§ 9. Mr. Allen McKayTo ask the Secretary of State for Energy when he next expects to meet the chairmen of the area electricity boards; and what matters he expects to discuss.
§ Mr. WakehamI meet area board chairmen regularly to discuss various matters.
§ Mr. McKayWhen the Secretary of State next meets the area board chairmen will he ask them whether they agree with John Bailey of National Power that domestic consumers should get through 1990–91 without an increase in domestic electricity rates? Or is it the case, in a newly privatised industry, of "Excused boots" during the fight against inflation?
§ Mr. WakehamI do not know the Mr. Bailey to whom the hon. Gentleman referred.
I have already stated my views about prices. I believe that domestic and commercial consumers will get a good deal out of privatisation. It will compare well with the price rises that were imposed under the Government whom the hon. Gentleman supported.
§ Mr. DickensWhen my right hon. Friend next meets the chairman of the electricity boards, will he impress on them that the greatest wish in the nation is for security of supply to keep the lights burning at home and the factories working? Will he also impress upon them that we must go 7 for all options, whether they be coal, oil, gas or nuclear? All those options must be open to us if we are to keep the lights burning and the factories working.
§ Mr. WakehamMy hon. Friend is right. Under the terms of the privatised electricity industry, there will be a legal obligation on area boards to offer terms to any customer. Under their licence conditions, they must have the capacity to meet any likely requirement. There will be substantial penalties if they do not meet those requirements.
§ Mr. HardyI share the concern that people should be reasonably warm and that the wheels of industry should turn, but does the Secretary of State accept that the price of electricity should command more attention and priority than it seems to? In addition, when he meets the chairmen of the area boards, will he advise them that although the licence under which they will operate after privatisation may allow them to run funeral parlours and second-hand car showrooms, and other activities in the service sector which may be even less attractive, their overwhelming concern must be the maintenance of an electricity supply?
§ Mr. WakehamI have no doubt that the area chairmen require no lectures from me, or even from the hon. Gentleman, about their responsibilities. The area boards will be public limited companies of substantial local significance. They will be big employers in their areas and will have big responsibilities. In my opinion, they will be very well run and will be very good members of the community that they serve.
§ Mr. SumbergWhen my right hon. Friend meets the chairmen of the boards, will he outline to them some of the plans for allowing employees in the industry to buy shares after privatisation, particularly in the north-west of England? When the water industry was privatised, over 90 per cent. of the employees took shares in it. My right hon. Friend can expect a willing and eager response from the people who live in my constituency. They want to involve themselves in this newly privatised industry.
§ Mr. WakehamAbsolutely. We very much hope that a large number of the employees in the privatised companies will take advantage of the opportunity to have shares in their companies. The necessary arrangements will be announced in due course.
§ Mr. MorganWhen the Secretary of State next meets the chairmen of the area boards, will he ask them whether they agree with John Baker, the chief executive-designate of National Power, that, in economic terms, there is no need for an increase in domestic electricity prices from 1 April? For the third year running, the Government are imposing an increase in domestic electricity prices at least twice what was requested by the industry. Are the Government jacking up electricity prices as a form of taxation, to use the price of fuel to encourage conservation —one might call it an insulated roof tax —or do they simply wish to increase the rate of return, which is not high enough for the Government's friends in the City?
§ Mr. WakehamThe hon. Gentleman is quite wrong. The price of electricity must be determined at a price which is accepted and enables the industry to earn a reasonable rate of return.
§ Mr. BarronAnswer the question.
§ Mr. WakehamI will answer the hon. Gentleman. The rate of return that a privatised industry will earn will be slightly less than the 5 per cent. return on assets that would have been required under Labour party policy had the industry remained in the state sector. The deduction that any reasonable person could make is that the price of privatised electricity will be lower than it would have been under a Labour Government.
§ Mr. John MarshallDoes my right hon. Friend agree that the history of privatised power shows that investment is greater and prices are lower than they would have been had the industry stayed in the public sector?
§ Mr. WakehamThe record is there for all to see. The electricity industry will be run more efficiently and I hope that investment will be better directed than it sometimes has been in the past.