ENERGY CONSERVATION

HL Deb 12 February 1975 vol 356 cc1336-415

3.3 p.m.

Lord STRATHCONA and MOUNT ROYAL rose to call attention to the pressing need for more effective measures for the conservation of energy and the protection of the balance of payments ; and to move for Papers. The noble Lord said: My Lords, in calling attention to the pressing need for more effective measures for the conservation of energy and the protection of the balance of pay-ments, I feel that I cannot do better than remind the House of the simple economic philosophy of that well-known character, Mr. Micawber, who said this: Annual income twenty pounds, annual expenditure nineteen, nineteen six, result happi-ness. Annual income twenty pounds, annual expenditure twenty pounds, ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene ; in short, you are for-ever floored.

The Government may recognise them-selves in what Charles Dickens went on to say: To make his example more impressive, Mr. Micawber drank a glass of port with an air of great enjoyment and satisfaction and whistled the College Hornpipe.

My Lords, the trouble about the bal-ance of payments is that we have been so bludgeoned by the sheer enormity of the deficits that we have built up that we are numb. We used to worry about a deficit in the region of £500 million a year which was offset by our invisible earnings. Now, largely as a result of a fivefold increase in the price of oil, these deficits are running in the region of £4,000 million a year. Oil imports are costing this country £10 million a day and, even making the rather bold assump-tion that I shall not trespass too long upon the patience of your Lordships this afternoon, the chances are that we shall be worse off by a quarter of a million pounds by the time I have finished speaking.

Lord SHINWELL

My Lords, could not we save even more if the noble Lord stopped speaking now?

Lord STRATHCONA and MOUNT ROYAL

My Lords, I only hope I have the sharpness of wit that the noble Lord has when I reach his exalted age.

My Lords, our purpose this afternoon is to ask the Government what they are doing about a frightening situation to urge them to act to tackle certain aspects of it with greater vigour and a greater sense of urgency. I should first like to try to debunk the idea of salvation lying in a lowering of the oil price of the OPEC cartel. Most informed opinion now seems to agree that there are very few reasons for believing that this will happen, even after the meteoric rise which happened over a period of only a few months when the price went up from two dollars a barrel to around 10 dollars a barrel, and even though that oil is prob-ably costing something like 20 cents a barrel in the Middle East. There is a school of thought that says that the price will come back to seven or eight dollars. I hope to show that this does not affect the argument but, in any case, it goes further than that.

There is now talk, particularly in the United States and the International Energy Agency, as well as in other coun-tries, about finding ways to establish a guaranteed floor price of about eight dollars a barrel. The purpose is to encourage, by the underpinning of the huge investments needed, the develop-ment of indigenous and more secure alternative sources of supply by protect-ing those investments against what is now called in popular jargon, the " down-side risk ". The other side of the coin is the danger that we could be getting into here. It is one of which I have to be well aware, and it is that we could be committing ourselves to a high cost energy policy in this country so that if the price came down the rest of the world would have an advantage over us. In this connection, it will be interest-ing to hear from the Government about their attitude to the International Energy Agency's recent deliberations in Paris, where I believe there were discussions about conservation measures and prices which are now matters of international concern, most particularly to the oil-importing countries.

However, my Lords, the real point that I want to make is this. We must assume that for the foreseeable future we shall be living with energy costing vastly more than the kind of figures we have been accustomed to for the last 50 years. The main argument is not altered whether the increase is by a factor of three, four or five. In an article in the current issue of the authoritative American magazine Foreign Affairs, five international authors discussed the implications of the rise in the oil price and suggested that, even if the oil price dropped as low as six dollars—which, as I have said, is deemed to be unlikely— the transfer burden among the oil import-ing countries would still be 400 billion dollars a year, as against the present level of 600 billion dollars a year with the price at 10 dollars.

The MINISTER of STATE for ENERGY (Lord Balogh)

My Lords, may I ask the noble Lord about that figure of 600 billion dollars? Is that a per annum figure? What is the period?

Lord STRATHCONA and MOUNT ROYAL

My Lords, I have not brought the magazine with me, but I have written down " 600 billions a year ". However, I will check it and will let the noble Lord know if I have got it wrong. I was going on to say that I would leave it to the bankers and the economists, including the noble Lord, who understand matters such as the re-cycling of petro-dollars so much better than I do—at least, I hope they do. But, at the present time, the light that we see at the end of the tunnel, and the something which we hope will turn up, is of course our own oil from the Continental Shelf around the islands. It had better turn up, my Lords, because we are daily borrowing vast sums against the prospect of getting this oil. Let us keep a sense of proportion about this, too.

We are now being told that, even in the biggest fields, North Sea oil is to cost four dollars a barrel and it may be five dollars a barrel for the less prolific fields. The investment required to win this oil is now coming to something of the order of £3.000 per barrel per day. So to achieve our target of 2 million barrels a day which we require to be self-sufficient —that is, 100 million tons a year—will require an investment of the order of £6,000 million by 1980. I would assume that the interest rates on those borrowings must come to something of the order of £1,000 million a year.

It is an unfortunate fact, my Lords, that there is increasing evidence every day that the Government are only paying lip service to their laudable declared aim to extract North Sea oil as fast as possible. Their preoccupation with what I can call only political posturing over participa-tion, and their somewhat inflexible and unrealistic attitudes to the tax régime— motivated I can assume only by a fear that somebody may make a large profit in return for all the risks and the trouble taken—has led company after company to admit that they are holding back while the present uncertainties prevail. We have had other opportunities, and we shall be having further opportunities, to discuss this point.

I wanted to bring the point up just in case the Government's view may have been coloured by the seductive siren song of the ebullient and, I think, grossly over-optimistic Professor Odell. He is con-vinced that there is three times as much oil in the North Sea, as are all the geologists of all the oil companies who have made all the explorations. He claims there is enough oil for us to be exporters well into the 21st century and that we shall make Europe independent in its oil imports. The great danger of this kind of thinking is that it follows that there is a suggestion that no great urgency exists for energy conservation measures or investment to develop nuclear power or the alternative sources of energy. Yet we find that the EEC, in its recent document Rational Use of Energy, gives first priority to energy conservation with a target of 15 per cent, by 1985, rising to 25 per cent, by the turn of the century.

We now come to the question of the time-scale. I was very glad to hear last week in the discussion of the Offshore Petroleum Development (Scotland) Bill the noble Lord reasserting that the target is still to be independent of energy imports by 1980, despite the setbacks and delays to which I claim the Government have contributed. But this underlines the point that we should now be concentrating on those measures which will yield substantial results within five years; that must surely be the priority. Thereafter the urgency is somewhat less and the considerations are somewhat different. Making the optimistic assumption that we shall succeed in surviving what are now known as the macro-economic problems of the next five years—of absorbing the transfer of money to the oil-producing States—we may, by that time, hope that the drain on our balance of payments will have begun to ease.

However, at the same time let us not lose sight of the longer-term case. The sprint of urgent energy-saving measures that we need over the next five years will serve to put us into good training for the marathon which confronts us in the years ahead as our finite resources begin to become exhausted over a period of, perhaps, 40 years ahead. So for once we find the short-term measures are consistent with our longer-term needs at the same time, and furthermore we shall be on the side of what I might call the environmental angels argument, for nearly all forms of consumption have adverse environmental effects in terms both of pollution and of visual impact. The less energy we waste the less we shall have to contend with problems of pollution by oil spills, dust, smoke, heat, smell, noise and radio-active waste, and the more manageable will be the impact of things like opencast mines, slag heaps, power lines, mammoth power stations and refineries.

At this point it might be a good idea if I could clear up a certain confusion which surrounds the word "conservation ". It has been rather an over-used word recently. For today's purposes I take my definition from the OECD book-let Energy Prospects to 1985 in which it is stated: Energy conservation may be defined as the reduction in the amount of energy consumed without significant reduction in gross domestic product, general standard of living or level of personal comfort. The booklet goes on to draw a distinction between this and what it calls … demand restraint by Government regulation, the latter being applicable mainly in emergency situations. But, unfortunately, the word "conservation" is also used in a technical sense by the oil companies when they refer to the control of the rates of depletion for oilfield management purposes. It is also used of course by the environmentalists when they discuss measures to protect the environment, and the admirable all-Party Conservation Committee chaired by my noble friend Lord Craigton is a good example of the use of the word in this sense. But in the sense that we are dis-cussing conservation today I find it infinitely regrettable that the Government have played politics in this matter. Let us just look at the recent history.

A year ago when the Election was called we were reeling under the com-bined onslaught from the OPEC cartel from without and the miners' strike from within. We were experiencing speed limits, the three day week and the cuts in public services. In passing, it is interesting to note how little our production was adversely affected by the three day week and some of the remarkable economies which were made—not with-out considerable pain in a number of areas—most notably in the Armed Forces, which I experienced myself. What happened in February? The Labour Government are returned. Everything is all right—relax. The Conservative-generated crisis is over. Forget the three day week. Give the miners anything they ask. Bury the tension in the trade union movement under a smoke-screen of a bromide called the Social Compact which mysteriously, by the honeyed words of Messrs. Foot and Wilson, becomes a totally phoney animal known as the Social Contract, but it is of course no such thing. In these intervening months, visitors to this country from places like America—which are infinitely less dependent on imported energy than we are—were amazed to discover that the energy crisis appeared to have gone away. Twelve months later we find that Minis-ters are belatedly bleating that perhaps the energy crisis has not gone away after all.

My Lords, it is small wonder that at times the politicians' stock stands exceedingly low. However, we look on the bright side—perhaps the Government are beginning to see the light. The question is: are they doing enough and are they doing it in the right direction? One of the ways of easing demands upon our fossil fuel resources is by exploiting alternative sources of energy, the sun, the wind, the tide and the waves. Perhaps the noble Lord will be able to tell us what the Government's attitude is to these possibilities, always bearing in mind our particular interest in prospects which will yield an early return but also remembering that the five-fold increase in energy costs has had a very important effect on the economics of some of these non-conventional power sources. The present fashion is to dismiss all these suggestions of substitution or alternative energy sources as too long term to be immediately relevant, yet there are on the market at the present time solar panels which can make a useful contribution. Recently I was given some figures of what is called the heat pump. Perhaps I should explain that the heat pump uses the principle of the radiator at the back of a refrigerator to extract the heat out of the ground and use it as a high-grade heat inside the building, and, indeed, it can be reversed in the summer to do the opposite thing. This is showing a 15 per cent, return and is using one-third the amount of electricity which would otherwise be used in an electrically-heated house. And let us bear in mind that electricity generation is itself only some 30 per cent, efficient.

So the question is: are we doing enough to co-ordinate and direct efforts of this kind? Should we be providing more money through the medium of agencies like the NRDC to turn some of these projects into immediately applicable technology? The scope for energy saving is enormous. Over half of all the energy used in European countries is wasted, and one of the worst offenders is electricity generation and distribution, which runs at around 30 per cent, to 25 per cent. efficiency. Great efforts are being made to improve this efficiency, usually by scaling up the size of the power station from megawatt size to what we now have to call gigawatt size, with the consequent problems that arise from that. So the single largest potential area for energy saving is in this two-thirds of the heat which is wasted up unsightly cooling towers all over the country. Smaller stations might be able to use the rejected heat for either industrial processes or district heating. Also, have any efforts been made to find industrialists who would be attracted to the sites of these big stations by large quantities of free or very cheap heat which could be made available to them?

If we are looking for imaginative long-term projects, I understand that the Severn Barrage has recently been re-examined —possibly the noble Lord could tell us whether there is a Report about to become available, as I believe there is. This may well show that the investment requited for power from this source would not be much more costly in capital than the equivalent in conventional power sources. And, of course, to somebody who sat on a recent Committee on Leisure and Sport in this country, the prospect of creating an inland lake bigger than the whole of the Solent and within easy reach of the industrial Midlands is enormously attractive— although I accept that I am now straying away from my own self-imposed limit of talking about the short-term projects.

In face of all these opportunities, is one not tempted to say that the Government have so far been pursuing trivial and half-hearted measures?—a few tax concessions in terms of rapid write-off of investment here, a £3 million fund for fuel conserva-tion measures, an advertising campaign that strikes me as being very déjà-vue, and some unenforceable speed limits. In this latter connection, the EEC Report to which I referred is interesting. They pointed out that energy waste in transport is 83 per cent., and they made a number of observations—I pick out three. Diesel engines are 30 per cent, more efficient than petrol engines and cause less pollution ; radial ply tyres reduce consumption by 1.5 per cent, and incidentally last longer and are safer. Some German trains apparently use more energy for heating the train than they do for traction. But the interesting point is that the Report never once mentions speed limits. The Government must be aware that 40 per cent, of our energy is used by industry. I would agree that if you are going to clobber anybody it is probably better to clobber the domestic consumer rather than the industrial consumer, but all the studies agree that energy savings of the order of 10 per cent, or 15 per cent. are available without an adverse effect on efficiency or comfort, and are indeed economically justifiable. These methods could mean a saving of between £1 million and £2 million a day.

Because the change has come upon us so fast, we have got to accelerate our rate of adapting to it, and a policy of the "stick and the carrot" is going to be needed. Disagreeable as it may be, there is no doubt that the most effective energy-saving mechanism will be the price mechanism. In farming circles there is an old saying, "High rents are good manure". This, I think, is the philosophy which we shall have to apply to energy saving. Here let us give credit to the Government. They have shown courage in this respect, and recently we have found Mr. "8.6 per cent. " Healey talking of using the social security system to alleviate hardship caused by rising prices, in preference to the absurd blunt-edged weapon of trying to hold down prices by subsidy. If we are to avoid the anomalies which market distortions can impose upon us we shall have to face a gradual adaptation to realistic relative prices for things like off-peak electricity. Natural gas is an example. I seem to remember that the noble Lord, Lord Balogh, is something of an expert on the subject of the price of natural gas, but the fact is that by pricing natural gas unduly low at the present time we have a shortage of supply, while at the same time all exploration for natural gas in the southern North Sea has come to a standstill.

We shall have to bring home to domes-tic and industrial consumers alike that investment in energy saving, and most particularly in insulation and draught proofing, is worth doing. The expertise exists, the materials can be produced. Many of these measures pay for them-selves in one year, and there are a great many others which take three years to pay off, but these are attractive rates of return. In the domestic sphere alone we are talking about expenditure more like £300 million than £3 million. The Government, I think, have at last realised that the advance corporation tax proposal, which was so unfortunately introduced in the Budget last year, has seriously exacerbated the liquidity problem, so could we not make available short-term loans repayable out of the fuel economies achieved?

Pursuing the "stick and carrot " theme, I ask, why not initiate a programme of energy audits on the lines of the fire precautions for hotels? Business over a certain size should produce an energy audit with a proposed programme of implementation. Short-term loans could then be made available to meet the cost of the audit and the economy measures if they were started within, say, three years. Thereafter we might insist that an audit should be made at the company's expense, and measures which could be demon-strated to be economically viable would have to be undertaken at the expense of the company. This leads me to wonder whether there might be a case for resuscitating the old National Fuel Efficiency Service which was disbanded not many years ago. Above all, it is clear that we need to do all we can to stimulate investment in new plant, new building and improvements in old equipment and better control devices. All these things will yield a good return. In passing, my Lords, should we not look at the disincentives of the rating system? It would be much more encouraging to any-body who was going to spend money on improved efficiency if he were told that he would not be up-rated within a period of, say, five years.

Is this the kind of question which will be covered in the joint survey which, I understand, is being undertaken by the Department of Energy and the CBI? I shall be interested to know whether the noble Lord can tell us when this joint survey is going to report. Going on from there, I should like to ask another question regarding the Advisory Council on Energy Saving under Professor Hawthorne. Could the Miinster tell us what exactly it is intended to do and whether the Council will keep in touch with industry—because, if so, it seems odd that there is not on the council a representative of the industrial consumer or of somebody like the CBI. The real point in this whole field is that exhortation is not enough and cash is short. The Minister will have to play the role of the doctor who forces the reluctant patient to take the medicine for his own good and to cure the epidemic which is affecting the whole of our nation. We have overspent our quarter of a million ; but I have nearly done.

