§ 4.3 p.m.
§ Debate resumed.
§ Lord Diamond
My Lords, I, too, am most grateful to the noble Lord, Lord Ezra, for having introduced this matter in such a comprehensive way. I am indeed 1424 especially grateful to him because then it justifies, perhaps, my seeking your Lordships' leave to discuss only one narrow point, he having fully and fairly discussed the major issues.
What I want to draw to your Lordships' attention is a proposal which has already been discussed in two oral parliamentary Questions, but the discussion showed that there was no possibility of minds meeting. Perhaps that was the fault of the fact that they were attempts to bring into a discussion under a parliamentary Question an issue which was too large to be accommodated there. It is perhaps more suitable that one should attempt to raise it during a short speech in this debate. The proposal is, against the accepted background of closure of fully uneconomic pits, to repeat what has been a highly successful experiment in the steel industry in similar circumstances.
As I understand it, BSC (Industry) Limited was formed in the 1970s to help create new jobs in areas most affected by the steel closures. Since 1978 it has achieved the following remarkable results. Some 1,250 companies have been helped to start up in these areas; some 19,000 new jobs have been created; and a further 14,000 are forecast by the end of next year. I understand that those are reliable figures; and your Lordships will have added them up and seen that we are talking about a total of 33,000 new jobs in areas affected by steel closures at that time. A comparison immediately comes to mind of areas affected by pit closures. Thirty-three thousand is a substantial number, and in the context of the mining industry is such as to give some hope in an area where very little hope is felt at the moment by those affected. This proposal has been put forward in very short form, and the Government have reacted very unfavourably against it. They say that coal is not the same as steel. Of course it is not, but it is sufficiently similar to merit very careful consideration of whether a true comparison exists.
Then the Government say, "We can rely on the existing services. You do not need to have a separate creation in order to try to achieve the maximum new employment in these affected areas". You could have said just the same with regard to steel. It was not said, and this steel company was formed for that special purpose. It has achieved this remarkable result, and for the very good reason that the existing services were not truly geared to cope with special circumstances of this kind. A new organisation would be likely to bring new enthusiasm to co-ordinate all the existing services and to direct efforts in the correct direction. It would act as catalyst to help, as it did with steel.
A further objection of the Government is that there is no real problem, because any problem resulting from compulsory redundancy in the mining industry is to be met by redundancy payments. I must repeat that we are not talking about an individual's grocery purchases: we are talking about the continuing existence of communities. That is the background in the mining industry. We are talking about people who are concerned about going out to work every day, instead of staring at a blank future of unwanted idleness.
Finally, by implication the Government say that this is an ordinary industrial dispute and they should 1425 leave it to be settled between employer and employee in the ordinary way. Nobody would want the Government to get involved in the detailed negotiations of a dispute of this kind, but it is quite wrong to regard this as an ordinary industrial dispute. First of all, it concerns miners, and there is no need for me to remind a Conservative Government that that takes it out of the definition of "ordinary".
Secondly, the dispute is a great one, and escalates day by day. We are now in a situation where there is a possibility of miners being sent to prison as a result of charges being made against them under the Riot Act. We all know, since the 1939 to 1945 war, how difficult a situation a Government are placed in once they allow striking workers to get involved with imprisonment, and what extraordinary steps the Government have to take to get them out of prison before negotiations can proceed. We do not want that to happen. I understand that a particularly sensitive turn has been given by the arrest of a rather well-known lady only today.
So it is certainly the Government's responsibility to concern themselves with the social consequences of market forces. They believe in market forces and want to leave matters to the market forces but the social consequences are the responsibility of the Government. Also the social consequences of the Government's industrial policies are the Government's responsibility and they cannot turn their backs on those.
Above all, we should recognise that this is a political fight. This is not for the first time. The miners' leadership has rejected the private ballot in favour of the political battle and the Government cannot avoid a political response. Their present stance of withdrawal and seeming to be indifferent to what is happening, is providing Mr. Scargill not only with his platform but with a pedestal as well. The mining communities see no one else taking any care for their long-term future. I must ask the Government what help they are giving to the miners and their wives in Nottinghamshire. They are being spat on by their fellow miners and the Government are merely turning their backs.
§ The Earl of Avon
My Lords, may I intervene for one moment? Is not the noble Lord aware that these miners in Nottinghamshire want to work? Would the noble Lord not wish them to work?
§ Lord Diamond
My Lords, I am grateful to the noble Lord for his intervention because it shows that he was listening. Alas, it does not show that he understood. I was making exactly the opposite point. I am saying that the Nottingham miners deserve to be encouraged and the Government are doing nothing but turning their backs on all mining problems and on all miners, whether they come from Nottingham, Derbyshire, Yorkshire or wherever. The Government say that they have nothing to do with it and I am saying that they ought to reconsider. I am grateful to the noble Earl for having advanced that step in his intervention.
I wanted to keep this speech as short as I possibly could. In brief, what I am suggesting is a method whereby the Government can be seen to be showing 1426 proper concern in an area of Government responsibility. It would cost them virtually nothing to try. The noble Earl will correct me if I am wrong, but I understand that the present cost of the police bill in connection with the mining dispute has accumulated to £25 million. It may well be that in relation to the huge figures for proposed redundancy payments, savings could be made there, too, if the matter were handled with care. I can see no reason why an attempt should not be made, why this experiment that has been so successful in steel could not be repeated so far as coal is concerned, and why, at the end of the day, we might not enable the mining villager to say once more, "How green is my valley".
§ 4.12 p.m.
Lord McAlpine of Moffat
My Lords, it is a great privilege to be able to thank the noble Lord, Lord Ezra, for raising this very topical and interesting debate at a time when this subject is so much on our minds, and to be able to listen to such a well-informed summation from a man who has been so closely involved with the problems which are worrying us all today. That is the first joy.
The second joy was to hear a certain amount of praise for my old friend, the AGR reactor. It was nice to hear the noble Earl, Lord Halsbury, so well-informed and so up to date on this subject. There is no doubt at all that it is very, very important that somehow or other we make the right choice of reactor. It saddens me to find that the Department of Energy take the view, "We will leave this decision to the commercial judgment of the CEGB". To my mind, that is unfortunate. That is unwise. It is unfair. If the choice be a wrong one, it could be unforgivable and unforgettable.
I do not like having to make all these "uns" because it sounds rather rude and I should like to explain why I say those things. When I say it is unfortunate, I think it is unfortunate because in this nuclear world you go along a road and it is very difficult to retract. Some years ago the PWR appeared to be the right reactor. We have had more experience of the AGR, which now means that the PWR could well be the wrong one and there is an opportunity of putting it right.
Secondly, I think it is unwise because I think it is a terrible kick in the stomach to one of our greatest professions. Nothing hurts me more than to see two American companies, that is Bechtel and Westinghouse, being employed to design reactors for Britain when we have the finest engineering consultants in the world. The point is that they have done so much for us. When a British consultant is appointed for a foreign country what do they do? They specify everything British. What do you expect an American to do? Will he not specify everything American? To my mind therefore that is a terrible danger with the PWR.
