GAS AND ELECTRICITY INDUSTRIES

HC Deb 11 July 1984 vol 63 cc1139-52

`Upon the passing of this Act, the Chancellor of the Exchequer shall include in the annual Financial Statement and Budget Report a statement showing the impact on the public sector borrowing requirement of the external financial limits of the gas and electricity industries.'.—[Mr. Hattersley.]

Brought up, and read the First time.

Mr. Roy Hattersley (Birmingham, Sparkbrook)

I beg to move, That the clause be read a Second time.

The new clause has a simple and clear intention. It is an attempt to provide the House and, through the House, the country with what I can best describe as honest information about the Government's fiscal intentions and the application of those intentions to the energy industries.

10.15 pm

In a moment, by way of example, I shall argue that in Britain there is now a tax on the purchase and consumption of gas and electricity. That tax has been imposed by the Government, certainly against the wishes of the British Gas Corporation. As I said in a previous debate — I repeat it now not least because my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan), under whom I had the honour to serve in a previous Administration, will confirm it — under the Labour Government the Treasury constantly proposed to us what it believed to be the ripping wheeze of reducing the public sector borrowing requirement by charging more for gas and electricity than was necessary for the welfare and prosperity of those industries and hoping that the general public would not notice this addition to their tax bills. In plain language, the addition is a purchase tax on energy.

The new clause intends that, when Governments are not sufficiently wise and protective of the public's interest and wish to avoid the blandishments of reducing the PSBR in this surreptitious and not altogether honest way, they must at least report the position openly and honestly to Parliament. During the past year we have seen a tinkering with the external borrowing requirements of the energy industries in a way that has enabled the Government to be deeply evasive about the effects. From time to time the Chief Secretary, the Chancellor of the Exchequer and even the Prime Minister have argued that the obligation on the gas and electricity industries has been changed only to make them more commercially viable in the normal, free market sense of those words. It has been argued that the Government are simply struggling to obtain a proper return on investment in those industries, although it is known by those who are prepared to examine the performance of the industries honestly and objectively that the Government have unnecessarily increased prices as a means of reducing the PSBR.

The Prime Minister has developed the doubly unfortunate habit of imposing price increases on the public sector fuel industries and then criticising them for increasing prices. That is typical of the Prime Minister's attitude towards political propoganda. All I say about that this evening is that, whether the gas and electricity industries were being used in that way, and whether their contributions to the PSBR were negative or positive, it is only reasonable that the House and the country should be told the effect of the financial requirements placed upon them by the Government. If we are told that such information is unavailable—that cannot be true—or that it is inappropriate for the House or the country, we must assume that the reason why the Government do not wish to make available that information honestly and openly is that it will confirm what most commentators already know to be true: that the Government have used the energy industries surreptitiously to increase indirect taxes.

I can demonstrate that by using an example, and, I fear, demonstrate at the same time the evasive way in which the Government have continually treated this subject when they have been cross-examined on it, not in the party political forum of the House or in a Standing Committee, but in the more objective and calmer atmosphere of Select Committee sittings. The first example comes from the Chancellor's evidence to the Treasury and Civil Service Committee, as reported in its first report dealing with Government lending to or borrowing from, as he chose to describe it, the energy industries. He said: What such industries are doing"— he was referring to industries that were required to raise revenue beyond what they regarded as necessary for their economic success— is actually lending money to the Government, whereas in the case of a positive external financing limits the Government is lending money to the industries. That seems a neat way of wrapping up the two alternatives — at least until we hear what the Select Committee said on the subject: Subsequently in written and oral answers to us, we have established that only the British Gas Corporation lends other than temporary surpluses. The BGC deposits attract interest, as do other temporary surplus funds placed by industries within the public sector. In other cases, industries use their surpluses to reduce their financing expenses by paying off existing loans or by reducing their leasing commitments. In a statement of masterly reticence, the Select Committee went on: We have experienced considerable difficulty in ascertaining the precise accounting treatment of negative external financing limits, and accordingly we propose to take more evidence". The new clause aims to provide a circumstance in which the Chancellor and Chief Secretary are obliged to tell the truth to the House, a circumstance in which the Chancellor is not enabled to be evasive before Select Committees, a circumstance in which the situation is clearly and plainly set out. I look forward to hearing the Chief Secretary using all his ingenuity in explaining why the House is not entitled to know the real effects on the Budget, on the PSBR and on the Revenue of the public utilities' financing requirements.

I will give an example of the difficulty that we have had in the past in obtaining the most simple answers to the most straightforward questions. I refer to the first report of the Energy Select Committee, paragraph 46 of which dealt with the recent electricity financing targets and the consequent price increase that resulted from them. The Select Committee said: the industry is being required by the Government … to make payment to the Treasury in 1984–85 of some £360 million over and above the figure of £380 million which would be consistent with the Financial Target. Earlier the Select Committee reported: The proposed increase is not needed in order to maintain electricity at an economic price. The industry believes that its current prices"— that is, the prices before the proposed increase— are equivalent to a broadly mid point view on Long Run Marginal Costs. In paragraph 44, the Select Committee said: the Electricity Council believes, almost a year after the Financial Target was set in the light of the changed circumstances since then, that a 2 per cent. price increase on 1 April"— which was a 2 per cent. increase in electricity prices in April of this year— is inconsistent with its Financial Target and is not required on grounds of economic pricing. Though that is the view of the industry, as reported by the Select Committee, the Chancellor and his supporting Ministers persist in arguing that the increase was made to obtain a viable pricing structure. However, we know that the increase was made so as to make an adjustment to the PSBR that the Government felt was appropriate at the time of the Budget.