My Lords, I have tried once again this afternoon to call attention to the pre-carious position created by an adverse balance of payments as a result of the meteoric rise in the price of oil, from the effects of which it would be unrealistic to hope for an early respite. I believe that the Government have faltered on the supply side. They have frightened off the oil companies in attempting to placate their own Left Wing and thereby are delaying the more rapid exploitation of the North Sea. So far, they have failed to augment our coal supplies and have shown little interest in promoting immediate schemes for augmenting sup-plies from non-fossil or non-conventional sources. I believe that the energies devoted by the Government to those disturbing influences like the Industry Act, the participation in the North Sea and the creeping nationalisation which lurks behind the facade of the Off-Shore Petroleum Bill, which we have been discussing recently, would have been better directed to a convincing and systematic approach to energy saving on a comprehensive scale, including, I hope, some positive measures as well as purely instructive ones.

We might, in a special sense, say that, like Nero, the Government are fiddling while Britain burns. In saying this, I may be unfair to the Government; perhaps they are doing more than we realise. Certainly there are signs of dawning enlightenment. There is said to be much job in Heaven over the sinner that repenteth. A the risk of mixing my metaphors, I can only say that this particular prodigal son bears an unhappy resemblance to a chicken coming home to roost.

What I believe is beyond dispute is that the Government have so far failed utterly to communicate to the anxious people of this country any sense of urgency or seriousness of purpose about energy saving ; and I think that it is about time that they got on with it. I beg to move for Papers.

3.35 p.m.

Lord BALOGH

My Lords, despite the harsh words, albeit delivered in his usual gentle and winning way, about all our policies—and I thought that there was in this haché, rechauffé hotchpotch all the ingredients of all our policies at all times—I am personally very grateful to the noble Lord, Lord Strathcona and Mount Royal, for having raised this all-important global and, I would almost say, planetary problem. I must in passing, however, slightly protest against the noble Lord and his friends accusing us of having caused exchange crises, because much before the increase in the oil price the balance of payments, which was highly positive under us, turned very sour under the late Leader of the Conservative Party who has now been replaced, to the admiration of all of us—and, certainly, of us males—by a beautiful woman.

Neither do I think that noble Lords opposite ought to complain about the Social Contract; seeing that their Party also had a social contract, only it misfired because of ill-will on the part of the then Government. I am not going into these matters. I shall take the word "conservation" as defined not in the very large encyclopaedia, but in the smaller Oxford Dictionary, as " the saving of energy ". In dealing with our measures I think I shall be able to show that on the whole the noble Lord was not entirely justified—obviously, we are all dissatisfied ; life is imperfect in the human condition and we are dissatisfied with its imperfection—and that we have done more than one would have gathered from the noble Lord's speech.

My Lords, the massive way of using energy is the most important characteristic, indeed the basis, of modern civilisation. Even ten score years ago life was much as it was a hundred score years ago. The invention of steam power, electricity and the internal combustion engine—not to say rocket burning and nuclear energy—all in the last 200 years is that which differentiates today so fundamentally from even the recent past and from Babylon or Memphis. This explosive increase in the need for energy, especially in the need for oil, is the sustenance and moulder of our often distasteful way of life. In a light-hearted way, the great industrial nations took for granted the supply of oil in ever-increasing quantities. Most, if not all, the territories whence we derived our supplies of oil, were direct or indirect dependencies of Western Europe or North America, who thus secured the main advantages. The rise, in the shape of the Soviet Union, of a competing system had for some time no impact on this problem. Until the autumn of 1973 we continued to enjoy the luxury of cheap energy from Africa and the Middle East. The pundits, as usual, predicted an inexorable trend whereby coal would be replaced by oil because it was more flexible as the main source of energy. Accordingly, the mining industry was left to languish and shrink in Europe even more than in this country.

I am not a great student of the Hudson Institute, which sells its shoddy, pseudo-intellectual products in a snide and credulous market. I am sure that if they had written (and I do not know whether or not they have) a treatise on the future of oil in 1973 they would, no doubt, have extrapolated not merely the decrease of coal but the parabolic increase in the production and consumption of oil. It was left to the other epicentre of futuristic nonsense, the Club of Rome, and the sinister computer of the Massachusetts Institute of Technology to point to the doom and death of the planet if the irreplaceable resources of energy and raw materials were exhausted by mad prodigality. This doomsday cry was taken up by one of the most fashionable members of the high international establishment—I am sure that the noble Lord, Lord Robbins, knows who I mean—and secured wide, if undue, notice. We, my Lords, are not in this gloom business today—

Lord DAVIES of LEEK

Thank God for that!

Lord BALOGH

—though, no doubt, one of them one day will try to frighten the rest of us. It is, after all, a very nice theme, philosophic in depth and all-embracing in its consequences. What we are facing is not a shortage of energy, but the quadrupling of the price of the most indispensable element of our civilisation. What we are facing is the need to adjust to the sudden sundering of the base of our mode of life. Dooms-day would approach slowly with dawning realisation that would stimulate research, say, in fusion plasma technology—this was a point which, rather interestingly, the noble Lord, Lord Strathcona and Mount Royal, did not mention. It is important because it should lead to the discovery of new materials for energy to be used in combination with others. Scarcity due to exhaustion of reserves would not come silent as a thief in the night, but would be predictable. Therefore one can take measures.

Though morally an adjustment from a wasteful to a saving society might be very satisfying, it is difficult in the extreme in practice to persuade oneself and others not to switch on the light or the heat in the home, not to use the washing machine or other labour-saving machines or not to get into the car to lighten the burdens of shopping. The Hoover is useless without electricity and without a Hoover our wives would be in a bad way indeed. Electricity at the margin is equivalent to oil. It is not easy to change the basis not merely of consumption but also of production. So I would beseech noble Lords who are to follow me—they are not so numerous as I thought they would be—not to underestimate the difficulties. We have to change habits which have grown up since the last century.

It is, of course, so easy to decry efforts or criticise policy without offering practical alternatives. Indeed, when my right honourable friend the Secretary of State for Energy announced his interim package of 9th December, he met with instant and, if I may say so, not very thoughtful critic-ism to the effect that it was inadequate. But when asked to put forward practical suggestions for consideration, most critics either fell silent or returned to the subject of the illumination of public buildings or reducing street lighting. Those ideas were considered for the 9th December package, but were rejected at the time because savings would not be great and there were disadvantages—in terms of crime and accidents, for instance, with regard to street lighting—in putting them into practice. But we have not ruled out these and other proposals for later action. We have not ruled out anything. I can assure the noble Lord that we shall study his speech with the same care that he put into it when he wrote it, and we shall ensure that the various suggestions are considered. However, I must confess that, on the first hearing—by a visual type and not an oral type—they did not really impress me as immediately practicable, but perhaps the noble Lord, Lord Avebury, will deal with this part of the question.

We have not ruled out any of these or other proposals for later action, but I must repeat that there are no simple solutions. If energy saving is to be effective its effectiveness will be achieved by helf-help on the part of individuals and firms and not by Government first. This will take much time and effort if real hardship is not to be endured by not inconsiderable groups of people. There is much that can be saved from what was a profligate use of energy. We must stop various forms of power heating and, also, light in competing for new custom. But when all is said and done it will be an extremely difficult task.

Our publicity campaign, of which I hope noble Lords will have seen something—indeed, I hear that a certain illumination from the last century was brought into the mind's eye of the noble Lord, Lord Strathcona and Mount Royal—will bring home to all sections of the community that we need to save energy, the true nature of the problem and the need to change attitudes and behaviour, which is very difficult. Our programme must be steady, capable of being sustained for a period of years and must take account of the energy situation as it develops. We have not been altogether unsuccessful, given the complexity of the problem. I shall come to that in a moment, but I stress that what has been done is by no means the end of the story. If real progress is to be made in the programme, it is essential to understand the nature of the problem and analyse its forms. This, I think the noble Lord has done. He pointed to the price situation and to the problem of the balance of payments which obviously is extremely important; but here again I would not on the whole frighten people. This country is in a very fortunate position in this whole field. It has the only really modem coal industry in Europe.

Lord DAVIES of LEEK

We should have heard a bit more about that from noble Lords opposite.

Lord BALOGH

As to the North Sea, I would not go so far as Professor Odell and I would not accept imaginative American public relations officers' stories given to credulous journadists about what is happening there. If I were an oil magnate—alas! I am not an oil magnate—I would behave exactly as they do. Obviously, they have to frighten us. Obviously, like a good buyer or a good seller of a suit, one has to pretend that what he is buying is worth nothing and the other has to pretend that the money paid is of no value.

Lord CAMPBELL of CROY

My Lords, may I interrupt the noble Lord for one moment? Has he ever met a credulous journalist?

Lord BALOGH

Numerous ones, my Lords, especially those who cannot study the problem at first-hand but have to accept Press releases. The American companies are extraordinarily adept at giving out Press releases when it is too late for homework to be done, and there-fore a statement has to be accepted because it is news.

It is essential to understand that it is not within the power of Central Government to dictate necessary changes in out- look and habit. Its role is to do all it can to ensure that necessary adaptations are made. The noble Lord pointed to the "slap-happy" way in which we came into Office and the very strong position that we inherited, and mentioned the attitude which he and his friends have towards the trade unions. I am not saying that all we have done is faultless, but at least we have tried. We recognised the need for action, and since the end of the crisis last winter we have taken certain positive steps. In April 1974, an energy technology support unit was established at Harlow to assist the Department of Energy in assessing scientific and techno-logical options in the energy field, including conservation. We are not back-ward in studying solar energy and other things. Unfortunately, enormous investment and very slow yield is the answer. The noble Lord wanted to heat houses with the English sun. Coming from Hungary, I am sceptical about the practicability of that. The unit also monitors the progress of relevant research and development abroad.

In June 1974, the Secretary of State outlined his preliminary programme of action, and in July 1974 the Central Policy Review Staff Report on Energy Conservation was published to promote discussion. During the next few months the Advisory Council on Energy Conservation was set up under the chairman-ship of Professor Sir William Hawthorne to give expert, independent advice to the Secretary of State. The Council has been meeting monthly and has set up a lot of investigating teams and working parties to study different aspects and areas. Then the Department of the Environment published a very useful leaflet. In November 1974, the Chancellor announced in his Budget speech several energy conservation measures, the most important of which was the decision that subsidies to nationalised fuel industries should be phased out as fast as possible.

One of the most important means of achieving energy conservation is to price energy at its true cost. Last year the price for domestic coal was increased on average by 23 per cent. to the consumer and the price of industrial coal rose even more—on average by 79 per cent. Electricity for domestic consumers went up on average by about 30 per cent. The price of gas went up by nearly 30 per cent. on average for non-domestic tariffs. I must tell the noble Lord opposite that gas development is going on very steadily indeed. In fact, of course, the enormous demand arose because we secured cheap gas from the companies, and to complain that we have secured cheap gas for domestic and certain valuable industrial purposes is really taking criticism a bit too far.

Then on 9th December the Secretary of State announced a twelve point pack-age of measures to save energy, making it clear that the Government intend to extend and reinforce those measures in the future. The major elements of that package, the details of which I gave to your Lordships at the time, were a loan scheme ; oil price increases to be weighted on petrol to discourage imports of motor spirit—which, of course, is of higher value than crude oil. Other measures included a programme to cut fuel bills for Government buildings ; a reduction in maximum speed limits ; a compulsory limit on heating levels in buildings ; the approximate doubling of the standard of thermal insulation required for new dwellings ; a restriction on the use of electricity for external display and advertising ; a request to companies to make a commitment to energy saving by including statements in their annual reports, which I hope will be stimulating ; and, finally, the launching of a major publicity campaign. There are two main complementary objectives underlying these measures and any that we may take in the future. They are to get savings which could have a significant impact on the balance of payments in the short term, without disproportionate hardship or damage to the economy; and to change the general attitude.

Future measures under consideration are many. The measures taken so far are by no means the end of the story. We are still considering many proposals, including some suggested by the noble Lord. However, the form those future measures might take obviously depends very much on the response to the measures, both voluntary and statutory, which we have already taken, and the degree and endurance of the effort forthcoming as a result of our publicity campaign. The Government are convinced that before any further decision on conservation is made, the possible effects must be weighed very carefully to ensure over- all saving in energy economically achieved. Then, too, the importance of other social and economic effects must obviously be taken into account. It is all too easy to propose the introduction of laws and regulations, such as the banning of the use of cars in city centres or providing for the introduction of petrol rationing.

Perhaps at this point I should say something about two proposals for energy saving which have been discussed in the newspapers lately. They are two-tier petrol pricing, and electricity and gas tariffs. Two-tier petrol pricing is one of those actions—such as reducing street lighting or banning floodlighting which I mentioned earlier—which the Government have been considering, No decisions have yet been taken. It is an extremely complex problem, because it depends on the margin between the two and the amount of petrol which is available at the basic price, which will really decide that the action is not "back-firing" or tending to be counter-productive. It is a very complicated problem. Then we have all those who think they are entitled to extra on the basic ration. I beseech your Lordships to believe me when I say that we are looking very carefully at these problems, but we find it extremely difficult to make any pronouncement as yet. It has been suggested that gas and electricity tariffs should be "inverted", so that a higher average price should be charged as consumption increases. The idea is sometimes advanced on energy conservation grounds, and sometimes on the ground that it is socially desirable to help the small consumer. It is necessary to keep in mind that what is involved in these complex two-part tariff structures is a situation which has been produced by what has happened earlier. A number of your Lordships now present will have noticed the persecution that a formidable Baroness has meted out to me on night heaters. No one who has gone through that experience would very easily under-take measures which might bring about a repetition of that ordeal.

As I said, it is necessary to keep in mind what is involved in these complex two-part tariff structures and, in particular, to avoid the misconception that at present they work to help large consumers at the expense of small consumers. They do not, since the two parts of the tariff pay for different things. The standing charge or its equivalent in the higher initial rates contributes to costs which do not vary with consumption. Once this is paid the rates within the particular tariff are the same for all units consumed. The prime need for energy conservation is to raise the general price level for these fuels. Beyond this, any radical inversion of the present structures would of course penalise the heavy, poorer consumers. Under the new domestic gas tariffs introduced on the 1st January there were proportionately greater increases for larger consumers. The same thing happens in electricity.

In all this we must remember that legal sanctions are not the only, or indeed the best, form of enforcement in a long-term programme of this nature. One should not, and cannot, force a person to change habits acquired over years. As our publicity campaign makes clear, " Energy sense is common sense ". This is the message to put across. Saving energy is not something to be done simply to comply with the law ; it should be accepted by all as sound economic sense and sound moral sense. Even where legislation has been introduced, as in the case of the new heating and lighting restrictions, our hope is to secure compliance and savings by voluntary, willing observance of the new standards.

The effects of the measures announced on the 9th December are difficult to quantify for several reasons. The effects of certain measures cannot be accurately estimated since practices prevalent prior to the 9th December were not properly known. We do not know, for example, the temperatures to which buildings were heated just before the limits on heating were announced. It is of course said that if the Americans would put the thermostat in the winter at 70 and in the summer at 78 degrees, instead of doing the reverse, as everybody who has visited American universities in the summer can testify, they could cure their problem. But with us it is more difficult The inborn Puritanism of the English has always made for very bad heating in the houses.

The effect of energy price increases, in particular the increases in electricity prices, will also have tended to promote conservation. Energy consumption is also affected by the level of economic activity, and this will be reflected in the figures for consumption. It is therefore confusing to quote published statistics when evaluating the degree of energy savings achieved. It is also worth remembering that the 9th December measures should not be viewed in isolation and that energy savings are likely to result from other steps taken—I have given the Budget as an example.

