§ Mr. Deputy Speaker (Mr. Michael Morris)
We now move to the next debate, which is on energy policy. I have to announce that Madam Speaker has selected the amendment in the name of the Prime Minister.
§ Mr. John Battle (Leeds, West)
I beg to move,That this House notes that British Energy has been privatised for just £1.4 billion, well below the Government's early estimates and proof that the sale was a bad deal for the taxpayer which was carried through in defiance of basic common sense; notes that there is no sign of a strategy from the Government upon the ad hoc restructuring of the electricity industry in which companies and billions of pounds have changed hands but consumers have become an afterthought; further notes that, as more coal pits close, there is no sign of a strategy on the effect of the renegotiation of the coal contracts in 1998 or of the take-or-pay gas contracts problem and no sign of leadership on the introduction of competition into the domestic gas and electricity supply industries in 1998, risking chaos and a crisis of public confidence in competition; and calls on the Government to establish a framework to promote efficient energy industries delivering a fair deal for consumers.According to press accounts, the Minister for Industry and Energy will relinquish his post soon, and he has already informed us that he intends to stand down from Parliament. I believe that his intention, on going into the private sector, was to leave us on a high note following the successful privatisation of British Energy—that "final burst of energy".
I understand that on 12 July the right hon. Gentleman delivered a valedictory address subtitled, "Some thoughts on energy policy, past, present and future", in which he helpfully admitted:there's still a few things to be sorted out.Perhaps that was a coded way of telling us that he is leaving behind him an in-tray stacked high.
One tribute in the Evening Standard report of the Minister's leaving says:One major unresolved issue left by the minister is the introduction of competition in the domestic electricity market, in theory due to start in 1998.This week Sir Denis Rooke, who was the head of British Gas from 1976 to 1989, declared that millions of "Sids" had been conned into buying shares:Over the years 'Sid' certainly has been conned … There's not even been any real explanation … What is happening is the kind of mess I thought we were going to get into. It happens to be much greater, and faster, than I'd expected".So much for the dream of shareholder democracy that the Conservative party held out to the Sids.
In The Times today, under the headline, "Damning report for electricity competition plan", we find an article spelling out Coopers and Lybrand's view that the plans to bring competition to 23 million domestic energy customerswill fail or be significantly delayed, with the inevitable resultant recriminations and potential harm to the industry and its customers".1003 In today's "City Comment" column in the Evening Standard we read:The British Energy flotation"—that is, the nuclear privatization—has combined bad subject matter, bad luck and bad judgment … the advisers look foolish, the Government is poorer than it hoped and Sid is out in the cold … It is an ignominious end to a story that was jaded from the start.If that is the note on which the right hon. Gentleman hopes to leave, he is getting out of the way in time before the flak catches up with him.
In recent months, the Labour party has twice forced the Government to come to the Chamber to debate nuclear privatisation—on 26 March and 18 June. After each debate, our critical questions were left unanswered. Our view—that this fag-end privatisation would prove to be a bad deal for the taxpayer—has proved to be right. Sadly, it is fast proving to be a bad deal for the 606,000 who have bought shares since then. They have seen their shares falling in value, and they do not yet have their share certificates—so they cannot even get themselves out of the privatisation.
We objected to the selling off of the eight nuclear power stations for less than the cost of building a single one—the new Sizewell B. BZW, the Government's advisers—who put the prospectus together—originally suggested a valuation of £2.4 billion. However, the price in the end was £1.4 billion—well below the original estimate. It was a giveaway sale by the Government, who were fixed on a last desperate dash for cash. We argued that the cash-generating profitable part had been sold off too cheaply, while millions of pounds of liabilities would remain with taxpayers for generations to come.
§ Mr. Jacques Arnold (Gravesham)
How can the hon. Gentleman say that it has been sold off too cheaply, as anything only has the value that someone is prepared to pay for it? If the market is now pricing it at below the level at which it was sold, did not the taxpayer get a very good deal?
§ Mr. Battle
I am delighted by that intervention. We once had monetarism and neo-Reaganomics, but we now have the economics of the car boot sale—it does not matter what we get for it as long as we get something. The point is that the Government have sold off assets at well below their value to the taxpayer, and the taxpayer will carry on paying for those assets for years to come. The sale has proved to be a bad deal for the shareholders as well. The estimates of the productive efficiency of the power stations, which at the time were set at 83 per cent., were well above 75 per cent.—the usual performance of the reactors. In other words, they were grossly optimistic.
When we challenged the Government on reports of faults at Hunterston B power station, we were accused by the Minister of scaremongering. Yet within five hours of the closure of the sale of shares on 10 July, the company publicly revealed that two out of the seven privatised advanced gas-cooled reactors—Hunterston B and Hinkley Point—had been found to have identical steam leak weld faults, and both were taken out of service.
Before the Minister leaves, perhaps he will tell us when he and his Department knew of those faults. Why were the potential investors not told? Why was the problem 1004 not even spelt out in the prospectus? Can he confirm the chronology of the problems with the re-heat boiler pipe weld cracks on Hinkley Point B and Hunterston B? In late March, Hunterston B reactor 4 load was reduced and the C quadrant boiler was taken out of service with a suspected steam crack. It was shut down on 13 April, but was re-opened at 75 per cent. of capacity on 4 May after the removal of the defective pipe. It was then put into what is called statutory outage for repairs on 1 June.
When we challenged the Government on 4 June to publish the Clifford Chance report that made direct references to the steam cracking, we were told that these matters would be dealt with in the forthcoming prospectus. We asked for that Clifford Chance report to be put in the public domain, and I again ask the Minister to do that, so that the details of what went on can be known. I hope that the Minister will confirm that, on 7 June, Hinkley Point B also moved into statutory outage. Yet, for some reason, it took 28 days until 4 July to reveal that a similar fault with steam pipe weld cracks had been discovered on reactor 4 of Hinkley Point B as well. Why did it take 28 days for that fault to be revealed?
The Minister may claim that the problem was announced in advance and that the shareholders ought to have picked it up. But it was published in that well-known and well-read journal, the "British Energy Monthly Output" figures. It appeared on 4 July, but only as a footnote on weld inspections at Hinkley and Hunterston. I do not think that those who have bought shares will think that that is good enough. They will believe that they have been seriously short-changed.
§ Mr. Alan Duncan (Rutland and Melton)
The hon. Gentleman is telling the House that because certain reactor faults were not made public, shareholders have overpaid for the purchase of nuclear energy shares. How does he reconcile that with his earlier comment that the Government did not get a sufficiently high asset price for the sale?
§ Mr. Battle
We know that the reactors were undersold because of the price of building them, and we have seen today that the cost of the shares is falling through the floor—89p is I believe the price today. [Interruption.] I do not think that the shareholders will be amused by the remarks of the hon. Member for Rutland and Melton (Mr. Duncan). They believe that the Government have short-changed them again. [Interruption.] The hon. Member for Rutland and Melton puts his finger to his head, as if he were an idiot. I would suggest that his economics have proved to be idiotic for the past 15 years, and that it would have been common sense to calculate the cost to future generations of taxpayers of selling off the nuclear industry.
§ Mr. Battle
I have given way already to the hon. Gentleman, and I want to make a little progress.
Why were the shareholders not told that there were faults in the reactors? It is not that the structural faults would jeopardise safety—I accept that, despite what some have irresponsibly claimed. But they certainly would affect generating efficiency and capacity. In other words, 1005 those reading the prospectus and buying the shares on the basis of that prospectus were sold short. Either that, or Conservative Members think that they ought to talk up shares and not give people the real facts about what they are buying. I suspect the latter to be the case.
While the Secretary of State was in the dealing room of BZW watching the shares being sold on screens, were the Ministers sitting on that crucial information that we know and they know would have jeopardised the sale even more? That is why this desperate dash for cash is the final betrayal of the ordinary shareholders whom the Government have claimed for years to support.
§ Mr. Battle
I have allowed the hon. Gentleman to intervene once already. I want to refer to that other acclaimed success—something to which the hon. Gentleman may wish to refer himself—the opening up of the electricity market to competition. Day by day, we learn that company after company—including GEN and Sainsbury—are refusing to pay the pool for electricity because they believe the pool system to be operated in the interests of its members, rather than its customers.
Of the 9,000 who were brought into the scheme in the industry on the last occasion the Government opened up the electricity market to commercial customers, only 5,000 had meters on the day. Coopers and Lybrand published a report subsequently describing the whole process as chaos. What do we find today? Coopers and Lybrand has published a review of the preparations for the introduction of the 1998 competitive supply market. On the likelihood of delivering that market in 1998, the review states:A significant majority felt the likelihood to be well below 50 per cent., while a number felt that the deadline is already unachievable.The report continued:OFFER's contribution is still not sufficient … Furthermore, PA Consulting … who currently undertake the role of the overall programme manager on behalf of OFFER was seen by many as being 'gagged' by OFFER leading to a lack of trust and credibility in them within `the industry'.The report continues:By most standards, an industry-wide programme such as 1998 represents a very sizeable project and not one to be managed by loose overall coordination … it is inappropriate to allow the various parties free rein with the hope that it will all prove 'all right on the night'. In our view, it requires firm and committed programme management.That is the view of the Government's own auditors.
§ Mr. Jacques Arnold
The hon. Gentleman seems to assume that the value of energy projects is exactly equal to the amount of money invested in them. Is he aware that he is making the same mistake as that made by the Labour Government that invested millions of pounds in the ground nut scheme, which proved to be worthless?
§ Mr. Battle
I am always glad of a historical reminder. I am tempted to divert the debate, but you would rule me out of order, Mr. Deputy Speaker. If the INMOS project had been properly supported, half of software production would be in Britain rather than elsewhere. This is a Government who know the price of everything and the value of nothing.
1006 Competition, yes—but not simply for its own sake. We believe that it is vital to get it right. If competition in the electricity market in 1998 fails and falls flat, although the Minister for Industry and Energy will be well out of the way, it will generate a massive crisis of consumer confidence in competitive energy markets. There must be leadership from somewhere to ensure that metering, billing and the settlement of the bills and payments is sorted out in advance and not left to a simmering row between the regulator and the pool.
As the head of Yorkshire Electricity is already warning, the real test of 1998 will be its effect not only on price, as Conservative Members insist, but on our social obligations to the people who find it hardest to pay their bills. Yorkshire Electricity argues that the electricity prices charged to those least able to pay will have to rise in the new market when the new entrants take up their customers. The social obligation to share costs will disappear and companies will remove any cross-subsidies. That will lead, as we have predicted, to cherry picking. Direct debit payers will get the best deal and the cheapest energy at the expense of the poorest. Yorkshire Electricity and other regional electricity companies rightly ask who will address the effects of unbundling the costs before 1998. If price competition is to work, it must be judged by its effect on those least able to pay, whose need for energy is basic.
It is true that this is the great age of transition in energy markets. Coal, gas, electricity and nuclear energy have been privatised by the Government. There has been a shift from coal, the total fuel demand for which has fallen from 40 per cent. in 1970 to some 25 per cent. today. Gas-generated power contributes some 20 per cent. of energy generation; nuclear energy 25 per cent. There has been a dash for gas.
§ Mr. Duncan
There is one point about which the House is puzzled. On the sale of nuclear energy, does the hon. Gentleman think that the share price should have been lower because of what he said about the prospectus, or higher because of what he said about the asset value?
§ Mr. Battle
We made it clear that we would not have started to sell nuclear energy. We have emphasised that it is a bad deal for the taxpayer and the shareholder alike. [Interruption.] I am sure that shareholders and future generations will not laugh when the Government have been seen off the park because they will have to pick up the tab for the Government's irresponsibility in dealing with the industry.
§ Mr. Alan W. Williams (Carmarthen)
Does my hon. Friend think that it is a sensible use of taxpayer's money to spend £3 billion on building the world's largest pressurised water reactor at Sizewell and within 12 months of it coming on stream, to sell it for £1 billion and throw seven free advanced gas-cooled reactors into the bargain?
§ Mr. Battle
I thank my hon. Friend for his patience in spelling out the arithmetic so that a schoolchild could understand it. The problem is that the Government do not seem to be affected by the arithmetic. They are still prepared to press ahead.
There has been what has been described as the dash for gas—the move to gas as a primary generator of fuel. When we discussed the coal review, the Government said 1007 that they wanted diverse and secure supplies of energy at competitive prices for years to come. We should take that seriously and make sense of it so that we do not end up dependent halfway through the next century on one source of fuel generation—gas—and then run out of it, and so become dependent on importing gas through the gas interconnector. That would be typical of the short-sighted cash-in mentality of this Administration.
The recent report by the 2,000 scientists who came together for the United Nations intergovernmental panel on climate change concluded that the balance of evidence suggested that global warming is a real phenomenon in many parts of the world, even though it may be masked in Britain by pollution from burning fossil fuels. We should take it seriously and plan for it in our energy and environmental strategies. It is not simply about price.
In a written answer to a question that I asked when I was first appointed to my present position, the Minister for Industry and Energy told me that we did not need to worry because there were 53 years of gas reserves in the North sea. I do not know how he arrived at that figure but some oil companies argue that it would need only two hard winters for the gas bubble, as it is called, to disappear. That would put us under pressure and we would have to import gas. If our source of gas imports was the Caspian region, it would be difficult to guarantee secure supplies because of political difficulties.
We believe in a sustainable energy future for Britain. When a previous Secretary of State for Energy, Nigel Lawson, was asked about that, he said that Britain did not need an energy policy because the market would provide one. There would be some regulation for a while and then it would wither away. We do not believe that the market alone will provide for the future energy needs of Britain. The mayhem of the past week is proving that already. We believe that we will need fair, accountable, transparent, depersonalised regulation and we will publish our detailed plans for that shortly.
§ Mr. Nigel Waterson (Eastbourne)
I do not want to interrupt the hon. Gentleman's flow but can he confirm that industrial gas prices, on average, have fallen by 48 per cent. in real terms since privatisation? To what does he attribute that—the tooth fairy?
§ Mr. Battle
I can confirm that gas prices are falling but we should compare them with the beach price. Some people believe that when the gas market is open for full competition in 1998, domestic prices could fall and commercial prices rise. The chimera of the lowest possible gas price is not what Conservative Members claim.
