§ 6 pm
§ Mr. Michael SpicerI beg to move amendment No. 35, in page 25, line 32, leave out 'makes an order' and insert
'has made one or more orders'.
§ Mr. SpeakerWith this it will be convenient to take Government amendments Nos. 36 to 43.
§ Mr. SpicerAfter the previous debate, I shall be brief, although the Opposition may want me to come back to some points. I shall explain the purpose of the amendments. If the contract between the generator and the supply company contains terms that allow for payments to be made before stations are commissioned, the amendments will allow the costs to be covered through the levy.
The issue is complicated, so the best way to proceed is for me to listen to any Opposition comments and respond to them if necessary.
§ Mr. DoranI was interested to hear the Minister's point. My interpretation is that the amendment extends considerably the scope of the nuclear levy and introduces the concept of advance payments. There is no reference to contracts between suppliers and generators, so it seems that the amendment seeks to introduce the concept of payment in advance of the intended nuclear generating 612 capacity. We have heard of four new generators and we have already referred today to the cost of that scheme, which the Minister put at £38 billion. That is interesting in the context of the debates in Committee. My hon. Friend the Member for Sedgefield (Mr. Blair) often pressed the Secretary of State and the Minister to make clear what was covered by the nuclear levy and it was made clear at that time that it did not cover advance payments.
One possible interpretation of the amendment is that the whole cost of any new generating capacity can be included in those advance payments. In Committee, the Minister conceded that the level of the levy was likely to be in excess of 8 per cent., and gave a figure approaching 10 per cent. when pressed by my hon. Friend the Member for Sedgefield. That is a crucial and fundamental question on a day that is devoted to consumers and prices. The Minister should advise us what extra cost has been added to consumer costs as a result of the amendment, which allows the payment of advance expenses. The Minister conceded a figure of 8 per cent. If we take into account the additional expenditure of about £30 billion between now and the turn of the century, we must be talking about a considerably increased cost. We are entitled to an answer at this stage of the debate.
It is also important to note—although we are talking about a different degree of cost—that amendment No. 40 allows the Government to farm out the whole process. In Committee, the Minister talked about the possible use of a firm of accountants. That is another area where the bureaucratic structure of regulation and the collection of the levy will involve more cost for the consumer. I shall be interested to hear from the Minister what costs he envisages will be involved. The structure required to assess the level of levy and to collect it will be considerable. Amendment No. 36 appears to add substantially to the costs brought within the scope of the levy. We demand to know what that will mean for the consumer.
§ Mr. HardyI had not intended to speak on these amendments, and I want merely to make one point. In his rather long reply to the previous debate, the Minister did not say a word to explain the grossly unsatisfactory situation that faces industries that are high energy users, such as the one in my own constituency to which I referred. The Minister will be aware that, while the Bill was in Committee, the chemical industry expressed deep anxiety about its position. British industry, especially that part of it that uses a great deal of energy, will have found no cause for comfort in anything the Minister has said. He did not appear to address the problem at all.
§ Mr. Michael SpicerI must remind the hon. Member for Wentworth (Mr. Hardy) of a point that needs to be made every so often, which is that, in real terms, electricity prices have been falling over the past five years. Industrial electricity prices have fallen by 6 per cent. It also has to be said—and I did not want to raise the point again—that in the five years of the last Labour Government, domestic prices rose by 9 per cent. and industrial prices by 6 per cent. in real terms. The hon. Gentleman asked a question on behalf of the chemical industry or possibly the steel industry—I do not know which. Under the last Labour Government, prices rose in real terms, whereas under this Government prices have fallen in real terms. What substantial case is the hon. Gentleman making?
§ Mr. HardyThe Minister overlooks the central point. The Government should be looking at our industrial costs in comparison with those of our competitors. It is no good the Minister saying that electricity prices have fallen in real terms. I would not say whether they have or not. What we must do is to compare the costs faced by British industry with the costs faced by our competitors. As I said in an earlier debate, the competitive edge of British industrial high energy users is considerably blunted as a consequence of the decisions taken last year and this year. It seems that we are justified in being fearful about the effect next year or the year after.
