§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
§ 4.52 p.m.
§ The Secretary of State for Energy (Mr. Anthony Wedgwood Benn)
I welcome, as I am sure will the House, the opportunity to have a debate in the rather easy atmosphere of an Adjournment motion covering the whole range of energy policy issues. I think that all would accept the importance of energy and energy policy for the United Kingdom.
It is wide ranging and complex. Forecasts in energy policy are uncertain. Long-term factors are involved. There are international ramifications. Energy policy affects technical matters, environmental questions and financial, industrial and social problems. It is, therefore, difficult for anyone opening a debate to know exactly where to start.
If it is agreeable to the House, my intention is to make a progress report under various headings and to identify particularly the current problems rather than to emphasise the points where things are going well. That will give the House an opportunity for focusing on those problems which are not yet fully decided. I shall also say one word about Community energy policy, as our presidency ends on Thursday. I shall also say something about the international aspects and something about energy and energy investment in our domestic economy.
I, therefore, begin by saying something about coal, where the development of the investment programme is going well. The tripartite committee, which, in a sense, oversees the coal industry, is a very fine forum for discussion. The coal reserves are good. The Coal Bill has now been passed by the House and is on its way to another place. That will allow the National Coal Board to engage in further activities, particularly in refining and in extending itself internationally.
There are three problems with regard to the mining industry to which I wish to turn the attention of the House. One is the problem of production. I think that everyone who follows what is said both by the National Coal Board and by the NUM will recognise that the levels of 281 production have been disappointing. It is not a matter in which the judgment or exhortation of a Minister is of much value. It is not unconnected with the problem of pay and productivity in the context of phase 3. That is certainly one of the factors that we have to take into account, but perhaps some hon. Members will wish to comment upon that.
Another problem concerns the markets for coal, both domestic and international. The House will know that there have been special problems of getting the Scottish coal-burn negotiated. I would pay tribute to my hon. Friend the Member for Midlothian (Mr. Eadie), the Under-Secretary of State, who chaired the Scottish working party with a result which is known to the House and where the Government, in order to prevent short-term fluctuations from changing the long-term prospects for the industry, have arrived at certain arrangements which we think are satisfactory. In effect, they have involved bridging the gap between what the SSEB says is a reasonable price and the level at which it was practicable to sell coal from the Scottish pits. In South Ayrshire, to which both my hon. Friend and I devote a lot of attention there are special problems which are as yet unresolved.
In Wales there has been a similar problem, although the difficulty has arisen because of technical difficulties, indeed explosions, at the Aberthaw B power station. Repair work is in progress, but we must see that the Welsh mining industry does not suffer for reasons entirely unconnected with itself, namely, that it was not yet practicable to burn coal at the rate anticipated when Aberthaw B was built.
The third problem in the coal industry to which I wish to refer is the access for coal that would be created by the Drax B power station. As I mentioned in the House in answer to a Question, Drax B has been a part of the CEGB programme since 1969 when it brought it to my attention as Minister for Power and Technology. There has never been any argument about the place for a Drax B coal-fired station. The question has been whether the special problems of the turbo generator industry and the boiler makers merited or justified the advancement of the order for power stations.
282 I know that I shall carry the House with me in saying that under the previous Government the Ince B power station was advanced with public compensation for reasons not dissimilar from the reasons advanced now. Whether it is right or wrong to spend public money for these purposes is therefore not by itself a matter of controversy. The energy case for Drax B is not historically a matter of controversy. It is a matter of judgment in each individual case whether it is right or wrong.
The argument is not an argument on energy grounds because with the Selby coal becoming available I was advised that the CEGB felt that Drax B burning Selby coal would be the cheapest option open, including the nuclear option.
The question is whether it is possible to find a way—here I move into territory which my right hon. Friend the Secretary of State for Industry occupies—of getting an industrial restructuring that will make this possible. This has been a problem which the House will breathlessly follow day by day in the Press stories put out by those who are interested. It is a difficult problem. It is a problem to which the CPRS devotes its attention and it is a problem that has concerned the CEGB because it is being asked to provide a steady home ordering programme as a basis for the turbogenerator industry.
That, of course, has been the reason that the negotiations have been so long in being conducted. There are difficult problems that I should like to put on record, but the question over Drax B has been a matter of timing.
§ Mr. Peter Rost (Derbyshire, South-East)
The Secretary of State has made a most important statement in saying that Drax B is the cheapest option, cheaper than nuclear. Would he tell us on what basis of coal prices he has made that calculation?
§ Mr. Benn
The argument is about the timing. The House has followed this closely and it is easy to give the facts because they are pretty widely known. The argument is about the timing of the Drax B station. The CEGB favours a 1979 order. But the question is whether a 1979 order would leave an unacceptable gap for the turbogenerator industry. But 283 on Drax B itself, as a power station, the argument about compensation derives from the prospects of advancing the date and not from the uneconomic nature of the operation.
§ Mr. Mike Thomas (Newcastle upon Tyne, East)
I welcome what my right hon. Friend has said about this matter. It is very helpful in clearing up the energy case for Drax B. As he will know, five of the last 10 power station orders for turbogenerators have been made by single tender, and the last one, under the Conservative Government, was on employment preservation grounds. Does my right hon. Friend agree that the question of timing is not an uneconomic one? I am not suggesting that he thinks that it is. In fact, next week, C. A. Parsons in my constituency will begin to talk with its employees about the process of individually identifying the first of 1,600 redundant men, with all that that means for Tyneside. I accept that it is not strictly my right hon. Friend's affair, but will he convey to the Government the urgency of that position since it will lead to industrial unrest, bad industrial relations and problems in exports which in my view the delays over this matter have exacerbated greatly?
§ Mr. Benn
I appreciate the concern. In the course of a chequered Ministerial career, I have sat on both sides of the table, first as Minister of Power originally when the CEGB was demanding the maintenance of competitive suppliers, later as Secretary of State for Industry where I was concerned with the future of the industry, and now as Secretary of State for Energy, with these responsibilities. The House is well aware of the problem.
The reason why I emphasised that the economic argument was one about timing and not about the economics of Drax was that I do not want anyone to think that there was any doubt about Drax being, as a coal-burning station, an economic proposition. Everyone recognises the interests of my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas), but he recognises, as do other hon. Members who represent Babcock and Wilcox, Clarke Chapman and GEC constituencies, that these are very complex problems and that they relate to 284 the problem of industrial restructuring, because that is the core of the problem.
§ Mr. Nigel Forman (Carshalton)
The right hon. Gentleman mentioned the interesting bit of information that coal, used in the way that he described, as between Selby and Drax B would be cheaper than any available alternative. That seems to fly in the face of the information which he gave me in a Parliamentary Answer on 26th May about average generating costs. Can the right hon. Gentleman enlighten us further about the figures on which he based his statement?
§ Mr. Benn
All estimates are based on forecasts which have to take account of great uncertainties, including the cost of oil, the cost of all alternative fuels, the cost of coal, and the capital cost of building, say, nuclear stations and what inflation might do to capital construction costs. I am only telling the House—and it is nothing new—that the argument about compensation is not an argument about compensation for building an uneconomic type of power generation system but an argument arising from what would be the additional cost of advancing. That is a different argument. I hope that I have clarified that, though, as I say, everything is based on forecasts.
I am afraid that I have a great deal to say, and clearly I have hit the right note in respect of coal. I turn now to electricity, where the problems of the industry are not unfamiliar to the House. They are problems of over-capacity, not entirely disconnected from the matter that I have just been discussing.
There is a general view worldwide, which I share, that the switch from oil-fired and gas-fired stations to coal and nuclear energy as base load carriers for the generation of electric power is right. That is the view expressed in the United States, where they are boosting their coal production to 1 billion tons, in the Soviet Union, again to 1 billion tons a year, and, of course, here with our own plans for the expansion of coal production and nuclear energy, to which I shall come separately.
The main problem at the moment is the organisation of the electricity supply industry. The House will recall that over the years there have been a number of examinations of this matter. There 285 was the so-called Mason Bill, which had not quite reached the statute book in 1970 when we left office. The Plowden Committee was set up and reported 18 months ago. Plowden identified, as I think is widely understood in the industry, that the Electricity Council and the boards and the separation of the CEGB did not provide the focus necessary to give a central sense of direction to the electricity industry.
Plowden recommended a CEB to undertake this central rôle. There has been considerable consultation with the unions, with the Electricity Council, with the CEGB and others and, although I am not able today—I wish I were—to make a definite statement about this, it may be helpful, especially to the industry where the uncertainty has caused problems, which I recognise, if I indicate that there is no dissent in the Government's mind from the desirability of having a unified central electricity board capable of providing just that degree of central focus for the purpose of investment and management.
I shall come to decentralisation in a moment. But central questions must be determined centrally. I have the problem, as does any Minister, of getting legislation into the legislative timetable, and I cannot anticipate what may be coming forward. But at least the discussions have now narrowed down to some fairly simple points.
First, it should be said that we are generally agreed—and I hope that, when the House looks at the Bill, it will agree with it—that it would be a mistake to try to concrete every detail of the organisation of a great industry into a primary statute and that it would be better to aim for a Bill that provides for basic matters and for organisational changes to be capable of being carried through by Statutory Instruments brought before the House to take account of changing circumstances. This is very much in our mind as we approach this problem.
There are other points—and I mention one. There is the question whether it is right, as part of what is necessary to get a unified direction of the industry, that all the local boards should disappear so that we end with an organisation rather like the Gas Corporation which is not as deeply rooted in the localities as the present area electricity boards are.
286 I have said that it would be strange if, in the new Session, on Tuesdays and Thursdays, we were devolving power through Scottish and Welsh devolution Bills and, on Mondays and Wednesdays, we were centralising the organisation of the electricity industry. We have to strike a balance here, and this bears upon appointments, who should make them and how the structure should develop. This is not entirely resolved in discussion yet, but it is a matter of great importance in which Ministers have a legitimate interest. A Minister talking to a statutory official is quite different from talking to an employee, in that the relationship between a statutorily-appointed local chairman and a Minister is a much more open relationship than having matters on a wholly centralised basis.
In fairness to Plowden, he did not want centralisation. But devolving management is rather different from retaining some local vitality. I mention that as one of the factors.
§ Mr. Tom Ellis (Wrexham)
It is to be hoped that the same will not happen to the electricity industry as happened to the gas industry over the years 1967–68, in de facto terms being formalised with the 1972 Gas Act.
§ Mr. Benn
I am not persuaded that that is necessarily the right way to do it. But I am also reporting to the House that Ministers who have to consider these matters collectively have not reached a final view, otherwise I would simply be making an announcement today.
There are a couple of other matters which have been discussed based upon possible experience from other industries. I have mentioned them in public speeches. For example, in the case of the British National Oil Corporation, just to take one other energy industry, there are two civil servants on the board and there is a power of specific directive which is of a character which permits a relationship to be rather more open than it has been by the historic method of arm-twisting, in which all Ministers have engaged and which I dislike intensely. The hon. Member for Bedford (Mr. Skeet) may laugh, but my relations with the nationalised industries have not been so secret as to constitute examples of closed government. They have all come out 287 openly, and I have never been ashamed or arguing my case with those concerned.
§ Mr. T. H. H. Skeet (Bedford)
The Secretary of State has a right to give a special directive to the BNOC. Does he intend to have the same power in respect of the CEB?
§ Mr. Benn
What I am doing is exploring matters not yet resolved. In doing so, I am providing the House with an opportunity to consider these matters and to give its judgment on them. There are parallels, and not only with the National Enterprise Board. The Industrial Reorganisation Corporation operated in a much more open way than in the old historic relationship. Herbert Morrison's Acts provided for general directives which, when the lawyers examined them, they decided could never be used. Apart from saying "Be good", I do not think that I could send a directive to anyone under the Morrison doctrine. "Be good, be efficient or be quick" is not a sufficient form of directive under which to conduct a sensible energy policy.
On the question of oil, I shall not go into the subject of PRT, or the establishment of the BNOC, or the fifth round. The House is familiar with it all, But, as I came into the Chamber I was given a Press release from my Department which shows that during May, North Sea production was running at an average of 836,417 barrels a day—about half our domestic requirements. It is a total coincidence that I can say this to the House today—
§ Mr. Benn
No doubt in the course of his speech the hon. Member will describe the contribution that he has made to our energy supplies—the coal that he has dug, and the other achievements he has made in the development of energy policy. But it is very satisfying to know that we are now producing about half our requirements.
I now come to the essential British interests in oil policy. There is no doubt that if this oil which is available in the North Sea is to yield the benefit required for this country, certain things must be agreed between us all.
288 The first is that the powers under the Act must be capable of being enforced. That is a test of will. Secondly, the BNOC has to operate both its commercial and advisory functions and it must have the capacity to be a sole licensee in the North Sea. This wholly new factor was not available to previous Governments and has become available to us only recently.
Thirdly, the landing rights provision for our policy, that the oil must be landed in the United Kingdom, is an essential interest, as is our option that oil should be available to us. The sale-back provision in the participation agreement should be such that we should be satisfied on a number of points to which the companies have given their word on the participation agreement — namely, the optimisation of the balance of payments and the optimisation of the use of United Kingdom offshore oil. In the development of these policies, the "short-term contract" approach provides the Government with a way of having meaningful discussions with the multinational companies covering refining and a whole range of issues relating to its relations with the oil companies.
The House knows—and I stress this because it is important—that we absolutely reject the idea of confiscation or whatever the OPEC policy may be. We also reject the idea of burdensome and cumbersome litigation which characterises oil policy in the United States. We are seeking a working relationship with the oil companies on the basis of a treaty relationship for safeguarding our interests. I would like to feel that in advancing British interests we are seen to be agreed between ourselves because, frankly, without that agreement these revenues and benefits may not accrue to us. The mere existence of oil resources docs not guarantee benefits to the country in which they are found, as the long history of the Middle East shows. Any idea that abandoning our policy of defending United Kingdom oil interest would benefit any part of the United Kingdom is out of the question and I expect hon. Members in the Scottish National Party to support the Government in defending our interests.
§ Mr. Gordon Wilson (Dundee, East)
I accept that the Secretary of State feels 289 that the benefit from oil and gas found in the northern basin of the North Sea should go to the country as a whole, but could he say what proportion of the benefit Scotland will receive?
§ Mr. Benn
If Yorkshire coal were sold at marginal prices it would close every pit in Scotland. Also, the hon. Member knows that gas comes from the southern North Sea. Any attempt to divide the people of the United Kingdom in their determination to get the most from our resources is condemned to failure. I understand that the hon. Member has a right to put his point of view, but he would not find much support from the Scottish miners, who recognise and welcome the tremendous support given to them in the campaign for the Scottish coal-burn from miners in other parts of the United Kingdom, who happen to be working in pits that are more economic.
§ Mr. Tam Dalyell (West Lothian)
Would the Secretary of State make it clear that the Cabinet is not toying with any ideas from certain quarters that oil revenues or a proportion of them should be hypothecated to a possible Scottish Assembly?
§ Mr. Benn
The very word "hypothecating" would send many shivers through the Treasury. I cannot imagine the Chancellor hypothecating. It is a very unlikely solution to any problem.
I wish also to identify clearly the essential British interests—the right to develop as best we can the jobs coming from the oil industry. There will be 100,000 jobs altogether, most of them in Scotland, and as the inspection, maintenance and repair market develops from the £50 million a year to the £300 million market a year there will be more jobs, and we expect to be able to use revenues to help create more.
§ Miss Harvie Anderson (Renfrewshire, East)
On the point about refining, will the Secretary of State bring his statement up to date?
§ Mr. Benn
I do not know which statement I should bring up to date. The Minister of State argued forcibly in the Community Council of Ministers the importance of general consultation, without being tied to specific consultation which might slip into 290 Community control over refineries. We are becoming the tenth largest oil producer in the world and we expect that our refining policy should remain under our own control. I think that that is a non-controversial policy between us.
§ Mr. Cledwyn Hughes (Anglesey)
Before my right hon. Friend leaves the question of oil, he is aware that there has been drilling in the Celtic Sea for some weeks and hon. Members from Wales are very hopeful that he will make a statement on the results of the drilling. I emphasise that if oil or gas is found in the Celtic Sea, we shall regard it as British oil or gas.
§ Mr. Benn
To be candid there has been some disappointment over the drilling in the Celtic Sea, but on the other hand the discovery of the Fulmar field recently indicated that some oil structures are more hopeful than we thought. I am certainly hopeful that more British oil and gas will be found in the Celtic Sea. My hon. Friend the Minister of State will deal with that matter.
On gas, there has been a great deal of Press comment in the last couple of days about the Price Commission's comments on the outturn of the accounts of the Gas Corporation. This is a matter for the Price Commission and the Secretary of State for Prices and Consumer Protection. It is something for him to decide. Having read some of the leading articles before I saw the report from my Department on this matter, I should make it quite clear that there would be no veto by me on the collective decision about gas profits that will be taken.
Dr. King's report on gas explosions was also published today. I had an opportunity to thank him before his Press conference. The report is systematic and serious, and I am sure that the House will want to consider it. Important recommendations have been made. The report has been published and is available.
I turn now to nuclear matters. We were the first country to engage in the development of nuclear power, and 13 per cent. of our electricity is now generated by nuclear power. This will increase to 20 per cent. when the advanced gas-cooled reactors in the process of construction are completed.
291 We have some important decisions ahead, and I should like to explore them for a few moments. The Atomic Energy Authority having advised me last summer that in its opinion the SGHWR should not be proceeded with, we were driven back to a choice involving the AGR— which was not available for consideration in 1974, because it was not on stream and was thought to be too uncertain— the light water reactor, and the SGHWR, which remains in process of examination. I aim to reach a conclusion on reactor choice rapidly because I believe that it is important that that should happen. I emphasise that delay is not of the Government's making. It was advised that the matter should be re-examined, and it would have been wrong if I had declined to examine it.
The factors on both sides are well known. One is that the light water reactor has shown itself to have the largest world export possibilities and that is the strongest arguments in support of it. On the other hand, all our experience has been in gas-cooled reactors. It would be a big decision to take if we were to seek to wipe away that experience in the interest of export possibilities in favour of a system of which we have no experience. This is a matter on which we shall move quickly, and all information will be made available before a decision is taken.
I also wish to comment on the fast breeder. I have read with a great deal of interest the speeches made on this subject on both sides of the House. The hon. Member for Oswestry (Mr. Biffen) who had responsibility as an Opposition spokesman, has made some trenchant speeches of this matter. The House will understand that a decision of this magnitude must be taken after consideration of all the factors—economic, safety, environmental and so on.
I make no apology whatever for having allowed this decision to be made in a measured way, in due time. The rate of spending on preliminary work on the fast breeder—and I had this information from Sir John Hill—has been such that it cannot be argued that the time we have taken has delayed development. Therefore, we are using the time that is available to us to consider the question: if, when and how a CFR-1 should be built.
292 These matters are being given lengthy consideration not only in this country. We know that there has been a great deal of discussion in other nations. President Carter has cut back sharply on resources for the Clinch River fast reactor. The hon. Member for Bedford appears to dissent. The German Government may have their own reasons for freezing funds in this connection. The French are proceeding with Super Phoenix, but it is generally believed that our Dounreay station is better than Phoenix. Therefore, we are not losing out in taking time to consider the matter. It is also a matter on which the Flowers Committee reported.
I wish to say to those who have a strong interest in the matter that nothing I have said or done has been designed to pre-empt a decision either way. I believe that in nuclear policy there must be absolute ministerial control. It is notable that President Carter, in one of his many initiatives, has drawn nuclear policy back to the heart of Government, instead of allowing it to be determined in the technical and industrial margins of Government.
The magnitude of the issue is such that it cannot be seen as other than a test, in its own way, of the democratic system. I speak as a layman in these matters but also as somebody who has spent 11 years, on and off, dealing with nuclear policy. This must be accompanied by openness in publishing facts and figures. We have made as much information available as we could. Indeed, we have published everything. We have published information on nuclear safety, choices, performance, techniques, and the various technologies. All this is known by anybody who wishes to take advantage of that published material. The Windscale inquiry is an example of how we handle these matters. I think that all nuclear policy should be handled in that way.
§ Mr. Benn
There is always a question of contractual confidentiality on commercial arrangements. Obviously, there is an openness in certain respects that would not be possible in certain commercial matters. I was dealing with the main 293 ingredients of energy policy. However, I shall look again to see whether there are matters not yet revealed that should be revealed. I am grateful to my hon. Friend for reminding me of that point.
§ Mr. Norman Atkinson (Tottenham)
In respect of the Windscale inquiry, does my right hon. Friend agree that we are likely to get into a confusing and contradictory situation if we regard that inquiry as a factor in the public debate dealing with whether we should go for a fast breeder reactor? A body consisting of a lawyer, a chemical engineer and an expert in radiological matters is not the ideal forum to which we should submit basic questions of this kind. Therefore, my right hon. Friend should be alerted to the fact that Windscale should not be allowed to assume such prominence in this matter that it may pre-empt any ministerial decision. In other words, my right hon. Friend should take that decision on the basis of expert advice and should not allow Windscale to pre-empt the situation.
§ Mr. Benn
My hon. Friend knows that Windscale is the subject of a Department of the Environment inquiry and is not a Department of Energy matter. He also knows that in such inquiries ministerial power is always reserved. Occasionally Ministers take a different view from their inspectors, and those Ministers are then accountable for the decisions they take.
