HC Deb 04 April 1989 vol 150 cc159-66

Motion made, and Question proposed, That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

  1. (a) to make payments to the Secretary of State in respect of advances made by him to the Council or Board;
  2. (b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.—[Mr. Michael Spicer.]

11.11 pm
Mr. John Maxton (Glasgow, Cathcart)

I shall be brief, but it seems astonishing that when we have already debated the Second Reading of the Electricity Bill, when we have been through the full Committee stage and when we are approaching the Report stage, we should have a new money resolution and a new Ways and Means resolution. If Labour Members had not been ready to ask questions, the Government were prepared to nod the motions through without any explanation.

I hope that it will not be the junior Minister from the Department of Energy who will reply to this debate but that it will be a Minister of State, Scottish Office. The Ways and Means resolution covers the Electricity Council, but it also covers the two Scottish boards. The money resolution did not cover the Scottish successor companies. I hope that a Minister will be forthcoming in explaining exactly what is going on—[Interruption.] I know that hon. Members who stand at the Bar do not like to listen to debates; perhaps it would be better if they were to leave the Chamber.

In his previous speech the Parliamentary Under-Secretary of State for Energy tried to suggest that the Ways and Means resolution was a follow-on from the money resolution. So far as I understood what he was saying, the money resolution provided for the loan of money to the companies and the Ways and Means resolution was giving the Government the means to take that money back at a later date.

If we read the money resolution we find, first, that it does not cover Scotland at all but covers only the English and Welsh successor companies, and secondly, that it refers to successor companies and to the money that will be lent to successor companies while they are owned wholly by the Secretary of State. The Ways and Means resolution is entirely about the Electricity Council, the North of Scotland Hydro-Electric Board and the South of Scotland electricity board. It does not refer at all to the successor companies. So far as I can see, it has no effect on the successor companies. I hope that a Minister will manage to explain exactly what is meant by that.

As I read the Ways and Means motion, it states that the Electricity Council, the North of Scotland Hydro-Electric Board and the South of Scotland electricity board will be required to repay loans made by the Secretary of State. Perhaps the Minister can explain what the second part of the motion relating to "currencies other than sterling" means. That requirement will presumably cease after 1 January 1990, when the boards and the Electricity Council will disappear and the successor companies take their places. What does the Minister mean by that? What moneys are to be repaid, to whom, and how much is involved?

11.15 pm
Mr. Malcolm Bruce (Gordon)

This second motion relating to the Electricity Bill coming just before the Report stage underlines the extraordinary way in which the Bill is progressing through the House. The money resolution that we have just debated and this motion introduce significant changes which I find it hard to believe that the Government were not aware of when they brought the Bill before the House only a few weeks ago. The Ways and Means resolution raises a number of questions and requires clarification.

We have regrettably just approved a borrowing consent for an extra £2 billion and we are now asked to pass a Ways and Means resolution under which the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board can make payments to the Secretary of State in respect of advances made and also make them in relation to loans made in currencies other than sterling. We are entitled to know what kind of loans we are talking about and their scale. What is the time scale of the loans and what are they for?

At the moment significant changes are occurring almost weekly in the industry which the Government are trying to privatise. The industry is moving the goal posts and the Government are running around in all directions, rather like headless chickens, trying to respond to those changes.

In Committee I made a suggestion, which did not command widespread support, that as the SSEB had 110 per cent. excess capacity, it could do worse than sell one of its power stations to a company in England—and I suggested Torness. I received a letter from the chief executive of the SSEB saying that my suggestion was outrageous and irresponsible and that the SSEB would need the capacity. However, last week the SSEB announced that it was to close Hunterston A prematurely because it could not find a market for the electricity that it generated.

Will the Minister tell us whether the moneys that are moving backwards and forwards, as described in the motion, relate to the extra early costs of decommissioning the Hunterston A power station which, until recently, the SSEB claimed had still a few years to run? I refer to that station to show how muddled and confused the industry is.

I notice that over the past few days there has been confusion in the west country. It appears that the Central Electricity Generating Board is applying to build a large new 1,200 MW pressurised water reactor generating station. However, it has cancelled an order for a coal-fired station in the same region.

One can question the legitimacy of applying to build one kind of power station, closing others down prematurely and arguing that we need extra capacity when the present capacity cannot actually be deployed. It is apparent that, even in the existing state of the market, there is over-capacity. Of course, with an imaginative Government pursuing an imaginative programme, we could use the existing capacity much more efficiently and have no need to build new power stations of any description.

