§ Order for Second Reading read.3.47 pm
§ The Under-Secretary of State for Energy (Mr. John Moore)
I beg to move, That the Bill be now read a Second time.
I am especially pleased to move the Second Reading of the Bill because of my special responsibilities for the Government's energy conservation policies, which, of course, lie at the heart of Government energy policy. Since the Industrial Revolution, our industry and our way of life have been based on abundant and cheap energy, but 1973 marked a watershed. It is now universally recognised that we have moved into an era of dearer and scarcer energy. The United Kingdom, like other countries, has undertaken—as the Venice Summit last year recognised—to accord an important priority to improving energy efficiency and to breaking the link between economic growth and energy consumption. This is especially important to Britain since, apart from the USA, we are more energy-intensive than our major industrial competitors, and the evidence suggests that we use our energy less efficiently.
The cornerstone of our policy is, of course, the economic pricing of energy. We have to get the price signals right so that consumers have an incentive to use fuel efficiently and economically. But we also recognise the need to reinforce pricing signals by supplementary measures. We have a strong programme of publicity advice and information, the budget for which has been substantially increased by 30 per cent. this year, in real terms. We make grants for provision of specialist advice to help people identify their problems and take the necessary corrective action. We have a highly successful demonstration projects scheme, which stimulates investment in new technology by mounting show-piece projects with Government assistance. Again, the budget for that is being increased. In the domestic sector we have the homes insulation scheme—for which next year's allocation is being increased by about one-third in real terms. Although we are opposed to unnecessary bureaucratic intervention, we also use mandatory measures where these are in the national interest.
This is a comprehensive and well-rounded programme, which compares well with what is being done in other countries. But the Government can do only so much, since 94 per cent. of our energy is consumed outside the Government—in a myriad of individual homes, schools, hospitals, offices, shops and factories. Their response provides encouraging evidence of the effectiveness of our policies.
In industry, many firms are going for investment in energy conservation. They see that these investments make money. They see, too, the general sense of investing in energy efficiency now. They realise that such investment pays handsome, secure dividends and lowers energy costs straight away. Some remarkable savings have been achieved.
ICI, for example, found that the energy saved by using a microprocessor monitor paid for the £20,000 cost within 659 10 days Sainsbury's has recently achieved savings of £1 million a year on a £7 million fuel bill through staff education, improved lighting and heat recovery. One local authority—Hackney—invested £600 in a controls system for a hot water boiler which saved it £125,000 a year—a payback period of six hours. Pauls and Sandars, a large malting company, has reduced its annual energy consumption by 27.5 per cent., equivalent to 2½ million therms a year. If no energy savings had been made the annual fuel bill would have been £500,000 higher, representing about 15 per cent. of the company's profits. Trust Houses Forte is installing new equipment which, with no loss of comfort, will trim £1.7 million off its anticipated energy bill for 1980–81 of £15 million, with a further £3.75 million potential saving if staff follow an energy-saving code.
§ Mr. Arthur Palmer (Bristol, North-East)
The Minister is giving the savings that have been achieved by various private companies. However, the Government are great consumers of energy. When I asked the Minister responsible some time ago for details of the savings achieved in each Government Department he refused to give them. May we have some figures today?
§ Mr. Geoffrey Johnson Smith (East Grinstead)
May I ask my hon. Friend about the efficiency and energy saving of some companies in this country? Does he agree, looking back over the past few years, that the overall rate of improvement in conservation by British industry, compared with our international competitors, is not good? What steps does the Department intend to take to ensure that information on technical improvements introduced by progressive companies is made available to those who seek it?
§ Mr. Moore
As always, my hon. Friend is slightly ahead of events. I was coming on to describe the workings of my Department's demonstration project scheme and the energy advice schemes. My next comment, which relates directly to my hon. Friend's point, is that our demonstration project scheme is proving exceptionally successful. For example, we are supporting two novel and very successful projects to recover waste heat in the sulphuric acid industry. Several companies have now, as a result of visiting the project, placed orders to buy similar equipment. Other companies are considering doing so. Eventually, we expect the overall result to be a national energy saving of 30,000 tonnes of oil equivalent a year, worth about £3 million a year, for a cost to the taxpayer of £140,000.
Another example for my hon. Friend concerns another of our demonstration schemes in which Rockware Glass has achieved savings of 55 per cent. in primary energy. If this project is replicated—the obvious key value of these schemes—throughout the glass container industry, savings of some 1 million tonnes of oil equivalent a year could be achieved. That represents about 2½ per cent. of all our industrial energy use. That demonstrates the tremendous size and potential of what can be achieved by demonstration schemes.
For the schemes as a whole, there are now 80 projects at various stages. Their total cost is about £17 million, with 660 the Government contributing about £4 million. The saving which it is hoped the projects will stimulate totals nearly 2 million tonnes of oil equivalent a year, or, in money terms, about £180 million a year. Very sizeable achievements can come, therefore, from replication.
We are also seeing results in the domestic sector. As I said at Question Time, roughly 1 million homes have had loft insulation installed in the past 18 months, and expenditure on domestic insulation is running at over £400 million a year. Another area of important achievement is the development of energy management skills throughout industry, commerce and local authorities. We have encouraged the energy management movement and there are now 74 groups throughout the country with a membership of over 5,000 interchanging their experience of conservation equipment and new technology and so reinforcing each other's efforts.
The figures of our energy consumption for 1980 are telling. Provisional figures show that our primary energy consumption fell by 7.4 per cent. compared with 1979, to its lowest level since 1975. The largest fall—13 per cent.—was in consumption of petroleum products. Although the recession had made its impact, there has clearly been a perceptible gain in efficiency.
It is against this background that I am introducing the Bill. It will enable the United Kingdom to implement certain EEC obligations. It will add to the armoury of Government conservation policies and provide a useful stimulus to greater efficiency in our use of energy. It is aimed at improving the energy efficiency of appliances which consume about one-third of this country's primary energy.
The basic purpose of the Bill is to set standards of efficiency for a wide range of appliances. These appliances are, according to the terminology used in the Bill, "heat generators" and "gas appliances". A heat generator is any energy-consuming appliance designed for space heating or hot water production, or both. It can, therefore, be anything from a small domestic fire to a large boiler used for heating a factory, blocks of flats or offices, or for providing such buildings with hot water. A gas appliance is, in particular, any gas-powered appliance used for heating, hot water production, or cooking.
Some appliances, such as gas fires, water heaters, and central heating boilers are, of course, covered by both definitions. They are heat generators and gas appliances.
§ Mr. Peter Rost (Derbyshire, South-East)
Will my hon. Friend explain why the Bill does not cover the other wide range of domestic appliances, such as fridges, freezers, cookers and washing machines, which consume about 40 per cent. of domestic electricity?
§ Mr. Moore
That point has been made by the Consumers Association and it is appropriate that I should deal with it. I shall certainly do so later in my speech.
Part I of the Bill will enable the Government to set standards of efficiency and of safety for any categories of new heat generator and gas appliance which we may specify. These standards will be applied by way of type approval, a well-known procedure for ensuring that appliances manufactured and sold in large numbers conform to specified standards. There is no need, in these cases, for all the appliances to be tested. Instead, if a representative sample passes the test the whole of the 661 production run can be said to have been approved subject to the manufacturer's being able to maintain the quality of the individual appliances produced.
Type approval arrangements on these lines are already applied for many heat generators sold in the United Kingdom, though only on a voluntary basis. What we are proposing in the Bill, therefore, is not new. Instead, the Bill will build on existing voluntary arrangements. It will allow these arrangements to be given statutory authority, so as to bring in importers and manufacturers who do not participate at present, and for them to be extended to appliances which are not currently covered.
Under part I the Government will be able to prohibit the sale of any specified categories of new heat generators and gas appliances unless the appliances concerned have been given type approval. Standards to be applied in deciding whether approvals should be granted will be prescribed by the Secretary of State. The testing of appliances to see whether they conform to these standards will be carried out by Government-appointed type approval bodies, which will operate within a framework established and supervised by the Secretary of State. These bodies are likely to be those organisations which operate the existing voluntary-type approval arrangements. These bodies and schemes include the British Gas Watson House laboratories; the Domestic Oil-Burning Testing Association; and the domestic solid fuel appliances approval scheme.
As I mentioned earlier, type approval depends on the manufacturer being able to maintain the quality of individual appliances produced. Part I also contains provisions, therefore, in clause 5, which are designed to ensure that all further production of a model which has been type-approved continues to conform to the relevant standards.
The proposals in part I have been the subject of very wide consultation. In August 1979 the Government issued a consultative document which was given wide circulation among organisations representing those likely to be affected by the proposals. About 120 replies were received, revealing a high level of support for the Government's proposals from organisations representing both manufacturers and consumers. In particular, I draw the attention of the House to the fact that most United Kingdom manufacturers of heat generators welcomed our ideas and pointed out that the existing voluntary testing arrangements often were thought to be of inadequate status in the countries to which tested appliances were being exported.
Similarly, the United Kingdom gas appliance industry strongly supports the implementation of Community standards for gas appliances in the United Kingdom, partly because this will enhance its ability to export to the rest of the EEC.
Part II is concerned with the testing for compliance with efficiency standards of those heat generators for which "type approval" is either not practicable or is too expensive. In practice, this means very large boilers, mostly with a capacity of 600 kilowatts or over, which are either produced in small numbers or are essentially "one-off jobs. Only about 700 new boilers a year are likely to be affected. For these boilers, the Government will be able to appoint testing authorities to test each boiler concerned on-site after installation to see that it meets prescribed 662 standards of energy efficiency and to prohibit the use of any boiler which does not pass the test within a specified period.
Part III includes two miscellaneous matters. Clause 15 empowers the Government to make grants for the purpose of energy advice schemes. This does not mean that we intend to introduce new schemes. Instead, the intention is merely to provide specific statutory authority, in accordance with the established convention, for the Government's existing energy conservation advice schemes.
We are currently spending about £3 million each year on these. One important scheme involved is the energy survey scheme, which provides subsidies for either one-day or extended energy surveys of industrial, commercial or public sector premises. This is proving particularly successful and cost-effective. It has so far involved more than 40,000 surveys. Moreover, a sample study of the one-day surveys has shown that more than 50 per cent. of the consultants' recommendations are implemented and that the estimated savings, involving little or no investment, amount to about 10 times the cost to the Government.
§ Mr. George Grant (Morpeth)
Does the Minister feel that this advice service or, indeed, the measures in the Bill, go far enough bearing in mind the special energy problems that we face? He talked about oil saving and the EEC. This country has a mountain of coal. Many industrialists would like to change from oil to coal but will find that such measures are not included in the Bill. However, even though France does not have such a coal surplus it gives a 25 per cent. subsidy to those changing from oil to coal.
§ Mr. Moore
When I have concluded my speech I am sure that the hon. Gentleman will recognise the limitations of the Bill. I expect comments from both sides of the House suggesting what extra energy conservation measures ought to be included. However, it might be wiser if I let the hon. Gentleman make that point in his speech. It is certainly not envisaged that it should come within the context of the Bill.
As I was saying, clause 16 was added to the Bill by the Government when the Bill was considered in another place. It is concerned with charges made by water authorities in England and Wales for the abstraction of water for hydro power generation. The users of water power believe that water charges, even when levied at the lowest rate—as they generally are—can seriously undermine the viability of some small hydro power schemes. They also argue that the case for charges on a volume-related basis is, in any case, suspect because hydro power generation restores water to the water course undiminished in quality and quantity.—[HON. MEMBERS: "Hear, Hear".] I am delighted to have vocal support from behind me. When one's Chief Whip supports one, one knows that he is in good company. I therefore hasten to add that the Government have a great deal of sympathy with the position of small-scale hydro power users and certainly wish to encourage their activities, as there is no doubt that small-scale hydro power schemes can make a worthwhile contribution to the United Kingdom's energy needs. We were therefore very happy, when the point was raised in another place, to be able to introduce, as an amendment, the present clause 16. We believe that it goes a very long way indeed to meet the justifiable grievances of water power users.
663 It amends the Water Resources Act 1963 so as to require water authorities to have regard to the need to conserve sources of energy. Water authorities already have powers to make agreements waiving or reducing charges for the abstraction of water, and this clause in the Bill will require them to have regard to the desirability of preventing charges from inhibiting the abstraction of water to use as a source of power. This will have the desirable effect of ensuring that hydro power users are not required to pay uneconomic levels of charges, and avoid the inhibition at present on some users, and potential users, of hydro power.
Under the provisions of section 60 of the Water Resources Act, water power users will have the important right to appeal to the Secretary of State for the Environment if a water authority does not agree to waive or abate charges, or if it insists on conditions which the water power user regards as unacceptable.
§ Mr. Peter Hardy (Rother Valley)
I agree with the Minister that no charge should be a disincentive to this development. Will he make it clear that protection for the user does not extend to the point at which his interests will override environmental considerations or the need to safeguard the water supply for the community?
§ Mr. Moore
I made it quite clear that the ultimate appeal authority was the Secretary of State for the Environment. Obviously, this clause, which presumably will be debated in more detail in Committee, does not seek to remove the possibility of all charges as in some cases they are to the advantage of the electricity authorities. It also seeks to retain in the Secretary of State for the Environment those powers which he must clearly have in order to cover the points made by the hon. Gentleman.
§ Mr. Palmer
The Minister seemed to dismiss the 6 per cent. energy use in Government Departments in a rather airy fashion. I hope that he appreciates that total use of hydro power in this country, including the North of Scotland hydro board, does not amount to more than about 2 per cent. of total energy.
§ Mr. Moore
If I inadvertently appeared to dismiss 6 per cent. of energy expenditure by the Government, I in no way intended to do so. I am conscious of the limitations on low-water hydro power, but I am also conscious of the fact that this is a modest, small-scale potential addition to our nation's energy supply, especially for many small companies which can create small units which in the Schumacher fashion are still beautiful. I would have thought that the Government ought to be commended for moving in that direction.
The remainder of part III contains supplementary provisions. Two aspects are worthy of mention—consultation and enforcement. First, clause 26(3) contains the very important provision that the Secretary of State must, before making any order under the Bill, consult representatives of those he considers likely to be affected. This is an important assurance that the views 664 of manufacturers, consumers and others concerned will be considered carefully before any of the enabling powers provided for in the Bill are used.
There is absolutely no question, therefore, of the Government doing anything which will affect new appliances until there has been full consultation with all the interests concerned. Perhaps I could emphasise as well at this point that the Bill relates only to new appliances. It will, of course, have no effect on appliances which are already in use.
The second aspect is enforcement. Clause 20 provides powers, similar to those in other legislation such as the Trade Descriptions Act 1968, which could, where necessary, be used for the enforcement of the Bill's type approval provisions. However, we do not envisage that these powers will need to be used to any great extent.
First, they will not be needed to ensure that appliances of a model which has been type-approved continue to conform to the approved type. This aspect of enforcement will be handled by the type approval bodies under the provisions of clause 5. Secondly, there is no reason to believe that manufacturers and retailers will be anything other than co-operative in implementing orders under the Bill; neither have any particular incentive to evade them.
In practice, therefore, we consider that it will be sufficient for trading standards officers to make visual checks to ensure that appliances which should bear type approval marks do in fact do so. As these checks will mostly be carried out during visits to premises made for other purposes, there are unlikely to be any significant implications for local authority manpower.
Clause 21 provides powers of enforcement over the onsite testing provisions of the Bill. Again, though we expect these powers to be used only rarely. The number of boilers for which on-site testing will be required will, as I mentioned earlier, be very small. Enforcement, carried out by matching records of boilers supplied with records of boilers tested and by making inquiries about apparent discrepancies, will therefore be reasonably simple. The manpower implications of enforcement are accordingly not expected to be significant.
I should explain what we expect the public expenditure implications of the Bill to be. The practical implementation of much of the Bill will fall to type approval bodies and testing authorities, some of which exist already, of course, as bodies responsible for voluntary testing schemes. It will not be necessary to set up any elaborate bureaucratic back-up, and I have already pointed out that the manpower costs of enforcement will be small.
In all, we expect that four civil servants will be needed in the Department of Energy to run the type approval and testing system. They will be found within the existing allocation of staff. Even then this small financial cost—about £65,000 each year—will be recoverable by means of a levy on the fees paid for testing as provided for in clauses 4(6) and 9(9).
Why do we consider this proposed legislation to be desirable? First, the Bill will enable the United Kingdom to fulfil its obligations to implement an EEC directive requiring member States to ensure that all new heat generators installed in non-industrial buildings comply with minimum standards of energy efficiency. It will also enable us to implement two other directives which are still in draft and under discussion in the Community. One of these directives will require member States to set standards for very large heat generators, such as boilers to heat 665 factories or office blocks. The other concerns the setting of EEC-wide standards of safety and efficiency for new gas appliances.