I am saying that in respect of the fast breeder reactor, which is not the subject of such inquiries but which certainly creates a great deal of public interests, the facts should be made available before the Government reach a view. I was not trying to make a comparison directly with the situation at Windscale.
The Downing Street Summit dealt with some other matters of proliferation arising from the possible dangers of reprocessing and other matters. The House will find it comforting to know that among the nuclear powers—the three signatories of the nuclear proliferation treaty; the United States, the Soviet Union and ourselves—there is a strong commitment shared by other countries to the use of nuclear power for peaceful purposes to be designed in such a way as to prevent as far as possible the proliferation of nuclear weapons. This aspect cannot be left out of account.
294 I wish to say a few words to those who work in the nuclear industry. They have been through a period of considerable uncertainty. I have a great deal of sympathy with those who have experienced it. In asking Dr. Walter Marshall to return full-time as Deputy Chairman of the Atomic Energy Authority—he is a man with immense experience of nuclear policy and of other matters with his capacity for scientific management— I felt that I should indicate the rôle which he could play in restoring confidence—[Interruption.] I shall come to other arguments about my desire for a full-time scientific adviser, but I used the same language when I spoke to Dr. Marshall as I have used in the House today. [HON. MEMBERS: "Oh."] Since it was I who appointed Dr. Marshall as Deputy Chairman a few months ago, hon. Gentlemen should not smirk and giggle at my desire that he should play his full part in working within the AEA.
I have known Dr. Marshall since 1966 when he was responsible for non-nuclear work at Harwell. He is an outstanding scientific manager and a nuclear expert. Therefore, we are fortunate to have him in the public sector. I very much resent the suggestions which have appeared in print today, and I want the House to be in no doubt as to the high regard in which I hold Dr. Walter Marshall and the rôle which he can and must play in the decisions which must be reached in the nuclear industry within the AEA.
§ Mr. Skeet rose—
§ Mr. Benn
The hon. Gentleman must allow me to continue. I should like to continue on this basis for a couple of hours but there is a great deal more that I wish to say.
There is a substantial and growing interest in the potential of alternative sources of energy. A £10 million programme has been announced. Dr. Marshall has done much to make that possible. There is solar wave energy and geothermal energy, and tidal energy may well have its part to play. One of the recommendations in the Flowers Report, to which the Government have not yet given their minds in great detail, is whether the capacity of building within the AEA a sort of ERDA like the American Research and Development 295 Agency may be the proper way of using our skills to ensure that they are not pre-empted by the large budgets inherited from past traditions in energy development. Beyond the year 2000, which is not so many years away, the potential for alternative benign and renewable resources could greatly exceed the 10 per cent. that is forecast for them, without the associated environmental hazards of other sources of energy. No one should think that environmental hazards are limited to the nuclear sector. We have only to consider the Ekofisk blow-out, the Duke of Rutland and the Vale of Belvoir to realise that all energy sources involve some environmental damage. I am not sure whether it is the Duke of Rutland— I am not very good on dukes. It is my understanding that it is the Duke of Rutland. Good luck to all those who live in another place.
Similarly, conservation must not be seen as just a matter of pricing policy, with which I know monetarists will find it attractive to deal. It involves a systematic capacity to compare the benefits from conservation investment with generation investment. We estimate that a 6 per cent. saving was achieved in 1975. If we take major insulation measures, which are well within the range of present technology and labour-intensive in character, there is a possibility that substantial investment might be justified on the most harsh economic criteria. It might create jobs as well. I hope that the House will go with me on this issue. It is a matter that I specially asked the European Council to discuss in March. We have much to do in this area.
§ Mr. Neil Macfarlane (Sutton and Cheam)
Is the right hon. Gentleman aware that one of the most attractive feasible alternative sources could well be the Severn Barrage in South-West England? I attended a conference during our Jubilee Recess, as did one of the right hon. Gentleman's officials, and, like about 150 experts who were also present, we went away very concerned by his reaction. There is already doubt as to the depth of the right hon. Gentleman's Department's determination accurately to review all alternative sources.
§ Mr. Benn
I mentioned tidal energy, as Hansard will reveal. The reports that 296 came out, including the Dutch engineering report and the Wallingford Report from the Hydrological Research Station, indicated that further work needs to be done. I have now decided to spend more time personally on this subject, partly because I have an acquaintance with the area but partly because the Severn Barrage has been discussed since 1925. I am not of the view that some take, that it does not have a substantial offering to make, but the capital investment would be enormous. I believe that it is £3 billion to £4 billion. Further, my hon. Friend the Member for Bristol, North-East (Mr. Palmer), who is Chairman of the Select Committee, has not yet made his final report.
I turn to consumer interests. Any comprehensive energy policy must ultimately be based and be tested against the question whether people have enough heat and light at home. It is easy in the stratosphere of energy policy to forget that. Energy policy is as much about people being warm and able to enjoy energy as about future forecasts of various sorts that are conducted at a high level. Because of the nature of energy and the imperfect nature of the market, to use the jargon, competition of itself does not provide an answer. If coal becomes cheaper, the man who is locked in the all-electric flat who does not have a flue cannot do much about it. Similarly, those with investments in a particular energy systems cannot shift. We must provide much more formidable consumer protection in energy matters than we have yet achieved.
I cite some modest beginnings although I make little claim for them. There was the stopping of disconnections for old-age pensioners over a year ago. There was the code of practice that we hammered through. That was one of the most difficult things to achieve. My hon. Friend the Member for Whitehaven (Dr. Cunningham), the Under-Secretary of State, undertook that work last summer. The publication of factual information about alternative costs and the winter fuel scheme were modest but helpful beginnings. These advances are just the beginning of what must be achieved. There must be proper consumer representation.
I turn to those who work in the industry. Whatever the decision on the 297 Bullock Report may be, progress is possible within the publicly-owned fuel industries. The tripartite coal arrangement is in my opinion one of the finest ways of bringing to bear the management and trade union interests and allowing them, together with the Government and the Treasury, who are represented, to review the development of the industry. I attach the highest importance to industrial democracy.
How are all these ingredients to be put together in an energy policy? It must be done by an open method, partly because of, as a Secretary of State, I reach decisions privately, I am denied the benefit of the advice of those who do not know what is about to be decided and who cannot contribute to the discussion. We must proceed by discussion.
In answer to a Question this afternoon —the House will not have had the opportunity to read it as it has not yet appeared in Hansard—I announced that we have decided to proceed with a view to establishing our Energy Commission with the following terms of reference—namely,To advise and assist the Secretary of State for Energy on the development of a strategy for the Energy Sector in the United Kingdom; and to advise the Secretary of State on such specific aspects of energy policy as he may from time to time refer to them.The Commission will have seven representatives of the energy industries, seven representatives drawn from the six General Council members of the TUC Fuel and Power Committee and their secretary, and seven others, including industrial and consumer interests. I shall make a further announcement about the allocation of the non-producer seats as soon as possible. I shall take the chair. My hon. Friend the Minister of State, Scottish Office, will be a full member because of his supervisory role in respect of the SSEB. Other Ministers, including those from the Treasury and the Department of Prices and Consumer Protection, will be able to attend. We shall seek to form an agreed view on major energy policy issues, especially of a strategic nature, as they arise. My answer states… and perhaps annual reports on the energy situation prepared by the Government, setting out decisions taken and other developments and renewing current prospects and the matters likely to come up for decision. The setting up of this Commission will not affect the existing executive responsibilities, nor will it in any way diminish the responsibility of Ministers to 298 Parliament for decisions taken in the energy field.As there are so many interests that would like to be involved, it seems that the only practical way of dealing with the matter is to ensure that the documents for the Energy Commission are made public so that others can get hold of them, feed in their views and make representations.
§ Mr. Rost rose—
§ Mr. Benn
There will be secretarial facilities but this is not a way of developing a corporate state in the energy sector with Ministers becoming spectators of a great energy sector. I must remain accountable to the House for the decisions that are taken. The Treasury, with its financial responsibilities, must continue to have a proper function in dealing with investment decisions.
I shall devote one or two words to EEC energy policy. Recently we have had two debates and there have been two Council meetings. I have appeared twice before the Energy Committee of the Assembly. We have taken a solid, serious and constructive approach to try to involve Ministers more directly and to have an informal atmosphere. I failed entirely to achieve open meetings of the Council. Vital interests in the EEC must be respected, but I believe that there is a serious possibility of making progress. If we consider President Carter's difficulties with Congress, the problems of the North-South dialogue and the fact that the East-West discussions on energy have not really begun, I do not think that we have done too badly.
Internationally, energy will be a major factor beyond the Community. I have referred to the United States and to North-South relations. We must one day open up discussions that extend East-West. There must be a world forum. It is astonishing that so many forecasts should be published and that there should be no place where they can be assessed internationally. The role of the United 299 Nations in all this will no doubt fall for active consideration. We are in a unique position. We are the only industrialised power in the West that will be self-sufficient and we have a range of unrivalled fuel experience. Therefore, our role in the discussions would seem to be of very great importance.
Finally, I should like to refer to the relationship of all this to the central problem of our economy, which is the capacity to get investment and to create jobs in our society. Energy alone does not guarantee benefits, as anyone knows from a superficial study of the Middle East which has had all the energy in the world and yet its people have lived in poverty without industrialisation.
We must use the oil revenues to create jobs and to deal with the deep-seated problems caused by unemployment. We must do that through the agency of public investment. We are fortunate in having publicly-owned energy industries. Therefore, we have the capacity to do what has not been possible in many parts of the private sector.
Huge revenues are available. They are certainly sufficient to meet our international capital and debt repayment obligations. The Chancellor of the Exchequer and I are working on this matter together. It seems to me that the use of the oil revenues for the reindustrialisation of British industry through the agency of public investment will be the key question for this country in the 1980s. The reindustrialisation of Britain by the use of energy, as we industrialised in the nineteenth century upon coal, seems to me to be the question that is bound to absorb the House and the country. I hope that in presenting this report on our achievements we shall win some understanding and support for what we have done.
§ 5.43 p.m.
§ Mr. Tom King (Bridgwater)
I must say that the last words uttered by the Secretary of State about achievements took our breath away. The right hon. Gentleman has made a long speech lasting 50 minutes. We make no criticism of that, because, as he rightly said, we are dealing with a major issue which has been too little debated in the House. We are dealing with a wide-ranging series of 300 matters. The Secretary of State honestly said that he did not feel that he knew where to begin. I am not sure whether he really knew where he was going in parts of his speech.
Indeed, he seemed to pick a random selection of topics and to make a "Little England" speech. The matter with which we are dealing has enormous international implications. There is no way in which the United Kingdom will be able, for all its resources, to stand aside from the problem of shortages which may exist whether in Europe or throughout the rest of the world.
I knew that we were in for a fairly long speech when the right hon. Gentleman said that he would be exploring matters not yet resolved. There is quite a list. I realised that would take some time. The right hon. Gentleman said that, as the Minister responsible, he must remain accountable for decisions taken. He said that in an aggressive sense. I hope that he will also be accountable for decisions not taken, because that is far more the hallmark of this Administration.
We are debating energy policy. The first question is: should there be an energy policy at all? That carries with it the implication of precise, dogmatic forecasting by the Government of what fuels and energy sources will be available. Plans made on Government forecasts can often lead to problems which we all wish to avoid. At the same time, it is clearly madness to approach a very serious problem without identifying the possibilities and ensuring that a range of options is at least open so that the problems can be met.
I think that it is common ground between us that the most flexible approach must be adopted towards the uncertain future facing the world. The corner-stone of that flexible approach must be the maximisation of known recognised sources of energy and the most energetic pursuit of possible novel, benign renewable sources of energy which may be still some years ahead. That is no reason not to pursue them as quickly as possible throughout the world if we are to achieve some of the benefits from them.
Whatever policy we pursue, I suggest that at the top of the list should come conservation. There can be no excuse 301 particularly with the knowledge that we have of the problems that we could face, for energy to be wasted in any country. There is clearly no time to lose.
The Secretary of State may have felt that such was the circulation of energy information nowadays that he might in this House be preaching a little too much to the converted on the problems of the potential energy gap, but it is a shock to realise that that gap could be as little as three to four years away. That may sound surprising but, indeed, it may be less.
I think perhaps that I should point out how much the free world supply of oil in particular depends on the Saudis' willingness to maintain their current levels of production. Even if the Saudis hold production at current levels there will be a considerable impact due to United States imports which are scheduled to be 50 billion dollars next year and which have already risen by more than 8 per cent. this year since President Carter made his announcement. If there were any curtailment of those supplies—barely a month ago there was a fire on the pipeline service out of Saudi Arabia along which came 60 per cent. of American oil imports from that country—that crisis could be upon us even earlier than we think. We are conscious of the acute interest being taken by Washington in the world's energy problems. Clearly, the Americans are in an acutely difficult situation.
Superficially, our position is more favourable than others. I say "superficially ". We are in an unusual situation. Historically, we think of America —particularly Texas—as a great source of energy. America is one of the great energy-rich countries of the world. Now America is moving in the opposite direction to us. We are moving into a period of freedom from dependence on imported oil, whereas America is moving directly into a period of much greater dependence on imported oil. Again, we possess over half the total energy resources of the Community. So we are in a much happier position than our partners.
I referred to our superficially more favourable position. I believe that it would be unsustainable to remain in an energy-rich situation if the Community or other countries, through being desperately short of energy supplies, were unable, as the Secretary of State rightly said, to give 302 their people heat and light and the ability to lead normal lives. We may in the short term be better off, but long-term we shall have to face similar problems. Therefore, the relevance of those problems must be faced now.
Let us consider the magnitude of some of the decisions that must be taken. I do not want to dwell on the Government's conduct for too long. However, we take precious little encouragement from the failure of this Administration to take decisions in a whole range of areas. We are overwhelmingly impressed by the sense of lack of urgency in relation to energy. There is the question of reactor choice and the Plowden Report. We had the world-shattering announcement that we are narrowing down the options in the Plowden Report. That is indeed headlong progress after 18 months.
The industry is in some confusion and disarray, not knowing what its management structure will be. I should have regarded the decision that must be made on the electricity industry as a minor one compared with the major energy decisions that must be taken. Such a record of progress does not give much optimism for the bigger issues. Today is a red letter day because there has been a decision on the Energy Commission. That has now been announced, and even if the debate has not achieved anything else we should be grateful that one decision has been taken.
There has been a lack of impetus towards any announcement of a positive programme of energy saving measures. I listened to the Secretary of State's speech but, with great respect, one feels that the only matter in which the right hon. Gentleman takes any positive and urgent decisions is in sacking people who disagree with him.
§ Mr. Dalyell
Could we have two concrete examples of what the Opposition spokesman would do if he were Secretary of State?
§ Mr. King
Is the hon. Member for West Lothian (Mr. Dalyell) referring to the lack of decisions? I can give a list that includes reactor choice and the Plowden Report. I promise that if I had had the responsibility of the office of Secretary of State I should have decided the future structure of the electricity industry, based on the report submitted by Lord Plowden, 303 in less than 18 months. By any standard that would not be outrageously impetuous decision taking. Within his Department the Secretary of State has had to deal with a range of issues, and they have gradually been put out for consideration and consultation. I agree that there is no need for immediate choice over the fast breeder reactor. I disagree about the method of allocation of funds for the research and development, but that is merely a small point. However, nothing is being held up there. There are other matters, such as the reorganisation of the electricity industry—which is causing great difficulties within the industry—on which decisions should have been taken.
§ Mr. Jim Marshall (Leicester, South)
The hon. Gentleman said a few moments ago that he had just returned from Washington. A number of hon. Members from both sides of the House preceded him there. I assume that, during his visit, the hon. Member discussed the Carter energy programme intently. Surely, even he must admit that, if that programme is compared with the British energy policy, which has not been enunciated in the same way, and if one is absolutely fair, in spite of the political points that the hon. Gentleman must inevitably make, we in this country, and particularly the Secretary of State, foresaw some two and a half years before the Americans the problems concerning conservation, coal and the need to have nuclear power. We faced those decisions and are now continuing to pursue those policies.
§ Mr. King
I cannot agree, and I shall spell out the reasons for that in detail later.
The Secretary of State understandably had to take some time to introduce the debate. I do not wish to take up so much time. There have already been two statements and a Ten-Minute Bill, so we must make progress.
However, I make this point in reply to the intervention of the hon. Member for Leicester, South (Mr. Marshall). Energy policy cannot work without a lead from the top. The first point about President Carter's energy package was that it was President Carter who introduced it. The package covered the whole field of energy, industry, transport, the 304 environment and the interior. The Secretary of State also made the point that that package brought together a whole range of interests and concerns. There is no way in which the Secretary of State for Energy—and I say this without any disrespect—could bring to the House a comprehensive energy package without bringing with him in support a number of other Ministers with responsibilities in those areas. I should like to see an awareness and confirmation by the Prime Minister that he shares the concern about the seriousness of the matter that is felt by hon. Members attending the debate today, and I should like to see him take a lead in this matter.
I said earlier that I put conservation at the top of my list of matters of importance. The Under-Secretary of State for Energy has been working hard to try to get across the message about the importance of conservation. In a speech last week he said that a barrel saved should be as good as a barrel produced. The hon. Gentleman was quite wrong. It is better by far to save a barrel of oil, because there is a tendency to believe that, if one can have sufficient supply to meet demand, the energy problem is met.
However, the problem is not just a matter of supply. Environmental issues are involved. It is not just a matter of having an additional number of power stations or an additional distribution grid. There are other issues involved, including the benign sources of energy, such as windmills. One must consider the environmental impact of such energy sources. No energy sources are without an environmental impact, and the benign effect of conservation cannot be understated.
There is also the matter of capital costs. I am sure that hon. Members and the Secretary of State appreciate that the demands that could be made on capital in future for energy production and research may drain away enormously resources that could have a much more beneficial use in other directions.
In considering the fuels available the Secretary of State referred first to coal. I have just returned from the United States. The production target there is 1 billion tons of coal a year. One must recognise that the Americans have geological advantages and with opencast mining they have clearly a far better 305 possibility of achieving such a target than we have of achieving our targets.
The Secretary of State referred to declining productivity. The matter has been referred to frequently recently by Sir Derek Ezra and the Coal Board. Production this year was lower than last year and last year it was lower than the year before. Production in the first eight months of this year was lower than in the first eight months of the previous year. That means that we are now facing a decline in coal production, and that is totally contrary to our plans for the coal industry.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie)
The hon. Gentleman has just said that he found during his recent visit to America that that country's target was 1 billion tons of coal a year. The hon. Gentleman said that the opportunities for America to reach its target were better than those for this country. Did the hon. Gentleman, in the course of his visit, deal with the colossal environmental problems that are associated with this in relation to State legislatures? Is the hon. Gentleman confident that America can overcome that problem—which is one that we do not yet have in this country?
§ Mr. King
It was my impression that it could. However, I accept that there are real environmental problems, not merely in the production of coal but in the burning of it in power stations—particularly high sulphur coal.
I was dealing specifically with the matter of production. I am sure that the Minister was not challenging the concern that is felt by Sir Derek Ezra, by me, generally, and, I am sure, by the Minister about declining coal production. I should have thought that that would worry the Minister greatly. This is not an attack on the Coal Board or the NUM. It is a matter of fact over which Sir Derek Ezra and Joe Gormley have both expressed concern. I share that concern to the full.
One of the messages that I brought back from the United States was the Americans' great admiration for the technology of the NCB. There is no doubt that our skills in this area are recognised in the United States, and I was delighted to note the award of a contract to ERDA 306 on a joint project with the NCB for the gasification of coal.
Oil and gas have been the great success stories of recent years. The Secretary of State may not have been claiming the credit, but I was quick to point out that it was not all his work. I am delighted that we have reached the 50 per cent. figure. This is a great achievement by private enterprise in the North Sea.
We do not agree with all the right hon. Gentleman's policies and we do not think that he has tackled the North Sea in the best ways in every respect, but I can assure him that when the Conservative Party has responsibilities for these matters —and I hope that this will be shortly— we shall defend British interests as vigorously as any other party and any changes will not be at the expense of British interests
§ Mr. Benn
The hon. Gentleman has made a very important statement of policy. It is the first time since he left office that he has been prepared to admit the truth that not one gallon of the oil coming ashore under the fourth round of licensing would have been available to the United Kingdom under the legislation that we inherited from the Conservative Government. Every gallon would have been under the control of the oil companies.
§ Mr. King
I am surprised that the Secretary of State should even bother to repeat that canard because he knows that it is totally untrue. It was part of the licence terms in the fourth round that the oil had to be landed in the United Kingdom. The one field that was not properly covered— and, my God, it might have been a bad mistake—was the Forties field that was licensed by the Labour Government of whom the right hon. Gentleman was a member. In different circumstances or with another oil company, that could have been a disastrous blunder. I am staggered that the right hon. Gentleman has the nerve to raise that point. He has done so before and we have answered it before. I hope that I have given him a clear answer today.
§ Mr. Benn
The oil was to be landed here because the pipes are here, but the oil would have been owned entirely by the multinational oil companies. The Government of the right hon. Member for Sidcup 307 (Mr. Heath) had no power over the oil landed in the United Kingdom under the licences granted by that Government.
§ Mr. King
How, then, does the Secretary of State explain the position of those fields in which the oil did not come ashore through pipelines, but was loaded into tankers at sea? The right hon. Gentleman should know the terms of the licences granted in the fourth round. Let him read them again and also read the licence terms issued by his Government for the Forties field. We shall then look forward to hearing further from him.
