HL Deb 18 July 1989 vol 510 cc697-748
The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Electricity Bill, have consented to place their prerogatives and interests, so far as they are affected by the Bill, at the disposal of Parliament, for the purpose of the Bill.

Read a third time.

Clause 4 [General duties of Secretary of State and Director]:

Lord Ezra moved Amendment No. 1:

Page 3, line 3, after ("on") insert— ("" to promote all activities connected with or associated with combined heat and power schemes;").

The noble Lord said: My Lords, for the convenience of your Lordships Amendment No. 1 has been grouped with Amendments Nos. 3 and 13. The objective of Amendment No. 1 is to refer once again to combined heat and power, which has been raised on previous occasions. However, before moving into the purpose of Amendment No. 1, I should like to deal briefly with Amendments Nos. 3 and 13 which are purely drafting amendments.

Amendments Nos. 3 and 13 refer to combined heat and power but it would take people who have a particular mastery of the English language to realise that that was the case in the Bill. For some reason the parliamentary draftsman on this occasion has adopted a particularly convoluted form of words. The purpose of Amendments Nos. 3 and 13 is to refer to the very simple words used in Section 19 of the Energy Act 1983 which refers to the combined production of heat and electricity. I hope very much that when we come to those amendments your Lordships will agree that we should refer to combined heat and power in terms which are comprehensible rather than in terms which are difficult to follow.

Amendment No. 1 is the substantive amendment. I need hardly remind your Lordships of the importance now being attached, on all sides, to the need to ensure that energy is used not only in an efficient manner but in an environmentally effective manner. It was only yesterday that the Energy Committee in another place issued a report dealing with the effect of energy in regard to the greenhouse problem and referring specifically to the need above all to concentrate on energy efficiency. We shall be coming back to the question of energy efficiency later, I have no doubt.

The purpose of this amendment is to emphasise the enormous contribution to energy efficiency and, above all, the environmentally positive impact on energy of combined heat and power. As mentioned at previous stages, the use of waste heat from power stations has been strongly developed in continental countries, including Scandinavia, but very little in Britain. We now have an urgent need to review the ways in which we produce and use energy as efficiently as possible but essentially in a way that is as environmentally satisfactory as possible. The use of waste heat from power stations is one way of achieving those objectives.

What many of us on all sides of the House regret about the present Bill is that the reference to combined heat and power, which was only accepted by the Government at a fairly late stage, has been introduced in a way which is much less positive than in the Energy Act 1983. The purpose of this amendment is to ensure that the Secretary of State and the director will take positive steps to promote the development of combined heat and power so that the energy produced in power stations can be augmented by the useful utilisation of the waste heat. Instead of running the hot water through cooling towers and then back into the system we must make use of this hot water by piping it through surrounding buildings and providing a heating service.

This matter of making the most effective use of our energy resources in an environmentally acceptable manner is so important that I have not the slightest hesitation in coming back to it for the third time. We have an opportunity, even at this late stage of this major Bill, to make sure that we attach importance as a House and as a country to the best use of the energy that we produce and to recognising the environmental consequences of the misuse of energy and the fact that we produce more energy through electricity generation than is necessary for the needs of the time.

Therefore, I ask your Lordships to take particular note of this third opportunity during our lengthy deliberations on this Bill to introduce into it no more than is in the Energy Act 1983 which this Bill supersedes. We are not going beyond that. What we are saying is that this is an issue of such importance that it should figure in the early part of the Bill under the duties of the Secretary of State and the director. I hope very much that the noble Baroness, when she responds on behalf of the Government, will agree that at the very least the promotion of combined heat and power schemes in present circumstances, as recently emphasised at the summit meeting—to mention only one instance when this issue has been raised—should be accepted. I beg to move.

3.15 p.m.

The Earl of Lauderdale

My Lords, at this late stage of the Bill I do not propose to detain the House for very long but I should like to cross one or two "t"s and dot one or two "i"s concerning what was said by the noble Lord, Lord Ezra. It is to the advantage of every one of us, wherever we live, whatever our labour, whether in industry, commerce or the professions, that we should have the cheapest heating available. The object of privatisation, we have been told not once but many times, is to bear down on prices. I have never liked the phrase "bear down". The gracious Speech referred to policies designed to "bear down" on inflation. And look what happened! We have had reference from my noble friends on the Front Bench, who must be as weary of this Bill as we are, to the fact that they will bear down on prices. If that is one of the objects of the exercise, surely combined heat and power is one way of achieving it.

I support wholeheartedly the noble Lord, Lord Ezra, in pressing for this matter to be put at the forefront of the Bill. I have little doubt that if it were done it would find considerable support in another place. I do not think the Government would have great difficulty in persuading their supporters to agree.

We are told that more efficient power and electricity generation will derive from the Bill thanks to competition. That must mean that there will be less waste. There would be less waste still if we had combined heat and power. It is very simple. As the noble Lord Lord Ezra, said, combined heat and power is environmentally beneficial. We are all environmentalists now. The point is: who is greener than the rest? We are all green now. Some of us are very green indeed, likewise our knowledge of electricity. But let that pass! We are all green, and this is a green consideration.

Combined heat and power is one of several ways of increasing the efficiency of electricity generation. That is all I have to say. It is all that needs to be said, but others will say it much better than I.

Lord Stoddart of Swindon

My Lords, there are grave suspicions as to whether the Government are serious about their new green image. One way they could expel those doubts would be to accept this amendment, which is extremely important in the context of many green issues.

As we have already heard, in the first place, if heat from power stations is used more efficiently, you will (a) need fewer power stations and (b) you will need to burn less fossil fuel. If that is so, the injury to the ozone layer and the heating-up of the atmosphere will be that much less. In green terms that is one of the best ways of ensuring that the Government can appear to be green whether or not they are.

So I sincerely hope that the noble Baroness will consider this amendment very seriously indeed. It may very well be argued that, as the industry is being privatised, if combined heat and power is so good and if it so increases efficiency, market forces will naturally become involved in combined heat and power projects. But that is not so. Under normal circumstances that may very well be the case, but there is another element to be considered.

There needs to be co-operation between the providers of power and the local authorities. Through combined heat and power you need to get the waste heat into people's homes and into factories. Therefore you need the co-operation of local authorities because highways have to be dug up in order to provide the links between houses or factories. It may very well be that the schemes could start off with local authority housing being the first to be connected to the national or the local heat grid.

That is why this amendment is so important and why I believe that the Government should accept it. As I say, it is necessary that there be co-operation between various authorities. The Select Committee on Energy in another place produced an admirable report on combined heat and power. It showed very clearly in print and with no dubiety at all, that combined heat and power would not only be beneficial in relation to conservation or energy, but it would also be beneficial to people by reducing the price of the heat. That is another reason why, if the Government want to reduce inflation, they should be considering this amendment very seriously and considering accepting it in its entirety.

In conclusion, the noble Baroness will be aware of the Atkins Report and the lead schemes. In her reply perhaps she will say exactly how those schemes are getting on. Can the Minister also confirm that the Atkins Report agrees that combined heat and power schemes are viable in their own right? Nevertheless, can she also endorse what I have said; namely, that it needs the co-operation not only of the energy producers but of other authorities as well?

Lord Peyton of Yeovil

My Lords, I admit that I am not all that optimistic about the prospect of my noble friend accepting this amendment. That is not to say that I do not think that it should be included in the Bill. I can see very few possible arguments against its inclusion. There is fairly general and widespread support for the sentiments that underlie this amendment. I suspect that the Government will say two things: first, that the amendment is unnecessary and that it will be implemented in any case. If it is unecessary there are other sections of the Bill that I have described as legislative garbage, which could well be omitted thereby leaving space for this modest contribution.

Secondly, I suspect that there is also the argument that the Government view this amendment, coming as it does from sources outside themselves, as somehow impingeing on the integrity of their own scheme. I believe that that reflection leads one to think that that is not a great tribute to the wisdom, strength or sense of the Government's scheme. I fear that what concerns them is that a very minor but sensible amendment such as this, moved by the noble Lord, Lord Ezra, will somehow place a burden on newcomers to the industry who as a result will find themselves less competitive.

It adds to my suspicion that in this Bill the Government have had their priorities wrong. However, so firmly are they committed to the aim of competition that again and again they have tended to lose sight of matters that are equally important; namely, security and safety.

Lord Hylton

My Lords, the noble Earl, Lord Lauderdale, mentioned bearing down in electricity prices. I wonder whether in the past couple of years, when fuel prices have actually been falling, we have been witnessing a certain amount of bearing up on those same prices. I ask why in this Bill the Government are taking a line that is less positive than the Energy Act 1983? Can the Government explain that?

Each time I travel home from the House by train—when I am allowed to do so both by management and unions—I pass Didcot power station. At the base of that station one sees an enormous pile of black coal. Suspended above the cooling towers there is an enormous white cloud of steam which is simply heating the sky and inducing all kinds of undesirable effects elsewhere. By making clear that we want combined heat and power we shall be encouraging everybody to double the fuel efficiency of power-generating plants.

The co-operation of local authorities and the importance of domestic heating have already been touched on. I simply add the case for using this waste of heat in industrial applications. I cite the example of Bulmer's cider factory at Hereford which both generates electricity, some of which goes into the grid, and uses the waste heat and steam in its cidermaking process. So there is a big industrial application. Mention was made by an earlier speaker of newcomers to industry or to electricity generation. The example I have just cited is surely the kind of operation that the newcomers should be headed straight into.

Viscount Mersey

My Lords, I declare an interest as the new president of the Combined Heat and Power Association. I agree with every word that has been said so far by every noble Lord. I hope that my noble friend has read the very excellent sixth report from the Energy Committee which is Tory dominated. I wish to draw her attention to just one small passage in particular in paragraph 128. It states: Estimates of the feasible savings in CO2 production up to the year 2020 due to CHP vary widely. Dr. Ken Currie suggests that savings could be 9.5 million tonnes per annum". For that reason alone I hope that my noble friend is able to take on board this very modest amendment.

Viscount Hanworth

My Lords, I simply cannot understand why the Government oppose this amendment or others on the same lines. It does not interfere with market forces. All it does is try to encourage them. They must know as well as I do the difficulties of putting a CHP scheme into operation if it is more than an industrial one. The roads must be dug up and the heat mains must be laid. There is a considerable time to wait before a project is viable. Any encouragement—that is the word I would have used—that can be given by the Government surely ought to be given.

We now have an opportunity with CHP which was not easily there before. A difficulty arises with a large city. The power station may be some distance away and the mains are expensive to lay. Therefore a long time passes before the scheme can be made viable. However, it is probable that in the future we shall have many smaller power stations, probably running on natural gas turbines. With such a set-up, the heat going out of the turbine can be taken, with no loss of energy or electrical generation. There is a slight loss when using steam because the steam must be condensed at a higher temperature. But with likely new power stations heat will just be thrown away. Surely the Government realise that in any such scheme many different authorities are involved. The director must overcome the difficulties and obstacles which may be laid before the commercial exploitation of CHP. It is nothing to do with trying to override market forces. It is helping market forces. It is time that the Government gave us a proper explanation of why they do not support CHP if that is the case.

3.30 p.m.

Viscount Torrington

My Lords, being, it would appear, almost a sole voice in rising to oppose the amendment I do not in any way question the desirability of CHP as a concept. It is extremely elegant but it is seldom economical. I lived in Pimlico very close to a post-war housing estate called Churchill Gardens, which had one of the first CHP schemes in this country. I understand that it was not the ultimate closure of Battersea power station that brought the CHP scheme to an end but something which happened rather earlier. I do not know what it was but it is symptomatic of the problem that CHP is seldom economic.

Lord Ezra

My Lords, perhaps I may intervene and declare an interest. I happen to be chairman of a company which is providing that heating now. We were asked to do it simply because Battersea power station closed down. To my certain knowledge there was no intention to close down the scheme. The power station itself was to close and some other way had to be found to provide the heat.

Viscount Torrington

My Lords, I am grateful to the noble Lord. I was under the impression, obviously wrongly, that the CHP scheme closed before the power station.

In thinking about the future CHP schemes it always seems to me that power stations and high density housing do not on the whole go very well together. I accept what the noble Viscount said about possible future generation through rather smaller schemes. However, the idea of a new nuclear power station alongside high density housing is unattractive.

The purpose of privatising electricity is to make the industry profit conscious. One cannot force the board of directors of a company to take deliberately uneconomic decisions unless one is prepared to provide considerable subsidies to create quasi-economic conditions. I question whether that is desirable today. By the same token, no board of directors of a privatised company will turn down the opportunity to go into a CHP scheme if it can be seen to be potentially profitable. Thus, where CHP is based on sound economic conditions, it will in all probability be developed.

