Electricity (Financial Provisions) (Scotland) Bill

HC Deb 07 December 1982 vol 33 cc732-68

Order for Second Reading read.

4.37 pm

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)

I beg to move, That the Bill be now read a Second time.

The purpose of the Bill is to increase the statutory borrowing limit of the Scottish electricity boards—the South of Scotland electricity board and the North of Scotland hydro-electric board. Clause 1 increases the limit from the present level of £1,950 million to £2,700 million. Clause 2 is formal. The limit is a joint one in that it applies to the total outstanding borrowings of the two boards, including any foreign or temporary borrowings.

A joint limit has been in operation since 1963. It was introduced to help the boards in their joint planning and operation of the Scottish electricity system. As hon. Members will be aware, the boards operate a joint generating agreement to enable them to run the most efficient power stations at any one time to meet demand throughout Scotland. This allows generating costs to be kept to a minimum. Similarly, new power stations are planned on a joint basis. For this reason, it makes sense to control the combined borrowings of the two boards.

The present borrowing limit was originally laid down in the Electricity (Financial Provisions) (Scotland) Act 1976. The Act increased the borrowing powers of the boards from £1,200 million to £1,500 million, and allowed the House to increase the limit up to a maximum of £1,950 million. These limits were taken into the Electricity (Scotland) Act 1979, and earlier this year I sought, and received, the approval of the House to increase the boards' borrowing powers to the upper limit specified in the Act.

The further increase in the limit is largely because of fairly heavy borrowing at present to finance the construction of Torness nuclear power station. I shall return to this point later. If we were to delay the Bill for a year, it would not receive Royal Assent until mid-1984, which could be too late, since we expect the present limit of £1,950 million to be reached around that time. I warned the House during the debate on the Electricity (Borrowing Powers) (Scotland) Order 1982 that we would be likely to introduce legislation this Session. On 23 November the borrowings of the boards amounted to £1,544 million.

A feature of the Bill is that, as in the past, we propose to set an interim limit so that the House will have a further opportunity to consider the borrowings of the Scottish electricity boards in a few years' time. The interim limit of £2,300 million is expected to be reached during 1986. An order, subject to an affirmative resolution of the House, would then be needed to increase the limit up to or towards the maximum figure of £2,700 million. This final limit is expected to be sufficient to meet the boards' borrowing needs until 1989.

I now turn to the point I raised earlier about the underlying reasons for the increased borrowings by the boards.

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

Let us be absolutely clear about what the Minister is saying about the borrowing limit up to 1989. Will this increase service all foreseeable committed projects, including Torness, but no others?

Mr. Fletcher

If I understand the right hon. Gentleman properly, that is correct. He asked whether any other major power stations projects were envisaged. The answer is "No". Therefore, the borrowing powers that we are now proposing are sufficient for the known capital needs of the electricity boards.

As the House is well aware, the main reason for the boards' borrowings is the need to finance capital expenditure. In part, this capital expenditure is met from internal resources. The power stations are extremely expensive to build, and it would be unreasonable to assume that the Scottish boards between them could find the necessary internal resources to build large, modern power stations without resort to borrowing. The construction costs of the SSEB Torness station are the main cause of the increase in the boards' borrowings and the need for the Bill.

Some hon. Members may be opposed to the building of the power station, although I am aware that the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) is not among them. I am grateful for the support that he gave for the continuation of the project during the debate on the order earlier this year.

The Government, shortly after coming to power, undertook a careful review of the economics of the Torness project in view of the overcapacity in the Scottish generating system. We came to the conclusion that there was a good commercial case for allowing Torness to go ahead, because the operating savings from the station are expected to exceed the capital costs involved. Despite the recent weakening in oil and coal prices, most commentators expect there to be real increases in those prices over the next 20 years. Without Torness, the Scottish boards would be dependent on coal and oil supplies for more than 65 per cent. of their generating capacity in the 1990s. With Torness, that dependence will be reduced to about 50 per cent., leading to lower overall generating costs. That will be of great benefit to electricity consumers throughout the country.

Mr. Michael Ancram (Edinburgh, South)

My hon. Friend said that most "commentators"—a strange word to use—believed that there would be real increase in oil and coal prices. In the light of the recent Select Committee report on oil depletion, will he say which commentators believe that there will be a real increase in the price of oil by the year 2000?

Mr. Fletcher

Perhaps I should have said most "experts".

Mr. Donald Dewar (Glasgow, Garscadden)

Answer the question.

Mr. Fletcher

Of course I shall answer the question. I am surprised at the hon. Gentleman's impatience.

The Government take a wide selection of advice on these matters from various sources within, and external to, the Government. My hon. Friend the Member for Edinburgh, South (Mr. Ancram) will also be aware of the number of public statements on price forecasts. He can at least be satisfied that the Government are not taking specious advice or trying to rig the forecasts to suit any purpose that they may have in mind, and I am sure that my hon. Friend would never suggest such a thing.

It is important that these matters should be understood by the Government, the House and the public. The best advice available suggests that it would be wrong to be complacent about the prices of oil and coal merely by taking into account the state of those markets at present.

The value of the work completed at Torness by the end of September this year amounted to about £325 million. I understand that the project is generally on target against both its timetable and its budget of £1,097 million at March 1980 prices. Many jobs have also been provided in the construction of the power station. At present, there are 3,500 employees, and about 1,350 of these jobs have been filled by people from East Lothian, the Borders and Edinburgh.

I am sure that hon. Members will appreciate that new power stations are not the only capital projects undertaken by the boards. They have a continuing need to expend money on updating their existing power stations and maintaining and upgrading their various extensive transmission and distribution lines. The North of Scotland hydro-electric board is actively engaged in research and development of renewable sources of energy, the linking of the islands to the mainland grid by underwater cables—as it recently did with the Orkneys— and the continuing development of run-of-river hydro schemes where these projects can be seen to produce the required return on the capital investment.

Another important factor when considering the boards' borrowings is the level of their costs and prices. Many of the boards' costs, particularly the fuel element, are outwith their direct control, except in so far as they can increase the efficiency of their operations. The boards' record here is good, and indicators of their performance in this respect are published each year in their annual reports.

Mr. Gordon Wilson (Dundee, East)

Although the boards' record in that respect may not be unreasonable, their record on forecasting electricity demand has been extremely bad. Does the Minister agree that there has been a great waste of public assets by the building of unnecessary power stations to meet a demand which has not materialised or is not likely to materialise?

Mr. Fletcher

We can all be extremely wise after the event, but the two power stations at Inverkip and Peterhead were commissioned before the oil crisis in 1973. The boards would be the first to admit—any reasonable Member would do the same—that, before that time, no one envisaged either the recession from which we are now suffering or that the types of oil and coal used to generate electricity would become so expensive. For those reasons, we now have over-capacity. We now have two new power stations which, frankly, are of limited value to the boards in planning ahead. That is why the capacity at Torness is so important. It will save fuel costs.

Mr. Gordon Wilson

Surely the boards could have stopped work on those power stations instead of going ahead with completion, especially as they knew that they would have to close the Carolina Port B oil-fired power station in Dundee. Should not the boards also have taken into account the fact that the gas grid network was extending northwards and, therefore, that gas would make a substantial penetration into the energy market?

Mr. Fletcher

I reject the idea that somehow we should leave half-built power stations as some kind of monument to the 1973 oil crisis. Had the hon. Gentleman made those clever forecasts before the oil crisis in 1973, the House might have more respect for his comments.

Dr. J. Dickson Mabon

Has not the Minister advised the South of Scotland electricity board to reconsider its gas tariffs for industrial customers, and have not less than a third of its customers renegotiated contracts? Is that not to the disadvantage of the SSEB, especially as the English boards have treated their customers reasonably well?

Mr. Fletcher

It is wrong to suggest that the SSEB has not treated its customers well. I am happy to admit that there has been ministerial pressure on the boards. The right hon. Gentleman should bear in mind the statutory obligations placed on the boards, which must show no favour between one customer and another. We have asked the boards to look closely at the method of supplying electricity to large users.

My right hon. and learned Friend the Chancellor of the Exchequer made extra finance available to the boards to operate these schemes. Most recently, in the important circumstances of the Ravenscraig steel works, the board has been able to reduce substantially the cost of electricity. The right hon. Gentleman has raised important matters. For these elements of cost which are under direct control, the boards are conscious of the need constantly to strive for economy and efficiency, and this is a matter that we have raised with them on a number of occasions.

The boards' prices are a matter which arouse public interest and hon. Members will be aware that my right hon. Friend has recently asked the boards not to increase the average levels of their prices next year. This follows a study of the bulk supply tariff in England and Wales. The conclusion of the study was that, when there is overcapacity in the system, prices should not contain an element based on the need to build new capacity. On present trends, new power stations in England and Scotland in the near future will be built not because of a need for new capacity, but because they are more economical and will result in lower overall costs.

Where there is overcapacity, electricity prices should not contain any element based on the need to build new capacity. I must stress that the Government continue to maintain that prices should be properly linked with the economic costs of supply.

Hon. Members will know that the Scottish boards have introduced special load management terms for those intensive users of electricity who are at a particular price disadvantage compared with some of their European competitors. A number of companies are taking part in this scheme and are enjoying significantly better terms as a result. The external financing limits of the boards were relaxed slightly to allow them to operate this scheme.

Finally, I should like to refer briefly to the recently published efficiency audit on the SSEB. The consultants who prepared the report were asked to look at management and cost information and control, control of the board's generating system, fuel purchasing and investment appraisal. A number of detailed recommendations were made. The board is considering these and will respond to them early in the new year. Overall, however, the consultants' assessment was that the board compared favourably with other organisations of similar size and kind, and the activities examined were performed and organised to a good standard. The report, therefore, confirms the general efficiency of the SSEB, and that will be welcomed by the House in considering the Bill.

I commend the Bill to the House.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. Has the Minister sat down?

Mr. Fletcher

I shall be happy to answer any questions.

Mr. Norman Hogg (Dunbartonshire, East)

I was disappointed that the Minister did not pay tribute to my noble Friend Lord Kirkhill, who has just ceased to be chairman of the North of Scotland hydro-electric board. When the hon. Gentleman paid tribute to the efficiency of that board, he might have mentioned the leadership that it received from my noble Friend.

With regard to efficiency and the fact that there is so much plural activity between the two boards, what major policy decisions does the Minister envisage the hydroelectric board taking within the next few years within the financial parameters of the Bill? I cannot see what it will do, because it seems that all its major decisions have been taken for the forseeable future.

Mr. Fletcher

I am delighted to pay tribute to Lord Kirkhill, whose term as chairman ends at the end of this month. My right hon. Friend and I have already paid tribute to the noble Lord privately. The hon. Member for. Dunbartonshire, East (Mr. Hogg) is right. The Bill provides an opportunity for the Government, and all hon. Members, to pay tribute to the excellent service that Lord Kirkhill has given during his chairmanship.

With regard to the future policies of the hydro-electric board, it does have work to do. I agree that it has been in existence for a long time and has effectively carried out the duties laid upon it in the 1940s. However, there are still links to be made—for example, between the mainland and the islands. As I said, I had the pleasure of opening the link between the mainland and Orkney a few months ago. That was an underwater cable stretching about 28 miles, which will bring cost savings to the generating system. The cable cost about £8 million, and some of that money, hon. Members will be pleased to know, came from the European Community.