The target that we must aim at is not driving up the price every day for a short-term win or lose competition but to get sustainable, long-term competition in energy markets. We are committed not only to developing cleaner energy supplies, conserving energy and reducing demand but to ensuring that there is sustainable long-term competition in energy markets.
We are committed to increasing the proportion of energy generated by renewables. Lamentably, renewables such as combined heat and power schemes and photovoltaics have not been backed by the Government 1008 and renewables contribute only 3 per cent. of our energy. We shall push harder for a clean fuel levy. We spell out that we would increase targets for cutting emissions.
§ Mr. Matthew Taylor (Truro)
I am interested in the hon. Gentleman's comment about a clean fuel levy, because, at the weekend, the Financial Times suggested that the Labour party was considering using that levy to subsidise so-called "clean" coal. That clean coal will, however, contribute to global warming. Can the hon. Gentleman clarify what the Labour party's position is on this matter?
§ Mr. Battle
We would certainly examine the current levy on renewables and other options. The Government lock out the option of photovoltaics, for example. We would examine options to ensure that we have various sources of fuel, which does not mean writing off the coal industry. The tragedy is that the technology to clean up coal at the front end rather than at a later stage was developed in Britain but it was sold abroad. That technology could help to get rid of some of the noxious emissions, such as sulphur dioxide and nitrogen dioxide, and it is still a possibility.
We will consider the issue of home energy efficiency. We do not think that reducing energy demand is necessarily in conflict with the generation of energy. There should be programmes to promote energy efficiency and to build on home energy efficiency schemes. We could create 50,000 new jobs, as my right hon. Friend the Member for Sedgefield (Mr. Blair) spelt out in February. We are committed to taking action to reduce greenhouse gases, which means dealing with the issue of energy generation—as the hon. Member for Truro (Mr. Taylor) mentioned.
We need a more comprehensive approach if we are to reduce our carbon dioxide emissions. It could be argued that the Government have hit their targets only because they have closed down the manufacturing sector that created most of the problem. The Government have cut £31 million in the Budget from the home energy efficiency scheme, which has meant the loss of more than 1,000 jobs and the insulation of 2,000 fewer homes.
As the poet Valéery said:the future is not what it used to be.Energy markets may look very different in the future. Already supermarkets are saying that they could be energy suppliers through the use of smartcards. Already we face turmoil in takeovers and mergers in the electricity generation and supply sectors.
We say clearly that we do not want to be faced with a nuclear flotation flop. We do not want to face competition chaos, which risks causing a crisis of public confidence in even the idea of competition in energy markets. We do not want takeover or merger confusion in which the Minister disagrees with the Secretary of State over reports from the Monopolies and Mergers Commission on PowerGen and National Power. The impression that I get from the Minister for Industry and Energy is that, yes, he has been involved in all the privatisations, but he has lit the blue touch-paper and is simply walking away.
The Government lack leadership and vision. They are incapable of providing the leadership and vision to face the fact that we live in an age of transition. We face great 1009 changes, not least in the energy sector, and the future will look different: but we should face the changes positively, and welcome their challenges.
We are prepared to work with industry to achieve the potential in the energy utility sector. We want to set our sights so that they break out of the restrictions caused by the Government's short-term thinking and to deal with the problems that our society will face half way through the next century. That is too much to expect from this short-term, short-sighted Government. Whoever replaces the Minister for Industry and Energy at the Dispatch Box will not be able to provide the leadership and the vision that we need in energy policy to take us into the next century.
§ The Minister for Industry and Energy (Mr. Tim Eggar)
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:`congratulates the Government on its privatisation of the former state energy sector; notes that its market-based energy policies have led to lower prices and better services for consumers; and looks forward to the further benefits to consumers which will flow from the opening up of the gas and electricity markets in 1998.'.Whoever replaces me at the Dispatch Box at some stage in the future, I am sure that he will do much better job of it than would the hon. Member for Leeds, West (Mr. Battle), whose speech was completely incoherent. He did not seem to understand most of what he talked about, and he made no attempt at all to describe the Labour party's energy policy, which does not surprise me. Looking at the motion, in a flash I was transported back to the old days of old Labour—back to the 1970s, and to the days when no speech from a Minister in the then Labour Government was complete without making reference to an energy strategy and no paragraph was complete without paying obeisance to an energy plan. Those features can still be found in the motion. Let us go through it.
According to the motion, the hon. Member for Leeds, West and his advisers should decide how much British Energy is really worth. For Labour today, it is a case not only of "Whitehall knows best" but of "Short money advisers know best". There is no role for the market. When my hon. Friend the Member for Rutland and Melton (Mr. Duncan) asked the obvious question, how a deal can be bad for both the shareholder and the taxpayer, the hon. Member for Leeds, West seemed to be totally incapable of understanding the absurdity of his statement. The Opposition motion seems to state that the Government should restructure the electricity industry. According to Labour, the market should of course have no role.
Further on in the motion there is a complaint about coal pits closing. But what is the Labour party's policy on coal? Will it or will it not, if it were to get into power, renationalise the coal industry? We know very well what the right hon. Member for Livingston (Mr. Cook) said about it. He was quite clear about it and said:I should be astonished if our plans to rescue the coal industry after the next election did not involve public ownership.That well-known friend of the right hon. Gentleman, the hon. Member for Clackmannan (Mr. O'Neill), was even more precise later in the debate. He said:When Labour returns to power … we shall restore it"—the coal industry— 1010to public ownership".—[Official Report, 23 March 1994; Vol. 240, c. 313–84]That is a quite clear and unequivocal commitment—one that would really warm the heart of the hon. Member for Bolsover (Mr. Skinner).
We have heard not a word about the Labour party's policy on coal. I ask the hon. Member for Leeds, West now to tell us—I shall willingly give way to him—whether the Labour party will or will not renationalise the coal industry.
§ Mr. Skinner
The Minister has taken my name in vain, because he said that I would agree with the statement that he just made. Let me put him straight about coal. The Government destroyed the coal mining industry. There are now no pits left in my constituency. There are four or five pit villages in which the unemployment rate is more than 50 per cent. That is the tragedy of the pit closures.
I shall tell the Minister, in case he wants to repeat it, that I believe that the next Labour Government—when he has a job in the City, raking in money from the people whom he has been dealing with—should take the coal industry back into public ownership and not pay any compensation at all.
§ Mr. Eggar
I think that it is the hon. Member for Leeds, West, because he is squirming. He has discovered what all previous Labour energy spokesmen have discovered: they cannot make a single pronouncement, because they are frightened of the hon. Member for Bolsover and what he might do to them. They are concerned about making any commitment at all.
Let us go on and examine what the motion says. According to the Labour party, it is up to the Government to intervene to fix coal contracts and to impose changes on gas take-or-pay contracts. There is no role for the market there, only central direction by the Government.
To cap it all, the motion then says that we are not taking the lead in introducing competition in electricity and gas. Yet the Labour party opposed the Electricity Act 1989, which introduced competition in both the industrial and domestic markets, and the Labour party voted against the Gas Act 1995, which introduced competition for domestic gas consumers. So to accuse us of lacking leadership in introducing competition in electricity and gas is inaccurate humbug.
§ Mr. Eggar
No, I shall not give way for the moment.
1011 I wish to deal seriously with the points made by the hon. Member for Leeds, West. Although he did not have the guts to do so from the Dispatch Box, during the past two or three hours he has been running from television studio to television studio and from radio station to radio station saying that he has a leaked document that shows that British Energy deceived shareholders. That is a serious accusation to make. It is significant that he did not repeat that accusation from the Dispatch Box. I wish to go through the chronology of what actually happened.
§ Mr. Battle
The Minister will recall the chronology that I read out: it was from that document. There is no problem about that.
§ Mr. Eggar
The hon. Gentleman did indeed read something out from a document. The problem is that the document is from a company that competes with British Energy; so he has been going around claiming that British Energy has been deceiving shareholders, basing his allegation on a document that comes from a competitor of British Energy.
§ Mr. Eggar
The hon. Gentleman says that it is not a competitor of British Energy. I know that he is ignorant about the energy sector, but he seems to be unaware that Magnox is separate from British Energy. We have just floated British Energy, not Magnox, on the stock exchange. The Government continue to own Magnox, and it is therefore a competitor of British Energy.
§ Mr. Battle
If the Minister reads through the document, he will see that it is the minutes of the meeting attended by Magnox—that is the heading on the paper—Nuclear Electric, Scottish Nuclear, British Energy and various British Energy advisers.
§ Mr. Eggar
I shall go through the whole chronology, and the hon. Gentleman will find out the true position. I am treating this issue with the seriousness that it deserves, because the hon. Gentleman has been making a serious accusation outside the House rather than from the Dispatch Box.
The British Energy prospectus sets out clearly and exhaustively the range of issues that prospective investors should consider. It covers British Energy's continuing programme of work to deal with the reheat cracking in welds, which led to last week's closures. Had the hon. Gentleman bothered to look at the prospectus, he would have found the details on page 65, and further warnings about this and other technical issues on pages 67 and 109. Far from misleading people, British Energy went out of its way to deal openly with those difficult technical issues.
§ Mr. Eggar
I promise the hon. Gentleman that I will give way to him, but will he first listen to my statement? I am trying to put clearly on the record what actually happened. It will benefit the House if I am free to do that. 1012 While carrying out planned testing of reheater pipes during the Hinkley Point B statutory outage—which was scheduled to last for two months from 7 June—the existence of a crack in the pipe was confirmed on 1 July. A further test was carried out on 2 July. On 3 July, Nuclear Electric Ltd., which holds the licence, decided to cut out the affected weld for detailed metallurgy tests. On 4 July, Nuclear Electric issued a press release, which reported on its monthly output figures and, in accordance with normal practice, on the progress of the statutory outages at the reactors at each of Hunterston B and Hinkley Point B. I have that press release in my hand.
§ Mr. Eggar
If my hon. Friend will forgive me, I shall do so in a moment.
The press release noted that a crack in a weld had been discovered at Hinkley; that the weld would be cut out and replaced; and that steam-pipe weld inspections would be undertaken on the remaining reactors at Hinkley Point and Hunterston in due course. Accordingly, the pipe was cut out on 8 July and, on the morning of 9 July, the pipe was sent to the Berkeley laboratory for analysis. At 5.30 that evening, the initial results of the analysis, which showed the extent of the crack to be greater than expected, was passed to Nuclear Electric's director of engineering and, shortly afterwards, to the chairman, managing director, operations director and director of safety at NEL, and to the chairman of Scottish Nuclear.
At 7.15 that evening, the NEL managing director and the Scottish Nuclear chairman, in consultation with the appropriate technical, engineering and safety directors, decided to shut down immediately the remaining reactors at Hinkley Point and Hunterston for precautionary inspection of their steam-pipe welds. Controlled shutdowns commenced at 8 pm. British Energy's chairman and chief executive were subsequently informed of the position and my officials at the DTI were notified at 9 pm that evening. Ministers, including me, were told about the closures at 9 am on Wednesday 10 July.
During the morning and early afternoon of 10 July, a high-level group of executives from the British Energy group, including its chief executive, met their advisers and considered carefully the evidence from the metallurgical examination of the cracked weld and the financial consequences of the decision to close the remaining reactors for a two-week inspection so that they could issue a press release containing all the relevant information. At 3.30 pm on 10 July, they met DTI officials and privatisation advisers to advise us of their conclusions and the terms of the proposed press release, before issuing it at 5.30 pm.
I have taken some pains to explain the process at length because I want to assure the House that there is no question of anyone being misled or of information being withheld. The company acted entirely properly and it is a tribute to its stringent safety procedures that precautionary measures were taken so promptly to deal with the problem. Clearly, the timing of the closures at the two stations was earlier than originally planned, but the company did not regard the developments as representing a significant change for potential investors, so invalidating the prospectus.
§ Mr. Battle
This is an important matter, and I listened carefully to the Minister's outline of the programme. 1013 The Minister will concede that Nuclear Electric is part of the group. I have in my hand issue No. 6, page 1, of "Hinkley Point News", dated Monday 1 July. It says:During planned inspections on boiler pipeworks associated with reactor 4, a slight defect was discovered on a reheater pipe weld. This weld will now be cut out and preparations are in hand to replace it. This will either require an extension to the current outage, or a separate outage later in the year.That was on I July, which does not quite chime in with the timetable that the Minister has just read out.
§ Mr. Eggar
The employees knew about it. It is part of the culture of British Energy that it is open in its communications with its employees and that it informs both management and employees as issues arise. I am very surprised that Opposition Members, especially the hon. Member for Barnsley, West and Penistone (Mr. Clapham), laugh at the idea of open communication with the work force.
§ Mr. Williams
The Minister says that it is the culture of the nuclear industry to have a free exchange of information with its work force, and I am pleased that we are making good progress in that direction, but should it not be part of that same culture to have free communication with its potential investors and shareholders rather than to defer this announcement to one hour after the close of that share offer? Should not that announcement have been made, at the very least, earlier that day or, better still, two or three days before the close of the share offer?
§ Mr. Eggar
I am sorry; I did go to considerable pains, and I think that, if the hon. Gentleman reads Hansard tomorrow, he will follow through the sequence of events, which makes it very clear that the full extent of the crack was not known until the Tuesday evening, that the stations were then closed down and that, subsequently, the chief executive and chairman of British Energy were informed.
The chief executive and chairman met on the Wednesday, the day in which the retail offer closed, to discuss with their financial advisers the financial implications of the decision to shut down the two stations. 1014 They did that, because clearly there was an issue; they were in the process of floating the company. They decided, in the light of all the advice that they had had, that it was not an issue that needed more than the issuance of a press release. As I said, that press release came forward at 5.30 that afternoon.
I can assure the hon. Gentleman that there was no attempt to deceive, that absolutely—[Interruption.] The hon. Member for Leeds, West laughs.
§ Mr. Battle
I followed the details through as the Minister related them, but they still conflict with the newsletter and the information that was given to the shareholders. He told us to read the prospectus; I notice that he did not read out the relevant part, because it does not spell it out in the prospectus.
§ Dr. Clark
Does my right hon. Friend agree that nuclear power stations—indeed, any power station—will from time to time require shutdowns, sometimes scheduled, sometimes not? Despite all this, the power stations about which we are talking at present have increased their load factor in the past five or six years from 52 to 71 per cent. Does that not show the value that the taxpayers are getting when they buy into British Energy?
