HC Deb 13 December 1988 vol 143 cc877-84

Queen's recommendation having been signified—

Motion made, and Question proposed,

That, for the purpose of any Act resulting from the Electricity Bill ("the Act"), it is expedient to authorise— (1) the payment out of money provided by Parliament of the following, namely— (a) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Electricity Supply and any staff of the Director, any other sums payable under the Act to or in respect of a person who holds or has held office as the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act; (b) the remuneration of the chairman of a consumers' committee, any travelling or other allowances payable under the Act to such a chairman or to other members of such a committee, any other sums so payable to or in respect of a person who holds or has held office as such a chairman, any sums so payable to members of a sub-committee of such a committee and any expenses incurred by such a committee; (c) sums payable under the Act to persons who, immediately before the Electricity Consumers' Council and the Consultative Councils established under section 7 or 7A of the Electricity Act 1947 cease to exist by virtue of the Act, are the chairman or other officers of those Councils; (d) expenses incurred by the Treasury or the Secretary of State in acquiring securities of a successor company or rights to subscribe for any such securities; (e) sums required by the Secretary of State for paying remuneration and travelling or other allowances to persons on whom duties with respect to the preparation and auditing of statements of accounts are imposed by order under the Act; (f) sums payable under the Act to or in respect of persons who immediately before the transfer date are the chairman or other members or are employees of the existing bodies; (g) sums required by the Secretary of State for paying grants to the existing bodies; (h) the remuneration of, and any other allowances payable under the Act to, meter examiners and any other sums payable under the Act to or in respect of such examiners; (i) expenses reasonably incurred by the Fisheries Committee appointed under section 5(2) of the Electricity (Scotland) Act 1979 and continued in existence by the Act; (j) sums required by the Secretary of State for making grants or loans towards nuclear expenditure, or for fulfilling guarantees given by the Secretary of State in respect of sums borrowed from a person other than the Secretary of State for the purpose of meeting such expenditure, so long as the aggregate of any grants so made and of any amounts outstanding by way of principal in respect of loans so made and of sums paid in fulfilment of guarantees so given shall not exceed £1,000 million or such greater sum, not exceeding £2,500 million, as the Secretary of State may by order specify; (k) administrative expenses incurred by the Secretary of State or the Treasury in consequence of the provisions of the Act; (l) increases attributable to the Act in the sums payable out of money so provided under any other Act; (2) the payment out of the National Loans Fund of— (a) any sums required by the Secretary of State for making loans to successor companies in England and Wales which are for the time being wholly owned by the Crown, so long as the aggregate of any amounts outstanding by way of principal in respect of such loans shall not exceed £400 million or such greater sum, not exceeding £600 million, as the Secretary of State may by order specify; (b) any sums required by the Secretary of State for making loans to successor companies in Scotland which are for the time being wholly owned by the Crown, so long as the aggregate of any amounts outstanding by way of principal in respect of relevant loans and sums issued out of the Consolidated Fund for fulfilling guarantees given by the Treasury in respect of sums borrowed by such companies from persons other than the Secretary of State shall not exceed £3,000 million; (c) any sums which, by virtue of the Act, are payable under section 5 of the Miscellaneous Financial Provisions Act 1955 in respect of unclaimed interest of redemption money on British Electricity Stock or North of Scotland Electricity Stock; (3) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities of a successor company in Scotland in respect of relevant loans as the Secretary of State may by order extinguish; (4) the payment out of the Consolidated Fund of any sums required by the Treasury for fulfilling guarantees given by them in respect of sums borrowed from persons other than the Secretary of State by successor companies in Scotland which are for the time being wholly owned by the Crown; (5) the transfer to the Treasury of all rights and liabilities of the Electricity Council in respect of British Electricity Stock and all rights and liabilities of the North of Scotland Hydro-Electric Board in respect of North of Scotland Electricity Stock. In this Resolution— existing body", "successor company" and "transfer date" have the same meanings as in Part II of the Act; nuclear expenditure" means expenditure incurred by any person in connection with the storage or reprocessing of nuclear fuel, the treatment, storage or disposal of nuclear waste or the decommissioning of any nuclear installation: relevant loan", in relation to a successor company in Scotland, means—

  1. (a) any loan made, or deemed to have been made, by the Secretary of State or from the National Loans Fund the liability to repay which vests in that company by virtue of the Act;
  2. (b) any loan made to that company by the Secretary of State; and
  3. (c) any sums payable under debentures issued as a consequence of the making of an order under the Act extinguishing any liabilities of that company.—[Mr. Maclean.]

