§ [Relevant documents: First report of the Energy Committee, HC 25 of Session 1991–92, on privatisation of Northern Ireland Electricity, and the Government's observations, HC 178 of Session 1991–92.]3.40 pm
§ The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Richard Needham)
I beg to move, That the draft Electricity (Northern Ireland) Order 1991, which was laid before this House on 27th November, be approved.
I understand that it will be convenient for the House also to discuss the second motion:
That the draft Electricity (Northern Ireland Consequential Amendments) Order 1991, which was laid before this House on 27th November, be approved.
I am sure that all hon. Members representing Northern Ireland constituencies will welcome the opportunity to debate the orders. The Government wish to present our proposals for legislation that will enable the electricity industry in Northern Ireland to be privatised.
The House has already had considerable opportunity to discuss our proposals. We had three sessions on this in the Northern Ireland Committee in June last year, when we had a thorough debate. Indeed, it appears that that debate was so thorough that many Northern Ireland Members no longer wish to debate the matter or to listen to my opening comments. A variety of opinions was expressed in Committee, and at the end of our debates some of the opinions were slightly different from those held at the start of our Committee proceedings.
§ Mr. John D. Taylor (Strangford)
I should point out in all fairness that quite a few Northern Ireland Members are engaged in talks with the Secretary of State on the future government of Northern Ireland and therefore cannot be present at the moment.
§ Mr. Needham
I understand the right hon. Gentleman's point, but all three members of the Democratic Unionist party are surely not required to attend those talks. I am disappointed that none of those hon. Members is in his place, because I had been looking forward to their contributions and should have liked to address the odd remark to them, but I shall do that in any event.
The Select Committee on Energy has also examined the proposals in considerable depth, and the Government welcome its report. In particular, I welcome the Committee's conclusion that there are admirable features in our privatisation proposals. I agree with the Committee about the welcome developments that are in prospect, such as the electricity interconnector and the possibility of a gas pipeline. We have made some proposals to Commissioner Millan for a contribution from the European Economic Community of about 35 per cent. of the cost of the pipeline and 50 per cent. of the interconnector. I am sure that that former right hon. Member of this House could do a lot to help Northern Ireland by giving us a favourable response in the very near future, as I believe he will.
I part company with the Committee in a small way on its comment that those developments would have come about irrespective of our privatisation proposals. According to paragraph 25 of its report, the Committee did not feel that the gas pipeline was dependent on the 709 form of privatisation that we have proposed. I shall return to that point later, but I want to put down a clear marker now. Potential purchasers—
§ Dr. Michael Clark (Rochford)
Although the Select Committee on Energy did indeed say that some of the advantages that would flow from the privatisation of the electricity industry in Northern Ireland were not entirely dependent on privatisation for their achievement, we accepted that privatisation would accelerate that achievement, and in that sense, we certainly welcome the privatisation.
§ Mr. Needham
I am grateful for the comments of my hon. Friend, who is the distinguished Chairman of the Committee. Nevertheless, I do not believe for one moment—I made this point on enough occasions to the hon. Member for Antrim, East (Mr. Beggs)—that, if we had not given potential investors the opportunity to buy a power station that could be converted to gas, there would have been much hope of bringing a gas pipeline to Northern Ireland. I am convinced that it was only our privatisation proposals which allowed us to bring gas as a real possibility—now a probability, and almost certainly a certainty—to Northern Ireland. Without those proposals, I am sure that the gas pipeline would never even have got out of the locker.
If we had not given investors the chance to bid for Ballylumford and taken steps towards privatisation, that vital option would not have been made available to us. I hasten to add that I would not lightly disagree with the findings of the Committee, but I am firmly of the view that the developments to which I shall later refer—interconnection, increased fuel diversity, competition within the system, downward pressure on cost, environmental benefits and energy efficiency—are all a direct result of our proposals to restructure the electricity industry and change the conditions under which it operates.
There is a consistent logic to our position. We are privatising the industry for two reasons. First, the existing position is unsatisfactory and should be changed. Secondly, privatisation can deliver a significant range of benefits to Northern Ireland consumers. That will be a recurring theme of my speech.
§ Mr. David Winnick (Walsall, North)
Is it not ironic that the Government are introducing the Bill at a time when virtually all the political parties—parties which rarely find common ground, as we have tragically and sadly witnessed over the years —see eye to eye in opposing the scheme? When so many different strands of opinion oppose privatisation—a view that will undoubtedly be expressed today—is it not stupid for the Government to introduce the Bill in their dying days?
§ Mr. Needham
It is an order, not a Bill. The Government have proposed to privatise Northern Ireland Electricity for a considerable time. If the hon. Gentleman had participated in our debates in Committee, he would have heard a wide range of differing views and opinions expressed by the various parties in Northern Ireland—and, to some extent, by people within the same party. I shall refer to the positions within the parties as I proceed.
§ Mr. Peter Bottomley (Eltham)
Following the remarks of the hon. Member for Walsall, North (Mr. Winnick), does my hon. Friend the Minister agree that most people want the benefits that will come from privatisation freeing 710 the constraints placed on the industry? What effect will the measure have on rural electrification, and in particular the mains system for Rathlin?
§ Mr. Needham
My hon. Friend was one of the major promoters of the scheme to bring electricity to Rathlin. As he will know, the scheme is in the process of being introduced. He knows Northern Ireland Electricity as well as I do. He will recall that dealing with NIE and trying to bring electricity to Rathlin was not one of the easiest tasks that he or I had to undertake. When we consider the regulation that will be imposed and the rights of consumers in Northern Ireland, my hon. Friend will find that consumers will be much better protected and safeguarded under privatisation than if they had been left to continue with a publicly owned monopoly which too often had a life of its own and was not subject to the outside pressures that consumers have a right to bring to bear.
§ Mr. Harry Barnes (Derbyshire, North-East)
The debates in Committee have been mentioned. Although hon. Members representing Ulster voiced different shades of opinion, they reached a common conclusion with the Liberal Democrat and Labour hon. Members in the Committee that they were opposed to the order. The party of the hon. Member for Belfast, West (Mr. Adams)—although he has not taken his seat—was also in opposition. The only party in Northern Ireland which supports privatisation is the small Conservative party. As there is such widespread unity, I reiterate the words of my hon. Friend the Member for Walsall, North (Mr. Winnick) —surely in that case Northern Ireland's viewpoint should be taken into account, and the order should be kicked into touch.
§ Mr. Needham
The hon. Gentleman has listened to the debate and knows perfectly well that a vast variety of views exist within the Northern Ireland parties. The Labour party's proposal, which I shall come to later, is to do nowt. The hon. Member for Antrim, North (Rev. Ian Paisley) said that, if it was all right, we should leave it alone. The hon. Member for Antrim, East was in favour of the introduction of gas, but could not explain how on earth to get it without privatisation.
The view of the hon. Member for South Down (Mr. McGrady) was that many things should be left as they are, but he accepted that savings could be made and changes ought to be made, although he did not explain how. There is plenty of time for hon. Members to make speeches, and if I can develop my argument a little en route, I shall be happy to do so.
§ Mr. John D. Taylor
I am sure that the Under-Secretary will agree that there is usually more agreement between political parties within Northern Ireland than between the Labour and Conservative parties in England, so I do not understand the logic of the statement by the hon. Member for Derbyshire, North-East (Mr. Barnes).
To get back to the subject of the gas pipeline—I suspect that the Minister has left it and will not return to it—
§ Mr. Taylor
In that case, could the Minister tell us whether it has already been agreed which firm will provide 711 the gas pipeline? Will it be the gas board in the Republic of Ireland? Has a proper analysis been made of its implications for the fishing industry in the Irish sea?
§ Mr. Needham
No, it will not be the gas board in the Republic of Ireland, and I suspect that I shall be returning to the subject of gas all afternoon and most of the evening.
§ Mr. Seamus Mallon (Newry and Armagh)
The Minister is right to say that there are different reasons and attitudes in the different parties in the north of Ireland on this issue. Some arguments are ideological, some are about practicalities and others are about economy. I am sorry to interrupt the Minister at this point, but he should clarify one great worry—we are concerned about exchanging a public for a private monopoly. That is the underlying fear of all of us in the north of Ireland. He must argue convincingly for that during the debate.
§ Mr. Needham
If the hon. Gentleman will allow me to proceed, I shall cogently answer that question, because it is the key to our decision.
First, even critics of privatisation have the greatest difficulty in defending the existing position. How does one continue to justify the Northern Ireland electricity system's over-dependence on a single fuel? Seventy per cent. of our capacity is still oil-burning. Why does the system in Northern Ireland remain isolated with no connection to any other system, with all the technical and economic disadvantages which that entails and which the hon. Member for Antrim, East has referred to on several occasions?
Given its captive market, why does NIE have such a poor track record in improving efficiency, productivity and profits? Why has it been necessary to have endless debates about developing phase 2 of Kilroot as an oil or coal-burning plant, which is the expensive and the dirty option? Why was the lignite option given such short shrift by NIE when it was raised a few years ago? Hon. Members from the Democratic Unionist party are constantly asking me that question. Why has it taken so long to bring interconnection back on to the agenda?
The answer is simple. To operate an undertaking in public ownership locks in management to a mindset that is "steady as she goes". That system is flawed. I do not believe that, in those circumstances, management can recognise new opportunity when it occurs—and, my goodness, there is new opportunity around. Only the prospect of competition can alter that outlook. The system of publicly owned monopoly is flawed. It cannot be expected to deliver the kind of service that Northern Ireland consumers have a right to expect.
It was repeatedly said, particularly in Committee, that there was nothing seriously wrong with NIE; to quote again the hon. Member for Antrim, North: "If it ain't broke, don't fix it." There seemed to be an unspoken acceptance by hon. Members that the present system was less than satisfactory, but that we must avoid at any cost anything as dangerous and revolutionary as suggesting a change. That attitude is incomprehensible in hon. Members who say that they wish to represent the interests of the consumers in their constituency. If we all shared that attitude, we would undoubtedly still travel in steam trains, and passengers would be covered in soot.
Of course we should not endlessly meddle and interfere 712 with the electricity industry in Northern Ireland. That would serve no useful purpose. Equally, if we see that the electricity industry is not performing to maximum efficiency and should be doing better—there is general agreement on that—surely we have an obligation to do something about it. That applies as much to hon. Members opposite, to whose arguments for improving the system under their regime I look forward, as to other hon. Members with their proposals about what should be done about it.
§ Mr. Jim Marshall (Leicester, South)
We are all interested to hear the Minister's view on NIE. Could he remind the House which Minister exercises overall responsibility for NIE, and why that Minister has shown such a lack of activity in the past few years?
§ Mr. Needham
I do not know what the hon. Gentleman is talking about. I am in charge of NIE, and whatever matters I can be criticised for, showing a lack of activity is not one.
Let us look at what has happened to other utilities in Great Britain that were fixed by the Government before they broke down. British Telecom prices are down by 27 per cent. in real terms, 96 per cent. of all call boxes are in working order at any given time, and waiting lists for connections are virtually eliminated. Gas has seen domestic prices fall by 12 per cent., and disconnections are at their lowest recorded level. The RPI minus X factor is now RPI minus 5. The water companies are investing some £28 billion between now and the end of this century. The fact that Treasury rules restricted past investment makes it all the more necessary now for the privatised companies to get on with it.
In Northern Ireland itself, Shorts and Harland and Wolff have demonstrated an ability to hold their position even in recessionary times. Employment levels at Shorts are higher now than when the company was privatised. Recently, Harland and Wolff has attracted the largest orders in Europe.
How many Northern Ireland Members who agreed with Labour Members and opposed the privatisation of Shorts and of Harland and Wolff would do so now? Would the hon. Member for Belfast, East (Mr. Robinson) now oppose the purchase of Shorts by Bombardier? We cannot ask him, because he is not here, but it is an important question, to which his constituents have a right to know his answer. He opposed the privatisations, yet they are now the two greatest flag carriers in the Northern Ireland economy. If he were here to answer the question, I suspect that he would be in considerable difficulty if he tried to say that he continued to oppose those privatisations.
I want to see the right kind of deal for electricity consumers in Northern Ireland. I want greater investment and efficiency and to see prices stabilised in a tougher, more competitive electricity industry. The arrival of the single market in 1992 means that, as never before, our costs must be in line with those in the rest of Europe. A revitalised electricity industry is crucial to the supply of power to our factories and businesses at the cheapest possible price.
I wish to tell the House not what hon. Members have said about our proposals, but what industry and commerce in Northern Ireland have said. I hope that Opposition Members will give credence to the views of 713 industry and commerce in Northern Ireland, if they hope to attract future investment and employment to the Province.
The Confederation of British Industry in Northern Ireland has stated:CBI (NI) welcomes Government's decision to privatise NIE. Moving NIE into the private sector will bring benefits in terms of efficiency, commercial drive, attitudes and investment decisions free from Treasury interference.The Northern Ireland Chamber of Commerce has stated that itsupports the privatisation of NIE because it is convinced that the introduction of private sector business disciplines will ultimately produce a more efficient industry.The Action Group on Northern Ireland Electricity Prices states:The group supports the Government's plans for privatisation … and in particular the link to Scotland.That is the authentic voice of industry and commerce in Northern Ireland, and surely Opposition Members should listen to it.
§ Mr. Mallon
The Minister is attempting to paint a comprehensive picture of what those in industry and commerce in Northern Ireland say about the privatisation, but what about the views of the Northern Ireland Economic Council? First, it has said that the benefits to the consumer are far from obvious. Secondly, it has expressed fears about changing a public sector monopoly into a private sector monopoly, and expressed concern about consumer protection. If the Minister wishes to quote sources, he should be comprehensive so why does he not quote the views of the Northern Ireland Economic Council as well?
§ Mr. Needham
I am happy to acknowledge the views of the Northern Ireland Economic Council, and the questions that it had at the time of its submission need to be dealt with. I have already said that I shall answer the three particular issues that it raised. I cannot say that I believe that that council necessarily represents the views of industry and commerce.
On political opinion, the submission of the Ulster Unionist party shows, I am pleased to say, movement towards reality. However, it is alone on that. First, it now believes that competition is possible. I was delighted that the hon. Member for Antrim, East told the Select Committee on Energy that, with the introduction of gas and interconnection, competition was becoming possible. Secondly, the Ulster Unionist party felt that supplies of natural gas should be obtained for Northern Ireland. I hope and believe that we shall be able to meet that objective. Thirdly, it suggested that interconnection with Scotland was a good idea. I am in complete agreement with that. Finally, it suggested that interconnection with the Republic of Ireland ought to be re-eastablished. The hon. Member for Antrim, East said that we had lost millions of pounds as a result of the failure to re-establish that interconnnection. I could not agree more.
Reading the submission of the Ulster Unionist party brought me back to a comment made by the right hon. Member for Lagan Valley (Mr. Molyneaux), the leader of the Ulster Unionist party, during the first sitting of the Northern Ireland Committee on 13 June. I asked him if he would be prepared to support the Government's privatisation proposals, and he said:I should be happy to do so, provided that the general public can apply for shares."—[Official Report, Northern Ireland Committee, 13 June 1991; c. 5.]714 After reading the submission of the Ulster Unionist party, I am delighted to tell the right hon. Gentleman and his hon. Friends that I can add to their happiness. I have served a place for him at the head of the queue to buy shares in the privatised NIE. I hope that all hon. Members representing Northern Ireland will take the opportunity to invest in the economic future of the Province. I know that some have already taken the plunge and purchased shares in privatised utilities, and I trust that they will encourage their colleagues to do likewise.
§ Mr. Roy Beggs (Antrim, East)
Is the Minister telling the House and the people of Northern Ireland that they will have an opportunity to buy shares in the generating companies that he proposes for Northern Ireland?
§ Mr. Needham
The hon. Gentleman knows perfectly well how Northern Ireland Electricity privatisation is taking place. For the first time in any privatisation proposal, the people of Northern Ireland will be able to buy shares in the transmission, distribution and supply business.
May I bring the House up to date with recent developments?
§ Mr. Needham
I am sure that the hon. Gentleman has a speech to make. I should like to progress a little before giving way to him.
In July last year, we sought expressions of interest for the power stations. Bids were received in November, and those have been the subject of scrutiny and discussion. No final decisions have yet been taken, but we have identified the parties whose bids best meet our objectives. Those are a consortium of an American company, AES, and a Belgian concern, Tractebel, which wish to purchase the stations at Belfast West and Kilroot; British Gas, which is interested in purchasing Ballylumford; and a management-employee buy-out for Coolkeeragh.
We did not begin the sales process with a policy decision that only one of the smaller stations would be sold to a MEBO, but in view of our objectives, the bids for the other stations—particularly the prospect of gas for Ballylumford—simply could not be ignored.
We are still engaged in negotiations with those parties and others, so the House will understand that I cannot give further details today. We hope to be able to sign contracts soon after Parliament has approved the legislation, and to get all the usual merger clearances under European and domestic law. We need to sign those contracts as quickly as possible, so that the new owners can become fully familiar with the day-to-day running arrangements, and to prepare for the operating changes that will be necessary when the power purchase agreements come into effect.
I am especially pleased about the prospect of obtaining a gas supply for the conversion of Ballylumford, particularly as it would open up real prospects for developing the downstream market. The hon. Member for South Down (Mr. McGrady) said that such a prospect was "as dead as a dodo". In my judgment, the only thing that is as dead as a dodo is the hon. Gentleman's policy on Northern Ireland Electricity.
§ Mr. Needham
I took it from the Select Committee Hansard, which I read just before I came here this afternoon.
The attractions of gas for Ballylumford are obvious. It would not only provide a welcome diversity of fuel generation, lessening the industry's dependence on oil, but also enable easier compliance with EC emissions limits and minimise the expense of fitting cleaning equipment and associated waste disposal problems. The hon. Member for South Down, who has done so much since he has been a Member of Parliament and previously to stress the need for clean fuel and a greener environment, will also welcome the fact that we have raised gas from the dead and are now in the process of bringing its use to reality.
Gas also offers the prospect of modern, gas-fired combined cycle gas turbine plant competing with coal, oil and lignite-fired plant. Hon. Members are aware of the efficiency, cleanliness and capital cost benefits of CCGTs. It has been estimated that it would cost in excess of £300 million to build Kilroot 2 with flue gas desulphurisation fitted. I hope that no one, even the hon. Member for Leicester, South (Mr. Marshall), would go along with the view of Northern Ireland Electricity that we should build Kilroot 2 without FGD.
§ Mr. Needham
As my hon. Friend the Member for Eltham (Mr. Bottomley) will remember, that was the proposal by Northern Ireland Electricity. No doubt, had we not been in power the plan would have been accepted, as were all the proposals of Northern Ireland Electricity by our predecessor.
§ Mr. Bottomley
Normally, discussions between Ministers are kept private. When I was an Environment Minister, my hon. Friend the Parliamentary Under-Secretary of State, as an Industry Minister, stood up against the proposal to look for a clever way of getting round the European environment plans. I appreciated the way he stood up steadfastly for what was right, rather than what was convenient to NIE.
§ Mr. Needham
I am grateful to my hon. Friend, who I am sure will confirm that some Opposition Members also agreed with us. If we want to look at division in Northern Ireland, that is not a bad place to start. Building a CCGT plant would cost almost half the cost of building Kilroot 2. Therefore, not only is CCGT cleaner; it is much less expensive.
The potential for developing the downstream market exists. At present, for its energy requirements, excluding transport, about 60 per cent. of the domestic sector in Northern Ireland relies on solid fuel and about half the industrial sector relies on oil, as does two thirds of the commercial sector. In each of the three sectors, there is only a 3 per cent. reliance on gas. Therefore, we rely almost entirely on oil and coal. Penetration of the market by a gas supplier is commercially attractive, and the possibility of industry using gas to develop combined heat and power is only one prospect that is opened up in addition to all the alternatives already mentioned.
All of us know of the environmental effects of burning oil and coal on a large scale. One has only to fly over Belfast on a clear winter's day when there are thousands of chimneys discharging smoke fumes to see that it is not attractive or healthy. I do not believe that smokeless fuel 716 is the answer. How can we expect people to burn it in significant enough quantities when it remains so much more expensive than coal? Even leaving aside cost, there are harmful emissions from smokeless fuel, which is another reason why gas is such an attractive proposition.
Technically, developing the downstream market is feasible. We have not yet looked at all the details, but I understand that the refurbishment of the old Belfast gas system, which served the most densely populated districts of South Antrim and North Down, is practicable. It goes almost without saying that such developments will have the benefit of employing people to bring gas to the downstream market.
The energy efficiency section of the Government's proposals were rightly welcomed by the Select Committee on Energy. I think we all recognise the essential message that energy efficiency not only reduces costs but contributes to a cleaner environment. Our proposals will be particularly effective. The regulatory regime will require TDS to purchase energy as cheaply as possible. It will remove any incentive that TDS might have to increase its sales by promoting the wasteful use of electricity. It will oblige TDS to take account of least-cost planning.
Those are not just vague promises—TDS will have to deliver. One of its licence conditions will oblige it to produce a code of practice showing how it proposes to encourage the efficient use of electricity by its customers, and that will have to be approved by the regulator. Another licence condition will require TDS to satisfy the regulator that it is not ordering new generation plant before it has considered a full range of alternative options —including least-cost planning. Therefore, it must show the consumer and the regulator in Northern Ireland that, before a new plant is built and comes on stream, more cannot be taken out of existing plant, and more cannot be done through reducing energy usage.
This means that, when demand is rising, TDS would have to consider carefully whether it was more economical to commission new generating capacity, which would evidently cost more to purchase than energy from old, fully depreciated plant, or whether there were ways of limiting demand so that the need for new capacity could be deferred for a time. Such measures, known as demand side control, are a feature of electricity undertakings which we have taken from the United States.
This is an extremely important provision, and its inclusion in the TDS licence is probably unique on this side of the Atlantic. It is evidence of the Government's determination to create a system in which efficiencies can be maximised in the interests of consumers, and green interests can be promoted at the same time. I am sure that it will command the support of hon. Members throughout the House.
This fully accords with the duty placed on the Department of Economic Development and the regulator by this order to carry out their functions in a way that takes into account the environmental effects of generation, transmission and supply.
Another closely related area is the development of a non-fossil fuel regime for Northern Ireland. I am pleased to announce that a joint study will be carried out by my Department, Northern Ireland Electricity and the Department of Energy to examine the technical and economic factors affecting the deployment of reusable energy resources in Northern Ireland. The first phase of the study will review the current status of the various 717 renewable technologies and identify those with the best prospects for development. A report on this initial phase will be available in April.
The second phase will give a more detailed assessment of the resources which have the best prospects for commercial development, and when the results of the study are available, I will announce details of the NFFO arrangements that we intend to make for Northern Ireland.
The first competition for renewable supplies will take place later this year. The draft order is the legislative basis for the Government's privatisation proposals. It is a long and complicated document, so I hope that the House will bear with me if I briefly outline what it does.
First, the order creates the office of regulator for Northern Ireland. It is important that a strong, independent, central authority should exist to ensure that the new industry operates in the best interests of the consumer and the Northern Ireland economy. The order places on the regulator and the DED duties to carry out their functions in a way that promotes an efficient and effective industry and protects the interests of electricity consumers. It also gives the regulator the means to direct the industry through the generation, transmission and supply licences and the conditions contained in them.
This represents a wide-ranging and extremely flexible means of regulating the industry, and copies of the first draft of the Northern Ireland licence have been placed in the Library.
§ Mr. John D. Taylor (Strangford)
On the question of the regulator, is the Minister aware that, in my constituency, one of the largest users of electricity, which consumes about 11 million units a year, has to pay 4.64p per unit, compared with an average 3.5p per unit in Great Britain? Will the regulator take into consideration such comparative prices for electricity between Northern Ireland and Great Britain?
§ Mr. Needham
Yes, he will. One of the jobs will be to examine how best to help large users, for the reasons that I explained earlier. The 30 per cent. gap exists, and one of the reasons for our privatisation proposal is the desire to provide more flexibility in the system so as to allow our bigger users to remain competitive and to be able to attract more inward investment to the Province.
§ Mr. Needham
I do not know where the right hon. Gentleman heard that suggestion. It is certainly true that companies with energy-intensive proposals have gone elsewhere, and one can only surmise that that has been partly due to the high cost of supplying electricity in Northern Ireland.
The order specifies terms, conditions and standards for the supply of electricity to customers. This is a considerable advance on the 1972 electricity order, which took comparatively little account of the requirements of consumers, or the standards of service that they were entitled to expect.
718 The order establishes a new consumer body dedicated to the interests of electricity consumers. The General Consumer Council for Northern Ireland has welcomed the order's safeguard and protections.
Finally, the provisions of part III provide for the transfer of NIE's assets, rights and liabilities to Government-owned successor companies, and for those companies to be transferred to the private sector. The order is similar to the Electricity Act 1989, but it is not identical. The legal and contractual framework that the order makes possible is specially tailored to the requirements of the electricity industry in Northern Ireland, not least in its provisions to ensure that electrical power is not wasted.