In the latter case, member States will probably be free to choose whether to apply the EEC standards. The Government and the gas industry believe it is likely to be in our interests to do so, as this will help United Kingdom manufacturers to export to other EEC countries.
As well as enabling us to meet our EEC obligations, the Bill will provide a useful addition to our energy conservation programme. Let me make it quite clear that we do not believe in indiscriminately creating rules and regulations which will promote only bureaucracy and not energy conservation.
Mandatory standards for the appliances covered by the Bill can be justified. Many of the appliances are sold not direct to the customer but through builders and central heating installers. The final user of the appliance—that is, the person who pays the fuel bills and who will be concerned to get an energy-efficient appliance—often has little say over which appliances are installed. The market pressures on manufacturers to improve energy efficiency is therefore indirect and so imperfect.
About one-third of the country's energy use is accounted for by appliances of the sort dealt with in the Bill. Even a small improvement in the average efficiencies of these appliances would therefore have a significant impact on our energy consumption. There is certainly scope for such improvement. Only very recently has energy efficiency become a significant factor in design.
Although British standards relating to energy efficiency exist for some but by no means all categories of heat generator and gas appliance, manufacturers are not at present compelled to observe these standards. Moreover, as many of these standards were conceived in an era of cheap energy they may, in any event, be below the levels which would be cost-effective and desirable from an energy conservation point of view.
§ Mr. David Alton (Liverpool, Edge Hill)
I hope that the Minister will refer to other appliances ranging from dishwashers to video machines, which will consume more and more energy in future and which concern many hon. Members.
§ Mr. Moore
I am about to turn to the part of my speech that deals with that issue.
We believe that the enforcement of efficiency standards under the Bill will, over time, make an important contribution to improved energy efficiency. The exact amount of energy saved will depend on a number of factors, such as the rate of technological progress, the rate at which existing appliances are replaced by new and more efficient ones, and the extent to which the existing voluntary arrangements would, in the absence of mandatory standards, have developed.
It is very difficult to give any accurate estimate, but it is clear that the savings will be substantial. An increase of 5 per cent. in the efficiency of new heating and gas appliances could, for example, eventually save the nation as much as 3 million tonnes of oil equivalent a year, or, in money terms, between £250 million and £375 million at current prices.
We expect the costs of implementing the Bill to be very small. Type approval, for example, is expected, as under 666 the existing voluntary arrangements, to cost very much less than 1 per cent. of the selling price of an appliance. This should be more than outweighed by the benefit to consumers of more efficient appliances. We expect that manufacturers will also benefit, since the fact that their appliances have been tested and approved under a mandatory independent testing system should make these appliances more attractive to both overseas and United Kingdom consumers.
The British type approval mark will be unequivocal evidence of the energy efficiency of the appliance in question. The fact that it was issued under a scheme established by law will give it recognition and authority at home and, more especially, in foreign markets. This will be particularly important as other countries, especially those in the Community, develop their own energy efficiency standards for heat generators.
The Government's intention is first, to apply the powers of the Bill to those appliances, such as oil fired boilers, for which there are already voluntary testing schemes. It is also our intention to have early, and continuing, consultations with the British Standards Institution with the aim of raising existing standards where this is practicable and cost effective and of setting standards for those appliances for which no standards yet exist.
We will not be making all categories of heat generator and gas appliance subject to type approval right from the start. Instead, we shall be proceeding step by step in full consultation with manufacturers, consumer organisations and others concerned. In addition, we shall not, in any event, be requiring type approval for some types of heating appliance.
Type approval will not, for instance, make any difference to the fact that most electrical heaters already convert electric energy into heat to a high degree of efficiency. We do not, therefore, intend to require electrical space and water heaters to be subject to type approval under the Bill.
It may be tempting to argue—as indeed it was argued when the Bill was considered in another place—that because type approval appears to be an appropriate way of improving the efficiency of many heat generators, it is right to extend the principle almost indefinitely to cover all sorts of other appliance from electric tooth brushes, shavers or coffee grinders upwards. I believe that that approach would be fundamentally misconceived.
It cannot be said too often that the driving force for improved energy efficiency must be the price mechanism. Government action must be aimed at complementing and supporting the price mechanism, not at taking the job over. As I have already explained, there is reason to believe that market mechanisms may work indirectly and imperfectly in the case of appliances such as heat generators, which are normally sold through installers, builders and property companies instead of direct to the person who pays the fuel bills. The market circumstances of most other appliances are very different, and this means that action which is appropriate for one group of appliances is not necessarily appropriate for others.
I have already drawn attention to the wide support which exists for the proposals contained in the Bill and to the importance that the Government attach to this consensus. To extend the Bill to cover new categories of appliance would mean departing from the principle of full advance consultation, and that is something which the Government are not prepared to do.
667 In conclusion, in introducing this measure I want to make quite clear what is the Government's view on the use of compulsory regulation in relation to energy-using appliances, both under this Bill and more generally.
We believe that it is essential that there should be real evidence that regulation will speed up cost-effective improvements in energy efficiency; that regulation will not impose an unnecessary burden on bureaucracy; and that it will in general help rather than hinder the competitive position of British industry. We believe, too, that there must be the fullest advance consultation with those likely to be affected, and that is why we have written such a provision into the Bill.
I am sure that the Bill will draw wide support from all parts of the House. The Government commend it both as a measure necessary to fulfil Community obligations and as a desirable measure in its own right.
§ Mr. Alex Eadie (Midlothian)
There is an overwhelming necessity—indeed, some would argue that it should be on the list of priorities—for Parliament to discuss the question of energy conservation and to legislate on it. In a debate on energy policy, the Secretary of State for Energy gave us the following reminder:since 1972, the price of crude oil has increased by 1,800 per cent. In fact, it has nearly tripled since early 1979, although, because of the effect of the appreciation of sterling, it has less than tripled—it has just about doubled—lor the United Kingdom. That is the magnitude of the volcano, the price earthquake, against which we are operating."—[Official Report, 21 January 1981; Vol. 997, c. 266.]The price aspect—if one may borrow the phrase—makes energy sense and common sense and gives rise to a need for conservation. As regards price and the wish for price stability, it has been said that the days of cheap energy are over and are unlikely to recur. Most of the Governments of the Western economies wonder what price increases will result from the OPEC meeting, to be held in May 1981. They wonder what effect attempts to absorb price increases will have on their respective economies.
Price escalation has two other dimensions. First, I refer to the availability of energy supplies—particularly of oil—on which the countries of the Western world are so dependent if they are to sustain their economies. In the main, dependence is based on areas of political instability. The Arab-Israeli war of 1973 illustrates that point. The present Iran-Iraq war is an example of how oil supplies can be seized with uncertainty.
We should not take cosy comfort from the fact that the United Kingdom is self-sufficient in energy. If a crisis arose that involved a disruption of energy supplies, we should be sucked into that crisis because of our involvement with Europe and the International Energy Agency. I see from the press that a statement has been made about the fact that we may become militarily involved. The Opposition have an opinion about that, and perhaps there will be an opportunity for debate.
Secondly, the fossil fuels of oil, gas and coal are wasting assets. Whatever life span we may give them, they are finite. As we consume more oil than we can find, that in turn adds to the important need for energy conservation. If only part of that background is accepted, the Energy Conservation Bill—which the Government have introduced after it had been hanseled in the other place—remains a bit of a let-down. As the Minister said, 668 it contains three parts and 28 clauses. Given that we know how the Minister in the other place presented it, it is difficult to escape the conclusion that the main spur for its introduction was the implementation of Community directives. Indeed, in a burst of candour, the Minister apologised for the fact that the Bill was rather technical.
We were told that the heat generator, which describes an important group of appliances, was a term of European origin. Again, "gas appliances" is a Community term that derives from a draft directive on gas appliances. The Bill will enable us to implement Community directives on heating generators with defined performance standards. We are informed that it will enable us to implement directives that are at present only in draft form.
The Minister referred to the argument—which I well understand—in favour of uniformity of design and standard within the EEC for such things as small domestic fires, heaters and boilers. Indeed, that uniformity could stretch to the largest items. As the hon. Gentleman said, it could help our exporters to penetrate the EEC market. As Britain is a member of the Community it is entitled—if it is reasonable—to look for a share of any potential market. The more one looks at the Bill the more one realises that that aspect is the Bill's main thrust. Without it we should not have an Energy Conservation Bill. However, it does not stretch energy conservation policy as far as it could go.
The Bill was first introduced in the other place in December 1980. The criticism that the Select Committee on Energy made of the Government's policy on nuclear power could not have been known. However, for the purpose of this debate, it is sufficient to heed the reference made about the Government's need to pay more attention to conservation policies. The view of the Select Committee emphasises the fact that the Bill is dated and, therefore, inadequate.
It is worth reminding Parliament that, after the Arab-Israeli war, most nations were forced to think about energy conservation. It is on record that the International Energy Agency complimented Britain on its spending on energy conservation and on its imaginative policies. That could not be said today. Where do we figure in the league table today? Britain spends only half the amount that Sweden spends, yet our population is probably 10 times greater than that of Sweden. The only country to spend less than us is Italy.
Compared with other European countries, not only do we spend less, but we spend considerably less. That does not give much credence to the assertion that we hear from time to time to the effect that, nowadays, Britain counts more in the world. The House should welcome the proposals as they encourage what can be fairly described as modern heating appliances, type design and approval. I refer mainly to domestic heating appliances.
Within the compass of our public experience we have come across dated heating appliances. There has been a big advance in technology in this area. We now have better, cheaper and more efficient forms of heating. We should praise our manufacturers for making their appliances more efficient and attractive. This applies particularly to coal fires but to some extent to gas heaters as well. There may be others. I am relating my experience. We should publicise and encourage this aspect of the Bill.
I do not want to comment on the fact that electric heating appliances are omitted from the Bill. We shall certainly want to return to that aspect in Committee. I 669 understand that hon. Members have been contacted by various organisations, particularly consumer organisations, and some of us have read the debates in the other place. Frankly, the Government did not put forward a convincing argument in the other place—nor, without in any way trying to deride the Minister, did he today—for the exclusion of electrical appliances. However, we shall return to that matter in Committee.
In part I we find the range of "heat generator" and the proposals for "type approval". I want to refer to the large or small boilers which come into that category.
The Minister in the other place pointed out that oil accounts for 37 per cent. and gas for 28 per cent. of heat supplied to industry. We know that in some areas there is difficulty, particularly for residential categories, in getting a gas supply. A college of education in my constituency has been refused a gas supply. If the Government keep forcing up the price of gas, that situation may change. I am sure that the Government will be pleased about that, as they are wedded to the philosophy of pricing in relation to energy. Surely, it is reasonable for the Government to strengthen "type approval" in the Bill as regards boilers based on their own figures. There should be encouragement to accelerate the process of boiler conversion to coal.
If the Minister's right hon. Friends, at their meeting with the miners on Wednesday, wonder what to do about the coal stocks, I suggest that this is a good way to tackle that problem. It is not a question of this not being a bargain for those involved in the conversion. The Minister of State, who I understand is to wind-up the debate, can correct me, but I think that coal has a 30 per cent. price advantage over oil. I should have thought that that would influence members of the Government who approach most problems with the minds of chartered accountants. I mention "chartered accountants" because I understand some searching has gone on for chartered accountants to play a role in various nationalised industries.
§ Mr. T. H. H. Skeet (Bedford)
Oil boilers are much cheaper to purchase than coal boilers. I am in favour of the hon. Gentleman's argument that the Government should provide some form of subsidy to convert from oil to coalfired boilers. But does he not realise that we have already provided tens of millions of pounds to the coal mining industry? If we are to spend more money on pits which are near to exhaustion, the money will be pre-empted well in advance and it will be difficult to have additional arrangements included in the Finance Bill.
§ Mr. Eadie
I knew that the hon. Gentleman would have difficulty in talking about the Bill, because there is very little in it. To call it a "conservation" Bill is an abuse of language. I agree that the nation is investing millions of pounds in the coal industry. However, I remind the hon. Gentleman that the money is being borrowed and that interest has to be paid on it. It is costing the National Coal Board £250 million a year in interest charges. That is part of the reason for the crisis. If we are to have a debate on coal at some later date, the hon. Gentleman and I can probably deal with the matter at that time.
In view of the stockpiles of coal and the finances of the National Coal Board, I submit that there is an economic case for boiler conversion to coal. I understand that industry would have to pay about 20 per cent. in interest rates to borrow money from the banks. It has been denied 670 that new legislation may be needed as a result of the settlement that we hope that the miners will get on Wednesday. I should like to think that the Government can introduce under this Bill a measure to lower rates of interest on money borrowed for boiler conversions. The Government may say that they cannot do that. Looking at part III, we find "Miscellaneous"—I do not know whether she is a blonde or a brunette—"and Supplemental". Anything can be put in part III. I suggest that the Government may wish to reflect on that.
After all, the Bill is dated. Events have overtaken it. The Government may decide, when the Bill goes into Committee, that they want to do something under part III to deal with boiler conversion and the high interest rates that are worrying industry. This is a good proposition for the nation as well as for those in industry.
Reference has been made to how little the Bill will cost. There are two particular aspects here that I should like to mention. The first concerns on-site large appliances. In the other place there was a reference to about 700 conversions a year, and I understand that the cost of testing would be about £500. I hope that we can have more information on these calculations. In part II there is a reference to the persons to carry out the testing being authorised by the Secretary of State. The Minister made a slight reference to this point, but we are entitled to more information. How many persons are we talking about? Whence will they come?
We understand that type approval for heat generators and gas appliances will be enforced by weights and measures departments. As this is likely to involve local authorities, we are entitled to know what discussions have been held with local authorities and what costs are likely to be involved. How many additional staff will local authorities be required to employ?
The Opposition are entitled to put these questions to the Government. The question of the rate burdens that local authorities are being asked to impose and the question of authority staff are very much on the agenda. The Bill states that there will have to be additional staff and that that additional staff will come from the weights and measures departments. Therefore, local authorities will be involved in employing additional staff.
If the Government were to say "Very few additional staff will be employed by local authorities", that would not meet the optimism expressed by the Minister when winding up the previous debate. He said then that the Government expected this to be a growing concern and to be successful. Indeed, if it is to be successful, additional staff will be required. The Government must inform Parliament how many additional staff will be involved.
Running through the Bill is a great sensitivity on the part of the Government to the effect that the Bill will not cost very much, that there will not be another quango, and that additional staff will not be needed. To some extent, there is a nervousness on the part of the Government even about their own inadequate Bill. Therefore, the Government must tell us more about this matter.
Whatever else the present Government can complain about, they inherited a vigorous and growing energy conservation strategy from the previous Government. [HON. MEMBERS: "Oh."] Progress was made on a wide 671 front. The International Energy Agency is not complimenting the United Kingdom now on the Government's conservation strategy. I have given the figures. We are well down the league, almost relegated, so I do not know why groans are coming from Conservative Members.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
Order. The hon. Gentleman is not heading for a point of order.
§ Mr. Eadie
It is very difficult to try to have any enthusiasm about the Bill. However, I have to hand it to the hon. Member for Bedford (Mr. Skeet), who is certainly doing his best.
Progress was made on a wide front. Unfortunately, the present Government have undermined much of this strategy. For example, as a Government, they cannot deny that by the ending of the industrial energy conservation scheme and by the reduction in the support for loft insulation in the public and private fields, their policies have not been very distinguished.
The Government have lost credibility in industry because of their damaging pricing policies in energy. At the same time, they are ending incentives to invest in more efficient plant and equipment.
Whilst price is important, it cannot be the sole determinant of action to conserve energy. At Question Time today, the Minister referred to loft insulation. That is the simplest and quickest way to reduce energy consumpton in homes and to help people to reduce their energy bills. However, in the resources that the Government are making available for such work, they are being shortsighted and insensitive, when these resoures are set beside present energy pricing policies. Millions of houses in Britain have little or no loft insulation.
§ Mr. Alton
I think that the hon. Member would agree that the other great resource of Britain is our work force—human beings, people in the construction industry in particular, who are out of work. Whilst he is dealing with loft insulation, would he care to agree that the talents of many of those in the construction industry who are out of work could be used for installing loft insulation and that we should get people out of the dole queues and put them to doing something useful?
§ Mr. Eadie
Yes, and I shall be referring to that matter later. The Government ask whether this will be cost-effective. But look what it is costing us in unemployment 672 benefit to pay people in the construction industry who are unemployed. Look how cost-effective it could be, as the hon. Gentleman said, if we were to put skilled people in the building industry back to work. Look at the benefit that that would be to work people and the nation. Therefore, I agree with what the hon. Gentleman is saying.
