Electricity Privatisation

HC Deb 25 June 1990 vol 175 cc23-75

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

3.36 pm

Mr. Frank Dobson (Holborn and St. Pancras)

I beg to move,

That this House deplores the privatisation of the electricity industry, which will cost every family in Britain over £1,000, damage the environment and undermine the balance of payments; and believes this too high a price to impose upon the British people. First, we object to the electricity privatisation because the industry will be sold off for a third of its proper value. Secondly, we believe that measures to prevent acid rain have been reduced and put back. We also believe that the structure of the industry hinders investment in energy efficiency and energy saving. Thirdly, there is a danger of over-rapid depletion of our fuel reserves, especially natural gas. Fourthly, we believe that electricity privatisation is increasing coal imports, thus threatening the balance of payments. Fifthly, we object to the enormous sums of money that are being poured out on advice from City advisers and public relations advertising companies that are intimately involved with the Tory party. Sixthly, we believe that people are being expected to pay a scandalous price for nuclear power under the privatisation arrangements and it is about time that the Government came clean. For all those reasons, we believe that the electricity privatisation amounts to a bad deal for taxpayers and electricity customers.

The Secretary of State has been praised for sorting out the mess that he inherited from his right hon. Friend the Member for Hertsmere (Mr. Parkinson). Although we recognise that it was a terrible mess, and to the extent that it is possible to sort out such a mess, the Secretary of State has sorted it out, I am nevertheless reminded of the dung beetle. We admire the skill and persistence with which the dung beetle moves it ball of dung, but our fascination with the process should not distract us from recognising that, at the end the substance being moved remains a ball of dung—and so it is, with the structure of electricity privatisation.

Mr. Dennis Skinner (Bolsover)

The big fat slug will have to gobble it up.

Mr. Dobson

My hon. Friend should not refer to slugs and the Chancellor of the Duchy of Lancaster in the same breath.

The distribution, transmission and generating parts of the electricity industry in England and those parts of the Scottish boards that are to be sold off are worth at least £38 billion. There are a number of ways of calculating those assets, but the lowest reasonable figure is about £35 billion. I do not know whether the Secretary of State is prepared to challenge that figure. When I asked him whether he could tell me the values of the various boards that were to be sold, he told me:

Asset values are contained in the relevant annual report and accounts."—[Official Report, 12 February 1990; Vol. 1511 c. 92.] I checked carefully through those reports and accounts and the highest estimate that I came upon was £38 billion for the industry or £35 billion. That is the net asset value, using current cost accounting. It does not include the merits of taking over an industry with highly trained, highly skilled and highly educated staff who have gone about their job efficiently in the past and who a new owner can reasonably expect will go about it efficiently in future. All we are talking about is the fixed assets.

I take as an example the generating board's last annual report. Peat, Marwick, McLintock, the distinguished city accountants, said: We have audited the accounts in accordance with approved Auditing Standards. In our opinion the accounts which have been prepared under the current cost convention give a true and fair view of the state of affairs of the board and its subsidiaries. The auditors of the other boards signed similar certificates. Pear, Marwick, McLintock also said that the fixed assets of the generating board alone amounted to £26 billion. If we take an average estimate of the total assets of the industry, we can reckon that it is worth £35 billion. Then we must ask: what price are the companies to be sold for? James Capel, the Government broker, is advising energy correspondents that they will be sold for about £10 billion. That is £5 billion for the distribution companies, £4 billion for the generating companies and just £1 billion for all the assets of the electricity boards in Scotland.

In a parliamentary answer, the Minister denied that James Capel is saying that. Because I usually believe the Minister and we expect honesty in parliamentary answers, I checked with the journalists who produced those articles. At my request, they have gone through their shorthand notes of the briefings from James Capel, and in some cases they cross-checked with the other broker, Warburg, and both brokers said that £10 billion is the sum for which they expect the industry to be sold.

If the industry is to be sold for only £10 billion, that is a shortfall of £28 billion or £25 billion, which works out at more than £1,000 per family. The Chancellor of the Duchy of Lancaster, the chairman of the Tory party, last week had the brass-faced cheek to talk about Labour spending and Labour waste. There will be no Labour waste like this. This is Tory waste with a vengeance. The sum of £1,000 per family—£20 a week per family for a whole year—is too much to lose on this shabby transaction.

British people and our European partners will be asked to pay a big price by way of increased or not reduced environmental damage. Measures against acid rain will be postponed and reduced. Until the Prime Minister made her speech at the United Nations, which the Evening Standard modestly described as Maggie's plan to save the world", we were going to have flue gas desulphurisation equipment on 12,000 MW of coal-fired plant. Now that figure has suddenly been reduced to 8,000 MW, and there is no real commitment to it—there is a firm commitment only to 4,000 MW.

The reason is that the Secretary of State has been informed by his fancy-pants City advisers that, if he goes through with flue gas desulphurisation on this scale, it will be hard to sell the electricity industry. In other words, his friends in the City are interested not in an environmentally friendly industry but only in a dirty one.

So, if right hon. and hon. Members will excuse the expression, flue gas desulphurisation has been put on the back burner and the Government have gone for cheap options. They say that there will be a big increase instead in the burning of natural gas, but even British Gas has doubts that there are sufficient reserves on the British continental shelf to meet the demand for gas from the electricity generating sector on the scale envisaged. In any case, there are better uses for that gas. It should be used for direct heating or industrial purposes, or for chemical feedstocks, long before it is used for generating electricity.

Mr. John Marshall (Hendon, South)

What would the Opposition do about flue gas desulphurisation? Would they meet the cost from higher electricity prices or by a higher subvention from the taxpayer?

Mr. Dobson

I do not know whether the hon. Gentleman has attended previous debates, when we have made our view clear. We believe that Britain is under an obligation to meet its international agreements, which currently means fitting 12,000 MW of plants with flue gas desulphurisation equipment. We have also said that in so far as the generating companies persuaded the Government to postpone implementing that obligation, so that they will incur additional costs when it is eventually installed, the companies themselves—not their customers—will have to meet that cost. [HON. MEMBERS: "How?"] They will have to meet that cost out of the money that they would otherwise have paid their shareholders. It is entirely up to them.

If we do not have sufficient supplies of British natural gas to feed all the gas-fired power stations that are envisaged, the question arises of natural gas imports. We import too much of it already, which damages our balance of payments, and it would be absurd to harm it further. In any case, what would be the source of any additional supplies? The Soviet Union is entering a period of instability, as is the middle east. In the past, Algeria has been one of our major suppliers, but the recent local elections there can scarcely make anyone feel that there will be stability in that country in future and that it will be a continuing stable source of natural gas. We might find ourselves in the lunatic situation in which our gas supplies were vulnerable and we had no influence on their cost. Instead of going for flue gas desulphurisation, the Government are going for depletion of gas reserves and reliance on insecure foreign sources. We believe that that is too high a price to pay for electricity privatisation.

The Government propose switching instead to burning low-sulphur coal. It is a pity that they did not think of that over the past 10 years, when they permitted British Coal to close no fewer than 49 low-sulphur pits. That wiped out the Kent coalfield and, reduced the Scottish coalfields to one pit and the Welsh coalfields to five—and they were the coalfields that produced low-sulphur coal.

What will be the effect on our balance of payments if we have to import low-sulphur coal? I imagine that the Chancellor of the Exchequer would have a few views about that. A very cavalier attitude is taken by the Department of Energy and the big generating companies. What about the security of coal supplies and their price? We have been told that Department officials and the generating companies believe that supplies of low-sulphur coal will be secure and that the price will be all right. They are the very people who said in the past that we could rely on imported oil from the middle east, but then OPEC hit them and they were taken by surprise.

They are the self-same people—they continue in the same manner—who said that nuclear electricity would provide us all with cheap power, that it might be so cheap that it would be given away. The only giveaway now is that the truth is out at last about the cost of nuclear power, and it is costing electricity consumers a fortune. We believe that all that would be too high a price to pay for electricity privatisation.

One of our major objectives at the moment should be energy saving. Everything we do should be geared to promote that, but the new structure of the electricity industry will hinder energy saving, because it has been set up to promote sales. As my hon. Friend the Member for Pontypridd (Dr. Howells) pointed out, the chairman of the biggest electricity board in the country was talking in grandiose terms last week in Scotland about the job of the electricity industry being to compete with British Gas and to get as big a share of the market as possible. There was no talk about restriction, energy conservation or anything else. All he wants is more sales and more profit from them.

The problem is that, due to the ramshackle Parkinsonian regime that the Secretary of State has inherited, there is an unnatural break between electricity distribution and generation. If there were all-purpose electricity boards in various parts of the country, they could face an easy question. They could ask themselves how to cope with an extra 1,000 MW of demand, and could calculate whether it was better to invest money in reducing demand by 1,000 MW by improving energy conservation, or whether it would be cheaper to build new generating capacity.

In the present circumstances, we all know that the boards would opt to invest money in energy conservation, because it would be cheaper than buying new generating plant. However, under the new separated regime that the Government are wishing on the country, the decision would not be reached in such a way, because generating and distributing companies would make more money the more electricity they sell. That is why we are saying that, when Labour comes to power, we will impose an obligation on distributing companies to invest money in energy conservation and efficiency.

Dr. Michael Clark (Rochford)

While it is true that energy companies will make more money the more electricity they sell, is it not also true that consumers will want to buy less electricity because the less they buy the less money they will pay? Therefore, consumers will be interested in energy conservation.

Mr. Dobson

The hon. Gentleman's logic is that we should double the price of electricity and so double the consumer's interest in energy conservation. That seems to be a perverse way to go about things.

Another enormous cost that the Government are imposing on the taxpayer and the electricity user is the cost of advice on privatisation which they are obtaining from the City, allegedly to the benefit of all. Unless the score has increased—I rather think it has and he has got his 50—at the moment, according to official figures, the Secretary of State has 47 companies advising him on privatisation, including 13 estate agents—which is unlucky for some, or indeed for all of us, as they are estate agents—and 10 firms of accountants. The electricity boards are employing many more companies. More than 130 City companies are employed by the Secretary of State and the electricity boards to advise them on electricity privatisation.

Mr. Graham Allen (Nottingham, North)

Any MPs?

Mr. Dobson

There is probably the odd MP here and there—I am not sure—but I trust that they are not Opposition Members.

The Secretary of State is spending more than £50 million on those 47 companies, but the boards say that they will not tell me how much they are spending, and I have written to all of them. Two boards told local newspapers who inquired that they did not know how much they were spending on City advisers. I got the journalists to ring back and ask how the boards were going to pass the cost on to the customer. They said, "We are working it out and it will probably be set out in our annual reports."

Mr. Skinner

They could be friends of the family.

Mr. Dobson

Yes, they could. I was struck by the thought the other day that the Tory party was once going on about a famous book called "Jenny lives with Eric and Martin." On the Tory side now, it is "Nigel lives with Barclays and Money" and "David lives with Cable and Wireless." There are quite a few of them around. It is a pity that the Secretary of State has not said that he will not take a job with any of these privatised companies. My hon. Friends are not given to cynicism, but we do not need to be cynics to ask whether the Secretary of State is fixing himself up with a cushy number in Eastern Electricity, or whether he is trying to protect the interests of the electricity consumer. We know what the answer to that question is.

Mr. Doug Hoyle (Warrington, North)

My hon. Friend has probably read in the press, as I have, that the Secretary of State for Energy may be the Prime Minister's adviser on the date of the next election. When the Tory party loses the next election, perhaps the cause of our cynicism will be confirmed when the Secretary of State for Energy takes up a job with a privatised company, just as the Secretary of State for Wales took a job with British Gas.

Mr. Dobson

The Secretary of State for Wales did not just take a job with British Gas; he took a job with two firms of City advisers that advised on the sale of British Gas, both of which are also giving advice to this Secretary of State. It is a question of "double your money". I cannot understand why the electricity boards will not tell their customers how much they are paying for their advisers. What do they have to hide?

A more basic question is whether the Secretary of State needs all this advice. He proposes to sell the electricity industry for a third of its real value—for what, in a street market, might be described as two thirds off the list price. At that price, the shares could be sold on a stall in Petticoat lane. The Secretary of State should remember the old slogan, derived from the founder of Tesco: "Pile 'em high and sell 'em cheap." That is what the Secretary of State intends to do. He does not need 50 million quid's worth of advice to tell him how to do it.

As for the question whether the advisers are giving value for money, I commend all hon. Members to look at the evidence, when the full details are published on Wednesday, that Kleinwort Benson gave to the Select Committee on Energy about its advice on the privatisation of the nuclear part of the electricity industry. During that public session, the company made it crystal clear, in answer to questions from my hon. Friends and, to be fair from Conservative Members that it did not have the faintest idea about anything to do with nuclear power. It said that all the information on which it had based its advice came from the Central Electricity Generating Board and that, if the CEGB's advice was wrong, there was nothing that Kleinwort's could do about it, because it did not know enough about the industry to challenge and question that information. What contribution did Kleinwort's make to the proceedings? It continued to advise the previous Secretary of State for Energy that it could sell off the industry, which proved to be impossible.

I have made inquiries as to whether Kleinwort's received its fee in full. By and large, the Government are in favour of payment by results. I gather that Kleinwort's got every penny of the fee that was due to it—not every penny of what it deserved, because in that event, it would have had to pay us. On the only occasion when evidence has been given about the question of this advice, those people gave bum advice that has damaged the interests of the country and even the interests of Conservative Members of Parliament.

Mr. Max Madden (Bradford, West)

Before my hon. Friend leaves that interesting line of inquiry and revelation, has he discovered whether any of these well-paid advisers are contributing to Tory party funds, thereby squaring the circle?

Mr. Dobson

I have not had time to go through them, but suspicions occasionally spring to mind, and I shall come to them in a moment.

The way in which the public relations firms are involved is best described by several American political phrases such as "gravy train", "pork barrel", "sleaze bucket"—you name it, they are in it. Let us consider first the public relations and marketing advisers.

The Secretary of State is not usually portrayed as an arrogant or puffed up person, but apparently he is not content with one public relations and marketing adviser to the Energy Department and the electricity supply industry, so he has appointed two—one from the Energy Department and the electricity supply industry and one for himself. Dewe Rogerson has been appointed public relations and marketing adviser to the Energy Department and Lowe Bell Communications has been appointed special public relations and marketing adviser to the Secretary of State. A director of Dewe Rogerson is a Tory Member of Parliament and Lowe Bell Communications is chaired by Tim Bell who, if rumour is correct, is scarcely ever out of 10 Downing street.

How were those people appointed? Another company called Valin Pollen International previously had the job of advising the Department and the industry. Tenders were then invited for the new separate jobs. I am told that three companies applied for each job and that Valin Pollen did not proceed with its application. Dewe Rogerson got one contract and Lowe Bell got the other. So I inquired a bit further and asked who was the unsuccessful applicant for the Dewe Rogerson job—and lo and behold, it was Lowe Bell, and when I asked who the unsuccessful applicant was for the Lowe Bell job, lo and behold it was Dewe Rogerson.

In theory, there are rules governing such appointments, laid down and reinforced by the Prime Minister. Those appointments break four rules. There was no proper tendering procedure. Appointing a personal public relations adviser is contrary to those rules which also lay down that no public relations advisers may have direct contact with the press or the news media. We now know that Lowe Bell and Dewe Rogerson have contacts with the news media. The appointments involved intimate friends of the Tory party. The whole thing stinks, and the Secretary of State knows it.

Sir Nicholas Bonsor (Upminster)

Perhaps the hon. Gentleman is not aware that almost every major company in the country has direct interests in the Conservative party, because they are determined to keep the Labour party out.

Mr. Dobson

I should have thought that the last way to commend the propriety of those appointments was to say that the people concerned were determined to seek a return of a Tory Government rather than a Labour Government. That is not usually a basic criterion on which public contracts are awarded. The hon. Gentleman, who is an old Etonian, has let the cat out of the bag.

Mr. Allen

May I correct the record in one particular? The biggest contributor to the Tory party, British and Commonwealth Holdings, no longer contributes to the Conservative party as it went bust a fortnight ago.

Mr. Dobson

That organisation was probably doing something useful, whereas these people just have their snouts in the trough.

Mr. Peter Hardy (Wentworth)

Does my hon. Friend realise that he is raising very serious issues which have real implications for the quality and integrity of British public life? Does he recognise that, if those in local government—the Prime Minister and her colleagues are always calling for prudence and good behaviour in local government—conducted themselves in the way in which my hon. Friend is describing to the House, any qualified and respectable chief executive of a local authority would tell those local representatives that, if they maintained that course, or if it could be proven that they had pursued such a course, they could look forward to a considerable period of imprisonment?

Mr. Dobson

I follow my hon. Friend's point. Indeed, because of my concern about the propriety of these appointments, I wrote to the person responsible for judging the propriety of anything done by the civil service—its head, Sir Robin Butler. After immense delay, I received a reply from the Secretary of State saying that he took responsibility. At least Sir Robin Butler did not say that he agreed with it.

Another aspect of the privatisation was still to come—the award of the privatisation advertising contract. A panel was established to choose who should receive that lucrative contract. One member of it was—surprise, surprise—Mr. Tim Bell. Hon. Members will be aware that he was one of the three Tory party PR friends that the chairman of the Tory party wanted to appoint as special advisers to the Home Secretary, the Secretary of State for Education and Science and Secretary of State for Health, on the grounds that they were boring or were damaging the Conservative party's interest. That idea was so improper that even Mr. Bernard Ingham—a man not noted for his fastidiousness about the propriety of public behaviour—objected to it.

Who did the panel, including Mr. Tim Bell, choose for the advertising contract? It chose the firm Wight, Collins, Rutherford, Scott, Mathews, Marcantionio, whose chairman is Mr. Robin Wight, the man originally selected by the chairman of the Tory party to provide personal public relations advice to the Secretary of State for Education. What a racket! All those friends of the Tory party scrambled to get their snouts in the trough of electricity privatisation. The people of this country are paying a high price for those people.