§ Mr. Michael SpicerI am grateful for that further intervention, because it gives me the chance to put the record straight. I gave one figure wrongly by 100 per cent. Industrial prices have fallen not by 6 per cent., but by 12 per cent. under this Conservative Government. That is one of those slips of the tongue on which the Opposition would be happy to sit. Industrial prices have fallen by 12 per cent. under this Conservative Government, whereas they rose by 6 per cent. in real terms under the last Labour Government.
The hon. Gentleman made a fair point about competitiveness, so I must point out that if one compares our industrial electricity prices with those of, for example, other European countries, we come in about the middle. If we consider the West Germans, we do much better than——
§ Mr. MorganNot for bulk supply.
§ Mr. SpicerThe hon. Gentleman refers to bulk supply and industry sometimes makes the case that there is a panoply of special contracts in Europe about which nobody knows much. I have asked the industry from time to time to come up with information that can be publicised about this mass of subterranean contracts which would give a different picture from the one that I have given to the House, but it is difficult to obtain specific, detailed evidence. However, we have published data about electricity prices for industry generally. That shows that British industry as a whole receives electricity at about the median price level compared with other European countries. Nobody denies that.
§ Mr. MorganWhat about contract prices?
§ Mr. SpicerThe Government have to go on published data. Private contracts may exist, but such private information is not available to the Government.
The hon. Member for Aberdeen, South (Mr. Doran) asked what was to be included in the levy, and whether the amendment would mean an increase in the levy. I shall make broadly the same point as my right hon. Friend the Secretary of State made in reply to the hon. Member for Sedgefield (Mr. Blair) in Committee. At the moment, the cost of financing nuclear power stations is taken directly, within the price. Whether that will be the case in future, and whether the levy will directly finance nuclear power stations—as it would under the present arrangements—depends on what contracts are struck. In particular it depends on the financing arrangements catered for and the timing of payments under those contracts. Until the contracts have been settled, therefore, I cannot give the hon. Gentleman the answer that he seeks.
What I can say is that the Government will ensure that the contracts strike the right balance between providing a 614 motivation for the industry to invest in nuclear power stations and ensuring that they do not make excess profit from, and are not wasteful in, that investment to the detriment of the consumer. I can give the hon. Gentleman that assurance.
§ Mr. DoranThe Minister seems to have confirmed what he refused to confirm in Committee. I want to be clear on exactly what he is saying. The amendment says nothing about contracts. It gives a specific right to the new supply industry to receive payments in certain specific circumstances. The amendment seems to cover the whole cost of providing the capacity and appears to have nothing to do with contracts or the Government's control of those contracts.
§ Mr. SpicerThe hon. Gentleman is absolutely correct, because the amendments are permissive and allow for the recouping of costs. I am not saying that the costs will be financed as he suggests, because that will depend on how the contracts are struck. At the moment, the industry finances its development directly and passes its costs straight on to the bulk supply tariff. In future, there will, no doubt, be an element of financing, but we cannot tell what the exact result will be until the contracts have been struck. I hope that, on the basis of that explanation, the Opposition will feel able to accept the amendments.
§ Mr. MorganThat was a completely unsatisfactory reply. An issue of Electrical Review that came out over Christmas carried the headline "Proposed Contracts are Riskless". The description that the Minister has given is a perfect description of a contract that is riskless for the private sector. The electricity consumer will now have to pay the private generator to build private generating stations. If that is the purpose of the Bill, it is about time the consumer knew it.
My hon. Friend the Member for Aberdeen, South (Mr. Doran) and I spent a long time examining Government amendments Nos. 36 to 43, and concluded that they showed that the nuclear levy is in serious trouble. The Government and the electricity companies do not know, and the consumer and the House certainly do not know, how the nuclear levy will work. It has been devised at a Sir Humphrey's mad hatter's tea party and the amendments show us all just how much trouble the levy is in and just how short a time the Government have left to get it right.
The area boards do not know how the nuclear levy will be collected. They know only that the additional costs of nuclear production over coal production—which John Baker, the chief executive, told us would be 42 per cent. in the financial year that has just started—will be distributed in some way. The proposal cuts completely across the concept at the heart of the Bill and the Idea of direct contracts between generators and suppliers. It looks to us as though the Government are beginning to admit that they have devised a wholly unworkable system for collecting the levy.
