THE ENERGY SITUATION (Hansard, 13 December 1973)

§ THE LORD PRIVY SEAL (LORD WINDLESHAM)
My Lords, the following Statement is now being made in another place by my right honourable friend the Prime Minister:
1286 "With permission, I will make a Statement on the energy situation.
"The ban on overtime working by the coalminers has led to a sharp fall in coal supplies to the power stations which are now running at nearly 40 per cent. below the expected level and are well below normal levels of consumption. Though the electricity supply industry started the winter with good stocks of coal, those stocks are now having to be run down at the rate of about 1 million tons a week at the present rate of electricity use, even after the restrictions already imposed.
"To conserve coal stocks my right honourable friend the Secretary of State for Trade and Industry instructed the oil companies, on December 5, to increase supplies of fuel oil to the power stations. But fuel oil supplies are also under pressure, and a still larger allocation to the electricity industry could be only at the expense of severe further cuts to other users of fuel oil.
"Deliveries of coal and of oil to the power stations are seriously threatened by the industrial action of train drivers started yesterday by ASLEF.
"The ability of the electricity industry to deal with the consequences of these disruptions of supply has been further constrained by the action of the power engineers to restrict out-of-hours working.
"It is clear that, so long as the industrial action by the coalminers and the train drivers continues, stocks of fuel at the power stations will continue to be run down at a rate which could, before many weeks had passed, reach a point when large-scale interruption and disruption of electricity supply became unavoidable.
"In this situation the Government have a responsibility to take the measures necessary to safeguard the electricity system from major disruption, to prevent essential services from being placed in jeopardy, and to ensure the maintenance of a reasonable level of industrial activity.
"The Government judge that this requires further savings amounting to 20 per cent. of electricity consumption, in addition to the measures already announced by my right honourable friend the Secretary of State for Trade 1287 and Industry. This will inevitably require reductions in consumption in homes, in industry and in commerce.
"First, in homes. The Government the asking all domestic consumers to restrict the use of electricity for space heating in the home to one room, and then only if the householder has no other form of heating available.
"Second, in industry and commerce. From next Monday, December 17, large, continuous process users will be limited to 65 per cent. of their normal electricity consumption each week. Electricity supplies for other industry and for commercial premises will, in general, be limited to a total of any five days over the two weeks ending December 30. After that, from December 31, they will be limited to three specified days each week, which will be consecutive, and the days will be selected on the basis of scheduled drawn up for each Electricity Board area. On the days when firms are free to use electricity, they will not be able to work longer hours than usual. Maintenance or other work not involving the use of electricity could continue on other days and most shops and offices would also be able to open on those days, though they would not be able to use electricity.
"Orders to give effect to the restrictions on industry and commerce will be made over the next few days. The Orders will name certain essential businesses which will be exempt from these restrictions, and specify other special purposes for which the use of electricity would be permitted at all times; for example, the operation of fire-fighting equipment, computers, cheque-sorting machinery and office machinery.
"From next Monday, B.B.C. Television and Independent Television Services will close down not later than 10.30 p.m. each evening, save over Christmas and on New Year's Eve.
"In addition, the Government asks that everyone should economise in the use of all fuels and save all the electricity they can. There are innumerable ways in which all of us can do this: by keeping rooms at lower temperatures and heating them for shorter periods; by switching off lights and by not using electrical appliances unless absolutely 1288 necessary; by setting thermostats controlling water-heaters, refrigerators and deep-freezers at the most economical levels; by reducing lighting levels in theatres and other places of entertainment. These are only examples: unless we can save electricity—and indeed all fuels—in every aspect of our daily lives, we shall have to impose yet further restrictions on business.
"Mr. Speaker, you will have noted that the measures we propose do not include rota cuts or periods of electricity disconnection. The Government have thought it right to avoid such cuts as long as possible, particularly in view of the fact that the ban on out-of-hours working by the power engineers would mean that any cuts would have to be highly unselective and would be bound to affect essential services. But I must warn the House and the country. If we failed to achieve the necessary savings in electricity consumption as a result of the reduction in domestic consumption for which we are asking and the other measures I have announced, frequent periods of electricity disconnection would become unavoidable. Essential industries and vital services would be cut indiscriminately. Young and old alike, at home, at work, or in hospitals, would all be hit.
