§ 3.24 a.m.
§ Mr. Peter Rost (Derbyshire, South-East)At this hour we should be more concerned about conserving our energy by sleeping than by discussing it. It is a reflection of the low priority that the Government have so far given to energy conservation that we have not had the opportunity of a proper debate in Government time during the past three years. The only opportunity available to us to raise this issue of great national importance is at this ridiculous hour of the night. That is a sad reflection on the Government's attitude. I hope that the Minister will take this opportunity of correcting that impression.
I declare an interest which is well known to the House. I am a director of two small companies involved in giving advice on energy issues. But I have a more important interest to declare and it is more relevant to the subject of energy conservation. It is that I am a member of the human race and have four small children. That is a more important interest than any indirect or direct commercial one. I regard the question of energy conservation as far more serious and important a matter than simply commercial considerations.
I am pleased that the Minister has taken the trouble to wait up to this late hour to take part in this brief debate. I am aware that he has had to cancel important engagements elsewhere to he here at short notice. The House will also know that before the hon. Gentleman was promoted to his office in the Department of Energy he played an important part in the activities of the Select Committee of Science and Technology, of which I am a member, and that the Committee produced recommendations for an energy conservation programme. I am sure that he will not take it personally if I have to rebuke him.
§ Mr. RostYes, again. I do so because the Government have not provided time to debate the Select Committee's Report on energy conservation—a report that was presented to this House two years ago. I hope that he will respond to my remarks 1182 in a constructive, positive and honest manner instead of using the opportunity to repeat some of the more complacent platitudes we have heard from the Department of Energy in the past three years.
The reasons why I believe the Government must give priority to using less energy are well-known factors—factors which are not fully accepted—involving the contribution which it could make to the balance of payments, the cost-effectiveness in investment terms in a more rational use of energy, and the contribution to our national productivity and our standard of living, bearing in mind the fact that energy is likely to contribute an increasing proportion of our gross domestic production. Therefore, it is vital that we should waste less energy and that investment should be more cost-effective in future than it has been in the past.
The need for greater priority for investment in energy conservation is also related to the desirability for self-sufficiency in this country over a period of time and the independence which this will give us. But the most important justification of all, in my view, is the fact that it will lengthen the lead time that we shall have to fill the energy gap. The longer the time we have by wasting less energy in the meantime, the longer we shall have to get our solutions right and our technology improved and the easier we can make the provisions that will be necessary for alternative sources of energy in the years to come.
The Government's programme so far—and I do not wish to be derogatory and I shall give credit where it is due—has been primarily a publicity and educational campaign—the "Save It" campaign—which has been fine, as far as it has gone. But it has contributed only a marginal amount to savings, and has now run out of steam. The error into which we are falling is that we are inclined to regard a promotion campaign as a substitute for positive programmes. We have had a series of energy conservation schemes, hut the incentives have been marginal. What we have not had is the follow-through programme that is desperately needed.
I want to concentrate on two important areas where we have not done what we should and where substantial energy savings could result if the right incentives 1183 were created. The first is thermal insulation. We are well aware that buildings take as much as 40 per cent. of our total primary energy consumption, yet two-thirds of that energy is wasted where there is not a reasonable standard of insulation. It is unsatisfactory that we still do not have positive incentives or improvement grants, that VAT is still chargeable on do-it-yourself insulation materials, and that there is a positive disincentive to people to improve their insulation because they are re-rated at a higher level for doing so.
Meanwhile, as was highlighted in an earlier debate, we are paying vast sums of public money to subsidise the heating for less-well-off families who cannot afford to insulate or to pay the present heating bills. It would be far more sensible to spend some of the money on providing incentives for insulation rather than to continue to subsidise heating and to go on wasting fuel.
We need better building insulation standards for new buildings. Why has not the Minister tried, for example, to promote, in combination with the electricity boards, a form of credit scheme for insulation similar to that by which the boards sell cookers, deep freezes and refrigerators, with payment being made in instalments with the electricity bills?
