§ The Secretary of State for Energy (Mr. David Howell)
I beg to move,That this House takes note of EEC document No. 9625/79 on the Energy Programme of the European Community, which describes the Commission's view of the current energy situation in the Community and the longer term outlook, together with EEC Documents No. 8587/79, amending the Council decision of 29th March 1977 on the EURATOM Loans Scheme and No. 5331/79, a proposal on the Plutonium Cycle Research and Development Programme.I am grateful for the chance tonight to hear the views of the House on these three EEC documents and to outline my impressions of recent developments in the Community and international energy scene, which will be reviewed in depth by the Energy Council of Ministers at its March meeting.
I turn first to the background report on the Community energy programme that was proposed by the Commission for the Energy Council last October. That report describes the Community's energy situation and outlook, in particular developments in the oil supply situation. It goes on to outline the Community's existing energy objectives and the Commission's proposals for new 1990 objectives and, against that background, describes in detail what member States are doing in each of the main energy sectors.
A great deal of the effort described is, of course, going on at national level, where the main thrust of Community energy developments must lie, complemented by Community schemes and programmes where these can make an extra contribution. They do that in energy savings and research into alternative energies and in major projects like the Joint European Torus fusion development—to name three examples of areas where Community collaboration can pay dividends.
This document is a heavy and formidable catalogue of commitments by Governments and industry in member States to tackling the Community's energy problems. In the United Kingdom this Government, together with United Kingdom industry, are shouldering the massive 399 investments in coal, oil and gas, and nuclear developments which are essential to secure our energy future. We are playing a vital part towards the achievement of the Community's energy objectives as described, and other member States derive benefit from our growing oil production as well as from the important part our coal production plays in reducing the Community's import dependence.
Vital to long-term stability in the world's energy markets is the need to reduce oil and energy consumption. In the United Kingdom we are making a good contribution to this important objective. It would obviously be easy to concentrate on what we have done and on the considerable achievements on the supply side of the picture. But in reality, as I think the House agrees, energy conservation is also a vital part of the response needed from us and from all our partners in the industrialised world.
In the last quarter of 1979, our daily rate of oil consumption was about 5 per cent. below expectation. That was in accordance with the objective for 1979 agreed in the EEC in March. In 1979 as a whole, despite a very severe winter, we pegged oil consumption at around 1978 levels. That was a substantial achievement, and that vital effort by householders, motorists, managers and the Government, in their public sector role, must be sustained in the future.
Let me say finally, in this general background document, that I welcome the emphasis it places on wider international co-operation. The Community's energy problems are, inevitably, only part of a wider picture in which we are determined to play our part constructively.
§ Mr. Nigel Forman (Carshalton)
Before my right hon. Friend leaves that background document, can he say now, or can my hon. Friend say in winding up, what the achievement of the United Kingdom has been in relation to paragraph 35 of that document in terms of the overall saving of energy over the last three years?
§ Mr. Howell
May I leave my hon. Friend the Under-Secretary of State to give the precise figures? I have outlined our approach and contribution, particularly the aspects that have been registered on oil consumption for the past year. I 400 will ask my hon. Friend to provide the figures for the past three years.
The Community has frequently acknowledged the vital contribution which nuclear power will have to make in meeting our energy needs. Decisions on how much, how fast or what kind are necessarily taken by each Government in the light of their countries' needs and potential and according to their own democratic procedures. That is entirely right. The Community as such cannot hope to have a great influence on this, but in certain areas it can provide useful help by encouraging collaboration and supporting common aims. The two proposals on the nuclear sector which are before us for debate must be considered against that background.
I now come to those two proposals. First, the Euratom loans scheme was launched by the Community in March 1977. It allows the Commission to lend money for the construction of nuclear power stations and fuel cycle installations. The Eupropean Investment Bank acts as the Commission's agent in operating the scheme. The scheme complements in the nuclear sector the wider role of the bank in financing projects in the interests of the Community.
The Commission raises the money on the international market and lends it on to the borrower against first-class guarantees, so there is no element of subsidy in the scheme. It enables an undertaking building a nuclear power station to take advantage of the Community's Triple A credit rating to raise long-term finance on world money markets.
When it was set up, a ceiling of 500 million units of account—about £335 million—was placed on the total volume of loans under the scheme. To put the figure in perspective, a commercial nuclear power station may cost upwards of 1,000 million units of account. The Commission was required to notify the Council when the value of transactions effected reached 300 million units of account, so that the Council could consider a further allocation of funds. This position was reached in the middle of last year. Accordingly, the Commission proposed to the Council that the ceiling be raised to 1,500 million units of account, all other aspects of the scheme being left unchanged.
401 The scheme has evidently been attractive to borrowers. In addition to the 300 million units of account already lent, applications had been made for a further 845 million units of account. No applications were made in respect of United Kingdom nuclear facilities in time to qualify for the first tranche of loans. However, applications have been made by United Kingdom utilities for money from the second tranche.
§ Mr. Arthur Palmer (Bristol, North-East)
I am interested in what I think the right hon. Gentleman is about to say. How far is the Central Electricity Generating Board likely to get help from the Commission under this scheme for the new nuclear construction that is now proposed, and how far will it affect the public sector borrowing requirement?
§ Mr. Howell
The hon. Gentleman is percipient to a degree in that I am about to say something concerning not so much the CEGB as the SSEB and the funds available to it. As these funds are to be raised from outside the United Kingdom, they do not fall upon the Government. To that extent, they ease the burden of our borrowing. As I said, the scheme has been attractive to borrowers and applications have been made by United Kingdom utilities for money from the second tranche. I shall come to the detailed aspects later.
The Commission's proposal was considered in the Council machinery. The United Kingdom Government had formed the view that the scheme was fulfilling a useful role in helping the development of nuclear power and that it clearly met a real demand as evidenced by the number of applications. Of course, we are very conscious of the recommendation made by this House's Select Committee on European legislation on 7 November that the proposal should be considered further by the House. But, on 15 November, agreement was reached by all other member States that the ceiling on the scheme should be raised to 1,000 million units of account. Only the United Kingdom reserve prevented the proposal going forward. It was decided that it would be wrong for us to hold up the extension of this useful scheme further and delay the release of funds to the United Kingdom and other applicants. 402 Accordingly, on 19 November our reserve was lifted.
Unfortunately, it was not possible to arrange a debate on this document, particularly in the context of a general debate as the Scrutiny Committee had understandably recommended, in the short time available. The formal adoption of the decision by the Council took place on 20 December. The lapse of time between all member States agreeing the proposal and its being adopted was necessary to complete certain formal procedures, including notification of the decision to the Greek Government.
Once the Commission was informed of our agreement to let the proposal go forward on 19 November, the way was clear for it to process applications under the second tranche. Following the intervention by the hon. Member for Bristol, North-East (Mr. Palmer), I can tell the House that the Commission has now informed me that a decision on the first of these applications, for £100 million by the South of Scotland Electricity Board for the Torness power station, is due to be announced in the next few days.
§ Mr. Frank Hooley (Sheffield, Heeley)
What is the difference between the interest rate on this form of loan and the interest rate on other sources? How far does this difference represent a subsidy to nuclear power that other forms of power are not enjoying?
§ Mr. Howell
The interest rate is the Triple A rate that can be raised by the Community in world markets. If there is a differential, it is between raising money at the Triple A rate and raising money at higher interest rates. The European Community has a number of schemes and loan facilities for different projects of different kinds. I do not think that this represents a discrimination between nuclear projects and others so much as a particular scheme that allows Triple A access. There are many projects other than energy projects that allow it as well.
§ Mr. Nick Budgen (Wolverhampton, South-West)
If we borrow money at preferential rates of interest from the European institutions and this goes on for a long time, will they not say to us that we are under some form of moral obligation to accept a European energy policy?
§ Mr. Howell
The aspects of European energy policy are discussed at different times and arise in different contexts. Our view is that nuclear policy is a sovereign matter for this Government to decide and that this is the end of the issue. These loans are made under the Euratom provisions. It is good business for the loans to be available. Our own nuclear policy is a matter for the House of Commons.
I turn now to the proposed research programme on the plutonium cycle and its safety. Nuclear programmes in the Community are underpinned by a considerable research and development effort. To esure that this effort is deployed effectively, without unnecessary duplication, there is a wide measure of international collaboration. This makes sense. The Community has an important role to play here. It has a joint research centre with a budget of about £70 million, of which the bulk is devoted to nuclear research.
The Community also has a number of indirect action research programmes in the nuclear sector. Under these, Community funds are made available to contractors to support work in certain specified areas. Existing programmes concern uranium prospecting and extraction, safety of light water reactors, decommissioning of reactors, and radiation protection.
A programme on recycling plutonium in thermal reactors was adopted in 1974 and came to an end in 1979. The Commission has now proposed that the programme be broadened to cover the use of plutonium in fast reactors and that it should look more deeply at all aspects of the plutonium cycle. The new programme, if the Commission proposal was adopted, would cost about £13 million over the next five years, about four times as much as the last programme.
The plutonium in nuclear reactors is an important man-made fuel. If recycled in thermal reactors, it can reduce uranium requirements by about 20 per cent. compared with reactors fuelled with uranium alone, but the economic benefits of doing this at present are calculated to be marginal. If it is used to fuel fast reactors, uranium requirements are ultimately reduced to zero. There is a considerable body of expertise in the 404 Community on the manufacture, transport and use of plutonium-based fuels.
The prototype fast reactor at Dounreay and its counterpart in France use plutonium. Plutonium fuels have also been used on a small scale in thermal reactors in Germany and elsewhere. The purpose of the proposed new Community programme is to develop this expertise so that decisions on the wider use of plutonium fuels can be taken with full information being available.
§ Mr. Tam Dalyell (West Lothian)
May I put to the Minister a question of which I gave his office warning this morning? It is being said that the British are being difficult about commercial secrecy. May we hear something of the argument that is going on inside the Community and whether the view expressed by our partners has any foundation? Some of us think that it might not have and that the British have a very good case.
§ Mr. Howell
If by "being difficult" the hon. Gentleman means are we asking whether we would gain by participation in certain aspects, he is perfectly right. We are not so much being difficult as assessing, quite reasonably, whether we wish to join and whether the BNFL, for instance, would gain from being involved in this research. In our view, it is probable that it would not, for the good reason that we have some extremely advanced and commercially advantageous programmes and techniques, such as the gel precipitation in the plutonium fabrication, and so on. These are commercially advantageous and we would lose the commercial advantage involved in participation in that aspect of the programme. I confirm what the hon. Gentleman has heard, but I would put it in a slightly different way.
I emphasise that this programme would in no way pre-empt decisions on nuclear policy, and I hope this makes clear the point I tried to emphasise to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). The responsibility for taking these decisions is and will remain with the national authorities.
Most of the areas covered by the proposed programme are of common interest to a number of member States, and it makes good sense to collaborate in 405 carrying out research in some of these areas.
I have some reservations on the proposal. I have just indicated as much in my reply to the hon. Member for West Lothian (Mr. Daly ell). I believe that it should be somewhat amended before it is adopted. I am particularly anxious about that part of the proposal concerned with new plutonium fuel fabrication methods where commercial considerations may make it difficult for the Community to mount a worthwhile programme, at any rate from our point of view.
I am also hesitant about the emphasis placed on the use of plutonium in thermal reactors. We have no plans in the United Kingdom to use plutonium in thermal reactors, and some other member States are in a similar position. In our view, sufficient research has been done to establish the feasibility of using plutonium in thermal reactors. The principles are understood, so it therefore seems inappropriate to us to spend substantial sums in this area, particularly at a time when pressures on public expenditure are severe.
§ Mr. T. H. H. Skeet (Bedford)
Will my right hon. Friend tell the House what is the store of plutonium held in the United Kingdom?
§ Mr. Howell
I shall have to ask my hon. Friend to wait for my hon. Friend the Under-Secretary of State to give him the precise figure.
In conclusion, I would say that, while this proposal is not unacceptable in principle, there are some reservations about its size and detail. It has already been subject to considerable discussion in the Council and I believe that when it finally emerges it will reflect some of the qualifications I have tried to express and be in a more acceptable form.
Those are the three documents that are before us tonight. They give rise to a much wider range of issues on which I and my hon. Friend will be glad to provide the House with answers that are available to us. We are the EEC's leading energy producer and as such we are making a massive contribution to the energy effort of the Community. This debate gives us the opportunity to 406 reaffirm our intention to continue along this path.
