§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]
§ 5.4 am
§ Mr. D. N. Campbell-Savours (Workington)
I wish to speak on a matter that is of interest to my constituents, and to ask the Government to consider certain courses of action. My constituents' interest derives from the high level of unemployment in my area and the belief that many unemployed people could be employed in the areas that I shall identify.
Unemployment in Great Britain has reached a disastrously high level. Everyone agrees that it is desirable to create more employment, but there is a dearth of practical ideas that would produce rapid results. One excellent way of producing more jobs is through energy conservation measures. A vigorous national home insulation programme similar to the gas conservation programme of the 1960s would reduce Great Britain's energy consumption by about 10 per cent. and energy consumption in the home by at least one-quarter.
According to calculations by Friends of the Earth, in their report "Earthworks", it would save householders over £2,000 million a year and create 14,000 jobs if implemented over the next 10 years. They would be direct jobs, involving the installation of insulation material, but the programme would generate a large amount of indirect and induced employment. Such employment would occur in the hard-pressed construction and insulation material industries. There are innumerable empty factories in my constituency where such products could be made.
As well as leading to a dispersal of jobs and income across the country, the employment gains would accrue mainly to low or unskilled workers, among whom employment is high in my constituency. Many installation jobs could be targeted to benefit young unemployed people, and several job creation projects, such as those run by Birmingham and Durham Friends of the Earth, have already shown what can be done. As well as creating thousands of jobs, such a programme would have the additional bonus of insulating the United Kingdom economy from shocks in the international oil market.
If we are to realise the full potential for energy conservation and job creation, there must be some Government involvement. The ACE report on energy conservation prepared by The Economist advisory group summed up the position as follows:Although the returns to investment in domestic energy conservation are very great, there are a number of important disincentives to an adequate level of investment by individual householders. The householder is unable to recoup his investment if the house is sold. Conservation measures are much cheaper when carried out on a number of houses in an area as part of co-ordinated programme. Many of the indirect returns from conservation do not accrue to the household at all. Thus, the overall or social return from conservation is much greater than the return it yields to an individual household. There is thus, a need for a positive Government policy to subsidise investment in domestic conservation.The Government's policy of relying virtually entirely on raising energy prices to bring about energy conservation is woefully inadequate. Low income groups, who spend proportionately more on energy and who are least able to adapt their consumption patterns, are hit hard by it. More significantly, it does not work.
829 The slight decline in energy consumption over the past few years has been primarily due to the recession and structural shifts in the economy, not conservation. In the domestic sector, householders have not responded to price rises and therefore the insulation industry runs well below capacity. A new approach to energy conservation is clearly urgently needed.
A more effective energy conservation policy boosting employment throughout the country need not involve massive increases in public expenditure. The necessary funds can be made available by rechannelling investment. Thousands of millions of pounds of Government money are invested in the energy supply industries every year. A large fraction of this should be reallocated because energy is simply a better investment. The rates of return on energy supply investment such as power stations tend to be low. The Treasury's test discount rate is 5 per cent., which translates into a pay-back time of about 20 years. Insulation measures have fast pay-back times of two to four years and they are particularly short if the insulating materials are bought in bulk.
The Government should be initiating insulation schemes for neighbourhoods of houses throughout the country. There are many possibilities, including efforts by local voluntary organisations, local authorities, building and insulating firms and the fuel industries. In the United States, the energy utilities have gone in for loan schemes to encourage conservation in a big way. As energy conservation is cheaper than building extra supply capacity, the utilities lend money to their customers to insulate their homes and then recoup the money by billing them for it. As the customers' fuel bills have been reduced, they can afford the repayments and everyone benefits.
The announcement by the Department of Energy last summer that it would provide grants for local authorities and local voluntary insulation schemes was a step in the right direction, but as the sum involved was a derisory £105,000—if that figure is wrong, I am sure that the Minister will correct me—it is hardly very meaningful. Will the Government instead embark on a vigorous home insulation programme to create much-needed employment in the declining construction and insulation material industries? I hope that the Minister will respond to that point.
Apart from employment, which would derive directly from a substantial commitment to energy conservation, I call the Government's attention to employment gains that would accrue from another socially and environmentally desirable course of action. It has been estimated that less than 1 per cent. of the transport supplementary grant for England alone would be sufficient to build and maintain a 6,000-mile cycle network for the whole country, creating 11,600 jobs over the next 30 years. For example, a recent report prepared for the Department of Transport by John Grimshaw and Associates calculated that an 18-mile disused railway track which lies partly in my constituency, between Keswick and Penrith in the Home Secretary's constituency could be converted to a cycle route for as little as £125,000, employing 40 people on Manpower Services Commission schemes for one year.