10.45 pm
Mr. Malcolm Bruce (Gordon)

This money resolution is something to which the House should give serious attention, because it is being asked to vote through a sum in excess of £6 billion, and it will not be appropriate to let such a major item pass without raising a number of questions.

A high proportion of the sum required of the taxpayer will be used to obviate nuclear power costs. It is difficult to establish precisely how much, but a figure of £2.5 billion is specifically identified in relation to nuclear power, with another £3 billion for the Scottish electricity debt conversion—most of which is due to Scotland's substantial nuclear capacity and its associated debt. It means that the taxpayer is being asked substantially to underwrite both debts incurred and yet to be incurred, to that level.

One or two other matters should be covered by the Bill, and one is bound to ask whether the money resolution is adequate, given that large sums of money are specifically earmarked.

Concern has been expressed about the Bill's implications for low income groups and the threat of disconnections. Schedule 6 deals with disconnections but does not make it clear that protection will be provided in cases of hardship. It states that an electricity company may disconnect a customer whose bill has not been paid within 15 days of receipt of a demand for payment. That provision is unqualified, and the House will want to ensure that the protection against disconnection in cases of hardship that exists in the present regime will be continued in the Bill, and that provision for that will be made by the taxpayer—which seems not inappropriate-or that a clear indication is given that such protection will be given by the electricity companies.

Another matter of considerable concern in many quarters is the lack of any obligation under the proposed legislation to provide a supply. That means that, if the social clause observed by the Hydro Board in areas such as the north of Scotland is removed, new developments in the Highlands may be placed at risk. Although the board may say that 99.9 per cent. of existing customers are connected, many will not have been. Under existing legislation, there is an obligation to supply them, too. There could be new developments in remote locations which, under the new legislation, may be denied the rights of access that currently exist.

One is entitled to ask what provision will be made either to require the companies taking over from the existing boards to provide such a guarantee, and, if necessary, for public funding to underwrite it. If public funding can be provided on such a lavish scale to underwrite the Government's political objectives, and their strategic objectives in terms of nuclear power, one would like to think that the interests of low income groups and of developments in remote areas will be similarly protected. It is worth reminding the House that people on low incomes spend on average between 15 to 25 per cent. of their incomes on heating and lighting, compared with the national average of 6 to 7 per cent.

A number of complaints have been expressed to me by industries that are high users of energy. I freely admit that the paper industry is very important to my constituency, and it has suffered badly from the privatisation of British Gas: in its own words, the industry in the last four years has been ripped of shamefully by a monopoly that has now been properly called to account, as we said it would have to be. Having suffered that, the industry now fears that it will face a similar problem with the privatisation of electricity.

Many companies are committed at present to investing in combined heat and power systems, but fear that the changed circumstances could prevent that from being viable. After all, as the Minister has told us, the Scottish electricity industry has 100 per cent. over-capacity, and appears to be prepared to undercut any other competitive supplier to any level to try to ensure that the maximum connection is maintained—although that is not in the wider national interest in terms of energy efficiency, competitiveness or indeed conservation. Such factors should either be explained in the Bill or provided for in the money resolution.

Given that the Bill is likely to become law, and privatisation is likely to go ahead, I make a plea on behalf of companies in my constituency—which I know have applied to be put on the shortlist before—that they be given the opportunity to supply the paper for the prospectuses. That might help to mollify them after the way they have suffered through increased energy costs in both the past and the proposed legislation.