§ 11.4 pm
§ Dr. David Owen (Plymouth, Devonport)
Once again, the House will be concerned that we are debating energy—possibly the most crucial issue which faces the EEC—late at night. We are grateful for a three-hour debate, but the Leader of the House should find at least a day for a major debate on enenrgy.
The Secretary of State should have taken this opportunity, just before another important Energy Council meeting, to take the House into his confidence about some of the major issues that face the Council. There is a widespread feeling that it is now urgent that the European Community and the OECD countries enter into a dialogue with the OPEC countries. We hear reports on whether there is a possibility of an opening of discussion between the European Community and OPEC. There is some speculation in the newspapers. If the Secretary of State wishes to intervene, I should be grateful if he would let the House know what is his thinking on this matter. There are few more important issues.
We debated this matter some months ago. The events in Afghanistan have underlined the importance of the crucial danger that we would face in the industrialised West over the next 10 years if there were any major interruption in oil supplies from any major oil-producing country. The events in Afghanistan have underlined the absolute vital necessity to reduce our dependence on oil imports.
Whatever one's views about the Soviet aggression—whether the Russians went there primarily for defensive reasons fearing that they were going to be thrown out or whether they went there for offensive reasons—there is no doubt that the Russians are now placed geographically in a situation which makes it much easier to interfere with oil supplies from the Gulf.
A dialogue must be opened between the OPEC countries and OECD. It is not enough for the European Community alone to be involved. With Japan taking so much oil from the Gulf States and with the United States being such a crucially important area, the dialogue 407 should not be entirely confined to the European Community.
§ Mr. Tom Ellis (Wrexham)
Does my right hon. Friend agree that an extremely important issue in beginning a dialogue with OPEC is first to appreciate that OPEC is a heterogeneous establishment or institution? Is not one of the immediate and important requirements the need for someone to persuade the OPEC countries to agree upon a coherent economic policy spread right across the whole area?
§ Dr. Owen
I agree with my hon. Friend. It will be extremely difficult. One of the problems with OPEC is that in recent months it has found it increasingly difficult to get an agreed position on pricing policy. To some extent, that reflects a difference of attitude. One of the powerful pressures on OPEC is the general concern of the Third world, to which it has been much more sensitive in recent years. The possibility of a dialogue in the North-South context, between OECD and OPEC, is perhaps the most important aspect. In that dialogue OPEC would be under some pressure from the OECD countries. I stress that as it puts this debate into context.
We face a serious situation. The Saudi Arabian oil production is held at 9½ million barrels a day. If that were to be cut by a significant amount to 2 million or 3 million barrels a day or less, it would have a very grave impact on the economies of all the Western industrialised countries.
Against that background, reading these Community documents, our response is nowhere near serious enough. The commitment undertaken on the reduction of imports has already been broken by some of the Community countries. The Federal Republic of Germany is above target at the moment. What is being done within the Community to ensure that the member States actually live up to the commitments that they have already undertaken?
Before we are complacent about our own record—and the Secretary of State said that we were well within our target figure—in fairness we have to admit that one of the reasons is that we had substantial room to switch from oil-fired to coal-fired power stations. Our switching 408 formed the largest section of that reduction. Our record in other areas of conservation is disappointing.
We do not lead the rest of the European Community. We are slow to cut our demand. We do not put anywhere near enough money behind conservation.
This matter was raised in our debate on the gas industry, but there was no reply. I ask the Secretary of State whether the rumours that we hear about a reduction in the conservation effort of the Government are true. I think that many hon. Members would not accept this as an area for reducing public expenditure.
The Secretary of State's Department contributes substantially to the Exchequer and the reduction of the public sector borrowing requirement. It is a Department in which he should be able to argue with the Chancellor of the Exchequer that an investment in conservation will pay off in a short time. We are not talking about a 10 or 15 year pay-back.
There is evidence in industry that some of the smaller firms that face high bank rate charges, and all the other financial pressures that they are under, find it difficult to find the money to invest in conservation. They need financial incentives in terms of preferential loans and preferential tax arrangements.
It is not enough to talk about conservation. There is a whole series of actions that the Government must take. So far the record is depressing. One of the first areas is in the home. The insulation grant of £50 is still grossly inadequate, and our building regulations must be tightened up.
§ Mr. Peter Rost (Derbyshire, South-East)
The right hon. Gentleman's criticism of the conservation programme might make people wonder who had been in charge of the nation's affairs for the previous five years. Does not the right hon. Gentleman accept that the Labour Government were not only slow in starting anything but were lethargic in pushing through any conservation programmes or providing any incentives?
§ Dr. Owen
That level of debate on an issue such as conservation is unnecessary.
The investment in 1977 in the "Save It" campaign was a substantial pioneering achievement to which tribute was paid 409 by the European Commission. The introduction of the home insulation grant was an important measure. If the hon. Member for Derbyshire, South-East (Mr. Rost) is saying that that should have been increased a year or so earlier, I agree that it probably should have been. But at least it was introduced. The Secretary of State announced a minor widening of that scheme as regards local government, which I welcome, but it does not go far enough. I think that it needs more resources.
I am making a plea for the exemption of conservation from the financial restraints to which we understand the Secretary of State has been asked to contribute. He should be able to say to his colleagues that conservation should be exempted. As I have already argued, relying on the price mechanism is totally insufficient.
I turn to the three main documents before us. The terms in which the Secretary of State has explained the procedural issue may well have satisfied some hon. Members, in the sense that he recognised that by not having come to the House for authorisation before he gave it he was technically in breach of the undertaking. He has tried to make amends for that. However, I believe that the Leader of the House should have found an earlier opportunity for this debate.
Most of us would agree—I believe that the Scrutiny Committee agreed at the time—that the regulation was not a substantive one of principle. But it must be accepted that the procedure of coming to the House before Ministers make decisions in the Council of Ministers is something to which all hon. Members attach a great deal of importance. It is the exception when Ministers have to make a decision prior to coming to the House. I am inclined to accept the explanation we have been given on this occasion, but on a major issue of policy it would not be acceptable. This should be something that happens very rarely.
§ Mr. Nigel Spearing (Newham, South)
Does my right hon. Friend agree that when the exceptional procedure has to be undertaken—that is, of course, part of the written undertaking from the Leader of the House—whilst it says that a statement should be made to the House at the 410 earliest opportunity, there should be an oral statement and not, as in this case, a written statement some time later which can easily go unnoticed?
§ Dr. Owen
I think that it is far preferable for it to be an oral statement. I agree with my hon. Friend, although I think that there are occasions when it would be done by a written statement. However, when one is in breach of an undertaking to the House it is always preferable to make an oral statement to the House.
On the issues involved, when we analyse what the Secretary of State has said we realise that he has indicated that it is no subsidy. As far as I can understand what he was saying, the terms of the loans are not giving us any preference, apart from the fact—[Interruption.] As I understand it, the interest rate is not necessarily any lower than we could get ourselves. I should be very interested if the right hon. Gentleman could clarify the matter. As I understand it, the net gain to us from taking this loan is minimal. If I am wrong, I should be very grateful to have it quantified.
What is the financial benefit to us of accepting this loan? What percentage of the overall increased tranche is likely to come to the United Kingdom? Will this be going at least some way towards the financial contribution upon which we are trying to improve? Is this something that will be put on the credit side in assessing our financial contribution?
My understanding is that there is very little value to us in getting such loans. I am not saying that we should not do so, because it allows us to free up our capacity for getting loans in other sectors, but I think that the financial advantages are very minimal.
On the question of the plutonium cycle, I had hoped that the Secretary of State would make the attitude of the French Government a little clearer. They have traditionally taken a very sceptical view of the Euratom treaty anyhow, and they have been asking for a substantial amendment to the treaty. In no area is their scepticism greater than where it affects plutonium. As I understand it, they are very anxious that the Euratom treaty should not be used to extend into 411 areas concerned with plutonium. What the Secretary of State said implied that the cost was very much greater, and he gave his qualifications. But I do not think that any of us were left with a clear impression as to whether the British Government would agree to this proposal in its present form, and, if not, what they intend to do about it. Is this likely to be put to the vote in the imminent Energy Council? What is the French Government's attitude? We would like to know a good deal more about this, and perhaps a little more about the fundamental criticism that is raised, if I am right, by the French Government.
However, the substantive matter which I wish to address tonight is the issues concerned in the overall look at energy policy. In particular, I draw the attention of the House to paragraph 70 on page 20 of document No. 9625.
For a variety of reasons, not least because it has been extremely difficult to separate the issue of coking coal from the dispute which is involving the British Steel Corporation, we have not had the opportunity to focus on the specific issue of coking coal. I do not know whether every hon. Member is aware of the significance of this issue.
First, I should like to hear the final date by which the BSC has to make up its mind whether to import any further coking coal. Previously we have been given a pledge that the BSC would not import any further coking coal before the end of January. We are now into February. Has there been a further extension of the time limit? That is an important question. The British Steel Corporation went ahead with its decision to import, with almost no consultation with the National Coal Board. The NCB had invested £50 million in improving the washing and overall coking coal facilities and it was suddenly faced with a fait accompli—a substantial import of coking coal.
The history does not need to be described in detail. We have heard arguments about the quality of coking coal and about the price. It is clear that the level of imports of coking coal that have already been contracted are such that the quality and safety arguments are fully met. There is no doubt about that. In Redcar there has been understandable 412 anxiety about the quality and safety arguments and about the Japanese consultants. The level of imports to Redcar is already enough to meet all requirements. We are dealing with the issue of price alone.
§ Mr. Budgen
May we hear the official Opposition's attitude towards a European energy policy? Is it proposed that the next Labour Government—if such a thing emerges—will cede sovereignty over our natural sources of energy to any of the European institutions?
§ Dr. Owen
When we have a full day's debate we can debate energy policy. The last Labour Government were extremely zealous in protecting British interests on the United Kingdom continental shelf. We made it clear that in the areas of oil, coal and overall energy policy we were not prepared to cede sovereignty. That does not mean that there is not a case for a Community energy policy, particularly in a crisis. It is important that we agree that if the Community and the rest of the world are plunged into an acute oil crisis there should be sharing arrangements.
I have argued for a tough depletion policy. I hope that the Secretary of State will tell us what that will be. If we adopt a tough depletion policy under which we shall not export more oil than is necessary to achieve net self-sufficiency and we are faced with a severe cut in oil supplies, it will be in our interests to increase our production. As a manufacturing nation, we would suffer deeply from an economic recession affecting not only our Community partners but all the industrialised West. We cannot adopt an energy policy which is totally selfish and which fails to take account of the Community States. Equally, we should not forgo the right to make our own decisions, particularly on the continental shelf.
§ Mr. Edwin Wainwright (Dearne Valley)
Is my right hon. Friend aware that the Government have scheduled Mexborough as a development area? They now propose to close the coking plant at Wath-upon-Dearne, which means that 580 jobs will be lost. What do the Government mean by talking about importing coking coal? They have made false promises about bringing new jobs to the Mexborough area.
§ Dr. Owen
My hon. Friend knows the history well. I was about to refer to the 413 shadow that has been cast over the industry by the coking coal issue. The industry has experienced difficult years under successive Governments.
Substantial investment has gone into the industry from 1974 onwards, and it has begun to pay off. Over the past year the coal industry's record is striking. Production is rising, and at an accelerating rate. The indicator of absence, which includes absenteeism, but also non-appearance at work, is substantially down. The third aspect is recruitment. [Interruption.] Conservative Members may scoff, but the industry had serious problems of production, absenteeism and recruitment. To have reversed all three is an achievement that we should all be pleased about. Snivelling comments about it will get us nowhere.
The coal industry is one on which the country will rely over the next few decades more than on almost any other. It is in this context that we come to coking coal and why we are so concerned about it. There are many jobs at risk. We are talking about redundancies. Some people have spoken about as many as 10,000. We are talking in terms of substantial pit closures. All this is because of a short-term decision to import coking coal, on the basis of a narrow financial advantage that may not last for more than a year. This is against every policy that is being pursued by every other industrialised country in the world—not only our Community partners, but certainly including them.
