§ The Minister of State, Northern Ireland Office (Dr. Rhodes Boyson)
I beg to move,That the draft Gas (Northern Ireland) Order 1985, which was laid before this House on 11th July, be approved.Those who have had to consider this topic in recent months are well aware that the future of the Northern Ireland gas industry has given rise to argument and debate in the Province for many years. Hon. Members may feel that those arguments should be rehearsed again today, but I ask that we do not lose sight of the simple fact that the instrument that is now before the House is made necessary by the fact that only one of Northern Ireland's gas undertakings—and that in private hands, the Portadown undertaking—considers it can continue in business without Government subsidy. This subsidy has rapidly increased from £2 million a year between 1974 and 1980 to £10 million a year between 1980 and 1984, and today it stands at £12 million.
Listening to recent criticism of the draft order, the disinterested layman could be forgiven for assuming that it expressly commanded the closure of the Province's gas industry, overriding the wishes of all those involved in it who wanted to maintain it. That is not the case. In every instance, the decision to close was taken by the gas undertaker alone and was based on a recognition that remaining in operation was not a commercially sensible proposition.
The Government simply said that increasing the subsidy more and more, in the manner of the economics of Passchendaele, would have to come to an end. Once closure decisions were taken, the order became essential, first, to relieve such undertakers of their statutory obligation to supply, and, secondly, to allow the Government to fund an orderly and planned rundown of each undertakings operations.
§ Mr. Dave Nellist (Coventry, South-East)
The Minister referred to an increase in subsidy from £2 million to £12 million—a £10 million increase. He will no doubt point out in due course that the number of workers affected by the order in the gas industry totals at least 1,000 in Belfast and several hundreds elsewhere.
Does he not find it slightly ironic that he should be making such remarks only minutes after one of his colleagues in the Cabinet said that the Government could afford £9 million to increase the salaries of fewer than 2,000 people in the judiciary, the Civil Service and the armed forces? He is now saying that they cannot afford a a similar sum to secure for a further year the equivalent number of jobs in Northern Ireland.
§ Dr. Boyson
I thought that we had finished with that issue and were now dealing with the draft order. I appreciate the hon. Gentleman's feelings on the subject and I do not minimise them. Today, however, we must look coldly at the gas industry, and later in my remarks I shall deal with the question of jobs.
It is not simply a question of losing jobs in one industry. By employing coal—it and liquid petroleum already account for 50 per cent. of central heating installations in Northern Ireland—it is hoped, because of the number of people involved in distribution and so on, that there will be more jobs than there are at present. I am sure that the hon. Gentleman will join me in expressing that hope.
664 I have a responsibility to see that the £4 billion available to Northern Ireland is spent to the advantage of the people, and no hon. Member will disagree with me in saying that. We are prepared, as we are already doing, to put money into transferring one generating station over to coal. We believe that to do so is more economic and will save money for the Province because it will make it cheaper to generate electricity. We are also prepared to put money into lignite and to take other financial steps which, in the long run, will be to the advantage of the mass of the population of Northern Ireland. I am therefore grateful to the hon. Member for Coventry, South-East (Mr. Nellist) for intervening, because he has given me an opportunity to state the position.
For the benefit of hon. Members who may be unfamiliar with the problems of the gas industry' of the Province, I should point out that in the last 10 years Governments of both complexions—this can be demonstrated by many quotations from many debates—have sought to tackle the industry's fundamental problem of soaring costs due to its oil-based feedstock and the additional difficulties caused by its fragmented and declining structure.
In May 1976, our predecessors in office—a Labour Government—commissioned the Britsh Gas Corporation to determine the scope for resolving those problems, and the then Minister of State, the right hon. Member for Mansfield (Mr. Concannon), for whom we have a high regard, quoted the corporation's report when he said:As a whole, the industry has a poor image in the view of its customers and is becoming increasingly uncompetitive with other fuels."—[Official Report, Northern Ireland Committee, 6 July 1977; c. 2.]That was eight years ago.
In its report, the British Gas Corporation—I have that report with me and I am sure that other hon. Members have studied it—looked at all possibilities offering the prospect of viability. Among the options considered was the possibility of a gas pipeline from Great Britain. On the basis of the corporation's report, the Government concluded that, as with a number of areas on the British mainland covering at least 15 per cent. of households, a direct pipeline was not an economic proposition. That remains the position today.
I remind the House that 15 per cent. of households in Great Britain are not on natural gas, although most of them would like to be. That is because they are not within 25 yards of a main pipeline, or—I say' this from memory—they are not using more than 25,000 therms over a given period. It was accepted in 1975 that undertakings would at some stage be obliged to close unless further demand was placed on the industry.
§ Dr. Boyson
So far as I know, it is 25 yards, but I am always open to correction. On this occasion, speaking in a gas mantle position, I believe that I am right.
Hope for the industry was rekindled, however, when in 1980 the prospect of a natural gas supply from the Republic of Ireland became a possibility. It was an option which we pursued for the industry with determination, and in October 1983 agreement in principle on a supply of gas from the Kinsale field to Northern Ireland was reached between the British and Irish Governments.
Following the signing of the agreement in October 1983, but preceding the conclusion of a contract for supply 665 —it was only a memorandum of understanding—two critical developments took place which utterly changed the Kinsale project's prospect of viability. First, the long-term trend in heavy fuel oil prices, which was the integral component in determining the purchase price of Kinsale gas, was reassessed. Expert advice on fuel oil prices was that, over the long term, prices would remain much higher than had been anticipated. Heavy fuel oil prices are, of course, subject to large short-term fluctuations, but these are allowed for in our assessment of the long-term forecast.
The price has come down. At Christmas 1984 it was much higher than when the decision was made in the previous September by my predecessor. In March this year it was the same as it was then. It has since dropped. I have a graph showing the price increases in heavy fuel oil, and it shows tremendous increases in recent years. The graph showing the situation from 1976—I shall be glad to circulate it to any hon. Members who are interested—shows the increase to have continued well beyond the rate of inflation.
§ Mr. Peter Archer (Warley, West)
I understood the Minister to say that after October 1983 the Government took expert advice about the trends in heavy fuel oil prices. Is he saying that they did not take expert advice before they signed the memorandum of agreement?
§ Dr. Boyson
The Government take advice all the time. Indeed, one can suffer from the amount of advice that is received.
§ Dr. Boyson
I shall answer the right hon. and learned Gentleman, but he must be patient. He knows as well as I do that we get nothing but advice all the time. Ministers have the task of sorting out which advice is valid and which is invalid in the context of the matters with which they are dealing. My answer, therefore, is that the Government did take advice. I grant that the Labour party, when in office, did the same. Advice is continually coming in. It became more and more apparent that in the long term the cost of heavy fuel oil was more likely to increase than decrease. There was a secondary factor, however, which led us to consider what the fuel oil price would be—the fact that demand for gas in Northern Ireland was collapsing or, at any rate, was falling at a rate that was not expected.
We commissioned a very detailed study from Deloitte, Haskins and Sells to help plan the natural gas network at that time. I have the report here. Even allowing for a wide margin of error, the report of those studies presented an estimated total demand for gas about one third less than the previous forecast produced by Coopers and Lybrand in 1983. In one year the fall in the demand for gas was such that there would have been only two thirds of that demand by the time the pipelines had been laid and natural gas provided to the Province.
Further discussions with the Irish Government failed to secure agreement on a revised price, and evidence from other sources confirmed our amended forecast of demand. In an attempt to resolve the problem, we examined various adjustments to the project, such as reduced area of supply, but none of those proved viable.
We were faced with the stark alternatives of proceeding with an uneconomic project, which would continue to 666 make heavy calls on Northern Ireland's limited public expenditure resources, or withdrawing from it entirely. The decision to abandon the enterprise was unpalatable, unpopular and regrettable in many ways, but I believe that any responsible and honest Government would have made that decision on the information then available. The information is basically the same today as it was when my predecessor made his decision at the beginning of September last year.
The Kinsale project had appeared to offer the industry's only prospect of a secure future. In reaching the conclusion that it was not a commercially viable proposition, the Government reaffirmed the cecision taken in July 1979 that there could be no more subsidy for gas undertakings in the absence of any hope of their attaining viability. The Government had been moving towards that decision for about five years previously, and they made it perfectly clear in September last year.
The decision was not taken lightly. It was grounded in a recognition that we could not afford to spend £12 million a year—and it is self-increasing—on something which would contribute only 2 per cent. of Northern Ireland's energy supply. I repeat that 98 per cent. of the energy of Northern Ireland comes from other sources. Indeed, if all the energy of the Province were to be subsidised at the same rate, it would cost £600 million in subsidy—between one sixth and one seventh of the whole of the Northern Ireland block.
The subsidy represents £120 per consumer every year, or '70p for every therm of gas sold. Last year, even with that level of support, the Belfast undertaking alone lost about 10,000 customers, or one in seven. Subsidy of that order must, of course, come out of Northern Ireland's overall allocation. What we spend on a declining gas industry has to be offset by savings in some other area of public expenditure in the Province—for example, health or education.
In announcing the withdrawal of subsidy, my predecessor, my right hon. Friend the Member for Bosworth (Mr. Butler), invited representations about the future of the gas industry in Northern Ireland from the various interests involved. The Government were prepared to consider seriously any option proposed, on the sole condition that it offered the firm prospect of a viable industry without the continuation of an indefinite subsidy towards the price of gas. That was then the bottom line, and it was again the bottom line in a similar statement that I made in April this year.
In response, a joint working group from the industry announced that it was developing a revised Kinsale gas scheme which it proposed to offer as an alternative to the abandoned project. It has been alleged that we were not disposed to examine that proposal fairly. The reality, of course, is that we allowed the accumulation of another six months of deficit support, at £ t million per month, while the joint working group's scheme took shape. We said, "You can do it, but you must convince us that it will be viable without Government subsidy." When the scheme was finally produced, it was subjected to a thorough appraisal. That appraisal found the scheme to be seriously flawed, for reasons to which I shall come later.
Some hon. Members have suggested that we deliberately avoided conveying our reservations to the scheme's sponsors who, we are told, were "shattered" when I made my announcement to them on Good Friday. Incidentally, Good Friday is a working day in Northern 667 Ireland. We are talking about the Northern Ireland gas industry, not the one in Great Britain, and hon. Members should understand that. I told the sponsors that the Government could not accept their rescue plan for the industry.
The suggestion from hon. Members rather ignores the appraisal process which actually took place. The rescue plan was analysed by the Department's advisers, who then expressed their reservations in person and in detail to the consultants employed by the joint working group. Between five and nine meetings were held, and I have been provided with the dates. The reservations were severe and centred on the methods of analysis which has been used and the demand projections therby produced. Accordingly, the consultants were urged to inform their clients. Against that background, hon. Members will find it less than convincing to be told that the Government's rejection of their plan came as a total shock to the sponsors.
Our appraisal of the rescue plan uncovered a number of major difficulties, but fundamental to the reasons for its rejection was its failure to address that problem of a gas purchase price linked to heavy fuel oil and its dependence on gas capturing a huge share of the market at a high price relative to other fuels that could be bought.
It is generally implied by our opponents that some sort of accommodation on price could have been reached with the Republic of Ireland Government. That suggestion is based on nothing more than wishful thinking, as is hown by an examination of the evidence point by point.