The Bill fails on two counts, and the money resolution does not provide for any adequate coverage. First, contrary to what the Minister has said, the Bill substantially reduces the industry's commitment. to promote energy conservation. Clause 3(3)(b) lays down a requirement for the director general and the Secretary of State to promote efficiency and economy on the part of such persons and the efficient use of electricity supplied by them". That is far from a strong commitment to promote energy conservation. Energy conservation and the interests of the environment will not be served by the market; they are the Government's responsibility. We need from the Government a clear indication of how they will ensure that the privatised industry will genuinely attend to such matters, and the money resolution should have made provision for any associated costs.

The regulator proposed in the Bill is funded and staffed entirely inadequately, given the job that he is expected to do in an industry that has been completely reorganised and is extremely complex. The money resolution should have provided more money for the director general, who should have additional powers which would certainly require extra funds. He should have the power to set tariffs, or at least the company should have to apply to him for their approval. He should also have the power to approve major capital investment. He should have the power to direct companies in a way that is beneficial to the environment, and also to direct them to take action to promote energy efficiency and conservation. In pursuit of those aims, he should have the power to set up public hearings at which interested bodies could question the protagonists. All that requires considerably more money and staff than the Bill provides for.

But the most offensive thing about the money resolution is that the House is being asked to vote through at least £6 billion of taxpayers' money to finance a flotation for which the Government have totally failed to make a case. The real motivation is to secure, at the expense of £6 billion of taxpayers' money, the £20 billion proceeds that the Government expect to get to bribe their way through the next election. The House should not allow that blatant misuse of taxpayers' money to pass unchallenged. The money resolution is the biggest that I have known to come before the House. I find it quite extraordinary that the Government can expect it to pass without debate and without proper attention being drawn to those important matters.

10.54 pm
Mr. Alex Salmond (Banff and Buchan)

Before allowing the money resolution to pass, given the vast sums involved, we should pursue the Government's financial intentions as to the future of the Bill. I particularly want to know whether they will have the brass neck to ask electricity consumers to purchase shares in the new privatised organisations.

The array of assets owned by the electricity companies have been financed out of the bills paid by electricity consumers. Although the industry has substantial capital debt, nothing in the money resolution states that that debt definitely will be offset. Therefore, if that is the Government's intention it seems unreasonable to charge people to buy the assets to which they have already contributed as electricity consumers.

The Government do not have to charge people for the distribution of shares. They have a precedent in that the TSB effectively was stolen from its depositors. The industry was privatised and the money was put back into the industry instead of going to the Treasury. Have the Government considered that course? More reasonably, have they considered giving a free distribution of shares to electricity consumers? If the aim and intention of the Bill was to encourage share ownership, the Government might actively be considering a free distribution of shares to electricity consumers who have financed the assets which they will be asked to buy.

If the Government show no sign of taking any such action, I shall be led to the unworthy conclusion that the money resolution will provide two slush finds—a slush fund for the nuclear industry, which has been mentioned in the debate, and a slush fund for the Government to use the money taken from electricity consumers for the assets for which they have already paid through their electricity bills, for the Government's own political purposes in their attempts to win future elections.

10.56 pm
The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)

The hon. Member for Gordon (Mr. Bruce) finally got yesterday's speech off his chest. Although he kept mentioning the money resolution and asked some questions, most of the questions he raised are not covered by the money resolution. In his final peroration he mentioned the staffing for the director general. We believe that £10 million is certainly adequate to cover his various statutory obligations, in particular the two that the hon. Gentleman mentioned.

I am not sure that the hon. Gentleman understood the Bill sufficiently when he raised the question of energy efficiency. The Bill places a statutory obligation on the director general to further the interests of energy efficiency. He specifically mentioned CHP. Again, the Bill gives the director general specific powers to ensure that there is full and fair access of all forms of electricity to the system. We believe that we have adequately staffed for those items.

The obligation to supply is quite clear. Whereas at the moment there is no absolute obligation to supply outside the 50 yd from the mains limit, under the Bill every single consumer in Scotland, or anywhere else in Britain will have the right to be connected, unless there is a very specific technical reason why he cannot be connected.