The next point concerns a matter of safety. We have all been rather hypnotised with the French effort. But I think the Edwardians discovered that if they went to France they found a moral laxity that enabled them to enjoy themselves in a way that would have been frowned upon in London. It is exactly the same with nuclear power. When our safety gentlemen have 1427 finished, you will probably find a completely different set of figures, and it is right that it should be that way. So that is why I am rude enough to say that it is an unwise decision.
Then I will go on and tell you why I think it is an unfair decision. I think in the light of so much new and recent knowledge, it is very unfair that the CEGB should be put in the position of being responsible for having to make a U-turn. They have been responsible for spending £200 million of our money—and goodness knows what the commitments are! There are very good reasons now why they must make a U-turn and it is unfortunate that the department should abdicate their responsibilities in favour of a nationalised industry. That is nearly all I have to say but I will mention the other two points. If by chance the wrong decision is made, it will be unforgivable and it will also never be forgotten.
There is just one slight technical point which is very important and is not known to the lay mind. If something goes wrong with the PWR there is very little warning given and, for safety purposes very little time to correct the fault. If something goes wrong with an AGR, I am told that having received the initial warning they have then something like 48 hours in which to put things right. To my mind that is very, very important. So I would beg of your Lordships to do all you can to persuade the department to take a new look at this because things have changed. As things change, we must change our views and our policies.
§ 4.18 p.m.
§ Lord Harris of High Cross
My Lords, I particularly congratulate the noble Lord, Lord McAlpine of Moffat, for making his points with such commendable brevity. It allows me to say, at the outset of my contribution, that I think this is just the kind of debate to which my noble friend Lord Robbins would have made his usual wise and weighty contribution from these Cross-Benches. I have to tell your Lordships that I have just heard of his death this morning after a severe stroke two years ago. I am sure that all who knew him will agree that we will miss him grievously, both as a warm friend and a wise counsellor. He has served this House and many other institutions with rare, I would say incomparable, distinction. I know we would all wish to join in sending our heartfelt sympathy to his widow and family.
§ Lord Harris of High Cross
We must all have been impressed by the wide-ranging opening speech by the noble Lord, Lord Ezra. Like some other orations from the Liberal Benches, I found myself wondering what link it had with the fundamental principles of the Liberal philosophy. I shall try to remedy this deficiency by warning against pinning too high hopes on a long-term energy strategy. The noble Lord displayed a wide knowledge gained from a lifetime of some 35 years in the coal industry. I hope, however, that he will bear in mind that a lot of knowledge can be a dangerous thing, unless informed by constant humility about the changing variables that can never be known in advance.
1428 The complaint might be made that we have suffered by not having a long-term energy strategy over recent decades. Yet the question that I want to pose is: who could have foreseen the dramatic transformation of supply and demand in the United Kingdom and indeed in the world energy market? In 1960 coal represented almost 100 per cent. of British fuel production and we relied for some 30 per cent. of our consumption on imported oil. By 1973, despite the eruption of natural gas, we relied on imports for half of our then substantially increased consumption. When we come to 1982 we find that, with North Sea oil in full spate, we produced a surplus of fuel to export while coal accounted for no more than a third of our total production. Could any long-term fuel strategy have predicted such far-reaching changes?
If we have survived without too much difficulty, it is thanks chiefly to the adaptation of production and consumption to price adjustments in the market—a market, I may say, made more imperfect by Government obstructions and intervention. Allowing for the long time lags for producers and consumers to adjust their supply and demand from one fuel to another, is it not astonishing that we have avoided disaster without the noble Lord's strategy? Indeed, at intervals since 1973, the only disruption has been caused or threatened by the coal industry which, as I shall try to argue, has suffered from the handicap of a long-term plan.
The folly of the Plan for Coal, as with all similar political aspirations, is that it was an example of physical planning without too much regard for changing prices. I recall the noble Lord, Lord Molloy, in our debate last week on unemployment urging Government planning on the analogy of private enterprise companies which, as all of us know, may plan for five or 10 years ahead. But competitive planning by separate companies is quite a different matter from centralised government planning. No company pretends to plan for the whole industry, and it certainly does not inscribe its targets on tablets of stone.
All business planning is tentative and conditional upon changes in the market place. Each firm estimates the future market and its likely share, but then stands ready to adapt to unexpected changes. Competition provides a perpetual feedback on movements in relative prices reflecting substitution of new sources of supply. If things turn out worse than expected, enterprising businessmen are ready to lower their price to sell their present production, and to cut back their plans for the future.
National or corporatist planning stands in the sharpest contrast. For a start, it will always include a large dash of political expediency. Its targets will often smack more of hopes than of practical realities. Secondly, government plans are cast in terms of physical quantities that extrapolate forward from past experience in a way which has been compared with trying to steer a boat by looking backwards at the wake. Thirdly, once Government have set their seal on a plan, it takes on a life of its own and becomes highly rigid. It is then likely to be persisted in long after the assumptions on which it was based have been falsified by changing circumstances. Above all, official plans or 1429 strategies give hostages to fortune. They raise expectations among favoured interests and so provide a breeding ground for bitterness when the expectations are not fulfilled.
So we come to the Plan for Coal. By far the best obituary was written by Professor Colin Robinson and his colleague, Eileen Marshall, in their evidence to the recent Select Committee on European Coal Policy. They pointed out that the past decade,should have provided a favourable environment for the British coal industry".In 1973 the Arab oil cartel handed coal a massive competitive advantage. So the plan in 1974 projected an optimistic target, centred on production of 135 million tonnes for 1985 and based on a Government commitment to a large-scale investment programme. Success of this plan depended upon a 4 per cent. annual increase in average output per man to be achieved in part by closing down high-cost pits and opening up new, lower-cost capacity. Despite Mr. Scargill's Marxist-Leninist mathematics, the investment of £7,000 million is the only part of the plan to have been fulfilled. Output per man, assisted by the bonus scheme and the 1979 tax cuts, has increased by an annual average of nearer one per cent. than the promised 4 per cent., largely because the closure of high-cost pits lagged behind the programme until Sir Norman Siddall's surgery last year.
Behind Mr. Scargill's inflammatory and ideological rhetoric lies the damning truth that British deep-mined coal, at £46 a tonne after subsidies, costs twice or three times as much as the best achieved in the United States or Australia. But the paradox is that by protecting British coal against imports and by raising subsidies, governments have weakened the very competitive pressures that would have made for greater efficiency. They have thereby enabled the National Union of Mineworkers to keep pushing average costs up much faster than the cost of living index. In short, the Plan for Coal inflated the monopoly power of Mr. Scargill and of his predecessor to obstruct adaptation to market changes, to milk the taxpayer and to impose higher prices on consumers, including housewives, industry and the captive Central Electricity Generating Board.
I believe that our best strategy is to get markets to operate more freely and more flexibly. As the National Coal Board's outstanding marketing director, Malcolm Edwards, never tires of repeating, the best way to check imports, to stop more nuclear power stations, and to speed conversion from oil in industry and electricity generating, is to produce a dependable supply of British coal at £30 to £35 a tonne. That simply means a lot less coal produced at £50 to £80 a tonne, which now requires the public to pour in capital and current subsidies which are equivalent to approaching £150 a week for every miner in the industry.
