ENERGY CONSERVATION

HC Deb 14 December 1977 vol 941 cc772-96

4.47 a.m.

Mr. Peter Rost (Derbyshire, South-East)

At this hour, when we should be conserving energy in bed rather than burning it up at Westminster, it would be churlish of me not to congratulate the Government on having at long last introduced their first major programme of energy conservation.

It is also appropriate for me to acknowledge the contribution to that programme made by the Under-Secretary, who has worked very had to get this initiative finally off the launching pad. It is not that the hon. Gentleman has lacked advice over past years. He has only to look back on his own contributions in the House before he was promoted to his present post to see his speeches and the work he did with me on the Select Committee on Science and Technology and its report on energy conservation. Three or four years ago he was urging action on energy conservation. Therefore, I have no doubt that he was able to start on the right track with the right advice. My only regret is that it has taken the hon. Gentleman such a long time to win the support of his colleagues in the Government.

In return for my acknowledgment, I hope that the hon. Gentleman will respond by admitting that many of the initiatives in the latest energy conservation package are not novel ideas but are ones which have been urged upon him persistently by me and other right hon. and hon. Members. Of course, it is improper to criticise the Government on a package which to some extent incorporates suggestions that have been made by myself and others. However, I shall make one or two critical comments, but, as always, in a constructive way.

The first critical question that must be posed, and to which there is no really adequate answer, is why this has all taken so long. The energy crisis, which is the way in which we describe the fourfold increase in the price of oil and the shortage of supplies, was four years ago. We are now facing the fourth winter since that occurred. Although we have had a few small measures, including a comprehensive promotion campaign, it is really only now that that we have anything like the beginnings of a comprehensive energy conservation programme. Yet in the past four years there has been a huge volume of reliable and informed advice available to the Government.

I shall list one or two selected areas from which advice has been offered. First of all, there was the CPRS Report in July 1974 on energy conservation which included many very important recommendations for action. That was three years ago. At the same time we had the NEDO Report "Energy Conservation in the United Kingdom", which offered a comprehensive series of recommendations for action. In June 1975—two and a half years ago—there was a most important document from the Building Research Establishment on energy conservation in the building area, with particular reference to insulation and building materials. That document pointed out the areas in which investment was then cost-effective.

At about the same time—in July 1975—the Select Committee on Science and Technology published the First Report of the Energy Sub-Committee on energy conservation. As the Minister knows, this contained a list of very sound recommendations, some of which have been adopted. But the fundamental recommendations of areas for action have only now been implemented. Many recommendations have not yet been implemented. That report resulted from years of hard work by the Select Committee, including a very wide-ranging investigation. It has been highly recommended outside the House. Yet that was two and a half years ago, and we have not yet debated it in Government time. In the evidence in the report, dated March 1975, there was a comprehensive memorandum from the Department of Energy itself. Had the proposals contained in it been implemented, we would have seen earlier action.

Then, in July 1975—again, two and a half years ago—we had an important series of recommendations from the Advisory Council on Energy Conservation, the Government's own advisory body, chaired by Sir William Hawthorne and comprising many other prominent members. That was a report to the Secretary of State making some important recom mendations, many of which have not been implemented even now.

In July 1976 we had the Plowden Report on the structure of the electricity supply industry, with its significant and critical advice that the statutory restraints in the present structure of the industry are an obstacle to the more efficient use of natural resources", that the present structure prevents flexibility in co-generation, district heating and combined heat and power, and that this leads to a less efficient use of energy than would otherwise be the case. That report also has not been debated, and its basic recommendations on energy conservation are not included in the latest programme.

I have listed a few of the more important pieces of advice which have been available to the Government not for a few months but for years, and there are many others of good authenticity from outside bodies. I return, therefore, to the question why all this has taken so long and why we are now facing the fourth winter and only beginning with a comprehensive programme.

While praising the Government for having at last done something, we must not become too self-congratulatory. I hope that the Minister will take this criticism in good part, because I know that he has done more probably than anyone else on the Government Benches to try to get matters under way. We cannot afford to be self-congratulatory or complacent, bearing in mind the time taken thus far. The Government could and should have acted sooner and done more.

I turn now to the programme announced by the Secretary of State this week. How does it match up to needs and to the national interest? First, there is the proposal to provide assistance for insulating public buildings through the Property Services Agency. I regard this as excellent. Of course, more should have been done sooner, but it is good that we are getting on with that at least. We all know that the main problem in an insulation scheme is one of incentive. Where the user of a building is not personally or directly responsible for facing the heating bills, there is often lack of action on insulation and waste in consumption as well. Therefore, the major priority must be in public buildings—schools, hospitals, local authority buildings and so on—where no one else would otherwise provide the insulation investment or ensure that energy was used more efficiently.