§ Amendment agreed to.
6.15 pm
§
Amendment proposed: No. 36, in page 25, line 42, after `the', insert
'aggregate of the amounts given by subsections (2A) and (2B) below.
(2A) The amount given by this subsection is a one-twelfth part of any advance payments which, in pursuance of qualifying arrangements, fall to be made by the public
615
electricity supplier during the relevant year; and in this subsection "the relevant year" means whichever one of the following periods the qualifying month falls within, namely—
(2B) The amount given by this subsection is the'.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 262, Noes 180.
618| Division No. 148] | [6.16 pm |
| AYES | |
| Adley, Robert | Dicks, Terry |
| Aitken, Jonathan | Dorrell, Stephen |
| Alexander, Richard | Douglas-Hamilton, Lord James |
| Alison, Rt Hon Michael | Dover, Den |
| Allason, Rupert | Dunn, Bob |
| Amess, David | Durant, Tony |
| Amos, Alan | Eggar, Tim |
| Arbuthnot, James | Emery, Sir Peter |
| Arnold, Jacques (Gravesham) | Evennett, David |
| Ashby, David | Fairbairn, Sir Nicholas |
| Atkins, Robert | Fallon, Michael |
| Atkinson, David | Favell, Tony |
| Baker, Rt Hon K. (Mole Valley) | Field, Barry (Isle of Wight) |
| Baker, Nicholas (Dorset N) | Finsberg, Sir Geoffrey |
| Baldry, Tony | Fishburn, John Dudley |
| Banks, Robert (Harrogate) | Fookes, Dame Janet |
| Barnes, Mrs Rosie (Greenwich) | Forman, Nigel |
| Batiste, Spencer | Forsyth, Michael (Stirling) |
| Beaumont-Dark, Anthony | Fowler, Rt Hon Norman |
| Bellingham, Henry | Fox, Sir Marcus |
| Bennett, Nicholas (Pembroke) | Franks, Cecil |
| Benyon, W. | Freeman, Roger |
| Biffen, Rt Hon John | Fry, Peter |
| Blackburn, Dr John G. | Gale, Roger |
| Body, Sir Richard | Gardiner, George |
| Bonsor, Sir Nicholas | Garel-Jones, Tristan |
| Boscawen, Hon Robert | Gill, Christopher |
| Boswell, Tim | Glyn, Dr Alan |
| Bottomley, Peter | Goodhart, Sir Philip |
| Bottomley, Mrs Virginia | Goodlad, Alastair |
| Bowden, Gerald (Dulwich) | Goodson-Wickes, Dr Charles |
| Bowis, John | Gow, Ian |
| Braine, Rt Hon Sir Bernard | Greenway, Harry (Ealing N) |
| Brandon-Bravo, Martin | Greenway, John (Ryedale) |
| Brazier, Julian | Gregory, Conal |
| Bright, Graham | Griffiths, Sir Eldon (Bury St E') |
| Brown, Michael (Brigg & Cl't's) | Grist, Ian |
| Browne, John (Winchester) | Ground, Patrick |
| Bruce, Ian (Dorset South) | Grylls, Michael |
| Buchanan-Smith, Rt Hon Alick | Gummer, Rt Hon John Selwyn |
| Buck, Sir Antony | Hague, William |
| Budgen, Nicholas | Hamilton. Hon Archie (Epsom) |
| Burns, Simon | Hampson, Dr Keith |
| Burt, Alistair | Hanley, Jeremy |
| Butcher, John | Hannam, John |
| Butterfill, John | Hargreaves, A. (B'ham H'll Gr') |
| Carlisle, Kenneth (Lincoln) | Hargreaves, Ken (Hyndburn) |
| Carrington, Matthew | Harris, David |
| Carttiss, Michael | Hayes, Jerry |
| Chalker, Rt Hon Mrs Lynda | Hayhoe, Rt Hon Sir Barney |
| Channon, Rt Hon Paul | Hayward, Robert |
| Chope, Christopher | Heseltine, Rt Hon Michael |
| Clark, Hon Alan (Plym'th S'n) | Hill, James |