The question the Minister has to address is whether the Ways and Means resolution is before the House because the dynamics of the industry are changing as we look at it. No doubt to some extent the Secretary of State, having proudly produced his package of inspired duopoly as a retort to the monopoly of previous privatisations, is finding that the composition of the industry that he is proposing to create in advance of privatisation is actually changing before the flotation date and that, consequently, the industry's financial requirements, the repayment zones, the deals it is doing and the currencies it is doing them in are all changing in the light of those new circumstances.

Over the next few days we shall have a detailed debate on the Report stage of the Electricity Bill and no doubt some of these issues can be discussed more fully then, but I think that the Government have shattered any confidence that they are in control of the Bill, because we have before us a clear indication that they are not in control and they are having to make major changes as the Bill goes through the House, Indeed, in a few weeks' time the Bill will no doubt come back from another place with even more unrecognisable amendments which have never even been debated in this place, because, we will be told, the circumstances have changed.

I hope that the Minister will be able to give some reasonable and satisfactory answers, and I hope that he will accept that we are now faced with an indication of a Government and a Department out of control of their legislation.

11.21 pm
Mr. Bob Cryer (Bradford, South)

I would like to make a few brief remarks on the question of the giving of directions. The Ways and Means resolution authorises directions to be issued by a Minister to make payments to the Secretary of State and to make payments to the Treasury. Can the Minister tell us, for example, why it was not thought necessary to include statutory instruments in the legislation to give regulatory powers to the Minister? I say this because, if we take this at face value, the Minister can give any directions he chooses in relation to the money. The great virtue of the statutory instrument, whether using the negative procedure or, preferably, the affirmative procedure, is that it actually comes before this House.

As I understand it, these directions will simply be issued by the Minister. They will not be public documents. We shall not know what is going on. They will not be subject to any scrutiny or vote. The procedure of statutory instruments is lamentable enough in its accountability, but at least it exists. There is the opportunity for a prayer to be laid and for a debate to take place, albeit for an hour and a half, or, on the affirmative procedure, for a resolution approving the instrument to be tabled.

I do not think it is a very good procedure. If the Minister says, "It has been done before," frankly, I think that, with this Government, we should have a very close look at procedures, because there is the question, raised by a former Tory Lord Chancellor, of an elective dictatorship.

I am opposed to any Government receiving unqualified powers which place them outside the scrutiny of this place. The Minister has a duty to explain why it is necessary simply to have unqualified directions. He might argue, "Of course, this is to require money to be repaid, and surely the House should ensure that, to obtain money for the Treasury, whether in sterling or any obscure currencies such as European currency units"——

Mr. Dennis Skinner (Bolsover)

It is not Euro-currency that is the problem, but money that comes from the Sultan of Brunei. If he wants to become involved he will want to use other foreign money and at the same time he will want to hide it. He will not want that fact disclosed by the people to whom he loans the money, who will act as purchasers, as in the case of Harrods. He will not want anybody to know that he is behind the deal.

Mr. Cryer

That is another aspect of the need for transparency, particularly in financial arrangements. If the resolution is passed, the Secretary of State will presumably have the power to give directions. Will they be by way of letter or published document? Will they have to be published in any paper anywhere at any time? Can they be questioned or refuted? For example, could the North of Scotland Hydro-Electric Board say that a direction was faulty because the amount of money contained in it was wrong? Does the Secretary of State have the right to demand a sum of money even though there is a dispute about the amount involved?

As the Minister knows, from time to time Departments get statutory instruments wrong. Sometimes they contain ambiguities or faults. Sometimes a Minister goes beyond his or her powers and a statutory instrument will come before the Scrutiny Committee to be corrected. But, as I understand it, there is no scrutiny of the directions that we are debating. I know that it will come as a shock to many hon. Members, but civil servants can make errors and Ministers can compound those by signing a bit of paper as it is pushed in front of them along with many other hits of paper, and then there is no possibility of challenge.

The Minister may say that any dispute could go to court, but that is a counsel of despair. Our legislation should be as clear as possible before it leaves this place. We should try by our best endeavours to exclude the possibility of resorting to the courts in order to rectify a mistake.

Through a statutory instrument a Minister has power to require repayment, setting out the terms and condition; of that repayment. It is open to scrutiny by the House and by the public bodies referred to in the resolution. That would be a better and more satisfactory procedure.

If the Minister says that we have always dealt with such matters in this way I can only reiterate what I said about an elective dictatorship. The fact that something has always been done in a particular way in this place is no substantial argument for saying that it should always be done in that way in the future. There are many virtues in many of our procedures, but there are also many defects., and this is one of them. Any opportunity to improve our methods should be taken.

This is a radical Government. This is the Government who undertake new procedures. [Interruption.] I am being ironic.

Mr. Skinner

That will not be clear in Hansard.