I share the view expressed by other noble Lords that there is great hope for the future of British coal. But it is a great hope that can be fulfilled only if the price of coal is made competitive and customers can rely on an uninterrupted supply, without the costly insurance policy of massive stocks or keeping alternative 1430 capacity in reserve. There is no future for British coal under Mr. Scargill's political programme of high costs and unreliable delivery.
For the good of coal miners and their customers, our strategy should be to break up the present politicised monopoly, phase out the subsidies and find ways of giving workers a personal equity in the success of their own efforts. As a first step towards such a competitive strategy, I want to offer to the Minister a simple proposal. It is that the Government should repeal Section 1(1)(a) of the 1946 nationalisation Act which gave the National Coal Board the exclusive power to work all new discoveries of coal found in Great Britain. I believe we would soon find that there is nothing like competition, even the threat of competition, to galvanise a monopoly into greater efficiency.
§ 4.29 p.m.
§ The Duke of Portland
My Lords, in the United Kingdom and the United States nuclear power has suffered in recent months from a spell of bad publicity. In the United Kingdom we have had misfortunes at Sellafield, and in the United States it has been lack of funds for the completion of nuclear plants and the discovery of faults in the construction of some reactors. However, elsewhere nuclear plants are in general operating satisfactorily.
In the United Kingdom nuclear power currently produces 18 per cent. of our electricity. When Dungeness B, Heysham and Hartlepool are fully commissioned, which should take place within a year, the nuclear contribution will exceed 20 per cent. Unfortunately, the satisfactory operation of nuclear power stations is not news and consequently is of little interest to the media, while any nuclear incident, however small, can form the basis for horror tales as to what might have happened which will sell the paper and assist the ratings of the television stations.
In the United Kingdom nuclear power has shown itself to be cheaper than coal, and this experience has been matched throughout Europe. Therefore, it is hard to understand why we have to obtain 80 per cent. of our electric power from power stations fired with coal for which the Central Electricity Board have to pay a higher price than if they were free to purchase coal from overseas. This increases the cost of electricity and thus handicaps our industry when competing in foreign markets. Moreover, so long as we obtain such a preponderant proportion of our energy from one source we remain at the mercy of that source.
Surely it is high time, quietly but steadily, to begin to make a change. Let us commence this operation with the long-term energy strategy for the United Kingdom so ably advocated by the noble Lord, Lord Ezra. Let us decide that for the present we will construct no more coal-fired power stations until these are competitive with nuclear power. Instead, let us follow the example of France, Germany and other countries and let us be masters in our own house so that we are no longer hearing the effrontery of a minority who threaten to overthrow our Government and compel us to change our mode of life. Let us begin by offering public opinion a really authoritative assessment of the safety and environmental risks of 1431 nuclear power compared with the corresponding risks from other forms of energy. The French, Germans, Belgians and Swiss and other European nations are not foolish people and have not taken the nuclear road without the most careful consideration of all aspects—safety, health, environmental and, above all, financial.
It will be said that this change will inflict unbearable hardship on the mining communities, but this hardship can be alleviated by financial subsidies until these communities can find suitable employment, as has happened in France and Belgium and to some extent in Germany. Surely it will be preferable to make such payments, which will be required for only a limited number of years, than to continue to pour money down mines which are unable to produce coal on a competitive basis. It may also be said that this would not be necessary if the import of foreign coal into the European Community were prohibited. I submit to your Lordships that anyone who can believe that the French, Germans, Belgians and other members of the Community will allow themselves to be forced to purchase coal from the United Kingdom at £40 a tonne when they can obtain coal from outside the Community at less than £35 a tonne is living in cloud-cuckoo-land.
§ 4.35 p.m.
§ Viscount Hanworth
My Lords, today I propose to speak in the main about combined heat and power (abbreviated as CHP) as it concerns district heating, using our national power stations as a source of energy. I think it may be helpful to give a brief explanation of what this means. Because of fundamental physical laws, at present our best steam power stations, whether coal, oil or nuclear, are approaching only 38 per cent. efficiency in generating electricity. About 50 per cent. of the energy put into the steam boilers appears as waste heat in the cooling water used to condense the steam after it has passed through the turbines.
For maximum efficiency of electrical generation the temperature of the cooling water containing this 50 per cent. of wasted energy should be as low as possible. Therefore the cooling water is directly useful only for heating greenhouses, fish farming and similar applications. However, at the expense of somewhat reducing the amount of electricity generated, the temperature of the cooling water can be taken or raised to a useful temperature for district heating. For those interested in figures, the loss in electrical output is between one-fifth and one-tenth of the hot water provided. In this comparison I am speaking in energy terms.
Looking at the overall energy balance sheet, efficiencies of up to 80 per cent. can thus be obtained. With gas turbines and diesels the waste heat appears in the exhaust gases, which are at a useful temperature. But the efficiency, cost of generating electricity and other factors tend to balance the advantage, except for some industrial applications. A CHP scheme using waste heat from one of our power stations should be able, on a marginal costing, to provide energy at one-quarter or less of the cheapest alternative available to consumers. But marginal costing does not take into account the interest on the capital expended in 1432 bringing a scheme into operation. Nevertheless, the potential of CHP is exciting.
Such schemes were fully considered in the Atkins Report. They gave an estimated possible saving of 40 million tonnes of coal equivalent a year. The difficulties are the high capital cost of implementing any scheme, the delay in bringing it into full operation and the numbers of people or other users willing to change over to a new method of heating. These problems were much less serious on the continent and in Scandinavian countries because they already had district heating networks to which a power station could be connected, and of course they do not apply to green field sites.
At the Government's request, Atkins Partners have carried out a detailed survey of nine cities as possible sites for a lead-type CHP scheme. They have concluded that all the cities could provide a return on capital of between 5 per cent. and 12 per cent. The lower figure is the Government's minimum requirement for new investment by nationalised industries.
Very recently the Government issued a statement supporting the concept of using CEGB power stations to provide heat for district heating of cities. They are willing to provide three-quarters of a million pounds for studies into the financial viability of schemes in up to three cities, but the financing of any scheme would have to be by private investment. The major problem in making any new scheme financially viable is the necessarily slow build-up before it can begin to pay acceptable interest on capital invested. There is also a considerable risk that an insufficient number of potential users will decide to change over to district heating to make the connection to a power station economic. However, even if they did not do so the system could still be operated as a normal district heating scheme.
Although no detailed planning is available as regards how a CHP city scheme would be built up, it is likely to be in two main phases. First, some heat mains would be laid in parts of the city and connections made to houses and other buildings. A survey has indicated that a reduction of 10 per cent. in heating costs would probably be sufficient to persuade the majority of users to make the change. During this stage the heat would be supplied by conventional boilers. Inevitably, the build-up will last several years before the point is reached at which the heat load justifies connection to the power station.