The savings to the generating system as a whole will be between £1 million and £2 million. My hon. Friend the Member for Argyll (Mr. MacKay) may be interested to know that the hydro-electric board plans a link to Colonsay, to be completed in the summer of next year, in addition to its research on aero-generators in Orkney and elsewhere, and into peat and water power and other ways to find different methods of generating electricity. The hydro-electric board has been in business for a long time and has met the basic aims given to it. There are still outlying areas, not least of which are the islands, where the board is able to provide, and is still planning, an effective service.

Mr. John Home Robertson (Berwick and East Lothian)

What proportion of the excess capacity in the generating system of Scotland does the Minister expect to be consumed by the islands of the Orkneys and Colonsay?

Mr. Fletcher

That question is not helpful either to the House or to the residents of the islands. This is an expensive link-up. The hon. Gentleman should know that the hydro-electric board was set up to provide electricity to the remotest parts of the Highlands and Islands of Scotland. It is a good example of public enterprise. The hon. Member for Berwick and East Lothian (Mr. Home Robertson) should be the last to criticise.

4.57 pm

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

This debate gives us an opportunity to discuss in some detail the policies of the SSEB and the North of Scotland hydro-electric board. The Minister left more questions unanswered than answered.

It is a developing feature of Scottish debates that the chairman of the Conservative Party in Scotland, the hon. Member for Edinburgh, South (Mr. Ancram), is becoming more and more sceptical of his Government's policies. This is the second successive debate in which he has displayed that feeling. I take it that this is a sign of an oncoming election, and that he is hoping to be able to go to South Edinburgh and compare himself to the lapdog who represents Edinburgh, North (Mr. Fletcher). He hopes to be able to say to his constituents that he is not a yes-man, like his hon. Friend, but has been a rebellious character, especially in the steel and energy debates, and that if they want proper representation and not a yes-man it would be best to send him back here. The hon. Member for Edinburgh, South should know that this will not work because, for the second time, he is about to lose a parliamentary seat.

Mr. Ancram

This is not the first time that the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has mentioned this strange idea. Perhaps he will comment on the fact that in the Conservative Party we have a Minister who listens to reason and answers questions, and we know that when we put questions to him we do not have an ideological party standpoint about which we are not allowed to ask questions.

Mr. Ewing

Perhaps the hon. Member for Edinburgh, South can tell me privately which Minister it is who listens to reason and answers questions. That Minister is not on the Government Front Bench today.

It is the intention of the Opposition not to oppose the Second Reading, but to explore in some detail the policies of the SSEB and of the hydro-electric board. Before I do so, I join in paying tribute to the noble Lord Kirkhill, and to the leadership that he has given to the hydro-electric board since his appointment in early 1979.

It is a pity that we do not have more continuity in the chairmanship of these boards. It is difficult to resist the criticism that in this case the change has been made, not because Lord Kirkhill's appointment terminates at the end of this year, but for purely political reasons. It is not without notice that the replacement, Michael Joughin, is the defeated Tory candidate in the European elections in the Highland and Islands region. I accept that when Lord Kirkhill was appointed there was a vacancy for a chairman, but surely at this stage it would have been easy to reappoint him, thus providing continuity. However, it is clear that the Government did not see the matter in that way. It is typical of what the Government have done in public bodies since they came to office in 1979. As I said, it is a pity, because we need continuity in policy for both boards.

I want to place on record our tribute to Lord Kirkhill, and I wish the new chairman well, because there are many consumers in the hydro board area who will stand or fall by the success of the policies introduceed by the new chairman and the board under his guidance. Our interests on these Benches are with the consumers, and for that reason our good wishes go to the new chairman.

The Minister referred to the increase in the borrowing limits. He said that the £2,300 million is, to all intents and purposes, the top limit until the Government introduce an order increasing it from £2,300 million to £2,700 million. These are substantial increases on the existing figures. As the Minister rightly said, they reflect the cost of the construction of the Torness power station and show that much more capital will be needed to complete construction. The Minister was correct to say that I was in favour of the continuation of the construction of Torness power station, because in my view it would not be realistic to stop the construction at this stage and mothball it.

However, that raises a number of questions. There is the question of over-capacity in the generating industry in Scotland, both in the SSEB and the hydro board. The hon. Member for Dundee, East (Mr. Wilson) raised the matter of the boards' inability to estimate the demand for energy. In my view, criticism should not be levelled at the boards. Criticism should be levelled at the Government for the way in which they have managed the economy during the past four years and made it almost impossible for generating boards, both the SSEB and the hydro board, to estimate the demand for energy. Therefore, I do not criticise the boards for their inablity to estimate demand for energy, because it must be the devil's own job to do so in the context of the Government's economic policy and the downturn in Scottish industry.

There is one great worry. Let us take the steel industry as an example. Capacity there is being drastically reduced, with the Government's agreement, because of the downturn in the economy. In our steel debate last week, I referred to the British Steel Corporation's view of the future of the British economy. I am worried because at some time in the not-too-distant future the Government may bring forward proposals that would have the same effect on the generating industry in Scotland as their proposals for the steel industry in Scotland. In other words, the Government may introduce proposals drastically to reduce capacity in the generating industry in Scotland in the same way as the proposals that are now under consideration to reduce the capacity of the steel industry.

It is clear that a number of domestic matters concerning the SSEB and the hydro board need to be seriously discussed in this debate and subsequently. I shall mention a few of those matters. First, there is the standing charges. As the Minister will know—I am sure that all right hon. and hon. Members get many letters on this subject in their postbags—there is growing and serious concern about the effect of standing charges on electricity accounts—gas accounts, too, but we are not discussing that subject. I hope that the Minister, in winding up, will tell the House about the effect on the SSEB and the hydro boards' accounts if the standing charge were abolished altogether. The Prime Minister gave me the impression, in a recent letter to me, that the Government were concerned about the effect of the standing charge on the accounts. I hope, therefore, that the Minister will say something about the effect on the boards' accounts if the standing charge were abolished. If it were abolished, it would be a great advantage to many consumers throughout Scotland. Equally, of course, there would be no advantage for many consumers. However, by and large, the consumers who would benefit are old-age pensioners, people on low fixed incomes, and people who do not use the electricity that others use because, frankly, they cannot afford it.

The "can't afford it" syndrome brings me to the disconnection policy. In our last debate we went into the matter in some detail, and I was somewhat surprised that the Minister did not mention the SSEB's disconnection policy in his speech today. Thanks to my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. O'Neill), I have had some correspondence from the Fuel Poverty Action Group, which shows that there has been some improvement in the situation. If there has been an improvement, we should say so. There has been a reduction from 14,000 disconnections per annum to 12,000 in 1982. However, the figure is still high. Of the 12,000 disconnections, it appears that 80 per cent. fall within the code of practice, and that a fair number of the 12,000—about 3,500—have children under the age of 11. It appears to me that the code of practice is not being applied. In other words, it is being ignored on a fairly widespread scale if there is that number of disconnections. The Fuel Poverty Action Group, whose statistics I am using, argues that if the code of practice were fully implemented, disconnections would be about 1,200, not 12,000.

A worrying aspect of these disconnections is the number of disconnected consumers who are off supply for a fairly long time. A substantial number of disconnected consumers have been off supply for more than a year. The letter from the Fuel Poverty Action Group says that in the most severe winter this century—last winter—substantial numbers of people were off supply for a fairly long time. That is extremely serious. Of course, there are parts of Scotland where, because of the age and type of property—Edinburgh, compared with Aberdeen—it is much more expensive to heat houses. That all adds up to the disconnection problem that I seek to ventilate today. I hope, therefore, that the Minister will tell us how the Government are dealing with this problem.

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) mentioned preferential tariffs for industries taking interruptible supplies. It is a bit much for the Minister to suggest that Ministers were bringing pressure to bear on the boards. The Minister presented, if not an inaccurate picture, certainly a not wholly accurate picture, of what took place. What took place was that in the Chancellor of the Exchequer's Budget of 1980 a discount scheme for England and Wales only was introduced, which was to cost £10 million. The Treasury gave the £10 million to the Central Electricity Generating Board to finance discounted electricity rates for industries taking interruptible supplies.

I asked the Secretary of State for Scotland why that scheme had not been introduced in Scotland. I still remember the answer. The Secretary of State said that he could find no industry in Scotland that was at a disadvantage in relation to energy charges compared with its counterparts in other parts of the United Kingdom. As the year went on it became fairly obvious that a host of industries in Scotland were being placed at a serious disadvantage compared with their counterparts in England and Wales.

In the Budget of 1981 the Chancellor of the Exchequer introduced a scheme for Scotland similar to the one introduced in the previous year for England and Wales. Therefore, the Scottish industry lost a year of being able to take energy from the SSEB at a preferential rate on the basis that the industry was taking an interruptible supply.

Has any estimate been made of the damage that was done to Scottish industry in that year? Damage must have been done to Scottish industry. One of the favourite ploys of Conservative Members used to be rate comparisons and the damage that was done to industry in Scotland as a result of rates and almost everything else that they could drag up. This is a good example of where damage was done. The Secretary of State failed to persuade the Chancellor of the Exchequer that a preferential energy rate should be introduced in Scotland at the same time as in England and Wales. It was not introduced in Scotland until a year later.

A great deal more requires to be done about preferential energy rates for industry in Scotland if we are to rebuild the Scottish industrial economy. I hope that the Minister will comment upon this. We must be able to say to industry in Scotland that it will have a continuous guarantee that over a period—I am not saying that it should be for five, six or seven years; three years would do—it could depend on constant energy prices so that it could make a contribution to the rebuilding of the Scottish economic base. That is very important. I hope that pan of the increased borrowing that we shall approve today can be used for that purpose, with additions from the Treasury through the Scottish Office.

The Minister referred briefly to the construction programme when challenged by my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson). He asked the Minister whether the SSEB or the hydro board had major construction proposals for the period covered by the proposals that we are discussing, which is between now and 1989. The Minister said that neither the SSEB nor the hydro board had any major construction plans for that period.

That brings into question a point that I am sure my hon. Friend the Member for South Ayrshire (Mr. Foulkes) will want to raise. I shall mention it without developing it. It is on the number of sites that are presently held by the SSEB. I am not sure whether any or many are held by the hydro board. I should be grateful if the Minister would tell the House exactly what discussions have been held between the Scottish Office and the SSEB about the sites that are held if there are no proposals for major construction or the construction of another power station in Scotland between now and the end of the 1980s and, I suspect, well into the 1990s.

It would be more accurate to say that it is doubtful whether, under the present Government's approach, there would be a need for another power station in Scotland during the rest of the century. It would be more accurate if the Minister were to admit it. I am not saying that that would be the position if the Labour Party were to win the next election. Things would change. We would expand the economy and there would be an upturn in the demand for energy. It is obvious that the Labour Party would take a different view of generating policy from that of the present Government. I shall leave that point. I know that my hon. Friend the Member for South Ayrshire has a particular interest in the matter and will want to raise it.

It is noticeable that the Minister did not refer to the Energy Bill on the privatisation of the electricity supply industry. My hon. Friend the Member for Midlothian (Mr. Eadie) is on the Committee considering that Bill. The Minister who was asking for substantial increases, which we are being asked to approve, has an obligation to tell the House what effect the Energy Bill, will have on the SSEB on the one hand and the hydro board on the other hand.

The Minister walked into a trap when he responded to an intervention by my hon. Friend the Member for Midlothian. He waxed eloquent about a good public enterprise and the link between Argyll, the mainland and Colonsay. The Minister hit the nail on the head. No private enterprise will pay for the social links. That is one of the main criticisms of the Government's privatisation proposals. None of the private entrepreneurs will take on the social responsibility that would be taken on to ensure that facilities that are taken for granted on the mainland can be spread to the most remote corners of constituencies that by and large are represented by Conservative Members. I forecast that the day will come when Conservative Members live to regret the privatisation proposals that are being introduced not only in the electricity supply industry but in the telecommunications industry.