Our new clause is intended to avoid the sort of sleight of hand that the Government have perpetrated over the enforced electricity price increase—an increase that the Government have always defended by saying that it was less than the rate of inflation since the previous increase. No doubt the Chief Secretary will repeat that tonight. However, I have no doubt that in his calmer moments he shares the view that simply to say that we are increasing the price in some way related to the going rate of inflation is in itself an admission that the price increase is concerned not with economic pricing, but with political considerations which may or may not be reasonable; with social considerations which may or may not be right; but not with considerations directly related to the economic pricing of the product. They are considerations which should be reflected in Government policy by the sort of statement that we suggest in the new clause.

It is not only electricity where this problem has come about. I will give another example, which I offered to the Chief Secretary when we debated the Government's public expenditure plans some months ago. On that occasion he was unable to answer my question, not least because he could not find the appropriate page in the gas accounts. I read the quotation to him then and I shall do so again this evening. The right hon. and learned Gentleman has had six months to consider the matter, and he can probably answer my question when he replies.

When the gas price increase was announced, it was justified as a necessity to increase the return on capital of the gas producers. It was said that the return was only 2 per cent. I advise the right hon. and learned Gentleman to listen to me and not to talk to his Front Bench colleagues. He will lose his place again if he does not listen to my question. Anyone who watched his performance six months ago will not want to see it repeated. We remember that he could not find a way round the numbers. I suggest that he listens to my argument and attempts to rebut it when his chance comes.

It was said originally that there had to be an increase in gas prices because there was only a 2 per cent. return on capital invested in the industry. We now know—this appears in the industry's accounts—that its operating profit as a percentage of real capital was about 5.7 per cent. That was originally the measure, the test and the criterion of success of the British Gas Corporation. By measuring its success against that criterion, the gas industry was exceeding the target set for it by the Government by nearly 60 per cent. As it was exceeding its target by that amount and as the Government wanted justification for increasing gas prices and imposing an indirect tax, they changed the criterion by which to judge the success of the industry.

The British Gas Corporation refers to the change of criterion in its accounts. it states: The corporation believe that the Secretary of State will by order arrange for the disposal without compensation. Accordingly provision has been made for an estimated loss … which is expected to amount to £285 million. The Government then sold off about £300 million of the industry's assets. They judged its success by the use of a criterion that was constructed around the sale and insisted that the industry increase its prices to compensate for the phoney reductions that the Government had arranged in the apparent profitability of the industry.

I could continue with example after example of the way in which the Government have manipulated, or attempted to manipulate, the appearance of the finances of the energy industries to justify a tax on energy, on fuel, on gas or on electricity.

On another occasion we might wish to debate whether such a tax is appropriate. I am heartily opposed to the levying of such taxes, especially on those who already find their fuel bills almost impossible to pay and who suddenly discover that they are making an indirect tax contribution to the Government's financial strategy. The argument now is not whether there should be a surplus, not whether there should be a profit, which the industry says it does not need and does not want, and not whether the Government should milk off the profit and use it as taxes are normally used, but whether the Government should be open in telling the House and the country what they propose to do. I am fascinated to hear how the Chief Secretary will defend the concept that the Government should keep their surreptitious tax-raising to themselves.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

When I first came to the House in 1979 one of the pieces of legislation that the Conservative Government placed before the House which caused me considerable unease was that which sought to impose increases in gas prices. At that time I thought that the Treasury was seeking to cream off taxes in a new way. Therefore, I have much sympathy with the Opposition on this occasion. The then Secretary of State for Energy, my right hon. Friend the Member for Guildford (Mr. Howell), was unable to persuade me differently, as was the Government Chief Whip. Perhaps that is why I am still sitting on the Back Benches.

The British Gas Corporation and the Government knew full well that for years they had been spending millions of pounds on television advertising of cheap North sea gas "at the turn of a switch". Many people used their life savings and took out loans to change from other forms of energy such as oil, electricity and solid fuel to gas to heat their homes. I recorded at that time that more than 1 million people and many companies had made the switch. Gas was the cheap form of energy.

10.30 pm

My Government stepped in to put before the House legislation giving authority to raise gas prices three years in succession. I was unhappy about that, but I was more unhappy about the Government following that measure a little later with the Gas Levy Act 1981 enabling them to cream off the profits from gas sales.

All hon. Members know that the British Gas Corporation made tremendous profits — more than it needed to make. I like any good, straightforward, honest legislation, but I am unhappy when we do things through the back door. In the Tea Room, 40 Conservative Members felt the same, but they all succumbed to pressure. On that night in 1979 I was left standing, exactly as I am this evening—the only Conservative Member prepared to speak his mind plainly. I did not support my Government. If this measure were now put to a vote, I certainly would not support the Government.

