§ 7.7 p.m.
§ The Minister of State, Scottish Office (The Earl of Mansfield)
My Lords, this Bill makes provision for the statutory limit on the borrowing of the Scottish electricity boards to be increased from £1,950 million to £2,700 million. The boards operate a joint generating agreement to enable them to run the most efficient power stations in Scotland at any one time to meet demand throughout Scotland, and it is therefore appropriate that, as has been the case since 1963, there should be a joint statutory limit on the borrowing required by both boards to finance the programme. Also, in accordance with established practice, the Bill makes provision for an interim borrowing limit of £2,300 million, which may be exceeded only once an order to extend the limit has been made. Such orders are subject to affirmative resolution procedure in another place. The interim limit which is likely to be reached during 1986 may either be increased directly to the final limit of £2,700 million, or increased by a smaller amount, leaving the move to the final limit to be made by order at a later stage. The opportunity is therefore provided at these times to review the boards' performance in relation to the borrowing limits.
Borrowings against the existing limit of £1,950 million amounted to almost £1,544 million at the end of November, and it is expected that the current limit will be reached some time during 1983–84. The order bringing into operation the existing upper limit was made earlier this year. Noble Lords might then wonder at the reasons for proposing a further increase in such a short space of time.
The boards' borrowing requirements are determined mainly by the level of their capital expenditure and the extent to which this can be financed from internal resources. The South of Scotland Electricity Board is currently building a new 993 nuclear power station at Torness, and because power stations are very expensive to build, it would be unreasonable to assume that the board could find the necessary internal resources without having recourse to borrowing. Although this Bill is needed to finance these borrowing requirements for this undertaking, there are also other capital projects carried out by the boards. Existing power stations require refurbishment, while the maintenance and upgrading of their extensive transmission and distribution lines are other major areas which require outlay of capital by the boards. The North of Scotland Hydro-Electric Board may not have any large construction programme under way but, if it is to be encouraged in its research and development of renewable sources of energy and other worthy schemes including distant islands connections, then it must have the necessary funds available for such projects.
The boards are to be congratulated on their good record in the efficiency of their operations particularly when one considers that many of their costs, particularly the fuel element, are outwith their control. Following the conclusions of the review of the bulk supply tariff in England and Wales, the Scottish boards, in line with those South of the Border, have agreed not to increase the average level of their prices in 1983. The boards have also been active in seeking to help intensive users of electricity within their area by introducing a special load management scheme and a number of companies are now enjoying lower fuel bills as a direct result of their participation.
The boards have been criticised for their record in disconnecting consumers who have failed to pay their electricity bills. However, noble Lords will realise that, like any commercial organisation, a high level of debt causes increased charges to those consumers who do pay their bills on time. The boards operate their disconnection policy within the terms of the code of practice; and independent surveys by the Policy Studies Institute and the Electricity Consultative Councils in Scotland have confirmed that they obey both the letter and the spirit of the code. As matters of fact, the total number of disconnections in Scotland have fallen from 17,881 in the year ending November 1981 to 14,903 in the year ending November 1982 and the number of consumers being assisted by the DHSS scheme for direct payment of fuel bills by those on supplementary benefits has risen from 23,332 in 1981 to 33,652 in 1982. This Bill will enable the boards to borrow the sums necessary to permit their required investment to be undertaken and I therefore commend it to your Lordships. I beg to move.
§ Moved, That the Bill be now read a second time.—(The Earl of Mansfield.)
§ 7.12 p.m.
§ Lord Ross of Marnock
My Lords, I would not dream of opposing this Bill. In fact, I am surprised that we are having a debate at all on it. I should have thought that this would have been ruled as a Money Bill, but I gather that it has not been so ruled. Certainly in another place there was quite a lot of discussion which, to my purist mind, would have been well outside the rules of order normally in relation to 994 Money Bills. But it gives the Government an opportunity of explaining it. I think that it is easy to explain when you are building a nuclear station at Torness, whether people like it or not, that it is going to cost a lot of money. I think that that is the more important part rather than the research and development for the North Border zone.
One or two interesting things are certainly happening there and I should not like to see them being discontinued for lack of money. On the point of disconnections, there have been some complaints in some areas about the code of practice not being properly followed. I remember that it was very troublesome a few years ago, but I am glad to have the assurance of the Minister that we are looking into this and watching it carefully. It is rather shattering to find that there are 33,000 people dependent on the DHSS for payment of their electricity bills. It is an indication of the increased poverty and of the spread of unemployment.
A very important statement was made by the Electricity Council in England the other day about standing charges. We have not heard anything at all about any relief being given in Scotland. If the Minister or the Secretary of State have not had any queries about it, I should be very surprised because it is the kind of situation where if you give some relief in England and Wales and do not give it in Scotland, then, once certain people have stopped rowing among themselves, they might appreciate that here is another insult, or something like that, to Scotland. Perhaps the Minister could say a word about that; but, generally speaking, I support the Bill.
§ The Earl of Mansfield
My Lords, I am obliged to the noble Lord for his welcome to this Bill. There is only one matter which I need take up and that is the matter of the standing charges. As the House will know, in England and Wales the effect of the new pronouncement will be that standing charges will be limited to 50 per cent. of one bill. In Scotland we have a rather different system. The South of Scotland Electricity Board do not have a standing charge but they operate a two-part tariff which is rather more favourable—I was going to say "to the poor consumer"; but I am not sure that that is right—to the consumer of low quantities of electricity than is the standing charge. The North of Scotland Hydro-Electric Board have a standing charge, but I understand that both Scottish electricity boards will be considering the implications of the Electricity Councils request to area boards in England and Wales to implement this proposal. I am advised that they will complete their deliberations before very long.
§ On Question, Bill read a second time; Committee negatived.
§ Then, Standing order No. 43 having been suspended (pursuant to Resolution of 16th December) Bill read a third time, and passed.