§ 6. Mr. Ormeasked the Secretary of State for Energy what recent representations he has received on electricity prices.
§ 7. Mr. Winnickasked the Secretary of State for Energy what are the latest representation he has received relating to increases in fuel prices in the new year.
§ Mr. Peter WalkerI have received a number of representations concerning gas and electricity prices.
§ Mr. OrmeWill the Secretary of State now inform the House about the electricity price increase? Is he not aware that the Electricity Council does not want an increase? Does not industry need the proposed increase like a hole in the head? Consumers certainly do not want an increase.
Is the right hon. Gentleman aware that we know that he is wholly opposed to any increase? Is there not a major division in the Cabinet, with the Prime Minister and the Chancellor of the Exchequer carrying the day? Do they not want an increase to pay for cuts in taxation at the expense of the least well off in our society? The Secretary of State should resign.
§ Mr. WalkerI am grateful for the right hon. Gentleman's invitation. Both gas and electricity price increases are decided and announced at the appropriate time by the industries themselves. The right hon. Gentleman knows that the Government have no power to increase prices.
The gas industry will be announcing its price increase shortly. It will be a decision wholly for the gas industry, without pressure of any description by the Government. On industrial electricity price increases, it is unlikely that there will be an increase for a long time other than the normal adjustment clauses.
The Cabinet has asked the Electricity Council to reconsider its proposals on domestic electricity prices for the next two years. We are talking about the possibility of a 2 per cent. increase next year, which would mean an increase of 2 per cent. over two years. Yet under the Labour Government there was a 2 per cent. increase not every two years but every six weeks. The right hon. Gentleman, who was at that time responsible for those on low incomes, should therefore have resigned every six weeks.
§ Mr. SpeakerOrder. I appeal for short supplementary questions and answers.
§ Mr. WinnickIs the Secretary of State aware that his rhetoric does not disguise the fact that he was beaten and humiliated in Cabinet by the Prime Minister and the Chancellor of the Exchequer about an electricity price increase? If the Electricity Council refuses to increase prices—it has stated clearly that there is no justification for such an increase—what power or persuasion will the right hon. Gentleman use to force it to take action which it does not wish to take?
§ Mr. WalkerThere is no question of a power. We are having a perfectly reasonable dialogue with the Electricity Council. We are asking it to consider its price increases for the next two years, and are making suggestions. This morning I met the chairman of the Electricity Council and he agreed to consider the views expressed by the Cabinet. We have a good and sensible relationship.
I find it extraordinary that the hon. Gentleman should condemn the possibility of domestic electricity prices rising by 2 per cent. over two years when the Labour Government put up prices by 170 per cent.
§ Mr. HordernAs the advisers appointed by my right hon. Friend the Chancellor of the Exchequer—Coopers and Lybrand — have reported that, if anything, electricity prices should be reduced by 7 per cent., and as the Electricity Council apparently sees no need for any further increases in electricity prices, should not the Electricity Council, which knows about these matters, set the prices which it believes to be appropriate?
§ Mr. WalkerThe Electricity Council will set the prices, but it is reasonable for Governments to have a dialogue with the major nationalised industries and to make suggestions about the manner in which future prices are managed. That dialogue is going on.
The press quotation to which my hon. Friend referred mentioned one part of the Coopers and Lybrand report, dealing with the effect of the decision to write off capital assets. The advisers did not come to an overall view that electricity prices should be reduced by 7 per cent. As my hon. Friend said, ultimately that is a matter for the Electricity Council to decide.
§ Mr. WallaceAs the amicable dialogue with the Chancellor of the Exchequer is still continuing, I and my Liberal and Social Democratic right hon. and hon. Friends wish the Secretary of State well in winning that dialogue. If, at the end of the discussions, the Electricity Council is directed to increase fuel prices against its better judgment, how will that square with the Government's policy of nonintervention in the industry?
§ Mr. WalkerI repeat that the statutory power for fixing electricity prices lies with the council, but it has always been customary, under all Governments, for the council to have a genuine discussion and to bear in mind the Government's view on the economic position. A great deal of the calculation of prices in the electricity industry is based upon Treasury forecasts about the trends An the economy. It is right that the dialogue should have taken place. Most of the hon. Gentleman's Social Democratic Friends were supporters or members of a Government who increased electricity prices by 170 per cent.
§ Mr. David HowellMy right hon. Friend has my sympathy on the problem of electricity prices. Is he aware that, in my experience, the Treasury has always had a rather poor grasp of energy industry issues and energy 7 prices? Does he accept that if he approves a price increase it should be on the basis of the energy market, proper energy policy and energy balance rather than on the shortsighted views pressed on him by the Treasury?
§ Mr. WalkerIt is important that the Government's financial targets should be met. It is important for the nationalised industries, like everyone else, to take account of general economic requirements, and I am sure that the electricity industry will do so. I agree with my right hon. Friend that it is important that if we are to have good management of those industries we should try to set financial targets that are acceptable to them such as those that we have just set for the gas industry.
§ Mr. Campbell-SavoursSince 1979 the RPI has risen by 57.2 per cent. Why have the Government sanctioned gas price increases of 112 per cent., electricity price increases of 82.5 per cent. and coal price increases of 82.2 per cent.? Should not they give a lead by using public utilities as a vanguard?
§ Mr. WalkerThat is why I am sure the hon. Gentleman is delighted that during the past two years electricity prices have decreased in real terms.
§ Sir Kenneth LewisIs my right hon. Friend aware that at this time of the year he has the complete good will of every member of the Cabinet? If the electricity industry increases prices and makes a large profit above the level required, will he try to persuade the Cabinet that we should all receive a rebate, as we all own the electricity supply industry?
§ Mr. WalkerI want to contribute to Christmas good cheer by saying that there is no possibility of any electricity price increases until the end of this winter. If there are any increases they will be below half the very low current rate of inflation. It would be correct to achieve sensible financial targets rather than be involved in the complexity of rebates.
§ Mr. OrmeWill the Secretary of State tell the House the arguments that he used against the increases that were arrived at when he was away in China? We are told that on his return he was very angry. At the weekend he made a statement, and the House, too, is entitled to a statement.
§ Mr. WalkerThe right hon. Gentleman has the time scale completely wrong. The proposals put forward in the Cabinet while I was in China about our approach to the Electricity Council had been agreed with me a week previously. As the hon. Gentleman knows, I am never angry. I am also glad to say that, whatever the results of any views that I have expressed, the increases will be way below the rate of inflation.