HC Deb 30 January 1984 vol 53 cc9-11
9. Mr. Campbell-Savours

asked the Secretary of State for Energy if he proposes to raise electricity prices at his next meeting with the chairman of the Electricity Council.

10. Mr. Orme

asked the Secretary of State for Energy if he will make a further statement on electricity prices.

11. Mr. Winnick

asked the Secretary of State for Energy when he last met the chairman of the Electricity Council; and what subjects were discussed.

Mr. Peter Walker

The Electricity Council has recommended to area boards that domestic electricity prices should rise by 2 per cent. from April and that tariffs for larger users should be held at their present level. I have regular meetings with the chairman of the council, and this has been one of the subjects discussed.

Mr. Campbell-Savours

How did the Secretary of State respond to the statement by the Electricity Council chairman, Mr. Phillip Jones, that the 2 per cent. increase was unnecessary? Is it not true that because the Government lack the courage to raise taxes through direct or indirect taxation in their annual Budget they are using the energy industries to raise taxes?

Mr. Walker

That is a remarkable question from a supporter of a Government who raised electricity prices by 2 per cent. every five weeks. Our proposal is a rise of 2 per cent. on domestic prices only over two years.

The chairman made it clear to the Select Committee that the council considered that it was unnecessary, but decided to accept the suggestion because it knew that the Government considered it would be a safe way of meeting the external financing limits set by the Government. We are considering a sum of £70 million on a total turnover of billions of pounds. It will be interesting to see where the correct judgment lies.

Mr. Orme

Did not the Coopers and Lybrand report which was commissioned by the Secretary of State's predecessor, the present Chancellor of the Exchequer, recommend that tariffs be reduced by 5 to 10 per cent. and that there should be a freeze for several years? Why does not the Secretary of State publish that report so that the public can see it?

Mr. Walker

As the right hon. Gentleman knows, the report has been made available to all members of the Select Committee. It has not been published because the information it contains was obtained on the basis that it was commercially confidential. All previous Governments have done that. We have not tried to hide it from the Labour party or anybody else. Members of the Select Committee were given copies of the report so that they could study it fully, and doubtless they have discussed it with the right hon. Gentleman.

As to the result of the report, we had a freeze last year, and in real terms there is a substantial reduction in electricity prices this year. Our record compares favourably with that of dear old Socialist France, where electricity prices rose 12 per cent. last year and where there is another application for 5 per cent. now.

Mr. Winnick

Is the Secretary of State aware that it will come as a bitter blow to consumers, especially those on low incomes, to learn that, instead of the recommended reduction, electricity prices will be increased again in April? Why should consumers be penalised because the right hon. Gentleman lost the argument with the Prime Minister and the Chancellor of the Exchequer in Cabinet?

Mr. Walker

Last year there was a total freeze. This year there will be a reduction in real terms. People on low incomes will have their allowances increased by far more than the increase in electricity prices. If that is a bitter blow, all I can say is that the hon. Gentleman remained extremely silent during bigger blows every five weeks under the Labour Government.

Mr. Rost

Does my right hon. Friend agree with the chairman of the Electricity Council, who told the Select Committee last week that the industry would have preferred the raising of financial targets as an incentive, as that would have allowed it to improve efficiency still further, and that electricity prices should have been increased only as a last resort if the industry could not improve its internal efficiency?

Mr. Walker

That is a matter of judgment. The Electricity Council decided to do this. The Government put forward the anxiety that if the calculations were slightly on the wrong side, the increases that would be needed later in the financial year would be much steeper. After consideration, the industry, which has ultimate powers over price increases, recommended the 2 per cent.

Mr. Madden

Have not this Government, who are taking more in taxation from the British people than ever before, leant on the electricity industry to increase prices—a move which is wholly unnecessary and undesired by the industry? If the Secretary of State was so opposed to this increase, would there not have been more respect for him in the House and outside had he resigned rather than run around complaining to journalists about the wonderful fight that he put up against the increases?

Mr. Walker

If the hon. Gentleman holds such views, he should not have stood at the last election in view of the fact that the Labour Government increased electricity prices by 170 per cent.

Mr. Hal Miller

Does my right hon. Friend accept that large industrial users, which are relieved that the prices have been held, are concerned more about the maximum demand tariff than about percentage increases of this order? Has he discussed this subject with the Electricity Council?

Mr. Walker

As I think my hon. Friend knows, we have had considerable discussions with the industry on this topic, and a number of major improvements have been made. Discussions are continuing with the interested parties.