I want to hear from my right hon. and learned Friend the Chief Secretary—I know that much work lies before us tonight—why he feels that the Government cannot present to the House an honest statement of the financing arrangements.

Mr. James Wallace (Orkney and Shetland)

I shall speak briefly to give the support of Liberal Members to this new clause. It is clear that the new clause is designed to promote local government, and we support it on that ground. It is equally clear that the general financing limits that the Government impose on the gas and electricity industries have a significant effect on the public sector borrowing requirement. That effect seems likely to increase in the next few years.

Table 1.6 of "The Government's Expenditure Plans 1984–85 to 1986–87" shows that the estimated outturn of total external finance for 1983–84 is £2.5 billion, which is expected to fall to £90 million in 1986–87. The small print following that table states: By far the largest amounts of external finance continue to be for British Rail and the National Coal Board. Implicit in that statement are greater demands to pay back profits in the gas and electricity supply industries.

It is clear that the new clause will make the Government face up to the consequences of their demands on those industries. When the most recent requirement on those industries was made known last autumn, hon. Members found, on questioning the Secretary of State for Energy during Question Time and the debate on the Government's reply to the report of the Select Committee on Energy, that the Government tried to hide behind a smokescreen of attempted justifications for the price increases by saying that the increases were less than the rate of inflation and comparing the increases under the Conservative Government with those under the Labour Government. The Government did not face up to the fact that they were taxing by the back door.

It is a matter of regret that the new clause does not go far enough. I am not criticising the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), but, as he said, there may be occasions when we might wish to debate the back door tax consequences resulting from the demands made of the energy supply industries. They affect individuals. It is a bad form of regressive taxation on those who are already struggling to deal with their own fuel bills and has an effect on industry, particularly energy-intensive industries that already have to struggle to compete with foreign competitors who, it appears, are charged lower energy costs than our native industries.

For those reasons and in the interest of open government and making the Government face up to the consequences of their own action, I support the new clause. The Select Committee said in paragraph 50 of its report: If, however, the Government decides that it is necessary, on revenue-raising grounds, to require the electricity industry to increase its prices in order to ensure that its greatly enlarged negative EFL can be met, then this should be openly and honestly avowed. The Treasury should not seek to cloak a largely fiscal policy decision in the impenetrable garb of economic pricing jargon. In as much as the new clause tries to show up the Government's true motives, it has our support.

Mr. Kevin Barron (Rother Valley)

I support new clause 3. One reason is that the Budget speech lacked honesty about the energy policy. That afternoon the Chancellor made great play of the abolition of the tax on paraffin. He said how much that would help domestic consumers in poverty-stricken homes, and was cheered by Conservative Members. However, he actually knocked 1p off the price per gallon of paraffin, making it approximately £1.46 per gallon instead of £1.47 per gallon. That was supposed to cure fuel poverty.

I, too, sit on the Select Committee on Energy, which has looked at policies on gas and electricity over the past 12 months. We found in January this year that the price of domestic gas went up by 4.3 per cent. The hon. Member for Orkney and Shetland (Mr. Wallace) talked about the bad effects on industry, but this year the increase was just in domestic prices. Electricity prices rose in April this year. There was a 2 per cent. rise in the cost of domestic electricity.

This year the energy tax in both industries was directly related to the domestic market. There are also more than 120,000 disconnections of domestic heating and lighting in homes in Britain annually. For an energy-rich country such as ours, that is a disgrace. The Government should try to avoid that, rather than trying to make it worse by taxing energy at this crude source.

When the Select Committee considered electricity prices we came upon a Coopers and Lybrand report that was instigated in 1981 by the then Secretary of State for Energy, now the Chancellor of the Exchequer. The report had been kept under the wraps in Whitehall and was brought out only this year. That firm of City accountants, asked by the Government to look into the electricity supply industry, recommended that domestic and industrial electricity prices should be reduced. How much was a matter for debate, according to the report, but it was conclusive in believing that they should be reduced, and that the system of pricing in the electricity supply industry was wrong and unfounded.

If the price of electricity had been reduced as a result of that report, there might have been fewer domestic disconnections, more competitive industry and greater use of electricity. The NCB and the NUM might not then have been involved in an 18-week strike about an alleged overproduction of 4.4 million tonnes of coal. Sooner or later, someone will have to apply simple economics to these matters instead of hiding things all the time and forcing one industry into difficulties by putting a fuel tax on another. British Gas is currently £300 million in the black with the Treasury and the Treasury paying interest on that. Hiding figures of that kind simply creates wider problems in the economy at large. It is nonsense to be arguing about whether pits are economic when we have reports showing that electricity prices are not soundly based.

We need more honesty about fuel costs. New clause 3 will ensure that any Government will have to state annually exactly what they are doing with domestic and industrial energy charges. For that reason, the whole House should support the new clause.

Dr. Marek

I agree with my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that the external financing limits on gas and electricity are a form of fuel tax which is hidden from public perception by the way in which it has been presented to the country, as I shall describe in more detail shortly. I also agree with the comments of my hon. Friend the Member for Rother Valley (Mr. Barron). The hon. Member for Littleborough and Saddleworth (Mr. Dickens), too, has my respect for the statements that he has made.