§ Mr. Eggar
My hon. Friend is right. Anyone who knows the nuclear industry, who knows the improvement 1015 in the performance of the stations and the dramatic change that has been achieved during the past four or five years, knows that that is a tribute to the skills of the employees of British Energy and to the management of British Energy.
§ Mr. Eggar
Many accusations could be made, but I am afraid that that one by the hon. Lady is not one that would have much credibility. I have spent disproportionate time on this issue, because it was raised by the hon. Member for Leeds, West. I now want to try to deal with the wider issues raised by the motion.
The debate is entitled "Energy Policy". The hon. Member for Leeds, West made it clear that for him energy policy means centralised command-style planning—the planning that gave us all the energy mistakes of the 1970s.
Conservative Members have consistently applied an energy policy for several years. We do not believe that direct control or ownership of the energy industries is necessary or desirable. We believe that what is needed is competition in open markets, working within a stable framework of law and of regulation. That is how we think we can best promote our energy objectives of providing secure, diverse and sustainable energy supplies in the form that people and businesses want and at competitive prices.
For much of the past 50 years, most of the energy sector was in the grip of state-owned monopolies formed in the splurge of Labour nationalisation after the last war. The lessons that we have learnt since then, at some cost to us all and to the national economy, are as follows. Governments are no good at running a business from day to day. Mistakes produced by a central planning system tend to be large and expensive. Innovation and efficiency are stifled in a monopoly system, as customers have no choice or alternative.
Over the years, nationalised industries' operational efficiency was subordinated to whatever current political imperatives held sway. At one time, prices and incomes policy held electricity prices down; the next year, International Monetary Fund pressures forced them up. That was the reality of state ownership of the nationalised industries and state control of dirigiste energy policy.
The Conservative Government determined that we do a lot about this. We determined that the energy businesses should be run as businesses, not arms of the state. We privatised the nationalised industries. We set up regulatory regimes to encourage the development of competition and to control prices where competition did not exist.
1016 All that has been very successful. Let me take some examples. In the industrial electricity market for supplies over 1 MW, more than half the consumers have switched to a supplier other than the local regional electricity company, and more than one third of the smaller industrial consumers of supplies over 100 kW have switched suppliers. The result has been clear—real industrial electricity prices are the lowest since records began.
In the industrial gas market, as has been said, very many firms have switched to the new entrants. The result is clear: real industrial prices are about half those at privatisation 10 years ago. Despite the fact that full competition is not yet here, domestic consumers have benefited considerably. Real annual average domestic electricity prices are the lowest since 1974. Coke and coal prices are the lowest in real terms since 1975.
In 1986, it used to take the average earner about 77 hours' work to pay for his year's gas bill. It now takes that average earner about 55 hours to pay for the average gas bill. The prospects for domestic gas consumers under full competition appear even brighter. The average earner in the south-west trial area only has to work about 44 hours to pay for his year's gas supply.
Strong regulation and competition are not only about price; they are about higher standards, better service and stronger customer orientation. Social responsibilities have not been forgotten—since privatisation, gas disconnections have fallen by two thirds and electricity disconnections have fallen by a staggering 98 per cent. The system is working. Consumers are already receiving significant benefits from the changes that we have made, and there will be even more benefits in the future. Companies have been encouraged to innovate, to become more efficient and to become more effective. The environment has also benefited because of the reduction in the pollution that is emitted from the more advanced electricity-generating sets. Our market-based policies are working. We have brought about a radical and revolutionary change in the way in which the energy sector works, to the benefit of all.
§ Mr. Tipping
The Minister has referred to things that have come down, but will he also refer to things that have gone up, such as complaints against British Gas? Has not the consumer lost out in many ways?
§ Mr. Eggar
The consumer has gained from the reduction in real gas prices, which have fallen by almost one quarter over the past 10 years. I have already referred to figures that show that the average earner has to work 22 hours less each year to pay for his gas than was the case at the time of privatisation. That is a significant benefit, and the hon. Gentleman will recognise the benefit that competition has introduced into the south-west.
The hon. Member for Leeds, West did not make a statement about energy policy, but there was something else: a dog that did not bark. We know that one area of Labour policy exists: the windfall tax, which was not mentioned by the hon. Gentleman. I suspect that he did not mention the windfall tax because, as is well known, the Labour Front-Bench spokesmen for industry and 1017 energy do not support it. as was made clear by the hon. Member for Pontypridd (Dr. Howells) on the "Today" programme.
§ Mr. Battle
If the Minister read the newspapers, he would know that we have gathered together in support of the windfall tax and that we have made it plain that we will impose it.
§ Mr. Eggar
We have made an advance: we now know that at least one member of the Labour party's industry and energy team supports the windfall tax. I ask the hon. Member for Leeds, West to answer a few questions. Will he confirm whether the windfall tax will be retrospective? There is no answer from the hon. Gentleman—he has failed test No. 1. Will the hon. Gentleman say which energy companies will be hit by the tax? He has not answered—he has failed test No. 2. Will he say how much the windfall tax would be? Again, he has not answered—he has failed test No. 3. Will he say how long the windfall tax will last? Again, there is no answer—he has failed test No. 4. I am sure that the hon. Gentleman can confirm how this windfall tax money will be spent.
§ Mr. Eggar
Jobs? That is probably another commitment. The Labour party has committed itself to 11 ways of spending the tax, and I am willing to take additions to the list. Will the hon. Gentleman confirm whether he still intends to finance £75 a week payments to the unemployed from the windfall tax—yes or no? Again, no answer. Is the tax still earmarked for a new environmental task force?
§ Mr. Eggar
I should read the newspapers? In other words, is it still intended that the windfall tax will be used to pay a fixed sum to people taking jobs in non-profit organisations`' Is the windfall tax going to pay for removing lead piping from the water systems? Will the windfall tax pay for the changes in the VAT thresholds and the capped allowances? Labour Front Benchers have made 11 commitments on how they will spend the windfall tax, but there is no explanation of how they will raise it, who at will be raised from, what the rate will be and how long it will last.
In "The Road to the Manifesto", the Labour party stresses how important stability is for industry—it is in lights. However, the hon. Member for Leeds, West cannot even answer my simple questions about the windfall tax.
§ Mr. Battle
At least we have made it plain that we will introduce a windfall tax. We did not go to the electorate and promise that we would not put VAT on fuel and then put VAT on fuel once we were elected.
§ Mr. Eggar
The hon. Gentleman should be better briefed or stay seated. The Government have pursued a constant and consistent energy policy since 1979. The policy has delivered enormous benefits to customers, led to dramatic reductions in the price of industrial gas and domestic gas, and to the reduction in the price of industrial electricity. Domestic electricity consumers have 1018 received more than £50-worth of free electricity already this year, with further reductions in the pipeline and 6 per cent. in October. Meanwhile, the standard of service is up, and gas and electricity disconnections are down.
The Government have introduced an energy policy that has benefited the environment and played a critical role in enabling us to meet our climate change commitments. Over the past 10 years, we have introduced competition and change into the energy sector—change that has meant more choice, more efficiency and better technology for consumers and producers alike. The Government have transformed the energy sector, as they have transformed industrial relations. That transformation has been good for consumers, for competitiveness and for the country. I am proud to have played a major part in that transformation over the past four years. I urge the House to reject the Labour party motion and to accept the Gvernment amendment.
§ Mr. Michael Clapham (Barnsley, West and Penistone)
I take the Minister back to 1945, a period to which he referred as a splurge of activity in nationalising the industries. He will be aware that in 1947 the coal industry was in such a state of deterioration that it took state backing to regenerate it. The electricity supply industry was nationalised in 1948 and the gas industry was nationalised in 1949—all the legs of the energy industry were brought together in a co-ordinated and efficient way.
Over that 35-year period, the United Kingdom's energy policy was based on a framework of publicly owned and publicly accountable industries—throughout the 1960s, British competitiveness was able to meet competitiveness anywhere in the world. It is fair to say—I am sure that the Minister has checked his figures for the 1960s—that labour productivity in the nationalised United Kingdom electricity industry was second only to Japan. In other words, the United Kingdom electricity industry, under a nationalised system, delivered electricity efficiently and supported British industry.
§ Mr. Peter Hardy (Wentworth)
Does my hon. Friend agree that, if the electricity industry had not been nationalised in the late 1940s and allowed to operate nationally, many rural areas of England would not have received electric power for at least another 20 years?
§ Mr. Clapham
I agree with my hon. Friend. The condition of the electricity, gas and coal industries was so bad in the late 1940s—they had deteriorated during the war years—that they needed state backing in order to provide power to the consumer. There is no doubt that, if it were not for nationalisation, rural areas would have had to wait many years before they received power supplies.
The main changes over that 35-year period occurred in the energy balance. Coal was gradually displaced by oil, nuclear energy and later gas. Some pundits—perhaps the Minister will agree with their depiction—describe energy policy in those years as nationalisation followed by pragmatic regulation. It is not fair or correct to say that there was no regulation during that 35-year period: there was pragmatic regulation. That is how many academics, to whose research the Minister refers, describe the 35 years of nationalisation.
1019 There was no semblance of energy policy in the 1980s—it disappeared altogether. It became a nostrum that privatisation and the market would allocate energy resources efficiently. That led to the ultimate privatisation—as Lord Parkinson referred to it—of electricity in 1990 and to the privatisation of the coal industry.
The privatisation of electricity left three main generators: National Power, PowerGen and Nuclear Electric. Twelve regional electricity companies were responsible for supplying electricity. Nuclear Electric remained within the public sector and contributed about 25 per cent. to 26 per cent. of our electricity needs. Nuclear Electric was not privatised in the 1990 package as the market would not take it because of the risks involved—we are talking about £31 billion of undiscounted liabilities.
Consequently, in 1990 it was decided that it would be better to leave nuclear electricity in the public sector. It was recognised that the income stream that would result from the company's remaining in the public sector could be used to deal with the massive liabilities that had been left behind. Those liabilities, in part, remain in the public sector as the newer power stations have been privatised.
The privatisation of the electricity industry led to the colliery closure programme of 1992–when the then President of the Board of Trade, now the Deputy Prime Minister, threw out all the recommendations in the Trade and Industry Committee report "British Energy Policy and the Market for Coal". Following his rejection of those recommendations, privatisation of the coal industry was inevitable. After write-downs and write-offs, the rump of the coal industry was sold to RJB Mining for a knock-down price. About 30 deep mines from the original package are still operating and they produce between 34 million and 36 million tonnes of coal.
§ Dr. Michael Clark
The hon. Gentleman said that the "rump of the coal industry" was sold to RJB at a knock-down price. Does he recall that at the time of the sale, everyone—particularly the financial papers—said that RJB had paid about twice as much as it should, that it would never be able to repay the money and that it would be driven into liquidation? Of course, RJB went on to make a profit. However, it did not seem a knock-down price at the time—certainly not in the view of the analysts.
§ Mr. Clapham
It was a knock-down price if one considers the way in which British Coal had previously written off the debt and dealt with the liabilities, so that anyone who took over the mining industry was bound to make a profit in the first few years. I believe that RJB bought the mining industry at a knock-down price and, in hindsight, most analysts would agree with me.
The coal industry currently produces 34 million to 36 million tonnes of coal. Other companies—such as Coal Investments Ltd., which recently went into liquidation—operate deep mines. It is unlikely that any of the pits that have closed will open again. I ask the Minister to tell us whether assistance will be available to companies that 1020 take on the contract to recover plant and machinery from underground. Perhaps he can answer that question when he winds up the debate.
§ Mr. Tipping
Perhaps the Minister will tell us also what discussions he has had with the Coal Authority. The liability arising from the liquidation of Coal Investments was transferred from the private sector to the public sector and the Coal Authority. Will the Minister confirm whether that liability will amount to about £5 million?
§ Mr. Clapham
I am grateful to my hon. Friend for prompting me. The Minister may refer to that matter when he winds up. I have put several questions to him but, as yet, he has not confirmed whether the Government will provide assistance to enable companies to retrieve plant and machinery from underground.
In addition to taking over the deep mines, RJB took control of most opencast sites and potential opencast sites. Those sites stretch throughout England. Opencast production currently runs at about 17 million tonnes, which is about half of all deep mine production. It is the most opencast mining that has ever occurred in this country. Some agencies, such as the Coalfield Communities Campaign, argue that we do not need that much opencast mining—particularly if it is required only for technical reasons.
I ask the Minister to consider that point when he receives new opencast mining applications. He will be aware that British Coal is now selling land not only to those who have farmed it for years but to the highest bidder. It is attracting opencast miners—and that is its intention. British Coal is putting out its land to tender in the hope that companies will buy the land for opencast mining. Some of the most beautiful countryside in Yorkshire is now under threat.
For example, "For Sale" signs have gone up on a piece of land in a beautiful valley between Hood Green and Silkstone common in my constituency. It is quite clear that the owner wishes to attract opencast companies. That site is situated in one of the most beautiful parts of Yorkshire. It has high scenic value and it would be a tragedy for the community if the land were used for opencast mining. I invite the Minister to visit that site so that he can see what is at stake as a result of British Coal's policy of offering its land to the highest bidder. The Minister may wish to take up that invitation, and come to see the land. If he does, we may well have his support when it comes to defending the site against the opencast mining companies.
It is clear that safety in the deep mines has deteriorated radically. Figures for the first year of private ownership, produced by the Health and Safety Executive, show that the number of fatalities and major accidents has increased dramatically. I recall that, during our previous debate on this subject, the Minister said that there was no evidence of an increase in the number of major accidents, but the HSE's figures make it clear that that is not the case.
Let us take the HSE's comparison of the figures for 1994–5 with those for 1995–96. According to the HSE, there has been an alarming increase in the number of major injuries, from 135 to 159, while the number of fatalities has risen from two to five. I suggest to the Minister that that evidence clearly shows that British deep coal mines are not as safe as they were following 1021 privatisation. The alarming increase in the number of injuries and fatalities can be explained by deregulation, by the fact that miners must now work for much longer hours, by increased use of contract labour and by the downgrading of the deputies' role.
The Minister will recall that the Deputy Prime Minister, when he was at the Department of Trade and Industry, insisted that miners would never be put at risk. Perhaps, bearing that in mind, the Minister will tell us what he will do to ensure that the high safety standards that obtained in British mines under nationalisation are reinstated in the next year.