We have opened up a large area of debate. It is important that we should take this opportunity to discuss and debate the important issues that are involved in the borrowing powers in the Bill. The sums of money are substantial. We are entitled to know on what they will be spent and what is the future of the generating industry.

The Minister—I say this in the kindest way—is not the best forecaster. I remember the last time we debated the smelter account, when the Minister was pointing at me across the Dispatch Box and telling me in no uncertain terms that the smelter account could not be renegotiated or bought out. That was in October 1981. By November or December 1981 the Minister who was telling me that it could not be bought out was involved in negotiations to buy it out. I caution the Minister about his forecasts. He should try to make them more accurate this time.

My final point is about the Minister's confidence about the output from Torness. I do not accept that the construction stage of Torness could be stopped. I have made my position clear on that and I shall defend it before anyone.

The Minister is naive in the extreme if he believes that Torness, or any nuclear power station, will achieve its output potential. No nuclear power station in this country has ever achieved its full load potential. Indeed, the main problem with the aluminium smelter at Invergordon was that the Hunterston B power station never approached the load factor that it was designed to achieve. Hunterston B was designed to produce 70 per cent. of its load factor, but I do not think that it ever reached even 60 per cent. Therefore, if the Minister's calculations on these borrowing limits or his forecasts of the future cost of energy are based on a belief that Torness will achieve its full load factor, I must caution him that there is no evidence in nuclear generating that these stations ever reach their full load factor.

I know that the Minister appreciates that the matters under discussion are very serious. We are discussing a whole industry in Scotland, and the Scottish economy is giving us all cause for deep concern. If we do not get the electricity generating industry right, we shall not be able to rebuild the Scottish economy. These things are all linked and intertwined; nothing is separate.

When the Minister replies I hope that he will try to give answers to the serious questions that have been and will be posed in this debate. We do not intend to oppose the Bill tonight, but we hope that our questions will be answered.

5.23 pm

Mr. Michael Ancram (Edinburgh, South)

Perhaps I should reassure my hon. Friend the Minister that I do not intend to oppose the Bill tonight, either. I am always fascinated to listen to the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), particularly now that he does not have a piece of paper to refer to when he speaks. This makes him more entertaining, but perhaps it also makes him less accurate. It is noticeable that now that he speaks without notes the hon. Gentleman makes far fewer forecasts. However, I was delighted to hear, and I am sure that Mr. Michael Joughin will be delighted to hear, the hon. Gentleman's commitment to the effect that, whichever party is in power, the job security of Mr. Joughin will not be endangered.

Mr. Tom Clarke (Coatbridge and Airdrie)

Since the hon. Member for Edinburgh, South (Mr. Ancram) has a piece of paper in his hand but is not referring to it, can we assume that he will be neither entertaining nor accurate?

Mr. Ancram

As I hope to talk rather more statistically than the hon. Member for Stirling, Falkirk and Grangemouth, I have provided myself with a little support, for accuracy.

I welcome the report on the efficiency of the SSEB. I have been fairly critical of the board in the past, but I accept that this report is a proper one and that the board's efficiency has improved over the past year. It should be congratulated on the fact that its net return on assets has increased by 11 per cent. Moreover, the number of units that it produces per employee—its unit cost—has also increased by nearly 6 per cent. It should be given credit for that.

Given the surplus that the SSEB has again earned, will the consumer see the advantage of that in any direct way? In providing extra borrowing powers for a nationalised industry of this kind to cover unexpected or extra expenditure, it seems reasonable that, when a surplus is made, the consumer—in this case, particularly the domestic consumer—should derive some benefit from the profits made by the industry. I hope that the Minister will comment on that.

The hon. Member for Stirling, Falkirk and Grangemouth talked about privatisation. I do not know whether he has read the Energy Bill. As I understand it, we are not denationalising the SSEB or the grid in England, which is what I understand by privatisation. We are allowing private enterprise to come into the generation market. We are allowing private generators to provide electricity—largely, I suspect, for their own industries, where they may be able to produce it more cheaply because they can produce it locally. We are also removing the disincentive that existed in the past—that they could not get rid of the excess electricity produced by selling it to the grid. They will now have the incentive to do just that. If, as I believe will happen as a result of the legislation, there is more efficient generation of electricity in Scotland, I hope that the hon. Gentleman will have the decency to admit to the House that he was wrong.

Mr. Harry Ewing

Any company generating its own electricity has always been able to sell the surplus to the grid. That has never been a problem, and it is not what the Bill is about.

Mr. Ancram

The question is whether the person generating the electricity can obtain a proper return for it. As the hon. Gentleman well knows, unless that is guaranteed, as the gas-gathering pipeline proved, private industry is unlikely to take part.

Mr. Alex Eadie (Midlothian)

Will the hon. Gentleman give way?

Mr. Ancram

I do not wish to detain the House. I have given way several times already. This will be the last time.

Mr. Eadie

I did not intend to intervene, but the hon. Gentleman made certain strictures about accuracy because my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) happened not to be using notes. As the hon. Member for Edinburgh, South (Mr. Ancram) has notes, he had better read and understand the Energy Bill, as he has misled the House to some extent in his interpretation of what happens when surplus electricity is generated. I hope that the hon. Gentleman will do that, even though he has notes.

Mr. Ancram

I was explaining how I envisaged the results of the Bill. The position that I understand the Bill will produce is very different from that described by the hon. Member for Stirling, Falkirk and Grangemouth.

The Minster rightly said that the basic reason for the increase in the borrowing limit is to finance the Torness power station. I agree with the hon. Member for Stirling, Falkirk and Grangemouth that we must now accept that the Torness project cannot be stopped. It would be ridiculous to leave it as a half-built "Benn's folly" sitting in that part of East Lothian for all time. Nevertheless, we should remember the lessons learnt from this venture. It is all very well for the Minister to say that he is still confident of a net system saving. That was the argument used by the SSEB to justify the power station when it could no longer justify it in terms of load demand forecasting.

The Minister said blandly that he was confident of a net system saving because of predictions about the future prices of oil and coal. Since the Select Committee on Energy reported and took evidence on the projected future costs of coal and oil, the estimates have fallen considerably. When the Select Committee examined the matter a year later a number of predictions were made regarding oil prices, the lowest of which was made by Professor Odell who said that the real price of oil was likely to fall by the year 2000. The general balance of opinion appeared to be that the real price of oil would rise by only a small degree by the year 2000 and that it was only the Government who were arguing that the rise would be higher. That is why I asked where the experts or commentators came from.

We should be told where the projections are coming from, because the whole argument as to whether a net system saving is made by building a particular power station early depends on the projected cost of alternative fuels in other power stations over the lifetime of a Parliament. By setting a high enough figure, anybody can justify any project of this sort on a net system saving basis. If we are to think of having other power stations of this sort in future, we must have clearer information from the Government of the sort of projections on which they are basing their analyses.

I know that the hon. Member for Berwick and East Lothian (Mr. Home Robertson) is trying to catch your eye, Mr. Deputy Speaker. As I am speaking before him, may I welcome his conversion, after five years, to the view that Torness is not the great bonanza for his constituency that he and his party used to say that it was. When I contested his seat in 1974 I remember being told that I was trying to stop the creation of jobs for local people in the area by my opposition to Torness. I understand that that is now the hon. Gentleman's position. I am glad that he has seen that it is a case of better late than never.

I was also told that I was wrong to suggest that the power station would never be needed. I understand that that is also the hon. Gentleman's position now. Again, I welcome his conversion. I remember the days when I was slated for suggesting that that power station would ruin beautiful tracts of the hon. Gentleman's constituency by its power lines. I was told that I should not stand in the way of progress and energy production. I understand that that is also the hon. Gentleman's position now. Although it has taken the hon. Gentleman and his local party some eight years to arrive at that position, we always welcome such conversions.

My hon. Friend the Under-Secretary of State referred to the overcapacity in the Scottish electricity industry. He told the House that he was pleased to announce that his right hon. Friend the Secretary of State had arranged with the SSEB that in future prices would not contain any element that could be attributed to the creation of new capacity. Will that include the interest on the borrowing extension, which the Bill is about and which I understand will be used almost exclusively for the creation of that new capacity, or will the interest be excluded in any future price considerations of the SSEB?

Finally, may I make a general point, which I made in a similar debate last year? Whereas the internal management of the SSEB may have been found to be good, any manufacturing industry—that is what the SSEB and the hydro-electric board are—which produces, or has the capacity to produce, 60 per cent. more than anybody will ever be able to buy, even at the peak of demand which we saw last year, will affect the price being charged to the consumer. Will the Minister who is responsible for energy in Scotland continue to impress on the SSEB that there is nothing clever in having 60 per cent. overcapacity, if people are having to pay for it, particularly as production at Torness will be coming on stream fairly soon?

The most efficient form of industry in this sphere is one which has a planning margin of between 20 per cent. and 28 per cent.—which is what the CEGB aims for—and consequently gives the best deal to the customer.

5.33 pm

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

I have notes and I hope that the House will forgive me for referring to them as I go along. I might be more accurate. The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) should give credit where it is due. It was from exchanges with me during the Minister's speech that it became clear that the Bill will apply to investment in the two boards which does not include any new project until 1989. That is significant. There are several foreseeable and possible new projects. There was a Government announcement only last week which could represent a substantial investment for the future of electricity in Scotland if it were to come about. It has clearly been postponed for a decade if we are to believe the Government. I refer, of course, to the possibility of a commercial fast breeder reactor.

Mr. Alexander Fletcher

There seems to be a misunderstanding. The Bill relates to the SSEB and the North of Scotland hydro-electric board. If the right hon. Gentleman is referring to a commercial demonstration fast reactor at Dounreay, that would come from an entirely different budget.

Dr. Mabon

The Minister and I must disagree. Unless we are to change the rules, my understanding is that, if such a commercial station were to be established, it would have to be built by one of the existing electricity boards. I may be wrong, but that is the information. given to me by my advisers.

Mr. Fletcher

It is more than just a matter of bookkeeping, because the Scottish electricity boards have their own plants and are responsible for them. The Bill relates to the servicing of the generating plants in Scotland or any plans of the SSEB or the North of Scotland hydro-electric board to build additional plants. Any decision to build a CDFR at Dounreay—which comes under the auspices of the Department of Energy—would not be included in the financing arrangements that we are discussing this afternoon.

Dr. Mabon

With respect, if the Government were to change their mind on the timing, it is conceivable that it could come within the compass of the moneys voted in this Bill, given that there was no specific legislation to deal with the matter de novo in respect of the commercial station. Will the Minister, who is normally extremely well informed, take advice on that? All I am complaining about is the Minister's statement that the Bill covers investment up to 1989 and includes no new projects whatever—including any commercial fast breeder reactor.

Mr. Fletcher

I want to be helpful and prevent any possible misunderstanding. There is no question at the moment of the SSEB of or the North of Scotland hydroelectric board, through the Bill or any other financing that may be planned, building a CDFR at Dounreay. If such a decision were made within the decade that we are discussing, it would be presented to the House under entirely different financing arrangements from those that we are discussing this evening.

Dr. Mabon

We are at one. That is what I am saying. I asked the Minister for confirmation of that, and he confirmed it. He has now reconfirmed it.

All I am saying is that if the timetable which was issued last week as a written answer to a planted question by the hon. Member for Edinburgh, South (Mr. Ancram),—without the statement to the House of Commons which was promised by the Leader of the House four days previously and earlier on Second Reading of the Energy Bill—were to be changed, a new Bill, or part of the money voted under this Bill, would have to be devoted to that purpose. I do not blame the hon. Member for Edinburgh, South because, as in so many cases, he was the pliant instrument of his party carrying out the strategy of the moment.