I am not being unfair; I am not raising new standards of behaviour that are required of Governments. I shall judge the Government by the standards that they set, not for themselves, of course, but for local government. The new national code of conduct for councillors says: It is not enough to avoid actual impropriety. You should at all times avoid any occasion for suspicion The Government are guilty on all counts. They are guilty of double standards: others must live up to those standards, but not the Government. What is the result of all this?—National Power adverts in between the halves of world cup matches. I was going to say that, if that is a good use of public money, I am a Dutchman, but as Holland did not do too well last night, perhaps I am not.

I have had passed to me proposals for electric privatisation road shows. I have the document submitted by the people who won the contract. They will receive over £2 million for giving presentations to opinion leaders in Britain, North America, Japan and Europe. It is a good sign of Government priorities that they are prepared to spend £2 million on that, but, as my hon. Friend the Member for Copeland (Dr. Cunningham) said earlier, less than £500,000 on urging people to register to vote. Registering to buy cheap shares in electricity is a top priority, but registering to exercise democratic rights is a low priority. That has always been the Tory way.

That programme, which has been drawn up by Imagination Design and Communications, will lay on 41 road shows—26 in Britain and 13 abroad, in north America, Europe and Japan—at a cost of more than £2 million. That excludes the cost of the time of people in the electricity industry who will be taking part in it or helping to prepare it. The proposal will give presentations in major cities, and we have some wonderful sample menus of these events. People in Bristol will get lamb kebab, and in Paris they will get rack of lamb, if the French farmers will allow it in. In the United States one does not do too well; one gets spinach salad. In Japan, one gets an amazing concoction called roast duckling chipolata.

The document refers to "all-important institutional lunches". The company promises attention to detail, so much so that it will prescribe the folds that are to be made in the table napkins at these lunches. The Government proposed having a presentation in Northampton, but the company thinks that the Northampton presentation should be transferred to Leicester because there are more "high net worth individuals" in Leicester. I do not know what the people of Northampton will think of the idea that they are low net worth individuals. The company promises that there will be an "Executive Mothercare" service for people doing the presentations. As those people go around the country, they will all get "Executive King Size bedrooms". The company further proposes to cater for all their "personal idiosyncrasies"—the mind boggles.

I was going to talk about the chaos over nuclear power, but it is impossible to make a sensible contribution until we know the estimates of the costs of Sizewell B. The Secretary of State said that he will talk about them. There is not much that we can say about them until we hear him. The right hon. Gentleman should come clean on the figures now and for the future. He should come clean also on something that he has refused to do and disclose the price that the electricity companies will pay Nuclear Electric for the electricity that they are buying from the existing nuclear power stations.

The Secretary of State will be praised, rightly, by the Energy Select Committee for letting it all hang out on the old nuclear costs, but I am afraid that, if he let the information out on the old nuclear costs and will not do so on the new nuclear costs, people will just think that he had got it in for Cecil. I cannot believe, even from the right hon. Gentleman's smile, that that could possibly have been his main motivation. People are entitled to know as much about the costs of nuclear power as the Cabinet. We are all entitled to know those figures, so that rational discussion can take place and rational decisions can be reached.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Is my hon. Friend aware that the Secretary of State might find himself in some difficulty in providing the costs? Every expert witness, without exception, who appeared before the Energy Select Committee conceded that it was not possible to calculate the true costs of nuclear power. The fact that the Government are shoving forward with their non-fossil fuel requirement—a percentage being for nuclear—shows that they are going ahead with that programme whatever the costs. No one knows those costs.

Mr. Dobson

My hon. Friend is right to caution anyone about making guesstimates about the long-term costs and the time taken to construct nuclear power stations. Remember Dungeness B—construction started in 1965; it is still not working properly; and it is costing between eight and 10 times as much as was originally intended. I do not want to become involved in guesswork, and no one else should. The facts should come out, and we should have a debate in due course, with all the facts before us.

Mr. Jack Thompson (Wansbeck)

For a number of years, we have known that the cost of nuclear electricity generation has increased. Would it not be reasonable to suggest that Nuclear Power should sell some of its land assets to pay for some of the highly expensive electricity from nuclear power—for example, the site at Druridge bay in Northumberland?

Mr. Dobson

I entirely agree with my hon. Friend. So long as either the electricity industry or the nuclear industry possesses land at Druridge bay, at Denver in Norfolk or in Pembroke in south Wales, there is always a danger that someone will want to build a nuclear power station on one of those sites. It will not be a Labour Government, but it would be better if the sites were sold or used for some other purpose.

Electricity privatisation will cost the people of Britain a fortune. It will damage the environment, it is damaging the reputation of the conduct of public business by the sleazy nature of the public relations exercise and advertising contracts connected with it, and it ought to be stopped.

4.14 pm

The Secretary of State for Energy (Mr. John Wakeham)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:

'welcomes the privatisation of the electricity industry and the internationally recognised benefits which the Government's policies are already achieving through the introduction of real competition, the introduction of new and enhanced rights for the consumer, the emergence of new, cleaner, more efficient and cost-effective generating plant, through the Government's commitment to the protection of the environment and by ensuring that the needs of the customers drive the decisions of the electricity industry.'. The hon. Member for Holborn and St. Pancras (Mr. Dobson) has had his fun and I hope to deal with the matters that he has raised. But there is one point with which I should deal straight away. I was somewhat surprised to hear the hon. Gentleman's comments about the book value of the electricity industry's assets. His assertion that the cost of privatisation would be more than £1,000 per family does not stand up to a minute's scrutiny.

The historic net value of the industry's fixed assets in its last audited accounts—leaving aside nuclear assets—was 10 billion. The economic value of any particular company is derived not from the asset value that may appear in its book but from a calculation of what the assets are capable of earning. The current cost balance sheets of each electricity company seek to reflect individual assets at their net replacement cost and hence involve a considerable number of subjective judgments. Net replacement cost is not the same as the net cost of the asset to the taxpayer—the actual amount paid, less the amounts written off to date. The latter cost is reflected in the historic cost balance sheets of the companies, which, as I said, amount to about £10 billion.

There appears to be another mistake in the hon. Gentleman's calculations. He appears to have included the current cost of nuclear fixed assets—some £9 billion in the current cost accounts—even though the nuclear stations are to remain in the public sector. But what is £9 billion between friends? We know that to the Labour party it is an insignificant sum.

Mr. Dobson

Would not the right hon. Gentleman agree that the historic cost method of valuation is absurd in relation to the electricity industry? And he is surely not suggesting that the grid companies' assets, which will all be necessary, could be replaced at the historic costs at which they were bought. They would have to be replaced at current costs. That is why the assets are given that value.

I included nuclear assets deliberately. The right hon. Gentleman should remember that the nuclear assets were in fact liabilities. If one takes from the industry the nuclear assets and the nuclear liabilities, its value must increase. It was because the nuclear assets were liabilities that they could not be sold.

Mr. Wakeham

I agree with the hon. Gentleman that historic values are not the only values to bear in mind, but nor are current cost balance sheets. My point was that the asset values represent the values that those assets are capable of earning. On that basis, we shall see to it that the industry is sold at its proper value.

It is a little over four months ago that I stood here listening to the Opposition voicing their misconceptions about privatisation. From what has been said today, it is clear that they have learnt little since then. Once again, I am pleased to have the opportunity to put the record straight.

The Labour party talks about the price of privatisation; the rest of the world talks about its benefits. While the eastern bloc moves to privatise whole economies and we advise them how to do it, the Labour party talks about central planning and state intervention. For all the Labour party's glossy pamphlets, it still lives in the past.

It is now more than 50 years since Herbert Morrison set out what he saw as the major benefits that would result from nationalisation. They were as follows: The quality of service will tend to advance and the prices charged will tend to fall … The industries would be more efficiently and economically conducted and their boards and officers would regard themselves as the high custodians of the public interest. That all sounded far too good to be true then, and so it has proved. Few of the anticipated economies of scale have materialised, and major new bureaucracies developed. Without competition, the state sector monopolies quickly became inefficient and overmanned, with low productivity, dissatisfied customers and frequent financial losses.

Privatisation is one of the great success stories. During the past 10 years, no fewer than 29 major businesses have been returned to the private sector. British Airways, British Gas, British Telecom, British Aerospace, British Steel, the water companies and many others have been exposed to new commercial and regulatory disciplines and they have thrived. Profits, investment and productivity have risen and customer service has improved.

Mr. Nicholas Soames (Crawley)

Does my right hon. Friend agree that the conditions for those working in those industries have improved materially, to their great advantage?

Mr. Wakeham

I quite agree: my hon. Friend adds to the list of successes in the privatised industries.

Because of those successes, politicians, officials, business men and others from around the world come to London to talk to us and to learn how to privatise their industries. Only at the end of March was the electricity industry reconstructed, when the new statutory and regulatory regimes came into force. However, we have already seen the effects of our policies on the electricity industry. The past few months have seen the emergence of fierce competition to sign up large industrial customers; that is competition not just between the generators and the generators and the regional electricity companies, but also between the regional electricity companies themselves.

New entrants are emerging into the generation market. The Lakeland Power project is a fine example of that, and 22 other projects have sought consents of one kind or another from the Department. In turn, National Power and PowerGen are responding by reviewing their plans and cutting their costs. As a result, the proposals coming forward for new generating plant are increasingly focusing on the development of new, cleaner and more efficient technologies. That will benefit the consumer by lowering costs. It will also minimise the impact on the environment. The special provision that we have made for power from renewable energy sources as part of the non-fossil fuel obligation has given renewable technology the greatest boost that it has ever received in this country.

There is also competition in supply. Large customers now have real choice. They can enter negotiations not just with their regional electricity company but with any regional electricity company or any generator connected to the system. They are also showing interest in generating their own electricity. The benefits can be clearly seen in the lower prices that have resulted from those fierce negotiations. For the longer term, the regional electricity companies and generators are responding to that competition by actively promoting schemes tailored to customers' needs—schemes such as co-generation and combined heat and power.

We have introduced a spot market for trade in electricity, which determines the price of about £15 million-worth of electricity every day. We are the only country with a market that sets a price for electricity every half an hour, and that has real advantages. It puts pressure on generators to be cost-effective, because they must bid prices to be called on to run and it gives suppliers and customers the right signals about the cost of electricity. They can then plan much more effectively to meet their requirements at the least cost. Our policy is working. Competition has started and it is already having an effect on prices and efficiency.

What is the Opposition's policy? Well, it is rather difficult to answer that. As usual, their policy is full of contradictions, because half the Opposition Members believe in central planning and state intervention while the others realise that privatisation, competition and free markets are popular, even if they do not believe in them.

The first contradiction that I want to highlight in the Opposition's policy is a perfect example of that. The Opposition say that they want a single organisation to be responsible for ensuring security of supply. At the same time, they say that they want more competition. That is a complete contradiction. A single organisation responsible for supply is what I call a monopoly. Generators and suppliers cannot compete if they are controlled by one organisation. Clearly the Labour party does not know what it wants. It thinks that competition is popular, and it cannot give up the desire to interfere and plan the economy.

Mr. Rhodri Morgan (Cardiff, West)

Will the right hon. Gentleman tell the House why, if it is such a contradiction to have security of supply as an objective, that was the Government's objective for the privatisation of the electricity supply industry throughout the progress of the White Paper and the legislation, and our proceedings in the House? It was dropped only when they were advised by merchant banks that it would make the area distribution companies far more difficult to sell.

Mr. Wakeham

I believe that the Government have maintained a better security of supply through the position that they have created. By virtue of their licence, the regional electricity companies will have to contract for sufficient electricity to meet the demands of their areas. That will be a matter for the regulator to settle. How those demands are satisfied within a competitive position is for them to determine, by competition. We believe that we have improved the position by providing a licence system and a competitive market with substantial financial penalties for any company that does not contract for enough supply in the market.

The second contradiction is evident in the Labour party's policies for coal and the environment. It wants to be green; it also wants to be clean. However, it cannot face up to what that might mean for British Coal. Flue gas desulphurisation is not the simple answer. Although it reduces acid rain, it increases carbon dioxide emissions, whereas combined cycle gas turbine plant tackles both problems. Let me point out again that that is exactly the type of plant that is coming forward as a result of our policies.

Of course we need to make British Coal competitive in the new world, and that is why we are restructuring its finances. FGD is not the simple answer, however, and the Opposition cannot avoid the problems.

Mr. Lofthouse

Will the right hon. Gentleman concede that, if FGD is not the whole answer, it is certainly the main answer to the problem of reducing emissions of sulphur dioxide from power stations?

Mr. Wakeham

It is certainly an important part of the answer for coal-burning power stations. I welcome the fact that, under the present plans, 8 GW are likely to be fitted as a minimum; that will enable the industry to compete in the market for a substantial volume of coal up to 1988. From then onwards—and it is a good few years away yet it must be competitive. In that case, the generators will no doubt fit further FGD by choice.

That is not the end of the list of contradictions in Labour party thinking. Labour is muddled on the question of nuclear power: it wants to close nuclear power stations, but it is outraged that privatisation should have shown the true costs and benefits. Nationalisation buried the costs of generation. Monopolies ensure that customers are paid. The Opposition may complain, but privatisation has now helped to bring into the open some of the issues surrounding nuclear costs. The need to assess nuclear power in terms acceptable to the market obliged all concerned—including the Government—to take a long hard look at the costs of the business.

In the end, it proved impossible to privatise nuclear power without giving the private sector unprecedented guarantees. The increased fuel diversity available from other sources also meant that it was right to postpone the three PWRs beyond Sizewell. Obviously, those decisions had an impact on the Sizewell project. Immediately after my decision on nuclear power last November, I asked Nuclear Electric, the public-sector company set up to operate our nuclear stations, to institute a thorough review of the costs of Sizewell B. A number of questions needed to be addressed.

Mr. Simon Hughes (Southwark and Bermondsey)

If one of the right hon. Gentleman's criticisms of the Labour party is that it does not quantify the cost of nuclear power —I accept that it was hidden under a nationalised industry —why does he not allow the cost of nuclear power to be separately quantified for the consumer? The right hon. Gentleman and his colleagues have been asked to ensure that that be done, but they have refused.

Mr. Wakeham

Under the privatisation proposals, when Nuclear Electric becomes a plc, although the shares will remain in Government hands, unprecedented amounts of information about the cost of nuclear power will be available as a result of our proposals. I hope that the hon. Gentleman will welcome that as a move in the right direction.

As I was saying, a number of questions needed to be addressed. First, what direct effect did our decision have on the capital costs of the station? I recognise that some programme costs that would have been spread over the follow-on stations would have to fall on Sizewell alone and that a single station project faced an increased risk of delay and contractual difficulties. Secondly, could Nuclear Electric still keep to the CEGB's timetable?

Thirdly, given that the capital cost was expected to rise, was the station still a worthwhile public investment? How much would it cost, in terms of pence per unit, to produce Sizewell electricity? In answering that point, it is necessary to take account of the avoidable costs of power from Sizewell. It would be ridiculous to revisit the economics of the station as though no concrete had been laid on the site over the past three years.

Those, then, are the questions. As to the answers, I can confirm that Nuclear Electric's report is a comprehensive piece of work that deals with all the searching briefs of last year. It is for Nuclear Electric to announce the results of its review, and I understand that it will do so tomorrow. However, it has told me that the selective misquotation of some figure is highly misleading. Presumably that is what was intended. I shall therefore arrange for the published material to be made available in the Library of the House.

It may be helpful if I indicate the conclusions of the report that I am likely to make. First, the project is not behind schedule. Rather, it is well in advance of the announced 72-month timetable. Secondly, all the new extra costs revealed by the report are attributed to the decision of 9 November and, in particular, the decision on the remaining three PWRs, which resulted in a saving of public expenditure of about £5 billion. They are not due to cost overruns at Sizewell B.

Thirdly, at the time of the original decision to proceed with Sizewell B, and using the rate of return then applicable, the cost of nuclear-generated electricity was comparable with that from newly constructed coal-fired stations. The new costs do not undermine the original comparison. Fourthly, the important investment decision now, however, is to compare the avoidable costs of completing Sizewell B with the costs of obtaining the same amount of electricity with the most cost-effective alternative, gas. The economics of the two are broadly comparable on the basis of the 8 per cent. public sector rate of return, and there are, of course, other benefits from completing Sizewell in terms of its contribution to the reduction of fossil fuel emissions and diversity.

Dr. Michael Clark

Does my right hon. Friend agree that the completion of Sizewell B is vital if we are to retain the option of having power in the future that will be more environmentally desirable, and also that we have power stations in future that give us insurance against declining fossil fuels?

Mr. Wakeham

My hon. Friend is absolutely right. I confirm that the Government attach the greatest importance to the timely completion of Sizewell B, as a direct contribution to the reduction of carbon dioxide emissions and as an essential part of maintaining the nuclear option in the United Kingdom.

I say to my hon. Friend, who is Chairman of the Select Committee, that, as well as putting the Nuclear Electric report into the Library of the House tomorrow, I shall write to him with an amplification of the points that I have just made.

Mr. John McAllion (Dundee, East)

If the Minister is prepared to accept strategic arguments for the retention of the nuclear industry in Britain, why were not the Government prepared to accept strategic arguments for the retention of the coal industry in 1984, when they took only a very short-term view on whether pits were economic or uneconomic at that time?

Mr. Wakeham

Of course we want a thriving coal industry in this country. The Government's strategic view is that there should be a diversity of supply of fuels. That diversity means a thriving coal industry and a quantity of electricity generated by gas, by nuclear and by oil. It is a question of creating the right environment in which those different competing fuels can find their place. I believe that all of them can.

Mr. Dobson

As Nuclear Elecric is publishing its figures tomorrow, will the Secretary of State publish the figures for alternative sources of the same supply? Will he give us the gas and coal figures, or will we still be whistling in the dark on the comparisons?

Mr. Wakeham

I shall give the hon. Gentleman all the figures I can. I recognise that I must give him sufficient figures. Initially, I shall give details of the figures in my response to the Select Committee. No doubt the hon. Gentleman will have an opportunity to study the information also.

Contradictions again appear when the Opposition consider the costs of privatisation. The hon. Member for Holborn and St. Pancras is addicted to sensationalism, and uses phrases such as "rip-offs" and "scandalous rip-offs". He makes misleading or misconceived comments about estate agents and "friends in the City".