Unless the House wishes to impose an obligation on the industry to invest in activities which have no clear economic justification, I would suggest and recommend that the amendment should be rejected. At the same time I see, as it were, the sense in retaining an advisory element. As the noble Lord, Lord Stoddart, suggested, perhaps such advice is more correctly directed to local authorities. The Bill is about privatising electricity. It is not the purpose of the Bill to enshrine advice which can be properly obtained elsewhere.

Baroness Gardner of Parkes

My Lords, I shall be a second voice against the amendment. I do not think it is necessary and there may be much more in the wording than at first sight appears. I would go along with the statement of the noble Viscount, Lord Hanworth, that there should be encouragement of CHP. I undertand that, but as I read the amendment, it does not simply suggest encouragement; it suggests positive financial decisions and obliges people to carry out such activities whether or not they are satisfactory. For that reason I do not like the amendment.

I confirm what the noble Lord, Lord Ezra, said about the Churchill Gardens estate in Pimlico. I was a member of the London Electricity Board at the time the power station was kept operating for no other reason than to keep that one estate supplied. That was uneconomic and eventually had to stop. That is not the only estate on which Westminster Council has tried to combine heat and power. It was also built into the Lisson Grove estate. It proved to be a failure there. All the waste products of the estate were incinerated on site. People did not like the nuisance and the occasional smell, which, when the wind was in a certain direction, definitely came back.

The noble Viscount, Lord Hanworth, said that such a scheme would not be practical in a large city. There is a marvellous scheme in Edmonton which is successful but was enormously expensive to build. Its production of heat may be very good and it is able to put some power into the national grid but the people who live locally have lorries constantly trundling up there—a large number of London boroughs share this facility—and therefore it is unsatisfactory from that point of view. The amendment refers to promoting all activities. It is not selective and does not say that consideration should be given to what will be good and what will be harmful. It is a general amendment and promotes everything.

The noble Lord, Lord Ezra, mentioned "positive steps". I do not know what the word "positive" means here but I think it might have financial implications if one compares it with other areas. I think in particular about positive sex discrimination which is constantly talked about in the committees on which I have been sitting at the United Nations. In that respect there are certainly implications beyond mere suggestion. However, the concept is without doubt right. Everyone would like to see the waste energy from power stations being used. In Iceland I was quite fascinated to see heat from volcanoes being harnessed for cooking and for heating people's homes. That was a most marvellous environmental scheme.

We all want to see the best use of energy but the noble Lord, Lord Ezra, went on to say that we do not want to see the generation of more electricity than is necessary. That was a strange remark because the amount of electricity that is necessary is extremely difficult to quantify. There is never any way of knowing from where a sudden call for more power will come. At present in London, with this heat, there is a great demand for electricity for air conditioning. Yet, if we had a normal summer the demand would be nothing like as great. Indeed, we are having an exceptionally hot summer which is creating a very heavy demand.

Further, if overnight we had a torrential storm and freezing conditions set in, again there would be a sudden demand for electricity. The peaks and troughs of demand for electricity are never possible to quantify. Every year one works out what one will need in terms of loading; but one never matches it exactly, because it always goes one way or the other by the end of the year. Moreover, I am talking about just one area board, so that factor must be multiplied all over the country.

As I said, I found the noble Lord's remark a strange one. I think it must always be necessary to have the capacity to generate more elecricity than is required.

Lord Ezra

My Lords, perhaps I may mention to the noble Baroness that the object—

Noble Lords


The Earl of Dundee

My Lords, I am sorry to interrupt the noble Lord in the flow of his remarks, but as we are now on Third Reading it is only correct for speakers to speak once.

Baroness Gardner of Parkes

My Lords, I am sorry that I am slightly lost in the technicalities of the matter. However, perhaps it was the case that the noble Lord should have asked the leave of the House before he spoke.

However, the noble Lord, Lord Stoddart, mentioned the number of highways which would need to be dug up. Again, that is no small problem in terms of the environment. Many matters have been brought out in this debate. I went to see the decontamination procedures used in the electricity plant in Hamburg. The amount of waste product left after decontamination was unbelieveably large. We asked, as regards a power supply for the size of London, what would we ever do with the waste products. We were told that the Swedes come and take the gypsum away and apparently make it into some form of building material.

We then asked the Hamburg people, "What do you actually get for that?" They said, "Oh, no, we don't get; we have to pay out quite a large sum to the Swedes to take it away". Therefore to shackle the industry which may be taking on this enterprise, and which may well undertake to develop combined heat and power, with government decisions or promotion as an absolute duty and not allow it to consider all aspects of the matter would be wrong. There is a need for the people who would be undertaking this as a private enterprise to be able to assess the good schemes together with other schemes and thereby work out those that are the most suitable environmentally—which are the ones we should all like to see used. I do not think that this blanket amendment is the answer.

Lord Peston

My Lords, in speaking to this amendment, I suppose that the noble Earl, Lord Lauderdale, is right in his view that we are all green now. I regret to say that I think I still remain a rather pale shade of pink. However, that is by the way. I do not think that the noble Lord, Lord Ezra, the noble Earl, Lord Lauderdale, or my noble friend Lord Williams of Elvel need apologise for bringing the matter back to your Lordships. This is a minor matter, but it is also a serious one.

During the passage of the Bill we have taken the opportunity to raise certain broad matters connected with the electricity industry. In my view, this is one which is worth raising. It seems to me that, under the three "Es", as it were, of engineering, economics and the environment, the amendment, and the thinking that lies behind it, score positively on all three counts. From an engineering point of view it is a sensible action to take. It makes economic sense at least to ask about the economics of not wasting so much of the input relative to the output. Of course, there is no argument whatsoever that what is proposed is environmentally undesirable and even the two noble Lords who are not happy about the amendment have not suggested that for one moment. Indeed, quite the contrary is the case: it is environmentally desirable.

As the amendment scored positively in respect of the three criteria which are relevant here I had hoped that the noble Baroness, Lady Hooper, would rise at the beginning of the debate to say that she would accept the amendment. But, I suppose that I must he as gloomy as the noble Lord, Lord Peyton, and deduce from her silence that she may not do so.

The crux of the matter, apart from the points which have already been made, is, first, that we are discussing here the general duties of the Secretary of State and of the director general. Therefore it is quite appropriate to put this kind of matter under their general duties. Secondly, the word in the amendment is "promote". I am bound to say that I do not read that word as meaning to provide money for, or instruct, or say that you must do such things. The word "promote" means promote; in other words, to encourage this development and to ask occasionally, especially of the director general, why it is not being developed.

The industry in private hands may answer—as I think the noble Viscount, Lord Torrington, has mentioned—that it is not being developed because it is uneconomic and therefore if makes no sense to it to do so. However, it is still perfectly reasonable for the provision to be in the Bill. Moreover, it is especially reasonable in terms of these general duties and because in other parts of the Bill such words are already included.

In supporting the amendment I also hope that the remarks made by my noble friend Lord Stoddart of Swindon and those made by the noble Viscount, Lord Hanworth, are accepted; namely that we are not trying here to supplant market forces. All of us would like to achieve this kind of development with market forces. Indeed, it makes life much easier, if the privatised industry simply does what is right. However, one's concern is that that does not always happen. As my noble friend Lord Stoddart pointed out, there are good reasons for supposing that that will not happen because of the complexity of the inter-relationship between the private and public sectors. That is why this is such an excellent amendment. I do not think that it is threatening to the concept of privatisation; it is also not threatening to any of those who believe very strongly in the doctrine of the market mechanism.

En passant I must say that I simply do not understand how sex discrimination came into the discussion on this amendment. I must confess that I became a little lost at that point. If there is a sex discrimination angle to the issue, then of course I shall support the amendment even more strongly because of my opposition to sex discrimination. Perhaps, again, the noble Baroness, Lady Hooper—if she managed to derive anything from the argument —will enlighten us on the matter in her reply.

It seems to me that the noble Lord, Lord Ezra, put his finger on the key point in the matter. He referred to the 1983 Energy Act. We certainly do not want to weaken anything in connection with that legislation. He said that the Bill gives us an opportunity. It is later, on the last day of this century, that we must grasp the opportunity and I very much hope that the Government will do so.

3.45 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)

My Lords, I have considered these amendments most seriously. I hope that in responding I may follow the example of the noble Lord, Lord Ezra, and deal first with Amendments Nos. 3 and 13 and then return to what is, I believe, the main amendment.

As regards the legal drafting point raised by Amendment No. 3, there are three separate aspects of the noble Lord's amendment. The first is to replace the phrase, "in association with electricity", with the phrase; in combination with electricity, or incidentally from its generation". I appreciate that those words are used in the Energy Act 1983 and that they probably mean much the same as "in association with". But, as no doubt my noble friend Lord Peyton would agree, why use nine words to describe a process when three will do? More important, the proposed new wording would conflict with other references to combined heat and power in the Bill, notably in new Schedule 13 and in Schedule 16.

The second aspect is to leave out the words; and steam produced from and air and water heated by such heat". The point here is that a reference to heat in the abstract is not enough, since the heat is always supplied in the form of hot air or hot water. Moreover, it should be borne in mind that Section 11 of the Local Government (Miscellaneous Provisions) Act 1976 gives local authorities power to lay heat pipes in streets and uses the same wording as we have provided in the Bill.

If we take out the reference to, steam produced from and air and water heated by such heat", in Clause 11, it may be thought that the powers which can be conferred on licence holders to lay heat pipes in streets are in some way different from the powers which local authorities already have. I am sure that that is something which is not intended.

The third aspect is to add the qualification that the heat must be for heating buildings or for other useful purposes. Again, I appreciate that this wording is in the Energy Act 1983. It was probably appropriate when describing the duties of electricity boards, but here the Bill is referring to works powers which can be conferred on licence holders by their licence. The effect of the amendment would be that works powers could be conferred by a licence only if the heat were for the heating of buildings or for other useful purposes. It would probably be relatively easy to decide whether heat was being used for the heating of buildings but the problems come when a decision has to be taken on whether a purpose is a useful one or not. Who decides? One person may think that a particular purpose is useful; another person might think that the purpose is useless. That aspect of the amendment seems to give rise to some recipe for confusion and uncertainty.

Despite being lawyer, I always sympathise with the desire to simplify the wording of proposals. Nevertheless, here, for reasons of consistency within the Bill and other applicable legislation, as well as the need for absolute clarity, I cannot accept the amendment nor Amendment No. 13. I should point out that with Amendment No. 13 the movers have lost the concept of heat being produced incidentally from the generation of electricity. It could be argued that in some processes the heat is not actually produced in combination with the electricity but is produced incidentally from its generation. For example, operationally, it may be necessary to provide a constant supply of heat but only an intermittent supply of electricity. Indeed, the opposite could also be the case. As I have already said, we think that the words "in assocation with" are the best way to describe the various processes that are involved.

I am sorry to have been rather lengthy in explaining this matter but it is always difficult to say something that can appear clear when written down.

I return to Amendment No. 1, which is the important amendment. We believe that combined heat and power has an important contribution to make to increased energy efficiency and environmental improvement. As the noble Lord said when he introduced the amendment, we have discussed the point on previous occasions. However, I should repeat the general proposition that our privatisation proposals are expressly designed to encourage competition and to allow fair access to the market. I believe that there is general agreement on that point.

Because we recognise the case made by combined heat and power supporters, we have specifically provided in Clause 11(3) equal rights of access to public undertakers; for example, the powers to break streets and lay cables. More significantly—this has not been mentioned a great deal in the course of our discussions today—we have amended the Bill in order to acknowledge directly the important role that CHP has to play. As a result of amendments introduced in your Lordships' House, it is now a part of the director's general functions to keep under review in particular all activities connected with the supply of combined heat and power. That concession, now contained in Clause 48, was introduced and welcomed on Report.

However, the amendment requires that in addition to keeping CHP activities under review the director and the Secretary of State should also have to promote such activities. A duty to promote, in the particular context of CHP, leads immediately into the grey and unsatisfactory area of government subsidies or other support for schemes which are not commercial. The concern applies whether we are seeking to "promote", "encourage", "support" or however else the noble Lord cares to describe such a duty. The very fact of a legislative duty means that CHP would be treated more favourably than if left to market forces alone. I believe that that is why my noble friend Lady Gardner introduced the question of sex discrimination. It was not applicable to the amendment but merely to the use of the word "promote" and the concept of positive discrimination.

I believe that CHP schemes once they are up and running, can prove themselves and that they will have a competitive edge over other forms of generation because of the economy factor which has been referred to. Everyone who has spoken believes that to be so—that once up and running the schemes can stand alone. I am therefore at a loss to understand why a subsidy should be thought necessary.

Lord Tordoff

My Lords, will the noble Baroness give way? It has been made clear from all sides of the House that there is no question of subsidies being contained within the amendment. It is unfortunate that she is trying to smear the amendment by saying things about it which are untrue.