The first report of the Select Committee on Energy states in paragraph 51: The Treasury witnesses did not strengthen their case by the manner in which they chose to present it to the Committee. An honest statement of the constraints placed upon their freedom to speak would have been more acceptable than the disingenuous claim that they knew no more about the Electricity Council's views than they had read in the newspapers. I cannot judge whether the Treasury witnesses were deliberately lying or merely being disingenuous, as I was not a member of the Select Committee, but the report states in thick print that an honest statement would have been more acceptable than the disingenuous claims reported to have been made by the Treasury.

The matter goes to the root of democratic government and of the question of freedom of information. Are we to know what we have the right to know? Shall we be told whether civil servants who give us information genuinely do not know the answer or that they know the answer but have been told by their masters, the Government, not to give it? I would prefer them to say honestly that they have been instructed by the Government not to give the information.

10.45 pm

Page ix of the Select Committee's report refers to the gas price increase and to the proposed electricity price increase. The most significant paragraph states: We find the whole process by which the ESI's EFL for 1984–85 was set, quite apart from the figure itself, extremely disturbing, since it appears to have almost completely inverted the normal procedure. We have all found the process disturbing and perplexing. We do not know how the figure was arrived at, although some of my hon. Friends have suggested possible ways in which the EFLs may have been calculated. If new clause 3 is adopted, the onus will be on the Treasury to state in the Red Book exactly how the EFL is arrived at and what impact it will have on the public sector borrowing requirement.

To support my claim that there has been obfuscation, and that it is very difficult for Opposition Members, let alone the general public, to know what is going on, I can point to a column in the Financial Times today about a report by the London Business School, the Institute of Public Sector Management and the Association of Certified Accountants, criticising Treasury documents. The report is quoted as follows: 'The documents currently produced to give the Government's expenditure proposals are the result of unco-ordinated historical developments.' They are … based on precedent and the needs of those who produce them". A third factor may be that the documents are designed to be evasive and difficult to understand because in certain cases the Government do not want the Opposition or the public to understand what they are doing. The Government price increases for electricity are seen by us as an extra tax on the public. It is easy to see that certain members of the Government would want to make that situation difficult for the public to understand.

Mr. Peter Rost (Erewash)

The hon. Gentleman has quoted the Energy Select Committee, of which I am a member. Would he explain whether he objects in principle to a nationalised industry making a surplus, from which the shareholder—the nation—can benefit? That surplus can be used to subsidise those nationalised industries for which the shareholder has to continue to provide huge subsidies, such as the coal industry. Would he not accept that the surplus obtained by the Treasury from the gas and electricity industries together does not equal the amount that has to be paid to subsidise the coal industry?

Dr. Marek

I can answer that. I have no objection at all to efficient and well-run industries such as the electricity generating industry making a profit, but they should not be making a huge profit. It is not the job of the Government to use the profits of one nationalised industry to cancel out the losses of another. It is the job of the Government to take the whole of their revenue and balance it out so that no group of citizens is disproportionately hit by any of its decisions. To say that the electricity supply industry makes a huge profit, and that therefore it must subsidise the railways or the farmers from that profit, is too narrow a view. The Government should take a much wider view. I have no objection to the electricity supply industry making a profit, but the profit should not be too large. The authors of the report which is mentioned in the Financial Times also criticise the Government for lack of clarity in defining Government expenditure. I agree that it would be far simpler if the Government made their public expenditure documents more intelligible. We can understand the gist if we spend time on them, but Members of Parliament do not have time so we often put them away and see what the journalists think the next day.

The authors of the report tried to establish total Government expenditure from last year's spending White Paper. It took them a long time and they discovered four totals that varied by £3 billion. I am not sure whether to be aghast, utterly surprised or not surprised. It worries me, however, and new clause 3 would remedy that. It puts the onus on the Government to equate the EFLs of the electricity and gas supply industries to assess the effect on the PSBR. Conservative and Labour Members disagree violently on economic policy, but I think that we are all interested to know what PSBR we want for any year and how it is composed. Opposition Members believe that, in recession, we should spend on infrastructure as we cannot expect manufacturing industry to build a superstructure in the absence of an infrastructure. Conservative Members have their own little theories that fall into ashes as clay follows day in 1984.

Even if the Opposition cannot get the economic policies that we want, we and the public would like a simple set of figures that correlate EFLs in the gas and electricity industries to see how they impinge on the PSBR. I hope that the Chief Secretary will take those points seriously. If he cannot accept new clause 3 now, he should get his civil servants to examine the matter with a view to simplifying the voluminous material that appears before us each year.

Mr. Eddie Loyden (Liverpool, Garston)

I support what my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said about the Government's dishonesty about indirect taxation on fuel. The issue goes far beyond the relationship between fuel taxation and the balance of payments. In many parts of the country, especially where there is high unemployment, fuel is becoming a luxury for many families.

We should consider the Government's attitude to fuel policy. Although this debate is about the Government's attitude to indirect taxation, there is a human dimension in terms of disconnections that Opposition Members see in their constituencies. People cannot understand—and why should they?—why the Government make viable industries impose price increases on consumers. Conservative Members have not mentioned consumer interest. They are interested only in profit.