My complaint is that we have never had the opportunity to debate that statement. The Minister has not said why the deferment is to take place. We have had statements from the Scottish Office and from other Ministers insisting that the team at Dounreay will remain intact and that the experimental and research work will continue there for another 10 years before any decision is taken in the 1990s.

That is a matter of grave concern, because since 1967 we in Scotland have been foremost in the United Kingdom in pioneering nuclear-generated electricity in Britain. We have had the first atomic stations. We have had the AGRs, and for some considerable time we have had the prototype fast reactor. There is a possibility that at some stage in this century our country will move along with the major nuclear powers in the world. I refer to the United States and France, with Russia a poor third. Scotland, however, comes a good fourth, considering its size and effort. We have a lead that we are now losing. When complaints are made about investment by the Scottish board in Torness and Hunterston, people seem to forget that there was a time when the Scots would have been up in arms at not receiving equal treatment with the board in England. Torness is a good example of that. When Torness was discussed by the Labour Government, the Scottish board, to its credit—it is small compared with the CEGB—demanded parity of treatment.

I am surprised that hon. Members are now moaning and groaning about Torness and are perhaps willing to see Scotland slip compared with England.

Mr. George Foulkes (South Ayrshire)

Rubbish.

Dr. Mabon

The cry "Rubbish" comes from an hon. Member who forgets that the original concept of expanding the nuclear power programme was achieved in an entirely different economic climate. The hon. Member for Midlothian (Mr. Eadie), who was a colleague of mine at the Department of Energy, knows that to be true. If one reads all the White Papers, published by successive Governments over the past 30 years, which sought to project the nation's energy requirements for six or 10 years ahead, one finds that they were almost all wrong. By their very nature they will be wrong. Unfortunately, however, the building of a nuclear, conventional oil-fired or coal-fired power station requires a six-year lead time for planning and construction before it is put on stream. Decisions cannot be deferred in the belief that all projections are wrong. That is why I find it disconcerting that this Bill, which will last until 1989, contains only the refurbishment of what we presently have or the completion of what we are presently building.

The nuclear power industry in our country has a remarkable record of safety.

Mr. Foulkes

Rubbish.

Mr. Gordon Wilson

The right hon. Gentleman must be aware of the dramatic overcapacity which was quoted by the hon. Member for Edinburgh, South (Mr. Ancram). Is he aware that every year during the 1970s saw a successive drop in the growth of power consumption in Scotland and that there was a drag before that was recognised by the electricity board. Was it not absolutely lunatic to go ahead with the order for Torness following those drops?

Dr. Mabon

No, it was not. I lived through the period of scarcity. In the middle 1950s, when I first came to the House, there were serious scarcity problems. Our industrial expansion was seriously inhibited.

Mr. Foulkes

The right hon. Gentleman is still living in it.

Dr. Mabon

The hon. Gentleman must contain himself. He might even learn something for a change. He desperately needs to learn.

There was a scarcity problem in 1956, which continued well into the 1960s. If the country is to prosper, we must proceed with the belief that our need for energy will expand, not contract. The hon. Member for Stirling, Falkirk and Grangemouth did not say that the Labour Government would not worry about that because there would never be a need for increased capacity. At the end of his speech he said that he hoped that things would change and that there would be a need for increased capacity. He is optimistic. He does not believe that demand for electricity is finite and that that is the end of the matter.

I am arguing also that it is wrong to believe that this is the end of the road for nuclear power stations in Scotland. I should not like any of our friends south of the border to gain the impression that the Scots have become suddenly converted to the belief that we do not need more nuclear power stations.

Safety has been mentioned. In Britain there are 15 nuclear power stations with an output of 7,600 mW. The Minister reminded me that they have operated for 26 years and that not one member of the public has been killed, injured or suffered radiation from their operation.

If one takes not 26 years, but the 15 years between 1965 and 1979, 1,360 miners were killed in the mines. At Aberfan 144 people died. Those of us who have connections with mining families or medical practice know that 600 new cases of pneumoconiosis are diagnosed every year. During those 15 years, 9,458 people died of pneumoconiosis in its advanced state. I am not arguing against coal, but to say that nuclear energy is fearfully unsafe in contrast with the coal industry is a caricature of the facts.

Mr. Foulkes

Will the right hon. Gentleman direct his mind not to safety but to efficiency and the way in which the nuclear power stations have not been operating to capacity, as my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) said? Will the right hon. Gentleman tell me on what occasion all parts of Hunterston have worked to full capacity? Does he recall all the difficulties that occurred, including the accident when water went in? Does he accept that power stations, such as Hunterston, have many problems that we have not yet solved?

Dr. Mabon

There are many problems that we have not yet solved, and I have no doubt that other problems will arise. Problems are there to be solved. The hon. Gentleman must not convert himself into a non-nuclear or anti-nuclear warrior on the grounds of safety. The hon. Gentleman is apt to do that. He is an intelligent man and I counsel him not to fall into that trap. I do not intend to be dragged into arguments about such matters. 1 want to make a short speech in my own way.

The annual reports show that both boards have done remarkably well in extremely adverse circumstances. I agree with the criticisms of the standing charge and the boards not being as socially responsive to disconnections as they could have been, but they have done remarkably well bearing in mind the major problem of lack of demand that they face. However, that does not mean that they are perfect.

The SSEB supplies Ravenscraig, which in turn delivers 90 per cent. of its output to the English market or abroad. We should be worried by what the boards have lost from closures, such as Invergordon. What would happen to the board's income if Ravenscraig were to close? The Scottish boards must learn that they cannot treat industries north of the border less favourably than English boards treat industries south of the border. Only today we had an example of that.

I am not suggesting for a moment that the Chemicals Industries Association is necessarily accurate, but it is on record as saying that in its discussions with the SSEB during the past few weeks it has achieved improved price benefits. Indeed, the Minister urged that, and he confirmed it in his opening remarks. However, the CIA does not see any improvement in its position on the penalty clauses. All the schemes that it has discussed with the SSEB depend on the customer cutting demand during peak hours, with penalties for non-compliance. The Chemicals Industries Association concludes that the Scottish proposals include penalties which could effectively wipe out any saving on prices. Hon. Members should bear in mind that their remarks relate to Scottish plants. The CIA said that these terms make operation of chemical plants virtually impossible.

Mr. Harry Ewing

I am grateful to the right hon. Gentleman for giving way, as he has already been generous in that respect. Does he accept that there is no greater moaner in this country than the chemical industry? Indeed, I have extensive experience of chemical plant in my constituency, and I refer particularly to the chemical industry in Scotland. It has one moan after another about rates, energy prices, and so on. Therefore, I caution the right hon. Gentleman in that respect.

The right hon. Gentleman said that the SSEB did not treat industry in Scotland on all fours with the way in which industry in England and Wales is treated by the CEGB. Does he accept that the Government put the SSEB at a disadvantage when trying to treat Scottish industry fairly, because they did not introduce the same scheme in Scotland as was introduced a year earlier in England and Wales? Had the scheme been introduced at the same time, the SSEB would have treated industry in Scotland on the same basis as that in England and Wales. I think that the right hon. Gentleman would agree with that.

Dr. Mabon

That is a very good point. Initially, that was true. If I am to believe the Minister—a tremendous question that begs many answers—he has rectified the situation. Despite the argument about the greetin' bairns of the chemical industry who are constantly complaining, we must consider the Minster's comment that, as far as the Government are concerned, the boards can treat industries equally. There is nothing in the Government's resolution—or lack of it—to say otherwise. In other words, the complaint is being passed from the Government to the SSEB.

The chemical industries complain not about the English board, but about the fact that the position in Scotland puts them at a disadvantage compared with chemical industries south of the border. However, if the SSEB feels that it is at a disadvantage because of the Government's lack of concern, it should complain to Members of Parliament. It should complain to Conservative, Labour, SDP, Liberal and Scottish Nationalist Members. It should do so without fear or favour from any party. It should say that the Government are treating the board unfairly compared with other boards. However, I have no evidence that the SSEB makes that complaint.

The chemical industries complain about the boards, and the Bill gives me an opportunity to raise that matter. Perhaps this greetin' bairn is dishonest, but a Minister's first duty—as the hon. Member for Stirling, Falkirk and Grangemouth knows from his experience—is to listen to and correct the imbalance, even if the case is only half made. I hope that the Minster will accept that. There may be industries which are not complaining and which are negotiating their contracts at present.

Reference is made to this concerning only about one-third of industrial consumers in Scotland. Are the other two-thirds content? Are all Members of Parliament content that the industries are being treated fairly? We do not know the answer, because the contracts have not been concluded. I am merely putting up a signal. We expect the Minister to ensure that, once the boards have been given the resources, they will treat our industries at least as fairly as those which come under the CEGB, south of the border.

Mr. Deputy Speaker

Order. I hope that I did not hear the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) describe the Minister as the bairn who was dishonest. If so, he should withdraw that remark.

Dr. Mahon

With due respect, Mr. Deputy Speaker, it was a form of flattery and not at all an unparliamentary expression. In Scotland, the phrase "the greetin' bairn, aye gets fed first" means the crying child is always fed first. The hon. Member for Stirling, Falkirk and Grangemouth was trying to claim that the Chemical Industries Association is a greetin' bairn. I did not say that; he said it. I am saying that the Minister should respond to that, just as he would respond to any such complaint. By the way—

Mr. Deputy Speaker

Order. The point is that the right hon. Gentleman must not describe the Minister as dishonest.

Dr. Mabon

I am sorry, Mr. Deputy Speaker, if you misheard me. I was saying that the industries that made representations might not be entirely honest. The Minister may be misled, be under a misconception, be deceived by others, may not read his brief properly, may lose his place in the brief occasionally and be helped by interruptions, but he is never dishonest.

Mr. Alexander Fletcher

I appreciate the way in which you have looked after my interests, Mr. Deputy Speaker. The debate has been a little difficult to follow, but I understand that the right hon. Gentleman is pleading with the Government to listen when industries complain. Indeed, we do. There is no antagonism between Ministers and the electricity boards. Whenever we have a complaint from the chemical industries—as we have had—we naturally take it immediately to the boards and ask them to comment. The boards are anxious to ensure that they give the same service and prices to industry in Scotland as are available south of the border. Overall, the boards' prices—certainly for domestic consumers—have been more favourable than the average prices in England. That is of benefit and of advantage to us.

If an industry, such as the chemical industry, has a complaint, we immediately discuss it with the boards and try to provide a satisfactory solution through them. They have the statutory responsibility. They are conscious of their statutory responsibilities as well as of their commercial and industrial responsibilities to Scottish consumers.

Dr. Mabon

I could be assuaged by the Minister's remarks, but I have the gnawing feeling that the saga of Invergordon does not bear that out. We do not yet know the figures associated with the smelters in Anglesey and Blyth. We do not yet know the comparisons that can be made between the contracts for Alcan and Rio Tinto-Zinc. We do not know the full story behind the British Aluminium Company's involvement in Invergordon. However, none of the information that can be gleaned will allay our fear that the Scottish Office is not fully alive to the board's fundamental role in sustaining industry in Scotland against its competitors south of the border. Scottish Members of Parliament say that Scottish industries should receive the same treatment from the SSEB as the English industries receive from their board. That is my point. My hon. Friends and I on the SDP Benches will not oppose the Bill at this or any other stage. However, I hope that the Bill will be rapidly overtaken by a considerable change in our economy so that present establishments—and the new ones that will be needed—can supply our country. A new Bill may then provide a fresh impetus to a new Scotland.