Speaking in the Irish Parliament on 11 June, the Republic's Minister for Energy said:Deputy Reynolds and myself were in accord with our decision not to reduce our price to the British and there has not been a change in that case.Further comments from Mr. Spring, as reported on 10 July in the Irish Times, regarding the Republic's policy on gas prices in general, show that there has been no change in its approach. That, of course, is the prerogative of the Irish Government, and I respect their judgment, as they will respect our determination not to become locked into a project which is not viable for Northern Ireland.
§ Mr. Archer
Did the United Kingdom Government ever invite the Irish Government to reconsider that matter?
§ Dr. Boyson
Conversations on price were held, and they ended when the Irish Government were not prepared to compromise on it. Conversations have not been held since then because there is no sign that the Irish Government have changed their mind.
Last September we made a decision on the information that we had, when there was no suggestion that there would be a lowering of the price, and that decision still stands. We gave them six months in which to produce a viable scheme. We do not believe that it can be a viable scheme. Private enterprise obviously does not believe that it is a viable scheme; otherwise it would back it. The corporations presumably do not believe that it is a viable scheme, or they would back it with their money. Everybody comes to us to provide the money and the guarantees. We are always regarded as the banker of last resort.
§ Mr. Roy Beggs (Antrim, East)
Is the Minister suggesting that a price was offered to our Government on 668 a take-it-or-leave-it basis? Is the Minister aware that the negotiations were taking place with the greatest horse traders in the world, who would have been offering gas at the highest possible price that they could obtain for it but who would possibly have accepted a much lower price?
§ Dr. Boyson
The hon Member has raised an important point. Conversations continued until September last year, when a decision was taken that, unless we could be shown that the scheme was viable, the talks would end. We were prepared to be proved wrong by somebody showing that it could be done more economically. Conversations have not been held since then because it was clear that the price we were then offered was linked with the price of heavy fuel oil. That meant that it was no cheaper than taking heavy fuel oil.
In April this year we said that we were not convinced of the viability of the scheme, and I am even less convinced now. It is the economics of "Alice in Wonderland" to believe that the scheme that was put to us is viable. It came from interests and workers in the gas industry who were not putting in their own money. I am not attacking them for that, but they were not having to cover the money. The bill would have been left with the Government. The more we spend in that direction, the less we can spend in areas where we know we can save money for the Province. We can help with the energy price of electricity and lignite. We cannot spend a pound twice.
§ Mr. Harold McCusker (Upper Bann)
How can the Minister describe as "Alice in Wonderland" the proposals which Coopers and Lybrand and the consultancy report justify in economic and financial terms? How can he use that term to describe the work of those two bodies?
§ Dr. Boyson
Politicians on each side of the House are elected to make decisions on the information that is put to them. That is why we are here. I have considersble respect for the hon Gentleman. I do not know how one can increase sales at a price that is between 30 and 50 per cent. more than coal. That would mean gas taking 50 per cent. of the central heating market compared with its present 3 per cent. share of the market. I think that no one outside the House would believe that either.
§ Dr. Boyson
The hon. Gentleman should ask Coopers and Lybrand, not me. We have made the decision. I am answering the hon. Gentleman perfectly frankly; I am not running away from the question. It was an honest question and the hon. Gentleman is getting an honest reply. I appreciate that there are strong feelings inside and outside the House about the matter. That is why I am putting my case so firmly and strongly.
I shall now spell out in more detail what I was saying about demand in my quick and no doubt correct reply, because I have now lived with the gas industry for about eight or nine months, day by day and step by step.
On demand, the rescue plan requires that gas should capture a tenfold increase in sales at a price which, at the minimum, is about 30 per cent. above the price of coal. For example, that would mean gas taking 50 per cent. of an enlarged central heating market in contrast with its 3 per cent. share of today's market. The plan's supporters have endeavoured to deflect their arguments with calls for the release of the Government's internal market studies, but the fact remains that the scheme requires us to accept 669 an estimate for demand that is 50 per cent. higher than any other source has ever estimated. Every time we have had a report, the figures have been different. Presumably the only reason why reports can be sold is that the results are different every time. However, after reading the reports one has to make a decision on their validity.
Any person in my positiion or that of my predecessor could see that demand was falling faster than had been expected. That was the logic of the argument that was put to us at the time.
§ Dr. Boyson
I entirely agree with the hon. Gentleman. People were getting out of gas so fast that they literally would have had to be won back to the possibility of natural gas. That is one point about the amended plan. It would have been a long time before natural gas was introduced. People thought that it was a dying industry—it it was already dying on its feet. Therefore, they decided not to use gas. They were making a judgment that we eventually had to make. With the information that they received, those people preferred other fuels.
§ Mr. Archer
I think that the Minister has missed the point made by the hon. Member for Antrim, East (Mr. Beggs). There is no point in saying that earlier surveys gave a different result about market prospects if at earlier stages prospective candidates for the market had not been offered gas on those conditions and at those prices.
§ Dr. Boyson
One of the attributes of most politicians is the misunderstanding of a question. In this case, however, I tried to understand the question. We assessed demand as it was at the time, and it was less than before. The right hon. and learned Member is right. The hope of natural gas being introduced in three or four years with the new pipeline and resulting in increased demand, is not one that I share. That is not something that I can prove or disprove. The decision was made on the balance of the facts, and the facts all pointed the same way.
I was trying to spell out all the paraphernalia and information that we were given before we reached our decision. I do not propose to go into all the other doubts that emerged. I mentioned them in the Northern Ireland Committee. Those doubts emerged from our examination regarding the plan's under-estimates of capital cost and optimistic assumptions of productivity. The plan's sponsors know what those doubts are and that, sadly, we find them persuasive. In brief, an investment analysis of the plan's costs and returns showed a large cumulative deficit over the 20-year period of supply. The bottom line was that we were not convinced that that was viable. We thought that it would be a running sore in the finances of the Province.
Notwithstanding the plan's non-viability, the Government were encouraged to invest no more than £4 million to allow its implemention, and that was contrasted with the much greater sums required to assist the industry's closure. That argument is bogus. It assumes that substantial funding would be available from the European Community, but ignores the problem of additionality and the fundamental requirement that projects needing EC assistance must be viable in their own right.
670 Similarly, the Government are accused of unfairness for daring to include the element of the guarantee that they are required to give in calculating the overall cost of the plan. It is elementary common sense to anticipate the £70 million cost of those guarantees to the taxpayer, as we would have to meet them fully if the scheme did not succceed. We did not expect it to succeed at the time. An individual would not take on a guarantee for anybody without realising that it might be called in. It is real money when it is called in.
It is not a question of spending £4 million or £70 million to keep the industry going, compared with £97 million to close it. We do not believe that the £4 million or the £70 million, would keep it going. We would have to spend £4 million, then £70 million, and then the £97 million in addition. As far as we are concerned, that is pouring good money after bad.
At this stage I wish to allude briefly to several points that were raised during the Northern Ireland Committee debate, which I believe require some comment. First, concern was expressed that a wider European gas network is being planned which would link the gas system in the Republic of Ireland to that of Great Britain. I assure hon. Members that, as far as we know, no such link is envisaged at present. There has been talk about the gas industry for so long, but no concrete plan is on the table. The Government will, of course, regularly review the scope for wider interconnections of various European gas systems, but in order for such projects to be realised they must be economically viable and fulfil a commercial need.
Hon. Members may have seen speculation this week about private sector interest in the funding of new gas supply arrangements in the Province. I applaud every attempt to enhance the role of private capital in the Province's industry, and the gas industry is no exception. Obviously, the Government would not prevent private investment in any plan to revive the existing undertaking or to set up a new gas industry as long as genuine private investment was involved without recourse to Government guarantees and protection. The Government cannot invest taxpayers' money in a project in which we no longer have confidence. If such people want to put their money in, we would not stop them, but it is no good their coming to us for bottom line guarantees.
Of all the issues raised regarding the abandonment of the Kinsale project and the subsequent rejection of the rescue plan proposals, none is more important than job losses arising from closure decisions by undertakings. No one on either side of the House has a monopoly of concern on that matter. I regarded the impact on jobs as the prime reason for affording the rescue plan the extra six to eight months to see whether it could bring forward a viable scheme. However, simply wishing to preserve jobs is not a feasible basis for the success of any industry.
In recent years, the desire to maintain employment in the Province's gas undertakings has persuaded Governments of both colours to provide ever-increasing subsidies only to see the industry's decline continue relentlessly. Also, as I stressed in the Northern Ireland Committee debate, the jobs factor is not a simple issue. Closure would mean the loss of 1,000 jobs. One recognises that, and nobody is satisfied about it. The April plan would save 400 jobs. Those jobs could be saved only if trade was taken away from coal or other energy resources, all of which are labour-intensive industries.
671 As I have said, time will tell, but I should not be surprised if the increased use of solid fuel and liquid petroleum gas, both of which are labour-intensive in distribution, results in at least as many, if not more, jobs in the long run. The Government will attempt to minimise hardship by underwriting payment of redundancy terms up to those agreed in the British Gas Corporation. In addition. certain employees participating in the local government superannuation scheme will be eligible for early retirement benefit. Incidentally, Kilroot power station, when converted to solid fuel, will at its peak employ 500 people. It will also employ more people than before inside the generating station.
All but one of the Province's gas undertakings have decided to close and a number have expressed their wish to do so without delay. However, 10 of the 12 undertakings opting for closure have statutory obligations to supply, the removal of which is not provided for in any existing legislation. I have already made it clear to the House that every month of subsidy costs the taxpayer another £1 million. For that reason, I consider it essential to provide those undertakings which wish to close quickly with the legal authority to do so as soon as possible. Following consideration of the points raised in Committee, I concluded that we should lay the draft order before the House without delay.
Those hon. Members who attended the Northern Ireland Committee debate on the order will be aware that I said on that occasion that, following representations made during the consultation period on the order, I was examining the possibility of removing certain provisions contained in the published proposal. That examination, with information from Belfast power station and elsewhere, persuaded me that the deletion of those provisions would not affect the orderly rundown of any gas undertaking wishing to close or the effective control of public expenditure on assistance during closure. Accordingly, the draft order reflects those amendments. Those hon. Members requiring notification of such changes have been duly informed by me in correspondence.
I propose now to refer briefly to the provisions of the order. Articles 1 and 2 are the customary clauses relating to the title and interpretation. I do not think that anyone can argue about those.
Article 3 permits gas undertakers in Northern Ireland to enter into a voluntary agreement with the Department to facilitate their rundown process when closure decisions have been taken.
Article 4 removes from such undertakers statutory and contractual obligations to supply.
Article 5 is a reserve power of direction providing the Department of Economic Development with power to direct aspects of the rundown process where this is considered essential.
Article 6 provides the Government with authority to offer direct financial support to undertakers allowing them to continue to operate while an orderly rundown is in progress. Support is also necessary to help undertakings to meet the various costs associated with actual closure, including the discharging of outstanding financial liabilities.
672 Article 7 establishes incidental legal provisions regarding rundown and provides for the legal wind-up of undertakings following closure.
