§ The Minister of State, Scottish Office (Mr. Ian Lang)I beg to move amendment No. 98, in page 72, line 15, leave out 'five years from' and insert
'the period of five years beginning with'.
Mr. Deputy SpeakerWith this it will be convenient to take Government amendments Nos. 92, 81 to 84, 93, 9 to 11, 94 to 96, 85, 86, 89, 29 and 30.
§ Mr. LangThe amendments in this group are all minor, technical or intended to clarify—with the single exception of amendment No. 92, about which I shall say a few words.
Schedule 3 sets out the procedure by which one licensee may compulsorily purchase land belonging to another licensee. The procedure would, in particular, be available when an independent generator wishes to purchase redundant land, for example a disused power station site, belonging to National Power or PowerGen. The procedure would involve both the Director General of Electricity Supply and the Secretary of State. The director is required to refuse his consent to a CPO application if it appears to him that
(a) the land would be used for the purposes of an installation necessary for the carrying out of the activities which the existing owner is authorised by his licence to carry on; (b) the use will commence, or any necessary planning permission or consent will be applied for, within five years.The compulsory purchase order then has to be confirmed by the Secretary of State.Amendment No. 92 enables the Secretary of State, by order, to vary the five-year period that the director general 453 has to take into account. It introduces an element of flexibility and calms the anxieties expressed in Committee and I commend the amendment to the House.
§ Mr. MorganWill the Minister give us further assurances on this point. He referred to the problems that could arise when a would-be private independent generator wants to take over "redundant land"—that was his expression. Redundant plant, or land that is no longer required, is one thing, and we understand that it would be particularly attractive for a private generator to acquire access to such land. That sounds an innocent and fair procedure—on the surface. However, something else is lurking beneath the surface. In the redundant power station, or major switching station, site is the belly of the transmission system.
The new would-be private generator will receive two advantages if the director general chooses to favour him with the benefit of the Secretary of State's advice. He not only gets a site—that is the innocent part of it—he gets a site which has been planned for the integrated system, from which we in Britain benefit, which has all the grid lines running straight out of it.
Therefore, the private generator has the advantage of a site with a windfall of gains which removes the need to invest in a transmission network. To do that without specifying in the Bill that compensation will be paid to those who have invested in the power lines from that location, whether it is a major switching station or a power station, would be an abortion; an improper procedure contrary to the rights of the people who have invested a large amount of money. We need some assurance from the Minister on that.
§ Mr. LangI understand the anxieties of the hon. Member for Cardiff, West (Mr. Morgan). They are probably exaggerated and I shall seek to reassure him. First, we are talking often about land which has not been developed in any way at all but which has been acquired with a view to possible development for a power station. In other cases we may be talking about redundant power station sites, possibly in an urban area, which might have value, not necessarily for electricity.
§ Mr. MorganThe hon. Gentleman is getting to the nub of the argument. It is precisely those sites that are the most attractive to the new technology. We could quote examples from almost every large city in Britain. The technology in electricity generation has caused the siting requirements to come full circle. Power stations 30 or 40 years ago were 50 MW, 100 MW or 150 MW on average, all in large cities. Then with the explosion of turbine generator size they went straight up to 500 MW, 600 MW, and finally 660 MW, as one sees in giant stations such as Drax. They all had to be moved 30 or 40 miles from the cities to sources of cooling water such as the large rivers of the Trent, the Ouse or the Ayr.
Now, according to John Baker, the chief executive designate of National Power and PowerGen, the technology has come back to the 200 MW or even 150 MW power stations, which can produce electricity just as cheaply. Therefore, those redundant downtown power station sites are needed once again. Those are the attractive sites because the technology means that the plants can be small. This is where the fight will come.
454 The old power stations of the municipal era in the 1920s and 1930s were located precisely where everybody who is after the jam which will be made available on privatisation will want to go. This is an extremely hot potato in the technological, profitable and competitive future of the industry. Any suggestion that that can be slipped through as a technicality is a complete misconstruction of where the investment will take place.
Mr. Deputy SpeakerOrder. The hon. Member for Cardiff, West (Mr. Morgan) was intervening in the Minister's speech. We cannot have an intervention on an intervention.
§ Mr. CryerIf my hon. Friend the Member for Cardiff, West (Mr. Morgan) is making a valid point, as I think he is, is it not also true that the very sites that he is talking about are ideal for combined heat and power schemes operating in inner-city areas? Would it not be important to keep such sites as an alternative?
§ Mr. LangThat may be so, but the point of the amendment is simply to vary the five-year period by replacing the words "five years from" with the words
the period of five years beginning with".In devising the procedures in schedule 3 the Government have sought to establish a balance between, on the one hand, the good competition reasons for enabling independent generators to gain access to redundant power station sites and, on the other, the rights of the incumbent owner.The Government believe that the schedule gets the balance right, but that the amendment would provide a reserve power that would enable the Government to reduce the five-year period in paragraph 2(2)(b) of schedule 3, if that should appear desirable on competition grounds, in order to facilitate access for independent generators to surplus land held by other licensees. It is a desirable element of flexibility and the balance is right.
§ Mr. MorganThe question is whether the balance is right. Even the CEGB, before the cap-badging and the theoretical split took place on 1 January, was anxious about the future of gas turbine stations which it wanted to locate on many of its old redundant power station sites such as Colchester avenue in Cardiff. It thought that these were the right places for its booster stations, even with the old-fashioned technology, and with none of the impact of the splitting of the two power stations, or the additional encouragement for private generation. The board still wanted those sites to be reserved for gas turbines. What compensation will there be for the loss of that ability to put gas turbine stations in to act as local boosters at times of peak demand?
