§ 3.33 p.m.
§ The MINISTER of STATE, DEPARTMENT of ENERGY (Lord BALOGH)I should like to repeat a Statement which has been made in another place my my right honourable friend the Secretary of State for Energy. I quote:
"As the House knows, this year our import bill for oil is likely to exceed £3,500 million. By the end of the present decade we should no longer be net importers of energy. We are almost the only major industrial country in the Western World which has this prospect. Nevertheless, the need to reduce our import bill, and at the same time our dependence on imported fuel, is acute. The need to save energy has been widely recognised abroad. Conservation programmes have already been announced by some other countries, and we are co-operating in the International Energy Agency and in the Community in considering different conservation measures. Progress has of course already been made. It is estimated for example that voluntary conservation measures this year have already saved about 2 per cent. of our normal energy consumption—worth about £150 million at current import prices.
"These savings are a good beginning. But we need to do much more in the years ahead. My right honourable friend, the Chancellor of the Exchequer made it plain in his Budget statement that the Government intend to ensure that energy prices are brought as quickly as possible to a level which reflects true costs. The best advice we have is that a move to such prices might save at least £50 million—and perhaps a good deal more—on our import bill in a full year. To rely on the price mechanism alone however is not enough. The Government has therefore considered what further steps it can take to reinforce the pressures of price. My Advisory Council on Energy Conservation has already produced a number of suggestions for the Government to consider and its work will grow and develop over the months and years ahead. The measures and proposals I announce today therefore must be 423 regarded as an interim package, which we intend to extend and reinforce in the future.
"The measures the Government have decided to adopt now are:
"First: To introduce a loan scheme which will provide a source of finance for energy saving investment in industry, to ensure that such investments are not held back by cash flow problems. Loans will be at rates of interest comparable with those under the Industry Act. I expect to make available £3 million a year for this purpose. Full details of the scheme will be announced shortly.
"Second: The Government will use their powers to ensure that the next round of oil price increases bears more heavily on motor spirit than on other oil products. This move will seek further to discourage imports of motor spirit and crude oil used to produce motor spirit, which currently cost us about £500 million a year. Details will be announced when the Price Commission has finished its work on the present round of company applications for price increases.
"Third: The Government have reviewed the programme for reducing the lead content of petrol. The reduction which took effect on 1st November has added more than £10 million a year to our import bill and further stages of the programme could be very much more expensive than this. We do not intend to go back on what has been done so far but have decided that a decision on further reductions should not be made before a thorough review of all the medical and economic implications of proceeding with the programme has been undertaken.
"Fourth: About 3 million tons of coal equivalent a year is used in Government civil ad defence buildings. The Property Services Agency expect to save 6 per cent. of the energy consumption estimated for the current financial year and are planning to spend, over the next few years, up to £5 million a year on improved control equipment, draught proofing and additional insulation. These and other measures aim to achieve eventually savings of around £20 million a year, 424 or more than 20 per cent. of current expenditure in this area. The Ministry of Defence expect, given normal weather, to achieve their target saving in the current financial year 10 per cent. of fuel oil and 6 per cent. of other forms of energy.
"Fifth: Public authorities other than Government, for example local authorities, use some 17 million tons of coal equivalent a year. And a further 20 million tons is estimated to be used in public sector housing. The Government are opening urgent discussions with local authorities and others concerned to see how far and in what ways savings can be achieved in this important area of our life.
"Sixth: Speed Limits: excessive speed wastes petrol, as well as costing lives. The Government have therefore decided to reduce the maximum speed limits on single carriageway roads to 50 ph and on dual carriageways other than motorways to 60 mph. Speed limits on motorways will remain unchanged. My right honourable friend the Minister of Transport will make a further statement on this later today.
"Seventh: Mr. Speaker, we will introduce compulsory limits on heating levels in buildings other than living accommodation and a limited range of further exemptions designed to protect the young, the old, the sick, the disabled and certain types of material and equipment. These standards will involve a maximum heating level of 20°C.-68°F. Substantial savings can also be made in private households, and these will be just as valuable as those in industry and commerce. I appeal for the maximum voluntary savings.