Almost in the same breath, he accuses the Government of giving away the industry. He also accuses us of raising prices to the consumers. Most people recognise that that would enhance the value of the industry. The hon. Gentleman does not realise that, in the market, the scope for manipulating prices at the whim of politicians and bureaucrats is less than in the centrally planned world of the Labour party. What does he mean? Surely he accepts that, to gain proper value for the assests, advice is needed on their value and how to market them. The Labour Government used advisers for similar reasons when the were in power. Perhaps the hon. Gentleman is bringing forward another new policy for the Labour party—that it will seek to buy and sell public assets, if it should ever have the chance, without proper professional advice.

The estate agents that the hon. Gentleman derides are property valuers, whose task is to ensure that the industry's land and buildings are properly valued when the companies are sold. Imagination—a stolen copy of whose presentation document the hon. Gentleman seems to have received—is responsible for staging the presentation of the companies to investors in Britain and overseas. The budget for that has not been finalised, but my Department and the industry will ensure that we get value for money.

Mr. Dobson

The right hon. Gentleman says that the cost has not been decided. Can he confirm that the contract has been let? If so, why is he letting a contract when he does not know how much it will cost?

Mr. Wakeham

The budget has not been finalised. We know that the firm is doing some work for us. It is riot the practice of the Government—or, indeed, of a Labour Government—to give individual details of individual contracts. I shall go no further than that, except to say that we shall get value for money.

It is clearly essential that the presentations are made; otherwise, the effort of marketing the industry will be weakened, with clear consequences for the price that the Government will get for it. Opposition Members seem to have their own friends in the City. If, as the hon. Member for Holborn and St. Pancras has suggested, we did not market the industry, we would risk selling it for less than its proper value.

The hon. Gentleman made much of the accountants who are employed by the Government and the industry. Is it too much to expect him to understand that reporting acountants are a legal and regulatory requirement for a public flotation? I fear that it is.

Perhaps that is another example of the contradictions that appear in everything that the Opposition say. I suppose that I should not be surprised at the Opposition, because their policies are full of contradictions. They make lots of commitments, while claiming that they would cost no money. They want lots of competition in electricity, but they also want central planning by a monopoly. They want lots of coal, but no carbon dioxide. Their only consistency is to say what they think people want, and to hope that no one notices the contradiction.

Mr. Dobson

Will the right hon. Gentleman confirm that, of the 47 firms advising him on the sale, costing the taxpayer £52 million, I believe, not one is advising him on the interests of the consumers?

Mr. Wakeham

If he understood these things, the hon. Gentleman would recognise that, through the Electricity Act 1989, the Government have given the consumer the strongest ever protection. We have set up a regulator to look after consumers' interests. We have given him statutory powers with which to conduct his work. That is infinitely better protection than has ever existed before. I should have thought that the hon. Gentleman would give us credit for that, rather than criticism.

The Labour party talks about the price of privatisation. The rest of the world talks about its benefits. What about the price of nationalisation, the price of state control? the eastern bloc knows the price. It is difficult to quantify just how much Great Britain has lost in terms of skills, profits and opportunities for industries in the public sector. Being divorced from the disciplines of the free market weakens incentives. It means a loss of the necessity to control costs, to relate earnings to productivity and to remain competitive.

I shall give a simple example. Under the last Labour Government, the price of electricity to domestic consumers rose to 22 per cent., whereas, in five years of this Government, it fell by 7 per cent. The competitive pressures that we have placed on the industry are designed to ensure that prices continue to fall. The Labour party says that it has cost £1,000 per family to privatise the industry. That is nonsense—

Mr. Ronnie Campbell (Blyth Valley)

Money for the boys.

Mr. Wakeham

That is nonsense. The industry is worth what it can earn—not necessarily the book value of the assets or some number that has been dreamt up by the Labour party. On the contrary, it is clear that privatisation has brought benefits, and it will go on bringing benefits. The rest of the world knows that. Central planning is discredited everywhere, except by the Labour party. It is well known that the Opposition have no policies. Our policies are sound and successful. I urge the House to reject a return to the past, and to vote for our amendment.

4.42 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Having listened to the Secretary of State, spent many hours in the Select Committee on Energy investigating the privatisation of the electricity supply industry, and read the subsequent reports, one thing is obvious to me. If all the members of the Select Committee could agree with me openly, I am sure that they would when I say that the Secretary of State and his Department have refused to take note of some excellent advice. I refer to the Select Committee's report of July 1988 on the privatisation of electricity. That excellent report advised—I shall not say that it warned—that the Secretary of State and his Department were moving far too rapidly if they were hoping to produce legislation that would be worth while and efficient and would ultimately benefit the British taxpayer.

The Government stand charged with refusing to take the advice of their own Select Committee on Energy, on which their own supporters formed the majority. I believe that I have advised the House before that it is worth noting that that document saw the light of day only because—unfortunately for some people—Conservative Members formed the minority at one Committee sitting, at which we were to decide whether to investigate the privatisation. It was rumoured—I put it no stronger than that—that the then Secretary of State was not very keen on the investigation taking place and that pressure had been put on certain hon. Members.

Mr. Peter Rost (Erewash)

Is the hon. Gentleman suggesting that all the Conservative Members who served on the Select Committee were opposed to the inquiry?

Mr. Lofthouse

I am certainly not suggesting that. I am simply saying that, if the Conservative members of the Committee had been present in force that day, it is doubtful whether the investigation would have taken place. However, it did, and the Committee produced an excellent document, which was eventually ignored.

Although the debate is about the price of electricity privatisation, I am sure that the House will not be surprised if I highlight the effect of the electricity privatisation on the mining industry. I have spoken on this subject many times, without having achieved much, but I am as convinced as I always have been of the devastating effect that it will have on the mining industry. I hope that I shall also expose the folly of coal imports, as I have repeatedly done in the House over many years.

Britain has traditionally been self-sufficient in the supply of coal to power stations. However, in the run-up to the privatisation, the electricity generators, backed by the Government, are planning to import large quantities of coal. All current evidence is that that will not only lead to massive job losses in the coal industry, but will increase the trade deficit by up to £1,500 million per year.

A recent report by the Oxford economist, Dr. Terry O'Shaughnessy, for the Coalfield Communities Campaign, shows that, because of balance of payments constraints, every 10 jobs lost in the coal industry could lead to a loss of 30 jobs in the United Kingdom economy as a whole. The question is, should the United Kingdom retain sufficient capacity in its coal industry to meet the needs of the electricity generators, or should it switch to relying on imported coal?

I noticed that, at Question Time this afternoon, the Secretary of State said that maintaining 8 GW of flue gas desulphurisation would be equivalent to 70 million tonnes of coal. If that is the case, and the coal industry is to be run down even to the extent that Sir Robert Haslam has mentioned—I believe that it will be far worse than that—by the time the FGD plants are available and working, this country's coal industry will be unable to meet demand, because we will have closed the pits and sterilised millions of tonnes of coal.

Mr. Wakeham

I know of the hon. Gentleman's deep interest in this matter, and I want to be sure that his recollection of what I said is correct. I said that my understanding is that, with 8 GW of FGD fitted, the coal industry would be enabled to sell up to a maximum of 70 million tonnes of coal per year and to meet the terms of the European directive, which would enable the industry do so for years to come. That does not deal with the CO₂ question or with that of competitive prices, but on the straightforward question of acid rain, 8 GW would, with other measures, enable a target to be achieved. That is what I said.

Mr. Lofthouse

I am grateful to the Secretary of State. Is it not a fact that, if the coal industry is run down, even to the extent suggested by Sir Robert Haslam, by the time the flue gas desulphurisation plants are available for British Coal, our mining capacity will not be sufficient to meet the demand? That will cause a major problem. If, in the short term, we import coal at the expense of the British coal industry, we shall run down our industry to the extent that we cannot meet demand. We shall sterilise millions of tonnes of coal which we shall never be able to mine.

Short-term price considerations suggest a switch to imports. At present, foreign coal at United Kingdom ports costs about £35 a tonne, compared with £42 a tonne for British coal. Only about half of British pits can compete with imports at today's prices. However, there are wider micro-economic considerations.

In his report, Dr. O'Shaughnessy draws on his exhaustive study of the current account balance rate of unemployment, or CABRU as it is referred to. That is the trade-off between the balance of payments deficit and the levels of income and employment. The report shows that, during the past 30 years, there has been a marked deterioration in the United Kindom CABRU. That means that, to eliminate the trade deficit, unemployment must be much higher than before. The scrapping of capacity in an industry which produces a tradeable commodity, such as coal, has an adverse effect on the country's ability to pay its way internationally. In the long run, Britain can afford to import goods only to the extent that it can sell home-produced goods abroad. If we import coal, it means that we must import fewer other goods and, in turn, domestic demand must be kept in check.

Unless there is a corresponding expansion in capacity in some sectors producing tradeables, the impact of additional coal imports is that unemployment through the economy must be maintained at a higher level than previously. The United Kingdom surplus from trade in energy is already disappearing fast because of a decline in North sea oil and an increase in gas imports Additional coal imports would worsen the position significantly. So far, manufacturing exports have singularly failed to plug the gap.

Dr. O'Shaughnessy examines four scenarios, involving coal imports to power stations of 10 million, 20 million, 30 million, and 43 million tonnes a year. The last is the level to which imports might rise if United Kingdom coal was forced to compete on price alone. The scenario shows that 43 million tonnes of coal a year would lead to 47,000 redundancies in British Coal, a £1,500 million increase in the United Kingdom's annual import bill and an £85,000 increase in CABRU—the increase in unemployment necessary to hold back the trade deficit. Those calculations are based on current coal prices and exchange rates. If, after scrapping United Kingdom capacity, world coal prices rise or the exchange rate weakens, the unemployment cost to the economy as a whole could be 30 jobs for every 10 jobs lost in the coal industry.

The main technical barrier to increasing coal imports is the limited capacity of the ports suitable for use by the power generators—I am sure that we shall hear more about that later in the debate—although proposals for new facilities on the Humber, Tees and Thames and at Milford Haven are at various stages. The report argues that the Government should take advantage of the temporary limits on ports capacity. If Britain is faced with paying more for energy imports, it will be difficult to resist a fall in the exchange rate and further inflationary pressures. The sensible step is to reassess the consequences of the headlong rush into coal imports.

References have been made to the flue gas desulphurisation programme. FGD is a process by which sulphur dioxide is removed from the waste gases produced by burning fossil fuels. Unless it is removed, large quantities of SO₂ cause acid rain. The United Kingdom is the largest emitter of SO₂ in western Europe and one of the largest exporters of SO₂ emissions to other countries. In 1987, 86 per cent. of the United Kingdom's SO₂ emissions resulted from electricity generation. FGD removes about 90 per cent. of the sulphur from the waste gases.

Under the European Community large combustion plants directive, which was agreed in June 1988, the United Kingdom is committed to reducing its SO₂ emissions from existing plants by 20, 40 and 60 per cent. of its 1980 emissions by 1993, 1998 and 2003 respectively. The CEGB estimated that compliance with the directive would require a 12 GW programme of FGD retrofits, costing £1.8 billion at 1989 prices. If we are to get anywhere near meeting the directive by the agreed years, we need a programme of 12 GW. If we fail to do that and if we are to meet our electricity demands, we cannot avoid importing a large amount of low-sulphur coal. That is the decision facing the Government.

Are the Government prepared not to further encourage investment in FGD by the private electricity companies? The chief executives of both National Power and PowerGen told the Energy Select Committee that they will make a purely commercial judgment, whatever the effect on our own natural energy resources. They suggest that it will be necessary for British Coal to reduce its prices by £5 or £6 a tonne less than imported coal to finance the retrofitting. That is an impossible task for British Coal. Despite all its recent achievements, it could never achieve that.

The Government must make the decision. Are they prepared to extend their programme to run down the natural resources of coal to the extent that millions of tonnes of coal will never be mined, so that eventually we have to rely on our foreign competitors to meet our demands? That is not a wise policy.

On 7 June 1990, the Energy Select Committee, on which I have the privilege to serve, produced a report entitled, "The Flue Gas Desulphurisation Programme". I do not want to detain the House too long, but the report is up to date and the House should have it brought to its attention. Paragraph 56 of that report, headed "The Coal Industry" says: The major issue arising from this Report is clearly the impact of the generators' plans on British Coal and the coalfield communities. Even if, as the Government states, it is entirely a matter for the generators how much British coal they use, a substantial decline in their purchases would have important consequences which would be matters for Government, including both the financial costs and the social costs of pit closures and the future security of energy supplies. Paragraph 57 states: A balance will need to be struck between, on the one hand, the interest of consumers in cheap electricity prices and of the Treasury in the maximum possible proceeds from privatising the ESI and, on the other hand, the long-term interests of the coal industry and the coalfield communities. In particular, private sector generators cannot be expected to take account of national interests, and pit closures are irreversible: deep-mined coal capacity cannot be turned on and off like a tap. We are not convinced that the Government has yet faced up to the dilemma which confronts it over the future of Britain's coal industry. Emphasised in bold is the observation: It is essential that these issues are not side-stepped. As a priority the percentage of electricity that will be generated using British coal in 2003 should be appraised. In the light of this, of the increased use of gas and of the freeze in the nuclear programme, the effect of limiting FGD to the 8 GW proposed should be evaluated with regard to the possibility of tightening up limits on emissions; the restrictions it will place on British coal in the absence of other clean-burn technology. I hope that the Secretary of State will, unlike his predecessor, give serious consideration to that report.

The Government should reassess their policy on the production of electricity by nuclear power. The privatisation of electricity has highlighted the unknown costs of nuclear power. No one who has given the matter recent study would disagree. We know that research and development expenditure on the fast breeder reactor programme alone totalled £4 billion at 1988 prices. The disastrous decision was made to order four different AGR devices from different consortia when there was scarely sufficient expertise to justify one.

For many years, the public have been told that the cheapest form of electricity generation is nuclear power, but we all know that that claim has gone out of the window. Either there has been a disastrous mistake or it is deliberate policy to market nuclear. I hope that it is the second, and that, in making the case for nuclear, the Government have kept its true cost from the public and from the House.

All the expert evidence given to the Energy Select Committee's recent inquiry confirmed that the true cost of muclear, including decommissioning, is unknown. I believe that no one can honestly come along and say—no one has yet—"Yes, including decommissioning costs, this is what electricity generation by nuclear power will cost."

Sir Ian Lloyd (Havant)

I am well aware that the hon. Gentleman follows such matters very closely. He always presses the case for the coal industry with great conviction, but can he really sustain his argument about the non-availability of information on nuclear costs? I have a copy of a document entitled, "Projected Costs of Generating Electricity from Power Stations for Commissioning in the Period 1995–2000" published by the Organisation for Economic Co-operation and Development, based on 18 countries in the OECD. The report contains a mass of information on nuclear generating costs.

Although it does not necesarily come out unequivocally in favour of nuclear power, its most significant conclusion is: The nuclear advantage in the reference case persists, for most countries, at common load factors for coal-fired and nuclear plants well below those assumed. However, the expectation which was shared by a number of countries in 1985, that the total cost of nuclear generation would be less than the fuel costs of coal-fired generation, no longer exists in any country covered in this study. The report concludes that assumptions about nuclear and conventional generating costs depend entirely on predictions made about load factors, discount rates and fuel costs. As the report points out, it is difficult to arrive at any general conclusions on that issue.

Mr. Lofthouse

That was the point I was making—that no one really knows the true costs. I notice that the report does not mention decommissioning costs.

Sir Ian Lloyd

It does.

Mr. Lofthouse

If so, I apologise. Nevertheless, the hon. Gentleman's points do not differ in any way from those that I made. The experts who presented evidence to the Select Committee all agree that it was not possible to estimate the true costs.

If the Government fail to take action on flue gas desulphurisation and to support the British coal industry over the next few years while FGD plants are installed—which I believe should be to the extent of 12 GW—a further 41 collieries, employing more than 35,000 men, will be lost. If one adds others involved, such as those in workshops and administration, total job losses could reach 50,000. If one then allows for the knock-on effect on other industries and services, the final job losses in coalfield areas could number 100,000 between 1995 and 2003. If mining communities are to be destroyed in that way, the Government will have a major obligation to prepare and encourage alternative industries in those communities, before they are wiped out.

5.7 pm

Dr. Michael Clark (Rochford)

It is a pleasure to follow the hon. Member for Pontefract and Castleford (Mr. Lofthouse), because he always defends the coal industry sincerely and effectively. I agree with much of what he said, but I shall take a different tack on another aspect of energy in the few words that I say.

The Government have a proud record on privatisation, starting with that of council houses. Although that was opposed when first suggested by the Government, it is now accepted by the majority of people and is now the official policy of Opposition parties.

As my right hon. Friend the Secretary of State said, the Government also privatised British Airways and the British Airports Authority, both of which subsequently expanded. The Government privatised British Steel, British Telecom and British Gas, and all three have become more profitable and found more money for investment. Those industries have grown, offer more secure jobs, and are in a better state than they were in public ownership.

Despite all the controversy surrounding the privatisation of the water industry, it too is gearing itself up for the investment that is demanded by those having an interest in the environment. Those and many more privatised industries will not be returned to social ownership under a Labour Government, if there should be one, because the Opposition know that to return them to public sector ownership would be neither desirable, popular nor economic good sense. Nor would it win votes or elections.

In all the areas that have been privatised, there has been initial opposition, yet as soon as the privatisation process is over and the arguments have settled down, in every case private companies have been accepted and it has also been accepted that they are more effective and efficient than before. The same will be true of electricity privatisation when it is completed.

We know that privatised industries work better. The staff are better motivated, they have better rewards, and they are more ambitious for the success of their industry that they were before. The privatisation of electricity is a major undertaking. It is a strategic industry—the base for so many other industries. If we do not have a proper power industry, we cannot have manufacturing and many of the other industries on which we rely.

Electricity will be the largest of all the privatisations and the most complex. It has many constituent parts, all of which have to go into the private sector. So far, progress has been remarkable. Staff have been allocated to their now companies. Assets have been divided and allocated and new plcs have been created and are working: generators, a grid company and distribution companies.