Article 8 enables the development of a gas conversion assistance scheme. Since the proposal for the draft order was published, I have been able to announce details of the scheme. I shall not go through them now as they are public knowledge.
Article 9 requires that gas consumers be given notice of any action arising from the order which will affect them.
Article 10 provides for the repeal of redundant provisions in related legislation.
Through the mechanism of the order, the Government propose to take the initial steps in the provision of substantial public funds to permit the orderly rundown and closure of those gas undertakings which opt for that course of action. In so doing we are attempting to ensure that the closure process in every case will cause minimum harship to consumers and employees alike. I remind the House that the provision of such support is not a legal obligation on the Government. It is not a nationalised industry, and they are not Government gas undertakings.
It would have been simple, and certainly much less costly, to inform the owners of the undertakings—private or local authority—that the Government had no further role to play in financing closure costs. We should be legally within our obligations simply to turn off the tap, because they are not nationalised undertakings. We have not done that, because we were concerned that there should be an orderly rundown. We were also concerned for the employees, and especially for the customers. The thousands of consumers who have already converted to other fuels have done so at their own expense. The only ones needing to be paid for are those who remain. In fact, meeting the clean air legislation was far more costly for individuals than the closure of the gas industry will be. I offer that comment in passing, for my own satisfaction and perhaps for yours, Mr. Deputy Speaker.
It is sad, but not entirely surprising, that some of those who failed to demonstrate the financial logic of their own proposals for the industry should then proceed to disparage the Government's estimate of the cost of closure support. I do not say that every figure is absolutely correct, but we have taken advice from British Gas, and the figures that we have given are our best estimate of what rundown and disconnection will cost.
I find particularly objectionable the attempts of some of our opponents—by this I do not mean anyone in the House—to distort and play down the extent of assistance available under the gas conversion assistance scheme. Such tactics merely alarm gas consumers, many of whom are elderly and in no position to verify the facts.
I have also sought advice on another important factor—the effect on the consumer not just of the disconnection of appliances but of the cost of alternative fuels. I have some interesting figures, which I will circulate if hon. Members wish, suggesting that the running costs will in every case be lower than they would be if the existing gas supply system were continued. With coal, the same amount of heat costs half the price. In other words, many people should be warmer after conversion. Other factors, such as safety, are equally important.
The scope of the order is intentionally wide so that we can react to problems as they arise. In life, the problems that one expects never happen, but the ones that one does 673 not expect become matters of great concern. That has been my experience, at any rate. I believe, therefore, that it is right to cast the provisions in broad terms.
A question was asked about the appeals system. There is nothing in the order to prevent the introduction of an appeals system. We realise that there is concern about the handicapped and that they must be provided for. The draft order is open for discussion. If it is felt that something ought to be done. the order is drafted in such a way as to allow that to happen. It is not drafted in a narrow way. I have already given an undertaking to consider the feasibility of an appeals system. We are examining how this can be introduced without crippling the rundown while being fair to customers.
§ Mr. Archer
If this were primary legislation applicable to any other part of the United Kingdom, these matters could be considered in Committee and amendments introduced on Report. The hon. Gentleman is asking the House to give him a blank cheque, with no guarantees attached to it.
§ Dr. Boyson
The constitution of Northern Ireland is a matter of continuing concern. I do not intend to put forward views on the future constitution of Northern Ireland, even if I had them, or even if I should be influential in putting forward those views. All I can say is that legislation is dealt with in a different way in Northern Ireland.
There is sadness in Northern Ireland that many of the Province's gas undertakings have reached the end. But that sadness is combined with a widespread realism that closure of those undertakings is simply the long-delayed outcome of a commercially untenable position. In a few quarters, that realism is abandoned in favour of an apparently obligatory denunciation of Government's failure to work miracles, accompanied by a ritual demand for increased public subsidies. But continually to shore up gas undertakings in an effort to insulate them against commercial realities is to fly in the face of a positive energy strategy for the Province. That strategy is now taking shape with coal generation of electricity replacing oil, while, in the longer term, the development of lignite offers our best hope of reasonable energy prices.
In the meantime, it is incumbent on us to accept that where gas undertakings are unable to survive without subsidy they should be allowed to close in a planned and orderly manner. The draft order seeks to facilitate that process. I commend it to the House.
§ Mr. Peter Archer (Warley, West)
The speeches of the Minister of State, Northern Ireland Office, are always characterised by courtesy and good humour, but we must not allow that to conceal what is happening. We are playing out what the Government no doubt hope will be the final chapter in this sorry story of doctrinaire intransigence, of arrogance in office, of the closed ear and the closed mind and of complete contempt for the procedures of the House. It is the logical and perhaps inevitable product of a Government led by a Prime Minister who boasts that she is not for turning and of a Government who dismiss moderation as "wet".
Let me remind the House of the principal chapter headings in the story. Prior to the autumn of 1984, the people of Northern Ireland believed that natural gas would 674 be available to them as one of the options for household fuel and industrial energy. It was to be provided from the Kinsale field pursuant to a memorandum of agreement, of which the Minister of State has just reminded us, that was entered into by the two Governments in October 1983.
On 6 September 1984, the then Minister of State, Northern Ireland Office, announced that the United Kingdom Government were not proposing to implement the agreement. For reasons which have already been explained and which we explored in Committee on 26 June, the Government did not believe that gas could be provided without a subsidy. As the Minister of State has again explained so clearly, the Government applied to this matter their general philosophy that any human activity which does not show a financial profit is not worth doing. So the Minister of State said that the Government would not continue to provide a subsidy and that this would have obvious implications for the future of the gas industry and for those whose jobs are dependent upon it. But he must have realised that the gas industry could not, with any pretensions to democracy or to fairness, be killed off without the opportunity for consultation, so he said that the Government would be glad to receive representations about the future of the industry from the various interests involved. The gas industry took the Government at their word and established a joint working group representing employers and trade unions. Each side was keen to do whatever was necessary to serve the industry.
The group produced a report setting out a scheme that was, admittedly, more modest than the original project. In the first phase it would have made gas available to Belfast and Newry, with the prospect of a wider market later. It would not have saved all the 1,000 jobs that were to be lost in the gas industry, but it would have saved 400, with a prospect of more jobs at a later stage. It offered 90 per cent. of the market envisaged in the original plan, at rather less than half the cost. It would have required some initial financial outlay by the Government, but over 20 years it would have shown a surplus of £159 million. So it met the Government's declared objective of ending the subsidy.
The plan was submitted to two firms of consultants of the highest repute and they endorsed the assumptions, the calculations and the conclusions of the report. The hon. Member for Upper Bann (Mr. McCusker) posed in Committee the reasonable question, "If Coopers and Lybrand is wholly reliable when it produces reports for the Government, what character change does it undergo when it produces reports for the gas industry?" The hon. Gentleman repeated that question today and again received no reply. The Government lose their enthusiasm for the work of Coopers and Lybrand when it produces a report for anyone else, and declare its reports to be Alice-inWonderland efforts.
The industry submitted the report to the Minister of State. It did not assume that he would necessarily accept the report in its totality and without question. It envisaged that he might wish to meet the working group and ask questions to test its conclusions and to explore further some parts of the plan. The industry did not envisage that the Minister would simply delegate to a few officials the task of meeting a few members of the working group, arid leave it at that. When the Minister invited members of the working group to meet him on Good Friday, they attended prepared to embark on the sort of discussion which is the life blood of consultation and, indeed, of the whole democratic process.
675 Despite what the Minister had said, members of the working group were amazed when he told them that there was nothing to discuss and that he had decided to reject the report without any discussion or any opportunity for further consultation.
As the hon. Member for Antrim, East (Mr. Beggs) pointed out in Committee, there were those who suspected that, no matter how persuasive the report, how careful the research and how compelling the conclusions, the Government's mind was already closed because the decision had already been taken beyond the possibility of further consideration.
The Minister has assured the House that the Government meant what they said when they invited consultation in October 1983. But it is hardly surprising that people have been led to ask why, if the Minister was not prepared even to discuss these matters with the working group, the Government invited representations. Why encourage the industry to take the trouble and expense of sponsoring a careful and well-researched report?
That question occurred to more people when the Minister of State, in giving evidence to the Assembly, said:In any case, the decision was not made now. As I have said clearly, it was made on 6 September.So the book had been closed before the industry even dipped its pen in the ink. It was all a charade.
The working group was not the only recipient of such cavalier treatment. The Minister has confirmed that the announcement was made on Good Friday, the day after the House had risen for the Easter recess. It was a working day in Northern Ireland, but not for the House. On the previous day Northern Ireland Ministers were answering questions in the House, and hon. Members representing Northern Ireland constituencies were in the Chamber. If the House could not have been informed of the decision in answer to a question, there was no reason why a statement should not have been made. Not one word was breathed about the Government's intention until the next day—after the House had risen. The Northern Ireland Assembly received similar treatment. It was deprived of an opportunity to express a view because it was no longer sitting.
Some of us made representations to the Government. I wrote to the Secretary of State asking him to receive a deputation from the industry as the closure of an entire industry was a matter that merited the decision of the Secretary of State. He replied:I do not see that a meeting with the Working Group to go over this ground would serve any useful purpose".In fairness, when I invited the Minister to convene the Northern Ireland Committee to discuss the matter, he agreed to do so and brought the proposed draft order before that Committee. I assumed, as no doubt did the other members of the Committee, that he genuinely wished to hear the views of right hon. and hon. Members. He heard them. After the Minister spoke, there were eight contributions, each of which was critical of the Government's proposals, each of which asked questions that demanded answers and each of which begged the Government to think again. At the end of the debate, 676 18 votes to 10. Every party represented on that Committee, with the exception of the Conservatives, voted in the negative.
§ the Committee divided and the Government were defeated by
§ Mr. Archer
Yes, and the Social Democratic party. If the Minister wanted to know the views of the Committee. he had them as clearly as they could be expressed. The Committee opposed the closure of the gas industry. My hon. Friend the Member for Bow and Poplar (Mr. Mikardo) said that those who attended the Committee had other calls on their time to which they might well have responded if they had believed that the Committee was simply an academic exercise and had no prospect of influencing events.
The Government proceeded as though the Committee had never existed. The Minister was kind enough to write to some of us a few days ago saying that the Government proposed to delete two proposals from the draft order. Those deletions were in the Government's mind before the Committee sat—the Minister referred to them in his original speech in Committee. Nothing said in Committee induced any change in the Government's plans. Indeed, the Lord President said the following day, 27 June, in reply to a question asked by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) that the decision of the Committee wasa technical vote which has no significance".—[Official Report, 27 June 1985; Vol. 81, c. 1079.]It was not technical at all. It was a considered opinion of the Committee on the merits of the argument. The Government's behaviour simply reinforces what I have already said. To members of the Government, the vote of a Committee of the House has no significance. So much in 1985 for the mother of Parliaments and the descendants of Pym and Hampden.
Lest anybody might have been so misguided as to have contemplated for a moment, in the face of all of that evidence, that the Government could consider it possible that they may be wrong and that, within those holes in the sand, ministerial heads were equipped with ears to hear, on 5 July, the Minister of State issued a statement reiterating that the Government had no plans to reopen examination of the project.
