HC Deb 08 March 1982 vol 19 cc591-3
11. Mr. Hal Miller

asked the Secretary of State for Energy what is the current price per therm to industrial users of oil, gas, electricity and coal; and how these will be affected by increases already announced.

Mr. Lawson

Prices based on my Department's survey of 900 large industrial consumers are published quarterly in "Energy Trends". I have asked for the latest available figures to be published in the Official Report.

Looking ahead, current coal prices will run until November. I hope that we can look forward to some stability in gas prices and I would expect electricity prices to rise broadly in line with inflation. Falling crude oil prices and weak demand mean that there is scope for buyers to seek lower oil product prices through aggressive purchasing.

Mr. Miller

While thanking my right hon. Friend for that reply, which I note was different from the answer to question No. 10, may I ask him to tell the House—as he referred in an earlier reply to market prices—what part of the elements that make up the price is represented by the external financing limit set by the Government, including the contributions required of electricity and gas, and what part is represented by the management and cost structure, and how those are being looked at with a view to reduction?

Mr. Lawson

My hon. Friend knows that gas is, if anything, below what would be the free market price. That is clearly the case, because the demand for gas for industry exceeds the available supply. The electricity industry follows a policy of long-run, marginal-cost pricing. That brings us to the important question that my hon. Friend rightly raised concerning the structure of the industries' costs. It is a major objective of the Government to do everything that they can to bear down on the costs of nationalised industries in general and the monopoly industries in particular. My hon. Friend knows of the recently announced list of Monopolies and Mergers Commission references, which is addressed to precisely that objective.

Mr. Hardy

Does the right hon. Gentleman agree that in relation to electricity the position is extremely serious in certain industries? Will he reflect on the fact that at previous Question Times he has compared our position with that of France and has suggested that the French gain enormous benefit from cheaper nuclear electricity? Will he accept that those previous answers have igored the fact that the £1.4 billion write-off of capital expenditure to assist French nuclear generation is yet another example of how other Governments do not leave their industries with one hand tied behind their backs?

Mr. Lawson

There is no point in the hon. Gentleman trying to bury his head in the sand. The French industry has a substantial advantage as a result of the large proportion of relatively cheap nuclear power that is available in France. Had we made the same sort of progress under the Labour Government we would have a different structure of electricity prices today.

Mr. Stokes

Will my right hon. Friend tell me, with his usual candour, whether domestic consumers of oil will share the benefits that industry will gain from lower oil prices?

Mr. Lawson

This is a free market, but my hon. Friend knows that there are already considerable signs at the petrol pumps of falling prices, from which the domestic consumer is able to draw full benefit.

Mr. Eadie

When the right hon. Gentleman replies to letters and communications does he, as I hope, make it clear that Government policy is responsible for the substantial increase in energy and gas prices?

Mr. Lawson

The Government have had the courage to stop the policy of the previous Government of holding gas prices to the domestic consumer artificially low, as a result of which industry had to pay substantially more. By getting a better balance between the price of gas to the home and the price to industry we have addressed ourselves to what is undoubtedly the major problem in energy pricing.

Following are the figures:

Prices Based on Survey of 900 Large Industrial Consumers Provisional fourth quarter, 1981
£—tonne p/kwh p/therm*
Heavy Fuel Oil 115.51 — 28.5
Gas Oil 189.51 — 44.0
Gas — — 22.57
Electricity — 2.889 84.7
Coal 41.93 — 16.3
Source: Department of Energy.
* Prices are not directly comparable as the costs to the consumer depend on the efficiency with which the fuel is used.