| Clark, Sir W. (Croydon S) | Hogg, Hon Douglas (Gr'th'm) |
| Conway, Derek | Holt, Richard |
| Coombs, Anthony (Wyre F'rest) | Hordern, Sir Peter |
| Coombs, Simon (Swindon) | Howarth, Alan (Strat'd-on-A) |
| Cope, Rt Hon John | Howarth, G. (Cannock & B'wd) |
| Couchman, James | Howell, Rt Hon David (G'dford) |
| Cran, James | Howell, Ralph (North Norfolk) |
| Critchley, Julian | Hughes, Robert G. (Harrow W) |
| Curry, David | Hunt, David (Wirral W) |
| Davies, Q. (Stamf'd & Spald'g) | Hunt, John (Ravensbourne) |
| Davis, David (Boothferry) | Hunter, Andrew |
| Day, Stephen | Irvine, Michael |
| Devlin, Tim | Irving, Charles |
| Jack, Michael | Patnick, Irvine |
| Jackson, Robert | Patten, Chris (Bath) |
| Janman, Tim | Patten, John (Oxford W) |
| Jessel, Toby | Pawsey, James |
| Johnson Smith, Sir Geoffrey | Peacock, Mrs Elizabeth |
| Jones, Robert B (Herts W) | Porter, Barry (Wirral S) |
| Jopling, Rt Hon Michael | Porter, David (Waveney) |
| Kellett-Bowman, Dame Elaine | Portillo, Michael |
| Key, Robert | Powell, William (Corby) |
| King, Roger (B'ham N'thfield) | Price, Sir David |
| Kirkhope, Timothy | Raffan, Keith |
| Knapman, Roger | Raison, Rt Hon Timothy |
| Knight, Greg (Derby North) | Rathbone, Tim |
| Lamont, Rt Hon Norman | Redwood, John |
| Lang, Ian | Rhodes James, Robert |
| Latham, Michael | Riddick, Graham |
| Lawrence, Ivan | Ridley, Rt Hon Nicholas |
| Lee, John (Pendle) | Rifkind, Rt Hon Malcolm |
| Lennox-Boyd, Hon Mark | Rossi, Sir Hugh |
| Lester, Jim (Broxtowe) | Rost, Peter |
| Lightbown, David | Rowe, Andrew |
| Lilley, Peter | Rumbold, Mrs Angela |
| Lloyd, Sir Ian (Havant) | Ryder, Richard |
| Lloyd, Peter (Fareham) | Sayeed, Jonathan |
| Lord, Michael | Scott, Nicholas |
| Luce, Rt Hon Richard | Shaw, David (Dover) |
| Lyell, Sir Nicholas | Shaw, Sir Giles (Pudsey) |
| McCrindle, Robert | Shaw, Sir Michael (Scarb') |
| Macfarlane, Sir Neil | Shelton, Sir William |
| MacGregor, Rt Hon John | Shephard, Mrs G. (Norfolk SW |
| MacKay, Andrew (E Berkshire) | Shepherd, Colin (Hereford) |
| Maclean, David | Shersby, Michael |
| McLoughiin, Patrick | Sims, Roger |
| McNair-Wilson, Sir Michael | Smith, Tim (Beaconsfield) |
| McNair-Wilson, P. (New Forest) | Speed, Keith |
| Major, Rt Hon John | Spicer, Sir Jim (Dorset W) |
| Malins, Humfrey | Spicer, Michael (S Worcs) |
| Mans, Keith | Squire, Robin |
| Maples, John | Stanbrook, Ivor |
| Marshall, Michael (Arundel) | Steen, Anthony |
| Martin, David (Portsmouth S) | Stern, Michael |
| Mates, Michael | Stevens, Lewis |
| Maxwell-Hyslop, Robin | Stewart, Andy (Sherwood) |
| Mayhew, Rt Hon Sir Patrick | Stewart, Rt Hon Ian (Herts N) |
| Meyer, Sir Anthony | Stradling Thomas, Sir John |
| Miller, Sir Hal | Summerson, Hugo |
| Mills, Iain | Taylor, Ian (Esher) |
| Mitchell, Andrew (Gedling) | Taylor, John M (Solihull) |
| Mitchell, Sir David | Thorne, Neil |
| Moate, Roger | Thurnham, Peter |
| Montgomery, Sir Fergus | Townsend, Cyril D. (B'heath) |
| Moore, Rt Hon John | Tredinnick, David |