We might have thought that, in those circumstances, the Government would at least have retained sensitivity enough to pretend that they were treating seriously all the representations, the questions, the expressions of opinion and the pleas to think again. But for the present system by which Northern Ireland is governed, a step of such importance would have required primary legislation, with days in Committee and on Report. We might have thought that the Government would at least have accorded the matter a day's debate when hon Members could arrange to attend and make their views known. We might have expected that at least, as a cosmetic exercise, but the Government do not consider it necessary even to go through the motions of taking it seriously. They introduce this business on a Friday late in July when, as they must have known, hon Members are under pressure to be in their constituencies. Such is the importance that they attach to the closure of a complete industry, depriving the 677 people of Northern Ireland of a fuel that is available in every other country in Europe, and consigning to the dole queue people who have given their loyalty and their lives to the industry. To them, the Government have devoted part of a day's business on a Friday. Later today the Government's Lobby fodder will undoubtedly troop obediently into the Lobby indicated by the Government Whips unquestioningly, uncomprehending, and without having spoken. We shall have witnessed the destruction of an industry by executive action. It is the ultimate in political hubris. I am tempted to point out that hubris is inevitably followed by nemesis.
In Committee we looked at the reasons for rejecting the report, which the Minister condescended to give after his announcement of the death sentence. We attempted to show that they were based on a complete failure to read and understand the report. I shall not repeat those reasons in detail, but, lest some hon. Members have not had the opportunity to read the report of our proceedings, I shall list them briefly.
First, the Minister said that the price that the Republic is proposing to charge for gas was based on the fluctuating price of heavy fuel oil, and was uneconomic. In September 1984 that price was 36.4p per therm. The working group's report was based on an anticipated price of 34p per therm, and the profit of £157 million was calculated on that price. Today the price is 28p per therm—6p per therm less than that on which the report was based. The consultants who considered the report tested the working group's proposals against a theoretical price of 40p per therm, and confirmed that the project would still show a profit.
A further question posed both in Committee and today by the hon. Member for Upper Bann remains unanswered. If the Government were troubled that the price of heavy fuel oil tends to fluctuate—that was known to them when they signed the agreement in October 1983—why did they sign the agreement? Today the Minister confirmed that no conversations had taken place with the Government of the Republic since September 1984. So the matter was never aired again, and the Republic was never invited to reconsider it. Nothing about the present price of gas can provide any reason for reneging on the agreement, much less for rejecting the Committee's report.
Secondly, the Minister said that the report overestimated the potential market. Experience of a similar plan in Dublin confirms that the report's estimate was, if anything, unduly moderate. The Minister appears to have based his views on the survey, to which he referred today—I assume that it is the Deloitte, Haskins and Sells survey—and which has been made available to him. We cannot comment on it because he has refused to make it available to anyone else. Suffice it to say that he has reasons, that we know not of. Today the Minister said that earlier reports had yielded a result less optimistic than that of the Committee, but the survey sought to find out who would be likely to buy gas at the prices and conditions proposed in the report. No earlier survey could research into that.
Thirdly, in Committee the Minister criticised the report because it included no estimate for reinforcing the transmission systems and no provision for leakages. He has not mentioned that today, and it simply is not the case. If the Minister reads the report, he will see that both matters are dealt with, and that the appropriate costs are taken into account. The Minister may disagree with the 678 figures, but how anyone who has read the report can say that there are no such figures is a mystery which admits of no further comment.
Fourthly, the Minister said that the productivity levels envisaged in the report were higher than the present levels in the British gas industry. That comment was made the subject of a devastating analysis in Committee by my hon. Friend the Member for Bow and Poplar, who has long experience as a management consultant. To compare two productivity figures in two different geographical areas, without taking into account the different circumstances, the installation sizes or the equipment used, can only be described, as my hon. Friend said, as superficial, unsophisticated and unscientific. In particular it fails to take into account the fact that the Government are trying to compare an industry which is concerned with generation and distribution with one which is concerned almost entirely with distribution. That is not comparing like with like. The fact is that the productivity figures in Northern Ireland have traditionally been higher than the figures for the whole of Britain.
Finally, the Minister's figures on funding related, as he conceded today, to £70 million which the Government were not being asked to provide in cash, but only to make available by way of a guarantee for an independent loan. I have not dwelt on the detail of these matters. Perhaps we have not fully understood what the Government said about some of them, but they have been ventilated on several occasions, most recently in Committee on 26 June, and until today, none has been answered. The Minister's speech today did not carry any of the arguments a step further. At the very least, those matters merit further discussion, not a rejection of the project out of hand without exploring what has been said.
Even if the proposal in the working group's report is rejected, that is not the end of the matter. In Committee, the Minister was asked about alternative ways to save the industry. The right hon. Member for Strangford (Mr. Taylor) asked about proposals from Europe to integrate the national gas grid. The Minister said today that he knows of no such proposals, but perhaps we could have been told a few more of the facts, if only out of courtesy to the hon. Gentleman who raised the matter.
I asked the Minister about the proposals being explored by Lloyds merchant bank. Neither the hon. Gentleman nor I received an answer, but in the 29 June edition of The Oilman there was a report that Lloyds' was exploring two possibilities: a company to convey gas from the border and distribute it to existing undertakings, or a company that would take over the complete network. A Lloyds' spokesman was quoted as saying:The amount of the initial investment would be relatively small beer. What is really important is that a competent operator should run the system and make it profitable.The Minister said today that nothing prevents Lloyds from putting together a scheme for private investment, but he must know that if the industry could be saved, his action today is likely to drive consumers away from the industry before it can be saved. We are simply asking for a breathing space so that these matters can be ventilated.
§ Mr. Nellist
It seems, not only to the Opposition but to many workers in Northern Ireland, that that is precisely what the Minister intends. The message that he is giving today, and his actions during the past six months, are designed to drive consumers away from gas so that he can say proudly, "I must have been right, because everyone is 679 deserting the industry." Therefore, by that self-fulfilling logic, he can argue that the industry should have been closed.
§ Mr. Archer
I agree entirely with my hon. Friend's conclusion. His point is reinforced by the fact that, on the day in September when the announcement was made, people were going round tearing down posters which invited consumers to switch to gas. Whatever was the Government's intention, they cannot be surprised by the fact that many people have come to that conclusion.
The Opposition invite the House to reject the motion on the ground that the avowed purpose of the order—to make provision for the assassination of the gas industry—is misconceived. There is no case for closing the industry. But even if there were such a case, the order simply will not do. If consumers are to be deprived of the option, they will need financial assistance, as the Minister recognised today, to transfer from gas to another fuel. As he said, article 8 of the order provides for financial assistance to consumers. But that article empowers the Department to make a scheme for compensation. It is the provisions of that scheme that are being left to the discretion of the Department. It is under no obligation to bring that scheme before the House. Its only obligation, once it has decided what is in it, is to make it known. So the House is being asked to sign a blank cheque or, more accurately, a blank receipt on behalf of consumers for compensation which may not be forthcoming.
Again, in Committee, we sought to explore what the Government had in mind by way of compensation. Again we received no answers. The Government are proposing to spend £97 million to kill off the industry. In their own argument, they are declining to devote money to saving it. That sum of £97 million does not include the loss in revenue to the Government because people will not be in work and paying income tax, and the vast sum of money consequent upon consigning 1,000 unemployed workers to the dole queue, as my hon. Friend the Member for Middlesbrough (Mr. Bell) pointed out in Committee, that is in place of a subsidy which, according to the Minister, is £12 million a year. If the Government were prepared to continue that £12 million a year, all this could have been saved.
Earlier, my hon. Friend the Member for Coventry, South-East (Mr. Nellist) posed a very reasonable question. If the Government are prepared to spend the money which has been mentioned this morning to increase top salaries by the proportions which have been discussed, £12 million a year does not seem unreasonable to save an entire industry for the consumers and workers of Northern Ireland.
§ Mr. Archer
Half a dozen field marshals, as my hon. Friend says, although if the field marshals do not receive the increase they may feel so dissatisfied with their jobs that they decide to go somewhere else.
We have seen no breakdown of that figure of £97 million. We have only the information that we have been able to drag from the Government by way of correspondence with the working group, or by questions in the Assembly and in this House.
680 The explanatory document described the £97 million as the cost of the rundown of the industry over a three-year period. The Housing Executive envisages running down the industry over a five-year period. Have the Government taken account of that? Are the three years' costs to be spread over the five years, or are there some more costs about which we have not heard?
I do not propose to rehearse in detail all the matters that we raised in Committee, but I refer briefly to three, about which we are still awaiting answers. If, as appears, the Government are proposing to allocate £200,000 for sealing off gas pipes, how does that compare with an estimate for the same purpose provided to the working group by British Gas of £3 million, especially if it was British Gas which advised the Government on this?
I wonder whether I know the answer. Is it that British Gas would regard it as dangerous, ugly and slipshod simply to blank off the pipes and leave them and the equipment where they happen to be—even in the way of the alternative installation and even if they are taking up space in rooms which will be further limited by the new equipment for alternative fuels? That seems to be what the Minister is proposing. In a written answer to me on 18 June he said:In disconnecting consumers from supply it is not the existing practice … to remove pipes and fittings on private property once they have been purged and made safe."—[Official Report, 18 June 1985: Vol. 81, c. 99.]Of course it is not. That is an expense which normally falls on the consumer. But we are speaking of compensating consumers for the expense that falls on them by reason of the Government's decision to deprive them of gas. If they want their pipes and installations taken away, they must pay for it themselves out of any savings they may have or, if they are young, vigorous and skilled, they may do it themselves.
The working group was told that the Government proposed to allocate £20 million to the conversion assistance scheme for what the Government assessed as 80,000 houses, although some of us thought that the figure was higher. How does that compare with the estimate of the Housing Executive, which proposes to spend the same sum on conversions in 10,700 houses which are heated by gas and 6,000 which cook by gas? Is the answer that the Government will offer the consumer no choice of an alternative fuel but base the cost on the cheapest alternative, even if it is quite unsuitable to the consumer?
The House will be grateful to Age Concern for the careful and well-researched note with which it has provided us. It shows that, whereas households in Northern Ireland that are headed by younger people tend to use domestic fuels other than gas, 55 per cent. of households headed by people of 60 and over depend on gas. So it is the elderly and those in middle age who will be most concerned by the provisions that we are discussing. It is also households in the lower economy groups that are most likely to be dependent upon gas. The lowest cost alternative is likely in most cases to be bottled gas, so the elderly will be required to lift about containers of bottled gas and will be at risk of running out of fuel, sometimes at inconvenient times, when the next delivery is not due, and frequently in the winter.
Thirdly, is it envisaged that the conversion costs to be made available to the domestic consumer will include the cost of redecoration? One would have expected that the answer would be yes. If conversion is forced on people, 681 they should be compensated for the cost of redecoration. But when I asked the Secretary of State about this, the reply was:In the absence of detailed information on existing gas appliances and individual assessments of the impact of conversion on each dwelling, it is not possible to provide any estimate of the cost of redecoration."—[Official Report, 18 June 1985; Vol. 81, c. 99.]If it is not known to the Government, and they cannot even make an estimate, that raises the question whether this item has been included in the figures with which we have been provided. If it has not been included, must we add something to the Government's figures for the provision for compensation and for the cost of closing the industry, or do the Government not propose to compensate householders for redecoration?