I draw attention to paragraph 70 on page 20 of the document. It is clear from that paragraph that the Community is prepared to introduce new schemes for coking coal to encourage its production in the member States. There are already substantial national subsidies. The Federal Republic of Germany subsidises its coking coal industry to a substantial extent, as, indeed, it subsidises its whole coal industry. It does so for overall strategic energy reasons, and for good reasons. If the Federal Republic, which is a greater believer in market forces than any other member State, can see the sense in keeping a viable coking coal industry and not relying on imports, I find it incredible that this country should be allowing the BSC to import coking coal.
414 I understand that the BSC's present financial problem makes it extremely difficult for the corporation to give up any potential savings. I have constantly reiterated that we must not have a dispute between the BSC and the National Coal Board or between steel worker and mine worker. There is a national interest here. It is not good enough for the Secretary of State and the Government generally to hide behind various statements and gradually to be seen to be shifting their position.
The latest statement is that made on 4 February by the Secretary of State for Wales, who said:The NCB has asked for an additional £18 million towards the agreed cost of £33 million, but, since the subsidies and cash limits were agreed, the price of oil has risen sharply raising the Coal Board's headroom and the Government can see no reason why, on the scale of a total turnover of around £3,000 million, the NCB should not be able to find the necessary funds."—[Official Report, 4 February 1980; Vol. 978, c. 39.]If that is, in plain English, permission for the NCB to subsidise the coking coal and to make up the cost to the BSC, I hope that the Under-Secretary will say so when he replies to the debate.
If we can end the uncertainty here and now for the coming year, we can settle a longer-term policy for coking coal and lift the shadow over the industry. It is a shadow that is cast over large areas of the coal mining industry. It is felt most bitterly over South Wales in particular, because of the effects on the BSC. In the North-East it is also very worrying. At least there is the possibility of selling most of its coking coal to the Central Electricity Generating Board and putting it into power stations. But that is expensive—and temporary. It will also affect Scotland, Stafford and Kent. What is needed for from the Government is an end to the uncertainty on the issue.
§ Mr. David Howell
My hon. Friend the Under-Secretary will certainly clarify the matter, which is as my right hon. Friend the Secretary of State for Wales has already described it. May I clear up one misapprehension that I believe continues in the right hon. Gentleman's mind? The right hon. Gentleman seems to think that there are still funds available on application from the EEC or the ECSC to help the coking coal industry. In fact, the only funds available are to 415 subsidise intra-Community trade in coking coal, and this country does not, save to a minute degree, indulge in such trade. So there are no such additional funds available.
What is available, and what the Federal Republic of Germany is using, are permissions from the EEC for the country concerned to use its own funds to subsidise as it wishes. That is a matter of legitimate debate. But the implication that there is some additional EEC honey-pot from which we could draw but are not drawing is not accurate.
§ Dr. Owen
If the right hon. Gentleman studies in Hansard what I have said, he will see that I said that I believed that the money is available within the Community. In my judgment, what is needed is a proposition from the British Government. We hear from the Prime Minister that she wishes to improve the contributions coming to the United Kingdom from Community resources in order to put us into broad balance. What is being asked in Brussels is what specifically the British Government want. Here is an area where, I believe, a proposal from the British Government would be met with a favourable response.
I agree, of course, that at present, as is said in paragraph 70 of the Commission's report,The only support scheme in operation at Community level is for Community production of coking coal";and it goes on to say that a proposal has already been made for a new scheme. But that is a limited proposal, and I believe that a more ambitious proposal from the British Government for a subsidy from Community funds would find a receptive response.
At any rate, let the right hon. Gentleman remember that if he does not try he will not find out, and this industry has had to hang about for three months for a reply. I do not mind if it comes from national funds. I do not mind either, if the National Coal Board, in the light of what the Secretary of State for Wales said, is told that the Government now expect it to make up the difference for the BSC. That is all that has been requested, and that is the issue which I want to see settled in this debate. We shall come back to it time and again.
416 First, we want an assurance that no more coking coal will be imported for the British Steel Corporation. We want to know that there is no question of the corporation going off and making a contract in the next few days. Apart from anything else, coking coal contracts last for from three to five years and are denominated in dollars. One only needs the pound to go down against the dollar and the whole equation is changed. Shipping rates are temporarily low and will rise. Some of the countries from which we are importing, such as Australia and the United States, will almost certainly put up their price. Moreover, if they run into an acute energy shortage, we can say "Goodbye" to there being any increase in coking coal on the market.
Moreover, coking coal is cheap at the moment because steel demand is low. If steel picks up and the world recession moves away, coking coal prices will pick up.
§ Mr. Skeet
The right hon. Gentleman has not stated the position correctly. Australia has millions of tonnes of coking coal. In fact, the National Coal Board has an interest in German Creek in Queensland, and I dare say that when that becomes productive the NCB will be exporting coking coal back to the United Kingdom—and most of it is opencast.
§ Dr. Owen
There are two grounds of difference there. First, on financial grounds, there is the question of a tax being put on by the Australian Government. That is being talked about at the moment. Second, the Australians will charge the international price, and if the international price goes up the Australian price will go up. We shall find that we have clamped down and cut off our coking coal supply in this country for two or three years and then, when we ask for our production to be expanded, we shall find pits closed and the capacity lost.
But there is an overall argument, which is that at a time when we are asking for self-sufficiency in energy and we are trying to ensure that there is less importation of energy—oil is the classic example, but the same is true of coal—it makes nonsense for us to run down the resources of coking coal which we have available.
417 What we are asking for is a decision not to import any more coking coal and not to make any more contracts, and a decision to authorise the BSC to go ahead and rely on National Coal Board coal and for the National Coal Board to make up the difference, so that the BSC will not have to find the money from its own resources. We ask that it effectively makes the decision which, in my view, is implicit in what the Secretary of State for Wales said. If that is not forthcoming, we shall return again and again to this subject. We are not prepared to see the coking coal industry, as part of the overall coal mining industry, run down in the way that is suggested. It would have savage social consequences. It is economic madness and it runs totally against the energy policy contained within the documents we are debating tonight.
I know that many of my right hon. and hon. Friends will wish to raise other issues. I have concentrated on the issue of coking coal because of the severe consequences for many parts of the country of a rundown in this part of the industry. It is also the most graphic example of how our energy policy is heading in the wrong direction. I call on the Secretary of State to change that policy, and to do so quickly.
§ Mr. T. H. H. Skeet (Bedford)
The right hon. Member for Plymouth, Devon-port (Dr. Owen) dealt with coking coal. I shall not pursue what he said on that point, other than to say that the British Steel Corporation would be prepared to take what coking coal the National Coal Board has, provided that it is of the right specification. It would be prepared to take the coking coal, not merely for Red-car but for other modern blast furnaces, on such a condition, provided that it was at a relatively advantageous price. The differential between the price of imported coking coal, which comes largely from opencast mining, and that produced in the United Kingdom is considerable.
The right hon. Gentleman spoke of the lack of advantage of loans from the European Investment Bank. He must recognise that interest rates in Europe are much lower than they are in the United Kingdom. A study of the figures relating to nuclear power station development between 1973 and1978 shows that we have 418 received 203 mua as compared with a figure of 268 mua for France. In 1979 we received a further 156 mua, and we have been told by my right hon. Friend the Secretary of State that Torness is to receive a further loan this year of 100 million—I do not know whether that is in units of account or £ sterling. That is a considerable advantage which we have derived from Europe and, possibly, in totality, it will exceed all loans to France.
We are supposed to be dealing with nuclear power. My right hon. Friend spoke a little time ago about the United Kingdom programme. It is to be 15 gigawatts over a 10-year period beginning in 1982. I am of the view that this programme probably will not get off the ground at the right time. We may be in a serious situation. My hon. Friend the Under-Secretary has given me some figures for the United Kingdom showing what the position was in gigawatts at the end of 1977. At that time the United Kingdom figure was 5.9. At the end of 1985 it is to go up to 9.4, which is 11 per cent. of total electricity generating capacity. By the end of 1990 it is estimated that the figure will go up only to 12.3. That is only a minor improvement over the period.
Let us compare the position with France. There, the figures for the same periods are 4.6 and 38.5, going up to a total of 58. These are very large figures in gigawatts. This is an important matter for the United Kingdom since it means that energy costs in France will be low but in the United Kingdom relatively high, making France much more competitive than ourselves. Similar figures apply to Western Germany.
We have had no indication whether any coal-fired power stations will be built—apart from Drax. Nor have we been told to what extent Selby and the Vale of Belvoir will affect the outcome. Nor have we been told when fluidised-bed combustion for power stations will enter the commercial phase. It would be a great help to us if we could be told whether, in the ordering programme, there are to be any further coal-fired power stations. Apart from the completion of Dungeness B, Hartlepool and Heysham A in 1982, Heysham B in 1987 and Torness in 1988, there are not likely to be any further nuclear power stations commissioned in the 1980s. Ordering a PWR in 1982, 419 and allowing a six-year period for construction, will probably mean commissioning in 1989–1990.
Commissioning in the 1990s will be affected by at least three factors. The first is the uncertainty of the development of electricity demand, which is itself dependent upon a correct interpretation of the United Kingdom's economic growth. Second, there is the long lead time required for the construction of power stations, and particularly the performance of the construction industry undertaking large-scale projects. Third, there are the doubts about the capacity and performance of the nuclear engineering industry, which has had no nuclear station ordered since 1970. Further, commissioning in the 1990s will be undertaken at a time when Magnox stations will be ready for de-commissioning.
I say all these things because it is important to note that the Europeans in two nations, France and Western Germany, are going ahead of the United Kingdom. What will be the reality here? When are we to move ahead in the United Kingdom? We are told that we have this 10-year programme, but to what extent is it a programme and to what extent will it be implemented?
A number of hurdles in the way of early implementation have to be overcome. First, we have to get a letter of intent, which I dare say will be secured without any great difficulty from Westinghouse. As has been indicated by the Secretary of State, a Westinghouse and not a Babcock licence will be accepted. Following that, we have to get a nuclear site licence. The Nuclear Installations Act 1965 will apply, but a safety case submission will have to be made by the NNC, in conjunction with the CEGB, to the Nuclear Installations Inspectorate, and the inspectorate will have to be satisfied.
Any result on that will be delayed by the Government's difficulty in recruiting engineers for that body. The inspectorate enters 1980 12 per cent. below strength in inspection staff, with the prospect of an increase in its heavy work load associated with the planning of the 1,100-MW demonstration PWR. It may take time, therefore, to overcome the first hurdle. At the same time, we are crying out in the United Kingdom for the discharge of the programme.
420 The next hurdle is the statutory consent, or the site consent, under section 2 of the Electric Lighting Act 1909, but where is the site in the United Kingdom to be? Is it to be Sizewell? Is it to be in Scotland? Is it to be in Wales, or elsewhere? The body of protestation is extremely loud these days and there may be opposition in any of those places.
§ Mr. Skeet
If it comes to Bedford, we shall consider it in the national interest. If I could make a personal recommendation, I would put it down just by Exeter—the best spot in the land.
The next hurdle is probably the most dangerous of the lot—the deemed planning permission under section 40 of the Town and Country Planning Act 1971.
The Secretary of State has to provide a plan for our acceptance. We hope that his plan will be realised. We have not the foggiest idea whether it will materialise at the time when it is required. If we do not have the increased capacity available for the United Kingdom, the standards of the people will fall relatively to those in Western Europe.
Are we to have a Windscale-type inquiry—we are quite familiar with that—or is it to be of the sort that is currently taking place in the Vale of Belvoir, which will last for approximately a year, after which it will have to be considered by the Minister, who will prescribe on that? Or will he be wise enough, under section 47 of the Town and Country Planning Act 1971, to have a planning inquiry commission during which all relevant matters may be considered? My hon. Friend the Member for Carshalton (Mr. Forman), who is very concerned in nuclear matters, will then be able to put forward certain ideas on whether we should have a nuclear programme.
Another hurdle amidst the long saga of difficulties is that of capital investment approval under section 8 of the Electricity Act 1957. That is not the end of it. Radioactive effluents must be covered. Under the Radioactive Substances Act 1960, authorisation must be obtained from the Minister of Agriculture, Fisheries and Food and from the Secretary of State for the Environment for the discharge of radioactive effluents. There is, therefore, a large amount of bureaucracy. It is 421 perhaps essential to have some such provision because of the public's sensitivity. However, could not several of the procedures be telescoped?