Energy management in industry is another area in which greater emphasis would have enormous benefits. Forty per cent. of all our energy is consumed by industry There are major opportunities for greater efficiency in energy use. It is no accident that industry as a whole is attacking the present Government on energy prices and conservation policies. Price subsidies in themselves are not the answer in this context. Hon. Members may doubt this, but they must know how concerned are the various insulation firms. I have one in my constituency.
Hon. Members must know that the industry is contracting when it should be expanding, and is paying off its work force when it should be expanding and not contracting. Therefore, we should be doing more in relation to insulation.
I wonder whether the present Government have, to some extent, forgotten the original philosophy of energy conservation. We used to talk about energy conservation as being the fifth source of energy. Taking oil, gas, coal and nuclear power, the fifth source of energy was the conservation of energy. Therefore, if we were really pursuing a proper energy conservation policy, it could be another source of energy for the nation. However, as we were told at Question Time today, the Government's conservation policy is based mainly on pricing. It is said the price of energy will ultimately give us the conservation.
I asserted today that if the Government's policy continues with pricing as the sole factor in relation to the conservation of energy, that is a lazy policy for a Government to pursue. These arguments were dealt with back in the early 1970s. It was said then that if the Government were to pursue a policy of energy conservation, they would have to invest in order to get it.
In conclusion, the Minister cannot have felt too proud when he introduced this minnow of a Bill. I cannot ask my hon. Friends to add to the discomfort that he must have felt when introducing it, especially under the misnomer of "energy conservation'' in the title. The best that we can do is to hope for better things to come. What hope there is will probably be the short life of the present Government. Nevertheless, we shall try to improve the Bill and to amend it as best we can in Committee.
§ Mr. Peter Rost (Derbyshire, South-East)
The hon. Member for Midlothian (Mr. Eadie) was very free and easy with his criticisms of the Government's conservation programme, but perhaps he should have been a little more modest and looked at his own pathetic efforts when he was in government and personally responsible for the programme. I was a member of the Select Committee on Science and Technology during that time. We produced a comprehensive report on energy conservation, which contained over 40 constructive recommendations. The report was published in 1975. The previous Government took virtually no action on it. Therefore, it ill becomes Opposition Members now to criticise the Government for apparently not having pursued what they believe should be an energy conservation programme.
673 Without wishing to offend my hon. Friend the Minister, I must say that this is a very modest little measure. It is rather pretentious to suggest that it is an energy conservation Bill. It received a very rough ride in the other place, and quite rightly so. Whilst it makes a great contribution in a very narrow field, it does not get to the roots of the main problem—the substantial waste of energy resources which continues in Britain.
Of course, conservation can and must be primarily achieved through the pocket, through pricing mechanisms. The Government have pursued an active and successful energy strategy—far more active and successful than that of previous Governments. It is not necessarily correct to say that such a policy of pricing and producing the right pricing signals always involves hardship to the consumer. On the contrary, a policy that produces the pricing signals encourages more efficient investment in conservation and makes it cost-effective, because the consumer uses less energy.
A classic example is what is happening in the motor industry. Two or three years ago who would have visualised that motor vehicles would primarily be sold on their petrol consumption performance rather than on the other criteria on which the motor industry previously tried to sell? That has come about only because the consumer is more conscious of the running costs of vehicles and is prepared to pay extra for a vehicle that will provide the same standards of motoring at a lower cost.
The same applies throughout day-to-day life in cutting out waste in energy. The consumer does not necessarily pay more, but if energy pricing produces the signals, the innovation in the market place produces the greater efficiency from which the consumer benefits.
My second topical example concerns a visit I made to Thorn Lighting Ltd. a few days ago. I was given a preview of its revolutionary new mini fluorescent lamp, which will reduce the electricty costs for the average householder. It will plug in to a normal light socket and will reduce lighting costs to approximately one-fifth. The life of the bulb will be five times the life of a traditional lamp. It costs much more, but the savings in electricity to the consumer over the life of that lamp will be substantial.
The reason why such developments, whether the Mini Metro, the new lamp or solar panels, have not come about sooner is that the incentives have not been there. The profit motive has not provided the right signals for industry and the market place to produce the products. I visited Volkswagen about a year ago and saw a new prototype of a Volkswagen Golf which will do twice as many miles to the gallon. I asked why the car had not been put on the market. I was told that the company would do so as soon as the consumer was prepared to buy it. It will cost £1,000 more. That stage is now being reached. That is yet another example of how energy pricing is the most important factor in providing the right motivation for the more efficient use of energy.
§ Mr. Palmer
I endorse what the hon. Member said about the great improvement made with the new electric light bulb recently produced by Thorn Lighting Ltd. However, the hon. Member should not overlook the fact that the efficiency of electric lamps has been steadily increasing since the days of the carbon filament lamp, even when the price of energy was falling.
§ Mr. Rost
Of course I accept that. But the major breakthrough of the mini fluorescent tube for the domestic market has come about now because the research and development has been rushed forward only since the acceleration in the price of electricity. There are many other examples, especially in the area that I have studied closely, the use of waste heat in industry and in the home. That has not happened in Britain because of the relatively lower price of gas, electricity, which, until recently, has not made it economic to develop a market for waste heat. It has been more economic to throw it away. On the Continent energy prices have been more realistic and combined heat and power has been developed far more extensively. That is another example of how artificial energy pricing has worked to the disadvantage of the consumer, held back the more efficient use of energy and resources and forced the consumer to pay a higher price than he would have paid if the innovation had been stimulated and produced more speedily.
Pricing policy is the most important policy. Nevertheless, I maintain that the stick is not enough. It is all right to cane the consumer and force the pricing signals to produce greater efficiency. That happens, but with the stick one also needs a carrot. That is where the second half of our energy conservation policy has not matched up to that in other European countries. We have not provided adequate incentives, whether fiscal or tax advantages, which the pricing signals should provide so that conservation occurs. I hope that my hon. Friend will give as much attention to providing the carrot as to the other half of our conservation programme.
The Bill is a disappointment, because it has missed so many opportunities. I refer especially to a recommendation from the Select Committee on Energy, of which I am a member, as is the hon. Member for Bristol, North-East (Mr. Palmer). The Select Committee is surprised that seven years after the major energy crisis resulting in the escalation of oil prices, the Department of Energy has still not calculated whether it is more cost-effective to invest, shall we say, £1 billion in a new power station, to invest that money in energy conservation projects or to provide tax incentives, grants or allowances for the same purpose. The comparison between the cost-effectiveness of investing in new sources of energy, such as electricity, or investing to produce savings in energy and greater efficiency in the energy we use has still not been calculated. We continue to investigate the spending side of our energy policy and regard investing in reduction or greater efficiency in use as something we cannot afford.
I do not regard that as a sensible approach, any more than I regard as sensible the way that we have failed to differentiate Government spending, between what is intended for investment and what is for current expenditure. It would be more constructive if we drew a line on Treasury spending accounts, one half to be capital investment, whether in the public sector or otherwise, and the other half to be running costs. Cost-effective investment or cost-effective incentives that will produce investment in energy conservation should be encouraged to go ahead, regardless of the need for that money to be borrowed. I do not think that it is sensible for us to regard it as good for, ICI, for example, to invest in new plant and bad for the Government to provide investment money which is equally cost-effective in saving the nation's resources. Both are creating wealth directly or indirectly and both make a major contribution to the nation's 675 economy. I urge my hon. Friend to consider the manner in which we differentiate unfairly between what is cost-effective investment and what is not.
I return to the Bill's inadequacies.
There may be other factors, such as higher productivity or more advanced investment processes in the energy-consuming industries, that account for the differences, but, whatever the reasons, the figures; show that our use of energy is less efficient than that of our major competitors. That puts up the prices of our industry and makes us less competitive, which is one of the problems that we are suffering.
Those figures are a yardstick of the potential that still exists, and it is time that, in the interests of improving our competitiveness and productivity and restoring ourselves to full employment, we began to grapple with the problem. The Bill would have presented an opportunity for at least one or two more measures to be included.
I wish to indicate why we have not scratched the surface of the potential for using energy more efficiently. I shall quote only one figure. There are many more that other hon. Members may wish to quote.The Times Europa supplement indicated recently that the United Kingdom produces about £500 worth of goods for every ton of oil or oil equivalent. For the same consumption of energy, Germany produces £600 worth of goods and France produces about £700 worth.
I am concerned about three major omissions. First, I am sorry that so many domestic electrical appliances have been excluded. I raised the matter with the Minister and he attempted to reply, but his answer was no more adequate then the replies given in another place when the matter was pressed to a Division in Committee.
A whole range of electricity-consuming appliances, such as freezers, washing machines and cookers—appliances that use 40 per cent. of electricity consumed in the home—are not included in the Bill, and no adequate reason has been provided for their exclusion. The Minister should at least give himself enabling powers. They would not cost anything and be could, at his discretion, subsequently include domestic electrical appliances as he thinks fit. There is no sensible reason why enabling powers should not be included in the Bill.
Secondly, the Bill is inadequate because it assumes that the consumer does not require guidance in relation to the domestic appliances that have been excluded. But studies show that consumers do not know the consumption of one appliance compared with another. It is a pity that the EEC recommendation that we should have energy labelling is not making progress. Can the Minister tell us a little more about why we are not proceeding with energy labelling?
The Government introduced the testing of motor cars so that there was a comparative yardstick and the consumer could see the petrol consumption of one model compared with another. Such tests may not be reliable, but they are the only yardstick of comparison and the consumer has found them helpful. The same could apply to the labelling of electrical appliances.
If the Government are not prepared to include in the Bill the appliances that are heavy consumers of electricity in the home, it would at least be sensible to proceed with the labelling of electrical appliances, so that consumers can see what one product consumes, compared with another.
§ Mr. Geoffrey Johnson Smith
Is my hon. Friend aware that the magazine "Which?" has conducted a survey that shows that there is a 2:1 difference between one type of refrigerator and others? Some consume energy much more efficiently than others and the fact that there is such a wide difference lends considerable weight to my hon. Friend's view.
§ Mr. Rost
My hon. Friend takes me on my next point. The "Which?" inquiry related to fridges and freezers and found that the worst model of fridge used twice as much electricity as the best. That is a wide difference and the consumer has no idea whether he is buying the one that uses half as much electricity as others or the model that uses twice as much.
Some guidance would be helpful. That is a part of the energy conservation programme in which information to help a consumer make his choice in the market place would be an advantage. If the Bill is to be regarded as anything remotely resembling an energy conservation measure, it should be strengthened in that area.
Thirdly, we have missed a great opportunity to do more on thermal insulation incentives. We have the Homes Insulation Act, but that is only a marginal measure. For example, in the autumn there was a great deal of advertising by the Department of Energy and nationalised industries urging householders to apply for grants under the insulation scheme for the insulation of their homes. Many people applied to local authorities and I had many letters from constituents who were upset because the money allocated to my local authority had run out. That was fair enough; there was a budget and it had been used up.
However, my constituents were annoyed because the local authority's letter of refusal told people who were desperate to insulate their homes that they must not start insulation work because they would not subsequently be eligible for grants. They were refused a grant and told that they had to go another winter without insulation. That was stupid.
If local authorities had run out of money, the Department of the Environment should have waived the stipulation that work must not proceed before a grant could be given. Why was it not possible to allow the work to go ahead and to permit householders to claim grants retrospectively? That would have been one way of getting homes insulated, and I hope that my suggestion will be considered in future.
In considering the inadequacy of insulation standards in this country, we must see the Bill as a missed opportunity. It is time that we tightened up building regulations. There was a consultative document as long ago as January last year, but we are still consulting backwards and forwards. There is no excuse for holding up the improvements in building regulations for new dwellings that the Government decided were necessary two years ago.
We know that much higher standards of insulation are cost-effective and would benefit the nation as a whole. I hope that the Minister will give some assurances that the overlap between his Department and others is being overcome. The lack of co-ordination between Departments has held up much of the energy conservation strategy in the past.
The final missed opportunity in the Bill is that, with one extra clause, it would have coped with what the 677 Government have already said they are prepared to do, namely to amend the Electricity Act 1957 in order to make changes in the monopoly powers of the CEGB to provide electricity without its being given a directive, or even guidance, that it must promote energy efficiency. The electricity supply industry has rested on this argument as its excuse for deliberately frustrating the development of district heating and combined heat and power schemes. This is the area where the greatest contribution to energy conservation could come about, as is happening increasingly in other European countries.
The Bill would have been an ideal opportunity for the Minister to include in legislation—he reaffirmed in the House at Question Time today that he intends to legislate—the power to allow private generation of electricity by those who wish to do so as a principal activity. It is possible to generate electricity but difficult to get permission to sell it to neighbours. It would not be allowed as a principal activity. This monopoly, statutory power must be amended to permit genuine competition and the development of localised, combined heat and power schemes in partnership between industry and local authorities. It should not simply be a matter of massive district heating schemes of the type now being examined to find one lead city to promote.
§ Mr. Palmer
Is the hon. Gentleman aware that 22 to 25 per cent. of electricity used for industrial purposes is generated privately? The hon. Gentleman misleads the House when he talks as if this were an innovation.
§ Mr. Rost
My latest figures are that 15 to 16 per cent. of electricity in this country is generated in combined heat and power plants. All of that, with the exception of one small public sector scheme recently opened in Hereford, is in the private sector. The hon. Gentleman is correct to say that there is private generation of electricity. It has come about only in those larger units of industry where there has been a balance between heat and electricity demand and where there has not be a requirement to sell surplus electricity into the grid or a need to market the heat to a nearby town. In other words, the industry or the firm has been self-contained in its demand for heat and electricity. That sort of scheme—like the one at Cadburys, although there are plenty of examples—has gone ahead. However, the reason why we are at the bottom of the league in using reject heat from power stations is that there have not been localised partnerships between industry and local authorities. About 3,000 of these smaller schemes have gone ahead on the Continent while we have been frustrated by an energy pricing policy that has undermined the cost-effectiveness of combined heat and power and because our nationalised monopolies in gas and electricity have done their best to frustrate them.
§ Mr. John Moore
I shall hope to catch your eye later, Mr. Deputy Speaker, to respond to my hon. Friend's legitimate points. I hope, however, that hon. Members will appreciate that, although they may have legitimate desires to see the Bill extended in its scope, powers already exist in building regulations and grants under the home insulation scheme. Hon. Members can legitimately argue for additional funds for that purpose but not the need for additional powers in the legislation that we are discussing.
§ Mr. Rost
I am grateful to my hon. Friend. There would be a great deal of benefit if the Government speeded up the policy already agreed that they wish to pursue regarding greater competition in the production of electricity and the marketing of heat which the citizens of this country desperately need. This Bill would provide an opportunity to introduce amending legislation to get this process under way. Market pricing tis already producing he incentive. One now needs to remove the obstacles.
I regard the Bill as useful so far as it goes. It is, however, rather a missed opportunity. It is rather pretentiously called an energy conservation Bill. I hope that there will be an opportunity to look at it again in Committee. This could have been the ideal Bill for the new experiment under which Bills are examined by Select Committees prior to their introduction to the House or prior to the Government having finalised their ideas. In this case, of course, the Bill went first to another place. It was debated sensibly but, unfortunately, not amended adequately.
While supporting the Bill so far as it goes and hoping that it can be amended, I hope that my hon. Friend will bear in mind that the Select Committee on Energy is now starting an inquiry into the Government's energy conservation programme and combined heat and power. I hope that the Government will indicate in this Bill that they are serious about coping with the problems of improving the efficient use of energy and will use the Bill to show their determination to tackle the obstacles so that the Select Committee will not, in due course, have to come out with a critical report.
§ Mr. David Ennals (Norwich, North)
The hon. Member for Derbyshire, South-East (Mr. Rost) has made a number of points with which I agree. There were one or two points with which I disagreed. The hon. Gentleman has, however, summed up the situation in describing the Bill as a missed opportunity and a very modest measure—the terms that were used in another place. I do not underestimate the significance of the modest proposals that are being carried through.
I was much concerned with energy conservation as Secretary of State for Social Services. I was able to see a substantial saving for health authorities when they concentrated on energy conservation which enabled them to make more funds available for patient care. The hon. Gentleman will not expect me to agree with him about pricing policy. One reason why the Bill is a modest measure is that the Government are relying far too heavily on the price factor as distinct from measures outlined in the Bill and other measures that should have been included. I shall mention one or two later.
If the reduction of fuel use were the only factor, it could be argued that 1980 was a good year for the Government in the sphere of conservation. In the first 11 months of 1980, compared with the same period in 1979, there was a fall in the consumption of coal of 4.7 per cent., of petroleum of 13.3 per cent., of natural gas of 1.4 per cent., of nuclear electricity of 3.9 per cent. and of hydroelectricity of 7.4 per cent.