Because of the small size of the Northern Ireland system and the constraints of system stability, there are limits on the extent to which we can promote competition while ensuring that it is beneficial to the consumer and in the long-term interests of the industry itself. We propose to encourage competition in a number of ways, both in generation and on the supply side.
In generation competition will most easily arise when TDS invites tenders for new capacity. The first such competition will take place later this year. At that stage, I expect to see a very clear demonstration of the benefits which flow from the decision to split generation from the TDS side of the industry.
For the first time, the playing field will be level. That means that, instead of automatically proceeding to develop Kilroot phase 2, which is what we would have been told was the only option, TDS will be able to choose the most appropriate and cost-effective option. At the end of the day, that might prove to be Kilroot 2, but if that is the case, it will be because the arguments for phase 2 have been won in the face of proposals for lignite, new coal-fired plant, CCGT plant or whatever other options have been placed on the table.
It will also be possible to have competition in running the generating stations. Within technical constraints, a generator's place in the merit order will be determined by how cheaply he can produce energy. If he is able to buy fuel in the market at a reduced cost, he will be able to offer to generate at a lower price than he is contracted for in his power purchasing agreement. He can then be given a higher place in the merit order, or be asked to run for a longer period. He will then be competing directly with the other generators. The pressure will always be to try to be able to buy fuel at the cheapest possible price.
The interconnector with Scotland will give access to electricity at prices relating to those of England and Wales pool. Interconnection with the Republic of Ireland would create the possibility of two-way trade between the systems. Those linkages will give TDS a strong incentive to keep prices down.
There are also the Government's proposals for supply competition, which were set out in my written answer of 18 December. If Opposition Members consider our proposals objectively, they will acknowledge that competition is the key to keeping prices down, and that our proposals give ample scope for developing it.
Costs will also be subjected to downward pressure by virtue of price regulation. There will be a cap on both the transmission and distribution elements of TDS's total revenue, which will be adjusted yearly. This will allow TDS to make a reasonable profit, but it will not allow profits to be boosted simply by promoting sales of more electricity.
719 Furthermore, an RPI minus X formula will apply to both the supply business and the transmission and distribution business, to give TDS the incentive to maximise its efficiency and ensure the lowest prices.
§ Mr. McGrady
Will the Minister explain how, under the existing regulatory machinery, substantial increases in electricity prices were permitted in the past three years? Those were well beyond the increase in the cost of the fuel needed to generate that electricity. Was that a fattening of the calf for this exercise?
§ Mr. Needham
The hon. Gentleman knows that it was not a question of fattening the calf. For many years, Northern Ireland Electricity did not make profits. It had very large Government subventions for many years. When we considered what NEI should charge, we looked at what prices were required to give NEI a reasonable return on its depreciating capital. That is the reason for the price rises, but they are not out of line with what has happened elsewhere. Regulation, competition and the caps that we are introducing mean that, for the first time, we can see transparently what the position is and how prices can be kept as low as possible.
I accept that energy prices in Northern Ireland are always liable to be higher than in Great Britain. That is a fact of geography, the absence of local fuel sources—until lignite is developed—the limited scale of operations and the need to supply and look after the rural community. However, the mechanisms that I have described should ensure that there will be no increases in electricity prices, in real terms, as a result of privatisation.
In introducing the draft order, I have tried to give the House some idea of our most important proposals and the background to them. I have tried to show that we are not handing down the Great Britain modeal for privatisation and imposing it on Northern Ireland but that we have tried to devise a system—and have done so—which is right for the needs of Northern Ireland. I hope to see evidence during the debate that Opposition Members approach the Government's proposals in the same light, by telling us what they would do. I hope also that the views of certain hon. Members have developed since our debates in the Northern Ireland Committee last summer.
In that spirit, I am confident that I can look forward to hearing new and exciting explanations from the hon. Member for Antrim, East as to why the gas that he advocates should be brought in would be good for Northern Ireland, whereas the gas that I am arranging to bring in would somehow be bad for Northern Ireland.
I am quite sure that the hon. Member for Antrim, North will wish to cast aside his native caution and reticence and confess that at last he sees some merit in our proposals. He will forgive me if I say that, in debates on this subject, he has shown a conservative approach to electricity in Northern Ireland. It reminds me of the sentiments voiced by the eminent figure who was the Member of the Northern Ireland Parliament for the constituency of Down in the 1920s and 1930s. He had a vision of the countryside without electricity, or any such tiresome modern conveniences. He referred toa land whose countryside would be bright with cosy homesteads, whose fields and villages would be joyous with the sounds of industry, with the rompings of sturdy children, 720 the contests of athletic youths, and the laughter of comely maidens; whose firesides would be forums for the wisdom of serene old age.The name of that visionary figure—I find it interesting that the hon. Member for Antrim, North should draw his political philosophy from the same wellspring—was, as he recalled, Eamon de Valera.
This order, and the proposals that flow from it, represent a tremendous opportunity to make changes which, in my judgment and that of the Government, will benefit everyone, from the captains of industry to old-age pensioners, irrespective of their religion or their political aspirations. This is a rare opportunity. I hope that the coming debate will be worthy of the importance of the occasion. I commend the draft electricity order and the consequential amendment order, which accompanies it, to the House.
§ Mr. Jim Marshall (Leicester, South)
I thank the Minister for taking us so carefully through the order. He did so in his usual charming and eloquent manner. I became a little concerned at the beginning of his speech when he tried to attack both hon. Members who are present in the Chamber and those who are absent. If the intention was to try to stimulate the debate, I am sure that he succeeded. However, I am sure that he will share my view that, in debates on Northern Ireland, Members of Parliament from the Province rarely need external stimulation to take part.
§ Mr. Needham
Perhaps the hon. Gentleman will tell us where he thinks those Members of Parliament are now.
§ Mr. John D. Taylor
Surely the point that the Minister should be making is that, as the order cannot be amended, there is little incentive for hon. Members to take part in the debate.
§ Mr. Marshall
Perhaps I could link those two points. I understand that certain hon. Members from the Province have been holding discussions with the Secretary of State for Northern Ireland about the future government of the Province and its relationship with the republic and the rest of the United Kingdom. Legislation such as this is ideally suited for debate in a devolved assembly in Belfast. I only hope that the talks will make sufficient progress for that to apply in future: when such legislation is discussed in the proper place, hon. Members—both here and in the Province—will be able to debate it fully and to make amendments if necessary.
I have complimented the Minister on his eloquence. I was a little concerned at first about his ebullience, but then I realised that both eloquence and ebullience were there for specific reasons. The Minister has taken the House through the contents of the order, but has sought to hide from us whether, in practice, the legislation will make the electricity industry work more efficiently in the Province and whether consumers will benefit from either a fall in prices or a less steep rise than those that they have experienced in the past.
The Minister has rehearsed at length the Government's ritualistic defence of privatisation. On this occasion, however, two themes from the usual song were missing: the concept of popular capitalism and that of wider share ownership. That is hardly surprising, given the strength of 721 political opinion in the Province, where the legislation is far from popular. Even those whose support for privatisation was cited by the Minister have reservations about the specific form of privatisation that is now being proposed.
The Minister mentioned the Action Group on Northern Ireland Electricity Prices. He should note that, although the group supports the proposals, the majority of its members would have preferred to retain Northern Ireland Electricity as an integrated generation and distribution company. He failed to mention that to the House. According to the report of the Select Committee on Energy, most members of the group would like NIE, as an integrated company, to continue to serve the Province as it has in the past —very well, in my view. It is most unjust of the Minister to denigrate NIE as he has this afternoon.
§ Dr. Michael Clark (Rochford)
The hon. Gentleman has referred to the report of the Select Committee on Energy, which gives the views of the action group. Perhaps it is not altogether surprising that the group expressed a wish for NIE to remain as a single entity. Does the hon. Gentleman recall, however, that the chairman and directors of the Central Electricity Generating Board wanted the whole electricity industry in the rest of the United Kingdom to be privatised in one go? It is now common wisdom on both sides of the House that there are not enough generators, although the industry has been divided into three parts.
§ Mr. Marshall
I am quoting from the report. It is a first-class report, which does much to undermine the Government's position on the privatisation of Northern Ireland Electricity. The Minister said specifically that this group supported the privatisation proposals. Lest the House has been misled, I should point out that the majority of the members of that group do not favour the form of privatisation being put forward by the Government. They would have preferred to retain Northern Ireland Electricity as an integrated generating and supply company.
§ Mr. Needham
If we had taken that route, how on earth would we have managed to attract gas into Northern Ireland?
§ Mr. Marshall
I will come to that point. The Minister is attaching too much credibility to his privatisation proposals, both from the point of view of the attraction of investment for the interconnector and from the point of view of the provision of a supply of natural gas to the Province. I shall deal with those points at the appropriate time.
As the Minister well knows, the sell-off of the generating sector certainly will not produce wider share ownership in the Province. There will be no public flotation of the companies, and they will be involved in a trade tender. I am pleased to hear that the Minister has nearly decided who will take over the four power stations in the Province. It will be cold comfort for the citizens of Northern Ireland that Belgians will be able to have shares in the power stations of the Province but that residents of Derry and Belfast will not be able to participate.
It will be interesting to know what provision, if any, the Government, when they float the supply company, will make to attract investment from the Province itself. Should privatisation of the supply company go ahead, it 722 would surely be in the best interests of the Province if its people were given preferential treatment with regard to the purchase of shares.
There is a feeling in the Province that the Government are taking a gigantic and reckless gamble with the electricity supply industry there. My view is that they are doing so for dogmatic political reasons, and not for purely economic reasons. It is their intention to impose upon Northern Ireland a risky and unprecedented experiment that takes little account of the distinctive features of the electricity supply industry in the Province. In addition, they fail to take account of electricity privatisation in another part of the kingdom. I refer to the methods chosen for the privatisation of electricity in Scotland.
Despite what the Minister says, there is no evidence that competition in the generating sector would produce financial gains, particularly in the first years. Until the Minister made a statement on Friday—a statement that he seems to have forgotten—there was a fear that this could result in higher prices. I should like to refer to a point that the Minister made towards the end of his speech. I sought to intervene—not to make a political point but to seek information. In reply to the Select Committee's report, the Government say:Furthermore, the Government has decided that there will be no real increase in tariffs until at least 1996–97.The House should note the words "the Government has decided". The Minister's speech today gave the impression that the matter was more conditional. Can he clarify the situation?
§ Mr. Needham
The statement, as it refers to 1996, stands exactly as the hon. Gentleman spelled it out. I am talking about the much longer-term effect of privatisation as it affects the existing generators and the new generators that will come along over the period of the power purchase agreements. The issue goes beyond 1996.
§ Mr. Marshall
I am even less clear now than I was before. The statement reads:The Government has decided that there will be no real increase in tariffs until at least 1996–97.In other words, the Government are admitting that, in the interim period between 1992 and 1995–96, there will be no substantial financial gain from competition in the generating sector and, as a consequence, they must put the lid on prices at the outset.
There is no evidence—and the Minister produced no evidence—that introducing competition in the generating sector will produce big, real or meaningful gains. The Government's reply to the Select Committee report shows that that is the case in the four or five years following privatisation. I support the point made in the Select Committee report that many of the benefits attributed to privatisation, such as fuel diversification, are not dependent on the ownership of Northern Ireland Electricity.
The Opposition welcome other aspects of the order. We welcome the emphasis on energy efficiency and the power to require least-cost planning. I am delighted that the Province will be the first part of the United Kingdom to participate in that kind of energy saving. We also welcome the introduction of the non-fossil fuel obligation, something which all hon. Members will welcome. None of these issues are dependent on privatisation. They should have been pursued irrespective of who owns Northern Ireland Electricity.
723 The Minister misleads the House if he suggests that those ideas have just been developed. Many of them are far more radical than anything we have in the remainder of the United Kingdom. However, it is wrong of the Minister to suggest that such discussions have taken place as a consequence of enthusiasm for privatisation. If that is the case, the Minister, who is the longest-serving Minister in the Northern Ireland Office—
§ The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Jeremy Hanley)
The longest-ever serving Minister there.
§ Mr. Marshall
I am not sure whether that is to his benefit, but never mind. However, the Minister is certainly the longest-serving Minister in the Northern Ireland Office of this Government.
If the Minister is claiming that, throughout his years in office, none of those discussions in terms of energy conservation or alternative fuel sources has taken place, that shows that there has been a clear lack of political thought and will in the Government. I hesitate to criticise civil servants, because they do not have the right of reply in the House, but perhaps they have not provided him with up-to-date information and ideas which could have allowed decisions on those points to have been taken some time ago.
The Government have failed to take account of the distinctive features of Northern 'Ireland Electricity. We all know that it is small and overdependent on oil; that it is isolated from other electricity supply industries; that its customers are dispersed and that its prices are historically high.
We share the objective of removing the isolation from other systems. Access should be available to alternative fuels, particularly natural gas. However, we fundamentally disagree with the Minister that those objectives can be obtained only through privatisation. We believe that the interconnector and natural gas could and should be introduced even if Northern Ireland Electricity were not privatised.
I remind the Minister that one of the Government's main objectives, as outlined in the White Paper, is tointroduce, wherever possible, forms of competition which will result in the lowest possible prices for consumers.The Minister has done nothing to dispel our doubts. We believe that the Government's privatisation proposals will fail to meet that objective, as the competition proposed in the generation sector is unlikely to lead to reduced costs, particularly in the short term. Indeed, I believe that it is unlikely to do that in the long term. The Government's statement in reply to the Select Committee's report shows that they accept that argument specifically for the period to 1996.
The Government's proposals as outlined in the order and by the Minister today envisage three independent competing generating companies operating the four power stations in Northern Ireland. They also propose a monopoly transmission and distribution system owned by Northern Ireland Electricity (Transmission, Distribution and Supply) and a strong regulatory system.
The Minister may be pleased to hear that the Government are correct in their general assumption that financial benefits are most likely to accrue through competition in the generating sector. However, the 724 Minister signally failed to answer the crucial question whether that will apply in the specific case of Northern Ireland. Our view, which was shared by some members of the Select Committee, is that the benefits must clearly outweigh the costs of competition. Clearly costs will arise from competition.
There will be a loss as a result of the breakdown of the integrated generating sector. There will be diseconomies of scale and less effective co-ordination. There will also be additional costs arising from the administration of the contract and regulatory systems. We believe that the changes arising from competition in the generating sector will not be sufficient to outweigh those costs of competition.
The Minister was a little unfair to the House when he referred to the existing power stations. The nature of the four power stations in the Province precludes any short-term financial advantage. As the Select Committee pointed out, the three companies operating four power stations will not—at least until 1996—introduce any merit order competition. As the Minister is aware, the costs of producing electricity are heavily dependent on the initial design of the power station. As a consequence, each station has a secure place in the merit order list. Together with the need to ensure or guarantee security of supply, that means that all four stations must be used for some proportion of almost every day. Consequently, competition will become significant, as the Minister said, only once new capacity has been provided, and that will not happen this side of 1996.
I have a word of caution for the Minister. Even that gain may prove to be illusory unless the new supplier is given a disproportionate share of the market. Unless it is given a disproportionate share of the market, other, less efficient, plant will still be required to maintain security of supply, which, again, will effectively rule out any merit order competition. There is a strong possibility that, even after 1996, there could be no real financial benefit from competition in the generating sector.
I am sure that the whole House welcomes the proposed interconnector between Scotland and Northern Ireland, but, again, it is not a consequence of privatisation. The Minister should be wary of overestimating or exaggerating the economic benefit that it will bring. It will diversify the fuel mix available to the Province, but it will be of financial benefit to the Province—the Minister failed to mention this—only if we are able to obtain European Community grants to underwrite the capital cost of providing the interconnector in the first place.
§ Mr. Needham
The hon. Gentleman is continuing to read out his speech regardless of what I said. I made it absolutely clear that we have approached Commissioner Millan, and he is looking most favourably at our application for grant. I hope that the hon. Gentleman makes that point clear.
§ Mr. Marshall
The Minister probably misunderstood or misheard what I said. I said that the electricity will be cheap compared with present prices in the Province only if an EC grant is available to underwrite the capital cost. I was going to say—I assure the Minister that this point is not in my speech—that we would wish the negotiations well and hope that the grant could be obtained so that the Province could have access to cheaper electricity.
§ Rev. Ian Paisley (Antrim, North)
Does the hon. Gentleman agree that it comes very strange to the people of Northern Ireland that the Minister has talked of getting a grant from Europe, when other grants are available at this time? Because we did not obtain an assurance that these would be additional payments which would not be used just to bolster Treasury handouts, those grants are not being claimed. Does the hon. Gentleman agree that that reflects into the hearts of the people of Northern Ireland some hypocrisy, because we are talking about a grant from Europe, yet grants are available but we are not getting them because of Treasury humbug?
§ Mr. Marshall
I hesitate to use the word "humbug", but I take the hon. Gentleman's point. He and his colleagues from the Province will know that, over the past few years, I have been charging the Government with not using the principle of additionality in its correct way. Irrespective of the nationality of the Commissioner responsible in Brussels, it appears that the European Community has finally rumbled what the Government have been doing with European Community funds over the past few years. If we are able to get true additionality, as I hope that we will, we should see an increase in public expenditure not only in the Province but in other regions of the United Kingdom.
I have mentioned the interconnector. I claim—the Minister is wrong on this point—that it is not dependent upon privatisation. If it is to provide cheaper electricity to the Province, it will depend on a grant from the European Community, and we hope that the negotiations will succeed. However, I take a slightly different view on how the interconnector will work. I fear that it will not be used as an interconnector as such, which would reduce the need for extra capacity in the Province. Rather, it will be used as an alternative power station. In that sense, it will secure a place in the merit order and it will provide baseload electricity. If it fulfils that function, it will perform its function as an interconnector in reducing the need for surplus generating capacity. That would not lead to the reduction in costs which one could expect if it were used only as an interconnector.
We also welcome the provision of a natural gas pipeline to Northern Ireland. The biggest obstacle is not ownership by Northern Ireland but the capital cost of providing the pipeline in the first place. Again, that option will be available to the Province only if we are able to get funds from the European Community. Whether or not British Gas finally takes over Ballylumford, its ability to convert that station to the part burning of gas will be determined by financial considerations. Unless money is available from the European Community the company will not be prepared to finance the building of the pipeline out of its own resources. It will be feasible to do so only if external finance is available to underwrite the capital cost.
We accept the Government's view that the provision of natural gas could lead to more efficient electricity generation. In the longer term, that could affect prices, and that is to be applauded. We also welcome the idea that natural gas could provide a competitive alternative source in the wider energy market. It would be far better if industry and domestic consumers were able to choose between different forms of energy, rather than having to rely on electricity or coal, as is the case at present. Natural 726 gas would have a major effect on the economy of Northern Ireland, and we would certainly give the Minister all the support that is required.
§ Mr. Needham
I thank the hon. Gentleman for his kind words of support about gas. If a Labour Government would not opt for privatisation— Opposition Members have clearly said that they would not—and a gas pipeline were to be brought to Northern Ireland; the maximum applicable amount under the EC rules is 35 per cent.—would the hon. Gentleman ensure that the remaining 65 per cent., which would not come from private funds, came from the Treasury?
§ Mr. Marshall
I am glad to remind the House of the Labour party's position on privatisation proposals. If the Minister will bear with me, he will see that the time scale that he foresees for the sale of the power stations and the timing of the next election would preclude that point.
§ Mr. John D. Taylor
Does the hon. Gentleman recall firm Labour commitments to support the provision of the gas pipeline to Northern Ireland? Has there been any change in that policy?
§ Mr. Marshall
There has been no change in our policy on the necessity, if practical, to provide a pipeline. We have made it clear that, if the sale of the power station proceeds—the Minister expects it to be completed by the end of March—we would not intend to take back those companies into public ownership. Any contracts into which the Government enter will be honoured by a future Labour Government.
On the transmission and supply company, which I understand will be wholly owned by the Department of Economic Development until it is floated, if that company is still owned by the DED after we win the next election, we shall retain it in public ownership, rather than proceed with the privatisation, as the Government would. If the transmission and supply company is still in the possession of the DED by the end of April or May, that company will remain publicly owned, but if the Government proceed with their proposals before the next election, we would give the same pledge about that as we have given on the other privatised industries—
§ Mr. Needham
The hon. Gentleman knows as well as I do how the Treasury works. He knows that the Treasury has assumed that it will gain certain proceeds during the year from the sale of TDS by a public flotation. Considerable sums are involved. Is the hon. Gentleman prepared to say where those hundreds of millions of pounds for the Treasury might otherwise come from? Or is he saying that, if his party was returned to government, other capital programmes in Northern Ireland would be cut because the funding would not then be available?
§ Mr. Marshall
I am surprised that the Minister should ask that question. If the Treasury is working on the premise that it already has money in its pocket for the power stations and from the sale of the transmission companies, and if it is including in its estimates for next year the proceeds from the sale of the Northern Ireland electricity industry, that shows laxity and ineptitude by its officials.
Let us put it another way: I do not think that the people of Northern Ireland would be pleased to be informed that the Treasury was already including in its accounts the 727 proceeds from the sale of Northern Ireland Electricity—not to finance public expenditure, which is what the Minister sought to imply, but to pay for the election gimmick of 1p off income tax in the Budget in March. Instead of the proceeds being spent on increased public services, they will be used to finance the Tory election Budget bribe of 1p off income tax.
§ Mr. McGrady
Does the hon. Gentleman agree that if the supply company is not privatised, public funding will not be required to carry out a non-existent exercise?
§ Mr. Marshall
I shall let the hon. Gentleman develop that point later.
May I come to the conclusion of my speech—[Interruption.] I am sure that the House wishes to hear it. We welcome the introduction of natural gas to the Province and will give as much support as possible to encourage successful negotiations with the European Community so that the finance to provide the pipeline can be obtained. However, I repeat that the provision of a pipeline is not dependent either on the privatisation itself or on the form of that privatisation.
As I have said, the proposals represent a tremendous risk—a gamble—with the electricity supply industry in the Province. We should like the Government to reconsider those proposals even at this late stage. If the Government decide to proceed with the privatisation, we should prefer them—I ask the Government to think again about this —to float NIE, which is a vertically integrated company of proven worth. Like many people in the Province, we find the present proposals totally unacceptable. The Minister will not be surprised to learn that if, as I expect, a Division is called tonight, we intend to vote against the proposed order.
§ 5.3 pm
§ Dr. Michael Clark (Rochford)
As both the Minister and the hon. Member for Leicester, South (Mr. Marshall) have said, the Select Committee on Energy has spent a considerable amount of time considering the possible privatisation of the electricity industry in Northern Ireland. One reason for that was that hon. Members representing Northern Ireland made it known to the Select Committee that they were somewhat disturbed by the fact that the privatisation proposals relating to Northern Ireland would pass through the House without debate, and that they were therefore being denied the opportunity to present any case that they might wish to present.
On checking, I learned from my hon. Friend the Under-Secretary of State for Northern Ireland that there had been three days' debate on the proposals in the Northern Ireland Committee. Even so, the Select Committee on Energy thought it appropriate to give wider coverage to the issues involved in privatising the electricity supply industry in Northern Ireland. We took evidence from all the parties in Northern Ireland that wished to come to see us, from the Northern Ireland electricity supply industry, from civic dignitaries in Northern Ireland and from my hon. Friend the Under-Secretary, who gave generously of his time.
As has been said, our report stated that the proposals to privatise the electricity supply industry in Northern Ireland had some admirable features. In particular, we 728 liked the proposal that there should be bidding for the right to supply and provide any new capacity for electricity generation in Northern Ireland. We also welcomed the proposed non-fossil fuel obligation, which I believe would also be welcomed by the hon. Member for Leicester, South.
There are some favourable sites for wind generation in Northern Ireland. I believe that a 300 kW generator has now been commissioned. It is only right that that should be encouraged and that there should be more wind generation in the Province. Small-scale hydro-generation should also be encouraged in the Province. Apart from some areas in the north, there is little scope for hydro-generation in England, but that is not the case in Scotland and in Northern Ireland.
We also praised the Northern Ireland Office's innovative proposals for encouraging energy efficiency, and welcomed the possibility of new supplies of fuel being brought to Northern Ireland, such as through the gas pipeline and the interconnectors. We welcome the fact that the interconnectors will not only come from Scotland, that my hon. Friend has said that he is determined to rebuild the interconnector from Eire. The Select Committee welcomed that decision. I hope that the people of Northern Ireland will do so as well, because it would be an interconnector not only of electricity but of good will.
However, we pointed out that not all the proposals that we thought admirable were wholly dependent on privatisation. Some of the things that are now being suggested could have been carried out in the past—or could be carried out now or in the future—without the electricity supply industry in Northern Ireland necessarily being privatised.
As I said when I intervened earlier in my hon. Friend the Minister's speech, we accept that things do not always get done as one might wish. If privatisation acts as a catalyst by highlighting a problem that has been pushed to one side or by emphasising a solution and hastening its implementation, then we welcome it. If the privatisation proposals have brought to the attention of the Northern Ireland Office the possibility of bringing new fuels to Northern Ireland, which would help to regenerate the economy of the Province by, we hope, ultimately bringing about cheaper electricity, we welcome them.
