HC Deb 11 November 1991 vol 198 cc765-6
3. Mr. Jacques Arnold

To ask the Secretary of State for Energy if he will make a statement on the real price of energy supplied to domestic households during the last five years.

The Parliamentary Under-Secretary of State for Energy (Mr. David Heathcoat-Amory)

The price of fuel, light and power supplied to domestic households is now estimated to be 6 per cent. lower in real terms than it was five years ago.

Mr. Arnold

Is not that reply an absolute vindication of our policy of privatisation, linked to the operation of the regulators? Is it not good news that, under the new proposal before the House, the work of the regulators is soon to be extended further?

Mr. Heathcoat-Amory

My hon. Friend is right. Privatisation of the industry has brought with it assurances of higher standards of service. For the first time, domestic and smaller industrial customers are protected from unjustified price increases.

Mr. Robert Hughes

Do those figures include the rapid escalation in standing charges, which are, in fact, the industry's poll tax on its consumers? Do those figures include the threefold increase in service charges applied by British Gas, or is this just another way of massaging the figures, as the Government always do?

Mr. Heathcoat-Amory

No. I can confirm that the figures which I gave include all charges to domestic customers. Over the past seven years, domestic prices have fallen by 2 per cent. in real terms, whereas under the last Labour Government domestic prices increased by a staggering 2 per cent. in cash terms every six weeks.

Dame Elaine Kellett-Bowman

The question refers to the real price of energy. That must include environmental considerations such as the disposal of nuclear waste. Will my hon. Friend therefore join me in congratulating scientists at Culham who, through an EC experimental station there, have made a breakthrough with fusion?

Mr. Heathcoat-Amory

Yes. We should take pride in the success of the experiment. However, I should strike a note of caution. There is still a long way to go before fusion power surmounts the engineering and commercial challenges ahead.

Mr. Morgan

Is not it true that the Government and the hon. Member for Gravesham (Mr. Arnold) have been using statistics in a phoney manner which surpasses all understanding, so that a 38 per cent. increase in electricity prices in the past four years somehow becomes a 6 per cent. drop in so-called "real terms"? "Real terms" must be set against the fact that the price of the crude fuels that are being bought, such as coal, oil or gas, has remained stable. In any common-sense meaning of "real terms", a 38 per cent. increase in cash terms is a 38 per cent. increase in real terms as well.

Did not the hon. Member for Gravesham get it right when he said, "Is it not good news"? Indeed, it is not— [Interruption.] That is what the hon. Gentleman said. Have not the privatised electricity companies got such a one-sided bargain out of the Government that it has meant the creation not of privatised companies but of pound note machines?

Mr. Heathcoat-Amory

It is a matter of record that, over the past seven years of Conservative Government, the electricity prices charged to domestic customers have fallen by 2 per cent., whereas under the Labour Government they rose by 22 per cent. in real terms. It is not speculation but fact that Labour Governments are bad news for electricity customers.

Dr. Michael Clark

Does my hon. Friend expect the real price of energy to domestic households to rise if an energy tax is introduced? What would be the effect of such a tax on British industry, exports and jobs?

Mr. Heathcoat-Amory

Yes. My hon. Friend makes the fair point that we must be very cautious before we assent to a carbon tax which could increase the price of domestic energy. If that were done unilaterally ahead of the rest of the world, it could put British industry at a severe disadvantage. Therefore, although we are interested in continuing the debate in a European context, we shall not make any premature decisions.

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