"Mr. Speaker, I should also like to say a few words to the House about the oil situation.
"The restrictions on oil exports by the Arab oil-producing countries affect the whole world: the developed countries of North America, Europe and Japan and the developing countries in Africa, Asia and Central and South America.
"We have been less hard hit than some other European countries, partly because (given normal levels of supply for other fuels) we are less dependent than they are on oil, and partly because the Arab producers have applied their reduction less severely to us.
"But, when the whole world is short of oil, we cannot escape entirely.
"This month we shall probably get about 85 tons of oil for every 100 tons we expected. The figure may be lower in January.
"That is why we have had to ask everyone to economise in the use of 1289 oil in the home, in the office, in the factory, in the shops, on the road. But I can confirm that, on the basis of the level of supplies we now expect, the allocations of petrol and derv to garages will continue at their present levels throughout January.
"The situation has been greatly helped by the savings which drivers have made. I should like to take this opportunity to thank the public for their co-operation. It is vital that these efforts should continue. The savings in the demand for petrol over the last few days have amounted to about 15 per cent. As a result, I can announce to-day that, although plans for rationing will proceed so that it could be introduced at short notice, it will not be introduced this side of the New Year.
"The improvement of the supply position clearly depends upon progress towards a peace settlement in the Middle East. The peace conference is due to open in Geneva on December 16. We are going and will continue to do all we can, by diplomatic means, to promote the success of the conference and to make the Arab oil-producing countries aware of the hardship and the damage which the restrictions inflict.
"We must hope that the shortage of supplies will be reversed before long. We cannot expect the sharp rise in oil prices to be reversed. This is bound to have a very damaging effect upon our balance of payments, which is in any case running in substantial deficit at present.
"Until a few weeks ago we could foresee a progressive diminution in the balance-of-payments deficit during the course of next year. But that prospect has now disappeared. We shall have to find—and therefore to earn—much more foreign exchange in order to pay for the same amount of oil.
"In the long run some of the money will, we hope, come back to us in payment for increased exports to the oil-producing countries, who will need the goods and services we can provide for their own development.
"And here again we in Britain are more fortunate than most. Within five 1290 to seven years we can look forward to bringing two-thirds of the amount of oil we need in from the North Sea. This will in due course make an enormous improvement in our balance-of-payments position.
"But that does not help in the immediate future. In the short run, if we have to have oil, as we do, and we have to pay more for it, as we shall, the country will have less to spend on other things from abroad. The Chancellor of the Exchequer will be making a Statement in the House on Monday about fresh measures to achieve these purposes. For the time being we shall have to postpone some of the hopes and aims we have set ourselves for expansion and for our standard of living.
"Other countries will be similarly affected by the rise in oil prices and will be having to consider the implications for their balance of payments. In this situation there is an acute danger that, if we all independently resort to deflationary measures for the sake of our individual balances of payments, we shall set off a disastrous slump in the level of world trade. It will require all the effort and all the farsightedness of which the international community is capable to escape this consequence.
"I leave for Copenhagen this evening for the Community summit meeting to-morrow. We shall be discussing the energy situation in all its aspects; but this particular aspect will be very much in mind.
"The House will have seen that in his speech in London last night Dr. Kissinger announced a proposal for an Energy Action Group, which would have as its goal the assurance of required energy supplies at reasonable cost. Under this proposal the nations of North America, Europe and Japan would co-operate in a programme to rationalise and conserve the use of energy, develop alternative sources of supply, and give existing producers an incentive to increase supply. I shall be discussing this with the other Community Heads of Government at Copenhagen; but I can say here and now that the British Government warmly welcomes this imaginative proposal, which is in the great tradition of the Marshall Plan after the war.
1291 "I must apologise to the House for so long a Statement; but it seemed to me that the House should be given as full a statement of the position as possible, as a basis for our debate next week."

§ LORD SHACKLETON
My Lords, I thank the noble Lord the Leader of the House for reading this lengthy Statement, which is of such gravity that I find it very difficult to make any comment now. Since it is clear that we are in a situation of the greatest seriousness we shall, of course, need to debate the whole position at a very early date, and at that time perhaps we can consider how we got into that position.