| Morris, M (N'hampton S) | Trotter, Neville |
| Morrison, Sir Charles | Wakeham, Rt Hon John |
| Morrison, Rt Hon P (Chester) | Walker, Bill (T'side North) |
| Moynihan, Hon Colin | Ward, John |
| Neale, Gerrard | Warren, Kenneth |
| Nelson, Anthony | Wheeler, John |
| Neubert, Michael | Widdecombe, Ann |
| Newton, Rt Hon Tony | Wiggin, Jerry |
| Nicholls, Patrick | Yeo, Tim |
| Nicholson, David (Taunton) | Young, Sir George (Acton) |
| Norris, Steve | Younger, Rt Hon George |
| Onslow, Rt Hon Cranley | |
| Owen, Rt Hon Dr David | Tellers for the Ayes: |
| Page, Richard | Mr. Sydney Chapman and Mr. Tom Sackville. |
| Paice, James | |
| NOES | |
| Abbott, Ms Diane | Beckett, Margaret |
| Adams, Allen (Paisley N) | Beith, A. J. |
| Allen, Graham | Bell, Stuart |
| Anderson, Donald | Benn, Rt Hon Tony |
| Archer, Rt Hon Peter | Bennett, A. F. (D'nt'n & R'dish) |
| Ashley, Rt Hon Jack | Bermingham, Gerald |
| Ashton, Joe | Bidwell, Sydney |
| Banks, Tony (Newham NW) | Blair, Tony |
| Barnes, Harry (Derbyshire NE) | Boateng, Paul |
| Barron, Kevin | Bray, Dr Jeremy |
| Battle, John | Bruce, Malcolm (Gordon) |
| Buchan, Norman | Kirkhope, Timothy |
| Buckley, George J. | Lambie, David |
| Caborn, Richard | Lamond, James |
| Callaghan, Jim | Leighton, Ron |
| Campbell, Menzies (Fife NE) | Lestor, Joan (Eccles) |
| Campbell, Ron (Blyth Valley) | Lewis, Terry |
| Campbell-Savours, D. N. | Lloyd, Tony (Stretford) |
| Carlile, Alex (Mont'g) | Lofthouse, Geoffrey |
| Cartwright, John | Loyden, Eddie |
| Clark, Dr David (S Shields) | McAllion, John |
| Clay, Bob | McAvoy, Thomas |
| Clelland, David | Macdonald, Calum A. |
| Coleman, Donald | McFall, John |
| Cook, Robin (Livingston) | McKay, Allen (Barnsley West) |
| Corbett, Robin | McKelvey, William |
| Corbyn, Jeremy | McLeish, Henry |
| Cousins, Jim | Maclennan, Robert |
| Crowther, Stan | Madden, Max |
| Cryer, Bob | Mahon, Mrs Alice |
| Cummings, John | Marek, Dr John |
| Cunliffe, Lawrence | Marshall, David (Shettleston) |
| Cunningham, Dr John | Martin, Michael J. (Springburn) |
| Dalyell, Tam | Martlew, Eric |
| Davies, Ron (Caerphilly) | Maxton, John |
| Davis, Terry (B'ham Hodge H'I) | Meacher, Michael |
| Dixon, Don | Michie, Bill (Sheffield Heeley) |
| Doran, Frank | Mitchell, Austin (G't Grimsby) |
| Douglas, Dick | Morgan, Rhodri |
| Duffy, A. E. P. | Morley, Elliott |
| Dunwoody, Hon Mrs Gwyneth | Morris, Rt Hon A. (W'shawe) |
| Eadie, Alexander | Morris, Rt Hon J. (Aberavon) |
| Evans, John (St Helens N) | Mowlam, Marjorie |
| Ewing, Harry (Falkirk E) | Mullin, Chris |
| Fatchett, Derek | Murphy, Paul |
| Faulds, Andrew | O'Brien, William |
| Field, Frank (Birkenhead) | O'Neill, Martin |
| Fisher, Mark | Orme, Rt Hon Stanley |
| Flannery, Martin | Patchett, Terry |
| Flynn, Paul | Pendry, Tom |
| Foot, Rt Hon Michael | Pike, Peter L. |
| Foster, Derek | Powell, Ray (Ogmore) |
| Foulkes, George | Prescott, John |
| Fraser, John | Quin, Ms Joyce |
| Fyte, Maria | Randall, Stuart |
| Garrett, Ted (Wallsend) | Redmond, Martin |