Mr. A. J. Beith (Berwick-upon-Tweed)

On that very point, is the charge to consumers provided for in the Bill likely to be as it is now under the nationalised boards, when consumers are asked to pay as much as £10,000 to be connected to the mains supply?

Mr. Spicer

That is a very good question. The costs must be reasonable. The director general will act in an arbitration role. If a company could charge arbitrary high costs and thus discriminate against certain consumers, that would be wrong. There are ways in which such matters can be arbitrated.

The final point made by the hon. Member for Gordon in his finishing-up of yesterday's speech was about disconnection. The Bill makes it clear that, where a right to disconnect exists, the supplier must give 15 working days for payment and two days' notice before disconnection. Once the cause of the disconnection has been removed, the supplier will have to reconnect within two working days. Therefore, there will be a tightening up.

The hon. Member for Banff and Buchan (Mr. Salmond) raised an almost incomprehensible question. I think he asked whether we were going to exclude electricity consumers as buyers of shares. I have said that the obligation will be upon companies to sell electricity to all domestic customers, so the answer must be no.

Mr. Salmond

Perhaps I can explain my point to the Minister. The question is not whether shares will be sold to consumers but whether they will be charged for shares in assets for which they have already paid through their electricity bills. I argue that the Government are asking people to pay twice for the same thing. I gave the example of the Trustee Savings bank, which was privatised, when another course was taken.

Mr. Spicer

As everyone will be a consumer, it would be crazy to give special discounts to everyone. That would be an extraordinary proposition. I thought that I had understood the hon. Gentleman correctly, and I find that I did. I hope that I have answered hon. Members' specific questions.

Question put:

The House divided: Ayes 191, Noes 19.