But we are to have only £5 million a year, even though the Property Services Agency has proved investment for this purpose to be highly cost-effective. It has said that in its own reports. How soon does the Minister believe that with this projected programme all the buildings within the ambit of the Property Services Agency will be effectively energy-proofed, as I like to describe it? What proportion of the buildings are still energy wasters, and what proportion of them are upping the standard?

There is, rightly and excellently, an allocation of investment for other public buildings, for the National Health Service, education and, presumably, other Government Departments—although this was not specified in the Secretary of State's statement. I assume that we include prisons and other public buildings of every description. Such investment where there are now inadequate insulation and insufficient heating systems must be highly cost-effective. I therefore ask again what proportion of these buildings are now adequately insulated and effectively heated and how long will it take for all of them to be covered. The question is relevant and I hope that the Minister accepts it, because continuing waste is paid for by the taxpayer. As investment in insulation is recouped within two to three years with this type of building through the energy bills saved, it is an extremely relevant question for the national economy.

Having supported the proposals, I must now make a somewhat more critical comment on the programme to provide full Government aid to insulate all council dwellings. The programme specifies that over 10 years 2 million homes are to be insulated by Government and local authority grants. This is rather unjustified discrimination against the private owner-occupier, and we should have some explanation of why the Government think that only council houses should be entitled to this form of aid. Other countries have provided tax incentives, allowances and grants or part grants for all domestic homes, and yet here we have the Government apparently excluding incentives for domestic privately owned and occupied homes. Surely the Government are not under the misapprehension that all people in council houses are poorer and less able to finance their own insulation than those living in their own homes. I am sure that the Minister will agree that that is not so.

Many people living in their own homes are on supplementary benefit, pensions or even family income supplement. There are even the unemployed, the disabled, the sick, the elderly and so on who are worse off and less able to pay for their own insulation and, indeed, who are unable to pay their heating bills as easily as many of those who live in council houses, where in many cases there is a substantial income coming into the home.

I hope that the Government will think again about this. We accept that resources for this budget are limited. They should have been allocated in a fairer way and on a more selective basis so that those most in need would get most aid. I am sure that the Minister will have studied the report on insulation prepared by Mr. David Green and published by the National Consumers' Council. It particularly highlights the problem of the less-well-off sectors of the community and says that less-well-off owner-occupiers are one of the real hardship areas where help with insulation may be needed far more than in many council homes. A fairer, if selective, distribution of the aid should be considered, and I hope that the Government will look at this again.

It is strange that VAT is to be retained on do-it-yourself insulation materials. Surely, if we are to have co-ordination between Government Departments on energy conservation, it would have been sensible to provide some incentive for people to do the job themselves. There is a further justifiable criticism of the Government's programme in that they seem to assume that everyone in a council house must have the insulation installed for him by the Government or the local authority and that these people are incapable of doing the job while everyone who lives in his own home can automatically do the job himself. This is an odd sort of discrimination. Many people, whatever sort of house they live in, are capable of providing their own insulation. They have the resources to do it and should be given incentives to get on with the job rather than automatically get a subsidy. Aid should be allocated to those most in need, whether a person lives in a council or a private home.

Another major defect in the proposals is the neglect to modify the building regulations. The Secretary of State said that consultations were continuing to impose insulation standards for all domestic buildings. It is time that building regulations for thermal insulation were agreed for non-domestic buildings. This is an area where a great amount of energy is consumed, yet there are no regulations at all.

It is surprising that after all this time we are still only at the stage where consultations are taking place. It was a strange admission from the Secretary or State that domestic insulation regulations were still under consideration. Every one concerned with energy conservation—though perhaps the building industry still wishes to discuss the matter with the Government—believes that the present regulations, particularly the roof regulations with their 2-inch provision are inadequate.

I am not expert on this matter and I would not wish to make any recommendation. That is not for me. I can only say what other experts are telling the Government and what happens in other parts of Europe. But what certainly is apparently agreed is that in this country, with present energy prices, it is cost-effective to roof insulate between 6 in. and 8 in. Surely it is time that the building regulations were improved a little from 2 in., even if the increase is only to 3 in., so that at least we make surey that new buildings start off with a higher standard.

I come to what I regard as a final major omission in the package. That is, that there is no mention whatsoever about Government initiatives to make better use of resources in the area of electricity production. We are well aware—and there has been plenty of supporting evidence—that this is a major area in which energy conservation can make a big contribution. It is happening increasingly in industry, where we are getting more co-generation. It would have happened far more in this country, as it has on the Continent of Europe, if the present electricity supply industry was not continuing to penalise industry that wishes to generate its own supply through the tariff system.

The Plowden Report has clearly highlighted the problems that there are statutory restraints and that there is lack of co-operation, whereas the financial incentives now exist because of the price of fuel. There are artificial restrictions which inhibit the development of a mole flexible system which would be far more effective in the use of fuel. I hope that we shall not use an endless series of further Government inquiries as an excuse to stall on this matter.