Mr. Cryer

That is the sort of claim that the Government make. My guess is that the Minister will use the old, traditional arguments to justify this legislation.

The Government often claim—falsely—to adopt new methods and to take new initiatives. This measure is not good enough. We should have some accountability. That is one of the Government's Achille's heels. They do not like accountability. That is why they are not publishing the report from the Department of Trade and Industry on the takeover of Harrods. That is why they are keeping it covered up. I know that you, Mr. Deputy Speaker, share my concern that there should be transparency and accountability to the House, and I hope that the Minister will respond in that spirit.

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

In view of the three interventions I had better explain to the House exactly what the resolution does and particularly how, in answer to the hon. Member for Glasgow, Cathcart (Mr. Maxton), England and Wales are to be distinguished from Scotland.

When the new electricity companies move into the private sector it will no longer be appropriate—as the House will agree—for them to borrow for long-term purposes from the national loans fund or to enjoy interest rate benefits associated with Treasury guarantees and exchange cover on foreign currency borrowing. However, the Electricity Bill provides in clause 72 for lending from the national loans fund between vesting and flotation, and this is intended for short-term purposes.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

I am glad that the Minister made that clear.

Mr. Spicer

The hon. Gentleman says that he is glad I made that point clear. That is what my remarks are all about, and I hope to clarify other points as I go along.

Once in the private sector, the new companies will secure the debt finance they need from the sources that are open to the private sector generally—banks, institutions, and the money and capital markets, for example. The capital structures with which they will be established will take account of their future borrowing needs.

We believe that it is sensible that during the period when the new companies have been vested as plcs but are still publicly owned, they should start to deal with their financial requirements as much as possible as though they were already in the private sector—and despite the fact that they will still be able to borrow for short-term purposes from the national loans fund.

That means for the industry in England and Wales that present long-term debt provided from Government sources or with Government guarantee and exchange cover must be repaid by the transfer date. In the case of England and Wales, the present long-term loans are due to be repaid in instalments. By the end of December 1989 the Electricity Council's outstanding debt to the national loans fund will be £1,185 million, and its outstanding debt to foreign lenders £194 million. The new clause to which the resolution relates ensures that that outstanding debt will be prepaid by the transfer date.

In answer to the hon. Member for Cathcart, the position in respect of Scotland is substantially different. The Scottish boards' level of outstanding debt, both to the national loans fund and to foreign lenders, reflects the successive investments made in new operating plant, most recently at Torness. The restructuring of that debt will occur primarily after vesting day, as allowed for in clause 74 of the Bill—when sums owing to the national loans fund will be replaced by a combination of debentures, issued share capital and reserves. To make that process easier, the bulk of the outstanding debt to foreign lenders will be replaced, prior to vesting, by NLF debt.

Mr. Maxton

The Minister should make it clear to the House that clause 74 also gives the Government the power to write off a large amount of that debt, if they so wish.

Mr. Spicer

The hon. Gentleman has twice made that point to the House tonight. The companies' capital structure will of course be a matter for final consideration—and that applies to England and Wales as much as to Scotland. The companies' capital structures, debt to equity ratios and so on, will be addressed when the companies are formed. I have given the hon. Gentleman the answer for which he asked and I hope that the House feels able to accept the motion.

Question put:—

The House divided: Ayes 140, Noes 40.