The second stage would consist of laying several miles of heat mains from the power station; adapting the steam turbines; and probably providing some hot water storage and possibly back-up boilers, if those in use for the stage 1 system are unsuitable. The costs of all this are very substantial, and certainly not less than £100 million.
With the need to restrict capital expenditure, I do not at this moment criticise the Government's decision to try to finance projects from the private sector. However, this may not prove possible, and, in fairness to the needs of future generations, the Government must, if necessary, finance CHP or one of the other major energy options such as the Severn barrage scheme or a demonstration fast reactor.
We should, of course, continue funding other 1433 smaller alternative energy options—wind, solar power, geothermal, biomass and so on. But none of those requires major capital expenditure at present, and if any of them are brought into general use the expenditure could be in small instalments. With the uncertainties of nuclear fusion, I am afraid that it cannot be considered as a factor in future planning.
In favour of CHP—even if investment has to be made by the Government—are the following advantages. First, it can give real and substantial energy savings, and could avoid buying, for example, gas as our own supplies diminish. Secondly, it uses known technology. The continent has all the necessary experience. Thirdly, it would provide employment in urban areas. Fourthly, it is in the consumer interest, as it should reduce fuel bills. Finally, for those concerned with environmental issues, it could greatly help because we could get heat without increasing pollution.
§ 4.44 p.m.
§ Lord Energlyn
My Lords, we have been talking about conventional methods of producing electrical energy by means of converting water into steam. No matter whether we use solid fuel, liquid fuel or nuclear fuel, we are still converting water into steam. Even though the noble Earl. Lord Halsbury, has proved quite conclusively the merits of using nuclear fuel in terms of units of electricity costs, the output of electricity from all these generators is determined by the steam turbine. The steam turbine is only about half as efficient as a water turbine. Therefore, in looking to the future I am so pleased that the noble Lord, Lord McAlpine, is present, because his firm has, indeed, been responsible for very large developments in the creation of hydro-electricity, and I venture to add that it will be equally great in the provision of electrical energy from the noble Lord's rather lovely windmills.
However, I return to the issue raised by the noble Lord, Lord Ezra, to whom we are all so grateful. I should like to suggest that perhaps we might address ourselves for a few moments, not so much to the production of energy, because that is reasonably easy, but rather to the utilisation of energy. What are we going to use it for? Let us, for example, take the lesson that we learnt in the war. Suddenly we were unable to import any iron ore. We were driven to use home ore, which contained, on average, only about 28 per cent. to 30 per cent. available iron. Yet we won the war on that iron ore. There is still 100 years of supply of these bedded iron stones running through the Midland belt of England, and they can be mined at very low rates. Incidentally, we have one of the largest draglines in the world operating on them. It is a magnifient piece of British engineering, about which very few people know. But if we could return to the smelting of low grade iron ore, it would cut the imports of iron ore into this country, and that would lead to a very substantial reduction in the overhead price of iron and steel.
The reason why we do not use low grade iron ore is that it consumes too much coal. But if we convert our iron and steel furnaces into electric arc smelters, we would no longer need coal to smelt iron ore and, indeed, we would not be in the impasse that we are at the moment, where these furnaces are in danger because they cannot be kept hot. We can turn on an 1434 electric arc smelter willy-nilly and create the iron and steel that we require. Moreover, we can create iron and steel with a higher degree of purity than we can from a converter furnace.
The interesting aspect is that the technology now exists for adding to these low grade iron ores; and, indeed, low grade iron ores are preferable, for my concept, to high grade iron ores because low grade iron ores contain a large number of other metals, not least aluminium. Having taken the iron out by means of suitable organic fluxes and electric arc smelting, the liquid then flows through electrodes which take out the aluminium. So we have a source of aluminium. Then the larva goes on further into another set of electrodes which take out the magnesium. It still goes on, and then it takes out the prize metal of the future: silicon. That is the only way in which we can produce silicon in any large quantities. After that, the residue of larva is poured into a pond and we have the perfect fertilizer. So nothing is wasted; we have a metals factory. I venture to suggest that by following that course, we will see the re-birth of Llanwern, Corby and Scunthorpe as centres, not of iron and steel but of metal production.
Having said all that, you must, of course, knock me flat by saying, "Have we got enough cheap electricity?" I should like to return for a moment to the production of electricity from coal. As I said earlier, we can get only a certain amount of electricity out of a steam turbine. But if we convert coal into hot coal gas we can pass that into a magnetic field and place two electrodes in it and abstract direct current. It is known as magneto-hydrodynamics. This has always been a dream and a nice laboratory experiment to show students, but now it is a reality. I have seen a pilot plant in Sydney, where Professor Messerle has demonstrated its potentialities. He tells me that there is a 500-megawatt station about to be commissioned outside Moscow, and in America there are a number of similar developments.
Therefore, instead of using our coal for smelting iron and steel we use our coal to produce coal gas, from which we produce direct current. It is direct current that you need to drive an arc smelter, not alternating current, so you cut out the cost of conversion. I would suggest and recommend that here is a use for coal which is in the pipeline, as it were. Talking about pipelines, there are also the dramatic experiments with which I am in contact in Australia, where some of my ex-students have shown that if you pour coal powder on to a hot bed you distil oil by flush distillation direct into heavy petroleum. Therefore, you have a new arena of uses for coal directed towards its viability.
We then come to a factor which is never talked about much, and that is transport. Transport is one of the biggest on-costs which the National Coal Board has had to face in its distribution of coal. If coal is reduced in particle size until it becomes a coal slurry, then it can be transported as easily as any oil anywhere, or pumped into ships, and so on.
Having got the coal down to that particle size it is now in the size and range which von Diesel could never attain when he invented the diesel engine. His first fuel was powdered coal, but it did not work because the powder was too coarse and it wore out the 1435 pistons. Therefore, he turned to oil, and that is how diesel oil was born. We have the techniques now for reducing particles of coal down to microbes where they become explosive in their thermal potentialities, and so you have a fuel which you could put into what one might call a diesel engine and create electricity, not by boiling water but by driving coal diesel engines which you can turn on and turn off at will.
Having said that, I should like to return to something that is nearest my heart, and that is renewable sources of energy—Lord McAlpine's windmills and water storage turbines. I have been carrying out a desk exercise for many years in Norway. There we can prove that by tapping the melt waters of the permanent ice-cap in Norway—I see the noble Earl looking at me; I know how receptive he is to new ideas, and this one is for the formation of an Anglo-Norwegian hydro-electric company—and with 200 power lines across the North Sea, we could fill the grid, as it is at the moment, for ever.
§ 4.53 p.m.
My Lords, I am sure that noble Lords will agree with me when I say that my noble friend Lord Ezra dealt with this important subject not only extremely comprehensively but also succinctly in what I am sure noble Lords will agree was an admirable speech. Other noble Lords have added important points, and some have developed themes parallel to those pursued by my noble friend. There is thus little left to say.
