HC Deb 13 July 1987 vol 119 cc688-90
2. Mr. Tony Lloyd

oyd asked the Secretary of State for Energy if he will make a statement on the future of the electricity supply industry.

7. Mr. Baldry

asked the Secretary of State for Energy if he will give an estimate as to the timetable for the proposed privatistion of electricity supply.

The Secretary of State for Energy (Mr. Cecil Parkinson)

The Government are working to secure a very successful future for the electricity supply industry in the private sector. We are urgently tackling the important issues involved, and consulting widely, and will bring forward proposals as soon as this work is complete.

Mr. Lloyd

The Secretary of State believes that this question is about privatisation. The privatisation of the industry is very important, but the security andefficiency of electricity supplies are at stake. Those factors are of paramount importance to Labour Members. What guarantee will the Secretary of State give that a privatised electricity supply industry will still look to the British sector for its supplies of switchgear, turbines, generators and all the other important equipment, particularly as the Government have already failed to invest adequately in research and development in the industry?

Mr. Parkinson

We cannot force the CEGB to buy British. It chooses to do so because British goods are competitive, because British equipment is good and because it has a long tradition of working closely with the supply industry. If the industry is privatised, there is no reason why that should change, provided that British suppliers continue to perform as well as they do now. I do not believe that the change of ownership need give rise to a change of policy, unless the suppliers fail to perform.

Mr. Baldry

Does not the British Gas experience demonstrate that privatisation is good for the consumer, that it is good for manufacturing industry—in that jobs have been created because manufacturers now pay a lower price for their energy—and that it is also good for the weaker members of the community, such as pensioners, who also now pay less for their energy? Is not the British Gas experience good for the taxpayer, who no longer bears the burdens that face nationalised industries? The sooner the electricity supply industry is privatised the better it will be both for the consumer and the taxpayer.

Mr. Parkinson

It was widely predicted that the only way that British Gas would increase its profits was by shoving up prices, but following the first financial results and the pricing formula that we imposed on British Gas it has reduced its prices by 4.5 per cent. That was because the price of its basic supplies had been reduced, but the benefit of those cost reductions was passed on to the customer, which Opposition Members predicted would never happen.

Mr. Benn

Is the Secretary of State aware that since the privatisation of British Telecom there has been a sharp deterioration in the service, a sharp deterioration in the record of repairs, an increase in profits and an increase in charges——

Mr. Speaker

Order. The question is concerned with the future of the electricity supply industry.

Mr. Benn

Mr. Speaker, I am drawing a comparison with a privatised industry that has already moved into the private sector where none of the Secretary of State's claims turned out to be correct. Will the right hon. Gentleman assure the House that this will not occur when a privately owned monopoly in British electricity is brought into being by a Government who claim to believe in competition?

Mr. Parkinson

I am afraid that I shall have to disappoint the right hon. Gentleman. He is making an unjustified assumption. We recognise the need to introduce competition into the electricity supply industry. That is why we are studying the matter with great care. The right hon. Gentleman would be most unwise to assume that there is only one way to privatise an industry.

Mr. Rost

I warmly welcome my right hon. Friend to the Front Bench and wish him every success in a very challenging job. Will he assure the House that privatisation will not be along the lines of British Gas, but that a formula will be devised that will provide genuine competition and give a fair opportunity to private producers?

Mr. Parkinson

In approaching the subject of electricity privatisation there are many interests to be balanced: the work force, the customers and the public—the taxpayers—as the owners. It is because we are trying to find a way to introduce competition and at the same time to be fair to all those interests that the matter is receiving deep and detailed attention. We are not rushing towards making decisions that have not been thought out.

Mr. Wallace

Given the Government's enthusiasm for privatising the electricity supply system and nuclear power, particularly the PWR, why do they not put their convictions to the test and see whether they could raise on the market the private capital to build the Sizewell plant?

Mr. Parkinson

That is a typically muddled alliance approach to the problem. Until we have settled a structure for the industry and decided on the basis for privatisation such questions are pointless.

Mr. Speller

I congratulate my right hon. Friend on assuming his onerous office, but when considering the future of the electricity supply industry will he consider the potential input of energies that are alternatives to the normal coal or nuclear sources, particularly the amount of value that could be obtained from the many wind generators throughout the British Isles?

Mr. Parkinson

I am tempted to make the obvious joke, but I will not. The matter of renewables and power that is generated from wind is under close study. The House will have noticed that we have commissioned a pilot project to consider power that is generated by the sea and tides. We think that this is an important sector and it will receive careful attention.

Mr. Orme

Is the Secretary of State aware that the question of nuclear power and privatisation will be exceedingly important, particularly the accountability for nuclear power stations? Will parliamentary accountability be removed under any future legislation?

Mr. Parkinson

I cannot imagine any circumstances in which the regulations under which the nuclear industry operates could be weakened or in any way lightened. We recognise the very serious point that the right hon. Gentleman is making, but there is another point. Chernobyl was a wholly state-owned station and Three Mile Island was wholly privately owned; ownership does not decide safety. What decides safety is the safety regime that is instituted and the rigid enforcement of it, which we are determined to do.