5.59 pm

Mr. John Corrie (Bute and North Ayrshire)

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) referred to "greetin' bairns". I always thought that farmers tended to be the "greetin' bairns", but I am pleased to hear that there is another industry that feels the same way.

I warmly welcome this small Bill that gives the Scottish boards a chance to update their generating stations and to finish the new ones. As the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) said, the borrowing powers that are being given are large. Like everybody else, I congratulate the boards on holding down their prices to consumers to a reasonable level. As most industries recognise, nothing is more inflationary than high energy costs. However, both boards are in a difficult position because the recession has caused a cut in demand. There is now a delicate balance between consumer prices and unemployment. Industry needs low-cost power, especially during a recession. Some help has been given, but we have seen how oil prices have completely distorted fuel input costs to power stations.

We all accept that the boards need long-term planning. I wonder how far ahead their present plans are, because in future they must not only build new power stations but they must replace old ones. I wonder which old stations are wearing out. Presumably at least 10 years planning are required before a station operates and an even longer planning period is required for nuclear power stations.

I agree with the Minister that it was impossible in the late 1960s and early 1970s to forecast that oil prices would quadruple. Oil-fired stations such as that at Inverkip in the Clyde estuary, where many of my constitutents work, are now uneconomic. The figures, which I received this morning from the South of Scotland electricity board, are frightening. The cost of producing electricity for one hour at 670 mWs at the oil-fired station at Inverkip is £12,000 more than the cost of producing electricity for one hour at Hunterston, which is nuclear powered. At Longannet, which is coal-fired, the cost is £5,000 more than at Hunterston. Those figures show the huge advantage that nuclear fuel has over coal and oil. However, I pay tribute to the staff at Inverkip power station, which now obtains little work. None the less, the staff are on an eight-hour standby and from a cold start they can go up to 680 mWs in eight hours. No other power station in Britain can do that.

I wonder whether oil-fired stations, which look as though they will be uneconomical for the rest of time, can be converted to coal. There are massive reserves of coal in Scotland and we should use that fuel to protect the jobs of pit workers even if we cannot create new jobs. The hon. Member for Stirling, Falkirk and Grangemouth pointed out that the Select Committee said that if we lost Ravenscraig the boards would lose an enormous amount of consumption. Other pits could close, not simply because they supply coking coal, but because they supply coal to other electricity stations.

The board's real success must be the Hunterston nuclear power station in my constituency. I pay tribute to everyone who works in that station for the excellence of its output as well as its safety record. Both the A and B stations are doing extremely well and output is running up to expectations, although I take the point made by the hon. Member for Stirling, Falkirk and Grangemouth that they never reached full potential. However, the lifespan of those stations is likely to be much longer than was first thought. Maintenance and reloading are performed extremely efficiently without the necessity to shut down the reactor. Output is lowered at the weekends when the cells are recharged. That means that the real production costs are low compared with those for coal and oil. It is relevant because one must take into account the capital costs.

It is interesting to compare Hunterston with the original hydro stations in the constituency of Galloway, whose Member of Parliament is sitting on the Front Bench as a Government Whip. Each generation at Hunterston has a potential output that is 50 times greater than the old hydro-powered stations in the scheme built in 1935. However, those old hydro schemes are just as efficient today as they were then. There are areas in Scotland where small hydro plants could he installed. On many private estates that are miles away from the main grid, there are ideal spots for small hydro-electricity plants. There is enormous potential in the growth industry of fish farming in the Highlands, especially in lochs that have no electricity provision at present and that are unlikely to have any such provision. Power is needed for pumps, heating and lighting and it would cost too much to provide grid lines. Perhaps my hon. Friend would say something about private generation in the future because there is some confusion in hon. Members' minds.

Many new methods of electricity production are being considered, such as wind, waves, thermal and sun, although there is not much of that in Scotland. Perhaps under the new legislation an individual can generate electricity as he wishes. Must the boards buy the excess electricity produced by that individual, because that will simply increase the present overcapacity? Will the boards have a final say in the matter?

The extra capital expenditure provided to the boards is to complete the building at Torness. I assume that, once that station is completed, the unit costs will be as low as at Hunterston, even taking into account the interest on capital.

The report states that, this year, fuel costs rose by 14.6 per cent. I assume that that is an average increase for oil, coal and nuclear power. Does my hon. Friend have a breakdown of the increases in each of those fuels so that we can have an idea of the costs? I strongly support the continued building at Torness. It would be disastrous to stop it. It provides desperately needed jobs in the area and to mothball it would simply increase the capital costs when we start to build again.

Some generators are coming to the end of their functional life and we are considering future programmes. As many hon. Members said, electricity production is undoubtedly over capacity now and it looks as though it will stay that way for the foreseeable future. The South of Scotland electricity board and the North of Scotland hydro-electric board have a delicate task to balance new nuclear power against the old coal-fired plants so that they do not destroy jobs. I accept that the extra capital expenditure is necessary for the building of new stations, but I hope that we shall not disrupt the production of electricity in Scotland by producing too much.

6.7 pm

Mr. George Foulkes (South Ayrshire)

Like the hon. Member for Bute and North Ayrshire (Mr. Currie), I welcome the opportunity to discuss the generating and other policies of the electricity boards. I shall concentrate on the South of Scotland Electricity Board and take a rather different view from that of the right hon. Member for Greenock and Port Glasgow (Dr. Mabon). It is easier to do that since he moved to another party and we do not have the same internal conflict when we disagree. I am glad that the Minister mentioned the Coopers and Lybrand efficiency audit that was commissioned by the SSEB. Reports on the production of electricity seem to be the only growth industry in Scotland nowadays under this Government. Although I am not against efficiency audits, I wish to see an audit that will consider services to the consumer as well as the internal efficiency of the boards.

The report recommends a new agreement between the SSEB and the National Coal Board. I do not know why the Secretary of State for Scotland and the Under-Secretary of State for Energy do not take a leaf out of the book of my right hon. Friend the Member for Glasgow, Craigton (Mr. Milian) and my hon. Friend the Member for Midlothian (Mr. Eadie), who helped conclude a contract between the SSEB and the National Coal Board which guaranteed both the price and stability of coal supplies to the SSEB and a market to the Coal Board. That seemed to be a sensible, equitable, fair and good contract. I do not understand why the Government are not intervening in the same way to produce a contract that benefits both the SSEB and the Coal Board. Such a contract could have been extended and developed.

I suspect that it is all part of the Government's attack on the coal industry. With one or two honourable exceptions, Conservative Members are attacking the coal industry. I was glad to hear the hon. Member for Bute and North Ayrshire make some positive comments about the coal industry. There is a doctrinaire attitude among many Conservative Members which suggests that the coal industry should be undermined. That is a short-sighted attitude.

The coal industry, which is under threat from the Government, is important to the future of the SSEB. During the 1970s there was some security and stability in the industry and the decline was reversed. That now appears to be changing. The decline is being accelerated by the actions of the Government. At last Mr. Arthur Scargill has winkled out of the Coal Board—he said it all along but the Coal Board denied it—the admission that there is a list of pits that the Coal Board has it in mind to close. The Government allege that those pits are exhausted. My hon. Friend the Member for Kilmarnock (Mr. McKelvey) and I recently went down one of those pits at Highhouse in my constituency. The Government allege that the pits are exhausted. That is nonsense.

Mr. William McKelvey (Kilmarnock)

indicated assent.

Mr. Foulkes

My hon. Friend and I spoke to the miners, who know that there is coal there. The hon. Member for Bute and North Ayrshire admitted it, and, in their more rational moments, many Conservative Members will admit it. If there were a sudden upsurge in the demand for energy the coal miners would be asked to pull out all the stops and the coal, on which Conservative Members now cast a blind eye, would be suddenly rediscovered.

It is proposed that the coal should be abandoned and not exploited. That would have a devastating effect in my constituency. Earlier today I asked the Prime Minister about the closure of Ravenscraig and Strathclyde. The Select Committee on Scottish Affairs has said that the closure of Ravenscraig would have a disastrous effect. The closures of Sorn, Highhouse and Killoch, without any new investment for new pits in the area, would be equally disastrous for Ayrshire and for the west of Scotland.

Not only 2,500 jobs would be lost in the mines but there would be an effect on British Rail, whose principal freight in the west of Scotland is coal. There would be effects on the shops, the bus firms and the private contractors—the friends of Conservative Members—who take the men to the pits. We already know that demand for steel is declining rapidly but the closure of those pits would mean a decline in demand for the girders that one sees every few yards in the pits. There would be a decline in demand for pit props and switchgear produced by Wallacetown Engineering in the constituency of the Secretary of State for Scotland.

The threat is so great that we must not allow it to be carried out. Therefore, I hope that the Scottish Office Minister who has responsibility for industry will use what influence he has to persuade the Government that investment is needed in the coal industry. There is more coal at Sorn, Hurlford, Barony, Killoch and Highhouse. Reserves have already been discovered at Happendon in Lanarkshire. One of the largest coal fields in Scotland is at Canonbie. Work on that mine should be started now to provide replacement jobs for the time when the pits are genuinely exhausted.

Coal is our most secure form of energy. We have vast resources. It is not subject to the uncertainty of the political position in the Middle East or elsewhere, or the uncertainty of nuclear power. I do not wish to exaggerate the dangers of nuclear power—it would be alarmist to do so—but there are genuine worries. Such worries were seen in the United States, at Three Mile Island. There are dangers in the coal industry, which were described by the right hon. Member for Greenock and Port Glasgow. We must do everything possible to minimise those dangers, but they are minimal compared with the type of catastrophe that could occur at one of the major nuclear power stations in the United Kingdom. Such a disaster would be appalling in comparison to anything we have experienced before. We must be sure about nuclear power. I am a nuclear sceptic rather than an anti-nuclear power person.

The forecast for electricity demand is crucial to the future building of power stations. I did not oppose the continuation of Torness because it had gone so far that opposition would have been too difficult. When Torness is completed the SSEB will have about 100 per cent. overcapacity. If one allows for all types of margins of error, that is still a ridiculous amount.

Since the 1960s, there have been major changes in circumstances—the right hon. Member for Greenock and Port Glasgow was living in the 1960s when he made his speech tonight. I sometimes believe that he hankers back to the 1960s—we all do in some ways. I see that I have touched a sympathetic chord with you, Mr. Speaker. Since then, circumstances have changed. Demand for energy has not increased by as much as was expected. That is due not only to the recession. There have been substantial changes and there will be more spectacular changes in the future. The SSEB has built in a 3 per cent. margin for growth which is double the maximum growth allowed by the Central Electricity Generating Board. Even allowing for the growth that will occur when a Labour Government come to power after the next election, we will still have far too much electricity capacity.

The hon. Member for Bute and North Ayrshire rightly said that it is accepted that the working lives of power stations will be much longer than was thought 10 or 20 years ago. That fact must be taken into consideration. There are now the new microchip smart meters. The right hon. Member for Greenock and Port Glasgow will know all about them. In England, the Eastern Electricity Board has carried out extensive tests. The meters, when installed in a house, are able to cut off electricity to non-essential electrical appliances when demand is at its highest, thus reducing the peaks substantially. That has not been taken into consideration by the SSEB.

There have been major developments in conservation. Even if it were not sensible normally to invest in conservation, people are doing so because of high costs and to keep their electricity bills down.

There is also a saturation of domestic demand. After one has bought a refrigerator, a deep freeze, a washing machine and a dishwasher, one does not buy a second or a third. One reaches a saturation of domestic demand and we are reaching that point in Britain.