In 1988, the Select Committee on Energy emphasised the need for competition in the electricity industry in Northern Ireland. I recognise the special difficulties of Northern Ireland. It is possible that those special difficulties might make competition more difficult to obtain, because those who wish to invest in electricity generation may not see Northern Ireland as an attractive area in which to do so.
I also accept that the market in the Province is not too large. Therefore, it will not attract money as the large market of the mainland did. However, if privatisation attracts competition, that competition alone should make privatisation attractive. Competition should bring cheaper prices, which should help to regenerate a difficult and problematic economy.
The Government's proposals to break up Northern Ireland Electricity into the four power stations and the distribution company Northern Ireland Electricity (Transmission, Distribution and Supply) follows to a large extent the pattern adopted in the rest of Great Britain. It should be welcomed in principle. Indeed, if we reprivatised electricity supply on the mainland, we would follow much 729 the same pattern, the only difference being that we would break down the generators into more than the present foursome of National Power, PowerGen, Nuclear Electric and Scottish Power.
I, the Select Committee and many other pople believe that we did not go quite far enough in the electricity privatisation on the mainland. Therefore, it is not a matter of saying that the industry in Northern Ireland should stay together as one entity. One could perhaps say that the previous privatisation did not go far enough.
§ Mr. Jim Marshall
Why does the hon. Gentleman think that the Government chose a different process for Scotland, which has a similar mix of rural and urban and is also relatively small? Why did they go for vertical integration in Scotland rather than the proposal that they have made for Northern Ireland?
§ Dr. Clark
That question should properly be addressed to my hon. Friends the Ministers. The reason for the difference between England and Scotland—which is what I thought the hon. Gentleman was going to ask about—was the complex nature of generation in Scotland. The south of Scotland is heavily dependent on nuclear electricity, so it could not easily be separated out. The north is heavily dependent on hydro-electricity. That, coupled with the fact that, north of the two large cities of Glasgow and Edinburgh, Scotland has a sparse population by the standards of the rest of the island, meant that there had to be a special case for vertical integration over a sparesly populated area.
I see the hon. Gentleman smile. I am trying to second-guess my hon. Friend the Minister. If I am not doing it well, I hope that he will forgive me. If I am doing it brilliantly, I hope that he will praise me. Northern Ireland is much smaller than Scotland. By and large, the population is more concentrated. With its four power stations, it lends itself more readily to being broken up into competitive generators. One hopes that more generators will come along.
I agree with the hon. Member for Leicester, South (Mr. Marshall) that we have still to assess the benefits of breaking up the organisation in Northern Ireland. While undoubtedly, in the fulness of time, competition between the four power stations will bring advantages, in the first instance the loss of economies of scale will bring disadvantages. It will be up to the generators to ensure that they quickly overcome the loss of those economies of scale and show that competition brings savings greater than the losses incurred by breaking up a single entity.
We said in our report that it was a little unclear from the Government's proposals how power purchase agreements would work between the generators and NIE (TDS). How can the consumer be sure that NIE (TDS) will purchase competitively from the generators, particularly as the Government's proposals make provision for the generators to pass on price fluctuations to TDS? Presumably TDS will pass on the fluctuations to Northern Ireland consumers.
I put it to the Minister that there is a need to ensure that the regulator is properly briefed and has the right powers to check carefully that the generators do not pass on bogus price fluctuations, and that they pass on drops in price as quickly as price rises.
The Select Committee made 12 recommendations in its report, and I wish to spend a little time on six of them. One 730 of our recommendations was that the Government should provide in the licence to NIE an independent way to supply electricity directly from the Scottish interconnector. If a large energy user wishes to buy directly from the interconnector instead of through NIE (TDS), it should have the opportunity to do so. If not, there will be a danger that NIE (TDS) will become semi-monopolistic and buy in bulk without passing on its bulk purchase advantages.
One way to keep TDS sharp will be to ensure that large companies which have the purchasing power and ability to do so can buy independently from the Scottish interconnector. That would mean five suppliers of electricity in Northern Ireland—the four power stations plus the interconnector. The interconnector could be seen as another direct supplier to Northern Ireland. If we really believe in competition and breaking down the Northern Ireland supply industry into smaller units, the interconnector from Scotland should be allowed to make the number of generators in Northern Ireland five instead of four.
We made another recommendation about power purchase agreements. One hopes that generators will have incentives to enter into arrangements for price smoothing. They already have the facility to enter into long-term contracts. Indeed, they will inherit some contracts which will continue for another 20 years or more. One must be careful with price smoothing. Companies have to buy forward and make agreements with the generators, but it is no way to run an economy to have electricity prices constantly going up and down.
If prices constantly go down, it is fine. If prices constantly go up, it is not fine but it can be allowed for. But when prices go up and down, it is difficult for any industry anywhere in the world, and perhaps especially in Northern Ireland, to set its costs right so that it can compete on the world and, indeed, the home market. The Select Committee wondered whether it would be possible for the power purchase agreements to allow for some price smoothing and to give incentives for that allowance.
The Committee also made a recommendation about the existing long-term contract. We understand that at least one contract will continue until the year 2024. It is not always certain that to continue the contract is in the best interest of the electricity consumers of Northern Ireland. It is hardly compatible with competition and the moving markets that it tends to encourage and thrive on for a company to be tied to one contract for the next 32 years. Is there any way in which those long-term contracts could be terminated? One does not wish to be unfair to the people who entered into it. It may be necessary to compensate those who lose the contract with Northern Ireland Electricity.
Again, perhaps the regulator would have to be involved. If he were involved strongly enough, it is possible that the long-term contract could be modified voluntarily. If not, perhaps it could be terminated, with appropriate—whatever that word might mean—compensation for the supplier who had lost a long-term contract.
The next recommendation concerns the regulator. The rest of Great Britain has an admirable regulator, and there has been debate about whether he should be given the responsibility of regulating electricity supply in Northern Ireland. The argument for saying that he should is that he is able, he is experienced, he has had a hand in drafting the regulatory framework, and he would be able to bring a lot of that experience to the Northern Ireland electricity industry.
731 Hon. Members representing Northern Ireland draw to our attention the argument against, which is that Northern Ireland is a special case. It prefers someone who is domiciled in Northern Ireland to look after its business. Far too often, Northern Ireland business is regulated—in whichever way one wishes to use the word "regulate"—from London or from the mainland. There is therefore a case for having someone specifically allocated to Northern Ireland.
I think that there is a happy combination of the two, and I believe that that view is shared by members of the Committee. A regulator should be located in Belfast, or some other suitable place, with the sole responsibility of regulating the Northern Ireland electricity supply industry, but he could be under the wing of the United Kingdom regulator, so that he could call upon his experience and on the framework of practice which he has established, thus bringing the best of both worlds to the Province. There could be a Northern Ireland regulator domiciled there, but acting within the framework of the regulator for Great Britain and Northern Ireland.
Another recommendation in the report was that the regulator needs to ensure that the capacity contracted by NIE(TDS) is required and has been chosen on a fully competitive basis, and he must satisfy the regulator accordingly. There is always the danger that NIE may contract capacity which does not have a proven need or a visibly competitive price. The Committee was anxious that that should not be the case and that the regulator should have appropriate powers to ensure that all contracted capacity is needed and that the price is competitive.
If that does not happen, electricity in Northern Ireland will be more expensive than it need be, because built into its price will be an element to cover electricity which has been contracted but is not truly needed.
The final recommendation that I wish to mention, although the report contains another six, concerns energy efficiency. As we understand it, it is proposed that the generators can keep all the benefits of any efficiency that they may achieve in generation. We consider that that is not entirely appropriate, because some benefits should be passed on. To some extent, consumers should get the benefit of more efficient generation. Otherwise, a company which bought the least efficient power station in Northern Ireland in a trade sale—presumably for the cheapest price—could turn it into a fairly efficient power station, although no great shakes, and by so doing would have saved a lot of generating costs in fuel burned and would keep it all for itself, rather than passing any savings on to the consumer.
The consumers will still be charged as though the electricity were generated in an inefficient power station, although the owners of the station, by making it more efficient, will benefit and will have bought the station at a cheap price. There must be an incentive for efficiency, and some of the savings must be directed to the coffers of the owners of the power stations, but some must also pass to the consumer; otherwise, there will he no pressure from consumers for the generator to put his house in order.
As the Minister told us in Committee and in the House, Northern Ireland has historically relied on oil for 70 per cent. of its electricity generation. The industry is fairly isolated due to the geography of the Province, and has 732 industrial disadvantages. We learned from industrialists who came before the Committee of the handicaps they suffer due to adverse electricity prices compared with those in the rest of Great Britain. I and the Committee believe that privatisation will go a considerable way to removing isolation, removing dependency on oil and helping the Northern Ireland economy along the road that we all want for it.
Significantly, the Northern Ireland electricity industry will be in the hands of the people of Northern Ireland, who will have an opportunity to purchase shares of NIE (TDS). On behalf of the people of Northern Ireland, I hope that there will be some scrutiny of those bidding for the four power stations in Northern Ireland to ensure that, if they do not go to Northern Ireland nationals, at least they go to people or organisations with the interests of Northern Ireland at heart.
§ Mr. Roy Beggs (Antrim, East)
While my colleagues and I are aware that the debate will effect no change in the Order in Council, we still wish to discuss these issues until there are changes that would provide more realism.
On 20 March last year, when the proposals to privatise NIE were announced in the House by the Secretary of State for Energy, my party made it clear that it opposed those proposals. I was pleased to have the support then and later of all the other political parties in Northern Ireland for that position.
The Minister has drawn attention to a number of factors in the rather lengthy submission put forward. I do not intend to repeat all that, but, having declared our opposition, we canvassed the views of many interested parties in Northern Ireland, including our constituents, of Northern Ireland Electricity employees at all levels and of the trade unions, bearing in mind their special and specific interests. We took the opportunity to consult the Under-Secretary of State at the Department of Economic Development and the chairman of Northern Ireland Electricity. As a result of those consultations, we felt justified in holding to the opinion that the privatisation proposals, as put forward, would not be of benefit to the development of the energy industry in Northern Ireland.
We pledged our support to the employee buy-out to ensure that some Ulster hands would be on future generation. In view of the Government's intransigence and determination to push through the transfer of NIE to the private sector, with complete disregard for the united opposition from all parties in Northern Ireland and from the Opposition parties at Westminster, we were keen to support the employee buy-out so that some Ulster people would have an involvement in the new electricity companies.
The proposals will not bring competition to the electricity industry in the Province. They will not bring benefit to the Northern Ireland economy, to the people of Northern Ireland or to the energy industry in the Province. I accept that real competition will be the key to lowering costs and that prices are and will remain high for as long as we remain over-dependent on oil for generation. It must also be borne in mind that our generating sets are extremely small compared with mainland generating stations and that we need to maintain a surplus for safety. 733 Real competition will come only when there is a demand for new capacity. Therefore, these proposals are, if anything, premature.
§ Mr. Needham
I agree with the hon. Gentleman's point about real competition being the key. Can he explain how a vertical, integrated structure would allow competition at the point where we both agree competition is vital—the new generating set? Surely a vertically integrated structure would in itself he a major hindrance to any outsider coming in, because he would be faced with a private monopoly against which he would have to compete.
§ Mr. Beggs
The Minister has gone to great lengths to assure us of the strength of the regulations that will be in place. He must also recognise that the likelihood of gas for generation changes the entire picture. He must recognise the possibility of future generation using lignite. Only then will we see the real possibilities and a fall in prices.
Our opposition is not based on dogmatic ideology: it is on a practical level. We have been confronted by a wall of dogmatic ideology which has shown little understanding of the issues at stake. Privatisation theory has been manipulated for the purposes of these proposals which will not satisfy the free market. Our only ideological ground and the ground that we occupy on this matter is what is best for the people of Northern Ireland and the Northern Ireland economy.
§ Mr. Needham
The hon. Gentleman accuses the Government of dogmatic intransigence, but the Government carefully took the advice of the Select Committee, which was that we should go down the route not of a vertically integrated structure, but of as much competition in generation as possible. Is he accusing the Select Committee of a dogmatic, doctrinaire position?
§ Mr. Beggs
As the Minister knows, most Committees of this House on all occasions have a majority representation of Government Members. I am sure that he will accept that, when a vote is called, it will always favour Government proposals, whether or not other members of the Committee have participated in the business.
§ Mr. Jim Marshall
I do not want the Minister to give a misleading account of the Select Committee's suggestion. It was that the best way to create competition in the electricity supply industry was by encouraging competition in the generating sector.
§ Mr. Marshall
I see the Chairman of the Select Committee agreeing on that. The questions that must be asked—the Select Committee did not come to a definite conclusion on this—is whether competition can be introduced into the generating sector of NIE as it exists and whether further developments of power stations are likely to enhance the prospect of greater competition.
§ Mr. Beggs
I thank the hon. Gentleman for that intervention, and I shall deal with it shortly. Meantime, one notes the absence of any necessity for major representation of Conservative Members in the House during this debate. That is for the simple reason that, when a vote is taken at whatever time this evening, there will be sufficient numbers to see through the Government's policies.
§ Dr. Clark
May I clarify the composition of the Energy Select Committee? There are six Members from the Government side and five from the Opposition Benches. The Chairman has a casting vote only—he does not have a primary vote. Therefore, the ratio is 5:5, with a Chairman who happens to be from the Government side. In any event, this particular report was passed unanimously and there was no need for any vote at any stage in our deliberations.
§ Mr. Beggs
I thank the hon. Gentleman for his contribution and I accept what he says. I hope that he too will accept that those of us who come from the Province are at the coal face. We are fully aware of the difficulties facing NIE and its management. We are aware that, if previous Northern Ireland Ministers had had the same enthusiasm for a gas pipeline or for providing interconnection, the moneys might have been voted to the NIE which would have carried out the direction dutifully.
§ Rev. Ian Paisley
In its conclusions, the Energy Select Committee report emphasises:In 1988 we emphasised the need for competition in generating if Northern Ireland consumers were to benefit from privatisation, and it is disappointing that the degree of competition the Government's proposals will make possible is so limited.The Committee criticised the proposals rather than, as the Minister suggested, more or less put a benediction on them, if I may use that theological term.
§ Mr. Beggs
I thank the hon. Gentleman for that contribution, and I am coming to that point.
The general duty of the Department, as stated in article 4 of the electricity order, is to promote competition in the generation and supply of electricity. These proposals will not facilitate the exercise of that duty, because genuine competition will not be possible at this time. Any competition that prevails will be under the artificial conditions for competition devised by the Department of Economic Development.
NIE is a vertically integrated generation, transmission, distribution and supply industry. As yet, there is no interconnection with the mainland grid. The interconnector to the Republic of Ireland was not reinstated following its destruction by terrorists. Practically all generation of electricity in the Province is at the four power stations, which operate on a merit order system, whereby a central control unit places first in merit order whichever generating sets are producing the cheapest electricity at a given time. Consequently, the four power stations can be seen as one unit. I defy anyone to say that we can suddenly create competition between them. They already compete to provide the cheapest possible electricity to the people of Northern Ireland. Only when there is new generation will there be greater competition.
The general intention of the order is that it should depart from the model of the Electricity Act 1989 only where local circumstances make it necessary or desirable to do so. That does not take account of the great difference between the electricity industries in England and Wales and in Northern Ireland. The fact that the Northern Ireland grid is isolated has not been given due consideration and neither has the size of the Northern Ireland system. In Northern Ireland, generating capacity, is 2,100 MW, but in Great Britain it is about 67,000 MW.
735 The maximum demand recorded in Ulster from 1987 to 1989 was 1,326 MW, compared with 46,935 MW in England and Wales.
Because of the small size of the Northern Ireland system, the economies of scale available in the larger systems in England and Wales cannot be achieved. The consequence is that, in Northern Ireland, the optimum set size is about 140 MW compared with 600 MW sets in use in England and Wales. Furthermore, a system using smaller generating sets must maintain a higher reserve capacity. Such a system cannot be privatised by simplistic adaptation of the Electricity Act 1989. Paragraph 69(1) of the draft Electricity (Northern Ireland) Order states:Before such a date as the Department may direct, Northern Ireland Electricity shall make a scheme (a 'transfer scheme') for the division of all its assets and liabilities (other than excepted rights and liabilities) between 2 or more companies nominated by the Department for the purposes of this paragraph; and of the companies so nominated—
My party would accept privatisation of NIE, as a vertically integrated system, but the Government have a short-sighted view that would simply replace a public monopoly with a private one. We are prepared to look to the future of the entire energy industry in Northern Ireland rather than to adopt a short-term policy for one aspect of that vital industry because of political ideology. It will be detrimental to the development of the energy industry of Northern Ireland to divide NIE into separate units for the sake of staging a charade with regard to competition.
- (a) one shall be designated as a generating company; and
- (b) one shall be designated as a transmission and supply company."
Belfast West and Coolkeeragh power stations are due to be retired by 1998 and 2004. They play a full role in the merit order system and would continue to do so in a vertically integrated industry, whether NIE were privatised or not.
I accept the economic reality that the combined cycle gas turbine conversion of Kilroot would make economic sense, but that has become a reality only since the commitment to bring gas to Northern Ireland. Has NIE in the past been prohibited by the Government from receiving the necessary funding to install the pipeline? We cannot allow the Minister to pass all the blame to NIE and its management and to claim all the achievements. That must be challenged. Had previous Ministers been as enthusiastic and foresighted as the present one, money could have been found to provide this link.
Even so, the Minister has asked several times where the money would be found to provide the pipelines. However, he is much more aware than I of the tremendous profits that were generated by NIE last year. I am sure that, if two years' profits, which were huge, had been allowed to go towards the cost of the gas pipeline, the profits of the next two years would have provided the necessary share of the cost of the interconnector. If NIE had had the freedom and encouragement, we might have had the gas pipeline in place and the interconnector installed.
§ Mr. Mallon
The hon. Gentleman makes an interesting point. In a year when profits of about £90 million were made, electricity prices went up between 8 and 9 per cent. Was that money reinvested in the Northern Ireland 736 Electricity Service, or was it kept in the kitty to be an attractive selling point when privatisation arose? That is a crucial question.
§ Mr. Beggs
I can only say that the hon. Gentleman has rightly raised our suspicions about the fact that there has been a lot of encouragement recently to fatten the calf, as the hon. Member for South Down (Mr. McGrady) said. NIE has suddenly become attractive for a sell-off, and it is possible—only the Minister can tell us—that the money went straight into the kitty, because we know that the Government are a bit hard up.
§ Mr. Roger Stott (Wigan)
I am following the hon. Gentleman's argument with interest. He has asked the Minister about the cost of providing the interconnector and the gas pipeline. I believe that the profits of NIE were paid directly into the Treasury. If that were the case, what the Treasury has done with that money—or some of it —is to reimburse some of the poll tax payers in the rest of the United Kingdom because of the awful mess that the Government made of it. The Government have put £44 million of wasteful expenditure into a tax that is universally reviled. The hon. Gentleman and his colleagues should be grateful that that tax was not visited upon them and the rest of Northern Ireland. NIE's profits have probably gone to offset the mammoth cock-up of the poll tax.
§ Mr. Needham
I believe that I can help the hon. Gentleman. NIE's accumulated losses in the past were substantial, and therefore the profits that it has made recently have helped to cover those losses. In fact, the hon. Gentleman's argument supports the case for getting NIE out of the hands of the Treasury and the claws of public expenditure constraints and establishing a competitive system. I am grateful for the hon. Gentleman's help on that argument.
§ Mr. Beggs
I am grateful for the Minister's observation, but I remind him that, if there is one thing that aggravates and annoys the Northern Ireland electorate, irrespective of which political group they owe allegiance to, it is the suggestion that they have been unwilling to pay their way or that they are spongers. We can all take pride in the achievements of NIE in clearing its outstanding debts and ensuring that we are paying our way. We are also paying our way by providing cheaper energy resources and better connections with the mainland.
§ Mr. McGrady
Does the hon. Gentleman recall that, when the Minister was asked in Committee about the £90 million profit. his response was not that it had gone to the Treasury but that it had been kept in the coffers of Northern Ireland Electricity for future capital expenditure? The hon. Gentleman should also point out that the profit was so great because depreciation was not charged, although depreciation of capital assets had exterminated the assets many years before. Which story are we to believe about the end product of that money?
§ Mr. Beggs
There is an old saying that you live and learn. As I come from Larne, I am still learning, and I have learnt a lot more this afternoon.
I do not want to get lost altogether. It would be ungracious not to recognise the Minister's commitment in 737 helping to make possible the natural gas supply to Northern Ireland. We appreciate that. I hope that the Minister will clarify—I did not quite catch his earlier remarks—whether British Gas will be responsible for the pipeline and whether it will be most likely to be favoured with the opportunity of operating it in Ballylumford power station. We all look forward to the additional spin-off and the possibility of downstream employment. New jobs will always be welcomed, though it is doubtful whether those will balance the overall number of jobs likely to be lost in the industry.
In welcoming article 4(5), which says that the Department will take into account the protection of consumers in rural areas, and paragraph (6), which says that the Department will take into account the interests of pensioners and the disabled, I wondered why there was no special provision for infants and children under school age, who are often at risk in low-income households. Why were they not included?
§ Mr. Mallon
In relation to the £90 million that somehow left the system, surely it could be argued that, in a year when substantial profits were made, that sum should have been ploughed back into the infrastructure, especially in rural areas where the supply of electricity and the structural requirements are inadequate. It is crucial that we realise that that money could have been used where it was needed and, as the Minister said earlier, we could have been standing on a level playing field. The playing field simply is not level and, unfortunately, the money to make it level has been handed over.
§ Mr. Beggs
I thank the hon. Gentleman for his observations. There is no doubt that, in any industry or enterprise, profits should be reinvested for the betterment of that industry and those served by it.
Reference is made throughout the order to fees that may be prescribed in respect of a licence authorising the supply of electricity. Does the Minister recognise that, in the case of very small generators, especially those using non-fossil fuels, exorbitant licence fees could render generation uneconomic? Will he assure us that licence fees will be kept reasonable? What is the likely scale of fees and the circumstances of exemption from the need to have a licence to supply or generate electricity?
Article 15(1) states:The Director may make to the Monopolies Commission a reference which is so framed as to require the Commission to investigate and report".Has the proposed sell-off of Ballylumford power station to what appears to be the most-favoured purchaser been considered by the Monopolies and Mergers Commission or the Office of Fair Trading, or is the Minister confident that none of the disappointed bidders will follow that course, feeling aggrieved?
In welcoming the planned interconnection between Northern Ireland and the national electricity grid as a right of Northern Ireland Electricity consumers, I am conscious of the fact that, although that decision will not necessarily create new jobs in Scotland, it is likely to reduce jobs in Northern Ireland, especially in my constituency. We depend very much on overall prosperity within the Northern Ireland economy creating additional jobs. The House will be interested to know how many jobs have been lost to date through voluntary redundancies in Northern Ireland Electricity's reorganisation. How many more job losses does the Minister expect after privatisation?
738 Similarly, the promise of a natural gas pipeline to Northern Ireland became popular because it too is likely to attract EC funding, as gas will be used for generation in Northern Ireland power stations in future. However, there is a cheaper option than installing costly equipment in power stations and burning oil and coal to achieve compliance with EC standards on emissions from power stations. That has played the biggest part in the urgency to get gas to Northern Ireland. The Scottish interconnector and the gas pipeline would have happened long ago had the Government and the Northern Ireland departments so directed and funded NIE. Those projects are therefore not happening simply as a result of privatisation of our electricity industry.
I welcome and look forward to the study on non-fossil fuels which the Minister said will be published in April this year. Article 35 deals with electricity from non-fossil fuel sources. Can the Minister advise the House on the non-fossil fuel obligation in Northern Ireland? Can he give an undertaking that Scottish Hydro will not swallow up the total allocation in respect of Northern Ireland, and that Northern Ireland generators will have incentives to expand and develop hydro-electric and wind generation through contracts that are sufficiently long to secure the return of capital investment?
In encouraging wind generation, the Minister will need to look closely at the eastern side of the Province, so much of which has been designated as areas of outstanding natural beauty that it is virtually impossible to develop the land to provide employment. My constituents and I believe that insufficient encouragement is given to Northern Ireland generators to maximise the generation potential of non-fossil fuel sources. We would welcome any support given to wind farms and hydro-electric generation. It is surprising that more has not been done in that area, because we are over-dependent on nonrenewable energy sources. I hope that it will be possible to provide generators using non-fossil fuels with fairer prices for generation in the future and to give them the incentive to help them to recover capital investments and research project costs.
Article 53 refers to a report from the director general of electricity being laid before the Assembly. It also refers to copies of directions given by the Department being laid before the Assembly, subject to certain conditions. I think that we all welcome the confidence expressed in the order that there will soon be an Assembly in Northern Ireland. Can the Minister confirm that today's talks have been successful and that much progress has been made which should fill us with optimism for the future?