I have no wish to join the noble Lord, Lord Campbell of Croy—much though I enjoyed his speech, with which I agreed—in the guessing game about how long our different sources of energy will last. All I would say on that score is that our resources are clearly finite. Sooner or later they will run out. That means that we have a duty to husband and cherish what we have, and to use our energy without waste so as to provide the maximum time in which to pioneer and develop alternative sources of energy. This was referred to by the noble Lord, Lord Energlyn, with other ways of saving energy, and also by my noble friend Lord Hanworth.
I take the view that, given something like 50 years—and we have much more than 50 years if we accept that our coal supplies will certainly last us for 300 years, if not more—of adequate investment and effort, that could produce results with wind, wave, and solar power, and even with schemes like the Severn barrage, or the development of pump storage schemes like that at Dinorwic, which could perhaps solve our problems. But there might still then be a gap which might, and indeed probably will, have to be filled by nuclear power. I shall return to that briefly in a moment.
First, I should like to refer to one or two matters in which I have some direct personal experience, and these are matters which have not yet been raised in this debate. I practised medicine as a general practitioner for many years, largely in a mining area. Many of my patients were miners, or they were the dependants or families of miners. I also worked as a surgeon in a hospital in the middle of a mining area.
1436 From my medical experience there I was able to see the health hazards of coal mining at first hand. I had to deal with them at first hand, with all the conditions about which we know so much: osteo-arthritis; beat knee; miner's nystagmus; pneumoconiosis; and all the other various conditions from which miners suffer. My observations and professional experiences have convinced me beyond any doubt at all that these health hazards arise in the main, if not almost exclusively, in the old, worked-out and inefficient pits. In other words, the dangers to the health of the miners arise in the very pits which Arthur Scargill is now fighting to keep open.
That seems to be something of a melancholy contradiction, but there really is clear evidence that the health hazards are minimal in the new and highly productive pits, in which, incidentally, the miners' earnings are also maximal. That comes not only from my own evidence, which is direct evidence from personal professional experience, but the figures produced by the Department of Health and Social Security regarding sick absence and morbidity among different sections of the community. They show clearly that the morbidity incidence in mining communities close to old, worked-out pits is immeasurably higher than in those communities in which people are involved substantially in the more efficient and more productive pits. In addition, there have been studies carried out under the auspices of the Royal College of General Practitioners which have confirmed those facts.
All that should surely mean that at least from the point of view of the health and safety of the miners, and probably also for economic reasons, we should now be closing down the uneconomic pits and opening up new pits in productive and profitable areas. The Government may say that that is exactly what the National Coal Board is trying to do. If so, why this present dispute? Not a lot has yet been said about the dispute, though it was mentioned by my noble friend Lord Diamond, but I think there is no doubt that the dispute has arisen largely as a result of the lack of clarity of the message which has gone out from Government sources with regard to their future intentions.
Here I perhaps could resume the brief argument which took place between my noble friend Lord Diamond and the noble Earl, Lord Avon. If the Government had expressed their intentions with regard to nuclear power, for example, with the clarity with which the noble Earl, Lord Halsbury, expressed what ought to be the Government's intentions with regard to nuclear power—had we had that kind of message with that kind of clarity—or if, in addition, we had had the other message suggested by my noble friend Lord Diamond about the development of new industries in old mining areas in a way comparable to that in which new industries have been developed in the old steel towns, if those two messages had been going out in a clear form from Government, I think it would have been impossible for people like Mr. Scargill to exploit the understandable fears of miners in the way in which those fears are now being exploited. Surely the ultimate answer is that we want the old inefficient pits closed down, certainly for the health of the miners.
1437 I say that not just as a doctor but as a person who comes from a family connected with mining. My eldest uncle was in charge of the Prince of Wales Miners' Relief Fund in about 1930. He saw much of the health or ill health of the miners in those days. My great grand-father was one of the leading, if not the first, consulting mining engineers in Britain and since that time my family have either become doctors or involved in mining. The two professions are not without some kind of connection. We should think about the health hazards. From that point of view we should be closing down the uneconomic pits, but at the same time expanding mining in the more productive areas where the earnings are higher and the health hazards are much fewer.
There has been a tendency for the Government to appear to be relying, perhaps to an excessive extent at the moment, on nuclear power. I am not saying we should not have nuclear power, because I very much take the view that was expressed by the noble Earl, Lord Halsbury, but had the message been clearer—in other words, had there been a clear energy strategy such as is now being called for by my noble friend Lord Ezra—then I do not think we would have had the recent dispute and I do not think it would have been possible for those who have sought to exploit the fears of miners to have done so.
I will say no more, but I hope that at the end of this debate we shall hear something about a clear strategy. I will say no more about the dispute, save that I hope that it is soon over. Like other noble Lords, I should like to extend my sympathy to the police for the difficult work they are doing; work which they sometimes find almost as distasteful as having to molest some of the good ladies of Greenham Common—but that is a separate matter entirely. I also join with the Chief Constable of Nottingham in expressing my personal sympathy to the miners of Nottingham who at the moment are having to put up with intolerable provocations merely because of their demand for the democratic procedure of a ballot, which I hope in the fullness of time they will have.
§ 5.2 p.m.
§ Lord Stoddart of Swindon
My Lords, I, too, should like to congratulate the noble Lord, Lord Ezra, on introducing this short debate today. I must confess that when I heard that he was to introduce this Motion in a two and a half hour debate I wondered whether the House would have sufficient time to deal with this great subject, but I have been very pleasantly surprised that we have had excellent contributions and the debate we have had has been very well balanced indeed. It has been intriguing in many senses. We almost reached a consensus about the need for a long-term strategy on energy. That consensus, I think, was a little dented when the noble Lord, Lord Harris of High Cross, came in followed by the noble Duke, the Duke of Portland. Nevertheless, we have reached a measure of consensus which is good and which bodes well, I hope, for the future of our energy industries.
The noble Lord, Lord Ezra, who is an expert in energy matters—not only in coal; his experience ranges wider than that—set the scene and in some respects left very little for the rest of us to say because he covered the subject so well. Nevertheless, there are 1438 some things to be tied up. Indeed, it is necessary for me to put my own party's point of view on the need for a long-term energy strategy. Indeed, there is a crying need for a long-term energy strategy. We have for too long dealt with the subject piecemeal. We have suffered too many crises of very great note which have done damage not only to the energy industries themselves but to the economy of the country as well. For example, our failure to recognise and realise exactly what the advent of North Sea oil would do has caused great damage to much of our manufacturing industry. This was touched upon by the noble Lord, Lord Ezra, when he opened the debate.
By not using those oil revenues to the full we have lost, or at least nearly lost, the opportunity for rebuilding our manufacturing base, which in the long run will ensure a good and prosperous future for this country. Instead we have allowed the benefits of North Sea oil to be used to finance large-scale mass unemployment and also to invest about £18,000 million abroad (according to the Chancellor of the Exchequer) since 1979, creating jobs in other countries when we needed the jobs in this country. Therefore we have, to a very large extent, lost the opportunity that North Sea oil gave us from 1980 onwards.
There is still some time left to repair the position because we are still likely to remain self-sufficient in oil until 1995. It is true, as the noble Lord, Lord Campbell of Croy, said, that North Sea oil will not suddenly run out. It will peak next year or the year after. On present estimates we shall lose self-sufficiency by 1995, and from then on it will be downhill all the way.