Baroness Hooper

My Lords, I am by no means trying to smear the amendment. The noble Lord, Lord Ezra, well knows that I am a great supporter of CHP. All that I have said so far goes to prove that we have made every effort to meet the arguments that have been raised. I am now going on to show how the Government support the various schemes and the concept of combined heat and power.

I did say that this was a grey area. While we are opposed to subsidising uneconomic CHP schemes, I am not saying that every scheme would be uneconomic. However, it is possible that that is how the provision would be interpreted. We are, and have been, active in providing proper help and support to bring CHP schemes to the market place. As I said, we are all agreed that once up and running they are economic in their own right and should therefore not need subsidy. I believe that we are in agreement on that point.

The Department of Energy, through the Energy Efficiency Office, has funded an extensive programme to seek to establish the potential for CHP, both on a city-wide and a local basis. We have supported and funded schemes at the demonstration stages. Ministers have taken every opportunity to spread the message. A wide range of CHP projects has benefited from the support and there is no reason to suggest that such support and encouragement will not continue.

References have been made to the wording of the 1983 Act and why we do not continue the "adopt and support" phrase contained in that Act. The answer is that the duty placed on electricity boards to adopt and support economic CHP schemes in Section 19 of the Energy Act 1983 was framed in very different circumstances from those of the privatised industry. The 1983 Act was seeking to create new market opportunities within an industry which was still totally dominated by the CEGB and its close relationship with the area boards. Given the absence of effective competition and the monopoly position enjoyed by the CEGB, it was felt necessary to place the boards under a direct duty to consider proposals for that important and energy-efficient alternative source of generation. It was also felt necessary, again to counter-balance the dominance of the CEGB, to require boards to adopt and to support all such viable schemes.

Our privatisation proposals are designed to overcome the obstacles to CHP development at source; therefore, we do not need to repeat the 1983 Act. In view of the interest shown in the Government's "green" image, perhaps I might say that, as we all know, "green" has more than one meaning. It may be a bit green of the Opposition not to recognise that combined heat and power is already supported. In the environmental sense, we believe that the Government most certainly are green.

I should like to say to the noble Lord, Lord Hylton, that we understand that there are about two gigawatts of existing industrial CHP schemes. The independent projects that have already been notified to the department as a result of the privatisation proposals envisage a further two gigawatts of industrial CHP. This means a doubling, so it is clear that industrial CHP is economic and is going ahead in the way in which we hope all CHP schemes will do.

On the industrial and commercial front, the Energy Efficiency Office has been active in supporting and promoting CHP and novel applications for CHP under its energy efficiency demonstration scheme. To date, 25 projects have been supported. In addition we have undertaken extensive research into the potential for CHP, and reports on the market potential for CHP in public, commercial and domestic buildings and in industry have been published during the past year.

On the subject of reports, the noble Lord, Lord Stoddart of Swindon, raised a question about the Atkins Report. As your Lordships will know, the Atkins Report recommended that C'HP could be economic in the long term. The Government therefore provided £0.75 million for lead city studies in Leicester, Belfast and Edinburgh. These studies showed that the Belfast and Edinburgh schemes were not attractive enough for further development. However, the Leicester scheme is progressing through Leicester Energy Ltd. which at the moment is considering how to proceed.

In short, in relation to Amendment No. 1, we offer support and funding at the research and demonstration stages. In the Bill we are removing all the legislative barriers to the further development of CHP and our privatisation proposals in general provide an unparalleled opportunity for CHP operators to enter the market. In addition, in the Bill we have added the specific duty to review CHP activities. I believe that this adds up to the sort of support, promotion, encouragement—say what you will—that the noble Lord seeks in moving the amendment. For that reason, I hope he will think that it is not necessary to pursue the amendment.

Baroness Phillips

My Lords, before the Minister sits down, as one who has been very keen in the women's movements, can she tell me where I can find the reference to sex discrimination? It has completely confused me. I have searched the amendments and see no reference at all to it. The Minister referred to it and I am genuinely asking about it. I do not understand what the reference was.

Baroness Hooper

My Lords, I am sorry for the reference; it clearly has no application at all to the amendment; it was used only as an analogy.

4 p.m.

Lord Ezra

My Lords, I am much indebted to the noble Baroness for the considered reply which she gave to the amendment. However, before I proceed I wish to ask about the procedures of the House during Third Reading. I am clear that no noble Lord, apart from the one introducing an amendment, can speak more than once. But, apart from that, I thought that the normal rules of procedure applied. I had undertood that if a noble Lord wished to intervene on something that another noble Lord has said, subject to the agreement of that noble Lord—which in the case of the noble Baroness, Lady Gardner, I had—that noble Lord could speak. I am not at all clear why I was prevented from making the very brief comment which I had intended.

The Earl of Dundee

My Lords, I am grateful to the noble Lord, Lord Ezra. I apologise to him; he is absolutely correct that at Third Reading he is entitled—as are any of your Lordships—to seek clarification during the course of the remarks of any other noble Lord. He is correct when he makes the point that he will have spoken twice when he winds up the debate on the amendment which he has initiated. One is not allowed to speak twice when one is not seeking clarification and not winding up a debate which one has initiated. Apart from that one may speak only once.

Lord Ezra

My Lords, I am much indebted to the noble Lord for that clarification. He could not have known what I was going to do because he interrupted me as soon as I got on my feet! However, let that pass; I shall deal with it in a moment.

Perhaps I may deal first, with the subsidiary amendments. I am sorry that the noble Baroness has not agreed to them or to some part of them. In dealing with the matter she herself referred to combined heat and power. Everybody knows what that means; the combined use of heat and electricity is something about which a lot of people know. I am very sorry that it is not referred to in the Bill, whereas it was specifically referred to in the Energy Act 1983. For the life of me, I cannot understand why this measure of obscurity has been introduced unless there is some ulterior motive. I very much hope that there is not.

So I wish to ask the Government to think again about that. When the Bill goes to another place, perhaps they could introduce an amendment to make it clear that the reference in the two other amendments that I have moved is to combined heat and power. I wish to leave that to them; it is of course not a matter on which I wish to ask the House to express an opinion. I merely make an appeal to the Government to clarify what they mean in those clauses of the Bill.

Turning to Amendment No. 1, I wish to underline what my noble friend Lord Tordoff said when he intervened—namely, that the word "promote" does not involve, and is not intended to involve, any form of financial subsidy. The promotion of a cause does not involve a financial subsidy; it merely means that one supports a cause, one encourages a cause. If the Government prefer the words in the Energy Act 1983, I should be delighted; the phrase "adopt and support" is stronger than the word "promote".

We are simply asking that in the circumstances in which we live today, in which energy efficiency and the minimisation of adverse environmental impact are so important, the Government should indicate that they promote those activities in the energy sector which can serve those purposes. That is what the word "promote" is intended to mean. I do not suppose that if we had the Oxford Dictionary at our disposal and looked up the meaning of the word "promote", it would necessarily or exclusively say that the word means that one provides a subsidy. In fact, it may not use the word "subsidy" in connection with "promote" at all. As soon as we have finished the debate, I shall rush to the Oxford Dictionary to see whether or not I am right. I merely wished to say that in order to make absolutely sure that the amendment does not involve any form of financial contribution. I should like to make that very clear.

Next, I wish to turn to the remarks of the noble Baroness, Lady Gardner of Parkes, on which I was going to made a brief point. I shall now take the opportunity to do that. She did not understand my comment that by developing combined heat and power schemes we could diminish the need for additional electricity generation. Let me explain. If we use the waste heat from power stations to provide heating which would otherwise have to be met from electricity, obviously we are reducing the demand for electricity. I cannot explain it more simply than that. We are getting more energy out of power stations than we would otherwise get. Therefore it diminishes the need for additional generation. I should have thought that that was relatively simple. I hope that I have made my point.

However, what disturbs me in general about the reply of the noble Baroness, Lady Hooper, is that she has assured us that the Government are very keen—I cannot use the word "promote"—to develop, to encourage, to ensure that combined heat and power schemes come about. They have taken trouble to remove the impediments which have previously existed. She made that point very clear and I can confirm what she said. She herself is a great supporter of combined heat and power schemes.

If that is how the Government are minded, if they wish to encourage these schemes, if they wish to make sure that the schemes are extended, I should have thought that this simple amendment could have been agreed to. I could say much more but I think that the time has now been reached when we should decide whether or not as a House we accept the amendment. I commend it to the House.

4.10 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 97; Not-Contents, 146.

Addington, L. Broadbridge, L.
Airedale, L. Brooks of Tremorfa, L.
Ampthill, L. Bruce of Donington, L.
Ardwick, L. Carter, L.
Auckland, L. Cledwyn of Penrhos, L
Blackstone, B. Cobbold, L.
Blease, L. Cocks of Hartcliffe, L.
Blyth, L. Craigavon, V.
Boston of Faversham, L. David, B.
Bottomley, L. Davies of Penrhys, L.
Dean of Beswick, L. Milner of Leeds, L.
Donaldson of Kingsbridge, L. Molloy, L.
Dormand of Easington, L. Monson, L.
Elwyn-Jones, L. Mulley, L.
Ennals, L. Murray of Epping Forest, L.
Ewart-Biggs, B. Nathan, L.
Ezra, L. Nicol, B.
Falkland, V. O'Neill of the Maine, L.
Fitt, L. Peston, L.
Foot, L. Peyton of Yeovil, L.
Gallacher, L. Phillips, B.
Galpern, L. Ponsonby of Shulbrede, L.
Gladwyn, L. Prys-Davies, L.
Graham of Edmonton, L. [Teller.] Ritchie of Dundee, L.
Rochester, L.
Grey, E. Roll of Ipsden, L.
Halsbury, E. Russell of Liverpool, L.
Hampton, L. Seear, B.
Hanworth, V. Sefton of Garston, L.
Harris of Greenwich, L. Serota, B.
Henderson of Brompton, L. Shackleton, L.
Hirshfield, L. Stallard, L.
Houghton of Sowerby, L. Stedman, B.
Hylton, L. Stoddart of Swindon, L.
Irving of Dartford, L. Strabolgi, L.
Jeger, B. Taylor of Blackburn, L.
Jenkins of Hillhead, L. Taylor of Gryfe, L.
Kinloss, Ly. Taylor of Mansfield, L.
Lauderdale, E. Thomson of Monifieth, L.
Listowel, E. Thurlow, L.
Lockwood, B. Tordoff, L. [Teller.]
Longford, E. Turner of Camden, B.
Macaulay of Bragar, L. Underhill, L.
McCarthy, L. Walston, L.
McGregor of Durris, L. Warnock, B.
Mackie of Benshie, L. Whaddon, L.
McNair, L. White, B.
Mason of Barnsley, L. Williams of Elvel, L.
Mersey, V. Winstanley, L.
Abercorn, D. Eccles, V.
Airey of Abingdon, B. Eden of Winton, L.
Aldington, L. Ellenborough, L.
Alexander of Weedon, L. Elliot of Harwood, B.
Allerton, L. Elliott of Morpeth, L.
Annaly, L. Elton, L.
Arran, E. Erroll of Hale, L.
Ashbourne, L. Faithfull, B.
Barber, L. Fanshawe of Richmond, L.
Belhaven and Stenton, L. Ferrers, E.
Beloff, L. Fortescue, E.
Belstead, L. Fraser of Kilmorack, L.
Bessborough, E. Gainford, L.
Birdwood, L. Gardner of Parkes, B.
Blatch, B. Gray of Contin, L.
Boardman, L. Greenway, L.
Borthwick, L. Grimston of Westbury, L.
Boyd-Carpenter, L. Hailsham of Saint Marylebone, L.
Brabazon of Tara, L.
Brentford, V. Hanson, L.
Brougham and Vaux, L. Harmar-Nicholls, L.
Bruce-Gardyne, L. Henley, L.
Butterworth, L. Hertford, M.
Caithness, E. Hesketh, L.
Caldecote, V. Hives, L.
Carnegy of Lour, B. Home of the Hirsel, L.
Carnock, L. Hood, V.
Carr of Hadley, L. Hooper, B.
Cayzer, L. Hylton-Foster, B.
Cockfield, L. Jenkin of Roding, L.
Colnbrook, L. Johnston of Rockport, L.
Constantine of Stanmore, L. Kaberry of Adel, L.
Cork and Orrery, E. Killearn, L.
Crickhowell, L. Kimball, L.
Cullen of Ashbourne, L. Knutsford, V.
Daventry, V. Layton, L.
Davidson, V. [Teller.] Long, V.
Denham, L. [Teller.] Lyell, L.
Donegall, M. McAlpine of Moffat, L.
Dundee, E. Mackay of Clashfern, L.
Margadale, L. Rochdale, V.
Marley, L. Rodney, L.
Massereene and Ferrard, V. Sainsbury of Preston Candover, L.
Merrivale, L.
Middleton, L. St. Aldwyn, E.
Monk Bretton, L. St. John of Fawsley, L.
Montagu of Beaulieu, L. Sanderson of Bowden, L.
Morris, L. Savile, L.
Mottistone, L. Shannon, E.
Mowbray and Stourton, L. Sharples, B.
Moyne, L. Skelmersdale, L.
Munster, E. Stanley of Alderley, L.
Murton of Lindisfarne, L. Strange, B.
Napier and Ettrick, L. Strathcarron, L.
Nelson, E. Strathclyde, L.
Nelson of Stafford, L. Swinton, E.
Newall, L. Terrington, L.
Norfolk, D. Teviot, L.
Northbourne, L. Thomas of Gwydir, L.
Nugent of Guildford, L. Thomas of Swynnerton, L.
Onslow, E. Thorneycroft, L.
Orkney, E. Torrington, V.
Orr-Ewing, L. Trafford, L.
Oxfuird, V. Trefgarne, L.
Pender, L. Trumpington, B.
Penrhyn, L. Ullswater, V.
Platt of Writtle, B. Vaux of Harrowden, L.
Plummer of St. Marylebone, L. Weir, V.
Wise, L.
Rankeillour, L. Wolfson, L.
Reay, L. Wyatt of Weeford, L.
Rees, L. Wynford, L.
Reigate, L. Young, B.
Renton, L. Young of Graffham, L.
Renwick, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.17 p.m.

