HC Deb 14 January 1980 vol 976 cc1194-6
13. Mr. Winnick

asked the Secretary of State for Energy if he will make a further statement on the likely level of gas prices.

Mr. David Howell

I will be making a statement in the near future about the financial targets that we shall be setting the gas and electricity industries, which will include implications for pricing policy.

Mr. Winnick

Is it not clear that the proposed increase in gas prices will cause tremendous hardship to a large number of pensioners and others on very low incomes? Is the Secretary of State aware that there are many elderly and poor members of the community who cannot afford fuel at its present price? If the Government go ahead with substantial increases in the price of gas, surely they are under an obligation to bring in a proper scheme to help those in need.

Mr. Howell

I shall be making a statement on the precise price implications. I have repeatedly made it clear that, after a year in which crude oil prices have risen 100 per cent. worldwide, domestic gas prices must go up if we are not to burn up all our natural gas assets dangerously fast and so create future shortages. I recognise that those facing hardship must be helped by social policy. Our policies are designed to concentrate help where it is most needed.

Mr. Emery

Does my right hon. Friend realise that, whilst economic pricing is accepted by everyone, many people, particularly domestic consumers, find it surprising that they are to suffer price increases of 17 per cent. in January and February and of 10 per cent. 12 months later? Will he therefore, in consultation with the chairman of the British Gas Corporation, ensure that the reasoning behind this move is better explained, as otherwise there will be major criticism of this policy?

Mr. Howell

My hon. Friend has made a fair point about gas prices. As regards the profits of the British Gas Corporation, we must look not just at the Corporation but at the wider considerations of British energy policy and the cost of future supplies of gas, as they will be far higher than at present. It is desirablethat some of the proceeds of higher gas prices should go to the community as a whole as is the case for North Sea oil. I am glad that a report of the consumer councils which was published today recognises that point. It is not clear to me why those using electricity should subsidise those using gas.

Dr. Owen

Most people would agree with the Secretary of State that some of the hundreds and millions of pounds of profits that will come to the British Gas Corporation should go back to all the energy industries in order to help their investment programme, but does the right hon. Gentleman accept that we cannot continue to have a domestic gas or electricity price that is subject to OPEC decisions without some generous system of helping those families and people most at risk because of the high energy cost? Fuel is now one of the largest elements in the household budget. There are rent and rate rebate schemes. Surely there is now an overwhelming case for an energy rebate scheme.

Mr. Howell

The consumer councils, which have written a very good report, rightly point out that these are the concerns of social policy and not of energy policy. I recognise the right hon. Gentleman's point, but our social policies will be developed in order to take account of hardship caused by the high cost energy era. However, six months ago even the Price Commission said that domestic gas was under priced by 30 per cent. to 35 per cent. It is still about the cheapest domestic gas in Europe. We must meet the vital needs of industry, yet the previous Government ducked this issue along with many others. We must now move towards consistency in energy prices if our national strategy is not to be undermined.

Mr. Eggar

Will my right hon. Friend consider linking gas prices as a percentage of the home heating oil price as a long-term policy?

Mr. Howell

No. That would raise very great complexities. We must move towards consistency in energy prices in order to maintain a proper national energy strategy. That is the path upon which we must now set ourselves. We cannot achieve that at once and nor should we seek to do so.