§ Mr. John Home Robertson (Berwick and East Lothian)
The hon. Member listed a number of hurdles over which planning procedures must pass before a nuclear power station can be built. However, I believe that I am the only Member of Parliament to represent a constituency that has a nuclear power station under construction. Even if the Secretary of State is satisfied with the plans, it may be that the majority of people in that locality are not satisfied. We must therefore persuade people that a nuclear power station is desirable and safe.
§ Mr. Skeet
I recognise the sensitivity of that point. I also agree with the hon. Member about obtaining a consensus. However, that can surely be accomplished by a wide-ranging public inquiry. At a public inquiry all the arguments can be put forward and they will be considered in extenso. The matter will then revert to the Minister and he may reconsider the issue.
When the Labour Party was in power, we dealt with the Windscale inquiry. The issue was not only thrashed out before the inquiry, but there was a debate in the House. I believe that the then Secretary of State for the Environment did a good job of informing the public about the reality of the situation. The chances of dying from radioactivity are minute. It is much more dangerous to walk across the road or to travel by train. Travelling by air is yet more dangerous. The most dangerous job at sea is that of working on a trawler in the North Sea. The most dangerous job on land is that of working in a mine or quarry in the United Kingdom.
Many people's fears are totally unfounded. They are whipped up by such groups as Half Life and Friends of the Earth, who appear to have a vested interest in causing difficulties. We are trying to pave the way to a high standard of living by having relatively cheap energy costs, compared with Western Europe and elsewhere. Unless we go ahead with plans for a coal and nuclear future, we shall be in dire difficulties. If we postpone the evil day it will be too 422 late, because of the long lead time involved in building nuclear stations.
§ Mr. Budgen
Surely my hon. Friend is not saying that groups such as Friends of the Earth have no right to express their objections. That group has a valid point of view that should be considered.
§ Mr. Skeet
My hon. Friend has probably misunderstood me. Of course it has a right to express its views, just as I have a right to express my views in the Chamber. I debated with Friends of the Earth in the Cambridge Union and I beat them. However, we should not play with the lives of people by rendering the future of nuclear power more difficult. We should strive to sustain the high standards that we enjoy. Nuclear hazards are limited because the industry takes great care to ensure that no great danger is involved.
There were three other difficulties in the way of building nuclear power stations. There are not merely procedural problems. Before the Secretary of State can decide on any arrangement, he must be satisfied about the level of demand in the United Kingdom and about the performance capacity of the British nuclear industry, which has had no new nuclear order since 1970. It is a rundown industry and will have to be built up. It has little experience in building a PWR, and I strongly recommend PWRs in the United Kingdom.
The third point concerns project management responsibility. Anyone who has visited the Isle of Grain or the suspension bridge that is being constructed near Hull must conclude that those projects were apparently never intended to be completed. The cost to the public is rising annually. The amount of money wasted on these projects is scandalous. Unless management or the unions can secure some control of large nuclear power station developments, there will be difficulty in fulfilling our programme.
The Secretary of State mentioned the 10-year programme for 15 gigawatts, starting in 1982. I believe that it is much more likely to begin as late at 1984 or 1985. Bearing in mind the long lead time. I do not believe that any of these stations will be commissioned until well into the 1990s. Another difficulty is that we cannot supply the coal that is in the ground. We could have a shortage of coal, which would make life difficult for 423 members of the public, who are represented on both sides of the House.
§ Mr. Deputy Speaker (Mr. Richard Crawshaw)
Before I call the next hon. Member, let me say that less than two hours of the debate remains and 11 or 12 hon. Members wish to speak. Any hon. Member who speaks for longer than 10minutes will prevent another from speaking.
§ Mr. Arthur Palmer (Bristol, North-East)
I should like to follow the hon. Member for Bedford (Mr. Skeet) in referring to the nuclear aspects of the documents.
First, may I put four propositions about the country's ultimate future with regard to energy? There will be increased total demand for energy, particularly in view of greater industrial production and a rising standard of living once this Government are out of the way and an improved Government take their place. The relationship between energy use and gross national product is close, though not exact. If we are not to scramble madly among ourselves for a share of the national cake, that cake must grow in size.
Secondly, increased demand for energy will be less than it might have been because of higher efficiency in the production and use of energy as costs rise. There will be less waste and more conservation.
Thirdly, primary energy sources that are as yet little developed—sea tides, sea waves, sun and wind—will contribute much more than in the past. However, they will not be sufficient to fill the gap caused by the ultimate decline in the output of fossil fuel sources—coal, oil and gas—due to physical exhaustion of supplies and increased expense of extraction. I agree with my right hon. and hon. Friends who say that in the next 10 years or so there will be considerable demand for and, I hope, availability of coal. However, I believe that in the longer term there will be increasing difficulty in finding people prepared to risk life, limb and future health in what is still the highly dangerous trade of coal-getting.
Fourthly, with present levels of scientific knowledge—and we cannot say what 424 the future will bring—more energy from nuclear fission processes, mainly in the form of electricity, will be needed to meet demand because there are no other sources from which it can with certainty come. Hence the British contribution to the overall European nuclear development need is important. The Secretary of State announced before Christmas a new nuclear programme. It was astonishing because some 15,000 MW was promised over 10 years.
I agree with the hon. Member for Bedford because I believe that between that aspiration and its fulfilment a great gap is fixed. As the Secretary of State knows, I questioned him very closely on these matters in 'the public hearing of the Select Committee on energy last week. The hon. Member for Bedford was in the audience. He seems to have learnt his lesson very well, because he listened to what I said and he has improved on what I said. I congratulate him; his Government would do well to listen to his cogent remarks.
I do not know whether the Government appreciate the width of the difference between what they have on paper and what they are likely to get in practice. There is, first, the question of choice of reactor. We are committed now to a trial PWR. The last Labour Government agreed to these design studies, but it is not yet clear whether the AGR will finally be abandoned. The issue is extremely cloudy. Secondly, as the hon. Member for Bedford has said, the nuclear reactor industry has been running down for many years and it is hard to see how a programme for the building of one 1,500-MW nuclear station per year from 1982 can be fulfilled quickly given that fact.
Sir Francis Tombs, the chairman of the Electricity Council and formerly chairman of the South of Scotland Electricity Board, who has a lot of experience in these matters, said last September, I think, that such a crash programme would not be possible. It will be useful for the Secretary of State for Energy to check the view of Sir Francis Tombs against that of Mr. Glyn England, the chairman of the CEGB.
§ Mr. Ronald W. Brown (Hackney, South and Shoreditch)
Would my hon. Friend agree that the feasibility study did 425 no more than generally argue that safety could not in itself be the sole reason for not having a PWR? However, that circumstance does not validate it and this is still an issue that the Government must get clear before we can go forward with PWRs.
§ Mr. Palmer
My hon. Friend has great knowledge in these matters, and, as he says, it is a question of clearing the PWR through all the difficult British nuclear planning processes and of clearing it also through the British nuclear inspectorate. There may be all the difference in the world between a PWR built rather carelessly, as I think has been done in the United States, and a PWR built to stringent British safety standards. I am sorry to have to raise these doubts, but it is important that we should not live in cloud-cuckoo-land and that we should keep our feet firmly on the earth.
We still have not done very much to bring our total electrical nuclear manufacturing capacity in this country into a unified whole. Some valuable changes were made a number of years ago, but the rivalries between the independent firms still within the British nuclear construction concentration—part private and part State-owned—continue. One considerable section of manufacturing interest in his country is still openly opposed to the PWR because its resources financially, technically and so on are committed to the AGR. Therefore, the right hon. Gentleman should look at these matters realistically and try to get at the truth on timetables, if he can, from those who advise him, and certainly not put on paper plans that are not likely to be fulfilled. I say that as one who is very friendly to the idea of further nuclear construction and regards it as essential.
I should like to make two final points which were not mentioned by the right hon. Gentleman. The first concerns the future of the fast breeder reactor, particularly the commercial fast breeder reactor. About three years ago the Atomic Energy Authority told some of us that a decision on a commercial fast breeder reactor was needed urgently. Some of us went to Dounreay and listened to Sir John Hill when he gave evidence to the then Select Committee on science and technology. He said that it was essential that there should be a 426 decision by the autumn of that year. That was several years ago. Since then everything has gone quiet. I should like to know whether we are to have a joint fast breeder reactor programme with the French. Or is that something that is talked about that again has no reality?
§ Mr. Edwin Wainwright
Is my hon. Friend able to tell us about other countries which are developing prototype fast breeder reactors? Has he any observations to make on the safety of the running of the prototypes to date?
§ Mr. Palmer
So far the running of the prototypes has been very safe, but everyone is cautious about a commercial fast breeder because, if it is to be a truly commercial reactor, it will have to be placed not far away in the North of Scotland but nearer population centres. It is assumed that the risks are greater than with conventional thermal reactors, rightly or wrongly. But other countries, including the Soviet Union and the United States of America, are working on these fast reactors because of the need for economy in the use of uranium.
Finally, will anything be done about further interconnection between the British and Continental grids? I know that the CEGB has plans and is carrying out certain work in the English Channel, but it would be interesting to know once again the reality and the facts and figures of the related energy economy through interconnection.
§ 12.3 am
§ Mr. Nigel Forman (Carshalton)
It is always a pleasure to follow the hon. Member for Bristol, North-East (Mr. Palmer), the former Chairman of the Select Committee on science and technology, with whom I served for some time on that Committee. I am sure that the whole House will wish to pay tribute to his great personal knowledge and experience of energy policy.
I do not propose to pursue the hon. Gentleman's remarks. I want to astound the House by concentrating on one of the documents that we are supposed to be discussing, namely, COM(79) 527 final, which is the appellation of the document headed:The energy programme of the European Communities.427 The House should bear in mind that the background against which we are discussing these documents and considering what the Commission has to say is bleak. There are the international recession and the prospect of British GDP declining by 2 per cent. or 3 per cent. over the coming year. Oil prices are rising fast in real terms with Saudi Arabian market crude now up to about 26 dollars a barrel and Nigerian and Libyan crude even further up at about 34 dollars a barrel. There is the extreme vulnerability of all the OECD countries to sudden interruptions of oil supply and the real danger, as the right hon. Gentleman said, of another Iranian crisis elsewhere in the Middle East. If it were to strike in Saudi Arabia, I do not know what the advanced Western world would do in the short term.
Document No. 9625 makes the important point of the economic burden of an adequate energy insurance policy. I use the phrase "energy insurance policy" because it is contained in one of the paragraphs of the document.
The progress that the Community has made so far in attaining its energy objectives has not been good. Nothing like enough has yet been achieved on energy conservation. There is a need for much better progress in reducing the dependence on imported oil. There has been some progress but nothing like enough to ensure a margin for safety.
I am sure Opposition Members will agree that it is disappointing that coal production and consumption have declined since 1973. Forecasts for natural gas are probably too sanguine, especially the expectation of vastly increased imports in paragraph 20 of the document. I am not sure where these imports are expected to come from. A quadrupling of imports by 1990 presumably refers to Algeria and Norway. I should like to know the evidence on which that is based.
There is growing realism about the contribution of nuclear power from 1990 onwards. My hon. Friend the Member for Bedford (Mr. Skeet) was right to warn the House of the real danger that the out-turn on nuclear building and nuclear stations coming on line will be a great deal more modest and slow than the paper plans.
428 The most vital points in the document are those made in paragraphs 21 and 22. A salient sentence in paragraph 21 states:The evolution of demand can either exacerbate or moderate these supply problems and depends on future economic growth and on the effectiveness of our efforts to use energy more effectively.In other words, the document brings out the shortcomings of previous energy policy in the unwillingness to act sufficiently on energy demand as well as on the supply side. What has to be recognised over the coming years is the inevitability of the energy sector as a whole preempting to a massive extent resources that were previously available to other sectors of the economy.
The objectives for Community energy policy are set out in paragraph 26. I agree with objective (i), but I believe that the Community could go much further, especially if some of its economic growth can be wisely invested in the more efficient conversion and use of energy. I agree with objectives (ii) and (iii), but these imply a vigorous policy of fuel substitution and conservation.
I agree with objective (v), although it contains an element of internal inconsistency. There is an inherent tension when the same paragraph talks of increasing coal imports and restoring Community coal production. It is important that coal should be used as efficiently and effectively as possible. I hope that my hon. Friend the Under-Secretary will say something positive about the Government's attitude to CHP and the wider use of fluidised beds, especially the direct use of coal in British industry.