Most remarkable of all, the privatisation programme is going ahead on schedule. I pay tribute to the Secretary of State, the other Ministers and staff at the Department of Energy for keeping to a tight schedule, despite the many squalls that would attempt to blow them off course.

The morale of staff in the electricity industry is high, contrary to predictions and expectations, and I know from my personal contacts with them that they are looking forward to having greater freedom to operate the companies and the industry in a way that they can predetermine. I have confidence that when the stock of the privatised electricity companies is sold off, there will be a successful launch. I am sure that most, if not all, Conservative Members will become shareholders, and I have a shrewd suspicion that many Opposition Members will become shareholders, too.

What about the benefits of privatisation? We should pay tribute to my right hon. Friend the Member for Hertsmere (Mr. Parkinson) for the way in which he contrived to bring competition into the privatisation of the electricity industry in a variety of ways. Competition was the catchword, and he was determined not to privatise the electricity industry as one giant monolith, as had been done with gas. It is a credit to him that the electricity industry was broken down into so many constituent parts, and that competition was encouraged in that way.

There will be many alternative sources of supply. There will be a non-fossil fuel quota, which will admittedly be protective for the nuclear industry, but it will also encourage alternative energy sources—renewable and benign—to generate and put their share of electricity into the grid.

I believe that the greatest benefit of privatisation is cost transparency, which the Secretary of State and the hon. Members for Pontefract and Castleford and for Holborn and St. Pancras (Mr. Dobson) mentioned. As a known supporter of nuclear industry, I still welcome cost transparency, which has shown that nuclear costs are high. I support the nuclear industry, not only because I used to think that it was a form of cheap electricity, but because I thought that we had—and I still think this—an obligation to find sources of electricity for future generations, apart from burning fossil fuels, which are declining every year and some of which will be needed in years to come as premium fuel for aviation and road transport.

Therefore, as a scientist, I saw the need to develop a new energy source, and I thought that nuclear electricity was that new source. Twenty years ago—and until 20 months ago—we were told that nuclear energy was cheap and we believed it. I do not think that I am making myself appear to be the only gullible person in the House or in the country by saying that I believed it. There was so much propaganda telling us that nuclear was cheap, from so many different sources, that many people thought that it must be true. Now we know that nuclear is not cheap, but I am delighted—I share equal delight with the hon. Member for Pontefract and Castleford—to find out a cost that is closer to the truth, even though we do not know the 100 per cent. truth. The cost that we are now being given is closer to the truth.

I must tell the hon. Member for Pontefract and Castleford and other hon. Members in the so-called coal lobby that it is not appropriate for them to rejoice at the nuclear industry's discomfort and to complain that the effects of privatisation on the coal industry are unfair or undesirable. We must have not only equality of cost transparency, but equality of consequence.

What are the effects of privatisation on costs? We know that in the nuclear industry high costs are associated with decommissioning and the back end of the fuel cycle. The inclusion of such costs in the prospectus for the sale of the nuclear industry, along with other generating stations, under the umbrella of National Power, was known to depress the price of that grouping, and was thought to make it unsaleable at a price that would benefit the taxpayer. Therefore, the Secretary of State made the right decision to withdraw nuclear electricity from National Power.

Of course, there were consequences for the nuclear industry. It meant that the family of PWRs that were to be built would no longer be built, because the nuclear industry stayed in the public sector and public funds were not available for that development. For the sake of the taxpayer it was right that the nuclear element was taken out of National Power, because that way we shall get the best price for National Power and we shall satisfy the hon. Member for Holborn and St. Pancras by ensuring that taxpayers get a good deal.

The coal industry will suffer under privatisation to some extent, but it will suffer anyway for environmental reasons. The suffering caused to the coal industry by the present environmental regime is exacerbated by the fact that privatisation is taking place at the same time. Privatisation will put pressure on costs. As the electricity industry is privatised and competition introduced, the generators will want to buy coal at cheaper prices and obtain contracts at keen prices. The price will be forced down, as the hon. Member for Pontefract and Castleford said. One consequence of trying to buy coal at cheap prices may well be the importation of coal. I do not welcome that any more than the hon. Gentleman did, but there has been a massive increase in productivity within the coal industry in the past four years and there is every reason to believe that during the next three or four years productivity will continue to increase until British coal can compete quite effectively with imported coal.

As regards sulphur dioxide, of course, burning British coal, which has a higher sulphur content than some imported coals, means that sulphur dioxide will go into the atmosphere, and flue gas desulphurisation is essential to bring that under control. If the electricity industry had not been privatised, the nationalised industry mught have put in more flue gas desulphurisation and might have put in the 12 GW that the hon. Member for Pontefract and Castleford called for. It seems that the privatised industry will put in only 8 GW, which will have an adverse effect on burning British coal.

As the Secretary of State mentioned, while it has been decided to burn more gas and while coal/gas price ratios remain at the preset level, the use of coal will probably decline at the expense of gas. Gas, however, will not stay at its present volume or price for long. Gas prices will rise and gas reserves will be depleted. We shall need to burn more coal. At that time coal will be cheaper. I share the concern of the hon. Member for Pontefract and Castleford that if we are to see a dip in the demand for coal now and if we are to anticipate a rise in the demand for coal in future, it is essential not to allow our coal reserves to be sterilised so that we cannot get at them when we need them.

As for carbon dioxide—the greenhouse gas that creates the blanket in the upper atmosphere that is responsible for global warming—we cannot get rid of it, whatever we do. We could scrub it out in the flues, but the cost would be enormous. We have to accept that coal produces greenhouse gases. If we are to burn more coal, we must try to get the maximum amount of energy out of the coal that we burn, thus producing less carbon dioxide per megawatt of electricity produced. To do so, we have to continue to invest in coal-burn technology and in combined cycles. We must also, as my hon. Friend the Member for Erewash (Mr. Rost) constantly tells us, invest more in combined heat and power. If we want to burn more British coal yet stay within the European directives on acid rain, we must have coal-burn technology—perhaps fluidised bed, or the process that is being developed at Grimethorpe.

For the sake of both the British coal industry and the environment, I call upon the Secretary of State for Energy and his Ministers to consider carefully how much money should be expended on coal-burn technology. It would be a two-sided reward. We could protect both our indigenous coal industry and our environment by investing in coal-burn technology.

In due course I shall propose—I believe that my proposal will be well received—that the Select Committee on Energy holds an inquiry into coal-burning technology and recommends what technology should receive priority and the type and volume of funding that would be necessary. I have every reason to believe that the Select Committee will agree unanimously to hold such an inquiry.

As gas volumes decline and as gas finds in the North sea become rarer, market forces will push up the price of gas. Eventually, coal and nuclear will come back into their own. The market forces that will allow the nuclear industry to make a comeback in due course will, before then, give a boost to indigenous British coal. Both fuels have a future, but it is right that both fuels should determine their own future within a proper financial environment that takes account of price, markets and competition.

5.23 pm

Mr. Simon Hughes (Southwark and Bermondsey)

It is interesting to follow the hon. Member for Rochford (Dr. Clark), given his professional background and his present responsibilities. I pause to reflect on the link between a pair of his statements. The hon. Gentleman said that he was a late convert to the view that the nuclear industry was expensive, both relatively and absolutely. He knows that my colleagues and I have advanced that argument for a long time and that one of the industry's greatest defects is that practical one, as well as the other ethical defects.

I ask the hon. Gentleman to reflect whether he might similarly be wrong about his present absolutist view that privatisation will benefit industry. An issue that most appeared to affect his constituents in recent years was the sale of local authority homes in Rochford. The proposal that they should be moved out of local authority control met great opposition from his constituents when his Conservative colleagues on Rochford district council put it forward. I wonder whether in time the hon. Gentleman may come to realise that some of the Government's privatisation measures are not as popular or as justified as he may now think.

I welcome the hon. Gentleman's intention to ask the Energy Select Committee to examine the implications of coal-burn technology. Such a report will be well worth while. I also share his view that we are likely to invest far too little in flue gas desulphurisation. One consequence of the direction that the electricity industry is taking is that we may do too little about FGD, which is greatly to be regretted.

The hon. Gentleman knows that my colleagues and I have approached previous debates on this subject from the point of view that we do not oppose privatisation per se. We do not oppose the change of ownership, but question the practice of it and the motivation for it. We have consistently argued that the Government's intention to privatise the electricity industry was more for dogmatic reasons than for benefit to customer reasons—more for private good than because it was publicly bad. As we watch the advertisements on our television screens, aimed in particular at peak time viewing during the World Cup, but also at other times, we see that the Government have created a new industry in the private sector that already appears to spend money in a most unjustified way which undermines many of the Government's arguments that the industry will be more effective in the private sector.

This is an odd debate because it takes place in the knowledge that tomorrow Nuclear Electric will make an announcement about the cost of Sizewell B. I intend nonetheless to spend a few moments now on the nuclear industry in the context of the privatisation of electricity, since more important questions will have to be answered about the nuclear industry in the near future. Will the Under-Secretary of State for Energy tell the House when he winds up the debate whether the Secretary of State is to make a statement on behalf of the Government in response to Nuclear Electric's announcement tomorrow? Will he also ask his colleagues, in particular the Secretary of State, whether there is to be a formal request from his Department for a debate on the cost of Sizewell B to be held in Government time? It is a matter of significant public expenditure, on which there should be a proper debate.

We do not need to debate the matter this week; I should prefer the debate to be held after we have had an opportunity to consider the report. I welcome the announcement that the report will be made public. However, the Government should make a statement tomorrow, announcing that there will be a debate in Government time about Sizewell B and the implications for the nuclear industry.

The nuclear industry was the only matter that was allowed to interfere with the privatisation of the electricity industry. Originally, all the stations were to be privatised; then it was decided to keep the Magnox reactors in the public sector. That decision was attacked at the time by the chairman of the United Kingdom Atomic Energy Authority as "terribly, terribly messy". When nuclear plants were withdrawn from the privatisation programme, it became possible that we might see the real cost of nuclear power. Nuclear plants were withdrawn from the privatisation proposals when it was realised that they would become a financial albatross round the neck of an industry that the Government wished to privatise.

My colleagues and I argued in Committee and at the time of the announcement that it would have been better if the Government had said, "For heaven's sake, stop now," rather than commit the mistake that Governments of both parties have made since the war, on various issues, of continuing to spend and spend instead of being brave and pulling the plug early on. Nuclear plants are essentially uneconomic, as the French are now discovering. To build one plant of one type is even worse madness, because economies of scale are lost. We know all about the delays at Dungeness. There may be costs of delay at Sizewell, too. If the figures are right, in 1987 the cost of Sizewell B was £1,691 million. Now we could be talking about £2.5 billion. Some estimates put the cost of Sizewell B at well over £3.5 billion.

There will be additional costs. The loss of the rest of the family of four reactors which was originally proposed is calculated to add about £350 million. Although I have not read it extensively, the clear evidence of people such as the chief executive of the PWR project group of Nuclear Electric at the Hinkley inquiry was that, if the company did not proceed with building a family of PWRs, the investment in Sizewell B would become extremely doubtful.

The hon. Member for Rochford will confirm that the Select Committee has been extremely critical of the Department of Energy for allowing the cost of the nuclear industry to get out of control. There is no cross-party dispute about that. The already sharply increased costs call into question whether construction is any more justified.

Only last month the Secretary of State said two things about Sizewell B—that the future of nuclear power in Britain depended on Sizewell B being completed "successfully" and "on time". No doubt tomorrow he will respond more particularly as to whether it will be on time. He said that, so far, his understanding is that it will be. We shall see. But I wonder whether it is not already possible to say whether it will be completed successfully, and, more importantly, I wonder whether it will not be an increasing and haemorrhaging cost on the public sector which makes it economically unjustifiable by any criterion.

It almost goes without saying that if Sizewell B has failed economically, it is continuing to fail environmentally. The environmental danger and criticisms, in addition to the economic criticisms, are making Sizewell B a public sector white elephant the like of which we have not seen for a long time.

The other questions which the Government must answer concern the new structure of the area boards. They have been given the duty of keeping the lights on—a front-line responsibility but it appears that PowerGen and National Power are now negotiating with big customers behind their backs and behind the scenes. It is quite clear that the area boards are under pressure to sell as much as possible instead of encouraging energy efficiency.

One of our underlying criticisms of Government policy is that it is all geared to selling energy. Why else are we sitting at home and seeing on our television screens adverts for electricity in between World Cup matches? Why is there so much promotion of the use of something that we should be trying to conserve? If we are aiming for across-Government environmental policy, we should consider whether it is justifiable to spend so much money on advertising, in addition to the money that is being spent on other matters outlined by the hon. Member for Holborn and St. Pancras (Mr. Dobson).

The Minister may remember that in Committee my colleagues tabled an amendment calling for least cost planning, but it was rejected. It is still perfectly proper to suggest that generators should have to show that extra demand could not be met through efficiency measures before they should be allowed to expand.

Much more recent press cuttings from only last month show that National Power has failed to satisfy a Department of Energy investigation into complaints from the distribution companies that it has engaged in unfair pricing tactics to win industrial power business. I wonder whether the area electricity boards' complaints should not be dealt with much more properly by the Government, not simply by being investigated by the Department of Energy but by the Department saying what it proposes to do about those entirely justified complaints.

I am not sure whether the Government can yet be satisfied that National Power and PowerGen will be able to resist the threatened Monopolies and Mergers Commission inquiry. They are at risk because, had the Government been committed to really privatising them they would not have been allowed to achieve such a dominant position. The privatisation of electricity is not a real privatisation; it is an expensive privatisation, but it is also a falsified and distorted one and no one should try to delude the public about that.

We have a substantial concern that the Government are directing energy at the expansion of one sector of the industry rather than taking measures to which they are publicly committed but on which we have seen no action.

Last year the Secretary of State told the world energy conference: Energy efficiency is the single most cost-effective response to the efforts to limit carbon dioxide emissions from fossil fuels.". Although the Government's evidence to the Intergovernmental Panel on Climate Change suggests that it is possible to reduce spending by 60 per cent. through cuts in fuel use, in written answers they still quote a reduction of only 20 per cent. Energy efficiency is still not a sufficiently high priority.

When one compares the money spent on research and development in the nuclear industry with that spent on renewables, the proportions are incredibly distorted. More than 80 per cent. of money spent on energy research and development is spent on the nuclear industry and less than 10 per cent. is spent on renewables. One consequence of that distortion is that we are developing inadequate use of the most environmentally acceptable energy opportunities.

The victims of the privatised electricity industry will be those who are most vulnerable and find it most difficult to pay. People who live in rural areas will lose all protection after five years and it looks as though the costs will then escalate so as to discriminate against and harm many of our most remote and threatened communities.

Finally, a large proportion of our elderly citizens rely most on electricity. They are threatened with ever-increasing electricity prices. The Minister will know that I regularly table questions reflecting the concern of many peope about the difficulties encountered by elderly people in paying for protection from cold and illness in the winter. We have to assess privatisation by its benefits or disbenefits to the consumer. It seems that a great deal of money is being spent on feather-bedding the nuclear industry which is no longer economic and giving big profits to the private sector in a distorted free market without any great benefit to the consumer. It is an enormously wasted opportunity.

5.38 pm

Mr. Peter Rost (Erewash)

I am particularly pleased to follow the hon. Member for Southwark and Bermondsey (Mr. Hughes) because I suspect that he may agree with much of what I have to say.

Although I welcome the debate, I am rather surprised that the Opposition seem too eager to shoot themselves in the foot yet again. I declare an interest as an energy consultant. Those of us who are aware of what is happening in the real world can report two particularly exciting developments in recent weeks. Even during the transitional period when the electricity industry has not yet been privatised, these two major events are evolving before our eyes—at least for those of us who wish to see.

First, real competition has broken out and is resulting in lower-price contracts for those who need them most—the large energy users. For too many years, our industries have been penalised with far too high electricity prices compared with our competitors abroad. Competition is working. Lower-price contracts are being signed and all the fears that were expressed by Opposition Members, industry and the CBI only a few months ago have disappeared. We are not hearing a word about the suggestion that energy prices to large users would rise; on the contrary, the silence is deafening. Some of us know that the first contracts in the competitive market have resulted in lower energy prices for heavy energy users, who will benefit most and whose lower energy costs will benefit the British economy most.

The second exciting development is that, for the first time, our electricity industry has suddenly become aware of the new technologies that are available, which produce electricity not only more cheaply but more cleanly and more efficiently, with less environmental destruction.

Those are two most significant changes. I am disappointed that the Labour party still appears to be stuck in a socialist rut with the dogma of nationalisation, whereas the contrast is already emerging. Instead of trying to pretend that it is not happening, Labour Members should have the courage to admit that the state monopoly of electricity led to the high-cost nuclear option. They tried to hide that high cost and only privatisation brought it to the surface. The state monopoly of electricity led to wasteful planning, the mismanagement of national assets and dirty, inefficient coal burn. Flue gas desulphurisation was fitted not by the nationalised CEGB but because of privatisation. It may not be enough for Labour Members, but it is happening now, whereas it did not happen before.

The national electricity monopoly rejected energy efficiency options such as combined heat and power. It rejected the combined cycle and the gas turbine, which at least would have given diversity of supply, cleaner energy production and lower-cost electricity. It rejected the fluidised bed, which would allow us to burn British coal cleanly. The private sector, preparing for privatisation, and the distribution companies such as East Midlands Electricity are proposing to build smaller coal-fired power stations, which will burn coal more cleanly and efficiently.

The nationalised industry was not interested in that. It did not start promoting renewable energy such as wind power. That is now happening thanks to the Government's renewable energy tranche, to which they are giving special encouragement, and partly thanks to the distribution companies and the producers, PowerGen and National Power, which are interested in investing in and promoting renewable energy. It certainly did not happen before.

The nationalised industry did not lead to lower and more competitive prices to British industry, but prices are lower now. It certainly did not do much to provide consumer protection. That is the contrast. We are now beginning to see the increased application of energy efficiency in the production of electricity.