If the right hon. Gentleman wishes to indulge further in this matter, may I suggest that we leave it to our Scottish collagues who are to wind up the debate? My hon. Friend the Member for Ross and Cromarty (Mr. Gray) is an expert in matters concerning oil and gas and takes a close interest in them. He will be saying more about these aspects later.
Turning to nuclear energy, we have to recognise that this is a time of crucial decision for this country. The Secretary of State recognises that we are facing two crucially important decisions on thermal reactors and on reprocessing and fast breeder reactors.
President Carter's statement has been taken by many to be anti-nuclear. In fact, it is much more precautionary on reprocessing and the fast breeder reactor, but involves a massive increase in the programme for the thermal reactor PWR. Does the Secretary of State share that view? In a speech that was delivered on his behalf last week because he was kept here by a three-line Whip, he said that the question on a thermal nuclear reactor programme was not "whether" but "how many". Can he confirm that this is his view?
On the fast breeder reactor and reprocessing, the whole House understands the concern expressed by President Carter. No one can be ignorant of the risks of proliferation, but we are entitled to ask whether the method proposed by the President will deal with proliferation or whether there is not a risk of it making the situation worse.
We also have to look at the two main planks on which the President's policy 308 depends. First, there is the assumption that there are massive spare supplies of uranium in countries from which it could be obtained. This is far from certain, and even the American Administration does not maintain that it is definitely so. More research will have to be done to establish whether this is the position. This is an important premise of the whole policy.
Secondly, there is an assumption that there will be an acceptable area for the large increases in the amount of storage required for unprocessed waste. The remarkable conclusion of the Ford Foundation document, which has been carefully considered in the preparation of President Carter's statement, is that America should be prepared to accept other people's unprocessed waste. This is a generous theory, but I wonder how realistic it is in political terms. It would certainly give a new meaning to the inscription on the Statue of Liberty:Give me your tired, your poor,Your huddled masses yearning to breathe free ".I checked the rest of the inscription and discovered that the Statue of Liberty had even anticipated current events because the inscription continues:The wretched refuse of your teeming shore".That may be quoted again if this becomes a serious possibility.
There is a real problem over where radioactive nuclear waste would be stored, if it were not processed, in the quantities that may emerge.
Turning to United Kingdom's response to President Carter's initiative, I noted that the Secretary of State said that it was essential that decisions on reprocessing and the fast breeder reactor programme should remain with Ministers, but I agreed with the intervention of his hon. Friend the Member for Tottenham (Mr. Atkinson) who said that, realistically, the decision on whether there will be reprocessing and a fast breeder programme is not in the hands of the right hon. Gentleman or of his right hon. Friend the Secretary of State for the Environment, but rather in the hands of Mr. Justice Parker and his assessors. The findings of their inquiry will have a tremendous effect on future decisions. I do not propose to ask the Secretary of State 309 what he thinks future policy will be because it is out of his hands. His statement that decisions will remain with Ministers is technically true but is no longer true practically.
§ Dr. Jeremy Bray (Motherwell and Wishaw)
Is the hon. Member giving away his own position or that of the Opposition? Personally, he has not got a leg to stand on on this important question.
§ Mr. King
I am not clear about what the hon. Member means. I am making a statement of my assessment of the present situation. The reality is that it will be extremely difficult for Ministers. There may not be a clear judgment, but the House should realise the implications of the Secretary of State's decision. I cannot claim to be original in this line of thinking because the point was first made by the hon. Member for Tottenham.
§ The Minister of State, Department of Energy (Dr. J. Dickson Mabon)
My hon. Friend the Member for Tottenham (Mr. Atkinson) did not say that. He complained to the Secretary of State that he must assert that Ministers, in the last analysis, have the right of decision. My hon. Friend asked an important question. We do not take the view, whatever the results of the inquiry, that we must absolutely abide by every letter of the finding. I hope that the hon. Member for Bridgwater (Mr. King) would say the same if he were in office.
§ Mr. King
I make a distinction between making a commitment on action and making an assessment of the situation at the moment. It depends on the outcome and the exact form of the findings. Perhaps no categoric or clear statement will arise from it.
We must recognise the need to take into account public opinion when making 310 energy policy decisions. We must see that public opinion is informed. This is not a matter that arises out of the Windscale situation alone. It will come up again and again.
For instance, we are looking to Canada for further supplies of uranium. The Canadians intend to attach further conditions to the reprocessing of uranium in support of President Carter's initiative. Canadian public opinion must, therefore, be taken into account. We are hoping for supplies of uranium from Australia. The Australian Prime Minister, Mr. Fraser, has been touring Europe discussing these matters, but he has problems on his own doorstep. There have been demonstrations about supples at the port in Sydney. Not only have there been demonstrations at Seabrook in the United States but at a nuclear plant in Germany. There is a need to ensure that the public really understands the issues.
One of the greatest benefits of our energy surpluses and affluence in the country at the moment is the opportunity it provides for our industry to learn new technologies and to develop new opportunities in this country and abroad. For instance, I pay tribute to Coal Board technology. I am delighted with the orders that it has obtained from ERDA. I hope that that will continue and that our new technology will not be lost to the United States at some stage so that we have to buy it back later.
I hope that we shall use North Sea technology and exploit it to the full in every possible market. I hope that full support will be given to British suppliers in the North Sea. There is misguided information about some of the activities in the North Sea. I see from a report in The Scotsman that at the Confederation of Shipbuilding and Engineering Unions conference Mr. Gavin Laird, a director of BNOC, accused foreign companies of blackballing British offshore equipment companies in supply contracts. I wonder if the Minister of State might care to point out to Mr. Gavin Laird that BNOC does not employ a single British ship in its area of the North Sea. Nor does BODL. That is scandalous. Those organisations are serviced by Norwegian vessels. Mr. Laird might look at the beam in his own eye and do something about it.
§ Mr. Gordon Wilson
BODL is largely composed of American expatriates. Is it not right to point that out, along with the amount of employment provided through BODL to the area?
§ Mr. King
No doubt the hon. Member can pursue that later. It would not be an attractive function for BNOC if one of its purposes were to be contractor for overseas services.
Anyone who has travelled abroad as I have recently and who has looked at the energy situation in the wide international sense would appreciate the importance in which energy is regarded at the highest level of Administrations throughout the world. All Governments are considering what to do about shortages, or how to make best use of supplies. One is conscious that research into new processes, whatever they are, will be enormously expensive. One wonders at the capacity of even the United States to cope with the scale of development.
There have not been enough attempts at collaboration in sharing out the costs of many of the ventures. There is an important role in that context in Europe. We deplore the failure to agree on a site for the JET project. That is an important matter and it would be sensible to share the costs. When I visited the United States Senate one of the first things that I heard concerned the cost of the United States' fusion project. Is it sensible for us to spend enormous sums of money on parallel projects? The Government should consider that further. There is still much to be done. It will require leadership and co-operation. The risks of failing to achieve our targets and ambitions are great.
Last week Mr. Dean Rusk, the late Secretary of State, said in a speech that the energy crisis wasa new cause of war coming down the road that will set nations at each other's throats".The conclusion of the Workshop on Alternative Energy Strategies sums up the situation by saying:The interdependence of nations in the energy field requires an unprecedented degree of international collaboration in the future. In addition, it requires the will to mobilise finance, labour, research and ingenuity with a common purpose never before attained in times of peace. And it requires it now.
§ 6.19 p.m.
§ Sir Geoffrey de Freitas (Kettering)
Unlike the hon. Member for Bridgwater (Mr. King), I found my right hon. Friend's speech interesting and an important contribution to the study of this subject. I shall refer to it not only tonight but on many occasions in the future.
It was right of the hon. Member for Bridgwater to draw attention to the precarious nature of the supply lines for oil. My right hon. Friend said that President Carter, from the beginning of his Presidency, has put a great deal of emphasis on energy, as indeed he should.
Let us examine the domestic energy situation in the United States. Houses there are made artificially hotter in the winter than anywhere else. In the summer they are made artificially cooler. Some houses are so cold that one has to put on a pullover when the summer sun is shining outside. American cars are most inefficient and consume enormous amounts of petrol. Although the United States imports a considerable amount of oil, the President has already met resistance in Congress to his plans to reduce the consumption of oil.
I too, was in Washington last week, and all the talk among Senators and Representatives was about energy and President Carter's initiative in trying to get his fellow countrymen to abandon their habit of wasting oil. Yet, as we know, a recent Gallup survey in the United States showed that a very large number of Americans did not even know that the United States imported oil.
§ Sir G. de Freitas
I did not know that it was as high as that, but certainly it was a very large number indeed.
I am told that many other countries in the North Atlantic Alliance have also had similar parliamentary debates in recent times. There is no doubt that these national debates are important—of course they are—but how much more valuable would be joint debates between Members of Parliament from 14 countries and Members of Congress from the United States—parliamentarians from both sides of the Atlantic.
By good fortune, there is a forum which can be used for such a debate. 313 In the North Atlantic Assembly there are 172 parliamentarians. There is the annual conference in September, and this year there will be a debate on energy. Not everyone can go there, but there will be 172 Members of Parliament from both sides of the Atlantic debating energy.
Last Friday I had the great honour of being received in the White House by President Carter. Since only the two of us were present, it was possible to discuss a great deal in the 15 minutes that I was with him. He had not invited me because he thought that I was to take part in the debate this afternoon—in fact, he was not aware of it, nor was I at that moment—but because I am President of the North Atlantic Assembly.
The most important point that the President made to me was in reaffirmation of his belief in the value of the North Atlantic Alliance, but he then covered the full range of the activities of the North Atlantic Assembly, and it was with the economic problems and especially energy, that the President was most concerned. That is the energy of the whole of the Atlantic community, that is to say, the 15 industrialised nations in this part of the world.
I was able to assure the President that since the Assembly would be meeting in September and would be discussing economic problems it would be easy to give special attention to the international problem of energy, whether derived from traditional sources or from nuclear power. Like my right hon. Friend, I believe in open debate such as this. It is important that we can exchange ideas with Members of other Parliaments on these subjects.
As an illustration of the documents which will be before the Assembly in September, I shall refer to a report by a German member on the various aspects of our energy problems. The Assembly will also have before it the Hansards, or the equivalent, of all the debates which have taken place in the national Parliaments on this question.
My right hon. Friend regretted that there is no world forum for discussing energy. I also regret it, but at least there is a forum of parliamentarians from our 15 industrial countries, and that is better than nothing. In this forum we can learn from each other. For example, I 314 have not met any continental Member of Parliament or Member of the United States Congress who realises the enormous physical and financial problems attaching to winning oil from the North Sea, or who realises what we are doing about sources of energy other than coal and oil.
I recall the speech made last month by the Under-Secretary of State for Energy, in which he stated that it is estimated that by the year 2000, 8 per cent. of our energy would come from the sun and the waves. Yet Sir Martin Ryle pointed out early this year that in this country we allocate less than 1 per cent. of the budget for energy research and development to the non-nuclear programme of alternative energy. Yet even if the figure of 8 per cent. were to be raised far higher, coal would still be our principal source of power in the future.
I can understand people resenting the intrusion of collieries into the beauty of rural England, but we must be realistic. We need the energy and we have these coal resources. We have accepted motorways, we have accepted suburban houses and we have accepted factories. We must also accept the collieries. They can be sited only where the coal is, so that there is a limited choice of area. We are fortunate in having the coal, and we must use it.
There are all sorts of ways of conserving energy. I shall not touch on them now, because of the time, except to say that we could have smaller and more efficient cars, and that better insulation is very easy to achieve. But such technology cannot solve our problems, although it can make a valuable contribution. We must look at the positive aspects and at our coal resources.
Sir William Hawthorne, of Cambridge University, has reminded us that Governments and businesses plan only five to 10 years ahead. For this reason, as he put itthe problem of shortage could become critical before it becomes serious".If in 20 years the Atlantic countries were to run out of oil a crash project in the United States would be far too late to have any influence whatsoever. By that time, of course, those developing countries which do not produce oil would not be able to buy any oil at all.
315 The President of the United States must, of course, be aware of the power of the elected legislature. He is more aware of this than is any other Head of Government in the Alliance. For this reason President Carter, more clearly than any other Head of Government, can appreciate the part that can be played by parliamentarians in debating these problems in a common assembly and exchanging views on them.
§ Mr. Macfarlane
Like the right hon. Gentleman, I have been on a pilgrimage to Washington in the past two or three weeks, with hon. Members from both sides of the House. I hasten to add that this was during the Jubilee Recess and not in parliamentary time. I wonder whether, during this very interesting exchange of views with the President of the United States, the right hon. Gentleman asked about American public opinion. It is all very well for the President to introduce a package of ideas for conserving energy over a wide range, but is it not a fact that many American Congressmen are coming up for re-election next year, and that this is bound to be a pressure point for the President?
§ Sir G. de Freitas
I think that question has a very obvious answer. It was not necessary for me to tell the President of the United States about that, and I did not.
The North Atlantic Assembly, which has been meeting since 1955, was originally concerned principally with military and political matters, and concentrated on them. Over the years the Assembly has dropped "NATO" from its title and has become much more concerned with economic matters. I have always felt that the Assembly had an important role to play in matters such as this, and it is beginning to play it.
We shall have a big discussion on energy in the Assembly. I have argued in the European Parliament for open meetings of the Council of Ministers and I well remember my right hon. Friend, last March, encouraging publicity for what the Ministers of the European Community were talking about. On that occasion he used words to the effect that there is nothing particularly secret about energy, anyway. I fully endorse that view, to which my right hon. Friend referred 316 again today. The more open the discussion, the better it is.
I was greatly encouraged to find that the President saw in the Assembly an important instrument for the conduct of political affairs in our 15 parliamentary democracies. He saw that it could bring together parliamentarians from both sides of the Atlantic to discuss common economic problems. In a matter such as that which is the subject of this debate, we Members of Parliament would reinforce one another. The decisions in the energy battle are too important to be left to the technocrats.
§ 6.30 p.m.
§ Miss Harvie Anderson (Renfrewshire, East)
I am glad to have the opportunity of speaking in this debate, since certain aspects have a profound effect on part of the area which I have the honour to represent. I also declare an interest through my connections with Babcock and Wilcox, as registered.
It is impossible to cover the full range of matters involved, as the Secretary of State made clear at the outset of his remarks. I wish to concentrate on one part of the power supply aspect and in doing so to set out what I believe to be necessary and immediate moves.
It is ironic to think that this debate finds much of the industry concerned with power supply in precisely the same position of uncertainty as it was in in May 1974, when we debated the subject here—so much for the dwindling influence of the House under a Government controlled by external factions and factors.
The indisputable fact is that there will be nuclear reactors and that there is no avoiding the use of atomic power. When the environmental lobby becomes as eager as it is over some matters today, I am very glad to find myself with a strong ally in Sir Jack Rampton, as reported in the Financial Times on 23rd June.
In our debate in May 1974 I set out— the Hansard reference is column 1385—what I believed then to be the position of the AGR.
§ Mr. Tom King
My right hon. Friend has referred to Sir Jack Rampton's speech. She will know that I referred to that as well. I think that we may take it, since the Secretary of State did not 317 intervene, that that was in fact his speech which he was intending to deliver but which, owing to his detention, Sir Jack Rampton delivered, and that he endorsed every word of it.
§ Mr. Benn
I should make it clear that it consisted of notes prepared by the office. I did not actually see the final text of what Sir Jack Rampton says, but speeches I deliver I am responsible for. Sir Jack Rampton very kindly filled my place, as I was tied in the House by a three-line Whip. It was his speech that he delivered.
I have always encouraged my officials to make speeches publicly, and the attempt to try to make something of the fact that I was tied in the House by a three-line Whip is confusing. I think it is important that it be known that I asked Sir Jack Rampton to make a speech, as he often does; he did so, and it was his speech. It was not a speech that I had either written or agreed to deliver and asked him to read; it was a speech delivered at lunch when he kindly took my place.
§ Miss Harvie Anderson
I am still happy with my ally. I do not think that the House would expect me to interfere between views, which may or may not please me, exchanged between the Front Benches.
I return to my own theme. The Secretary of State was kind enough to say earlier in his speech that the lay view was not necessarily the only view. There are a great many laymen, including myself, who seem to have strong views, and I intend to express mine, which I believe I have, Mr. Deputy Speaker, with your permission, a perfect right to do.
I have said that in May 1974 I expressed certain views about the AGR. Happily—it is not always so—I am not at all ashamed of what I said then, because I said that I thought there was potential in this system, and all the evidence since then has gone to prove my point.
If we look at the actual performance to the extent that we know it, I think I am right in saying that both AGR stations are running at approximately 60 per cent. capacity, and that they are running to schedule. This was what I predicted at the earlier date. I am merely 318 saying now that I am very glad that that has been proved.
There then arises the importance of timing of ordering, to which the Secretary of State referred. But, of course, there are many facets to timing. The point that I want to make is that the delay in ordering is now so serious that it is doubtful whether this country can retain its boiler-making capacity. There may be some who are content with that prospect, but it looks sheer madness to me, because if the argument runs that we have no need for additional power stations now, we must look to the future.
There are three questions that I would like to put. First, are we going to rely increasingly on obsolete stations without any idea of a replacement programme?
Alternatively, are we going to rely on the sun or the waves at an earlier date than the predictably possible year 2030? The Secretary of State mentioned the year 2000, as did the right hon. Member for Kettering (Sir G. de Freitas). That may be so. But I was very interested to hear the right hon. Gentleman emphasising the restrictions on research and development in this field, which are inevitable in view of the very small amount of money allocated to it.
Much as I would like to accept the earlier date, I feel that it is optimistic, and that it is more realistic to assume that we must go on without this method for a longer period than has been suggested.
The third alternative is to buy from abroad to fill the undoubted gap that will be evident by 1990, while a huge work force remains unemployed in this country. It is perhaps appropriate to remind the House that it costs many thousands of pounds to create a job to re-employ one man made redundant. It is, therefore, a very costly business.
I turn now, as the Secretary of State did, to the question of the work force. I would like to place on record—and I know that I have the support of the hon. Member for Renfrewshire, West (Mr. Buchan) in this—that at the firm of Babcock and Wilcox, which for many years was in my constituency, the redundancy position is tragic, and that is only one firm. One thousand three hundred men have already been made redundant 319 in this one firm alone. Unless there is an immediate order for Drax B a further 1,300 will have to go.
When I spoke earlier of the likelihood of this industry being able to carry on in this country, I was speaking in real terms. I have seen, week by week and month by month, a labour force skilled in these matters cast aside. I repeat that unless Drax B is ordered immediately the capacity in this industry will no longer exist in this country. These redundancies are from a works industrially harmonious, modern in equipment and well led in both managements and unions. I pay particular tribute to management and unions with whom I have worked in that works and throughout the industry for a long time, and whose sense of responsibility is, in my view, second to none.
§ Mr. Dalyell
Suppliers such as the North British Steel Company in Bathgate are equally concerned about the fate of Babcock and Wilcox and the need for the order for Drax B.
§ Miss Harvie Anderson
I do not want to digress, Mr. Deputy Speaker, and I am trying to be as brief as possible, but it is true to say that unless this great company had had the capacity that it has, through diversification, it would have been unable to sustain even until now its present work force. I merely repeat for the third and last time that unless the Drax B station is ordered immediately it cannot be expected to sustain that work force much longer.
A regular ordering programme is essential, in the first place to enable the building capacity to remain at all and in the second to enable this country to supply its own needs in generating power in future. Drax B is, therefore, only a starter, and in terms of cost this is a very serious matter. But it must be followed up without the delay experienced now, because that delay has lasted literally for years. The follow-up must, of course, meet the time scale essential for the industry as well as for the efficient generating of power.
I repeat that to delay this order for the ideological reasons that are put forward—I do not want to go into this, 320 because the Minister of State knows more about it than I do—places in jeopardy much more than those dedicated to rationalisation seem to acknowledge. There is the strongest case for this work to reach the shop floor and even today there is a terrible timelag.
The programme needs to be clear. I recognise that it has to be bold, but for the reasons which I have given we have to utilise the know-how and the capacity which still exists in the country. What it means is an immediate order for Drax B. It means, as time will soon show, the ordering of another AGR station. I know the difficulties and the cost and the arguments that we shall be saved by the sun and the waves, but I do not think that the time scale fits. The AGR is essential and the performance of the AGR with the knowledge that we have of the method suggests that that should be the choice.
Then I come, of course, to the fast breeder reactor. Here, the area of doubt and controversy is inevitably wide. I am sorry that the Secretary of State did not refer to the fact that the work at Doun-reay has gone on broadly on schedule and with immense success. That team cannot be expected to go on forever in a vacuum. It wants some assurance not only about the exceptional quality of its work but about the potential for the future. There are other countries which would much like the experience, indeed the genius, of those men. I hope that the Minister of State will tonight send a message to those people that we in this country value their contribution and that we intend to form our policy so as to ensure that we retain their skill.
To fail in this length of vision now and to be diverted by environmental prejudice as uncharted as the nuclear prospect and despite scientific support of the highest order is to condemn this nation to shrink still further in the industrial race. It is for that reason that I hope, that, even at this eleventh hour, the Government will move forward and place an order.
§ 6.44 p.m.
§ Mr. Ronald Brown (Hackney, South and Shoreditch)
I am broadly in agreement with the right hon. Member for Renfrewshire, East (Miss Harvie Anderson), particularly in her conclusion 321 on what should be the current reactor choice.
Energy is a subject which lends itself to almost infinite discussion without coming to a positive conclusion. The Secretary of State ran true to form today. My criticism of the Government is that they have an almost negative energy policy. We have had much open government, with much detail given, but at the end of the day decisions must be made, and my criticism is that the Government will not make them.