I have two points only that I would ask about now. First, there is a reference to cutting to 65 per cent. the supply of the continuous process industries who are dependent on electricity. I do not know whether the noble Lord can answer this point, but it would appear to mean that some industries, if they are continuous processing industries dependent upon electricity, would have to cease operating entirely. Secondly, referring to the rightly described imaginative statement of Doctor Kissinger, I was a little concerned, since the Prime Minister is going to Copenhagen tomorrow, at the suggestion that the Energy Action Group would be considering giving existing producers the incentive to increase supply. I hope this is economic and financial, and not political. I hope it does not herald new pressure on Israel. I make that point as a warning, because it could be political.
My Lords, I understand that the Chief Whip has indicated that there may be some rearrangement of business. Clearly there will need to be at least a whole day's debate on this subject. At the same time, we ought not just to push out of the way the debate on Northern Ireland. Perhaps at some stage later on we shall have a Statement.

§ LORD AVEBURY
My Lords, we on these Benches also thank the noble Lord the Leader of the House for repeating the Statement which has been made in another place. So far as concerns the welcome which has been given by the Prime Minister to Dr. Kissinger's 1292 initiative, we also endorse that very warmly. We hope the discussions with our partners in Europe and the United States may concentrate on the management of demand as well as the finding of alternative sources of supply. It is to be hoped that we may learn something from the work already done on this in the United States, particularly the recommendations made by the Office of Emergency Preparedness to President Nixon on the means whereby consumption of energy sources in the United States can be reduced by 30 per cent. We could learn a lot from that, and I hope that the Government will study the recommendations made to President Nixon.
My Lords, so far as the domestic situation is concerned, we will go along with the reductions which the Government have announced because we are quite sure that they are necessary. Indeed, my noble friends and honourable friends in another place have been asking for measures to be taken along these lines for some considerable time past. As regards the use of electricity for space heating, would not the Government consider going one stage further, and placing a complete bar on the unrestricted sale of electrict heaters for use in homes during the crisis for as long as it lasts? So far as industry is concerned, may I ask the noble Lord the Leader of the House for a little clarification on the question of how much electricity people will be able to use during the three days per week permitted after December 30? If they have been working a certain amount of overtime during December, or in the winter months leading up to the emergency, will they be allowed, under the phrase "longer hours than usual", to continue working that amount of overtime during the three days they are going to work? Secondly, can the noble Lord say how those who are exempted from these restrictions because, for example, they are working with computers or office machinery, will be able to comply with these restrictions, and how the restrictions on ordinary consumers who are not entitled to concessions will be enforced?

§ LORD WINDLESHAM
My Lords, both the noble Lords. Lord Shepherd and Lord Avebury, referred to Dr. Kissinger's speech. I believe it would be best not to add to what was said in the Statement, since the Prime Minister referred to the 1293 fact that this would be discussed by the Heads of State and the Heads of Government of the European Community who are to be meeting in Copenhagen shortly.
As to the large continuous process industries, the intention is to try to enable such industries (for example aluminium smelters) to continue to keep going, but on the basis of a reduction in power supply, using 65 per cent. of the electricity consumption that they would normally require. If I can add to this information in the debate next week I will.
The noble Lord, Lord Avebury, asked about the sale of appliances for domestic space heating. I will take note of that point and pass it on to my right honourable friend. The Government are concerned primarily with the use of appliances rather than their sale, but I take the noble Lord's point. As to the hours of work, I should like a little notice in order to be able to give an accurate answer to the point the noble Lord has raised. Subject to correction, my understanding would be that the normal hours of work over the year should be regarded as the hours of work to which the premises would be confined; otherwise it would be possible, by very substantial overtime, to get round the aim and purpose of the restrictions.
My Lords, with reference to exemptions, there are a whole number of these, mainly by category. These will be included in the Order when it is tabled; the Order will be available to your Lordships when we have our debates next week. Where employers are in some doubt, whether in commerce or industry, as to whether or not they fall within an exempted category, we hope they will get in touch with the regional officers of the Department of Trade and Industry, and consult with them. As for the business for next week, it would be helpful if my noble friend the Chief Whip made a Statement.