Article 87 deals with compensation to members and employees of NIE. What are the minimum and maximum redundancy payments that have been made or offered to date? We want to know a little of what is happening, without causing any breaches of confidence.
Schedule 1 deals with pensions. We all wish to be assured that former employees of NIE will not be worse off in the successor companies. We want those companies to be under a legal obligation to ensure that the benefits that pensioners and contributors have already earned will be fully protected.
Schedule 2 deals with the consumer committee for electricty and the possibility of sub-committees, including local ones, being set up. I hope that the Minister will use his influence with the director general of electricity supply 739 for Northern Ireland, when he or she is appointed, to encourage the appointment of elected representative of constitutional political parties to such committees.
It is a matter of great regret that the opposition of Northern Ireland political parties to the Government's proposals to privatise NIE has not been recognised and the alternative of a vertically integrated privatised electricity industry is unacceptable. I am disappointed at the crumb that is likely to be offered to the employee buy-out. Some people have been sceptical, and believe that the privatisation process was sewn up long ago in favour of favourite bidders.
We shall be dependent on strong regulations in Northern Ireland to keep prices down when costs rise, as I believe they will. The contrived privatisation of electricity in Northern Ireland may not prove to be in the best interests of the country. For that reason, my colleagues and I will have to vote against the order. We still believe that a vertically integrated electricity industry, with its natural gas and with the Scottish connector in place, would provide a secure system and, ultimately, competition at the right price for consumers in Northern Ireland.
§ 6.4 pm
§ Rev. Ian Paisley (Antrim, North)
I understand that the Minister began by passing strictures on absentees from the debate. Some of us had business with the Secretary of State and were asked to be present at a meeting. We made representations saying that today's important debate would be in progress, but we were told that it was our duty to attend another place. I greatly resent the fact that a Minister who knew that should pass strictures on us.
§ Mr. Needham
I assure the hon. Gentleman that I had absolutely no intention of suggesting that he was not in his place, as I was well aware of the importance of the meeting that he was attending. I was referring not to the hon. Gentleman or his colleagues but to some of his hon. Friends, whom I had expected might have been present. I was looking forward to hearing their contributions and entering into debate with them. If my disappointment was slightly exaggerated, I willingly apologise to the hon. Gentleman.
§ Rev. Ian Paisley
My Friends experienced difficulty getting to the House because of the fog. I, too, expected them to be present. Their absence was not because of fog in their minds. I think that they would have dispelled the fog in the Minister's mind as to their views on privatisation. I accept the Minister's explanation. My colleagues and I were absent not out of any discourtesy to him. Because of business in another part of the House, I may not be present during the Minister's winding-up speech, but I shall diligently read what he says and no doubt talk to him about it later.
I greatly regret that the Government are making such speed on the legislation. I thought that we should have had fuller consultation on the matter. I notice that on page XXII, paragraph 55, the Minister's Committee, which he praised, said:We emphasise the need for the Government to clarify matters such as these before pushing ahead".We have not received that clarification. I do not know whether the Minister has clarified matters.
740 The report continues:we recommend that the Secretary of State arrange detailed consultations with the Northern Ireland political parties before the legislation is finalised.
§ Dr. Michael Clark
I am perhaps speaking on behalf of the Minister as well as myself. The hon. Member for Antrim, North (Rev. Ian Paisley) referred to the Minister's report—the Minister may not wish to own the report, but I am delighted to do so. It is the report of the Select Committee on Energy, not the Minister's.
§ Rev. Ian Paisley
I apologise for dubbing the report with the Minister's name. I am sure that if its pages could speak, they would cry out mightily and say that they want no connection with the Minister. I apologise for the fact that I made the slip, and I apologise to the Select Committee Chairman, the hon. Member for Rochford (Dr. Clark).
The report, which the Minister earlier called to his aid, stated:We recommend that the Secretary of State arrange detailed consultations".I do not know whether the Secretary of State did so, but neither I nor any of my friends were invited. In fairness to the Minister, he did have consultations with us, but they were at a lower level, not at a high level. The three leaders of the political parties in the House expressed a desire to talk to the Prime Minister on this subject, but that meeting was not forthcoming.
We feel that there has been a bit of a rush. As the Minister knows. Northern Ireland is a great place for rumours. I do not know why there is such a rush, but people tell me that all sorts of things are happening. I do not think that it is good for the Province to have a question mark hanging over such an important decision. Caesar's wife should be beyond accusation—the Minister has been unduly hasty on the matter. He must now tell the House why there is such a rush. Are the lamps going to go out in the streets? Is there going to be a crisis?
I trust that the Minister will tell us and lay to rest the serious accusations that have been made about the fattening of the calf. It certainly was not being fattened for the return of a prodigal son but was being fattened for the return of other people who, for some time, had not been as prominent as they might have wanted to be. Here they have the opportunity to be so. I could go on and on—
§ Mr. Needham
It was a very mangy beast that was being fattened. It made £350 million-worth of losses, so it was a little short of sustenance. The profits that it has since made have gone some way towards giving it back its proper weight and colour, which it needs if we are to have a successful industry in Northern Ireland.
§ Rev. Ian Paisley
I am sure that the Minister has little farming experience, although his forebears practised farming in South Down. If he knows the scriptures, he will remember that it was the lean kine that had the enormous appetites, swallowing up the well-reared kine. Perhaps this swallowing is taking place to make the beasts in question even fatter.
I want to know about the future. It has already been suggested that the generating stations that do not look so good now could be given cosmetic treatment to make them very profitable—but consumers would not benefit from such an exercise. We should keep our eye on that.
741 I do not believe that the Minister's ideal of competition will mean lower prices. I do not think that we will have real competition under the Government's scheme. In fact, consumer prices will rise. There will be a detrimental effect on those employed by NIE—the scheme will lead to unemployment. The Minister has already been challenged to say how many people have been made redundant or have taken voluntary redundancy. Employment prospects in NIE are not good.
I remind the Minister that when he met my colleagues and me I asked whether he could guarantee people's jobs. He brought his fist down on the table and said, "You know that you cannot ask a question like that and get an answer, because I don't know." That was at least an honest answer, but the trickle-down effect has already started; we fear that the trickle may become a torrent and that many jobs will be lost in the industry.
The Government claim that the privatisation scheme will introduce forms of competition that will result in the lowest possible prices for consumers. Are the Government really introducing such forms of competition across the board? They are not. Their ideal—making electricity prices lower—would be welcome, but the proposals are fundamentally flawed. The Northern Ireland marketplace is neither large enough nor diverse enough to sustain the amount of competition that the Government think will follow.
I am glad that the Select Committee's report pointed out that very factor in its conclusions. Paragraph 54 reads:In 1988 we emphasised the need for competition in generating if Northern Ireland consumers were to benefit from privatisation, and it is disappointing that the degree of competition the Government proposals will make possible is so limited.Competition, which was to be the be-all and end-all of the great scheme, is limited; yet the Minister has introduced it with great gusto. He has been smiling on the television box and has been going around the country telling people about the great advantages of competition—despite the lack of it.
§ Rev. Ian Paisley
I am in favour of competition right across the board, but I have said already that Northern Ireland's size and the capacity that it has make competition difficult.
I was thoroughly examined by the Select Committee on Energy, whose members were tougher on me than on any other hon. Member. I told one of its members that he was asking hard questions and was told that they had been well prepared. I am glad that hon. Members are doing their job so well. I said:The Government appears to be operating from a standpoint that what is good for the rest of the United Kingdom is good enough for Ulster.Of course, Opposition Members do not agree with privatisation anyway because they have a doctrinaire view on it. I, however, would be happy if what was good for the rest of the United Kingdom was good for us, but it definitely is not—Northern Ireland happens to be different.
I gather that the Prime Minister has told the people of Scotland that, if they are to have devolution, they will have to pay for it in the form of a special tax. I do not know how much the Minister plans to make us pay if we get some sort of devolved government. It will be something more than a 742 poll tax—it will be a new Assembly tax which we will have to pay for the privilege of democratically taking our own decisions.
To return to my evidence to the Select Committee, I said:Everyone who knows about dependent economies and knows about Ulster's social and economic problems will understand that there are certain intrinsic differences which mark Ulster as a place for special consideration. I believe that this legislation will severely handicap Northern Ireland. I also believe that the Government's proposals have not in themselves been properly thought through.It was clear at our meeting with the Minister that the new boss thought that the privatisation proposal was the most complicated development that he had encountered in his business career. It is certainly not all plain sailing, as the Minister would have us believe.
Did the General Consumer Council for Northern Ireland think that privatisation would be wonderful for consumers'? I know that the Minister burned the midnight oil, reading, with his glasses well shined, a document called "Privatising Electricity in Northern Ireland: The Consumer Perspective". I know that he spent a great deal of time parsing the sentences of that report. It said that 48 per cent. of those surveyed were opposed to privatisation. Only 4 per cent. of those surveyed were strongly in favour of privatisation. Thirty-seven per cent. concluded that privatisation would make no difference in terms of efficiency, compared with 10 per cent. who claimed that NIE would he more efficient if privately owned.
It was also agreed by a majority of those surveyed that prices would rise under private ownership. The consumer council's chairman, Lady McCollum, said:as far as consumers are concerned the quality of service and price of electricity are more important than who owns the industry.I agree. She went on:competition as a general rule benefits consumers but the small size of the Province's system may restrict the scope for such benefits here.That was a warning shot across the Minister's bows.
§ Mr. Needham
The hon. Gentleman says that he is in favour of competition. What sort of competition would he like to see introduced to Northern Ireland's electricity system?
§ Rev. Ian Paisley
If the Minister follows the thread of my argument, he will understand that I am saying that, because of Northern Ireland's size and its dependent economy, it is difficult to have competition. The Minister's theory is that, because it works in the rest of the United Kingdom, it will work in Northern Ireland, but that is not so.
I have no doctrinal view on privatisation, but I know that Northern Ireland Electricity does a good job to the best of its ability and delivers the goods very well. Every hon. Member knows that difficulties and costs are associated with linkage, but I do not think that privatisation will cut those costs. The Minister could not say with his hand on his heart, "Yes, you will be able to link into the service more cheaply." If he did say that, I would doubt his word—I will not put it any higher than that.
The Government's proposal is unacceptable to the vast majority of Northern Ireland's people. No business men have knocked on my door saying, "Let us get this 743 privatised." People in the business community have the same view as general consumers—that they will be badly hit.
I am sure that the Minister is a great supporter of the CBI and likes to quote it when it suits him. The CBI says:it is thus true to report that the proportion of business people in the Province are not wedded to privatisation".The CBI says that not because it takes a doctrinaire stand but because it thinks that privatisation willbe to the disadvantage to the Province from pure cost and supply.Does the Minister think that he is right and that every-one else is wrong? Does he believe that surveys and business people are absolutely wrong and that he has found something that they have not? Time will show that the Minister has taken a wrong turn that will affect Northern Ireland, people more than it will affect him. During the time that he is in Northern Ireland, he uses only a little electricity, but the population burn the whole of the generated supply, and people will find that prices and the cost of interconnecting will increase. The competition that they have been told about will not occur. Where will that leave the population of Northern Ireland? People will be seriously affected.
Was the Northern Ireland Economic Council wrong when it said:against the disadvantages must be set the longer term damage to employment which may result if a major proportion of our electricity needs are met by imports rather than being generated by indigenous power stations"?It would be better for the Minister to withdraw his Order in Council and to hold the consultations that were sought by the Select Committee on Energy. The matter should be looked at again; the Minister should lay down his crusading spear and take up a peace initiative with the people who are trying to get him to listen. We are asking the Minister just to listen to us; if he did, he might agree that there is something in what is being said.
As the Minister knows, not many issues unite Northern Ireland's people and on few occasions will he find all the political parties in the Province, including the Communist party, republicans, loyalists and Protestants saying, "Minister, you are wrong." That is happening, and the Minister should pay heed to it and realise that the greatest act that he could do for Northern Ireland would be to withdraw the proposals, listen to representations and look at the issue again. The matter has gone too fast and too far, and moves were going on before the legislation reached the House.
§ Mr. Stott
I am sure the hon. Gentleman remembers that the last time the constitutional parties that are represented in the House came together to oppose an Order in Council was on the Northern Ireland Education Reform Order. At that time, the hon. Gentleman and I and other hon. Members told the Minister of State, the hon. Member for Peterborough (Dr. Mawhinney), who had responsibility for education, that the time scale for implementation would have a catastrophic effect on education in Northern Ireland. The Minister's successor has finally listened to what we said two years ago. He slowed down the rate of implementation of the provisions of that order, because we were right and the Minister was wrong.
§ Rev. Ian Paisley
I should like the Minister to slow down and look at the matter again. Where is the money for advertisements coming from? Are they another effort to extend benefits to the companies that will buy into Northern Ireland Electricity? We are told that £50,000 is set aside for advertising. The people of Northern Ireland are not so naive as to believe the statement about the matter. According to a newspaper report,A spokesman refused to divulge how much the advert was costing and how much the leaflets that had been distributed are costing. He said 'All companies get involved in corporate credibility advertising. These ads are in response to our market research which showed that we were perceived as monopolistic and bureaucratic'.Those advertisements praise privatisation even before it has been approved by the House.
During much of the progress that has been made, the House has been ignored. Before it has voted on the Order in Council, advertisements have appeared saying how good privatisation is. Who ordered those newspaper advertisements? How much did they cost, and why do they advertise privatisation of the industry before the House has placed its seal of approval on what the Minister seeks? If the Minister cannot answer in his winding-up speech, perhaps he will write to me on those matters.
§ Mr. Eddie McGrady (South Down)
I hope that the Minister will agree to take cognisance of the fact that all Northern Ireland Members of Parliament, whatever their viewpoint or standpoint, are sincere in their endeavours to ensure that the result of this piece of legislation will benefit the people of Northern Ireland, be they large consumers or one-person households. It is a complex piece of legislation, and we are greatly concerned about it, because of its great potential for enhancing or destroying Northern Ireland's future, both economically and socially.
Because of its grave consequences, it is absolutely disgraceful that this legislation should come before the House in the form of an order. It should have come before the House as primary legislation. The order negatives a substantial part of the role played by hon. Members. It deprives them of the ability to amend or change one sentence, word or letter of the order. As it is impossible to change the order, I do not intend to deal with the details, which cannot be changed. Instead, I intend to address one or two of the principles that the Minister said underlie the order.
Before I do so, it is interesting to observe that, in his speech tonight, as in his contributions to the Committee proceedings and the consultative process, the Minister engaged the minds of the participants in the details and arrangements of the order and deflected many of them from continuing to deal with the principle of the exercise. He deflected the debate from unanimous opposition to the order, to its details.
At one point, the leader of the Ulster Unionist party said:We in the Ulster Unionist Party have no particular hang-ups on the arguments over the merits of privatisation."—[Official Report, 29 July 1988; Vol. 138, c. 606.]At the first meeting of the Northern Ireland Committee, when referring to the proposed flotation of the transmission, distribution and supply company, the right hon. Member for Lagan Valley (Mr. Molyneaux) said 745 that, if there was support for privatisation, he would be happy to do so, provided that the general public could apply for shares.
At the second afternoon sitting of the Northern Ireland Committee on 13 June 1991, the hon. Member for Antrim, South (Mr. Forsythe), who I understand is the Ulster Unionist party's energy spokesman, said that he would accept that Northern Ireland Electricity should be privatised, with strong regulatory bodies and an elected member, or members, to protect the consumer interest. Creeping acceptance of privatisation is to be regretted. There ought to be strong and united opposition to all aspects of that process.
My party considers that the privatisation of NIE as it stands represents the worst of both worlds. A privatised absolute monopoly would supply and distribute electricity in Northern Ireland. My party remains firm in its conviction, that, in the context of Northern Ireland, privatisation is wrong, not from any particular dogmatic political viewpoint—I see that the Minister smiles and laughs. We have already experienced disadvantage from lack of competition and real alternative sources of supply as a result of the privatisation of other industries. I refer in particular to telephones, to which the Minister referred earlier.
My party is also worried about the follow-on consequences of the order. We do not altogether accept the Minister's arguments.
§ Mr. Needham
Does the hon. Gentleman not welcome the fact that his constituents are paying 27 per cent. less for their telephone calls? Does he intend to continue to oppose the privatisation of Short Brothers plc and Harland and Woolf? Is the hon. Gentleman content that Northern Ireland Electricity should continue to be run as it was in the past, with all the problems that that meant for him and his party in the past and all that it means for him now? Is that what the hon. Gentleman is telling his constituents and the House?
§ Mr. McGrady
I have not yet completed my remarks, and I have made no reference whatsoever to my contentment or discontent with the present position. The Minister has jumped the gun.
The Minister has chosen to use two arguments in introducing the order. He says that it will introduce competition into the supply of fuel and into the cost of energy supply. He also says that it will be extremely beneficial to consumers, particularly to industrial consumers. I challenge both statements. If those twin pillars of his argument are knocked down, we are left with another translation of Tory dogma, as we had with health, social services and education from England, Scotland and Wales to Northern Ireland. Something that was tailored—or not tailored, as the case may be—for the rest of the United Kingdom does not fit the body politic in Northern Ireland. I fear that the same will be true of this order.
I am aware of the many deficiencies and inefficiencies and of the political interference in NIE's current arrangements. The people I represent and I myself will never forget the withdrawal of electricity from our homes, especially from the homes of the sick and the elderly, and from industry, in furtherance of a plot to overthrow the legitimate Government of Northern Ireland at that time. That policy and action was aided and abetted by all those employed at Northern Ireland Electricity, from the very 746 top to the very bottom. I refer to the withdrawal of power in 1974 during the workers' strike. It was attempted again, although it was an abortive attempt, a couple of years later.
I have every reason to be conscious of the sectarian employment practices in Northern Ireland Electricity. Sectarian manipulation of practices went on, and continues to go on, in the allocation of contracts. These practices have gone on for the last 18 years, and beyond, but Northern Ireland has been under direct rule for 18 years. Despite these grave misgivings and concerns, and despite the inefficiencies to which the Minister so often referred, we still oppose the order.
It is alleged that the Minister's twin-pillar approach will bring down prices and, consequently, benefit the consumer. The Minister admits that there can be no competition in the transmission, distribution and supply of energy. That is already on the record. The public company that will be established under the order will be a total monopoly. It will be the interface between the consumer and the electricity generator. Nobody else will be concerned. Northern Ireland consumers will be unable to obtain a supply from a competitor. That applies to industrialists and single householders.
§ Mr. Needham
The hon. Gentleman knows that I did not say that. I have stated all along that it will take time to bring about competition, and that it will not be easy. However, I can think of a large number of cases where we have introduced competition into supply—for example, the Northern Ireland Housing Executive. What I said was that, to start with, there is no immediate means by which competition can be introduced into supply. That is not, however, the Government's long-term ambition, which the hon. Gentleman knows perfectly well
§ Mr. McGrady
At no point tonight, or in Committee, has the Minister suggested that the Government intend to set up a rival public company to deal with transmission, distribution and supply.
§ Mr. Needham
If the hon. Gentleman reads carefully the documents that are in the public domain, he will note that there is such a thing as a second-tier supplier. We shall not set up new supplying organisations; in time, existing purchasers will be able to buy direct from the generator or the interconnector, rather than going through TDS.
§ Mr. McGrady
The Minister seems to be saying that certain people will be able to bypass TDS and buy directly from the generator. Will only those who are big and powerful enough to negotiate a direct supply be able to do that? I am concerned about the farmer and the householder in my constituency, who will not have the financial might to negotiate a separate deal personally. A parallel can be drawn with British Telecom. There is no separate supply in Northern Ireland; we have no choice. In such circumstances, the consumer is the victim of whatever whim or fancy is imposed by a large company at any time.
§ Mr. Needham
The hon. Gentleman cannot have it both ways. He cannot say that he is opposed to the idea of TDS as a monopoly supplier, and then protest when I tell him that that is not necessarily the case—that, for instance, the hospitals and the Housing Executive could buy direct, thus forcing down prices and introducing competition. What does the hon. Gentleman want?
§ Mr. McGrady
The Minister misrepresents what I am saying. Whatever it buys, the Housing Executive cannot send an electricity unit down the line to one house at one price, while an individual sends it to another house at another price—unless two people living side by side are to bear separate costs, simply because of the might of negotiation.
It is suggested that, because shareholders in the monopoly plc might be Northern Ireland residents, that might make everything all right. As I pointed out to the Minister in the Committee, however, the needs and desires of shareholders are diametrically opposed to those of consumers: the two groups are on opposite sides of the financial argument. The shareholder wishes to maximise profits, and that is done by means of efficiency and price structures. Efficiency should, we hope, help the consumer, but price structures will prevent the supply of low-cost energy.
The Minister argues that it is necessary to establish a privatised company to achieve many of the benefits that he mentioned in his opening speech. He cited the "green" environmental issue, with all that that entails; improved efficiency, with better business and production methods; alternative fuels; and the "profit and prices" syndrome. Given proper professional supervision and expertise, all those goals should have been achieved over the years by NIE in its present form, with the guidance of the Department of Economic Development.
Why, then, were they not achieved? The answer must be that the Department does not contain people with the professionalism, expertise and strength of character to provide the necessary instruction, and exercise the required control. The blame does not lie entirely with NIE, although it must shoulder some of that blame; in some measure, the blame must lie with the overseeing Department, which did not force the company along the admirable paths which—or so we are told—privatisation, with all its history, will now voluntarily embrace.
§ Mr. Needham
As the hon. Gentleman must know perfectly well—and would know even better if events in 1974 had allowed him to sit where I am sitting—my civil servants, admirable though they are, are not professional power workers, station managers or technicians. I am sure that the hon. Gentleman did not mean to criticise them. They, like the Minister they serve, must take advice from professionals within NIE. Unlike the new system, a public monopoly is not open to transparent regulations; the advice that is given is, to say the least, parti pris. The hon. Gentleman clearly wishes to continue with exactly the same system that led to the problems of 1974, and left us with an electricity system that is not as efficient as it ought to be.
§ Mr. McGrady
I did not say what the Minister has suggested I said. I said that all the aims to which he refers could and should have been achieved through proper supervision of the Department. The Minister can point to the civil servants if he wishes, but I do not expect any of them to be professionals. In every other walk of life, the Government bring in advisers. I am sure that that the Minister has played a part in the appointment of members of the board of NIE—people of character, substance and experience, who allegedly know all about business and represent the best of Northern Ireland expertise. They—let 748 alone the civil servants—should have been able to run the industry with the consumer, efficiency, the green policy and alternative fuels in mind.
§ Mr. McGrady
I am not in a position to say; but they either did not have the desired effect or—if they were worth while—simply were not implemented. That question must now lie with the investigative bodies that control NIE.
§ Mr. Mallon
May I highlight a crucial point in the interesting exchange between my hon. Friend and the Minister? It all seems, more or less, to boil down to choice. Those who are critical of the efficiency standards of the electricity service in Northern Ireland must, it appears, favour privatisation—yet many of us are strongly critical of that service, while simultaneously believing that privatisation was not the way to deal with the problem.
§ Mr. McGrady
My hon. Friend, with his usual clarity and logic, has helped me to make the point that I was trying, without much success, to get across.
I want to come now to the question of generation and to the introduction of competition in respect of price. The argument can be distilled into two points. In other words, it is alleged that competition will arise on two fronts—between companies using the same fuel, and between companies using different fuels. If we are to believe all that we are told, there will be multiple competition in this area, leading to really competitive prices fo the consumer. However, this matter must be considered against the backcloth of the reality in Northern Ireland, which has a limited population—1.5 million—scattered throughout an area where accessibility varies.
In previous debates on this matter, the Minister has said that the supply company will buy from the generating company that provides energy most cheaply. Apparently it is anticipated that the supply company wil buy on a day-to-day basis, switching from one company to another according to prevailing prices. It seems to me that that is a particularly simple—I almost used the word "naive"—interpretation of what I think will happen in practice. The Chairman of the Select Committee on Energy referred to long-term contracts up the year 2024.
In the context of meaningful contracts that set out time spans and guarantees, will this day-to-day switching be possible? Notwithstanding my puzzlement in respect of this matter, the Minister, at the second meeting of the Committee, on 13 June, said:The basis of the scheme is that the transmission, distribution and supply company, a separate, publicly floated company subject to regulation and with a consumer council interest, will itself determine the merit order, of fuels from which it draws down power. If, for example, gas is cheaper today, lignite tomorrow, oil the day after and coal the day after that, competition will draw down the cheapest fuel being generated in Northern Ireland. That is why we have separated the generators from the transmission, distribution and supply business. The regulator is there to ensure that the fuel drawn down is the cheapest.My interpretation may be entirely wrong, but I find it extremely difficult to envisage someone daily standing by a switch and deciding that, as company B is selling fuel at a lower price than company A, a transfer should be made from company A to company B. That is exactly what will 749 happen. The Minister must have in mind some massive financial incentive to keep all the potential suppliers in production and on standby for a draw-down of power when their prices hit the bottom.
