HC Deb 06 July 1981 vol 8 cc15-6
15. Mr. Hannam

asked the Secretary of State for Energy if he intends to meet the Confederation of British Industry energy group to discuss industrial energy prices.

Mr. David Howell

I meet leaders of the CBI from time to time and discuss energy issues, including prices.

Mr. Hannam

Does my right hon. Friend accept that one of the factors affecting industrial energy costs is the high level of duty on heavy fuel oil? Will he clarify the reason why some previous contracts for Norwegian gas seem to prevent us from reducing the heavy fuel oil duty?

Mr. Howell

The duty on heavy fuel oil is a matter for my right hon. and learned Friend the Chancellor of the Exchequer. He made it clear at the time of the Budget that a reduction in heavy fuel oil duty would not be a cost-effective way of helping British industry, because of the influence of some gas contracts.

Mr. Campbell-Savours

Is the Secretary of State aware that an hour ago a member of the CBI, Messrs. Tootal, announced the closure of a major factory in my constituency—Condura Fabrics, of Flimby? Inasmuch as the availability of subsidised energy and feedstock prices in America and in the European Community have, in part, been responsible for that closure, will the Secretary of State, having already denied us a form of inquiry into energy costs on a regional basis, now inquire of that company specifically why it had to close, in the light of those energy costs?

Mr. Howell

The hon. Gentleman should be aware that with the deregulation of oil prices in the United States, for which this Government and many others were pressing, and with the active interest of the United States in deregulating gas prices, some of the severe pressure of the disparities of feedstock prices between here and the United States that arose last summer have been reduced. On that front, therefore, although one does not welcome any news of closures, some of the pressures have been eased—

Mr. Campbell-Savours

What about jobs in my constituency?

Mr. Howell

—as they have for the foundry industry, where there has been a reduction in the list price for foundry coke. That, too, has helped and is a benefit that helps jobs.

Mr. Crouch

Will my hon. Friend bear in mind that some parts of the chemical industry are suffering considerable disadvantages these days, not just because of energy prices, although energy prices are the major factor which is putting the chemical industry at a great disadvantage compared with Continental competitors? Will he bear in mind that high energy cost products, such as chlorine, are being put at a disadvantage by as much as 50 per cent. higher costs in this country compared with Germany? Will he look at that matter in particular?

Mr. Howell

I shall bear those points in mind. The NEDC task force identified the disparities at the beginning of 1981 in its examination of energy prices. Since then, with the fluctuations in exchange rates, there is likely to have been some change in energy pricing. At the same time, prices are rising on the Continent. I mentioned earlier that electricity prices in France rose by 15 per cent. last week and industrial gas prices by 22 per cent.