In Committee, the hon. Member for Antrim, East pointed out that in many homes, conversion to a different fuel would entail rebuilding entire flues to take solid fuel. The Committee wished to know what the Government proposed about that. Had the cost of that been included in existing figures, is it an additional item that we must have in mind, or do the Government not propose to meet the cost which is falling on householders?
It is not only the consumers who have reasons for anxiety. What of those who face redundancy? No doubt they will receive the statutory minimum entitlement under the redundancy fund, but it would be monstrous to close an industry with no other provision for those who are being deprived of their livelihood. The Department says that it proposes to provide £12 million for redundancy payments and outstanding debts. I understand that outstanding debts amount to £11 million and that appears to mean that the Government are proposing £1 million for redundancy payments above the statutory minimum, to be shared among 1,000 employees. That averages £1,000 per employee. Is that all that the Government are proposing, because there will inevitably be those who will contrast that sum for the price of lifetime's employment with the Government's proposals for top salaries?
Our anxiety was not alleviated when we saw a copy of the letter to Mr. Fell of the Department of Economic Development from Mr. McClements, the director of the Northern Ireland Economic Council, dated 28 June. He mentioned that in May 1980, the Department of Commerce estimated that the amount of public expenditure entailed by any closure of the gas industry, at 1980 prices, would be £101.78 million. That is nearly £4 million more than the Government's estimate in 1985, at 1985 prices, and the estimate was based on only 50 per cent. compensation for domestic conversion costs. If the Secretary of State now expects to do the job at 1985 prices for £97 million, what corners does he expect to cut?
Let me try once again. It is no disgrace for a Minister to listen to what is said to him. It is no disgrace for him to declare that, in the light of what he has heard, he has thought again. We would not hold it against the Minister if he changed his mind. Rather, we would congratulate him openly and publicly on having the courage and imagination to respond to the democratic process. We want only to save the Minister from making a ghastly mistake for which future generations will not forgive him. But if he brushes aside our arguments, as he brushed aside all our earlier arguments, we shall register our protest in the Division Lobby, notwithstanding the Government 682 arranging the business at a most inconvenient time, because we will have no part in this mean, sordid and shameful business.
§ 1.5 pm
§ Mr. Harold McCusker (Upper Bann)
Like the right hon. and learned Member for Warley, West (Mr. Archer), I think that the Minister probably hopes that this is the last act in the Northern Ireland gas drama—some might say farce. I doubt it. The events teat we have been discussing for the past seven or eight years will come back to haunt the Government one day. That explains why the Minister took half an hour to introduce the order and 10 minutes to deal with its provisions.
When considering how to approach the debate, I thought that the Minister would probably try to play cute and stick strictly to the order, expecting the Chair to save him if hon. Members strayed beyond the strict limits. it struck me that the Minister was doing what many of his predecessors have done—trying once again to justify the decision. He was almost trying to convince himself that he was right.
I do not want to rehash arguments used since 1977. The Minister has heard them all before and I have heard all the answers. The right hon. and learned Member for Warley, West said that the self-fulfilling prophecy element in the debate had existed for only seven or eight months. It has existed for eight years.
The Minister seemed to ridicule the Northern Ireland gas industry for being unable to keep its prices competitive, for losing customers and for having low morale. That is like saying to a man condemned to death in 1977 and put in death row, "Why are you losing the colour in your cheeks?" It is like saying after a year, "Why have you not the same enthusiasm you had a couple of years ago?" The Northern Ireland gas industry has been under sentence of death for seven or eight years.
Publicity has been almost 100 per cent. adverse except for a few months when the industry was given hope that it might be saved by natural gas from the Irish Republic. I fought the case in the early years and I realise that the publicity that I gave to the industry to make my case contributed to the industry's decline. By highlighting the problems the industry was subjected to news coverage which deterred people from using gas or from renewing their equipment.
Northern Ireland does not have the best gas and we have not been able to use the modern equipment that is available on the mainland. Northern Ireland gas consumers do not realise what natural gas would mean for them. I did not realise the potential myself until I visited an Ideal Homes exhibition about five years ago. I suddenly realised that the new gas industry was in a different world. Our equipment has been modernised to some extent to give us choice, but we have nothing comparable to the equipment on the mainland.
All those factors have militated against the industry from day one, and that is the cause of the steady drain of consumers. It is not good enough for the Minister continually to trot out statistics and say that the industry is not worth saving because it has not had self-motivation and has not held on to its consumers. However, I will not go over the arguments again.
Like the right hon. and learned Member for Warley, West, I am concerned about the effect of the order on the handicapped, the elderly and poor people. Will the 683 compensation arrangements be adequate, not only for conversion but for redecoration and so on? We are aware from constituencies throughout the country that the present levels of assistance offered, for example, by the Housing Executive, for redecoration after rewiring and other improvements are inadequate.
It is not possible to redecorate a room nowadays for between £50 and £70. The costs involved, particularly following the conversion of which we are speaking, can be considerable, especially for people who, in many instances, may have just finished redecorating their homes as a consequence of schemes of modernisation by the Housing Executive. I hope that the Minister will bear in mind our plea in that respect.
The safety aspect of what we are doing also concerns me. In 1977–78, before many people had bought their own homes and were in Housing Executive property in Northern Ireland, the industry was confronted with problems caused by people who, because of the price of gas, did their own conversions. They converted from gas to solid fuel—I am speaking particularly of cases which arose in Ballymena—and because the flues were designed for gas they were a danger when solid fuel appliances were attached to them, yet that happened in many cases.
Steps were taken at that time to rectify the situation and to avoid it recurring, but since then many of those homes have become privately owned. If an owner installs a solid fuel heater, will he be in breach of some regulation? Will monitoring be done to ensure that someone who, perhaps inadvertently, embarks on a conversion—because it is the cheapest way for him to obtain an alternative source of fuel—will not be put at risk? What if that person's neighbour is still a Housing Executive tenant and the conversion done by the private owner endangers not only his life and home but those of his neighbour?
There are grave safety aspects of this issue which, perhaps because we have been concerned with major matters, we may have overlooked. For example, what will happen to the redundant gas system? If I own property and large pipes run beneath it, and later those abandoned pipes are flooded, what guarantee shall I have that the flooding will not undermine the foundations of my home and that gas pockets will not eventually gather there? What guarantee shall I have concerning subsidence, explosions and other dangers that could occur in the future?
Are the Government washing their hands of such issues? Will all responsibility pass to the occupier or tenant? Many people in, for example, Belfast own property which will be substantially undermined by gas pipes. I hope that the Minister will assure us that the dangers and difficulties of which I have spoken will not arise.
Like the right hon. and learned Member for Warley, West, I should like to know how the Government have arrived at the reduction in the price of closure from November 1980 to June 1985. How is it that the total public expenditure cost in 1980 can be £100 million and in March 1985 £97 million? We must have an answer to that question, particularly when we consider that the costs in 1980 were based on 50 per cent. compensation, for 50 per cent. compensation must be less than even the lowest cost alternatives when conversion is done. In a period 684 when costs must have risen by 30 per cent. or 40 per cent., how can the Minister tell us that the cost of closure has been reduced from £100 million to £97 million?
The right hon. and learned Member referred to what came out of his question of 18 June 1985, when the Minister gave £20 million as the cost of the gas conversion assistance scheme, rising by a further £4 million for full compensation for industry and commerce, plus £9.75 million for the conversion of public buildings. Thus it would appear that between March and June 1985 the estimated cost of conversion fell from £50 million to £30 million. During a period when costs were increasing, how could there be a reduction of that amount?
These matters are very important, for at the end of the day, as many people suspect, we may find that the cost of closing the industry is not £100 million but closer to £150 million. There is no doubt that then the justification that the Minister gave us this morning—he spent half an hour on it—will be trotted out to explain to some Select Committee of the House, "Ah, but we did it all in good faith. Here are the reasons. We had no alternative. We were faced with the economics of Passchendaele, and with `Alice in Wonderland' economics as deployed by Coopers and Lybrand".
Northern Ireland Members know how embarrassing it was to be confronted with the consequences of decisions made by others in regard to companies such as Lear Fan and De Lorean when we had no say in the matter. We have a collective guilt about the losses involved in those two companies. Are we to have another collective guilt about the £150 million used to kill our gas industry?
§ Mr. McCusker
There is no doubt about that.
I have with me the transcript of an interview conducted on RTE this morning with a Mr. Michael Smyth of Lloyds Bank. Several questions were put to him, no doubt sparked off by the reports emanating from the gas industry yesterday about the extra cost of closure. He was asked:Can it be made not only to break even but to make a profit?He replied:I must emphasise that we haven't finished our studies yet … There is that possibility.He was asked:Government says closing the whole thing down is going to cost £97 million. Could you make it work with that?He replied:No problem at all. If you could offer that to a potential investor, I think there would be a queue of them at the door.I am not suggesting that the Minister should now make a gift of £100 million to anyone who comes forward with a scheme to save the Northern Ireland gas industry, but if there is the possibility of some private investment, and if Lloyds Bank is interested in putting up some money, should not the Minister give serious consideration to providing a fraction of what it will cost to close the industry? If there would be a queue at the door for £97 million, there would still be a few people queueing for £30 million, £40 million or £50 million.
Would it not be a better use of public funds to use the money for that purpose rather than to spend £150 million to close the industry and put 1,000 people on the dole? I think it would, many people in Northern Ireland think it 685 would, and the industry certainly thinks it would. Coopers and Lybrand thinks it would. A representative from Lloyds Bank thinks it would. Why does not the Minister?
§ Mr. A. Cecil Walker (Belfast, North)
I feel that I must commiserate with the Minister of State in his unenviable task of steering the order through the House. With his customary flair and dedication, he has pursued the task with vigour and determination. It has not been his fault that he has had the misfortune of being in the wrong place at the wrong time, and is now saddled with the job of making the case for killing off our gas industry, which, in the past, has produced profits that built our beautiful city hall in Belfast. It provided cheap energy for the domestic needs of thousands of our citizens. It was responsible for industry that developed from as far back as the industrial revolution. In those days, we used coal as our base fuel. Many of us remember the coke-burning furnaces, the tar, the creosote, the coal oil and many more by-products that supported other large sections of our population.
I congratulate the Minister on making such a formidable case for closure. His powers of persuasion and reasoning, together with the figures and statistics that he quoted, would leave no doubt in most people's minds that there is now no case for gas in Northern Ireland. However, I am sorry to say that, although I have the greatest admiration and respect for the Minister, I cannot support the order because I believe implicitly that a gas supply could have been provided at a cost less than that of closing the industry and that the reason for closure must have political roots.
The wording of article 6 of the order leaves much to be desired. It gives me the impression that the Department is not being fair and honest with the gas undertakers in its commitment. Statements such as:The Department may … make payments … at such times and on such terms and conditions as the Department may, with the approval of the Department of Finance and Personnel, determine.appear to be a trifle ambiguous or even devious, according to the interpretation that one may draw from such statements. Similarly, paragraph (2) is little better. It states:Without prejudice to the generality of paragraph (1), the terms and conditions on which a payment is made under that paragraph may include terms and conditions as to the repayment by the gas undertaker to the Department of any part of any such payment in such circumstances as may be specified by the Department.One could be forgiven for asking just what those terms and conditions are. There is not an inkling in the order as to what is in the Minister's mind. I am sure that the gas undertakers will be wondering just what is involved for them in running down the industry. The Government should be much more explicit in framing such paragraphs if one is not to think that there will be some abdication of responsibility on their part.