I am very pleased to be able to tell your Lordships that the evidence is that people are aware of the situation and are exercising restraint. Last year, for example, the Department's estimate of the country's energy use was reduced by 2 per cent. I do not, however, wish to set individual targets, which might in some cases be inequitable. Some people already use energy efficiently and might find targets impossible to meet ; others with considerable scope for improvement might be persuaded to stop short before full potential had been reached. Nevertheless, the Government fully appreciate the enormous problems involved, particularly with industry facing severe cash flow difficulties. The energy-saving loan scheme is a measure we considered essential to help industry in this respect. The response so far has been encouraging, and some nine hundred inquiries have been received by the Department. Urgent discussions with local authority associations about energy saving in schools, local authority housing and other buildings are taking place. The Department of Health and Social Security are carrying out similar activities concerning local hospitals, social service buildings, et cetera. A number of companies have informed the Department of their intention to appoint conservation officers, and in some cases to set up fuel advising committees. This is encouraging. Finally, our publicity campaign will have some effect, we hope.

May I now refer very briefly, because I do not think they should be left unanswered, to some points in the speech of the noble Lord, Lord Strathcona and Mount Royal, which in my opinion are not altogether germane to the discussion. First of all, may I tell him that his figures are subject to revision. I shall revise them and communicate the revision to him in writing. If he wants them pub-lished, obviously I have no complaint to make. The other very common misconception which he repeated and which I must answer (despite my limit of 30 minutes ; I shall be within his limit, so it is all right) is that the Americans, especially American companies, are looking for better pastures. I should like to see those better pastures. What is interesting about the American moods is that they are rather harsher on their friends, as we are, than on their enemies, as are some of the Middle Eastern countries. They take the things others do to them apparently with greater pacific resignation and they are rather concerned that we should do something very different, something much fairer, something which is absolutely essential if our balance of payments is to be safeguarded. Let me tell the noble Lord that if we did not act and if we did not participate we should not know how much it would affect the balance of payments, only it would not be in visible trade but in invisible trade.

Secondly, the kind of announcements which have been made are misleading in the sense that not all activity is decreasing, but certain increases have been postponed. Never were there so many explorations and exploitation rigs and platforms in the North Sea as at the present moment. No agreement has been reached about Dr. Kissinger's imaginative plan to underwrite prices in consumer countries, but negotiations are afoot and therefore I do not wish to say any more about it. In due course, I have no doubt, given the importance of the matter for us, it will be debated. My Lords, the balance-of-payments situation demands and common sense dictates an energy conservation programme. I think the lines which we have followed are the right ones. Much has been done, but much more will follow.

4.8 p.m.

Lord AVEBURY

My Lords, I am not at all sure that your Lordships' House is the best forum in which to debate energy conservation, interesting though the two speeches to which we have just listened may have been, because we tend to get a mixture of allegations of political posturing, such as we had from the noble Lord who initiated the debate, and partially-informed attempts to deal with the laws of thermodynamics, which again, if I may say so with the greatest respect to the noble Lord, Lord Strathcona and Mount Royal, are not altogether successful. I am not sure that a Chamber composed as is your Lordships' House is competent to deal with these matters, especially in comparison with the enormous volume of expertise which is available to the Government and indeed to anyone who wishes to look at the matter—from the NEDO Report on Energy Conservation, for instance, and the enormous amount of discussion which takes place in all the technical journals and which is freely available to any member of the public. If we want to go into technical details we have not the time to do it in a 20 or 30 minute speech. Although I feel greatly tempted to follow the noble Lord, Lord Strathcona, in some of the suggestions he made, I will except in one or two instances resist that temptation.

However, I must take up first of all, as the noble Lord, Lord Balogh, has, Lord Strathcona's allegation that political interference by the Government is having a disastrous effect on the programme of North Sea exploration. I do so with a sense of déjà vu, because I remember that at the time of the debates on the Gas (Borrowing Powers) Bill of 1967, the new Leader of the Conservative Party, Mrs. Margaret Thatcher, who was then leading from the Opposition Front Bench as spokesman on fuel and power, several times made the allegation that because the Government were being so harsh in the terms that they were offering to Amoco and all the other companies who were operating in the southern sector of the North Sea, they would drive all the exploration rigs across to the other side, where they would be fully engaged in drilling in the Dutch sector. It so happened that at that particular time three rigs were moved over to Holland from the British sector of the North Sea as part of the normal programme which oil companies undertake. There was nothing politically significant in it. However, Mrs. Margaret Thatcher said at that time that it was quite impossible for us ever to meet the target of 3,500 million cubic feet a day of gas that was laid down in the 1967 White Paper.

I think that, if he ever has the time to do so, the noble Lord, Lord Strathcona, would find it instructive to look back at those debates and to be a little more cautious about the allegations which he makes of political interference having an effect on exploration and development programmes. But if what he says is true, then I personally welcome it. If there were a slow-down in the rate of activity in the North Sea and, indeed, in the other parts of our Continental Shelf which are very seldom mentioned in these discussions, it would tend to spin out the period during which these natural assets would be exploited. Then we should not get the situation mentioned by Professor Odell who said that he did not care what happened in the 21st century to our descendants. That is the opposite view to the one which I take, because I think that these resources are so precious to the country—as, indeed, are the resources of coal—that we should consider very carefully over a much longer period than the next five or ten years or, indeed, the next generation, how best they can be exploited. In another context the noble Lord, Lord Shepherd, said at the Bucharest Conference on Population Matters that it is not enough to consider merely the problems of the next generation. That is equally true in respect of energy and the conservation of energy as it is in respect of population. Of course, the two are connected, in the sense that the more people you have, the more energy they will use. The noble Lord, Lord Strathcona—

Lord DAVIES of LEEK

My Lords, I am grateful to the noble Lord for giving way. I have listened to this debate and I am wondering whether the noble Lord is going to say something about a source of energy over which we have control, whatever the moguls of the oil companies may do, namely, coal. I am wondering whether we are to go along with investment in coal, together with our mining engineers and others. I do not agree that this House has insufficient knowledge to talk in a common-sense way about developments in the mining industry over which we do have control.

Lord AVEBURY

My Lords, I had noticed that the noble Lord had criticised the speeches which had been made so far as containing inadequate reference to the problems of the coal industry. I took it that this was because we had already reached all-Party agreement that the programme as set out following the discussions between the National Coal Board and the National Union of Mineworkers was considered to be realistic and sensible. It is not that your Lordships under-estimate in any way the importance of the contribution which coal can make to the solution of the problems which we are discussing, but simply that it is one aspect of it where there is no need for argument across the Floor of the House. I hope I am right on that point.

Lord DAVIES of LEEK

My Lords, I hope so, too.

Lord AVEBURY

My Lords, we fully support the NCB and the NUM in the efforts which they are now making to increase production at least to the level of 120 million tons a year. We hope to get back to the targets which were mentioned only a few years ago of 150 million tons, since that would enable us to reduce the import of oil, pending the attainment of self-sufficiency from our North Sea supplies.

Lord DAVIES of LEEK

I thank the noble Lord. I am sorry that I interrupted him.

Lord AVEBURY

Not at all. The noble Lord, Lord Strathcona and Mount Royal, said that over half the energy we produce is wasted. That is what I meant when I said that he displayed— and I am sorry that I have to harp on this—an ignorance of the laws of thermodynamics. In any heat engine, the efficiency is proportional to the difference between the temperature of the source of the heat and the sink of the heat. You take in heat at one temperature and reject it at a lower temperature, and this determines the thermodynamic efficiency of the heat engine, whether it be an internal combustion engine, or a turbine in a power station, or any other device of that kind. When he says that the Electricity Boards produce energy at only 30 per cent. efficiency, that is perfectly true, in the sense that the calorific value of the electricity produced is only one-third of the calorific value of the primary fuel input. Unfortunately, however, there is an upper limit beyond which thermodynamic efficiencies can be increased only at the expense of great increases in the capital cost. If the noble Lord wished the CEGB to increase their thermodynamic efficiencies to 40 per cent., it would be quite possible for them to do so by the expenditure of vast amounts of additional capital; but we are also concerned not only with the efficiency with which the Central Electricity Generating Board and the Scottish Boards utilise the primary fuels but with the efficiency with which they use the capital which is provided for them by the Treasury.

The noble Lord also mentioned that diesel engines are considerably more efficient than petrol engines for road transport. That is perfectly true. I have often wondered why, in view of the increase in the cost of petroleum fuels, there is not more scope for manufacturers to produce a diesel engined private motor car. British Leyland did produce a diesel engined motor car, but for export only, and it might be worth considering whether they could not be asked by the Department of Energy, or perhaps by Professor Hawthorne's Committee, whether they have any plans for pro-ducing a diesel engined vehicle for the domestic market. I think it is a 1.8 litre engine, so it is within the size bracket of a large family saloon car, and it might have very considerable sales if they were to put it on the market in Britain instead of just in the overseas markets.

There are four short points which I should like to make as a contribution to this debate on conservation rather than to go over much of the old ground. I want to enunciate four propositions which I should like to put to your Lordships. The first is that any policy for the conservation of energy must also include measures for the conservation of materials, since materials are a form of packaged energy. Secondly, in the short term there are only two ways of reducing energy consumption: they are legislation and the price mechanism. Thirdly, with the application of "state of the art" technologies, there are substantial savings which are achievable in the medium term, by which I mean in five to ten years' time. Fourthly, energy research and development in this country is not sufficiently weighted towards the potential saving of energy and renewable sources of energy.

May I take the first point? From the consumer's point of view the most obvious waste of materials is in the use of unnecessary packaging, the cost of which is, of course, added to the cost of the final product that he buys. But waste also occurs on a very large scale because of the insufficient attention which is paid to the material cost of products at the design stage. That results from the previous era which we have enjoyed of low material costs. Even now we find that the emphasis is always on the labour costs of manufacturing and its implications for the competitiveness of British goods, and not on the material side of the equation. However, I believe that, just as we have this Advisory Committee on Energy Conservation under Professor Sir William Hawthorne, there should be a similar body to give the Government advice on materials utilisation and conservation. There is a wealth of expertise which might be available to the Government if they decided to set up a body of that kind. I should be grateful if the noble Lord who is to reply will give me at least some pre-liminary indication of his reaction to that proposal.

On the second point, I believe that the scope for legislation is not large. I agree here with the noble Lord, Lord Balogh, that when critics of the Government's policy have been challenged there have been very few constructive suggestions that they have been able to make. Personally, I think the 50 mph speed limit on roads should have been made universal, and should have applied just as much to the dual carriageways and motorways as to the minor roads, although I realise that such a policy would not be at all popular, and there might be problems of enforcement. Similarly, I think that office temperatures could have been restricted to 18 degrees Centigrade instead of 20 degrees Centigrade, with benefit to the health of the occupants. This would provide a healthier working environment for these people, as well as saving energy.

In passing, I must say to the noble Lord, Lord Balogh, that I do not find even now that Government offices observe the upper limits which, in my opinion, are inadequate. Several times I have been in Departments where temperatures have been higher than 20 degrees. Great consternation has arisen when I pointed this out; people have rushed around in circles trying to get the temperatures reduced, and have apologised, saying, "Unfortunately, the engineers are not very good at controlling the temperature. We cannot understand how this has occurred." I think the noble Lord might make a spot check on a number of Departments in Central London to see whether the Government's own policy is being properly observed. I am sure that it is in the Department of Energy ; the noble Lord will have seen to that.

Lord DAV1ES of LEEK

My Lords, perhaps they are all suffering from hypothermia.

Lord AVEBURY

My Lords, I am sure that is not the case so far as the noble Lord, Lord Balogh, is concerned. He is not old enough to suffer from a disease which primarily affects old people. I believe the noble Lord, Lord Balogh, mentioned en passant that restrictions should be imposed on the use of private motorcars by commuters to London. This is a policy which is rapidly gaining public acceptance, perhaps also in other major cities as well. I put forward a very controversial proposal as entirely my own view—someone in the Electricity Council said that even Beria had not suggested this—as I believe the use of electric fires for unrestricted space heating should be stopped. It is a wasteful use of electricity. It is far better from the consumer's point of view, too, that that heating should be provided by gas, coal or oil rather than by electricity.

Finally on Government measures, I think thermal insulation of buildings of all kinds could be encouraged if the owners of those buildings were provided with loans at reasonable rates of interest. This is a proposal which I have mentioned before. In the case of owner-occupiers, loans might be channelled through the building societies, the money being pro-vided by the Government at the ordinary rates of interest which are applicable to house loans, to encourage the proper insulation of existing dwellings as well as the adoption of the higher standards laid down by the Government on new dwellings. These are of minor effectiveness compared with the price mechanism, as I think was agreed by the noble Lord, Lord Strathcona and Mount Royal, and the noble Lord, Lord Balogh.

My Lords, the proposals I have mentioned so far are for the most part. limi- tations on the freedom of the consumer to spend money as he chooses, and for that reason we accept them with some reluctance, if we accept them at all. But the use of the price mechanism, on the other hand, is a restoration of the freedoms which have been denied to public enterprises by successive Governments. Conservative and Labour, for many years past, with extremely damaging effects on the pattern of consumption and on the morale of the persons working in those industries.One has only to ask members of the Boards of the Electricity Council or the Gas Corporation to discover that what I say is true ; that the continual making-up of the deficits of those organisations by subventions from the Treasury—that is to say, from your pocket and mine, because we are all tax-payers—is not good for the healthy morale of people working in these industries. It is sensible that the Government have belatedly decided that we should have a realistic pricing policy.

But what, in fact, do we mean by a realistic pricing policy? Is it adequately defined? As I understand it, the targets for 1975–76 which have been given to these industries are set at either 2 per cent. on turnover or 10 per cent. on net assets. But, at the same time, they are supposed to strike a balance between the restoration of profitability and the imposition of hardship on the consumer. This qualification makes the phrase "realistic price" fairly meaningless, since there will always be enormous political pressures against any price increase, as the noble Lord, Lord Balogh, recognised in his rueful reference to the case of the night storage heaters. But to the extent that prices arc increased, one would expect to see reductions in demand. It is a source of wonder to me that so little work has been done by the economists on elasticity of demand for primary fuel. The only paper I have been able to find in the Library is one by two economists in the Electricity Council, of which I may say the Electricity Council library itself was not aware. Apart from that, the literature on elasticity of demand is extremely sparse. All I can say is that if one looks at the figures—

Lord BALOGH

My Lords, will the noble Lord, Lord Avebury, allow me to say that any calculation on the elasticity of demand would be absolutely useless at the present moment. I am sure the noble Lord, Lord Robbins, will agree. A completely different situation has arisen. We have never had such a sudden rise in price, and therefore the reaction to such an extreme rise in price will be very different from the sort of fluctuations which we used to have. That is what I would submit to the noble Lord.

Lord AVEBURY

My Lords, I think that is a fair point. The Electricity Council economists who wrote the paper to which I was referring made specific reference to the fact that they did their work before the five-fold increase in oil costs, but they said that the methodology which they applied in the paper would still meet the altered situation. I am not enough of an expert to be able to judge whether that is so, but I do think that the Department of Energy, in its approach to realistic prices, should begin to make a more thorough estimate of what effect this is likely to have on demand. Looking at the figures for 1974—

Lord ROBBINS

My Lords, would the noble Lord allow me to make one observation on his point about elasticity of demand? I must say that I agree 100 per cent. with the noble Lord, Lord Balogh, here. We are now concerned with what in technical terms is called arc elasticity. The earlier investiga-tions were concerned with point elasticity.

Lord AVEBURY

My Lords, I am certainly not going to dispute that with the noble Lord, Lord Robbins, who is absolutely correct in the terms he uses. But looking at the matter as a layman, all I am saying is that in this altered situation it would be valuable, from the points of view of the Government and the energy industries themselves, to know what will be the effect of the approach to the realistic prices, if they mean 2 per cent. on turnover or 10 per cent. on net assets.