"Eighth: The Government recognise the need for improved insulation in private dwellings. My right honourable friend the Secretary of State for the Environment has today laid an Order which will have the effect of approximately doubling the standards of thermal insulation required in new dwellings.
"Ninth: In all areas of our national life greater attention needs to be focused on the careful use of energy. My Advisory Council has suggested 425 that company annual reports should state the expenditure incurred on fuel and the steps taken to save energy. The possibility of including this provision in future legislation is being considered. Meanwhile Boards of Directors should voluntarily demonstrate their public spirit and their good stewardship by implementing this suggestion. All Boards should make clear within their firms their commitment to energy saving and should make someone specifically responsible for achieving it.
"Tenth: Both management and employee representatives engaged in joint consultation in industry and commerce should see that energy saving is made a regular subject for practical discussion leading to early and effective action. I have written to the CBI and to the Association of British Chambers of Commerce asking them to draw the attention of their members to these points, and to give them their full support; and I have written similarly to the TUC on the important contribution which union representatives can make through joint consultations.
"Eleventh: I have decided to restrict the use of electricity for external display and advertising purposes during daylight hours. The necessary orders for this and the proposed heating standards will be laid shortly and will come into effect after the New Year holiday period. I do not propose to ban floodlighting at this time. I would, however, ask those concerned to consider urgently in the New Year whether the lights so used are really necessary outside the hours when they have maximum impact.
"Twelfth: Finally, to promote and reinforce action in all these areas, the Government will, over the months ahead, develop a publicity campaign to inform and advise industry and commerce, motorists and households, on how they can help themselves and the nation by using energy more carefully and efficiently. In addition, the heads of nationalised fuel industries have told me that they will co-ordinate energy saving publicity.
"It is not possible to estimate with any precision the energy savings which may emerge from this package, not least because many of the effects are 426 cumulative over time. The Government are directly responsible for only a very small part of the nation's use of energy. Within this area some impressive savings are being made, as my Statement has shown. For the rest, while the Government can and will give a lead, and will run a major energy saving campaign, success will depend primarily on the efforts of individual businesses and households. There is no doubt that substantial savings are possible. Indeed, if we were to be able to save, within the next few years, say 10 per cent. of our total energy consumption—an amount which currently costs about £700 million a year to import—we would have made a major contribution to our national wellbeing and national future."
That is the Statement, my Lords.
§ 3.44 p.m.
§ Lord STRATHCONA and MOUNT ROYALMy Lords, the House will welcome that long and rather complicated Statement on what I suppose we may call an "energetic" afternoon in this House. We have awaited this Statement for a long time—I think I am right in saying that we have been promised it on more than one occasion—and we welcome it now it has arrived. I am sure that voluntary savings can be increased; I am glad that the Government intend to bend all their endeavours in this direction. I cannot possibly comment on all the individual suggestions in this Statement. We on this side particularly welcome the reality which is indicated on the question of cost.
The Statement is a very imprecise one. What does it mean by achieving reality on cost as quickly as possible? If I remember rightly, in that respect we have had trouble in this House earlier, particularly on the question of off-peak heaters. Then, on the question of the increased prices, are the Government saying that the saving that is resulting is purely as a result of economic pressure? Then there is the question of saving heavily on motor spirit. Is it not a fact that there is a danger of upsetting the refinery balance? If you go too strongly towards petrol saving, what do you do with the heavier fractions in the refineries? Some of us are bound to regret the third item in the Statement. Having struggled with the Prevention of Pollution Act (as I think it was finally called) we now find 427 that we have to backslide on the lead content. I feel sure that this is an inevitable and sensible move at the present time.