It is well known and acknowledged that the balance between our national demand for low temperature heat and for electricity is such that by using the available systems nearly all our electricity could be produced by co-generation, saving approximately half of the fuel that is at present consumed in electricity production.

We know that Dr. Walter Marshall's further investigations are proceeding and we look forward to the report, but in the meantime the Government could be giving more encouragement by removing the statutory restraints and artificial restrictions which prohibit the natural evolution of a more efficient form of fuel burn.

I believe that there is some evidence that the Government have taken on board and acknowledged the role of conservation but there is little evidence that they have yet accepted that conservation is more than just a narrow definition of encouraging less wasteful use of energy. Conservation is really far more than that. The Government have to produce evidence that they understand this. The right incentives really must be provided so that we do not merely encourage less wasteful consumption but concentrate more on investment in less wasteful production of energy. So far, the Government have really only started on the consumption end, whereas a great deal of the waste of resources takes place in the production of our energy.

Although the measures so far introduced are a useful start and should have come sooner, we have a long way to go before we provide the fiscal incentives, which are not here yet, before we use the price mechanism more effectively—in other words, the carrot and the stick—and before we have a fairer allocation of priorities.

The Government should by now have set a specific target, as has been strongly urged by the EEC, for a conservation programme. We have not had that yet. Although we have at least some acknowledgment by the Government that energy conservation produces benefits to the economy, can maintain and improve our standard of living and help the balance of payments, and, of course, help us to maintain self-sufficiency in energy, the Government have not yet acknowledged that investment in energy conservation in the sense of more rational use can be cost-effective. In other words, conservation reduces the resources that are required to supply more energy.

By investment in conservation we can save public expenditure, because we shall not have to invest so much in developing new energy sources and new energy supplies such as new power stations. It is that aspect of the overall energy conservation strategy that has not yet been grasped.

There is a consensus at last that energy conservation has a role to play—namely, that it will help us to buy more time as part of an overall strategy, perhaps help us find the right solutions in the longer term, and reduce the risk of an energy gap and the problems that might result from being forced into a crash programme in a direction that we might not be sure is right. However, the emphasis must surely be less on increasing supplies and more on increasing efficiency in the second stage of the Government's conservation policy, and that we have not yet seen.

We must stop wasting national wealth. We can no longer afford to squander costly and finite energy; nor is there any necessity for us to continue doing so. The more rewarding alternative options are available to us, and perhaps we should be thankful that at last the Department of Energy has begun to accept that.

Conservation in its wide context must form an essential integral component in the development of energy policy. It is only if that is accepted and policies are implemented that we can maintain our competitive position, our growth potential and our standard of living.

5.20 a.m.

Mr. Nigel Forman (Carshalton)

It is my privilege to begin by paying the warmest possible tribute to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who was first in the field in energy conservation matters in this House. He is a long-acknowledged expert on the subject. He has great knowledge and he has been the scourge of the Government on this important matter, at least since February 1975. He has instigated much of the scant parliamentary debate that there has been. I also thank the Under-Secretary for going to the considerable inconvenience of being with us at this ungodly hour of the morning to talk about a subject that should have had much more parliamentary time at peak hours devoted to it.

I agree with virtually everything my hon. Friend said in his excellent speech, and not least with the way in which he successfully put the case for conservation into the broader framework of the case for a more rational energy policy. That must include taking a view on the way in which energy is used and the extent to which Government action, the price mechanism and every other method available can influence the pattern and total level of energy demand.

As the official Opposition spokesman, my hon. Friend the Member for Bridgwater (Mr. King), said in response to the Secretary of State's statement on Monday, the Opposition warmly welcome the Government's conservation package, but we feel it a tragedy that so much time has been lost in bringing that package forward. If the Government had moved faster, there would have been more savings and they would have come through more quickly. In short, another winter will have been lost, because the package comes into operation only in the financial year 1978–79, although the Secretary of State on Monday often spoke of bringing the package in on a phased basis, saying that it was not necessarily the Government's last word that it would start in 1978–79. I can only hope that he meant that there might be an opportunity to bring forward the operation of the package.

Although £321 million over four years may seem a large amount of public spending, only half that sum, as I understand it, will require additional allocations of public money. Money invested in energy saving is one of the most cost-effective investments any Government can make these days. What it really amounts to is spending money today to save bigger sums in the future.

The Secretary of State has made clear that his Department is firmly in overall charge of this important subject. As he put it in his statement, Conservation will now rank with the energy-producing industries as an essential element in our energy policies."—[Official Report, 12th December 1977; Vol. 941, c. 32.] We on the Conservative Benches welcome that.

I am tempted to think that the Secretary of State was perhaps following the lead of my hon. Friend the Member bor Bridgwater, who said in his wide-ranging speech at Banbury: the first priority for policy must be the encouragement of energy saving. It is surely indisputable that whatever view we take on future energy supplies there is no possible case for wasting any at all. That thought is very much in keeping with the mainstream of the argument put by my hon. Friend the Member for Derbyshire, South-East.