My Lords, I was about to say that if one looks at the figures for 1974, the Department's Energy Trends, which I find a useful document, indicated that in the first eleven months of the year, total energy consumption was down 5 per cent. on the corresponding period of 1973, while for electricity in particular the reduction was 4.1 per cent. That indicates that the price increases that have taken place already, which were referred to by the noble Lord, Lord Balogh, combined with the effect of a reduction in gross domestic product, have had some considerable effect already. When we look at the White Paper on Public Expenditure to 1978–79, Cmnd. 5879, over the five-year period 1974–75 to 1979–80, electricity consumption is forecast to grow by 30.4 per cent. and simultaneous maximum demand by 25.4 per cent. The noble Lord may care to make a note of those figures. Over the five years 1968–69 to 1973–74—that is to say, before the oil crisis—simultaneous maximum demand grew by only 19.7 per cent. on the CEGB system alone. Unfortunately, these figures are not directly comparable, because the previous ones I gave were for the whole of the United Kingdom. Over the five-year period 1967 to 1972, again when there could have been no effect from the increase in oil prices, the supply of electricity to consumers rose by 27.7 per cent.

This is the mystery to me. Why is it that over the five-year period before the oil crisis both consumption and simultaneous maximum demand were increasing at a faster rate than is assumed in the public expenditure White Paper for the next five years, during which we are going to approach realistic prices? It does not make sense, except that, as one economist whom I consulted about this said, once you start with the 3 per cent. growth rate postulated in the public expenditure White Paper—which, in itself, is a triumph of hope over experience—you then come up with ridiculous figures for electricity consumption and presumably for the other energy industries.

This is extremely dangerous, because it could be a repetition of what happenes in 1964 when the noble Lord, Lord George-Brown, produced his National Plan showing a 4 per cent. growth rate, and the public sector was obliged to formulate its own capital spending plans on the basis of accepting that fundamental postulate. As a result, the capital expenditure which was incurred by the electricity supply industry, for example, was much greater than would have been necessary to meet the demand that materialised. The effect was cancelled out by lateness in the delivery of plant, late-ness by the contractors on the sites, so that in the end one had about the 20 per cent. margin of capacity over demand that was required. But it could have been very serious, and it could be now if we are better at maintaining time-scales in the building of power stations. At the end of the five years, if we have succeeded in meeting this estimated growth in terms of capacity of electricity production, then we will have an enormous spare margin of capacity over demand.

I would question whether we really need to keep this figure of 20 per cent. that I have mentioned. In the old days it used to be 17 per cent., and then it was agreed by the Government with the electricity supply boards that this was really inadequate to meet the once-in-a-century peak demand and we should make it up to 20 per cent. I do not believe we can afford to do that any more. If we arc seriously concerned about containing public expenditure, here is a sector in which many millions of pounds can be knocked off, if we are willing to accept a lower margin of safety with the possible risk that once in a century some user of electricity has to accept a lower voltage or even be disconnected.

My Lords, I think I have exhausted my time, and I will not go on to discuss the third and fourth points which I outlined at the beginning of my speech. I will say simply that at some point in the future we have to aim at a steady state economy, and this implies steady state usage of primary fuels. It is no good assuming that once this immediate crisis is over, once we have tightened our belts for the next five or ten years, we can start again on the sort of growth rates that we experienced in the 1950s and 1960s. The attitude of some people in discussing growth, and in discussing growth of energy in particular, is rather like that of St. Augustine when he said: Da mihi castitatem et contincntiam sed noli modo ", that is, Give me chastity and continence but not yet". Let us at some point in the future arrive at a situation where we are using a constant amount of energy in a steady state economy, but for the time being let us provide for continuous increases in the amount of coal, electricity, gas and nuclear energy that we use. We live in a finite planet, and that is impossible. If we are thinking about conservation, the sooner the Government begin to think in terms of the maximum sustainable amount of energy which this country and the world can consume, the sooner we shall reach satisfactory solutions.

4.35 p.m.

Lord HINTON of BANKSIDE

My Lords, I find myself unable entirely to agree with the point the noble Lord, Lord Avebury, made at the beginning of his speech, when he seemed to suggest that this was not a suitable subject for debate in your Lordships' House. It seems to me that the availability of energy is fundamental to our wellbeing, that the drain on the balance of payments at the present time is extremely serious, and that these arc matters which well merit discussion. I myself am extremely grateful to the noble Lord, Lord Strathcona and Mount Royal, for having introduced this debate. There were one or two minor points on which I found myself in disagreement with him, but those were mainly points in connection with thermodynamics, on which the noble Lord, Lord Avebury, has already given him an admirably concise lecture which I do not need to follow up. The pressing problem of energy supply does not arise from absolute shortages of energy ; it is a question of difficulty in paying prices which have risen too steeply. The difficulty is essentially an economic one, and there are other noble Lords in this House who are better able to discuss the economic difficulties than I am.

What I should like to ask your Lord-ships to do is to throw your minds forward beyond the present period of temporary difficulty to a period of real difficulty, which I think we may reasonably expect to run into towards the end of this century and at the beginning of the next century. May I, first of all, assure your Lordships that I am not one of those prophets of doom. I have no respect for those prophets of doom who forecast that usage of exhaustible resources will go on increasing at a constant exponential rate up to the point of exhaustion. That is not what happens. The consumption of exhaustible resources normally rises quite gradually when their usefulness is first realised, and then, as they become more popular, the rate of increase of usage rises more steeply until a point is reached where demand starts to outstrip supply. Then the rate of increase of use falls off until it passes over a peak, after which it starts to fall slowly ; it then falls much more rapidly and ultimately continues at a very slow rate of decrease until absolute exhaustion takes place at some date in the fairly far distant future.

But the important point to remember, I suggest, is that the date of exhaustion is of comparatively little importance. The date which is of real importance is the one at which the curve passes over its peak, because it is at that point that supply ceases to rise in such a way as to meet the demands of increasing populations who have become accustomed to improved standards of living. If one needs to underline the fact that this is very much the case, I think one can look back to the period of the Middle East War in 1973–74 and remember how much alarm was caused by a shortfall in supplies of energy. It was not an exhaustion of energy supplies, but merely a comparatively small and brief shortfall in supply as compared with the rate of demand.

It is extremely difficult to obtain reliable figures on energy reserves. Indeed, this is one of the points that I hope to make in this debate. In what I am saying today, I am relying mainly on Dr. King Hubbert's figures and on the figures which were published in the World Energy Conference Review of Energy Resources at the end of 1974. I do not want to weary your Lordships with a lot of statistics, but I am bound to quote some figures. At present, about 60 per cent. of the world's production of primary energy for industrial purposes is in the form of petroleum and natural gas. Petroleum is the most flexible of all the fuels that we use, and it is the primary energy source on which we are most dependent. According to Dr. King Hub-bert's figures, world supplies of petroleum will pass their peak round about the year 2000, and some British experts forecast that the peak will be passed at an even earlier date than that.

We, in Britain, are constantly being offered comfort in the shape of North Sea oil supplies, but the figures given in the World Energy Conference Review show that if our North Sea oil resources, as at present known, are used to meet all our energy requirements at the present level of consumption, they will last little more than 30 years, which means that they will pass over the peak sometime in the 1990s. I know very well, and it has already been mentioned in the debate, that there are analysts who claim that those figures are unduly pessimistic. Those arguments are, in the main, based on the historical fact that in the past when oil-fields have been discovered the amount of oil recovered from them has far exceeded the initial estimates of their capacity.

But I am extremely doubtful whether those historical arguments ought to be used, because the technology of geo-physical exploration has been so much improved over the last ten years. If one wants proof of that, I suggest one should remember that the American Navy was doing exploration work on the Alaskan North slope for 20 years and then gave it up, and it was only when British Petroleum went in with very much improved methods, very much more sophisticated methods of analysis, that the Prudhoe Bay reserves were discovered. So I suggest that we ought not to rely on forecasts which are revised on the basis of historical experience.

I believe that it would be folly to accept the conveniently optimistic view and to disregard the forecasts of the geologists and geophysicists. I suggest that until there is absolute proof that the geo-physicists are wrong, the wise thing to do is to assume that unless present trends of consumption are changed world sup-plies of petroleum will start to fall by the end of this century. The petroleum which is then available on the world market will, I think, go to those countries who are best able to pay for it. The picture for natural gas is not very dissimilar from the picture for petroleum.

For coal, both globally and within Britain, the future is considerably brighter. Dr. King Hubbert's figures fore-cast that the peak of the supply of coal should not be passed until well after the year 2100, but he gives warning that if coal is used as a primary fuel—as may well happen, because as we run out of petroleum fuels processes will be developed for converting coal into liquid fuel substitutes—the reserves will be exhausted at a considerably earlier date. Even so, when looking at King Hubbert's figures one should remember that nearly 50 per cent. of the coal reserves of the world lie in the Soviet bloc, and that 50 per cent. of the remainder are on the North American continent. Only 5 per cent. of those reserves are in Europe.

It is interesting, puzzling and thought-provoking to look at the figures given for coal reserves in the United Kingdom. According to the World Energy Conference Survey on Resources, our total reserves of coal are about 99,000 million tons. At our present rale of consumption that would meet our requirements for about 600 years, and that is the figure which is usually given to a believing public. But the figure of 99,000 million tons includes all of our coal reserves, and the figure given in the World Energy Conference Survey for the reserves of coal that are recoverable within the economic and technical limits which exist in 1974 is only about 3,900 million tons, which is a very different figure from 99,000 million tons. The lower figure means that unless it is found possible to work some deposits which have in the past been uneconomic, or to use methods of recovery of coal from underground which have as yet to be developed, we should pass the peak of supply of British coal comparatively early in the next century.

We have, of course, been told that our salvation lies in nuclear power. Before going on to nuclear power, I should like as quickly as possible to mention the renewable resources as distinct from the finite resources of energy in the world. Globally, there are very large resources of hydro-power, but they lie in parts of the world which are remote from the United Kingdom. It will be of little direct help to us to know that there is plenty of hydro-power in Brazil and Central Africa and the more remote parts of Canada. We have only a negligible quantity available here.

In some parts of the world solar power is already being used for domestic and commercial purposes. However, as the noble Lord, Lord Balogh, has already said, I do not think that it is likely to be extensively used even for those limited purposes in this country. Its use to supply large blocks of industrial power is really no more than a sparkle in the eye of the scientist at the present moment. Wind power can supply limited quantities of energy in limited parts of the world. In the same way geothermal power can, and is, already supplying power to those regions which are fortunate enough to have wet rock at depth, but whether it will be useful in areas like the United Kingdom where we have dry rock, is I think, doubtful. Tidal power globally can do little. The number of locations where it can be developed are comparatively small. As has already been mentioned this afternoon, there is a prospect of one scheme in the Severn Estuary in this country which has been under examination off and on for the last 40 years and which is now being examined again. But let us remember that even though it may be found to be viable it could, at the most optimistic estimate, supply only 5 per cent. of the electrical power that we need ; that is to say, about 2 per cent. of our total energy requirements. As for wave power, this at the moment is little more than a dream. So for use in this country I feel bound to say that the renewable sources of energy can contribute very little to help us.

For the last 20 years we have been told that nuclear power will provide the answer to all our energy problems. But if the world is to run into shortages of fossil fuels by the end of this century, world progress in the development of nuclear technology has to be much faster than in the last 19 years since Calder Hall was commissioned. In the paper which he wrote for the Royal Society, Dr. Bowie, of the Institute of Geological Sciences, forecast that uranium prices would rise steeply. Indeed, they have already risen far more steeply than his forecast. He forecast also that, unless energetic action was taken to discover new uranium reserves, there would be a uranium famine early in the next century. The discovery of new uranium reserves will be extremely difficult and costly, because already most of those surface reserves which are fairly easily discovered by aerial survey have been located and are counted in the reserves on which he has reckoned. There is a real possibility of a shortage of uranium early in the next century if we continue only to build the thermal reactors which are being built all over the world.

Those thermal reactors burn less than 1 per cent. (in fact, between 0.5 and 0.8 per cent.) of the uranium which is fed into them. Unless fast reactors can be brought into use and incorporated into our energy planning in sufficient numbers we will be in a real difficulty, because the date when we can count on fusion power is, I believe, unforeseeable. But much more than the fast reactor alone is needed if we are to solve our energy problems. The fast reactor can do no more than supply electricity, and electricity in itself is not a universally applicable source of energy. For instance, one cannot propel an aeroplane with it. To meet the energy shortage, which I think we should be foreseeing towards the end of this century and in the early years of the next century, research and development are needed over a frighteningly large area. In relation to the amount of work which has to be done the time which is available for that work is, to my mind, all too short.

The figures suggest that the shortage of some esssential energy sources will start to develop as soon as 1995 or 2000 A.D. That is only 20 or 25 years from now, and in terms of the volume of the development work which has to be done it gives us far too little time. If we look backwards in order to put that time into perspective, let us remember that those dates are no further ahead of us than the Queen's Coronation is behind us, and that occasion seems, at any rate to me, to have taken place very recently; or, in more technical terms, let us remember that those dates are no further into the future than the date when work on building the world's first industrial power station at Calder Hall was started in 1953. Sadly, nuclear power has made little progress in reliability since then. The year 1995 is not so far away as the date when work on the fast reactor was started in 1950, and that fast reactor is still only at the prototype stage.

I do not want to be thought of as a prophet of doom, but I think we should realise the problems which lie ahead of us. I have tried to make a sober forecast of the difficulties that we may have to face. I have done this on the basis of the figures which I think to be most reliable. If those figures are proved to be wrong, I must confess that I shall not feel immediately inclined to apologise to your Lordships' House. I shall say, rather, that I have made the first point which I wish to make ; that is, that on this subject, which is absolutely fundamental to the wellbeing of this country, we have no set of figures which is universally and unquestionably accepted as a basis of policy formation. I understand that the World Energy Conference is trying to set up a study group, composed of representatives from Governments and from inter-Governmental organisations, to prepare better estimates. The task which faces them is immense and it involves inter-disciplinary research by geologists, geophysicists, scientists, engineers and by other people of every kind. I hope that Her Majesty's Government will be able to give help and support to that study.

It must be about two years since we debated in this House a Motion tabled by the noble Lord, Lord Tanlaw, in which he proposed setting up an Energy Commission. I did not support his proposal at that time. I suggested that because internal and external political considerations were so closely inter-meshed with the technical problems, it would be better instead to set up a strong inter-disciplinary team within the Department of Energy. So far as I know, little or nothing has been done to follow either of those courses, and if it were felt today that the quickest result could be achieved by setting up an Energy Commission, I should be in favour of that course.

I support the proposals which have been made by the noble Lord, Lord Strathcona and Mount Royal. I support them not merely because I hope they will do something to solve our present economic problems, but also because they give us a rather longer time in which to deal with the slightly more distant, and very much more difficult, problems which I believe this country and the whole world will have to face at an inconveniently early date.

5.0 p.m.

Lord NATHAN

My Lords, in following the noble Lord, Lord Hinton of Bankside, who is one of the world experts in the subject on which he was speaking, I think that it is reasonable to give some indication as to one's qualifications, such as they are, to speak in your Lordships' House on this subject at all. I was chairman of a Working Party which produced a report entitled Energy and the Environment, which was published in July last year. It was largely in the con-text of the work undertaken by that Working Party that I came to have some small knowledge of the subject being discussed today.

The Working Party reached a main conclusion—that we are not adequately organised to cope with the short-, medium- or long-term problems with which we are confronted, and I was very interested to hear the noble Lord, Lord Hinton, refer to an Energy Commission which was something that we also recommended in the Working Party's report. However, it is not about that that I propose to speak this afternoon. In the short term, there are, no doubt, many steps which can be taken and I do not propose to spend any time on them. I mention in passing that if clothes, particularly for women, were made of rather wanmer material and if diet were more appropriate to our climate, we could in fact save a great deal of fuel.

My Lords, the timescale of which I had thought of speaking is between five and ten years rather than of the immediate future, and I should like to say, as so many others have said, something about the problem as I see it. We have a dual problem: we have the problem that we have enjoyed cheap fuel and we have thus been able to economise on capital expenditure in the use of that fuel. As a result of that we have, for example, petrol and not diesel engines, and thermally inefficient buildings and isolated power stations far from centres of population in many, though of course not all, cases where waste heat cannot be utilised.