I return to the important contribution that cogeneration, combined heat and power, can make. The nationalised CEGB rejected that option. In a few days' time, I shall visit yet another of the new combined heat and power installations at Heathrow airport. It is saving a huge amount of energy for the BAA and is therefore helping the environment. That installation will have a good rate of return. I have visited other industrial combined heat and power installations, as has my hon. Friend the Minister, at British Sugar and Tunnel Refineries. There has been a surge in interest in co-generation in industry. Every day, one reads in the technical press announcements of new plants being constructed by industry, which will save energy, reduce fuel costs and save the environment. If he has not already done so, my hon. Friend the Minister should visit Trust House Forte, which is installing small combined heat and power plants at its motorway service stations and hotels. It is getting a three-year pay back on its investment and halving the amount of fuel consumed. That is all happening under privatisation; it certainly did not happen before.

The increased use of municipal waste in energy production will improve energy efficiency and reduce environmental pollution. The House may be aware that we are still bottom of the league for turning waste into useful energy. We still dump our waste in holes, pollute the water supply and create the risk of pollution and danger from methane explosions instead of doing what other European countries have done for many years—using municipal refuse as a valuable and cheap fuel. We convert only 3 per cent. of our huge volume of industrial and municipal waste into useful energy. France converts 25 per cent. and Denmark, the Netherlands and West Germany convert 30 per cent. at clean incineration plants, which produce electricity and hot water for district heating. In Sweden, the figure is 40 per cent. The figure in Britain is still 3 per cent., but projects are coming forward, thanks to privatisation and to the Government making refuse a renewable energy source. Those projects will produce useful energy such as electricity and hot water from refuse instead of polluting the environment with it.

I remind my hon. Friend the Minister—I am sure that he is aware of this—that converting refuse into energy is the only technology that produces a net reduction in global greenhouse gases. Although burning refuse produces carbon dioxide, it also burns the methane—a far more damaging greenhouse gas—that would otherwise be released from landfill for the next 20 or 30 years. Even if the methane from landfill is tapped for energy production, as it is on some sites, only 10 per cent. of it can be used. The remainder goes into the atmosphere, and it is a far more damaging greenhouse gas than carbon dioxide. If that refuse is burnt, other fossil fuels are displaced that would otherwise have to be burnt to create that electricity.

Mr. Simon Hughes

I entirely endorse the hon. Gentleman's view about the environmental importance of burning refuse to create energy, but does he accept that one of the problems is that we have not converted the public to the view that that process is not environmentally harmful? Work must be done to win the argument so that we can change the balance of resource use.

Mr. Rost

I am grateful to the hon. Gentleman for making that intervention, because it helps me to make my next point. My colleagues in the Department of Energy and the Department of the Environment have an important role to play. A helpful new clause in the Environmental Protection Bill obliges local authorities to find sensible ways of disposing of their refuse, rather than dumping it in holes, and to promote waste recycling. I hope that we shall ensure that that happens. I look forward to seeing progress in that important direction.

I have referred to the way in which more efficient energy production is taking over. Of course, we can meet our global greenhouse targets by the year 2005, and freeze the amount of emissions that will be released, but we can do much more. We can bring about a net reduction of global greenhouse gases by encouraging greater efficiency of use and of energy production. By increasing thermal efficiency in the way in which fuel is used in our power stations, we can make a much bigger contribution than in any other way to reducing global greenhouse gases. To meet, as we must, the targets that the world will demand—they are stricter than the targets so far announced by my right hon. Friend the Prime Minister—we shall have to do more than just encourage energy efficiency. We shall have to encourage greater improvements in the efficiency with which we convert energy.

The fact that this is not a costly option does not seem to have got across to many people. Blood, sweat and tears are not involved. It will not be a penalising technology. On the contrary, as I said, industries are to have a pay-back period of two or three years. Energy savings of 25 to 30 per cent. a year will result from combined heat and power. It will reduce our national energy bill, thereby improving competitiveness and productivity. Rather than being a costly option, it will result in savings.

I hope that my right hon. and hon. Friends in the Department of Energy will accept that, although industrial co-generation is cost-effective and taking off, the big contribution can come only when there is more city combined heat and power and when the waste heat from power stations is used to displace the fossil fuels that we now burn to provide space heating. City combined heat and power is marginally economic at present, but it needs a stronger market signal. I hope that progress will be made—we have started in Sheffield—to get more core city schemes going. They will be a major contribution to energy savings and to reducing global greenhouse gases. If that can happen in many towns and cities in Europe, it is time that we got on with it. In due course, it must happen.

I should like my right hon. and hon. Friends in the Department of Energy to give an annual tranche of expenditure to city combined heat and power, just as they do for renewable energy, and to get one or two cities a year to apply that system. By accepting that combined heat and power will displace the fossil fuels that would otherwise have to be burnt, thereby creating pollution, and giving that tranche, we shall give a slightly stronger marketing signal to the consortiums of local authorities, private enterprise and distribution companies—such as those in Leicester—which are keen to proceed.

The Government have taken a major initiative in giving renewable energy an opportunity to get into the marketplace, even though it is not competitive when compared with gas and other fossil fuels. The Government believe that it is important to have diversity of supply and that that initiative will result in less pollution because carbon dioxide will not be released. The 300-odd projects about which information has flooded into the Department of Energy, overwhelming my right hon. and hon. Friends—I do not think that they expected such an enormous response—show the potential for the production of 2,000 to 3,000 MW in the next few years. They should be allowed to go ahead, provided that they can produce cheaper electricity than nuclear power.

It would be difficult for the Government to justify rejecting projects involving renewable energy sources if they offered cheaper electricity than nuclear electricity. Nuclear energy has been given a special, continuing role on environmental and diversification grounds. The same should apply to renewables.

I hope that my right hon. and hon. Friends in the Department of Energy will plead with the other European Energy Ministers and the European Commission to ensure that an eight-year cut-off point does not apply to subsidising non-fossil fuels. That cut-off point is intended to stop us subsidising the nuclear industry for more than eight years, but the baby has been thrown out with the bath-water, because renewable energy projects have been undermined.

I hope that my right hon. and hon. Friends will take a tough line in Europe and persuade our colleagues that it is not in the long-term interests of a global energy strategy to discourage renewable energy production. There should be a European policy that allows each member state to develop a tranche of renewables, which could be subsidised if we wished, in the interests of environmental protection and diversity of supply. That would be exempt from the 1992 competitive rules, which are the reasons why the Commission allowed us to subsidise renewable energy only over an eight-year cycle.

Mr. George T. Buckley (Hemsworth)

The hon. Gentleman praised market forces in the privatisation of electricity, but he now suggests that renewable energy should be given a subsidy. I wish that the Government would make up their mind whether they believe that the operation of market forces will result in cheaper electricity. The hon. Gentleman said that the contracts that are being negotiated for major consumers prove the benefits of privatisation. Will he assure the House that the domestic consumer will also look forward to a substantial price reduction?

Mr. Rost

The hon. Gentleman raised two points. I shall concentrate on the first because that is what I have been talking about. I have not suggested for renewables anything new that has not already been agreed, promoted or proposed by the Government. The Government have provided for a tranche for renewable electricity, which obviously will need to be subsidised, just as with nuclear power and the coal industry. I have not suggested anything that will extend that subsidy. I have merely suggested that, if we give a subsidy to encourage renewables, we should ensure that it goes ahead. If the European Commission imposes an eight-year limit on such subsidies, there will he many projects that will not be bankable for private sector investors.

The European Community should make it a part of its energy policy to do what the British Government have done. It should allow a small proportion of every member state's electricity generation to come from renewables. If member states wish to promote renewables through a form of subsidy, they should be allowed to do so. I am not suggesting anything new; I merely propose an extension of what the Government are already doing.

Of course I accept that we want a competitive market in electricity, but we also want to save the environment, and that aim must be an equally important part of our energy strategy. If global warming becomes a serious threat, as scientists are now beginning to argue it will, we may have to do many things, some of which will be far more costly than providing limited support for a marginal amount of electricity generated by wave, wind and tidal sources. I believe that the cost of renewable energy will fall as the technology develops and that it will become competitive. I wholeheartedly support the strategy which, as a result of electricity privatisation, is now going ahead. For that reason alone—leaving aside the other reasons that I have mentioned, such as the promotion of greater energy efficiency—the Government's privatisation of the elec-tricity industry will be seen as one of the most important policy measures that they have introduced in their 12 years in office.

6 pm

Mr. John McAllion (Dundee, East)

The speech of the hon. Member for Erewash (Mr. Rost) improved as it went along, and given the hon. Gentleman's opening remarks, there was no alternative to such an improvement. If the hon. Gentleman's remarks about the superiority of a privatised industry over a planned approach to energy policy proved anything, it was that it is the hon. Gentleman who does not know what is going on in the real world. He made accusations about the mismanagement of national assets, and laid that at the door of socialism and the nationalised industry; in fact, it is a key characteristic of the Government's madcap privatisation schemes, as we have seen from the electricity privatisation proposals.

I shall concentrate on the consequences of privatisation for Scotland, and particularly for the Scottish coal industry. Given the Government's original intention to privatise nuclear capacity, and as 60 per cent. of Scotland's electricity is nuclear-generated, the future for the Scottish coal industry under private ownership originally appeared bleak. There were so many cheaper alternatives to which the private sector could turn.

There was the nuclear industry itself, which had been subsidised by the Government and the taxpayer for the previous four decades and which the private sector clearly expected to continue to be subsidised on into a privatised future. There was gas-fired generation. There were plentiful supplies of gas from the North sea and elsewhere and the new combined cycle gas turbine plants offered an alternative to coall generation that was not only cheaper but environmentally sound. Then there were the imports of cheap low-sulphur coal from South Africa, Venezuela and Colombia.

In addition, in the private sector's view there were so many problems associated with coal. There were the carbon dioxide and sulphur emissions created by coal generation, and a European directive had set national targets for reductions in such emissions. Expensive technologies were required to clean up coal generation. We are not talking just about flue gas desulphurisation, which, in any case, applies mainly to pits and plants outside Scotland. We are talking about fluidised bed combustion technology, which, if it was applied to the refurbishment of the Kincardine power station, would help to secure the future of the Monktonhall and Frances collieries, at present mothballed by British Coal.

It is against the background of the investment needs of the coal industry and of the cheaper alternatives available to the private sector that the key attitudes to the coal industry have been struck in recent years. It is against that background, too, that the Scottish industry has all but been betrayed by the Government in their privatisation policies.

A report issued by George Kerovan and Richard Saville at the time of the last general election warned that, if the privatisation of the electricity industry went ahead, all the mines in Scotland, with the exception of Longannet, would be closed down and that the number of miners in Scotland would be reduced to 2,000 or less. At the time of its publication, Ministers dismissed the report as scaremongering and criticised its authors as left-wingers who could not be trusted and who were in any case likely to criticise the Government's privatisation policies. Three years on, the authors have been proved exactly right: Longannet is now the only deep-mined pit surviving in Scotland and there are now fewer than 2,000 miners in my country. The authors have been proved right partly because of the drive toward privatisation by the Government and the electricity industry.

Like many others, I welcome the recent news that Scottish Power has at last made a five-year deal with British Coal that helps to secure the future of the Longannet complex. But I ask the House to examine the timing of that agreement. It came not before but after the decision to pull nuclear plants out of the privatisation. The question has to be asked: would a privatised Scottish Power that still owned Torness and Hunterston B have struck such a deal with British Coal? If Scottish Power had continued to own a massive generating capacity provided by those nuclear stations, would it still have felt it necessary to enter into new agreements with British Coal? I fear that the answer to those questions is no. So long as Scottish Power enjoyed a nuclear alternative, it did not need Scottish coal and, as a private operator, what it did not need it was not prepared to pay for.

Only when Scottish Power was brought face to face with the reality that nuclear generation was uneconomic and could not be privatised, and only when it had to face a future in the free market without Torness and Hunterston B, did it rediscover the value of coal in generating electricity. That explains the five years deal on Longannet struck between British Coal and Scottish Power. It also explains Scottish Power's new willingness to negotiate on the Cockenzie power station, with the possibility of reopening Monktonhall. It is as simple as that. Scottish Power's private need to secure new sources of generation after the nuclear alternative was taken away from it explains the different attitude that it has now brought to its negotiations with British Coal.

What was in the interests of Scotland and the Scottish people or of the United Kingdom as a whole never entered into the equation, which was dominated by the private interests of Scottish Power. That explains Scottish Power's different attitude before and after the nuclear capacity was removed from the privatisation process. That has been the greatest price to be paid for the privatisation of the electricity industry—the loss of any consideration of what is in the strategic interests of the country as a whole. It used to be called planning, which the Secretary of State told us today belongs to the past.

Private interests have come to predominate. That is why the tremendous potential of the Scottish coalfield has been sadly neglected by a Government bent on privatising and by an industry intent upon lining its own pockets and those of its shareholders. Make no mistake about it: a priceless national asset has been neglected in the privatisation process. The Scottish coalfield has massive resources. In the Musselburgh basin alone, we have workings capable of sustaining 100 years worth of production. Monktonhall could work for 20 years from its current workings. With the appropriate development, both Monktonhall and Frances at Dysart have another 50 years worth of workable coal. Those pits, along with large unexploited coal stocks at Harpendon in Lanarkshire and at Canonbie in Dumfriesshire represent a tremendous national resource which ought to be exploited economically in the national interest—all the more so because Scottish coal is green, environmentally friendly coal with a very low sulphur content. So why is it not being exploited? Why is it being wantonly neglected by the Government and the industry?

The pathetic excuses for the failure to use Scottish coal simply cannot be sustained. We were told that it would cost too much to transport coal from Frances colliery in Fife to elsewhere on the United Kingdom mainland. Yet, in the same breath, the Government tell us that it is not too expensive to transport similar coal from other continents on the other side of the world. We are expected to believe that moving coal more than 3,000 miles is economically more efficient than moving it 300 miles. No one in their right senses would believe such a preposterous proposition. However, that is the present position because of the Government's plan to privatise the electricity industry. The hon. Member for Erewash referred to the waste of national assets, but Scotland's national assets are being wasted as a direct result of the Government's free-market privatisation policy.

One of the great ironies of the whole business of privatisation had been the stark contrast between the Government's attitude in 1984 and their attitude today. In 1984, the iron law of the market was rigidly applied to the coal industry. Uneconomic pits which could not show short-term profitability had to go. The Government came close to waging a civil war with the National Union of Mineworkers to drive that lesson home—and drive it home with a vengeance they did. More than 100 pits were closed, and more than 100,000 miners have gone to the wall. Yet just five years later, the Government have run away from applying the same iron market laws to their beloved nuclear industry.

Nuclear power stations are uneconomic, and they are not profitable. The private sector would not touch them with a bargepole, as everyone is aware. Are those nuclear power stations to close? Is that industry to be decimated? No. Those stations are to be withdrawn from the privatisation process and they are to be propped up, like the economic lame ducks they are, within the public sector.

We can only marvel at a Government who happily write off £1,400 million of debt which nuclear power had cast around the neck of the electricity industry in Scotland, but who baulk at a fraction of that investment in new clean coal technologies that would secure the future of economic exploitation of the massive strategic reserves of Scottish coal. That behaviour is beyond rational explanation, but increasingly the same accusation can be levelled against a range of Government policy. Because of that, the people of Scotland, England and Wales are turning away from the Government and their wasteful polices. The people are turning towards the Labour party—the party which will put the national interests before private interests and the party which will win the next general election.

6.11 pm

Mr. Hugo Summerson (Walthamstow)

I hope that the hon. Member for Dundee, East (Mr. McAllion) will forgive me if I do not refer to Scotland as he did. I want to begin by referring to the Social and Liberal Democrats. I am sorry that the hon. Member for Southwark and Bermondsey (Mr. Hughes) has disappeared from the Chamber, together with his colleagues. There is not one SLD Member present in the Chamber now. However, I am afraid that that will not stop me saying a few words about the SLD and its policies.

It is one of the SLD's more endearing characteristics that that party shows a degree of muddle and confusion. If ever one day the SLD showed itself to be sharp and incisive, we would all wonder what on earth had gone wrong.

Opposition to the Government's proposals on privatisation was expressed by the hon. Member for Truro (Mr. Taylor) when he was SLD energy spokesman. In a press statement on 25 February 1988, he claimed, among other things, that privatisation of electricity would be a repeat performance of British Telecom and British Gas in that there will be no protection for the consumer … and the only result of privatisation so far has been an increase in electricity prices … The Government has yet to convince that privatisation on these terms will benefit anyone but the get-rich-quick privateers. Those views are in sharp contrast to those of his successor as energy spokesman, the hon. Member for Gordon (Mr. Bruce). In an article entitled "Why I'm buying electricity shares", which appeard in Liberal News, the hon. Member for Gordon wrote: It is impossible to defend the status quo in the electricity industry. The Central Electricity Generating Board has become a centralised monopoly which is closed, secretive and accountable to no one. The economics of generation and conservation are neither being properly examined or subjuted to market forces. The hon. Member for Gordon said that on 7 October 1987.

However—this is yet another element of muddle—the SLD green paper "Privatising Electricity", which appeared in August 1988, states openly: Social and Liberal Democrats oppose the Government's privatisation plans for the electricity supply industry because they are irrelevant to the problems facing the industry … because they will not lead to any significant degree of competition. As I have said, it is one of the SLD's more endearing characteristics that its members are muddled, and I am only sorry that there is not one SLD Member present to add to that muddle and confusion now.

I want now to consider the Central Electricity Generating Board. If you, Madam Deputy Speaker, were to ask the ordinary man or woman in the street what the CEGB was, most of them would not have a clue. They would probably think that it was a foreign football team. However, the CEGB, which was of course one of the most important bodies in this country, displayed poor accountability and a lack of market discipline and was also susceptible to Government interference. It led to enormous over-capacity, as a result of which British consumers have been paying for years for mothballed power stations.