We still have a breathing space to ensure that North Sea oil revenues are used for the benefit of creating new jobs, new industries, and repairing old industries in the United Kingdom. Indeed, warnings have been given many times in this place, in another place and in the country that as the benefits of North Sea oil run out so we shall run into dreadful balance-of-payments problems.
The noble Lord, Lord Ezra, produced figures during a previous debate to show that we were now running in awful deficit in manufacturing goods throughout the world. In the EEC last year alone our deficit in manufactured goods was £8,000 million. Unless we replace the amount of overseas earnings that we gain from exporting North Sea oil and the amounts we save by being a net producer of oil, within the next few years we face a catastrophe. We ought to understand that and the Government ought to be planning for the time when we meet and have to face these balance-of-payments difficulties.
Britain has the advantage, as the noble Lord, Lord Ezra, and many other noble Lords have said, of considerable energy resources. We have coal for hundreds of years. We have oil self-sufficiency until 1995–10 years hence. We have gas which will last into the next century, particularly if reserves are extended by imports from places such as Sleipner. But it is essential that we plan the use of these reserves together so that we get the best from them for the longest period of time possible, and to slot into these reserves a nuclear power programme which is suitable to this country.
1439 Furthermore, it will be necessary—and we need to do a good deal more work on this—to engage in energy conservation. Any money invested in energy conservation is a bonus to the nation's reserves. It is a bonus to people's heating needs and, what is more, it pays for itself. It pays for itself in money terms and in better heating-standard terms and it could enable a regeneration of work in this country and assist in getting some of those 3 million people who are now on the dole back to useful work. It is not only necessary to spend more on research and development on renewables but also essential to start using renewable resources—and, to date, we have done hardly anything at all (except to start building one windmill) in actually getting renewable sources at work. So we need not only to spend more money on research into renewables but we need to install renewable energy in place.
The noble Viscount, Lord Hanworth, mentioned CHP, and I support him. I have been a supporter of CHP over a very long period of time because it will enable this country, in many instances anyway, to get twice as much power from the fuel put in as it does at the present time. When we have a power station at the present time to produce only electrical energy, we find that we are getting an overall efficiency of only 35 per cent.; whereas, if we used CHP, as the noble Viscount has told us, we could get overall efficiencies of up to 80 per cent. It is worth getting on with projects of this sort because of the energy savings and, again, because in places like Belfast, Liverpool and Glasgow, where unemployment rates are high, we could get people doing useful work building a new infrastructure service.
We cannot (as was suggested, I think, by the noble Lord, Lord Harris of High Cross) simply leave energy planning to the caprice of the free market. It simply cannot be done. The finite nature and long lead-time of development make fossil fuels unsuitable to leave to the free play of market forces. In the case of oil, the flow can be cut off almost overnight by the oil-rich nations. If they should have political difficulties, then, as we saw in 197 3, the price could suddenly go through the roof—and not only our own economy but the economy of the world as well. Have we not yet learned the lessons of the 1960s?—when, through lack of foresight and planning, we closed down coal mines which still had good, recoverable reserves and instead built oil-powered stations which now stand as a monument to crass stupidity, lack of foresight and lack of proper energy planning.
Therefore, it is necessary to have a long-range plan. It is no use thinking that the free market can deal with our energy problems over the long term—and they must be dealt with over the long term. In any energy plan, coal must and will remain the base fuel. There is simply no other possibility available, since energy demands cannot be met now or in the future without a large coal component; and the higher that component can be, the more effective and efficient will be our management of total energy reserves. That is something that we must all understand, and I hope that the Government will understand it. We have coal reserves adequate for our own needs and, indeed, a healthy surplus for exports at least until the 24th century. Over the next few years, it is likely to be an 1440 increasingly cheap energy and fuel source in relation to other fossil fuels—even, in my view, with nuclear energy; that is, where all the costs of nuclear energy are taken into account.
Coal needs an expansionary future. The short-term difficulties which are now being experienced must not be allowed to detract from the main aim; that is, a large coal industry to meet our own needs and an exportable surplus to make up the loss of oil exports which will occur in the not too distant future. Of course, the coal industry has to be efficient and competitive. We all agree with that. The problems which we have at the present time and the problems of getting the coal industry efficient must be dealt with and handled sensitively. The future of the coal industry can be assured only if all concerned recognise that their own interests and those of the coal industry, as well as the total national energy interest, are all bound up together.
All these interests will be best served through co-operation, understanding and good relationships rather than through confrontation, recriminations and and mistrust. It is possible to get that understanding and co-operation and I sincerely hope that the Government will bend their minds to that as soon as they possibly can. I believe that this House wants them to do so, that Parliament as a whole wants them do do so, and, indeed, that the nation as a whole wants them to do so. And the sooner we can solve the present problems in the coal industry and get down to real planning, the better it will be.
Although, my Lords, I have run over my time, we do have a little in hand and before I sit down I should like to say a word about nuclear energy. I think it was the noble Earl, Lord Halsbury, who said that proper thought had not been given to nuclear energy problems. I welcomed what he said. There was so much sound sense in it. I hope that the Government, if they will not listen to the Select Committee on Nationalised Industries, if they will not listen to other people and if they will not listen to people like me, will listen to what the noble Earl has said—because he was absolutely right.
The PWR has got itself bogged down into a never-ending, expensive inquiry. Indeed, had we not decided to change, had we decided just when the AGR was coming into its own to go ahead with an AGR programme, we should not have had any inquiry. We should have been building an AGR at Sizewell instead of having this inquiry. I hope that the Government will take note of what has been said. I believe that the PWR is not a suitable reactor for introduction into this country, for the reasons stated by the Select Committee in their most recent report, and because I, certainly, believe that there are dangers inherent in that type of reactor.
I think that the Government ought now to rethink their nuclear strategy in its entirety, not only to decide whether they will go ahead with the PWR, but to decide whether they need a new nuclear power station before the fast breeder reactor comes on stream—and that is possible by the end of the century. In the meantime, they really ought to be considering meeting their additional energy needs by refurbishing coal-powered stations.
1441 Let me say this, finally. I wonder whether the Government themselves, bearing in mind the quarrels that take place between the Treasury, the Department of Energy and other energy-using departments, can plan energy alone. I wonder whether it is possible for the Government to do it alone. Do they need some assistance from outside? Would it be right to set up an Energy Commission which would bring in all the energy interests and all the expertise that is available to assist them? I believe that that may be very helpful indeed towards obtaining a long-term energy strategy and I sincerely hope that the noble Earl, Lord Avon, when he comes to reply, will be able to say that he will take that possibility on board.
§ 5.20 p.m.