I support the right hon. and learned Member for Warley, West (Mr. Archer) when he expresses concern about article 8 on financial assistance to consumers. I am pleased that the Government state categorically in paragraph (1) that they willmake a scheme … towards the replacement or adaptation of gas appliances where such replacement or adaptation is necessitated by the cessation or expected cessation of the supply of gas".686 However, I am certainly not at all happy with paragraph (2), which states that a scheme mayprescribe the persons to whom financial assistance shall be paid".I hope that everyone who is inconvenienced by being deprived of his gas supply will be considered eligible for compensation.
I am also concerned about paragraph (2)(b), which states that the scheme mayprovide that no financial assistance shall be paid in such cases or in such circumstances as may be specified in the scheme".I am most unhappy that when the supply is terminated, people may not have a legitimate claim against the Government, assuming that no debts are due to the undertaking under the terms of paragraph (2)(c).
On compensation in general, the Minister will know that the gas industry joint working group publication based on the Northern Ireland Housing Executive paper on the cost of conversion shows that the Government's plans for compensation are inadequate. For example. the cost of replacement of heating and cooking facilities is estimated at £60 million but the Government intend to pay only £20 million in compensation, leaving two thirds of the cost to be met by consumers. The report shows that it will cost £24 million to carry out the Housing Executive's conversion programme, but no provision is made for that extra money, so the housebuilding and renovation programme will be hit. The housing associations are unlikely to find money elsewhere as they are funded on only four specific projects, so if they have only the equivalent of the Government compensation they will riot be able to treat their tenants as the Housing Executive can treat its tenants. The Housing Executive's programme is expected to last for between four and five years, two years longer than the Government expect, so two additional years' subsidy will be needed for operational deficit. That probably represents a further £25 million on top of the Government's estimate.
My constituency has the highest proportion of elderly people in relation to the population. I am most concerned about those senior citizens, many of whom are frail and confused. The majority of them use gas, so closure will mean that they face major upheaval through no fault of their own. The ramifications of the compensation scheme have not yet been defined, but I hope that those with arrears of payment will be treated sympathetically.
The right hon. and learned Member for Warley, West dwelt at some length on the least cost compensation clause. This provides that if a serviceable electric cooker socket does not already exist, the least cost option, at least for pensioners, will be bottled gas. The other options are solid fuel and oil, which present bulk storage problems. No allowance is made for the present or future ability of elderly people to cope with the replacement fuel. There are bottle gas delivery services but some lifting of heavy containers by pensioners is unavoidable. There is also the risk of interruption of deliveries, leaving pensioners without fuel in hard weather, when they are most vulnerable. Solid fuel involves similar lifting problems and there is a risk of hypothermia if there is a delay in lighting fires.
I have already expressed concern to the Under-Secretary of State responsible for housing matters, the hon. Member for Bath (Mr. Patten), about the difficulties faced by pensioners in clearing grates and lifting solid fuel. In many parts of my constituency able-bodied 687 volunteers ensure that fires are lit and maintained for pensioners, especially in the winter months, but more consideration must be given to ensuring that the most appropriate fuel supply is provided for pensioners. Serious consideration should also be given to providing compensation for the inevitable redecoration that will have to be carried out because of the changeover from gas to an alternative fuel.
§ Mr. Mikardo
There will be an additional loss, for which compensation ought to be paid. If gas piping remains in position while apparatus for another form of heating has to be installed, there will be a loss of space. People will lose a bit of their living room. I should want compensation if I had to lose a bit of my not very large living room.
§ Mr. Walker
I agree wholeheartedly with the hon. Gentleman. I am sure that he agrees with me that compensation ought to be provided for the inevitable redecoration because of the changeover from gas to an alternative form of fuel. Elderly people face difficulty in redecorating their homes. It is only right that money should be provided to enable redecoration to be carried out.
A full consultative and advisory service ought to be made available to pensioners so that they know that financial assistance is available. I should like large-print publicity to be provided so that pensioners can be made aware of the procedures. I should also like there to be home visits from advisers approved by the Government. It is imperative that all the voluntary agencies should be kept fully informed of the developments so that they, too, can subscribe to the welfare of this very deserving section of the population.
§ Mr. Dave Nellist (Coventry, South-East)
The Minister of State, Northern Ireland Office, intends, virtually at the stroke of a pen, to initiate the closure of an industry in Northern Ireland which will lead directly to the loss of a minimum of 1,200 jobs. In recent weeks and months his decisions have closed down the most viable alternative—the Kinsale gas project—and sounded the death knell for those who work in the industry and for the consumers whom those workers serve. He seems to be looking for a new reputation. He is becoming known as the MacGregor of Northern Ireland.
All we heard about this morning and during various Question Times, in which I have participated, since November of last year was the uneconomic nature of the gas industry. Images are being introduced which mirror or parallel those which MacGregor provided for the coal industry. Just as there was the same falsity in the arguments of MacGregor and the Secretary of State for Energy about the real costs of the closure programme—the loss of 70 pits and 70,000 jobs—so the real cost of the closure of this industry is being masked by the Minister of State.
Some reports, including those which have been mentioned this morning and during the Northern Ireland Committee proceedings on 26 June, put the closure costs at about £97 million. From a phone call that I had about an hour ago, I understand that a report, which may have included Government involvement and which was leaked 688 on Wednesday of this week, puts the cost of the closure programme at about £140 million. We have heard that the figure will be higher than that. Whatever it may be—£97 million, £140 million, or more—that is far more than the cost of maintaining a viable industry, particularly when one takes into account the additional cost of unemployment, social security, lost tax revenue, national insurance and the wealth that is created by having people in work rather than languishing in the dole queues.
The Minister of State referred to the gas industry extracting subsidies from the Government that have risen from £2 million a year to £12 million—a difference of £10 million a year. I intervened at that point, and I refer again to what I said then. The supreme irony. four hours after points of order and two and a half hours after a statement, is that £9 million or £10 million is to be given this year to fewer than 2,000 people: the top people in the judiciary, the Civil Service and the armed forces, many of whom went to the same schools, eat at the same restaurants and belong to the same clubs as members of this Tory Cabinet. Those people are getting £9 million in wage rises, yet the Government are not prepared to spend a similar sum to give another 12 months' employment to workers in the Northern Ireland gas industry.
The Minister spoke about consumers deserting the gas industry. He said that about 10,000—one in seven—no longer use gas for cooking or heating. But if gas in Northern Ireland cost the same per therm as gas in Britain instead of, in some cases, three or four times as much. consumers would not have transferred from gas. Indeed, more consumers would be relying on that source of energy.
The Government ought to arrange parity in what working people pay for their energy sources, whether they live in Northern Ireland or in Great Britain. If the cost of gas in Northern Ireland had been reduced to the United Kingdom average, I am sure that those 10,000 consumers would still be using gas.
Working people must note the cost of the closure of the gas industry to the 100,000 or so households who rely on gas for cooking or heating. There will be a particular burden on the low income groups—the low paid, the unemployed and the elderly. We have heard eloquent testimony of the problems that will be created if an alternative fuel such as bottle gas is the only option offered to elderly people.
The Minister's estimates of the compensation costs to consumers work out at about £200 per household. That has to cover the provision of a new fuel, redecoration of the property and, in many cases, the even greater expense of rebuilding flues and brickwork. All that is supposed to be done for £200.
The only specific example given in Committee of a similar transformation was offered by my right hon. and learned Friend the Member for Warley, West (Mr. Archer). There is no point looking in the crystal ball when we can read the history book, and it is no good predicting how cheap conversion will be when we have evidence that that will not be so.
The Northern Ireland Housing Executive withdrew gas supplies from an estate because the gas appliances were out of date. The cost to the executive of the changeover in those 129 houses was £250,000—£1,938 per house, or 10 times the Minister's prediction of conversion costs.
If the figures from that example are applied to the 100,000 households that will be converted if the Minister 689 gets away with his plan to close the gas industry, we are talking not about £20 million for redecoration, rebuilding and so on, but £200 million—over twice the most quoted estimate of the total cost of the closure of the gas industry. Who will pay that? The cost will be put on rents, rates and taxes. It will he taken out of the pockets of working people.
§ Mr. Beggs
Does the hon. Gentleman agree that it would be wrong if the Northern Ireland Housing Executive had to allocate funds for improvements out of its existing budget when there are so many urgent housing needs in Northern Ireland? Does the hon. Gentleman also agree that we should be told how much is being allocated to the NIHE for home conversions?
§ Mr. Nellist
I agree. It cannot be denied that housing in Northern Ireland is among the worst in Europe, and its condition bears no relation to the religious divide. It is easy to find houses on the Shanklin road or the Falls road without basic amenities, such as inside toilets, baths and hot and cold running water. There are areas where the proportion of such houses might be 60 per cent. Any attempt by the Government to offset against Northern Ireland Housing Executive expenditure the cost of the transformation from gas to another fuel would be deplorable and should be resisted by people who live in the areas concerned, members of the Northern Ireland Public Services Association who work for the Housing Executive and by the trade union movement in Northern Ireland. The executive's money should be used to raise the standard of housing in Northern Ireland to the highest possible level.
In the past six years, Northern Ireland has been savaged by Tory policies. Output in the north of Ireland has been reduced by 14 per cent. and industrial employment has fallen by 30 per cent. Northern Ireland is now virtually an industrial desert.
§ Mr. Nellist
I am coming to that, if the hon. Gentleman can contain himself. If the hon. Gentleman has attended debates during the past two years while I have been an hon. Member, he will know that, on issues such as Sri Lanka, Ministers and the Government have tried to throw terrorism at me. I am a Socialist, whether it be on the green or orange side of the divide and the hon. Gentleman will have heard me condemn all sectarian or paramilitary groups trying to change the situation in Northern Ireland by methods of individual terror, the bomb and the bullet. They do no good to working people in any part of the country.
The official unemployment rate in Northern Ireland is now 21 per cent.—more than 120,000, half of whom live in the city of Belfast. An extra 1,000 redundancies and the closure of the gas industry are a tremendous burden to put on working people in that area. If we consider the real level of unemployment, counting people on youth training schemes, people aged over 60 and women who are not counted—the calculation that we have to make in Great Britain to establish the real unemployment figure under this Government—we discover that there are 160,000 or 170,000 unemployed. What guarantee will there be—I notice there is nothing in the order—to working people in the gas industry that, having closed the industry, the Government will offer them alternative work? What will 690 the Minister tell them? Will he emulate the words of the Secretary of State for Trade and Industry and suggest that they get on their bikes? To which area of the North are they supposed to go? Do they go to Strabane, where unemployment for men is 53.9 per cent.? Do they go to Deny, where it is 38.6 per cent.? Do they go to Coleraine, where it is 32.2 per cent.? Do they go to Enniskillen, where it is 33.2 per cent.? Under this Government, mass unemployment is endemic in Northern Ireland. A further 1,200 job losses as a result of the closure of this industry will be another nail in the coffin of working people in the North.