Under privatisation, there will be greater democracy and greater accountability, particularly through the Secretary of State and the director general's office. It might also be worth-while to consider the attitude of some of the trade unions. I beleve that in today's Times Mr. John Lyons states that he wanted 10 per cent. of the shares in the industry to be allocated for his members on favourable terms. That shows that Mr. Lyons is very wise. Similarly, Mr. Eric Hammond said: There is scepticism, to say the least, among our members about the moral and practical effects of nationalisation that is ignored by our composites … Our members reveal an enthusiasm for the market system and its values that infuriate the sherry party revolutionaries with their model resolutions and conference hall rhetoric. Those are wise words once again.

When the electricity industry was a nationalised industry, there were difficulties in planning before and after 1974. Reference has already been made to the nuclear industry. In the mid-1960s, a Labour Government commissioned different types of advanced gas-cooled reactor power stations. As a result, those power stations have had many difficulties. As has already been said, 20 years on, one of those stations is running at about 1.1 per cent capacity. That is a poor record.

I want now to consider the concept of business and profit alongside service. The other day I had the misfortune to catch my foot in my telephone cord, which caused the telephone to fall to the floor and burst open. I rang British Telecom and a man came round the next day. I must say that that was very efficient. He put my telephone right in no time. He told me that British Telecom operates as a business today, not as a service.

I thought that that was significant because, apart from anything else, I had to pay for that service. I did not mind doing so, because I had been careless enough to break the telephone and it was right and proper that I should pay to have it mended. However, I can remember that, before the industry was nationalised, if I had done the same thing, it would have taken three weeks for an engineer to appear. It would have been little consolation for me to discover that I would not have been charged directly, but that the charge would have been added to everyone's bill.

I am afraid that time is fast running out, but I want to refer briefly to pollution and the environment. We have heard about alternative sources of energy and about wind farms, tidal barrages and the generation of hydro-electricity. However, all those have their own costs in terms of the environment.

A wind farm is incredibly noisy. No one can live within miles of one. Once the wind speed rises above 30 or 35 mph, the windmills must be stopped to prevent the vanes from blowing off. A barrage across the Severn estuary would have an appalling effect on the wildlife in the estuary and the life forms that depend on the tide going up and down. The Scottish people know the environmental cost of installing hydro-electricity. The River Garry in Perthshire is now almost permanently dry because its water was taken years ago for hydro-electric schemes.

The latest technology—combined cycle gas turbines—is far more efficient than coal-fired power stations. Instead of requiring the hundreds of acres that are needed for the latter, they require only about 15 acres, and have a far shorter lead time. There is no doubt that that is the way forward. If the technology had been adopted some years ago, we would not now be wrestling with all the problems of FGD, which is immensely costly: £700 million is to be spent on the Drax power station.

Nearly 50 per cent. of Sweden's electricity is generated through nuclear schemes. Sweden is now in serious trouble, because the people have recently said that they do not want nuclear power any more, and that it must be phased out by 2005. The Swedish authorities are at their wits' end to know how to produce that amount of electricity without using nuclear power.

There is no doubt that the privatisation of the electricity industry will bring great benefits to consumers and the British public. Therefore, I hope that the House will reject the Labour party's motion.

6.21 pm

Mr. Peter Hardy (Wentworth)

Unlike the hon. Member for Walthamstow (Mr. Summerson)—I am sure that he will forgive me—I wish to refer to the texts before the House, and especially to the Government amendment. The amendment refers to internationally recognised benefits … rights for the consumer … the Government's commitment to the protection of the environment". Although "internationally recognised benefits" will accrue, they will not benefit the people of Britain, who will see an asset being sold off for far less than it is worth to help an appalling balance-of-payments problem. Government policy—and certainly electricity privatization—make no contribution to resolving that problem. As for the reference to "rights for the consumer", the Minister cannot deny that consumers are already paying 20 per cent. more for electricity as a result of the Government's privatisation policy than they would otherwise have paid: Opposition Members made that clear in our last debate on this subject.

The Government say that they are committed to the environment. I have long been committed to the environment, and I could spend a long time listing the Government's abject and appalling environmental failures. Sites of special scientific interest have been damaged, international conventions have been ignored and, a mile from my home, an enormous quantity of toxic waste—which should never have come into this country—has been dumped. It has been there for over a year. If the Government allow such poisons to enter the country, they are not fit to be in charge of the environment, and it is a disgrace for them to refer to it.

I detect the stench of corruption to which some of my hon. Friends have referred. I do not need to spell out the details, but let me describe a debate in Budapest in which I took part three weeks ago. It took place in the Hungarian Parliament, and was attended by Prime Ministers and Finance Ministers from eastern Europe. They were educated by the assorted bodies of the European right.

There was a substantial delegation of Conservative Members, who presented a paper advocating privatisation in eastern Europe. To support their argument, they produced a list of all the privatisations that had taken place in Britain since the Prime Minister took office, in chronological order. At the side, in the same order, was a list of the net proceeds that the Government had received.

I examined the list with great interest. It is not a list that Conservative Members would like to see published in the Official Report; it showed, for example, that the net receipts from the sale of the royal ordnance factories was about one tenth of the amount involved in the land fiddles that followed that privatisation, and that the net proceeds from the sale of British Gas amounted to £1.74 billion. That—as my hon. Friends who served on the Committee examining the Gas Bill will recall—is about 10 per cent. of the worth of the industry before it was privatised. When public assets are sold for one tenth of their actual worth, the stench of corruption is strong.

Mr. Rost

Will the hon. Gentleman give way?

Mr. Hardy

I will not give way. The hon. Gentleman made an appallingly long speech: he spoke for half an hour, although many other hon. Members wanted to make important contributions. To the best of my knowledge, he has already made that speech three times.

Mr. Rost

For the record, my speech may have been appalling and long, but it did not go on for half an hour: it was 21 minutes.

Mr. Hardy

It seemed like half an hour.

Ministers are carrying out their normal task and saying that we do not need to bother about asset value or what anything is worth, but should merely sell for what we can get in a market where Britain is increasingly less valued. The countries that may provide the purchases know that we have a balance of payments deficit of appalling proportions, and that beggars cannot be choosers. The Government have brought Britain to beggary, and the privatisation of the electricity industry is one example of that.

At the debate in Budapest, I made sure that the assembled gathering was made aware—although I do not like to criticise Britain abroad, and do not do it often—that assets had been disposed of at knockdown value. I also provided a response to the choruses of demands and advice that had been forthcoming from Conservative Members who told eastern Europe: "Dismantle your controls, get rid of regulations, leave your economies to the market force and let our entrepreneurs come and help you."

I suggest that eastern Europeans would be well advised to resist the greedy, salivating entrepreneurs who want their snouts in everyone's gravy trough. I advised them to bear in mind that in any civilised country there must be regulation to protect the community, the consumer, the worker and the environment. The Conservative Members who advised people in Budapest to sell of their assets cheaply and to scrap all their rules would not say that on the hustings in Britain. However, what they said in Budapest they believed, and that belief smells of corruption.

Conservative Members have echoed the cheers in support of the dismantling of a large part of the British coal industry. In my area, there is a blight: hundreds of acres of land have been rendered derelict as a result of the pursuit of greed. Yet, despite the economic blows that the Government have inflicted on that area—despite the ravaging of public sector assets—we are now told by this corrupt Government that my area is one of the least deprived, most fortunate and well-furnished, in a civic sense, and least necessitous areas of Britain.

Coalfield areas that have been robbed blind by the Government are now seeing their prospects being further reduced by this sort of dogmatic privatisation. At the same time, Departments of State are saying that our areas need less help than others. Let us think about those other areas. They include Purpeck, the Isle of Wight, Kent, Sussex, Surrey, Hampshire, Dorset, Wiltshire and parts of the most salubrious areas of outer London, such as Royal Tunbridge Wells and Richmond on Thames. All those areas are now regarded as deprived.

When the shares are sold at knockdown prices, they will not be bought by people in areas such as mine, because they cannot afford them; they will be bought by people in areas that the Government are assisting. That is why we are entitled to say that there is a stench of corruption. That is also why I hope that my hon. Friends will ensure that we maintain our opposition to the Government's disgraceful policy.

6.30 pm

Mr. Alan W. Williams (Carmarthen)

The Prime Minister, in her third term of office, has at last started to take some interest in environmental matters. Unfortunately, the Department of Energy, which perhaps has the most to contribute to environmental protection, is preoccupied with this privatisation rather than devoting its time to what it could contribute to protect the environment.

We know that acid rain is a major problem for industrialised countries throughout Europe. Despite being in office for more than a decade, the Government have so far achieved nothing in tackling the problem. Britain is by far the largest producer of sulphur dioxide in Europe. We were about the last to reach an agreement with our European partners on progressive cuts of 20 per cent., 40 per cent. and 60 per cent. by the year 2003. We are way behind other countries in terms of doing something. West Germany has already fitted flue gas desulphurisation units to 40,000 MW of generating capacity—that is, 116 separate units—yet, when the Government leave office, not one of our power stations will have been desulphurised. That speaks volumes for the Government's and the Prime Minister's commitment to the environment.

On global warming, the Prime Minister made a major speech to the Meteorological Office on 25 May and impressively recognised that a major problem confronts the planet. Higher carbon dioxide levels in the atmosphere pose the threat that sea levels will rise and, much more important, climatic change across the globe. Having accepted that there is a major problem, the Government's policy is simply stabilisation of carbon dioxide levels by 2003. That implies that, if the Government were returned to office, they would allow carbon dioxide levels to continue to rise—business as usual—and would then leave it to a successor Government towards the end of the century or early next century to try to effect those difficult cuts.

West Germany has a target of 25 per cent. cuts by 2005. The Labour party is committed to stabilisation by the year 2000, which is the policy for most of the European Community. With the privatisation measure, there was an opportunity to do something constructive and substantial to tackle problems such as global warming. The answers lie in energy efficiency and in the development of renewable sources of energy. However, we know the record of the Energy Efficiency Office and the cuts in its budget. When the privatisation measure was considered in Committee and on the Floor of the House, many amendments were tabled by the Liberal Democrats and by Labour Members, but the Government voted them all down. A major amendment on energy efficiency and the idea of least cost planning was tabled in the other House, but it was voted down.

It is clear that, rather than invest £2 billion, or whatever is the figure now, for Sizewell nuclear power station, a much better use of the nation's resources would be to put that £2 billion towards improving home insulation, district heating schemes and so on. Investment in energy efficiency creates jobs and makes the economy more efficient. Last week, the right hon. Member for Henley (Mr. Heseltine) made some powerful remarks to that effect. If we invested to save energy use, the whole economy would be more productive and competitive. Energy would be saved and goods would be cheaper. That is the Japanese record, and it is self-evident common sense.

The other way of tackling global warming, which is one of the most intractable environmental problems—by stabilisation of carbon dioxide levels—is not enough. We need drastic cuts during the next century. If drastic cuts are ever to be possible, we must develop renewable sources of energy. According to what I hear from organisations and from what I read in the newspapers, far from encouraging renewable sources of energy, this privatisation measure is faulty.

As the hon. Member for Erewash (Mr. Rost) mentioned, when the Department of Energy asked for projects to take the renewable tranche within the privatisation, it was embarrassed by the hundreds of replies that it received. Having got 600 or so projects lined up, it moved the goal posts and changed the 15-year payback to an eight-year payback. If we want renewable sources to make the major contribution that they could to our energy supplies in the next century, we must invest in the same way as we are willing to invest in nuclear power.

The only good thing that has come out of the privatisation measure is the fact that it has introduced transparency to nuclear costs. When people in the City started to examine the costs of decommissioning and the costs of treating nuclear waste and possibly disposing of it, they were horrified. I am relieved and pleased that that aspect has been taken out of the privatisation measure. A 20 per cent. cost escalation at the Sizewell nuclear power station during the past two years has been mentioned. There is no question but that that power station, along with the other three, should be scrapped now.

Hon. Members have heard several contributions about economics and cost of the privatisation—selling £20 billion or £30 billion of assets at knockdown prices. The consumer will have to pay for that. It is my strong belief that the consumer cannot afford this privatisation. Because of imports implications, the country cannot afford it either, and nor can the environment.

6.38 pm

Mr. Rhodri Morgan (Cardiff, West)

In the light of the limited time available, I must dispense with some of the customary niceties in sweeping up at the end of the debate and get straight into the remarks that are necessary for Opposition Members to explain what we find so unsatisfactory about the Government's privatisation of the electricity supply industry.

This privatisation is different from other privatisations in that the industry is being dismantled and reassembled at the same time as it is being privatised. That poses entirely new problems for those guiding the industry not just into the private sector, as on 1 April, but on to the stock exchange and being sold off somehow or other over the next 12 months or two years.

Usually, when selling a company on the stock exchange, five years of audited accounts must be produced as a guide for anyone buying shares. What animal are they buying? Is it fish, fowl, chalk, cheese or whatever? Buyers will not have the benefit of that procedure with this flotation. Anyone wishing to buy shares in an area distribution company will find that it is not the same as the distribution board that existed until 31 March. It is without some of its previous operations, but it has many others. It has the power to generate, but it does not have a monopoly over distribution. When a new housing estate is built in the area, a generating company—or any Tom, Dick or Harry—could bid to put in the wires. There is no automatic monopoly; the company has lost that guaranteed income.

Similarly, when buying a share in a generating company, that will not be the same as simply buying the 70 per cent. coal-fired and oil-fired generating sets that belong to the Central Electricity Generating Board, because the electricity distribution companies can operate in generating and the generating companies can operate in distribution. It is a complete mish-mash of an industry.

Conservative Members may say, "That's fine; that is what we want. We want a mish-mash. We want distributors to be able to generate and generators to be able to distribute. We want distributors to be able to pinch business from each other in the borders or, for example, the North of Scotland Hydro Board to take contracts in south Wales, and so on." That is exactly what they want. What does that mean for the small shareholder who might be inveigled into buying shares? Stockbrokers can no longer say, "Here are the audited accounts for the previous five years. It appears that there will be a gently rising path into the future, which means that we can expect so much capital growth and so much dividend income." Now a new company, of a new kind, is being floated. What sort of protection will be offered to the small shareholder?

The Government could say, "Well, that does not really matter, because we are converting the company not merely into shares but into a sort of granny-bond operation. Whatever the results this year, we can project forward through the inclusion of the retail price index plus x minus y formula." Apart from the fact that that builds inflation into the formula, it is no real protection for the small shareholder because he cannot find any independent advice about new shares that he wants to buy.

Mrs. Edwina Currie (Derbyshire, South)

As the hon. Gentleman knows, a large number of people in my constituency work in this most important industry.

apologise for not having been present for the whole of the debate; I have been in my constituency. Is he aware that the main question asked by people in the industry in my constituency is when will they get their shares? They have complete confidence in the industry and in the privatisation.

Mr. Morgan

The trouble is that that assumes that the shares will be given away at a very low price by writing off two thirds of their book value—and if that can happen once, it can happen again. Where will they get advice on what is the proper and fair arbitration of the current value of the shares as they belong to the taxpayer, and the appropriate value for selling them to the private shareholder? Who will provide that?

A recent heavyweight article in The Times Business News stated:

A few weeks back, a highly-placed executive at one of the country's 12 electricity distribution companies was threatened with court action by the Department of Energy. His alleged crime was giving an honest review of the prospects for his business, a breach, in the department's eyes, of the Financial Services Act … Nothing better reflects the paranoia and uncertainty surrounding electricity privatisation … It was a feature of the water floatation that the FSA was used as an extension of the Official Secrets Act, to plug unwanted—as opposed to Whitehall-sanctioned—leaks. The problem with this privatisation—it is worse than with any previous privatization—is that we cannot put a proper value on the industry unless we allow independent comment. The Government are putting a blanket ban on any independent comments that could help small shareholders to decide what is the right price and whether they want to go into the industry as investors.

As far as I am aware, the Government have not yet decided whether to sell any shares in the generating companies to the Sids. Perhaps the hon. Member for Derbyshire, South (Mrs. Currie), who has joined the debate at the last minute, has views on that which she may want to make to the Secretary of State. I understand that it might be done by replacement or by tender. The Secretary of State may have views on that which he could express to the House tonight—it is a suitable opportunity—because it is very important to the way that public expenditure on this industry is being thrown around.

We have heard several times tonight about the way in which the generating companies are presenting themselves as the wonderful folks who bring us the world cup and the weather forecast. The world cup sponsorship slots are not just advertisements, they are included in the commentator's references. He might say, "This game is brought to you by National Power," as though the world cup would not be on television were it not for electricity privatisation. Bob Phillips, a sports commentator on my local newspaper in Cardiff, said that it was the most unwanted electricity plug of all time, and I agree.

The blurring of the distinction between what is sponsorship and what is advertising is absolutely appalling. It is part of the drift into sleaze to which we have referred several times. It is impossible to obtain a contract in anything to do with privatisation unless Tim Bell is one's public relations adviser—

Mr. Barry Jones (Alyn and Deeside)

Ireland beat Romania 5:4 on penalties.

Mr. Morgan

I am glad to hear that.

I am anxious that we should know just how much money is being spent on advertising. It appears that, this year alone, the corporate advertising of National Power, PowerGen, the 12 area distribution companies and the Government in presenting the companies for sale will be well above £50 million. That is creating a whole new class of privatisation junkies—advertising agencies that cannot do without the full-page advertising and newspapers which, in the downturn in commercial advertising, cannot really afford to keep on their journalists unless they take privatisation advertising.

The stockbrokers and merchant bankers—the Kleinwort Bensons, the Warburgs, the Capels and the Cazenoves—are now completely dependent on privatisation proceeds to keep them going during a period of slack business in the stock market and in merchant banking.

What we now need to know is the real purpose and the real priority of privatisation of the electricity supply industry. Will it meet the priorities of the industry? Will it convert the industry into the shape that it should be so that it can answer the real problems that it will face over the next 10 or 12 years—as perceived by Conservative Members, let alone by Labour Members? Will the electricity industry's top priority be competition?

Some Conservative Members probably think that everything should be subject to competition—even, as we heard last week, the very currencies in which we deal. They believe that hard and soft currencies should be the subject of competition when one buys groceries or uses a travel agent. We believe that there are more important priorities in the energy industry—and when it comes to attending international conferences, even the Prime Minister thinks that there are more important priorities than merely competition.