§ Mr. Needham
I am sorry that the hon. Gentleman finds this all so complicated. Under the purchasing power agreement, there is an availability payment to ensure that stations will be available to generators. In terms of the merit order, indeed, that has to be the case at present. Then there will be an additional payment for burn. How will it be decided which company should be taken on to burn? That will depend on what is the cheapest fuel source on the day. If individual generators can secure fuel more cheaply from the sources available to them, they will get a higher pecking position in the merit order. Right from the start, that introduces an element of competition into the generating side. That can be done only by separating the generators, which is exactly what the Select Committee suggested we ought to do. That is how it will work.
§ Mr. McGrady
I thank the Minister for his explanation. I must take his word for it that there will be a number of generators supplying the Northern Ireland grid and that a generator can be switched off without any warning.
In his evidence to the Northern Ireland Committee, the Minister went on:The regulator will insist that the transmission, distribution and supply company will buy at the cheapest price wherever possible.It will be mandatory, under the direction of the regulator, for the supply company to draw down the cheapest price available on the day. The commercial arrangements that the Minister hopes will be put in place to enable that instant, day-to-day—or even part-day—transfer to take place will be extremely complex. The Minister will forgive me if I show some scepticism about the matter. I shall leave it and see what history tells us.
The Minister told the Northern Ireland Committee:there will be an incentive built into the contract with the transmission, distribution and supply company for the licence from the regulator to ensure that the transmission, distribution and supply company cannot just pass on the full costs of the generation for which it has been charged by the generators.Again it is a question of what is the right price, what is the quantum of the incentive, who pays, and to whom.
The Minister referred to a second incentive when he said:A further incentive will be built into the transmission, distribution and supply company, so that it does not try to improve its profits by increasing its sale of electricity. We want to ensure that we are energy efficient and that we are doing the best that we can in the interests of conservation for the people of Northern Ireland. We shall be building competition into the system from the start."—[Official Report, Northern Ireland Committee, 13 June 1991; cc. 51–2.]The point being made there is that the TDS company should not take advantage of decreasing costs to improve profits. In terms of a public liability company making a profit on behalf of its shareholders, those are very pious, if impractical, thoughts. I do not believe that they will be put into effect. The normal conflict will always arise from the desire to maximise profits for the benefit of shareholders.
§ Mr. Needham
That is exactly why we need strong regulation. In this regard, I agree with the hon. Member for Antrim, East (Mr. Beggs). The regulation will be transparent. All this will be open to scrutiny by the public.
750 If the TDS company exceeds its prognosis for a given year, it will have to put its extra profit back in the following year. Through lower prices, it will have to ensure that it does not maximise its profits by over-supply. Surely the hon. Gentleman thinks that that is a better way of proceeding than the present opaque, monopolistic, publicly owned system, which he rightly accepts—on this matter, he and I do not disagree—is just not doing the job that it ought to do.
§ Mr. McGrady
The question that brought the Minister to his feet will have to be answered in the winding-up speech. I asked what was the anticipated quantum amount of the two incentives to which he has referred—the incentive built into the contract with the TDS, and the further incentive to prevent the TDS from increasing its profits or sales. Who pays what, to whom, and for how long?
I fear that, if I were asked to gaze into a crystal ball with regard to electricity supply in Northern Ireland, I should see a rapidly developing situation in which energy was supplied entirely by one undertaking. That supplier might be outside Northern Ireland. Generating capacity in Northern Ireland from coal, gas, oil or lignite might eventually be put out of business. We in Northern Ireland might lose our capacity to generate our own energy. We might then be totally at the mercy of outside suppliers. We would have little or no control over the prices, just as we have little or no control over prices with respect to any of the other nationalised industries.
I do not believe that competing fuels will lead to massive competition. The Minister must bear in mind an important financial factor: it is argued that alternative fuels will contribute massively to keeping prices down, but the Minister's Department has stated that only 30 per cent. of the cost of electricity is related to the fuel that is used. Therefore, any variation in price in terms of fuel is only in respect of one third of the cost of supply.
Any cost advantage from competing fuels would only affect one third of the cost. Under the new set-up, there would be shareholder pressure and capital investment pressures. Such a small reduction of one third would be swamped by price increases. That is why my party and I are completely opposed to the privatisation process. We strongly urge that the generation of energy in Northern Ireland should be kept in the public sector, but with much greater involvement of the Northern Ireland Office, with more professional direction and more consumer protection.
All the efficiencies and the accomplishments that the Minister claims will be achieved under privatisation, can be and should have been achieved by the existing organisation. This is not a massive monolith. The company is of a size that could be and should be suitably managed. We will vote against the order this evening.
§ 7.2 pm
§ Mr. Clifford Forsythe (Antrim, South)
The Minister would be disappointed if I did not make my normal objection about the Order-in-Council procedure being used in respect of the orders. The draft Electricity (Northern Ireland) Order 1991 has 95 articles and 14 schedules. It is not good enough for the Minister to argue that three sittings of the Northern Ireland Committee and 12 weeks for consultation are sufficient to replace the First and Second Readings, Committee stage, Report and Third 751 Reading which the House normally gives such a proposal. Amendments can be tabled in Committee or on the Floor of the House and when an argument is won—as it is occasionally—it can be used to alter that legislation.
The orders are important because they privatise a Northern Ireland asset which is essential for everyone. They will be pushed through the House by hon. Members who have not been in the Chamber during our debate. The Minister commented on Northern Ireland Members, but he should bear in mind that the hon. Members who will vote for the orders were not in the Chamber when he made his speech. The orders will be approved regardless of any mistakes of content or policy. If anything, that is more disgraceful than what happened to the education order, which was completely opposed by every Northern Ireland Member but which became law regardless of that opposition.
The Minister missed a unique opportunity. Despite the continued assertion of the Northern Ireland Office that, if cross-community support is achievable, the Northern Ireland Office and the Government will concede the point, that does not happen.
The 95 articles and 14 schedules are subdivided into 173 paragraphs with innumerable sub-paragraphs and sub-articles. It is obvious that much more time for examination should have been given to the draft Electricity (Northern Ireland) Order. That could have been achieved if the measure had been introduced in the House by way of a Bill.
I never cease to marvel that this process is permitted in the House— in this mother of democracies. I am amazed that hon. Members can allow that to happen. The Minister failed to convince me that privatisation is the right way forward for Northern Ireland Electricity. I do not believe that the price of electricity will be reduced for my constituents. The contrived splitting of the service will not create the competition which the Minister is seeking and which is essential to prove the Minister's point that privatisation will be for the good of electricity consumers in Northern Ireland.
It is illogical that a company which is at present publicly owned and under the Minister's control should be able to provide cheaper electricity for consumers if it is handed over to a private company which will seek continually to improve its profit margins—if it does not do that, the shareholders will want to know why. A company with a group of consumers who are dependent on it for their supply is no great support for the Minister's case.
If, in the years that the Minister and other Conservative Ministers have run Northern Ireland Electricity—albeit at arm's length—with full control of all aspects of Northern Ireland Electricity, they had discovered faults in the running of NEI, who should have corrected those faults? Who else, other than the Minister, would have been capable of calling the board to account for that money? Who else could have improved the lot of consumers in Northern Ireland?
When the Minister and his colleagues made decisions about oil and about electricity generation in Northern Ireland, why did they not make the great plans that we hear about in the House, in Committee and in the newspapers? If they had done that, the benefits would have already gone to Northern Ireland electricity consumers. At 752 least we have a little time to debate the matter and to put forward our points of view. From our experience in other Committees, the Minister and I know that we could talk until the early hours of tomorrow morning or Wednesday morning and it would not make any difference to the net result.
Article 33(1) states that theDepartment may appoint competent and impartial persons to be electrical inspectors under this Part.What qualifications will the electrical inspectors have? Will they have a general electrical background such as that of an electrician, or will the narrow terms specified in article 33(2)(a) and (b) apply? Article 33(2)(c) uses the words:to inspect and test, if and when required by any consumer, any such lines and plant on the consumer's premises".Incidentally, the consumer will be charged. The fee that is paid to the electrical inspector will be paid to the Department. When will that provision be used? Article 88(1) states:The Department may, with the approval of the Department of Finance and Personnel, make grants to Northern Ireland Electricity of such amounts as the Department thinks fit towards such expenditure incurred by Northern Ireland Electricity during its transitional period as is not met under Schedule 13 by such of its successor companies as may be designated by or under the transfer scheme.Will the Minister explain that article? In what circumstances will it operate?
When we discussed another order relating to the tourist board's annual report, the Minister said that we would have the board's report within three months. Article 53 states that there will be an annual report. Will the Minister tell us what time scale he has in mind for that report to become available? Will three months be too soon, or will the period be six months?
Under paragraph 11 of schedule 4, matters can be referred to the Lands Tribunal. In my constituency there are difficulties with the Lands Tribunal. It can be quite expensive for a property owner to insist that a dispute goes to the Lands Tribunal. On occasions, it appeared that some were deliberately steered in the direction of the Lands Tribunal because it was felt in the Department that the Lands Tribunal would find against the landowner, even when the landowner seemed to be right. Perhaps the Minister will comment on that point.
Schedule 4 contains wide-ranging powers—for example, in paragraph 14—which operate to the disadvantage of the landowner. The company is entitled to go on to his or her land and, in certain circumstances, insist that certain things be done. An advantage is being given to the company. The Minister will not be able to change that. However, if we had been considering a Bill, an amendment could have been tabled.
Under paragraph 15 of schedule 4, if there is a dispute the Department could interfere. Will the Minister state the circumstances in which the Department could interfere? In certain circumstances, the Department is the final arbiter. Is it possible for the landowner or the person concerned to go beyond the Department? In the past, we have not found it satisfactory to allow a Department to be the final arbiter.
The Minister said that the Housing Executive could take its own supply of electricity. Am I to assume that the Northern Ireland Housing Executive will be capable of taking electricity to supply its estates? Will it use the existing infrastructure, the mains, cables and so on to do that?
§ Mr. Needham
I said to the hon. Member for South Down (Mr. McGrady) that there is no reason to suppose that, at some time in the future, it will not be possible to bring in supply competition. For example, it would be perfectly possible for the Housing Executive, if it so wanted on behalf of its tenants, to undertake a contract direct with the generators. The electricity would have to go down the wires of the transmission company, but the accounts for the transmission element would be separate from those for the supply side. Therefore, it would be perfectly possible to work out what element of the cost relates to the use of the wires and what element should be shared directly between the Housing Executive and the generator. There should be no problem with that, provided that the two sets of accounts are kept separately by the TDS company.
§ Mr. Forsythe
If this had been a Committee debate, I might have debated that point with the Minister, but I will not do so now, because you, Madam Deputy Speaker, would rightly call me to order if I did.
I am interested in schedule 11, not only because it relates to pensions but because it has given rise to many questions that I should like to put to the Minister. I refer to the "power to amend" of paragraph 2 of schedule 11, which states:Regulations may make provision amending— (a) the trust deed of the scheme for the purpose of enabling the trustees to amend any provision of that trust deed".As one who serves on the Select Committee on Social Security, which has been looking at pensions of all descriptions, it has been my experience, having heard the evidence given to that Committee, that it is dangerous to give a "power to amend" when transferring a scheme from one company to another. There is no doubt that, although the intention of the power to amend may simply be to amend what is in the scheme to enable it to become part of a new company, the power to amend allows the company to amend the scheme in whatever way it thinks fit, provided that that does not disadvantage those who are already receiving a pension or who may do so in the future.
Will that power to amend cease as soon as the regulations are in force? Will the company cease being able to amend the scheme once the scheme comes under the company's control? Has there been any actuarial assessment of the present NIE pension scheme? Who carried out any such assessment? What is the name of the scheme's present actuary? Will the members of the scheme who are employees of the new company be entitled to withdraw their share of the scheme and to take out a personal pension instead of becoming members of the new occupational scheme? If there has not yet been any actuarial assessment, when will that take place and when will the results be made public?
A very important question about any pension fund or scheme is: what will happen to any surplus in that fund or scheme? I should have asked the Minister whether there is a surplus, but if the fund has not been actuarially assessed, we cannot know. I ask about a surplus, bearing in mind paragraph 23 of the seventh report of the Select Committee on Public Accounts, entitled "Privatisation of Harland and Wolff", which states:We note that the Department's advisers put a value of £12.5 million on the pension fund surplus, which had been contributed indirectly from public funds. The Heads of Agreement envisaged the Department receiving all except £2 million of this surplus but the final position gave the new 754 company the totality of any surplus subject to restrictions on £6.5 million of it. We recognise that the fund trustees had put a value of only £4.5 million on the surplus but we expect that, in due course, the taxpayer will benefit from the H & W pension fund surplus to an amount of £6.5 million, whether by way of repayment from MEBO/Olsen or by abatement of aid from public funds towards vessel construction.The crucial statement is the next sentence, which reads:Any amount of surplus over £6.5 million will clearly accrue to the company.The report's findings show why it is important that the surplus of any fund relating to the NIE should be investigated carefully, reported on to the House or made public.
I should like to ask the Minister about the practicalities of transferring the scheme. Will the pension scheme finances be divided 50:50 between the two new companies—one on the generation side and one on the supply side? If more than one new company is formed on the generation side, will the 50 per cent. that is to be transferred to the generation side be divided between the companies that will form that generation side, including any surplus—
§ Mr. Forsythe
One of my right hon. Friends has prompted me to ask, "And in what proportion?"
I hope that I have given the Minister sufficient food for thought, and that he will either answer those questions or undertake to write to us about them.
Finally, I refer to a document that the Minister sent me and my colleagues. It explains various points about the order. Appendix 2 relates to proposals not resulting in changes to the draft order. Comment (a) states:The Department is likely to require the PES, by means of an order, to ensure that its tariffs do not vary from one part of Northern Ireland to another.Why is the wording "is likely", not "shall"? Why is the Department "likely" to require the PES to do that? Surely the word should be "shall". Indeed, I hope that it will be "shall", although that is not what the order states.
I draw the Minister's attention to article 19(2). Will the Minister estimate the maximum amount of power that would be required for any of his dwellings? Even if members of the general public know a little about electricity, it is difficult for them to estimate the load required for a house. It appears that, if people cannot estimate it themselves, they will have to pay to have that done. The Minister is trying to protect consumers in Northern Ireland and, by means of competition, reduce the tariff. It would be extremely unfair to ask them to pay out more money. Perhaps the Minister will make that point clear.
I also draw the Minister's attention to paragraph 1(1)(a) of schedule 9. Where a company has to publish a statement about guarding the environment and so on, will any work in connection with it be allowed to start before the statement is available? Will the statement be made public? The companies will be given 12 months to issue a statement. How long after the 12 months have elapsed will the statement be published? Will the Minister explain what the schedule means when it says that the statement can be modified? What occasion could arise that would require the statement to be modified? Will the statement be available to the general public and not simply published for internal purposes?
The Minister will be glad to hear that I am coming to the end of my specific points. Paragraph 2 of schedule 10 755 refers to an arbitrator for certain disputes. Who will that arbitrator be? Will he or she be in the legal profession, or will it be someone from the electricity generation business?
Time will tell whether the Minister's confidence that there will be lower electricity prices in Northern Ireland is justified. Having gone to the sharp end of the discussion and taken up that stance, the Minister will realise that he will be criticised if his forecasts are wrong.
It is hard to understand why the citizens of Northern Ireland are being prevented from participating in buying shares in the generation side of the industry. I go further: it is disgraceful that those citizens who regard Northern Ireland electricity as one of their industries are excluded from share ownership. I have not been convinced by the Minister's arguments. With the rest of my colleagues, I shall vote against the order this evening.
§ Mr. Seamus Mallon (Newry and Armagh)
One of the difficulties about the order is that we face a choice between a quango and the unknown. The Minister put it in succinct terms when he referred to the Northern Ireland Electricity Service for which he held little or no brief. The service is a quango. The Minister's statement was very telling indeed. He made the essential point that the Northern Ireland Office could not control the quango and, despite its efforts—I accept that those efforts were genuine—could not turn the service into an effective organisation.
By implication, we have a choice between supporting a body such as Northern Ireland Electricity and supporting privatisation. The service has failed, as the Minister clearly told us. He told us about the enormous debts that had accrued. He told us that the service was not amenable to the Department. Yet the alternative is the imponderable of a privatisation process within which there are great potential difficulties.
Given that the order will be a fait accompli tonight, we must make sure that we do one fundamental thing. The Minister said that—I hope that I quote him verbatim—for the first time, the playing field will be level. Unfortunately, the deficiencies in the Northern Ireland electricity service mean that the playing field is not, and has never been, level. In one major patch of my constituency the electricity infrastructure is such that it is impossible for people to be confident that they will have a supply of electricity.
For example, for the past five Christmases there has been no electricity. I know of one lady who told me that only this Christmas her turkey was cooking in the oven on Christmas day when out went the lights and there was no electricity in the entire area. I spoke to her later that day. Another lady came into my office as recently as last Friday and recounted an incident. She was caring for her disabled son when the electricity went off for a stretch of 10 hours. Her problem was how to give her son the type of care that he should have had.
It is not simply that if one opposes privatisation one supports the Northern Ireland electricity service. If the order is to go through—as it will—we must get the playing field level. I ask the Minister as the person now responsible to ensure that a proper structural system of electricity supply exists in the part of Armagh ranging from Camlough to Mullaghbawn so that people do not face day in and day out the problems that I have described.
756 The problem is not simply the lights going off in people's houses. Milking machines in milking parlours throughout the area, fax machines and computers go off and the infrastructure of the area suffers greatly. Why does it happen in Armagh? I want the Minister to answer that question.
Is any old thing good enough for south Armagh? Is the service that I have described good enough for south Armagh? I have asked that question of the electricity service and I ask it again of the Minister. The facts are there. The Northern Ireland Office can find out the number of times that the electricity service has failed, the length of time that it took to re-establish it and the problems that it caused. That is all a matter of record. The question is what type of body allowed that position to develop. What attitude in the organisation allowed it to continue? What is the attitude in the Northern Ireland electricity service and in the Northern Ireland Office? How will the Department ensure that the playing field is level before the change takes place? If that structural change is not made, I have no doubt whatever that we shall face the further problem that those who become involved for profit will not replace the infrastructure properly.
§ Mr. William Ross (Londonderry, East)
It is not only the hon. Gentleman's constituency which suffers. One part of the town of Coleraine suffers from very low voltage due to the enormous amount of building which is taking place; equipment has not been upgraded to take care of it. He need not think that his constituents are being discriminated against, as it seems to be universal.
§ Mr. Mallon
I thank the hon. Member for that information and shall rephrase my question. What is wrong with south Armagh, Coleraine and all the other places in the north of Ireland where, having had the ball at its own feet for so many years, the quango called the Northern Ireland electricity service has not been able to provide a structure to carry electricity in the way that we have come to expect in this day and age and should be able to expect as we near the end of the century?
I am not pleased that there is a problem in Coleraine, but I am delighted to hear that the problem is not peculiar to my constituency, and it is all the more reprehensible that it has not been dealt with.
Problems exist in three areas. Last week I met representatives of the Northern Ireland electricity service, who told me that monitoring equipment would be obtained quickly. I have a strong suspicion that the speed had something to do with this debate. I look forward to seeing the monitoring equipment in operation next week and I shall be looking out for it.
As we near the end of the century, I should have thought that immediate maintenance would be a matter of course, not something that we must wait another two months for, but that is the time scale. However, the most important matter is the replacement of lines. I asked when I might expect that to take place. No commitment could or would be given. Will that be put back until the change takes place? Will the playing field be made level? Irrespective of monitoring equipment or maintenance, unless new lines are installed the problem will not be solved.
Let us make the playing field level and do so in such a way that, whatever the problems of privatisation—and there will be problems—at least every household can be 757 confident that it will have an electricity supply at all times, barring the occasional accident, which could happen anywhere. At least people in industry and in farming will be able to rely on the supply to continue their activities. At least we could then cope with the difficulties resulting from privatisation. The reality is that the Northern Ireland electricity service has failed the people of the north of Ireland.
There was another way to deal with the problem and I was surprised by the Minister's approach. Normally he does not back away from facing up to a problem. Was it not possible to kick the industry into shape? Was it not possible to tell it that it could not continue with the practices that it had used in the past? Did we have to dive into the unknown in such a way that we may have to deal with the same problems in the future but with people responsible for the problems who will not even be as amenable to direction as the Northern Ireland electricity industry should and could have been.
Another detail of crucial importance in a rural constituency is the lack of three-phase electricity cables. They simply do not exist in many areas, which means that small or light industries, which are often placed in farming communities to deal with work on farming machinery, cannot operate. Without three-phase cables, they lack the voltage to carry out the work. Why are such cables not in place in farming communities? Why does that huge gap exist throughout the north of Ireland, not merely in my constituency?
Representatives of the Northern Ireland electricity service should have been asked those questions when they were lobbying on this order. Those are the questions being asked by people in the community.
While the Northern Ireland community is no great advocate of privatisation and is concerned about its possible effects, it sheds no tears about the fact that the Northern Ireland electricity service will not continue in its present form.
The Minister referred to a remark made by the hon. Member for Antrim, North (Rev. Ian Paisley), who said, "If it ain't broke, don't fix it." I agree with that. By and large, I do not believe in tampering with something that works. However, the industry is broken because of its debt, because it has not provided an adequate service, because of its attitude to the Government and the community and because it did not do what any publicly appointed body should have done. It did not ensure that it was effective and efficient and that it dealt with the entire community in the way that any public body should.
The Minister mentioned that the Housing Executive might be able to buy electricity direct as a result of privatisation. I now realise why the Housing Executive recently spent millions of pounds on group heating schemes only to turn round a few short months later, abandon them and introduce new schemes based on Economy 7 electricity. I could not understand why. I tabled parliamentary questions and wrote to the Housing Executive and to the Minister. Now the penny has dropped—it was part of the pre-planning for the new electricity supply.
How could the Housing Executive or the Department otherwise justify spending hundreds of thousands of pounds in one month on group electricity schemes and knock on people's doors two months later saying, "Sorry —we made a mistake; we're going to do it differently. We're going to rip it out and put in electric heaters"? That 758is what happened. If the Minister is sceptical, I refer him to what happened in North street flats in Newry. It happened, and it is on record. It also happened in other places, and now I think I know why.
I fear what may happen as a result of privatisation. Probably in the initial stages it will be prevented, because the present Minister is proactive in such matters and a close eye will be kept on the situation and every effort made to ensure that what he has committed himself to is delivered. However, there will come a time when accountability will cease— it will give way to profitability. Once that happens, the people of the north of Ireland will once again have been the victims of experimentation which is what I believe this privatisation to be.
Why cannot the north of Ireland be like other places and not have to suffer those difficulties? Hon. Members have stressed that the economy of scale and size of the north of Ireland are such that it is probable that lack of accountability will come into the system there long before it happens in other areas.
Privatisation is an unfortunate choice. The Northern Ireland electricity service should have been done away with —it should have been restructured in such a way that the defects could have been dealt with. That would have been a better alternative to what is being offered in the order. I should like to think that at least the full weight of Government influence has gone into restructuring a body which could have coped adequately, before taking a risk which we will probably all have to pay dearly for.
§ Mr. James Kilfedder (North Down)
I think that I can help you, Madam Deputy Speaker, and the House by formally adopting what has been said by Northern Ireland Members, particularly by my hon. Friends the Members for Antrim, South (Mr. Forsythe) and for Antrim, East (Mr. Beggs). I would, indeed, waste the time of the House if I repeated all the arguments that have been advanced with such force today.
I am disappointed that so few Members are in the Chamber for a debate which is so important for the people of Northern Ireland. I am surprised that so few Members have been present throughout the entire debate.
I was interested in what the hon. Member for Newry and Armagh (Mr. Mallon) said about central heating in Housing Executive homes in his constituency. I got the impression from his remarks that the Housing Executive was tearing out existing heating systems and installing Economy 7. I have many constituents in Housing Executive homes who are desperately waiting for any central heating, whether Economy 7 or any other. Therefore, I appeal to the Government to urge the Housing Executive to think of the people of North Down who are living in public sector housing and need to have their heating system uprated.
I wish to use this opportunity to protest once again at the wholly discredited system of introducing Northern Ireland legislation by Order in Council. It is undemocratic and to the discredit of the Government that they continue to use this system, despite continuing complaints from Northern Ireland Members. We have protested time after time throughout the lifetime of this Government since the abolition of the Stormont Parliament and, subsequently, 759 the abolition of the Stormont Assembly that was brought disgracefully to an end two months before its legislative demise.
I regret that the Government have not responded sympathetically to our appeals for the restoration of democracy to the people of Northern Ireland. If legislation for Northern Ireland were introduced in the form of a Bill, we, like hon. Members who represent other parts of the United Kingdom, would be able to move amendments to alter and improve it. In my time in this House, I know of no piece of legislation that has not benefited from amendments tabled by hon. Members on both sides of the House. In this day and age, it is a disgrace that the privatisation of Northern Ireland Electricity is introduced by Order in Council. We are being denied a fundamental right.