I advise, through the channel of the House of Commons, that trade unions in the gas industry should offer no co-operation in the massacre of that industry. They should offer no co-operation with the Government. They should step up the campaign involving workers and their families and take it from workers in the gas industry to other industries where jobs will be affected by the Government's plan. Various newspapers have mentioned the threat to those for example like Hughes Tools, bakeries and engineering plants whose livelihoods might be threatened by the closure. Those workers should be welded together in a campaign to oppose the plan.
As we are debating an order which expresses one point of view—that the gas industry in Northern Ireland should be dismantled—I am entitled to put another. I suggest that those workers consider stepping up the campaign for the nationalisation of the gas industry in the North and for its control to be put in the hands of a board of directors on which the majority of votes come from the trade unions and the stewards' committees in the industry and the trade union movement.—[Interruption.] If Tory Members—there are now two or three of them, but there were not many when we started the debate—want to put up a case in favour of closing the industry, if they want to justify another 1,200 people in Northern Ireland going on the dole and if they want to come clean with the working class in Northern Ireland, they can do so when I sit down.
I emphasise the need for control and management by workers. The single most important lesson to learn frorn the farces of De Lorean and Lear Fan is that one cannot control what one does not own. Working people in Northern Ireland—indeed, anywhere in the United Kingdom—should own and control the industry in which they create the wealth, which is then stolen by the Government.
§ Mr. Robert Atkins (South Ribble)
How could the workers have controlled Lear Fan, bearing in mind that lie problems there were largely related to engineering and technical difficulties, which they could not have solved?
§ Mr. Nellist
In the hope, Mr. Deputy Speaker, that you do not find that question too wide of the mark, I shall reply briefly. I have a far higher regard for the technical, political and industrial skills of our working people than of any Tory Member. Four years ago the Lucas work force faced the prospect of 4,000 redundancies. It called together all the stewards, who then called meetings of every section of the industry, and an alternative plan was drafted. It stated that instead of being sacked for not producing sights for nuclear bombers, the workers could produce kidney machines, road and rail transport equipment, heat pumps, long life batteries and so on. I am 691 convinced that if the workers had been given a say in Lear Fan, they could have come up with alternative products, which would have been more useful to the working class, using their engineering skills, their techniques, the tooling and materials, instead of being thrown on the dole.
We need to oppose the order in the House with a vote and outside it. The trade unionists and their families in the North should link up with other trade union organisations and mount a massive campaign of opposition.
I make no apology for finishing on this point. A Labour party must be built up in Northern Ireland to put forward plans for publicly owned and co-ordinated energy industries, decent houses, jobs and high living standards. I hope that from that campaign of opposition—the linking of trade unionists, members of joint shop stewards' committees, community organisations, trade councils and tenants' organisations—a Labour party can be built to oppose all the economic, industrial and political decisions of the Tory Government.
Clearly, during the past 15 years, the working classes have suffered most from sectarianism and the orange-green divisions. But not one major strike or struggle, whether involving civil servants, fire fighters, teachers, health workers or miners, has been broken by sectarianism. The hope for working class unity lies with the trade unions and working class organisations. I hope that the campaign will strengthen the quest to form a Labour party in the North.
I hope that the Government are defeated on the proposed closure of the gas industry in Northern Ireland, and thrown from office once and for all.
§ Mr. Roy Beggs (Antrim, East)
I shall remain on safer ground by supporting entirely the speeches of my colleagues from Northern Ireland. I cannot endorse all the observations of the hon. Member for Coventry, South-East (Mr. Nellist). We certainly have serious unemployment. If ordinary people could resolve their problems, they would, but the unemployed, who are sufficiently intelligent and as capable as anyone else, have not been able to resolve our problems. We depend on maintaining existing industries with Government support and by encouraging investment and new manufactured products.
Since the hon. Member for Brent, North (Dr. Boyson) became Minister of State, he has earned a reputation for being energetic, hard-working, straightforward, direct, helpful and constructive in relation to the needs of Northern Ireland. Unfortunately, his good record has been tarnished by his decision to close the Northern Ireland gas industry. To some extent, I blame the officials who advise him for that. The speed of the rejection of the rescue plan for the gas industry has caused the Minister to be considered as the Government's hatchet man, responsible for axing 1,000 jobs and finally killing an industry that has been strangled by the indecision of successive Governments, who supported it financially but who instilled inadequate confidence in consumers. That contributed to customer loss of confidence in ever having reasonably priced gas supplies, so they started to drift away from gas.
The decision not to provide gas from the British gas grid sentenced the Northern Ireland gas industry to decline and to dependence on a subsidy which, as the Minister said, 692 increased annually without any hope of the industry becoming viable. The 80,000 gas customers left in Northern Ireland have been badly let down. Northern Ireland will soon be the only part of the United Kingdom that cannot share in benefiting from the nation's gas reserves and all the advantages that flow from the availability of natural gas. Their choice for heating will be restricted largely to LPG, with which the elderly find it difficult to cope, electricity or solid fuel.
Many well-informed people believe that all the signs point to the existence of oil and gas reserves off the coast of Northern Ireland. Will the Minister assure the House that the Government have placed no obstacles in the way of exploration? Have they given positive encouragement to those who wish to explore for offshore oil and gas reserves from which Northern Ireland could benefit?
In evidence to the Economic Development Committee of the Northern Ireland Assembly, the Minister said:To lay down piping for natural gas which the Republic of Ireland would sell to us at a price equivalent to that of heavy fuel oil is to be on a loser before one starts.That must show clearly—to those who wish to see it—that the Kinsale gas deal was a red herring from beginning to end. However, it served as a useful distraction from the proposal to build a pipeline to the mainland had the Government been willing to link Northern Ireland to mainland supplies. Have the Government seriously considered a pipeline across the north channel from Scotland? Does the Minister know whether applications have been made for EC finance to assist this possible project? What is the current estimated cost of running a gas pipeline from Northern Ireland to the mainland?
Will the Minister assure the House that, in the event of substantial gas discoveries off Northern Ireland, money will be made available to provide a new distribution network and to establish a modern, viable gas industry?
I share the concern expressed this morning about job losses, and I welcome the time that was given for further consideration and consultation, although it did not turn out to be very satisfactory as the consultation was felt not to be all that meaningful.
I am also concerned about the level of compensation and about the timing of the rundown and closure. Knowing as I do the somewhat haphazard way in which the Northern Ireland Housing Executive organises work programmes, I shall be concerned to ensure that pensioners are not left without heating and cooking facilities in the middle of winter by a badly organised rundown and closure.
I congratulate the gas industry joint working group on its efforts to save the industry, but my colleagues and I are not convinced that the Government gave it the consideration that it deserved. I trust that the guesstimate—I used that word earlier because it is a rather rough estimate of closure costs—will be adequate to meet the real cost of the industry's closure and the cost of replacing and reinstating property to domestic consumers.
I am not satisfied with the level of compensation available to industrial users. They, too, have been obliged to incur new expenditure for which they have not planned. It has been forced on them by the Government's decision to end subsidy to the gas undertakings.
I hope that the Minister will assure the House that his Department and the Northern Ireland Housing Executive will work together very closely to protect the consumers especially the aged and handicapped.
693 I am also concerned about the obvious lack of interest of Government supporters in the real problem that we face and the absence of contributions, apart from haggling and interruptions, by the small number of them in attendance today. There was not a word from any of them in the Northern Ireland Committee, although we can almost predict how the vote will go at the end of this debate.
I remain opposed to the closing down of the Northern Ireland gas industry.
§ Dr. Boyson
The problem of the rundown of the gas industry has been with us for 10 years. At some stage a Government had to make up their mind. This Government did. After years of wobbling, a decision was made. However distressing it may be, that decision had to be made.
None of those who voted against the proposal before the Northern Ireland Committee and none of those who voted it down in the Northern Ireland Assembly carry any responsibility for Government policy. Obviously it was possible for them to vote against our proposal because they were not responsible for the budget. Their action was one of those freaks of freedom which occur from time to time and which people enjoy. But it must be recognised that, had the positions of the parties been reversed, a Labour Government would have made the same proposal.
We have heard a great deal about compensation and the estimate of £97 million. That is the best estimate that we have. It was brought to us by the British Gas Corporation, which has the greatest experience in these matters and believes that the figure will be about that.
I was asked about the breakdown of the figures. Some £12 million is for the deficit support for 1984–85. We have to prop up the industry while it runs down, just as it has been propped up year after year. One of the problems has been that it has needed a bigger prop every year. Ten years ago. the gas industry needed £2 million a year to support it, but now it needs £12 million a year. One could imagine what the figures would be if we continued supporting it. Some £120 per household is spent in subsidy, and if all the energy sources in Northern Ireland were subsidised at the level of the gas industry, £600 million of subsidy would be paid.
In 1987–88, the closure support will require £20 million for conversion, including £18.5 million to the Housing Executive. The operation deficit, the termination costs such as works closures, purging and the rest will cost about £12 million. The whole cost adds up to £97 million.
I was asked why figures are different. In many cases, the figures for compensation have decreased because the number of houses that will have to be compensated has decreased with the years. It decreased by one eighth in the past year alone. Most people have covered the cost themselves.
It is worth reminding the House that this is not a nationalised industry and there is no legal obligation on the Government to give compensation. The gas industry is run by private concerns. The hon. Member for Coventry, South-East (Mr. Nellist) may be horrified to learn that we are giving compensation to customers of private concerns that cannot make a profit. I do not want to affect his political purity.
§ Mr. Nellist
The Minister says that we are talking about private, not nationalised, concerns, but the order is 694 designed to remove a statutory duty from those private companies for the supply of gas. Therefore, it strangles the industry and the Minister is acting in the same way as MacGregor in the coal industry.
§ Dr. Boyson
The hon. Gentleman is obviously a seeker after truth and desires to hold to the truth in every way. We are not closing the gas industry; it is closing itself because we have said that it must run on its own money. If we followed the hon. Gentleman's theory, we would prop up everything in the country, including private industry. The hon. Gentleman is opposed to private industry, but he wants this subsidy to continue. I do not doubt his political morality, or even his fervour, but I am astonished, and some of his supporters may be astonished when I bring it to their attention, to hear that he wants continued compensation for private industry that cannot make a profit. He is advocating not the nationalisation of these concerns, but their continuation, although they are not making a profit and are run by private directors.
The hon. Gentleman is obviously a political thinker, so he should think about these things. He should remember that there are 13 concerns involved in the gas industry. We know that 13 is not a lucky number. It is not a football team or a rugby team. Nobody likes 13, so perhaps the hon. Gentleman has been misled by the number. Perhaps the number 13 has put a spell on him.
Four of the concerns are private and nine are run by corporations. The only one of the 13 that is continuing because it can still make a profit is a private firm. The hon. Gentleman should think about that. The workers will lose their jobs because the concerns run by corporations cannot make a profit. In one concern, their jobs are being saved because the private firm is making a profit.
I am concerned about unemployment, as we all are. The hon. Member for Holborn and St. Pancras (Mr. Dobson) may laugh. I do not accept that there is a morality on Labour Benches that does not exist on this side of the House. I have great respect for the hon. Member, hut he must have more breadth of vision.