| George, Bruce | Rees, Rt Hon Merlyn |
| Godman, Dr Norman A. | Reid, Dr John |
| Gordon, Mildred | Richardson, Jo |
| Gould, Bryan | Roberts, Allan (Bootle) |
| Griffiths, Nigel (Edinburgh S) | Robertson, George |
| Griffiths, Win (Bridgend) | Rogers, Allan |
| Grocott, Bruce | Rooker, Jeff |
| Hardy, Peter | Ross, Ernie (Dundee W) |
| Harman, Ms Harriet | Rowlands, Ted |
| Hattersley, Rt Hon Roy | Ruddock, Joan |
| Haynes, Frank | Salmond, Alex |
| Healey, Rt Hon Denis | Sheerman, Barry |
| Heffer, Eric S. | Sheldon, Rt Hon Robert |
| Henderson, Doug | Skinner, Dennis |
| Hinchliffe, David | Smith, Andrew (Oxford E) |
| Holland, Stuart | Smith, C. (Isl'ton & F'bury) |
| Home Robertson, John | Smith, Rt Hon J. (Monk'ds E) |
| Hood, Jimmy | Smyth, Rev Martin (Belfast S) |
| Howarth, George (Knowsley N) | Snape, Peter |
| Howell, Rt Hon D. (S'heath) | Soley, Clive |
| Howells, Dr. Kim (Pontypridd) | Steinberg, Gerry |
| Hughes, John (Coventry NE) | Stott, Roger |
| Hughes, Robert (Aberdeen N) | Taylor, Matthew (Truro) |
| Hughes, Roy (Newport E) | Thompson, Jack (Wansbeck) |
| Hughes, Sean (Knowsley S) | Turner, Dennis |
| Hughes, Simon (Southwark) | Vaz, Keith |
| Illsley, Eric | Wall, Pat |
| Janner, Greville | Wallace, James |
| Jones, Barry (Alyn & Deeside) | Wareing, Robert N. |
| Jones, Ieuan (Ynys Môn) | Welsh, Michael (Doncaster N) |
| Jones, Martyn (Clwyd S W) | Williams, Rt Hon Alan |
| Kaufman, Rt Hon Gerald | Williams, Alan W. (Carm'then) |
| Kennedy, Charles | Winnick, David |
| Wise, Mrs Audrey | Tellers for the Noes: |
| Worthington, Tony | Mrs. Llin Golding and Mr. Ken Eastham. |
§ Question accordingly agreed to.
§
Amendments made: No. 37, in page 25, line 44, leave out from 'cost' to 'during' in line 45 and insert
`to the supplier of purchasing or generating any electricity supplied by him'.
§ No. 38, in page 26, line 1, after 'cost,' insert 'to him'.
§
No. 39, in page 26, line 4, leave out 'the regulations' and insert
'regulations under this section and excluding, in the case of the cost mentioned in paragraph (a) above, any advance payments taken into account under subsection (2A) above'.
§
No. 40, in page 26, line 14, after 'sufficient', insert
`(after payment of the administrative expenses of the prescribed person)'.
§
No. 41, in page 26, line 17, at end insert—
'"advance payment" means—
- (a) any payment made by the public electricity supplier in pursuance of the qualifying arrangements; and
- (b) where he is generating electricity in pursuance of those arrangements, any expense so incurred by him,
which is made or incurred before any electricity is generated in pursuance of those arrangements, and any reference to the making of advance payments shall be construed accordingly;'.
§
No. 42, in page 26, line 21, leave out
`the order under section 30(1)'
and insert
`an order under section 30'.
§
No. 43, in page 26, line 25, leave out from 'the' to end of line 26 and insert
'first day appointed by the first order under section 30 above or, if that'.—[Mr. Michael Spicer.]