Industrial Gas Prices (Hansard, 5 April 1982)

§ 9. Mr. Hannam
asked the Secretary of State for Energy by how much he expects the price of industrial gas to increase in 1983.

§ Mr. John Moore
The price of industrial gas in 1983 will be influenced by the British Gas financial target and prevailing market conditions. The November NEDC report showed clearly that the majority of industrial gas consumers in the United Kingdom enjoyed prices that were at or below those paid by their European competitors. Following the action announced in the Budget to freeze industrial gas prices for the rest of this year, I have no reason to believe that United Kingdom prices will not remain competitive in 1983.

§ Mr. Hannam
May I congratulate my hon. Friend on the help that is being given to British industry through the freezing of gas prices this year? Does he accept that this will give a welcome boost to jobs as our industry will have a competitive edge over our Continental rivals' prices? Will he confirm that, apart from basic cost increases, there will be no general increase in gas prices over the next few years?

§ Mr. Moore
It is difficult for me to prejudge the future. Suffice it to say that this area of activity is profitable. In such a profitable area one sees no reason for any radical change in pricing policies.

§ Mr. Edwin Wainwright
Will the Minister take into account the fact that some industries have great difficulty in converting from the use of coal? Does he realise that the glass industry is finding it difficult to use oil because of the huge costs involved and would like to transfer to gas if the Government offered it a grant? Will the Government consider doing that? Instead of reducing the price of oil from $34 a barrel to $31 should we not continue to sell at $34 so that we can help industries that are present unable to use coal efficiently?

§ Mr. Moore
I am sure that the hon. Gentleman will be pleased to know that his advice, and that of others, was taken into account by the Chancellor and that we have added to the oil boiler conversion scheme those who are converting from gas to coal.

§ Mr. Richard Page
Will my hon. Friend either confirm or deny that the recent increase in domestic gas prices now means that British Gas will make a small profit in the domestic sector while its vast profits will come from industry?

§ Mr. Moore
After this year's increases we expect to see a return to profit in the domestic sector. The profits are not excessive. We are talking about a post tax profit of £156 million, which is a 1.6 per cent. return, in the current financial year. That will come from the industrial and commercial sector.

§ Mr. Campbell-Savours
Is the Minister aware that the Confederation of British Industry in the Northern region is publishing a report that proves that the majority of manufacturers are having to cut their prices to retain their markets? How does he expect those same manufacturers to manage in 1983 when it is obviously the Government's policy to increase energy charges?

§ Mr. Moore
It is the height of cheek and absurdity for Labour Members to make such absurd comments. Industrial gas prices are about 24½ per cent. cheaper than they would have been if the policies of the Labour Government had been followed. This has been achieved by the Government's actions.

§ Mr. Archie Hamilton
When does my hon. Friend expect private supplies of gas to be available to industry? Does he imagine that the price of this gas will be higher or lower than that which is offered by the British Gas Corporation?

§ Mr. Moore
There is a happy prospect of competition in supply, and the opportunity for the consumer to receive more than one offer of gas, I hope that that will come in the not too distant future following the successful completion of the Oil and Gas (Enterprise) Bill. My hon. Friend is right to draw attention to the opportunities that competition will offer to those in industry who seek competitive supplies.

§ Mr. Merlyn Rees
Whatever the supply and demand influences, is it not likely that in a pre-election year there will be no increase in energy prices under the control of the Government?

§ Mr. Moore
I made it clear in the debate on this subject that these policies were introduced to the House in January 1980. That seems considerably in advance of an election.