Energy-intensive Industries (Hansard, 13 December 1982)

§ 6. Mr. Skeet
asked the Secretary of State for Energy if he will take further action to assist the energy-intensive industries.

§ 7. Mr. Proctor
asked the Secretary of State for Energy what recent assessment he has made of energy price trends within the Organisation for Economic Co-operation and Development countries; and if he will make a statement.

§ 14. Mr. Hannam
asked the Secretary of State for Energy how electricity prices paid by British industry compare with those paid by industry in other European Economic Community countries.

§ 20. Mr. Beaumont-Dark
asked the Secretary of State for Energy when he last met representatives of the Confederation of British Industry to discuss industrial energy prices.

§ The Secretary of State for Energy (Mr. Nigel Lawson)
Industrial energy prices were discussed at the NEDC last Wednesday. Generally speaking, they are broadly in line with those in other European countries. Industry will get further substantial help from next year's standstill in electricity prices, worth a total of £500 million to consumers as a whole, and also from the extension of the freeze on industrial gas prices.

§ Mr. Skeet
As the intensive electricity users in Europe, in appropriate circumstances, will secure discounts ranging between 15 per cent. in France and 50 per cent. in Italy, compared with negligible figures in the United Kingdom, is my right hon. Friend not being misled by his Department? Will he consider one of the appropriate answers, and that is to enable the CEGB to sell direct to the energy-intensive industries in the United Kingdom?

§ Mr. Lawson
The problem of electricity prices is directly related, as my hon. Friend well knows, to the costs of generating electricity, and they are not significantly affected by whether the consumer goes to the area board or direct to the CEGB, which in this country is not the 7 normal approach. My hon. Friend knows, too, that the cost of coal is critical in this regard. However, the difference between what the average industrial consumer pays and what is paid by the heavy energy intensive high-load factor customer on CCL—contracted consumers load; the arrangement was brought in with the agreement of my right hon. and learned Friend the Chancellor of the Exchequer in the last Budget—is about 40 per cent. The man on that scheme pays up to 40 per cent. less per unit of electricity than the average industrial electricity consumer. Incidentally, I belatedly take this opportunity to welcome the right hon. Member for Lanarkshire, North (Mr. Smith) to the Opposition Front Bench on energy matters.

§ Mr. Proctor
I thank my right hon. Friend for the assistance given to heavy energy-intensive users of energy so far, but will he accept that industry itself is always nervous about accepting estimates and figures that come from his Department? Will he consider having a regular, authoratitive, agreed and unclassified statement on energy disparities with other European countries similar to that achieved through the NEDC?

§ Mr. Lawson
I do not accept that what my hon. Friend says about the nature of figures emanating from my Department is warranted. We participated fully in the NEDC task force, and at present we are well content to allow the CBI and the trade associations affected, together with the electricity supply industry and the gas corporation, assisted by our good offices, to reach agreed figures on this matter. I hope that we shall get the figures sorted out quickly. In fact, we are very near to that, and I do not believe that there is any major difference between the CBI and my Department and the Government on the figures.

§ Mr. Hannam
Does my right hon. Friend accept that heavy energy users in industry face not only higher energy prices than their continental rivals, but 20 per cent. higher costs for their heavy fuel oil? Notwithstanding the concessions given during the past year and the freeze on prices, does he accept that this small but important sector of heavy energy users in industry needs further help, and will he do all that he can to assist in the forthcoming Budget?

§ Mr. Lawson
I am sure that my right hon. and learned Friend the Chancellor of the Exchequer, who is an assiduous reader of Hansard, will note my hon. Friend's last remark. However, it is equally important to get the matter into perspective. Although there are certain disparities, they apply to a very small number of consumers. The disparity probably affects those with a load factor of over 80 per cent.—certainly over 70 per cent.—and even those with a load factor of over 70 per cent. are only 15 per cent. of industry as a whole. As I said, that represents only a part of the industries concerned.

§ Mr. Skeet
If only a small number of firms are affected, the problem is easy to cure.

§ Mr. Lawson
I am sorry. I should have said that it is 5 per cent. of industry using 15 per cent. of industry's electricity. If the tariff were tilted in such a way that other consumers paid more to help those consumers, that would cause equal dismay in other quarters.

§ Mr. Beaumont-Dark
Does my right hon. Friend agree that there is considerable force in the CBI's argument that industry is being asked to bear the cost of many of the surrenders that have taken place year after year to the National Union of Mineworkers? Does he also agree that every time an uneconomic pit is kept open, which means that coal costs more, it means that jobs can be lost in private industry?

§ Mr. Lawson
I entirely agree with my hon. Friend about the importance of keeping down coal costs. I hope that all right hon. and hon. Members will do all that they can to assist and support the Coal Board in its current drive to make the industry more efficient and cut the cost of coal.

Several hon. Members
rose—

§ Mr. Speaker
Order. I now propose to call several hon. Members from the Opposition side of the House.

§ Mr. Hardy
Does the Secretary of State accept that industries such as the special steels industry of South Yorkshire have been badly hit and appear to face competition which enjoys favourable energy prices? That is because Governments in competing countries intervene and give subsidies which in some respects appear to be in breach of Community rules and appear to have gone unremarked upon? Does the Secretary of State accept that, even in countries where energy prices may be lower than they are in this country, the input price of energy and raw materials appears to be a great deal higher than here, and that Sir Terence Beckett and his friends have had little to say about that?

§ Mr. Lawson
Again, it is important to get the matter into perspective. The steel industry throughout the world is facing serious and difficult problems. To speak as though the problems were peculiar to the steel industry in this country or the one about which the hon. Gentleman is rightly concerned bears no relation to the truth. About 6 per cent. of steel costs, both direct and indirect, are accounted for by electricity. The Japanese, who are the toughest competitors in steel, pay more for electricity than do steel makers in this country.

§ Mr. Stoddart
Is the right hon. Gentleman aware that the coal industry in this country contributes greatly to keeping costs down? Surely the right hon. Gentleman is also aware that coal prices on the Continent are subsidised to a high degree, sometimes by as much as between £18 and £30 a tonne.

§ Mr. Speaker
Order. We must have a question, not an argument.

§ Mr. Lawson
I am aware of the coal industry's contribution and I am also aware of how much greater a contribution it could make.

§ Mr. Palmer
On electricity, could not the right hon. Gentleman use the Energy Bill, which is now going through the House, to remove the non-discrimination clauses on electricity tariffs for industrial users?

§ Mr. Lawson
It is a nice question whether in the long run industry would benefit from the removal of the non-discrimination clauses. The hon. Gentleman should consider the case of gas, where there is no similar non-discrimination, no undue preference statute. Under the Labour Government the price of gas to industry was forced 9 up and the price of gas to the home was kept down. I therefore very much doubt whether the practical facts of politics are such that industry would benefit from the removal of the undue discrimination clause.

§ Mr. Hal Miller
Will my right hon. Friend pause to recollect that energy-intensive industries are concerned not only with gas and electricity? Will he say anything about the future of the foundry coking coal subsidy, and whether those prices are still to be related to the oil coefficient thermal value?

§ Mr. Lawson
The last matter is a trifle too technical for me, but I am sure that my hon. Friend the Under-Secretary, who knows all about these things, will be only too happy to write a letter, expressed in simple terms, which I might be able to understand. The future of the renewal of the foundry coke subsidy is under consideration.