I do not want to become involved in something of which I know absolutely nothing—that is, the laws of thermo-dynamics—but I am reliably informed that there is a substantial amount of waste heat created in the generation of electricity. If I may give the figures which have been given to me, they are that approximately 65 per cent. of the heat which is used in a power station is wasted. However, I do not think that the figure is particularly important to what I have to say. Therefore, I believe that to make a real impact on economy in the use of energy, we shall have to incur heavy capital expenditure. I do not believe that we can do it, except in the very short term, in any other way.

There have been references to transport. Of course, economies have been made in the use of fuel for transport and no doubt there can be more. However, when one considers that the total amount of energy used in the transport field is about 15 to 17 per cent. of the total energy expended, we must see that we cannot make as great an impact there as we could in other fields, particularly space heating, which uses a vastly greater proportion of our total energy resources.

My Lords, some (but not those who have spoken in your Lordships' House this afternoon) seem to be under the impression that the nuclear alternative is that which will save us in the quite short term. Therefore, I though that I should mention that the nuclear alternative is not available to make any effective impact before 1985. I say this, first, because of the long lead times ; secondly, because of the enormous capital costs; and thirdly, because of the research and industrial back-up facilities required. It was no surprise to me when the Secretary of State for Energy, referring to the EEC Commission documents on energy policy in another place yesterday, confirmed this view.

My Lords, I therefore start with the proposition that we shall have to foresee substantial capital expenditure and this, as it seems to me, should be expended on new buildings, when they are to be built in any event, being far more thermally efficient. When one considers the new office blocks which have been erected—and this is not a question of style—with huge plate-glass windows and often with the need for air-conditioning, their loss of heat and the constant need to keep the temperature up, that must surely be an area in which there should be Government intervention requiring thermal standards, and quite high standards, too. This will cost money, and the buildings will cost more than they would without such a requirement.

My Lords, I should have thought that an extensive system of loans, grants, tax allowances and so on, in order to improve the thermal efficiency of existing buildings would be money well spent. Lastly, I think one of the most important matters requiring urgent consideration and, if consideration proves that it is practicable, action, is the building of small power stations within towns and cities. These could be powered by coal, gas or oil, coupled with a system of district heating to utilise a large part of the waste heat which would otherwise be wasted if such power stations were removed from centres of population.

Finally in that connection, consideration of the use of waste heat from existing heavy industry is needed. This is of course at present being dealt with in a scheme which is being developed at Newport in South Wales, which involves district heating—space heating—derived from waste heat produced by the British Steel Corporation's steel works at Llan-wern. This seems to be the way forward. I have every reason to believe that the technology and the manpower for such schemes are available and that we are not looking into the distant future or to the far ranges of technology.

My Lords, when considering capital investment in terms of money, consideration must also be given to the input of energy into the capital project itself. It is necessary to balance the energy input against the energy output or the saving in energy consumption. I believe that some active consideration should be given to the question whether it is practicable and desirable to develop some form of energy accounting in order to arrive at a proper assessment of various types of investment. This is rather different from the point made by the noble Lord, Lord Strathcona and Mount Royal, with regard to an energy audit. What I have in mind is that one should be able to see how much energy has been put into a particular capital project and what the saving or the output of energy may be.

Therefore, my Lords, the conclusions which I reach are that there should be serious study with regard to small, conventionally powered power stations coupled with district heating, a radical approach to new building, capital grants, allowances against tax or some other fiscal assistance in relation to insulation of old buildings, and that we should look into developing some system of energy accounting. These programmes require an extensive research background cover-ing fields far wider than we have discussed this afternoon or I have indicated in these few remarks. For instance, they would require study of the impact on local authority housing schemes and the whole area of town and country planning. They would require consideration of the location and extent of industry; they would require consideration of the impact on the environment within and outside centres of population, and they would require consideration of the industrial and financial back-up for these programmes.

Now there is an Advisory Council on Energy Conservation which was established, as it happens, very shortly after the Working Party report to which I referred was published. That Council could no doubt undertake this task ; but if so, it would have to have its terms of reference and its manpower considerably expanded ; or a further body, such as an Energy Commission could be created, of which the existing Council would either form part or with which it would work in the closest association. Without some such centre point of information and organisation, it seems to me that we are going to talk a lot and achieve little.

5.11 p.m.

Lord SELSDON

My Lords, I must confess to feeling something of an interloper in the debate today, for after the very erudite speeches on energy I shall be something of a barb in the tail on the second part of the Motion, which is the protection of the balance of payments. I feel somewhat ashamed that most of the speeches I have made in your Lord-ships' House have been connected with foreign affairs, trade and industry or balance of payments, and much of what I have said I will probably say again. But to noble Lords opposite I will say one thing: on occasions when I have spoken here, many of you have been kind enough to nod your heads in agreement with some of the things which I modestly and moderately say. Today I hope you will do the same thing, for I have reached a stage in my life where my disillusionment with this country continues to grow.

A few months ago, or even six months ago, when I plucked up courage to read previous speeches I had made in your Lordships' House, I urged the need for co-operation and optimism, and I thought, as I preached some form of optimism, there was a chance that I could be right. And when the world was becoming more and more pessimistic, I still remained optimistic, and as now for some unde-scribable reason there is the beginning of a feeling of optimism again in England, I find myself utterly pessimistic. The current Administration, which has some excellent people in it, will, I am sure, go down in history for one thing: it will go down as the last Government in the United Kingdom who failed to govern the country properly. During previous Governments, of all Parties, we have criticised the inability of Government to manage economic affairs, the inability of politicians to communicate with industry and commerce and to unite the nation. This Government, in my mind, goes down the same as the last: they have failed to unite the nation. Their policies have failed to be consistent, and we cannot afford at this time to have a Government who change their mind and who have to learn. We need a Government who know.

We are, as I look at it at the moment, at a far more critical point than many of us may believe. The future of our nation depends upon international activity. This we all know and accept. It has been this international activity that has kept us alive for years, but the balance has changed. Once upon a time we were in the dominant position of controlling and running the international activity which benefited us. Now other people are in that position. Atlas has shifted the world on its axis and some of the wealth of Western Europe and the Western World has moved steadily in a South-Easterly direction. We find ourselves, I believe, at a point of crisis, not on economic management of our own affairs, for frankly the operations which we see, like the Government today, are rather like those of an impoverished tailor who has but one bolt of cloth and snips and snips away until there is not enough to make one good suit. I feel my own birthright has been mortgaged. I feel that unless something is done in the foreign affairs field, and soon, we may find ourselves sliding further and further down the slope.

When we look at balance of payments, as we must, we see we have started the disease of trying to separate these. We divide them into smaller and smaller compartments. Once upon a time it was balance of payments; then it became visible and invisible trade, and then it became the oil deficit, and it may well become the raw material deficit, the manufactured goods deficit. All of these I shall try not to cover in detail, but to speak about in general. The invisible sector is one I have tried to cover in your Lordships' House before. There is one thing to say about this. Our invisibles are what to some extent are helping to keep us alive, and this is not generally recognised or accepted. I speak not just for the City of London, but for all other sectors. It is disgraceful that we should have such division in the nation that those people who provide services and earn money abroad should be subject to so much criticism. It is also sad that when we rely upon confidence within our own country, we should try to destroy that confidence and play into the hands of our friends on the Continent of Europe and in other major centres of the world. But invisibles are our lifeblood and we will continue, I am sure, to show a surplus. But the potential for extending that surplus with the recycling of petrodollars and all of this is far greater than many of us may believe.

On the oil deficit, there is energy conservation and may be we are fortunate that inflation to some extent may bail us out; and in real terms the price of oil has started to go down and there is a more realistic outlook in the Arab world. But another danger I see is the raw material sector. We rely, as we know, upon the importation of other raw materials besides oil. The last Conservative Administration blamed many of the failures of their economic performance upon the escalation of commodity prices, and now people say that the decline in commodity prices is helping the current Administration. But we should recognise that raw materials are other nations' assets, and we know too that these countries, perhaps emotionally or perhaps wisely may recognise the value of what they hold in their soil, or in their timber forests or in other parts of their countries.

So why cannot we, too, have a fair price for our birthright? Already, as your Lordships will know, discussions are taking place between different nations around the world, and with good reason— and often with fair reasoning. It would be wrong to assume that we may not in due course face a sharp escalation in the price of copper, foodstuffs and other imports, and then, no matter what we may do in manufacturing we will slide further and further down the slope. It would be wrong, too, for us to assume with pride that the pound has stayed up solidly and firmly against the dollar because of our balance of payments position, and our export ability, and the policies of this current Government, for technical reasons to do with petrodollars, which we all know have led to some stability in the relationship of the pound against the dollar.

But, my Lords, all these things are little besides what may happen, and before I leave the home front there is one thing I should say. We are in some form of industrial and commercial quicksand and quagmire. The Government have denied industry and commerce the right to manufacture and export. The cash-flow problems which we know exist in industry, and inflation, are such that industry can no longer afford to export. It cannot in many cases afford to keep the stocks abroad, to provide the service abroad or even to provide the sales teams that are so badly needed, because of escalating hotel costs and travel bills. It is no longer a question of British goods being cheap. The price is not material. It is true, perhaps, that we should have even increased our export prices. It is a question of delivery and service, and British companies, for all their quality and ability and reputation, cannot deliver and cannot provide that service, sometimes because they are unwilling or are unable to do so, but more and more often because they cannot afford to do it, and winning export orders abroad becomes no good when we can no longer deliver.

I see gloom on that front without some form of help to industry, and to exporting industries in particular. But when we look at the United Kingdom we will find today—and these are estimates that I think I could justify—that 80 per cent. of all our exports will depend on the activities of maybe as few as 200 companies, and that 50 per cent. of the profit and work and activity of those companies depends directly, or indirectly, upon inter-national activity, and that one-third of the total employment in the United Kingdom depends upon international activity as well.

That leads me to believe that half the efforts of the Government of this nation should be upon the domestic front, al-though at least half should be in the international field. I think it is unfair to criticise a Socialist Government just because it is socialist, but in the foreign affairs field it tends to rely too much upon interference and ideology instead of on realism and vision. I do not believe that the current Administration has any definable foreign policy at all. I do not believe they recognise how important it is at this moment that we should cement and build old-established links which we have had, particularly with countries in the Third World, for generations. I think they do not realise the good will that lies latent in these countries towards the British, and they would be well advised to give further attention to these areas.

My Lords, as I mentioned, the shift in the economic wealth of the world can be divided into a number of sectors, and I shall concentrate on only one of these. There is, of course, South-East Asia where the good will towards the British —as noble Lords who have been there on numerous occasions in the past will know—is still there waiting to be encouraged. Our companies are preferred to many of those of other countries; despite delivery, despite quality, they want to do business with the British. But where are the British and where is the Government policy which says, "We wish to be friends with you and to build a trading relationship which will last another hundred years "? There is the Latin American area with the growth of Venezuela. There are not quite the same links there as with South-East Asia, but there are links and a willingness to build a growing relationship, particularly when one looks at the relationships which many of these countries have with the cultures of Western Europe. There was hardly a Brazilian before the recent coup in Portugal who did not stop over in Lisbon on his way to London. There was hardly anyone from Argentina who did not stop in Madrid on his way to London. These people came here full of enthusiasm for the British. There are Mexicans with Scottish names like Fernandez MacGregor who have spent fortunes trying to trace their Scottish history. This is another part of the world on which I will not dwell.

We then come to Africa—that exciting, dynamic Continent with names which many of us cannot remember; countries who have suddenly discovered their new wealth—former British or French colonies—now looking for independence, looking for friends, looking for technology and know-how to develop the resources they have in terms of raw materials and labour forces. I think not only of Nigeria, but of some of the former French colonies whose names until recently I hardly knew. But I will come back to the immediate area which I have been visiting quite recently.

My own job in the commercial world is mainly with Continental Europe, but as the economic balance shifted South-Easterly I moved with it and I returned from Egypt only last weekend. I will speak of the Arab world and in case there may be any emotional feeling here I am wearing a commercial and industrial hat and not a political one. The advantage that an hereditary Peer may have in your Lordships' House is that he can wear both hats ; he can put his toe into the murky water of international politics and if he cannot see it or does not like the temperature he can withdraw it and go back to the commercial side. This I will do with the Arab world now. In the Arab world, as your Lordships will know, despite the political situation in the Middle East, despite all forms of reaction which there may be against Zionism or Zionist countries, there is a desire and a willingness to do business with British companies. The Arabs are saying, "Where are the British? The Americans are here, the French are here, the Germans are here in force, as are the Italians, but where are the British? "These other countries work closely together, company and Government, politicians and industrialists. The French are pastmasters in utilising their political know-how and ability and links to further their industrial and commercial aims in the Middle East. The British are nowhere to be seen.

It was amazing to me in a Socialist country such as Egypt to have everybody say to me: "We prefer the Conservatives ; we as Socialists have always preferred the Conservatives. We do not like your Socialist Government—they are inward-looking and not outward-looking, and they lack vision". They have said to me in Cairo, and other parts of the Arab world: "Come here ; bring your companies. It does not matter that the Americans are here before you ; you can have our export orders, you can do our joint ventures and our projects ; you do not need the money any more, you have the good will, the export markets, the reputation, the people, and you have that ability to use that old proverb that know-how was the magic word for converting common sense into cash. Come out here, we will provide the money for you to set up your business; we will provide the money for you to import your Western products. You help us, for we have no infrastructure in middle management, we lack technology and know-how ". In due course when the political situation is resolved on a step by step basis, as I believe it will be, then all this reaction against Zionism and Zionist companies and others will fade away and die. To me it is but a stone's throw to the opening of the Suez Canal. One move by one side in one direction will undoubtedly mean a move by the other. And when that first move is made, the Middle East will take off in a way that no one would believe, and the British must be there, and the British Government must make things clear.

To me it is sad and showing a remark-able sensitivity on all sides that one kiss by Mr. Wilson could almost throw away generations of relationships. It is odd that such an emotional reaction should take place. It is something that should be recognised and one should try to take industry and commerce out of politics but to link it with politics. I have been to Cairo twice in the last two months. When one looks at a map of the Arab world one sees that, like most maps, it shows part of the Arab world as part of Africa. A European map may show one part or an Asian map another. But if you look with Cairo at the centre you realise the infra-structure that has been built there, the way that the petrodollars are not coming directly back to Western Europe, other than for short-term deposits and the possible acquisition of some of the basic assets of Western Europe, but waiting poised to go into partnership with Western companies in developments in the Sudan, Egypt, parts of Africa and the Third World.

It would be wrong for us not to recognise that we have a major asset in our people and in our know-how. It is not something you can measure in true cash terms but in terms of balance of payments it could be substantial. It is also true to say that our relationships with these countries, if developed now, as I believe they should be at a much greater rate, could stand us in good stead when dealing with the problems of raw materials which undoubtedly will come within five years' time. They would need our help and they would request our help if only we would go towards them in a slightly more open way.

I feel that at a time when we depend so much more on international operations and the good will of international people than we did at any time in our history, any reduction in expenditure on foreign affairs or on international defence, trade or other areas, could be disastrous. I should like to see the Government making some gestures and taking some initiative with these countries. The friendship and willingness is there, as many noble Lords who have served in these countries will know. We have a problem that many of the people we have in middle and senior management are too young to have known those countries personally. Take myself, for example. Although I have been to Egypt before, when it was an independent country I was only seventeen years old. Most people who knew Egypt and the Arab world are far older, and yet their resources, know-how and relationships are not being harnessed. There are some major projects in the Arab world which could go to the British ; many are going to the French. There is a political reason for this. As we saw after the meeting in Paris a short while ago between Sadat and Giscard d'Estaing, the awarding of contracts could equally well have gone to the British. The contract for the underground railway in Cairo went to the French, but in a hot country an underground railway with rubber tyres does not make sense.

There are other deals and propositions being brought forward which the Arab world would willingly put towards the British if the British would go towards them. The political problems, if the two commercial sides are encouraged, can be resolved. There is no reason to be totally partisan, and some of the embar-goes or boycotts which have developed in the invisible sector at the moment could be overcome. It is but one sector of the world in which something must be done, but if we stand back and look inwards and try to keep snipping away at the cloth which is getting smaller and smaller, borrowing up to the hilt and selling our country to foreigners so that our children have no heritage, I believe that we shall be making a very grave mistake indeed.

