Energy Prices

HC Deb 27 April 1981 vol 3 cc506-8

8. Mr. Cadbury

asked the Secretary of State for Energy what representations he has received since the Budget on the subject of industrial energy prices.

The Secretary of State for Energy (Mr. David Howell)

I have received some representations from energy-intensive industries.

Mr. Cadbury

Is my right hon. Friend aware that, despite the Budget measures, there is still considerable anxiety among industrialists about the discrepancy between energy prices in this country and those on the Continent of Europe? Will he consider introducing further measures and concessions, at least for the energy-intensive users, to give them more time to adjust to high energy prices, which I accept are inevitable in the long run?

Mr. Howell

I acknowledge that high energy prices are a disagreeable reality to which industry must adjust and that the Budget measures did not entirely remove the disparities, part of which arose from the high exchange rate and other factors. However, the aim of the Budget measures was to give some significant benefit to bulk gas and electricity users. For up to 200 companies which are bulk users of electricity, it has offered gains of up to 8 per cent. in price, which is a start. In the longer run, we must realise that we have a high-cost structure of electricity based on high-cost coal and a lack of nuclear power. The question is whether reducing electricity prices below cost, and thereby subsidising electricity prices, is the best way to help certain industries, or whether there are better ways to help, particularly the chemical industries, for example, which are big electricity users and are facing high costs.

Mr. J. Enoch Powell

Will the right hon. Gentleman remind his right hon. Friend the Secretary of State for Northern Ireland of the undertaking given by the Leader of the House before the House rose for the recess that there would be a statement on electricity prices, pursuant to the Prime Minister's decision, by the end of this month, and that there are three days still to go?

Mr. Howell

I shall remind my right hon. Friend of that.

Dr. Glyn

Is my right hon. Friend aware that during the Presidential election a great deal was made of the low price paid by commercial undertakings, thus enabling them to compete favourably with us and other European countries? Will he comment on that?

Mr. Howell

I am not sure whether my hon. Friend is talking about the French Presidential election or the American one.

Dr. Glyn

The French one.

Mr. Howell

The French nuclear power programme was pursued with great vigour in the 1970s while ours was delayed and caught up in dither and indecision. As a result, the rate for electricity supplied to the grid for French industry is now one of the cheapest in Europe. It is cheaper than ours, as well as that in Germany, Belgium, Italy and Holland.

Large electricity users throughout Europe are beginning to wonder how they can compete with the French. We shall have to tackle that serious issue by the vigorous pursuit of our nuclear programme and by making our coal competitive with world prices. We can do that provided that we face the consequences in terms of high investment and the closure of uneconomic capacity.

Mr. Merlyn Rees

To judge from the representations that the Secretary of State has received, is not the consensus of industrial opinion that the Government's scheme is a mouse, particularly for the heavy users, and that in many cases its benefits have been wiped out by the increase in the cost of derv? Is nothing else to be done by the Government in general or to help some of the heavy users, particularly the chemical companies?

Mr. Howell

Questions about the taxation of fuels, such as that raised by the right hon. Gentleman's reference to derv, are for the Chancellor of the Exchequer. I am ready to keep electricity prices under close review. I have said that we are going much further for bulk users. For 95 per cent. of users, the NEDC report claimed that there were no disparities. However, I recognise that for the minority—the bulk users—there are considerable disparities, and I should like those to be overcome. There are certain basic facts that I should put before the House. One is that, in the short term, to overcome the disparities substantially could mean providing subsidies. Does the right hon. Gentleman want higher subsidies?

Mr. Speaker

Order. It is enough to have questions from the Opposition, without having them from the Government Front Bench.