One might exclaim "What a success story." We know, however, why it happened. There was the dramatic fall in industrial activity and output. The fall in manufacturing output amounted to about 14 per cent., together with an increase of almost 1 million in the number of unemployed. 679 This is a tragedy of national proportions, affecting every part of the country, not least my constituency in Norwich that has usually been spared the horrors of unemployment but where there are now about 8,000 unemployed—a figure new to a city such as Norwich.
A contributory factor is the Government's ruthless use of its price mechanism to curb the industrial use of energy. If we look at other countries, we see at what a disadvantage we have been placing industry, apart from the effect on the pockets of our people. In the past year British Gas prices have risen by 30 to 40 per cent., and in some cases by 70 per cent. This is crippling for the energy-intensive industries. Worse is to come later this year.
British industry as a whole is paying £8 a tonne in heavy fuel oil duty, which is, with that of Ireland, the highest rate in Western Europe. In Germany the duty is under half, at £3.55 a tonne, and in France industry pays less than £1 a tonne, to the great benefit of French manufacture and trade. So we can see what the Government are doing to industry and the consequences that it is having.
The British Gas Corporation is making massive profits, which will enable it to pay for 1980 about £400 million to relieve the public sector borrowing requirement. That looks nice for the Treasury, but it is not nice for industry. I find it difficult to take it when the hon. Gentleman says that that is the best method of energy conservation.
§ Mr. Rost
Is not the right hon. Gentleman being a little unfair about the so-called massive profit of British Gas? Is it not true that it could hardly fail to make profits, considering the price at which it has managed to buy the gas from the original southern North Sea basin? Those resources are now running out, and, because the price was so low, it has not been profitable to develop an alternative British gasfield, so that British Gas now has to buy Norwegian gas at about 10 times the price that it is paying our own developers. Is not that a nonsensical policy? It is not surprising that the gas price is low now but will have to rise sharply when the prices of that imported gas come through the pipeline.
§ Mr. Ennals
The hon. Gentleman's intervention enables me to remind the House—every hon. Member knows this—that the price of gas now is, and will increasingly be in the future, higher than the corporation would wish it to be. It has been forced up by Government decision. That enables the corporation in a sense to act as tax collector for the Government, at the expense of both industry and the public. Industry is paying at least £300 million a year more for its gas supplies than it would in other EEC countries. The result is heavy lay-offs, increasing unemployment and lost orders.
My second point concerns the inadequacy of our energy conservation programme, which is small compared with that of other countries. Conservation is not simply a long-term programme; it is the only short-term method to reduce fuel consumption—apart from the price mechanism, with all its disadvantages.
Our fuel costs are very high, yet our spending on conservation is extremely small. My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the Federal Republic of Germany. Perhaps I may put the matter differently. We consume as much energy as it does, whereas our gross domestic product is only half that of the Federal Republic. Our use of energy is much less effective; the Federal Republic is twice as effective in fuel use.
680 Sir William Hawthorne, former chairman of the Advisory Council on Energy Conservation, has said thatexisting technology lavishly applied could almost halve our energy consumption".That is borne out by studies by the International Institute for Environment and Development, the Open University's energy research group, Friends of the Earth and others. I wish that the Government had taken more of that advice in drafting the Bill. I hope that there will be significant changes in Committee.
We spend on energy conservation half of Sweden's programme, though our population is many times larger. Only one country in Western Europe spends less than Britain on energy conservation. This must be remedied, and this is the Bill in which we should seek to remedy it.
My third and last point is linked with my second. Like the hon. Member for Derbyshire, South-East, I want to draw on the excellent report of the Select Committee on Energy on the Government's statement on the new nuclear power programme, published last week. The Minister decided—and I understand this—that this was not the opportunity to comment on the report, but one or two of the Committee's statements should be considered in this debate. I want to carry a little further one of the points made by the hon. Gentleman. In paragraph 32 of the first report we read:although the official energy projections include allowance for potential conservation in each main economic sector, we were unable to detect real progress towards a coherent, effective policy for energy conservation as recommended in 1975 by the former Select Committee on Science and Technology … we were dismayed to find that, seven years after the first major oil price increases, the Department of Energy has no clear idea of whether investing around £1,300 million in a single nuclear plant (or a smaller but still important amount in a fossil fuel station) is as cost effective as spending a similar sum to promote energy conservation.The Committee's recommendation, following from that, was:We therefore recomend that the Department of Energy should assess in future, as it should have done in the past, the economics of public expenditure to promote energy conservation, with the same rigour as that required for the economic appraisal of new generating plant.I strongly support that recommendation. The Minister and the Committtee considering the Bill should reflect upon it.
I wish also to draw upon the evidence —page 527 of the minutes of evidence—given to the Select Committee by the Friends of the Earth, arguing strongly against the Government's plans for a substantial expansion of the nuclear power programme at a cost of about £15 billion over the next 10 years, and especially against the pressurised water reactor System. The Friends of the Earth advocated more use of combined heat and power stations, and said that theyhave a conversion efficiency of up to 85 per cent—far greater than the average efficiency of 30 per cent for the UK's present stations. CHP is a reliable technology, unlike the PWR, and several European countries are meeting an increasingly large proportion of their space and water heating requirements from combined heat and power stations both in industry and through district heating systems. District heating systems, an increasingly large number of which incorporate CHP, supply a quarter of the total heating load in Denmark, 20 per cent. in Sweden and 40 per cent. in the Soviet Union… The United Kingdom is rapidly falling behind other countries in the provision of heat from CHP/ DH schemes.681 These schemes can be built more quickly, and are more effective, than nuclear power stations, and I hope that there will be a greater emphasis on them as a result of the recommendations of the Select Committee.
I hope, too, that we shall look at other conservation measures such as solar energy. I do not want to go into any detail, but it is clear from the experiments that have been taking place—some of them even in this country over many years—that solar energy is a force to be taken into consideration. It is renewable, and I believe that eventually it will play a very important part in our total fuel economy.
Although I welcome some of the recommendations contained in the Bill, my main criticism of the measure is that it is unimaginative and misses great opportunities which ought to be tackled seriously in Committee. At one stage, the hon. Member for Derbyshire, South-East in a sense criticised even the short title of the Bill, which describes it as an energy conservaton Bill. But its long title says that it isAn Act to make provision for regulating the design, construction and operation of certain energy-consuming appliances and otherwise with respect to the nation's use of energy.One of the greatest advanages of both its short title and its long title is that it will enable hon. Members on both sides of the House to put into it some of the more imaginative proposals which seem to have escaped the notice of the Government and which will, I hope, be considered seriously in Committee.
§ Mr. Nigel Forman (Carshalton)
I welcome the Bill as a small step in the right direction, and I find myself very much in agreement with the words of my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who made the case that it had been my intention to argue. However, he did it so well that I can confine myself to some rather briefer observations.
What is needed from the Government over the months and years ahead in this connection is more "carrot power", as implied by my hon. Friend. As he said, we have had the stick of the price mechanism, which I support strongly and recognise as an integral part of the Government's conservation policy. But I think that more "carrot power" in the various forms which my hon. Friend described is urgently necessary.
There is a danger in energy conservation, like all good causes, that rapidly it can become almost what I have heard some people say in a Freudian slip an energy "conversation". That is not entirely surprising bearing in mind the nature of the concept and the fact that it can provide packages which offer attractions to all people from all points of view.
Whatever may be the semantics of the matter, it is very important to have on record the very serious energy background to the Bill which was sketched out so clearly by the Minister. I hope very much that one outcome of this debate will be for my hon. Friend's Department, if it is not already intending to do so, to publicise as widely and as clearly as possible those very good examples of how energy conservation can pay off in hard-nosed economic terms. That is the best possible way of demonstrating to consumers of all kinds the enormous advantages both in 682 terms of a very good return on the money invested and in terms of short pay-back periods of so many of the projects being undertaken in both the private and the public sectors.
I note from what the Minister said that the Government recognise the need to reinforce price signals with supplementary measures. He gave instances of the Government's advice programme on energy conservation and the various demonstration projects to which he said the Government were contributing some £4 million a year. He went on very interestingly to underline how already it could be said that that £4 million a year was producing savings worth £180 million a year.
Earlier today, at Question Time, we had the related point about the very large sums of money now going into energy efficiency in the domestic sector. The figure of £400 million was mentioned in connection with the domestic sector. It is clear that this, in the shape of insulation, double glazing and the rest, is having very beneficial results already.
Looking at what is happening in energy conservation and looking at the prospects for the future, we see that it is fair to conclude that the assumptions built into energy planning hitherto have been very conservative. In all the documents, we have seen talk about 20 per cent, energy savings overall by the end of the century compared with what would otherwise have been the case. These projections were made back in 1979, assuming roughly 1 per cent, a year, albeit with a cumulative compound effect, and the time must shortly be arriving when the Department of Energy will be in a position to revise those assumptions and the forecasts which are based on them.
There is no doubt that this is a vitally important area, even if this is a fairly modest Bill, not least for the reason given in a very interesting article in The Times on 9 February, when Pearce Wright, the science editor, reported at some length on an idea which was then canvassed for a national agency committed to energy conservation. The point was made in the article that the objective was nothing less than to reduce Britain's £16,000 million fuel bill.
Looking at the dimensions of the problem in that way, we see that, whatever the strength and advantage of all the sensible investment which is going on in the private sector to encourage energy conservation, the figure of £120 million in a full year which, according to my noble Friend in another place, speaking for the Government, is apparently what the Government are contributing to energy conservation, seems to my way of thinking to be not as large as it should be.
When we consider that this Government are committed above all to forms of investment in the public and private sectors which bring us value for money, I can think of no item of public spending where the value for money would be more dramatic and more quickly responsive to what we invest wisely than energy conservation.
I hope that the Minister will be able to tell the House a little more and hold out some hope that that £120 million, albeit an indicator though it is not the only indicator of the Government's energy conservation programme, will be expanded in the near future to good effect not only for the consumers concerned but also for the country as a whole.
There is no doubt that there has been a lot of agreement, in the House and outside, about the nature and purposes of energy conservation, I refer, for example, to the excellent submission made by the Council for the Protection of Rural England, which no doubt the Minister 683 has seen. It makes some powerful suggestions for ways in which this small Bill can be improved and extended. I do not know whether all its suggestions are necessarily apposite or timely, but I should like right hon. and hon. Members to be aware of the support of this thoughtful organisation for some of the measures and suggestions already touched upon by my hon. Friend the Member for Derbyshire, South-East.
The council's first point relates to the wider scope of these energy efficiency standards and the desirability of applying them to domestic electrical appliances of the kind mentioned already. I shall not labour that point, but I hope that the Government will be prepared to look at it again and to consider it carefully.
The second point relates to the idea of giving the Secretary of State powers to initiate programmes of thermal insulation of the existing household stock and also to make reports to Parliament on the wider cost benefit analysis of energy conservation.
This, of course, links closely with the point mentioned at least twice by the right hon. Member for Norwich, North (Mr. Ennals) and others, namely, paragraph 32 of the recent Select Committee report. Any fair-minded person will agree that, although that report is entitledThe Government's statement on the nuclear power programme",paragraph 32 is one of the most important single paragraphs in it and has a great bearing on the Bill and on the Government's energy conservation strategy.
The third point to which the Council for the Protection of Rural England attaches importance, is one that I raised at Question Time today, namely, the possibility of amending the statutes which apply to the area gas and electricity boards to empower them to provide advice, loans, audits and possibly even packages of energy conservation hardware for the benefit of customers. The idea has been floating around for some time. There was an article in The Guardian along those lines not long ago. Moreover, it has not remained merely in the realm of theory and newspaper articles. As the Minister knows only too well from his own experience, it is being put into practice in countries such as Sweden and in states such as Oregon and California in the United States. It can be done, and it can be of great financial benefit to the energy users concerned.
As this has already been pioneered by companies such as Pacific Power and Light and the Tennessee Valley Authority, to name but two public sector organisations in the United States—the home of free enterprise and the entrepreneur—I hope that this aspect, too, will be seriously considered by the Government.
The fourth suggestion of the CPRE brings us to the more difficult question of amending the statutory terms of reference of the CEGB. This has already been mentioned by my hon. Friend the Member for Derbyshire, South-East. I believe that it is a crucial aspect. Again, therefore, I hope that the Government will consider this further.
The possibility of turning around and modifying the objectives of an organisation as large and as monolithic as the CEGB is, of course, very worrying. Indeed, previous Secretaries of State have sometimes said that they cannot have an energy policy worthy of the name, that the CEGB is the only organisation in this country which really has one. Whether or not that is an exaggeration, the fact remains that Parliament must do everything possible to make its terms of reference flexible, to point it in the right 684 direction and to ensure that it interprets those terms of reference in a way that is consistent with the long-term needs of this country. After all, in dealing with energy policy and energy conservation, we should be considering principally the long-term needs of the country.
The key words in section 2(5) of the Electricty Act 1957 put a duty upon the CEGB to providean efficient, co-ordinated and economical … supply of electricity".Clearly, without being too semantic about it, the key question here is what exactly the CEGB takes the word "efficient" to mean. How broad is the concept of efficiency to be? Is it to be confined simply to providing electricity at the lowest feasible cost in order to maximise the market share of the CEGB and, of course, the Scottish boards? Or is it to be seen in broader, slightly more ambitious terms as energy efficiency pure and simple?
If, as the Minister said at Question Time, it has been decided to be somewhat cautious about a national energy agency because of the difficulties of setting up new institutions, one must nevertheless hope that we shall at least consider seriously—preferably taking early action—an alteration to the statutory terms of reference of these vital energy utilities. If we do that, we may bring about changes more quickly than any institutional engineering that we may seek to undertake.
All in all, this is a good small Bill. I hope that it and the Government's policy can be expanded and improved as time goes by.
It behoves me to say, briefly, how I think that the policy might be expanded. First, the Government must continue to reply upon getting the right economic price signals through to consumers of all kinds. That must be the bedrock of the policy. Secondly, there is a role—although probably one with diminishing returns—for advice and exhortation through all the various mechanisms and centres available to the Government. Thirdly, demonstration projects in energy conservation are clearly effective, as my hon. Friends figures showed.
Fourthly, there is a role for private and public sector investment in insulation and similar campaigns. The dilemma here, as my hon. Friend in only too painfully aware, is that responsibility for these matters is shared among a range of Whitehall Departments and public sector institutions. There is thus a perennial problem of knocking heads together and getting Departments to co-operate and give equally high priority to a matter which crosses departmental boundaries. None the less, if the Government realise that they have the support of both sides of the House in this vital matter in the national interest, I believe that that should strengthen the bond of Ministers who have to deal with these interdepartmental matters.
There are, however, two aspects of the energy conservation package in which I believe the Government are still falling short of what they could achieve. The first is in the area of what my hon. Friend chooses to call "regulation". I wish that he would not call it that. I wish that he would adopt a self-denying ordinance and drop that word from his vocabulary, because it is not a good "buzz word", at any rate on these Benches. It would be far better to speak in terms of improving and raising standards. If that can be done in education, to argue by analogy from another sphere, surely we can seek to do it in energy, where it is equally vital.
If we can raise mandatory standards to levels which also encourage our Community partners to do more 685 themselves, we shall have a better chance to export energy conservation equipment to markets elsewhere in the Community and overseas. If we set standards of efficiency in all sectors of energy use which achieve the results that we hope to see and have built into our calculations, that can only be good for the country and a saving of scarce resources for the future.
To take one small example, I remind my hon. Friend of the point that I made previously about the Offices, Shops and Railway Premises Act, in which temperature levels are laid down. As one who is wearing a sweater this afternoon, I believe that there is a great deal to be said for encouraging people to live in healthier, cooler temperatures. The Government have a role to play in this regard. In many places that one visits these days, one notices the extent to which buildings of all kinds, including factory premises, are overheated, wastefully heated, or both. Very often, the temperature is too high, the windows have to be opened to make it more tolerable, and there is a double waste of energy.
I therefore hope that other important pieces of legislation which cross departmental boundaries, such as the Act to which I have referred, will be re-examined with a view to tightening them up. I am sure that the Government would have public backing for measures of this kind. They are commonsense, moderate, realistic measures of the kind to which the Government are committed in other spheres. I believe that they would redound very greatly to our credit if we adopted them in energy conservation as well.
Underlying the arguments of several of my hon. Friends on this and other occasions is the fact that we need a new approach to energy efficiency, whether in distribution, conversion, storage or final use. Whatever sector of energy processes we are discussing, we need a different approach—an approach which asks whether it is better to spend £100 million, £10 million or £1,000 million on traditional energy supply channels, or to spend less in a number of different parcels on different forms of energy efficiency.
