HC Deb 10 March 1980 vol 980 cc906-9
6. Mr. Chapman

asked the Secretary of State for Energy by how much the total output of energy increased in the last five years for which figures are available; and what is his latest estimate of the increase or decrease of energy demand to 1985.

Mr. David Howell

United Kingdom indigenous energy production totalled 328 million tonnes of coal equivalent in 1979, an increase of some 85 per cent. on 1974. Demand for primary fuel over the next five years will depend on a number of economic factors. On the assumptions of "Energy Projections 1979", demand in 1985 would be some 3 to 7 per cent. above present levels.

Mr. Chapman

I am grateful to my right hon. Friend for that studied reply. Although I recognise that our gas and oil resources are finite and that known alternative sources of energy could not make more than a marginal impact on the supply figures, will my right hon. Friend confirm that it is essential for us to expand our coal and nuclear power industries even if energy conservation is much more of a reality in the next five years than it has been in the past five?

Mr. Howell

My answer to my hon. Friend, again, is "Yes". We need nuclear power expansion, we need coal industry expansion, and we need a very substantial gain from increased energy efficiency. The projections which I referred to earlier imply, by the year 2,000 a 20 per cent. gain in energy efficiency through energy conservation.

Dr. Owen

Will the right hon. Gentleman confirm that there has been a considerable fall-off in electricity demand? Will he let the House know the implications of that for the existing AGR programme at Heysham and Torness and also for the future nuclear power programme? Can he confirm that there will be no question of an increase in electricity price rewarding electricity consumers for a fall in demand?

Mr. Howell

I can confirm that recently the electricity supply industry reduced somewhat its forecasts of sales in 1986–87. Dealing with the right hon. Gentleman's last point, I share the view that if there are increasing costs arising from lower sales, that is not by any means automatically a reason for passing on all the costs to the consumer. The implications for the overall capital and current programmes of the electricity supply industry are being looked at in the light of the new forecasts.

Mr. Emery

Will my right hon. Friend confirm that no new capital programme instituted at the moment would have any relevance within that lead time of five years? Therefore, is my right hon. Friend confident that the industry has enough capacity to be able to meet that band of a 3 to 7 per cent. increase?

Mr. Howell

I am not clear what my hon. Friend's point is.

Mr. Emery

In his original answer, my right hon. Friend suggested that the increase over that period would range from 3 to 7 per cent. Has the industry the capability of being able to meet that? If it has not now, it never will.

Mr. Howell

Perhaps my hon. Friend did not hear my original reply, which was that the electricity supply industry was now forecasting somewhat lower electricity sales. If my hon. Friend is asking whether the industry has capacity to meet these needs, the answer is that, with its present capital and current programmes, it believes that it will be able to meet all the needs upon it.

Mr. Palmer

With reference to the right hon. Gentleman's statement about the new electricity demand figures, will he say whether the Government's desire to expand the nuclear power programme, with which I do not disagree, will triumph over the Government's equally strong desire to reduce the public sector borrowing requirement?

Mr. Howell

The case for nuclear power as a component of future electricity supply stands on the merits which have been put forward for it, which are concerned with its economic cost and the desirability of a larger nuclear electricity generating capacity in the future. In the meantime, it is correct to say that this industry has to meet its financial targets and keep within its cash limits. These two problems have to be reconciled.

Mr. Rost

How does the Government's forecast of electricity demand differ from the CEGB's latest downward revision? Was not my right hon. Friend made aware of this downward revision? Why is it happening, and what will be the impact on the nuclear power programme?

Mr. Howell

The electricity supply industry has come forward with these reduced sales forecasts. My Department makes energy projections from time to time. When such proposals come forward from the electricity supply industry, they are, of course, examined in my Department and have an effect on energy projections. Part of the sales forecasts relates to the very short term and to the short-term fall in demand because of warmer weather, so that would not really fit in with the longer-term problem of energy projections. The Government remain fully committed to the nuclear programme which I outlined before Christmas. That is not affected by the short-term matters that we are discussing now.

Mr. Joseph Dean

Would the Secretary of State care to comment on press reports this weekend of a possible cut in the future provision not only of nuclear power stations but of conventional ones? Is he aware of the disastrous effect that this would have on our base industries manufacturing power plant to supply both the home market and its export potential? Is the right hon. Gentleman aware of the disastrous consequences that this would have for unemployment?

Mr. Howell

I am aware of the consequences for the nuclear power ordering programme and the interests of our industry and jobs. But I cannot comment on newspaper speculation of the kind that the hon. Gentleman mentions.

Mr. Dover

Is my right hon. Friend aware that the industrial need for energy in West Lancashire has reduced markedly over the last five years? Is that a picture which is reflected nationwide, and is my right hon. Friend concerned about it?

Mr. Howell

Projections of energy demand are under constant review in my Department. We have to take a view of the likely growth of energy demand in the future. The investment necessary to meet that demand, whether nuclear, coal, oil, gas or conservation, is a matter for constant reassessment and a flexible approach. The views being taken about future growth of demand obviously are a very important component in trying to get a balanced and flexible energy policy in the future.

Mr. Ashton

The constant reassessments taking place must be based on some estimate of the unemployment figure. Is the right hon. Gentleman saying that the unemployment figure for 1985–86 will be well above 2 million, because that is what is indicated by the assessment of the drop in demand that he has given?

Mr. Howell

The hon. Gentleman is a little confused. We are concerned with the growth in demand for different forms of power. That depends on the relationship between the growth in demand for, say, electricity, and the growth of output and other energy coefficients. If, as we go along, increasing efficiency is gained in the use of energy, that in itself will have a depressing effect on the rate of growth in the demand for energy. It is a separate question from the one with which the hon. Gentleman is concerned.