5.30 p.m.

Lord ROBBINS

My Lords, I am sure that we must all feel grateful to the noble Lord, Lord Strathcona and Mount Royal. The debate has produced a most vigorous and competent speech from the noble Lord himself; it has produced an interesting exposition of the attitude of the Government to points which the noble Lord raised and certainly it has produced a most notable survey of the far distant future of our energy supplies from the noble Lord, Lord Hinton of Bankside. The Motion of the noble Lord related both to energy and to the balance of payments. Most of the speeches made this afternoon in this House have related to energy and to energy saving. I should be the last to deny the relevance of these considerations to the balance of payments but, like the last speaker although with a different horizon, I should like to focus my main remarks this afternoon on the balance-of-payments position and to focus those remarks on the very short-term position with which we are con-fronted.

In this connection, two things seem to me to overshadow the whole position of the British economy and the future of agreeable social conditions in this country. First, there is the fact that, at the present time and for some time to come, our standard of life is maintained, or may be maintained, by borrowing at a rate the magnitude of which must be approaching £4,000 million a year—a state of affairs, I think, quite unprecedented in the economic history of this country, save perhaps in wartime. The conversion of equivalents would be a difficult matter. The second point which I think deserves to be emphasised, al-though to many noble Lords it will be well known, is the extraordinarily pre-carious nature of the situation.

Far be it from me to suggest that ex-ternal borrowing is always a sign of ill-health. Who will say that the external borrowing of the United States in the 19th century—although it sometimes led to ill-will and breaches of trust—was, in the main, a sign of ill-health in that developing country? But our external borrowing is not of that nature. It is true that we look ahead to the development of certain resources in the North Sea which, if present plans are fulfilled, will be of some assistance to our balance of payments and our energy position ; but a lot of water has to go under the bridge before that state of affairs prevails. In the meantime, there is no doubt at all that we arc in a position of extreme danger.

My Lords, one must try to establish perspective in these matters. Let me therefore begin my observations on this state of affairs by recognising explicitly the external factors which have given rise to this situation. I need not expatiate on the abrupt and the discontinuous misfortune to our balance of payments of the unprecedented rise in the price of oil. One should recognise, too, that in the last few years there have been other adverse influences affecting the terms of trade: the breakdown of food supplies at one time in Russia ; the rise in price of food, and so on. All this is well known and I say it only in order to make it quite clear that what I shall say does not underestimate the degree to which we can, if we like, call ourselves unfortunate.

However. I have two points to make even on that matter. The first point is that there are other countries besides the United Kingdom whose terms of trade have been affected by the rise in the prices of oil and other commodities ; and it must be recognised that with a few exceptions in the industrialised countries—I leave the underdeveloped world out of account— the position is not as bad as it is in this country. Germany, for instance—which depends to a very large extent for its energy supplies on imports of oil—is still in the position of having a very favourable balance of payments. One even hears talk in expert circles of the possibility of an upgrading of the rate of the Mark in order to escape the effects of a surplus which is still running. Even in the case of Japan, exceptionally vulnerable as regards the price of oil, progress has been made which certainly surpasses any progress which is immediately observable in our own country.

The second point is rather less down to earth and some may think, at the beginning, that it is somewhat abstract; but I think it deserves to be said. If inside any country or any community the price of one domestically-produced commodity goes up, or the price of a group of domestically-produced commodities goes up, then, unless at the same time there is a perverse creation of money, there is for the citizens of the country concerned less to spend on other things. These homely generalisations apply not only to trade within countries but to trade between countries. If the terms of trade become adverse, then, unless there are financial offsets of one kind or another, there is less to spend for domestically produced products and consequently a release of resources to push exports. This takes place either by a slowing down of the rate of increase of domestic expenditure, or it may take place, of course, by reason of an adjustment or, if you like, a fall in the rate of sterling exchange.

I am certain, my Lords, that the prices of certain goods have gone up. It does not seem as if we have very much less to spend in the aggregate, and our rate of exchange has certainly dropped over the last few years, but our position is still worse than the position of any important Western Power, except perhaps Italy. The fact is—and here I am not making a point which is favourable to either Party in your Lordships' house or in the coun-try—that the adverse movement of the terms of trade, taking all in all, has been aggravated for us by a rate of inflation greater than the rate elsewhere, and that still goes on. Only yesterday in the newspapers we read an announcement by an important international financial body to the effect that, in their terms of reference, their rate of inflation was greater than anywhere else. Of course there has been inflation elsewhere ; there is inflation in the world as a whole in greater or lesser degree, and the extent to which there has been inflation elsewhere, given our inflation, has meant that our position as regards imports and exports has probably been easier than it would have been if we had been inflating alone. But the fact still remains that our position is worse than the position of others.

To sum up this part of my observation, it is not true and I do not contend that all our troubles are due to internal policies ; but I certainly contend that our troubles have been made very much more difficult by policies which were pursued during the period of the last Government and which continue to the present day. Think of the difference that would exist if our inflation had been running only at the rate of inflation of the West German Republic, for instance.

My Lords, how do we get out of this position? I do not wish to add to the learned and well-informed remarks made from different parts of the House about possible ways of economising on energy. I am sure that some of the suggestions which have been made are important and I am equally sure that Her Majesty's Government are pursuing with some activity policies tending in that direction. I should like to mention a fact to which my attention was drawn recently by an extremely powerful article by the noble Lord, Lord Kahn—who I notice is not here today—in a brochure published by the Institute of Economic Affairs. In the article he emphasised the extent to which—I think he had in mind possibly some of the facts to which our attention has been drawn by the noble Lord, Lord Selsdon—our efforts to push exports in the countries enriched by the price of oil have fallen behind the efforts which have been made, for instance, by Germany or Japan. Lord Kahn's article is well worth reading in that respect.

The only other observation I have to make about oil relates to international action. My view has always been that, in the absence of an international " Sherman Act "—it is really crying for the moon to expect such an Act to come into operation in the lifetime of any of us, even the youngest here, although we all discussed this in the last days of the War when we were considering recon-struction—if we have a producers' cartel why should we not have a consumers' cartel. Surely the producers have it all their own way if they can bargain separately with each of the parties concerned. I say nothing in disparagement of the members of OPEC. They are looking after their business according to their lights, but I wonder whether, to some extent, we have not been over-inhibited in international action designed to get better bargains than we are at pre-sent getting.

Lord JACQUES

Would not the noble Lord agree that even if we had a consumers' cartel the power would lie with the producer? The consumer needs the oil, but the producer does not need to sell it.

Lord ROBBINS

I agree with the noble Lord, Lord Jacques, that we are in a sticky business. All I say is that there is some need for concerted action in these matters. I think the noble Lord will agree with me. That view has been shared by people who know more than I do about this matter. Walter Levy, the greatest authority in the world has been pushing that view very energetically for some time. But when all has been done in this direction, my Lords, the fact remains that somehow or other there has to be a curtailment of our internal standard of life pro tem.

It is very difficult to get a perspective in these matters. When words of this kind are uttered, they conjure up at once visions of judgment, visions of a state of affairs in which the standard of living of people in this country would be reduced by half. Although this is one of the most difficult matters in the world to calculate—and certainly one of the matters on which I would disbelieve any exact figure—if one reflects that since the late 'sixties there have been increases (not as good as elsewhere, but increases) in productivity per head, I should guess that, if by some stroke of the wand curtailment of our standards were to go back that short time, a good deal of the external difficulty would disappear, but not all. That is simple enough to say, but the question is, what is happening in the real world? Some people attach importance to the promise of reflation by the President of the United States. I believe the Chancellor of the Exchequer goes round the world urging his col-leagues—the opposite numbers in the Ministries of Finance—to reflate, which would certainly help with some of his problems. Our exports would be stimulated and our imports would be more extensive. Certainly reflation elsewhere, whatever its effect on the rest of the world, would help us. But we cannot count on that; and some moderation, some exercise of self-restraint in this country, is necessary if we are to escape these almost intolerable dangers.

We talk a good deal about observance of the guidelines. I have never been able to understand in detail what they are, but I understand that, broadly speaking, the guidelines are supposed to involve increases of salaries and wages which maintain the constant for the time being, marking time as regards the standard of life. I must say that for the time being, given the change in terms of trade, it does not seem to me to be enough. I am bound to say that I feel that some contraction is necessary—and all I have said is on the assumption that the guide-lines are being kept; but it is notorious that they are not being kept. I myself, in another capacity, have seen demands for increases in present rates ranging from 40 per cent. to 60 per cent. One has only to open one's newspaper in the morning to see other demands which go far beyond any conceivable guidelines hitherto enunciated.

My Lords, why is this so? On the whole, if one takes a broad perspective of our economic history, one finds that the results of collective bargaining have not been all that bad. Moderation has been exercised on one side or another— though of course there have been deplorable exceptions. He would be falsifying history who said that in days gone by responsible leaders of the trade union movement were making demands of this order of magnitude. Of course, to some extent it is a case of the chicken and the egg: there is inflation and, ipso facto, there is a pretext for demands which are higher than they would have been had there not been inflation. It may be—I have heard it said by noble Lords—that there is a certain amount of pure " destructionism " in some of the demands that have been made. I do not know about that, but what I firmly believe, and what I do not think is widely recognised even among well-informed people, is that there is a limitation of the real resources which exist to finance demands of the order of magnitude which we read about almost every day of the week.

I have just been reading an extra-ordinarily interesting tract, published by a body I have never heard of before but one which is obviously a body of good-will, called Working Together. Then there is a pamphlet written by a very well-known person indeed, the famous Professor Phelps Brown, who was recently President of the Royal Economic Society —a person whose integrity and technical ability would surely be recognised by knowledgeable people on all sides of the House. The pamphlet is entitled: Where do Rises in Pay Come From? To illustrate his argument—it is an elaborate one and I shall not attempt to reproduce it here—he takes an extreme case. He suggests something which would clearly be impracticable, if not impossible, and which would be rejected by all responsible people: that there should be a confiscation of all incomes over £3,000 a year. That would cause no little disquietude in the other place! That is the Professor's hypothesis, and he then takes incontestable statistics and makes adjustments for taxation—because of course adjustments in taxation would be essential with an operation of that sort, as I am sure the noble Lord will agree. What is the net result? Even I, who am a little sceptical about the existence of the widows' cruse, was taken aback by Professor Phelps Brown's conclusion. He finds that there would be available in real terms an increase of 5 per cent. for all the people who are earning below £3,000 a year. Therefore any demand which exceeds that amount is a demand which can only be met, nominally, by inflation ; and I do not believe that that fact is at all commonly recognised. There is no widow's cruse, my Lords, which would help us out of the present position.

At the present time, the one thing which stands between us and a siege economy, with food rationing and the rationing of imported raw materials, together with the collapse of the pound, is the willingness of foreigners to lend us money and, if I may be permitted to say so in your Lordships' House, the great skill and dedication of the leaders of our financial institutions who are concerned with foreign borrowing, especially the Governor and staff of the Bank of England. Only the willingness of foreigners to lend and the trust engendered by the people I have referred to stand between us and a catastrophe of a kind which has never so far been seen in this country. And how precarious it all is! One seriously adverse industrial dispute on a large scale, a few more collapses of important businesses, a series of very bad trade figures, and there is a 50 per cent. chance that the position would become out of hand. And it would not be the doing of an obscure group of speculative " Gnomes of Zurich" and hypothetically evil groups of that sort: it would be the result of the sober advice of financial advisers in all countries other than this all over the world.

May I conclude by saying that, in my judgment, never since the shadow of Hitler was lengthening over this country has there been such a gap between what Keynes used to call "outside opinion" and " inside opinion" in this country. "Inside opinion" knows the dangers I have been talking about, but how many "outsiders" do? Go into Victoria Street and observe the deportment and demeanour of the people hurrying to and fro on their daily rounds ; go into the centres of retail trade, which are not doing badly at the moment; make a sample survey anywhere you like, at any rate in the South-East of England, and you will find that people have become anaesthetised to the cry of " Crisis!" So far as they are concerned, things are pretty normal though the headlines in the paper are perhaps a little more disquieting than usual, " but after all we all know what the papers are."

Lord BOOTHBY

My Lords, I hesitate to interrupt and hesitate still more to contradict the noble Lord, but I find moving around in the places he has just mentioned that everybody looks intensely gloomy, and that applies to the country as a whole—outside and inside.

Lord ROBBINS

My Lords, I would always hesitate to disagree with the noble Lord who has so many contacts and so much experience. I should be extremely glad if what he said were true. But I myself, when I move about, which I sometimes do, gain the contrary impression. I am reminded of the lines of Thomas Gray, Ode on a Distant Prospect of Eton College: Alas, regardless of their doom, The little victims play! No sense have they of ills to come, Nor care beyond today. My Lords, the thing that this country needs most is candour and truth, and those of us on the Cross-Benches look to the fine characters on both sides of the House to act in that spirit.

6.1 p.m.

Lord MONSON

My Lords, the noble Lord, Lord Strathcona and Mount Royal, and most noble Lords who have followed him have dealt most thoroughly with the broad picture and the main issues. I should like to discuss briefly four specific, but mainly unrelated, minor spheres in which I believe there is scope for energy, and specifically fossil fuel, conservation, together with balance-of-payments savings.

Since the implications of the oil crisis first impinged upon the public conscious-ness, I have been struck time and time again by how often when one walks in the middle of winter down the main shopping streets of London or other towns and cities one gets almost bowled over by gusts of warm, expensively centrally-heated air gushing through the wide-open doors of certain shops, whether department stores, dress shops or street corner tobacconists. The majority of shops keep their doors closed in cold weather—a notable example being Harrods—and this has no noticeable adverse effect upon trade. But a size-able minority do not, and taken over the country as a whole this must add up to a very considerable waste of fuel. It may be argued that this is purely a matter for the commercial judgment of the shopkeepers concerned or, in the case of chain stores, their shareholders. But I would dispute this.

Although the Exchequer may benefit from the higher taxes paid on the fuel wasted, the balance of payments must suffer. Furthermore, the higher over-heads must ultimately be reflected in higher prices for the goods sold. Any-thing that unnecessarily nudges up the cost of living, however imperceptibly, must be deplored. I do not believe this is a matter for legislation, even if such legislation were enforceable, which I doubt. There are far too many restrictive laws in this country already. But I believe it to be a suitable case for exhortation. I wonder whether the Department of Energy would consider drawing attention to the folly of this wasteful practice during the next stage of their advertising campaign.

Secondly, there is the question of insulation standards, to which other noble Lords have drawn attention. We must all welcome the double thermal standards recently proposed for new housing—not before time. But the question is: Do they go far enough? It is generally supposed that Norway is an exceptionally cold country in winter. In reality, on the coast where most of the population lives, the climate is Atlantic rather than continental, mainly because of the Gulf Stream and the prevailing South-Westerly winds. In fact, the average winter temperature on the coast is 43 degrees Fahrenheit. In other words, there are climatic as well the ethnic and linguistic affinities with the East Coast of Scotland. Norwegian law requires all new houses to have at least 15 centimetres of loft insulation, as well as sufficient extra insulation on the underside of the pitched roof to prevent the water tank, normally located in the loft, from freezing. In addition there must be at least 10 centimetres of external wall insulation.

At a time of financial stringency and high interest rates, there is understand-able antipathy among both local authorities and private house builders to anything that would raise the capital cost of new housing. Against this, as the noble Lord, Lord Strathcona, pointed out, certain forms of insulation pay for them-selves within one to three years. In other words, the return on capital invested varies between 33 and 100 per cent. Per-haps the answer should be on the lines of what was proposed by the noble Lord, Lord Avebury, and briefly touched upon by the noble Lord, Lord Nathan; namely, grants or some sort of fiscal assistance to householders who install additional insulation themselves to an approved standard. I would think that such assistance should be available to tenants of rented property as well as to owner-occupiers. In this connection, it might be even more of an incentive if such works could be classified as tenants' improvements rather than landlords' improvements.