If we can approach that goal and get across to the public the idea that it need not mean lower living standards or greater discomfort and inconvenience, that it might actually be consistent with better value for money, we should be true to our party principles and serving the interests of future generations in a way for which we would wish to be remembered.
§ Mr. Arthur Palmer (Bristol, North-East)
I was Chairman of the Select Committee on Science and Technology, so I know that the hon. Member for Carshalton (Mr. Forman) served on it with great distinction and worked very hard. As ever, he has spoken with great good sense on these matters.
I should like to take up one point that the hon. Gentleman made about the Central Electricity Generating Board. I am not hostile to the idea of looking again at its powers, but it must be remembered that the electricity supply industry, unlike the oil and gas industries, which are in a position to provide interruptible supplies, has to give a supply 24 hours a day, day and night, and must accept every consumer offered to it. It cannot pick and choose its market as the other energy industries can.
686 The hon. Member says that the Government should do something about the CEGB. But the Government had the opportunity to do something but neglected it. They refused to do anything about the Plowden report for the industry's reorganisation. That would have given a great opportunity both to the Government and to the House to consider the relative powers of the electricity boards, and their powers in relation to other generating sources including private sources.
§ Mr. Forman
I share the hon. Gentleman's view that Plowden's diagnosis was sound, but I am more dubious about its prescriptions. That is why I am glad that the Government have not proceeded with those prescriptions.
§ Mr. Palmer
I do not want to go too far down this road, because it would lead us away from the subject of this debate, but it is not unknown for Governments to make considerable alterations to reports when they are drawing up legislation. That happened with the Herbert report on electricity supply in the 1950s.
Like everyone who has spoken, I welcome the Bill—not that it goes very far in itself. As other hon. Members have said, it is only one facet of conservation, which as a whole deserves much wider consideration. As I said, total electricity output from water-powered schemes including the Hydro Board and what is left in North Wales and in Cumbria, does not amount to more than 2 per cent, of our energy requirements. The sources are exhausted economically. So I do not see how we are going to get more energy from water. It is a very marginal contribution. I thought that the Minister brought it in to puff out his speech.
The Bill is none the worse for being inspired by European legislation, but I doubt whether we would have seen the Bill at all if our membership of the EEC had not required us to do something along these lines. That is the true genesis of the Bill.
This is a Bill for Committee, and I do not intend to deal with Committee points. I shall content myself with some general observations on conservation.
Of course we waste energy in every direction. Much more could be saved by home and factory insulation, by remedies for process losses in factories, by combined heat and power schemes—the hon. Member for Derbyshire, West (Mr. Rost) is a great expert on that—and in other ways. That cannot be stressed strongly enough. But it is important to distinguish between the reduction in energy consumption due to lower standards of life and energy saved by the avoidance of waste. Genuine energy conservation means higher efficiency by the use of less enegy to maintain a given output of goods and services and of comfort and convenience to the individual.
For example, if I switch off the light when I leave a room, that is sensible and saves energy, but it is equally sensible to return to the room to install a higher power bulb to facilitate reading without strain—even if it does mean that I am using more energy. I am raising my comfort and convenience, and in a small way my standard of life.
Energy saving is only one aspect, although a very important one, of the misuse of natural resources as a whole, and as such is a separate issue from the origin of energy. People often mix these things up. For instance, if all our electricity came from windmills, whirling across the countryside, mile after mile—a huge number would be needed—it would be just as important to conserve it as if 687 it came from three or four gigantic nuclear reactors. Conservation is an aspect of energy efficiency, and should be seen as such.
In all circumstances, conservation must be related to the purpose for which the energy is used. Such purposes as the higher overall productivity of the country and improvement of living standards may mean greater energy use rather than less. Therefore, in quoting figures, the Department of Energy should try to discover how much energy, particularly in present circumstances, we have truly saved so far.
Unemployment is now over 2 million. We are faced with redundancies, factory closures, short-time working, falling demands for goods and services all round and cuts in Government expenditure. No wonder that in those circumstances we are using less energy. It would be amazing if we were not.
One of the fixed points in the Government's thinking is that pushing prices higher all the time will save energy in proportion. I very much doubt it. If the ordinary domestic consumer has installed electric space heating only to discover that natural gas—it used to be oil, but that is no longer true—might save him money, he cannot afford to pull the whole expensive installation out and replace it with a gas system.
There may be an adjustment over the years, but by the time one has reached it, gas may be more expensive than electricity. These relationships are always changing. I am not an economist—I am sometimes grateful for that—but I think that the expression is that energy consumption is not particularly "price-elastic". To say that energy is being saved because prices are higher is to say that people cannot afford to use it. That is not much of a recommendation.
Some hon. Members kindly referred to what was said in the recent report of the Select Committee on Energy. For some extraordinary reason, the press and some hon. Members are representing the report as anti-nuclear. It is nothing of the sort. As a member of that Committee, I know that its report wants a more effective, efficient and better use of resources and the development of a more cost-conscious nuclear programme. The Committee is not against nuclear energy as such. The present report refers to the pioneer work of the Select Committee on Science and Technology, of which, as I said, I had the privilege of being chairman. Its report was produced about five years ago. Having emphasised the meaning of true conservation related to efficiency, the report states:Nevertheless, if, as we are persuaded is feasible by several expert witnesses, the energy consumption of this country could be reduced by 15 per cent, without sacrificing output, employment, or living standards, it would wield annual savings of around 50 million tons of coal equivalent (mtce). At current prices this would reduce the nation's annual fuel bill by approximately £1,000 million. The greater the: proportion of the total saving represented by oil, the greater the benefit to the balance of payments.Furthermore, it is quite clear that the capital sums involved in a sustained energy conservation programme would have to be very large indeed to equal the high costs of developing an equivalent additional supply capacity from North Sea oil and gas, the Selby coalfield, or nuclear power stations?Five or six years ago we made the point that so many hon. Members made today.
The Labour Government must take some responsibility in the matter. It is not a divisive party question. How far do the Government think they have gone in achieving a 15 per cent, genuine saving in energy use? I see no reason 688 why figures cannot be given to the House. I know that it might not suit the Government to do so, but the House has a right to know.
We have been given figures relating to savings made by Marks and Spencer. I was delighted to hear them. I could quote many firms in my constituency that are making savings. That is very good. But the Government are an enormous consumer of energy through the defence-establishments, the dockyards, the National Health Service, and so on. Some time ago, I asked the Government whether we could have a list of the savings achieved in each Government Department. I was fobbed off with the answer that the figures could not be obtained—in spite of the enormous governmental statistical system in Britain. I do not think that it was convenient for the Government to give those figures because the Department of Energy has little control over other Departments. I must press that point with the Minister. The Government's arguments do not carry conviction, because there are such blanks in their statements.
I wish to raise just two possibly Committee points. I do not think that the present standards for gas and other heating appliances covered by the Bill are high enough. The British Standards Institution plays some part in that. I know a little about that body. It once had great prestige and standing, but its methods are becoming out of date. It tends to include in its Committees too many experts from the firms making the appliances. It is often argued that they are the only people available who know enough about the product. However, they do not necessarily take a critical attitude to the standards being established. The Select Committee on Science and Technology thought that when BSI representatives appeared before it for our electric lamps inquiry. Those remarks are not meant as an attack on BSI, but it needs to modernise its methods. There is a great deal to be said for both the Government and consumers' organisations being more strongly represented.
I shall support the Government on the question of electrical appliances. To include electrical appliances, perhaps with the exception of refrigerators, would mean an increased inspectorate. I do not think that the resultant benefit would be great enough to warrant the cost. Electrical appliances, especially those converting electricity direct into space heat, do the conversion at practically 100 per cent., and for water heating by more than 80 per cent. Those are high efficiencies. The high-conversion efficiency of electrical appliancies in the total heat cycle does a great deal to make up for the often quoted loss of heat in the power stations.
§ Mr. Rost
Was not the hon. Gentleman in the Chamber when I said that the most efficient electrical appliance—for example, a refrigerator or a freezer—uses half the energy of the most inefficient appliance of the same size? That fact comes from a study produced by Which? magazine. Will the hon. Gentleman concede that the consumer could benefit from some guidance on which appliance is more energy efficient?
§ Mr. Palmer
I saidperhaps with the exception of refrigerators".Generally speaking, it would not be worth the trouble to bring in electrical appliances. If the whole range of 689 electrical appliances was included, the net gain would not be great enough. We need to concentrate on the energy areas where there is proven and accepted inefficiency.
§ 6.8 pm
§ Mr. David Alton (Liverpool, Edge Hill)
While I disagree with the hon. Member for Bristol, North-East (Mr. Palmer) about electrical appliances, I wholeheartedly endorse his remarks about the central Government and local authorities putting their own houses in order. There are many ways in which we could save energy through the way in which we distribute our resources through both central Government Departments and local authorities. For instance, it is crazy that local authority schools close for several weeks during the summer holidays when the need to consume oil and heat does not arise, while during the winter months—at a time when we consume far more energy in the school buildings—schools close for only about 10 days at Christmas. That might be a practical suggestion of an area where the Government might try to save energy.
The Minister will appreciate that criticisms from hon. Members are not directly about the Bill. We all agree that, as a small measure, it contributes to energy conservation.
But Members are not looking for that. I suspect that the critical speeches by the hon. Members for Carshalton (Mr. Forman) and for Derbyshire, South-East (Mr. Rost) and by Opposition Front Bench spokesmen, came about because they see the Bill as a small, 21-page token rather than a grand programme to try to conserve energy. It has been referred to as a minnow of a Bill, as being modest and as a charter for lost opportunities
Britain lacks an energy policy. The Government have been floundering. They have been plodding along from pit closure to reduced insulation programme, from fast-breeder reactor to half-hearted conservation measures, on to a dismal response to the question of alternative energy resources, and from an oil glut and the petro-pound to inordinate price increases for fuel and redundancies in firms for whom a realistic energy policy could have provided a lifeline.
Now the Government have provided only this 21-page Bill which will do little to put us on the right road towards energy conservation. It is a modest Bill with much to be modest about. Its grandiose title hides its limited aims. It should properly be called the heat generator, gas appliance efficiency and miscellaneous energy provisions Bill, as was suggested in an amendment in another place. Instead, its title inevitably raises false hopes and expectations among hon. Members who are concerned about the matter.
The Bill is inadequate and unsatisfactory precisely because the Government do not have an energy policy. Instead, they rely on market forces to cripple large sections of industry and on a commitment to spend £15 billion, without discussion, on nuclear power stations which probably will not work and which the public certainly do not want.
The Prime Minister asked us last year to have faith in the development of nuclear fast-breeder reactors. She was seen sitting on top of one of these virility symbols of the '80s at Dounreay saying "It's safe, it's safe, it's safe." I think, however, that we have all learnt that what may at first sight appear to be safe does not necessarily work out that way. The right hon. Lady has been depicted by 690 some—perhaps unfairly—as being like Attila the hen who has all her nuclear eggs in one basket. Instead of pouring resources into the construction of fast-breeder reactors, with all their safety problems, the Government would do better to examine alternative sources, and the conservation of energy.
Britain's record to date on energy conservation has been lamentable. In terms of our GNP, our energy consumption is extraordinarily high. We have a population seven or eight times that of Sweden, but we spend less than half Sweden's budget on energy conservation. I believe that the figure this year will be about £120 million, a derisory figure compared with what the Government are spending on nuclear energy, nuclear missiles and so on. The Minister has had his attention drawn to paragraph 32 of the report of the Select Committee on Energy, which was published last week. While I support what hon. Members have said about that paragraph, I disagree with the hon. Member for Bristol, North-East (Mr. Palmer) who said that the report was not anti-nuclear. He was a member of the Committee, but we must be guided by what is in the report. Paragraph 34 statesWe concur broadly, however, with the conclusion of the Royal Commission on Environmental Pollution that it would be unthinkable for any Government to commit this country to a substantial programme of nuclear power until there is a firm prospect that the problems of the transport and long-term disposal of nuclear waste can be managed safely.Therefore, rather than the Government spending vast sums on the development of a fast-breeder nuclear programme they should think more carefully about how existing energy supplies can be saved by the development of energy conservation.
§ Mr. Palmer
Perhaps I misheard the hon. Gentleman, but I thought that he referred to a fast-breeder programme. There is no contemplation of a commercial fast-breeder programme. The question is whether we go ahead with AGRs or PWRs.
§ Mr. Alton
I accept that, and I am sorry if I misled the House. However, there is talk to the effect that the fast-breeder reactor of the type that was built at Harrisburg is being contemplated for possible use in this country. Therefore, we must accept that, until the lessons of that incident have been learnt and we have properly investigated the differences between the various types of reactors available, until we have overcome the problems of the disposal of nuclear waste, we ought not to proceed along that road.
The Liberals have no doubt about the merits of promoting conservation above the production of energy. The claims of the nuclear industry are looking increasingly thin while the public are beginning to question whether we should go nuclear at all in the shadow of the Three Mile Island incident. My hon. Friend the Member for Truro (Mr. Penhaligon) has spoken several times on that matter in the House. Our current surplus of fossil fuels will not last for ever. The more we save the more we shall be able to export in order to pay for other raw materials, all of which will be increasingly scarce and expensive.
I turn next to the question of alternative sources of energy. While we must be prepared to invest heavily in searching for alternative sources, we should not delude ourselves that they will supply us with energy in quantities and at prices to which we have become accustomed. They can play a part in saving conventional energy. For instance, the St. George's school in the Wirral on 691 Merseyside has been heated by solar energy for over 15 years. That must make a valuable contribution to saving conventional sources of energy.
We are doing far too little to insulate our buildings at a time when so many people in the building industry are unemployed, have little to do with their time and cost, according to the Treasury's Economic Progress Report, £3,500 a year each in unemployment pay and lost tax revenue. They could be employed on providing the country with a proper insulation programme that would save the estimated one-third of energy that is lost by inadequate insulation through the roofs of our homes.
If the Minister tries to claim that broader issues of this type are outside the scope of the Bill he should not present it with such a misleading short title. It is only a heat exchanger and gas appliance efficiency Bill. It is a modest measure. If it were presented as such we should support it in that spirit. The Government would then, however, be unable to trumpet about how much they have done for energy conservation. The Bill should be given more teeth. I should like its powers to be extended to all domestic appliances, as was suggested in another place by my hon. Friend Lord Beaumont of Whitley in an amendment that was defeated by only five votes.
If the Government are to legislate for gas appliances because of an impending EEC directive, they might as well use the opportunity to legislate for electrical appliances and make sure that they, too, are energy efficient. I refer to appliances such as washing machines, tumble dryers, dishwashers, refrigerators, televisions, ovens, irons and freezers. They account for 38 per cent, of the United Kingdom's domestic consumption of electricity, and their use is concentrated at periods of peak load when the level of overall demand is used by the CEGB to justify its policy of nuclear expansion. Therefore, anything that can be done to cut the energy consumption of these devices will help to prevent unnecessary investment at tremendous public expense in more giant nuclear reactors. In view of the forecasts of increased ownership on a whole range of appliances from videos to dishwashers, legislation on this subject will become even more important. I therefore hope that the Government will take the opportunity to amend the Bill in Committee to include those appliances, as the hon. Member for Derbyshire, South-East (Mr. Rost) suggested.
It is no good the Government relying on advertising. People are not obsessed with the fuel economy of household appliances in the way that they are with the fuel economy of motor cars. There is tremendous scope for improving standards of ovens and refrigerators and for improving insulation. Work is being carried out on that aspect in Denmark and in the United States, so why not here?
I turn next to the possibility of an energy audit. I should like money to be made available for such an audit to cover the country, particularly with a view to extending the installation of thermal insulation. Clause 15 on the provision of grants for insulation should be amended to allow such a survey to take place. I wonder, for example, how many Government and local authority offices have been surveyed to see how energy can best be saved. I do not want a quango. I want to see the legislation used to ensure that the Department of Energy does the job that it should be doing.
I should like more emphasis to be placed on combined heat and power schemes. Many hon. Members live in 692 Dolphin Square. That is a practical example of a block of flats which is heated through a combined heat and power scheme from Battersea power station. The problem is that at the moment, to achieve a conversion efficiency of up to 85 per cent., compared with 30 per cent, in a typical power station, electrical generation may be less efficient. I should therefore like more research to be conducted and more schemes to be promoted on this aspect.
Finally, I should like to see an amendment, not connected directly with energy conservation but which could usefully be enacted in this legislation. That is the provision for the placing of gas and electricity meters outside people's homes, as is quite common in other countries. The Minister should realise the increasing terror, induced in elderly people in particular, when the meter man calls. There have been many incidents of muggings and burglaries through people pretending to be what they are not. Indeed, my noble Friend Lord Winstanley has been responsible for instituting a "password" scheme in the North-West, and Liverpool city council has introduced outside meters on some of its council estates. Such a reform would also get around the problem of estimated bills, and might prevent some of the cut-offs that occur today due to misunderstandings.