Is the Minister satisfied that the employment potential of creating cycle routes can be adequately realised if left to local initiative and voluntary groups, as recently advocated by the Under-Secretary of State for Transport? 830 Surely he cannot be. Although I realise that I have widened my topic somewhat and he may not be able to reply to that precise point, I hope that the Minister will indicate his general view.
The paper manufacturing industry is a major employer in my constituency and as yet we have not been hit directly by the job losses that have followed nationally from the decline in the industry, although a total investment of more than £80 million did not create as many jobs at Thames Board Mills as I should have liked.
The decline has, however, adversely affected local waste paper processors and a similar firm elsewhere in Cumbria has closed down. Nationally, 17 mills and 9,500 jobs were lost in 1980 and early 1981 alone.
In this context, I welcome the news that Her Majesty's Stationery Office is now using about 10 per cent. recycled paper. However, will the Government consider a more vigorous policy to revive the British paper industry by measures such as the following? There should be mandatory use of recycled waste paper products by local authorities and central Government institutions, especially HMSO. The lowering of spcification requirements for paper would also be a real incentive. Low interest loans and grants should be provided, especially to mills using recycled paper, for extensive investment in energy conservation. There should be the repeal of import duty legislation which permits newsprint to enter duty-free, and a renegotiation of newsprint import quotas into the EEC. Further, we need the dismantling of the EFTA agreements allowing Scandinavian paper imports to enter duty-free. The energy pricing arrangements for North American mills should be declared distortions of trade acting against, as I understand it, article 92 of the Treaty of Rome which—although it does not apply to United States producers—should influence our attitude to American internal pricing arrangements.
Loft insulation, paper recycling, cycleway construction and so on all reflect the positive contribution of an environmental approach, and show how environmental and economic well-being go hand in hand. Perhaps the Minister might consider sponsoring the creation of an energy conservation commission as proposed by the Select Committee on Energy in appendix 1 of the Committee's fift report. That idea is fully supported by John Adams, who is director-general of the British Paper and Board Industry Federation.
The policies that I suggest would yield thousands of jobs and would benefit mainly the low-skilled at a time when such workers are the main victims of the recession and of increasingly capital intensive technologies. In each case, induced employment effects would lead to many additional jobs being created. I am talking of a total well in excess of 50,000 jobs to be created and ask if the Government would recognise the heretofore largely unexplored employment potential of the environmental policies that I have described.
I should like to place on record my thanks to Mr. John Preedy of Friends of the Earth for the help that he gave me in compiling my speech. Such people are in the vanguard of action in conservation initiatives. I look forward to the day when their activities, such as the bottle plant in West Cumbria, can give way to the establishment of a national scheme sponsored by Government and fully supported by the Exchequer. Indeed, I hope that Minister will answer fully the points that I have made in my brief speech.
§ The Under-Secretary of State for Energy (Mr. David Mellor)
I am grateful to the hon. Member for Workington (Mr. Campbell-Savours) for raising the important subject of energy conservation and for giving me notice of some of the arguments that he intended to adduce in the debate. I hope that will enable me to respond thoroughly to the points that he made and to deal with these important issues fully in the time available to me.
I assure the hon. Gentleman that the Government are concerned about employment opportunities. Our economic strategy is designed to secure and create real jobs. In our view, the prospects for long-term secure employment are inexorably linked to the success that we can achieve in making British industry efficient, competitive and profitable. Our energy policy must be viewed as part of our overall economic policy. Energy conservation, or, more aptly, the efficient use of energy, has a central and permanent place in our energy policy. Indeed, that must be so, because we are determined, almost above all else, to increase efficiency throughout the economy.
We have a comprehensive and effective programme to promote and support energy conservation through a combination of economic energy pricing, advice and information, incentive and regulation. We are convinced that the economic pricing of energy, reflecting the long-term costs of supply, must remain the key to the effectiveness of the programme as a whole. We reinforce this with a vigorous programme of information and advice designed to help both domestic and industrial consumers to respond intelligently to energy price signals. Those price signals reflect, as truly as circumstances allow, the underlying real cost of the energy consumed. That is vital, as many Governments throughout the Western world accept.
We also campaign to encourage awareness by householders of the need for conservation measures in their own homes. I have no hesitation in accepting the contention that significant Government financial assistance is in some cases appropriate—for example, if householders are to achieve a basic level of insulation in their dwellings.
Under the homes insulation scheme of the Department of the Environment, the Government have increased the level of grant allocations significantly over the past three years—at current prices, from £16.7 million in 1980–81 to £31.1 million in the current financial year—but we do not accept that there is a case for massive Government aid essentially to assist consumers to save their own money. Not only is such an approach wasteful of taxpayers' money; in some respects it is also counter-productive. I say that because it does nothing to encourage the consumer to appreciate the merits of energy efficiency, and it also fails to alter the traditional attitude to energy as a cheap resource, which I believe still underlies too much present thinking.