Attention has been riveted on energy since 1973, when the prices of oil were increased by three or four times and for the first time people realised that it was an important factor. But the energy crisis is in itself a long-term problem, which must lead to a complete reshaping of world patterns of energy supply and consumption. How we do that will seriously affect the future of the world's economy and the nature of our society for the twenty-first century.
Economic expansion is possible only with cheap and plentiful supplies of energy. The Industrial Revolution was based on cheap coal and the post-1945 expansion has been based on cheap imported oil. Today, neither coal nor oil is cheap and the best assessments of world supplies of oil and natural gas are that they will be exhausted in 30 to 50 years. Unless growth in consumption is checked, that will be a disaster.
Therefore, we are left with trying to define alternative energy sources and expanding and developing them quickly, together with more stringent energy use. The prospect of continued economic growth or even of maintaining existing production appears extremely doubtful. I listened to the argument about coal, which I have heard rehearsed in other parts of the world. I am in some difficulty, because I have listened to the pleading that we should now revert to the use of coal as our major energy source, but I cannot forget that, by design—not because of the energy crisis, but because we did not regard this energy source as of the best performance—we have cut back on the use of coal in gas works, on the railways and in the domes- tic and industrial sectors.
Certainly, at the present extraction rate and together with the new coalfields, 322 supplies could be assured for well into the next century, but we decided to cut back because the commodity itself is so poor. It is expensive to burn, it contributes enormously to pollution, it is difficult to extract from a hostile terrain, and it endangers the health and well-being of those who mine the coal. That last was the major argument. So much so, that we are now arguing that miners should be permitted to retire at the age of 55 on full pension because of the hazards which they have to face.
I, therefore, do not understand how we can all talk about the anxiety to produce more coal while forgetting, apparently, that in the end the people who must produce it are losing their lives and suffering other hazards and that they are demanding the right to retire earlier than any other section of the community.
I do not go along with the argument that coal is the great saviour. It happens to be here, but I have yet to hear it argued that the filth and squalor of this commodity has now been removed and that it is marvellous for chaps to travel three miles down into the earth and live that kind of life. I am still waiting for an explanation of our sudden change of attitude and of our belief that coal is now so marvellous. Perhaps the Minister of State will say whether his family will be going down the mines to earn a living.
Talking about coal gives me an opportunity to ask the Minister of State to answer a question for me. I put this question to my right hon. Friend the Secretary of State when he visited Paris some weeks ago. He was then telling us about what he called one of his great achievements during his period as President of the Council of EEC Energy Ministers. He was describing the introduction of a monitoring scheme to keep out cheap coal. He was not of the view that the housewives of this country ought to enjoy cheap coal. He encourages cheap food, but apparently draws the line at cheap coal.
The monitoring system would protect the Community from imports of cheap coal, said my right hon. Friend. I listened to him with interest, because it struck me as a little odd that my right hon. Friend, who is titular head of BP—which is very proud of the fact that it is now 323 diversifying its activities by buying into coalfields in the cheaper areas in other parts of the world, such as South Africa and Brazil—should take this line.
I asked my right hon. Friend to explain the apparent paradox. If BP is buying into coal-bearing areas in other parts of the world, presumably so that it can make money by exporting that coal from those areas, and if my right hon. Friend, who is head of that organisation, is busy setting up a protection scheme to prevent cheap coal entering the Community, what is the virtue of BP diversifying in that way? My right hon. Friend said that I had drawn to his attention something which he could not at once answer. He promised to let me know the answer. I realise that he is very busy and that we have had three-line Whips, but I have not yet had his letter. I presume that my right hon. Friend the Minister of State will be in a position tonight to explain this apparent paradox.
§ Dr. J. Dickson Mabon
I know that other hon. Members will comment on what my hon. Friend has said about mining. I have done some coal mining and I would not recommend it to anyone. That is not the view of the miners. My right hon. Friend will certainly write to my hon. Friend—I give him that assurance—reminding him, no doubt, that the Bradbury and Bridges letters define the relationship between BP and the present Government and preceding Governments, dating back to 1914. They do not mean that the Secretary of State at any moment is the titular head of BP. That is not the relationship of BP with any Government.
§ Mr. Brown
I am sure that, following the Secretary of State's assertion that Ministers must be in final control—he said that quite clearly—my right hon. Friend will want to think again about that intervention.
I confess that I have little faith in the proposals to develop what are now called "other sources of energy", such as wind power, wave power, solar energy and geo-thermal energy. These are now being canvassed as if we had suddenly discovered the sun—as if we had, for the first time, wind and waves and hot rocks. I am bound to say that I thought the House knew, as I knew a long time ago, that 324 these were always available. I thought the House was also aware that we had spent a great deal of time in research, trying to assess what the final value of those resources would be to the economy. I thought that those who were employed as technologists had come to the view that while such things would make some contribution, the overall contribution would be of little value because we would still have to spend a vast amount of money on putting in the primary source.
Now, apparently, we are going round the track for the second time. No doubt my right hon. Friend the Member for Kettering (Sir G. de Freitas) was so anxious to tell us what President Carter told him and what he told President Carter that President Carter was still being chased around the track. Perhaps being a peanut farmer, President Carter feels that the sun ought to be used for more than growing peanuts.
I am not converted to this view and I have yet to hear arguments put to me which will show that in some way these methods will make anything but a minor contribution. I hesitate to think of what windmills on all of the high spots of the country would look like. I am told that if there are enough of them it is likely that they will contribute 5 per cent. of our total energy demand.
§ Mr. Forman
May I put one argument to the hon. Gentleman to suggest how his view may be changed? As real energy prices rise, the potential contribution from these so-called alternative sources can be, and is likely to be, much more substantial.
§ Mr. Brown
The hon. Gentleman and I have a meeting very shortly on the Select Committee dealing with this issue. We can joust about it then. I do not believe that his argument is impressive. I do not believe that it will be possible to replace the basic primary requirement by these rather fringe issues, which are attractive because we are talking of them against a background of high-price oil.
We have to put our faith in the provision of nuclear power plants. I make no excuses for being in favour of such plants. I came to this decision 25 years ago, after much discussion. I taught the subject for a living, I still believe that I am right, and I repent not for the sins 325 of my time in this House. The Secretary of State rightly pointed out, with pride, that we are providing 13 per cent. of our needs from nuclear power plants and that by 1980 we shall be providing 20 per cent. That is a tremendous record— one of the best in the world. I am convinced that a major contribution to solving the energy crisis lies in research and development of fast breeders.
§ Mr. Jim Marshall
I hesitate to prolong my hon. Friend's speech, but may I put a point to him related to this issue? He is arguing that nuclear power can make a great contribution to our energy needs. Can he explain the speech made last week by the civil servant—who we are now told did not make the speech on behalf of my right hon. Friend—in which it was said that nuclear power will not make one iota of difference to the so-called energy gap which we shall face by the year 2000? It is an energy—
§ Mr. Deputy Speaker (Sir Myer Galpern)
Order. The hon. Member for Leicester, South (Mr. Marshall) has indicated that he would like to try to catch my eye later in the day. If he is to make lengthy interventions his chances of being called will be so much more remote. In any case, as he said, such interventions lengthen speeches. If we go on at this rate fewer than half of those hon. Members anxious to take part in the debate will be able to do so.
§ Mr. Brown
I take your strictures to heart, Mr. Deputy Speaker. I am trying hard not to take too long. There is a straightforward answer to my hon. Friend. It is being advanced regularly. This is one of the criticisms that I have made of my own Government and the previous Tory Government. The Opposition Front Bench spokesman was a bit cheeky— when we think of the delay of the previous Conservative Government in reaching any decision at all—to have the effrontery to complain that this Government had not made a decision yet. Within almost six weeks of taking office the Government decided to support the steam generating heavy water reactor. That was a decision which the Tory Government could have made at any time they liked in the previous three years but failed to do.
That is one of the answers to the question why there is likely to be an 326 energy gap. One way of filling the gap is by going ahead with research and development on fusion and with the development of the fast breeder reactor, together with continuing work on safety requirements to reduce the hazards. It was, therefore, disappointing to me to realise that the Secretary of State did not intend to explain his rather extraordinary behaviour as President of the EEC Energy Ministers over the joint research centre programme and the JET.
I do not know whether the House is aware of the fact, but my right hon. Friend followed an extraordinary course of action with which I hope the Minister of State will be able to deal. When we held discussions with our partners in the EEC about where the joint research programme should take place the general consensus was that it ought to be at Ispra. My right hon. Friend took the view that that was not the place that he would select, and he was not sure that the amount of work being given to Ispra was necessarily the right amount.
One does not know everything about what happens at these meetings because, although my right hon. Friend is in favour of open government, he could not get the council meetings open. I understand that when the discussion took place the opinion of Ministers was taken in turn, but when it came to the turn of my right hon. Friend he said that he would enter an ad referendum. That is a means of saying that one accepts in principle but that one will go back to discuss it with one's own Government. By custom and practice, an answer is given in two or three days confirming it. However, in this case the answer was not given.
My right hon. Friend has now entered reservations of some description. It is understood that the reason for doing so is that he feels that this must be connected with JET. The view of my right hon. Friend, which I share, is that Culham is the right place for JET to be located, but we have yet to persuade our friends in the Community that this is so. My right hon. Friend has apparently now taken the view that he will refuse to free money for the joint research centre pending a decision on JET. I think that that is unsatisfactory. I understand why he has done that, and some of the arguments 327 that he is putting forward, but it means that we have left our colleagues in Europe in a very angry state. That is not the best way of doing business.
If we had reservations it was right to put them on the table and to argue the decision. But after we had used the means of an ad referendum knowing that a decision was expected within two or three days and that we were regarded as having accepted the idea in principle, it seems unreasonable that we should then adopt a further position of reservation. I invite the Minister of State, in winding up, to set out the current situation. Are we still blocking funds for the joint research programme? Is my right hon. Friend sure that he intends to continue blocking the project until a JET decision is made?
Abundant energy is an important factor for economic growth. Our aim must be to ensure sufficient energy supplies at a reasonable price to permit a level of economic activity which will enable us to obtain growth and a return to full employment. We must step up the conservation programme to ensure economic utilisation of our oil and natural gas. Our experience with fast breeders is very encouraging and the major thrust of our research and development should be towards this end. Much work needs to be done on storage and disposal techniques, and the reprocessing of fuel must be improved.
I do not have time to enter into arguments about Windscale. It was my right hon. Friend who authorised the first development of Windscale back in 1967. He assessed its value, urgency and the hazards then. Now, when the question of an extension has arisen, he has refused to make the decision. Once more he has used a technique—in this case a planning technique—to try to resolve the problem. That is the sort of thing that I reject. If we want to go ahead let us say so, but do not let us use some obscure planning device for not extending Windscale and say that that is the end of reprocessing, because reprocessing is wrong. That will not be the conclusion of the judge who is to decide on this issue. Therefore, we must step up our work in this area. We cannot continue blowing with the wind, never really 328 making up our minds on anything, in the hope that somehow it will all come right in the end.
Our decisions today will have a major effect on our country in the year 2000 and I hope that my right hon. Friends will realise that it is up to them to accept this challenge and have the guts to make decisions. Let us see whether we can make this country great.
§ 7.5 p.m.
§ Mr. John Hannam (Exeter)
I agree with the hon. Member for Hackney, South and Shoreditch (Mr. Brown) in his description of the Secretary of State's speech as somewhat lacking in clear decision and being rather woolly. There was enough flannel in that speech to keep ue warm during this cold summer and probably next winter, too.
This is a valuable debate, because it allows hon. Members to make contributions on the question of energy that may assist the Government when they make crucial decisions that are now being delayed and that should be made more urgently. During my years in Parliament I have listened to a great number of experts and scientists and people from all sectors. We have heard from the coal and gas industries, from those concerned with the alternative sources of energy, and from the nuclear industry. I have attended many seminars, as no doubt many hon. Members have. Throughout that period, which in energy terms stretches from about 1972, I have seen many forecasts come and go and many assumptions get washed away by subsequent events.
I recall a luncheon with the vice-president of the Exxon oil company early in 1973, when he grandly informed us that there was no need for politicians and Governments to take any role in Middle East affairs because it was perfectly all right to leave the oil companies to decide matters. Six months later there was the explosion of Middle East oil prices.
Over the years I have become ever more convinced that two things would happen in the last quarter of this century. The first was that as the era of cheap world commodities came to an end so energy, upon which modern civilisation depends, would rocket in price as the shortfall in the supply of oil became apparent. The second factor was that not 329 only would energy costs rise dramatically, eating into our standard of living, but that the growing energy shortage would force us into considering new energy production systems. The conclusion that I arrived at was that although there might be a limited period of, say, five to 10 years when a small surplus of oil, gas and coal would exist, we should very quickly move into substantial deficit from 1990 onwards. With the best will in the world the various attractive alternative sources of eneregy will not and cannot be developed quickly enough to satisfy that shortfall.
I made this point during the Second Reading of the Coal Bill on 2nd March, when I declared my support for investment in our coal industry, especially in regard to the development of new techniques of extraction and use for industrial feedstock purposes. But I linked with that statement my belief that nuclear power with coal would be our energy backbone in the future, and today I want to develop the nuclear theme in the context of the post-North Sea oil era.
I believe most strongly that we politicians have a grave responsibility being thrust upon us—a responsibility to succeeding generations not only to provide safe industrial processes but to provide the basic energy needs of a society growing in numbers and expectations. By that I do not mean a growth society based on the materialistic type of growth witnessed in the 1960s. I have in mind a society in which such growth has reached a plateau but in which we shall need to provide reasonable heating and mobility levels, fertilisers for agriculture and horticulture, and essential industrial production to maintain the standard of living of the British people.
I believe that notwithstanding all the efforts to find new oil and gas reserves and to increase coal production, plus the introduction of new systems of power from the sun, the wind and the waves, we in the Western world—and probably the Communist bloc as well—will face a grave shortage of fuel and power before the end of the century.
It is in that context that energy is so relevant, for no one can deny that energy policy, although not likely to send political temperatures soaring, is vital to our economy in human terms and from the point of view of industrial costs. 330 Although when thinking of energy we are prone to think only of electricity for domestic heating and cooking, 75 per cent. of our electricity comes from coal generation only 10 per cent. from oil. But in terms of the overall primary use of energy for industrial and domestic use oil provides the largest share—41.1 per cent., compared with 37.7 per cent. from coal.
Energy is a vital part of economic planning. I am the first to accept that there are no easy answers to some of the questions that I have asked. Until 1965 it was just a question of using as much cheap oil as possible. Coal mines were being closed as uneconomic and electricity was made so cheap to the consumer that we all fell over backwards to close up the chimneys, install oil-fired burners, electric cookers and night-store heaters.
All the forecasts were then proved completely wrong by the 1973 oil price explosion, when the price of oil went up from $2 a barrel to $9 a barrel within a matter of months. I estimate that by 1985 the price of oil could be around $25 a barrel and by the end of this century it could be $100 a barrel. The result of that price hike in 1973 was that we suffered a substantial fall in demand and had an over-capacity of electricity supply.
Nevertheless, I take the view that it is still better to err on the side of over-provision, because the costs of capital construction are always left behind by inflation and provided that we have the money to pay for that capital investment the subsequent electricity will turn out to be cheaper. The one thing we cannot do, unfortunately, is to take all the alternative paths at the same time.
Looking back at the 1965 White Paper one sees that it was reasonable at that time to go for a cheap fuel policy. This meant that despite the charge on the balance of payments the cheap oil that we were able to obtain could be used, together with nuclear power, to produce low-cost electricity. The coal industry was rationalised, with the closure of uneconomic collieries, leading to higher productivity, with a rundown of about 35,000 men a year. The result was that coal production fell from 207 million tons in 1956 to 112.6 million tons last year, plus 10.2 million tonnes opencast.
331 How do we recreate the expansion of coal production? The NCB talks about producion of about 150 million tons of competitively-priced coal in 1985. This would allow 100 million tons for electricity generation. But I am afraid that all the indicators—this has been pointed out in previous debates—like the present level of coal productivity and the intentions of earlier retirement, lead me to the conclusion that the coal industry will not reach those targets until a radical technological revolution takes place in coal extraction and coal use.
Coal productivity has fallen from 45 cwts. per manshift in 1973 to 43.8 cwts. last year, despite hundreds of millions of pounds of investment in recent years. Regardless of that, I am convinced that the tremendous coal reserves that we possess will be of great value to us when we have properly developed the new methods of liquefication and gasification, fluidised bed combustion and oil from coal refining processes.
When I talk of our future energy needs being satisfied by coal and nuclear power I am referring to the post-1990 era, for which we should be planning and making decisions now. When I assume an energy crisis of the 1990s I know that there are those who believe that as prices rise so other sources of energy will be developed. I accept that, just as I believe that a lot of North Sea oil would not have been developed in a pre-1973 situation. One can foresee some new marginal oil extractions being viable as basic prices rise. But costs will also rise, in proportion. Even with all the shale oil, tar sands and new discoveries, I contend that a shortage of oil necessitates a major nuclear power construction programme.
There is, of course, a great deal of controversy surrounding nuclear power, just as there is around any great new technological breakthrough. Those who now campaign so vigorously against nuclear power would, I believe, have led the anti-car campaign in the early part of the century, despite the warning by Hohler that unless the growth in the number of horses was halted we should all be submerged 'neath horse manure in 50 years.
Nuclear power will be our main source of electricity during the next century. It will be made safe by man's ingenuity and 332 in time it will be non-polluting. Our problem is how to ensure a proper acceptability of the next stage of nuclear power. It behoves all of us in this House to make a careful appraisal of the facts and figures. Then, if we agree on the conclusions, we must present the case to the British people.
The immediate problem is not one of "if" but of "which"—which type of thermal reactor should constitute the nation's ordering programme? I regret that wrong decisions were made in 1974 and could be made again this summer by the Secretary of State. Britain was a pioneer in nuclear power with her Magnox reactors back in the 1950s. The AGR programme of the 1960s has slipped behind schedule but is now well under way and proving a success. Nevertheless, 13 per cent. of our electricity, at lowest cost, comes from nuclear plants, and this will become 20 per cent. if a proper ordering programme is instigated.
§ Mr. Macfarlane
Did I understand my hon. Friend to say that the Secretary of State will make his decision this summer? I do not believe that the Secretary of State indicated that during his speech. Although I should like to think that a decision was to be made this year, I believe that my hon. Friend is indulging in wishful thinking if he thinks that ever the populist Secretary of State will make a decision this summer.
§ Mr. Hannam
Having heard the right hon. Gentleman's statement today about the urgency of the decision, having heard the announcement at the Sunningdale conference about the urgency of making decisions, and having read newspaper reports, I have come to the conclusion that we can expect a decision from the Secretary of State sometime during this summer. But, as my hon. Friend pointed out, the Secretary of State has dithered and dathered on this point for so long that we may be coming back this time next year wondering whether the decision will be made.
The objective in making this decision must be to design a reactor that we can export if possible and that can be built by our construction industry. But in the mistaken belief that we could achieve this export potential we went ahead with the SGHWR design. We could have had a winner in 1974 and could have been well 333 under way had we chosen the right model —I spoke against the choice of the SGHWR—but we have wasted two or three years. Since then we have run down the construction industry almost to a point of no return. [An hon. Member: "With hindsight."] This is not hindsight. It was a view expressed by a number of hon. Members at the time which received some sympathy from the then Secretary of State for Energy, who wrote to me personally about it.
The same prevarication is likely to delay the development of our fast breeder technology and it is to these two points that I wish to address my closing remarks. First, on nuclear power in general, can we do without it? I believe that it is something that we cannot do without and we shall therefore have to establish our future energy needs on the basis of a substantial nuclear power programme. If energy demand continues to increase by 3 per cent. a year from 1980, Western Europe's energy demand will increase from last year's 1,190 million tons oil equivalent to 2,730 million tons oil equivalent by the year 2000. I agree that, in fact, we ought to aim for a nil increase in energy demand, but these are the realistic appraisals of what the energy demand is likely to be. Oil demand in Europe will increase from 665 million tons oil equivalent to 1,235 million tons oil equivalent by the year 2000, with a massive increase in oil imports into Western Europe. Gas production will be greater than hitherto forecast, but after 1990 a gap will open up which we shall have to meet by coal gasification and further liquid gas imports.
Hydro-power will probably remain roughly as it is. Coal production will probably remain constant at 360 million tons from 1980 to 2000, but coal demand will increase dramatically if we start using coal to produce gasification in order to meet the gap in gas demand. There will be a further need to import this amount from outside Europe. These figures give some idea of the gap that will emerge in Western Europe. It is a gap that is also affecting Japan, the United States and other major industrialised sectors.
There must be a major new supply of nuclear power in Western Europe. If one analyses the amount of nuclear 334 power that we shall need, this comes out at something like 22 gigawatts in operation at the moment and a further 80 gigawatts under order, and we shall need about 20 additional power stations each year between 1985 and 2000. This is only half of what the OECD forecast as being the actual amount of nuclear power that Western Europe would be producing.
§ Dr. Phipps
I am sure that the hon. Gentleman appreciates that there are many hon. Members who think that any kind of nuclear programme, and the fast breeder reactor, should be avoided altogether. He said that it must be nuclear power. Does he agree that what he is saying is that in investing the enormous sums of money that will be required to fill that energy gap he prefers that it should be nuclear power? I would prefer to see that enormous investment spent on other forms of energy.