When I look at what is happening in eastern Europe, where communism is being replaced by a democratic system, I wonder when democracy will be brought to Northern Ireland. Under communism, one had the right only to vote for or aginst a measure. With an Order in Council we have that same right of the totalitarian states either to vote for a measure or to reject it. The people of Northern Ireland are entitled to have the fundamental right that is bestowed on all people and their represenatives throughout the democratic world. In the dying days of this Parliament, I challenge the Government to meet the rights of the people, to restore democracy to Northern Ireland and to give power back to the people.
As the Minister told us, this matter was debated in the Northern Ireland Committee. That was not of any great benefit to hon. Members from the Province. I never asked for it to be debated there. Any debate that takes place in that Committee is a charade. Indeed, I said so when the Committee first debated the privatisation of NIE. It merely means that the Government can say, as the Minister said in his opening speech tonight, that Northern Ireland Members had an opportunity of discussing the electricity privatisation. We know that whatever we said, it was of no account to the Government. They showed their contempt for the people of Northern Ireland by rejecting the unanimous opinion of the representatives of those people.
As has been said, it is not often that Northern Ireland constitutional politicians get together, but we are certainly united in our opposition to this measure. There must be something wrong when the Government reject such a united appeal. The Government and political commentators often say that whenever it is possible to get unanimity among Northern Ireland constitutional politicians, the Government will back them in the Chamber. During our debates on the privatisation of NIE, we have achieved unanimity, as we have tonight, but the Government will bring in the payroll vote—their Lobby fodder—to ensure that, no matter what the people of Northern Ireland may say through their representatives, the Order in Council will be passed. There may not be many Members present in the Chamber, but once the Division bell rings, they will emerge from the smoking room, the bars, the tea room and elsewhere to pass this legislation.
It is worth underlining a few points that have already been made. As I have mentioned, the Northern Ireland 760 Committee is worthless. Over the years, I have repeatedly asked for a Select Committee on Northern Ireland. I know that other Northern Ireland Members have also made that request. That would give us power. We could call before such a Select Committee Ministers, civil servants and experts in the particular subject under discussion. We could sit at Westminster and in Northern Ireland. I am not asking for anything remarkable, because we already have a Select Committee on Energy, which has considered this matter. We have Select Committees on Scottish Affairs and on the Environment.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
I must correct the hon. Member. The Select Committee on Scottish Affairs has not met during this Parliament, because the Tories cannot supply enough people to man it. There are only nine Tory Members from Scotland, five of whom are in the Government. Therefore, Scotland has been denied a Select Committee, so we have fellow feelings with our colleagues from Northern Ireland.
§ Mr. Kilfedder
I am grateful to the hon. Gentleman for that information. A Select Committee has been appointed for Scotland even though it has not met for the reasons that the hon. Gentleman gave. We have not even got the shadow of a Select Committee on Northern Ireland, and that is what we want. Nothing would give the people of Northern Ireland more pleasure than to have a Select Committee sitting in Northern Ireland—perhaps at Stormont, Bangor, Antrim—
§ Mr. Kilfedder
I will not take up that suggestion, but perhaps the Committee could sit in Armagh. There is a need for a Select Committee in Dublin to examine the political shenanigans that are going on there now. However, as a representative of the people of Northern Ireland, I shall not interfere in the affairs of a foreign state, and it would be wrong to do so. From the press it seems that there is a need for a searching inquiry into every branch of government in the Irish Republic. However, that is not a matter for me, nor for this debate.
I am not hung up on political ideology and I am not opposed to privatisation. In fact, I supported the privatisation of the electricity for England and that shows I am perfectly fair in my approach to the subject. However, I have heard nothing from the Minister, or in the Northern Ireland Committee or read anything since to suggest that the proposed privatisation of NIE will benefit domestic or commercial customers by reducing prices to the lower ones which exist in Great Britain.
§ Mr. Frank Haynes (Ashfield)
The hon. Gentleman is making an important point. Whenever things go wrong in Northern Ireland, people have a right to complain. More often than not, they go to the Parliamentary Commissioner for Northern Ireland, who is a wonderful lady doing a wonderful job. She often gets complaints about the electricity industry. I wonder what she thinks about the proposed privatisation. That lady comes over here because she is answerable to Parliament through the Select Committee on the Parliamentary Commissioner for Administration, but it does not have an hon. Member from Northern Ireland serving on it. It should have, so that the people of Northern Ireland can be represented properly.
§ Mr. Kilfedder
I am not surprised to hear such eloquence from the hon. Member. He always inspires me when I hear him and I regret that he will be leaving Parliament in a few weeks when the next election takes place. We will miss him: I say sincerely, I would call him my hon. Friend. Whenever one needs advice, one can always go to Frank and he will help.
The hon. Member for Ashfield (Mr. Haynes) has emphasised a point which I should not have overlooked. Many hon. Members from Northern Ireland try to get on to Select Committees—we may not have a Select Committee on Northern Ireland, but we try to get on to others—but sufficient places are denied us. We have one hon. Member on the Select Committee on Health and the hon. Member for Antrim, South (Mr. Forsythe) is a member of the Select Committee on Social Security—the Committee that tried to get the Maxwell brothers to speak before it.
§ Mr. Harry Barnes
The Energy Select Committee, whose report we are discussing tonight, also has no Member from Northern Ireland on it. That report dealt with the privatisation of NIE. If there is a Committee in which someone from Northern Ireland should have exercised their judgment as well as giving evidence, surely it should have been the one producing that report.
§ Mr. Kilfedder
The hon. Gentleman is absolutely right. It proves what I said. There ought to be a Select Committee on Northern Ireland which could have gone into the matter in great detail. Sadly, that did not happen, and as a result we are faced with the draft order, which may not be beneficial to the people of Northern Ireland.
Electricity prices in Northern Ireland have gone up a great deal recently and I fear that those increases were dictated by the approaching privatisation. They were pushed up deliberately to make privatisation much more attractive. As a result, the people of Northern Ireland have suffered.
The order proposes to replace a public sector monopoly with a private sector one. I want some reassurance from the Government on an issue that worries me greatly and I am sure that the Parliamentary Under-Secretary will do his best to answer me. Every time a public sector concern has been privatised, the chairman suddenly finds he is worth more than he was paid before. That has happened with the privatisation of water and British Telecom, but there are other examples. Suddenly, the salaries of the chairmen have doubled or even quadrupled, and every year they are voted salary increases of hundreds of thousands. Those are obscene figures and they are offensive to me and everyone else in the Province.
Certainly I dread the prospect that with privatisation the chairman of NIE, whoever he may be, will suddenly be voted a salary as though he had just got a pot of gold at the end of the Irish rainbow. I warn the Government that if that happens, the people of Northern Ireland will be incensed.
Many people, some of whom are in my constituency, feel the burden of electricity prices. We must always remember the elderly. When I visit them in their homes, they may have one bar of an electric fire on while the wind is whistling around my ankles. When I suggest that they ought to turn on a second bar, they say that their bills are enormous. We must think of them when we debate this 762 proposal. Are we pushing up their electricity prices, and will we make life more difficult for retired people in Northern Ireland?
I fear that, as a consequence of the proposal, no matter what promises the Government make and what happens in the next few months, electricity prices will go up and the people in Northern Ireland will suffer. When that happens, at least my hon. Friends and I will be able to say that we voted to oppose this proposal.
The increased electricity prices also punish commercial and industrial concerns in Northern Ireland. They are doing their best to compete with industries elsewhere, which are near their markets and where electricity prices may be cheaper. The industries concerned provide jobs for people in Northern Ireland and they should be encouraged. The price of electricity should be reduced to help them. Again, I fear that the order will not do that.
For many years, I have been asking for a pipeline to take natural gas from the gasfields of Great Britain to Northern Ireland. That would certainly introduce competition in energy supply. Such a pipeline would ensure a cheaper form of heating for homes as well as for industry in the Province, and we must have that as soon as possible. The Government may say that the pipeline is being introduced only because of privatisation, but it should have been created ages ago. I believe that the European Community would have supported it and will support it.
§ Mr. Beggs
My hon. Friend is right to highlight the length of time that Northern Ireland has been waiting for that gas pipeline. I am sure that he will agree that the former hon. Member for Upper Bann, the late Harold McCusker, fought a strenuous campaign throughout his time in this House for a proper gas supply to Northern Ireland.
§ Mr. Kilfedder
I agree with my hon. Friend's comment. The issue of energy conservation has always amazed me. Wherever I go in Northern Ireland, whether Bangor in the heart of my constituency or North Down or elsewhere, the street lights are on. I know that the time clock can go wrong, but surely it cannot go wrong that often. The phenomenon may be peculiar to Northern Ireland or it may apply to other parts of the United Kingdom, but something should be done for the sake of energy conservation to ensure that the lights do not burn away during daylight hours when the Government, through expensive advertisements, have been appealing to the public to save electricity. There is an onus on the Government and the electricity service, no matter who owns it, to ensure that electricity is not wasted during daylight hours.
§ Mr. William Ross (Londonderry, East)
I apologise to the House for arriving so late this afternoon, but it is rather more foggy in Northern Ireland today than it is in London. Unfortunately, one or two other matters also intervened. One should never try to read the Whips' minds when they are arranging business in the House. It makes life much easier if one intends to be present on Monday as well as every other day of the week.
The last two sentences of paragraph 55 of the Energy Select Committee's report say:We emphasise the need for Government to clarify matters such as these before pushing ahead with privatisation, and we 763 recommend that the Secretary of State arrange detailed consultations with the Northern Ireland political parties before legislation is finalised. We hope that an absence of full and detailed debate by the House, our recommendations will be fully taken into account.That is where a great deficit exists with regard to legislation for Northern Ireland. A full debate simply cannot take place in the context of the procedure that we are following this evening. We are all well aware of that. The deficit would be easily remedied. Indeed, it could have been remedied many years ago but unfortunately the Government, like their predecessors, have seen fit to ignore the remedy.
Consultation, which is such a large feature of government in Northern Ireland at every level, not only at parliamentary representation but also at council level, is an abomination. It gives the electorate the impression that their councillors and Members of Parliament are capable of getting changes made. But consultation is no substitute for proper debate in the House, and consultation at local government level is not and cannot ever be a substitute for democratic control. The Government should have remedied that a long time ago. As it is apparent that it will not be done in this Parliament, perhaps it will done in the next, because 23 years without it is far too long.
Throughout the debates that have taken place on the privatisation of Northern Ireland Electricity, many attacks have been made on past decisions by the Northern Ireland Electricity Service and its forerunners. I am old enough to remember electricity undertakings for Londonderry city and for Belfast city, which were quite successful and even made money at one stage. They were eventually swallowed up by Northern Ireland Electricity. All those decisions seemed to be the best at the time.
My hon. Friend the Member for Antrim, South (Mr. Forsythe) said that the Minister in charge of the Department that ran Northern Ireland Electricity could have improved standards in the company. There is no doubt about that. The Government use that means to control nearly everything else in Northern Ireland. It is quite simply a quango that is given responsibility. If the Government continue to use quangos to control the Housing Executive, health and social services, and nearly every local government and many central Government powers, there is no good reason why they should be willing to depart from them only in the case of Northern Ireland Electricity but cling to them to control everything else. That is quite astonishing: if the Minister stops to think about it, he will find it as astonishing as anyone else.
The attacks which Ministers have launched on Northern Ireland Electricity are not soundly based. The organisation has faced many problems throughout the years. It has the smallest market, totally isolated within Northern Ireland, to contend with. Given the size of modern generating units, that has made its job almost impossible in terms of economies of scale.
Most of the planning for the mess that has existed since the early 1970s was done in the 1950s and the 1960s because of the long lead time needed to create a generating plant. At that time, NIE had to make up its mind which fuel—not fuels—to use, and it naturally chose the cheapest. With hindsight, one can see that it was foolish to rely on oil, but that was before the oil shortage of the 764 1970s. Even in those days, although there were difficulties with the price of coal and miners' strikes, there were no real problems.
The Northern Ireland Government and the electricity service took what then seemed to them a logical decision and opted for a single fuel. There is always a danger in putting all one's eggs in one basket, but it was a reasonable decision at the time. There was also a rapidly expanding economy and a number of man-made fibre factories in Northern Ireland that needed enormous amounts of electricity. The decision makers faced an expanding economy and did not foresee that the development would come to a juddering halt.
In other parts of the United Kingdom, where many large undertakings in the heavy industry sector ceased, surplus electricity could be passed down the line from Scotland to England or wherever on the national grid, but there was no interconnector with Northern Ireland and all the projections relating to Northern Ireland Electricity were blown out of the water. No one could have foreseen all those events, and I resent some of the attacks that have been made on those who ran Northern Ireland Electricity and on the decisions they took. They were acting for the best at the time.
If an interconnector had been installed then—perhaps it was not technically possible, but I suspect it was—Kilroot and the rest might have been built. They were modern plants and could have succeeded if the interconnector had existed on a large enough scale, but it is not yet in place.
When considering the future of Northern Ireland, we must remember that it has an indigenous fuel. Fairly large amounts of lignite have been discovered which may eventually be used, even if they are not used now. We cannot have such a fuel and not use it. The United Kingdom has an indigenous fuel: coal. Despite the difficulties within the coal industry, we shall return to greater use of that fuel.
We shall always find a use for coal—perhaps even in large-scale generation. I have always thought it daft to import something that we could produce ourselves, even if we have to do so at a higher price. I do not know much about coal mines, but I know enough to know that, once shut, they stay shut. It should concern all hon. Members that sometimes economic features must be regarded on a slightly longer time scale if we are to understand the true worth of our indigenous fuels.
Gas is now literally in the pipeline. Reference has been made to the work done by the late Harold McCusker in this sector. If the gas pipeline had opened in the 1970s, we would still have had a gas alternative to electricity in Northern Ireland, but that has now gone, and it is sadly missed. If it pays us to produce electricity now, it must have been worth while to do so in the 1970s, when it would have involved much lower cost not only to maintain the gas supply, but to expand the gas industry.
It is interesting to learn today that Irish Gas is to pipe gas from Scotland on a spur to Northern Ireland. Was that decision taken on the basis of competitive tendering, was it a quango decision or was it a straightforward Government decision? Where did the competitive edge lie? Will Irish Gas comply with the requirements of the Fair Employment Agency in Northern Ireland, as the issue has a bearing on Northern Ireland? Will those standards apply to the building of the gas pipeline?
765 Peat has never been used on a large scale in Northern Ireland, but it has been used in the Irish Republic. Using peat brings all sorts of problems, and there may not be enough of it to do anything on a large scale in Northern Ireland. The use of peat was considered in the 1940s and 1950s, but it was decided that it was not viable. Have any recent investigations been done into the possible use of peat for generation or its more widespread use as a fuel in the Province?
There is on-going experimentation with biomass, principally willows, that may have a future as a renewable energy source. Some renewable energy can be used for producing electricity. We use quite a lot of wind power in Northern Ireland. Will any serious effort be made to increase the amount of wind power in Northern Ireland? I know that the door is open, but I am not sure that anybody is going to give it a further shove, and I should like that form of power to be promoted.
There is also some wave power in Northern Ireland. That could be studied to see what use could be made of it in the long term. We also have limited water power. Reference has been made to the Bann scheme, which is quite large, would have been useful and could probably have been developed. However, the Bann has only a small fall—Lough Neagh is only 50 ft above sea level. I have to declare an interest, as I owned and ran water turbines for many years. I grew up with water power, which, once installed, is the cheapest form of fuel.
There are several possibilities for sail power, even on a small scale, but that system is not as simple or easy as some would have us believe, as it necessitates a 440 volt supply. If someone asks Northern Ireland Electricity or its successors for a 440 volt supply on which to hitch up a water turbine, the price for installing the necessary lines will come as a shock. Some people would allege that the price charge was far beyond that which would be quoted if the cost involved using electricity rather than selling it.
There was once a scheme to use the River Roe in Limavady to produce almost 5,000 hp, which is not to be sneezed at. However, it was turned down due to the difficulties of building the dam.
I am sorry that the hon. Member for Newry and Armagh (Mr. Mallon) has left the Chamber, as the Camlough scheme, once proposed, has now vanished into the mists of time due to objections from people who are now probably his constituents. If that Camlough scheme had gone ahead, perhaps we would have less trouble today with the poor quality of supply in that district.
Efforts were made, although some were not developed. Some of the projects proved destructive, but I do not believe that we should say that Northern Ireland Electricity did not try. I think it did, but it was restricted by the limited framework within which it had to exist.
There will inevitably be competition, but who will compete? I have never been able to understand how we can have competition unless a sizeable number of organisations are involved in providing the power. That will not be so in Northern Ireland where, due to the limited capacity of the interconnector, we shall never be able to transmit electricity across from Scotland or wherever to provide proper competition. We cannot even have internal competition within the island of Ireland, never mind Northern Ireland. The Government have not yet given a satisfactory explanation of their position on that problem.
766 The life of generating plant is long and getting longer as technology advances. The next generation of generating plant contains equipment that will certainly last beyond the lifetime of many of us.
How will the new set-up compete? The first cut will involve staff. Which sector of staff will be cut? The cuts cannot take place at the expense of safety, so I suspect that the number of field staff will be cut. There is a limit to how many cuts can be made, as a certain number of hands are needed to do the job. No matter how much automation there is, some people are still needed to work.
There will be interlinking to Scotland and eventually to the Republic, and I hope that it goes ahead. If it does, the cost of electricity will fall and the spinning reserve will be kept much lower.
I am also worried that people of Northern Ireland and the employees of NIE are not being given a chance to purchase. I have drawn the Minister's attention to this before, but I might as well tell him again. Back on 16 May, I asked another Minister:Given that one of the ways in which employee participation and ownership was increased was through the sale of nationalised industries, will the Minister give an assurance to the House that the employees of NIE and the citizens of Northern Ireland will have an opportunity to bid for and own shares in Northern Ireland Electricty when it is sold off?The Financial Secretary to the Treasury replied:That is a matter for my right hon. Friend the Secretary of State for Northern Ireland, but it is inconceivable that he would propose arrangements which would do anything other than what the hon. Gentleman suggests. It is of great imortance that when nationalised industries are privatised we encourage the employees of firms to participate by direct ownership in those companies and that the local population and customers of the industry or service also become owners. That seems to us to be desirable."—[Official Report, 16 May 1991; Vol. 191, c. 418.]In fact, it seems desirable to the entire machinery of government except the Northern Ireland Office.
Once again, Northern Ireland is being treated differently. This process would not be acceptable to any other region of the United Kingdom, and I do not see why the Government think it acceptable to the people of Northern Ireland. I note that a pious hope is expressed that large industrial users will be able to make their own separate agreements with suppliers, or possibly even generate their own supply. There are not many places in Northern Ireland large enough to warrant generating their own, but large users will be able to make their own deals and presumably someone else—probably domestic consumers—will have to pay the price.
The Housing Executive will apparently make an agreement to get cheaper electricity for its tenants. It is difficult to imagine a better recipe for a nightmare. The electricity will not be sold to the large estates as such—it will be sold to individual tenants of the Housing Executive and it is they who will pay for it, not the executive. So tenants will pay for the electricity they use, and someone who has bought his house may find himself paying rather more than the fellow next door. I do not look forward to all the complaints which I and every other elected representative of Northern Ireland will receive about such an arrangement. It is just not good enough—like the rest of the bloomin' mess.
I finish where I began, with the Energy Select Committee's report, particularly the first paragraph of its conclusions: 767There are some admirable features in the privatisation proposals, including the system of bidding for the right to provide new capacity, the proposed Non-Fossil Fuel Obligation, and the innovation provisions relating to energy efficiency. There are also other welcome developments in prospect, such as the proposed interconnectors and gas pipeline. However, few of these changes are wholly dependent on privatisation, and they are still less dependent on the particular privatisation scheme proposed.That encapsulates the fears and anxieties of Northern Ireland Members. We are not satisfied that what is being done is right, or that it is being correctly done.
§ Mr. Harry Barnes (Derbyshire, North-East)
This is one of the last privatisation measures to be introduced by the Government who have been in power between 1979 and 1992. There have been other massive privatisation measures, including the legislation that privatised electricity in Great Britain. We are left with this order for Northern Ireland, which is designed to push through privatisation all in one go.
One wonders what Northern Ireland has done to deserve that. Perhaps because it was not subjected to poll tax, it is having this measure foisted on it. We have been told that the railways and coal are to be privatised, and paving measures to that end have been pushed through the House. They will not be privatised, however, because the Conservatives will not win the next election; but the people of Northern Ireland will have this measure inflicted on them if the decision by the Northern Ireland Committee is overturned tonight by the payroll vote.
The timing of this measure is terrible because it sends out the clear message that devolved government for Northern Ireland is not on the cards, never mind not just around the corner. The Brooke initiative is on ice but still alive, so there is still hope in Northern Ireland that some democratic space will be allowed it so that devolved government can deal with certain significant issues. What could be more significant to the people of Northern Ireland than deciding themselves matters connected with privatisation? They would like to hold debates in which a full legislative measure was presented to them so that it could be amended, fully discussed and—if they wanted —rejected. Instead, the order has been pushed first through Committee and then through the House.
The order is anathema to all Northern Ireland Members, none of whom supported it in Committee, where it was soundly defeated. By a procedural sleight-of-hand, the decision of that Committee is being overridden. Even though a decision has already been made on it, one of the items put before the Committee has been returned to us tonight. It is as though that Committee never existed. This evening we have been left with a few hours in which we can examine just one item instead of discussing the entire complexity of the order.
The order has 95 articles and 381 paragraphs, not to mention a host of subdivisions. I have heard hon. Members on both sides of the House ask questions about the detail, but because of the lack of time and because of the procedures applying to the order they have little hope of being answered in detail. A Bill that went into Committee could be amended line by line, but here we find ourselves only able to ask Ministers what article 75, or the schedule, or a reference in the Select Committee report, 768 mean. With the best will in the world, the Minister cannot cover all those questions; they need to be dealt with one at a time and that could be done only in a normal Committee—a procedure that Northern Ireland does not enjoy.
The order has 13 schedules with 435 paragraphs, one of which deals with the compulsory acquisition of land. That is an important topic and requires debate, especially as that sub-paragraph has 105 components. Some 66 Acts, orders and statutory instruments are referred to in the measure, ranging from the Conveyancing Act 1881 to the Planning (Northern Ireland) Order 1991. When we dealt with the planning order in Committee, it had not been allocated a number because it had not completed all its stages in the House and the intention had been to relate it to the order before us. The process for dealing with such large measures is inadequate, bearing in mind the fact that devolved government in Northern Ireland could be around the corner, and the measure could be fully dealt with in the Province.
We have just completed the Committee stage of the Transport and Works Bill. There was no Division on Second Reading and the Bill's general principles were agreed. Amendments were accepted and about 20 improvements were made to the Bill. That measure, which affects private Bills and planning procedures, has been properly scrutinised. Northern Ireland may have electricity privatisation forced down its throat; proper scrutiny would have improved matters, but such scrutiny cannot be given to the order.
The Northern Ireland Committee is looked upon as a waste of time. The Committees that consider European legislation do not have much say, but even they are better than the Northern Ireland Committee. In a European Standing Committee, a Minister can be questioned for an hour and amendments can be tabled in the following hour and a half, although they may be overturned. The order cannot be overturned. If we could have questioned the Minister for an hour about its detail, that would have been some improvement on the existing procedures, even though it would not be perfect.
If direct rule is to continue, I hope that the Government will consider procedures for dealing with Northern Ireland measures in the House because they should not be dealt with in that way. However, even on existing rules, marginal improvements could be of considerable benefit in a serious discussion on Northern Ireland issues. The attendance for the debate is low, even though it deals with bread-and-butter issues which are of key concern to the life of the people and should be fully discussed. Many hon. Members appear in the Chamber when there is a terrorist incident in Northern Ireland or when there is a debate about security or on constitutional issues. We spend too little time on matters affecting the daily lives of Northern Ireland people.
The order is being pushed through before the general election, perhaps because after that election, in a hung Parliament, the Northern Ireland Members could become more significant and could trade away issues such as privatisation. They are not yet in that position, and in any case Labour will gallop home.
I have the feeling that this is not quite a Northern Ireland Office measure, because the Northern Ireland Office attempts to draw people together and to put peace and tranquility, instead of violence, on the agenda. It has carried out some good work. It is inappropriate for the Northern Ireland Office to push a measure as divisive as 769 this. It is divisive in social terms, in that it is the last fling of the enterprise culture, and divisive in the constitutional sense which I suggested, given the implacable opposition to the measure in Northern Ireland.
Only the Conservative party in Northern Ireland, which as yet has no seats in the House, represents those people in Northern Ireland who are likely to support the measure. Although people may have different reasons for opposing the order and some might accept privatisation if the order were given a different structure, the measure is rejected by the 16 Northern Ireland Members who have taken their seats and by the 17th Member who does not choose to take his seat, the Member for Belfast, West (Mr. Adams). From Sinn Fein to the Democratic Unionist party, there is opposition to the order, but it is not the only issue over which there is occasionally such unity—the same unity existed over the measure to introduce a student loans scheme.