The Property Services Agency will earn a 20 per cent. return on capital invested. This is something that we must obviously welcome; it seems totally in line with the publicity campaign which the Government are proposing. I have a particular interest in the Ministry of Defence figures, to which reference was made, because my recollection is that during the crisis last year a saving of the order of 40 per cent. was made; I agree that this was done with considerable inconvenience and damage. It is good to see that they are still doing this. I wonder whether they are being asked to do enough.
Regarding the need to protect old people, I believe that hyperthermia is a grave danger for them and I hope that the Government will bear this in mind when dealing with the seventh provision in the Statement. Many old people would be delighted if they could maintain temperatures in their homes at 68 degrees Fahrenheit. The Statement seems slightly a rag-bag in the way it is presented; it is a pity that all the industrial points on loans, return on capital and so on are not gathered together. But that is possibly a rather carping presentational point. I support everything that the Government are trying to do, but may I finally ask whether we could use the Factory Inspectorate to go to individuals and firms to point out what can be done, and then to visit again to see what has actually been done?
§ Lord AVEBURYMy Lords——
§ Lord BALOGHMy Lords, may I first answer the questions of the noble Lord, Lord Strathcona and Mount Royal, because they were a long series? I will then deal with the points which the noble Lord, Lord Avebury, wants to raise. I thank the noble Lord, Lord Strathcona and Mount Royal, for his very generous and appreciative remarks and for the way he put his questions. Regarding delay, the Government have already taken a number of steps. It was felt that the general situation had to be considered. The noble Lord asked whether the saving is merely due to economic pressure. In fact, it is mainly as a result of changing 428 relativities between various production factors. By making energy a little dearer it is hoped that this pressure, so far as industry is concerned, will express itself in cost and investment decisions. As regards the implementation of the price increases, I am sure the noble Lord will realise that his point regarding old people is really concerned with this question. One will need to have a strategy for increasing costs with due consideration of social and economic consequences. Therefore, one cannot in advance say how this will be arranged.
So far as petrol and balance of the refinery programme is concerned, we are unfortunately importing petrol as such, not merely refining, and if we could save imports of petrol itself we should be very happy indeed. With regard to pollution, I would say that the basic reduction, which is important, will be maintained. As my right honourable friend said in another place, obviously the medical advice on this matter is at the moment conflicting, and we shall have to wait further to see how the advantages and the disadvantages balance. So far as defence cuts are concerned, I should have thought that as this will be over a longer period whereas last year, of course, it was thought to have been for a short period—it was shorter, as a matter of fact, than the then Government thought—we have to accept the defence experts' advice. Suggestions that the Factory Inspectorate should be used will certainly be transmitted by me to my right honourable friend and we shall see what can be done.
§ 3.51 p.m.
§ Lord AVEBURYMy Lords, may we also welcome the Government's Statement so far as it goes, with the exception that the noble Lord on the Conservative Benches raised regarding lead in petrol. I should have thought the move by the Government was short sighted and that, because we face a desperate situation, this is no reason for back-sliding on the measures which we are taking to cope with pollution. So long as medical advice is that increased lead content of the atmosphere may be harmful, particularly to small children, it is quite wrong of the Government to try to save money and imports in this way. With that exception, we very much welcome the Statement.
429 May I ask the noble Lord, first of all, whether the true costs spoken of in relation to the nationalised energy industries mean depreciation at replacement cost of their assets? May I also ask whether this includes the kind of return on their capital which they would be required to generate; I think it was 8 or 9 per cent. when they previously had targets of this nature at which to aim, before the price restrictions were imposed on them which made those targets impossible to meet? Secondly, may I ask the noble Lord whether in the discrimination against motor spirit—which is quite welcome for the reasons which the noble Lord has given—he will bear in mind the needs of public transport and the fact that there should not be corresponding increases in the price of diesel fuel, which would hit the public bus companies hard at a period when their labour costs are rising extremely rapidly and fare increases are having to be imposed by London Transport for this reason? Anything he can do to help the public transport industry in this respect will be most welcome.