As the Government now take the view that this important matter is a central concern of the Department of Energy, why are they content to leave the political impetus to the Under-Secretary who has kindly come along tonight? In our view, the matter should have had the more continuous and sustained backing and involvement of the Secretary of State himself.

Why is there such small representation of what I would call conservation interests on the National Energy Commission? If one looks at its membership, one finds that Sir William Hawthorne is on it but that precious few of the other members could be said to have a direct knowledge of or a direct interest in energy conservation. Does this not indicate a certain lack of political commitment on the part of the Government when we see evidence of the way in which the Department of the Environment has been dragging its feet on one or two important matters dealing with building regulations and so on? In short, is it not time, as my hon. Friend said, for the Government to broaden their view of energy conservation to include not only savings with energy use but, even more important, much more efficient means of conversion and distribution of the energy that we produce?

One has only to look at the figures to see that the United Kingdom is still painfully low in the European thermal efficiency league. We are not making fast enough progress with combined heat and power or industrial co-generation, and there is a need, with the present energy situation, to look critically at an electricity supply system that is only 30 to 35 per cent. efficient and in which perhaps 17 per cent. of the energy involved is lost in high voltage transmission.

We know that we can expect some legislation, as foreshadowed in the Queen's Speech and in the light of the Plowden Report, and I hope that the Minister can say something positive about that tonight, because if the Plowden Report were followed through in certain conservation respects, we could see some beneficial changes in that direction.

Several times the Secretary of State said that the 12th December package that he was introducing—his 11-point package—was not the Government's last word. He spoke of bringing forward further measures as and when these were necessary. Can the Under-Secretary give the House more precise indications of what the Government have in mind in that regard and say when further measures will be brought forward? As my hon. Friend said, it is not only by setting overall targets—such as the 20 per cent. overall reduction in final energy consumption by the end of the century, the target mentioned on page 19 of the recent Energy Commission Paper No. 1—and then working to attain them that we shall achieve the savings that we need. Is not that the sort of target that should have been incorporated in this package of energy conservation measures? If we are to get savings of the dimensions that we need, would not that have been a more purposeful way of going about it?

There are one or two points of important detail that I want to put to the Under-Secretary, and I invite him to comment upon them. If he is not in a position to do so this morning, we shall understand; perhaps he will then be kind enough to write to me later about them.

As I understand it from public speeches by Ministers, the nation now spends about £13 billion a year on its energy. Last Monday the Secretary of State said that existing policies of energy conservation had contributed towards an energy saving worth about £2 billion over the past four years. That works out at £500 million a year, on average, or a little less than 4 per cent. a year savings. I suggest that is not good enough.

The Secretary of State said that the Property Services Agency is aiming at a target of saving 35 per cent. of the fuel used in 1972. I ask the Under-Secretary whether that 35 per cent. figure applies to all the 11 points in the Government's conservation package. If not, ought it not to do so in view of the right hon. Gentleman's acceptance of the point made by my hon. Friend the Member for Exeter (Mr. Hannam) on 12th December, when the Minister was asked about this matter? The Secretary of State agreed that it would be a satisfactory and more worthwhile objective if in fact the 35 per cent. target could be adopted rather than the minimal target, which had been the case before.

The Government are obviously determined to secure energy savings in non-domestic local authority buildings, but that will depend on the outcome of discussions, no doubt, with local authorities. Ought not these discussions to have been going on long ago, and ought they not now to be reaching practical conclusions?

Is the Minister aware, for example, that it was nearly four years ago, as my hon. Friend the Member for Melton (Mr. Latham) pointed out in the exchanges on Monday, that this House passed powers for the Department of the Environment to make building regulations on insulation? Looking at the answer that my hon. Friend got on that occasion, it would appear that the Secretary of State was either confused or trying to dodge the real issue. We would appreciate a clearer answer from the Under-Secretary this morning.

Once again, the Government's 10-year programme for public sector dwellings is long overdue, as my hon. Friend the Member for Derbyshire, South-East said. But in saying that spending for this purpose will be made eligible for central Government housing subsidies, which is the way that the Secretary of State put it, will the Under-Secretary confirm that ratepayers throughout the country in the private sector of housing will not be obliged to help finance insulation in public sector housing? If so, I assure him that it will be a welcome reassurance for an important section of the population who, it seems, are to derive no direct assistance from these measures, even if, on the pattern of the 100 per cent. tax allowance for installing insulation in existing industrial buildings, there might be a case for grants or tax incentives for insulation in private housing.

On that point, it is interesting that the National Council of Building Material Producers was reported in the Financial Times today as saying that it believed that the package discriminated against two-thirds of householders and it was concerned that perhaps landlords in the private sector were unlikely to respond to indirect encouragement to spend on insulation without corresponding financial benefits—that is, benefits corresponding to those which will be available in the public sector.

