Energy Conservation (Hansard, 8 December 1980)

§ 11. Mr. Chapman
asked the Secretary of State for Energy if he is satisfied with his Department's progress in encouraging maximum energy conservation.

§ 17. Mr. Waldegrave
asked the Secretary of State for Energy whether he is satisfied with progress on energy conservation in the United Kingdom.

§ Mr. David Howell
I am satisfied that the Government's energy conservation policy is making a substantial contribution to improving the efficiency of energy use in this country.

§ Mr. Chapman
Will my right hon. Friend confirm that a high proportion of total energy consumption takes place in buildings, and that therefore the design and insulation standards of buildings assume much more critical importance than hitherto? Will my right hon. Friend assure the House that there is the closest co-ordination with the Department of the Environment on, for example, standards for building regulations? Does my right hon. Friend's Department propose to take any initiative, with organisations such as the Royal Institute of British Architects, that will lead to more energy-conscious designs?

§ Mr. Howell
We have constant discussions with bodies such as the Royal Institute of British Architects. There is constant attention to conservation. It is right that the major advances that can be made in efficiency lie very much in the areas of space heating and building design.

§ Mr. Waldegrave
Following my right hon. Friend's answer to my hon. Friend the Member for Carshalton (Mr. Forman) on the matter of energy costs, will he clarify the relationship between the Government's conservation policy and pricing? Will he confirm that no nationalised industry has asked to add anything to its prices to meet the Government's target for energy conservation?

§ Mr. Howell
The move to economic pricing of energy has caused the consumer to adopt the most efficient use of energy. That must follow automatically. Substantial energy conservation is taking place, and energy use has fallen to a far greater extent in the past year than is justified merely by the effect of the recession. The nationalised industries, the suppliers, are concerned to promote conservation, and do so. The pricing policies of the oil and gas industries are governed predominantly by market considerations, and those of the electricity industry predominantly by the long-run marginal cost of the replacement unit of capacity.

§ Mr. Crowther
In view of the deterrent effect of the top interest rates that industrialists must pay for any sort of borrowing for capital investment, would it not be helpful if the Government were to provide preferential interest rates for any sort of installation of plant or machinery, which would have the effect of making the use of energy more efficient?

§ Mr. Howell
One would like to see as much encouragement as possible of new investment in preparation for recovery in energy-saving machinery and technology. My Department intends to increase its spending on energy conservation demonstration projects in the next financial year. That is an important intermediate phase between research and the commercial use of new machinery that saves energy. However, once the industries see a commercial process in which it is worth investing it is up to them to decide their priorities in terms of investing in one process and not another. That is the most sensible approach. As interest rates come down, as they have been doing, the industries will have greater opportunities to choose which investment to make.

§ Mr. Beaumont-Dark
Bearing in mind my right hon. Friend's well-known desire to conserve energy, will he tell us why the British Gas Corporation is allowed to blackmail people into using more energy than they need, with minimum contracts? Surely that is diametrically opposed 615 to Government policy. Industry is charged for what it has not used, and encouraged to use what it does not need. Is it not time that that was changed?

§ Mr. Howell
I am not sure that that is the position. The details of contracts will be a matter for the chairman of the British Gas Corporation, and I shall call his attention to my hon. Friend's question. In general, if a contract is made to supply gas at a certain rate of off-take, a large investment has to be made in pipelines and basic capital equipment. The supplier and the customer enter into a contract, which both sides are expected to keep.

§ Mr. Freeson
Why does not the right hon. Gentleman take action on pricing generally? Why do we persist in having a system of pricing that means that those who consume the most pay least, and those who consume the least, who are often the poorest in our community, pay the highest unit charges?

§ Mr. Howell
I know that it is confusing. However it is not the case that those who consume the least are the poorest and that those who consume the most are the best-off. It is often the other way round. Many very large families have to consume a considerable number of units. The British Gas Corporation and the electricity supply industry have been asked to review their patterns of charges to reflect the need both to cover costs and to have the most sensible supply tariffs. I am satisfied that they are constantly seeking to achieve the best solutions to meet those problems.