The current coal contracts are due to be renegotiated in 1998. At present, the collieries provide some 30 million tonnes; last year RJB Mining supplemented that from stock. I understand that the generators took some 56 million tonnes of coal. As the contracts come up for renegotiation, the potential of the entire coal industry will clearly depend on their being long term. As we know, there has been little investment. The Minister did not mention that, since electricity privatisation, there has been no investment in research and development relating to clean coal technology. We now need a balance in our energy policy, but we do not have the means to burn coal efficiently and in an environmentally friendly way.
Perhaps, when he replies to the debate, the Minister will tell us whether any assistance will be given to such research and development, whether he is prepared to reinstate the investment programmes and whether he is prepared to be helpful to the coal companies in the renegotiation of contracts. Does he, for example, foresee the maintaining of the contracts at 30 million tonnes? Does he expect them to be of a shorter duration? If they are of shorter duration, that will have a considerable impact on mining communities, and it would help those communities to know what is in the Minister's mind.
My hon. Friend the Member for Leeds, West (Mr. Battle) spoke at length about nuclear privatisation. The report of the Select Committee on Trade and Industry on the intended flotation of British Energy, produced in February—which urged caution on the Government—has clearly not been taken into consideration. As the Minister will know, the report emphasised that the scope of the segregated fund did not seem sufficient to cover the liabilities.
Since the publication of that report, two energy economists have produced a further report. I know that the Minister has read about that material; he will also know of the open letter to him from the two energy economists, published in The Guardian, which made it clear that they stood by their figures. Those figures suggest that privatisation of the seven advanced gas-cooled reactors and the one pressurised water reactor has left up to £6 billion-worth of liabilities in the public sector. If 'we add that to the £17 billion-worth of liabilities that are tied up with the Magnox stations, it seems that the public sector has been lumbered with up to £24 billion-worth of liabilities. As my hon. Friend the Member for Leeds, West pointed out, that is certainly not a good deal for the taxpayer.
It is clear that the company could never achieve the performances that Barclays de Zoete Wedd advised the Government that it could. As the Minister will know, BZW clearly said that the advanced gas-cooled reactors would be able to reach 82.5 per cent. of their performance 1022 over the year. In fact, they have never been able to achieve more than 74 per cent., and I suggest to the Minister that even that has caused problems with welds that have resulted in the closure of the reactors at Hinkley Point B and Hunterston. The AGRs have been pushed to their limits. If that is true, they will never reach the levels that the Government told us that they would, and, consequently, the industry will not be able to generate the profits that were anticipated. This is not a good sale for the shareholder either.
The closure of the Department of Energy following the 1992 election clearly signified the end of any United Kingdom energy policy as far as the present Government were concerned, and heralded its replacement by an industry-based regulatory authority. The Minister should pay attention to what I am about to say. He chided some of my hon. Friends for the way in which they referred to what the Labour party would do, but it will be left to Labour to harness the utilities for a collective purpose. I suggest to the Minister that, in doing that, we shall ensure that public ownership is back on the agenda within 10 years.
§ Dr. Michael Clark (Rochford)
It is a pleasure to follow the hon. Member for Barnsley, West and Penistone (Mr. Clapham). We served together on the Select Committee on Trade and Industry following the demise of the Energy Select Committee, to which he referred.
I support the amendment in the name of the Prime Minister. Energy has been a key feature of this Conservative Government's policies since 1979. No Government had a realistic energy policy before that, although attempts were made to establish energy policies of sorts. Under the 1974–79 Labour Government, there were attempts to introduce such a policy, but in the context of a command economy; never before have we had an energy policy in the context of a supply economy.
Energy is a commodity, but it is not like other commodities in that it is not tangible. In other words, it cannot be felt or seen. At the same time, it can be measured. The tangible commodity is the fuel that generates energy, so to a large extent energy policy has to be determined by fuels. It is therefore important that we have fuels available at realistic prices. It is also necessary, if we are to build power stations, that we take into account the cost of capital for such investment. That, too, will have a bearing on energy policy.
We must ensure reliability of power supply, which there has not always been. Above all, we must ensure—the Government have succeeded on this score—that we take into account consumer satisfaction and industrial competitiveness for the well-being of our country. On all these scores, the Government have succeeded, and in all instances the points obtained have been high.
From the outset, the Government declared that their policy would be one of diversification and market forces. The then Minister who espoused that policy more than any other was Lord Wakeham, as he now is. He constantly stressed the need for diversification and market forces. I remember arguing with him on some occasions and asserting that the latter, market forces, would destroy the former. I argued that diversification would go as market forces took over.
I accept, however, that that has not been the outcome. Market forces have obliged other energy sources and other fuels to become more competitive. That has 1023 happened in the short term, and as a result, there have been price reductions. There has been a downward spiral of prices as competition has come into play. Fuels have decreased in price, as has energy, and consumers, whether domestic or industrial, have benefited.
We want to see the liberalisation of markets, and those markets should be looked after by regulators who are promoting competition and acting as a proxy for competition when fuel competition is not available for the time being. The Government have ensured that that has happened.
The greatest step forward on the road towards a liberalised, competitive, consumer-oriented energy policy has been the Government's privatisation programme. It was thought by some—I dare say that the hon. Member for Barnsley, West and Penistone took the view—that, in the state sector, there was greater security of energy supply. I do not criticise the hon. Gentleman for taking that approach. Sometimes, however, it was a false sense of security. Frequently, the monoliths in the state sector were inefficient, bureaucratic and susceptible to the whims of union power. It seemed at times that they were run more for the benefit of employees than for consumers.
The Government privatisation programme took place in five stages. We saw the first stage in the early 1980s with the privatisation of British Petroleum, Britoil and Enterprise Oil between 1981 and 1984. That set the tone, and paved the way for future privatisations. The early privatisations ensured that the oil industry, both upstream and downstream, exploration and retail, was in the private sector.
Oil was important, of course, for transportation, for heating and for chemical feedstock. Let us never forget that oil should be reserved for chemical feedstock. It is not a fuel for burning. It is a feedstock, as it were, for a complex and highly sophisticated chemical industry.
§ Mr. Jack Thompson (Wansbeck)
Does the hon. Gentleman accept that the use of gas for power generation is also a waste of a valuable fuel? Gas should be retained for the domestic and commercial markets, not used for the generation of electricity.
§ Dr. Clark
I concede that gas is a premium fuel. Indeed, it could be said to be more of a premium fuel than oil. We can use gas for chemical feedstock and for sophisticated forms of transportation where oil could not be used. If we went down that path for any distance, we could say that coal, too, is a chemical and should be used as a chemical rather than as fuel.
The hon. Gentleman tempts me to go down the path that leads to the conclusion that the only fuel that we should be using is nuclear energy. I shall leave that argument for the time being. That, however, is the path down which the hon. Gentleman takes me if we are to consider all hydrocarbons as chemicals rather than as fuels for burning.
When privatisations took place—this is apart from feedstock and transportation being primary forms of usage—oil was being burned in our power stations, as was coal. Those were the two main sources of fuel for power generation for industry, as well as for home and industrial heating.
1024 The next form of privatisation took place in 1986 with British Gas. We privatised it as one entity. Some criticised the process for introducing a privatised monopoly, and I suppose that in some ways that is what it was. It was, however, a big and bold privatisation, the like of which had not been attempted by any other Government, in any country, let alone in the United Kingdom. If there were some aspects of that privatisation to which we wished to return, perhaps that was not too surprising bearing in mind when privatisation took place and how large the endeavour was.
Prices decreased dramatically as a result of privatisation. As we have already heard from my right hon. Friend the Minister and others, since privatisation, industrial gas prices have decreased by 48 per cent. Domestic gas prices, notwithstanding the imposition of value added tax, have decreased by 18 to 19 per cent. In real terms, gas prices have returned to the prices of 1970, 26 years ago. We have seen efficiency improvements in British Gas. Indeed, British Gas became a world-class international gas company. It was able to export its expertise and to gain contracts for international consultancy.
As it was an early privatisation, there was clearly a need for regulatory readjustment. Accordingly, the Gas Act 1995 was enacted. That measure will ensure that there will be domestic choice for gas by 1998. Test trials are already being conducted in the south-west. Consumer choice for gas supply has brought about radical change to British Gas. I accept that it has been painful for British Gas employees, and difficult for British Gas shareholders, but it has been beneficial to consumers, many of whom are also employees and shareholders.
§ Mr. John Home Robertson (East Lothian)
The hon. Gentleman is talking about choice for gas consumers. In the coldest days of the year, during the beginning of January, about 10,000 of my constituents found that their gas supply had failed because of the inadequacy of the distribution system in the area. Is the hon. Gentleman sure and satisfied that there will be security of supply in the brave new privatised world he is describing?
§ Dr. Clark
It is always difficult to give a cast-iron 100 per cent. guarantee. I doubt very much, however, whether the failure in the hon. Gentleman's constituency, which we all regret, was anything to do with the privatisation of British Gas. If there is competition and two or three companies are supplying gas, there is a greater chance of gas being available.
§ Dr. Clark
We know that there is only one distribution network. If it was that which had failed, it would have failed whether it was a private sector company, public sector company, privatised or nationalised competition. I think that the failure to which the hon. Gentleman refers was probably incidental and nothing to do with privatisation.
§ Dr. Clark
I will continue if I may. I may give way in a moment.
1025 The third aspect of privatisation, and perhaps the most complex of all, was in 1990–91, when we privatised the regional electricity companies and generators. It was very complex, but a great success. Again, consumers benefited: industrial electricity prices are down by 10.5 per cent., and domestic prices are down by 8 per cent., in addition to the £50 rebate that householders received from the sale of National Grid. It is anticipated that there will be another fall of 20 per cent. per bill when the fossil fuel levy is reduced later this year or the next.
At the same time as that privatisation, the Government introduced the non-fossil fuel obligation, which began to encourage benign energy sources—alternative energy sources—and we saw the greatest leap forward ever in alternative energy supply. We were able to make a contribution to the environment by reducing carbon dioxide, and as a result of the prices that were available for people generating electricity from alternative sources, research and development was encouraged for benign and renewable energy sources.
§ Dr. Robert Spink (Castle Point)
Does my hon. Friend agree that the liberalisation of the energy market and the privatisations have gone hand in hand with a greater social responsibility and performance in terms of environmental care and control across all the energy companies?
§ Dr. Clark
My hon. Friend is quite right, because, in the prospectuses for all the privatisations, care was given to environmental matters far exceeding any care that had been given to them before privatisation and before a portfolio and specification were necessary.
Before I leave electricity, I must say one thing to the Minister, to which I hope he will reply. It is not right that we should have a pool system when bidding for electricity, whereby everyone is paid the price that is paid to the highest bid accepted. I give him an over-the-top example.
Let us suppose that, on a cold winter's day, we are desperately short of electricity, and some chap in Castle Point is pedalling his bicycle to generate electricity for the grid. We are so short of electricity that we take the electricity from him and pay him 35p a unit for it, even though the going rate at that time may be only 2.8p a unit, but we have to take it because he is not prepared to generate electricity for anything less than 35p.
Just because we pay 35p for that half-hour period, why should we pay 35p to every single generator in the country, whether the electricity comes from oil. gas or nuclear? I have made an exaggeration to prove my point, but my point is still valid. Every generator should not be paid the equivalent of the highest bid accepted. Payment should be according to the bids made.
The fourth privatisation was coal. Major change had been brought about by the liberalisation of energy. We all know that, at the end of the privatisation process, the coal industry suffered. I do not deny that. Hon. Members will know that I was as assiduous as most in trying to prevent the decline of the coal industry, but it happened. To some extent, it happened because more gas is being used in electricity generation, but there has been a long-term effect on our coalfields and many coal pits have closed and may never reopen.
The good news, however, is that, where the industry has been privatised, whether it be RJB Mining or Celtic Energy, the downsizing and the privatisation have brought about an 1026 upsurge in efficiency in the coal industry, in morale and productivity. There has been a great improvement in employee participation, and the increase in competitiveness is quite spectacular. Those examples can be seen in both RJB Mining and Celtic Energy. I was pleased to be able to meet representatives of both those companies last week and learn how well they are getting on.
§ Mr. Clapham
The hon. Gentleman obviously did not discuss the situation with the men who work at the coal face for RJB Mining or Celtic Energy. Does he agree that, of all the pits that have been privatised, the colliery with the best industrial relations and, indeed, the best and most efficient way of using its human resource, is Tower colliery, which was an employee buy-out?
§ Dr. Clark
I am delighted with the results from Tower colliery. As the hon. Gentleman has said, it is the only example of an employee buy-out of a colliery in this country. It has been extremely profitable, as indeed have other pits owned by bigger companies. It is just as much a delight to me, my hon. Friends and the Government as it is to the hon. Gentleman that it has been a success. I hope that it will be successful for a long time. Many of its employees staked—I shall not say "gambled", as it was not a gamble—a large amount of personal money on it, and it is a delight that it has succeeded and that they have seen a return on their investment.
In December 1988, my hon. Friend the Member for North Bedfordshire (Sir T. Skeet), who is not present this evening, and I spoke to urge a delay in the privatisation of the nuclear industry, as we thought then that it was not ready for it. The Government thought otherwise, although, a year or so later, my noble Friend Lord Wakeham pulled the nuclear industry out of the privatisation programme. I think that, with the load factor improvements to which we have referred, with public confidence in nuclear energy and with the reprocessing that is available for nuclear fuel, it is the right time to privatise British Energy.
I hope that British Energy in the private sector will remember its core commitment to nuclear energy. Although it will be tempted to go down other paths, it should remember its expertise and its roots. It should be the source of nuclear power for the future, not just nuclear power for the past. I hope that it will remember that. I am sure that it will be profitable and that it will give a good return to shareholders.
I conclude by congratulating the Government on their creative energy policy, on their brave decisions on privatisation of the past 17 years, on the care that they have taken to look after consumers, and on their sheer determination to benefit not only the energy industry but the whole of British industry by ensuring cheap and competitive energy.
§ Mr. Matthew Taylor (Truro)
I hope that the House is in no doubt about at least one point—that energy policy is important. Indeed, the present lack of a coherent energy policy aptly symbolises a Government who have long since lost their way.