This is not a bad Bill, despite my strictures. It is just inadequate and short-sighted. My hon. Friends and I will support it, but in Committee we shall be looking for changes along the lines that I have suggested so that it can live up to the grandiose name with which it has been baptised.
§ Mr. Ednyfed Hudson Davies (Caerphilly)
Like many of my right hon. and hon. Friends, I wish to express some modest satisfaction with the Bill as far as it goes, but I stress that it goes nothing like far enough.
Just a year ago, the President of the EEC Commission, speaking of the Community as a whole, said:We have built our industrial society on the consumption of fossil fuels, in particular oil. It is certain that if we do not change our ways while there is still time, our society will risk dislocation and eventual collapse… We should rapidly raise our investment in new ways of saving energy. In the short term, energy conservation must be the cornerstone of our policy.In another place, the Minister of State, Dept of Employment, acting as spokesman on energy, said during the Second Reading debate on this Bill:Energy conservation has a central and permanent place in our energy strategy".—[Official Report, House of Lords, 11 December 1980; Vol. 415, c. 802.]I am prepared to concede that the Government really believe that and that the Secretary of State for Energy is genuinely concerned to achieve more energy conservation. But he is far from prepared to tackle the measures necessary to achieve thorough-going conservation.
On the basis of the figures which the Government placed before the Select Committee on Energy, it is evident that countries such as France, Germany, Sweden and the United States are prepared in each case to spend about £300 million on grants and loans to encourage conservation measures.
The Secretary of State refuses to acknowledge that we should be doing much the same. Our problem in Britain is that the Government believe that the only mechanism required to achieve conservation is the price mechanism combined with some exhortation. The Department these days is taking praiseworthy steps to inform the public and 693 the industrial sector of the cost saving which can result from investment in energy efficiency, but then it simply expects it to happen.
It believes that the degree of conservation that we require could be achieved if, on the domestic level and in the commercial and industrial sectors, cost-effective conservation measures were taken. In other words, provided that people know how much they can save, they will go in for energy-saving measures as a sensible, businesslike decision; and nationally we will have achieved the desirable level of conservation.
Again I quote:We feel that the key to effective energy conservation is economic and realistic prices".—[Official Report, House of Lords, 19 March 1980; Vol. 407, c. 299.]Those are the words of the Minister in another place.
When the Secretary of State gave evidence to the Select Committee on Energy on 28 January, he defended the Government's refusal to introduce subsidies to assist sectors of the economy which have been facing collapse and closure as a result of high energy prices by shielding behind the price mechanism. I quote from his words on that occasion:it is a fact rather than a virtue that if energy prices are set at their correct levels as determined by the market or the price to cover the long run cost of supply on a continuing basis they will as a consequence send the correct signs to industry in making their calculations when they come to order new equipment, build new factories, or redesign their present processes, or improve their costs in the factory".Later he said:The major incentive for that new investment in energy-saving is getting the correct price, but on top of that the Government recognise that more can be done, and this is why we do indeed spend taxpayers' money on demonstration projects and pilot projects which would enable industry to have confidence and invest in new equipment which will cut energy costs.I contend that there are two underlying fallacies in the assumption that if we get the price right—and it is a high price—and we explain to people what they can save, conservation will be achieved automatically.
The first fallacy is that even if every individual and every firm made the correct rational, cost-effective decision, it does not follow that overall we would achieve the degree of conservation that we might nationally need. I do not think that that follows at all. It might well be that there are factors which make it desirable to have a level of conservation higher than the totality of cost-effective, voluntarily taken decisions might lead to.
For example, oil is a finite commodity, and that in itself can be an argument for conserving it for its own sake, sometimes even at a cost. Moreover, it is desirable that we should decrease our dependence on politically unstable Middle Eastern suppliers, again even at a cost—perhaps a higher cost than the financial saving involved.
There are certain things which we need which are not cost-effective. Surely the Government would not argue that defence expenditure had to be cost-effective. Yet, as I have already said, other countries, such as the United States, France, Germany and Sweden, have seen the necessity of spending and investing to attain a level of conservation as an insurance for the future so that they may face a future energy crisis.
To face the problem of future energy costs, and to free ourselves from Middle Eastern dependence, we may have to do things very differently from the way which a 694 traditional cost-effective approach might require. For non-economic reasons, it would pay us in the long run actually to spend in order to achieve conservation.
The second underlying fallacy is the assumption that the price mechanism, coupled with adequate information about energy-saving techniques and some exhortation and persuasion from the Department, will at domestic and industrial level lead to sensible and rational decisions leading to energy saving. In fact, it often does not work that way.
One problem is that investment leading to long-term saving, sensible though it would be, must frequently give way to more immediate short-term investment requirements both in the home and the factory. Decisions in real life do not follow rational patterns. In answer to a question of mine this afternoon the Minister stated that what was needed to achieve conservation was a "change in individual demand attitudes." Change in human attitudes to demand involves more than a simplistic reliance on a price mechanism
The Minister will be aware of the work carried out by Ellis and Gaskell in the Department of Social Psychology of the London School of Economics. The Government should conduct their own sociological research into the way in which energy-saving decisions are made. For instance, if a family decides to insulate its home, will it save on energy costs or will it enjoy a higher temperature level for the same energy cost?
A further complication arises when we consider the desirability of sensible expenditure to install energy saving devices. In many instances, both domestically and industrially, the money is not available. What point is there in explaining to an industrialist how over a few years he could pay off an investment in new energy-saving equipment when perhaps he does not know where to find next week's wages? He cannot make that expenditure, yet in the national interest his energy saving is needed and the Government should be willing to help finance it.
I quoted earlier the Secretary of State's evidence before the Select Committee on 28 January. I quote from this evidence again. He said:To give a homely viewpoint, the plain fact is that anybody who comes to a personal decision about buying a new motor car is now automatically looking for something with a very much better performance in terms of miles per gallon. That is a homely and personal viewpoint which is now going on throughout industry.Is that so? It is an interesting simile, but if the Minister notes the cars that are owned in low income areas, he will find not sensible low-consumption saloons but old heavy-consumption bangers. The young man on a low income needs an economical car to run more than anyone else, but he cannot raise the money to buy it. Very often the only thing that he can afford is the ancient six cylinder model that will be a constant drain on his pocket.
So exactly it is in many homes and firms. Without Government help they cannot afford the energy-saving investment that would pay them in the long run, because they do not have the necessary cash flow. That is something that the Government do not seem to understand. In the short run, sadly, it is often cheaper to waste than to save. The Government should realise that the price mechanism will not overcome that unpalatable fact. Like other countries, Britain will have to be willing to subsidise conservation if it is to achieve it.
I am convinced that the two main planks in our future energy policy should be coal and conservation. Both a 695 healthy coal industry and a successful conservation policy have to be paid for. This week the Government seem to have learnt the lesson that we must subsidise the coal industry to safeguard its future. It is time that they also accepted that we shall have to pay the proper price for effective energy conservation. It cannot be obtained on the cheap.
§ Sir Bernard Braine (Essex, South-East)
I shall be brief, as I know that the debate is coming to its conclusion after some interesting speeches. I preface my remarks by saying that I always consider it to be a great pity that so often Governments introduce useful legislation of this sort which would be much more effective if it had been preceded by fuller consultation with the interested parties—in this instance, the Consumers Association and the electricity and gas consumers' councils.
I wish to make two points. First, I find it odd that the Bill as drafted is restricted to water and space heaters and a limited range of gas appliances. It is true that the former are the main users of electricity in the home. Nevertheless, we can all think of a wide range of domestic electrical appliances that are currently excluded from the Bill—for example, freezers, tumble dryers, ovens, washing machines and refrigerators—that are important users of energy in the home. The International Institute for the Environment and Development demonstrated that 38 per cent, of domestic electrical consumption is used by such appliances. That is a substantial proportion. What is more, ownership of such appliances is growing steadily.
The Bill provides an opportunity to give the Secretary of State enabling powers to issue type approvals for a broader range of appliances at his discretion. Surely it would be a significant and useful extension of his powers if some provision of the sort that I have postulated were included in the Bill. I hope that he will say that he will be amenable to accepting an appropriate amendment in Committee.
Secondly, we are all urged nowadays to conserve energy. The Government have given a lead on home insulation. Their scheme is a recognition of the cost-effectiveness of thermal insulation as a way of reducing energy costs for the domestic consumer and contributing to the nations's need to reduce energy consumption. There is clearly a need for much more urgency in identifying the contribution that the cost-effective thermal insulation of homes and work places could make towards lessening the demand for new and ever more expensive generating stations.
Surely it is obvious that we should be examining the cost-effectiveness of all energy conservation schemes. It would be tragic if we lost the opportunity that the Bill provides of doing something on these lines. I hope that the Minister will accept an amendment in Committee to require, for example, that a report be laid before Parliament within a year on potential energy savings from a greatly expanded thermal insulation programme and on ways of overcoming any obstacles to achieving such a target. Such an amendment would focus the attention of the Department of Energy on the problem in a way exemplified by the Select Committee on Energy in its recent First Report.
696 Let us see whether the Government really mean business in this important area of energy conservation. I look forward to hearing what the Minister has to say in reply.
§ Mr. Lawrence Cunliffe (Leigh)
May I try to bring some balance into the debate? As the Minister and my hon. Friends and colleagues know, I have a vested interest in energy conservation. Before I came to the House I was employed as a mining engineer—I was an employee of the National Coal Board and I am now sponsored by the National Union of Mineworkers. It is in that context that I shall try to put into perspective the feelings of my constituents and the organisation that I represent in the House.
I associate myself with the remarks of the hon. Member for Derbyshire South-East (Mr. Rost). Unfortunately the hon. Gentleman is no longer in the Chamber, but I acclaim some of his arguments. It may be that some of us, including the hon. Gentleman and myself, had expectations concerning the Bill that were too great. In my view the Bill is minute and abysmal in the context of a global energy strategy. It only tinkers and pussyfoots about with some minor regulations. History will record that its effects will be insignificant in terms of energy planning, saving and conservation.
It is regrettable that electrical supplies and appliances are not covered by the Bill. Anyone with a little foresight about the next 10, 20 or 30 years will know that we should plan for posterity and that we should do so in a more positive manner than has been demonstrated in the past 20 years or so. Electrical supplies will always be provided by cables, not pipes. Gas has had a distinct advantage over coal and over the cost of electricity supply.
The Bill does not deal with the imperative needs that many of us recognise. As recently as last weekend, I addressed the North-West miners' conference on energy conservation. Despite "the week that was"—which the Minister will know about—some legitimate and responsible contributions were made. I am sure that the Minister will readily understand that, as it was a miners' conference, it was not as impartial as it might be if it had been a pure conservation conference or a gathering of Friends of the Earth. Nevertheless, some sensible recommendations were made.
I do not wish to pre-empt the tripartite talks that are to take place this week between the National Union of Mineworkers, the NCB and the Government. I wish to reflect the NUM's thinking about future energy demands and requirements. If the Government are serious about energy planning and conservation, they should consider some of the points that will be raised this week by the NCB and the NUM. One of the best contributions that I have heard towards a positive, useful and rewarding form of energy conservation is the suggestion that we should achieve the maximum conversion of possible oil-consuming industries to coal. What better time could there be? Much of our industry is running at under-capacity and order books are low. In my opinion, and that of the NUM, this is an ideal time to encourage conversion to coal and to move away from our precious and diminishing supply of oil.
In the British Isles it is estimated that there are 45,000 million tonnes of coal reserves. It is inconceivable that we should lose this opportunity, at the best possible time, for 697 conversion. If the Government wish to make a declaration of faith and intent to the mining industry and to the NCB, they should enter into a period of dialogue as to how investment can be directed into another avenue.
As a result of a strong pound and high interest rates, many industries are struggling. Their viability is in question. In the package deal on the coal industry's borrowing powers—and in the hope that cash limits will be raised—would it not be wise to offer cheap loan grants and lower interest rate subsidies to industries so that they can convert? However, I shall not go into the raising of those cash limits, as I do not wish to pre-empt any tripartite talks.
The financial facts of life are that British coal is the cheapest to produce in Western Europe. Unfortunately, the hon. Member for Bedford (Mr. Skeet) is not in the Chamber. I always relish the opportunity to take him on when unit and energy costs are referred to. The coal supplied to power stations is about one-third cheaper than the same amount of oil. Therefore, an argument on the economic value of coal can be made. Home-produced coal is not only cheaper to British industry than oil, but it offers—as the hon. Member for Essex, South-East (Sir B. Braine) said—greater security of supply
There is an understandable and widespread desire to convert from oil to coal. The NCB already has a long list of factories that have planned switches that will allow considerable savings in running costs. Unfortunately, as a result of the recession, many industries cannot afford to convert. It is for the Government to take the initiative and to encourage industry, if they wish to keep faith with the mining industry. It would mean a minor change of course. It would also involve foresight and good planning for the energy requirements of our nation. However, in the long run, it would pay dividends.
We must think seriously about using our investment grants to the best of our ability if we wish to ensure that we receive a suitable reward for our effort. Other countries have taken such steps. For example, France has offered grants to large users of up to 25 per cent, of the total conversion costs. Medium-sized firms used to be the backbone of the Conservative Party. Reference has been made to the many family firms that will have to close and that will never reopen.
Inducements could be given. They would give firms the financial stability to see them through a difficult period. It is argued that such provisions would mean lower costs for manufacturing industry. I hope that the recession will come to an end. Indeed, we should look forward to that time and plan for it. At the same time, much useful and much-needed work could be provided for combustion equipment makers. Everyone knows that the coal industry deserves some assistance.
Several months ago many members of the Committee that examined the Coal Industry Bill pointed out what the future held in terms of cash limits for particular industries. There are some classic examples. For example, a great combine such as Boots chose to switch its heating system to coal. Its main chemical and pharmaceutical plant in Beeston, Nottinghamshire, has switched to coal-firing. That is another indication that during the 1980s industry will return to coal-fired energy, which will be assisted by fluidised bed combustion technology. Over a 10-year 698 period, Boots will gradually replace its ageing gas and oil-fired boilers with new, coal-fired equipment. It will need 350,000 tonnes of coal a year from local collieries.
The company predicts that there will be a considerable saving in its fuel bill, because, therm for therm, coal is significantly cheaper than other fuels. Now is the time to grasp the nettle and the opportunity. I shall not go into more detail. However, hundreds of firms would grasp the nettle if the Government would give them some encouragement based on financial inducement.
Oil is unpredictable because of potential military crises developing in any part of the world. We see nations which have great oil resources acting aggressively towards each other. That, again, is a warning factor which should be taken into account. If we were to mount a large scale campaign backed by Government support—certainly such a campaign would be guaranteed support by the Opposition and I am sure by other sensible political elements in this Chamber—to switch from the 14,000 tonnes of oil now being used by British industry to its equivalent of 23 million tonnes of coal, not only would we sustain the jobs of 40,000 to 50,000 miners, but that would be the sensible way to go about energy planning and conservation. We would also bring about sensible industrial relations in the mining industry, and that would play a great part in making a substantial and positive patriotic contribution to our economy.
§ Mr. Peter Hardy (Rother Valley)
My comments will be brief, largely because my hon. Friend the Member for Leigh (Mr. Cunliffe) has said so much with which I agree. I hope that all hon. Members agree that his suggestions were both sensible and relevant.
I hope that the Bill can be enacted rapidly, not because it is perfect—it is a meagre little Bill—but because we should have the legislative space for the Department of Energy to bring in another Bill, which many hon. Members are eagerly anticipating, to put right the Coal Industry Act of last year.
I say not that the Bill is bad, but that it is meagre. I do not suggest that the Department of Energy is appalling in its attitude to conservation. We could possibly criticise and find much fault in it, but we must accept that the Minister—I do not know about the Secretary of State—who has taken reponsibility for conservation matters, has put a great deal of personal energy, drive and imagination into them. It is a pity that his imagination is limited by Treasury policy.
I am particularly angry that the Minister's efforts regarding conservation have so often been frustrated by the Department of the Environment. If the Minister disagrees with me, I suggest that he consults experienced people in local government, because they will explain to him the distressing, unfair and unjust approach towards conservation which has been adopted by the Department of the Environment. I believe that, unless Ministers in the Department of Energy can persuade Ministers in the Department of the Environment to change their approach to conservation and the priority accorded to it, the Minister's efforts will be confounded and whatever good little Bills of this kind may bring about will be grossly overshadowed by the effect on conservation of matters such as the housing moratorium. In my area we are not seeing the progress in insulation and conservation activity 699 that we hoped to see. The responsibility for that lack of progress lies entirely at the door of the Department of the Environment.