§ Mr. Hannam
If any hon. Member or, for that matter, any scientist, could show that by making that investment now we could produce a solution to the energy gap by any other means, I should be happy to fall in with that suggestion. I look forward to hearing what the hon. Member for Dudley, West (Dr. Phipps) suggests as the solution. I have seen no evidence that there is any other solution to this problem. One either assumes that there will be an energy gap, in which case it must be nuclear power that fills it, or one puts forward the hypothesis that there will not be an energy gap, and that is one that quite a number of people put forward, and one that we have to consider.
But we in the United Kingdom can see ourselves in a much more favourable position than most other European countries. We have large reserves of oil, coal and natural gas, and we should be self-sufficient during that limited period of the 1980s. So the non-ordering of more nuclear power stations since 1970 will probably not rebound on us. However, in the longer term we shall probably find ourselves in a similar position to that of most other Western European countries, except, perhaps, Norway. We shall have to import energy at a time of declining world availability of oil. We cannot, therefore, isolate ourselves from the global energy situation when determining our energy policy.
335 When the Secretary of State was speaking I had the sensation that he was talking like a little Englander. However, we shall require substantial oil imports and gas imports in the late 1990s. Solar and alternative sources are not a major solution to our problem.
If nuclear power is to provide the balance of our requirements in the 1990s, we have to increase installed capacity from the five gigawatts that we have now to 55 gigawatts by the year 2000. That will include the existing five gigawatts of Magnox plants that we have, plus the six gigawatts of AGRs curently coming into commission, plus four gigawatts of new thermal reactors by 1985. Then we shall require a further three stations a year throughout the 1990s.
It is vital, therefore, that the Secretary of State makes a decision soon on the ordering programme for these thermal reactors. The SGHWR decision was wrong, as I forecast at the time. The question is which reactor will now give Britain a chance to achieve a good export stake as well as having a safe and economic system for the country.
Since 1974, I have heard a great deal of evidence from leading scientists, energy experts and members of the Safety Inspectorate, and all that I have heard confirms in my mind the view that the choice between the light water reactor and any other form of thermal reactor does not rest on safety grounds. That aspect is purely one of additional costs to bring any reactor up to the necessary safety requirements of the Safety Inspectorate, which is admired and respected throughout the world. I am sure that the NNC assessment will confirm that only a marginal increase in costs will be required.
With 90 per cent. of the world's reactor production being in the mass-produced PWR, making it cheaper and more effective, it seems to me right that we should choose one which will give export potential for our manufacturing industries and the greatest opportunities for a viable British construction industry with £1,000 million to £2,000 million of exports available for the light water reactor. We shall be able to create a new British-designed light water reactor industry. Therefore, I take the view that 336 it is not a question of choosing a reactor that will allow our finances and expertise to go abroad. It is one that will enhance the existing technologies that we are providing already for the French and the Tennessee reactors being built in America. We can have a British light water reactor design which is better than the existing Westinghouse design, and using a better fuel.
§ Miss Harvie Anderson
Can my hon. Friend put a time scale on what he is suggesting, making reference to the overcapacity of components for the light water reactor at present and, therefore, the unlikelihood of a vast export programme?
§ Mr. Hannam
In whatever programme we embark upon, we are talking in terms of building up a successful industry again for the massive ordering programme which is certain to take place throughout the world in the 1980s and the early 1990s. Therefore, decisions made now will enable confidence to return to the construction industry.
I hope, therefore, that the Government will cease to maintain their present posture of standing back from these decisions and answer the minority opposition to nuclear power in this country. We have a wonderful record for safe nuclear development, and the chances of a nuclear accident involving 100 deaths in a country with 100 nuclear stations is about once in 100,000 years, according to a Massachusetts Institute of Technology study.
§ Mr. Penhaligon
Did not experts of similar calibre give West Country Members of Parliament an assurance that if the Concorde flew up the middle of the Channel to Paris there was no chance of anyone living in Cornwall or on the south coast of Devon ever hearing a sonic boom?
§ Mr. Hannam
I did not hear that assurance. I know that there has been a rebound problem from the Concorde, which is now being adjusted by a movement of the flight path by the French some 15 miles further away, but I do not think that has any relevance to the scientific assessment of the likelihood of injuries caused by major industrial explosions, dam failures, or whatever it may be. In fact, the death damage that 337 we face from dam failures is about one in every 15 years. So one can get a totally different proportion by looking at all the various factors that determine hazards in the present day.
§ Dr. Phipps
Did the same experts give statistics about the likelihood of just one additional hydrogen bomb being dropped on people over the next 15 years, due to this process?
§ Mr. Hannam
I do not want to go into the realms of fantasy with this. We have to take the factors as they are known at the moment. There are a large number of nuclear power stations in existence. They have been in existence for a long time. Many other industrial fatalities have occurred. The evidence has been assessed, and that is the conclusion that has been reached. It must be quoted, therefore, to answer some of the irresponsible charges made against nuclear power by the minority opposition in this country.
I turn finally to the fast breeder reactor. We have here a very difficult problem. He would be a foolish man who pretended that we could now go ahead with a construction programme of operational fast reactors. But that is not what is being asked for. We have produced a successful prototype at Dounreay, but for a year our development team has suffered uncertainty and falling confidence. Even our research and development programme is approved only on a three-monthly basis. This must be changed if we are to retain confidence amongst our scientists.
First, we must declare our faith in the skilled British technology that we have created. We must give it an assured annual research and development budget and press ahead with the solutions to plutonium proliferation, transportation and disposal.
The big question marks raised by the Flowers Commission are those of waste disposal and the proliferation of plu-tonium. I believe that we can look forward to the successful solution of these major problems. Our scientific technology will overcome them. It is right that we should advance along this path and answer many of the fears that have arisen before we embark upon any major ordering programme.
Conservation and new uses for coal are vital parts of our policy, but the de- 338 cision that I want to see made is one that needs the full support of the Secretary of State and the backing of this House. It is a declaration of faith in our nuclear power industry and our Safety Inspectorate, and a decision to order four light water reactors based on a British design.
In my view, we must follow that up by international co-operation on reprocessing and on the fast breeder. If we do that, our energy problems of the 1990s have a good chance of being overcome and we shall also be playing a very important part in the global energy strategy, which, in the final instance, means heat, light and mobility for British people and for people throughout the world, and jobs for our workers.
§ Several Hon. Members rose—
§ Mr. Deputy Speaker
Unless there is a drastic reduction—and I mean drastic —in the length of speeches, fewer than half of the 12 hon. Members present who are anxious to take part in the debate will be able to do so.
§ 7.30 p.m.
§ Mr. Jim Marshall (Leicester, South)
I take note of your rebuke, Mr. Deputy Speaker, which you made on my intervention a little time ago. In the light of that, perhaps I should not follow the speech of the hon. Member for Exeter (Mr. Hannam).
I start by saying that while many adverse effects have arisen from the oil embargo and the consequential price increases since 1973, there has been an increase in one particular industry as a result. In fact one might call it the biggest growth industry in the world today—that is, the proliferation of experts on energy matters. If one looks at their differing and diverse views one is driven either to the optimistic extreme of believing that there is no problem or to the pessitimistic extreme of believing that if we continue to waste energy at the present rate by the year 2,000 we shall be back to a cave-type economy. The speech of the hon. Member for Exeter falls somewhere between those two extremes. I am not sure whether this is the best position to occupy in this debate.
My own position is that I am certainly not pessimistic about the future. In fact, I am optimistic. We must set the record straight—the world just does not have 339 an energy shortage. What the world is facing is a relative decline in the contribution of oil and natural gas to our economies.
Having said that, I hasten to point out that there still will be substantial—I hesitate to say vast—amounts of oil and natural gas remaining. We have vast quantities of coal and we do not know the extent of coal resources in the world. The uranium resources of the world are probably substantially higher than the present known reserves.
In the longer term, despite the observations of my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown), I believe that solar power, wave power, tidal power, possibly geothermal power and probably fusion power and other benign sources will give us plentiful supplies of energy. What we face in the longer term is not an absolute shortage of energy but an increase in the price that we have to pay for it.
Despite the doom scenario painted by experts both inside and outside this House, the effect of high energy costs on Western economies, while certainly serious, is not catastrophic. It does not mean, as the hon. Member for Exeter said, that there will be zero or even negative economic growth.
If one looks at the developed economies of the Western world, one sees that energy inputs are small enough to ensure that any reasonable changes will not make any major impact on our economic and social future. Anyone who pretends otherwise is misleading the House and the country.
The difficulties arise in the less-developed countries, which have no indigenous sources of coal, oil or natural gas and are attempting to build a firm industrial base. In these economies, energy inputs are of such magnitude that they affect disproportionately the development of their economies. We must try to ensure that in these countries there is some kind of compromise over commodity prices, and that the consequential adverse effect of increasing energy payments on the balance of payments is ameliorated as much as possible.
In the Western developed world there is no reason why economic growth should not continue despite higher energy costs. 340 We must put that point across repeatedly. Why is there this scramble within Western Europe and the United States to formulate national and international energy plans? It is perhaps interesting that the Secretary of State for Energy has been criticised for scrambling more slowly than his colleagues in Europe and America. While my question may be naïve and the answer may be obvious, I think that I should reiterate the reasons for it.
The world, which prior to 1973 enjoyed cheap and apparently limitless and secure supplies of oil, has found that since 1973 energy has become expensive and supplies apparently insecure. There have been projections about the excess of demand over capacity for certain fuels between the years 1990 and 2000. I do not deny —and I am not in a position to do so— that there will be an excess of demand over supply in certain fuels, but I draw the House's attention to an observation by Mr. Gladstone in his 1866 Budget speech. He arrived at the conclusion that the United Kingdom would require 331 million tons of coal in 1900, 2.6 billion tons in 1960 and 3 billion tons by 1970. That estimate was based on a growth rate of 3.5 per cent. The growth was out, as was his basic assumption that no substitute for coal would be required and that it was doubtful whether it could be found even if it were required.
§ Mr. Macfarlane
Some two years after that Budget speech a Conservative Government came into office in 1868. Therefore, it is significant that those figures probably were not accepted by the electorate.
§ Mr. Marshall
I am pleased to hear that petty party squabbles went on even in 1868. But we are dealing with more serious matters today. I made the observation in order to indicate the kind of uncertainty in following any long-term assessments. I do not deny that there may be an energy gap and that we must take steps to try to overcome it, if and when it arises. But we must not be mesmorised by assuming that it will arise in 10 or 15 years.
For the plans of this country, the United States, and other parts of Western Europe there must be three main aims which I reiterate because so far they 341 have not been articulated in this Chamber today. The first is the optimum use of expensive fuels; the second is the attempt to protect supplies; and the third is the development of alternative fuel sources.
The hon. Member for Bridgwater (Mr. King) apparently came here today just to regale the President Carter energy plan. He seems to be imbued with the enthusiasm of the President and Mr. Schlessinger. But the enthusiasm of those two is not shared by all Congressmen and senators. I think that President Carter will be very lucky to obtain a great deal from his original energy plan.
This country, in formulating its energy plans, has made one of the best starts in the developed world. We have also made a good start in conservation, which is the best short-term method of reducing the rate of increase in energy consumption. But we must seek to maintain the momentum. Will my right hon. Friend consider the possibility of linking conservation, particularly on the insulation side, in planning terms, so that local authorities are given responsibility to ensure that minimum insulation standards are maintained throughout the country?
We have also laid increasing emphasis on other fuels, particularly coal and nuclear power. Apparently we have a limitless supply of coal. I support "Plan for Coal" and the Coal Industry Bill, which is at present in the other place. If the coal industry takes advantage of the situation, I believe that it has a golden future. The miners will be in a position to contribute to our future well-being as they have done in the past, and perhaps they will even surpass what they have done in the past. Coal must continue to be the backbone of the electricity supply industry. In the coming years conversion into gas and petrochemicals will also make a contribution. Those of us who took part in the proceedings on the Coal Industry Bill have had an opportunity to pursue these arguments at greater length. I believe that coal has a good future in generation terms and in conversion to synthetic natural gas and petrochemicals.
Those hon. Members who joined the parliamentary delegation on energy to the United States will remember that the term used there was that the coal indus- 342 try is a "reactive" industry—a dreadful word which the Americans use often. In other words, so far the coal industry has sought to find reserves to meet only the current demand. I believe that that situation is now being reversed. The coal industry throughout the world will go out to discover new reserves and I believe that they are immense.
I should like to say a few words about nuclear power. I support the nuclear power industry because it will be required for the generation of electricity, but we must seek to separate the question of thermal reactors from the topic of reprocessing and the subject of the fast breeder reactor. I believe that the thermal reactor will stand by itself.
The hon. Member for Bridgwater referred to a publication issued by the Ford Foundation. That document said that America would be prepared to act as the dustbin for atomic waste but made the point that reprocessing should not be dealt with in isolation. The document from the Ford Foundation stressed that on a long-term or short-term basis of waste one can safely dispose of it from the light water reactor. I agree with the hon. Member for Exeter that we should have a commitment to more thermal power stations.
If we have to make a choice soon, I believe that we should come down on the side of the light water reactor. I say that for two reasons. The first is that it is the considered view in some parts of the industry that if we continue with the present advanced gas-cooled reactor, there will be no nuclear power construction industry in this country in 10 years' time—that is, unless we choose the light water reactor. Secondly, that reactor will give us for the first time an opportunity to enter into a growing export market.
There are many other points I could have made in this debate, but I shall refrain from doing so because I know that many other hon. Members still wish to speak. I merely wish to emphasise in my concluding remarks that on the international front we cannot isolate ourselves from the rest of the world, but we must work together, whether through the United Nations or the EEC institutions, to arrive at a coherent international energy policy.
§ 7.45 p.m.
§ Mr. Peter Rost (Derbyshire, South-East)
I am pleased to be called to speak following the remarks of the hon. Member for Leicester, South (Mr. Marshall) because my approach is similar to his, although I shall develop a strong variation from it.
I subscribe to the view that there is no shortage of energy, as is patently obvious, and that there is now a surplus of energy. It takes a brave man to forecast what the energy scene will be in 10, 20 or 30 years' time. I would not attempt to predict the energy mix at the turn of the century, but I maintain that there is no shortage of energy, nor will there be in the future. I cannot accept that there could possibly be an energy gap any more than that there could be a caviare or champagne gap, since supply must balance demand. It will mean that there will be a high price to pay in real terms in relation to gross domestic product. Our energy may cost more, but there will not be a gap.
Provided that the normal laws of supply and demand are allowed to operate, we shall not wake up one day and suddenly find that oil or gas or coal have run out. It will not happen in that way. There will be a long process of evolution. Indeed, it has already happened. The only way in which there will be an energy gap, and the only circumstances in which we or any other countries in the world will suddenly face an energy crisis, will be if politicians create one. There is a serious risk that political interference will create an energy shortage or an energy crisis. We must learn from the mistakes of the past and must not allow them to be repeated.
§ Dr. Phipps
The hon. Gentleman seems to be expounding an astonishing thesis. Is he suggesting that when the last barrel of oil disappears, the mere fact that people are prepared to pay an exorbitant price will, in some miraculous way, produce a non-existent barrel of oil?
§ Mr. Rost
The mistakes of the past must not be repeated if we are to avoid creating an energy gap or crisis by political meddling. One of those mistakes involved the subsidisation of electricity. That has resulted in a distortion of the market that is now leading to a higher price for electricity than would otherwise be the case. It is one of the causes of the confusion in the distorted energy scene from which we are still suffering. If electricity had not been so heavily subsidised, it would not have been possible to continue to produce electricity so inefficiently. Without that subsidisation, we should now have a far more efficient system of electricity production with combined heat and power, which would be in the long term and, I believe, in the current term, not merely a more efficient way of converting our energy but a relatively cheaper process.
There are other examples of where we are in danger of repeating the mistakes of the past by political intervention in what should be a far more free market operation. If market forces are not to be allowed to operate in this crucial area of energy supply and demand, we are in a serious danger of creating problems for ourselves that need not otherwise arise.
The evidence is that there have already been adjustments in the supply and consumption of energy since the Middle East oil price increase which have not yet been allowed to follow through but which will do so in future years. For example, who would have predicted a great acceleration in demand for solar panels in this country? Anyone who made that suggestion two or three years ago would have been laughed out of court, or would have gone bankrupt in trying to market such panels, yet already there has been a great increase in their use for heating. That is because it is proving economic to do so. The use of solar panels is making only a marginal contribution to the supply of energy but it is an illustration of the point that I am trying to make—namely, that if market forces are allowed to operate, the supply will come forward.
The same can be said about the incentive that now exists for thermal insulation. There was no incentive before. It did 345 not pay to invest even £200 to £300 to have one's house properly constructed or insulated because the return in terms of cost saving were so low that it would have taken more than the life of the house to meet that cost. The position has changed and the cost saving takes place within two to three years. There are other examples that demonstrate that if we did not have political meddling and intervention the energy problem would not go away but would solve itself.
There are already economic processes of secondary and tertiary oil extraction that have not been bothered about before. Most of the oil wells that have been abandoned in the past have had only about a quarter of their oil extracted. We know that there is technology that would enable us to extract a higher proportion if it were only worth while.
We are making the same mistake in the North Sea by imposing a penal system of taxation. The Government are being too greedy and are trying to make too much. That is now proving a disincentive for the optimum extraction and development of oil fields. We shall pay the price for that in later years. That is a good example of where we are making mistakes by political intervention instead of letting the market forces operate.
Another example of where the meddling in the free operation of the market forces is having an adverse effect is in the application of coal technology to the processes of the oil industry. If we had not had artificial subsidies in the coal industry as in other energy industries, I believe there would now be a greater impetus for the development of the fluidised bed process. This has come to the fore, but only slowly. Development could be much faster if the Government provided the right incentives rather than interfering in the market place.
A final example of where market forces are already operating in a direction that will make a major contribution to the longer-term solution of our energy problems lies in the internal combustion engine. It is only over the past year or so that there has been any real financial incentive for the motor industry to spend on developing and marketing a more efficient motor car or other forms of transport. It is happening now only because the consumer is demanding it. The 346 consumer is doing so because the price of energy is rising.
As the process continues, the first car manufacturer who is able to put a car on the market that does 60 miles to the gallon while being of the same quality and size to which we are accustomed will scoop the market. That is quite feasible but it has not been worth while to work on it hitherto. We are now getting to the stage where for the first time the incentive exists.
I am well aware that there are many hon. Members who still wish to contribute, and, therefore, I am not able to develop my argument as I would wish. However, I shall attempt to summarise the point that I am trying to make.
If market forces are allowed to operate, we can go a long way towards producing the extra energy that we need through stimulating alternative sources of supply. As the price of energy rises the incentive will exist for the more rational use of energy, for the better utilisation of energy in industry, for more efficent processes of production and for the more efficient use of energy throughout the system.
Although the Government must not intervene and prevent the normal and natural evolution of the market place from solving our problems, they have a rôle to play that they are not playing at the moment—namely, to remove the disincentives and restrictions so that we may have a more rational use of energy. There are many areas in which the Government should take action to create the right economic climate and the right incentives so as to get the problems solved. They will not do so by imposing controls or restrictions.
We shall not solve the energy problem unless we can remove some of the monopoly powers that are now inhibiting the efficient use of our energy. We shall create an energy gap only if we do not remove them. The electricity supply industry is a monopoly that has proved a very powerful disincentive for the more efficient production and conversion of energy. The coal industry, because it is a State monopoly, has been a disincentive for more efficient productivity in the industry. The processes of coal technology have not gone ahead as fast as I believe they would have done if the industry were not a State monopoly.
347 I believe that the gas State monopoly is acting against the best long-term interests of a more rational use of our energy. It will help to create an energy gap in future unless we get it right. It is a controversial subject to be raised, especially by a Conservative Member, but I believe that gas is too cheap. The fact that it is being flared in the North Sea is evidence that it is under-priced. At the moment it is not economic to pipe it all inshore. It is not being sold at the world market price. The gas that we are now getting from the Frigg field could be sold at a higher price in the European market.
The return on the capital of the gas industry is quite inadequate. If the industry were not a State monopoly but were operating in the same climate as that in which the oil companies have to operate, I am sure that gas would be priced at a level that would build up the reserves that will be required to develop more high-cost gas in future from the more expensive fields.
I fear that the consumer is being fooled and tricked into believing that gas is cheap and plentiful. He is falling into the same trap as the consumer of electricity who was encouraged to install all-electric space heating in the 1960s. The more we develop the domestic market for gas on the assumption that it is cheap and plentiful, the more the consumer will find in 10 years that that is not so and he will feel cheated.
Investment in the provision of and more rational use of energy can be proved cost effective if market forces are allowed to operate. I believe that there will be a gap and a crisis only if we mismanage our own affairs, prevent realistic pricing and do not provide incentives for conservation, substitution and innovation.
Therefore, we need less Government intervention and a greater opportunity over the long term for the market forces of supply and demand to go a long way to solving these problems.
§ 8.2 p.m.
§ Mr. Albert Roberts (Normanton)
I am pleased that this debate is taking place. My intervention will be brief, because I want to deal with something which is germane to my constituency.
348 I agree with the hon. Member for Bridgwater (Mr. King) that we should have more debates on energy.
My right hon. Friend the Secretary of State will recall that my opinion is that the position that he holds is the most important in the Cabinet, because without energy life stops. That is one of the great problems which leads us to make speeches some of which are pessimistic while others are sanguine. I agree with speeches which have been on the light side, because there is no fuel crisis at present.