A strategic and comprehensive energy policy is essential if we are successfully to contain global warming by reducing the environmental impact of energy use. It is essential if we are to end the scandal of fuel poverty that 1027 affects 8 million families in this country and ensure adequate supplies of energy for future generations. Let me briefly review what we have instead of such a policy.
We have a Government who choose to sell the profitable parts of nuclear energy for less than the cost of building Sizewell B, while leaving the taxpayer to pick up the bill—a bill that will be paid by future generations many decades hence. The recent news that, just before its flotation, British Energy shut down Hunterston B and Hinkley Point B but did not release that information until after the flotation, has sparked a stock exchange inquiry.
We have always said—I have spelt out our position in detail in two debates, and do not plan to do so again now—that the sell-off was bad for the taxpayer. It now appears that small shareholders have also paid the price. Only the Government are laughing all the way to the bank, with another £1.4 billion in their coffers for pre-election tax cut bribes at the expense of saddling the taxpayer with huge long-term liabilities and shareholders with at least short-term liabilities.
This is a Government who have pushed privatisation on the gas and electricity industries but ignored the problems of fuel poverty and energy inefficiency; a Government with no interest in or understanding of the problems that their approach to every sector of the energy industry has wrought.
I might add that the Government have not even recognised the countervailing impact on their usual regional development policies of the increasing encroachment of regional pricing differentials. That means—you know this as well as I do, Madam Deputy Speaker—that, in the south-west, in addition to the highest water bills in the country, we shall soon face the highest electricity and gas bills, too. That impacts not only on individuals but on business and on the Government's so-called regional policy, but the Government seem wholly unable to co-ordinate their policy position.
The lack of any strategy is evident in the Government's amendment to the Labour party's motion. For example, the environmental problems associated with energy use are not even touched on. The Secretary of State for the Environment is fond of saying that his party cares about the environment; unfortunately, the rest of his party does not appear to be listening—certainly not his colleagues at the Department of Trade and Industry. However, the Government are not alone.
In the very week that national Governments are meeting to discuss climate change, the Labour party manages to table a motion entitled "Energy Policy" which makes no mention of the environment or sustainability, let alone global warming and its relationship to the use of energy. Indeed, the motion contains no indication of what the party's energy policy might be. Was the party not aware of the problems of global warming? Did it simply decide that it was not sufficiently important to warrant a mention? Or, to judge by the brief comments that we have heard tonight, perhaps it simply does not understand the issue.
Each and every one of us needs energy, but no one consumes energy for the sake of it. Businesses and consumers need energy services such as heat, light and power, but the key question is whether those energy services can be delivered satisfactorily simply through the 1028 free operation of the market in energy supply. Unlike the Government, the Liberal Democrats think not. I should like to take a few minutes to explain why, and say what needs to be done.
First, let us consider the facts. Pollution associated with energy use accounts for the majority of the most serious current environmental problems we face. It is true that the substitution of gas for coal in recent years has contributed to a significant fall in CO2 emissions in this country, as has the recession, but the failure to incorporate environmental costs and benefits into economic decisions has meant that energy efficiency levels over the whole economy have hardly improved since the late 1980s.
The gains from the dash for gas were a one-off—they cannot be repeated. As, we hope, the economy comes out of recession, they will not even be sustained unless we get back to the important long-term business of improving the efficiency of our energy use.
As fuel prices have declined in real terms over the past 15 years, the motivation to invest in energy conservation projects has been largely non-existent, while the regulatory regime has promoted and encouraged suppliers to increase sales rather than improve efficiency.
Gas competition will bring further cuts in prices. Businesses that once employed business efficiency managers are now employing contract managers, realising faster savings by changing suppliers, but gaining no environmental benefits. That situation has been exacerbated by the inadequate funding of the Energy Saving Trust, due to the decision of the gas regulator to rule out the levy, by the lack of action by the Government to restore their original pledges on it, and by Government cuts in the home energy efficiency scheme.
Eight million families remain afflicted by fuel poverty, the inability to afford adequate warmth in the home and an absence of capital to make efficiency improvements that would cut their bills while creating a warmer home. The impoverished in society live in the worst insulated houses, suffer most when fuel prices rise, cannot afford new and energy-efficient appliances, and therefore waste more of their money and contribute disproportionately to environmental damage by wasting more of the energy they buy. Policies for sustainability must therefore ensure that those who are already worse off are not made more so, and that the prosperity and employment that can be generated by the right economic programme is spread evenly throughout society.
A reduction in overall energy use is an essential component of any serious attempt to combat pollution, and should also be part of any serious policy to combat fuel poverty. Such a reduction is not a hair-shirt option: about going without warmth or light or about businesses closing. It is about saving waste, not cutting essentials. Government figures show that 50 per cent. of energy used in the United Kingdom could be saved with existing technology alone. Even at current prices, energy use is at least 20 per cent. higher than would be economically optimal, and represents an economic loss of about 3 per cent. of gross domestic product.
Liberal Democrats believe that there is enormous scope in this approach. First, we would introduce mandatory standards and information to ensure that new buildings, machinery, vehicles and appliances were more energy efficient, and we would encourage consumers to take 1029 efficiency into account when making purchasing decisions, by providing advice, information and education.
Secondly, we would give more support to renewable sources of energy through requirements on energy generators, and redirected research and development support. We would stop the ludicrous cost of subsidising a nuclear industry that has proved uncompetitive and—internationally—a threat to the environment. By cutting energy use and investing in development of alternative energy, we will show, as I have always believed, that the nuclear industry is unnecessary as well as uneconomic.
We read in last weekend's Financial Times that the Labour party is considering boosting the United Kingdom coal industry by subsidising electricity generated by clean-coal technology, as it is called, with money earmarked for renewable energy. So-called clean-coal technology may be cleaner than conventional coal power stations in terms of some pollutants, but it still has a direct impact on increasing global warming.
That Labour party proposal makes a nonsense of its claim to understand the threats to the environment—let alone tackle them—especially given that comments tonight have made it clear that the renewable energy levy, of all things, should pay for the coal industry subsidy. Such a subsidy would make it impossible for this country to meet the reduction in carbon dioxide emissions that are needed to combat global warming, which other Labour spokespeople have suggested they want to achieve.
Thirdly, we would introduce a major programme of investment in energy conservation, organised and funded through the Energy Saving Trust. About £1 billion a year will be released for that by removing—by legislation if necessary—the regulators' block on the Energy Saving Trust levy. We will implement a policy that the Government pledged, but on which they have failed to take action.
Since the policy will come in as the nuclear levy goes out, it need not add to the cost of electricity. Householders will have access to a range of loans and incentives to invest in energy efficiency improvements, especially the poorest, who face the misery of cold, draughty homes and huge fuel bills. Moreover, it will provide a huge boost to employment in this labour-intensive industry.
Finally, and most important, we will reform the tax system—switching the burden of taxation away from employment and income towards pollution and resource use. In all the countries of the Organisation for Economic Co-operation and Development over the past 20 years, the tax burden on labour has greatly increased; yet, on the use of environmental resources, it has fallen. That distribution of the tax burden has led to increased unemployment and environmental degradation. It has made sense for business to invest in low-tax, energy-consuming capital equipment instead of in labour. Businesses that need to invest heavily in people are disadvantaged by the tax system, whereas for decades Governments have helped energy-intensive capital investment, which often replaces jobs with machines.
By shifting the tax burden from good things such as jobs to bad things such as pollution and the excessive use of limited natural resources, we shall protect the environment, create new jobs and encourage new, green industries that tend to be more labour intensive. Recycling, for example, is 10 times more labour-intensive 1030 than landfill, and our proposed programme of insulating low-income homes in the United Kingdom could create 50,000 jobs.
However, our key policy will be the phased introduction of a carbon tax. We can create a long-term incentive to save energy and switch to less polluting fuels only if there is a long-term incentive to do so and the polluter genuinely pays. The revenue generated will be recycled into the economy through cuts in other taxes with an overall positive economic impact.
Those on low incomes will be protected from higher costs by limiting carbon tax increases and, where necessary, providing transitional help. Therefore, we shall combine that policy with an overall cut in fuel bills for the poorest households by helping pensioners and low-income families use less energy and have warmer homes through insulation. That is the purpose of our investment in the work of the Energy Saving Trust.
We have said in the past that we would adopt a carbon tax in the context of an European Union proposal, but that is increasingly unlikely in the short term. Provided that there is a gradual approach, we believe that Britain can gain both environmentally and economically by imposing a carbon tax—alone, if necessary.
§ Mr. Tim Devlin (Stockton, South)
If the hon. Gentleman is so in favour of a carbon tax, why did he not support the imposition of VAT on fuel?
§ Mr. Taylor
First, because VAT was imposed on all energy uses, not only those that created pollution. That does not make sense in environmental terms, although it may have made sense to the Government in terms of trying to balance their books.
Secondly—and crucially—the difference between what the Government did and what we are proposing is that our proposals are tax-neutral. We are talking about imposing environmental taxes, but cutting taxes on jobs and other goods. The hon. Gentleman would probably have preferred that had the Government proposed it; however, they made no such proposal.
Let me add one final difference. We make such a proposal before the election and spell out what we would do, whereas the Government pledged not to increase taxes, and specifically, not to increase VAT. There is a choice between explaining one's policies to the electorate and deceiving them, and we come down firmly on the side of explanation.
Carbon taxes have been introduced in four European countries—the Netherlands, Finland, Norway and Sweden—without hurting either their citizens or their industry.
There is no evidence that higher energy prices need to be detrimental, even to the competitiveness of relatively high energy-using industries, providing that they know what is happening and have time to invest in energy-saving measures. Energy prices in Japan are 49 per cent. higher than those in the United Kingdom, and energy prices in Germany are 41 per cent. higher, but that has not made them uncompetitive, as they use energy more efficiently. The aim of a carbon tax is to create the expectation that energy prices will rise, so that energy conservation becomes a powerful incentive for designers, manufacturers and consumers.
1031 The tax raised would help to cut other taxes such as VAT and employers' national insurance, leaving most people better off and creating extra growth in the economy and more jobs.
However, tax reform in itself is not enough. We also need to reform the energy market. The achievement of those environmental and social aims implies an energy market structure that requires energy suppliers to treat energy conservation on a par with energy supply. We have built in incentives to encourage suppliers to improve energy efficiency for their customers rather than to sell ever-increasing quantities of fuel. That approach also ensures that poor or geographically remote consumers are guaranteed access to supply on equal terms with those who are richer or live in less remote areas. That would be almost impossible to achieve under the current Government's plans to liberalise the domestic energy market.
We strongly supported the Government in introducing more competitiveness into the energy markets, as it encourages greater efficiency, but we would reform the system of awarding licences to promote investment in energy conservation. A commitment to energy efficiency measures should be a prerequisite for the award of a licence, and suppliers should be monitored by the regulator to ensure that they meet agreed targets. Without such an arrangement, they will not meet the targets, as we have seen with British Gas, which is already dropping several of its programmes.
I do not believe that any supplier should secure a long-term contract, with all the advantages that that brings, unless it can show that it will be linked with investment in energy conservation. In that way, we aim to ensure that suppliers compete in the provision not only of energy but of energy conservation.
Many still argue that we cannot afford to protect the environment. They say that environmental measures would increase unemployment and harm most people. That is a myth. The fact is that action to protect the environment, whether it means moving towards environmental taxes or encouraging people to drive more energy-efficient cars less often, can increase jobs and competitiveness, and will certainly improve our quality of life. Moreover, our carbon tax proposals would leave people better off financially.
In addition, the Organisation for Economic Co-operation and Development estimates that environmental protection—
§ Dr. Spink
The hon. Gentleman is making a brave speech, and, and unlike Members from the other Opposition party, he is actually spelling out what his policies are. That is good, although I think that some of my constituents might be afeared of the 40 per cent. hikes in energy prices that the hon. Gentleman seems to espouse. Does he agree with the hon. Member for Barnsley, West and Penistone (Mr. Clapham) that the energy sector companies should be renationalised during the coming decade? Or would he step back from that idea?
§ Mr. Taylor
No, I do not believe that the companies should be renationalised, and—unlike the Labour party, perhaps—we never proposed that they should be. I am 1032 about to finish my speech, so I do not want to follow up the hon. Gentleman's intervention too far, but I must tell him that, although I have never put any figure on the changeover, I have said that the changes would be phased in gradually, that we would help people on low incomes to cut their bills through energy conservation, and that the money would be used to cut other taxes.
So the measures would be fiscally neutral. If anything, the nature of energy use in this country means that the benefits of our policy would result in a slight transfer away from business and towards the consumer.
The switch to cleaner generating technologies and more energy-efficient products, together with the huge backlog of home energy conservation work, will create major export and employment opportunities. Ours is a win, win, win strategy. Householders will win because investment in energy conservation will provide warmer homes and lower net energy bills as people need to use less energy. Taxpayers will win, because our proposals mean not paying more tax but paying different tax, and most households will pay less—although businesses and individuals that simply waste energy will pay more.
Indeed, everyone will win, because such an environmental strategy will produce more jobs in a cleaner and healthier environment within the United Kingdom, while giving the world a lead in averting the catastrophic impacts of climate change.
§ Mr. Nigel Waterson (Eastbourne)
I begin by paying a warm tribute to my right hon. Friend the Minister for Industry and Energy, who opened the debate, because he has been at the centre of so many of the exciting and productive developments in energy in recent years.
When we have stripped the Opposition motion of its party political rhetoric, although it makes a passing reference to consumers, it has nothing to offer them. There is no mention whatever of energy saving or of the environment. The wording of that motion confirms the Opposition's total lack of interest in the environment.
In the week when the parties to the United Nations framework convention on climate change are meeting in Geneva to discuss the report of the intergovernmental panel on climate change, which unanimously concluded that there is now a discernible human influence on global climate, the Labour party has tabled a motion on energy policy that does not even mention energy conservation. That beggars belief.
We know that energy conservation is important for three main reasons. The first reason is the need to conserve finite resources, which has a broad measure of support among the British people. Secondly, there is the protection of our environment, and all the follow-through from the Rio summit. The third reason is our desire to help the consumer, especially in places such as Eastbourne, where there is a combination of older people, often on limited incomes, and aging housing stock. Everyone has a contribution to make—individual property owners, local authorities and business.