I believe that the Minister's approach to the matter, which has concerned the Consumers Association, is correct. Normally I would support the Consumers Association wholeheartedly, but, in view of the appalling position in which sections of British industry have been placed, I believe that it would be inappropriate at this time to insert "electrical" in the early clauses of the Bill. I hope that the trading position will improve. In that event, there may be strong arguments for applying the logic of the Consumers Association's recommendation.
I should like to ask the Minister about the arrangements for giving approval for on-site inspection, seals of approval and so on. I take it—it will be good to have the Minister's confirmation—that we shall not discriminate between British and overseas firms. I am sorry that the Minister agrees with me. When I consider some of the unfair practices and the ruthlessly unfair competition currently facing British industrialists, I believe that, sooner or later, such an honest and relatively noble attitude should not persist.
For example, one firm in my constituency realised that it could beat the French into a cocked hat in a particular commodity. Unfortunately, it cannot sell its goods in France. It can beat the French, its quality is superb, its deliveries are first-class, but it has not been able to get a certificate of approval for its product from the French Authorities. The reason is that the French have not yet set up the necessary bureaucracy to allow a foreign supplier to get the seal of approval which is readily available to French firms.
Recently, I put down a series of questions about electrical goods from Australia. There is at least one ship on the high seas now bearing electrical goods towards Britain. They will face a tariff of 4½ per cent. If British electrical goods manufacturers wish to export to Australia, they face a tariff on similar commodities of 30 per cent. Obviously, they face enormous difficulties. For that reason, the Minister should ensure that they do not have this additional burden, but it would be better if the Government ensured that the much greater burdens imposed upon industry by central policies were relieved.
I suggest that the point made by my hon. Friend the Member for Caerphilly (Mr. Hudson Davies) should be borne in mind by the Government. Many firms in South Yorkshire—this goes for the rest of the country as well—would dearly like to invest in new heating and energy-providing arrangements, but they do not have the liquidity or immediate trade prospects to justify such expenditure. They are too busy meeting redundancy costs, laying people off and frantically striving to get orders to maintain themselves to embark on expenditure which would be so valuable in the national interest.
I hope that we shall soon see the Bill enacted and see it rapidly succeeded by a new coal industry measure. I hope, too, that the Minister will maintain his enthusiastic and imaginative approach and exercise his personal drive to ensure that we get an energy conservation Bill which will start in the Commons rather than in the Lords and make a more positive and helpful contribution to this country's interests.
§ Mr. Edward Rowlands (Merthyr Tydfil)
There has been a considerable degree of agreement and understanding and common ground among all who have spoken in the debate. There has been one major disagreement on the role of pricing policy in relation to conservation, to which I shall refer later. Otherwise, there has been common agreement.
I do not know how much comfort that should give the Minister. The common agreement is that the Bill is so modest that it scarcely deserves the attention that has been devoted to it and that it is a Bill of missed opportunities. The number of hon. Members on both sides of the House who have used that term should be a slight warning to the Minister that he faces a Committee stage in which there could be certain all-party understandings and support for amendments and for expansion of the Bill in certain directions.
At one stage, after the speech of the hon. Member for Liverpool, Edge Hill (Mr. Alton), I thought that the Minister would be found guilty of a breach of the Trade Descriptions Act in bringing forward the Bill as an energy conservation Bill and that, had it been so labelled in a shop window, quite rapidly the trading standards men would have been round to tell him that he was mislabelling and was misleading the House and the public in describing this as an energy conservation Bill.
However, as almost all hon. Members who have spoken in the debate have attempted to put the Bill in the context of a broader energy conservation policy, I shall shortly follow suit. Before doing so, however, I want to raise two specific points about the Bill. One of them has already been mentioned by hon. Members on both sides—the exclusion of domestic electrical appliances from the provisions of the Bill. I tried to follow the Minister's arguments for the exclusion. I am still willing to be convinced by him. He seemed to suggest that the chief reason for the exclusion was that energy efficiency in the design and production of electrical appliances had reached such a point of success that it did not require the sort of supervision of testing and monitoring that the Bill will apply to other forms of appliances. I am not so sure that hon. Members are convinced on that point. I look forward to the professional technical evidence that can be brought forward to justify that, in the whole area of domestic electrical appliances, we have achieved a degree of efficiency which means that the Bill is not required and the application of the testing powers of the Bill is not required for electrical appliances.
I should like to raise a point about gas appliances which has not been mentioned. In describing the monitoring and testing procedures, the Minister said that they would be very much in the hands of the voluntary bodies and the existing institutions. He made specific reference to the important role of British Gas at Watson House. Hon. Members know of the tremendous work done by the research outfit of British Gas at Watson House. The Minister will know that British Gas has played a pioneering role, in co-operation and close partnership with manufacturers of gas appliances, in the development of safe and energy-efficient appliances. That role has stemmed primarily from the fact that British Gas is the major supplier in sales and distribution of gas appliances.
701 The whole of that role, which has been vital in the promotion, development and design of safe and energy-efficient, gas appliances, has been put under a cloud as a result of the absurd proposal by the Monopolies and Mergers Commission, which suggests that British Gas should be banned from selling any form of gas appliance. That is the so-called radical solution of the Monopolies and Mergers Commission. If that disastrous stupidity were to be accepted by the Government, it could damage irrevocably the invaluable role that has been played in the design and development of safe and energy-efficient appliances promoted by British Gas.
Everyone wants wider and better competition in gas appliances, as in other appliances, for the British consumer. But to ban British Gas from the major role in the sale and distribution of gas appliances would damage the whole area of development and the substantial and successful standards in safety and energy-efficient appliances which British Gas has promoted. That would leave the door open to a collection of cowboys who would be only too happy to lower the standards of gas appliances and to sell cheaply, to the greater expense, eventually, of the consumer.
This matter is very relevant to the Bill and the success of its monitoring and testing aspects, so I hope that the Minister will tell us when we can expect the Government's decision on this report from the Monopolies and Mergers Commission. I urge upon him that that decision should be sympathetic to the role of British Gas and should be made as early as possible to lift the blight that exists as a result of this recommendation.
Like other hon. Members, I wish to raise the matter of our general energy conservation policy and to put the Bill into some sort of context. In 1979, the Government's projections, referred to by the hon. Member for Carshalton (Mr. Forman)—I wish that he were present now, because I would have had some complimentary comments to make on his speech—assumed a 20 per cent, reduction in primary energy demand by the year 2000 as a result of conservation measures. That amounts to 100 million tonnes of coal equivalent by the year 2000.
The hon. Member suggested that this target would be very easy to reach. I am not so sure. The fact that there has been a recession and, therefore, we have had this initial boost in savings in energy, chiefly as a result of the recession, does not mean that that target is easily achievable. Our fundamental disagreement with the Government's conservation policy is that we do not believe that such targets can be achieved just by higher and higher energy prices. We do not believe that that sort of target can be achieved by just punishing the consumer into some sort of conservation policy.
Therefore, although, as hon. Members on both sides rightly say, price signalling—which is the rather "in" word for saying "Here come some hefty price increases"—has a role in bringing home to the consumer the cost of energy; and, therefore, it leads him to conserve energy or to have a more conservation-minded approach to his own domestic, industrial or commercial energy needs, we utterly reject the over-dependence of the Government on pricing as the only basic conservation measure. Rationing by price hurts the most vulnerable and loads unnecessary costs and burdens on consumers, domestic and industrial. It is a crude and coarse way of conserving energy. It does 702 nothing for our competitiveness. We heard repeatedly at Question Time today about the growing uncompetitive-ness of British industry, as a result, partially, of the energy-pricing policy followed by the Government. Such a policy, dependent upon higher and higher prices in order that we may conserve more and more, only fuels inflation. The crazy decision to raise gas prices again by another 25 per cent, for the domestic consumer will be the best proof of that point.
The Minister and other Conservative Members suggest that it may force people to use less and shiver more. But surely there must be a better way than that of encouraging a positive conservation policy. The hon. Member for Derbyshire, South-East (Mr. Rost) and other Conservative Members are beginning to recognise more and more that what he called the carrot power, or the carrot as well as the stick, has to be an essential part of any energy conservation policy.
§ Mr. Rost
Will the hon. Member also accept that perhaps the consumer would be better off today if the previous Government had allowed the price of gas to rise to nearer the market level in Europe? If so, we might now have that North Sea gas-gathering pipeline already carrying the gas to where it is needed, and our petrochemical industry might still be alive today, and not half dead, and the consumer might have more gas—admittedly at a slightly higher price earlier—instead of having to buy it in from Norway at much higher prices.
§ Mr. Rowlands
That was a rather long intervention. I am sure that we shall have the opportunity of debating that matter further if the hon. Gentleman joins us on the Gas Levy Bill on Wednesday, when we shall be able to discuss why the gas-gathering pipeline could not be built faster, and some of his remarks, which I thought were misleading, about British Gas's role in the southern and northern North Sea gas reserves. We shall deal with that at greater length in Committee on the Gas Levy Bill.
I was trying to gain a measure of agreement with the hon. Member for Derbyshire, South-East, who made a constructive and interesting speech which hon. Members on both sides supported. One can take to extremes the argument of pricing policy as the chief mechanism for conservation. The Government are in grave danger of doing that. There is surely a more positive way of encouraging and develop energy conservation policy and attitudes towards conservation by the individual, and the firm whether commercial or industrial.
We recognise that the Bill might make a minor, modest contribution to a positive conservation policy. I shall not put it any higher. Hon. Members on both sides have supported the need for a broader total energy conservation policy, planned and financed. That must be part of a total energy policy.
A number of times hon. Members on both sides have referred to the vital recommendation made in the most recent Select Committee report on energy. Governments of all complexions can be condemned for the fact that years after such a recommendation we still have not achieved a method of assessing whether it is better to embark on a £15 billion power station programme with all the problems and arguments, especially if it is a nuclear programme, against the possibility of more modest energy conservation measures supported and financed in a way which would conserve energy rather than promote the 703 supply of energy. That is what hon. Members on both sides have told the Minister. There is a gap in the major area of policy. There is a gap at a much lower level—even at the level of the Bill.
I have had discussions recently with two experienced consultants who have suggested that marginal gains made from the use of more efficient appliances would play a minor part in total energy savings, especially in the energy needs and consumption of a building. What is needed is a total energy view of the building—its design, structure, fittings and appliances. We doubt whether the Government have adopted such a total view.
The hon. Member for Derbyshire, South-East and others have spoken about the importance of the new building regulations to reinforce energy conservation consciousness among architects and those building new buildings as well as converting existing buildings. There is no point in ensuring efficient heat generators in an energy inefficient building, which is partially insulated and which has wasteful lighting systems. As many hon. Members have said, the Bill is a missed opportunity to promote the concept of a total energy requirement and to produce a comprehensive view and approach to energy conservation.
What is worse—this is where Government Back Benchers pulled their punches—is that other Government actions are damaging a positive conservation policy. From the nice catalogue produced by the Minister when he introduced the Bill one would have thought that all was going well, that the Government were putting more money into insulation, promoting successful industrial conversion projects, and so on. there are good examples, but they should be a spur for others. But that spur is missing because the Government will not renew the important grant scheme designed to encourage industry, to save energy, to improve insulation and to replace or renew boilers. The incentives to convert from oil to coal in the passionate speech justifiably made by my hon. Friend the Member for Leigh (Mr. Cunliffe) are missing. There is little likelihood of that sort of thing happening in the present econonic climate.
What is worse, in measures such as the reduction in the allocation of funds to local authorities the decision made by the Government will impede the promotion of insulation of large numbers of public sector houses. The hon. Member for Derbyshire, South-East mentioned the painful letters he had received from constituents about that matter.
In other respects the Government's policy and actions are damaging the promotion and developments of energy conservation policy. For example, I am surprised that the Government are lowering the standards of roof insulation which have been adopted by local authority housing departments. They are reducing the cost-effectiveness standards from 100 mm to 80 mm at a time when higher energy prices have increased the cost-effective thickness to 140 mm or more. The Minister shakes his head. I hope that he will confirm that that has not happened. I understand that it is one of the measures that is now in the pipeline.
We want to be sure that the Minister who comes to the Dispatch Box from the Department of Energy has the support of Ministers in the Department of the Environment and other Departments who, in their other decisions, are doing damage to the policy. That is the point that Members on both sides of the House made to the Minister.
704 Many imaginative and innovative ideas are being introduced in energy conservation. Like other hon. Members I have been to the Thorn Lighting laboratories—I have a substantial Thorn factory in my constituency—to see the new fluorescent lamp. I also saw some simple ways in which one could save lighting by reorganising the arrangement of lighting in a room, as the Minister indicates, by reflecting the light on to the ceiling. That is the sort of idea that should be promoted by the home energy centres in our communities which have been abandoned by the Government. Energy centres could have promoted simple changes which, to the individual, might have a significant effect on his energy bills. Instead, the Bill does nothing to promote energy advice centres. Indeed, the Minister said that the Bill would authorise the spending of money that has already been spent. In a small way that is a condemnation of the limited scope and vision of the Bill. Even in the one clause that looked hopeful it turns out that it will not promote a wider range of advice centres for consumers.
I turn, finally, to a subject mentioned by almost every Member who has spoken, that is the necessity to spend in order to save. There can be no worse time and less likelihood of that than now. Speech after speech made by my hon. Friends that Members for Rother Valley (Mr. Hardy), for Caerphilly (Mr Hudson Davies), for Leigh and others all said that the chances of industry taking the opportunities for major energy conservation measures by spending initial capital now to save later are less likely because of the dreadful economic and industrial climate in which such decisions have to be made. The Minister quoted a number of examples, but those examples should by now have been multiplied, but that is not likely now as a result of the Government's economic strategy and the climate in which firms are having to take decisions.
In the new spirit of compromise and pragmatism which pervades the Department of Energy, and for which we are all thankful, I suggest that the Department might consider one of the ways in which selective reflation could take place in the economy, creating jobs and promoting energy conservation—by financial backing and support for a number of industrial projects, to which my hon. Friend the Member for Leigh and other hon. Members referred, and which at the same time would help to create jobs in the vital industries which are working on short time or which have announced large scale redundancies.
While we welcome this modest measure, we do not support the broader conservation policy that the Government are following. That view was echoed in speeches from both sides of the House. My hon. Friend the Member for Rother Valley advised us to give the Bill a speedy passage so that we can get on to the real Bill. Many hon. Members would like to use the measure before us as the vehicle for a real energy conservation policy. I hope that the Minister will give us a positive response to the points raised in the debate and will assure us that this or another Bill will achieve the sort of conservation policy that we all desire.
§ Mr. John Moore
By leave of the House, I shall reply to the debate. For a modest, minor, meagre minnow—to use some of the descriptions of the measure—the Bill has given rise to an excellent debate. We do not have sufficient opportunities to debate conservation and, if nothing else, the Bill has given us such an opportunity.
705 However, I wonder how modest the measure is. Despite its modesty, it has been welcomed on both sides of the House and, after recent events, a touch of modesty may be more acceptable than an immodest politican. We are talking about a Bill which encompasses one-third of the energy used by the nation. Some may regard the sums involved as modest, but a mere 5 per cent. improvement in efficiency in the areas covered by this modest measure would save the nation between £250 million and £375 million. I find it difficult to throw around such sums of public money and regard them as modest.
I am sure that the hon. Member for Merthyr Tydfil (Mr. Rowlands) paid attention to my opening speech. He said, rightly, that the cornerstone of the Government's energy conservation policy is pricing. I continue to stress that and our view is accepted by all nations in the Western world. However, I said with great care, and I do not wish to repeat it all in detail, that we sought to reinforce the pricing signals by supplementary measures, including publicity, advice and information, grants, demonstration project schemes and certain mandatory measures. I cannot say that more clearly, but obviously it merits repetition.
The hon. Member for Merthyr Tydfil made some strange remarks about building regulations. I ought to put him right. The existing building regulations for loft insulation, which are not my Department's responsibilty, effectively require 50 mm of loft insulation as a bare minimum in new buildings. The proposals in the original consultation papers were to increase that minimum to 80 mm. In consequence of much debate and discussion, for which my Department should take some credit, new consultations will take place soon, before new regulations are laid, in order to see whether the minimum can be increased to 100 mm. That is a development for which we should receive commendation from hon. Members.
The hon. Member for Merthyr Tydfil also referred legitimately to the role of British Gas and, in particular, to Watson House. I visited Watson House recently and saw the excellent work being done there on safety. The hon. Gentleman linked that to the Monopolies and Mergers Commission report. The hon. Gentleman will understand that I do not wish to comment on the possible outcome of implementing the commission's report. It is still under consideration, and I cannot give any further information about timing, though I recognise the need for speed. I promise to draw the attention of my right hon. Friend the Secretary of State to the point made by the hon. Gentleman.