Consumer interest has been much affected by the Government's decision on this matter. This is one of the foremost problems that constituents raise. They cannot understand why a country that is rich in fuel energy should resort to increasing prices beyond what the industry demands.

There is something radically wrong here. It is a question not just of the effect upon the balance of payments and the dishonesty of the approach but of energy policy in general. It is time that we began to recognise that the resources available to us are for the purpose not only of making profits but of providing for people's energy needs. It is a scandal and shame that year after year people in this country should be dying from hypothermia while the Government impose taxes on the basic essentials of fuel and light. The importance of the effects of this policy on the consumers of gas and electricity ought not to be understated.

The Chief Secretary to the Treasury (Mr. Peter Rees)

We have had a most interesting debate. The substance of the remarks of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) perhaps went a little outside the form of the new clause, which provides: `Upon the passing of this Act, the Chancellor of the Exchequer shall include in the annual Financial Statement and Budget Report a statement showing the impact on the public sector borrowing requirement of the external financial limits of the gas and electricity industries.'. What appears to have escaped the attention of the right hon. Gentleman—and I am puzzled about this, because I know that he is assiduous in these matters—is that the external financing limits of the nationalised industries are set out, not once but twice, in the course of the year. For the year ahead, they are set out in the autumn statement. I know, from our exchanges in the past, that the right hon. Gentleman likes to be reassured of the page and the reference. I refer him to the autumn statement 1983, page 22, table 2.3. There he will find the external financing limits of all the nationalised industries for the year ahead. The second occasion when these matters are set out in even greater detail is in the White Paper on public expenditure. Again I refer the right hon. Gentleman to page 134, and thereafter, where he will find set out the EFLs of each of the nationalised industries, breaking them down industry by industry.

It is true that the external financing limits are not reproduced in the Red Book, to which the right hon. Gentleman specifically referred. The Red Book sets out the projected level of the PSBR and the overall pattern of public expenditure. By relating the figures in the autumn statement and in the public expenditure White Paper to the figures in the Red Book, it is easy to see the likely impact of the PSBR and the EFLs. I am a little at a loss to know what additional information the House feels is required of the Government of the day to cast some illumination on the matter.

I deal next briefly with the principles underlying energy prices. It may surprise the right hon. Member for Sparkbrook to know that we follow precisely the same principles as were set out, but not necessarily followed, in the Green Paper produced by his right hon. Friend the Member for Chesterfield (Mr. Benn) in 1978. I seem to recall that the right hon. Member for Sparkbrook was then the Secretary of State for Prices and Consumer Protection, so he no doubt was concerned with the wording of that Green Paper. Because it contains a statement of some importance, I should perhaps read it: The principle that prices should reflect the costs of supply on a continuing basis while providing an adequate return on capital is now firmly established … the relevant cost is the cost incurred or saved in expanding or contracting supplies in the present or in the future rather than an average of past costs. Those are the principles that we attempt to follow. The Labour Administration did not follow those principles precisely, and I shall remind the right hon. Genteleman and the House of some of the salient facts. For example, between 1974 and 1979, domestic electricity prices increased by 169 per cent., and between 1979 and 1983 by 83 per cent. Over the same periods, industrial electricity prices increased by 134 per cent. and 67 per cent., and industrial gas prices by 291 per cent. and 85 per cent. We are following as faithfully as possible the general principles that had been enunciated, but it seems that the Labour Administration went a little wide of their target.

11 pm

Several hon. Members, in particular my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) and the hon. Member for Liverpool, Garston (Mr. Loyden) drew attention to the impact of energy prices on less well-off sections of the community. I hope that I can reassure them and the House by saying that the Government are spending about £380 million a year to cushion the impact of energy prices, and the heating addition is now at the highest real level ever. Therefore, both in substance and in form, we more than meet the points made by the right hon. Member for Sparkbrook and his colleagues.

Mr. Hattersley

The Chief Secretary is invariably as bad as we expect him to be, and today was no exception. He knows that by comparing the PSBR figure in the Red Book with the figures for external financing to which I referred, and which were published on previous occasions, it is not possible to identify clearly the impact of fuel taxes on the PSBR. If he was right, and the three sets of figures were there, available to anyone, and one had only to be subtracted from the other to obtain the results that we see, surely even this obdurate Government would not vote against a new clause that required them to do nothing more than a piece of simple arithmetic and publish it in the Red Book once a year. By not having the matter clearly set out, the Government are able to obscure the effect of their energy pricing policy.

Once again, the Chief Secretary has failed even to deal with the point that I have raised in two debates. He then misunderstood it, and now he has ignored it. The Government claim that, like their predecessors, they have struggled for a fuel pricing policy that is related to the needs of the industry, but they have changed the criteria by which the needs are measured. They have changed them in the case of gas specifically to impose an unnecessary price increase. It is that that we wish to expose, but the Government's majority will temporarily prevent us from doing so. Nobody, in the House or outside, will delude themselves into believing that it will not be increasingly understood in the country that the Government, first, impose a fuel tax on domestic consumers and, secondly, make a pathetic attempt to pretend that they do not.

Question put, That the clause be read a Second time:—

The House divided: Ayes 189, Noes 319.