Baroness Hooper moved Amendment No. 2: Page 3, line 38, at end insert ("and a duty to take into account, in exercising those functions, the effect on the physical environment of activities connected with the generation, transmission or supply of electricity.").

The noble Baroness said: My Lords, in moving Amendment No. 2, I wish to speak also to Amendments Nos. 21 to 26 which are also standing in my name.

During the Report stage on 5th July, I undertook to take back the environmental amendment to Clause 4, tabled by the noble Lord, Lord Williams of Elvel, and to introduce an amendment at Third Reading embodying the spirit of his amendment and taking into account also some suggestions from others, including some from my noble friend Lord Norrie.

The amendment tabled will place on the Secretary of State and the director a duty to take into account, in exercising the functions assigned or transferred to them by Part I of the Bill, the effect on the physical environment of activities connected with the generation, transmission or supply of electricity.

The expression "physical environment" is used in Section 10(4)(a) of the Telecommunications Act 1984. It is a wide concept and should I hope therefore be welcomed. The physical environment is of course to be distinguished from the social environment, the working environment or the home environment. The working environment is, of course, covered by health and safety legislation.

As your Lordships will be aware, the Government were strongly inclined to think that the environmental provisions of the Bill should be concentrated in Schedule 9. However, this amendment shows that we have recognised the strength of the feeling that there should be an environmental duty on the Secretary of State and the director in Clause 4. The amendment introduces such a duty in a straightforward manner. I hope that it will commend itself to the House. Taken together with the amendments to Schedule 9 which the House has already approved, I think that we shall have achieved a set of rigorous, precise and practical environmental provisions which I hope will be supported by Amendments Nos. 21 to 26.

Those amendments to Schedule 9 show that I gladly grasped the lifeline which the noble Lord, Lord Howie, chivalrously threw me during the discussion of his amendments on 6th July on Report. They make it clear that "sites" are among the objects of architectural, historic or archaeological interest whose protection is desirable. They also make it clear that the word "buildings" includes "structures". The amendments bring the schedule into line in this respect with the wording of the Water Act. I am grateful to the noble Lord, Lord Howie, for originating those amendments.

I commend the amendment to your Lordships. I beg to move.

Lord Williams of Elvel

My Lords, we are grateful to the noble Baroness for bringing forward the amendments. They respond to the points which we made on Report. We are glad that there will be a general duty on the director and Secretary of State in exercising their functions to take into account the effect on the physical environment. We interpret the physical environment rather more widely than the noble Baroness, but it will obviously be up to the courts or others involved to determine the meaning of the word "physical". I should argue that there should be no duty to take account of the effect on the mental environment and that the physical environment is anything that is not the mental environment. That includes the workplace and other areas which the noble Baroness mentioned.

I have only two problems with Amendment No. 2. First, I am uncertain about the grammar, and I do not quite understand how the amendment fits into the Bill as drafted. Secondly, if, as I am told, the new wording should not be inserted in line 38 on page 3 at the end of subsection (3) but should constitute a new paragraph at the end of subsection (3), there is a problem of slightly greater substance. If that is the case there is a duty, but only paragraphs (a) to (e) are qualified by the expression: in the manner which he considers is best calculated". If the additional wording were to come after paragraph (e) the duty would not be a duty which the Secretary of State or director would have to exercise: in the manner which he considers is best calculated". That is only a very small point. I see noble Lords opposite shaking their heads in disagreement. I have argued in the course of our discussions on the Bill that subsection (3) is subordinate to subsection (1). We have gone through that argument and I do not wish to pursue it. In the amendment moved by the noble Baroness, if the expression: and a duty to take into account is added at the end of line 38 it is either wholly ungrammatical in the sense that it comes within paragraph (e) or it comes after paragraph (e). If it comes after paragraph (e) it cannot be qualified by the expression: in the manner which he considers is best calculated because the clause will read: Subject to subsections (1) and (2) above, the Secretary of State and the Director shall each have a duty to exercise the functions assigned or transferred to him by this Part in the manner which he considers is best calculated (a) … (b) … (c) …(d) …(e) and a duty to take into account, in exercising those functions, … followed by the text of the amendment of the noble Baroness.

I very much hope that the noble Baroness will be able to obtain advice on the matter. It seems to us that if she had put forward a new paragraph (f), reading "leave out 'duty' and insert 'to take into account"' the new duty would quite clearly be subject to the decision of the Secretary of State and director in a manner which "he considers is best calculated …". If the wording is left outside paragraph (e) it does not seem to us or to our legal advisers to fall within the scope of that particular duty.

Having left that thought with the noble Baroness as a matter on which she might wish to take advice, on behalf of my noble friend Lord Howie of Troon I must thank the noble Baroness. I am afraid that the noble Lord is not able to be in his place today but he asked me specifically to thank the noble Baroness for her amendments to Schedule 9. Had he been here I am sure that he would have made a considerable intervention on the subject. Since he is not here I am happy to say merely that I accept the amendments.

Lord Renton

My Lords, now that the noble Lord has praised the amendment with faint damnation, perhaps I may say that I believe that the Government should earn our gratitude for having listened to the many representations made during Committee and Report stages. Those were to the effect that we should make it even clearer than is already stated in the ninth Schedule to the Bill that those concerned will have a duty to protect the environment. We should be glad that it has been put, as Members of both sides of the House suggested—

Lord Williams of Elvel

My Lords, will the noble Lord allow me to intervene? I apologise. It was my original amendment on Report which the noble Baroness agreed to take back and redraft. I am not ungrateful. I am always grateful when we score successes and receive concessions from the Government.

Lord Renton

My Lords, I hope that I have not done the noble Lord an injustice so far as concerns the origin of the amendment. However, I was surprised at the hesitation that he expressed in acknowledging his gratitude. He said that he doubted whether it was wise to insert it in this particular part of Clause 4. I should have said that if we are to have the duty in the forefront of the Bill, as it now is, it should be expressed, as it has been, as part of the general duty of the Secretary of State and the director.

Lord Williams of Elvel

My Lords, I am sorry to intervene again but the noble Lord has completely missed my point. I moved an amendment at Report stage seeking to make this a duty on the Secretary of State and director in Clause 4. I was very grateful to the noble Baroness for taking it away and redrafting it. What I am talking about at the moment is the drafting and the way in which this fits into Clause 4. I cannot have any objection to the inclusion of the duty in Clause 4 because I moved the original amendment.

Lord Renton

My Lords, I shall not go on trying to put the remarks of the noble Lord into the context which they deserve. I shall simply say, as I was saying, that I am very glad that in addition to what has been set out in the ninth Schedule to the Bill from the start we now have this clear statement of a duty, together with other duties in Clause 4. For that I should have thought we could unanimously rejoice.

Lord Morris

My Lords, I have listened carefully to the extremely interesting argument of the noble Lord, Lord Williams of Elvel. I think that his fear may be based—I may be wrong—on an interpretation of the words "and a duty". The word "and" should undoubtedly be interpreted as conjunctive rather than disjunctive. If that is the case, as I think it is, he has nothing to worry about at all.

4.30 p.m.

The Earl of Swinton

My Lords, my noble friend Lord Norrie is not able to be here today and has asked me to express his gratitude to my noble friend Lady Hooper for the amendment. By speaking now, it will save me having to speak on the motion that the Bill do now pass, so I am saving time by wasting time.

If there is any difficulty about the drafting, it can always be put right in another place when it considers our amendments to the Bill. Perhaps that might give my noble friend a way out, if a way out is needed. I do not follow the arguments of the noble Lord, Lord Williams of Elvel, any more than I do those of my noble friend Lord Norrie. However, I should like to pay tribute to my noble friends Lord Norrie and Lord Renton for the enormous amount of work that they have done to ensure that the environment is more properly recognised in the Bill. I also pay tribute to the work of the noble Lord, Lord Williams of Elvel. The Bill will leave the House a much better and healthier Bill so far as concerns the countryside.

As I have driven around and travelled around in trains, when they are running, I have been amazed by the number of ghastly overhead electricity lines throughout the length and breadth of the country. One hopes that, as a result of the Bill, we shall not see a proliferation of such lines in future and might in fact see some disappear. I am grateful for the amendment.

Lord Monson

My Lords, I think that the noble Earl, Lord Swinton, is absolutely right in suggesting that the other place will have to look at the drafting of the amendment. While we are all agreed on the merits of the principles of the amendment, I am convinced that the noble Lord, Lord Williams of Elvel, is correct in suggesting that the grammar is wrong. So far as I can see, one cannot secure a duty. I am certain that the wording will have to be tidied up in another place.

Baroness Hooper

My Lords, I am grateful for the escape lines as it were, offered by my noble friend and the noble Lord, Lord Monson. Nevertheless, I do not think that they are necessary.

Perhaps I may help the noble Lord, Lord Williams of Elvel. This is apparently the way of phrasing such insertions in the Bill. I queried it myself. It is stated explicitly, "at end insert", referring to line 38. I am assured that it will be a new line at the end of subsection (3). It will come after paragraph (e), so it will be within subsection (3) but it will be the final statement.

The duty in the amendment is additional to the duty referred to in the second line of Clause 4(3); that is, line 19 of page 3. The duty is one of taking into account the effects on the physical environment of exercising those functions which include all the functions in Clause 4. I think that it is quite clear. The noble Lord might like to reflect on it, but obviously we shall also look at it and, if there is a need to do anything—which I do not think there is—it can be done in another place.

On Question, amendment agreed to.

Clause 11 [Powers etc. of licence holders]:

[Amendment No. 3 not moved.]

Clause 34 [Electricity from non fossil fuel sources]:

Lord Williams of Elvel moved Amendment No. 4: Page 26, line 15, after ("stations") insert ("whether within or outside the United Kingdom").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 5 and 6.

There has been considerable discussion at earlier stages of the Bill about the status of what I would call, for abbreviating purposes, the "French link" in the non-fossil fuel quota. In responding to my noble friend Lord Shepherd when he asked whether what is to be supplied from France must be clearly identified by a generating station which uses renewable or alternative energy sources, the noble Baroness replied: To contribute to the obligation it"— referring to imported electricity— will have to be positively identified as from a non-fossil or renewable source within the non-fossil obligation".—[Official Report, 6/7/89; col. 1311.]

That is the object of Amendment No. 4.

The assurance given by the noble Baroness was very welcome and I shall discuss the other aspects of it when I come to Amendments Nos. 5 and 6. It seems to us that, because it was welcome, it should be included in the Bill rather than left to an order or some unidentified document of which a number have been mooted as being circulated after the Bill has received Royal Assent.

The French link imports electricity to the United Kingdom at a price determined by the EDF system of marginal cost, which is an extremely sophisticated marginal cost calculation. Particular generating plants are not explicitly identified as supplying the link. As the noble Baroness rightly pointed out, it is important for the purposes of the non-fossil fuel quota that they should be positively identified. Contracts must therefore be entered into via the French link with individual generating stations.

The problem in respect of Amendments Nos. 5 and 6 is the reverse. The aim of the amendments is to prevent imported nuclear or hydro-electricity from France being preferred over the development of any possible UK renewable generation. I believe that we are at one in trying to encourage renewables. We want to be assured that there is no possibility that, in the identification of the sources of French electricity, the renewable source could supplant UK renewable systems.