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Then there is the point that my hon. Friend the Member for Bradford, South (Mr. Cryer) made about CHP. Obviously, one cannot have CHP, on sites like Ratcliffe-on-Soar or Drax, a long way from stations. The middle of Slough or Cardiff or Bradford, where power stations that were built in the 1930s were knocked down in the 1960s, is where one finds the really attractive locations for water grids to go with electricity grids. Almost 455 invariably the switching stations are still there, conferring enormous benefit on the land. In addition, there are the housing and industrial estates that are to be supplied from the hot water grid. Whoever controls this land controls the industry.
We have heard the Minister of State boast about the 7 GW from potential private investors. He seemed to be waving some sort of macho symbol before the House, to indicate the great success of private generation, forgetting that half the time it was Labour-controlled city councils that were putting together the consortia which were going to have the more constructive and innovative schemes in areas like Leicester, Sheffield and Newcastle.
But they all need these sites. The whole point about this legislation is that we must be sure that the Minister, in his search to come good on the 7 GW of private power about which he has been talking—some of it might be described as Socialist private power, emanating from the innovative ambitions of Labour-controlled city councils, which, half the time, half of the rest of Ministers are trying to close down—realises that these sites are absolutely critical. Without the right site one does not have the potential for a profitable scheme.
I am concerned that private generators may, by back-door methods, gain preferential access to the Minister, who has been putting himself on the line by saying, "I am going to get private power in." When I say "private generators" I mean really private generators with just banks behind them, and not generators controlled by Labour local authorities—or even Conservative local authorities or hung councils—or British Coal, or other public-sector bodies. Private generators will want those sites, and they will get preferential access, because otherwise they will not go ahead, and if they do not go ahead the Secretary of State will not have much of a speech for the next Tory party conference.
§ Mr. CryerI can tell from the look on your face, Mr. Deputy Speaker, that you are looking forward to my comments. No doubt you will be disappointed to learn they will be fairly brief.
§ Mr. HaynesAnd in order.
§ Mr CryerAnd, of course, in order.
I, too, am concerned about the points that my hon. Friend the Member for Cardiff, West (Mr. Morgan) has made. In the early 1980s I was closely involved in questioning the CEGB about the closure of a number of power stations on these sites. I recall, for instance, the one near the centre of Huddersfield and, many years earlier, the one at Canal road, Bradford—a plum site which has been sold for retail development.
These are plum sites in every sense because they are near city centres. If the private sector, so beloved of the present collection of incompetents in the Government, acquires them for private generation, they will confer an enormous advantage, particularly if the private generators decide to opt out of generation and sell the sites for retail or industrial development.
I have always felt that city-centre sites should have been retained by the CEGB for electricity generation. I gave the reasons in that unfortunate—unfortunate, as it turned out —intervention in an intervention about combined heat and power. If the waste heat from electricity generation is to be used for heating domestic or industrial units, the 456 generating will have to be done near those units. The sites about which we are talking are situated largely in inner-city areas.
I thought that the CEGB pursued a mistaken policy in concentrating on large power stations, with consequent extended transmission lines, and closing down relatively recently constructed—in some cases in the 1960s—power stations near city centre sites. My view was that the CEGB was creating a power gap to justify the construction of nuclear power stations—because that was surplus generating capacity and was not a basic component—when the small stations were adequate in total to meet the generation demand.
I hope that the Minister will give more concrete assurances that this is not an opportunity for the private enterprise cronies of Conservative Members to come into the industry and have direct access to city-centre sites, which are the most valuable, whether for generation or For making a fast buck, enabling them to get their hands on real estate which at present is publicly owned.
§ Mr. LangI can give the hon. Member for Bradford, South (Mr. Cryer) the assurance he seeks. He is reading more into the amendment than it provides. We debated this matter in Committee. I am proposing a minor modification to the provision that already exists in the schedule to enable the five-year period to be varied and thereby introduce a desirable degree of flexibility. We are talking about a situation in which the Secretary of State and the director general are involved and have a role to play. We are talking in the context of a compulsory purchase order. This is a desirable modification of the provision as drafted.
The hon. Member for Cardiff, West (Mr. Morgan) raised the question of compensation. There are already compensation procedures in schedule 3. The standard situation when a compulsory purchase takes place is that compensation must be paid on the basis of market value without taking account of development value. That would apply here also.
I emphasise that under a Bill as drafted National Power or PowerGen will be able to forestall an attempt by another licensee to raise a compulsory purchase order against their redundant land by showing that they intended to use that land or expecting to apply for planning permission within five years. In our view, while that is a fair measure of protection for those companies, it is right that the Government should have the reserve power to vary the five-year period. That is what the amendment does, and I commend it to the House.
§ Mr. Morganrose—
Mr. Deputy SpeakerOrder. The hon. Gentleman has a right to speak only once at this stage of the Bill.
§ Amendment agreed to.
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Amendments made: No. 92, in page 72, line 16, at end insert—
'(2A) The Secretary of State may by order provide that sub-paragraph (2) above shall have effect as if for the period mentioned in paragraph (b) there were substituted such other period as may be specified in the order.'.
§
No. 8, in line 46, after first 'of', insert
', and paragraph 3 of Schedule 3 to,'.
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No. 81, in page 74, line 37, after '1 5.', insert
'—(1) Subject to sub-paragraph (2) below,'.
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No. 82, in line 41, at end insert—
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'(2) Paragraph 10 of the first Schedule to that Act (statutory undertakers' land excluded from compulsory purchase) shall not apply where the land or rights in question belong to another licence holder.'. —[Mr. Michael Spicer.]