Thirdly, there is the question of solar heating. The noble Lord, Lord Balogh, was sceptical about the feasibility of this, and indeed most of the recent comment in this country has been somewhat dismissive. But anybody who has taken the trouble to measure the temperature in a South-facing room during the months of December and January and compared this with the temperature in the North-facing room in the same building will have discovered that even in the short days of mid-winter solar radiation in this country is remarkably intense. The proof of the pudding is that there exists a school in Cheshire—I believe it was originally a secondary modern school, and presume it is now a comprehensive— which has been heated by nothing other than the sun's rays for the past 15 years or thereabouts. At the time the school was built the local authority was as sceptical as the noble Lord. Lord Balogh, and insisted upon boilers being installed, at great expense. So far as I have been able to discover they have never been used, even during exceptionally cold winters.

Of course, there have been certain problems with this school. It has become excessively warm on certain hot summer days, and it was argued at one time that the capital cost was rather high in relation to the fuel saved. This may have been a valid argument up until last year. But with the enormous increase in oil prices, surely the equation is altered. I believe that solar heating, which it should be remembered involves no maintenance costs to speak of, should be taken much more seriously in this country.

Lord STRATHCONA and MOUNT ROYAL

My Lords, if I might interrupt the noble Lord, I much welcome his support on this point but he could be spoiling his case by overstating it. If I remember correctly, this school has always had a large contribution to its heating load made by the lighting load, and sometimes lights are switched on and off when lighting is not necessarily neeeded, if it is found to be a little cold.

Lord MONSON

My Lords, I am grateful to the noble Lord for pointing that out. He has obviously studied the school in far greater depth than I have.

My final suggestion may seem rather more peripheral to the main issue in that the overall fuel saving, if it were adopted, would not be enormous, but I none the less put it forward for other reasons. Three weeks ago in your Lordships' House I drew attention to the way in which the exceptionally high cost of conveying bicycles by rail discouraged holidaymakers, students and others, from travelling by rail rather than by road. I had no idea at the time of the interest this would arouse and of the extremely strong feeling held by so many people on the subject. It is quite clear from my relatively large correspondence that these high charges discourage people, particularly those with families, from travelling by rail and drive them on to the roads.

The Motion speaks of the balance of payments. Apart from the obvious advantages of fuel saving, is it not conceivable that if these charges were lowered more foreign holidaymakers might be attracted to this country, with a consequent benefit to our balance of payments? On the last occasion I drew attention to the fact that in France the maximum charge for the conveyance of a bicycle was 58p, compared with £3.60 in this country, However, France is not unique in that respect. Sweden is a high cost country, yet to convey a bicycle from Malmö in the South to the Norwegian border beyond Kiruna in the North—a distance of 1,300 miles—costs a mere £1.26. Charges in other Continental countries are much in line with these. In fact, it is British Rail who are out of step.

Apart from the conveyance of bicycles, there is the question of storage, in so far as commuters frequently wish to cycle to a station car park and continue their journey by train rather than drive their car all the way into London. In The Times the other day a gentleman drew attention to the fact that the charge for storing a bicycle in a station car park is 15p, exactly the same charge as for a car, which seems to be rather ridiculous. Other correspondents have informed me that the charge for leaving a bicycle in a left luggage office is 25p, which also seems to be high. Another person, a war disability pensioner who is unable to walk to the station because of his leg wound, can none the less cycle there. He pays for the privilege of leaving his bicycle, returns every evening to find that it has been vandalised, and the station staff disclaim any responsibility for it. I raise this as an example of the kind of improvement which might be made in this sphere.

Of course, Parliament does not have power, and should not have power, to interfere in the day-to-day management of the nationalised industries. They must make their own commercial judgments. However, I suggest that by bringing charges for conveying and storing bicycles into line with the charges prevailing on the Continent, the balance of commercial advantage would coincide with the public interest, and I urge the management of British Rail to look at this matter again.

6.12 p.m.

The Earl of LYTTON

My Lords, I take part in a rather complicated debate in which I shall try to construct my words so as to fit in with those of other people. I am glad to take part in a debate which has been initiated by the noble Lord, Lord Strathcona and Mount Royal, because I served as a Staff Captain in the War Office when his father was Parliamentary Secretary to the Secretary of State for War. I remember a day in 1937 or 1938 when he chaired a conference. Everybody at the junior level who was there knew that there was going to be a war. We did our best to prepare for the gathering storm against the unpopularity of everything that we tried to do, with a conspicuous lack of support from the Treasury and the Government. I was secretary to a body called the Air Defence of Great Britain, which dealt with all the gun sites, all the aircraft sites, all the magazine sites, all the radar sites and, later, all the barrage balloon sites and that kind of thing. We had to get those sites, but nobody wanted us to have them.

A deputation, which was representative of many, visited the War Office and attended the conference chaired by the father of the noble Lord. A borough councillor said, " No, we don't want a gunnery in the park. This North London park is one of the ' lungs ' of London ". The hospital board said, " We don't want a gunnery which will break the windows of the hospital and keep the patients awake." An allotment holders' association made strong representations. They said, "We grow the nation's food. You can't dispose of us, even for a gunnery." The noble Lord's father listened patiently, as we all do, and, unlike so many Ministers, he did not say, "I have listened with great interest to the important remarks made to me during the afternoon and everything that has been said will be taken into account and most carefully considered before the Government make up their mind." He said, " That gunnery stays where it is". So few people say that kind of thing, but I think that is what has to be said in connection with the present situation although, of course, the context is different.

I was going to speak only on the subject of the balance of payments. However, I should like to make one or two very brief remarks on the subject of energy. I take it we are all agreed that one of the things which has precipitated the unity of the Arab world is the failure to solve the problem of Israel, and that the fulfilment of Resolution 242 would do an immense amount to "roll the pitch " and make it easier for everything in the Middle East where, in 1919, they ate out of our hands. Ever since the atom-sphere has been contaminated. Secondly, I was going to ask the noble Lord, Lord Hinton of Bankside, who made a splendid speech, what has happened to deuterium. That is the long-term nuclear element which is to be found in limitless quantities in the ocean. I imagine that the noble Lord indicated its impossibility when he said that fusion fuel was out of the question. However, when one is reduced to despair, because oil, gas, coal, wood and all the other things have gone, we shall have to deal with what is left, and I wonder whether anything is being done in the matter of deuterium which, as a nuclear fuel, is to be found in virtually unlimited quantities.

Lord AVEBURY

My Lords, in the annual report of the Atomic Energy Authority for 1972–73, it was stated that a fusion reactor which would be based on a mixture of deuterium and tritium fuels could not be expected to be in operation, even in prototype form, before the end of the century.

The Earl of LYTTON

My Lords, I am very grateful for the latest "stop press" news. However, 600 years have been mentioned, and as deuterium is calculated to last, at the present rate of consumption—which, no doubt, will increase—for 1,000 million years, I was just looking ahead a little way.

To turn to the balance of payments, I follow as closely as I can the line which has been taken by the noble Lord, Lord Robbins, who preceded me in the debate. However, I want to step back a little in history, because I am interested in the balance of payments. By that I mean all the transactions on the foreign exchanges, both visible and invisible—everything concerned with the balance of payments and not just the visible trade. I remember the arguments about the disturbing effect of reparations in a vast field, attributed to Clemenceau, but underlined by a very susbtantial panel of British bankers. Then followed the war debts and the economic consequences of Mr. Churchill's sticking out his chin, determined to look the dollar in the face—in other words, over-valuing the pound. One of our greatest men surely made some mistake there. Then, the French hoarded quantities of gold, and revalued the franc in 1928. The United States, by insisting on the repayments of war debts—all of which went through us, and we waived our claims to others—was known to this country as " Uncle Shylock ".

My Lords, through all these years our greatest men had been continually making dire mistakes about what was best. We were afflicted by the international gambling which ended on Wall Street in 1929. But our leaders have not succeeded. Mr. Wilson has failed; Mr. Heath has failed. We want a genuine kind of humility which admits that this is a difficult problem. Anyone who denounces the other side because of what they are doing has no support from me. I have watched too many great men doing their best and failing to succeed. How-ever, in the end we have succeeded.

In 1938 we had one anti-aircraft gun on the Medway. I attended its unveiling, and a German aircraft flew over as a sort of ceremonial salute, by accident. I agree with the noble Lord, Lord Robbins, that we are in the greatest danger, and we must face it. I agree with his observations on the subject of the social contract. I owe a debt of gratitude to the Chief Whip on the Government side, Baroness Llewelyn-Davies, for having sent me a very full letter explaining the social con-tract and the documents comprising it, which are four in the main and two sup-plementary, all of which I have studied. I wrote to her in return with the observation that I thought the guidelines were aimed insufficiently, and that the result might be to preserve inflation at 20 per cent. That is all that can be expected, if indeed that figure is not exceeded. I should have thought that something like a 20 per cent. reduction in consumption, or something more than that, should be aimed at. However, I have no wish to deride the document. It is not a contract; it is not really social. It is a kind of arrangement by the Labour Party, representing one third of the electorate—and they are important, because they are the Government. The number of trade union members represented could be as low as one-twentieth. Therefore, it is a very tenuous contract, but I see no reason why it should not be furbished, made to grow, or even why it should not make some sort of arrangement which could be developed and then taken over by one Government from another. I do not wish to poke fun at it; it is easy to do that, because it is nothing it claims to be. But it is a seed from which something may develop. I should like it to succeed. Everybody has failed. So let us not throw over this little seed of possibility for the future.

My Lords, as regards the policies of the right honourable gentleman the Chancellor of the Exchequer, it seems to me that the real enemy in this country is inflation. It is not the only enemy, but it is something that is not under our control, but which should be. It is the massive increase in income in excess of growth. All the leaders have said the same thing. Mr. Wilson, "One man's wage rise is another man's price rise"; Mr. Heath, "One man's pay rise is another man's redundancy " ; Mr. Healey, just recently, " Everybody's rise is going to lead to national bankruptcy ". All are agreed. Therefore, we should wish them well in their efforts. There are things about the policies of the right honourable gentleman Mr. Healey which I detest and deplore. Privately, to different friends of mine, I have indicated what I dislike, particularly the policy which seemed to me to be converting a "nation of shopkeepers " into a nation of shop assistants, which is another way to describe Marxism. I see he is yielding on this. I do not chide him, or gibe at him, as did the leader in the Daily Telegraph a day or two ago. When something happens which seems to agree with my way of thinking, I say, "Thank God we are on the same side so far!". I have no wish to make gibes at anyone.

I appreciate that there are rogue employers and rogue employees. As I see it—and I am sure noble Lords from all sides of the House must feel the same —the rogue employer is just as likely to be Henry Ford, raising wages irrespective of whether it suits the country or not—he has done it before. And the rogue employees are the miners, much as I respect them. Everyone knows it. They could ruin the whole social con-tract. I earnestly hope that the Government will succeed and that the Opposition will support them in everything that is necessary. There is so much that we must all support. We are facing the grave danger mentioned by the noble Lord, Lord Robbins. I am in agreement with him also that the man in the street simply does not know what it is about.

I have taught this subject, and I know that the number of people who confuse the balance of payments with balancing the budget is legion. I am not at all just that, if the extracts from his diary certain that Mr. Crossman did not do in the Sunday Times are to be relied on. He certainly knew nothing about bank rate, because when he quotes a very sensible remark made to him by the right honourable gentleman Mr. Callaghan, he says, " God only knows what he meant!" Everybody else should have known. One should not speak of the dead, but these diaries bring out criticism of everyone else and they do not add greatly to Mr. Crossman, because among the most ignorant is himself.

My Lords, I should like briefly to comment on the reference made by the noble Lord, Lord Robbins, to Germany and Japan and their successes in balancing their payments. They are two defeated nations, but they have a remark-able discipline. Discipline is a thing we have not got and probably do not want.

There is a certain lack of discipline in this country, which is bad.

Lord ROBBINS

My Lords, if I may interrupt the noble Earl, Lord Lytton, I did not say that Japan had succeeded in wiping out her deficit. I said that the Japanese were making good progress.

The Earl of LYTTON

My Lords, I am obliged for that correction. Is it not a fact that France is not doing too badly? France is a very undisciplined country. But I was going to say that if you get a job in Germany, you have to clock in and clock out, and there are some rules which you obey. They have strikes, but this is a different matter. While you are on duty there is a certain discipline. The workers are well paid, they enjoy their work, but they have to toe the line. Not only is Japanese labour good but their products arc good also. At one time I remember it was said of the Japanese that they could only imitate what others do. There was a story told between the wars that somebody sold them a plan for a battleship which was faulty, and they made it without examining it carefully and it turned upside down. The Japanese do not now correspond with this picture we once had of them. Their products, their wireless sets and televisions and some of their cars, are first-rate work. We must catch up again. There are things to be done on both sides; both the labour side and the technical side in this country have got into the doldrums.

For this immediate crisis, the danger lies in the vast amount of wage increases. The present Government have a very grave problem in front of them. We cannot have a General Strike. I remember the one in 1926. It is impossible now ; we have developed so far that such a thing is out of the question. It would mean too many people dying in hospitals on operating tables, and heaven knows what! It cannot be. Therefore we must get agreement with people and they must restrain themselves. My Lords, owing to the fact, as I said, that I have reconstructed my speech it is all higgledy-piggledy, and I think it is time I ceased. Alas! I have been talking for 18 minutes.

6.32 p.m.

Lord SEEBOHM

My Lords, as a banker I must stick to the financial aspects of this debate. I find it deeply disturb- ing that so few people I meet seem to realise and acknowledge the seriousness of the situation as it exists at this moment. But what I find far more disturbing is that those who must know and under-stand the situation seem to lack the courage and the political will to do any-thing about it or to take any positive action. Like the noble Lord, Lord Nathan, I, too, am not a prophet of doom. I think there is no reason whatever why this country should not be able to pull itself out of this mire provided it takes the right action within two or three years. I propose, therefore, to make a few brief comments about the situation as I see it and to suggest positive action which I think might be taken to put things right.

The energy crisis—which, naturally, is generally known as the price of oil crisis —is an important and very serious matter, but it is not the only matter that has got us into our troubles. The noble Lord, Lord Robbins, has already mentioned the general increase in the cost of raw materials over the last few years. We know there has been a transfer in favour of the developing countries from the manufacturing countries, which means a positive transfer of wealth from the manufacturing countries to the producing countries. The conclusion from this is—again, as the noble Lord, Lord Robbins, has pointed out—that our standard of life has to be reduced. It is no good thinking that by borrowing abroad we can maintain this unjustifiable standard. This is the policy of the grasshopper who sang during the summer and made no provision for the winter.

It appears that our masters are some-what relying on the possibility of what is known as the recycling of petro-dollars. May I assure your Lordships that not one single petro-dollar is being recycled or will be recycled. What is happening is that groups of countries are getting together so that those who have substantrial currency reserves and those who have good balance of payments may sup-port those, like Italy and ourselves, who are in difficulties. I am not against the Kissinger proposals or the Healey proposals ; both of these are helpful. But the Kissinger proposals do not, in fact, move petrodollars themselves. The OPEC countries leave their investments and their money where they will. I personally prefer the Healey plan. I believe the IMF is, in fact, a far better solution, if one can persuade the OPEC countries to lend massive amounts of money to the IMF. If they do, they get the benefit of a basket of currencies, which avoids losing a great deal of money in one currency that might go down. It also means that the responsibility for the credit and the exchange risk is transferred from the rich countries—for instance, in Europe, Germany and France at the moment—to the IMF, where it is spread over all members of the Fund.

There is another scapegoat about which we now hear quite a lot: that is, that inflation and monetary instability is now international and something we cannot compete with. I should like to assure your Lordships that world financial stability depends entirely on the internal policies of individual countries, and I would say that the United Kingdom has made a major contribution—a fair share of disruption—owing to the uncontrolled and mounting inflation.