On that note, I would like to refer briefly to "Making a Corporate Commitment", a Government campaign seeking board-level commitment to good energy management. More than 1,900 organisations from the private and public sectors have agreed to make the 1033 commitment, and 53 trade associations and professional bodies—including the CBI and the Institute of Directors—have agreed to endorse it to their members. Signatories agree to appoint a board member to take responsibility for these matters and to join the campaign to raise the profile of energy management at the highest levels of their organisation. "Making a Corporate Commitment" seems to bring real results, as market research indicates that the energy management performance of signatories is significantly better than that of business generally.
Local authorities have their own role, and I wish that I had more time to discuss the Home Energy Conservation Act 1995, which was widely supported in the House and effectively calls on local authorities to carry out an audit of the housing stock in their area so that measures can be taken to conserve energy. That again will help the constituents whom I have described.
Individuals are not just involved out of a sense of altruism or because of their concern for the environment, but because it also makes sound financial sense. A major thrust of the Government's energy policy is greater efficiency and lower prices, as we have heard, as well as removing burdens from the taxpayer—something of which we must not lose sight. We know that the nationalised industries cost the taxpayer £50 million each week in 1979, and that they now contribute £55 million each week to the Exchequer. We know that domestic electricity prices have fallen by 8 per cent. in real terms, and that electricity customers in England and Wales received this year a £50 rebate on their bills following the sale of the National Grid. It is worth reminding the House that under the previous Labour Government, the price of electricity went up in cash terms by 2 per cent. every six weeks—some 16 per cent. a year.
The average industrial gas price has fallen by 48 per cent. in real terms, while the domestic price—including VAT—has fallen by 18.5 per cent. in real terms. Consumers in the gas competition pilot area in the south-west are being offered discounts of up to 20 per cent. on the existing British Gas tariff.
Oil prices are now lower in real terms than at any stage since oil was discovered in the North sea, and we have also heard some incredible statistics about the effects of privatisation on the coal industry. I had the honour of serving on the Committee that considered the Coal Industry Act 1992.
These are tangible results of the Government's policies to open up markets to free competition and to privatise. Electricity bills have fallen, and they will fall also as a result of the reduction in the fossil fuel levy in England and Wales and changes to the nuclear energy agreement in Scotland. In June, Professor Littlechild announced that, as a result of nuclear privatisation, he expected to be able to reduce the fossil fuel levy from 10 per cent. to 3.7 per cent. This will result in reductions in typical household electricity bills of up to £20 a year.
Time is short, and there are other matters upon which I would liked to have touched—in particular, the Liberal Democrats' latest proposal for a carbon tax. Such a tax would target car drivers, and particularly those who really need their cars such as elderly people in my constituency and those in rural areas. It is an ill-thought-out tax and will create great burdens, but that is not a matter for this 1034 evening. In conclusion, both Opposition parties are bankrupt of policy ideas on energy. They have nothing to offer the consumer or the shareholder.
§ Mr. Ken Purchase (Wolverhampton, North-East)
The Conservative party is not bankrupt of policy because it does not have one. Its energy policy, as with so many things, is to rely on the market. I shall return to that point.
It has been two short years since the Confederation of British Industry called on the Conservatives to provide a champion for industry. It wanted that because it took a sensible Keynesian approach to manufacturing and recognised that there must be partnership between industry, Government and the people. The Conservatives long believed that we could leave everything to the market. The first 15 years of their rule after 1979 were about the market. Their policy aim has been to privatise everything that they can. As the Government, they are entitled to do that. However, they have never recognised that there is a role in any economy for the pragmatic approach that some things are best done in one way, and others in another way, but that usually there is also a middle way.
Without support from a Government committed to it, manufacturing industry will fail. Indeed, it has almost failed and is only now starting to make its way back. The energy industry shows the lack of a policy save that of leaving things to the market. That will not work because the market, sensibly, is driven by profit. The idea that we should exploit the cheapest form of energy and then move on to the next cheapest form is bound to lead to disaster because its effects on the rest of the country and, most importantly, on discovery and exploitation, are unpredictable.
There is also the British Gas problem with take-or-pay contracts. It seems only a few short weeks since there were calls to assist British Gas because of the great expense of such contracts, which were negotiated only a few years ago. Now a report entitled, "The Disappearing Gas Bubble" suggests that, far from creating a loss, it is likely that British Gas will make a profit from those long-term contracts.
In respect of oil, variations have been created in the short, medium and long-term time scales such that it is difficult, without a proper policy, to make any sense of the exploitation and production of energy sources. Industry cannot work—the wheels will not turn—without sources of energy. That is why energy policy must be at the heart of industrial policy.
British Energy said that its decision not to proceed with Sizewell C and Hinckley Point C was taken because it wasa sensible response to the realities of the current energy market which is characterised by an excess of generating capacity, falling electricity prices, and uncertainties over the structure of generating and distributing industries".It calls for a balanced energy policy.
Our energy companies have been exposed to possible foreign buyers. The Americans have bought Midlands Electricity and any hope that the Government may have of creating a balanced energy policy sinks further into the sunset with each buy-out. The logic of the market is not to create competition ad infinitum but to create monopolies. That is the only way in which finance capital can work. Control is impossible and despite all our 1035 attempts to regulate, we will find that in this activity, which is so crucial to our manufacturing capacity, the state—the Government—will have to have a hand on the wheel.
Conservative Members may ask how we would pay for renationalisation. Renationalisation is not the only option. It is right to point out, however, that if the Government had not spent, given away, wasted and thrown away all the money that they have received from North sea oil and from privatisations, for example, there would be money aplenty to renationalise those industries if that was the right and proper approach to creating an energy policy.
The truth of the matter is that we cannot have an energy policy that makes any sense for the vital manufacturing sector under a laissez-faire system. Without a policy, manufacturing will always be at the mercy of finance capitalists, who see it as in their own interests to exploit that which brings them the fattest and quickest profits, without regard to what may happen in the future.
There is such a long time horizon when considering energy exploitation and marketing, and it is right for us—for Opposition Members, at least—to ensure that there is a constant and sustainable flow of reasonably priced energy and that we avoid the rapid peaks and troughs that characterise the energy market. We must have a longer-term view to meet our responsibilities to unborn generations, and we must realise that only through a sensible, balanced energy policy will we achieve those responsibilities. We must realise that laissez-faire market economics, because of their internal logic, are incapable of ever delivering such a policy.
§ Mr. Piers Merchant (Beckenham)
I was very entertained by the speech of the hon. Member for Leeds, West (Mr. Battle). I do not know whether he intended to be amusing, although I suspect that he did not. When he was not frightening the House, however, he certainly was amusing. He seemed to suggest, for example, that a price could be too high and too low at the same time. He also pretended that he did not know anything about depreciation. The logical assumption is that he thinks that an old second-hand car should command the same price as a brand new car. If he believes that, I recommend that he tests the assumption.
I am more concerned about the serious set of deficiencies in the Labour motion itself. It is about energy policy, but it makes no mention whatsoever of energy conservation. As hon. Members have already mentioned, Labour's motion is being debated—of all weeks—in the week in which representatives of the United Nations are discussing the impact of man's activities on the global climate. I find that timing utterly bizarre.
Energy conservation is a very important part of the formula in the balances between supply and demand and between consumption and production. It should play an important role in this debate and in any discussion on energy. The Government have realised that fact, and they have introduced measures that deal with the need to take resolute action to achieve energy conservation.
I have time to mention only one such measure, but it is an important one—the home energy efficiency scheme. I pay tribute to my hon. Friend the Minister for 1036 Construction, Planning and Energy Efficiency for the energy that he has put into making the scheme successful. Since it was introduced in 1991, 1.8 million households have benefited from grants made available to them to ensure that their properties are brought up to a high standard of energy conservation—in simple, low-technology terms, such as by the use of insulation. Many of my constituents have benefited from the scheme.
Like many other hon. Members, I have accompanied representatives of the scheme to constituent's houses to see the installation of measures that not only reduce energy use and help with the environmental problems caused by pollution but that reduce the cost of the energy used by those people, many of whom are on low incomes. The average household benefiting from the scheme has had an annual reduction of more than £40 in its energy bills. In the last full financial year, the Government put some £105 million into the scheme. That is a worthwhile contribution to the problem of energy use, cost and conservation. It is a great shame that the Opposition should be so blind as to fail to recognise the part that that plays and therefore to include it in the motion.
The motion is deficient in other ways, too. It is full of internal contradictions, which reflect the Labour party's deficiencies in energy policies and its approach to the energy industry. One question that is worth asking is: does the Labour party believe in a private sector energy industry? Labour Members owe the House a simple answer. They have opposed every measure that the Government have introduced slowly to privatise the entire industry over the past decade and more, yet they now pretend that they accept a private energy industry. However, their motion and other policy statements show that, in practice, they would restrict the market. They would bring back state planning and Government control so that we would see nationalisation in another guise. That would bring severe danger to all sectors of our economy.
§ Mr. Merchant
The hon. Gentleman admits as much.
Gas consumers have benefited considerably from reductions in gas prices: industry has benefited from a 48 per cent. reduction; and domestic consumers from a 24.5 per cent. reduction. And electricity consumers have benefited from reductions in electricity prices: industry has benefited from a 10.5 per cent. reduction; and domestic consumers from an 8 per cent. reduction. Those benefits will be wiped out by a return to a command economy. Under a Labour Government, we would see the return of the sort of policies that contributed, in the last year of the last Labour Government, to an increase in the price of fuel by 2 per cent. every six weeks.
Millions of ordinary people who have invested in shares in the energy industries would also lose. Under privatisation, shareholders have gained through the long-term increase in the value of their investments, and the large yields and returns that they have brought. They would lose all those benefits if the industry was so rigidly controlled that profits were squeezed to a minimum. The Labour party admits that that is its objective. Millions of members of the public who have invested in the industry and benefited from it would lose out.
1037 Taxpayers would also lose because, under a command economy, we would return to the day when, instead of taxpayers benefiting from £55 million in tax revenues, subsidies of nearly that sum would be required from the taxpayer.
Finally, the industry would lose because, since privatisation, it has been set free to diversify, compete and strive for greater efficiency. It has been free to pursue activities in other areas where necessary. That is part of a free market economy. It is also free to change ownership because that, too, is part of a free enterprise economy. It all adds diversity, strength and flexibility, and drives towards efficiency and a better deal for consumers.
All those benefits would go if the industry were put back into the state straitjacket. All that the Labour party has to offer are old policies dressed up in a new tinselled package, offered in a new way but representing exactly the same threats and weaknesses as its policies represented before. We should not be fooled by that.
The motion is deficient by virtually every test. I bitterly regret the fact that the Labour party could not deal with the subject seriously today and look at the real issues and challenges that the future presents in terms of energy policies.
Much needs to be said about the need to find new sources of energy supply, to find environmentally friendly methods of generating our energy and to limit our energy consumption, as the hon. Member for Truro (Mr. Taylor) rightly said. That must be part of the formula, because we must be aware of the damage that is done to the environment by energy production and we must develop means of energy conservation that reduce the damage.
It is an indictment of the Labour party's approach to this subject that its muddled, incomplete and cynical motion fails to address those underlying issues. It shows contempt for the arguments and challenges with which we should concern ourselves when dealing with the energy industry and the energy market.
§ Mr. Paddy Tipping (Sherwood)
I am very conscious of the time, and I hope that the House will forgive me if my contribution to the debate is very much on a constituency issue. In the Sherwood constituency, there are still four collieries.
I believe that the coal industry faces a major challenge. New contracts are due in 1998, and the challenge before the coal industry can be risen to. I estimate that the newly privatised coal industry is producing at £1.30 per kJ. I estimate that that price will have to come down to £1.10 to compete in the highly competitive market.
In the long term—[Interruption.]
§ Madam Deputy Speaker (Dame Janet Fookes)
Order. I do not expect to have sub-conversations between the two Front Benches.
§ Mr. Tipping
In the long term, there is a place for coal in the energy market. In the short term, we are likely to witness the growth of gas. In the medium term, it is likely that nuclear companies will diversify and go into gas. No new nuclear power stations will be built. When gas goes, coal will be our only national natural asset. That is why we need to keep it going.
1038 That is why we need to invest in clean coal technology. I notice that Japan spends more on clean coal technology than this country does. We must find devices to keep coal going during the next few years because, in the long term, coal will be our salvation. We need an energy policy that is not short-term but recognises the value of coal. Coal can be the cornerstone of that energy policy.
§ Mr. Nigel Griffiths (Edinburgh, South)
I thank hon. Members from both sides of the House for their condolences following my father's death in a mountaineering accident. In the House, many harsh words are often exchanged in the passion of debate, but when tragedy strikes, no more generous spirit is to be found anywhere.
This has been an illuminating debate because it has exposed the great shortcomings in the Government's energy policy. In fact, they cannot even claim to have an energy policy. The Government abolished the Energy Secretary's office and the Select Committee on Energy. The casualties included not only tens of thousands of miners, electricity workers and gas workers but the distinguished hon. Member for Rochford (Dr. Clark), who chaired the defunct Select Committee with such distinction.
The Government have pursued a policy of privatisation, not for the prosperity of consumers in British industry, but to enable them to make short-term tax cuts. The main beneficiaries of that policy have been company directors and ex-Ministers, while consumers have often had to put up with poorer services. Even the supposed benefits of price cuts are eroded by the Government's tax increases.
There is no concept in this country of any strategic importance of fuel. We are a major energy-producing country without an effective voice in Cabinet. Coal, our greatest natural resource, the foundation of our industrial power, has been relegated to a minor role. The standards in our pits have continued to tumble and accidents have reached horrifying levels. On oil, we have a licensing and compliance regime that has made Britain the softest touch to the multinationals. Gas, once the Marks and Spencer of energy, is now judged to deliver the poorest service. Untold damage has been done to public confidence in nuclear energy by complacency about the ownership and control of that potentially hazardous resource. There has been minimal investment in alternative energy—such as gas and electricity for cars, wind power and wave power—and there have been cuts in the energy conservation budget. We condemn those Tory failures.
As my hon. Friends have pointed out, the Labour party has a battery of positive energy policies to tackle the real problems of the 1990s. The energy industry must be regulated for the benefit of consumers, not producers; there must be specific protection for vulnerable consumers, who must not be left prey to higher prices and no choice of supply; there must be wider access rights for rural households; there must be a major scheme to conserve energy and to bring the benefits of energy savings to every household; there must be energy labelling so that buyers of products know how much energy an appliance consumes; and there must be a windfall tax that attacks the boardroom abusers—we do not need the Tory tax, a VAT on millions of ordinary consumers.