What worries miners is the stocking of coal. I am a great believer in supporting the mining industry. I belong to it, and I believe that more could be done for it.
My right hon. Friend referred to the Bullock Report. He had great hopes about that report. It is for him to get the National Union of Mineworkers and the National Coal Board interested and to sort something out.
I am alarmed about the fall in deep-mined coal production which has taken place during the last two or three years. Miners want wages and conditions commensurate with the job that they do. Reference was made to recruitment. If we offer the right conditions and guarantees, we can get young men to go into the mines. My hon. Friend the Member for Pontefract and Castleford (Mr. Harper) and I, if we were young men, would not hesitate, if given the wages commensurate with the job and conditions, to go into the mines again. Unfortunately, we were in the mines at the worst possible time in the 1920s and 1930s. However, we understand the industry.
I take a keen interest in the mining industry because I am local born and homespun, I am concerned about the wellbeing of the industry. I am not afraid to criticise either the NUM or the NCB. Criticism can be levelled at both sides. Therefore, I ask my right hon. Friend to get both sides together to see whether something can be worked out for the good of the industry. There will always be mining Members who support the industry. The Minister knows that we are anxious for its well-being.
349 Despite increasing demand, there are coal reserves in this country for at least 500 or 600 years. But, in the meantime, why should not millions of pounds be spent on more research? I am referring to the money which has been expended on nuclear energy. I should like to know how much has been spent on research into nuclear eneregy since 1940. I have heard many forecasts over 25 years— indeed, my right hon. Friend has made forecasts—but many of them have not come true. I think that at the end of the day we shall still be dependent in large measure on coal. Electricity generation is obtained as to 70 per cent. from coal. It has been at that figure for between 10 and 20 years. I suggest that it will probably continue at that rate. If oil or natural gas takes up the slack, I have no objection. For example, I hope that there will be more research into gasification in the near future.
I turn now to Drax B. My right hon. Friend must understand that I am not concerned whether the plant is built in the North-East or the North-West. However, we must understand that it will take eight years to construct when we eventually make a start. By that time many of our conventional power stations will be inefficient. I agree with what the Secretary of State said about this matter. However, I disagree with the Chairman of the CEGB who said that there will be no need for it. I suggest that there will be a need for it within the next few years. I am sure that Drax B should be started in the near future. It will provide employment, and that is what concerns me in those areas in need of work.
There is controversy between certain or my hon. Friends whether Drax B should be constructed in the North-East or the North-West. That does not concern me. I am concerned that coal will be produced at Selby within four to five years. Therefore, it is incumbent that Drax B should be well on the way to take it. If it is on the spot, it will provide the efficiency that we want and that the industry needs.
§ Mr. Joseph Dean (Leeds, West)
My hon. Friend has touched on the very thorny subject of Drax B. As an ex-employee of the CEGB, turbine division, I am not aware that this is a North-East versus North-West battle. The point 350 expressed by some is that if the order for Drax B is to be placed, it should be beneficial to the industry as a whole, not just to one sector located in the North-East. That is the argument. It is not a battle between the North-East and the North-West.
§ Mr. Roberts
I accept what my hon. Friend said. We are concerned only about the efficiency and benefit of Drax B.
I am coming to the point which is germane to my constituency—opencast coal. The chairman of the NCB said that he wanted an extra 5 million tons of coal. The late Sir Albert Braithwaite helped to get opencast mining going some years ago. At that time opencast mining was in private hands and restoration was very bad through lack of experience. Opencast mining has been going on in my constituency for well over 30 years. Now Sir Derek Ezra is asking for another 5 million tons of coal. We have been living with opencast mining for more than 30 years.
I must point out on behalf of the Opencast Executive that its restoration work is first class. Many farms have benefited tremendously, while some farmers have been given compensation and gone on three or four years' holiday. There has been good restoration of farms and new hedging has been provided. That used not to be the case and it has happened in only the last 10 to 15 years.
I now come to the important point, and I ask the Secretary of State to take note. If I want to emphasise the point in the way in which it should be emphasised, I must say that my constituents are bloody sick of opencast mining and they are being threatened with it for the next 10 to 15 years. I can give a good reason for opencast mining being stopped in some areas. I have lived with opencast mining for more than half my life.
There are now threats to open four or five more sites in my constituency or in areas contiguous to it. The Leeds City Council and the West Yorkshire Metropolitan Council will offer strong opposition. Temple Newsan, the home of the Wood family, has been in the hands of the National Coal Board for a number of years and there has been opencast mining there since 1940. It has 351 been mined several times, and now the National Coal Board is returning to the same area for the fourth time and going still deeper. In the Yorkshire Post there was a huge picture recently called "The Rape of Temple Newsan". This has continued for 30 to 40 years.
Why should the coal all be taken out now? It can wait for another 30 to 60 years. By then we may have gasification. There is a campaign now going in in my constituency about opencast mining. People will object to it and obstruct it. Opencast mining reaches almost to the houses, and those sites are open for at least five to six years. Many retired people live in the area, and they will suffer from noise and dust if open cast sites are opened up. I agree that the executive responsible for opencast mining has stopped night working, but the muck and dust remains, and we have suffered from this since almost 1940. We are now threatened with the same problem for the next 30 years.
The Act dealing with opencast mining states that those responsible must consider the flora and fauna, features and buildings. In the area which we refer to as the Swillington and Methley there are many rare plants and birds. The ecology of that area is extremely important. The area is also important for educational purposes in the Leeds and Wakefield district. If those points are taken into consideration, we must decide that there should be no opencast mining at all. The Secretary of State has said that in dealing with coal and energy we are dealing with people. That is exactly the point.
The coal will not be destroyed. It can wait. We should not use all the coal in one generation. Let posterity have a little of the noise and dust. If we wait for another 30 years there may be gasification. I am not totally opposed to opencast mining provided that the area is convenient. However, the Minister must take more interest in the matter. He must be selective, give more support and listen to the pleas of those people who are threatened with additional opencast sites near their homes.
I have been obliged to mention the subject on behalf of my constituents and other people living close by because a 352 tremendous campaign is now being built up about opencast mining. It may lead to some rather difficult scenes. I hope that that will not happen. However, I also hope that my plea to the Minister tonight has done something to counteract the force of the Opencast Executive.
§ 8.15 p.m.
§ Mr. David Penhaligon (Truro)
Unfortunately, the hon. Member for Hackney, South and Shoreditch (Mr. Brown) has now left the Chamber. He made one of the most interesting comments when he said that 25 years ago, when he was a technical teacher, he made up his mind about nuclear power and that he had seen nothing since to make him change it.
I can well imagine that someone interested in science and technology would, 25 years ago, have envisaged that nuclear power was the be-all and end-all for the world energy problems. It appeared to offer limitless energy on tap. It seemed to be clean and it did not involve mining. However, that was 25 years ago, and the problems that existed then largely still exist. Quite honestly, there has been little or no progress. The problems have not been mentioned on one occasion in the whole debate. There seems to be an enormous confidence that the next 25 years of technology in nuclear power will solve the problem that we have failed to solve during the last 25 years. I do not share that optimism.
There are some questions that I should like to put to the Minister. While the Windscale inquiry is continuing, are we still importing the Japanese rubbish? If the Windscale inquiry says "No" to reprocessing, what shall we do with the rubbish? If the answer is that we shall keep it, does that mean that the agreement we have made with the Japanese— which we are not allowed to see—means that the United Kingdom is prepared to become the nuclear dump of much of the Western world?
What progress has been made on glassification? I have been assured on a number of occasions by many people that this is a simple problem. We are told that the waste from nuclear power stations can successfully be absorbed into glass. It was done 10 years ago, but nobody has succeeded to my knowledge in doing it on a commercial basis. What 353 has happened during the last 10 years? I have asked that question in several recent debates, so could the Minister say what progress has been made since my last opportunity of asking it?
What progress has been made with the heat transfer experiments in Cornwall? One of the worrying aspects of the energy business is that even if the waste can be put into containers and put down holes, there has been so little research in the last 25 years that nobody knows what effect the heat transfer from the containers will have on the characteristics of the local rock strata. I understand that experiments are taking place in Cornwall, so will the Minister say what progress has been made? Even if putting the waste under granite is a final solution and, even if the heat transfer is satisfactory, what progress has been made in finding a site in which to dump it? In the final analysis, that is obviously what is required.
I was interested to hear the Minister of State observe that he could see how the Windscale inquiry could in any way affect fast breeder reactors. He thought that they were totally separate issues. I stand to be corrected, but I cannot accept that. We are told that plutonium will come from these reactors. However, fast breeder reactors are misnamed. They should be called slow breeder reactors, because although they breed plutonium it takes 31 years to double the quantity. That means that if one has enough plutonium for one reactor and if one does no reprocessing it will take 31 years to have enough for two reactors and 62 years to have enough for four reactors. If the Windscale inquiry says "No" to reprocessing, that in reality will also make the decision on fast breeder reactors. That might not be a bad thing.
Proliferation is a word that has escaped from the lips of one or two hon. Members today. I cannot say that they gave it much credence, but it did escape. We understand that for a fast breeder reactor one needs 1.1 tons of plutonium. I have received assurances that a catalogue will be kept on plutonium in future and a guarantee that the catalogue will be accurate within 1 per cent. However, 1 per cent. is 22 1b of plutonium, which is enough to make three bombs at one go, because we under- 354 stand that 7 lb of plutonium is required for one bomb.
If this country and the Western world go for the fast breeder reactor as the solution to our energy problems, there will no logical argument to deny the lessadvanced nations their share of that technology. It appears that everyone agrees that we shall have to share the oil, so how can we not share the technology of fast breeder reactors if we are using them for ourselves? If this comes about during my lifetime, virtually every nation in the world will have some form of sophisticated nuclear explosive device at its disposal.
Before the House laughs off this suggestion, might I remind hon. Members that an American company recently admitted that it had lost 200 lb. of enriched uranium material. It hopes that the material leaked out of pipes, but it is not sure. Hon. Members should consider how much more could be lost in the world with the amounts of nuclear power that have been mentioned in this debate.
§ Mr. Peter Hardy (Rother Valley)
The hon. Gentleman suggests that the House may be laughing, but this is a serious matter and he seems to make the same serious point every time he speaks on this subject. If he is sincere, why is this topic not included in the Lib-Lab pact?
§ Mr. Penhaligon
We investigated the possibility but learned that we were outnumbered by about 622 to 13. It appeared that, if it came to the crunch, the Government could look elsewhere for support and rather more votes than we could offer.
§ Mr. Forman
Is the hon. Gentleman aware that some of us share his deep and genuine concern about proliferation and have spoken about it in public on many occasions? I echo the point made by the hon. Member for Rother Valley (Mr. Hardy). The Liberal Party should have attached this as one of the many conditions to the Lib-Lab pact.
§ Mr. Penhaligon
I shall investigate the possibility. We have asked at least for money to be provided so that the opposition argument at the Windscale inquiry and those presenting alternative arguments are not short of cash. No doubt this request is going through the system.
355 I did not want to talk too much about nuclear energy. My views on the subject are fairly well known. I want to concentrate on conservation. It was said earlier that we were doing a good job, and I am looking forward to hearing the Minister outline the great progress that has been made in recent years. All we have done is to change a few building regulations. On the inside wall of double cavity houses there must now be grey bricks instead of the white bricks that most people use or the red bricks that we use in Cornwall.
We have improved the insulation characteristics of wall materials, there has been a lot of money spent on advertising and the cost of fuel has been greatly increased, but no thought has been given to an insulation programme. With 1½ million unemployed, such a programme offers the best labour-intensive public works that we could provide.
Many houses in my constituency need insulation—not sophisticated work, but making the windows fit and putting in simple loft insulations. For many properties it is that crude and simple, but it could make a huge contribution towards solving many of our problems.
I was disappointed that so little emphasis was put on fuel economy in the recent White Paper on transport. I may be about to upset a substantial number of hon. Members with what I have to say. If I take a train from my home to the House, someone provides me with a ticket that costs £33. If I drive to London and back, the Government give me £72 for doing so. In such circumstances it has been tempting, when faced with a major repair bill, to drive to London and back, and many people are tempted to drive their cars for miles on journeys that are not really necessary.
Some hon. Members make far longer trips than I do. If my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond) had a bridge at the end of his journey from London he could solve the Liberal Party's financial problems in two or three trips. Our rate of 12 pence a mile is tied to a Civil Service rate and we must assume that many civil servants use their cars on the same basis. I know from my experience in industry how such schemes work. Great pressure is applied by the employee to be allowed 356 to use his own car rather than go by public transport becase he knows that mileage is a second source of money. The 12 pence per mile cannot be justified. There is no justification for anything more than a first-class rail fare to the House for hon. Members. If such a policy were applied throughout the country it would have two substantial effects.
§ Mr. Skeet
The hon. Gentleman's argument is totally unjustified. A large part of the mileage allowance covers depreciation. In addition, if one buys a car costing £1,700 one may have to pay all the energy that goes into it, that is one has finished paying for it. It is a nonsense for the hon. Gentleman to refer solely to running costs.
§ Mr. Penhaligon
If the hon. Gentleman chooses to drive a car costing £4,000 with all the energy that does into it, that is his problem. I drive a 10-year-old Ford Cortina that has done 136,000 miles. If any hon. Member chooses to have a better car, that is his decision and I am not criticising him.
§ Mr. J. Grimond (Orkney and Shetland)
My hon. Friend has made the interesting suggestion that perhaps I could live on what I could get by driving to London from my constituency. In reply to the intervention of the hon. Member for Bedford (Mr. Skeet), would my hon. Friend not agree that hon. Members buy cars regardless of whether they are going to use them to drive to the House?
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Order. I must draw attention to the fact that a lot of energy is being expended on a subject that is not strictly in accordance with the terms of the debate.
§ Mr. Penhaligon
I am suggesting a way of saving energy, and I am the first hon. Member to make such a proposal in the debate. A great deal of driving is done just to make a profit out of mileage expenses. Every hon. Member knows that—although it is obvious that no one will have the courage to admit it.
What progress has been made with the heat pump? That is relevant because 357 there are two basic kinds of energy— high-grade energy which provides light and low-grade energy which provides warmth. Low-grade energy is wasted from our power stations. It becomes little more than warm air. Saving that could make a major contribution towards putting off the evil day of the energy shortage, if that day arrives. Saving that energy would require the CEGB to build smaller power stations near where people live. It is worth remembering that two-thirds of the fuel used in our power stations is wasted because of the inefficiency of the operation.
If the basic thermo-dynamic law of the efficiency of engines is correct, there is no way in which we can further increase that efficiency. The development of that type of energy, together with tidal and wind power, must be worth mere than £10 million. I remember opposing £400 million being allocated for the Windscale reprocessing equipment. The sum of £10 million is chickenfeed compared with that. I hope that the Minister will say that that sum will be reviewed as a result of the debate. If he does, it will have been worth while.
§ 8.30 p.m.
§ Mr. Gordon Wilson (Dundee, East)
The energy crisis will come. We have learned that from the debate. Today we are dealing with the situation that will arise when oil doubles in price in 10 years' time. The argument is about how to deal with that event. The age of cheap energy will end. No one can see far into the future. Five or six years ago people argued about whether we would ever reach the five-dollar barrel. We have now gone well past that mark.
My worry is that if we do not prepare for the scarcity that will occur and that will generate high prices, we may end up with severe economic troubles. The last three or four years, since the oil prices went up, have been traumatic. We are facing problems of unemployment and inflation which have arisen partly from that increase in prices. One of our worries is that the rapidly rising energy prices could increase inflation, exacerbate balance of payments problems, produce negative growth rates and increase unemployment. We should attempt to avoid that.
358 We can expect prices for energy to grow over the years in real terms, but our economic systems will suffer from severe stress if there is a sharp increase in the price of oil. We would find a quick change difficult to take without causing economic and social stresses.
One could argue that there is plenty of time and that it is early days yet. One could say that there is plenty of energy. No one doubts that. The trouble is that we may not obtain the necessary energy soon enough. Even if one invests thousands of millions of pounds throughout the world trying to obtain energy which one knows is there one may fail to get it because of the time involved.
We are trying to find ways of dealing with that problem in advance in order to cushion the shock. The United States is particularly worried about it, although it neglects to stress some of the national security situations that arise in connection with its external sources of oil— Saudi Arabia, for instance.
If the United Kingdom is wealthy in energy, as the Under-Secretary of State said at the NUM conference on Friday, Scotland is super-abundant. We have a population of 5 million people. The total of between 3,000 million and 4,500 million tons of possible reserves in the North Sea would last for between 300 and 450 years, based upon Scotland's current 10 million tons a year consumption. However, we must deal with the real situation. The oil is coming out at a rate of five times our consumption and it will soon be 10 times and possibly 15 times our consumption. Nevertheless, it puts the amount of oil into perspective in terms of our population, and also in relation to coal, of which we have some 200 years' supply.
I have never denied that, compared with some sources of coal in England, Scottish coal is relatively expensive, but in the European league Scottish coal is very competitive. We have a resource of coal that will be very valuable as and when the world price of oil goes up. All things are relative. English coal is extremely expensive compared with some American coals, or with South African coal. I understand that coal could be imported into England from South Africa at a price much cheaper than that at which 359 it can be produced in England. As to natural gas, there are ample supplies for a very long period to come.
When doing some research I was interested to notice the different profile in Scotland, in relation to the production of energy, as compared with that in England. A very dramatic difference in electricity generation has emerged over the last year. If we combine the latest figures for both the South of Scotland Electricity Board and the North of Scotland Hydro-Electric Board, we find that 49.9 per cent. of the production is coal-fired, 8 per cent. is oil-fired, and hydroelectric power contributes 19.7 per cent. Nuclear power contributes up to 19 per cent. and there is a minor element of gas turbine power amounting to 3.1 per cent.
This is quite a different pattern from the reliance upon coal for electricity generation in England, where the figure is between 70 per cent. and 75 per cent. It shows the different profile in electricity generation which is to be found in Scotland. I shall deal later on with other types of renewable energy in which Scotland is extremely well placed, but the one type that does not really suit our winter climate and our short days is solar energy. We would probably accept that, apart from its limited water heating purposes, we must discount solar energy at an early stage.
It has been noted, from what the Secretary of State said, that Scotland is unlikely to benefit from the oil revenues that have been generated from my country. I am sure that the Scottish people will take note of that threat. It would be rather interesting to find out whether the Minister of State still believes as he was once quoted as saying that a proportion of the oil revenues should be made available to the Scottish Assembly. I wonder whether his elevation to his present important position has inclined him to change his views. Some clarification might be of interest to the House.
But whether we approach the production profile of the North Sea from a Scottish basis or a United Kingdom basis, it is high time that we had a much more active oil depletion policy. I am worried that the Government do not seem to be taking any action at all to prevent over-production, which could 360 cause disruption in the future. It is far better to have a level plateau for a longer period of time than to have a dash up to about 140 million tons production per year and then to drop off afterwards. It must be accepted that if we retain a higher proportion of oil under the ground it will still be there at a time when oil itself will increase in value, and that would make it a much more bankable commodity.
On the choice of nuclear technology, I was interested to see the way in which the United Kingdom has oscillated—if I may use that word—from system to system. Very few countries have indulged themselves in the luxury of darting from one system of nuclear reactor to another. I notice—here I am talking about the type of preference of each country and not just the type that it produces—that Canada has preferred at different stages two, France has three, Germany two, and the United Kingdom four. The United Kingdom is now considering the light water reactor, which would make five. The United States, with all its resources, has preferred only the boiling water reactor and the pre-surised light water reactor.
At some stage one has to say that enough is enough. How much money is being wasted in unnecessary research? What attempt is being made to produce a workable nuclear system, only to have it abandoned when it is coming into effect?
The same can be said about the advanced gas cooled reactor. I know that there were serious engineering problems which kept it from coming into effect, but I am informed by the South of Scotland Electricity Board that it has been surprised by the unexpectedly high contribution made by Hunterston B AGR station, which is expected to increase its capacity by the end of the year. In that Board's area it is estimated that nuclear power will contribute one-third of the requirements by the end of 1977. Therefore, it would appear that after a very slow start the AGR has begun to make good.
The same argument could perhaps be applied to the breeder reactor. I know that there are many arguments against the plutonium cycle and that there are worries about its safety. But one person observed to me "We now have a workable prototype. It is just at this time that 361 a British Government will seek to suspend operations on it. It will say that it has proved to be workable and therefore there is no point in going any further." We are now hearing these arguments for the abandonment of the fast breeder reactor. I am not suggesting that it is an argument that the present Government in particular have adopted, but the track record of United Kingdom Governments over a period of time is that they have gone into too many technologies and abandoned them perhaps just at the point when the investment has begun to come good.
I should like to tell the Minister what I wish to see in the Scottish context. There is no rush, because of the slow pick-up in the demand for power—it is beginning to accelerate, but it is still quite slow—for an immediate programme of power stations. I should like to see an investigation of the possibilities of a pump storage station at Craigroyston, on Loch Lomond, which is being considered for hydro-electricity generation to provide the peak load to the high-base load now being produced by the AGR stations of the SSEB.
Before there is any decision on Torness, which was intended to be an SGHW station, it would be wise to see whether coal might be the more suitable fuel, in view of the recent large discoveries in the Musselburgh area.
§ Dr. J. Dickson Mabon
I do not follow the hon. Gentleman's arguments. He complains that money has been spent on different projects which have not come to fruition, and about the diverse numbers of different systems. Which am I to take as the serious argument? Does the hon. Gentleman want us to go ahead with the fast reactor because we have spent a great deal of money on it, or to invest in the AGR system because, as he says, it is successful, or to have the SGHW? I do not understand.
