HC Deb 08 February 1982 vol 17 cc726-9
9. Mr. Winnick asked

the Secretary of State for Energy what have been the increases in gas and electricity prices since May 1979; and what increases he expects during 1982 and 1983.

Mr. Lawson

Approximately 70 per cent. and 60 per cent. respectively. I would expect price rises over the next two years to be considerably less.

Several Hon. Members


Mr. Speaker

Order. I am sorry that I did not call the hon. Member for Midlothian (Mr. Eadie) on the previous question. It is too late now, because we have had the answer to question No. 9. I shall try to remember next time.

Mr. Winnick

Is the Secretary of State aware of the considerable hardship caused to many families on average and less than average incomes, who receive no assistance with the payment of their fuel bills, by the substantial increases in gas and electricity prices? In the light of all the increases that have occurred recently, is there not a case for a 12-months freeze on gas and electricity prices?

Mr. Lawson

As my hon. Friend the Under-Secretary said in answer to the previous question, the Government are providing substantial help this winter for those in greatest need. The sum involved is £250 million, which is more in real terms, let alone money terms, than ever before, including the Labour Government's period of office. That help benefits about 2¼million people.

Mr. Rost

What has happened to the Government's promised legislation to allow fair competition for the private generation of electricity? Would this not be the most effective way to hold down electricity prices?

Mr. Lawson

I would not like to promise that private generation of electricity is the best way of holding down prices. Nevertheless, there are strong arguments for allowing private generation of electricity. As my hon. Friend, who is an expert in these matters, knows, the major element in the cost of electricity is the fuel burden, which at present means almost exclusively coal. The price of coal is the key to the price of electricity.

Mr. Rowlands

Will the right hon. Gentleman confirm that the formula for gas price increases of 10 per cent. over the real rate of inflation is the Government's formula and not that of British Gas? Does he appreciate that it is to the Government that complaints should be sent? Will he confirm that this formula is likely to mean gas price increases of 20 per cent. plus in 1982?

Mr. Lawson

When the previous Government, of which the hon. Gentleman was a member, were in office, gas prices were held down artificially to a point where, when the Conservative Government came to office, the British Gas Corporation was making a loss on business to the domestic consumer. That is not something that the Gas Corporation—any more than the Government—wishes to see. There has been a partial and gradual deregulation over a three-year period. Gas prices are still much lower in real terms than they were some time ago.

Dr. J. Dickson Mabon

Is the right hon. Gentleman aware that of the 60 per cent. mentioned, 10 per cent. is due to taxation? Is he suggesting that the British Gas Corporation wanted that increase?

Mr. Lawson

The price has nothing to do with taxation.

Mr. Archie Hamilton

Will my right hon. Friend give figures of the increase in gas prices among our Continental competitors?

Mr. Lawson

My hon. Friend raises a good point. Gas prices on the Continent are rising fast. Prices for domestic consumers of gas in West Germany and France are between 60 and 90 per cent. higher than in this country.

10. Mr. Hal Miller

asked the Secretary of State for Energy what progress is being made towards the introduction of a discount tariff for bulk industrial users of electricity.

12. Mr. Hannam

asked the Secretary of State for Energy whether he plans to take steps to reduce the cost of electricity to British industry.

Mr. Lawson

I have recently received from the Electricity Council the review of the bulk supply tariff. The review contains proposals for minor changes in the structure of tariffs that would benefit heavy industrial users. It also proposes new load management arrangements that could provide further benefits. I am now examining this with the industry as a matter of urgency.

Mr. Miller

In the light of the delay in dealing with the bulk supply tariff, a review of which was first demanded in June 1980, the lack of determined action on the two NEDC reports on energy prices for industry and the anxiety and scepticism among industrial bulk users, will my right hon. Friend confirm that the Government intend to deal with the cosy working practices and the contemptuous attitude towards their customers of these nationalised monopolies? Will the Government, at the end of the day, enable our industries to compete on an equitable basis with their foreign competitors?

Mr. Lawson

The Government are fully aware of the difficulties faced by certain industries. I had hoped that my hon. Friend would perhaps give a slightly warmer welcome to the statement that I have made. On the matter of cosiness, I have asked the Electricity Council to make copies of the review available on request, and my Department is ready to consider comments on it from industrial consumers and others.

Mr. Merlyn Rees

Is the Minister aware that there is concern throughout industry—I attended a meeting with trade unions only this morning—about the disparities in some respects between France, Germany and ourselves, to which reference is, I believe, made in the report? Does he agree that given the effect on industry and unemployment, it is important to act quickly? There have been plenty of reports. We need action.

Mr. Lawson

I appreciate the urgency. I am now discussing the proposals and suggestions in the bulk supply tariff review with the electricity supply industry as a matter of urgency.

Mr. Hannam

I welcome my right hon. Friend's announcement. Is he aware that it is vital to carry out a review of the tariff structure at the earliest opportunity if companies are not to switch factories across to the Continent where electricity costs are sometimes 20 or 30 percent. below ours? Is it not possible to give category "C" users some further assistance by widening the load management terms to make it easier for companies to comply with them?

Mr. Lawson

My hon. Friend has raised a good point. If the electricity supply industry is seeking some means to alleviate the burden on this category of consumers, the load management arrangements, introduced for the first time last year, represent a basis upon which it might be possible to build.

Mr. Hardy

The Secretary of State has suggested that the changes may be only minor. Is he aware that far more than minor changes will be required if the special steels industry is to retain competitiveness with France, Germany, Italy and other countries where electricity is much cheaper and, in certain circumstances, substantially subsidised, to the great disadvantage of British industry?

Mr. Lawson

My reference to minor changes was directed towards the bulk supply tariff as such. The proposals on the load management arrangements are more than minor. I cannot accept that whenever any other country—Italy or anywhere else—introduces a subsidy, this country must follow that example. We are seeking through the Community, at meetings of the Energy Council and elsewhere, to prevent these subsidies, which distort user resources and are particularly ill-advised when we are trying to conserve energy. We should try to get these subsidies removed.

Mr. Michael Brown

With reference to the question asked by the hon. Member for Rother Valley (Mr. Hardy), does my right hon. Friend accept that there is a feeling in the bulk steel making industry especially that the steel industry is being asked to accept burdens created by inefficiencies in the electricity generating industry and that much of the unemployment within the BSC has been caused by high bulk electricity costs? Does he agree that there is no incentive to the electricity industry to take action to rationalise the industry, such as that adopted by the British Steel Corporation?

Mr. Lawson

The British Steel Corporation, so far as I am aware, is not primarily dependent on electricity for its operations.

Mr. Spriggs

Is the right hon. Gentleman aware that on the last occasion he replied to a question on the bulk price of gas to industry he said that the glass industry had not made out a case about the cost at a conference held 12 months ago? Is he further aware that that point was not on the agenda of the conference to which he referred? Will he examine the matter again?

Mr. Lawson

I shall certainly look at any such answer that I may have made. I do not recall it. The most recent NEDC task force report indicated that the price of interruptible gas, representing two-thirds of supplies of gas to industry, is on average below that of most of our Continental competitors.