committee would be created on the basis of Article 135 of the Euratom Treaty, which empowers the Commission toestablish any study groups necessary to the achievement of its tasks.Ministers also decided that a consultative committee on fusion should be set up along the lines proposed by the Commission in Document R/253/76, but able to report both to the Council and to the 1279 Commission and not only the Commission as had originally been proposed.
A large majority, including the United Kingdom, favoured the preparation, by this consultative committee and the Commission, of a supplement to the siting report, which might have dealt with the further studies we and others believe to be necessary on the site, cost estimates, construction time and engineering of JET. However, unanimity could not be achieved, and no decisions were taken on this or any other aspect of the JET programme. I sat for 16 hours discussing this programme and putting forward the United Kingdom point of view, despite the statement of the hon. Member for Cheadle (Mr. Normanton) that before I went there the matter was signed, sealed and delivered, and that "It ain't coming to the United Kingdom".
§ Mr. Normanton
I did not say that it had been signed and settled. I said that there were rumours or statements to that effect. It was not a statement that I made myself.
§ Mr. Eadie
I can only say that the hon. Gentleman's enthusiasm has been tepid, as he has demonstrated tonight. If I am wrong, I shall apologise.
It was, however, still open to the Commission, under Article 135 of the Euratom Treaty, to invite the consultative committee or any other group it chooses, to carry out such studies. It has called the first meeting of this committee for 29th March. The Council agreed that the discussion of JET should continue at its meeting on 18th June 1976.
We regard it as essential that this difficult experiment should be sited where it has the best possible chance of success. This means that siting must be determined primarily on scientific and technical considerations which, by and large, received little attention from the siting committee and the Commission.
In our view, the most essential prerequisite is a strong background of appropriate fusion technology and plasma physics. On these criteria, we are sure that Culham is the best site. The background is there, the electrical supplies for the enormous currents which JET will take are right to hand, the design team—an international team under a Frenchman 1280 —is there and, above all, the will to succeed is there.
We regard the provision of infrastructure as important but secondary to the main issue. If JET comes to Culham, suitable provision will be made to house the international team and educate their children. And the academic background is certainly there—Oxford is just down the road. So we shall continue to press the claims of Culham for JET. If we are successful, we shall have to make provisions which will cost us a little more than our basic contribution to the cost of JET. Building, infrastructure improvements and schooling should not, however, cost us more than £4 million and there will be a balance-of-payments gain from expenditure by the project in the United Kingdom. We also believe that JET itself will be cheaper and more successful if we site it here.
The Council of Research Ministers is expected to consider the problems of JET again at its next meeting, which as I said earlier is planned for 18th June. One of JET, Buildings, infrastructur improve-how the JET design team will be paid if we cannot reach some agreement on JET. I understand that funds in hand will keep the team going until June, but not much longer. If we are serious about JET, the Council must at least provide money to keep the international team at Culham together while we make up our minds about the experiment.
As failure has been mentioned tonight, what happens if we cannot agree on JET? I believe this debate has pointed fairly clearly to two things. One is that fusion research will need some big experiments and we have to reach international agreement on them. The other is that it is a very long road, and a few months' delay while we reach these agreements cannot have a significant effect in the long run on the end result of the whole programme—the ultimate production of a fusion reactor.
Hon. Members have expressed concern about the future of Culham if JET is sited elsewhere. As I have said, all the fusion work at Culham forms part of the Euratom co-operative fusion programme. Its continuation is not dependent on JET being sited there.
There is no connection between the OECD's Dragon project and the Euratom 1281 fusion programme. Dragon was an experimental high-temperature reactor in which the EEC participated. Its programme was not extended because none of the Community countries wished to pay for it. There was no reason why the United Kingdom should have continued to pay the largest share of the cost. I think this was well understood by our partners, despite what was said.
I appreciate the tolerance and consideration that I have had from the House in mentioning these matters. We must get JET right. It is too expensive and important to be put at risk by inappropriate siting. My scientific advisers believe that it can be made to work, but they have not disguised its formidable difficulty. We have to give it the very best chance, and that means siting it where the essential background experience exists. The Government believe that Culham is the best site.
Although the importance of the fusion programme and of JET should not be underestimated in any way, we must also give thought to the more conventional sources of energy which are so vital to the economy of this country and of the other member States of the Community, in both the shorter and medium term periods. I should also like to mention the non-conventional alternative sources of energy, such as geothermal, wave power, and solar. We are not neglecting to assess the contributions which we can expect from these and other relevant sources, but we should perhaps remind ourselves that they can at best produce by the end of the century only a small fraction of our energy needs. Their potential contribution by the year 2000 is estimated at about 6 to 8 per cent. of the overall energy demand at that time, on the assumption that all the options are followed up.
The hon. Member for Derbyshire, South-East (Mr. Rost) is very knowledgeable about aspects of energy conservation, and pursues this aspect very diligently. We have crossed swords before on this matter both in private and in public. I shall read the hon. Gentleman's speech with a great deal of interest, but to some extent I think he over-egged the pudding when he talked of the United 1282 Kingdom being way down in the league in its conservation programme.
In 1975 the International Energy Agency examined in detail the energy conservation programmes of all member countries, and the United Kingdom came out on top. The hon. Gentleman must have known this, and I am surprised, therefore, that he should introduce a criticism which to some extent undermined our position.
I felt that there was some conflict among hon. Members opposite about a minimum safeguard price for oil. I do not think the point made by the hon. Member for Banbury (Mr. Marten) was answered. He said that if coal was coming in below the cost of production from third countries, the proposition had to be examined in relation to the whole argument about a minimum safeguard price. All I can say is that I believe this policy will be in the best interests of the United Kingdom.
It is all very well to talk of a liberal policy, but it should be liberal in the sense that we do not forget errors and mistakes made in the past—for example, in the Yom Kippur War in 1973. We were beginning to forget it and to think that energy development would trickle along quite easily. We obviously have lessons to learn.
It being half-past Eleven o'clock, Mr. DEPUTY SPEAKER put the Question pursuant to Standing Order No. 3 (Exempted Business).
§ Amendment accordingly agreed to.
§ Main Question, as amended, put and agreed to.
That this House takes note of Commission Documents Nos. R/210/76 and R/253/76 and further recognises the outstanding experience and facilities of the Culham Laboratory in the field of thermonuclear fusion, considers Culham to be the most appropriate location for the Joint European Torus, and calls on the Government to secure the choice of Culham as the research centre.