There are also new developments in energy generation. The district heating schemes have great potential, even if we do not consider wind energy, wave energy and solar energy which have great potential for the future.

In the light of what I have said, I should like to ask the Minister a crucial question, which is in the minds of people of all political persuasions. Why does the SSEB need to hang on to the valuable land at Chapel Donan, near Girvan? Even if it is to have nuclear power stations—I am sceptical about that—there is more room at Torness.

Mr. Home Robertson

No, thank you.

Mr. Foulkes

There is room for even two or three more nuclear power stations. There is room at Hunterston for at least two more nuclear power stations if the SSEB can get the land from the British Steel Corporation. There are these alternatives. In my view, and in the view of many others, there is no conceivable need for Chapel Donan in the next 100 years, let alone the next 10 or 20, yet the SSEB is doggedly, determinedly and stubbornly holding on to the land. As a result, £5 million of unnecessary expenditure will take place on the Girvan bypass, which will be taking a much wider route. Conservative Members always want to cut public expenditure. This is £5 million that could be saved at a stroke. Secondly, we shall be using—I say this with no disrespect to my hon. Friend the Member for Berwick and East Lothian (Mr. Home Rebertson)—some of the best farmland in Scotland that produces early Ayrshire potatoes among many other things. I know that my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) knows all about early Ayrshire potatoes. He is a gourmet and he knows about these things.

Thirdly, the town of Girvan is surrounded on three sides by the sea and hills. It can expand its housing and industrial development only in the north, but that area is sterilised because the SSEB has taken over all the land for a power station that will never be needed.

I wrote to the Secretary of State and asked for his view. I submitted all the evidence that I have put to the House this evening and more besides. I asked him to take action by telling the SSEB to give up the land because it will never need it. The SSEB will never do that on its own account. It will never admit that it made a mistake. It is over-cautious. However, the Secretary of State has an overriding responsibility and he should step in. Unfortunately, he refused to do so but in the last paragraph of his letter—I may be being overoptimistic—I detect a degree of sympathy. The right hon. Gentleman wrote: Should a specific proposal for industrial development come forward it would, of course, be possible for consideration to be given to the merits of the proposed alternative uses of the site. It seems that he is willing to consider alternative uses but the trouble is that no one will come forward with proposals while the SSEB is holding on to the site so doggedly and determinedly.

There is a strong feeling in the community that is shared by all shades of political opinion—for example, Councillor Stuart Stevenson, the chairman of the South Ayrshire Conservative Association, and the Chapel Donan co-ordinating committee agree with what I have said 100 per cent.—that every effort must be made to ensure that the Secretary of State gets the SSEB to release the land. I hope that the right hon. Gentleman will give the matter some consideration.

I have not referred to standing charges and disconnections, which are issues with which my hon. Friend the Member for Stirling, Falkirk and Grangemouth dealt extremely well. I endorse what he said. I do not want anyone to think that because I have not mentioned them I do not consider them to be important.

I shall finish with a prediction. The Under-Secretary of State said that Opposition Members are always wise after the event. I believe that coal is the fuel of the future. My hon. Friend the Member for Midlothian (Mr. Eadie) has said that on a number of occasions. I think that my hon. Friend will be proved right. He and I and others will be able to remind the Minister that we said so on this occasion and that events proved us right.

6.25 pm

Mr. Bill Walker (Perth and East Perthshire)

I welcome the opportunity to speak about Scotland's electricity boards. The hon. Member for South Ayrshire (Mr. Foulkes) said that some Conservative Members believe that the coal industry should be undermined. I have no wish to see the coal industry or any other industry undermined. We want to see it producing of its best and at its best.

If by chance the NCB should decide that mines are no longer viable—obviously its staff are the best people to make that sort of judgment because they have the necessary expertise and knowledge—I do not understand how it can be argued that it would be undermining the coal industry if mines were given to miners' co-operatives or to private enterprise. If there is coal in a mine that can be mined and those living in the area believe that it can be, it will not undermine the coal industry if we allow them to bring it to the surface in the name of a miners' co-operative or private enterprise. In my view, that would improve and enhance the industry. Any new work practices that came out of such an enterprise would increase competition and that would only be healthy and, therefore, good for the entire industry.

I hope that the hon. Member for South Ayrshire will not think that I am trying to undermine the industry. We are fortunate to be blessed with so many more years of coal. It would be foolish not to make the best possible use of a natural asset.

In some respects the boards are to be congratulated but in others one should be critical of them. First, I congratulate them on improving work force participation. The number of units of electricity that are sold has increased per employee by almost 6 per cent. That must be good by any standards and the achievement must warrant congratulations. However, when talking about the generation of electricity it is wise to remember that workpeople are not a major element in electricity generating costs. Capital and fuel costs are the major elements in generating costs.

I hope that I shall not be deemed churlish when I say that in the past the boards' relations with their customers have been highly suspect in my judgment. The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) talked about this and I do not disagree with his comments on standing charges. I happen to think that standing charges could and should be abolished. That does not mean that we cannot find other ways of properly charging consumers for the units of electricity that they have used. However, the standing charge as a ratio of the charges met by individual consumers, especially those on fixed incomes, such as pensioners, is out of all proportion to the units of electricity that they use. If we are a genuine caring society, we should recognise that it is mathematically possible to introduce a system that does not have a standing charge and that therefore it should be possible to introduce such a system.

There is a need to keep a careful watch on energy costs to industry. We must be constantly aware of that need. Scotland's industry must never be disadvantaged against other parts of the United Kingdom or Europe. It is right and proper, even if it is the "greetin' bairn" of the chemical industry, to listen to industry and to pay attention to what it is saying. It is probable that it is nearer the truth than we are.

The hon. Member for South Ayrshire was right to draw attention to sites that have been earmarked for projects that may never come to fruition. The object of the debate is to draw attention to such matters and I make no criticism of him for so doing.

We have a social responsibility to those who live in remote areas, and especially to pensioners. We have a duty and social responsibility to supply electricity to remote areas. I do not understand why that means that the responsibility should be that of a State-owned monopoly. That makes no sense to me. It is possible to supply the remote areas with electricity, to meet social responsibilities and still have a balance between the private and public sectors. That is possible and it is wrong to think that the private sector or the public sector is better or worse at so doing. The balance is right. We should supply the consumer, whether a large enterprise, someone in a remote area or a pensioner, so that he can live in the way that we would expect him to live in the twentieth century. That is our responsibility. I have never been able to understand—I hope that Opposition Members will agree—why that can be done only through a State monopoly.

Mr. Norman Hogg

The hon. Gentleman's enthusiasm for private enterprise and privatisation is well known. Where, in the area covered by the North of Scotland hydro-electric board, which includes the hon. Gentleman's constituency, does he envisage that privatisation will be accepted as an option and be successful?

Mr. Walker

I have no hesitation in answering that question. There are parts of the area, certainly in my constituency, where the private generation of electricity would be possible. I see no problem in it. If I had the time, I could even name the rivers where it could be done.

Competition, both for customers and for funds in the market place, is healthy. I understood my hon. Friend the Member for Edinburgh, South (Mr. Ancram) to say that we have more capacity than we shall ever need. I am not sufficiently qualified to make a judgment on whether that is true. It does not seem to be a wise use of either our capital or our resources. Consequently, after Torness comes into production, there will be a need to examine other conventionally fired power stations.

The use of fossil fuels, especially oil, for electricity generation is a waste of those finite fuels. Aviation and transport have little option but to use oil products. The chemical industry also requires oil products for such commodities as natural gas for feedstock purposes. We do not make anything like the proper use of coal. What is more, it is available in some quantity. It should be used to produce aviation fuel. We should be looking at the possibilities of using coal for transport fuel and chemical feedstock much more than we are. [Laughter.] The Opposition may find the subject humorous but we have a responsibility to examine our nation's assets and to see what we are leaving for our children and our children's children. As yet, there is no alternative to aviation fuel. If we ever reach a state when we do not have aviation fuel there will be savage cuts in transport services.

Mr. Eadie

I am not laughing at or quarrelling with what the hon. Gentleman is saying about the liquefaction of coal. I know that he does not know it, but the Government that he supports so religiously through the Lobbies have torpedoed the scheme for liquefaction that I approved. He is supporting a scheme that I as a Minister encouraged and which the Government have destroyed.

Mr. Walker

I have news for the hon. Gentleman—I am aware of that. Why does he think I am speaking? It is because I believe that we have a responsibility that goes further than the present. I am suggesting not that we should act now but that we must examine what we do tomorrow and in the future. It is important to recognise that we are using up oil products much faster than we are finding oil. We do not know how we shall meet future requirements. Thus far, we have been fortunate that exploration has kept pace with consumption. That has been lucky. We cannot continue to assume that that will be the case.

Unlike fossil fuels, nuclear power cannot at this stage be used for aviation or motor transport power. As a matter of priority and choice, it would be prudent for the bulk of future electricity power to be generated by hydro and nuclear power. There is also an advantage with regard to jobs at Torness that has been mentioned.

I should like there to be further development of hydro schemes and for much more attention to be paid to wind and wave power and solar energy as alternative sources. I welcome the opportunity to say that we should use the nation's natural assets to generate electricity rather than use fuels because we have used them in the past.

6.34 pm

Mr. John Home Robertson (Berwick and East Lothian)

It is perhaps appropriate that I should almost wind up the debate, as almost every hon. Member has referred to Torness, which is in the middle of my constituency.

I should like to correct a comment that the Minister made in response to my intervention earlier. I thought that he implied that I was being critical of the connections that are being made to some of the islands. Nothing is further from the truth. All Opposition Members want to encourage connections of electricity supplies and other services to the remote communities of Scotland. I was challenging the Minister's implication that that would lead to significant extra load for the electricity boards in Scotland. It is not true.

Much has been said about the Torness power station. As the Member of Parliament for a constituency that is heavily dependent on the electricity supply industry, I am a worried man. As my hon. Friend the Member for Midlothian (Mr. Eadie) knows, there is a coal-burning power station called Cockenzie in my constituency. It employs about 600 people, most of whom are my constituents. Moreover, many of my constituents travel to Midlothian every day or night to work at the two coalmines in the constituency of my hon. Friend the Member for Midlothian. About 4,000 miners are employed there. We are, therefore, discussing about 5,000 jobs in that neighbourhood which depend on the Cockenzie power station.

While I have consistently welcomed the employment that is created by the construction of the Torness nuclear power station, there are severe misgivings in my part of the world about the way in which the employment has been distributed.

The figures that I have are those that the Minister gave me only yesterday in a parliamentary reply. Apparently, at the most recent date for which figures are available, there were 4,124 unemployed construction workers in the area around Torness—Edinburgh, East Lothian and the Borders. It also appears that 2,207 people who work on the Torness construction site come from right outside that area. We appreciate that not everyone who works at Torness could be recruited locally but we were given a clear undertaking at the planning stage that, if jobs were required locally, suitably qualified construction workers in our neighbourhood would be given priority. It is a pity that the Secretary of State for Scotland has not seen fit, despite the pressure that has been put on him by me, the local authority and other people, to encourage the electricity board and the main contractors to carry out that undertaking.

Like other hon. Members, I am worried about the overcapacity in the South of Scotland electricity board. It is worth reflecting on the capacity figures that are given in the board's annual report. The capacity that is in commission amounts to 6,316 megawatts. There is an additional capacity of 1,510 megawatts which has been mothballed, although it exists, whether anyone likes it or not.