Has the noble Lord taken medical advice on the question of maximum standards of heating in buildings? Does he not think that 20 degrees centigrade is still higher than is strictly necessary for the health and welfare of people who work in these buildings? I think that the noble Lord will agree that last winter we became used to heating standards that were considerably lower than this, and that after a few weeks one does not find any discomfort at levels of 19 degrees centigrade or even perhaps 18 degrees centigrade, which would represent a considerable further saving if extended to all offices and factories. On the question of insulation of private houses, I notice that the noble Lord mentioned only the standards of thermal insulation required for new dwellings. Will the Government consider a scheme analogous to that proposed for industry, whereby private householders are lent money to insulate existing dwellings to a much higher standard—perhaps channeling the money through building societies and adding the cost to their existing mortgages?
Finally, may I ask the Government to bear in mind that, if we want to save energy, we are not concerned solely with the use of primary fuels but must also be concerned with materials, because, 430 whether one thinks of glass, aluminium, copper or steel, all these raw materials begin with inputs of energy; and in addition to saving oil, coal and gas, we mast also embark on a far-reaching programme to save the materials which are derived from that energy? May I ask the noble Lord to take a look at what has been done in this respect through the Office of Emergency Preparedness in the United States?
§ LORD BALOGHMy Lords, may I beg the noble Lord's pardon if I offended him by answering other questions before he spoke, but so many questions were put to me by the noble Lord, Lord Strathcona and Mount Royal. On the matter of lead, as I have already said, we are the first to regret not continuing with a reduction of lead content in motor spirits. On the other hand, the evidence at the moment is still conflicting as to whether or not the present level is tolerable. No doubt we shall have to reconsider the situation when we are in a better position to do so. I am certain that my right honourable friend the Secretary of State for the Environment will push very hard because he is under great pressure on this matter. So far as motor cars are concerned, as I stated last week the Government were concerned to prolong the 1973 legislation because under it they could regulate the absolute and relative prices of fuel, and we shall wish to shield as much as possible diesel oil as against petrol.
On maximum standards of heat, I think the noble Lord will excuse me. Coming from Central Europe, I am accustomed to better heating, or at any rate to better insulation. So far as material saving is concerned, of course I agree with the noble Lord. But I think that the relative price structure which will emerge as soon as we have this reconsideration of the mostly nationalised energy sector will influence material saving by making much higher the relative price of energy-intensive materials.
§ 3.58 p.m.
§ Lord ORR-EWINGMy Lords, may I reinforce the appeal from one section of our Front Bench and also from the Liberal Benches. It seems to me that this is rather a late conservation programme. The Government have been in Office for just over ten months, and it was very 431 obvious right at the beginning that there would have to be very rigorous measures to reduce our imports, and, I should have thought, to restore our reserves of energies, which are much lower at the start of this winter than they were at the start of last winter. This programme seems to me too little and too late. I am surprised that no attention has been given to private housing. It is not enough at this stage simply to reserve the provision for new houses. We must retrospectively try to insulate old houses. There is a tremendous do-it-yourself movement in this country today, possibly because of the price of hiring labour, and I feel that there would be a large number of willing householders who would try to save perhaps half their fuel bills if it was possible either to grant loans or perhaps to subsidise the cost of thermal insulation to their roofs. This is the biggest loss of energy in any single sector, and this is the one factor which has been totally left out of the Government's announced plan.
Secondly, on the industrial front, would the noble Lord bear in mind, as my noble friend has said, that factory inspectors could play a useful part in encouraging energy conservation? May we be assured that the rather lavish lighting standards which were set before this crisis will be reasonably relaxed, so that people who set out to save energy—and we all found how much we could save during last winter—will be encouraged to do so?
§ Viscount HANWORTHMy Lords, may I also reinforce from these Benches what has just been said about house insulation, by asking the noble Lord whether he agrees that in many cases where there is no insulation in houses—and I believe that in terms of rooms that is something like 12 million—the amortisation period can be as little as just over a year?