I suggest not a solution but something that might be done. I believe that Her Majesty's Government should now announce and launch a three-year programme during which they commit themselves, first of all, to control the rate of inflation, and then, by the end of that period, to make a significant reduction in the rate. We all know that it is impossible to cure inflation at this rate in a three-year period. If we did, the withdrawal symptoms would be far worse than the present situation. Therefore, I use the word "significant" intentionally and not dramatically. This involves a certain amount of unpleasant action. The first, which has been mentioned already, is the halting of increases in personal incomes in real terms. A complete income freeze—although it may appear attractive to some—again is out of the question. It is unfair; it is impossible to enforce, and again the withdrawal symptoms would mean that the cure is worse than the disease.

The next thing that must be stopped is the transferring of money from savers to spenders. We must stop taxing industry, which is trying to invest and produce the wealth of this country. We must, I am afraid, increase the taxation for you and me. At the same time we must stop any increase in public sector spending in real terms. This is absolutely essential. Those are things which must not happen. What do we do on the positive side? I believe we must help industry, first of all, by mounting a still greater programme of training and retraining, management and labour. This seems to me vital. On the social side, and also as an aid to halting unemployment if that comes, I should want to launch a major housing programme. This is something which is heavily overdue for every reason that I can think of. It also has the attraction, quite apart from increasing labour in a depressed area, of having a very small import content. It also, of course, has the final attraction of increasing the mobility of labour, without which retraining is probably ineffective.

To pick up a point made by the noble Lord, Lord Selsdon, there has been new assessment of what is to happen to oil money. Until now we have assumed that it will go on increasing in the developed countries until 1980, 1985 and beyond. But what is happening is that the ability to import goods and services of the oil-producing countries is far in excess of anything anybody ever imagined. Recently an international bank has produced an estimate which may be optimistic, if that is the right word, to show that Iran by 1978 may be actually drawing down on the credit balances that it holds overseas, that by 1980 the oil-producers as a whole may be drawing down and not increasing their balances. There is likely to be one singular exception, which is Saudi Arabia, which has such a small population that its ability to import is probably strictly limited. But the implication of this is that the demand for goods and services, ports, airports, hospitals and schools, roads, railways, machinery and factories will be so large long before the end of this decade that it could start an export boom to the developing countries such as has never been seen before. We must ensure that this country not only gets a fair share but more than its fair share, because I reckon that at the moment we are taking more than our fair share of the hardships of oil deficiencies.

This may seem an optimistic view. In the short term the situation is extremely gloomy. Why I am optimistic in the long term I have been trying to explain. I believe that we could come out of this gloomy situation, but the Government must do everything they can to help this export boom. They should, as a start, restore the BNEC, which should never have been cancelled. We must get back to studying the markets and finding out precisely what is required, where the demand is, what we can do, and then so organise our industry that we can do it. But unless some programme on the lines I have indicated is introduced very shortly, I believe that our sources of overseas funds will dry up. I and other bankers were very closely involved in the raising of that £2.5 billion last year. I should like to assure your Lordships that that exercise could not be repeated again. If, however, such action is taken as I have indicated, I believe that the response overseas would be immediate. I believe that their faith in this country would be restored and they would do everything they could to make our plans effective. If we do not take this action, I believe that credibility in our Parliament and in our possible viability will not be restored.

6.42 p.m.

Lord LOVELL-DAVIS

My Lords, this has been an extremely interesting and timely debate. As my noble friend the Minister of State for Energy, Lord Balogh, has said, we welcome the Motion, particularly in that it provides an opportunity to explain how our energy conservation policy is developing. The whole of modern life is based on energy and the almost limitless uses to which it is put. Indeed, so great is the extent of its use that to face the need to conserve it is to take on a massive and complex problem. The scale extends from those areas of heavy use, such as industry, where it is easier to discern solutions in terms of energy saving and production methods, to the individual domestic consumer who is perhaps best able to estimate and know what scope he has for saving and making more efficient use of the energy he uses—or to get expert judgment on what he can reasonably expect to achieve in these terms.

Given this, it is neither sensible nor really feasible to list all the possibilities and attempt to quantify them. On the other hand, Government measures to en-force energy saving in the rigid way which would be necessary to achieve immediate and dramatic effects on our balance of payments would be inequitable, would cause hardship and probably, too, a misallocation of our resources. In the long term, the only satisfactory solution will be found by gaining the co-operation of the whole community. And that must be the main objective of Government policy at this time—to create an awareness of the need for energy conservation and then to win and build up that co-operation. In this respect the views that have been expressed during this debate are most welcome.

I should like to refer specifically to certain points which noble Lords have raised. I hope that noble Lords will bear with me as I try to work my way through the notes I have made. The noble Lord, Lord Strathcona and Mount Royal—to whom I am sure we must all be deeply grateful for initiating this debate—as my noble friend Lord Balogh said in his speech, covered much of our programme. Perhaps I could take one or two points which were not fully covered, but say at the outset that I fully agree with him in his stating that there is a case for long-term energy saving. The noble Lord referred to the heat pump. I understand that the Department of the Environment is looking at this. He referred also to the use of waste heat, in particular in the case of power stations. I think the noble Lord mentioned that the Central Electricity Generating Board were looking at this. My right honourable friend the Secretary of State for Energy, and his Advisory Council on Research and Development, have in fact set up a study group on forms of waste heat recovery.

The noble Lord also referred to the Severn Barrage. The Advisory Council on Research and Development considered this question at yesterday's meeting, and will reconsider the position in a month's time. Here again, the Central Electricity Generating Board is studying the project and will submit a paper to the Advisory Council on Research and Development. He also referred—and this was dealt with by my noble friend Lord Balogh—to the efficacy of the price mechanism as a means of saving energy, and I thoroughly endorse all that he said in this respect.

So far as companies carrying out their own energy audit is concerned, my right honourable friend the Secretary of State covered this in his twelve point package, and recommended to companies that they should include energy reports in their annual company reports and that this should also be made the subject of discussion, and it was recommended to them that they appoint an energy manager. It seems that companies are in fact following this advice.

The noble Lord also asked what the Advisory Council on Energy Conservation is supposed to do. It is supposed to do precisely what its name says, which is to advise on energy conservation. It has been meeting regularly since 23rd October 1974. The noble Lord referred to industry and asked why no CBI members, et cetera, were on the Council. The members of the ACEC were selected on a personal basis and not as representatives. Therefore, there are no representatives of the CBI on the Council, though it contains people from industry.

I turn now to the noble Lord, Lord Avebury. The noble Lord gave me some figures, but I am afraid that I did not initially take them all down. I have not had the opportunity to consider them ; I should very much like to do so, and I shall certainly refer this matter back to the Department. I should like to refer to the Waste Management Advisory Council, which was set up at the end of 1974 under the auspices of the Department of the Environment. Close contact between that Council and the Advisory Council on Energy Conservation is being maintained, and the Waste Management Advisory Council is to look into such matters as waste in packaging. So far as the Department of Energy is concerned, I can assure the noble Lord that our thermostats are turned down to 65 degrees.

I should like to thank the noble Lord, Lord Hinton of Bankside, for his excellent speech showing us clearly those areas where we should concentrate our efforts to develop new resources of usable energy. There is only one point on which I should like to take issue with him, and that is over what he said about an Energy Commission, and in particular his suggestion that the Government have failed to do anything to establish a strong inter-disciplinary team in the field of energy policy. May I remind him of what has been done to strengthen the resources available to the Government in this area since the setting up of the Department of Energy, in itself an important step towards the kind of expertise inside the Government which he wants to see. We have established an energy technology support unit at Harwell to assess the scientific and technological options open to us in various fields and to monitor progress abroad.

We have appointed a chief scientist to ensure that we get the best top-level advice on scientific aspects of energy policy. We have set up an Advisory Council on Energy Conservation to bring together experts from many different fields to assist and advise us in this important area. We have continued to develop the considerable expertise in energy fore-casting which the Department possesses through its computer models of the energy sector, and we have strengthened professional and technical staff available to assist us in the formulation of energy policy with the recruitment, since the Department was formed, of a further 60 technologists.

I do not believe it is fair, in the light of these measures, to assert that little or nothing has been done to build up an inter-disciplinary team within the Department. But I hope that on further reflection the noble Lord may return to the views which he expressed on the subject when this House debated it nearly two years ago. The noble Lord, Lord Nathan, referred to substantial capital investment expenditure. It is not necessarily the case. Small economies can amass great savings. He referred also to the improvement of new buildings. The improvement of building standards is something on which the Government have intervened, as he may be aware. He mentioned the development of small power stations. This matter is under consideration.

In my comments on the speech of the noble Lord, Lord Strathcona and Mount Royal, I have already referred to what is being done to consider the use of waste heat from industry. Again I referred to the matter, which the noble Lord, Lord Nathan, mentioned, of the need to develop a method of energy accounting. I think that perhaps this is not so fully developed quite in the sense he implies, but as I have said we are taking steps to encourage companies to include this information in annual reports and to appoint energy managers.

District heating from surplus heat from both power stations in industry is possible and is something which the Department keeps under constant review. But introducing such a system into areas of existing development requires substantial capital cost. It is far more costly than heating by other methods, but obviously it is something to be considered for new developments. Finally, the noble Lord referred to the need to enlarge the terms of reference of the Advisory Council on Energy Conservation. The Council has been meeting only since 23rd October last and it can and will adapt itself to suit the circumstances.

I am not an economist and therefore I find it difficult to comment in detail on the interesting and informative exposition which the noble Lord, Lord Robbins, gave of our balance of payments situation, except to say that energy does fit into this, and the conservation of energy helps our position in respect of our balance of payments. He also made the point, which was taken by his noble friend, about people being anaesthetised to the cry of "crisis". This is something which we are trying to do, and I will come to it in a few minutes, in creating an awareness of a crisis situation. I am aware of people being more and more conscious of the situation which we are in, but we have to get it across much more fully than we are at the moment.

To the noble Lord, Lord Monson, I should like to say that we will see that the advertising campaign is considered in the light of the points which he mentioned. As for solar heating, I am due to visit Cheshire shortly and since the friend I hope to see there is Director of Education in Cheshire, perhaps I will have a personal chance to look at the school in question.

I cannot comment on the cost of sending bicycles by rail. No doubt this subject could be referred to the appropriate Department or to British Rail. In reply to the noble Earl, Lord Lytton, here again I should like to say that, so far as deuterium is concerned, I am not farsighted enough to say much about it in view of the intervention of the noble Lord, Lord Avebury, and the time ele- ment involved. Regarding the speech of the noble Lord, Lord Seebohm, so far as his three-year programme to control inflation is concerned, I can only hope that my right honourable friend the Chancellor of the Exchequer will have his attention drawn to the Hansard coverage of this debate. We will take into consideration all the recommendations and views which have been ex-pressed during the debate. The process we have established gives us scope within the Department to reinforce and extend existing measures and to take up new ones as they seem appropriate to the needs which may arise and as the time seems opportune. The work of the Department in developing the energy conservation campaign by no means stops with the many actions which have been taken so far. I shall not cover again the many points which my noble friend Lord Balogh dealt with so fully and concisely in his earlier speech.

However, I should like to refer briefly to the publicity campaign which we have launched and to put it into context. It is a very difficult matter to devise and maintain a campaign of this sort, for it is not typical in general advertising terms. We are not selling a product or even a service. Our aim in the immediate sense is to create and reinforce an aware-ness of the need to conserve energy, right across the board—to convince everyone that " energy sense is common sense "— to provide practical information for domestic, industrial and other users of energy, and to gain their co-operation.

More than this, however, we are engaged in what is, in fact, a process of education, and are setting out basically to change people's attitude towards the use of energy and their habits in using energy. Our aim is not to get people to " switch off something"—which, in the winter of 1973, was related entirely to an emergency situation and concentrated on one fuel, electricity, in an attempt to make large, almost brutal reductions in consumption over a very short period. Our campaign, now generally known as the " Save It" campaign, is more positive, concentrating immediately on the reduction of waste and the efficient use of energy to reduce the drain on our finances. But it also stands in a very large and important con-text, involving our whole attitude towards energy consumption in the future. It has to serve our immediate needs, but at the same time it must be the spearhead of a move to change that basic attitude. We are stating the antithesis of " the wasteful society ", and we are saying that we have to stop squandering energy and base the future of our society on real and generally finite resources.

The reasons are obvious and they are of some magnitude—in immediate order of precedence, economic, environmental, Third World, the very continuance of life on this planet. They need not be the cause of pessimism. As my noble friend Lord Balogh has said, we are not in the gloom business. On the contrary, to accept the need for energy conservation implies a positive and optimistic approach to the future. It is clear, from the surveys we have carried out, that people are growing more and more aware of the situation and of the fact that, so far as energy is concerned, we cannot go on living in the reckless way that has characterised the past decade or so. There are, therefore, powerful national and inter-national motives for making more efficient and economic use of our resources, and it is our aim to reinforce the growing public awareness of their validity. The fuel industries appreciate the need to encourage people to avoid waste, and the nationalised industries and some of the leading oil companies are running advertisements on an energy conservation scheme. Discussions are also being held with those industries in order to co-ordinate publicity on this important subject.

Misgivings have been expressed that fuel in any form should be advertised at a time when the Government are promoting an energy conservation policy, but it must be remembered that the aim of our campaign is to ensure that waste is avoided and energy used more efficiently. Many of the promotions by the fuel industries are designed to spread awareness of new developments and to assist the consumer to make a better-informed decision about what is appropriate to his or her needs. Moreover—and I think this is important, because much criticism attaches to this—in so far as the advertising of new energy-efficient appliances leads to the replacement of old and less energy-efficient machines, such promotion can itself be a means of reducing the wasteful use of fuel.

It is against this background that we should envisage the present publicity campaign, however much it may appear to be based on the technique of " soft sell" rather than a more aggressive approach which we believe would operate effectively only in the short term. In all the Department's activities in this respect, we are aiming to promote action and thought, to provide practical information, to stimulate discussion and to educate over the long term. In our approach to energy conservation, we hope that we may be establishing a base from which to launch projects not only from this Department but also from others. I feel that the matter of creating an aware-ness of the country's true economic situation is also involved, because our approach can be used to achieve even greater and more complex economic and social objectives for the future.

My Lords, while not wishing to end on too Party-political a note, and while welcoming many of the suggestions which have been made this afternoon, I find it very hard to accept much of the ill-conceived criticism to which our efforts have been subjected. We firmly believe that the measures which the Government are taking are the right ones. We know that they are already having an effect and that, as they develop, they will achieve our aims in both the short and the long term. In brief, we are convinced that our approach to the solution of these highly complex problems is the right one.

7.4p.m.

Lord STRATHCONA and MOUNT ROYAL

My Lords, we have tried this afternoon to cover a remarkably wide field and I should like to congratulate the noble Lord, Lord Lovell-Davis, on the way in which he managed to answer so many of the points which have been raised this afternoon. The noble Lord, Lord Balogh, expressed some surprise that there were not more speakers and, incidentally, I noticed that there were none from the Benches behind him. However, I think that if we were lacking in quantity, we can honestly say that we made up for it in quality and authority, and, I am afraid, in some regrettable cases, in length—in my own case, at any rate. May I add that I owe the House an apology. I gave the House some figures from the American magazine Foreign Affairs, which the noble Lord, Lord Balogh, very properly questioned. These were figures for the monthly transfer and I quoted them as per annum figures, when they should have been spread over five years. The noble Lord tells me that he still thinks that they are too high. I suggest that this mistake shows merely that at least some of us are totally bemused by the sheer magnitude of the colossal figures which are bandied around.

My Lords, I should particularly like to thank the noble Lord, Lord Nathan, who, I think, implicitly gave some sup-port to some figures which I used and of which my understanding has been questioned by the noble Lord, Lord Avebury, and, to some extent, by the noble Lord, Lord Hinton, that great scientist who gave such an excellent, though not wholly encouraging glimpse of the future. The noble Earl, Lord Lytton, clearly remembers my father as a man of very much greater stature than his son, and I am grateful for his kind family reminiscences.

I felt that we finished on a splendid note of good sense and even of cheer from the noble Lord, Lord Seebohm, and this was rounded out very nicely by the noble Lord, Lord Lovell-Davis, who, at least so far as the Government were con-cerned, was making all the right noises. My Lords, I beg leave to withdraw the Motion.

Motion for Papers, by leave, with-drawn.