I should like to take up one or two of the specific matters that were raised. The hon. Gentleman claimed that the poor were hit unduly hard as a result of our policy on economic energy pricing. I cannot agree with him. After all, the Government are spending larger sums of public money than ever before each year in heating allowances specifically to help the poor—more than £250 million last year, to rise to more than £300 million this year.
832 As I shall say at greater length later, the poor and the disabled are especially catered for in our community energy projects, which are encouraged and supported by my Department and by other Government agencies, notably the Manpower Services Commission.
I must take the hon. Gentleman up on two points that he made about energy demand. He said that the present reduction in energy demand—
§ Mr. Campbell-Savours
The hon. Gentleman said that the poorer sections of the community were insulated. What about those who are in receipt of rent rebates, who are equally in an impoverished position? To what extent are they helped by the schemes if they are not drawing supplementary benefit?
§ Mr. Mellor
All householders qualify for a fairly significant level of support with their insulation, and the poor and the disabled qualify for a higher level of grant, which has been increased significantly over the past few years. The various insulation projects that are starting up in various city centre areas have their own rules about who can be assisted. We hope that about 50,000 poor consumers will have their lofts insulated this year by a combination of neighbourhood energy action projects, MSC manpower and Department of the Environment grants. In a scheme, for instance, that I saw in Fulham, an elderly lady can have four people insulating her flat for a full working day, and it costs her £4.
The hon. Gentleman suggested that the present reduction in energy demand had been due largely to the recession. There is much in that, and I do not deny it, but it is not right to say that all demand reduction is due to this factor. We have sought to analyse this matter. I have reason to believe that our pricing and energy conservation programmes taken together have reduced demand by 6 per cent. beyond what can be attributed to the economic downturn of recent years.
I must also challenge the hon. Gentleman's notion that switching public expenditure from investment in supply to conservation is the right approach. To begin with, as we have pointed out so often, the energy demand that is reduced by insulation—that is, space heating—is not the energy save by cutting out a new power station. That is electricity, which provides only 7 per cent. of domestic space heating.
Furthermore, the hon. Gentleman should not believe that total capacity is excessive. At the peak of last winter's heavy demand, there was only 2 per cent. of spare capacity. He will also be aware that the electricity supply industry's present programme of plant closures is somewhat controversial among some of his right hon. and hon. Friends.
Above all—and perhaps this is the most crucial aspect—it must be borne in mind that there is already evidence that people take at least half of the potential saving from insulation and other energy conservation measures in extra comfort. Thus, there is no easy relationship between energy conservation measures and a reduction in demand leading to a reduction in the need for capital expenditure on supply projects.
The hon. Gentleman suggests that a vigorous home insulation programme would create much needed employment in the declining construction and insulation materials industry. I accept that such investment in energy conservation could create jobs in carrying out the work, 833 although much will be done on a do-it-yourself basis and through increasing demand for conservation material and equipment. However, if one believes, as prudent people do, that there must be some link between what the Government spend and what they take in taxation, and when we are seeking to lighten the burden of taxation and not increase it, it must be clear that investment in energy conservation would have to displace spending elsewhere. If so, the overall implications for employment will depend on the employment intensiveness of the displaced spending. They could prove crucial.
We have seen no evidence to suggest that conservation investment is significantly more employment-intensive and hence more likely to create more new jobs than other kinds of employment. Nor do we see any reason to believe that direct employment creation by public authorities is likely to offer as good a long-term prospect for jobs as private sector provision within the right economic climate.
In my view, the real scope for the creation of new long-term employment opportunities as a result of increased energy efficiency lies especially in areas of new industries using new technologies, such as the development and application of microprocessors for control of energy use areas, to which we already offer a wide range of financial incentives. When I visit conservation establishments, functions and exhibitions, it is a great encouragement to me to see the number of small companies that are springing up throughout the country dealng with energy conservation technology. They are doing so in response to the clear demand that is developing throughout industry for these products.
As I was saying about the poor and disabled, we are equally mindful of the need to encourage temporary employment opportunities; and the voluntary homes insulation schemes referred to by the hon. Gentleman are a good illustration of such an initiative. Here my Department supports the efforts of local voluntary organisations undertaking schemes of practical home insulation work, mainly using the long-term unemployed under Manpower Services Commission schemes. These schemes and the Government's support for them helps to further a number of important objectives. First, these insulation schemes are intended primarily to benefit the elderly, the disabled and those on low incomes to whom voluntary community-based organisations have ready access. Secondly, they provide temporary employment opportunities for the long-term unemployed whose services are paid for by the Manpower Services Commission under the community enterprise programmes. Thirdly, the insulation work carried out is eligible for grant aid under the normal rules of the homes insulation scheme.