The annual electricity energy demand in France is met at the moment by nuclear, hydro and fossil-fired plants more or less in the following proportions: 70 per cent. nuclear, 20 per cent. hydro and 10 per cent. fossil fired. Let us suppose that the electricity imported across the Channel through the inter-connector is identified as being hydro. It would then be theoretically possible under the Bill, and no doubt under the orders that will be promulgated, for that hydro-generated electricity in France to count as part of the renewable section in the quota mentioned by the noble Baroness. On 15th June she said that the size of the first extra renewable tranche should be around 50 megawatts and that there should be further tranches of 100 to 150 megawatts by 1995, a further 100 to 150 megawatts by 1997 and, finally, a further 300 megawatts by the year 2000, all within the 600 megawatt overall limit.

The capacity of the 2,000 megawatt cross-Channel link that could be attributed to hydro on the percentages that I have given of French production would be 400 megawatts. Therefore the whole of the renewable tranche that the noble Baroness spelt out on 15th June at cols. 1533 and 1534 of Hansard could easily be taken up by French hydro-electricity. Not only that, but by 1997—in the unlikely event that the whole of the French link were to be hydro-generated—it could absorb the whole of the renewable tranche that the noble Baroness has indicated is the Government's intention. We have an assurance from the Government that the imported electricity from France will have to be positively identified as coming from a non-fossil or renewable source within the non-fossil obligation. It seems important therefore to us first, to provide in the Bill that that shall be so, and, secondly, to make sure that the hydro-electricity generation in France should not replace, in the non-fossil fuel quota, United Kingdom renewables. That is the objective of the amendment. I beg to move.

4.45 p.m.

Baroness Hooper

My Lords, I appreciate the desire of the noble Lord, Lord Williams, to clarify the position. However I explained the purpose of Clause 34 (9) (b) when we discussed this topic during Committee stage. I explained then that the United Kingdom has treaty obligations which prevent us from discriminating in any way against supplies from other European Community countries. We do not intend—indeed we are unable—to do otherwise. Our approach will be to treat imports on a basis which is no less favourable, and no more favourable than the basis on which supplies from within the United Kingdom are assessed. Subsection (9)(a) was included in the Bill to make sure that this is the case, even where there may be significant differences between the non-fossil contracts within the United Kingdom and those for imports.

I fully accept that the purpose behind the amendment is to make sure that UK renewable generators are given a fair chance to meet the non-fossil obligation before any imports are considered. I am sure that this will happen even without the amendment. The public electricity suppliers will be looking for the most economic way of meeting their non-fossil obligations. I am sure that they will not be slow to take advantage of the competitive renewables on their own doorstep.

In addition, the extra tranches of capacity on top of the non-fossil fuel obligation exclusively for renewables—to which the noble Lord has referred —will give a further substantial boost to the development of renewables. We shall obviously be looking at the progress which the developing technologies have made when it comes to setting the size of each tranche as we go through the 1990s.

These amendments, however, seek to force any public electricity supplier who contracts for imports to prove that he was unable to find any renewable source from within the United Kingdom instead. But there is no balancing requirement on a public electricity supplier who contracts for UK non-fossil sources to prove that he could not have contracted for imports. It is therefore, as I read it, a one-way option against imports of electricity.

I very much fear that this would put us in breach of our treaty obligations. To impose onerous requirements which apply solely to imports would clearly be discriminatory. But this is just one of the problems—and the main problem—that we have with these amendments. They would also prevent imports counting towards the non-fossil obligation where there were intermittent renewable sources of generation available without putting any ceiling on the cost, and from anywhere in the United Kindom, as they are written at present. This could lead to renewable sources being contracted for at ludicrously high prices when imports were available at much more competitive prices. A public electricity supplier in the South-East may have to contract for power from an unbuilt wave machine in the north of Scotland, rather than contracting with an existing non-fossil station just 23 miles across the Channel. That would have alarming effects on the fossil fuel levy and on electricity prices in general. I am sure that that was not the intention of the noble Lord.

I have listened carefully to his arguments. However, I believe that the amendments would not achieve what he sets out to achieve. I trust that he will feel able therefore to withdraw the amendment.

Lord Williams of Elvel

My Lords, I am grateful as always to the noble Baroness for her response. I do not think that she has addressed the problem that I raised. There will be no contracts with individual stations in EDF, because on the basis of its system marginal cost EDF does not identify particular generating plants supplying the link. All we know is that the percentages are 70 per cent. nuclear, 20 per cent. hydro, and 10 per cent. fossil. The noble Baroness stated on 6th July that to contribute to the obligation—that is, the non-fossil fuel obligation—it (by which she meant imported electricity) will have to be positively identified as coming from a non-fossil or renewable source within the non-fossil obligation. That raises the problem of how one identifies non-fossil renewable and fossil within the context of the French link. The French link at the moment is not able to do that. I was glad that the noble Baroness made that statement. It is very important that UK renewables should not be swamped by electricity coming across the French link which it can claim in one way or another is hydro-generated.

In all frankness the noble Baroness has failed to address this problem. I therefore find that I have to press my amendment. I commend the amendment.

4.47 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 146.

Addington, L. Dormand of Easington, L
Airedale, L. Elwyn-Jones, L.
Ardwick, L. Ennals, L.
Barnett, L. Ewart-Biggs, B.
Blackstone, B. Ezra, L.
Blease, L. Falkland, V.
Bonham-Carter, L. Fitt, L.
Boston of Faversham, L. Foot, L.
Bottomley, L. Gallacher, L.
Brooks of Tremorfa, L. Galpern, L.
Bruce of Donington, L. Gladwyn, L.
Carmichael of Kelvingrove, L. Graham of Edmonton, L. [Teller.]
Carter, L. Grey, E.
Cledwyn of Penrhos, L. Hampton, L.
Cocks of Hartcliffe, L. Hanworth, V.
Davies of Penrhys. L. Hirshfield, L.
Dean of Beswick, L. Hylton, L.
Donaldson of Kingsbridge, L. Irving of Dartford, L.
Jeger, B. Ritchie of Dundee, L.
Jenkins of Hillhead, L. Rochester, L.
Kagan, L. Seear, B.
Listowel, E. Shackleton, L.
Longford, E. Stedman, B.
Macaulay of Bragar, L. Stoddart of Swindon, L.
McCarthy, L. Strabolgi, L.
McIntosh of Haringey, L. Taylor of Blackburn, L.
Mackie of Benshie, L. Taylor of Gryfe, L.
McNair, L. Taylor of Mansfield, L.
Mason of Barnsley, L. Thomson of Monifieth, L.
Milner of Leeds, L. Tordoff, L.
Molloy, L. Turner of Camden, B.
Murray of Epping Forest, L. Underhill, L.
Nicol, B. Walston, L.
O'Neill of the Maine, L. Warnock, B.
Peston, L. Weir, V.
Phillips, B. Whaddon, L.
Pitt of Hampstead, L. White, B.
Ponsonby of Shulbrede, L. [Teller.] Williams of Elvel, L.
Winstanley, L.
Prys-Davies, L.
Abercorn, D. Grimston of Westbury, L.
Airey of Abingdon, B. Hailsham of Saint Marylebone, L.
Aldington, L.
Alexander of Weedon, L. Halsbury, E.
Allerton, L. Hanson, L.
Annaly, L. Harmar-Nicholls, L.
Arran, E. Henley, L.
Ashbourne, L. Hertford, M.
Auckland, L. Hesketh, L.
Beloff, L. Hives, L.
Belstead, L. Holderness, L.
Bessborough, E. Hood, V.
Birdwood, L. Hooper, B.
Blanch, L. Hylton-Foster, B.
Blatch, B. Jenkin of Roding, L.
Blyth, L. Johnston of Rockport, L.
Boardman, L. Kaberry of Adel, L.
Borthwick, L. Killearn, L.
Boyd-Carpenter, L. Kimball, L.
Brabazon of Tara, L. Knutsford, V.
Brentford, V. Lauderdale, K.
Brougham and Vaux, L. Layton, L.
Bruce-Gardyne, L. Long, V.
Butterworth, L. McAlpine of Moffat, L.
Caithness, E. Mackay of Clashfern, L.
Caldecote, V. Macleod of Borve, B.
Carnegy of Lour, B. Margadale, L.
Carnock, L. Marley, L.
Carr of Hadley, L. Massereene and Ferrard, V.
Clitheroe, L. Merrivale, L.
Cockfield, L. Mersey, V.
Colnbrook, L. Middleton, L.
Constantine of Stanmore, L. Monk Bretton, L.
Cork and Orrery, E. Montagu of Beaulieu, L.
Craigavon, V. Morris, L.
Crickhowell, L. Mottistone, L.
Cullen of Ashbourne, L. Mowbray and Stourton, L.
Daventry, V. Moyne, L.
Davidson, V. [Teller.] Munster, E.
Denham, L. [Teller.] Murton of Lindisfarne, L.
Donegall, M. Nelson, E.
Dundee, E. Nelson of Stafford, L.
Eccles, V. Newall, L.
Eden of Winton, L. Norfolk, D.
Ellenborough, L. Nugent of Guildford, L.
Elliot of Harwood, B. Onslow, E.
Elliott of Morpeth, L. Orkney, E.
Elton, L. Orr-Ewing, L.
Erroll of Hale, L. Oxfuird, V.
Faithfull, B. Pender, L.
Fanshawe of Richmond, L. Penrhyn, L.
Ferrers, E. Peyton of Yeovil, L.
Fortescue, E. Platt of Writile, B.
Fraser of Kilmorack, L. Plummer of St. Marylebone, L.
Gainford, L.
Gardner of Parkes, B. Rankeillour, L.
Gray of Contin, L. Reay, L.
Greenway, L. Rees, L.
Reigate, L. Swinton, E.
Renton, L. Teviot, L.
Renwick, L. Thomas of Gwydir, L.
Rochdale, V. Thomas of Swynnerton, L.
Sainsbury of Preston Candover, L. Torrington, V.
Trafford, L.
St. John of Fawsley, L. Trefgarne, L.
Sanderson of Bowden, L. Trumpington, B.
Savile, L. Ullswater, V.
Sharples, B. Vaux of Harrowden, L.
Shrewsbury, E. Wise, L.
Skelmersdale, L. Wolfson, L.
Stanley of Alderley, L. Wyatt of Weeford, L.
Strange, B. Wynford, L.
Strathcarron, L. Young, B.
Strathclyde, L. Young of Graffham, L.
Swinfen, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.56 p.m.

[Amendments Nos. 5 and 6 not moved.]

Clause 35 [Fossil fuel levy]:

Baroness Hooper moved Amendment No. 7: Page 28, line 16, at end insert ("by reference to the aggregate amount charged by that person for leviable electricity supplied by him during the qualifying month").

The noble Baroness said: My Lords, in moving Amendment No. 7, I speak also to Amendments Nos. 8 and 9. These are technical amendments which make clear how fossil fuel levy payments are to be calculated.

My honourable friend gave a full explanation of the Government's policy on the levy in another place in early February. Since then we have touched on it several times in our debates. In response to the understandable interest in how the levy will work, the Government have made a series of amendments to include more information in the Bill. At Committee stage we clarified the costs to be covered by the levy, and at Report stage we introduced amendments showing what the fossil fuel levy regulations will cover. These three amendments complete that job by showing how levy payments will be calculated.

Perhaps I should briefly reiterate how it is planned that the levy will be calculated. Each year an estimate will be made of the financial shortfall which the public electricity supply companies are likely to incur in meeting the non-fossil obligations placed on them. This will be the difference between the total payments they are expected to make under their collectively negotiated contracts for non-fossil power and the amount they would have paid if that electricity had come from fossil fuel stations. That is the amount to be recovered through the levy—the cost we are paying for security of supply. That is a cost, incidentally, which we were always paying, but it was always hidden away in the bulk supply tariff.

There will also be an estimate of the total value of electricity sales by all licensed suppliers in the year. By dividing the expected shortfall by the expected value of sales, the director will calculate the levy rate for that year. The levy rate will therefore be a percentage of sales value. This is what Amendment No. 7 makes clear. Through the year suppliers will make regular payments of levy to the director based on the value of their leviable sales.

The sums collected, less administrative expenses, will be handed over to the public electricity suppliers to fund the deficit that they will have incurred. In line with government policy, our intention is that the detailed operation and enforcement of the levy should be contracted out by the director to an agent working on his behalf.

There is perhaps one aspect of these amendments which I might highlight for your Lordships. It is in the definition of leviable electricity. Sales from non-fossil stations which a supplier has contracted for individually, rather than collectively, will not come within that definition and will therefore not attract the levy. This will give a further boost to independent renewable generators because suppliers will not have to pay the levy on supplies that they receive from them. This will put renewable generators at an immediate competitive advantage compared to fossil generators, even if they have not come within one of the extra tranches of capacity which we are reserving exclusively for them.

I hope that this explanation has made the proposed method of charging the levy a little clearer and that your Lordships will welcome the further clarification of government policy on the face of the Bill. I beg to move.