Our standards of thermal insulation are already much lower than those in the rest of Europe. Therefore, we have more catching up to do. Yet we are doing less than most of the EEC countries. Apart from Italy, we are the only EEC country with no direct incentive in the form of a tax allowance or a grant or loan for domestic insulation. The EEC has now issued a strong directive that all countries should be doing more in that direction. I know that the Minister is anxious to make an announcement that a more widespread scheme of incentives is under way and will be promoted before next winter. I hope that he will make such an announcement tonight.
The second area in which substantial savings in energy could result, not overnight but over a programme of several years, is in electricity production. We are virtually bottom of the European league in the production of electricity generation. We are also bottom of the league in the production of electricity 1184 combined with heat where thermal efficiencies are much higher. That will not do. We must do more. The Plowden Committee Report of over a year ago made strong recommendations for the reorganisation of the electricity industry. Some of its recommendations referred to the wasteful use of fuel.
Two of the recommendations are most relevant to this aspect and require a Government response. They are recommendations 10.5 and 10.6 which are:
At present the industry's statutory duty is to provide 'an efficient, co-ordinated and economical system of electricity supply'. This duty should be changed to take into account the importance of energy conservation.The next recommendation is:In order to enable the CEB to initiate heat-and-power schemes, its power to sell heat should no longer be restricted to selling heat which is the by-product of electricity generation.Let us consider what happens elsewhere. In Denmark 35 per cent. of electricity comes from combined heat and power. In Germany the figure is over 20 per cent., and in France over 17 per cent. The United Kingdom produces only 7 per cent. in that way, and nearly all of that is produced by private industry.The EEC is now actively promoting and recommending a more rational use of energy by suggesting that there should be more incentive towards combined heat and power provision and that the disincentives that exist should be removed. Before long the pressure will come from Europe, as it rightly should, for us to begin to catch up.
The problem here is that there is no agreed method of economic analysis for combined heat and power schemes, that the CEGB is unenthusiastic, which is not surprising bearing in mind that it has 30 per cent. overcapacity, and that the Government have not directed the utility as a priority to take account of the longer-term aspects of energy conservation and energy economics.
We are still building power stations—for example Drax B—in the traditional method by which two-thirds of the fuel will be rejected as waste. It is time that we took aboard what is happening in the rest of the world and followed suit here. Only this week France has legislated to compel reject heat from power stations to be utilised in industry. Schemes are 1185 flourishing in other parts of Europe—Germany and Sweden—and yet we are only just starting.
I am particularly interested to notice that the Midlands Electricity Board is promoting—at Hereford—the first combined heat and power station in Britain in the public utility sector. This will have a thermal efficiency twice the average of our electricity generating system. So it is beginning to happen, but it is not being promoted hard enough and the disincentives have not been removed by the Government.
Electricity production in Britain takes about 30 per cent. of our primary fuel which is, adding coal and oil together, the equivalent of 90 million tons of coal equivalent. Two-thirds of that—66 million tons of coal equivalent—is wasted in the cooling systems. The figures are eye-boggling.
I want to ask the Under-Secretary, who I know is sympathetic, how much longer he thinks that we as a nation and other countries can go on affording the scandalous squandering of finite and increasingly expensive fossil fuels. It is tempting to say that we have had three years of complacency from the Government on energy conservation, but that might be slightly unfair. There has been some move. Unfortunately, the attitude still is that the Government are prepared to support conservation except when and until that means doing something about it. We must not go on masking a promotion campaign as a policy. It is no alternative to an actual programme.
I conclude by putting six questions to the Under-Secretary. It is late at night and six questions will have to do, but these are questions which some of us have asked before. They demand an answer if the hon. Gentleman is to indicate his genuine good will towards the objectives we all share.
First, are the Government committed to the EEC recommended target of a 15 per cent. saving in energy as a result of conservation measures by 1985? It is a feasible target which should be reached and which other European countries are trying hard to achieve. If the Government are committed to it, when will they promote a programme which will achieve it? Secondly, when shall we get some 1186 proper incentives for domestic thermal insulation?