I agree strongly with objective (vii) in paragraph 26. There is no doubt that what are calledeconomic and transparent energy pricing policiesare a major factor in conservation and the efficient allocation of resources. To this extent, I cite the Government's recent brave decision on gas prices as a step in the right direction and as being consistent with that objective.
I am a bit dubious about objective (iv) because of the nuclear costs and delays, the great problem of reaching the indigenous coal production targets and my personal doubts about excessive reliance upon electricity in the future, whatever that electricity will be fuelled by.
429 Equally, I am doubtful about objective (vi) because of the strengthening argument in favour of a cautious depletion policy for both oil and gas. Once again, I am in agreement with the right hon. Member for Plymouth, Devonport (Dr. Owen) on this. I hope that we shall get a positive statement on the Government's depletion policy, not necessarily in this debate but soon. If we wish to emulate partner countries, we would do better to emulate the Norwegians than the Dutch.
The top priority that comes out of the document is the priority which must be given throughout the Community to energy conservation. I commend paragraphs 34, 35 and 36 to the Government. They repay a great deal of study, and I hope that they will be implemented.
I also hope that the Government will use all the weapons at their disposal in energy conservation. I include price, exhortation, regulation, incentives and taxation. We cannot reply, as hitherto, solely on exhortation and price. We need to be more ambitious with the other mechanisms. All sensible studies show that conservation is the best, the quickest, the safest and the most employment-creating investment on an opportunity cost basis that can possibly be made in the energy sector. If I may be a little critical, I wish that the Government would show more signs of realising that, not just in their policy pronouncements but in the action they take.
§ Mr. Nicholas Winterton (Macclesfield)
Is my hon. Friend suggesting that the Government might adjust the rate of value added tax for the improvement of property, which in many cases involves insulation, which cuts energy costs?
§ Mr Forman
My hon. Friend is on to a good point. He has also pinpointed a dilemma, which is that the Department of Energy is the lead Department in energy conservation. Energy conservation entails a great deal of co-ordination throughout Whitehall if it is to work. I hope that the Government will say something positive tonight and do something positive in future about energy conservation.
§ Mr Peter Hardy (Rother Valley)
The House will have found the speech of the hon. Member for Carshalton (Mr. Forman) 430 very interesting. He is right to offer a note of criticism of the Government. I, too, shall be offering one or two criticisms of the Government.
The documents show that large sums of money are being made available for nuclear research. I do not object to nuclear research, but, given the note of realism that has dawned on the Community, it would be better for some of that money to be switched to augment the me agre funds which are devoted to the support of coal and research into coal technology.
My right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) was right to talk about the depletion policy. In document 9625/79 we are told that oil supplies to the Community were 6 per cent. higher in the first half of 1979 than they were in 1978. That is a very serious matter. If that trend is continued, the British commitment to be a net exporter of oil throughout the 1980s is very dangerous. I hope at the next Energy Ministers' meeting the Secretary of State will ensure that Europe is made aware that we as a net oil exporter—I think foolishly a net exporter—will expect EEC countries to abide by the commitments they have made. If they do not, we should rapidly examine our commitment to export oil and drastically change the depletion policy.
Coal, as the documents say, is the most abundant energy resource in the Community. Coal production in the 1960s fell by deliberate design. People have realised since then that that was a mistake. Unfortunately, despite all the protestations and comments, some of which we read in these documents, coal production is continuing to decline in the Community. Having recognised the need and realised that coal is necessary, the Community should take very much more positive action to safeguard the industries, particularly on the mainland.
The Belgian and French fields are contracting. Two of the four areas of the National Coal Board in Yorkshire will be producing far more coal than is produced in the whole of France. Their position is deteriorating. The production in West Germany may remain substantial, but it is bolstered by very heavy national subsidies and by its reliance upon the Community's reported trade within the rest of the Community. The West 431 German industry is not economic. It is scarcely viable. It cannot be regarded, under any criteria, as comparing with the National Coal Board. Yet, because of the Community's support, it is able to compete with the National Coal Board, which is an infinitely more successful and productive industry.
However, grievous problems have developed for the National Coal Board. It should be poised and buoyant. Since 1974 it has had confidence injected into it. Massive investment has taken place. It can properly be regarded as potentially the most successfull deep-mine industry in the world. Yet we are now facing enormous difficulties.
My right hon. Friend the Member for Devonport referred to some of the areas in Britain which were placed in difficulties as a result of coking coal imports. However, he did not mention South Yorkshire. I shall talk about the effect in my own constituency. So far, little attention has been given to that effect—not even by our local media. I have been surprised that the media in South Yorkshire have not properly understood the difficulties which the National Coal Board now faces in our area. The Under-Secretary of State understands it. I welcome the visits that he made. However, we shall require explanation and understanding over the next few months so that we may maintain the tremendous progress that was being achieved.
I want to talk about the pits in the Rother Valley. They produce coking coal. They have made the National Coal Board South Yorkshire area a successful and profitable area. That success is now in serious jeopardy. Cortonwood colliery produces the best coking coal in South Yorkshire. It may not be able to find a market for it other than generation. At the moment, National Smokeless Fuel is taking coking coal from Cortonwood on a temporary basis.
I hope that my hon. Friend the Member for Bassetlaw (Mr. Ashton) will forgive me for referring to Manton colliery. That was one of the most successful collieries in Britain. It supplied the BSC at Corby. That market has gone. Good-quality coking coal from Manton, at the southern end of the Yorkshire coalfield, is now being used for generation. That 432 is an absolute waste which should cause the Department of Energy a great deal of distress.
Nearby in my constituency Treeton, Brookhouse and Orgreave collieries provide coal for the British Steel Corporation (Chemical) Ltd. works at Orgreave and at Brookhouse geared to the BSC market, which is shrinking. The reduced operation at Scunthorpe, which is an example of absolute blindness, may actually mean that Scunthorpe cannot take all that those two coke ovens produce—or, if it does. it will shrink its demand for coking coal from other collieries in my constituency. Certainly that could be the case at Silver-wood, where an expensive merry-go-round, very efficient method of coal transportation has been developed to feed the Scunthorpe industry.
If the Government had the slightest sense, or if BSC was given the slightest grounds for confidence, far from reducing the operation at the important and expensive plant at Scunthorpe to single-vessel operation, we would see a moderate investment in iron-making there. That would make the whole of the Scunthorpe steel undertaking a viable, internationally competitive area. Instead of that it will be made permamently non-viable by the reduced level of operation. That means that the South Yorkshire area coking coal has no adequately sensible outlet. That certainly could be the case at Dinnington. Here is a classic example that illustrates the point made by my right hon. Friend.
Huge sums have been spent at pits in my constituency, especially at collieries like Thurcroft, which has one of the most advanced technique mining faces in the world, and Dinnington, where a large amount was spent to provide modern coal preparation facilities. Previously Dinning-ton, which did not have adequate preparation plant, was supplying the generating market. So the National Coal Board invested large sums of money in coal preparation at Dinnington colliery to convert to the coking market. Dinnington converted successfully and was doing well but now could be plunged into serious difficulty. That is a ludicrous position because the investment is relatively recent. For the miners and management at that pit to be told that they must now supply the generating market is rather foolish.
There may now also be difficulty at Kilnhurst, which is on the edge of my 433 constituency and that of my hon. Friend the Member for Dearne Valley (Mr. Wainwright). The coal from Kilnhurst goes to the Manvers complex in his constituency.
§ Mr. Edwin Wainwright
Is not my hon. Friend forgetting to mention the price of coal for coking purposes going to the power stations?
§ Mr. Hardy
My hon. Friend and I are well aware of the effect. I have heard some Conseravtive Members say in recent weeks "Send the coal to the Central Electricity Generating Board. It will take everything that the National Coal Board can provide." That may be so. But the price that the CEGB pays for poorer quality coal is much less than the price that coking coal demands.
Whilst Dinnington, Thurcroft, Treeton, Brookhouse, Silverwood and all the other collieries in my constituency will continue to provide coking coal, they are deep pits with thin seams, which will mean that those pits, because of the lower return they will receive for steam-raising coal, will be in a loss-making position. I did not know that the hon. Member for Sheffield, Hallam (Mr. Osborn) was interested in or familiar with the coal industry, near though his constituency may be to mine.
§ Mr. John H. Osborn (Sheffield, Hallam)
I have been talking about coal for considerably longer than the hon. Member for Rother Valley (Mr. Hardy).At one time he stood for Sheffield, Hallam, and it was not until he obtained another seat that he was in a position to talk about coal. Be that as it may, the hon. Gentleman spoke about the position in Germany. My hon. Friends and I have mentioned that acrisis faces Europe and its industries. Hon. Members who are in the European Parliament now—I am certain the hon. Gentleman knows this as a member of the Council of Europe—know that the Germans, the Belgians and, to a certain extent, the French will increasingly look to this country for their coal if they are to obtain it from Europe as opposed to cheaper sources elsewhere where there may be difficulties.
Can the hon. Gentleman speak about future markets for coal for hydrogenation and converting into liquid fuels on a 434 European scale? The future markets for the coal of our area are in the new processes for producing liquid fuels and, perhaps, for use in the chemical industry, yet the hon. Gentleman has not said one word about the future of the coal industry in South Yorkshire.
§ Mr. Hardy
The hon. Member may not have heard it, but the first part of my speech—briefly, I accept—urged greater investment of funds for coal research. I compared the meagre amounts going to coal with the amounts going to nuclear research. What annoys me about what the hon. Gentleman said—more than anything that he might have said during the 1966 general election—is his suggestion that I started talking about coal when I became Member of Parliament for Rother Valley.
The last thing that I did before the intervention of my hon. Friend the Member for Dearne Valley was to mention Manvers, which is in my hon. Friend's constituency. My father worked at that colliery, as did his father and his father's father. I started talking about coal mines and miners at a much earlier age than the hon. Member for Hallam started talking about steel. I resent the implication that some of us are, perhaps, carpetbaggers. But that implication is certainly not becoming to any Conservative Member, especially an hon. Member such as the hon. Member for Hallam, who could have played a positive part in influencing his own Government in the present steel dispute. The hon. Gentleman, because of his experience and geographical location, could have made a contribution to sanity in that stupid situation. The hon. Gentleman has lost that opportunity by his rather foolish attitude in this matter. I regret that he has intervened in this debate.
I believe that the National Coal Board must maintain a production level of 120 million tonnes a year of deep-mined coal, because if it falls below that level, given the loss of revenue from the coking market until that recovers, the NCB cannot maintain a buoyant attitude and a successful record on a lesser degree of production.
That means that the Minister must go to Europe and insist, with very great emphasis, that the production of subsidies for intra-Community coking trade needs, as a matter of urgency, to be extended 435 to cover support for steam-raising coal. That may well not provide the NCB with the same returns as the German industry gets from the trade in coking coal, but it would give it the capacity to sustain itself in the present months of difficulty.
I shall not say more about the matter except that the assertion that Wales is the only area affected by the decline in coking coal demand does a great disservice to the coalfields in England, and particularly in the Yorkshire area. I hope that the Department of Energy, during the next few weeks, will begin to make sure that the nation is presented with a rather more accurate picture than has emerged so far.
I should like to have spoken at greater length, but I recognise that others wish to speak. My final point concerns the question of gas. In document No. 9625 we read that Netherlands gas production will peak next year and that our production will peak in the middle of the decade.
I end on a note which I have expressed on a number of occasions in recent weeks in regard to gas flaring. I regret the grossly inadequate and inaccurate response to a parliamentary question which I asked the other day. I was told by the Minister that 551 million cubic feet a day was being flared in the last part of 1979. I got a letter shortly afterwards—the Minister will have put it on public record—to say that there had been an error and that the figure was wrong by 90 million cubic feet. If the error had been in the right direction—that is, 90 million cubic feet a day less—I would have been delighted. But it was 90 million cubic feet a day more than the figure given officially in answer to a question in the House.
That illustrates a disturbing lack of monitoring of the industry by the Department. It illustrates an appalling waste of a very limited natural resource. It certainly seems that we need to use that as an example of fecklessness in the Department, but, more important, it demonstrates the need for much more urgent consideration and much tighter control of offshore activities by the Department. We cannot afford that degree of profligate waste. It is disturbing that the Department could not even be accurate in its measurement of it.