Lord Peston

My Lords, we fully accept the fact that the amendment is technical. My slight difficulty, which does not need to delay the House, concerns the concept of leviable electricity. I think that I understand what the noble Baroness said: leviable electricity is either generated by a fossil fuel generating station or by a non-fossil fuel generating station in pursuance of qualifying arrangements.

However, to some extent the subject is new to me and I should like to know whether the Minister has any documents explaining the matter more fully. For those interested in the subject, is there a longer explanation which she may be able to convey? I add immediately the words "not at this moment", but one would like to understand the subject a little more. I do not seek to delay the proceedings and I have no intention of dividing the House. It is an interesting idea and one would like to pursue it a little further. We should be most grateful for any further documentation.

Baroness Hooper

My Lords, I shall be happy to find any such additional information and write to the noble Lord.

On Question, amendment agreed to.

5 p.m.

Baroness Hooper moved Amendments Nos. 8 and 9:

Page 29, line 21, at end insert— (""leviable electricity" means electricity which—

  1. (a) is generated by a fossil fuel generating station; or
  2. (b) is generated by a non-fossil fuel generating station in pursuance of qualifying arrangements;
non-fossil fuel generating station" means a generating station fuelled or driven otherwise than by a fossil fuel;").

Page 29, line 35, after ("and") insert ("other").

On Question, amendments agreed to.

Clause 37 [Provisions supplementary to section 36]:

The Minister of State, Scottish Office (Lord Sanderson of Bowden) moved Amendment No. 10:

Page 31, line 5, at end insert— ("(3A) The Secretary of State shall lay before each House of Parliament a copy of every direction given under section 36 above or this section unless he is of the opinion that disclosure of the direction is against the interests of national security or the commercial interest of any person.").

The noble Lord said: My Lords, this government amendment reflects the commitment that I gave at Report stage on 6th July to consider the points made by the noble Lords, Lord Peston, and Lord Rochester, in speaking to Amendment No. 83.

On that occasion I said that, while we saw some merit in what was proposed in the orginal amendment, it did not quite meet what the Government wished to see. As you will see, we have been able to take on board the amendment almost as it stood but have had to add an additional safeguard, that of commercial confidentiality. We believe that this is important since it is likely that the nature of the directions given in times of fuel shortage will directly affect how private companies will be required to carry out their business. We need to recognise that in all circumstances it may not be appropriate to publicise such details.

In view of your Lordships' wish to remove the commercial safeguard, it may be helpful if I explained why we believe that the government amendment, as drafted, should stand. It concerns the amendment which the noble Lord, Lord Peston, will move. It is important to bear in mind that the qualfications we are introducing to the publication of Clause 36 and 37 directions are more likely to be relevant to those which may need to be issued in the future should a dislocation to fuel supplies have occurred which threatened electricity supplies to consumers. As was made clear at Report, the stocking directions themselves are likely to in the public domain at vesting.

However, we cannot obviously foresee what circumstances might arise to make necessary further directions under subsection (4) of Clause 36 or subsection (2) of Clause 37. Hopefully they will never need to be used, but it is likely that any such directions will need to contain detailed operational requirements with which generating companies and the transmission company will have to comply. It is also likely that such directions will have an impact on the industry's financial and contractual relationships. We believe therefore that it would not necessarily be appropriate to publish in every case directions which in essence can tell private companies how to run their businesses. I beg to move.

Lord Peston moved, as an amendment to Amendment No. 10, Amendment No. 11: Line 5, leave out ("or the commercial interests of any person").

The noble Lord said: My Lords, I thank the noble Lord for his extremely helpful response to our earlier amendment. As I said on the last occasion that we discussed the subject, we do not wish to say anything that will prevent the Secretary of State from acting in the national interest at a difficult time with respect to fuel stocks. That is not a point of contention.

My noble friend Lord Williams and I have tabled our amendment to the amendment because, while we recognise the reasonable degree of validity in what the Minister has said about commercial interest, and also entirely accept that one hopes that the Secretary of State will never have to act under the clause but if he must make a direction that he will be able to reveal it, we are concerned to know whether it would be possible and in the interest of the Secretary of State to have to say at any time, "Yes, it is no secret that I have had to act but I cannot tell you"—that will probably be the other place largely—"and I cannot let you have a copy of the direction I have given because of the commercial interests of any person".

My unhappiness is precisely for the Secretary of State and for the operations of Parliament. I fully recognise the commercial interest question generally in a privatised industry. Clearly one must take that seriously here and elsewhere. However, contained in what the noble Lord said, with which I agree, were rather far-fetched circumstances in which that may happen. I believe that the Minister should think a little more about our amendment. To put it crudely, I am not persuaded that the Secretary of State would ever get away with the unlikely option given by the Minister.

That is the real reason for tabling the amendment. It is nothing to do with commercial interest per se. It is concerned somewhat with Parliament and the way in which the Secretary of State would behave in the position in which he found hirnself. I am not certain that the Minister has yet addressed himself to what I had in mind. Before deciding what to do I should like to hear his comments on my argument as to why our amendment to the amendment is reasonable. I beg to move.

Lord Sanderson of Bowden

My Lords, I thank the noble Lord for the way in which he put his amendment. I have looked at the matter closely and I shall try to give him the reason why we take this view. While I welcome the fact that he agrees that we should bring forward the amendment, I believe that we need to discuss further the question of commercial confidentiality.

First, I should like to give an example. In times of fuel shortage the Government may decide that, in order to maintain electricity supplies, it is necessary for the generators to purchase additional quantities of oil or coal from the international market. It is not difficult to imagine the effect that the publication of such directions will have on traded fuels in the market. Increased demand may serve to increase prices in any event. But to give those holding fuel for trading purposes notice that the generators were being directed to purchase additional fuel would be an open invitation for the holders to increase their prices. It would also be a stimulus to those ready to bid up prices by purchasing speculatively merely for on-sale to generators at even higher prices.

I looked closely at what the noble Lord was likely to say. I point out that there will be several generators in the field and not merely one or two. In any part of the country in a particular situation the Secretary of State might be required to direct certain generating stations to get supplies of one kind or another—that is, oil or coal—into that area. For that reason, it could put those companies at a commercial disadvantage. That is the purpose behind the addition to the clause which we have put in on commercial grounds. On the other hand, if it was an across the board direction, I believe that the Secretary of State would see no reason why it should not be brought to Parliament in the way suggested by the subsection.

Lord Peston

My Lords, I believe that the noble Lord has given an extremely good example of the nature of the problem. However, it is still not obvious to me that the Secretary of State could get away with doing that. I do not see how it could be kept secret that he was acting in that way and I do not see then how he could persuade the other place that for that kind of reason he will not let the other place know the directive. I am with the noble Lord as regards his concern about the problem. My concern is whether this clause, in any meaningful sense, gives the solution to the Secretary of State. I believe that the examples given were absolutely excellent but that does not solve the problem.

Lord Sanderson of Bowden

My Lords, with the leave of the House, it is a question of timing. Once the Secretary of State discloses the information to Parliament, then there is debate all round. However, there may be a timing advantage to companies affected if disclosure was not given. Eventually the information would come into the public domain, but at the time at which they were having to do what was required of them by the Secretary of State, they would still have confidentiality pertaining. That is the way I read it and I hope the noble Lord will understand why we have put this provision into this clause.

Lord Peston

My Lords, it seems to me a very evenly balanced argument. I am slightly at a loss as to what to do. I believe that my own view is correct. On the other hand, the Minister's view is not so different and so incorrect and therefore it would be rather bad manners to press the amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Amendment No 10, agreed to.

Clause 48 [General functions]:

Lord Sanderson of Bowden moved Amendment No. 12: Page 38, line 2, leave out from ("to") to end of line 5 and insert ("facilitating the exercise of his functions under this Part").

The noble Lord said: My Lords, during Report stage my noble friend Lord Peyton of Yeovil moved Amendment No. 117 which would have left out the second half of Clause 48(1)(b). I believe he described it as "meaningless and useless words", but he recognised that we might think them necessary. My noble friend Lord Dundee offered to take back and reconsider the amendment, and this is the result.

This amendment replaces the last 24 words in the paragraph with a mere nine words. This will simplify the clause without detracting from its meaning, and I am grateful to my noble friend for having raised the issue. I am sure that he will understand that the word "facilitate"—and I have looked this up—means to render easier, to promote or to help forward. In fact, it is a very active verb indeed. I hope that my noble friend will accept this amendment in the spirit in which it is moved.

5.15 p.m.

Lord Peyton of Yeovil

My Lords, I should like to take the opportunity to say that I am most grateful to my noble friend for having considered the point and for having taken out one piece of inelegance from the Bill.

I should like to make an additional two observations. First, I find it much easier to understand the meaning of the word "facilitate" with which my noble friend was good enough to help me than I do some of the other contents of this Bill.

Perhaps I may just shadow my thanks with one further observation. I am very sorry that there should not be on the Marshalled List a similar amendment to remove those horrible words to which I referred on Report in Clause 61(3). They are uniquely hideous and I am sorry that your Lordships are invited to leave them on the staute book. However, I thank my noble friend.

On Question, amendment agreed to.

[Amendment No. 13 not moved.]

Clause 53 [Periodical and other reports of consumers' committees]:

The Earl of Dundee moved Amendment No. 14: Page 40, line 34, leave out ("from time to time") and insert ("at least once in every year").

The noble Earl said: My Lords, during the debate on Report we discussed the concern of the noble Lord, Lord Peston, that the director should receive a report from each consumers' committee at least once in every year. I agreed that the Government would bring forward an amendment to meet the noble Lord's concern and achieve consistency with similar provisions elsewhere in the Bill, in particular in Clause 43(4).

As we come to the end of the proceedings of this Bill I should like to say to the noble Lords, Lord Peston and Lord Williams of Elvel, how grateful we are on the Government Front Bench to them for their part in those proceedings even though we have not always been able to accept amendments. I should like to say how grateful we are to all your Lordships who have taken part.

Whenever we accept amendments, of which this is an example, my noble friend Lord Peyton professes sometimes to be suffering from shock. I know that my noble friend has borne those shocks with fortitude and I hope that they have not hit him like those from an electrical current. In particular, I hope that the noble Lords, Lord Williams of Elvel and Lord Peston, and other noble Lords will think that we have meted out to them some similar shock treatment, whether or not it is electrical. I hope that they will realise that their contributions have been of very great value to this Electricity Bill.

Lord Peston

My Lords, I thank the noble Earl for the amendment about which we are extremely happy and for his further words. I am sure that in due course my noble friend Lord Williams will have some flattering words to say to the Government Front Bench. As I shall not have an opportunity to do that, perhaps I may echo the words of the noble Earl and say what great personal pleasure I have had in discussing this Bill and in particular in listening to the arguments from the Front Bench even though on occasions, as the noble Earl is well aware, one has had to say that one is not persuaded. However, I thank the noble Earl.

On Question, amendment agreed to.

Clause 62 [Concurrent proceedings]:

The Earl of Dundee moved Amendment No. 15: Page 46, line 21, leave out ("of this Act") and insert ("above").

The noble Earl said: My Lords, I shall also speak to Amendment No. 16. The sole purpose of these amendments is to correct a minor drafting error. The effect is to enable reference to be made in Clause 62 to earlier clauses of the Bill in a manner consistent with that employed elsewhere in the Bill when referring to preceding clauses. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 16: Page 46, line 45, leave out ("of this Act") and insert ("above").

On Question, amendment agreed to.

Clause 114 [Short title, commencement and extent]:

The Earl of Dundee moved Amendment No. 17: Page 74, line 35, leave out ("those paragraphs") and insert ("that paragraph").

The noble Earl said: My Lords, this is a drafting amendment. The reference in line 35 should be to "paragraph" in the singular, and not in the plural. This drafting amendment puts this right. I beg to move.

On Question, amendment agreed to.

Schedule 2 [Consumers' committees]:

Lord Peston moved Amendment No. 18. Page 77, line 8, at end insert ("and the National Consumers' Consultative Committee").

The noble Lord said: My Lords, I had hoped that the Government would accept this amendment. However, they may argue—and I look forward to hearing the argument—that it is unnecessary in that paragraph 6, which refers to "meetings of the committee" could be interpreted to include the new National Consumers' Consultative Committee. If the noble Lord can assure me that that is the advice that the Government have been given, then there is no need for the amendment. Otherwise it seems to follow overwhelmingly that meetings of this committee should be open to the public in the same way as are the other committees under this clause, other than the provisos contained in the two sub-paragraphs. It is overwhelmingly right, not only on logical grounds but on grounds of general consumer protection, that such meetings should be held in public as far as possible.

My current order of preference is (a) that the Government accept the amendment; (b) that they reject it but say that it is unnecessary because it is already in the Bill; and (c) that your Lordships' House should divide.