Thirdly, when will the Government get a grip on the situation and show determination to remove the statutory restraints, the legal restraints and the institutional restraints which are holding back combined heat and power production? Fourthly, do the Government accept the Plowden Committee's recommendations on the need for a more rational use of energy through the electricity production system?
Fifth, why is it that in Europe all new nuclear power stations are being sited only where the reject heat will be applied in industry or through district heating, yet in this country we seem so far to have made no such provision? Shall we site our nuclear stations and all future power stations where the reject heat can be used? Finally, why are any new power stations being constructed without applying the reject heat in a more useful way?
A programme for energy conservation does not mean hardship or going without. As I have often said before, it means the opposite, because investment in energy conservation can stimulate the economy, it can produce much useful employment instead of phoney jobs such as we are getting under the Job Creation Programme, it can help to save scarce, expensive and exhaustible resources, and it can save public expenditure because, if we invest in reducing waste, we do not have to invest so much in providing new energy. Moreover, it can help the balance of payments. It can improve the efficiency and productivity of our industry and so help our standard of living. Above all, it can buy precious time, which in future years may be our most valuable asset, in order to allow us the time we shall desperately need to provide alternative energy resources over the next two or three decades.
The Minister has an opportunity tonight to dispel the widespread impression that the Government regard good intentions as a substitute for positive action.
§ 3.46 a.m.
§ The Under-Secretary of State for Energy (Dr. John A. Cunningham)I recognise the long interest of the hon. Member for Derbyshire, South-East (Mr. Rost) in energy conservation. As he said, he and I were colleagues together 1187 on the Select Committee on Science and Technology for a number of years. However, I do not accept what the hon. Gentleman said about the lack of opportunity to debate the subject in the House. As recently as 10 days ago, we had a debate, which I introduced, on a number of EEC documents, three of which were specifically related to the more efficient use of energy, and the hon. Gentleman himself spoke from the Opposition Front Bench on that occasion.
If the Opposition have been so consumed with a desire to debate the subject, it has always been open to them to allocate one of their Supply Days, or part of one of their Supply Days, to it. I do not, therefore, accept any of the hon. Gentleman's strictures on the Government for failing to provide time for debate. As for commitments to debates on the subject, the hon. Gentleman knows very well that is a matter not for Under-Secretaries in any Department but for my right hon. Friend the Leader of the House.
Nor do I accept what the hon. Gentleman said about complacency on the Government's part in respect of the need for energy conservation. I think that my own activities, as the Minister responsible, alone contradict that argument. Moreover—to demonstrate the matter a little more effectively—at the conclusion of the Downing Street talks Her Majesty's Government, along with the other six participants, included the need for energy conservation as one of the seven points of the Summit declaration. Since coming into office, the Government have moved towards economic pricing of fuels. They have insisted that the nationalised fuel industries get out of the considerable deficit into which they were forced by the policies of the previous Tory Government, of which the hon. Gentleman was a supporter. We have made clear that energy must be sensibly used and economically priced. We have worked vigorously within the EEC for the development of energy conservation policies within Europe and within the International Energy Agency.
There is no evidence to suggest that in either national or international terms we have been slow to promote the need for a more rational, more effective and more efficient use of energy. I am very 1188 much committed, as the hon. Gentleman said, to the need for us to make further progress in this area, and I recognise that there is considerable room for further progress to be made.
This is a problem of a disaggregated nature. There are a great number of small organisations and a great number of decision-takers, much removed from Government, involved in giving effect to whatever policies the Government may produce in this area. It is not a popular area in which we can make central decisions and expect them immediately to be implemented, or to become immediately effective in many cases. It is a very disaggregated area in which to work. It is also a relatively new area, in that much of our thinking is post-1973, as the hon. Gentleman knows, and we, like many other people, are at the beginning of studies to see how best we can give effect to some of the things that we want to bring about.
I did not agree with the hon. Gentleman when he said that the basis of our effort was simply the publicity for which we have been responsible in the "Save It" campaign. That has been the spearhead for bringing to the attention of the public the need for energy conservation. It has been specifically aimed at the domestic and industrial sector. But we have done much more than that. We published a White Paper in 1976, of which the hon. Gentleman is well aware.