§ Mr. Wilson
If I am given time to answer, I shall. If a nuclear power station is required in theSSEB area, I should prefer that the SGHW reactor be not used and the AGR be chosen instead. But before that decision is taken, when the choice is made between nuclear and some other means for the Torness station, which was to have been the next power 362 station on line in Scotland, coal should be considered.
I regard the fast reactor as still being experimental. So far as I recall, the first prototype has been remarkably successful. When I recently visited Washington the Americans were surprised to hear just how successful it had been at Dounreay. There was not much competition from Germans in the party to put forward their own model of fast breeder reactor as having reached the same stage of development as the Dounreay reactor. As it is experimental, my wish would be that a commercial fast reactor be considered, but on a European basis.
It is ridiculous that three separate experiments in fast breeder technology are being conducted by members of the EEC. If the price is the abandonment of the JET scheme at Culham—I am inclined to think that the fusion technology is so much a thing of the future that it is almost pie in the sky—that is one thing that could be put in the balance in order to obtain common agreement on shared investment in the commercial fast reactor.
The Flowers Commission Report suggested, on page 120:There are, however, other safety measures that can be resolved only in the design process itself and thus the design and construction of a first FBR on a commercial scale is an important step in assessing whether the required level of safety can be achieved.I turn now to conservation. We have been concentrating unduly on the supply side in the energy industry. We have been delaying taking a look at the prospects of change. If one good thing came out of President Carter's programme it was the incentives by way of tax allowances and grants which he intended to make available in the industrial and domestic sectors for a large-scale policy of insulation. It is ridiculous that, in Scotland, if one puts in double glazing or improves one's house one becomes liable to an increase in gross annual value. I know that that does not immediately apply in England, but assessors in many areas in Scotland are entitled to, and do, place increments on properties which have been improved to save fuel. In America they are approaching the matter from the other side. They are prepared to assist domestic consumers in saving energy.
§ Mr. Forman
Perhaps I could amplify the hon. Gentleman's remarks by way of brief criticism of the Government. When I asked on 18th May whether the Secretary of State for the Environment would list the various forms and amounts of financial assistance so far provided by his Department towards the cost of insulating and draught-proofing local authority dwellings and any private dwellings, referring to the private sector, the Minister said:Prior to the issue of Circular 38/77, which abolished the need to obtain the consent of the Secretary of State to the making of such grants, consent was given in three cases, covering 10 dwellings.That is a pitiful record.
§ Mr. Wilson
It requires no further criticism from me, and I certainly agree with the hon. Gentleman. It compares badly with President Carter's intention to cover 90 per cent. of American dwellings.
One interesting idea that the Americans came up with was that the electricity companies should be enabled to do much of the improvement work and to collect by instalments from the consumers thereafter. That is an excellent idea—save now and pay later. It is a pity that our electricity boards seem far too keen to sell expensive current to help people to conserve it.
My constituents face many problems arising from the insulation of houses, particularly modern houses, which give rise to condensation. I am told often enough that this is due to a lack of ventilation, but when the advice of my local house factor is to burn electric fires during the day when people are out and leave the windows open, words fail me—particularly when he said that he could make no comment on whether people could afford to follow such a policy but that it would help to keep out condensation. If we have reached that stage, perhaps some of the vast resources made available for improvements in technology ought to be devoted to the simple purpose of making the insides of the houses much more comfortable for our constituents. At the same time we would save money. If we follow that precept we shall be in a far stronger position.
§ Several Hon. Members rose—
§ Mr. Deputy Speaker
Order. As I understand it, only 20 minutes remain 364 before the Front Bench speeches begin. Perhaps the time could be split equitably between the two sides of the House.
§ 8.50 p.m.
§ Dr. Colin Phipps (Dudley, West)
Most speakers today have been more or less convinced that the world is abundantly supplied with energy. I believe that this is a true statement of the facts. Unfortunately we are talking about finite sources of energy. There is no system of market forces or Government intervention which will produce more of a finite source when that source is exhausted.
I have worked for pretty well all of my working life in the energy industry, particularly within that part of it dealing with extraction of finite fossil fuels from the earth. I refer the House, as usual, to my interest on this matter, which are on the Register.
I can remember even in 1966, with respect to oil and gas, writing articles pointing out that just as the United States had run out of new sources of oil in 1963, sufficient to replace the amount of oil it was using —its discoveries were not as large us its internal domestic use—so this would happen sooner or later in the rest of the world. It was thought that this would happen about 1990. This was a figure known in 1966. I can remember talking about it then, and I have made umpteen speeches in the House since pointing this out. I am glad that now we are beginning to have debates upon this problem.
The central problem of finite resources is one of cost. Unless we address ourselves to that it will be extremely difficult for us to solve the overall problem. I shall deal specifically with the costs of oil and gas. Like other hon. Members I have recently visited the United States and tried to press this point strongly in Washington. There seems to be a general idea that the price of oil is something controlled exclusively by Saudi Arabia. The truth is that the price of oil is controlled both by the greatest producer, Saudi Arabia, and by the greatest consumer, the United Stales. The United States uses an enormous quantity of the world's oil.
The fascinating thing about world oil prices is that outside the United States, on the international market, oil is $14 a barrel, give or take, whereas the average price of oil produced in the United States 365 is about $7 a barrel. The rest of the world is subsidising the American consumer, because as Jong as the price of indigenously-produced oil in the United States stands at between $5 and $8 a barrel as opposed to $14 a barrel on the international market, the United States will consume more oil than it otherwise would. The United States is sucking in imports, which is helping to keep up the world price. Not only that, because it has relatively cheap oil, the greatest industrial nation, the richest nation in the world, is not putting the kind of money and investment into finding new sources of energy that it ought to be putting there. As a result we are suffering.
In a diabolical way, the United States, because it has cheap internal oil, can produce some manufactured goods more cheaply than we can and thus compete with us in international markets. This is bad enough for us. For the Third world the situation is tragic. The gas-guzzling United States motorist is effectively maintaining a high price of oil in the Third world and the United States is effectively producing goods at a cheap price which the Third World countries are purchasing. They are caught in a pincer. Unless we in the West do something to stop this exploitation of the world oil market by the United States that has taken place since 1973, I fear that all predictions about our coming to a world economic crisis, with wars and so on, are only too likely to be fulfilled.
The more the United States demands, the higher the world price will go. This will be extremely dangerous for the world as a whole. It may be argued that this is a good thing for the United Kingdom because we shall have an oil surplus and therefore the higher the price for oil, the better for us. But I think that that is a mistaken policy for us to follow.
World oil prices are likely to be at a level sufficient to provide a decent return from the North Sea. The more the United States pulls in, the faster our 366 resources will be depleted, along with the resources of the rest of the world— which is a very bad thing—and the more dangerous becomes our way of life in terms of the pressures which will be developing in the Third World.
I suggest that in this, the central problem of the world economy, Britain is in a remarkably fine position to give some moral leadership. We have a vested interest in a high price for oil and therefore we are in a unique position to say that the price should not go higher.
How shall we bring pressure to bear on the United States to stop it guzzling gas in this way? I am sure that my right hon. Friend the Minister of State has considered this aspect of our policy. We have to consider Britain, if not becoming a member of OPEC, at any rate joining OPEC in considering how to insist that the United States uses less oil. It is only by the producing nations—of which we shall become an important and significant member—getting together and insisting to the United States that it must not continue to use the world's oil at the current rate that we shall achieve three objectives. These are, first, the reduction of consumption in the United States; secondly, keeping the price of oil at a reasonable level for the Third World; and, thirdly, getting the great industrial and economic machine of the United States to put the necessary resources into finding other suitable renewable sources of energy which can be used not only by the United States but for the benefit of the whole world.
This seems to be one area where Britain's moral leadership in tackling the central problem facing the world today could be of utmost importance. We have a unique position, and I hope that we shall use it.
§ 8.59 p.m.
§ Mr. Patrick McNair-Wilson (New Forest)
Running through our debate has been a worrying complacency by some hon. Members who assume that the world is full of energy. That may be so, but the energy is not evenly spread throughout the world and in many cases it is in areas of great political instability. The Secretary of State told us that this country is almost half self-sufficient in oil. The other half of our oil comes almost entirely from the Arabian Gulf, however.
367 The storm clouds are once again gathering in the Middle East. I can speak with some authority on that part of the world, since I have been trading there in a business capacity for over 20 years. Only two years ago I had a business association with OAPEC, the 10 Arab oil producers. I know something of how they feel. I can assure the House that they will use their position of power, in energy terms, in any storm that may ultimately break out in that area. They are well aware of the strength of their position. When people happily talk about the fact that the world is full of energy they ought to bear in mind that political considerations could well overturn any complacency that might flow from that view.
Those oil producers will not be satisfied merely with Mr. Carter or any Government raising the prices of energy in their own countries by taxation in order to have conservation. They will want to see that energy conserved by themselves so that the producers have the benefit of any increase in price that may take place. They will not be satisfied, as they see now, with Governments throughout the Western world putting on taxes in order to cut down consumption.
The point that I am making is that in energy terms, particularly in oil terms, the producers still have an enormously strong position, and the Saudis have a dominant position, with regard to the United States economy.
§ Mr. McNair-Wilson
Yes, I agree with that. Having pointed out the dangers that exist, I want to move on to argue that we cannot rest on our laurels and say "We have masses of oil and gas, the whole thing will find its own market level and everything will be happy ". It will not be like that, and we should be crazy to think in those terms.
I urgently want to address my remarks to nuclear power, because that is an essential ingredient in our energy equation. We have coal in abundance. Everyone in the House knows my views about the coal 368 industry. I am a total supporter of it. However, in spite of the excellent news given us today, the nuclear industry has attracted so much criticism and anxiety in the past as to make people wonder whether we are committed as a nation to nuclear power. We are certainly not in the same position as the French, who do not have a great coal industry. Therefore, we shall not be in that league in nuclear terms.
But I very much hope that we are not going to drag our feet. We were told that by the time that the new AGR stations are in, 20 per cent. will be the figure of nuclear generation. I very much hope that we can resolve this design, this systems option, and go AGR. I make my own plea here. Everyone else is entitled to his own view. It is British technology. We know how to do it. It would be crazy to throw that down the drain. Those who talk about exporting are throwing a red herring across our path. I want to go for a system that we understand and for which we have the technology to make work.
I want to put in a plea for the fast breeder. I know that the campaign for nuclear disarmament could get involved in this campaign over all again. We shall not stop the spread of nuclear technology by burying our heads in the sand. The fast breeder reactor has a number of advantages. It uses the relatively plentiful uranium 238 and would thereby stretch out uranium reserves by 50 times. Let us not forget that uranium is a finite resource. Many of the places where uranium exists are in those unstable areas to which I referred before. I would very much like to see the fast breeder given sanction.
I turn to Windscale. This is where we could use British technology in terms of getting overseas currency. We have a lead in reprocessing, but President Carter's decision to limit plutonium and to start exporting in rich uranium will create a situation that could damage that industry. I very much hope that the Secretary of State and the Prime Minister, along with others who meet the American Administration, will point out that Wind-scale is a world leader, which could be of benefit not only to this country but to many others.
We must also remember that in 25 years of nuclear power there has never 369 been a fatality. That is more than one can say about almost any other energy system in this country.
With those words, which I kept brief because I want other hon. Members to have a chance to speak, please let us not be complacent. Let us push on with what we know and understand. Nuclear technology can be an absolute bridge to the future.
§ 9.5 p.m.
§ Mr. Tam Dalyell (West Lothian)
I rise to speak in truncated and question form.
What have the Government learned from the Ekofisk blow-out and the Red Adair team?
My second question is to the Secretary of State. What is being done both by national Governments and by the Council of Ministers in relation to the safety of transport of nuclear materials? This is not the occasion to go into the detail about the so-called Plumbat affair, involving the loss of 3 tons of uranium oxide. But various questions arise out of it. For example, when my right hon. Friend came to Paris first, he said that this had happened before Britain became a member of the EEC. At a later stage, he said that the first thing that he did was to look to his files to see whether he had been told.
This is very legitimate. The question which arises out of it is twofold. First, in relation to the transport of not only uranium oxide but now plutonium, who has the responsibility? Is it national Governments or Euratom and the Commission? There is a grey area which should be defined.
The second matter which concerns very many of us is that it now appears that, when this happened, Ministers in the various countries of the Community were not told. My right hon. Friend was not told. I thought that there was a Euratom obligation to tell him. Signor Colombo in Italy says that he was not told. In fact, it is impossible to find a Minister who was told. Has this situation changed?
My next question is truncated to the point of abrasiveness. I hope that there will be an answer to my hon. Friend the Member for Hackney, South and Shore-ditch (Mr. Brown) about JET. To put it in a sharper form than I had intended, it looks to many of us as though the 370 whole JET episode illustrates a dangerous tendency towards a generalised blackmail in the Community. It is impossible to operate a Community energy policy on a basis of tit for tat.
Together with this question, I ask about the obligations to the JRC employees. There are some of us who think that every decision should be made on its merits and not interlinked with other decisions.
Then I put a rather less abrasive question to my right hon. Friend the Minister of State. Does he think, in the light of the last six months, that a change in presidency on a six-monthly basis of a basically technical department is a sensible way to operate? One can understand the political changes, but is this the way to get the best kind of energy policy?
I ask my right hon. Friend also to say why he thinks that the efforts which the Secretary of State made towards open meetings failed. As a Member of the European Parliament, let me say sttaight away that many of my colleagues have a great deal more responsibility than my right hon. Friends on the Front Bench. But it would be interesting to hear their view of what I believe was a brave and good attempt at open government.
Finally, I ask two domestic questions. Do not the Front Bench think that the kind of speech that we heard from the hon. Member for Truro (Mr. Penhaligon) and the kind of propaganda that is poured out from do-good organisations is extremely damaging to the British nuclear industry? If I can put in a word of doubt, I am a little unhappy, as are some of my hon. Friends, about this system of having an inquiry. In theory, open government may be fine. But these inquiries are to find an excuse to make nuclear mountains out of molehills and to blow up all sorts of incidents to the disadvantage of a British industry which is going for exports. When I hear remarks about "Japanese rubbish", I know that that is the real rubbish which is so damaging to an industry with a safety record second to none. This is deeply resented by people in the industry whose technique is second to none.
On the issue of North Sea oil, I ask the Government to get some legal information as soon as possible about how much of the oil would belong to 371 a hypothetical separate Scottish State and how much would belong elsewhere. It is time that we had some information about that argument put in a legal fashion.
§ 9.11 p.m.
§ Mr. Hamish Gray (Ross and Cromarty)
I think that the last two speakers, my hon. Friend the Member for New Forest (Mr. McNair-Wilson) and the hon. Member for West Lothian (Mr. Dalyell), have illustrated just how easy it is to pack a great deal into a very few minutes' speaking time. I hope that those in charge of the affairs of this House will read Hansard very carefully and take the opportunity to note what those two hon. Members said.
We were perhaps a little disappointed with the speech of the Secretary of State. He spoke for 50 minutes and with his usual charm he made a very interesting speech on energy, but at the end of the day we were no wiser than we were at the beginning, and we got no indication of any decisions at all. Despite the support which the Secretary of State had from the right hon. Member for Ketter-ing (Sir G. de Freitas), his contribution was rather less than that which was expected from a Minister of the Crown in a Department as important as Energy, with so many issues of great international and national importance to be discussed and so many decisions to be taken. We were sorry that he decided to tiptoe through the issues rather than face up to them and give an indication of his Department's thinking.
My right hon. Friend the Member for Renfrewshire, East (Miss Harvie Anderson) spoke of Drax B. She came to the debate hoping to hear something firm about Government thinking, but the Secretary of State gave no indication of his thinking. He talked about Plowden, but gave no indication of the Government's reaction. On reactor choice, he outlined the various actions but gave no indication. He said even less about the fast breeder, and very little about alternative sources of energy.
There was one gem in his speech. He gave some conclusions about his Energy Commission. If this is the best we can get from the Secretary of State at the end of a 50-minute speech, it is just not 372 good enough. He should take a lesson from his hon. Friend the Member for West Lothian and make his remarks shorter but include something in them that is worth listening to.
I wish to consider a few of the problems facing Parliament and to look ahead to those that we have to tackle in planning and programming our energy requirements for the next two decades. Experts in every field point to the likelihood of an energy gap which will probably occur in the 1990s. While there are some voices advising us that such predictions are exaggerated and that such a gap may not even materialise, we as a responsible Opposition and the Government as a responsible Government should proceed on the basis that it may occur.
The Brown Book, which is virtually a bible to energy committees, tells us that proven oil resources have risen to a total of 1,300 million tons. That is an increase of 30 per cent. on the Brown Book predictions in 1975. But perhaps we should not go too much on those figures because to a certain extent they are book transactions. It is not oil that was not known about in certain areas, but with the exploitation it has become proven, and that may to some extent change the figure.
On the other hand, I do not think we can possibly go ahead without taking particular heed of the warning given to us by the Workshop on Alternative Energy Strategies. In its report of May 1977 it said that the West could face an energy crisis in 10 years' time. I also wish to refer to an OECD report of May 1977 in which it was stated that if the West were to pursue its present policies we could have an oil shortage as early as 1985.
Interesting arguments have been advanced from both sides of the House, some in support of that view and others disagreeing with it. It must be within the judgment of the Government of the day whether they place sufficient importance on such predictions.
What is an energy gap? What we mean by that term is an oil gap. Energy gaps in the past have been countered purely by an intensification of the exploitation and development of the oil resources of the world. In other words, oil has acted as a balancing fuel.
373 My hon. Friend the Member for New Forest in a good, short speech pointed out that the control of this sphere of activity in future is liable to lie in the Middle East. I remember a year ago last January visiting three Middle Eastern countries when I was part of a parliamentary group, including my hon. Friend the Member for New Forest, where these matters were brought home to us in real terms. One would start to talk to Middle Eastern oil Ministers about energy problems and oil considerations, but within a few moments we would find ourselves talking about the Palestinian problem, This impressed our group, and it is a matter which we must not overlook.
The immediate future, however holds no comparable alternative to oil as a source of energy. Coal and nuclear power would be the only readily available balancing fuels, and their exploitation will be slow and expensive. Long lead times are inevitable, and there is no evidence of a breakthrough—certainly nothing to compare with the discoveries of Middle Eastern oil or North Sea oil.
Oil is no longer cheap, and alternative sources which may replace it by the end of the century will ensure, by their own expensive creation, that the price of oil will continue to rise. There seems to be no way in which energy prices will fall for a very long time to come. Indeed, all the indications are that they may rise by as much as 50 per cent. in real terms in the next decade. This has led the OECD to recommend the substitution of coal and nuclear fission for oil wherever possible.
The effect of North Sea oil on our balance of payments is likely to be very large and could raise the value of our gross national product by as much as A per cent. between 1980 and 1985, or by a figure of £7½ billion in each year, which is the equivalent of several years of economic growth at current levels of performance and represents a substantial bonus—a bonus not only in real terms but in terms of time. It gives that little bit of leeway during which we can make up our minds on how to pursue alternative sources of energy.
We must not lose sight of the fact that these are short-term advantages, although the prospects seem bright with the further oil discoveries recently 374 announced by Mesa Petroleum near the Moray Firth. More recently Shell-Esso made a discovery in the new Fulmar Field north of the existing Auk Field. Indeed, the Shell-Esso discovery in the Fulmar field shows for the first time that oil has been found in the Jurassic sandstone in the central part of the North Sea. This could have significant implications for the future.
I would point out that The Times of 24th June this year, in describing this discovery said:oil companies would want to re-evaluatc previously unsuccessful work on Jurassic drillings in the light of the Fulmar find.This could make a difference to predictions about future oil reserves. Today's announcement by the Secretary of State that we are halfway towards self-sufficiency is welcomed whole-heartedly by the Opposition.
In the short time that is available to me in this debate I do not want to be led into any arguments about BNOC or the future of that corporation, or indeed about the progress that it has made so far. Suffice it to say that the fact that exploration and production in the North Sea has to such a large extent been achieved by the endeavours of private industry and by the investment of private capital should signify well for the future. As long as we can attract that capital from wherever it may come, the exploration of our resources in the North Sea can quickly be brought to fruition.
Production is likely to peak in the 1980s and decline thereafter. As we move into the 1990s an increasing proportion of our production is likely to come from marginal or near marginal fields, with a consequent lessening of the benefit to our economy.
The Government must guard against the temptation to have a spending bonanza for politically popular reasons. Although I agree entirely with what the Secretary of State said about re-industrialisation, our first two priorities in the spending of our oil revenues should be an adequate allocation of money for the research and development of alternative energy sources and the removal of this sector of energy planning from the political arena. I know that that is easier said than achieved.
375 Secondly, the reduction of the United Kingdom's net external indebtedness is of vital importance. There is little use in our reinvesting for the purposes of re-industrialisation if we have not already made provision for alternative sources of energy in the years ahead.
There is little purpose in reinvesting a great deal of money in our own country if at the same time we are not to reduce our overseas indebtedness. The second priority would, among others, help us to restore our national self-respect and self-confidence in the world while giving us a long-term foreign exchange benefit by reducing our debt service burden. It would reduce our public spending borrowing requirement and consequently reduce the level of domestic interest rates, thereby facilitating a substantial transfer of resources to private sector investment.