The hon. Member for Belfast, North (Mr. Walker) spoke about compensation. I know what his area is like, and I have walked through it with him. We shall do all that we can through voluntary organisations, pamphlets with large print for old people, and other important devices that must not be neglected to make sure that the consumers know what we are doing and what their opportunities are. When the closure notices are issued it is important for hon. Members, who have close contact with their constituents, to keep in touch with the Department and the gas undertakings to ensure that the job is done properly arid that people do not fall out because they do not understand what is going on.
We are following British Gas practices on safety to provide for a safe and orderly rundown of gas supplies to consumers. When new appliances are installed, they will be made safe wherever they are. I can assure the hon. Members for Antrim, East (Mr. Beggs), Belfast, North and Upper Bann (Mr. McCusker) about that. The grants are intended to cover the cost of all essential work associated with the installation on the basis of the least cost alternative. We do not want people to believe that they are receiving compensation. I do not want to mislead the House about that.
We are following the practice used for the clean air scheme which was a more difficult scheme for the ordinary 695 householder. We are paying for installations on the basis of the least cost alternative. In Committee hon. Members asked about the handicapped. The least cost alternative must be workable for the individual. It would be no use installing equipment which an old couple, for example, could not work. Decisions will be based on human need.
The question of the right of appeal was raised in Committee. I said that I would see what we could do, and we are looking into the issue. I shall retain contact with hon. Members about that.
I worked with Age Concern closely when I was a Minister in the Department of Health and Social Security. In its material it does not consider the figures which I am about to give to the House. At issue is how much, with the alternative system, heat and lighting will cost compared with the present system. The figures are good news. Central heating run on town gas for a terraced house costs £553 a year. Similar central heating using coal costs £289 per annum. That is why people have converted to coal in the last few years. Coal central heating costs only half as much.
§ Dr. Boyson
I share the faith in the ordinary people expressed by the hon. Member for Coventry, South-East. I grew up in Lancashire where coal was used to heat our homes and I am sure that, as then, people will use their heating sensibly. Sometimes the ordinary person can cope better than the officials who try to advise them. I could give similar figures for cooking and other heating, but in the long term it will be cheaper for people to convert to other fuels.
§ Mr. Stuart Bell (Middlesbrough)
Will the Minister take note of the statment by my right hon. and learned Friend the Member for Warley, West (Mr. Archer) in Committee that the Northern Ireland Housing Executive estimates that it would cost £20 million to deal with conversions for only 10,700 homes with gas heating? Are those figures correct?
§ Dr. Boyson
I shall not, because of shortage of time, go into the detailed costs, but I will write to the hon. Gentleman within a few days. So many statistics have been given that I prefer to look into the matter to make sure that my reply is accurate.
The hon. Member for Coventry, South-East questioned me about housing. I would not like hon. Members to go away for the weekend without realising how much money the Government have put into housing in Northern Ireland. About £500 million a year has gone to that sector and a vast number of homes have been completed. I agree that more remains to be done, but I should not like it to be thought that the Government had not taken action on that front. The Labour party, when in office. did what it could to provide homes, and the programme has been accelerated since we come to power. Housing has been one of our three priorities and whole areas of Belfast and Londonderry have been rebuilt.
§ Dr. Boyson
I will not give way because time is short. Anyway, the hon. Gentleman must not keep asking questions before I have answered his earlier questions. For example, he questioned me about jobs, but I do not think that he correctly followed what I said. Nobody wants more unemployment—at any rate, nobody I know wants to see more people out of work—and, although this action will mean 1,000 people losing their jobs in the gas industry, jobs will be provided in relation to alternative fuels, and similar men and women will take up those jobs.
It is likely that more jobs will be available because the distribution of coal has a strong labour content, and the same applies to liquid petroleum gas. The odds are that in the long term in the Province there will not be fewer jobs. We are shutting down gas, not to save jobs, but to enable the money that is being used in that sector to be used for lignite and coal, so securing cheaper fuel for the Province. I assure the hon. Member for Coventry. South-East that we are as concerned as he is about unemployment. He has no monopoly of virtue on that issue.
§ Mr. Nellist
I do not expect to convince the Minister about the loss of jobs and the lack of alternative employment. I am anxious to press him, however, on the question of redecoration, the replacement of flues and brickwork to cater for new fuels and housing costs generally. He says that £20 million is available for conversion. It has been estimated by the Northern Ireland Housing Executive that the cost of conversion will be £1,938 per household. For 80,000 to 100,000 households, we are talking of £160 million to £200 million. If the costs of conversion exceed £20 million, will the money that the Government at present provide for housing be diverted from repairs and renovation to conversion, or will new money be provided?
§ Dr. Boyson
I pointed out that the estimates, prepared by the British Gas Corporation, were the best available to us. The conversion will take place and the cost will come from the grants that we give for this to the housing areas. There is no question of the money coming from somewhere else. If we are wrong about the cost, we shall have to spend more money on it. The position is as straightforward as that.
We have said nothing about decorations. I have made perfectly clear what will be covered. Indeed, the clean air legislation did not include redecoration and so on. We have talked about putting in the cheapest alternative fuel that can be used, and if a new chimney is needed it must be provided. However, it does not mean taking out gas pipes and so on. That is the arrangement and that is what happens in this country, under the clean air legislation and similar provisions.
I have made the position clear. We shall cover all the costs of putting in the alternative fuel, but—I repeat that there is no difference between what we are doing in this respect and what happened with the clean air legislation—redecorations and the rest are not covered. In other words, we are following practice—[Interruption.] People may desire more, but we have made the position clear from the beginning.
We have been frank about all of this and the facts have been written down. If people cannot read the words, I cannot go round providing everbody with spectacles. There is no trick involved, no messing about, and we could not have been more frank.
697 Any Government subsidising every gas consumer at the rate of £120 a house, and facing an ascalation of cost of gas from a £10 million a year subsidy to £12 million a year—equivalent to £600 million if all the energy in the Province is subsidised in the same way—would have made the decision that we have made. Any Opposition Member who does not believe that should look at himself in the mirror.
We have faced reality in a responsible way. We are providing money for the transfer of Kilroot to coal which will say £25 million a year, because it will be cheaper than the alternative heavy fuel. Similarly, we are backing lignite. That will create jobs. Let us have more jobs in Northern Ireland. No one will he more pleased than myself if we get them.
I commend the order to my right hon and hon. Friends and trust that the House will approve it.
§ Question put:—
§ The House divided: Ayes 110, Noes 35.698
|Division No. 285]||[2.15 pm|
|Ashby, David||Fowler, Rt Hon Norman|
|Atkins, Robert (South Ribble)||Franks, Cecil|
|Baker, Nicholas (N Dorset)||Gale, Roger|
|Baldry, Tony||Galley, Roy|
|Blackburn, John||Ground, Patrick|
|Boscawen, Hon Robert||Gummer, John Selwyn|
|Bottomley, Peter||Hamilton, Neil (Tatton)|
|Bowden, Gerald (Dulwich)||Hampson, Dr Keith|
|Boyson, Dr Rhodes||Hanley, Jeremy|
|Braine, Rt Hon Sir Bernard||Hargreaves, Kenneth|
|Bright, Graham||Harvey, Robert|
|Brinton, Tim||Hayward, Robert|
|Bruinvels, Peter||Heathcoat-Amory, David|
|Buck, Sir Antony||Heddle, John|
|Burt, Alistair||Hind, Kenneth|
|Butcher, John||Howarth, Alan (Stratf'd-on-A)|
|Butler, Hon Adam||Hubbard-Miles, Peter|
|Butterfill, John||Hunt, John (Ravensbourne)|
|Carlisle, Kenneth (Lincoln)||Hunter, Andrew|
|Carttiss, Michael||Hurd, Rt Hon Douglas|
|Clark, Dr Michael (Rochford)||Irving, Charles|
|Cope, John||Jessel, Toby|
|Couchman, James||Jones, Gwilym (Cardiff N)|
|Cranborne, Viscount||Jones, Robert (W Herts)|
|Currie, Mrs Edwina||Key, Robert|
|du Cann, Rt Hon Sir Edward||King, Roger (B'ham N'field)|
|Dunn, Robert||Knight, Greg (Derby N)|
|Durant, Tony||Lang, Ian|
|Eggar, Tim||Lawrence, Ivan|
|Evennett, David||Lennox-Boyd, Hon Mark|
|Fairbairn, Nicholas||Lilley, Peter|
|Finsberg, Sir Geoffrey||Lloyd, Peter, (Fareham)|
|Fletcher, Alexander||McCurley, Mrs Anna|
|Forth, Eric||Major, John|
|Mather, Carol||Stanbrook, Ivor|
|Maude, Hon Francis||Stern, Michael|
|Merchant, Piers||Stevens, Martin (Fulham)|
|Mitchell, David (NW Hants)||Stewart, Ian (N Hertf'dshire)|
|Murphy, Christopher||Terlezki, Stefan|
|Newton, Tony||Thompson, Donald (Calder V)|
|Norris, Steven||Thompson, Patrick (N'ich N)|
|Parris, Matthew||Thorne, Neil (Ilford S)|
|Pawsey, James||Twinn, Dr Ian|
|Portillo, Michael||van Straubenzee, Sir W.|
|Raffan, Keith||Viggers, Peter|
|Rhodes James, Robert||Walden, George|
|Roe, Mrs Marion||Waller, Gary|
|Rumbold, Mrs Angela||Wardle, C. (Bexhill)|
|Sainsbury, Hon Timothy||Wheeler, John|
|Shepherd, Colin (Hereford)||Wilkinson, John|
|Silvester, Fred||Wolfson, Mark|
|Sims, Roger||Wood, Timothy|
|Soames, Hon Nicholas|
|Speed, Keith||Tellers for the Ayes:|
|Spicer, Jim (W Dorset)||Mr. Archie Hamilton and Mr. Michael Neubert.|
|Archer, Rt Hon Peter||Mikardo, Ian|
|Atkinson, N. (Tottenham)||Miller, Dr M. S. (E Kilbride)|
|Beggs, Roy||Nellist, David|
|Bell, Stuart||Nicholson, J.|
|Clarke, Thomas||Orme, Rt Hon Stanley|
|Cocks, Rt Hon M. (Bristol S.)||Pavitt, Laurie|
|Cohen, Harry||Pike, Peter|
|Cook, Frank (Stockton North)||Roberts, Ernest (Hackney N)|
|Deakins, Eric||Shore, Rt Hon Peter|
|Dobson, Frank||Skinner, Dennis|
|Dubs, Alfred||Soley, Clive|
|Freeson, Rt Hon Reginald||Taylor, Rt Hon John David|
|Godman, Dr Norman||Walker, Cecil (Belfast N)|
|Hogg, N. (C'nauld & Kilsyth)||Wigley, Dafydd|
|Hume, John||Woodall, Alec|
|Janner, Hon Greville|
|McCusker, Harold||Tellers for the Noes:|
|McKelvey, William||Mr. Sean Hughes and Mr. Robin Corbett.|
|Maynard, Miss Joan|
§ Question accordingly agreed to.
That the draft Gas (Northern Ireland) Order 1985, which was laid before this House on 11th July, be approved.