When there is unity in Northern Ireland matters, we should carefully consider the arguments. In Committee, the hon. Member for Antrim, North (Rev. Ian Paisley) said:We are always being told that if we get together, people will listen to us, but when we do get together on a matter such as this".—[Northern Ireland Committee, 13 June 1991; c. 35-6.]—the hon. Gentleman developed his argument on that premise. Although Northern Ireland Members do not link arms on the issue, there is unity on the matter and it is incumbent on the Northern Ireland Office to listen carefully and to tell its friends in the Cabinet that such a measure is not on.
Public assets in Northern Ireland should remain in the people's hands, especially in areas that are traditionally referred to as public utilities. The enterprise culture is divisive because it sets one person against another, and that is not required in Northern Ireland. The Province needs democratic institutions, civil liberties for minorities and democratic space in which it can make decisions about the quality of life, which will involve issues such as who owns what.
Nowhere else can avenues for discussing bread-and-butter issues be more important than in Northern Ireland. If, as some hon. Members have suggested, Northern Ireland Electricity is a failed quango, collective democratic control should come to the forefront and we should begin to build on that. If Northern Ireland Members had their own institutions, that lesson would need to be learnt by them. The hon. Member for North Down (Mr. Kilfedder) said that, when the Great Britain measure for electricity privatisation was discussed, he trooped through the Division Lobby in favour of it.
Many of the arguments that apply to electricity generation in Great Britain apply also to electricity generation in Northern Ireland. Northern Ireland faces additional problems connected with the size of the electricity industry and the lack of a democratic framework. If, however, power were devolved to Northern Ireland, some Labour Members would have the opportunity to make representations to those who make the decisions there. Moreover, trade unionists in Northern Ireland would be able to make their views known, as they have done in Committees here, on electricity privatisation. They have appealed here to the Government to take their views into account, but the Government have made only minor concessions. 770 My concern generally is about democratic socialism and collective provision and the economic measures that go with it. To introduce into Northern Ireland the worst values of the enterprise culture and privatisation is the wrong route to take. Northern Ireland needs a different framework—a democratic socialist framework so that it can begin to solve the many problems that it faces. This measure will do nothing to solve its problems.
§ Mr. Toby Jessel (Twickenham)
As the hon. Member for Derbyshire, North-East (Mr. Barnes) said, there is a thin attendance tonight, but it is a real pleasure to have been invited to speak in the debate on this order. I spent six very happy months in Northern Ireland while I was doing my national service in the Royal Navy. I was stationed in the constituency of the hon. Member for Londonderry, East (Mr. Ross), to whose speech I listened with great interest. While I was stationed there, I served in the anti-submarine establishment HMS Sea Eagle in Londonderry.
I hope that the hon. Gentleman will not mind if, due to my naval connections, I mention the tremedous success of the privatisation of Harland and Woolf. Now that it has been privatised, that company seems to be going from strength to strength. I hope that in due course it will obtain more orders for the construction of warships. A great deal of electricity will be required for their construction.
While I was in Northern Ireland I owned a lightweight motor cycle. It did not run mainly on electricity; often it did not run at all. When it did, however, I had ample opportunity to see the very beautiful countryside of Londonderry and County Tyrone, and developed a great affection for that beautiful country.
I receive inquiries from time to time about Northern Ireland from my constituents. My constituency adjoins that of my hon. Friend the Member for Richmond and Barnes (Mr. Hanley). He and I share the same borough. He has important Northern Ireland responsibilities for the health service and agriculture, which both consume electricity. It is remarkable, with all those pressures on his time, that, somehow, he manages to give a superb service to the people of Richmond and Barnes. He seems to work an eight-day week.
I have not had the opportunity to study the order carefully. Nevertheless, I want to ask about renewable sources of electricity generation and how they would fit into the framework of the order. Due to its geographic position, bordering the Atlantic ocean, Northern Ireland ought to be able to derive great benefit from the development of both wave energy and tidal energy. The waves of the Atlantic ocean are larger than those of some other seas; the floats for the generation of electricity would have to be strong enough to take a considerable buffeting from the waves and not to break loose. If they did, they would endanger shipping and hinder navigation. However, the waves of the sea provide an immense source of natural energy. If wave energy is not financially viable now, I hope that in future the Government will be able to develop this source of energy and that the wealth so generated will benefit Northern Ireland.
I believe that Lough Foyle would be an ideal site for a tidal barrage. I have seen the tidal barrage across the River Rance in Britanny, constructed by the French Government. It is a remarkable achievement and generates 771 a great deal of electricity from the tidal flow. The relatively narrow neck of Lough Foyle at its northern end means that the construction of a barrage would be much less expensive than would be the case at the mouth of the River Severn, for example. It straddles two countries, the Republic of Ireland and Northern Ireland.
It is not for me to say whether co-operation between the two Governments is good enough at present to make possible the construction of a tidal barrage. When that time comes, I believe that Lough Foyle would be an ideal place for a tidal barrage. I hope that the Minister will assure me that, as part of Government policy, this will be looked into in terms of the future generation of electricity for Northern Ireland.
As for the sale of electricity shares in Northern Ireland, as foreshadowed by the order, I hope that that will benefit the people of Northern Ireland as a whole. I hope that they will have the opportunity to purchase shares on relatively favourable terms, or that at least they will be given the opportunity to obtain an adequate quota of the shares. I should not like the benefits that have been conferred on the rest of the country to be denied to the people of Northern Ireland.
Next, I should like to ask about the pension fund. Can my hon. Friend assure me that it will be protected? I know that the Government are considering this in relation to the whole United Kingdom, and I should like to be sure that the position of the electricity industry is included.
Thirdly, can my hon. Friend tell me about the effect on prices for the consumer? This really is important, and it interacts with the quantity of fuel demanded, and with how people choose between electricity, gas, oil and coal.
Fourthly, can my hon. Friend define a Government policy on pylons? I have referred to the beautiful countryside in Northern Ireland; I should like to be reassured that the long-term trend is to reduce the number of pylons to protect the heritage, because if we do not preserve it, future generations will curse us—and they will be right to do so.
I should like my hon. Friend to describe the benefits that the measure will bring. I hope that the results will promote the economy of Northern Ireland, and strengthen its position within the United Kingdom in a way that all our people would want.
§ 9 pm
§ Mr. Roger Stott (Wigan)
It is unusual for Northern Ireland business to be given nearly five and a half hours. I was not a member of the Committee that originally considered the Government's proposals, but over the weekend I read some of its proceedings, and in many respects today's debate is an action replay of what hon. Members from the Province said then.
I note that the hon. Member for Antrim, South (Mr. Forsythe) always begins his speeches by complaining about the Order in Council procedure—as, indeed, do many other hon. Members. I must confess that I have done the same in the past, and will do the same in the future: I shall continue to tilt at the conventional windmill. The resolution of the problem, however, lies in the hands of elected Northern Ireland Members, as has been made clear by the Minister and by my hon. Friend the Member for Leicester, South (Mr. Marshall).
772 I have been in the Chamber for most of today's debate, but I am told that the Secretary of State has made a statement tonight to the effect that the current talks have slowed down somewhat. I very much hope—I speak for my party and, I am sure, for the House as a whole—that the constitutional Members in Northern Ireland will try to make progress with the talks and to find a political solution to the real and deep-seated problems that the Province and its people have faced for the 20 years of the troubles.
Unless and until that happens, we shall be stuck with the status quo. Whether the Minister is the hon. Member for Wiltshire, North (Mr. Needham) or me—when, that is, we have exchanged places at the Dispatch Box—that Minister will still bring major items of Northern Ireland business into the House under the Order in Council procedure. I hope and pray that the time will come when that will no longer be necessary.
Over the years, a policy of bipartisanship has operated between the two Front Benches on most Northern Ireland issues. My hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) and the Secretary of State have worked together very closely over the past 18 months in an effort to drive forward the Brooke initiative: they have given it every support. Only last week, I paid tribute to the work and enthusiasm that the Minister has put into promoting tourism, as well as industry, in Northern Ireland. I am bound to say, however, that the order will damage his reputation.
The Minister must know, in his heart of hearts, that the order represents the triumph of hope over experience. Unlike his counterparts in Great Britain, he knows that the benefit of hindsight is open to him if he cares to avail himself of it. We in the rest of the United Kingdom have experienced the disastrous consequences of the privatisation of our electricity industry. It defies belief to suggest that the Minister can assure us that all will be for the better, when virtually every hon. Member has his or her own horror story about the effect of privatisation on his or her constituents.
§ Mr. Stott
Not yet. The hon. Gentleman is just moonlighting in this Chamber. He has not been here all day. However, I shall give way to him when I have finished this point.
The order also represents the triumph of ideology over evidence. I must admit that I am somewhat disappointed that the Minister who is in charge of the Northern Ireland economy should be so personally involved with this legislation. His personal commitment to the improvement of Northern Ireland's economy is well known and beyond doubt. He has done much commendable work, which makes it all the more puzzling that he should persist in such a reckless course of action as that on which he is embarked.
I shall now give way to the hon. Member for Twickenham (Mr. Jessel).
§ Mr. Jessel
I wanted to ask the hon. Gentleman, who has not been in the Chamber all evening, what horror stories in the constituencies he is talking about.
§ Mr. Stott
The hon. Gentleman migh have waited for the development of my speech. I shall come to that point in a moment. He has referred to my absence from the 773 Chamber. In fact, I was absent on three occasions—first, to go to the toilet; secondly, to have a little supper; and thirdly, to ring my wife. Otherwise I have been here throughout the debate.
§ Mr. Stott
Before the intervention of the hon. Member for Twickenham, I was saying that it was somewhat puzzling that the Minister should persist in such a reckless course of action. It is not as though he, of all people, is a devotee of the thoughts, sayings and ideology of the previous Prime Minister. Courtesy of certain eavesdroppers, his views on the right hon. Lady are widely known in Northern Ireland and beyond. Indeed, in that regard I agree with every word that he has said. Why, then, does he persist in pursuing the dogmatic simplicities of the 1980s? It is all the more surprising when so much of his good work has been devoted to promoting Northern Ireland as far as possible and protecting it as far as possible from the wild men and women of the Conservative party.
The Minister said that he believes this to be a very good measure indeed. We believe that it is privatisation for privatisation's sake. The Northern Ireland Members have spoken graphically about the perceived effects of these measures on their constituents. In an intervention during the speech of the hon. Member for Antrim, North (Rev. Ian Paisley), I said that not since the hon. Member for Peterborough (Dr. Mawhinney) introduced the Education Reform (Northern Ireland) Order 1989 has a Northern Ireland Office Minister managed to unify the disparate forces of the Northern Ireland constitutional parties represented in this Chamber against his proposals. It is a remarkable feat on the part of the Minister. I bet that the Secretary of State for Northern Ireland would very much like to achieve such a degree of unity and unanimity for something much more positive.
The Under-Secretary assures us that Northern Ireland's future energy supplies will be secured once the industry has been sold off. How can he be so sure? The reality is that private generating companies will be interested only in making a profit. Ensuring that consumers get the electricity they require will be incidental to that aim. The Government have abdicated all responsibility for a long-term energy policy to the dictates of market forces well known for their short-term obsessions.
The Minister also assured us that electricity would be supplied at a reasonable cost. We need only consider what has happened in Great Britain to see the hollowness of that promise. Neither domestic users nor the vast majority of industrial consumers have benefited from privatisation of electricity in Great Britain. Is there something about the air in Northern Ireland which will make a difference?
The Minister assures us that competition in electricity generation will be beneficial. One is tempted to ask, "What competition?" I should have thought that the Minister knows enough about neo-classical economics and the economies of scale to realise that he has a choice between unrestrained competition leading to a new private monopoly or bureaucratically regulated wasteful competition.
774 The hon. Member for Twickenham asked me about the horrors of privatisation in Great Britain. The Minister has said that the proposals will be beneficial for Northern Ireland. In doing that, he said that the privatisation of Telecom, gas and water had been beneficial to the multifarious consumers of those former public utilities. However, he did not say that the privatisation of electricity had been beneficial to the consumers in the rest of Great Britain. As Nye Bevan once said,Why read the crystal when he can read the book?"—[Official Report, 29 September 1949; Vol. 468, c. 319]I invite hon. Members who represent the Province to do precisely that.
A privatised electricity industry elsewhere in the United Kingdom scooped £1,059 million profit in the six months to September 1991. The profit in the second half of the year, which includes the winter months, is expected to be much higher.
Let us consider the area that the hon. Member for Lancashire, West (Mr. Hind) and I have the privilege to represent. That area is covered by NORWEB—the North Western electricity board. I must at this point place on record my appreciation of NORWEB's sponsorship of Wigan rugby league club. However, having said that, one has to look a little deeper into its profits and loss account.
NORWEB's profits increased sixfold to £33.4 million. That is equal to £17.66 profit per domestic consumer in the first six months of the year. The higher profits followed higher prices in April. Domestic consumers had to fork out 7.26p per unit, which represented a 9 per cent. increase. That was in addition to standing charges totalling £20.88. That was an increase of 18 per cent.—the highest increase in England. Electricity privatisation is a legalised racket. Consumers are overcharged and the bosses are overpaid.
As the hon. Member for Londonderry, East (Mr. Ross) said, the Secretary of State defined one of the goals of privatisation as follows:to encourage participation by employees of Northern Ireland Electricity, as well as the electricity consumers in Northern Ireland, in the ownership of that industry."—[Official Report, 20 March 1991; Vol. 188, c. 285.]According to today's proposals, that worthy idea seems to have gone by the board. The management-employee buy-out appears to have been completely restricted to Coolkeeragh power station [Interruption.] I am sorry about my mispronunciation of the name of that power station. I am sure that the Minister will agree that it is an aging plant which will need to be replaced in the near future. In the light of what the Secretary of State has said, ministerial assurances will not command great confidence in Northern Ireland.
The determination with which the Government have pursued the issue cannot mask the fact that they do not have a properly defined energy policy. Rather than assess the needs of Northern Ireland and examine the best way in which those needs can be met, they have adopted this form of privatisation as a panacea, but without reference to the real world. Rather than put forward proposals based on reality, the Government hope that their proposals will alter the stubborn reality.
I have been present throughout the debate which has been conducted across the Chamber by hon. Members from Northern Ireland. Nobody is pretending that the current situation is magnificent or superb. Nobody is saying that that situation should continue. Nobody is saying that it is entirely the fault of the work force or 775 management in the Northern Ireland electricity industry. There should have been some on-going thinking. Something should have been done years ago.
However, at this eleventh hour, we do not require this spurious form of privatisation—a privatisation which does not bear any relation to the needs of Northern Ireland. It does not give the people of Northern Ireland a piece of the action. If the Minister wants to conform with the previous Prime Minister's belief that the enterprise culture should extend to every nook and cranny of this land, he must agree that the order completely ignores that philosophy. I am totally opposed to the measure, root and branch. If the Minister believes in the enterprise culture, he is not delivering it.
The order would make the need for an energy policy which can secure future energy supplies at reasonable cost more urgent rather than less urgent. My hon. Friend the Member for Leicester, South indicated what our party would do in respect of the imminent general election—it depends when it is called, it depends on the time scale, and it depends on progress in the implementation of the conditions of the order. I reaffirm that if a general election occurs before the order is fully commenced we shall put a hold on it and reverse it. That is a promise which we make to the people of Northern Ireland.
§ Mr. Needham
With the leave of the House, I begin by saying to the right hon. Member for Lagan Valley (Mr. Molyneaux) what I said to the hon. Member for Antrim, North (Rev. Ian Paisley). I fully and completely appreciated the vital meeting that he and other Northern Ireland colleagues had this afternoon. When I remarked on the thinness of attendance in the Chamber, I was not referring in any way to those discussions.
It was, as I said to the hon. Member for Antrim, North, a disappointment that so few hon. Members have been able to attend the debate, as I was looking forward to discussing their views in great detail. I appreciate that, unfortunately, fog has detained them, as the hon. Member for Londonderry, East (Mr. Ross) said. Nevertheless, it is a pity that the hon. Member for Belfast, East (Mr. Robinson), for example, did not have the opportunity to tell the House his views about the privatisation of Northern Ireland Electricity and what he now thinks about the privatisation of Shorts and Harland and Wolff in his constituency.
§ Mr. Peter Robinson (Belfast, East)
Should the Minister be in the least doubt about my views—he will certainly know when we vote at the end of the debate—may I say that we discussed this matter in Committee, and I made my views very clear to the Minister. I shall be acting in accordance with those views.
§ Mr. Needham
I understand that, but I feel that the hon. Gentleman's constituents and the people of Northern Ireland should have the chance to hear those views tested on the Floor of the House so that they can judge how well they match up to the successful privatisations that have taken place in the hon. Gentleman's constituency which I am sure that he now welcomes. I refer, for example, to the 776 massive expansion at Shorts now that it is under alternative ownership, but perhaps the hon. Gentleman still opposes that privatisation.
One thing that has become clear in the debate is that there are as many views about what is wrong with the present position in Northern Ireland Electricity and as many ideas about what might be done as there are parties in Northern Ireland. I shall refer first to some of the comments made by my hon. Friend the Member for Rochford (Dr. Clark), the Chairman of the Select Committee on Energy, because it is worth repeating what that Committee unanimously decided. It comprises five Opposition Members and five Conservative Members, with my hon. Friend in the Chair. Its unanimous view was that the Government's proposals on competition did not go far enough. I repeat that the Committee did not think that we went too far: it thought that we did not go far enough. It felt that we should not attempt to privatise Northern Ireland Electricity as an integrated vertical unit.
There were powerful and cogent reasons for that decision, not least the fact that to do so would simply make a public monopoly into a private monopoly—which, I am sure, is not something that any Opposition Member would want. I am sure that hon. Members representing the Social Democrats and the Labour party would not go for that option. I am not clear about the view of the Democratic Unionist party on this matter because we were unable to elicit any view on the way forward from the hon. Member for Antrim, North. However, although that is the view of the Ulster Unionist party, the arguments against were cogently made by the Select Committee.
My hon. Friend the Member for Rochford adequately answered the point about Scotland, but the most obvious point to make in that regard is that there are two integrated units there in circumstances that are very different from those in which the one unit that the hon. Member for Antrim, East (Mr. Beggs) proposes would operate in Northern Ireland.
My hon. Friend the Member for Rochford was concerned that we might lose the benefits of scale in the new organisational structure. He asked how we could get around that. A small team in the transmission, distribution and supply company will buy electricity from the power stations on a day-to-day basis and order and call off power in merit order. It will do so according to the fuel price index. It will be assisted in that by several additional competitive pressures that do not exist at the moment.
The first is the R factor, which will be introduced into the TDS company. That means that prices will not be allowed simply to pass through from the generator to the distribution and supply company and then straight through to the consumer. There is no such arrangement at the moment. Secondly, the power stations will want to sell power. At the moment, there is no incentive for the power stations in Northern Ireland either to sell power or even to make it available.
The hon. Member for Antrim, East made the extraordinary comment that the existing merit system provides some form of competition. It does not. The whole point of the privatisation proposal is that it introduces a series of competitive elements into the system through regulation and by putting one generator in competition with another. Splitting the TDS company introduces areas of competition that do not exist at the moment. Furthermore, because we have said that the regulator will be empowered under the licences to determine what the 777 TDS should charge, we can ensure that will be done on the basis of RPI minus X. That is another pressure that does not exist at the moment.
The hon. Member for Antrim, East says, "Oh well, let us privatise it as a single integrated unit." Then we would have to find the most draconian forms of regulation to achieve some control over that great private monopolistic beast. He and his hon. Friends and other Northern Ireland Members have accused me as the Minister of being incapable of providing that control.
§ Mr. Needham
I am not saying that. I am saying that there is no competition in the merit order. It is called off purely on the basis of what is available and what is the most economic at the time. But that has nothing to do with introducing competition into the system. There is no additional or special payment for availability. Furthermore, Northern Ireland Electricity buys fuel for the whole system—not, as individual generators will do in future, for the individual power stations.
The other argument that was raised by the hon. Member for Londonderry, East and others is based on the Select Committee's comment that many of the policies that we have proposed could have been achieved without privatisation. For example, the Select Committee said that we could have had a gas supply or interconnection in Northern Ireland without privatisation. I do not believe for one moment that without the privatisation proposals the money that might have been available would have gone into gas or an interconnector. On both issues—I must be frank with the House—Northern Ireland Electricity dragged its feet. The money would have gone on transmission lines or Kilroot 2.
The reasons why the money would have gone on Kilroot 2 are those which I have explained to the House and the Northern Ireland Committee on many occasions. Northern Ireland Electricity was determined to foist Kilroot 2 on the people of Northern Ireland whether they wanted it or not, whether or not it has flue gas desulphurisation or whether or not it was competitive. That is where the money would have gone.
§ Mr. John D. Taylor
Many of us welcome the gas pipeline and we are glad that it is back on the table for discussion. In fairness, does the Minister agree that it has been a matter of considerable debate during the past decade or so that at one stage the European Commission committed itself to giving regional fund aid for the provision of a gas pipeline for Northern Ireland? That project was supported by the Labour party but opposed by the Conservative party.
§ Mr. Needham
All right. But the fact is that gas would not have been on the agenda. It was not purely a question of providing a pipeline to bring gas for domestic use. In any event, as we all know, the amount would not have been sufficient to make the project economic. It comes down to the question of generation. As I have asked the hon. Member for Antrim, East on so many occasions, how 778 on earth could one bring gas generation into Northern Ireland if one did not offer to sell a power station for a gas supplier? The hon. Member for Antrim, East has always failed to answer that question. In his integrated vertical private monopoly proposals he has never dealt with that point.
My hon. Friend the Member for Rochford mentioned price-smoothing. The power purchase agreements will allow the generators to smooth prices. The generators will have both short-term and long-term fuel contracts which should enable them to smooth any sharp variations in price. The transmission, distribution and supply company's licence will allow it not to pass on automatically or immediately any fluctuations in price.
I have considerable sympathy with the point made by my hon. Friend the Member for Rochford about long-term contracts. They will be reconsidered by the regulator in 2010. It will be possible to cancel them if they are not performing to the benefit of the consumer.
As to the regulator, we have appointed Mr. Geoff Horton, a senior employee of the Office of Electricity Regulation, whom I met recently. I have suggested that he takes the opportunity to meet as many hon. Members representing Northern Ireland as possible in the near future. I am sure that he will be totally committed to looking after the interests of the consumer and the industry.
The regulator will control how much capacity should be available in the system in Northern Ireland. It will not be left to Northern Ireland Electricity to determine and Ministers to agree, as it is now. If arguments break out between the regulator and the generating companies or NIE(TDS), he will be able to refer the matter to the Monopolies and Mergers Commission.
The subject of price exercised the minds of most hon. Members who spoke. Contracts for the purchase of power from the generators have already been set out. They will keep prices constant. Obviously, major changes in the price of fuel will have to be allowed for but the purcashing agreements will keep prices constant during the lives of existing contracts. No new capacity will come on stream until 1996. Therefore, I am able to guarantee that, as I told the House, prices will stay constant at their present levels until 1996, the first time that new generation could enter the system.
Whether prices then go up or down depends on the source of the new electricity. Probably the interconnector will be in place and it will depend what happens to prices in the English and Welsh pool, and on how generous the hon. Member for Kingston upon Hull, North (Mr. McNamara) is in assisting us with the cost of that interconnection.
The cost of generation—the cost of fuel—represents two thirds of total electricity prices. The rest comes from transmission, distribution and supply costs. Northern Ireland Electricity will be controlled by the regulator to the extent that it can raise prices, but it will be limited to inflation by the RPI minus X formula, which will take into account efficiencies which the company should be able to achieve.
In addition, we are looking to control the extent to which the transmission and distribution company can pass on its costs. We have not yet fully agreed the details, but tight and transparent controls will be available to hon. Members, to the House and to the public in Northern Ireland, so that they can see for themselves.
779 As I said in my opening remarks, there will be a total revenue cap. I do not think that that happens anywhere else in the United Kingdom or in Europe. If NIE(TDS) sells more electricity than forecast—that forecast has to be agreed with the regulator—the following year it will have to reduce prices to take account of the additional amount it sold, thereby ensuring that it will not be able to make excessive or additional profits by selling more power. The cap—a punishment for the company—will ensure that consumers will benefit.
§ Mr. Stott
The Minister said that there would be a cap if NIE(TDS) sold more power than it originally anticipated. Does that take climatic conditions into consideration? We all know that a sudden cold snap or a storm may bring the lines down and cause a power failure. The generation of electricity is not linear; it varies and has peaks and troughs. There can be the best forecast in the world, but if, as happens in Northern Ireland, there is cold weather for a protracted period and more consumers use electrical power, will the company be penalised for producing more power? Is that what the Minister is saying?