If the methods of persuasion and exhortation, methods of allowing real energy prices to increase and even mandatory measures, such as building regulations and appliance, standards, prove insufficient to meet the kind of targets that the Government must set for themselves in energy conservation, will they give urgent consideration to some kind of incentive structure of grants or tax allowances, or a mixture of both? We would like some indication on that important question.

Why has it taken the Department of the Environment so long—I know that this is an unfair point to put to the Under-Secretary, because he is not responsible for that Department, but he has this co-ordinating role within Whitehall—to come forward with proposals for new thermal insulation standards in new non-domestic buildings and for the provision of appropriate heating controls? Is this not yet another example of Government Departments dragging their feet on this important issue? Does it not underline how all the ministerial and other co-ordinating committees which are now in existence in Whitehall have proved unable so far to give this programme the vital political impetus which it deserves?

The Government have announced the allocation of a small sum to an expanded programme of demonstration projects as part of the package. We would like to know what exactly the Government have in mind. Perhaps the Minister will give us a few examples. Is it likely that this aspect of the package will be expanded further? I notice that it is already somewhat larger than was envisaged in the autumn at the time of the conference of energy managers, and it seems to be growing all the time.

It might help the House and those who will read the debate to have some examples of the type of demonstration projects that the Government have in mind. One often requires a demonstration programme to convince doubting people.

Ministers have spoken of the contribution that oil savings could make and, in particular, of how more efficient motor vehicles could help. That is an important area given that the likely energy gap—if such a thing exists—will mean a shortage of cheap liquid hydrocarbons. In their discussions with the motor industry, how much consideration are the Government giving to the promotion of either weak-mixture petrol engines or dieselengined vehicles? Mercedes-Benz in Germany now manufactures more dieselengined than petrol-engined vehicles. Is not that the direction in which our motor vehicle manufacturers should be moving?

In their working document on energy policy, which was submitted to the Energy Commission, the Government said that there were strong arguments in favour of international collaboration on energy conservation going beyond the exchange of information and technology. I agree with that. The Minister would do the House a service if he told us what measures of that kind the Government have in mind and what measures they would like to see implemented by the Nine.

I press the Minister to agree that this is an area in which the Community has a useful role to play, if only to discourage any one member State from trying to seize short-term advantages to the detriment of the longer-term interests of the Community as a whole. Those interests must include the most efficient use of the energy available.

I reiterate that we on this side of the House stand by the warm welcome that we gave to the package. Our main criticisms are that it should have come much earlier, that it could have had greater effect if it had come earlier, and that it lacks the necessary political impetus because the Government have not shown sufficient evidence of giving it the political weight that a programme of such importance deserves.

5.38 a.m.

The Under-Secretary of State for Energy (Dr. John Cunningham)

It would be misleading to say that I welcome any debate on any subject at this time of the morning, so I shall not say it. I shall respond as briefly and as comprehensively as I can to the points that have been raised by the hon. Members for Derbyshire, South-East (Mr. Rost) and for Carshalton (Mr. Forman), whom I welcome to the Opposition Front Bench.

The hon. Member for Carshalton said that he hoped I would respond to the views which have been expressed in the debate. The views are so many and varied that I doubt whether I shall deal with them all. If the hon. Member feels that I have not adequately covered specific issues, I shall write to him. I give both hon. Members full marks for political cheek, if not duplicity. They talked a great deal about intervention in the private sector of industry and about the need for the Government to do more and dramatically to increase public expenditure commitments. They talked about the need to use the carrot and stick and about taxation, higher prices and the need to give more aid to industry.

All those things are in total contradiction to what right hon. and hon. Gentlemen say from the Opposition Front Bench about what the Government should be doing, and in this specific sector I wonder how the two hon. Members who have spoken reconcile themselves to that fundamental and harsh political point. I certainly do not intend to let it pass, because it is a major difference between the parties and one which it is far too easy for the Conservatives to gloss over in putting many of the suggestions which I welcome and support but which in other ways they are totally opposed to.

Mr. Forman

It is relatively easy to meet the point that the Minister has made by saying that he and the Government have admitted that spending on energy conservation is spending money now to save more later on, and that it is a very good investment of either public or private funds.

Dr. Cunningham

Of course the hon. Gentlemen is absolutely right, but that does not obviate the need to provide the funds in the first place. That is the very point that he has failed to deal with.

There are a number of general points to which I shall reply. This was not the first package in the Government's progressive energy conservation policy, of course. The statement in the White Paper of July 1974 heralded the Government's conservation measures, and there have been a number of admittedly smaller announcements since then. The Government's energy conservation policy has been well established. It is an evolving one and it is internationally recognised as one of the most comprehensive of any Government in the Western World. I say that advisedly. The International Energy Agency certainly supports that view and I believe that it will continue to do so in the future.

We are, therefore, not afraid of international comparisons, and we do not accept the point made by the hon. Member for Derbyshire, South-East that we lag behind. The reverse is the truth. There is a significant amount of evidence to show that we are one of the world leaders in taking initiatives on energy conservation.