436 The Government deserve to be criticised. If they do not take urgent action at the next Energy Ministers' meeting, that criticism ought to be very voluble indeed.
§ Mr. Tom Normanton (Cheadle)
I am grateful, Mr. Deputy Speaker, for catching your eye, particularly because it gives me an opportunity, in the next 10 minutes which you have recommended, to draw upon my involvement in the European Parliament energy and research committee. For most of the years in which I have been a Member of this House I have been serving on that committee. I am delighted to note that on both sides of the House in this debate there have been colleagues and former colleagues of mine who also served there and made a very positive and constructive contribution in that process.
It is the process of dealing with European legislation on which I should like to touch first, and I believe that the procedural observation is probably the most important.
We fail to use and to make use of those of our colleagues who have served in the European Parliament in fields such as energy and research, and of those who still do so. We are now taking part in a debate, which will last for three hours, covering three Commission documents. In fact, in the energy and research committee there has already been several times three hours spent on one of those documents alone.
Consultation on Community documents takes place, but I regret that my experience in the last seven years is that we do not utilise it to the benefit of the House. The briefing and debriefing has been inadequate. My hon. Friends and I are confident that the Secretary of State is taking action to fill that breach. I should like to think that the Opposition spokesman takes the same line with his colleagues so that they make a constructive contribution in the national interest.
The Secretary of State referred to oil consumption. The so-called pegging of oil consumption levels tends to overlook the high price. There has been a lack of growth in the last six or seven years. We should not use the present measure. We are dragging our heels unforgivably and 437 damnably in dealing with the energy crisis. I hope that the Secretary of State will give a long overdue impetus and I hope that he will take advantage of the nuclear energy situation in Europe.
The paper on plutonium cycle research makes the observation that the programme is held up as a result of the European Parliament's decision to reject the Community budget. I hope that the next time a Community budget is proposed—in the next 10 days or so—we shall have closer co-operation between the European Parliament and the Council of Ministers on the crucial issues of energy and finance.
The House will welcome the Secretary of State's favourable comments when referring to Community research establishments. He referred to the joint establishment at Ispra However, there are three other research establishments elsewhere in Europe, each of which plays its part. They should be supported. I hope that the Government will encourage colleagues to go to the Ispra establishment to see at first hand what goes on there.
Reference has been made to the United Kingdom having no plans to use plutonium in thermal reactors. Are we not running the risk of not utilising plutonium in an economic manner? Are we not in potential political danger of being short of uranium, bearing in mind the rate at which we are consuming or converting it?
This is a heaven-sent opportunity to use the accumulating masses of plutonium in fast breeder reactors. I plead with my right hon. Friend and the Department to place much more emphasis on, and to be much more speedier about, progress towards the establishment of fast breeder electricity generation.
There is in the Strangers' Gallery one of my colleagues in the European Parliament, the Member of the European Parliament for West Sussex.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
I remind the hon. Gentleman that it is not customary to refer to anyone in the Strangers' Gallery.
§ Mr. Normanton
I apologise for that lapse, Mr. Deputy Speaker. But it may be of interest to the House to know that that Member of the European Parliament has been appointed the rapporteur for 438 this subject, which is dealt with in one of the three documents that we are discussing. I am certain that hon. Members' contributions, including their criticisms, will have been noted and will be extremely valuable. This is another way in which the House can make a positive and clear contribution towards considering Community legislation.
I come to the last of the documents. My right hon. Friend referred to Community financing of nuclear energy production. He spoke, with justification, of the role and financial status of the Commission, as regards the funds that it is raising and disbursing. I hope that he and the industry will not overlook the European Investment Bank, which is playing a valuable role and I hope will be encouraged to continue to do so. It is not specially designed for dealing with nuclear energy, but there are many nuclear activities peripheral to electricity generation to which the bank can make a useful contribution. Its rating is the same as that of the Commission—Triple A.
I hope that my right hon. Friend will give serious thought to the whole question of Community financing by loans. I hope that he will note that in the European Parliament debate in December one of the many matters that were seen to be agitating the minds of European parliamentarians from throughout Europe was the whole question of Commission loans, and the pressure for the "budgetisation" of those loans within the Community budget. I know that the Council of Ministers has firmly set its sights against that, but there is a growing insistence by the European Parliament on the "budgetisation" of the increasing sums that the Community is raising by loans.
§ Mr. Alec Woodall (Hemsworth)
like my hon. Friend the Member for Rother Valley (Mr. Hardy), I shall confine my remarks to document 9625/79, and I shall speak particularly about coal. Therefore, it is as well that right at the beginning I declare my interest. I am a sponsored member of the National Union of Mineworkers.
The document was produced in Brussels on 10 October last year. It consists of 27 pages and four annexes. 439 On 8 November an explanatory memorandum was produced by the Department of Energy. It consists of just two paragraphs to explain the other vast document. I make one short quotation from it:…supply difficulties could become a constraint on economic growth unless greater efforts are made to increase production in the Community from all conventional and new sources.I emphasise the words "all conventional and new sources". I take it that "conventional" means coal, oil and gas, and the "new sources" must be nuclear, since neither the right hon. Gentleman nor his Department has yet made an announcement about wave power, the the use of the sea, barrages, solar power or any other source of energy.
We had an announcement about our nuclear energy programme only a few weeks ago, and it is clear that what the present Government have done, and done quite convincingly, is pin their hopes on nuclear energy, putting all their eggs in the one basket.
I turn now to annex 1 to the document No. 9625/79, showing the Community energy balances over the period 1973–90. It is interesting reading. In 1973 the contribution of coal to the whole of the Community's energy balances, was 200 million tonnes of coal equivalent, or 21 per cent. of the total. By 1978, due to closure programmes begun in the 1960s, it had fallen to 174 million tonnes of coal equivalent, or 18 per cent. of the total. But it is hoped that by 1985 coal will rise to 210 million tonnes, or 14 per cent. of the total energy balances. By 1990 it will be 194 million tonnes, but still only 14 per cent. of the total balances.
I shall skip over oil and gas, if the House does not mind, because their contribution is pretty well static over the whole period 1973–90.
I come then to nuclear energy production. In 1973, the nuclear contribution to the Community's energy balances was 14 million tonnes of coal equivalent, or 2 per cent. of the total. By 1978 that had doubled to 29 million tonnes, or 3 per cent. of the total. But what do we see for 1985? I am sorry that the hon. Member for Bedford (Mr. Skeet) has gone, because he referred to the planning difficulties in 440 particular for nuclear power stations and also to the Vale of Belvoir project. The Community hopes—I think that the Government agree with this—that by 1985 the nuclear contribution will be 190 million tonnes of coal equivalent, or 13 per cent. of the total, and by 1990 that will rise to 204 million tonnes, or 15 per cent. of the Community's total energy balances.
That proves conclusively to me that the Government's objective is to put everything into the nuclear basket. Why have they lost confidence in coal? The coal industry has never let this country down. Our coal industry was run down by successive Governments during the 1950s and 1960s, but more pits were closed by the Conservatives between 1951 and 1964 and between 1970 and 1974 than were ever closed by Labour Governments from 1964 to 1970 or from 1974 to last year. In fact, we did not close any collieries during the period of the last Labour Government except through natural wastage.
The last Labour Government gave the coal industry the incentive and the economic boost that it needed in order to increase coal production. My hon. Friend the Member for Rother Valley spoke of the target of 120 million tonnes, which it is hoped—I believe that there are high hopes—will be achieved this year, which ends after the end of this month. Over the years, the coal industry has always proved that it is capable of producing and will produce the goods.
Why has there been the switch away from coal to nuclear power? Given the present rate of extraction and the present rate of use we have coal reserves to last us for 300 years. The coal is there, in the ground. We have the men who can get it out. They have the technical expertise, backed by capital investment. There is the muscle behind the elbow—the machinery that is a feature of highly-developed mechanisation. The Government should come clean and tell us how they stand in relation to the energy requirements of this country and the Community as a whole.
The Government will find that there are manifold difficulties in putting all of their eggs into the nuclear basket. These were outlined by the hon. Member for 441 Bedford. We have evidence of the difficulties that have to be faced environmentally. The hon. Member for Derbyshire, South-East (Mr. Rost)—always an anti-coal man—was critical about the amount of investment put into the coal industry compared to the amount of coal coming out. Does he realise that it was three years ago that the first sod was cut at the Selby project? That mine will not be completely operative until 1985.
It is no use putting money into the energy industry one year and hoping to get quick returns the next year. The Government will find this when the right hon. Gentleman comes to give his permission for the Vale of Belvoir project, as he surely will, in the national interest. Never mind about the farming interests, the interests of this country and the Community depend upon the Vale of Belvoir, and upon all coal production.
The Government should state their faith in the viability and the future of the coal industry. We can produce the goods. We have proved it. Nuclear power has yet to be proved. I ask the right hon. Gentleman to think again. I wish that he would be more forthcoming about his nuclear programme. I asked him, when he made his announcement, where the sites of the nuclear stations would be. He could not tell us. I do not believe that he yet knows. The right hon. Gentleman should have more faith in the coal industry and less in a suspect nuclear industry.
§ Mr. Peter Rost (Derbyshire, South-East)
I am sorry that the hon. Member for Hemsworth (Mr. Woodall) should be so misinformed and misguided about my attitude towards coal. If he had attended energy debates more regularly and heard me in Committee, he would not have made that rather insuling remark. The hon. Member might be interested to know that I can claim to be the only Conservative Member ever to have been invited to speak inside the Barnsley Miners' Hall. I took part in a discussion on the coal industry because the miners know which Members of Parliament are interested in the industry.
I am also sorry that the hon. Member has taken such a bigoted attitude towards the future of the energy industry in assum- 442 ing that the Government are against the coal industry and in stating that the Government believe that it has no future. How does he think we shall replace the natural gas and the oil unless we develop the coal industry with the new technologies? Anyone who knows anything about the future of energy strategy in Europe will appreciate that coal has a major future, combined with new energy sources and nuclear power. The hon. Member should not speak in such an ignorant way about the policies of this Government but should take the trouble to find out what they are.
I suspect that, if the founding fathers of the European Community had visualised, a couple of decades ago, that energy would become the major problem for our strategic and economic survival, the Community might have been founded on a common energy policy rather than a common agricultural policy. We would have developed a budget which would have promoted the production of energy rather than food and, rather than having mountains of butter and lakes of wine, we might now have mountains of coal and lakes of oil.
§ Mr. Rost
I hope that the hon. Gentleman will forgive me for not giving way. I intend to be brief, because I know that other hon. Members wish to take part in the debate.
Those of us who look to the future, and who believe in the strategic, economic and political survival of Western Europe, must accept the importance of developing greater self-sufficiency within our energy policy. This is why I welcome the document. It is the beginning of an appreciation within Europe that we are vulnerable strategically unless we develop greater energy self-sufficiency. We are vulnerable economically, for unless we develop greater self-sufficiency, as the price of oil rises with scarcity, we shall become extremely vulnerable in Europe with the economic burden of having to import oil at escalating prices. We could well be faced with the sorts of problems with which America will be faced unless it grapples with its energy problems and the matter of the importation of oil.
443 I am therefore very concerned that we in this country should play a more constructive role than we have in the last few years in helping to achieve this primary objective, and what I regard as the most important objective in Europe for strategic, for economic and for political reasons, namely, greater self-sufficiency in our energy supplies.
This requires structural changes. It requires us to take the measures which will allow us to be less dependent upon imported oil. But, unless we react in this way, the scramble for increasingly scarce oil supplies in the years to come, with the price escalation that will result from it, will simply aggravate world economic problems, and particularly play a major part in impoverishing Europe rather than allowing us to maintain or improve our standards of living.
This will lead not just to strategic risks and political and economic problems but even to social upheaval. I am therefore particularly concerned that we play a greater role in a European policy for greater self-sufficiency. I regard conservation—or rather a more efficient use of our energy—as the primary contribution that we can make. There is, I believe, far more scope than we have yet been prepared to accept.
In the document, we are reminded that, if today's best practice in energy conservation and in the efficient use of energy were to be generalised throughout the European Community, it would be possible to save up to 30 per cent. of our energy in industry, up to 35 per cent. of our energy in transport, and up to 50 per cent. of our energy in domestic consumption.