The corporation has expressed the view that there cannot be a clear distinction between research into appliance development and research into gas safety. There is no reason to suppose that the implementation of either option should affect Watson House's important role in setting and maintaining safety standards. I said earlier that it is likely that Watson House would be one of the type approval testing bodies.
The hon. Member for Rother Valley (Mr. Hardy) was highly flattering and, after recent events, I do not know quite how to treat that. I shall respond to some of his points later, but he said that we will not be discriminating. However, he will be aware that we shall be giving a British statutory, non-tariff type approval test. British industry will be pleased to see that.
706 I shall also refer later to some of the valuable comments made by my hon. Friend the Member for Essex, South-East (Sir B. Braine). He referred to the home insulation scheme allocation. I remind him that we do not need additional powers in the Bill to increase the allocation. Indeed, the Secretary of State for the Environment recently announced an increase in the allocation for the scheme of 30 per cent. in real terms for 1981–82.
§ Sir Bernard Braine
I am not questioning the allocation. I was concerned with ascertaining the cost-effectiveness of what is being done.
§ Mr. Moore
I said that I would come back later to other points made by my hon. Friend.
The hon. Member for Midlothian (Mr. Eadie), the right hon. Member for Norwich, North (Mr. Ennals), who has apologised for not being here for the end of the debate—he has another appointment—my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), and the hon. Members for Bristol, North-East (Mr. Palmer) and for Liverpool, Edge Hill (Mr. Alton) all referred to the Select Committee report which was published only last Week. It is long and complex and we have not yet had a chance to study it in detail. All its recommendations will be given careful consideration and a full reply will be made in due course. I am advised that there will be an opportunity to debate both the report and our reply.
My hon. Friends the Members for Derbyshire, South-East and for Carshalton (Mr. Forman) raised again a matter that was raised in energy questions earlier today, namely, the private generation of electricity. The Government confirmed their commitment this afternoon to remove the statutory prohibition on the generation of electricity as a main business and we intend shortly to introduce a specific provision to that effect.
The hon. Member for Bristol, North-East raised many interesting points and referred specifically to quantifying energy savings. That is an important area to which we should return time and again. The hon. Gentleman was rightly concerned about energy savings by the Government. One of our difficulties is that most Government buildings are run by the PSA, but energy savings of more than 30 per cent. have been obtained since 1972, the data base on which information is obtained. It is not possible to break down the savings Department by Department. The figures are not compiled on that basis; the PSA has responsibility for the whole building stock of the public sector. I assure the hon. Gentleman that, even with that excellent record, the PSA will continue to improve on it.
§ Mr. Palmer
Does the Minister's figure include the Ministry of Defence—dockyard establishments, and so on?
§ Mr. Moore
It includes all the establishments controlled and managed by the PSA. I shall come back to the hon. Gentleman on the specific point of Ministry of Defence buildings. I cannot say whether they are controlled by the PSA.
The hon. Member for Edge Hill raised many interesting points. I attended all the discussions on the Bill in another place and heard there one or two of the points that the hon. Gentleman raised. I should correct one misapprehension that seems to linger in the minds of those who see in many of these measures an anti-nuclear position. The hon. 707 Gentleman referred to energy going out through the roof. We are talking about a Bill which concerns itself with space and water heating. Space heating and water heating have little electrical contribution. The nuclear industry is related directly to the production of electricity. We have to get this sorted out.
The hon. Member for Caerphilly (Mr. Hudson Davies), in an interesting speech, mentioned the need for more sophisticated analysis of demand attitudes relating to people's energy habits and how these are established in the long run. The hon. Member for Edge Hill went further, as did his party in the other place, and sought a massive national energy audit. The Government tried to point out at the time, in contrast to what the hon. Member for Caerphilly said, that we know pretty clearly in what areas of installation major cost-effective achievements can be made. That is relatively well understood. It would seem to the Government to be essentially a waste of public money to introduce a massive national energy audit of that kind, especially so far as domestic stock is concerned.
The Government accept the point made by the hon. Member for Caerphilly that there is a need for a more sophisticated understanding of the degree to which patterns of use of energy in domestic buildings are carried out. The Government are involved in a new study that they have commissioned, involving the Department of the Environment, which will compare, for the first time, the patterns of energy use in dwellings with the patterns of occupancy. This will be a valuable additional tool for the Government.
My hon. Friend the Member for Carshalton, in his usual very high standard of contribution to our energy conservation debates, talked of the need for more carrot power. I understand what he says. My hon. Friend, however, proceeded further and talked about getting the word "regulation" out of our discussions because it is not an easy, buzz word, as he described it. My hon. Friend said that we should use the phrase "improving and raising standards", but within 30 seconds he talked of achieving them by mandatory methods. We are: conscious of the limitations and the ways in which we must carefully exercise any form of mandatory powers in office. I am sure that my hon. Friend will recall that the Government reduced the temperatures in public buildings or sought to reduce them by reducing the level permitted.
There was also reference to the supply industries' involvement in conservation. In an outstanding speech, my hon. Friend the Member for Derbyshire, South East argued that it was a modest Bill. I do not deny modesty. My hon. Friend expressed better than [have heard from either side of the House for a long lime the essential arguments surrounding the use of price and price mechanism in the long term ways in which attitudes change. My hon. Friend put that matter extremely well, as did my hon. Friend the Member for Carshalton. Both argued—the point was also raised by my hon. Friend the Member for Essex, South-East and the right hon. Member for Norwich, North—about the degree to which investment in energy conservation, as opposed to investment in energy supply, was a legitimate and cost-effective operation.
There is no argument, I believe, on either side of the House, among those genuinely interested in this subject, about the cost-effective nature of investment in energy conservation. The question that has to be asked each time this subject comes up is "Investment by whom?". Does 708 this mean investment by the State or investment by the individual? I hope that there will be more time to debate in Committee upstairs the legitimate argument that when the State actually invests for the individual, the individual's long-term attitudes, patterns, and habits of energy demand do not effectively change. His comfort standards and his comfort attitudes might change. The hon. Member for Bristol, North East with his long experience in this matter, talked of the old Committee, of which he had the honour to be chairman, which looked at genuine conservation. We have to be conscious of the difficulty of changing the long-term attitudes of individuals whose millions of demand decisions ultimately are the bedrock for genuine long-term conservation of energy. This is a genuine, reasonable argument that can be pursued in Committee upstairs.
My hon. Friend the Member for Derbyshire, South East discussed the subject of energy labelling. My hon. Friend had a legitimate point. The Government are keeping open the option of adopting energy labelling of household appliances. They do not consider that the proposals under discussion among EEC member States have yet reached a point at which we can be confident that the proposals would be successful and cost-effective in helping consumers to choose appliances wisely. It would, therefore, be premature to include energy labelling provisions in the Bill. We will, however, continue to work within the Community towards a satisfactory and effective scheme. The labels under discussion did not seem to most, including members of the Consumers Association and consumers' organisations, to merit the argument that housewives or house persons—whatever we call ourselves—going out to buy these articles should be informed in a way we can understand. I would have thought that one needed a couple of economic PhDs to understand most of the tabs that were shown. We do not think that they are good enough at this stage. This is not to say that, if they eventually proved useful to the consumer, the Government will not seek to introduce them later.
§ Mr. Rost
I accept the difficulties of energy labelling in a way that would be meaningful to the consumer. Will not my hon. Friend at least consider having our own system of labelling for fridges and freezers where the differential between the good and the bad in energy consumption is so wide and where genuine energy savings could arise if the consumer was given some guidance?
§ Mr. Moore
It is worthwhile considering the points that my hon. Friend makes. I believe that there is unanimity of view about the need to try to improve the presentation to the consumer of energy consumption.
I have tackled the point about building regulations. I stress that I do not see a lack of co-ordination between Government Departments on energy conservation and its initiation. There will always be arguments between Departments. It is my Department's job to argue the policies of energy conservation and to seek to co-ordinate them.
§ Mr. Hardy
I suggested that the Minister should consult experienced people within local authorities to enable him to understand the effects of the Government's housing investment policy. I spoke to perhaps the most 709 experienced local authority housing committee chairman at the weekend. He was particularly angry about the effect of the HIP moratorium.
§ Mr. Moore
We have had discussions throughout the debate concerning other aspects of Government policy. On energy conservation policy, the Government are not worried about lack of co-ordination. The reverse is true. That co-ordination has been illustrated by the manner in which the building regulations have been going out for consultation.
The hon. Member for Midlothian and his right hon. Friend the Member for Norwich, North added to the commonly accepted and classic error in the judgment of conservation success. The hon. Gentleman put the great spending league argument. He argued that we were lowest in the league, or just above Italy, relative to Sweden, or anyone else. That approach shows a fundamental misconception of the nature of long-term conservation policy. The hon. Gentleman concluded that the Government had inherited a growing, successful programme of conservation.
I am not denying for a moment some of the mechanisms that the Government inherited. It is a fact, however, that when the Government came to office the conservation policies, in reality, were failing. In the last two years of the previous Administration—this is a fact and not a debating point—energy consumption in real terms was growing. It was no longer going down. It cannot be argued that the price mechanism was different. We have been told by the Opposition that the price mechanism is irrelevant. They have to get to grips with the essential dichotomy that exists in their minds. They argue against the price mechanism. However, when the price mechanism clearly had an impact on the manner in which energy consumption from 1978 onwards was rising, they failed to understand the ways in which energy spending by the State are not the key determinants of long-term energy conservation success.
§ Mr. Eadie
The House cannot allow that. The Minister has never had any compliments from the International Energy Agency on his conservation plan. If the hon. Gentleman is to talk about the price mechanism, he must confess that since his Government came into office we have had a recession. To draw an analogy between 2 million or 3 million unemployed and the previous unemployment figures is not fair.
§ Mr. Moore
In the long term, conservation success is measured by its achievement—the relative use of energy. The consumption of energy growing or not growing in real terms is the ultimate judgment, whilst one accepts that one adjusts for recession or a growing economy. There is no question but that after years of successful conservation, in that from 1974 to 1976 consumption was slowing in real terms, conservation was declining in real terms in the period after that. We can return to the point in Committee.
The hon. Members for Midlothian and for Leigh (Mr. Cunliffe) also raised the question of coal conversion. The price relativities that the hon. Member for Midlothian raised were right. There is no question about coal's advantage relative to other fuels at this time. That is an area that must be constantly under review by the Government.
710 The hon. Gentleman asked me to give more details of the role of civil servants and local authorities under part II. He suggested that the Government had not given the House sufficient information about the expenditure and manpower implications of the Bill. I thought that I had explained the position in my opening remarks. The facts are also set out in the explanatory and financial memorandum.
The enforcement role of local authorities will be a matter of trading standards officers making visual checks to see that appliances that should bear type approval marks in fact do so. We imagine that by and large they will do so in the course of visits to premises for other purposes, so the extra work load on them is likely to be small.
I cannot say precisely how local authorities will deploy their resources in order to fulfill their enforcement role under the Bill. That is a matter for them, not the Government, to decide. There is no reason to believe that the manpower implications will be other than very small. The local authority organisations received the consultative document that outlined the proposals now contained in part I. They registered their general support for the proposals and none of them expressed disquiet about the manpower implications for them.
We believe that overall about four civil servants will be needed to operate the type approval and on-site testing provisions of the Bill. As I explained, we do not believe that an elaborate bureaucratic back-up will be necessary. The enforcement of part II, for instance, will be a matter of matching records of boilers supplied with records of boilers tested for about 700 boilers a year.
Many hon. Members discussed the fact that the Government had not sought to cover electrical appliances. Those hon. Members included the hon. Members for Midlothian and for Merthyr Tydfil, my hon. Friends the Members for Derbyshire, South-East and for Carshalton, the hon. Member for Leigh and my hon. Friend the Member for Essex, South-East, who asked about consultations with the Consumers Association and the gas and electricity consultative councils, which in fact had been consulted in the run-up to the introduction of the Bill. The only hon. Members who seemed to be almost completely in line with the Government on this matter were the hon. Members for Bristol, North-East and for Rother Valley. These are difficult questions to get to grips with. We shall have more time to deal with them in Committee.
I accept much of what hon. Members have said about the likelihood that domestic electrical appliances will consume an increasing proportion of the electricity used in the home, and what has been said about the importance to the consumer of efficiency in energy use. This is certainly not a matter of indifference to the Government. We continue to make it clear to manufacturers and others that we think that a high priority should be given to practical, cost-effective improvements in energy efficiency of all appliances, including domestic electrical appliances. However, there is a number of important points that must not be overlooked.
The Government remain far from convinced that type approval would be cost-effective for domestic electrical appliances. Most electrical appliances already convert electrical energy to heat or mechanical energy to a high degree of efficiency. Of course, this is not the only aspect which is relevant to energy efficiency—controls on appliances and insulation on things like ovens and 711 refrigerators are important, too—but it represents a major difference between electrical appliances and appliances using other fuels. There are even, I am advised, problems about how standards of energy efficiency for domestic electrical appliances might be devised.
International standards bodies have been working in this field for 15 years, and they have so far failed to produce acceptably accurate standards by which the energy consumption of domestic electrical appliances—except for ovens—could be measured for legislative purposes. It appears to the Government, therefore, that there is a real possibility that setting up a type-approval system for domestic electrical appliances would add to manufacturers' costs, and hence to the prices paid by consumers, represent a further burden of bureaucracy and control, and achieve relatively little in terms of improved energy efficiency.
Many of the appliances covered by the Bill are not sold direct to the customer. They are sold through builders, central heating installers and so on. The final user of the appliance—the person who pays the fuel bills—often has little say over which appliances are installed. The market pressure on manufacturers to improve energy efficiency is indirect, and often therefore imperfect.
The situation with domestic electrical appliances is very different. They are bought direct by the final user. There are many competing products to choose from. The customer can go to things like reports of the Consumers Association to see how much different appliances cost to run, and what the alternatives are. Manufacturers use claims of improved energy efficiency as selling points. Recently, for instance, a freezer fitted with a new compressor was advertised as having lower power consumption, as was a redesigned vacuum cleaner. Market forces seem to operate for these appliances in the direction of improved energy efficiency. In these circumstances the case for the Government's intervening in the market place by imposing requirements for type approval is not strong.
§ Mr. Eadie rose—
§ Mr. Moore
I should like to finish this part of my speech before giving way.
The proposals now incorporated in part I have been the subject of wide consultation. In formulating them we sought the views of 170 different organisations and tried to take their comments into account. The great majority of those that responded—this included a majority of the organisations representing United Kingdom manufacturers and the consumer organisations—agreed with the Government's general approach. We were, therefore, able to bring the Bill to Parliament in the secure knowledge that it commanded a wide measure of support among those whom it was likely to affect.
If we were now to extend the scope of the Bill to cover domestic electrical appliances, despite all the comments that I have already made about the lack of cost-effectiveness, we should be in a different position. We should be acting without prior consultation. Indeed, we should be in an even less defensible position, since the main association representing manufacturers of domestic electrical appliances has made it clear to us, following discussion of this matter in another place, that it is strongly opposed to an extension of the Bill and that it believes that such an extension would be detrimental to its members' commercial interests, both in this country and in overseas 712 markets. The House should consider very carefully before moving away from the broad agreement among those affected upon which the Bill has hitherto been based.
§ Mr. Eadie
I am grateful to the Minister for giving way. I know that he was on an important part of his speech when I tried to intervene.
The consumer organisations have doubts about the matter. It may be that the hon. Gentleman has now covered the point that I wished to raise. I wanted to ask whether he could give an assurance that there was no difficulty in the export market. One of the arguments that were advanced in relation to other appliances was that type approval would help the export market. Is the hon. Gentleman telling us that, because there is no type approval for domestic electrical appliances, no difficulty is encountered in export markets?
§ Mr. Moore
The hon. Gentleman has made an important point. We are concerned with exporters of other appliances as well. We are concerned with manufacturing industry generally.
We have had further consultations with the Association of Manufacturers of Domestic Electrical Appliances. I repeat that it says that an extension of the Bill would be detrimental to its members' commercial interests, both in this country and in overseas markets. We shall come back to this important matter in Committee. It is a factor that we must be concerned about.
This has been a useful and very timely debate. I am grateful to all those right hon. and hon. Members who have spoken. If I have not taken up every point made in their speeches, I shall deal with them in correspondence.
The Bill represents a contribution to the country's energy conservation strategy. However modest, I stress that it is a contribution. It is aimed at improving, over time, the efficiency of one of the most important single groups of energy-using appliances. I am grateful for the welcome that it has received, and I commend it to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).