Division No. 139] [11.33 pm
Alison, Rt Hon Michael Ground, Patrick
Amess, David Gummer, Rt Hon John Selwyn
Amos, Alan Hague, William
Arbuthnot, James Hamilton, Neil (Tatton)
Arnold, Jacques (Gravesham) Hargreaves, A. (B'ham H'Il Gr')
Ashby, David Harris, David
Atkinson, David Hayes, Jerry
Baldry, Tony Hind, Kenneth
Batiste, Spencer Howarth, Alan (Strat'd-on-A)
Bennett, Nicholas (Pembroke) Howarth, G. (Cannock & B'wd)
Bevan, David Gilroy Hunt, David (Wirral W)
Blaker, Rt Hon Sir Peter Hunt, John (Ravensbourne)
Boscawen, Hon Robert Hunter, Andrew
Boswell, Tim Irvine, Michael
Bottomley, Peter Jack, Michael
Brandon-Bravo, Martin Jackson, Robert
Brazier, Julian Janman, Tim
Bright, Graham Johnson Smith, Sir Geoffrey
Brown, Michael (Brigg & Cl't's) Jones, Gwilym (Cardiff N)
Buck, Sir Antony King, Roger (B'ham N'thfield)
Carlisle, John, (Luton N) Knight, Greg (Derby North)
Carlisle, Kenneth (Lincoln) Lang, Ian
Carrington, Matthew Latham, Michael
Carttiss, Michael Lawrence, Ivan
Chapman, Sydney Leigh, Edward (Gainsbor'gh)
Clarke, Rt Hon K. (Rushcliffe) Lester, Jim (Broxtowe)
Coombs, Anthony (Wyre F'rest) Lightbown, David
Currie, Mrs Edwina Lilley, Peter
Davies, Q. (Stamf'd & Spald'g) Lloyd, Peter (Fareham)
Day, Stephen Lyell, Sir Nicholas
Dorrell, Stephen Maclean, David
Douglas-Hamilton, Lord James McLoughlin, Patrick
Dunn, Bob Mans, Keith
Durant, Tony Martin, David (Portsmouth S)
Evennett, David Maude, Hon Francis
Favell, Tony Maxwell-Hyslop, Robin
Fishburn, John Dudley Mayhew, Rt Hon Sir Patrick
Forman, Nigel Miller, Sir Hal
Forsyth, Michael (Stirling) Mills, Iain
Forth, Eric Mitchell, Andrew (Gedling)
Freeman, Roger Mitchell, Sir David
French, Douglas Morris, M (N'hampton S)
Gale, Roger Moss, Malcolm
Garel-Jones, Tristan Moynihan, Hon Colin
Gill, Christopher Nelson, Anthony
Goodhart, Sir Philip Neubert, Michael
Goodson-Wickes, Dr Charles Nicholls, Patrick
Greenway, John (Ryedale) Nicholson, Emma (Devon West)
Gregory, Conal Norris, Steve
Griffiths, Peter (Portsmouth N) Paice, James
Parkinson, Rt Hon Cecil Taylor, John M (Solihull)
Patten, Chris (Bath) Taylor, Teddy (S'end E)
Porter, David (Waveney) Thompson, D. (Calder Valley)
Powell, William (Corby) Thompson, Patrick (Norwich N)
Raffan, Keith Thurnham, Peter
Redwood, John Trippier, David
Rhodes James, Robert Trotter, Neville
Ryder, Richard Twinn, Dr Ian
Sackville, Hon Tom Waddington, Rt Hon David
Shaw, David (Dover) Waller, Gary
Shephard, Mrs G. (Norfolk SW) Watts, John
Shepherd, Colin (Hereford) Wells, Bowen
Smith, Tim (Beaconsfield) Wheeler, John
Speller, Tony Widdecombe, Ann
Spicer, Michael (S Worcs) Winterton, Mrs Ann
Squire, Robin Winterton, Nicholas
Stern, Michael Wood, Timothy
Stevens, Lewis Yeo, Tim
Stewart, Allan (Eastwood)
Stewart, Andy (Sherwood) Tellers for the Ayes:
Stradling Thomas, Sir John Mr. David Heathcoat-Amory
Taylor, Ian (Esher) and Mr. Michael Fallon.
Barnes, Harry (Derbyshire NE) Haynes, Frank
Bruce, Malcolm (Gordon) Hogg, N. (C'nauld & Kilsyth)
Buckley, George J. Hughes, John (Coventry NE)
Callaghan, Jim Lewis, Terry
Campbell, Menzies (Fife NE) Livsey, Richard
Cook, Robin (Livingston) McAllion, John
Dixon, Don Macdonald, Calum A.
Dunnachie, Jimmy McFall, John
Eastham, Ken McKay, Allen (Barnsley West)
Ewing, Mrs Margaret (Moray) McLeish, Henry
Foulkes, George Mahon, Mrs Alice
Fyfe, Maria Meale, Alan
Galbraith, Sam Nellist, Dave
Galloway, George Patchett, Terry
Golding, Mrs Llin Pike, Peter L.
Graham, Thomas Powell, Ray (Ogmore)
Griffiths, Win (Bridgend) Quin, Ms Joyce
Salmond, Alex Wray, Jimmy
Taylor, Matthew (Truro)
Vaz, Keith Tellers for the Noes:
Wallace, James Mr. Bob Cryer and
Wareing, Robert N. Mr. Dennis Skinner.

Question accordingly agreed to.

Resolved, That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

  1. (a) to make payments 1.o the Secretary of State in respect of advances made by him to the Council or Board;
  2. (b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.

Question put and agreed to.

Resolved, That, for the purposes of any Act resulting from the Electricity Bill, it is expedient to authorise the giving of directions requiring the Electricity Council, the North of Scotland Hydro-Electric Board or the South of Scotland Electricity Board—

  1. (a) to make payments to the Secretary of State in respect of advances made by him to the Council or Board;
  2. (b) to make payments to the Treasury in respect of loans to the Council or Board made wholly or mainly in currencies other than sterling.