It is this interlocking of the three different methods of funding that gives a much higher figure than the one that the hon. Gentleman quoted. I cannot give him the exact figures offhand and they are not in my brief, but the MSC is putting several million pounds into the scheme for the labour and, in addition, there is the money that is obtained from the Department of the Environment under the homes insulation scheme. It is that which comes together to create the 50,000 homes that we hope will be insulated during the coming year just by the neighbourhood energy action schemes.
834 There are usually start-up costs for putting such schemes together, which though small in themselves often represent a significant burden on the resources of local voluntary organisations. It was because of that that the Department agreed last year to give preparatory and start-up grants to help the establishment of these schemes. They proved so successful that we have nearly doubled to over £200,000 the funds available for such grants in the current financial year. These are essentially seed corn grants. What matters is that they are available in sufficient quantities for these groups to get started. They do not need to be very large because once a group is going it can tap into the MSC and homes insulation scheme.
In doubling the provision that we made, we are reflecting the growth in these neighbourhood energy action schemes, which I very much welcome. Along with the National Council for Voluntary Organisations, I hope that I have played a part in stimulating interest in them. This "pump-priming" support is an effective way of achieving an objective that is shared by us all. To describe it as derisory is harsh, for the reasons that I have given. Such a charge also commits an elementary but common error of using the level of subsidy as the measure of the quality and effectiveness of our energy conservation programme. That is not the right approach because merely making money available is no guarantee of a worthwhile and beneficial programme.
I remind the House of one point. In no year since the homes insulation scheme began, under the Government and their predecessor, has the total allocated fund ever been spent up. We have improved the take-up rate in the past couple of years by dint of enormous efforts in more sophisticated communications techniques, culminating in our advertising campaign on Independent Television last winter.
I turn now to the hon. Gentleman's suggestions for Government aid to the paper industry. I know of his interest in that matter. I keep in touch with the paper and board industry. We recently dealt with the industry's energy costs in another Adjournment debate initiated by the hon. Member for Bury and Radcliffe (Mr. White).
The use of waste paper is already being encouraged and the amount of waste paper in United Kingdom-made paper products already compares favourably with that in other countries. Although we would not wish to make mandatory the use of recycled waste paper products, for customer choice is important and there are technical constraints on the use of waste paper for some paper grades, all other things being equal, HMSO already gives preference to suppliers whose products contain the largest percentage of recycled fibre.
A European Community recommendation on the recovery and re-use of waste paper and board, which came into operation last year, also follows a voluntary approach and officials at the Department of Industry are now liaising with representatives of the paper industry on ways to follow up this recommendation. Local authority representatives have also been contacted on ways to encourage the use of paper with a greater amount of recycled fibre through the alteration of their paper specifications.
The Import Duties Act 1932, which the hon. Gentleman mentioned, was repealed many years ago. There are no quotas for newsprint imports into the Community. Indeed, 835 with the Community's newsprint capacity being insufficient to meet Community demand, quotas would be counter-productive and harmful to the newspaper industry. Also, there are international treaty obligations to be taken into account. However, Community producers of newsprint, including United Kingdom producers, are given a measure of protection by the provisions of protocol 13 of our Treaty of Accession to the Community. That means that the amount of duty-free newsprint allowed to enter the Community is controlled by quotas which are agreed annually and which take into account the amount of Community newsprint production, including United Kingdom newsprint production, available.
The hon. Gentleman also suggested "dismantling" the community's trade agreements with the EFTA countries, which he said allow Scandinavian paper imports to enter duty-free. In fact, they do that only in part, and, besides, many of the Scandinavian imports that come duty-free do not compete with British production.
More important, the hon. Gentleman ignored the important benefits that we derive from those agreements. 836 They provide British industrial exports in return with almost completely duty-free access to the Scandinavian markets. The three countries concerned, Norway, Sweden and Finland, are valued trading partners. They take 6 per cent. of all British exports. I hope that the hon. Gentleman understands that it is for that reason that there can be no question of dismantling, denouncing or dishonouring our trade agreements with those countries.
I began by commending the notion of pursuing the synthesis of our environmental and economic goals. I fully accept that the creation of jobs, the implementation of energy conservation measures, the establishment of cycle routes, and the recycling of waste paper, are individually and collectively desirable. But they are not the only candidates clamouring—
§ The Question having been proposed after Ten o'clock and the debate having continued for half an hour, (MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty-six minutes to Six o'clock am.