HC Deb 02 November 1987 vol 121 cc636-8
4. Mr. Boswell

asked the Secretary of State for Energy what steps he will take to stimulate competition in the electricity supply industry.

Mr. Parkinson

The introduction of competition is one of my principal objectives, and we are working on proposals to that end.

Mr. Boswell

I thank my right hon. Friend for that reply. However, does he agree that some measure of pluralism in the retail distribution system, an opening of the ownership of the grid and a measure of competition in generation are the best ways to ensure continuing competition, downward pressure on prices and innovation for the consumer?

Mr. Parkinson

I am not sure that I agree with everything that my hon. Friend has said. However, I do agree that a monolithic electricity supply industry without competition would be a handicap to the country. There are difficulties about competition in distribution. However, I believe that there is plenty of scope for competition in generation, and we are working on proposals that will produce more competition.

Mrs. Clwyd

If the Government foolishly persist with privatising the electricity industry, will the Secretary of State confirm that the control and financing of our nuclear power stations will remain with the state?

Mr. Parkinson

I cannot give the hon. Lady that assurance, but in our manifesto we said that, in addition to coming forward with proposals for the privatisation of the electricity supply industry, we would maintain a nuclear programme. I believe that it is vital to do so. Fitting those two commitments together is one of the problems on which we are working and with which we are achieving success.

Dr. Michael Clark

Is my right hon. Friend aware that due to the fact that generation is the major part of the cost of electricity, there is an increasing demand on this side of the House, and I believe in the country as a whole, for competition to be made available, not only on distribution, but on generation?

Mr. Parkinson

There is nothing new about this as a principle. The 1983 Act envisaged giving private generators access to the grid. At the moment seven proposals are being considered, and the CEGB tells me that it welcomes them. Therefore, what my hon. Friend says is right and possible, and we shall bring it about.

Mr. Prescott

As the Secretary of State has confirmed that he intends to privatise the electricity supply industry, but that he still does not know how that will be done, will he inform the House whether, through the intensive discussions that he is having with Lord Marshall, he agrees with Lord Marshall's view, in the leaked confidential document that was given to his board, that to privatise the electricity industry would, in breaking up the integrated power system, result in the loss of the benefit of economy of scale, seriously prejudice the security of supply and increase prices? Will the Secretary of State therefore confirm that prices are likely to be increased in April, in line with his policy?

Mr. Parkinson

I begin by welcoming the hon. Gentleman to his new responsibilities and wishing him well in them.

I have had discussions with Lord Marshall and also with the trade unions and many other people. Those discussions are continuing. I am sorry to have to disappoint the hon. Gentleman. Our plans are evolving nicely and we are on schedule. We shall be coming to the House with clear proposals for a restructured industry. I do not accept that the consequences will be as outlined by the hon. Gentleman.

Whether the industry stays in the public sector or goes into the private sector, the rate of return of the industry has to be improved if the investment programme is to be funded. That fact would be true whether the industry were in the public or the private sector.