§ The Parliamentary Under-Secretary of State, Department of Energy (The Earl of Avon)
My Lords, I join the whole House in expressing gratitude to the noble Lord, Lord Ezra, for initiating this debate. I have it down in the margin here to say how succinct was his speech, but the trouble is that, as I am speaking last, the noble Lord, Lord Winstanley, has already taken that remark from my lips. It certainly took us to the broad issues in a very brief space of time. I find the problem in these debates is that we have talks on energy renewables, talks on oil, and talks on nuclear power, talks on CHP and talks on the diesel engine, all of which I should very much like to take up as a whole debate, and really to deal with each effectively in a short debate is a great difficulty.
Before I open my remarks I should just like to pay my tribute to the noble Lord, Lord Robbins. I was sorry to hear of his death and I should like to join in the tributes that have been made.
I should like to begin my remarks by referring to coal, first because of its special combination of long-term opportunity with short-term difficulty and, secondly, because the noble Lord, Lord Ezra, has given a substantial part of his speech to this subject and, of course, an even larger part of his career to the coal industry.
Every government is necessarily concerned to create the conditions in which the industry can be fully and economically developed. These conditions require continuing modernisation of the coal industry, investment in new economic capacity as well as withdrawal of capacity which has become uneconomic. This is the essential meaning of the Plan for Coal which the noble Lord, Lord Ezra, and his board prepared with the noble Lord, Lord Gormley—I was pleased to see the noble Lord here earlier today—under a Conservative administration. It was their response to the oil price shock in 1974.
I believe that this Government more than any government in history have been willing to back their belief in the future of the coal industry with money and investment in modernisation. The figures are enormous. Between 1979 and 1984 we invested £3.9 billion in coal; over the next four years about a further £3 billion is likely to be invested—and yet the Government and the NCB are accused of intending to destroy the coal industry. The noble Lord, Lord Ezra, will be aware of the sums during his tenure and 1442 acknowledge the increase now. Investment was the Government's commitment to the Plan for Coal. It was and is being more than met, as the noble Lord, Lord Harris of High Cross, touched on. Two other key factors—productivity and closures—have not been met. It is not the Government who have failed the industry.
Modernisation means change, but the National Coal Board and the Government are united in seeking to protect individual miners from hardship. The House should consider, I believe, what has been done. First, there is a high pay offer on the cards. The offer made last November would give face workers about £185 a week, and keep average earnings in the coal industry above average earnings in manufacturing industry. Since the offer was made last November, gas and power workers have settled, without industrial action, for similar or smaller amounts. Secondly, there are most generous terms for transfer, and also for voluntary redundancy. Thirdly, not one single miner has been made compulsorily redundant. As many noble Lords have said, high cost uneconomic capacity, with no future, is a burden on the whole industry; it is to the advantage of everyone in that industry that it should be eliminated.
There is no future for the industry if coal cannot be sold. The impact of the strike on markets has been nothing less than tragic. Confidence of existing suppliers has been undermined. The crucial task of securing new long-term customers for coal has been brought almost to a stop. For example, there were 78 applications last December for aid to converting boilers to coal under the Coal Firing Scheme; in March there were only two. The noble Lord, Lord Ezra, will, I am sure, agree with me that marketing—in which he is much experienced and to which he continues to lend his expertise—is a key to the future of coal. There is a real potential for its future and at the moment it is being damaged and harmed.
The noble Lord, Lord Ezra, and the noble Lord, Lord Winstanley, asked specifically: what is the Government's plan for coal? Our aim is a future secured by a massive investment programme designed to produce coal at a price at which customers at home and abroad will increasingly buy. An industry productive and profitable, winning new markets in the years ahead, with miners working in safe pits, using the best machinery modern technology can buy and enjoying good wages and good conditions. This again was the point made by the noble Lord, Lord Winstanley. That is the Government's design—with our desire to improve energy efficiency and our encouragement of coal conversion. With the fact in Europe that France is cutting its coal industry in half and Germany reducing hers, Britain has the opportunity—if it produces its coal efficiently—to become the great coal producer of Western Europe. That is why we are investing in the future of the coal industry. As noble Lords have said, coal is only part of the United Kingdom's rich endowment of energy resources. The noble Lord, Lord Stoddart of Swindon, talked on this, and I would broadly agree with everything he has said provided it was not political.
My noble friend Lord Campbell of Croy touched on oil. Revised estimates of our UKCS reserves were 1443 announced earlier this month. The remaining recoverable reserves are now estimated to lie in the range of 1,410 million tonnes to 5,280 million tonnes. In gas, new estimates put remaining reserves in the range of 900 billion cubic metres to 2,260 billion cubic metres. These new estimates hold out the prospect of a longer period of self-sufficiency and continuing shelter from the vagaries of the world market. We believe that the Government have been successful in stimulating exploration. The level of drilling activity in 1983 was the highest since exploration began in 1964, with 128 exploration and appraisal wells commenced compared with 116 in 1975, the previous record year. Ten new developments were approved during the year.
Much was said on nuclear power and I shall come back to it again later. I believe that nuclear power has firmly established—
§ Lord Stoddart of Swindon
My Lords, I am most obliged to the noble Earl, Lord Avon, for giving way. Did I understand him correctly to say that the new figures produced in the Brown Book will give us a longer period of self-sufficiency? That was not my understanding of it. I read "possible reserves" to mean exactly what that is: that they were possible reserves. Is the noble Earl now saying that there is evidence that we shall have self-sufficiency beyond 1995?
§ The Earl of Avon
My Lords, I think that I avoided the term "self-sufficiency". What I said was that the reserves were there. Did I say, "self-sufficiency"?
§ The Earl of Avon
I did; in which case I will stand by what I said. What I find exciting in this field—I am sure that my noble friend Lord Campbell of Croy will be with me on this—is the new methods of extraction which are being found. These alone, I believe—certainly a recent talk by one of the oil companies to which I listened led me to believe this—suggest that the ideas we have for the future are pessimistic rather than optimistic. But as the noble Lord is well aware, we are in the world of hypothesis and, as the noble Lord, Lord Harris of High Cross, mentioned, we are in the world of crystal gazing and it is very hard to come to any firm conclusions.
Lord Campbell of Croy
My Lords, will my noble friend give way, as he very kindly referred to me? I would agree that it is exceedingly difficult to make forecasts about reaching self-sufficiency. After all, we hope that we shall be out of recession and there will be a great deal more demand for energy in years to come, so that is a very difficult estimate to make. Will my noble friend also take the point—because he has given the figures and referred to the recent increase in exploration—that the next stage is the stage of decisions on investment, which are the really important ones where our Continental Shelf is concerned?
§ The Earl of Avon
My Lords, I take my noble friend's point. To return to nuclear power, it has firmly established itself as a supply option for this country and for over a quarter of a century has been providing 1444 us with a safe and reliable supply of electricity. Last year it contributed around 17 per cent. of our electricity supply. By the end of the decade we expect 16 nuclear stations to provide 10 per cent. more than that. The Government expect nuclear power to play a significant role in meeting our energy needs in the future. We have a proven nuclear industry ready and looking for exports. I believe that the world needs our expertise, and not only in the nuclear field. There is a market for coal technology, which the noble Lord, Lord Ezra, touched on, and also for our know-how on oil and gas extraction offshore as well as for gas and electricity distribution.