We have a long list of policies in the industrial and commercial sectors which bring incentives of various kinds to people in industry. We have a very effective series of technical publications to bring technical advice to industry. Our energy conservation programme has been recognised internationally as effective and well thought out. This view is reflected in some of the reports which have been produced, of which I am sure the hon. Gentleman is aware. There is much more to what the Government have been doing than the "Save It" campaign.
The hon. Gentleman said that there had been no following through of what has been going on as a result of our energy conservation programmes. I will take two specific examples in industry to counteract that argument—the industrial energy audit scheme and the industrial energy thrift scheme. They are aimed at gathering from industry what is possible 1189 in the field of energy conservation, and the programmes run by the Department of Industry are free of cost to those firms which are invited to participate. They will provide us with a detailed follow-through of what is possible and what has been happening as a result of some of the measures taken.
We are also assessing the effect of other aspects of Government policy in the conservation field. It is important that we follow this through and develop new policies where we can, based on the information and the experience gained from those already in existence, and we are doing that.
The hon. Gentleman spoke about the subjects most dear to his heart—insulation, the need for incentives, and combined heat and power. There is in existence already a tax allowance which enables people to claim 100 per cent. of the cost of insulating existing industrial buildings. We encourage industrialists to take advantage of that wherever and whenever possible. The Department of the Environment has currently circulated a discussion document on a further increase in insulation standards in industrial buildings. No one can say that in the industrial sector we are not acting positively or that incentives do not exist. On the contrary, they do.
Domestic insulation standards were almost doubled in 1975. My view is that it should be possible to improve upon that situation, but there are procedures to be gone through. Consultations would have to take place, particularly with local authorities, the building industry and so on. It is too facile to suggest that this can be done quickly or without proper consultation, particularly with organisatons specifically concerned with building design.
I turn now to the promotion of commercial programmes by those who sell insulating materials or by the nationalised fuel industries. We encourage them to sell systems, including insulation material, and we also aim a lot of our publicity and advice on domestic consumption of energy to people on that basis, and we shall go on doing so.
The question of incentives offered to consumers is for the industries, not the Minister. The Minister has no power as such over that matter. It is for the day-to- 1190 day management decisions of the industries concerned.
The hon. Gentleman has spoken on a number of occasions on the subject of combined heat and power. The situation is largely the result of historical developments in urban and industrial environments in the United Kingdom. We have progressed differently from Eastern Europe and in some cases, as the hon. Gentleman pointed out, from countries within the EEC. It is not an easy matter to overturn our historic situation, certainly in a short time.
Our electricity generation has been developed on the basis of the national grid. I do not know whether the hon. Gentleman was suggesting that we should scrap our approach and move away from the idea of having a national grid. If so, I think that he should spell it out and be more specific about it.
We have published a paper on the subject of power. We shall be producing a fuller report later this year or early next year. There are a number of problems. If we were developing new towns involving the building of new power stations, it would be possible to do so on the basis of more effective utilisation of energy. But, given our existing power stations and grid system, the only way that we could use much of the so-called waste heat would be to insist that people in the urban environments in which the power stations are located should swop to a steam or hot-water system coming from the power stations. We could not embark upon the massive capital investment involved unless we were sure that there would be a high take-up to ensure some return or at least some effectiveness in terms of the scheme.
That is not an easy political decision to take. It would require a Minister saying to a city such as Coventry, Bristol or perhaps Derby "All your bets are off in terms of your heating system. Whether you have invested in electricity, gas, solid fuel or oil, you will now pipe steam or hot water into your houses. That is the way that it is and you will like it." I do not think that would go down too well in a democracy. There are some genuine problems associated with the present situation which we have inherited.
We shall draw conclusions about the future in the light of the report that I have already mentioned, but I stress that 1191 there is no easy or facile solution to the present situation.
The hon. Member made the point about the law and regulations. I assure him that this is being looked at. Although he did not mention it today, in the past —on the Coal Industry Bill and in letters to The Times—he has spoken of the need for further price increases as a fuel conservation measure. Here again I think that he should spell out what he is trying to say. He is not speaking from the Opposition Front Bench, therefore I cannot say that his views are Opposition policy, but if Conservatives are in favour of substantial price increases for fuels they should say so.