Division No. 401]	[11.05 pm
AYES
Adams, Allen (Paisley N)	Dewar, Donald
Anderson, Donald	Dickens, Geoffrey
Archer, Rt Hon Peter	Dixon, Donald
Ashdown, Paddy	Dobson, Frank
Ashley, Rt Hon Jack	Dormand, Jack
Ashton, Joe	Dubs, Alfred
Atkinson, N. (Tottenham)	Dunwoody, Hon Mrs G.
Bagier, Gordon A. T.	Eastham, Ken
Banks, Tony (Newham NW)	Evans, John (St. Helens N)
Barnett, Guy	Ewing, Harry
Barron, Kevin	Fatchett, Derek
Beckett, Mrs Margaret	Faulds, Andrew
Beith, A. J.	Field, Frank (Birkenhead)
Bell, Stuart	Fields, T. (L'pool Broad Gn)
Benn, Tony	Fisher, Mark
Bennett, A. (Dent'n & Red'sh)	Flannery, Martin
Bermingham, Gerald	Foster, Derek
Blair, Anthony	Foulkes, George
Boothroyd, Miss Betty	Fraser, J. (Norwood)
Boyes, Roland	Freeson, Rt Hon Reginald
Brown, Gordon (D'f'mline E)	Freud, Clement
Brown, Hugh D. (Provan)	George, Bruce
Brown, N. (N'c'tle-u-Tyne E)	Gilbert, Rt Hon Dr John
Brown, R. (N'c'tle-u-Tyne N)	Godman, Dr Norman
Brown, Ron (E'burgh, Leith)	Golding, John
Bruce, Malcolm	Gould, Bryan
Buchan, Norman	Gourlay, Harry
Caborn, Richard	Hamilton, W. W. (Central Fife)
Callaghan, Rt Hon J.	Hardy, Peter
Callaghan, Jim (Heyw'd & M)	Harman, Ms Harriet
Campbell-Savours, Dale	Harrison, Rt Hon Walter
Canavan, Dennis	Hart, Rt Hon Dame Judith
Carlile, Alexander (Montg'y)	Hattersley, Rt Hon Roy
Carter-Jones, Lewis	Heffer, Eric S.
Cartwright, John	Hogg, N. (C'nauld & Kilsyth)
Clark, Dr David (S Shields)	Holland, Stuart (Vauxhall)
Clarke, Thomas	Home Robertson, John
Clay, Robert	Howell, Rt Hon D. (S'heath)
Clwyd, Mrs Ann	Howells, Geraint
Cocks, Rt Hon M. (Bristol S.)	Hoyle, Douglas
Cohen, Harry	Hughes, Dr. Mark (Durham)
Coleman, Donald	Hughes, Robert (Aberdeen N)
Conlan, Bernard	Hughes, Roy (Newport East)
Cook, Robin F. (Livingston)	Hughes, Sean (Knowsley S)
Corbett, Robin	John, Brynmor
Corbyn, Jeremy	Johnston, Russell
Cowans, Harry	Jones, Barry (Alyn & Deeside)
Cox, Thomas (Tooting)	Kennedy, Charles
Craigen, J. M.	Kilroy-Silk, Robert
Crowther, Stan	Kinnock, Rt Hon Neil
Cunliffe, Lawrence	Kirkwood, Archy
Cunningham, Dr John	Lambie, David
Dalyell, Tam	Leighton, Ronald
Davies, Rt Hon Denzil (L'lli)	Lewis, Ron (Carlisle)
Davies, Ronald (Caerphilly)	Lewis, Terence (Worsley)
Davis, Terry (B'ham, H'ge H'l)	Litherland, Robert
Deakins, Eric	Lloyd, Tony (Stretford)

Lofthouse, Geoffrey	Robinson, G. (Coventry NW)
Loyden, Edward	Rogers, Allan
McCartney, Hugh	Ross, Stephen (Isle of Wight)
McDonald, Dr Oonagh	Rowlands, Ted
McKay, Allen (Penistone)	Sedgemore, Brian
McKelvey, William	Sheerman, Barry
McNamara, Kevin	Sheldon, Rt Hon R.
McTaggart, Robert	Shore, Rt Hon Peter
McWilliam, John	Short, Ms Clare (Ladywood)
Madden, Max	Silkin, Rt Hon J.
Marek, Dr John	Skinner, Dennis
Marshall, David (Shettleston)	Smith, C.(Isl'ton S & F'bury)
Martin, Michael	Smith, Rt Hon J. (M'kl'ds E)
Maxton, John	Snape, Peter
Meacher, Michael	Soley, Clive
Meadowcroft, Michael	Spearing, Nigel
Michie, William	Steel, Rt Hon David
Mikardo, lan	Stott, Roger
Millan, Rt Hon Bruce	Strang, Gavin
Miller, Dr M. S. (E Kilbride)	Straw, Jack
Mitchell, Austin (G't Grimsby)	Thomas, Dafydd (Merioneth)
Morris, Rt Hon A. (W'shawe)	Thomas, Dr R. (Carmarthen)
Morris, Rt Hon J. (Aberavon)	Thompson, J. (Wansbeck)
Nellist, David	Thorne, Stan (Preston)
Oakes, Rt Hon Gordon	Tinn, James
O'Brien, William	Torney, Tom
Park, George	Wainwright, R.
Patchett, Terry	Wallace, James
Pavitt, Laurie	Wardell, Gareth (Gower)
Pendry, Tom	Weetch, Ken
Penhaligon, David	Welsh, Michael
Pike, Peter	Williams, Rt Hon A.
Powell, Raymond (Ogmore)	Wilson, Gordon
Prescott, John	Winnick, David
Radice, Giles	Woodall, Alec
Randall, Stuart	Wrigglesworth, Ian
Redmond, M.
Rees, Rt Hon M. (Leeds S)	Tellers for the Ayes:
Richardson, Ms Jo	Mr. James Hamilton and
Robertson, George	Mr. Frank Haynes.