Division No. 15] [11.2 pm
Aitken, Jonathan Cope, Rt Hon John
Alexander, Richard Cran, James
Alison, Rt Hon Michael Currie, Mrs Edwina
Amess, David Davies, Q. (Stamf'd & Spald'g)
Amos, Alan Davis, David (Boothferry)
Arbuthnot, James Douglas-Hamilton, Lord James
Arnold, Jacques (Gravesham) Dover, Den
Ashby, David Dunn, Bob
Aspinwall, Jack Durant, Tony
Baker, Rt Hon K. (Mole Valley) Favell, Tony
Baker, Nicholas (Dorset N) Fenner, Dame Peggy
Baldry, Tony Finsberg, Sir Geoffrey
Barnes, Mrs Rosie (Greenwich) Fishburn, John Dudley
Batiste, Spencer Forman, Nigel
Beaumont-Dark, Anthony Forsyth, Michael (Stirling)
Bellingham, Henry Forth, Eric
Bendall, Vivian Fowler, Rt Hon Norman
Bennett, Nicholas (Pembroke) Fox, Sir Marcus
Bevan, David Gilroy Franks, Cecil
Boscawen, Hon Robert Freeman, Roger
Bowis, John French, Douglas
Brandon-Bravo, Martin Gale, Roger
Brazier, Julian Garel-Jones, Tristan
Bright, Graham Gill, Christopher
Brittan, Rt Hon Leon Goodhart, Sir Philip
Brooke, Rt Hon Peter Goodlad, Alastair
Browne, John (Winchester) Goodson-Wickes, Dr Charles
Buck, Sir Antony Gorst, John
Budgen, Nicholas Gow, Ian
Burns, Simon Gower, Sir Raymond
Burt, Alistair Greenway, John (Ryedale)
Butcher, John Gregory, Conal
Butterfill, John Griffiths, Sir Eldon (Bury St E')
Carlisle, John, (Luton N) Griffiths, Peter (Portsmouth N)
Carlisle, Kenneth (Lincoln) Grist, Ian
Carrington, Matthew Hamilton, Hon Archie (Epsom)
Carttiss, Michael Hampson, Dr Keith
Cash, William Hanley, Jeremy
Chapman, Sydney Hargreaves, A. (B'ham H'll Gr')
Chope, Christopher Harris, David
Clarke, Rt Hon K. (Rushcliffe) Hawkins, Christopher
Conway, Derek Heathcoat-Amory, David
Coombs, Anthony (Wyre F'rest) Heddle, John
Coombs, Simon (Swindon) Hicks, Mrs Maureen (Wolv' NE)
Holt, Richard Nicholls, Patrick
Howarth, Alan (Strat'd-on-A) Nicholson, David (Taunton)
Howarth, G. (Cannock & B'wd) Oppenheim, Phillip
Howell, Ralph (North Norfolk) Paice, James
Hughes, Robert G. (Harrow W) Parkinson, Rt Hon Cecil
Hunt, David (Wirral W) Patten, John (Oxford W)
Hunter, Andrew Pattie, Rt Hon Sir Geoffrey
Hurd, Rt Hon Douglas Peacock, Mrs Elizabeth
Irvine, Michael Porter, David (Waveney)
Jack, Michael Portillo, Michael
Jones, Robert B (Herts W) Powell, William (Corby)
Kirkhope, Timothy Price, Sir David
Knapman, Roger Raffan, Keith
Knight, Greg (Derby North) Redwood, John
Knowles, Michael Renton, Tim
Knox, David Rhodes James, Robert
Lamont, Rt Hon Norman Rifkind, Rt Hon Malcolm
Lang, Ian Roberts, Wyn (Conwy)
Latham, Michael Rowe, Andrew
Lawrence, Ivan Sackville, Hon Tom
Lester, Jim (Broxtowe) Shepherd, Colin (Hereford)
Lightbown, David Smith, Tim (Beaconsfield)
Lilley, Peter Spicer, Michael (S Worcs)
Lloyd, Peter (Fareham) Stewart, Allan (Eastwood)
Lord, Michael Stradling Thomas, Sir John
Lyell, Sir Nicholas Taylor, John M (Solihull)
Maclean, David Taylor, Teddy (S'end E)
McLoughlin, Patrick Thompson, Patrick (Norwich N)
McNair-Wilson, Sir Michael Thorne, Neil
McNair-Wilson, P. (New Forest) Thurnham, Peter
Malins, Humfrey Trotter, Neville
Mans, Keith Twinn, Dr Ian
Marland, Paul Vaughan, Sir Gerard
Marlow, Tony Viggers, Peter
Marshall, John (Hendon S) Waddington, Rt Hon David
Marshall, Michael (Arundel) Wakeham, Rt Hon John
Martin, David (Portsmouth S) Waller, Gary
Maude, Hon Francis Wardle, Charles (Bexhill)
Mawhinney, Dr Brian Warren, Kenneth
Maxwell-Hyslop, Robin Watts, John
Mayhew, Rt Hon Sir Patrick Wells, Bowen
Meyer, Sir Anthony Wheeler, John
Mills, Iain Widdecombe, Ann
Miscampbell, Norman Wiggin, Jerry
Mitchell, Andrew (Gedling) Wilkinson, John
Mitchell, Sir David Winterton, Mrs Ann
Montgomery, Sir Fergus Winterton, Nicholas
Morris, M (N'hampton S) Wood, Timothy
Morrison, Sir Charles Yeo, Tim
Morrison, Rt Hon P (Chester)
Moss, Malcolm Tellers for the Ayes:
Moynihan, Hon Colin Mr. Stephen Dorrell and
Neale, Gerrard Mr. Michael Fallon.
Neubert, Michael
Alton, David Salmond, Alex
Ashdown, Paddy Skinner, Dennis
Beith, A. J. Steel, Rt Hon David
Campbell, Menzies (Fife NE) Taylor, Matthew (Truro)
Carlile, Alex (Mont'g) Thomas, Dr Dafydd Elis
Cryer, Bob Wallace, James
Ewing, Mrs Margaret (Moray) Wigley, Dafydd
Fearn, Ronald
Hughes, Simon (Southwark) Tellers for the Noes: Mr. Andy
Jones, Ieuan (Ynys Môn) Kirkwood, and
Kennedy, Charles Mr. Malcolm Bruce
Livsey, Richard

Question accordingly agreed to.