This mothballing of capacity is interesting. In last year's annual report of the South of Scotland electricity board, an asterisk appeared after Inverkip in the table. This year, Inverkip appears only as a footnote. It has been mothballed. Perhaps next year the board will pretend that it does not exist at all. In fact, the Inverkip power station very much exists. It is still being paid for by the South of Scotland electricity board consumers. It is no good pretending that it does not exist.

Torness power station is to come into commission in 1987. It will have a generating capacity of 1,300 megawatts. If the generating capacity that is already in commission, that which is mothballed and that which is to come into commission at Torness are added together, they amount to 9,126 megawatts. That has to be compared with an all-time peak demand of 4,717 megawatts recorded by the South of Scotland electricity board in the Arctic conditions of January 1982. With the commissioning of the Torness power station, there will be 93.5 per cent. excess capacity over maximum imaginable peak demand. It has been claimed that 28 per cent. overcapacity is justified, although the Select Committee suggested that even that was too much. It is clearly pushing matters a little when the overcapacity amounts to over 93 per cent.

The assumptions of the South of Scotland electricity board, the electricity industry and successive Governments, based on a continuing modest increase in demand for electricity, were wrong. There has been reference to the efficiency audit of the SSEB by Coopers and Lybrand. I should like to draw attention to one paragraph that is particularly relevant to the board and to the Government. Paragraph 5.23 of the report slates that the SSEB's reliance on external macro-economic forecasts is reasonable in view of the staff available and the extra effort that would be required to improve upon the external projections. However, there is a major disadvantage in that SSEB's load forecasts depend heavily upon projections not relating specifically to Scotland. Clearly the adjustments which are made to the United Kingdom figures are crucially important. At present, these derive from informal judgments and are not well documented, making retrospective analysis which might be used to help improve future adjustments difficult. Part of the problem lies in the limited availability of disaggregated and timely statistics for Scotland, and hence a limited availability of Scotland specific forecasts. This, we feel, is a problem that the Scottish Office should be asked to consider.

It would be interesting to know whether the Scottish Office intends to consider that significant point. It is fair enough that Coopers and Lybrand should criticise the forecasts that have been made. I have already given figures of the massive overcapacity that has been built up in the south of Scotland, which bears no relation to the demand for electricity. Why is demand not increasing at the rate that the previous Government and perhaps even this Government hoped?

It is necessary to consider the difficulties facing industry and domestic consumers in Scotland. I was interested to hear the chief executive of British Steel inform hon. Members recently that the corporation has to pay between 15 and 25 per cent. more for its electricity than its competitors overseas. It is hardly surprising that British industry and the BSC are not as competitive as hon. Members might like.

Every time that a factory closes in Scotland, electricity demand is reduced. We are caught in a vicious circle. As demand declines, the price is forced up and competitiveness is damaged because of the Government's unwillingness to manipulate—or, if that is a pejorative word, their unwillingness to adjust—electricity prices to make it possible for our industry to compete with industries overseas.

Hon. Members will have met poor constituents without jobs whose income is pathetic. They often cannot afford to switch on their electric heaters or central heating even on the coldest days. As my hon. Friend the Member for South Ayrshire (Mr. Foulkes), who takes an interest in these matters, will know, it was estimated at one stage last January that 700 old people were dying every day as a result of hypothermia and cold-related diseases. Would it not be better if those people could afford to use the electricity generating capacity that exists in Scotland? Whether we like it or not, there is a massive excess of generating capacity over demand. One way out of the problem would be to stimulate demand. I put it to the Minister that we should be using this capacity. We should be burning our way out of this problem rather than freezing our way out of it. I should like to see use of this valuable asset in Scotland promoted rather than discouraged.

Mr. Tom Clarke

I wish to express some regret that the Minister seems to be taking rather lightly the points made by my hon. Friend. I remind the Minister that my hon. Friend is supported in his views by the Convention of Scottish Local Authorities, the Association of Metropolitan Authorities and the Association of County Councils. They are concerned about people suffering during the winter. We have not yet, as a society, responded to that suffering. If the Minister listens, he may agree with the points being made.

Mr. Home Robertson

I am grateful to my hon. Friend. All hon. Members live in hope that Ministers will listen to debates. There is little evidence that this has taken place in the past. But the hon. Member for Edinburgh, North (Mr. Fletcher) will, perhaps, make a constructive reply. I know that the hon. Gentleman is capable of it if he applies his mind to the matter. If it was my decision to say where the South of Scotland electricity board should spend more capital money, I would be thinking in terms of combined heat and power.

There is a degree of urgency about a matter affecting my constituency as well as that of the Minister. I have referred already to the Cockenzie power station. An enormous amount of coal is known to be available in the Lothian coalfield and under the Firth of Forth. The power station is almost unique in being close to the city of Edinburgh and a number of surrounding towns. The hot water pumped into the sea from the power station is more than enough to provide heat for every household, office and factory in the whole of Edinburgh and the surrounding area.

The Scottish Office is about to start constructing a new bypass around Tranent and Musselburgh which passes within one mile of the Cockenzie power station. During construction of the new road, it would be possible to instal flow and return main pipes to support a district heating scheme for the centre of Edinburgh. Much of the groundwork has already been carried out by Lothian regional council on provision of a combined heat and power scheme for Edinburgh.

If capital expenditure in the electricity industry is being encouraged, we should think less in terms of building more power stations to mothball and increasingly in terms of the more efficient use of the energy that is at present being burned.

6.49 pm

Mr. Dennis Canavan (West Stirlingshire)

There will be a general welcome on both sides of the House for the Bill. That is an unusual event when it concerns legislation produced by this Government, and especially by the Scottish Office.

This is the first increase in public investment in the Scottish electricity boards since the Government took office. Labour Members believe that a key to our economic future is increased public investment through our nationalised industries. That is one of the ways in which we shall beat the recession which is being worsened by the Government's economic policies. Their economic policies are affecting industrial and domestic consumers, especially those on low incomes.

For the first time ever, I was in substantial agreement with much of what was said by the hon. Member for Perth and East Perthshire (Mr. Walker) about standing charges and the difficulties they create for low income consumers. On the one hand, those people cannot afford to burn electricity, deliberately attempt to keep their fuel bills low, and are absolutely stunned when they receive a bill with a standing charge which is out of all proportion to the amount of fuel consumed.

I understand that the Minister's sidekick, the Secretary of State for Energy, has said that Government consultants are due to report on this matter by Christmas. Christmas will soon be upon us. What can we expect from these Government consultants? Have they given some kind of interim report or is the Scottish Office so out of touch with the Department of Energy that it does not have a clue as to what is going on? What are these consultants likely to recommend, not just for British Gas but also for the Scottish electricity boards?

There is a very strong argument in favour of waiving standing charges for old-age pensioners and others on low incomes, such as those receiving supplementary benefit. Could the Minister say what thinking is going on in Government circles, either in his office, if thinking goes on there at all, or in the Department of Energy?

Some hon. Members mentioned the vexed question of disconnections. Last year, well over 3,000 households remained disconnected during the coldest winter this century.

Will the Minister give us the up-to-date disconnection figures for this winter? Has there been any improvement on the figures for November and December 1982 compared with the respective months for 1980 and 1981? The incidence of disconnections in Scotland, where the climate is considerably worse than in the South-East of England, is becoming a national scandal.

The code ought to be made obligatory. If that means an Act of Parliament, so be it. It is worth pointing out that, despite the slight improvements in the code which have been introduced by the Government, 90 per cent. of those disconnected in Scotland last winter were mentioned in the code of practice yet were not protected by it. What is the point of having a code of practice if it is just a piece of paper which the electricity and gas boards can simply ignore?

Recently I had a particularly bad case concerning a single parent family—a young woman with a child—whose electricity was disconnected. The way in which the boards communicate with people leaves a lot to be desired. I have here a copy of the notice which she received. Before getting to the important part, there are about a dozen lines of absolute jargon which is written in language which only civil servants can understand. At the very end it says: If there is no one on the premises when the Board Officer calls this time, he will force an entry to the premises.

How much longer must we tolerate this legalised vandalism of breaking and entering people's houses? In this case, there was a misunderstanding and a lack of communication between the DHSS, the local social work office and the electricity board. As a result of that lack of communication, which was no fault of the consumer, my constituent was faced with the possibility of having no lighting, heating or cooking facilities for herself and her child until I got the supply re-connected. Must we tolerate this in a society which claims to be civilised or will we get to grips with the problem? Will the Secretary of State have the guts to tell the chairmen of the electricity boards that he will not put up with this, and if necessary will take the appropriate legislation through Parliament to make the provisions of the code statutory? At present, there seems to be a voluntary go-as-you-please attitude. Quite apart from the problem of disconnections, many people, particularly those on low incomes, try desperately to pay their electricity bills on time, perhaps successfully, but they still face the chronic problem of dampness. The problem of dampness, particularly in council houses, and more particularly in council houses where families are on low incomes, is greater where there is electrical central heating. In the 1950s and 1960s experts advocated the removal of chimneys and gas fires. The experts advocated that electrical central heating was the in thing, fired by the new nuclear technology. The whole thing has been an absolute disaster. When people are building houses, whether in the public or private sector, they ought to be instructed to give future tenants or occupants a choice of the type of fuel used. People should not be shoved into electrically centrally heated houses where they cannot afford to pay the massive bills. As a result, there is extreme dampness, which is a health hazard quite apart from anything else.

My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) referred to the excessive generating capacity in Scotland. The recession has exacerbated this problem whereby electricity generating capacity is in excess of demand. The reason for this, primarily, is the industrial decline in Scotland, which is a direct result of the Government's industrial policies.

I know that it is very difficult for the electricity boards or their economic consultants to get forecasts right, especially when just a few years ago nobody would have dreamt that the effect of the recession would have been quite so devastating on Scottish industry and on the whole Scottish economy.

In retrospect, it is all very well to say that the timing of Torness was a mistake. I can claim that I was consistent because I remember during the last Parliament saying that I would far rather have seen the investment for Torness going into the refurbishing of Kincardine power station or the further development of the Longannet project. That would have been far cheaper and would have provided more jobs at a time when unemployment was already too high in Scotland. Unemployment has more than doubled since the present Government came into office.

The last Labour Government were persuaded to invest £35 million in increased subsidies so that the South of Scotland Electricity Board could increase the amount of coal burning in its power stations. The Government have given nothing like that by way of public investment to try to encourage increased coal burn. Partly as a result of the policies of the last Labour Government, we saw the saving of Polmaise colliery in my own constituency which was threatened with closure, but now the Kinneil colliery seems to be on the National Coal Board's hit list. I hope that the Secretary of State, his Ministers and the chairman of the Tory Party in Scotland will defend Kinneil colliery with the same determination with which they appear to be defending Ravenscraig. If any Scottish pit with viable coal reserves is closed, it is only a matter of time before the whole Scottish coalfield will be endangered.

Apart from the 200 or 300 jobs immediately at stake in Kinneil, this is an important matter of principle, because if Kinneil goes it will never be reopened and others may follow suit. This is the danger, if one of our coal mines with workable reserves is closed, yet so far the Government have hardly lifted a finger or said a word about it.

There is almost a direct linear relationship between industrial and economic growth and electricity demand. Part of the reason for the decline in electricity demand is the industrial and economic decline of recent years. Another factor is the amount and use of investment in the hands of the electricity boards. For example. British Aluminium at Invergordon collapsed because the Government were either unable or unwilling to offer an energy supply package at an acceptable cost.