These are formidable targets but well worth attempting to achieve. I hope, therefore, that the Government will reaffirm their commitment towards a policy of greater self-sufficiency in Europe, and that they will play a greater role in trying to reallocate the resources within the Community, so that we allocate a little less proportionately to building up surpluses of food and have a greater proportion of the budget allocated to greater self-sufficiency in energy production.
It will involve a determined commitment to provide the incentives to do it, and the pricing signals must be enforced 444 to see that it happens. This policy towards greater self-sufficiency is absolutely vital for our future in Europe. Moreover, I maintain that the United Kingdom has a very large role to play here, very much to contribute as the major producer of energy, and therefore very much to gain from promoting this policy, not least by ensuring our own security, our own economic stability, and that of Europe as a whole.
§ Mr. Dick Douglas (Dunfermline)
I shall try to be brief. I apologise to the hon. Member for Derbyshire, South-East (Mr. Rost) as I shall not take up the broad scope of his remarks. The debate has demonstrated the great interest of many hon. Members, both in energy generally and in European energy policy in particular.
Some of my hon. Friends have already referred to the choice between coal/ nuclear fuel and accepting the Government's bias towards nuclear power. Yesterday, I was struck by the speech of Peter Baxendell of Shell. He demonstrated that Shell is now putting a lot of effort into the expansion of coal production. That is significant, and lessons can be learnt. In the 1960s and early 1970s, Shell had a partnership, which is still maintained, with Gulf concerning nuclear power. However, Shell finds it difficult to achieve commercial viability. It has now turned away from the exploitation of nuclear power and it has turned to coal.
I have two questions to ask and I hope that the Minister will reply to them. The Secretary of State said of oil that we would be a follower, not a leader. What is our position today? North Sea crude stands at $29.75 a barrel. Nigerian crude oil runs at $34. Our oil is about $4 or $5 cheaper. Do we intend to equate the price of our oil with that of Nigerian crude?
The present rate of petroleum revenue tax is too low at 60 per cent. The Government are responsible, and they should update that position. They should review the position continually. We must not lose our world position. We must not allow oil companies to exploit the United Kingdom and to reap windfall profits. Perhaps the Government will indicate their general line of thought tonight.
445 We have dealt particularly with the social stresses that arise. I refer to paragraph 7 of the paper on energy policy. It says,In these circumstances social tensions can appear or be exacerbated, and political and social norms can be challenged.That is a source of extreme danger. The Government are responsible for security of supply. As regards the Government's attitude towards gas prices, I have no quarrel with the principle of intervention. I believe that a Government should set prices. However, the Government have not jacked up prices in order to secure the supply of gas. They have done so as a result of their attitude towards the public sector borrowing requirement. Individuals have been conned into making huge capital expenditures per household. They have to bear a heavy burden. That burden is based, not on the desire to secure supplies, but on the Government's desire to achieve cuts in the public sector borrowing requirement. That must be questioned.
The Government must tell us how they intend to secure supplies, not just for the next four or five years, but into the 1990's. I keep stressing that we need more information on production profile. We keep awaiting a statement on depletion policy and on the Government's attitude to marginal fields.
Paragraph 22 states:A variation of 1 per cent. in the average annual growth rate of Community GDP between 1978 and 1990 could lead to up to 100 million tonnes or equivalent per annum more or less energy demand by 1990".That is a startling figure. If that is the type of analysis that the Community is using, what lies behind the statistics? The figure is equivalent to the entire present production of the North Sea.
Also in relation to equation of demand, we should consider our relationship with the United States regarding oil. How are the arrangements for curtailing demand agreed at the Tokyo summit working out? Is the United States continuing to import over 8 million barrels of oil a day, or has President Carter been successful in turning back demand? That is extremely relevant to Community energy policy. My right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) is perfectly right. The European Community cannot determine an energy strategy on its own. It must be done 446 certainly in concert with the United States and Japan.
I have one or two small but important points regarding nuclear fuel. Paragraph 61 refers to safety:The Euratom Safeguards Inspectorate, now in existence for over twenty years, was the world's first multinational nuclear safeguards system.In my constituency at Rosyth we have a PWR-type reactor. It is extremely important to understand the public's attitude. What do the Government feel about opening up all safety provisions to public scrutiny, and in particular involving the trade union movement in access to information on how radiation affects those who work in particular plants? The trade union movement and health and safety committees should have direct access to workers' records regarding radiation, and become involved in nominating independent organisations to vet the longterm effects of radiation on the work force and, if possible, the public generally. Will the Minister consider raising that topic in discussion with the Euratom Safeguard Inspectorate?
Turning briefly to the demand for coal, in paragraph 65 there is a startling discrepancy:Taking account also of the likelihood of stable demand for coal in coke ovens and of a decline in demand for other uses, the Commission foresees a total demand for hard coal of 185 million tonnes or equivalent in 1990–37 million tonnes or equalivent less than in member States' forecasts.What is the discrepancy in our forecasts? The discrepancy quoted there is enormous.
Paragraph 67 mentions coal policies for the future:Special attention will be given to technological programmes to devise new processes for the extraction, transport and processing of coal.What is the Government's attitude to the excellent document produced by the National Coal Board called "Coal 2000"and its relationship to that statement? How far are we going to secure the possibility of extracting coal from the North Sea using techniques similar to those used in oil production at present?
We must make it clear in the Community that we have to deal direct with the OPEC nations. The old attitude of using the multinational oil companies as 447 a buffer between the nation States and the producing countries has gone for good. Deals will have to be done between the consuming countries and the producing countries. We can act as honest broker here because we are a producing country. There must be an inter-relationship of mutual interest.
That is why I am hypercritical of the posture of the Prime Minister in relation to Afghanistan and the present tensions throughout the world. Her attitude is that the West has to do something because our interests are threatened. That is the wrong way to go to the bargaining table, and it is the wrong way to impress the OPEC countries.
There is a mutuality of interest here, and we are in a unique position because for the foreseeable future we will be self-sufficient in energy. We should be capable of taking a lead but, unfortunately, the economic policies of this Government have put us in a parlous state.
At the next meeting of the Energy Ministers I hope that the Government will take an initiative to get some drive behind them and secure an inter-relationship of mutual interest between the producing nations, including the United States and Japan, and the members of the Community so that we can overcome some of the dislocation that can be seen in the world. That dislocation will be exacerbated if we do not come together and secure a viable policy in our dealings with the OPEC nations.
§ 1.6 am
§ Mr. David Penhaligon (Truro)
I am tempted to make my fairly standard antinuclear speech. However, the House has heard it before so I will leave it for tonight except to say that the total lack of reference in any of these documents—except for two words—to waste disposal by the European Community will not make the problem go away.
Paragraph 30 quite clearly says, on energy saving, thatIn the short and medium term greater energy saving can probably make a larger (and cheaper) contribution to the equilibrium of supply and demand than can action to increase supplies".Reference has been made to paragraph 36 where quite massive energy savings are outlined. Thirty per cent. can be 448 saved in industry, 35 per cent. in transport and 50 per cent. in the domestic sector. It is to that area that I wish to address my few words, because I believe that the Government's programme on conservation to date has been hopelessly inadequate. I do not criticise this Govenment only. The previous Government were not a great deal better. Insulation and draught-proofing can make massive contributions to energy saving but the £50 a house scheme is inadequate.
After the number of times the subject has been discussed in the press and elsewhere we have not yet managed to control the temperature in this building. Except for four days of the year the heat is perpetually turned off and the windows are perpetually open in my office in order to get the temperature down to a reasonable working level. After all our debates on the problem, how far have we got with it? We must change our practices if we are to save energy. For example, glass bottles need to be used, cleaned and recycled.
I would like a Government statement on when we are going to get down to establishing heat and power schemes in this country. The most efficient thermal station we have is running at 41 per cent. capacity. The average cannot be much more than 35 per cent. and nuclear power stations hardly attain those percentages because of heat transfer problems.
We are wasting over 60 per cent. of the heat from our total electricity generation, whether it be from coal, oil or gas. If we could save half of that, it would mean a saving of 30 per cent. of our total electricity generation. Of all the alternative scenarios for energy that are offered, I believe that that area offers the best, the most likely and the most solid approach that we could take.
It means that we must build smaller power stations than the Government are planning in their nuclear programme. We must also build them closer to towns and be able to distribute the waste heat. It is possible to pump water over long distances, but there is little point in that as the energy required can quickly begin to equate with the energy distributed. When are the Government proposing to make some real announcement on conservation and, more important, because the lead time is longer, on their attitude to heat and power systems?
§ Mr. Alex Eadie (Midlothian)
It is no new feature that the House should be debating energy matters in the small hours of the morning. However, to some extent it is a tribute to the House of Commons that the debate has been so well attended. A great deal of interest has been shown by hon. Members. The House has distinguished itself, even at this very late hour, because, whatever our views, we have not tried to minimise the importance of the subject matter under discussion.
Views have been expressed on the contribution that the European Community can make through its respective funds and on the general attitude of Her Majesty's Government on the various Councils of Ministers. I do not envy the Minister's task in winding up what has been a far-reaching and broad debate. It may be that I am asking too much, but I think that he should endeavour to tell the House about the actions being pursued by the Government in Europe, because there is great confusion at the moment.
We read in the press that a battle is taking place between Ministers representing Her Majesty's Government and the various Councils of Ministers. We are led to believe that the Government, because of the monetarist restraint policies that they are pursuing, are not prepared to play the game that is generally played in Europe: that aid must be on a pound for pound basis. The Secretary of State knows that, in order to get aid from Europe for any project, we must also put money into it.
The discussions on the steel industry, for example, have not done the Government much good. They are refusing money because of the cutback in public expenditure. I think that is a fair point to make in this debate.
The papers that we are discussing indicate the likely demand for oil in 1985 as 3 million to 4 million barrels a day in excess of OPEC production. The whole House has been seized of the seriousness of the situation. Yet, to some extent, it understates the problem. I often gained the impression, when I was a Minister, that at times there was a failure in Europe to understand the two crises in 1974 and 1979 that shocked the 450 world and made it realise that cheap oil was no longer available. I have heard the Minister of State, Department of Energy say that the days of cheap energy have gone. Indeed, I said that many times, and I am sure that many right hon. and hon. Members have also commented to that effect.
The Arab-Israeli war of 1974 was not a crisis of energy. It was a situation in which the States of the Middle East applied political muscle to influence the outcome of the war. As a consequence, there was an increase by four or five times in energy prices. It was accepted in Europe that energy would never be cheap again. But memories began to dim until the Iranian crisis in 1979.
That was a different crisis. More than any other crisis, it highlighted the appetite of the world for oil and revealed the scarcity that existed even when Iran's tiny contribution was no longer available. Many countries were shown to consume more than their fair share of oil.
Energy represents, to some extent, defence. A country that does not possess energy cannot hope to function as an industrial country. Industry cannot be sustained without energy—there would be complete chaos. When a country tries, as best it can, to maintain its indigenous sources of energy, that is defence. At times, this House has not treated the matter with the seriousness that it merits. It is not simply a question of market forces or sheer economics. For a country with adequate, secure and indigenous sources of energy, this can mean industrial and economic survival.
I am surprised that paragraph 2 of the main energy document should state:The difficulties which arose in the first half of 1979 were due to the unforseen interruption in oil supplies from Iran, coupled with a severe winter".To say that it was unforeseen that something would happen in the world is complacent. It typifies the view of some European countries that oil can always be obtained if one is prepared to pay. That countries still take this attitude illustrates the general paralysis witnessed in the Community when there is call for bold, active decision-making to try to provide indigenous energy on a European basis.
Most of the oil comes from an area of political instability. There is a greater urgency for us to realise, as the Secretary 451 of State said, the need to exploit and invest in our good fortune and to ensure that we have adequate indigenous sources of energy. It would be brave for anyone to maintain that the position in the Middle East is safe. That would be a foolish attitude to adopt. Europe should be more seized of the situation following the warnings in 1974 that were ignored. The Europeans had a further warning in 1979. I wonder whether they are ignoring those warnings. What policies are the Government pursuing to make Europe realise the tremendous difficulties we shall be in unless the EEC develops its indigenous sources of energy?