Lord Renton

My Lords, we all welcome the addition of the National Consumers' Consultative Committee. It will be more important than each of the regional committees. I do not see why its work needs to be considered in any greater secrecy. Therefore, I would have thought that this amendment has a good deal to commend it.

Lord Sanderson of Bowden

My Lords, the effect of this amendment would be that all meetings of the NCCC would be open to the public, regardless of the subject under discussion. In other words, the NCC would have no discretion to exclude the public when confidential matters were under discussion. This is because the rest of paragraph 6 of Schedule 2 refers solely to the regional committees. I presume that this was not your Lordships' intention, and certainly not the intention of the noble Lord, Lord Peston, in moving the amendment. However, even if this defect were remedied, I am afraid that I cannot accept the amendment.

As my noble friend Lady Hooper made clear when she accepted the amendments moved by my noble friend Lady Oppenheim-Barnes at Report, including what is now Clause 54 of the Bill, the Government continued to believe that the interests of consumers will best be served by local consumers' committees serving local needs. In coming to this view, we had accepted the recommendation of the Select Committee on Energy in another place that there was no need for a body to replace the existing Electricity Consumers' Council in the privatised industry.

However, as she also made clear, we agreed completely with my noble friend Lady Oppenheim-Barnes that it was very important that the experience of the local committees should be pooled and exchanged at national level so that the appropriate lessons could be drawn and that any national issues could be addressed at national level. The amendment tabled by the noble Baroness and accepted by the House gave formal effect to this.

The NCCC, therefore, as its name suggests, will be essentially a co-ordinating and advisory body, and not a direct successor to the ECC. That body did not hold its meetings in public, and the Government feel that it would be neither appropriate nor practicable to subject the NCCC to the provisions of Schedule 2, paragraph 6. These provide for public access to the regional committees in order to give direct access at grass roots level to the body looking at those issues which directly affect consumers in that locality.

However, that does not mean that consumers will not wish to take an interest in what is going on at the national level. The director is already under a duty to include a survey of the NCCC's activities in his annual report, which will be published. Given this fact, and the nature of the NCCC's role, I do not think that public access to the NCCC's proceedings would furnish anything of value to the individual consumer to which he or she will not already have access through the local committees which he or she can attend.

The concern of the individual consumer is, ultimately, with the performance of his or her local electricity supplier. That is why the performance of each public electricity supplier will be monitored by a local consumers' committee. The NCCC will make sure that the chairmen of each of the regional committees, who will automatically be members of the NCCC, are kept fully abreast of developments in other parts of the country. If issues are raised at the NCCC which they feel are of interest, concern or relevance to the consumers which they serve, they will be able to convene meetings of their own committees which are open to the public, in order to keep local consumers informed.

I hope that the noble Lord, Lord Peston, understands the reason why we are resisting this amendment, but I have to say that we are.

Lord Williams of Elvel

My Lords, I should like to make a point to the noble Lord, Lord Sanderson of Bowden. Unless the Government accept this amendment, defective as it may be, they will not have the opportunity in another place to propose an alternative amendment.

This is a technical matter. If an amendment to Schedule 2 is not accepted here in this form, or in some form, there will be no opportunity in another place to rectify the amendment. The noble Lord has quite properly argued that there are technical defects in this amendment and that it would be wrong for the NCCC to have an obligation to hold meetings ad infinitum which are open to the public. Nevertheless, I hope that the noble Lord recognises that there will be occasions when the NCCC should have meetings which are open to the public. Unless the noble Lord accepts this amendment and redrafts it in another place as a Commons amendment coming back to us, there is no provision in our parliamentary procedure for introducing another amendment in the other place.

I hope that the noble Lord will bear in mind what I have said and consider whether he can accept this as a kind of interim amendment which the Government might like to redraft in another place.

Lord Sanderson of Bowden

My Lords, I hear what the noble Lord, Lord Williams of Elvel, says about the technicalities. I accept the point that he makes about the drafting; that the change would have to be made here. However, I am still very concerned about this amendment. The Gas Consumers' Council does not hold its meetings in public. The National Consumers' Council, as a private company, does not normally hold its meetings in public.

There is nothing to prevent the NCCC from holding open meetings, as does the National Consumers' Council on very rare occasions. The answer I have given must stand and I am sorry that I cannot accept the amendment.

Lord Renton

My Lords, I was much impressed by the reasons that the noble Lord gave in reply to noble Lords opposite. However, in order to clear one's mind and to get this absolutely straight, can we be sure that if there is not this amendment or any amendment like it, that the National Consumers' Council will be free to call a press conference or to hold a public meeting? If that is so, then my own fears would be dispelled.

Lord Sanderson of Bowden

My Lords, I see no reason why the NCCC should not call a press conference or have an open meeting if it so desires. I think that to accept this amendment would go very far beyond that situation.

Baroness Gardner of Parkes

My Lords, is it the case that if this body decided to hold its meeting in public, it could do so while retaining a private part of the agenda? However, under this amendment the private part of the agenda could not be private.

Lord Sanderson of Bowden

My Lords, my noble friend is quite right.

Lord Peston

My Lords, I have to admit that I am absolutely staggered. I thought this was an innocent little amendment but it seems to be producing an extraordinarily complex debate. I simply do not understand what the Minister is on about. We have the individual local committees which we all believe will be extremely useful and this schedule states that meetings of those committees shall be open to the public other than for certain matters, which I assume would be the private business part of the agenda.

Leaving on one side, for the moment, the precise drafting of the amendment, it seems to be elementary logic that the NCCC should behave in much the same way. I always defer to the noble Lord on matters of drafting and I do not seek to argue that my drafting is perfect. I want the NCCC to be exactly the same as the expression "the committee" in this schedule.

I believe I heard the Minister say that he has no intention of budging, and I see that he is nodding agreement. Therefore, I have to say to your Lordships that of my three possibilities I am now down to the third and I press the amendment.

5.31 p.m.

On Question, Whether the said amendment (No. 18) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 130.

Addington, L. McCarthy, L.
Airedale, L. McIntosh of Haringey, L.
Ardwick, L. Mackie of Benshie, L.
Barnett, L. McNair, L.
Blackstone, B. Mason of Barnsley, L.
Blease, L. Milner of Leeds, L.
Bonham-Carter, L. Molloy, L.
Boston of Faversham, L. Monson, L.
Bottomley, L. Murray of Epping Forest, L.
Brooks of Tremorfa, L. Nicol, B.
Carmichael of Kelvingrove, L. O'Neill of the Maine, L.
Peston, L.
Carter, L. Phillips, B.
Cocks of Hartcliffe, L. Pitt of Hampstead, L.
David, B. Ponsonby of Shulbrede, L. [Teller.]
Davies of Penrhys, L.
Dean of Beswick, L. [Teller.] Prys-Davies, L.
Dormand of Easington, L. Rea, L.
Elwyn-Jones, L. Ritchie of Dundee, L.
Ennals, L. Rochester, L.
Ewart-Biggs, B. Sainsbury, L.
Ezra, L. Seear, B.
Falkland, V. Sefton of Garston, L.
Foot, L. Shackleton, L.
Gallacher, L. Stedman, B.
Galpern, L. Stoddart of Swindon, L.
Graham of Edmonton, L. Taylor of Blackburn, L.
Grey, E. Taylor of Gryfe, L.
Hampton, L. Taylor of Mansfield, L.
Hanworth, V. Thomson of Monifieth, L.
Houghton of Sowerby, L. Tordoff, L.
Irving of Dartford, L. Turner of Camden, B.
Jeger, B. Underhill, L.
Jenkins of Hillhead, L. Walston, L.
Kennet, L. Whaddon, L.
Kirkhill, L. White, B.
Listowel, E. Williams of Elvel, L.
Lock wood, B. Winstanley, L.
Longford, E.
Airey of Abingdon, B. Ellenborough, L.
Aldington, L. Elliot of Harwood, B.
Alexander of Weedon, L. Elliott of Morpeth, L.
Allerton, L. Elton, L.
Annaly, L. Faithfull, B.
Arran, E. Fanshawe of Richmond, L.
Ashbourne, L. Ferrers, E.
Belhaven and Stenton, L. Fortescue, E.
Beloff, L. Fraser of Kilmorack, L.
Belstead, L. Gainford, L.
Blyth, L. Gardner of Parkes, B.
Borthwick, L. Gray of Contin, L.
Boyd-Carpenter, L. Greenway, L.
Brabazon of Tara, L. Grimston of Westbury, L.
Brentford, V. Harmar-Nicholls, L.
Brookeborough, V. Henley, L.
Brougham and Vaux, L. Hertford, M.
Butterworth, L. Hesketh, L.
Buxton of Alsa, L. Hives, L.
Caithness, E. Holderness, L.
Carnegy of Lour, B. Home of the Hirsel, L.
Carnock, L. Hood, V.
Carr of Hadley, L. Hooper, B.
Clitheroe, L. Hylton-Foster, B.
Constantine of Stanmore, L. Jenkin of Roding, L.
Cork and Orrery, E. Johnston of Rockport, L.
Cowley, E. Joseph, L.
Craigavon, V. Killearn, L.
Crickhowell, L. Kimball, L.
Cullen of Ashbourne, L. Knutsford, V.
Daventry, V. Lauderdale, E.
Davidson, V. [Teller.] Layton, L.
Denham, L. [Teller.] Long, V.
Dilhorne, V. Lyell, L.
Donegall, M. McAlpine of Moffat, L.
Dundee, E. Mackay of Clashfern, L.
Eden of Winton, L. Macleod of Borve, B.
Margadale, L. Reigate, L.
Marley, L. Renton, L.
Merrivale, L. Renwick, L.
Mersey, V. Rochdale, V.
Middleton, L. Sanderson of Bowden, L.
Monk Bretton, L. Savile, L.
Morris, L. Seebohm, L.
Mottistone, L. Sharples, B.
Moyne, L. Skelmersdale, L.
Munster, E. Stanley of Alderley, L.
Murton of Lindisfarne, L. Strange, B.
Nelson, E. Strathcarron, L.
Nelson of Stafford, L. Strathclyde, L.
Newall, L. Swinfen, L.
Norfolk, D. Swinton, E.
Nugent of Guildford, L. Thomas of Gwydir, L.
Onslow, E. Thomas of Swynnerton, L.
Orkney, E. Thorneycroft, L.
Orr-Ewing, L. Torrington, V.
Oxfuird, V. Trafford, L.
Pender, L. Trumpington, B.
Penrhyn, L. Ullswater, V.
Peyton of Yeovil, L. Vaux of Harrowden, L.
Platt of Writtle, B. Weir, V.
Plummer of St. Marylebone, L. Wise, L.
Wolfson, L.
Rankeillour, L. Wynford, L.
Reay, L. Young, B.
Rees, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.38 p.m.

Schedule 6 [The public electricity supply code]:

Lord Carter moved Amendment No. 19: Page 96, line 23, at end insert ("Subject to sub-paragraph (1A),").

The noble Lord said: My Lords, with the leave of the House, I speak also to Amendment No. 20. In Committee we discussed an amendment which I tabled regarding the positioning of meters to assist the disabled. This received a helpful reply from the Minister so I withdrew the amendment but we rather left in the air the cost of providing a meter which had been altered or adapted for a disabled person.

Therefore, I prepared an amendment to deal with that aspect and the Minister, having accepted the amendment in principle, kindly agreed to redraft it to fit the Bill more accurately. The amendment is now before the House. I am extremely grateful to the Minister for her help in redrafting the amendment and for placing it in the correct position in the schedule. I beg to move.

Baroness Gardner of Parkes

My Lords, I am delighted that this amendment has come forward again. On behalf of the boards, I wish to say that they consider it important—though they are quite willing to undertake anything of this nature—that the role of a general social services department of a local authority should not be overlooked. It might be that in conjunction with the kind of work set out here that there is need for greater adaptation of properties which would not be those with the social services. It would be important to have liaison with them.

Lord Sanderson of Bowden

My Lords, I thank the noble Lord, Lord Carter, for moving these amendments. We recognise the deep concern felt by your Lordships regarding the interests of the disabled. I recall the noble Baroness, Lady Seear, speaking on this matter at an earlier stage. Indeed, it was a concern that the Government shared.

In Clause 4 of the Bill we have already provided that in carrying out their duties in respect of the quality of electricity supply services provided, the Secretary of State and the director general will take into account in particular the interests of the elderly and the disabled. The draft public electricity supply licence also contains a condition requiring the public electricity supplier to produce a code of practice on the services it offers for the elderly and disabled, including such matters as the provision of special controls and adaptors.

These amendments add to this by ensuring that a disabled person will not suffer a financial penalty because of his need to have his meter re-positioned or adapted for his use. I commend these amendments to the House.

On Question, amendment agreed to.