§ Lord SLATERMy Lords, is my noble friend aware, in view of the lengthy Statement which he has been called upon to make in your Lordships' House about the conservation of energy in this country because of the serious position in which we find ourselves, that he ought to be complimented upon the way he has faced up to the questions which have already been placed before him by Members from both sides of the House?
432 Secondly, having regard to the question which was directed to him from the Liberal Benches regarding the conservation of temperature inside buildings, is my noble friend aware of what happened on one occasion when such a measure was sought to be enforced within certain factories in this country? Then the workers walked out because of the low temperature and the atmosphere in which they had to work.
Is my noble friend also aware that some of us have very long memories and that we remember the time during the last war when buses were run in this country by gas; they had a gas cover over the top. What investigation is taking place into chemical products in the chemical organisations—for example, ICI? At one time, ICI took the lead in regard to benzole. Will my noble friend agree that it would probably be to the advantage of this country if a small committee of investigation were set up to look at these major firms, which have sources of inspection and inquiry and top scientists at their disposal, in order to see what they are able to come up with at this serious stage in our history?
§ Lord BALOGHMy Lords, in answer to the noble Lord, Lord Orr-Ewing, of course we should very much like to have as great a do-it-yourself movement as possible. The Department will certainly take this into account when the campaign for energy saving is mounted; it will be a very large part of that campaign. However, may I revert to my unreconstructed past and remind the noble Lord, Lord Orr-Ewing, that he does not like retrospection. I think that retrospection in this matter would be no better than, shall we say, retrospection in the North Sea.
So far as loans and subsidies are concerned, which were mentioned by the noble Viscount, Lord Hanworth, I can only say that if noble Lords will look at the red book which was issued at the time of the third Budget they will see that the borrowing requirement is already at a daunting level and that this could mean a major programme. I have already said something about factory inspectors and we shall communicate with the noble Lords in writing. So far as the noble Lord, Lord Slater, is concerned, may I thank him for his very kind words. Obviously everything will be done—like the 433 Committee which he recommended to consider another possible source of motor power—to investigate all ways of saving petrol.
§ Baroness PHILLIPSMy Lords, may I make one plea to the Minister which has not been made so far? I take very seriously the point about materials connected with the use of oil. I notice that the noble Lord mentioned that there will be a campaign. May I beg the noble Lord to put it to his right honourable friend that we do not want any more paper; we do not want any more leaflets to be showered upon householders telling them how to save energy. In my experience, those people who have to pay for energy are quite capable of knowing how to save it. This campaign should not be directed at householders. Instead, I beg the Government not to add more paper to the volume which we are burdened with already, but to look at our own affairs and start with the conservation of the numerous envelopes, agendas, and leaflets which are sent to us every day. This would be an excellent start towards conserving energy.
§ Lord BALOGHMy Lords, may I thank the noble Baroness for her, as usual, very earthy remarks, and may I say that we shall obviously take that point into account.
§ Lord RAGLANMy Lords, while welcoming these many measures which the Government are taking to save energy, may I ask my noble friend why it is that only in the case of motor spirit is a price increase being used as a means of reducing consumption, especially when one considers that our total consumption of motor fuel is only 21 per cent. of all our oil imports? May I also ask my noble friend whether the Government will consider some way of reducing the extravagant use of street and road lighting? Some of us think that motorways are too brightly lit—and well on into the night, also, when no use can possibly be served by such illumination.
§ Lord BALOGHMy Lords, so far as the price effect is concerned, we do not exclude in any way the possibility of having other means. But at the present moment it seems to us that in the case of this matter, because of its complexity and the enormous difficulties of meeting indi- 434 vidual demands, this is the right way of proceeding. However, I do not rule out any change. So far as road lighting is concerned, I think the noble Lord ought to take into account the fact that here there are security aspects and also aspects concerning road accidents. Although sometimes I feel that one might do more I am then confronted by expert advice and usually have to retreat.
§ Lord BESWICKMy Lords, we have already spent 35 minutes upon this Statement. It is an important matter, but there are two other Statements and there is other business. I wonder, therefore, whether at this point we might proceed to the next Statement.