We have been discussing coal. Some of my hon. Friends have coal dust in their lungs, and the House recognises that they speak with authority. The EEC countries are not investing substantially in the coal industry; they are contracting their coal industry. I believe the day will come when they will be sorry for having done that. The United Kingdom is the biggest investor in the coal industry among the EEC countries.
My hon. Friend the Member for Hems-worth (Mr. Woodall) said that this country had coal for 300 years to come. We probably have coal for 1,000 or 1,500 years. When the technology improves that is what the figure will be, but with existing technology the figure is nearer 400 years.
Doubts have been expressed about whether we would get the miners. I have never had any doubt about getting miners. If we pay miners, we will get them. If we apply in the mining industry all the new techniques and technology, we will get the miners. It is said that in the age of the silicon chip we shall be job-hungry. I do not expect any difficulty in getting miners. I wish those who say that would go into the mining communities and see what a modern pit is like. If we invest in the mining industry and apply the new technology we shall get the coal.
When the Labour Government invested in the mining industry, they were criticised by the Conservatives, but I do not mind that the Conservative Government have inherited the investment made in the past five years by the previous Administration. I am glad to know that absenteeism has been reduced and that 452 coal production is increasing, but if the Government reduce investment in the industry production will fall.
In their attitude to coking coal the Government are running the risk of being accused of betraying the miners. If, as was stated in The Guardian, the Government make redundant 17,000 miners in South Wales and if hundreds of jobs are lost in Yorkshire, Scotland and the North-East, if they close the pits and fling miners on the scrap heap, they will be accused of betraying the miners, and the Minister may have some difficulty when he goes into the industry.
A country with all the rich energy resources that we have, with coal for 1,500 years—
§ Mr. Eadie
Yes, if I had time I would deal with nuclear energy. The miners and steel workers want to know whether there will be increased imports of coking coal into this country. The second point is material to this debate. The British Steel Corporation should not be allowed to import coking coal behind the backs of the Government and the nation.
I hope that the Minister will deal with some of those questions and give satisfaction to the House and to the people.
§ The Under-Secretary of State for Energy (Mr. John Moore)
I start by saying how much I have sympathy with and endorse and recognise the view of the right hon. Member for Plymouth, Devonport (Dr. Owen) that it would be nice if we could have a longer energy debate. I shall draw his remarks to the attention of my right hon. Friend the Leader of the House. The interest, the attention and spread of subject matter covered clearly illustrate how difficult it is to respond. I apologise in advance to those people to whom I cannot, obviously, reply in the brief time available. I shall write to them specifically.
I shall try to cover one or two points. I should like, as I think the House would wish, to concern myself primarily with the question of the EEC documents and their relationship with the ECSC and the coking coal question. That is a crucial part of the debate.
The hon. Member for Bristol, North-East (Mr. Palmer) and my hon. Friend the 453 Member for Cheadle (Mr. Normanton) raised a point about the fast breeder and the joint project potential with the French and other people. The United Kingdom Atomic Energy Authority recently put a proposal to my right hon. Friend the Secretary of State covering the next stage of the fast breeder reactor. This is being urgently considered. It includes the possibility of international co-operation.
I come on to the point raised by the right hon. Member for Devonport and picked up by my hon. Friends the Members for Bedford (Mr. Skeet) and Cheadle concerning the Euratom offer of loan facilities. It is normally the case that by the use of the EIB finance arrangements there usually are modest differentials in interest rates, but there does not have to be. The right hon. Gentleman was right to draw the attention of the House to that fact. That is a highly competitive additional source of finance, but there does not have to be a differential.
The right hon. Gentleman asked about the French views on the plutonium cycle and the implications for the Community competence. I am not aware that France has raised any objections to the proposed programme on the grounds that it would represent an increased role for the Community in matters concerned with plutonium. It would indeed be odd if it did so. My right hon. Friend said that there was a previous programme on plutonium fuels which the French Government agreed to in 1974. We would obviously be happy to refer back to that point when we have a little more time.
I agreed with much of what was said by my hon. Friend the Member for Carshalton (Mr. Forman). I hope to speak briefly about conservation at the end of my comments. All of those interested in our long-term energy programmes recognise, especially in the further industrial usage of coal, the very important potential for the fluidised-bed combustion techniques. We would not do anything to impede that progress. As to the point about CHP, which was raised by my right hon. Friend and the hon. Member for Truro (Mr. Penhaligon), we hope to make an announcement on this important matter in the near future.
I now proceed to the important area of coking coal, the ECSC and the EEC area. As the hon. Member for Mid- 454 lothian (Mr. Eadie) said, there is enormous confusion in the area. That is perfectly understandable. It does no good to the coal industry for us to follow potential crocks of gold that do not materialise.
I should like to outline briefly the present position and to indicate—this is relevant to the debate—why the support structures in the Community are as they are today and what proposals we have to try to broaden the whole area of Community coal production specifically and indigenous energy production generally.
The current position is that the Commission can authorise two kinds of Community aid and it authorises national aid systems. It can authorise Community aid via the ECSC system or EEC funds. At the moment there is only one aid of the two kinds that the Commission can produce—that is the one via the ECSC system. There is a very small fund under this system.
The proposed budget for 1980 is £119 million. Essentially this is raised—so we know exactly where the money comes from—from the steel and coal industries of the Community, including our own, plus, since 1978, as there have been some difficulties in these basic areas, some ad hoc national contributions. At the moment there is a proposal about the composition of this ad hoc contribution which is that it should be of the order of £27 million of which Her Majesty's Government are expected to contribute approximately £4.5 million. This proposal is still under discussion, but it is expected that if it were carried through—there are other States that do not see the potential advantages to themselves in it as we might—most of the money would be for restructuring in the steel industry.
So essentially the spend of the only Community funds available for coal and fiteel are £27 million which is still under debate and most of which is expected to go to restructuring the steel industry, and a remaining £92 million, mostly provided by our steel and coal industries. That is then allocated back through 20-year patterns of protocols to three areas—re-adaptation of redundant workers, research and development, and the redevelopment and alternative employment projects. In all these areas our National Coal Board and our Steel Corporation get more than their proportional fair value. So we are content in the sense that we know that 455 more is coming out from the specific Community area as currently structured.
Another scheme which is differently financed, and which has been constantly referred to, is the scheme for the cross-boundary sale of coking coal. There is much unnecessary confusion about this scheme which, on examination, is not as attractive as it might appear. First, how is the scheme financed? It is limited to £30 million at present and up to a maxi-quality to qualify for this cross trade, the comes from the ECSC budget of £92 million to which I referred. Fifteen million pounds comes from the six original members States, not including ourselves, and £11 million comes from a levy on the steel industries of those six original member States.
If our coking coal was of the right quality to qualify for this cross-trade, the maximum apparent potential benefit on the seaborne trade would be about £2.80 per tonne. That would not offset the production cost differential or the additional transportation cost, and it would be sold at a selling price of approximately £32. Even if we were to succeed in overcoming this barrier, we would be expected to contribute to the finances of the scheme, which we do not do at present, and we would come out with nil benefit. I have gone into the scheme in some detail because I think that it is important to understand it.
The other side of the case that people rightly look to is where the real support goes to national coking coal industries. That comes under a system by which the Commission essentially approves the ability of national Governments to support their national industries. I am sure the House knows that there is a whole series of specific grants that are exercised—certainly by our coal industry—such as social grants, stocking aids, regional and deficiency grants, coal-burn aid grants and production aids. This year, as hon. Members will know, Her Majesty's Government have received a grant for the coal industry of £255 million for production aids.
That is roughly the system as it exists at present. Hon. Members legitimately ask why we are so limited because of the obvious difficulties the Community faces in terms of long-term indigenous energy supplies. It is legitimate here to look at one or two facts in the documents 456 that we are discussing, because they show quite clearly that whereas today, in terms of coal production and consumption, within the Community there is a net deficiency of about 63 million tonnes, whatever Mr. Baxendell said yesterday the relatively accepted figures indicate that by the end of the century the Community will have a net import need of over 250 million long tons—a very large increase indeed.
Therefore, clearly one should wonder why the Community has not concerned itself more with the development of coal production indigenously.
I think that it is legitimate to look at the last few years and reconcile oneself to the fact that 88 per cent. of Community coal production comes from two countries only. With that as a blackcloth, I think that one legitimately asks "Where are the Government going? Where do we see the future?"
The proposals on the table, so far as the Community is concerned, the proposals that have been recently discussed in this coal area, are fourfold. First, there is a modest proposal, still under discussion, for investment in coal-burning power station capacity. But due to the current size of our existing coal-burning capacity in the United Kingdom, we do not think—although this is still under discussion—that we shall be net beneficiaries from this. We do not think that it would be as much to our advantage as other areas.
Secondly, there was a proposal to extend and enhance the cross-frontier sale of coking coal. I have gone into this matter a little. It did not seem to have net benefit of any kind to the United Kingdom. So the scheme has been enhanced, and not extended.
Thirdly, there is under discussion a proposal to provide reduced interest loans for investment in coal production capacity. We think that this bears attention and is of interest, but we do not think that it goes far enough.
That is where we come to the fourth proposal, which my right hon. Friend put on the table, relating to coal production investment directly. Currently we have a proposal to raise£160 million in grant aid specifically to see whether we can invest in production, which, in the long term, is the basic problem in relation to the Community.
457 I summarise by saying that I go back to what I said in the Adjournment debate last night, what was discussed with the chairman of the National Coal Board, Sir Derek Ezra, my right hon. Friend and myself yesterday, and what was discussed on 18 December in the meeting with the mining unions and the chairman of the NCB, when we made it quite clear that Her Majesty's Government have given this year—and it has not been adduced in debate tonight when hon. Members have been talking about the degree to which we support or do not recognise the long-term future of the coal industry—a major increase in investment. The investment programme has been maintained. The cash limits for this year are £709 million, along with the £255 million in grant.
We felt that the NCB, within that context, needed, within that overall limit, the facility, within the ECSC arrangements, to be able to provide a coking coal grant. That permission was given on 18 December. The position is very clear. Her Majesty's Government feel that, within the overall support structures for the industry, there is scope for the NCB to offer transitional support to offset the very recognised radical reduction in demand that has occurred—to offset, if it commercially so decided that it was in its long-term interests, within that structure of aid, additional imports that the British Steel Corporation might contemplate.
That is the position. I should have thought that we had made this very clear. The £18 million about which the NCB was talking as its net deficiency we regard as a matter that it can cover within its commercial judgment.
I have only three or four minutes left. I touch briefly on the very important subject of conservation. As I said, it was raised very well by so many hon. Members, on both sides of the House. With respect, I think that we really ought to try to change the nature of the debate on what I regard as a very fundamental subject of great importance for our country. I find it somewhat deplorable that we spend so much of our time in conservation debates—and there is a media debate on the subject—trying to judge which nation has the best spend programme. We assume that conservation is only a matter of the degree to 458 which a State, through public expenditure, can out-spend another State.
We should look at the issue in two ways. First, as a nation within the European context, we must regard the strategic nature of our energy asset resources—which include conservation—as a positive resource. We must look at conservation in the light of the large investment that we make, correctly, in our coal, nuclear and gas resources. We must see our spend and commitment as a nation in that context.
Secondly, we must face the unique problems of our modern society. Most adults have grown up with cheap and abundant energy. To change the nature of their fundamental demand processes is difficult. The most fundamental action of this Government is to recognise that the best way to change that long-term pattern of demand of millions of our citizens is to make clear, through the pricing mechanism, the obvious reality of longterm investment. While facing that truth and helping our people to find that truth, we recognise that measures must be introduced to offset the social difficulties from which some might suffer. In an energy debate, that does not detract from the fundamental principle of energy conservation. The coal industry will recognise the importance of understanding the true long-term value of energy. The workers in that industry would not wish that real value to be underestimated by society.
Obviously, I have not had time to answer all the questions. I shall reply to Members in writing. Our overall commitment to the coal industry is in no way denied by our desire to try to help that industry face the realities of a substantial long-term decline in the coking coal demand from a major customer.
§ It being three hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
§ Question agreed to.
§ That this House takes note of EEC Document No. 9625/79 on the Energy Programme of the European Community, which describes the Commission's view of the current energy situation in the Community and the longer term outlook, together with EEC Documents No. 8587/79, amending the Council decision of 29 March 1977 on the EURATOM Loans Scheme and No. 5331/79, a proposal on the 459 Plutonium Cycle Research and Development Programme.