The Government may argue that they cannot continue to subsidise industry for ever. However, if during a recession we are to retain capacity, be it steel-making capacity or aluminium-making capacity, we should be using the public sector to try to weather that recession. Given more generous public investment of the type mentioned in the Bill, I doubt very much whether British Aluminium would now be faced with these problems. The closure of Invergordon is already a fait accompli, and the Government are so incompetent that they could not even get an absolute guarantee from British Aluminium that it would safeguard all the jobs in Falkirk and elsewhere.

The Government seem to be reluctant to intervene in the affairs of multinational companies and even in the workings of the nationalised companies over which they have more control and which should be more accountable to the public.

The Government often claim that we face the worst international recession since the 1930s. We should not regard a recession as an act of God, such as the weather or a calamity that is caused by nature. Recessions are manmade, and we must find man-made solutions to them. The Labour Party's alternative economic strategy would use the public sector not as a whipping boy but as the means of triggering the economic and industrial regeneration that we all want to see.

Instead, the Government have carried out act after act of demolition and so-called privatisation of the public sector, with proposals now to privatise parts of the electricity generating industries, without a thought for the job security of the workers employed by the SSEB or the North of Scotland hydro-electric board. The Government seem to be motivated by doctrinaire policy making. Unfortunately, the Scottish Office seems only too willing to follow in the silly footsteps of the Departments of Energy, Industry and so on, and pays no regard to the fact that many of their policies are contrary to the real needs of workers and industrial or domestic consumers in Scotland.

Whatever good may result from the Bill—we welcome small mercies; even a modest increase in public investment should be welcomed—I fear that much of it may be destroyed by the so-called Energy Bill that is now in Committee.

7.4 pm

Mr. Alexander Fletcher

This small but important Bill has given us an opportunity for a fairly wide-ranging debate on the electricity industry in Scotland. That opportunity has been welcomed on both sides of the House. I shall try to deal with most of the points that have been made.

The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and some of his hon. Friends asked about disconnections. This is an important part of the Scottish boards' responsibilities. The boards have been able to achieve a significant decrease in the numbers off supply compared with the same period last year. That has been welcomed by those in Scotland who take a particular interest in these matters, especially as account should be taken of the fact that the Government have already substantially increased assistance with fuel costs and will be spending about £300 million next year on that type of aid. That is the most generous fuel allowance package that has ever been presented.

It is true that the Government are looking at the question of standing charges, particularly in England and Wales. The House will be aware that the SSEB's domestic tariff does not include a standing charge as such, although a higher unit rate for the initial block of units coupled with a minimum charge of £3.30 per bi-monthly period is introduced. However, I suggest that the serious criticisms of standing charges do not apply to the SSEB.

The SSEB has now removed its £l.50 ceiling on entry to the DHSS fuel direct scheme. That has also been welcomed. All these things have occurred in the past year or so, and this debate gives me an opportunity to put them on the record.

The hon. Member for Stirling, Falkirk and Grangemouth and the hon. Member for South Ayrshire (Mr. Foulkes) asked about Chapel Donan and suggested that the SSEB's ownership imposes a planning blight on the area. The board has made it clear to the district council that it would be glad to examine with it how any prospective development can be accommodated. Should a specific proposal for industrial development come forward, it would be possible to consider the merits of the proposed alternative use of the site. In the absence of any specific proposal, the board feels that it should continue to retain the ownership of the site and reserve it for the possible building of a power station in the future.

Mr. Foulkes

Does the Minister really think that anyone would take the time, trouble, effort and energy to submit all the details of industrial development in that area knowing that the SSEB intends to cling on to the land? That is quite unrealistic. Does he also accept that, on the Grangestone industrial estate, which is on the site contiguous with the power station site, there are already worries about the lack of development? People there are also worried about the possible development of food-related factories next to a future power station. Under all the circumstances, would it not be better for the SSEB to accept the reality that it will never have a power station, which will encourage industrialists to come forward?

Mr. Fletcher

The SSEB is entitled to make the decisions that it has about the future use of the site. The hon. Gentleman's argument is weak because no prospective developers are coming forward, and none has said it would like to go on the site. There are other sites in Scotland that are reserved in some form or another by some type of public body.

Mr. Bill Walker

Too many.

Mr. Fletcher

I do not dispute that there may be too many. However, if people wish to develop a site, or if they put out signals of that type, the first thing that we do is begin to discuss with the public body what prospects there are of the site becoming available.

There has been much discussion about overestimates of capacity or the actual capacity being well in excess of demand. At no time have we tried to ignore that. However, no one has suggested the steps that might be taken to reduce the capacity. Whatever protests are made, everybody knows that the two new power stations of Inverkip and Peterhead that contribute greatly to this overcapacity were built with the best intentions, and are excellent stations.

Peterhead will be using gas for two or three years, and will therefore serve a useful purpose. It can also burn oil, and there is a possibility that it will turn to coal. Unfortunately, it is not well located to be a coal-fired station. Inverkip was very much in use during last winter and was able to supply electricity not only to Scotland but to south of the border where it was badly needed.

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) asked why Scottish boards had negotiated favourable load management terms with relatively few industrial consumers compared with England and Wales. The proportion of eligible consumers taking up load management terms is about the same in Scotland as it is in England and Wales. As I told him, the questions raised by the chemical industry are ones of which we are aware, and we are examining these with the board to see whether anything further can be done.

My hon. Friend the Member for Edinburgh, South (Mr. Ancram) asked whether the consumers would benefit from the profits earned by the board. He said that they should. My hon. Friend will know that the statutory requirement of the board is to balance its revenue with its expenditure. The profits may sound substantial, but as a proportion of the turnover of revenue of the board they are not excessive, although every penny helps.

My hon. Friend the Member for Edinburgh, South asked me to clarify what I have said about the effect of the extra capacity at Torness on prices. The recent decisions on prices were concerned with the allowance for building future stations, not specifically Torness. That will have to be paid for through the prices that we are now paying. However, the board's prices should not reflect the need to build any future stations. That was the point that came out during the investigation of bulk tariffs in England and Wales. That has been applied in Scotland.

I agreed with the spirited comments made by the right hon. Member for Greenock and Port Glasgow on the need for Scotland to stay with the latest technology. We are lucky to be able to be generating electricity from coal, oil, gas, hydro-power and nuclear energy, with aerogenerators in development and likely to come on stream as well. I add to that the point that the right hon. Member made—although in another context—that we look forward in the years ahead to seeing the first commercial demonstration fast reactor in Scotland at Dounreay. There are few countries, if any, of the size of Scotland that can boast such a range of ability and facility to generate electricity. It is right to support this technology.

I also agreed with the right hon. Member for Greenock and Port Glasgow when he took the time to detail our good safety record in the nuclear industry, which is second to none. The right hon. Member compared it with the health and safety record in the coal industry. I see cars with stickers that say "Nuclear Power? No Thanks", and when people of that conviction come to see me I listen to what they have to say, but suggest to them that they should also pay at least as much attention to the hazards of coal mining and the illness and dangers faced by coal miners every day in their work. This is something that either does not occur to these people, or which they choose to ignore for their own purposes.

There has been some criticism of the load factor of Hunterston B, but the House should know that it is a prototype AGR, and Torness and Heysham could learn from experiences there.

My hon. Friend the Member for Bute and North Ayrshire (Mr. Corrie) helpfully mentioned the cost benefit of nuclear generation over oil and coal. He also mentioned the safety record, this time specifically of Hunterston, which is reassuring to all of us in Scotland, and is no justification for those who try to spread panic about the dangers involved in nuclear power. My hon. Friend also asked about the potential for new hydro installations, particularly in the private sector. Under present legislation, private hydro developments of 50 kW require the consent of my right hon. Friend. The new Energy Bill increases this limit to 1 mW. I hope that this will encourage private hydro developments. The Energy Bill also lays down the statutory procedures for the purchase of the excess supply by the boards.

I shall write to my hon. Friend the Member for Bute and North Ayrshire on the breakdown of the 14.6 per cent. increase in the cost of oil, coal and nuclear fuels.

The hon. Member for South Ayrshire asked the Government to intervene in providing a coal agreement between SSEB and the National Coal Board. The SSEB will be responding to the efficiency study early in the new year, as I said. The NCB will be providing its comments at the same time and the SSEB will be looking for a new agreement that will guarantee the consumption of Scottish coal in the board's power stations. This is all in hand, and I shall take into account the points that the hon. Member for South Ayrshire has made. However, we can, except in the most exceptional circumstances, which I cannot imagine, depend on the two organisations—SSEB and NCB—to reach a proper agreement.

Mr. Harry Ewing

The salient point that my hon. Friend the Member for South Ayrshire (Mr. Foulkes) was making, reinforced by my hon. Friend the Member for West Stirlingshire (Mr. Canavan), was that when we, as a Labour Government, assisted in the agreement for coal burn, we injected £35 million into that agreement. How much are the present Government prepared to inject into a similar type of agreement to give some guarantee for the future of the coal industry?

Mr. Fletcher

That may be a salient point, but it has to be answered by my right hon. Friend the Secretary of State for Energy, not by me. My right hon. Friend is the Minister responsible for the Coal Board.

The hon. Member for South Ayshire also spoke of pit closures, which are again a matter for the NCB. It must be allowed to close down any pits that it considers to be uneconomic, after consultation with the National Union of Mineworkers. It should be remembered that the NCB is investing, and has been encouraged by the Government to invest, in the development of new pits where this is found to be economic. Hon. Members cannot have it both ways.

My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) referred to standing charges. I am sure that he is aware that the main problem exists in industries and organisations outside the SSEB, although the whole question is being examined. I entirely agree with him in emphasising the importance of doing all that we can, as a Government and through the public utilities, to ensure that the prices charged to industry are as low as possible so that our industries have an opportunity to compete in Europe and elsewhere in the world.

I listened attentively to the hon. Member for Berwick and East Lothian (Mr. Home Robertson), but I was not sure whether he wanted Torness to be delayed to keep Cockenzie going or the other way round. At one point he seemed to suggest that electricity should be free throughout Scotland so that we could burn the excess capacity. His complaints about the lack of local employment in his constituency at Torness sounded more like Lothian nationalism than Scottish nationism, because every effort has been made to employ local labour. At present 3,500 people are employed at the station. The estimates are that two-thirds of those people are from various parts of Scotland—I hope that we do not grudge that—and about one-third locally. I suggest that that is not all bad.

Mr. Home Robertson

I think that I made the point that there is still a large pool of unemployed construction workers close to the site. On the point of which the Minister made light earlier, will he say how the Government propose to promote the use of all electricity generating capacity that we shall have? Many of us fear that the commissioning of Torness on top of the excess capacity that we already have will lead to the closure of other viable plants. That is what I am worried about, because of my constituency interests.

Mr. Fletcher

Of course, power stations do not last for ever. Power stations have been closed. Even nuclear power stations do not last for ever. They, too, have to be decommissioned. Obviously, Hunterston A would be the first. I shall not list the stations that have already been closed, because I am sure that hon. Members know them.

As I said, we have had an opportunity today to consider the electricity boards in Scotland. As I think the House will recognise, the boards have tried recently to keep their price increases below the rate of inflation. Ministers have asked the boards not to increase their average level of prices next year, and that will benefit all the boards' consumers.

I have already mentioned the independent study of standing charges and the load management scheme, which the boards have introduced for large industrial users. These are all positive steps, looking to the best possible system of managing the operation of the electricity industry in Scotland. This Bill provides the facilities to continue what is an ambitious and worthwhile capital expenditure programme in Scotland. That, if nothing else, has been welcomed by every Opposition Member, including the hon. Member for West Stirlingshire. As this is one of the few occasions when he and I are in agreement, it is an excellent time for me to commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.— [Mr. Archie Hamilton.]

Committee tomorrow.