Our energy endowment is unmatched in the European Community. We are the only major exporter of oil. and overall our net position is such that, after satisfying our needs, one-eighth of our total energy production can be exported; whereas, apart from the Dutch who are broadly self-sufficient in energy, our other European partners all need to import around two-thirds of their energy requirements.
Managing this energy endowment is my department's central task, and the key issue of this debate is the best way of discharging it. Terms like "long-term energy strategy" or "energy policy" inevitably suggest an attempt to draw up comprehensive long-term projections of primary fuel supplies and, on that basis, to determine an aim for some ideal fuel mix for the whole country for the future.
This is a bold intellectual concept, but it breaks down in two crucial ways. First, there are limits to human foresight, which the noble Lord, Lord Harris of High Cross, described as "constant humility". Whatever the abilities of those who attempt it, the uncertainties are so great that it is unrealistic sometimes to base decisions simply on a single preferred assessment of the future. Past attempts failed to anticipate the oil price shocks of the 1970s, the check to energy demand and the changing patterns of the fuel mix. That is why major companies like Shell, as well as the Government, have moved away from the central planning approach.
Of course, assessments of possible futures have their place but, like my department's current energy projections, if they are to be of practical use, they should offer a range of backgrounds against which possible decisions can be tested. They canot be used as premises to deduce decisions. These will be up-dated from time to time.
Secondly, the central planning approach diverts attention from managerial responsibility to forecasting. It gives too little weight to flexibility and responsiveness, which my noble friend Lord Campbell of Croy stressed. It also gives too little weight to all the competitive pressures which make for efficiency in meeting the needs of the customer.
All this put central planning in second place. Instead, the Government's approach is to encourage the maximum economic exploitation of our energy resources not by central direction but by clearing the way for producers and consumers to reach the best possible understanding in the market. This is not a simple task. We seek to strengthen the operation of market forces throughout the field of energy investment, production and sales. We seek to 1445 eliminate or reduce the effects of monopoly in inhibiting that operation. We also seek to promote economic efficiency in the use of energy; we seek to assist and encourage the contribution of British industry to energy development and to energy-related export. We seek to establish a firm financial framework for the nationalised energy industries and to increase the participation of the private sector in energy investment, production and sales. And, my Lords, we seek to manage effectively and economically the use of public expenditure in energy research and development as a contribution to balanced research and development effort in the energy sector as a whole.
The noble Lord, Lord Ezra, spoke about electricity prices. He may be aware that we have actually given our response to the Select Committee, and I gather that this is now in the Library of your Lordships' House. Some noble Lords spoke about over-capacity and others spoke of a long lead-time. This shows the difficulty in judging the balance of future supplies of electricity. The noble Lord, Lord Energlyn, gave us a stimulating talk on iron ore, and something that I shall be discussing with my advisers is whether there may be a future opportunity of discussing this matter.
My noble friend the Duke of Portland mentioned the price of coal as against that of imports. Perhaps I may just say that the extra costs incurred by the CEGB in limiting the amount of imported coal have been reimbursed so that electricity consumers do not pay any more than they would have done without that limit. The noble Earl, Lord Halsbury, made some very good remarks about the report of his Select Committee. I should like to welcome those remarks and say how much I would hope to have a debate on that report in due course.
We had a long and interesting discussion, as we usually do in your Lordships' House, on the subject of nuclear power. My noble friend Lord McAlpine of Moffat told us that his AGRs were doing a superb job. I am sure that that is so; and we had other alternatives put in front of us. Perhaps I may say that the precise level of future ordering of nuclear stations will depend on a number of factors, some of which noble Lords have introduced into the argument tonight. Not least of these is the level of future electricity demand. I believe that at the moment, with the inquiry over Sizewell going on, your Lordships would agree that it would not be right for the Government to comment further on this particular subject.
I think it was the noble Lord, Lord Ezra, who spoke of the links with Europe, particularly with gas in mind. I would say, first, about the Sleipner gas field, that the purchase there by the British Gas Corporation is of course a major economic decision and therefore is being given close and careful examination by the Government. We hope that a decision will be taken as soon as possible.
So far as linkage with Europe is concerned, we have no strong feelings about this for the gas industry. We note that the electricity supply industry is having interconnectors with France built at the moment and these will be ready in 1985–86. It is intended that there should be a two-way flow of electricity.
The noble Viscount, Lord Hanworth, spoke about combined heat and power. As part of a long-term 1446 approach, the Government have given extensive study to the potential for the economically viable use of CHP and district heating. As the noble Viscount pointed out, consultants have been appointed to undertake a programme of work to test the economic and practical feasibility of CHP in nine inner-city areas. The noble Viscount stressed his own views in what I felt was a well-balanced speech, and I thought put his case very fairly.
As part of the programme, my right honourable friend the Secretary of State announced that the Government were ready to encourage the formation of local consortia to undertake further studies, provided that the major participation in the development of such schemes comes from the private sector. While all this work on the lead city study has been going on, we have continued to demonstrate our support for viable schemes. Action was taken in relation to CHP in the Energy Act 1983. This was designed to encourage the private generation of electricity and to set a framework for ensuring that, among other things, private power-producers get a fair price for the electricity which they sell.
We discussed the renewables: I think that perhaps the noble Lord, Lord Ezra, might say a word on this subject in his winding-up remarks. The noble Lord, Lord Stoddart, also mentioned it. You all want us to spend more. I wonder what form of renewable energy your Lordships would like the money spent on. It may be that some of the ideas put forward by the noble Lord, Lord Energlyn, ought to be taken up. The Government are conscious of the renewable field, and we would welcome ideas in that connection. We have, as your Lordships know, put aside for the moment wave energy research; we are, however, investigating geothermal; we are looking at wind; and we are very ready to consider any new ideas which may be put before us which we can research and develop and which may possibly prove demonstrably profitable in the long run.
I seem to have slightly overdone my time limit, too. May I end by saying how much I appreciated what the noble Lord, Lord Ezra, said? I thought it was an excellent resume of the energy scene. The Government do not see the energy sector as protected from the uncertainties of the real world. It would be foolish to do so. Our task is to make sure that the country is well placed to tackle problems and to seize opportunities. I am grateful for the constructive remarks which have been made by many noble Lords this evening, which I assure your Lordships I shall take careful note of.
§ 5.40 p.m.
§ Lord Ezra
My Lords, may I, in my turn, thank all noble Lords who have contributed to this very important debate. It is a pity that it had to be constrained within such a short time, but it is remarkable how much wisdom has been distilled during that period. I am particularly grateful to the Minister for having given us such a wide-ranging reply—and I know that he had to speak fairly rapidly—covering most of the points raised.
I believe I would be right in saying, in conclusion, that with one or two notable exceptions there is agreement that there should be a strategic concept for 1447 energy. Everybody, however, emphasised that this would have to be flexible. Of course, we cannot forecast the future. On the other hand, nor can we take major decisions, requiring 10 or 15 years for their maturity and involving hundreds of millions of pounds, without having a broad strategic concept on which to base them. I believe that that was probably the conclusion of the views expressed by most of those who have spoken. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.