Mr. Rost

I do not wish to be misunderstood. I said specifically that we lagged behind in the more efficient conversion of fuel into electricity and heat, and that is an acknowledged fact.

Dr. Cunningham

The second general point is that the measures announced by the Secretary of State on Monday are a major extension of a continuing and developing programme. This is a far-reaching programme involving major public sector expenditure, and clearly the Government have a continuing duty to act in the public sector, where they have very great responsibilities. The third general point—I say this in acknowledgment of many matters that the hon. Gentlemen have raised tonight—is that there is more to be done and we plan to do more. We do not regard this by any means as our last word on the subject.

I want to emphasise the wide-ranging nature of the work that has been going on in industry and to stress that we see energy efficiency as one of the key factors in raising overall industrial efficiency. I find myself in accord with the remarks about the need not only to reduce energy use but to develop much more adequately than anyone has done hitherto the more efficient production of energy in the first place. So the energy industries themselves have a general rôle to play in this approach.

There have been some rather adverse comments about lack of commitment in the course of the debate. This is another general point. It seems strange to make it within 24 hours of the Prime Minister making a major speech at the Coal Industry Society's three hundredth anniversary lunch yesterday when he dedicated his Administration totally to aggressive and far-reaching energy conservation measures. The Secretary of State has on numerous occasions, despite what the hon. Gentleman implied, made clear his own commitment. It is spelt out in the document quoted by the hon. Gentleman, Energy Commission Paper No. 1, prepared by the Department of Energy setting out our thinking on the present situation. It makes it quite clear that we regard energy conservation as one of the fundamental cornerstones of Government policy.

Mr. Forman

If there is this political commitment at such a dizzily high level, why have not the Government been more successful in knocking heads together, particularly in relation to the Department of the Environment?

Dr. Cunningham

If the hon. Gentleman will allow me, I shall come to that in a moment. We have given a great deal of ministerial time and commitment to this, not only in the Department of Energy but in the Department of Industry. My hon. Friend the Under-Secretary of State for Industry made a major speech this week in Newcastle upon Tyne about the Department of Industry's commitment, and my hon. Friend the Under-Secretary of State for the Environment, who is at this moment on the Front Bench and is a member of the ministerial committee on energy conservation, has worked very hard indeed to bring about the kind of commitment from the Department of the Environment to which the hon. Gentleman referred.

I do not intend to enumerate all the details of existing energy conservation measures and policies. I do not want to attribute arguments that hon. Gentlemen did not use, but it seemed to be implied that somehow this is an easy area in which to act. I assure them that it is not. Nothing could be further from the truth. This is a totally unco-ordinated area of activity. It is much easier to co-ordinate action in energy production than it is in energy use. There is a very great difference between the ability of the Government to control energy supply as opposed to controlling energy demand, which results from millions of individual decisions taken every day in millions of different establishments, many of these decisions being taken several times each day. That is a very disaggregated problem to tackle.

It is not easy to come along with quick across-the-board general solutions to get to grips with energy demand and energy use. I hope that, whatever else hon. Gentlemen may disagree with my remarks, they will at least burn that into their general thinking and approach to policy making in this area. It takes time, because one needs to be specific in the approach to various sectors in energy use and to try, as far as it is ever possible in policy making, to tailor-make solutions to individual situations. I hope that hon. Gentlemen will accept that point.

It is well known that industry uses about 40 per cent. of all our national energy, and there are major opportunities to improve efficiency and competitiveness through energy conservation. Nevertheless, even before the present package we had by no means neglected the domestic sector. The main thrust of the "Save It" campaign and the information campaign, which has cost about £8 million to date, has been in the domestic sector. Its effectiveness has been reflected in the way in which, for example, the purchasing of the various materials used for home insulation has tended to follow and reflect the level of that advertising. A considerable number of local authority buildings have already been insulated through the job creation programme. We would have liked to see many more, but, nevertheless, some progress has been made.

As the House knows, we have organised the programme in such a way that substantial funds are available, and substantial discounts have been available for materials too. About 170 applications have been received by the area action committees under that general heading. However, this still leaves a massive area for action in the local authority housing sector. Over 2 million council houses lack basic insulation of any kind.

My right hon. Friend's statement on Monday included £114 million in the next four years for the start of a 10-year programme to bring public sector dwellings up to basic minimum standards of thermal insulation. Hon. Members have asked a few questions about this.

Let me try to say why we have acted in this area first. Obviously, it is for the fundamental reason that this is the biggest single area in the domestic sector where we could make progress rapidly. Approximately two-thirds of all local authority houses need bringing up to basic standards. It is much easier to organise, plan and cost, and, therefore, it is much easier to get action and results quickly. That is why we have acted in this area first.