I noted the hon. Member's points about job creation and the need to get on with house insulation. I agree that there is a massive opportunity here to conserve more energy and to make a real contribution towards helping people who face difficulty with their higher energy bills.
I do not accept his rather derogatory comment about the Job Creation Programme. We have organised the programme in such a way that substantial funds are available, and very substantial discounts on materials have been negotiated with the installation manufacturers. Therefore local authorities can get the labour free and the materials at a very significant discount. I remind him that it is local authorities who control these decisions, not central Government. I would like to see the hon. Member and his colleagues telling the local authorities—mainly Conservative controlled—to get on with the job. That would be a much more effective way of getting some movement in this area than continually telling the Government to get moving. It is well-known that we do not have powers of direct action in this matter. It would make a real contribution if he could persuade local authorities to act. There is no shortage of money; it would create jobs and help people. Whatever expenditure was incurred could be recouped by the local authority through the rents.
I turn to the questions that were put to me. Certainly we are working with the EEC and will continue to do so, although we have never set specific targets and I do not see much gain in having specific numbers as targets on a 1192 national scale. We are working with the EEC for a vigorous and effective conservation policy and we shall continue to do so.
We have been looking at incentives for domestic installations, and whether it is possible to give more. If so, we shall do so. I have already discussed combined heat and power in some detail, and I cannot add to that, or to what has already been said on previous occasions about reorganisation of the electricity industry.
The siting of power stations in the EEC is not a matter for me. But if power stations could be sited in areas where there is more effective use of the heat coming out from them, that would be sensible.
The Government are committed to the need for energy conservation. We, alone among Western industrial nations, shall soon be entering a period of energy self-sufficiency. We cannot afford to let that period delude us. We cannot isolate ourselves from the world energy situation. Therefore we must redouble our efforts to obtain a more effective energy conservation policy. I agree with the hon. Member for Derbyshire, South-East in that respect.
That does not mean that we need to go without energy or suffer deprivation. In many cases it means the reverse, and it can bring a stimulus to the economy create jobs, protect investment and make our energy more valuable than many people believe it already is by prolonging its lifetime. I also agree with the hon. Member there. It can bring us a further breathing space and make British industry more competitive.
I spend much time talking to industrialists about energy conservation. What surprises me is the vast spectrum of views that one finds in industry over this subject. Some industrialists show willing to commit resources and manpower to energy conservation. They have got on with making spectacular savings, they have cut energy input per unit of output and have increased their energy productivity. They have made themselves competitive and saved vital cash resources in the process. That is excellent.
On the other hand, I meet too many industrialists who say that they do not 1193 have time for this or that it is not important, that they do not think that there is much in it for them because their energy costs arc a relatively small part of their overall costs. That is a dangerous and slothful attitude, particularly at a time when the major competitors of those industries are working to increase their energy efficiency.
As the House knows, the Government are currently engaged in a wide review of our energy conservation policies. That has already been mentioned in the House on a number of occasions. In the review we are taking full account of the recommendations, draft recommendations and directives of the EEC, the reports of the international energy agencies, and of the OECD and the valuable advice that we receive from the Secretary of State's Advisory Council on Energy Conservation. I pay tribute here to the work of that council and particularly the work that it has done in the last few months. It has recently produced a document outlining the priorities for action.
There have also been some debates in the House. We find the work of the Select Committee helpful and valuable and we shall consider carefully all the views that may be put to us in the House or by the Committee. The regular and numerous contacts that officials and my colleagues at the Department have with local authorities and industry have produced a number of interesting ideas, based on practical experience of the difficulties of high energy costs. A number of those ideas are being carefully considered. There are also results available from the considerable amount of research and development work that is being carried out on energy use and conservation.
I can assure the House and the hon. Member for Derbyshire, South-East that I remain totally committed to the need for a vigorous, developing and more effective energy conservation policy. I thank the hon. Gentleman for his courteous words about my role and I look forward to future debates on the subject.