1039 The Minister put four questions to the Labour Front Bench, and I shall answer them. First, he asked whether the windfall tax will be retrospective. It will be based on the profits and the investment record of each of the utilities. Secondly, he asked which electricity companies will be taxed. Every company is being scrutinised. Thirdly, he asked how much money will be raised by the tax. Approximately £3 billion will be raised. Finally, he asked how long it will last. It will last as long as it takes to achieve a proper balance in the charges, profits and investment strategies of companies—and it will last as long as salaries as long as telephone numbers are paid to the directors in the boardroom.
It is hard for Ministers to face reality. On 18 June, when he last addressed the House, the Minister said:We believe that the privatisation of Nuclear Electric will be as successful as previous privatisations."—[official Report, 18 June 1996; Vol. 279, c. 779.]It has been such a flop that they can hardly give the shares away. The Minister was an early advocate of giving the shares away—he gave a powerful speech in favour of doing just that on 21 July 1980, and he has never regained any sense of reality. Since the present Minister took office in 1992, energy consumers have been hit by the imposition of a VAT, the closure of 200 high street gas showrooms and 400 electricity showrooms, and tens of thousands of jobs have been lost, including two thirds of the British Gas home energy advisers.
However, the Minister claims that consumers are better off. Post offices are no substitute for high street showrooms, where people could get advice on their bills, energy efficiency and appliances. People can pay their bills in post offices, but many post offices do not allow them to pay their bills for free—they add 88p to the bills of senior citizens and others. The Government have created a two-class system—some people are paying up to 12 per cent. more for their gas than others because they have bank accounts and direct debits while others are on pre-payment meters.
Every consumer wants to know why they are paying such high prices for fuel. We had the fastest falling raw energy prices in the 1980s and the 1990s, and only a shower of incompetents could fail to bring prices down, no matter who owned the utilities. Between gas privatisation in 1986 and now, gas prices have fallen by 23 per cent. and the cost to consumers has fallen by only 19 per cent. What has happened to the missing 4 per cent? The Government taxed it—they added VAT to fuel and wiped out any claimed savings from privatisation. They added £24 to the average household's gas bill—the Tory fuel tax.
Since electricity was privatised in 1990, the average bill has increased by 21 per cent., yet the cost of coal has decreased by 20 per cent. and the cost of gas has decreased by 9 per cent. The Government have taxed any benefits from privatisation and they have allowed the companies to pocket the savings. The latest abuse is the mis-selling of gas contracts, which has been highlighted in the debate tonight.
I answered the Minister's four questions, so I ask his hon. Friend the Minister for Small Business, Industry and Energy to answer four questions from the Labour party. Will he undertake not to increase VAT on fuel? Will he 1040 take action to restore high safety standards in our pits? Will he reinvest in the home energy conservation programmes? Will he support public transport in order to conserve energy and protect our environment in the long term? We suspect that his answers to all four questions will be no, no, no and no. The Government have nothing to offer and that is why they should go.
§ The Minister for Small Business, Industry and Energy (Mr. Richard Page)
I came to the Chamber tonight looking forward to the debate with some enthusiasm. As the seconds tick away to the next general election, I hoped that we would hear something about the Opposition's energy policy. I am in the same position as the man leaving a hall where a Member of Parliament was speaking. He was asked how long the Member of Parliament had been speaking and he replied half an hour. He was then asked what the Member of Parliament had said, and the man replied, "Well, nothing yet". As I rise to speak at the Dispatch Box, I am no wiser about the Labour party's policy than I was when the debate began.
The Opposition have had a good go at the Government—that is what Oppositions are for; it is all part of the game. As to policy, we got a big, fat zero. One might say that it is enough for the Opposition simply to oppose—there is no need for them to do anything else. However, is negativity the right approach of a potential Government who are waiting to provide positive leadership to voters? No, it is not. Whatever the slogans and however skilled the airbrush techniques of the new Labour spin doctors, the centralised ethos of the old Labour party has not disappeared; it lies like an old rotting log in the stream. [Interruption.] The hon. Member for Leeds, West (Mr. Battle) should keep quiet, because I shall come to his contribution and I will sort him out.
The Labour party's policy manifests itself in schizophrenic behaviour and policy announcements. It is bedeviled by paradox and inconsistency. The Opposition do not like privatisation, but they will not renationalise. They want to fine companies with a windfall tax, but they do not want the consumer to pay any part of the cost. They complain when people make a profit from buying privatised shares and then complain when others make a loss. They say that they want competition, but they hedge their bets by restricting market freedom with controls on pay, retrospective taxation and limitations on the regulator's independence. The list goes on and on, and it makes the Vicar of Bray seem the model of theological consistency.
The Opposition would impose the same old controls. They want to tell the industry what to do and what to spend: it is the return of the lunchtime directive. It did not work before and it will not work now. It is instructive to recall that a former Labour energy spokesman admitted exactly that in the House. The hon. Member for Truro (Mr. Taylor) came to the House and spelt out the Liberal Democrats' policies. I do not agree with them, but in so doing, he has increased in my estimation.
I return to some of the comments made during the debate, and in particular to the contribution by the hon. Member for Leeds, West.
§ Mr. Page
The hon. Gentleman should be worried. There was plenty of sound and fury—it obviously rubbed 1041 off on his hon. Friend the Member for Edinburgh, South (Mr. Griffiths)—but he was a little short on reality. He could not grasp the difference between capital costs of construction and market values. He took a 10 second gratuitous swipe at the non-fossil fuel obligation and brushed aside the 151 renewable energy projects that are generating some 335 MW. He completely ignored the other 600 projects that are under contract.
At the same time, the hon. Gentleman was dismissive of the new markets that are creating employment in the export field through selling abroad equipment for the renewable sector. The hon. Gentleman made some very serious and damaging allegations regarding the flotation of British Energy. He claimed that information was suppressed, praying in aid that informative document, the Hinkley newsletter dated 1 July. The station manager at Hinkley Point has been contacted. He confirmed that the newsletter, although dated 1 July, was not put out until 4 July, and that the section regarding the weld was not drafted until 4 July. I give the hon. Member for Leeds, West a chance to apologise to the House and my right hon. Friend for the gross and unfair allegations that he made against him.
§ Mr. Battle
I will withdraw nothing until the Minister tells me why on earth he employs a station manager who writes a letter on 4 July and dates it 1 July.
§ Mr. Page
I gave the hon. Gentleman an opportunity to admit that he was wrong, and to withdraw what he had said. He has not done so, and I am afraid that he has cheapened himself by his response.
The hon. Member for Barnsley, West and Penistone (Mr. Clapham) commented on coal safety. He has a record of concern about that, which I fully acknowledge. I can tell him that a recent National Audit Office report on the sale of British Coal's mining operation records, dated May 1996, said that the Health and Safety Executive was satisfied that safety was given a high priority in the sale, but what mattered was not so much ownership as the existence of a robust and regulative framework. The HSE is publishing a special report later this month, and I look forward to it with confidence.
My hon. Friend the Member for Rochford (Dr. Clark) opened up the exciting possibility of energy in this country driven entirely by nuclear power, and—rightly, in my view—drew attention to the value of feedstock. My hon. Friends the Members for Eastbourne (Mr. Waterson) and for Beckenham (Mr. Merchant) drew attention to the important work that the Government were doing on energy efficiency, which the Labour party completely missed. I thank my hon. Friends for the tribute that they paid to my hon. Friend the Member for West Hertfordshire (Mr. Jones) for the informative and valuable work that is being done in that regard.
During the past few months, much has been made of the metamorphosis within the Labour party—or new Labour, as we are supposed to say. I always thought that sticking a big label on something saying "new and improved" was a fairly cheap and fast way of raising the market profile without necessarily having to go through the tedious business of actually improving the product—but it carries a few risks. Eventually the consumer sees through it, recognises that this wonderful new brand has nothing to offer—it is the same tired old product as 1042 before—and resolves not to buy the product again. That sounds exactly like the Labour party to me: a lick of paint, a toothy smile, but the same—[Interruption.]
§ Madam Deputy Speaker
Order. I had occasion earlier to reprimand the Front Benches for making seated interventions. I note that that now applies to the Bench below the Gangway.
§ Mr. Page
Thank you, Madam Deputy Speaker.
It seems to me that, in the Labour party, the same old command-and-control instincts are lurking in the shadows. As today's debate has illustrated yet again, the fact that Labour has been out of power for so long has aroused an unhealthy desire to tell everyone exactly what to do.
Let me return to the original theme. The Labour party has no ideas of its own, and, in particular, no ideas that anyone would like. If no one believes me, let me add that I have a copy of "New Labour New Life for Britain". That document—a real snip at £10—shows how much Labour cares about the energy sector, that £1 billion sector on which many jobs depend. It refers to the windfall tax. We know that the Labour party is very good at raising taxes. Then there is another comment. The hon. Member for Edinburgh, South spoke of a battery of positive measures; the battery is, apparently, theextraordinary benefit of North Sea Oil.That is the Labour party's energy policy: that is precisely what they are offering to the country. That is called "raising Britain's potential" and the "stakeholder economy".
But we know what we are doing. We know that we brought radical change to the energy sector. We have brought benefits to consumers in the form of lower prices and better services, and I know that that is the way to go forward. I draw my remarks to a close by paying tribute to my right hon. Friend the Minister of State for the work that he has done in this context.
§ Mrs. Jane Kennedy (Liverpool, Broadgreen)
rose in her place and claimed to move, That the Question be now put.
§ Question, That the Question be now put, put and agreed to.
§ Question put accordingly, That the original words stand part of the Question:—
§ The House divided: Ayes 269, Noes 294.1046
|Division No. 204]||[9.59 pm|
|Abbott, Ms Diane||Beggs, Roy|
|Adams, Mrs Irene||Beith, Rt Hon A J|
|Ainger, Nick||Bell, Stuart|
|Allen, Graham||Benn, Rt Hon Tony|
|Anderson, Donald (Swansea E)||Bennett, Andrew F|