It is true that in the private sector about one-third of the housing stock in broad general terms also comes into this category. This will be much more difficult to organise, whatever scheme hon. Gentlemen may envisage. But I would point out that, even now, through the DHSS, local authorities can take action to help the elderly and disabled in private sector housing. Hon. Gentlemen should encourage some of their colleagues who control many, if not most, of our local authorities to get on and do that. I should like to hear them make some speeches to that effect.

The Prime Minister had something to say about this at the Coal Industry Society lunch yesterday. I do not wish to add anything to that at the moment except to make this point. Hon. Gentlemen said that the Government should undertake to look again at this problem. We have not stopped looking at the problem. It is not a question of looking at it again. We recognise that there is a problem, and in no sense do the Government mean to be discriminatory in their approach to the problem of house insulation.

There is also the question of how work can be done. It was suggested that we assumed that people in council house needed to have it done for them. We do not assume that. We have encouraged them to do it themselves, just as people in the private sector are encouraged.

In general terms, we have produced a lot of helpful technical advice to people. We shall be updating our booklet "Compare Your Home Heating Costs" and improving it. It will, we hope, be a further success, as the first edition was. More than 600,000 copies were taken up very rapidly indeed, and the updated version should be available within a few weeks. This is an area of the domestic sector which uses about 26 per cent. or all our national energy. Again, it is fundamentally important for us to continue to develop policies in that area.

Transport has also been mentioned. This is undoubtedly an area where we need to make progress and where, to date, little has been achieved. We know now that by improving the existing internal combustion engine performance significant improvements in fuel consumption can be obtained.

As the House knows, we are taking action to remedy what I have said about the lack of progress. The fuel consumption testing order will come into effect. That has been agreed with our home industry. We have begun further talks to make even further progress in this important area. But it is important that proper consultation takes place. We cannot afford to do anything—indeed, it would be folly—which disadvantaged our own domestic motor manufacturing industry vis-à-vis its international competitors.

This consultation will again take time. I emphasise the need for proper consultation simply to rebut the accusation that we are moving slowly and dragging our feet or that we could make progress more quickly. It is not easy when one is proceeding on the basis of consultation and discussion as wide ranging as it can possibly be and on the basis of consent rather than on the basis of the approach of some other countries and taking statutory measures.

We are also establishing a close working relationship with the British Standards Institution, which is to hold what we think will be an important conference on standards and conservation in January of next year. I hope to be attending. It is likely that the Government will need to devote additional resources towards assisting with the drafting of standards, and we are looking at how best we may be able to do this.

One further general matter concerned what we were doing internationally to promote more effective energy conservation policies. The Secretary of State was recently at an Energy Council where certain conservation measures were on the agenda. In general, however, we do not support the idea of open-ended, vague, wide-ranging attempts to bring in directives in an EEC context, because we do not think that there is any point in having statutes which are ignored, ineffective or may need so much detailed policing as to render them not worth the trouble.

We are keen on having more specific co-ordination internationally, but it has to be on a comparable basis. We do not want to agree to measures which are promoted through some international body if they are not on a proper basis of comparability of standards and specifications. Again, we have our own industrial interests to think of in taking that view, and I think that we are right to take it.

As my right hon. Friend also announced in his package, energy conservation in industry will be given further assistance in the development of demonstration projects. We have made further money available. We have developed projects based on the recovery of waste heat. Currently, we are drawing up a list of priorities for further action in this area. Our own technical advisers have ideas, but we have widely canvassed industry so that it, too, can come to us with suggestions, and we have received a number of interesting propositions already.

Combined heat and power is another topic mentioned by both hon Members. We shall be receiving from the working party a fairly comprehensive report early in the new year. We do not have to take any action until we have considered that report carefully. We certainly would not proceed with any action that would undermine the CEGB and the tremendous public investment in the grid. We would want to be absolutely sure that what we were doing was in the general interest of the industry which supplies energy as well as of consumers. Clearly there is a conflict here. The hon. Member for Derbyshire, South-East shakes his head, but obviously it would be nonsence to aid one and damage the other. Certainly we shall not choose until we have considered the report. I wonder what the hon. Member and his colleagues would do. They continually press us for action, but we never hear their views on this matter.

I turn now to international comparisons. Other countries have approached the problem in other ways. Having spoken in some detail to the French, we believe that our results are comparable with theirs. We are saving about 6 per cent. of primary energy demand, and the French have done the same. They have taken a different road and have gone for fiscal penalties and legislative measures. They have taken a more legalistic approach to the problem. Despite the total contradiction in the two approaches, the results have turned out very similar. Perhaps this is because our energy use patterns and economic backgrounds are very similar.

Other countries reflect different national situations, attitudes, and historical approaches to energy and housing provision. This explains why many have more combined heat-power installations than we have. As for the thermal efficiency league, we do not believe that some of the Press articles are working on the same basis of comparison. We want comparisons to be on a standard basis before we will accept them. We believe that our programme is one of the most forward-looking and the most cost-effective.