NOES
Adley, Robert	Burt, Alistair
Aitken, Jonathan	Butcher, John
Alexander, Richard	Butterfill, John
Alison, Rt Hon Michael	Carlisle, John (N Luton)
Ancram, Michael	Carlisle, Kenneth (Lincoln)
Arnold, Tom	Carlisle, Rt Hon M. (W'ton S)
Aspinwall, Jack	Carttiss, Michael
Atkins, Rt Hon Sir H.	Cash, William
Atkins, Robert (South Ribble)	Chalker, Mrs Lynda
Atkinson, David (B'm'th E)	Chope, Christopher
Baldry, Anthony	Churchill, W. S.
Banks, Robert (Harrogate)	Clark, Dr Michael (Rochford)
Batiste, Spencer	Clark, Sir W. (Croydon S)
Beaumont-Dark, Anthony	Clarke, Rt Hon K. (Rushcliffe)
Bellingham, Henry	Clegg, Sir Walter
Bendall, Vivian	Cockeram, Eric
Benyon, William	Colvin, Michael
Best, Keith	Conway, Derek
Bevan, David Gilroy	Cope, John
Biffen, Rt Hon John	Cormack, Patrick
Biggs-Davison, Sir John	Corrie, John
Blaker, Rt Hon Sir Peter	Couchman, James
Body, Richard	Cranborne, Viscount
Bonsor, Sir Nicholas	Critchley, Julian
Bowden, A. (Brighton K'to'n)	Currie, Mrs Edwina
Bowden, Gerald (Dulwich)	Dicks, Terry
Boyson, Dr Rhodes	Dorrell, Stephen
Brandon-Bravo, Martin	Douglas-Hamilton, Lord J.
Bright, Graham	Dover, Den
Brinton, Tim	du Cann, Rt Hon Edward
Brooke, Hon Peter	Dunn, Robert
Brown, M. (Brigg & Cl'thpes)	Durant, Tony
Browne, John	Dykes, Hugh
Bruinvels, Peter	Emery, Sir Peter
Bryan, Sir Paul	Evennett, David
Buchanan-Smith, Rt Hon A.	Eyre, Sir Reginald
Budgen, Nick	Fairbairn, Nicholas
Bulmer, Esmond	Fallon, Michael