|Anderson, Ms Janet (Ros'dale)||Benton, Joe|
|Armstrong, Hilary||Bermingham, Gerald|
|Ashton, Joe||Berry, Roger|
|Austin-Walker, John||Betts, Clive|
|Barnes, Harry||Blunkett, David|
|Barron, Kevin||Boateng, Paul|
|Battle, John||Bradley, Keith|
|Bayley, Hugh||Bray, Dr Jeremy|
|Beckett, Rt Hon Margaret||Brown, N (N'c'tle upon Tyne E)|
|Byers, Stephen||Hardy, Peter|
|Caborn, Richard||Harman, Ms Harriet|
|Callaghan, Jim||Harvey, Nick|
|Campbell, Mrs Anne (C'bridge)||Hattersley, Rt Hon Roy|
|Campbell, Menzies (Fife NE)||Henderson, Doug|
|Campbell, Ronnie (Blyth V)||Heppell, John|
|Campbell-Savours, D N||Hill, Keith (Streatham)|
|Canavan, Dennis||Hinchliffe, David|
|Cann, Jamie||Hodge, Margaret|
|Chidgey, David||Hoey, Kate|
|Chisholm, Malcolm||Hogg, Norman (Cumbernauld)|
|Clapham, Michael||Home Robertson, John|
|Clark, Dr David (South Shields)||Hood, Jimmy|
|Clarke, Eric (Midlothian)||Hoon, Geoffrey|
|Clarke, Tom (Monklands W)||Howarth, George (Knowsley North)|
|Clelland, David||Howells, Dr Kim (Pontypridd)|
|Clwyd, Mrs Ann||Hoyle, Doug|
|Coffey, Ann||Hughes, Kevin (Doncaster N)|
|Cohen, Harry||Hughes, Robert (Aberdeen N)|
|Connarty, Michael||Hughes, Roy (Newport E)|
|Cook, Frank (Stockton N)||Hughes, Simon (Southwark)|
|Cook, Robin (Livingston)||Hutton, John|
|Corbyn, Jeremy||Illsley, Eric|
|Corston, Jean||Ingram, Adam|
|Cousins, Jim||Jackson, Glenda (H'stead)|
|Cox, Tom||Jackson, Helen (Shef'ld, H)|
|Cummings, John||Jamieson, David|
|Cunningham, Jim (Covy SE)||Janner, Greville|
|Cunningham, Rt Hon Dr John||Jenkins, Brian (SE Staff)|
|Cunningham, Roseanna||Jones, Barry (Alyn and D'side)|
|Dafis, Cynog||Jones, Ieuan Wyn (Ynys MÔn)|
|Dalyell, Tam||Jones, Jon Owen (Cardiff C)|
|Darling, Alistair||Jones, Lynne (B'ham S O)|
|Davidson, Ian||Jowell, Tessa|
|Davies, Bryan (Oldham C'tral)||Kaufman, Rt Hon Gerald|
|Davies, Chris (L'Boro & S'worth)||Keen, Alan|
|Davies, Rt Hon Denzil (Llanelli)||Kennedy, Jane (L'pool Br'dg'n)|
|Davies, Ron (Caerphilly)||Khabra, Piara S|
|Davis, Terry (B'ham, H'dge H'I)||Kilfoyle, Peter|
|Denham, John||Kirkwood, Archy|
|Dewar, Donald||Lestor, Joan (Eccles)|
|Dixon, Don||Lewis, Terry|
|Dobson, Frank||Liddell, Mrs Helen|
|Donohoe, Brian H||Livingstone, Ken|
|Dowd, Jim||Lloyd, Tony (Stretford)|
|Dunwoody, Mrs Gwyneth||Llwyd, Elfyn|
|Eagle, Ms Angela||Loyden, Eddie|
|Eastham, Ken||Lynne, Ms Liz|
|Etherington, Bill||McAllion, John|
|Evans, John (St Helens N)||McAvoy, Thomas|
|Fatchett, Derek||McCartney, Ian|
|Faulds, Andrew||Macdonald, Calum|
|Field, Frank (Birkenhead)||McFall, John|
|Flynn, Paul||McKelvey, William|
|Foster, Don (Bath)||Mackinlay, Andrew|
|Foulkes, George||McLeish, Henry|
|Fraser, John||Maclennan, Robert|
|Fyfe, Maria||McMaster, Gordon|
|Galbraith, Sam||McNamara, Kevin|
|Galloway, George||MacShane, Denis|
|Gapes, Mike||McWilliam, John|
|Garrett, John||Madden, Max|
|George, Bruce||Maddock, Diana|
|Gerrard, Neil||Mahon, Alice|
|Gilbert, Rt Hon Dr John||Mandelson, Peter|
|Godman, Dr Norman A||Marek, Dr John|
|Godsiff, Roger||Marshall, David (Shettleston)|
|Golding, Mrs Llin||Martin, Michael J (Springburn)|
|Gordon, Mildred||Martlew, Eric|
|Graham, Thomas||Maxton, John|
|Grant, Bernie (Tottenham)||Meacher, Michael|
|Griffiths, Nigel (Edinburgh S)||Meale, Alan|
|Griffiths, Win (Bridgend)||Michael, Alun|
|Gunnell, John||Michie, Bill (Sheffield Heeley)|
|Hall, Mike||Michie, Mrs Ray (Argyll & Bute)|
|Hanson, David||Mitchell, Austin (Gt Grimsby)|
|Moonie, Dr Lewis||Short, Clare|
|Morgan, Rhodri||Simpson, Alan|
|Morley, Elliot||Skinner, Dennis|
|Morris, Estelle (B'ham Yardley)||Smith, Andrew (Oxford E)|
|Morris, Rt Hon John (Aberavon)||Smith, Chris (Isl'ton S & F'sbury)|
|Mowlam, Marjorie||Smith, Llew (Blaenau Gwent)|
|Mudie, George||Snape, Peter|
|Mullin, Chris||Soley, Clive|
|Murphy, Paul||Spearing, Nigel|
|Nicholson, Emma (Devon West)||Spellar, John|
|Oakes, Rt Hon Gordon||Squire, Rachel (Dunfermline W)|
|O'Brien, William (Normanton)||Steinberg, Gerry|
|O'Hara, Edward||Stevenson, George|
|Olner, Bill||Stott, Roger|
|O'Neill, Martin||Strang, Dr. Gavin|
|Orme, Rt Hon Stanley||Straw, Jack|
|Parry, Robert||Sutcliffe, Gerry|
|Pearson, Ian||Taylor, Mrs Ann (Dewsbury)|
|Pendry, Tom||Taylor, Matthew (Truro)|
|Pickthall, Colin||Thompson, Jack (Wansbeck)|
|Pike, Peter L||Timms, Stephen|
|Pope, Greg||Tipping, Paddy|
|Prentice, Bridget (Lew'm E)||Touhig, Don|
|Prentice, Gordon (Pendle)||Trickett, Jon|
|Prescott, Rt Hon John||Turner, Dennis|
|Primarolo, Dawn||Tyler, Paul|
|Purchase, Ken||Walker, Rt Hon Sir Harold|
|Quin, Ms Joyce||Walley, Joan|
|Radice, Giles||Wardell, Gareth (Gower)|
|Raynsford, Nick||Wareing, Robert N|
|Reid, Dr John||Watson, Mike|
|Rendel, David||Wicks, Malcolm|
|Robertson, George (Hamilton)||Wigley, Dafydd|
|Robinson, Geoffrey (Co'try NW)||Williams, Rt Hon Alan (Sw'n W)|
|Roche, Mrs Barbara||Williams, Alan W (Carmarthen)|
|Rogers, Allan||Wilson, Brian|
|Rooker, Jeff||Winnick, David|
|Rooney, Terry||Wise, Audrey|
|Ross, Ernie (Dundee W)||Worthington, Tony|
|Ross, William (E Londonderry)||Wray, Jimmy|
|Rowlands, Ted||Wright, Dr Tony|
|Salmond, Alex||Young, David (Bolton SE)|
|Sheerman, Barry||Tellers for the Ayes:|
|Sheldon, Rt Hon Robert||Mr. Robert Ainsworth and|
|Shore, Rt Hon Peter||Mr. Peter Hain.|
|Ainsworth, Peter (East Surrey)||Bowis, John|
|Aitken, Rt Hon Jonathan||Boyson, Rt Hon Sir Rhodes|
|Alison, Rt Hon Michael (Selby)||Brandreth, Gyles|
|Allason, Rupert (Torbay)||Brazier, Julian|
|Amess, David||Bright Sir Graham|
|Arbuthnot, James||Brooke, Rt Hon Peter|
|Arnold, Jacques (Gravesham)||Brown, M (Brigg & Cl'thorpes)|
|Ashby, David||Browning, Mrs Angela|
|Atkins, Rt Hon Robert||Bruce, Ian (South Dorset)|
|Atkinson, Peter (Hexham)||Budgen, Nicholas|
|Baker, Rt Hon Kenneth (Mole V)||Burt, Alistair|
|Baker, Nicholas (North Dorset)||Butler, Peter|
|Baldry, Tony||Butterfill, John|
|Banks, Matthew (Southport)||Carlisle, John (Luton North)|
|Banks, Robert (Harrogate)||Carlisle, Sir Kenneth (Lincoln)|
|Bates, Michael||Carrington, Matthew|
|Batiste, Spencer||Carttiss, Michael|
|Bellingham, Henry||Cash, William|
|Bendall, Vivian||Channon, Rt Hon Paul|
|Beresford, Sir Paul||Chapman, Sir Sydney|
|Biffen, Rt Hon John||Churchill, Mr|
|Bonsor, Sir Nicholas||Clappison, James|
|Booth, Hartley||Clark, Dr Michael (Rochford)|
|Boswell, Tim||Clarke, Rt Hon Kenneth (Ru'clif)|
|Bottomley, Peter (Eltham)||Clifton-Brown, Geoffrey|
|Bottomley, Rt Hon Virginia||Coe, Sebastian|
|Bowden, Sir Andrew||Colvin, Michael|
|Congdon, David||Howard, Rt Hon Michael|
|Conway, Derek||Howell, Rt Hon David (G'dford)|
|Coombs, Anthony (Wyne For'st)||Howell, Sir Ralph (N Norfolk)|
|Coombs, Simon (Swindon)||Hughes, Robert G (Harrow W)|
|Cope, Rt Hon Sir John||Hunt, Rt Hon David (Wirral W)|
|Couchman, James||Hunt, Sir John (Ravensbourne)|
|Cran, James||Hunter, Andrew|
|Currie, Mrs Edwina (S D'by'ire)||Hurd, Rt Hon Douglas|
|Curry, David (Skipton & Ripon)||Jack, Michael|
|Davies, Quentin (Stamford)||Jenkin, Bernard|
|Davis, David (Boothferry)||Jessel, Toby|
|Day, Stephen||Johnson Smith, Sir Geoffrey|
|Deva, Nirj Joseph||Jones, Gwilym (Cardiff N)|
|Devlin, Tim||Jones, Robert B (W Hertfdshr)|
|Dorrell, Rt Hon Stephen||Jopling, Rt Hon Michael|
|Douglas-Hamilton, Lord James||Key, Robert|
|Dover, Den||King, Rt Hon Tom|
|Duncan, Alan||Kirkhope, Timothy|
|Duncan Smith, Iain||Knapman, Roger|
|Dunn, Bob||Knight, Mrs Angela (Erewash)|
|Durant Sir Anthony||Knight, Rt Hon Greg (Derby N)|
|Dykes, Hugh||Knight, Dame Jill (Bir'm E'st'n)|
|Eggar, Rt Hon Tim||Knox, Sir David|
|Elletson, Harold||Kynoch, George (Kincardine)|
|Emery, Rt Hon Sir Peter||Lait, Mrs Jacqui|
|Evans, David (Welwyn Hatfield)||Lamont, Rt Hon Norman|
|Evans, Jonathan (Brecon)||Lang, Rt Hon Ian|
|Evans, Nigel (Ribble Valley)||Lawrence, Sir Ivan|
|Evans, Roger (Monmouth)||Legg, Barry|
|Evennett, David||Leigh, Edward|
|Faber, David||Lennox-Boyd, Sir Mark|
|Fabricant, Michael||Lester, Sir James (Broxtowe)|
|Fenner, Dame Peggy||Lidington, David|
|Field, Barry (Isle of Wight)||Lilley, Rt Hon Peter|
|Fishburn, Dudley||Lloyd, Rt Hon Sir Peter (Fareham)|
|Forman, Nigel||Lord, Michael|
|Forsyth, Rt Hon Michael (Stirling)||Lyell, Rt Hon Sir Nicholas|
|Forth, Eric||MacGregor, Rt Hon John|
|Fowler, Rt Hon Sir Norman||MacKay, Andrew|
|Fox, Rt Hon Sir Marcus (Shipley)||Maclean, Rt Hon David|
|Freeman, Rt Hon Roger||McLoughlin, Patrick|
|French, Douglas||McNair-Wilson, Sir Patrick|
|Fry, Sir Peter||Madel, Sir David|
|Gale, Roger||Maitland, Lady Olga|
|Gallie, Phil||Malone, Gerald|
|Gardiner, Sir George||Mans, Keith|
|Garnier, Edward||Marland, Paul|
|Gill, Christopher||Marlow, Tony|
|Gillan, Cheryl||Marshall, John (Hendon S)|
|Goodlad, Rt Hon Alastair||Marshall, Sir Michael (Arundel)|
|Goodson-Wickes, Dr Charies||Martin, David (Portsmouth S)|
|Gorman, Mrs Teresa||Mates, Michael|
|Gorst, Sir John||Mawhinney, Rt Hon Dr Brian|
|Grant, Sir A (SW Cambs)||Mellor, Rt Hon David|
|Greenway, Harry (Ealing N)||Merchant, Piers|
|Greenway, John (Ryedale)||Mills, Iain|
|Griffiths, Peter (Portsmouth, N)||Mitchell, Andrew (Gedling)|
|Grylls, Sir Michael||Mitchell, Sir David (NW Hants)|
|Gummer, Rt Hon John Selwyn||Moate, Sir Roger|
|Hague, Rt Hon William||Monro, Rt Hon Sir Hector|
|Hamilton, Neil (Tatton)||Montgomery, Sir Fergus|
|Hampson, Dr Keith||Needham, Rt Hon Richard|
|Hannam, Sir John||Nelson, Anthony|
|Hargreaves, Andrew||Neubert, Sir Michael|
|Haselhurst, Sir Alan||Newton, Rt Hon Tony|
|Hawkins, Nick||Nicholls, Patrick|
|Hawksley, Warren||Nicholson, David (Taunton)|
|Hayes, Jerry||Norris, Steve|
|Heald, Oliver||Oppenheim, Phillip|
|Heathcoat-Amory, Rt Hon David||Ottaway, Richard|
|Hendry, Charies||Page, Richard|
|Higgins, Rt Hon Sir Terence||Paice, James|
|Hill, Sir James (Southampton Test)||Patnick, Sir Irvine|
|Hogg, Rt Hon Douglas (G'tham)||Patten, Rt Hon John|
|Horam, John||Pattie, Rt Hon Sir Geoffrey|
|Hordern, Rt Hon Sir Peter||Pawsey, James|
|Peacock, Mrs Elizabeth||Sykes, John|
|Pickles, Eric||Tapsell, Sir Peter|
|Porter, Barry (Wirral S)||Taylor, Ian (Esher)|
|Porter, David (Waveney)||Taylor, John M (Solihull)|
|Portillo, Rt Hon Michael||Taylor, Sir Teddy (Southend, E)|
|Powell, William (Corby)||Temple-Morris, Peter|
|Rathbone, Tim||Thomason, Roy|
|Redwood, Rt Hon John||Thompson, Sir Donald (C'er V)|
|Renton, Rt Hon Tim||Thompson, Patrick (Norwich N)|
|Richards, Rod||Thornton, Sir Malcolm|
|Riddick, Graham||Thurnham, Peter|
|Robathan, Andrew||Townend, John (Bridlington)|
|Roberts, Rt Hon Sir Wyn||Townsend, Cyril D (Bexl'yh'th)|
|Robertson, Raymond (Ab'd'n S)||Tracey, Richard|
|Robinson, Mark (Somerton)||Tredinnick, David|
|Roe, Mrs Marion (Broxboume)||Trend, Michael|
|Rowe, Andrew (Mid Kent)||Trotter, Neville|
|Rumbold, Rt Hon Dame Angela||Twinn, Dr Ian|
|Sackville, Tom||Vaughan, Sir Gerard|
|Sainsbury, Ftt Hon Sir Timothy||Viggers, Peter|
|Scott, Rt Hon Sir Nicholas||Waldegrave, Rt Hon William|
|Shaw, David (Dover)||Walden, George|
|Shaw, Sir Giles (Pudsey)||Walker, Bill (N Tayside)|
|Shephard, Rt Hon Gillian||Waller, Gary|
|Shepherd, Sir Colin (Hereford)||Ward, John|
|Shersby, Sir Michael||Wardle, Charles (Bexhill)|
|Sims, Sir Roger||Waterson, Nigel|
|Skeet, Sir Trevor||Watts, John|
|Smith, Tim (Beaconsfield)||Wells, Bowen|
|Soames, Nicholas||Whitney, Ray|
|Speed, Sir Keith||Whittingdale, John|
|Spencer, Sir Derek||Widdecombe, Ann|
|Spicer, Sir James (W Dorset)||Wiggin, Sir Jerry|
|Spicer, Sir Michael (S Worcs)||Wilkinson, John|
|Spink, Dr Robert||Willetts, David|
|Spring, Richard||Wilshire, David|
|Sproat, lain||Winterton, Mrs Ann (Congleton)|
|Squire, Robin (Homchurch)||Winterton, Nicholas (Macc'fld)|
|Stanley, Rt Hon Sir John||Wolfson, Mark|
|Steen, Anthony||Wood, Timothy|
|Stephen, Michael||Yeo, Tim|
|Stern, Michael||Young, Rt Hon Sir George|
|Streeter, Gary||Tellers for the Noes:|
|Sumberg, David||Mr. Simon Burns and Dr. Liam Fox.|
§ Question accordingly negatived.
§ Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
§ MADAM DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
That this House congratulates the Government on its privatisation of the former state energy sector; notes that its market-based energy policies have led to lower prices and better services for consumers; and looks forward to the further benefits to consumers which will flow from the opening up of the gas and electricity markets in 1998.