I wonder whether the Government have made any plans or have set a target for eliminating the cumulative balance of payments deficit. I wonder whether the Department of Energy has considered the implications of allowing the depletion of our oil resources to exceed the 110 million to 120 million tons per annum that is forecast by 1980. Alternatively, have the Government considered the possible effect of reducing that figure in the interests of conservation?
My hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who has studied these matters to a great extent and who is an authority in the House on conservation, has made some interesting comments on the subject. In the event of a decision to reduce depletion, it is imperative that where major investment has already been committed it should be allowed to develop its commercial potential. In other words, any decision to restrict depletion in any particular field should be advised at the outset, in fairness to those exploring for oil. Exploration costs are expensive but production costs are even greater.
Gas will continue to play a major part in providing an alternative fuel. Like oil, it is uncertain for how long we can depend on it in quantity. The oil gap leads us inevitably to consider all alternative sources of fuel. There may be potential in solar, wave and wind power, or geothermal methods. Alternative 376 sources are essential in the long term, but in the short and medium terms coal must have a large part to play. The lique-fication and gasification of a certain amount of coal production in future is being researched fully by the NCB. Such researches have already taken place in South Africa and have been undertaken by the IEA. The Coal Industry Bill, which is at present in another place, provides a limited amount of finance to proceed with research on that sort of work.
We should not forget that alternative sources of energy are not cheap by any standards. For example, tidal power would cost three to four times as much as nuclear power to develop. Wind power can be operated only at a restricted level, and the resources are relatively small.
It is not surprising that much of the debate has revolved around the whole question of the nuclear alternative. I find myself in sympathy with the hawks on this subject. As my hon. Friend the Member for Exeter (Mr. Hannam) pointed out in his excellent contribution, it is not reasonable to expect that an alternative can be developed in time to meet the world demand for energy after we have used our resources of oil and gas. I shall be surprised if nuclear power is not developed on a major scale and on a worldwide basis. I agree entirely with my hon. Friend on this subject.
The debate on nuclear energy has been brought to the forefront of our discussions principally by two factors. The first is probably the publication of the White Paper on the report of the Flowers Committee in May this year and the second is the much-publicised speech of President Carter. The former we must treat with great seriousness, paying careful attention to the recommendations and ensuring that all the safety provisions are adhered to. The latter we shall perhaps be able to evaluate better after it has been digested and probably regurgitated several times by United States legislators.
The United Kingdom has always taken its own major decisions. I hope that on this occasion we shall examine President Carter's views with an open mind but in the full knowledge that we have a highly sophisticated scientific team which probably has a substantial lead on the Americans in research and knowledge of the fast breeder reactor.
377 Having said that, it would be quite wrong not to acknowledge that President Carter has done the world a service by his initiative. I think that as long as we can discuss the Carter proposals and at the same time bear in mind that we hold the initiative and the advantage with the fast breeder reactor, we can proceed carefully. I hope that before too long the Secretary of State will find it possible to take a positive decision on this subject.
Sir Brian Flowers wanted caution and debate. That has certainly been provided by the Government. I thought that The Guardian leader of Saturday 28th May got it just about right when, referring to the whole question of decisions in the nuclear industry, it said:These decisions nearly all revolve round the fast breeder reactor which, by converting uranium into plutonium, multiplies the working life of the fuel sixty-fold. In the ensuing debate it is important that real dangers should be separated from inflated ones.With respect to those who have fears about the future of the nuclear industry, particularly about the development of the fast breeder reactor, I suggest that they, above all others, should pay attention to those sentiments because they are doing and can do the nuclear industry no good at all. Indeed, the hon. Member for Truro (Mr. Penhaligon), whose speech I heard frequently in Committee and who made it again tonight, does the nuclear industry no good at all by raising the kind of doubts which he raises, for what I am sure are perfectly sincere reasons, but which, put across in the way in which he puts them, can do nothing to help an industry which has a marvellous record in this country and which can be of tremendous value to us not only as a money earner but as helping with energy problems in future.
Is the hon. Gentleman suggesting that the fears that I genuinely hold should be ignored?
§ Mr. Gray
Of course I do not suggest that the hon. Gentleman should withhold any fears that he genuinely holds, but when he expresses them, he should do so with a more responsible attitude. He should not try to stir up fears in those who listen to his remarks, because although perhaps we do not attach much importance to them, others may well do so.
378 In this context, one of the most important decisions that will have to be taken in the future is the siting of the reprocessing plants. The proposal to site such plants in close proximity to reactors must be eminently sensible.
I should like to pay tribute to those who work in the nuclear industry, and particularly those at Dounreay where, for the past 20 years, there has been great activity in nuclear affairs. Indeed, the prototype fast breeder reactor was built there and was highly successful. Dounreay holds a unique record of safety and it is a site which I commend hon. Members to visit. The nuclear area at Dounreay was built when nuclear power was completely new and great fears were expressed locally about it being sited there. I represent the neighbouring constituency, and wherever one may hear fears expressed about the future of the nuclear industry, one certainly does not hear them in the north of Scotland. People there have been living beside this for 20 years and are perfectly satisfied with the safety and the future of the industry.
We cannot do without the assistance of the nuclear industry. On a 2 per cent. growth rate we shall need during the 1980s no less than 2,000 megawatts a year of the new generating capacity increasing to 3,000 megawatts by the 1990s. That figure does not include replacement of our existing fossil fuel programme. The lead-in time for a new power station is seven to 10 years, and if we are to overcome the problems of future decades it is unlikely that we can do so successfully without the aid of nuclear power.
The stop-go ordering programme that has taken place over the years in the power generation industry has been disadvantageous to us, and every effort should be made to obtain wide agreement on an ordering policy, so that decisions taken today for final implementation perhaps 10 years ahead will not be subjected to political adjustments.
The question of Drax B is unavoidable. I was interested in a point made by the Secretary of State earlier and perhaps the Minister could clarify it. The right hon. Gentleman said that coal from Selby would ensure that the coal-fired Drax B would be cheaper than nuclear power. That contradicts the Central Electricity Generating Board's figures. It 379 may be that there is some misunderstanding here, because the latest CEGB figures that I have show that nuclear power would cost 0.69p per unit, coal 0.97p per unit and oil l.09p per unit. It may be that we are not comparing like with like, and I should be grateful if the Minister would clarify that point, because a number of my hon. Friends were worried about the figure that the Secretary of State gave.
It seems sensible to continue with the successful development of the fast breeder reactor which, after all, has been proceeded with in the United Kingdom for more than 20 years and in which we hold such a commanding lead. In that way, the fast breeder option for electricity generation will be available to us towards the end of the century if it is needed. It still has a major presentational problem, and the whole nuclear industry must look seriously at its image, because although many of us have complete confidence in it, its opponents will —to a certain extent and perhaps not intentionally—distort its purpose and alarm public opinion in a way that could be extremely serious for the future of the industry. I hope that we shall proceed with our nuclear programme, because I believe that we cannot exist without it.
§ 9.35 p.m.
§ The Minister of State, Department of Energy (Dr. J. Dickson Mabon)
We have enjoyed a sober and constructive speech from the hon. Member for Ross and Cromarty (Mr. Gray), which contrasted vividly with the opening speech of the hon. Member for Bridgwater (Mr. King). The hon. Member for Ross and Cromarty made a very good speech, and I agree with what he said about practicalities rather than ideologies in oil policy. I hope that there is a consensus that the regime that we have established is sound.
The companies take that view and have proved it by where they have put their money and by their response to the Fifth Round. They would not welcome our chopping and changing a policy that we built up first in the Labour Government up to 1970, then with the Conservative Government, and now with us in power again. I hope that the points made by the hon. Member for Ross and Cromarty will be endorsed by all hon. Members.
380 I noted the arguments of the hon. Member for Ross and Cromarty and Dundee, East (Mr. Wilson) about depletion. It is not fair to expect people who enter the exploitation of oilfields for a certain time and with considerable sums of money involved suddenly to have sprung on them requests for depletion. We have been scrupulously fair to the companies in warning those in any field where it is applicable that we have definite powers and will seek to use them, and I hope that our successors—if the country should suffer some misfortune— would try to do the same thing. Depletion must obviously be an important integral part of British policy in the 1980s, but it would be unfair to ask those in the fields to deplete earlier.
The hon. Member for Dundee, East's comments about figures were interesting. Our first objective is to get to 2 million barrels a day. Then we can consider how much oil we need to produce and whether a depletion policy should be brought into operation. So many things can change in such a short time. I was pleased to hear the hon. Member for New Forest (Mr. McNair-Wilson) explain how things can change so rapidly and so badly because of circumstances in the Middle East.
The hon. Member referred to the reduction of our overseas indebtedness. This is important. Our reserves in the North Sea are valued at very many times the size of our overseas indebtedness, so their is no question of our having mortgaged the oil, as is sometimes claimed by ignorant commentators abroad.
Having congratulated the hon. Member for Ross and Cromarty, I must chide him for not thanking the Government for providing this debate. We appealed to the Opposition to give us a Supply Day for a full-blown energy debate, but this good Government have had to provide the day themselves, and we should have had some graciousness and thanks for what we have done. Having congratulated and chided the hon. Member for Ross and Cromarty, I must now go on to commiserate with him for being one of what appears to be a minority of hon. Members who have not visited Washington in the past two months.
My hon. Friend the Member for Normaton (Mr. Roberts) spoke about 381 opencast mining, particularly in his constituency. He pressed on the Government the need to be selective. My hon. Friend the Under-Secretary will be writing to him on this important topic. My hon. Friend the Member for Normanton also asked how much we had spent on nuclear energy research since 1940. We believe that the net cost of nuclear research and development since 1945 has been slightly more than £1,000 million, which is a very good bargain considering what we have achieved in that time.
My right hon. Friend the Member for Anglesey (Mr. Hughes), who explained why he could not be here for the end of the debate, asked about the Celtic Sea. In a brilliant speech, delivered by myself at the University College of Wales at Aberystwyth—to which I was invited my my right hon. Friend—I said that of the seven wells that have been drilled in the Celtic Sea, six have proved to be dry. The results of the seventh well have not yet been released by the licensees. A total of 16 wells remain to be drilled by March 1978. I cannot hold out any hopes that Wales, like Scotland, will see a lot of oil. I am glad that my right hon. Friend said that if oil was discovered in Cardigan Bay it would be British oil as far as he was concerned.
The hon. Member for Bridgwater said that the 800,000 barrels of oil a day coming from the North Sea is a tribute to private enterprise. I say that it is a tribute not to capital but to labour. It is a tribute to men who have lost their lives and men who have worked hard. It is a tribute to managers and men, not just to money. Many workers in the North Sea are not involved in private enterprise. They work for companies some of which are publicly owned and some of which are partly publicly owned. I do not see why the hon. Member should bring in party politics. He should be like his hon. Friend the Member for Ross and Cromarty and rise to the occasion.
§ Mr. Tom King
I shall rise to the occasion. I was responding to the claim, frequently made by the Secretary of State and which he even made in Washington, that this was a tribute to and an achievement of State investment. By private enterprise I mean everyone who works in the North Sea. I am sorry that the Minister tried to distinguish in that way. The 382 achievement is a tribute to all concerned in the activity.
§ Dr. Mabon
I am glad that the hon. Member for Bridgwater said that. The sinner who repents is always more welcome. He might add a word about the National Coal Board and its early work in the Gulf-Conoco consortium and the British Gas Corporation's achievements. However, I shall not fall into the same trap. We should congratulate our country on a remarkable achievement.
I shall be fair to the hon. Member for Bridgwater. He referred to BNOC and BODL. I shall look into that. I do not have the facts at the moment. In fairness to BNOC, it acquired BODL by virtue of the Burmah transaction and inherited contractual obligations. However, I do not believe that that is a complete answer. I shall look into it. If true, it is not satisfactory, particularly when we are approaching the rest of industry and it is responding well.
I congratulate my right hon. Friend the Member for Kettering (Sir G. de Freitas), on the review that he gave in a brief speech. The right hon. Member for Renfrewshire, East (Miss Harvie Anderson) was concerned about Drax B. The decision falls on the Secretary of State for Industry or the Prime Minister. In the Energy Department we have made our views clear on the matter and naturally our colleagues are concerning themselves with the issue.
§ Mr. Joseph Dean rose—
§ Mr. Joseph Dean
The Minister's statement is at odds with what some of us have understood. Will he say categorically that the statement that he is now making reflects the correct position? It was reported in the responsible Press at the weekend that claims were being made by the Secretary of State for Energy that it was his responsibility, and that he would decide how and when the order would be placed.
§ Dr. Mabon
The Government in the last analysis are responsible. The decision on this question is not an easy one. The right hon. Member for Renfrewshire, East demonstrated this well. It is not just simply a matter of building Drax B. It is 383 about the entire future of the industry. The Government value the contribution that all these firms have made. We value the skill of the workers and wish as many of them as possible to be retained in a vibrant industry with a future. That is what it is really all about. It is not simply about just another power station. It is about the future of the industry. That is why the whole matter is being so thoroughly ventilated and gone into with all those concerned—not just some but all those concerned. I hope that we shall have an announcement very soon.
My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) made a very interesting and somewhat amusing speech in his own inimitable style. He tended to talk about people being against coal. Other hon. Members later on in the debate were against nuclear energy. No energy Minister is against any of these fuels. We are all for the development of the five principal fuel industries. We are, in addition, in favour of the development of renewable resources, which could contribute to the programme as much as 40 million tonnes of coal equivalent. That is not to be sneezed at. Maybe it is only 5 per cent., but 5 per cent. is 5 per cent.
With good conservation—the seventh weapon in the armament of energy—we do not think that we could get much more than 6 per cent. to 8 per cent. saving of consumption, but that is not to be sneezed at, either. All these sources can contribute at differing times in our national fortunes to the energy pattern of our country.
The Joint European Torus is not about today or tomorrow, but about the next century. We take it very seriously. We had a debate about it a month ago. I have looked it up and I am very glad that the terminology is now different and that the supportof all Members in the House is unqualified.
We, the British, believe that the right place for the JET is Culham. We have no principal activity in the Common Market. Everybody has something except the British. We have nothing. Therefore, we are legitimately entitled to something, and in this field we think we are the best. We have no qualms about saying that in the Council of Ministers. 384 I say to the hon. Member for Dundee, East that we shall not surrender one thing for another; the JET case stands on its own. He suggested that we might surrender JET to the German interest— the only dissenting voice—in order to get a fast reactor to the United Kingdom. It does not work in that way. The Germans already have an interest in the French Super Phoenix, and also have their own concerns. We believe that our fast reactor is as good as anybody's and perhaps even better than some others, and that it is well worth investing in by itself. It is a question of timing and not whether we shall or shall not.
§ Mr. Dalyell
In that case, ought not we, the British, to unblock the multi-annual research grants pretty quickly?
§ Dr. Mabon
We have a very important meeting of the European Summit, the European Council, this week. I do not want to go any further than that.
I think that the JET is terribly important to us and that we really should try to capture that for our own interest and for the interest of the EEC as a whole.
I was very amused—I think we all were—by the reference by my hon. Friend the Member for Leicester, South (Mr. Marshall) to Gladstone's speech of 1866 and the projections in it. I never thought that that wonderful old man could actually have stood in a place such as this—perhaps even literally here —and talked in 1886 about 1970. I think that that is taking Treasury forecasts just a bit too far. How absurd, anyway, it looks now.
I quite agree with my hon. Friend that the three issues in nuclear energy can be taken separately. We could discuss the thermal reactor and not have it confused with reprocessing. We could also discuss reprocessing, but reprocessing and the fast reactor are rather too difficult to separate like that.
The hon. Members for New Forest and Exeter (Mr. Hannam) both made very good speeches. The hon. Member for Exeter gave us his picture of the nuclear world in the post-oil phase, and with long lead times that is not ridiculous. We must get ahead with making decisions reasonably soon on the three matters that I mentioned.
385 I said a month ago that we hoped to receive the Nuclear Inspectorate report. I do not see the point in chiding my right hon. Friend or any of us for not having announced a decision when we do not have that report. The hon. Member for Truro (Mr. Penhaligon) would rightly beat Ministers around the head for the audacity of making a decision without knowing whether the chosen system was safe. We cannot make a decision until that report is available.
In addition, the Nuclear Power Company is to give us its assessment—and its staff are professionals—of the thermal reactor, of the various options that we have. The AGR has certainly proved a remarkable success, even now. We know that the three more stations to be commissioned will be successful, based on the experience at Hinkley Point B and Hunterston B.
We were asked for a debate about the Flowers Report. The Government have issued their White Paper giving a response to the report. Hon. Members should read paragraph 508 of the White Paper. Flowers is not an alibi or an excuse for abandoning nuclear power. Paragraph 508 says:We have considered whether this country should seek to abandon nuclear fission altogether, but even if it could be confidently supposed that this could be done without risk of unacceptable restrictions on energy supply in the future, we should not think that such a strategy was wise or justified.It could not be more definite. We believe that there is a continuing role for the nuclear industry in this country.
The hon. Gentleman was right to raise problems that are matters for the Wind-scale inquiry but also general matters that we can discuss concerning glassification or vitrification of the spent elements. We should see whether we can glassify and store that foul waste where it does nobody any harm. We are trying to do that, but the hon. Gentleman is right to persist on this matter. If I were in his position I should be banging the table all the time to get the scientists up to scratch on the subject. I should say "Give us all the assurances possible".
I join in chiding the hon. Gentleman a little for saying that the Japanese are bringing their rubbish here. We invited them a long time ago to participate with us in the matter, because we make money 386 out of it. We are not ashamed about that. We have our own waste to dispose of, anyway. It should be remembered that part of the contract—and this is public—said that if we could glassify they would take it back and that if we could not they would still take back offensive matter.
The hon. Gentleman uses pejorative words—he used them tonight—about our country being a nuclear dustbin. How often I see these remarks, particularly in tabloid newspapers! They are totally misleading the British people, trying to frighten them with bogy-bogy stories. This is nonsense.
As I have said, the hon. Gentleman is right to be concerned about these matters, but I hope that he will express his concern in mature terms, telling the people that it is our duty as legislators to make sure that the Government have done their job properly and that the industry is very concerned about safety and security.
The hon. Gentleman is right about non-proliferation. We are very concerned about it. The declaration of the Heads of Governments after the Downing Street Summit stated:Our objective is to meet the world's energy needs and to make peaceful use of nuclear energy widely available, while avoiding the danger of the spread of nuclear weapons. We are also agreed that, in order to be effective, non-proliferation policies should as far as possible be acceptable to both industrialised and developing countries alike.As the hon. Member knows, we have agreed with all the other nations involved to set up an expert study group to do the preliminary analysis of the best means of advancing the objectives which have been established, including the setting of terms of reference for the international fuel cycle evaluation programme proposed by President Carter. The objective of that will be to examine which fuel cycle will most effectively contribute to non-proliferation objectives.
We shall join in that programme whole-heartedly because we are one of the most able nations in nuclear energy. We have an absolutely first-class record —perhaps the best record—certainly in safety. Others may argue about our technical competence or about this reactor against that, but we need make no apology for the fact that we have an industry as good and as safe as ours.
387 We take seriously the problem of radioactive waste. I hope that we can give good news to the House later about the successes of our scientists in that regard. We all wish them well, I am sure.
The Government have thought carefully about waste disposal. The strategy and management of waste disposal now concern four Ministers—the Secretaries of State for Scotland, Wales and the Environment as well as the Secretary of State for Energy. It will be at the behest of these environmental Ministers, with the involvement of the Department of Energy, that the public will be assured that environmentally we are treating this matter seriously. It is in that kind of way that we are trying to see a future for nuclear energy which meets the doubts of the critics of the industry, who criticise it not because they deny its success but because they are frightened of the so-called "plutonium society".
I cannot say much about energy conservation at this juncture. It is true that our programme has not been as substantial as those of other countries. On the other hand we have achieved something since 1974. It may be modest in some ways, but we have revised this matter not once but twice, and I hope that in the autumn my right hon. Friend and the Under-Secretary will be able to announce our additional proposals for our energy conservation effort.
I would say to the hon. Member for Dundee, East that one should not confuse financial assistance to individual householders with the old argument about valuation of properties. If one improves one's property, the valuation law provides—I do not see how it could be otherwise—that the valuation figure is raised. But that is an old one that I do not want to go into now.
We have just had a meeting in Oslo of all the so-called North Sea riparian countries to discuss the experience of the Norwegians and others in relation to the Ekofisk incident. We helped the Norwegians and they greatly appreciated the Secretary of State's direct efforts. We have agreed to meet again and to commission various studies. The Norwegian report—under their own system of inquiries—on the Ekofisk affair will, I hope, be known to us in September. It 388 is a blessing that no one was killed or hurt in that incident and that the leak was so short-lived. I pay every tribute to those who risked their lives and limbs in extinguishing it. However, we must learn the lesson of Ekofisk. I hope that we shall be able to make our conclusions known to the House in the new Session.
§ Mr. Dalyell
Before he sits down, will my right hon. Friend clear up one point? He said that JET was a decision by itself. My hon. Friend the Member for Meriden (Mr. Tomlinson), the Under-secretary of State for Foreign and Commonwealth Affairs, told the European Parliament clearly that it was part of a package relating to many other things. Which is it?
§ Dr. Mabon
My hon. Friend must know that in discussions in the Council there are always arguments to and fro about different items on the agenda. I positively denied, in my speech in the House on 17th May, that our concessions on Euratom loans and so on at the March Council had anything to do with JET, and I stand by that.
§ It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.