§ Mr. Needham
It is up to the companies to negotiate and discuss that with the regulator in the light of the available evidence. What would the hon. Gentleman do? He does not like any of this. He wants everything to continue as it is. He wants everything to be done in a cosy Committee Room between civil servants and board members or officials of NIE. I have heard nothing from him about how he expects the consumer to find out transparently and openly about the negotiations.
I have been accused of not having a strategy or policy. I outlined our policy twice during the day, so I trust that the message has got partially through. I hear nothing from the hon. Gentleman and his colleagues about how they will ensure that a green cap is applied to NIE for the benefit of the environment and consumers.
§ Mr. McGrady
The usual practice in any industry is to increase sales, decrease unit costs and so make a profit. Is the Minister saying that the new companies will not be allowed to increase their sales, thereby achieving greater efficiency per unit cost and so enabling them to reduce the cost to the consumer?
§ Mr. Needham
The TDS company will not be allowed to increase its profits by trying to maximise the energy that it sells in Northern Ireland. It must abide by the forecast that it will have agreed with the regulator. The hon. Member for Wigan (Mr. Stott) is right to say that occasionally climatic conditions will throw the figures out of kilter, but that is a matter for open discussion and debate in a forum that everybody can see for himself. The whole point is that the TDS company must increase efficiency and productivity to make its profit.
§ Dr. Michael Clark
Will my hon. Friend confirm that under the proposed scheme, should NIE(TDS) generate much more electricity—either through increased sales or because of a cold snap—it will be able to recoup more of its overheads through its extra sales and that, rather than accumulate those recouped overheads as profits, it must decrease its unit cost, although it will be able to keep a little of its extra revenue as an incentive for its efficiency? In 780 other words, the company must pass on the bulk of its extra revenue to its consumers and both the transmission company and its consumers will benefit.
§ Mr. Needham
My hon. Friend should be replying for me. He has put the point even better than I could have dreamt of doing. He is exactly right. That must be of great importance to the consumer and the environment.
The hon. Member for Antrim, East accused me of intransigence. Without exception, everyone, from the Democratic Unionist party—if I understand correctly the speech of the hon. Member for Antrim, North—the Social and Democratic Unionist party and the Labour party to the Government, is opposed to the idea of a vertically integrated private monopoly. It would require draconian legislation. I cannot for the life of me understand how competition could be introduced into such a system.
It is argued that there will be competition when a new generator comes along. How will that happen if the new generator is expected to compete against a vertically integrated private monopoly? Nobody will be attracted if the rules are set by a private monopoly. It would be extremely difficult for a generator to come into the system under those handicaps. That is why we spent a considerable time listening to the views of the Select Committee, which unanimously proposed that we should introduce more competition for that reason.
The hon. Member for Antrim, East, who has done more than any other over the years to make a case for gas—the people of Northern Ireland should be remarkably grateful to him for that—should listen to me on the issue of intransigence. I do not believe that we would have had any chance of providing gas to Northern Ireland if we had not invited potential investors, such as British Gas, to buy a power station.
The hon. Member for Antrim, East said that he was at the coal face. I accept that. He is 2,000 ft underground and covered in dust; I recommend that he come up, take a deep breath, look around and recognise that our alternatives are in the best interests of the people of Northern Ireland.
The order provides competition. There will be an incentive to buy fuel cheaper, new generators will come in on a level playing field and transparency will be provided through regulations. The important element under regulatory proposals is the least-cost option. That is an important point to consider. The TDS company and the generators will have to show that if they need to introduce more generation, there is no better way of achieving that than by doing either as the hon. Member for South Down (Mr. McGrady) would like, through greater energy efficiency or environmental controls or, as in the case of Coolkeeragh power station, mentioned by my hon. Friend the Member for Twickenham (Mr. Jessel), by using a power station that will therefore get a longer life than under the present system.
§ Mr. Malcolm Moss (Cambridgeshire, North-East)
On the least-cost option, is my hon. Friend saying that the generation company or the distribution company can persuade those producing electricity to spend money on investment in energy efficiency measures for the public rather than on capital investment in new generating capacity?
§ Mr. Needham
I am grateful to my hon. Friend. Once again, a colleague has made the point better than me. At the least, the system in Northern Ireland will produce a series of choices for the future that do not exist now.
I am grateful to the hon. Member for Antrim, East for what he said about what I do in general in the Province. He gave me a back-handed compliment by saying that I do not seem to have much control over NIE and nor do my civil servants. The hon. Gentleman knows as well as I that it is a foolish politician who tells professionals what to do. It is right to say that the Government appointed the board, but there is absolutely no guarantee that, once that board is appointed, and without the competition pressing the board to make the sort of decisions that we have discussed, it would not be quickly seduced by the philosophy of the organisation to which it was appointed.
Those of us involved in Northern Ireland affairs can think of other organisations which have succumbed to that pressure. I am glad to see that the hon. Member for Antrim, South (Mr. Forsythe) is smiling about that.
§ Mr. Needham
I shall do so in a moment.
Job losses are of concern to all of us, especially given the new schemes that are being developed and that are designed to improve productivity and efficiency in NIE. However, the hon. Member for Antrim, East, who represents Larne and many people who work in the power industry, must appreciate that that industry must be competitive because it is crucial to the economy of the Province. The hon. Member for Belfast, East can see for himself what happens when privatisation is successful and a company doubles its turnover in two years, takes on an extra 700 or 800 staff and returns to profit. That is exactly what we want to see take place in Northern Ireland Electricity.
The hon. Member for Antrim, East asked me for assurances on the non-fossil fuel obligation. Other hon. Members, including my hon. Friend the Member for Twickenham, raised that question. The first step is to commission a study, jointly with NIE and the Department, to see what projects exist, what can be developed and what can be brought to commercial viability. Once we have done that, we shall introduce a renewables order that will give the transmission and distribution company a target. There are major opportunities, in terms of renewables, for us to go down that route, and there are some interesting ideas. As other hon. Gentlemen remarked, we must bear in mind the environmental appearance of wind farms and so on, and seek a balance, as we do with pylons.
The hon. Members for Antrim, East and for Antrim, South mentioned pensions. That is a complex issue and there has been widespread and understandable misunderstandings about some of the Government's intentions. Major concessions have been required by the Northern Ireland electricity service committee of management, including future benefit increases up to 10 per cent. of the retail prices index, adjustments made to the scheme to take equal account of the retirement age of men and women and an increase in the benefit payable to spouses.
The new system will provide five schemes to be created by the private sector companies, with all the existing pensioners going into the TDS scheme. The Government have been asked to underwrite private sector schemes against employers' insolvency. We are negotiating those 782 difficult issues and, apart from the latter issue, they have been agreed with the committee of management and the unions. Other industrial relations issues are also under discussion, and the unions are now starting discussions with potential new station owners on outstanding matters. The legislation provides statutory protection in respect of pension rights, ensuring that no one will be worse off.
The hon. Member for Antrim, North asked for further consultation. There has been an immense amount of consultation on this issue. Indeed, there has been more consultation and debate on that issue—without anyone being able to change anyone else's mind—than on almost any other Northern Ireland issue. The Government's proposals are not being rushed through. They were introduced in 1988, and one of our Committee debates even finished half an hour early; so there has been a reasonable time to discuss various views and everyone knows where hon. Members stand on the issue.
The hon. Member for Antrim, North complained about advertising. I must admit that I was not aware of, or asked my views on, NIE's advertising campaign. It is delegated to the NIE board and staff as an operational and management matter and I am delighted that they are taking their service to the public so seriously.
The hon. Member for Antrim, North said that, although he was in favour of competition, it was so difficult that nothing much could be done. I suspect that the hon. Gentleman used that argument in the debate on Shorts and Harland and Wolff. It is difficult and we understand that such changes are radical and challenging. In those debates, hon. Members—with the exception of Labour party spokesmen—said that it was not worth continuing with the status quo. Surely it is right for the politicians in Northern Ireland not only to criticise the Government's proposals, which they have every right to do, but to give some idea of their realistic alternatives to those plans to the people of Northern Ireland. I do not believe that any of their proposals stand up to scrutiny.
The hon. Member for South Down strongly opposed the views of the Ulster Unionist party on a single private monopoly, as did the hon. Member for Newry and Armagh (Mr. Mallon), who spoke—more bluntly than I would have done—about the role of Northern Ireland Electricity and some of its staff in the past. However, when it came to a solution, the hon. Member for South Down said that I was dogmatic and he blamed the civil servants. He seems content to keep bashing his head against a brick wall that he admits is there, on the basis that, if he continues for long enough, he might start to enjoy it. He says that the people of Northern Ireland should rely on the Minister and board. He must also accept—as the hon. Member for Newry and Armagh agrees—that relying on the Minister and the board has not got him very far in the past.
I repeat the point that I have already made about the need for competition. The hon. Member for Newry and Armagh talked eloquently about the lights going off in one of his constituent's houses when there was a turkey in the oven. I shall not stray into the citizens charter, but with a regulator and a separate consumer council, we shall be able to end the present incestuous relationships that inevitably exist in Northern Ireland because of the public monopoly. The hon. Member for Newry and Armagh would then have a much better chance of gaining satisfaction on behalf of his constituents, as he would not have to wait to debate the issue on the Floor of the House.
783 The hon. Member for Antrim, South made a series of exceptionally intricate and detailed points that I shall try to answer as best I can. He asked about electrical inspectors and when they were to be used. Article 33 empowers the Department toappoint competent and impartial persons to be electrical inspectors".Article 33(2) lists as one of the inspectors' duties(a) to inspect and test…electric lines and electrical plant belonging to persons authorised by a licence or exemptionThey also have a requirement to inspect or test equipment if required to do so by consumers. The Department will require inspectors to carry out duties such as considering accident reports and carrying out investigations into serious accidents.
On article 19(2) the hon. Member for Antrim, South asked howthe maximum power which may be requiredin a request for electricity is to be determined and who would pay. Article 19 is intended to apply to large users, but it applies to everyone. Large users can determine the power and will have to pay for the service. Domestic consumers will have to suggest their likely power needs, which can easily be worked out by considering the types and numbers of appliances that they intend to use. There will be no need to charge domestic users. The licensing conditions mean that providing the information will not prove onerous. However, the hon. Member for Antrim, South rightly asked the question, and we shall consider the matter carefully to see how it works in practice.
The hon. Member for Antrim, South also asked about pensions and whether there would be a power to amend the scheme. He asked whether paragraph 2 of schedule 11 would be used after privatisation. The answer is no. That power will be used to make the regulation and, thereafter, it will be up to the scheme's trustees to amend it.
The hon. Member for Antrim, South also asked about an actuarial valuation. That has been carried out and it is a legal requirement to carry it out. I cannot give the hon. Gentleman the name of the actuaries, but they were appointed by the trustees of the scheme. It is up to the independent trustees to decide whether they want to publish.
The hon. Gentleman asked how existing funds will be divided. As I said before, at the request of the trustees the scheme will be split into five separate schemes, one for each of the generating stations and one for TDS. At first, they will be mirror image schemes, identical to each other.
The hon. Gentleman asked what will happen to the surplus. It will transfer to the new funds, and it will be up to the trustees to decide how to allocate them. The hon. Gentleman asked whether people can leave and start up personal pension plans. The answer is yes; if any member feels that he could do better by leaving the scheme, he will be entitled to do so.
The hon. Member for Antrim, South asked about article 88—grants towards expenditure during the transitional period. The purpose of that provision is purely to enable the obligations of NIE to be discharged between the vesting of the assets on 31 March and the final dissolution when the accounts of the companies have been prepared.
The hon. Gentleman asked about schedule 4, and in particular about referrals to land tribunals being expensive 784 and operating against the small landowner. I can tell him that they will not be used often, and then only when there is a dispute involving significant costs. It will be in the interests of NIE(TDS) to obtain co-operation, and commercial pressures in the private sector will provide incentives to settle that do not exist under public ownership.
The hon. Gentleman asked whether the DED wil be the final arbiter in deciding who should have the right of entry. The answer is yes.
I apologise to the hon. Member for North Down (Mr. Kilfedder) for not being here during his speech. He talked about the Order in Council procedure and said, I believe, that it was a disgrace. We had a full debate on that issue. As the Opposition spokesman said, there are strong arguments for change but it will have to come about with the agreement of Northern Ireland Members.
The hon. Gentleman said that he supported electricity privatisation in England. I only wish that he supported it for Northern Ireland too, because I believe that our scheme improves in some respects on the original scheme for England. I hope that the hon. Gentleman maintains the principle with which he started off.
The hon. Gentleman said that this is a public sector monopoly becoming a private sector monopoly. I do not accept that—although, if the hon. Gentleman goes along with his colleagues in the Ulster Unionist party, he may well turn out to be right.
The hon. Member for Londonderry, East said that privatisation was not the way forward, but he repeated that gas should have been introduced to Northern Ireland before now, and likewise an interconnecter. How right he was. The problem is that, under the old system, that did not, would not and could not happen.
The hon. Member for Derbyshire, North-East (Mr. Barnes) said nothing about the merits or demerits of the case, let alone about what Labour would do to help the consumer. I believe that the consumer will be helped by this scheme, much more so than if we continued with a public monopoly dominated, as this one has been for so long, by management and workers.
The hon. Member for Wigan discussed the Order-inCouncil procedure. Every year, for every one Bill for Scotland, there are 20 or 25 pieces of primary legislation for Northern Ireland. It is up to Northern Ireland Members to decide how they want to proceed.
The hon. Member for Leicester, South (Mr. Marshall) said that he wanted this business left to a devolved assembly—but what would that produce? A private monopoly is the most likely outcome from a devolved assembly, exactly the result that the hon. Gentleman does not want. He told me that I was hiding because I did not explain how the order would work in practice. I hope that he now sees that what I said in practice will work.
What will happen under Labour's proposals if, as the hon. Gentleman promised, a Labour Government do not sell TDS? How will that Government decide what to do about generation? Am I being too cynical in believing that the Opposition, with votes in Scotland but none in Northern Ireland, will decide what is bought for the Province and how?
There was a great sigh of relief from the hon. Member for Leicester, South when he heard that Northern Ireland generators would be sold, because he will not be faced with the consequences. What about the Treasury receipts that 785 the hon. Gentleman laughed off? If that money is not received, there will be nothing in the kitty for undertaking many other worthwhile projects in Northern Ireland.
The order gives Northern Ireland consumers the best opportunity that they have had since the founding of the state. It gives Northern Ireland people the chance to own shares for the first time and it is a transparent way to plan for the future. It is an excellent order, and it will be approved for the benefit and with the support of the people of Northern Ireland.
§ It being Ten o'clock, MR. SPEAKER put the Question necessary to dispose of proceedings on the motion, pursuant to Order [24 January].
§ The House divided: Ayes 198, Noes 121.787
|Division No. 56]||[10 pm|
|Alison, Rt Hon Michael||Glyn, Dr Sir Alan|
|Amess, David||Goodlad, Rt Hon Alastair|
|Amos, Alan||Greenway, John (Ryedale)|
|Arnold, Jacques (Gravesham)||Hague, William|
|Arnold, Sir Thomas||Hamilton, Rt Hon Archie|
|Ashby, David||Hanley, Jeremy|
|Atkinson, David||Hargreaves, A. (B'ham H'll Gr')|
|Baker, Nicholas (Dorset N)||Hargrevaes, Ken (Hyndburn)|
|Beaumont-Dark, Anthony||Harris, David|
|Bendall, Vivian||Hawkins, Christopher|
|Bennett, Nicholas (Pembroke)||Hayes, Jerry|
|Benyon, W.||Hayhoe, Rt Hon Sir Barney|
|Bevan, David Gilroy||Heseltine, Rt Hon Michael|
|Blackburn, Dr John G.||Hicks, Mrs Maureen (Wolv' NE)|
|Body, Sir Richard||Hicks, Robert (Cornwall SE)|
|Boscawen, Hon Robert||Hill, James|
|Boswell, Tim||Hind, Kenneth|
|Bottomley, Peter||Hordern, Sir Peter|
|Bowden, A. (Brighton K'pto'n)||Hughes, Robert G. (Harrow W)|
|Bowden, Gerald (Dulwich)||Hunt, Sir John (Ravensbourne)|
|Bowis, John||Hunter, Andrew|
|Braine, Rt Hon Sir Bernard||Irvine, Michael|
|Brandon-Bravo, Martin||Jack, Michael|
|Brazier, Julian||Jackson, Robert|
|Bright, Graham||Janman, Tim|
|Brown, Michael (Brigg & Cl't's)||Jessel, Toby|
|Browne, John (Winchester)||Jones, Robert B (Herts W)|
|Burns, Simon||Kellet-Bowman, Dame Elaine|
|Burt, Alistair||King, Roger (B'ham N'thfield)|
|Butler, Chris||Kirkhope, Timothy|
|Butterfill, John||Knapman, Roger|
|Carlisle, John, (Luton N)||Knight, Greg (Derby North)|
|Chapman, Sydney||Knight, Dame Jill (Edgbaston)|
|Chope, Christopher||Knowles, Michael|
|Clark, Dr Michael (Rochford)||Knox, David|
|Clarke, Rt Hon K. (Rushcliffe)||Lang, Rt Hon Ian|
|Conway, Derek||Latham, Michael|
|Coombs, Anthony (Wyre F'rest)||Lawrence, Ivan|
|Coombs, Simon (Swindon)||Lennox-Boyd, Hon Mark|
|Cope, Rt Hon Sir John||Lester, Jim (Broxtowe)|
|Couchman, James||Lightbown, David|
|Cran, James||Lloyd, Peter (Fareham)|
|Currie, Mrs Edwina||Lord, Michael|
|Davies, Q. (Stamf'd & Spald'g)||Luce, Rt Hon Sir Richard|
|Davis, David (Boothferry)||MacGregor, Rt Hon John|
|Day, Stephen||Mackay, Andrew (E Berkshire)|
|Devlin, Tim||Maclean, David|
|Dickens, Geoffrey||McLoughlin, Patrick|
|Dover, Den||McNair-Wilson, Sir Patrick|
|Dunn, Bob||Malins, Humfrey|
|Emery, Sir Peter||Mans, Keith|
|Fenner, Dame Peggy||Marshall, Sir Michael (Arundel)|
|Forman, Nigel||Martin, David (Portsmouth S)|
|Forsyth, Michael (Stirling)||Mates, Michael|
|Forth, Eric||Maude, Hon Francis|
|Fox, Sir Marcus||Mellor Rt Hon David|
|Franks, Cecil||Mills, Iain|
|Mitchell, Andrew (Gedling)||Steen, Anthony|
|Mitchell, Sir David||Stern, Michael|
|Moate, Roger||Stevens, Lewis|
|Montgomery, Sir Fergus||Stewart, Andy (Sherwood)|
|Morrison, Sir Charles||Summerson, Hugo|
|Morrison, Rt Hon Sir Peter||Tapsell, Sir Peter|
|Moss, Malcolm||Taylor, Ian (Esher)|
|Moynihan, Hon Colin||Taylor, John M (Solihull)|
|Mudd, David||Tebbit, Rt Hon Norman|
|Needham, Richard||Thompson, Sir D. (Calder Vly)|
|Neubert, Sir Michael||Thompson, Patrick (Norwich N)|
|Newton, Rt Hon Tony||Thorne, Neil|
|Nicholson, David (Taunton)||Thurnham, Peter|
|Nicholson, Emma (Devon West)||Townend, John (Bridlington)|
|Norris, Steve||Tredinnick, David|
|Onslow, Rt Hon Cranley||Trippier, David|
|Paice, James||Twinn, Dr Ian|
|Patten, Rt Hon Chris (Bath)||Viggers, Peter|
|Pattie, Rt Hon Sir Geoffrey||Walden, George|
|Pawsey, James||Walker, Bill (T'side North)|
|Porter, Barry (Wirral S)||Waller, Gary|
|Porter, David (Waveney)||Ward, John|
|Portillo, Michael||Warren, Kenneth|
|Price, Sir David||Warren, Kenneth|
|Raffan, Keith||Watts, John|
|Raison, Rt Hon Sir Timothy||Wells, Bowen|
|Rhodes James, Sir Robert||Wheeler, Sir John|
|Riddick, Graham||Whitney, Ray|
|Ridsdale, Sir Julian||Widdecombe, Ann|
|Roberts, Rt Hon Sir Wyn||Wilkinson, John|
|Rossi, Sir Hugh||Wilshire, David|
|Sackville, Hon Tom||Winterton, Mrs Ann|
|Shaw, David (Dover)||Winterton, Nicholas|
|Shaw, Sir Michael (Scarb')||Wolfson, Mark|
|Shelton, Sir William||Wood, Timothy|
|Shephard, Mrs G. (Norfolk SW)||Yeo, Tim|
|Shepherd, Colin (Hereford)||Young, Sir George (Acton)|
|Skeet, Sir Trevor|
|Soames, Hon Nicholas||Tellers for the Ayes:|
|Speed, Keith||Mr. Irvine Patnick and|
|Spicer, Michael (S Worcs)||Mr. Neil Hamilton.|
|Adams, Mrs Irene (Paisley, N.)||Fatchett, Derek|
|Allen, Graham||Fearn, Ronald|
|Alton, David||Field, Frank (Birkenhead)|
|Anderson, Donald||Flannery, Martin|
|Archer, Rt Hon Peter||Flynn, Paul|
|Ashton, Joe||Forsythe, Clifford (Antrim S)|
|Banks, Tony (Newham NW)||Foster Derek|
|Barnes, Harry (Derbyshire NE)||Foulkes, George|
|Barron, Kevin||George, Bruce|
|Battle, John||Gordon, Mildred|
|Beckett, Margaret||Griffiths, Nigel (Edinburgh S)|
|Beggs, Roy||Griffiths, Win (Bridgend)|
|Bennett, A. F. (D'nt'n & R'dish)||Grocott, Bruce|
|Bidwell, Sydney||Hardy, Peter|
|Blunkett, David||Haynes, Frank|
|Boateng, Paul||Heal, Mrs Sylvia|
|Bray, Dr Jeremy||Hinchliffe, David|
|Caborn, Richard||Hood, Jimmy|
|Callaghan, Jim||Hoyle, Doug|
|Campbell, Menzies (Fife NE)||Hume, John|
|Campbell, Ron (Blyth Valley)||Jones, Martyn (Clwyd S W)|
|Campbell-Savours, D. N.||Kilfedder, James|
|Clwyd, Mrs Ann||Kumar, Dr. Ashok|
|Cousins, Jim||Lamond, James|
|Cox, Tom||Leadbitter, Ted|
|Crowther, Stan||Leighton, Ron|
|Cryer, Bob||Lewis, Terry|
|Cummings, John||Loyden, Eddie|
|Dalyell, Tam||McAllion, John|
|Darling, Alistair||McCrea, Rev William|
|Dixon, Don||McFall, John|
|Doran, Frank||McGrady, Eddie|
|Dunnachie, Jimmy||McKay, Allen (Barnsley West)|
|Dunwoody, Hon Mrs Gwyneth||McKelvey, William|
|Eadie, Alexander||McLeish, Henry|
|Enright, Derek||Maclennan, Robert|
|Evans, John (St Helens N)||McMaster, Gordon|
|McNamara, Kevin||Robinson, Peter (Belfast E)|
|Madden, Max||Rooker, Jeff|
|Maginnis, Ken||Ross, Ernie (Dundee W)|
|Mallon, Seamus||Ross, William (Londonderry E)|
|Marshall, Jim (Leicester S)||Ruddock, Joan|
|Martin, Michael J. (Springburn)||Short, Clare|
|Meale, Alan||Skinner, Dennis|
|Michael, Alun||Smith, Andrew (Oxford E)|
|Mitchell, Austin (G't Grimsby)||Smith, C. (Isl'ton & F'bury)|
|Molyneaux, Rt Hon James||Stephen, Nicol|
|Moonie, Dr Lewis||Stott, Roger|
|Morgan, Rhodri||Taylor, Rt Hon J. D. (S'ford)|
|Morley, Elliot||Taylor, Matthew (Truro)|
|Morris, Rt Hon J. (Aberavon)||Turner, Dennis|
|Mowlam, Marjorie||Walker, A. Cecil (Belfast N)|
|Murphy, Paul||Wareing, Robert N.|
|O'Hara, Edward||Watson, Mike (Glasgow, C)|
|O'Neill, Martin||Welsh, Michael (Doncaster N)|
|Paisley, Rev Ian||Williams, Alan W. (Carm'then)|
|Patchett, Terry||Winnick, David|
|Pendry, Tom||Wise, Mrs Audrey|
|Quin, Ms Joyce||Tellers for the Noes:|
|Redmond, Martin||Mr. Ken Eastham and|
|Reid, Dr John||Mr. Thomas McAvoy.|
§ That the draft Electricity (Northern Ireland) Order 1991, which was laid before this House on 27th November, be approved.
§ Mr. Speaker
Then put the Question necessary to dispose of proceedings on the other motion relating to Northern Ireland.
Resolved,That the draft Electricity (Northern Ireland Consequential Amendments) Order 1991, which was laid before this House on 27th November, be approved.—[Mr. Wood.]