I have dealt with housing, and I do not intend to deal with VAT. I do not think that this was too serious a point, and it is certainly not one over which I would be willing to spill blood with the Treasury. I do not believe that I would win anyway, and VAT is not a serious drawback to energy conservation.

Building regulations were roughly doubled in 1975. There is an argument for taking further action in the domestic sector, and we are discussing that now. In the non-domestic sector, I have been asked why it all takes so long. This is because the consultation processes are laid down and it is necessary to meet these requirements. It is a question not of dragging our feet but of going through the proper procedures that are laid down—publishing the proposals, inviting comments, assessing those comments and reaching a conclusion.

In the industrial building sector, people have the right to have 100 per cent. of the cost of insulating a building allowed against taxation. That includes the cost of installation as well as of the materials.

I am not convinced that the setting of rigorous targets by the central Government is a good idea. When I looked at this in Select Committee in some detail, I thought there might be something in it. But I would be much happier to see industrial sectors consider this themselves and set their own targets. Many companies are doing this and are showing increasingly good results. I think that that is a much better approach than our sitting in Westminster and saying what we think people should do, without the detailed information.

Mr. Forman

Would it not be possible for the Government to build up what one might call an aggregate target on the basis of disaggregated information fed to them by the different sectors of industry and other sectors of consumption?

Dr. Cunningham

We make very broad statements, for instance, that everyone can save at least 10 per cent. of energy consumption by adopting obvious good housekeeping methods. That is a broad generalisation in itself, and to go much beyond that would involve a disparate amount of effort. I think that there are easier, simpler and more effective ways of doing it.

I was asked about the PSA's target. The PSA's target is 35 per cent. That is for the PSA's own programme, and it has nothing to do with the programmes in health, housing or education. There is no basis for comparison. It is not generally applicable across the board and was never intended to be.

I was asked about local authority expenditure under the package as announced and the consequences for ratepayers. The hon. Gentleman was being cheeky here. He knows as well as I do that it is not for us in the Government to decide. Local authorities will decide for themselves how and where they apply any charges where necessary. They will get the money and the loans as two-thirds of the cost of borrowing under the normal housing loan finance arrangements, as the hon. Gentleman rightly said. Any residual small cost to a local authority will be recovered as it thinks fit, and, no doubt, individual authorities will do it in their own way. I cannot give the guarantee which the hon. Gentleman so cheekily asked for. He knows that I cannot do so, since the Government have no authority to give any such guarantee.

Mr. Rost

On the question of the grants available for council house occupiers and none for occupiers of their own homes, the Minister defended that by saying that it was easier to administer. Is he admitting none the less that the system as proposed would be completely unfair?

Dr. Cunningham

No, I did not defend it just on the basis that it was easier to administer, and I said also that it was not a question of looking again at this problem. We have not stopped looking at it. I did not accept the hon. Gentleman's argument that it was our intention to discriminate in the first place.

Praise from the hon. Member for Derbyshire, South-East is praise indeed. Our statement on Monday was widely welcomed in the House, it was welcomed in another place, it was welcomed in the Press and it has been welcomed internationally. At last, rather grudgingly, the hon. Member for Derbyshire, South-East gives it a welcome. I am pleased about that.

There is no doubt in anyone's mind now—there certainly should not be, and there is no doubt in my mind—that the political commitment is there within the Government. There is no doubt in my mind that the momentum for energy conservation is developing in industry in particular. I spend a lot of time in the regions and I go on industrial visits almost weekly, talking to people about these matters. The general feeling is that the arguments—I agree that they are selfevident—that investment in energy conservation is one of the lowest-risk investments that anyone can take today are gaining ground. When I say that it is one of the lowest-risk investments, I include the Government, people in their own homes and industry. The pay-back periods are often very short and the benefits, whether we are talking of ourselves as individuals, or industrial organisations or of the nation as a whole, are large and obvious.

That momentum is developing, and the arguments are gaining ground. I think that they will continue to do so because, if for no other reason, we in the Government intend to keep up the fight for those policies and arguments. There will be further measures announced in due course. I am asked when and on what. I cannot be specific as to when and what. Clearly, the interdepartmental and Government discussions are going on, as are discussions and consultations with the Advisory Council on Energy Conservation and in the Energy Commission.

The hon. Gentleman was most unfair in his views on the Energy Commission. Sir William Hawthorne is there, and so also is Dr. Pearce. They are totally committed to supporting the Government's policy, as Sir William pointed out in his speech in Liverpool recently. Sir Derek Ezra is there, and he has recently spoken in support of Government policy. Eric Sayers of the CBI also comes into that category. There is, therefore, plenty of support in the Energy Commission for what we are trying to do.

In spite of my earlier remarks, I have enjoyed speaking in this debate. I sometimes think that that is difficult to justify, but I hope that I have dealt with the points of major importance. However, if there are any points that hon. Members may wish to raise with me. I shall be happy to correspond with them on any issues they might like to pursue.