I know that the Prime Minister suffers from her own version of BSE—Boadicea syndrome encephalopathy. She likes to grab hold of the nearest chariot wheels in the conference game. If there is a conference, especially in this country where she can organise it and make sure that she has a starring role, she is in there, fighting for a leading role. She is one of those recognisable types of person who boss their way into being secretary of the best-kept-planetin-the-galaxy committee. When it comes to global warming, yes, the Prime Minister wants to be there, as long as everybody does what she says. If everybody did what she says, not what she does, we might have a healthier environment for our planet, but we certainly will not have that if we follow what she does.

The Prime Minister has refused to put conservation at the top of the energy industry's agenda, while talking up her role as the person who can solve global warming and acid rain. Having seen that wonderful headline in the Evening Standard, Maggie's plan to save the world", the Prime Minister cut the acid rain reduction programme from 12,000 MW to 8,000 MW. However, the Evening Standard did not run a headline stating, "Maggie's plan to save two thirds of the world", although it should have.

With all the advertising and the creation of an entirely new class of privatisation junkie, now is the time for the Government to giving serious thought to the real needs of the next 10 years. Is it rational to plan our use of energy and the way in which we sell energy, with a view to the global environment, or is it simply a question of selling off our energy industry to create a new class of small shareholder?

If global warming turns out to be a big problem, and if in 10 years' time the Secretary of State's successor is sitting on the Terrace with the successor to Sir Humphrey as the Thames water from the rising sea level comes over the parapet on to the Terrace, we do not want the Secretary of State to say to Sir Humphrey, "Well, global warming is here to stay; what is our policy response?", and Sir Humphrey to reply, "I suppose that we could always try breast stroke."

6.51 pm

The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry)

This has been an interesting and wide-ranging debate. It has enabled the Government, once again, to set out the success of our privatisation proposals. We have heard interesting speeches from hon. Members of all parties, all of whom take a close interest in energy policy. In the eight minutes left to me, I shall try to respond to some of their points.

The first point that the Opposition sought to make was about the price of the privatisation. I wish to make it clear that, via the supplementary estimates, the Government have obtained parliamentary approval for the preliminary spending. The other spending will be netted against the proceeds of the sale, and has been provided for with a token vote, as is the established practice. The final cost will be presented to the House as soon as possible after the privatisation sale—again, following the established practice. That is all perfectly proper.

It is clearly too early to make any estimate of the final costs because numerous factors may affect them. However, we are seeking to keep the cost to the minimum commensurate with maximising the proceeds of sale because that will obviously be to the benefit of the taxpayer. In all this, we are seeking to ensure value for money. That is why we have awarded contracts by competitive tender, and are therefore getting competitive rates.

Electricity privatisation is an extremely complex exercise, but advisers are appointed only where a clear need for expert advice can be demonstrated and where that advice is not available within the Department. Therefore, the appointment of advisers is the most cost-effective way of obtaining expertise. The bulk of that advice is on accounting and legal matters.

We are seeking to ensure not only that the privatisation of the electricity industry is a success, but that the taxpayer and the community as a whole benefit from that success. We have always sought to make what we are doing clear to the hon. Member for Holborn and St. Pancras (Mr. Dobson) and he, of course, has been given ample information, including a list of the advisers appointed by the Department, a list of the advisers appointed by National Power and PowerGen and the area boards, and our estimated costs up to the end of 1989–90, together with our estimates for this year. I understand that the hon. Gentleman has sought further information from the regional electricity companies.

Mr. Dobson

rose—

Mr. Baldry

No, I shall not give way—[HON. MEMBERS: "Give way."] With respect, I have very little time.

In every privatisation, the total cost of the privatisation as a percentage of the sale proceeds has been small. In Britoil, it was 5.5 per cent; for British Gas, it was 3.4 per cent; and for the water privatisation it was 2.5 per cent. Those costs, as a percentage of the sales proceeds, were spent in ensuring the maximised return from the proceeds to the benefit of the taxpayer. As I said, we are seeking to ensure the minimum cost commensurate with the maximum proceeds.

Opposition Members seem to scowl at both marketing and advertising. The marketing of the industry is necessary to ensure that we have maximum wider share ownership, including among employees. Marketing is designed to ensure that we achieve value for money and that there is proper information that can lead to the formation of a proper share price, which again leads to the maximum proceeds. Similarly with advertising: it is too early to estimate the costs of an advertising campaign, but it is intended to ensure maximum proceeds for the taxpayer. It is surprising that Opposition Members, who are quick to criticise when they feel that the Government have not secured the maximum proceeds for an industry, should be so derisory when we take all proper efforts to ensure that we achieve the maximum proceeds.

All the advisers who have been retained by the Department of Energy punctiliously meet the conventions governing the appointment of such advisers. All those appointments have been made in accordance with the proper proprieties and to ensure value for money. There has been no breach of any rules. Every appointment has been made in accordance with the clear criteria set out by the Cabinet Office.

Mr. Dobson

If all the proprieties have been followed, why were not many of those advisers appointed by competitive tender? That point was confirmed by the Secretary of State in an answer to me.

Mr. Baldry

With respect, all the advisers have been appointed by a proper competitive process, to ensure proper competitive forces—

Mr. Dobson

The Minister should ask the Secretary of State about that.

Mr. Baldry

The hon. Gentleman's mathematics leaves a lot to be desired.

Not only is his mathematics wrong—he was incapable of deducting the £9 billion of Nuclear Electric from the value of the electricity assets—but so is his methodology. The current cost accounting method is not an appropriate basis for valuing the industry because it seeks to measure replacement value, which is not the same as what the taxpayer has paid for the assets. One must therefore look at the written down costs, which are estimated at £10 billion.

Estimates of the sale proceeds are at present somewhat speculative. However, the benefits of the privatisation are not only the money that it realises, but the benefits of competition; of downward pressure on prices; of wider share ownership; and of removing the burden of interest costs from the public to the private sector. Competition and market forces are already producing real benefits in the price reductions that have been achieved for large industrial users. Our prices are good news for customers, industry and the environment.

The opposition has been based on a complete misunderstanding of the position and on ignorance of the progress being made. The benefits already secured in privatising the industry are considerable. The Opposition say that they want to get proper value for the industry, yet they criticise the valuation and marketing exercise which the Government are undertaking and which will ensure that we realise a proper return for the public.

This debate—

Mr. Frank Haynes (Ashfield)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 186, Noes 298.

Division No. 259]	[7.2 pm
AYES
Adams, Allen (Paisley N)	Ewing, Harry (Falkirk E)
Allen, Graham	Ewing, Mrs Margaret (Moray)
Alton, David	Fatchett, Derek
Anderson, Donald	Faulds, Andrew
Archer, Rt Hon Peter	Fearn, Ronald
Armstrong, Hilary	Field, Frank (Birkenhead)
Ashdown, Rt Hon Paddy	Fields, Terry (L'pool B G"n)
Ashley, Rt Hon Jack	Fisher, Mark
Ashton, Joe	Flannery, Martin
Banks, Tony (Newham NW)	Flynn, Paul
Barnes, Harry (Derbyshire NE)	Foot, Rt Hon Michael
Barron, Kevin	Foster, Derek
Beckett, Margaret	Foulkes, George
Bell, Stuart	Fraser, John
Benn, Rt Hon Tony	Galloway, George
Bennett, A. F. (D'nt'n & R'dish)	Garrett, Ted (Wallsend)
Bermingham, Gerald	George, Bruce
Bidwell, Sydney	Gilbert, Rt Hon Dr John
Blair, Tony	Godman, Dr Norman A.
Blunkett, David	Golding, Mrs Llin
Boyes, Roland	Gould, Bryan
Bradley, Keith	Graham, Thomas
Brown, Ron (Edinburgh Leith)	Griffiths, Nigel (Edinburgh S)
Buckley, George J.	Griffiths, Win (Bridgend)
Caborn, Richard	Grocott, Bruce
Callaghan, Jim	Hardy, Peter
Campbell, Menzies (Fife NE)	Harman, Ms Harriet
Campbell, Ron (Blyth Valley)	Hattersley, Rt Hon Roy
Carlile, Alex (Mont'g)	Haynes, Frank
Carr, Michael	Heal, Mrs Sylvia
Clark, Dr David (S Shields)	Healey, Rt Hon Denis
Clarke, Tom (Monklands W)	Henderson, Doug
Clay, Bob	Hinchliffe, David
Clwyd, Mrs Ann	Hoey, Ms Kate (Vauxhall)
Cohen, Harry	Hogg, N. (C'nauld & Kilsyth)
Coleman, Donald	Hood, Jimmy
Cook, Robin (Livingston)	Howarth, George (Knowsley N)
Corbett, Robin	Howells, Dr. Kim (Pontypridd)
Cousins, Jim	Hoyle, Doug
Cox, Tom	Hughes, John (Coventry NE)
Cryer, Bob	Hughes, Robert (Aberdeen N)
Cummings, John	Hughes, Simon (Southwark)
Cunliffe, Lawrence	Illsley, Eric
Cunningham, Dr John	Janner, Greville
Dalyell, Tam	Jones, Barry (Alyn & Deeside)
Darling, Alistair	Jones, Ieuan (Ynys Môn)
Davies, Rt Hon Denzil (Llanelli)	Jones, Martyn (Clwyd S W)
Davies, Ron (Caerphilly)	Kaufman, Rt Hon Gerald
Davis, Terry (B'ham Hodge H'l)	Kennedy, Charles
Dewar, Donald	Kilfedder, James
Dixon, Don	Kirkwood, Archy
Dobson, Frank	Lambie, David
Doran, Frank	Lamond, James
Douglas, Dick	Leadbitter, Ted
Dunnachie, Jimmy	Leighton, Ron
Dunwoody, Hon Mrs Gwyneth	Lestor, Joan (Eccles)
Evans, John (St Helens N)	Lewis, Terry

Litherland, Robert	Quin, Ms Joyce
Lloyd, Tony (Stretford)	Randall, Stuart
Lofthouse, Geoffrey	Redmond, Martin
McAllion, John	Rees, Rt Hon Merlyn
McAvoy, Thomas	Reid, Dr John
McCartney, Ian	Richardson, Jo
Macdonald, Calum A.	Robertson, George
McKelvey, William	Ross, Ernie (Dundee W)
Maclennan, Robert	Ruddock, Joan
Madden, Max	Sheerman, Barry
Mahon, Mrs Alice	Sheldon, Rt Hon Robert
Marek, Dr John	Shore, Rt Hon Peter
Martlew, Eric	Short, Clare
Maxton, John	Skinner, Dennis
Meacher, Michael	Smith, Andrew (Oxford E)
Meale, Alan	Smith, C. (Isl'ton & F'bury)
Michael, Alun	Smith, J. P. (Vale of Glam)
Michie, Bill (Sheffield Heeley)	Spearing, Nigel
Michie, Mrs Ray (Arg'l & Bute)	Steel, Rt Hon Sir David
Mitchell, Austin (G't Grimsby)	Steinberg, Gerry
Moonie, Dr Lewis	Stott, Roger
Morgan, Rhodri	Thompson, Jack (Wansbeck)
Morley, Elliot	Turner, Dennis
Morris, Rt Hon A. (W'shawe)	Wallace, James
Morris, Rt Hon J. (Aberavon)	Watson, Mike (Glasgow, C)
Mowlam, Marjorie	Welsh, Michael (Doncaster N)
Mullin, Chris	Williams, Rt Hon Alan
Nellist, Dave	Williams, Alan W. (Carm'then)
O'Brien, William	Wilson, Brian
O'Neill, Martin	Winnick, David
Orme, Rt Hon Stanley	Wise, Mrs Audrey
Parry, Robert	Worthington, Tony
Patchett, Terry	Wray, Jimmy
Pendry, Tom	Young, David (Bolton SE)
Pike, Peter L.
Powell, Ray (Ogmore)	Tellers for the Ayes:
Prescott, John	Mr. Ken Eastham and
Primarolo, Dawn	Mr. Robert N. Wareing.

Question accordingly negatived

Question, That the Proposed words be added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—

The House divided: Ayes 298, Noes 187.

Division No. 259]	[7.2 pm
AYES
Adams, Allen (Paisley N)	Ewing, Harry (Falkirk E)
Allen, Graham	Ewing, Mrs Margaret (Moray)
Alton, David	Fatchett, Derek
Anderson, Donald	Faulds, Andrew
Archer, Rt Hon Peter	Fearn, Ronald
Armstrong, Hilary	Field, Frank (Birkenhead)
Ashdown, Rt Hon Paddy	Fields, Terry (L'pool B G"n)
Ashley, Rt Hon Jack	Fisher, Mark
Ashton, Joe	Flannery, Martin
Banks, Tony (Newham NW)	Flynn, Paul
Barnes, Harry (Derbyshire NE)	Foot, Rt Hon Michael
Barron, Kevin	Foster, Derek
Beckett, Margaret	Foulkes, George
Bell, Stuart	Fraser, John
Benn, Rt Hon Tony	Galloway, George
Bennett, A. F. (D'nt'n & R'dish)	Garrett, Ted (Wallsend)
Bermingham, Gerald	George, Bruce
Bidwell, Sydney	Gilbert, Rt Hon Dr John
Blair, Tony	Godman, Dr Norman A.
Blunkett, David	Golding, Mrs Llin
Boyes, Roland	Gould, Bryan
Bradley, Keith	Graham, Thomas
Brown, Ron (Edinburgh Leith)	Griffiths, Nigel (Edinburgh S)
Buckley, George J.	Griffiths, Win (Bridgend)
Caborn, Richard	Grocott, Bruce
Callaghan, Jim	Hardy, Peter
Campbell, Menzies (Fife NE)	Harman, Ms Harriet
Campbell, Ron (Blyth Valley)	Hattersley, Rt Hon Roy
Carlile, Alex (Mont'g)	Haynes, Frank
Carr, Michael	Heal, Mrs Sylvia
Clark, Dr David (S Shields)	Healey, Rt Hon Denis
Clarke, Tom (Monklands W)	Henderson, Doug
Clay, Bob	Hinchliffe, David
Clwyd, Mrs Ann	Hoey, Ms Kate (Vauxhall)
Cohen, Harry	Hogg, N. (C'nauld & Kilsyth)
Coleman, Donald	Hood, Jimmy
Cook, Robin (Livingston)	Howarth, George (Knowsley N)
Corbett, Robin	Howells, Dr. Kim (Pontypridd)
Cousins, Jim	Hoyle, Doug
Cox, Tom	Hughes, John (Coventry NE)
Cryer, Bob	Hughes, Robert (Aberdeen N)
Cummings, John	Hughes, Simon (Southwark)
Cunliffe, Lawrence	Illsley, Eric
Cunningham, Dr John	Janner, Greville
Dalyell, Tam	Jones, Barry (Alyn & Deeside)
Darling, Alistair	Jones, Ieuan (Ynys Môn)
Davies, Rt Hon Denzil (Llanelli)	Jones, Martyn (Clwyd S W)
Davies, Ron (Caerphilly)	Kaufman, Rt Hon Gerald
Davis, Terry (B'ham Hodge H'l)	Kennedy, Charles
Dewar, Donald	Kilfedder, James
Dixon, Don	Kirkwood, Archy
Dobson, Frank	Lambie, David
Doran, Frank	Lamond, James
Douglas, Dick	Leadbitter, Ted
Dunnachie, Jimmy	Leighton, Ron
Dunwoody, Hon Mrs Gwyneth	Lestor, Joan (Eccles)
Evans, John (St Helens N)	Lewis, Terry

Litherland, Robert	Quin, Ms Joyce
Lloyd, Tony (Stretford)	Randall, Stuart
Lofthouse, Geoffrey	Redmond, Martin
McAllion, John	Rees, Rt Hon Merlyn
McAvoy, Thomas	Reid, Dr John
McCartney, Ian	Richardson, Jo
Macdonald, Calum A.	Robertson, George
McKelvey, William	Ross, Ernie (Dundee W)
Maclennan, Robert	Ruddock, Joan
Madden, Max	Sheerman, Barry
Mahon, Mrs Alice	Sheldon, Rt Hon Robert
Marek, Dr John	Shore, Rt Hon Peter
Martlew, Eric	Short, Clare
Maxton, John	Skinner, Dennis
Meacher, Michael	Smith, Andrew (Oxford E)
Meale, Alan	Smith, C. (Isl'ton & F'bury)
Michael, Alun	Smith, J. P. (Vale of Glam)
Michie, Bill (Sheffield Heeley)	Spearing, Nigel
Michie, Mrs Ray (Arg'l & Bute)	Steel, Rt Hon Sir David
Mitchell, Austin (G't Grimsby)	Steinberg, Gerry
Moonie, Dr Lewis	Stott, Roger
Morgan, Rhodri	Thompson, Jack (Wansbeck)
Morley, Elliot	Turner, Dennis
Morris, Rt Hon A. (W'shawe)	Wallace, James
Morris, Rt Hon J. (Aberavon)	Watson, Mike (Glasgow, C)
Mowlam, Marjorie	Welsh, Michael (Doncaster N)
Mullin, Chris	Williams, Rt Hon Alan
Nellist, Dave	Williams, Alan W. (Carm'then)
O'Brien, William	Wilson, Brian
O'Neill, Martin	Winnick, David
Orme, Rt Hon Stanley	Wise, Mrs Audrey
Parry, Robert	Worthington, Tony
Patchett, Terry	Wray, Jimmy
Pendry, Tom	Young, David (Bolton SE)
Pike, Peter L.
Powell, Ray (Ogmore)	Tellers for the Ayes:
Prescott, John	Mr. Ken Eastham and
Primarolo, Dawn	Mr. Robert N. Wareing.
NOES
Adley, Robert	Carlisle, John, (Luton N)
Aitken, Jonathan	Carlisle, Kenneth (Lincoln)
Alexander, Richard	Carrington, Matthew
Alison, Rt Hon Michael	Cash, William
Allason, Rupert	Chalker, Rt Hon Mrs Lynda
Amery, Rt Hon Julian	Channon, Rt Hon Paul
Amess, David	Chapman, Sydney
Arbuthnot, James	Chope, Christopher
Arnold, Jacques (Gravesham)	Clark, Hon Alan (Plym'th S'n)
Arnold, Sir Thomas	Clark, Dr Michael (Rochford)
Ashby, David	Clark, Sir W. (Croydon S)
Aspinwall, Jack	Clarke, Rt Hon K. (Rushcliffe)
Atkins, Robert	Colvin, Michael
Atkinson, David	Conway, Derek
Baker, Nicholas (Dorset N)	Coombs, Anthony (Wyre F'rest)
Baldry, Tony	Coombs, Simon (Swindon)
Barnes, Mrs Rosie (Greenwich)	Cope, Rt Hon John
Bellingham, Henry	Cormack, Patrick
Bendall, Vivian	Couchman, James
Bennett, Nicholas (Pembroke)	Cran, James
Biffen, Rt Hon John	Critchley, Julian
Body, Sir Richard	Currie, Mrs Edwina
Bonsor, Sir Nicholas	Davis, David (Boothferry)
Boscawen, Hon Robert	Day, Stephen
Boswell, Tim	Devlin, Tim
Bottomley, Mrs Virginia	Dickens, Geoffrey
Bowden, A (Brighton K'pto'n)	Dorrell, Stephen
Bowden, Gerald (Dulwich)	Douglas-Hamilton, Lord James
Bowis, John	Dover, Den
Boyson, Rt Hon Dr Sir Rhodes	Dunn, Bob
Braine, Rt Hon Sir Bernard	Emery, Sir Peter
Brandon-Bravo, Martin	Evans, David (Welwyn Hatf'd)
Brazier, Julian	Evennett, David
Bright, Graham	Fairbairn, Sir Nicholas
Brown, Michael (Brigg & Cl't's)	Fallon, Michael
Bruce, Ian (Dorset South)	Favell, Tony
Buck, Sir Antony	Field, Barry (Isle of Wight)
Burns, Simon	Finsberg, Sir Geoffrey
Burt, Alistair	Fishburn, John Dudley
Butler, Chris	Fookes, Dame Janet