Farr, Sir John	Knight, Mrs Jill (Edgbaston)
Favell, Anthony	Knowles, Michael
Fenner, Mrs Peggy	Knox, David
Finsberg, Sir Geoffrey	Lamont, Norman
Fletcher, Alexander	Lang, Ian
Forman, Nigel	Latham, Michael
Forsyth, Michael (Stirling)	Lawler, Geoffrey
Forth, Eric	Lawrence, Ivan
Fowler, Rt Hon Norman	Lawson, Rt Hon Nigel
Fox, Marcus	Lee, John (Pendle)
Franks, Cecil	Leigh, Edward (Gainsbor'gh)
Freeman, Roger	Lennox-Boyd, Hon Mark
Fry, Peter	Lester, Jim
Gale, Roger	Lewis, Sir Kenneth (Stamf'd)
Galley, Roy	Lightbown, David
Gardiner, George (Reigate)	Lilley, Peter
Gardner, Sir Edward (Fylde)	Lloyd, Ian (Havant)
Garel-Jones, Tristan	Lloyd, Peter, (Fareham)
Glyn, Dr Alan	Lord, Michael
Goodhart, Sir Philip	McCurley, Mrs Anna
Goodlad, Alastair	Macfarlane, Neil
Gorst, John	MacGregor, John
Gow, Ian	MacKay, Andrew (Berkshire)
Gower, Sir Raymond	MacKay, John (Argyll & Bute)
Grant, Sir Anthony	Maclean, David John
Greenway, Harry	McNair-Wilson, P. (New F'st)
Gregory, Conal	McQuarrie, Albert
Griffiths, E. (B'y St Edm'ds)	Madel, David
Griffiths, Peter (Portsm'th N)	Major, John
Grist, Ian	Malins, Humfrey
Ground, Patrick	Malone, Gerald
Hamilton, Hon A. (Epsom)	Maples, John
Hamilton, Neil (Tatton)	Marland, Paul
Hannam,John	Marshall, Michael (Arundel)
Hargreaves, Kenneth	Mates, Michael
Harris, David	Maude, Hon Francis
Harvey, Robert	Mawhinney, Dr Brian
Haselhurst, Alan	Maxwell-Hyslop, Robin
Havers, Rt Hon Sir Michael	Mayhew, Sir Patrick
Hawkins, C. (High Peak)	Merchant, Piers
Hawkins, Sir Paul (SW N'folk)	Meyer, Sir Anthony
Hawksley, Warren	Miller, Hal (B'grove)
Hayes, J.	Mills, Iain (Meriden)
Hayhoe, Barney	Mills, Sir Peter (West Devon)
Hayward, Robert	Miscampbell, Norman
Heathcoat-Amory, David	Mitchell, David (NW Hants)
Heddle, John	Moate, Roger
Henderson, Barry	Monro, Sir Hector
Heseltine, Rt Hon Michael	Moore, John
Hickmet, Richard	Morris, M. (N'hampton, S)
Hicks, Robert	Morrison, Hon C. (Devizes)
Higgins, Rt Hon Terence L	Morrison, Hon P. (Chester)
Hind, Kenneth	Moynihan, Hon C.
Hirst, Michael	Mudd, David
Hogg, Hon Douglas (Gr'th'm)	Murphy, Christopher
Holland, Sir Philip (Gedling)	Neale, Gerrard
Holt, Richard	Needham, Richard
Hooson, Tom	Nelson, Anthony
Hordern, Peter	Newton, Tony
Howard, Michael	Nicholls, Patrick
Howarth, Alan (Stratf'd-on-A)	Norris, Steven
Howarth, Gerald (Cannock)	Onslow, Cranley
Howe, Rt Hon Sir Geoffrey	Oppenheim, Philip
Howell, Rt Hon D. (G'ldford)	Ottaway, Richard
Howell, Ralph (N Norfolk)	Page, Richard (Herts SW)
Hubbard-Miles, Peter	Parkinson, Rt Hon Cecil
Hunt, David (Wirral)	Parris, Matthew
Hunter, Andrew	Patten, Christopher (Bath)
Jackson, Robert	Patten, John (Oxford)
Jessel, Toby	Pawsey, James
Johnson-Smith, Sir Geoffrey	Pollock, Alexander
Jones, Robert (W Herts)	Porter, Barry
Jopling, Rt Hon Michael	Powell, William (Corby)
Joseph, Rt Hon Sir Keith	Powley, John
Kellett-Bowman, Mrs Elaine	Prentice, Rt Hon Reg
Kershaw, Sir Anthony	Price, Sir David
Key, Robert	Prior, Rt Hon James
King, Roger (B'ham N'field)	Proctor, K. Harvey
King, Rt Hon Tom	Pym, Rt Hon Francis
Knight, Gregory (Derby N)	Raffan, Keith

Rathbone, Tim	Taylor, John (Solihull)
Rees, Rt Hon Peter (Dover)	Taylor, Teddy (S'end E)
Renton, Tim	Tebbit, Rt Hon Norman
Rhodes James, Robert	Temple-Morris, Peter
Rhys Williams, Sir Brandon	Terlezki, Stefan
Ridley, Rt Hon Nicholas	Thatcher, Rt Hon Mrs M.
Ridsdale, Sir Julian	Thomas, Rt Hon Peter
Rifkind, Malcolm	Thompson, Donald (Calder V)
Roberts, Wyn (Conwy)	Thompson, Patrick (N'ich N)
Robinson, Mark (N'port W)	Thurnham, Peter
Roe, Mrs Marion	Townend, John (Bridlington)
Rossi, Sir Hugh	Townsend, Cyril D. (B'heath)
Rost, Peter	Tracey, Richard
Rowe, Andrew	Trippier, David
Ryder, Richard	Trotter, Neville
Sackville, Hon Thomas	Twinn, Dr Ian
Sainsbury, Hon Timothy	Vaughan, Sir Gerard
Sayeed, Jonathan	Viggers, Peter
Scott, Nicholas	Waddington, David
Shaw, Giles (Pudsey)	Wakeham, Rt Hon John
Shelton, William (Streatham)	Waldegrave, Hon William
Shepherd, Colin (Hereford)	Walden, George
Shepherd, Richard (Aldridge)	Walker, Bill (T'side N)
Silvester, Fred	Wall, Sir Patrick
Sims, Roger	Waller, Gary
Skeet, T. H. H.	Walters, Dennis
Soames, Hon Nicholas	Ward, John
Speller, Tony	Wardle, C. (Bexhiil)
Spencer, Derek	Watson, John
Spicer, Jim (W Dorset)	Watts, John
Spicer, Michael (S Worcs)	Wells, Bowen (Hertford)
Stanbrook, Ivor	Whitfield, John
Stanley, John	Wiggin, Jerry
Stern, Michael	Winterton, Mrs Ann
Stevens, Lewis (Nuneaton)	Winterton, Nicholas
Stevens, Martin (Fulham)	Wolfson, Mark
Stewart, Allan (Eastwood)	Wood, Timothy
Stewart, Andrew (Sherwood)	Yeo, Tim
Stewart, Ian (N Hertf'dshire)	Younger, Rt Hon George
Stokes, John
Stradling Thomas, J.	Tellers for the Noes:
Sumberg, David	Mr. Robert Boscawen and
Tapsell, Peter	Mr. Carol Mather.

Question accordingly negatived.