Forsyth, Michael (Stirling)	Lord, Michael
Forth, Eric	Luce, Rt Hon Richard
Fowler, Rt Hon Sir Norman	Lyell, Rt Hon Sir Nicholas
Fox, Sir Marcus	McCrindle, Robert
Freeman, Roger	Macfarlane, Sir Neil
French, Douglas	MacGregor, Rt Hon John
Gale, Roger	MacKay, Andrew (E Berkshire)
Gardiner, George	Maclean, David
Garel-Jones, Tristan	McLoughlin, Patrick
Gill, Christopher	McNair-Wilson, Sir Michael
Gilmour, Rt Hon Sir Ian	McNair-Wilson, Sir Patrick
Glyn, Dr Sir Alan	Madel, David
Goodhart, Sir Philip	Major, Rt Hon John
Goodson-Wickes, Dr Charles	Malins, Humfrey
Gorman, Mrs Teresa	Mans, Keith
Gorst, John	Maples, John
Gow, Ian	Marland, Paul
Grant, Sir Anthony (CambsSW)	Marlow, Tony
Greenway, Harry (Ealing N)	Marshall, John (Hendon S)
Greenway, John (Ryedale)	Marshall, Sir Michael (Arundel)
Gregory, Conal	Martin, David (Portsmouth S)
Griffiths, Sir Eldon (Bury St E')	Maude, Hon Francis
Griffiths, Peter (Portsmouth N)	Maxwell-Hyslop, Robin
Grist, Ian	Mayhew, Rt Hon Sir Patrick
Ground, Patrick	Meyer, Sir Anthony
Grylls, Michael	Miller, Sir Hal
Hague, William	Mills, Iain
Hamilton, Neil (Tatton)	Miscampbell, Norman
Hampson, Dr Keith	Mitchell, Andrew (Gedling)
Hanley, Jeremy	Mitchell, Sir David
Hannam, John	Moate, Roger
Hargreaves, A. (B'ham H'll Gr')	Monro, Sir Hector
Hargreaves, Ken (Hyndburn)	Montgomery, Sir Fergus
Harris, David	Moore, Rt Hon John
Haselhurst, Alan	Morris, M (N'hampton S)
Hayes, Jerry	Morrison, Sir Charles
Hayward, Robert	Morrison, Rt Hon P (Chester)
Heathcoat-Amory, David	Moss, Malcolm
Heseltine, Rt Hon Michael	Moynihan, Hon Colin
Hicks, Mrs Maureen (Wolv' NE)	Neale, Gerrard
Hicks, Robert (Cornwall SE)	Nelson, Anthony
Hind, Kenneth	Neubert, Michael
Holt, Richard	Newton, Rt Hon Tony
Hordern, Sir Peter	Nicholls, Patrick
Howe, Rt Hon Sir Geoffrey	Nicholson, David (Taunton)
Howell, Rt Hon David (G'dford)	Nicholson, Emma (Devon West)
Howell, Ralph (North Norfolk)	Norris, Steve
Hughes, Robert G. (Harrow W)	Onslow, Rt Hon Cranley
Hunt, David (Wirral W)	Oppenheim, Phillip
Hunt, Sir John (Ravensbourne)	Owen, Rt Hon Dr David
Hunter, Andrew	Page, Richard
Irvine, Michael	Paice, James
Jack, Michael	Patnick, Irvine
Jackson, Robert	Patten, Rt Hon Chris (Bath)
Janman, Tim	Patten, Rt Hon John
Jessel, Toby	Pattie, Rt Hon Sir Geoffrey
Johnson Smith, Sir Geoffrey	Pawsey, James
Jones, Gwilym (Cardiff N)	Peacock, Mrs Elizabeth
Jones, Robert B (Herts W)	Porter, Barry (Wirral S)
Jopling, Rt Hon Michael	Porter, David (Waveney)
Key, Robert	Portillo, Michael
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
Knight, Dame Jill (Edgbaston)	Renton, Rt Hon Tim
Knowles, Michael	Rhodes James, Robert
Knox, David	Riddick, Graham
Lamont, Rt Hon Norman	Ridley, Rt Hon Nicholas
Lang, Ian	Ridsdale, Sir Julian
Latham, Michael	Rifkind, Rt Hon Malcolm
Lawrence, Ivan	Roberts, Wyn (Conwy)
Lee, John (Pendle)	Rost, Peter
Leigh, Edward (Gainsbor'gh)	Rowe, Andrew
Lennox-Boyd, Hon Mark	Rumbold, Mrs Angela
Lester, Jim (Broxtowe)	Ryder, Richard
Lightbown, David	Sackville, Hon Tom
Lilley, Peter	Sainsbury, Hon Tim
Lloyd, Sir Ian (Havant)	Scott, Rt Hon Nicholas
Lloyd, Peter (Fareham)	Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)	Thompson, Patrick (Norwich N)
Shaw, Sir Michael (Scarb')	Thornton, Malcolm
Shepherd, Colin (Hereford)	Thurnham, Peter
Shepherd, Richard (Aldridge)	Tracey, Richard
Shersby, Michael	Twinn, Dr Ian
Sims, Roger	Vaughan, Sir Gerard
Skeet, Sir Trevor	Viggers, Peter
Smith, Sir Dudley (Warwick)	Waddington, Rt Hon David
Smith, Tim (Beaconsfield)	Wakeham, Rt Hon John
Soames, Hon Nicholas	Walden, George
Speed, Keith	Walker, Bill (T'side North)
Spicer, Sir Jim (Dorset W)	Walker, Rt Hon P. (W'cester)
Spicer, Michael (S Worcs)	Ward, John
Squire, Robin	Wardle, Charles (Bexhill)
Stanbrook, Ivor	Wells, Bowen
Stanley, Rt Hon Sir John	Wheeler, Sir John
Steen, Anthony	Whitney, Ray
Stern, Michael	Widdecombe, Ann
Stevens, Lewis	Wiggin, Jerry
Stewart, Allan (Eastwood)	Wilshire, David
Stewart, Andy (Sherwood)	Winterton, Mrs Ann
Stewart, Rt Hon Ian (Herts N)	Winterton, Nicholas
Stokes, Sir John	Wolfson, Mark
Stradling Thomas, Sir John	Wood, Timothy
Sumberg, David	Woodcock, Dr. Mike
Summerson, Hugo	Young, Sir George (Acton)
Tapsell, Sir Peter	Younger, Rt Hon George
Taylor, John M (Solihull)
Taylor, Teddy (S'end E)	Tellers for the Noes:
Temple-Morris, Peter	Mr. Alastair Goodlad and
Thompson, D. (Calder Valley)	Mr. Tony Durant.

Division No. 260]	[7.15 pm
AYES
Adley, Robert	Burt, Alistair
Aitken, Jonathan	Butler, Chris
Alexander, Richard	Carlisle, John, (Luton N)
Alison, Rt Hon Michael	Carlisle, Kenneth (Lincoln)
Allason, Rupert	Carrington, Matthew
Amess, David	Cash, William
Arbuthnot, James	Chalker, Rt Hon Mrs Lynda
Arnold, Jacques (Gravesham)	Channon, Rt Hon Paul
Arnold, Sir Thomas	Chapman, Sydney
Ashby, David	Chope, Christopher
Aspinwall, Jack	Clark, Hon Alan (Plym'th S'n)
Atkins, Robert	Clark, Dr Michael (Rochford)
Atkinson, David	Clark, Sir W. (Croydon S)
Baker, Nicholas (Dorset N)	Clarke, Rt Hon K. (Rushcliffe)
Baldry, Tony	Colvin, Michael
Banks, Robert (Harrogate)	Conway, Derek
Barnes, Mrs Rosie (Greenwich)	Coombs, Anthony (Wyre F'rest)
Bellingham, Henry	Coombs, Simon (Swindon)
Bendall, Vivian	Cope, Rt Hon John
Bennett, Nicholas (Pembroke)	Cormack, Patrick
Bevan, David Gilroy	Couchman, James
Biffen, Rt Hon John	Cran, James
Body, Sir Richard	Critchley, Julian
Bonsor, Sir Nicholas	Currie, Mrs Edwina
Boscawen, Hon Robert	Davis, David (Boothferry)
Boswell, Tim	Day, Stephen
Bottomley, Mrs Virginia	Devlin, Tim
Bowden, A (Brighton K'pto'n)	Dickens, Geoffrey
Bowden, Gerald (Dulwich)	Dorrell, Stephen
Bowis, John	Douglas-Hamilton, Lord James
Boyson, Rt Hon Dr Sir Rhodes	Dover, Den
Braine, Rt Hon Sir Bernard	Dunn, Bob
Brandon-Bravo, Martin	Emery, Sir Peter
Brazier, Julian	Evans, David (Welwyn Hatf'd)
Bright, Graham	Evennett, David
Brown, Michael (Brigg & Cl't's)	Fairbairn, Sir Nicholas
Bruce, Ian (Dorset South)	Fallon, Michael
Buck, Sir Antony	Favell, Tony
Burns, Simon	Field, Barry (Isle of Wight)

Finsberg, Sir Geoffrey	Lightbown, David
Fishburn, John Dudley	Lilley, Peter
Fookes, Dame Janet	Lloyd, Sir Ian (Havant)
Forsyth, Michael (Stirling)	Lloyd, Peter (Fareham)
Forth, Eric	Lord, Michael
Fowler, Rt Hon Sir Norman	Luce, Rt Hon Richard
Fox, Sir Marcus	Lyell, Rt Hon Sir Nicholas
Freeman, Roger	McCrindle, Robert
French, Douglas	Macfarlane, Sir Neil
Gale, Roger	MacGregor, Rt Hon John
Gardiner, George	MacKay, Andrew (E Berkshire)
Garel-Jones, Tristan	Maclean, David
Gill, Christopher	McLoughlin, Patrick
Gilmour, Rt Hon Sir Ian	McNair-Wilson, Sir Michael
Glyn, Dr Sir Alan	McNair-Wilson, Sir Patrick
Goodlad, Alastair	Madel, David
Goodson-Wickes, Dr Charles	Major, Rt Hon John
Gorman, Mrs Teresa	Malins, Humfrey
Gorst, John	Mans, Keith
Gow, Ian	Maples, John
Grant, Sir Anthony (CambsSW)	Marland, Paul
Greenway, Harry (Ealing N)	Marlow, Tony
Greenway, John (Ryedale)	Marshall, John (Hendon S)
Gregory, Conal	Marshall, Sir Michael (Arundel)
Griffiths, Sir Eldon (Bury St E')	Martin, David (Portsmouth S)
Griffiths, Peter (Portsmouth N)	Maude, Hon Francis
Grist, Ian	Maxwell-Hyslop, Robin
Ground, Patrick	Mayhew, Rt Hon Sir Patrick
Grylls, Michael	Meyer, Sir Anthony
Hague, William	Miller, Sir Hal
Hamilton, Neil (Tatton)	Mills, Iain
Hampson, Dr Keith	Miscampbell, Norman
Hanley, Jeremy	Mitchell, Andrew (Gedling)
Hannam, John	Mitchell, Sir David
Hargreaves, A. (B'ham H'll Gr')	Moate, Roger
Hargreaves, Ken (Hyndburn)	Monro, Sir Hector
Harris, David	Montgomery, Sir Fergus
Haselhurst, Alan	Moore, Rt Hon John
Hayes, Jerry	Morris, M (N'hampton S)
Hayward, Robert	Morrison, Sir Charles
Heathcoat-Amory, David	Morrison, Rt Hon P (Chester)
Heseltine, Rt Hon Michael	Moss, Malcolm
Hicks, Mrs Maureen (Wolv' NE)	Moynihan, Hon Colin
Hicks, Robert (Cornwall SE)	Neale, Gerrard
Hill, James	Nelson, Anthony
Hind, Kenneth	Neubert, Michael
Holt, Richard	Newton, Rt Hon Tony
Hordern, Sir Peter	Nicholls, Patrick
Howe, Rt Hon Sir Geoffrey	Nicholson, David (Taunton)
Howell, Rt Hon David (G'dford)	Nicholson, Emma (Devon West)
Howell, Ralph (North Norfolk)	Norris, Steve
Hughes, Robert G. (Harrow W)	Onslow, Rt Hon Cranley
Hunt, David (Wirral W)	Oppenheim, Phillip
Hunt, Sir John (Ravensbourne)	Owen, Rt Hon Dr David
Hunter, Andrew	Page, Richard
Irvine, Michael	Paice, James
Jack, Michael	Patten, Rt Hon Chris (Bath)
Jackson, Robert	Patten, Rt Hon John
Janman, Tim	Pattie, Rt Hon Sir Geoffrey
Jessel, Toby	Pawsey, James
Johnson Smith, Sir Geoffrey	Peacock, Mrs Elizabeth
Jones, Gwilym (Cardiff N)	Porter, Barry (Wirral S)
Jones, Robert B (Herts W)	Porter, David (Waveney)
Jopling, Rt Hon Michael	Portillo, Michael
Key, Robert	Price, Sir David
King, Roger (B'ham N'thfield)	Raffan, Keith
Kirkhope, Timothy	Raison, Rt Hon Timothy
Knapman, Roger	Rathbone, Tim
Knight, Greg (Derby North)	Renton, Rt Hon Tim
Knight, Dame Jill (Edgbaston)	Rhodes James, Robert
Knowles, Michael	Riddick, Graham
Knox, David	Ridley, Rt Hon Nicholas
Lamont, Rt Hon Norman	Ridsdale, Sir Julian
Lang, Ian	Rifkind, Rt Hon Malcolm
Latham, Michael	Rost, Peter
Lawrence, Ivan	Rowe, Andrew
Lee, John (Pendle)	Rumbold, Mrs Angela
Leigh, Edward (Gainsbor'gh)	Ryder, Richard
Lennox-Boyd, Hon Mark	Sackville, Hon Tom
Lester, Jim (Broxtowe)	Sainsbury, Hon Tim

Scott, Rt Hon Nicholas	Thompson, D. (Calder Valley)
Shaw, David (Dover)	Thompson, Patrick (Norwich N)
Shaw, Sir Giles (Pudsey)	Thornton, Malcolm
Shaw, Sir Michael (Scarb')	Thurnham, Peter
Shepherd, Colin (Hereford)	Tracey, Richard
Shepherd, Richard (Aldridge)	Twinn, Dr Ian
Shersby, Michael	Vaughan, Sir Gerard
Sims, Roger	Viggers, Peter
Skeet, Sir Trevor	Waddington, Rt Hon David
Smith, Sir Dudley (Warwick)	Wakeham, Rt Hon John
Smith, Tim (Beaconsfield)	Walden, George
Soames, Hon Nicholas	Walker, Bill (T'side North)
Speed, Keith	Walker, Rt Hon P. (W'cester)
Spicer, Sir Jim (Dorset W)	Ward, John
Spicer, Michael (S Worcs)	Wardle, Charles (Bexhill)
Squire, Robin	Wells, Bowen
Stanbrook, Ivor	Wheeler, Sir John
Stanley, Rt Hon Sir John	Whitney, Ray
Steen, Anthony	Widdecombe, Ann
Stern, Michael	Wiggin, Jerry
Stevens, Lewis	Wilshire, David
Stewart, Allan (Eastwood)	Winterton, Mrs Ann
Stewart, Andy (Sherwood)	Winterton, Nicholas
Stewart, Rt Hon Ian (Herts N)	Wolfson, Mark
Stokes, Sir John	Wood, Timothy
Stradling Thomas, Sir John	Woodcock, Dr. Mike
Sumberg, David	Young, Sir George (Acton)
Summerson, Hugo	Younger, Rt Hon George
Tapsell, Sir Peter
Taylor, John M (Solihull)	Tellers for the Ayes:
Taylor, Teddy (S'end E)	Mr. Tony Durant and
Temple-Morris, Peter	Mr. Irvine Patnick.

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the privatisation of the electricity industry and the internationally recognised benefits which the Government's policies are already achieving through the introduction of real competition, the introduction of new and enhanced rights for the consumer, the emergence of new, cleaner, more efficient and cost-effective generating plant, through the Government's commitment to the protection of the environment and by ensuring that the needs of customers drive the decisions of the electricity industry.