Lord Carter moved Amendment No. 20:

Page 96, line 25, at end insert— ("(1A) A public electricity supplier who, for the purpose of meeting the needs of a disabled person—

  1. (a) alters the position of any electricity meter which has been provided by him; or
  2. (b) replaces such a meter with one which has been specially adapted,
shall not make any charge for the alteration or replacement; and section 25 of this Act shall apply in relation to any dispute arising under this sub-paragraph as if it were a dispute arising under sections 18 to 24 of this Act.").

On Question, amendment agreed to.

Schedule 9 [Preservation of amenity and fisheries]:

Baroness Hooper moved Amendments Nos. 21 to 26:

Page 111, line 8, leave out ("buildings and other") and insert ("sites, buildings and").

Page 111, line 12, after ("features,") insert ('sites,").

Page 111, line 19, after ("paragraph") insert—(" "building" includes structure;").

Page 112, line 6, leave out ("buildings and other") and insert ("sites, buildings and").

Page 112, line 10, after ("features,") insert ("sites,").

Page 112, line 22, at end insert—(" "building" includes structure;").

The noble Baroness said: My Lords, these amendments have already been spoken to. I beg to move them en bloc.

On Question, amendments agreed to.

5.45 p.m.

Baroness Hooper

My Lords, I beg to move, That the Bill do now pass.

In so doing, I make my remarks about the Bill now and my noble Lord Sanderson of Bowden will speak at the end of the debate. At the beginning of the Second Reading debate of 25th April I made clear that the Bill had been prepared in the light of extensive consultation with the industry, with employee and consumer representatives; with independent generators and with other interested parties including environmental bodies.

I also said that your Lordships would still wish to examine the Bill with your customary care and thoroughness. This your Lordships have done, and in a number of respects I believe that the Bill is better as a result of our deliberations. Not unnaturally, given your Lordships' well-known concern for the environment, Schedule 9 of the Bill has received intensive scrutiny. It is now supplemented by a general duty under Clause 4. I believe what we now have are environmental provisions which are rigorous, precise and practical. Careful thought has also been given to research and development. I am happy that we have been able to meet the anxieties expressed by your Lordships and particularly by Members of the Select Committee on Science and Technology in this respect.

On the consumer front it was always our view that national co-ordination of the activities of the new consumers' committees would be an important part of the arrangements for consumer representation which our proposals establish. But it is also due in no small measure to the advocacy of my noble friend Lady Oppenheim-Barnes that the Bill now makes provision for a National Consumers' Committee representative of those grass-roots regional interests which we believe are so important, and which will help to achieve the national co-ordination of the consumer representation in the privatised electricity supply industry. We have also accepted or introduced other consumer-related amendments dealing with access to meetings of the regional consumers' committees, and the guaranteed standards of service compensation concerning disconnections. There is also the amendment most recently passed relating to the disabled. I am greatly indebted to those on all sides of the House who contributed to these and other amendments which I have not particularised.

I know that we do not all agree with everything in the Bill. It would be a strange world if we did. Nevertheless, I am sure that we are all agreed that it is an important Bill that will have long-term repercussions on one of our most vital, important—and perhaps I can go so far as to say complex industries. So every moment of constructive disagreement and every moment of informed debate must be counted against those factors. I believe that the six guiding principles stated in the White Paper are still intact, relating as they do to customers needs, competition, regulation, security and safety of supply and the opportunities for those working within the industry. I also believe that some of the detail of the Bill we are sending back to the other place is an improvement in a number of significant respects.

I therefore thank all of your Lordships who have contributed from all sides of the House. I thank in particular my noble friends here on the Front Bench for their support. My noble friend Lord Sanderson, as well as dealing with all matters north of the Border, has done much else besides. He has certainly been present and vigilant throughout our debates. I also thank my noble friend Lord Glenarthur who was able to make an important contribution at the earlier stages. I am most grateful to my noble friend Lord Dundee both for his Front-Bench contribution and for all the behind-the-scenes activities that fall to the lot of a Whip. It has not escaped my notice either that noble Lords on the Benches behind me have been very active. I am most grateful to all those who felt able to show support consistently as well as to those with whom I have agreed to differ from time to time.

We have had important contributions from all sides of the House. At an earlier stage I seem to remember that there were contributions from the Bishops' Benches. However, I hope it will not be considered invidious if I refer to the main Opposition spokesmen. I refer in particular to the noble Lord, Lord Ezra, and the noble Viscount, Lord Hanworth, who fought so valiantly for their causes, and with some degree of success. I also refer to the Official Opposition and in particular the noble Lords, Lord Williams of Elvel, and Lord Peston, who have not failed in giving really detailed scrutiny to every provision. More importantly, they have never failed in their courtesy in so doing. In that happy spirit I commend the Bill to the House.

Moved, That the Bill do now pass.—(Baroness Hooper.)

Lord Williams of Elvel

My Lords, as the noble Baroness said, this is an important Bill. Next to the Water Act it is probably the most important Bill that Parliament has had to consider in this Session. At Second Reading I asked your Lordships three questions and they were these. What will this Bill do for the consumer? What will it do for the environment? What will it do for the investor?

Now that the Bill has passed through all stages in your Lordships' House, I wish to comment on those three questions. I also invited noble Lords opposite to join with me in amending what I regarded as an imperfect Bill. I am very happy to say that they have responded generously to my invitation. We have amended the Bill, sometimes against the advice of the Government, in a way that has improved it. Regarding the consumer there has been some improvement. There has been concession that there should be public access to consumer committees and that they should report and meet at least once a year. There has also been a concession that there should be a National Consumers' Consultative Committee. The definition of tariff consumer is now established, and there is to be an extention from 15 days to 20 days for payment of charges. All those are welcome concessions. I would be wrong if I said that those were the limits of our ambitions when we started with the Bill. Nevertheless, we have to settle for what we have.

There have been major changes as regards the environment. As the noble Baroness pointed out, after a good deal of pressing the Government have conceded a general duty on the Secretary of State and the director to take account of the environmental impact of electricity transmission, generation and supply. We have passed New Clause 3 which imposes on the Secretary of State and the director a major measure to take account of the efficient use of electricity, with penalties if that is not done. In New Clause 12 we have an obligation on the Secretary of State and the director to ensure that licences allow the Secretary of State to take control of nuclear installations in the event of a civil emergency. In Clause 97 we have strengthened that to ensure that all necessary powers are available to the Secretary of State to take control whenever he perceives that a civil emergency has arisen.

All that is good, and I am glad that the noble Baroness referred to the Schedule 9 amendments because we support practically everything the Government have done on Schedule 9. The argument concerning the investor is much less precise. We are told today—literally today, at one o'clock on the news—that the financial market puts a price tag of £13 billion on a privatised industry whereas in the last national accounts from the Electricity Council the net asset value was put at £37 billion. That is a substantial discount. The Financial Times, not traditionally a great supporter of my party, published a leading article entitled "Turn against Parkinson", on the grounds that nuclear power and the grid should be taken out of the construct. It suggested that if this was done it would become a saleable proposition.

I do not believe that the Government will pay attention to what the Financial Times says. The Government's position, as the noble Lord, Lord Peyton, said earlier, is set in concrete and is not to be moved. But if that does not happen, the Bill will leave the House deeply flawed. Because it is deeply flawed the flotation will be extremely difficult. Apart from anything else there is a the great unknown. What about contracts? What about the code of conduct for the operation of the grid? What about operation non-settlements? How will the merit order work? Who will run all this?

At Second Reading I said that this will never be a good Bill. It is based on what I described as the "Mars bar" philosophy, which is wholly inappropriate to the generation, transmission and supply of electricity. At that time I invited the noble Baroness to take away her Bill and put it in the waste-paper basket. Alas, she failed to accept my invitation, for reasons which I fully understand, but it is not too late for the Government to pay attention to what the Financial Times said. I say, that, as I said on the grid amendment which we discussed at Report stage, to help the Government. The construct of the Bill as it stands will not work.

In conclusion, I must thank my noble friends Lord Peston, Lord Carmichael of Kelvingrove and Lord Dean of Beswick for their help on the Bill. They have been extremely co-operative and have taken a good deal of the burden off my shoulders. As the House will know, the Opposition have to struggle without the resources which the Government have available to them. I must also thank the noble Baroness for her courtesy and kindness throughout all our proceedings. With that remark I associate the noble Lord, Lord Sanderson of Bowden, and the noble Lord, Lord Glenarthur, who was distracted from other matters to come to speak on parts of the Bill. I also thank the noble Earl, Lord Dundee. We are most grateful for the courtesy shown by the Front Bench to the points that we made.

I wish I could say that I wish the Bill well, but I cannot. I forecast a stormy passage for your Lordships' amendments when they go down to another place. There will be extensive debates. We feel that we are right. We feel that your Lordships have introduced into the Bill key elements which have made it better. If the Government try in another place to overturn those key elements, we will as a House reassemble to consider what another place has to say to us. The battle is not yet over.

Lord Ezra

My Lords, I too should like to thank the noble Baroness and her colleagues for their courtesy and for the consideration which they gave to all the points made from these Benches. I should like to thank her specifically for her reference to my colleague, the noble Viscount, Lord Hanworth, and myself.

Like the noble Lord, Lord Williams, I have certain reservations about the Bill. I should like to talk about two of them. One concerns competition. The Government have emphasised throughout the proceedings that one of the major objectives of the Bill is to stimulate competition in the electricity industry. In view of the way in which the industry is to be restructured, the emergence of effective competition is unlikely for a long time ahead. The noble Lord, Lord Williams, referred to the leading article in yesterday's Financial Times, which I have before me. It made clear the point which concerns me. Under the structure proposed in the Bill it will be difficult for there to be much competition. We read of the great difficulty that has already arisen in the negotiations between the distribution companies and the two major successor generating companies to reach agreement on the new contracts. Until that agreement is reached it will be difficult for any newcomers.

I have declared an interest during the course of our deliberations on the Bill. I am involved in two negotiations for new power stations. I am afraid that we have run into extreme difficulties in reaching any sensible basis on which we can negotiate. In view of the way in which the nuclear stations have been put into one of the two big generating complexes—the CEGB has therefore been split into only two parts—the prospect for real competition has been very much limited. Furthermore, the ownership of the grid by the distribution companies has added a further complication.

During the course of our deliberations we tried to correct those two fundamental defects, which would, as the noble Lord, Lord Williams, pointed out, have aided the Government cause. Had there been a more rational restructuring with at least four generating companies being the descendants of the CEGB; a separately owned nuclear company, with all its attendant problems; an independently owned grid company and then the 12 distribution companies, I think that we would have had a basis upon which real competition could have developed. However, as it is, the situation is very complex. I cannot see much effective competition developing for a long time. That is my fundamental concern about the Bill if the objective is to stimulate competition.

Secondly, as regards energy efficiency, we had to fight very hard to introduce Clause 3 into the Bill. Moreover, it is rumoured in press reports that the Government propose to use their strength either to get it annulled or replaced in another place. In that case the Bill will have to return here and we shall have to deliberate on the matter. I should be very saddened if that were the case.

The amendment was feelingly supported by the majority in your Lordships' House. It represents our views on the vital importance of energy efficiency. That was a view which was tellingly endorsed by the sixth report of the Energy Committee of another place which was published only today. Energy efficiency will be a crucial element in our future energy operations, especially as regards dealing with the problems of the environment. There is no doubt about that. We tried to inject that thought into the Bill and I hope that it will remain there. I am naturally saddened that, in spite of three efforts, we did not manage to achieve a more effective reference to combined heat and power.

Therefore, while we achieved a good deal during our lengthy debates in this House —for example, we managed to strengthen the references to the environmental problems; the position of consumers has been strengthened and that of rural consumers has also been safeguarded—there are still some fundamental defects. I believe that we shall return to this problem in the years ahead.

I should like to conclude by thanking all my colleagues on these Benches and expressing appreciation once more for the consideration given to our views, even though there was not that ready acceptance which I should have liked from the Government Benches.

6 p.m.

Lord Peyton of Yeovil

My Lords, I have not enjoyed the passage of this Bill. I found myself in repeated, sharp and convinced disagreement with my noble friends in the Government. But at the same time I should like to pay tribute to them and thank them for their unfailing patience and courtesy—and I mean that. I can well understand how difficult it must be to steer through your Lordships' House a Bill of this complexity which excites as much controversy as this one.

My anxieties have always centred more than anything else upon who owned and managed the grid. After the Report stage I was left in a state of considerable anxiety because I felt that we had inadequate information before us both on the management of the grid company and on the system of payments and contracts of which the grid company is bound to be the clearing agent.

I discussed with my noble friend the Leader of the House the possibility of moving a reasoned amendment to the Third Reading of the Bill. He is a monument of courtesy and patience and he responded to my arguments in the most generous way. He procured for me a copy of a document entitled The Grid Code. It is the first draft. I shall willingly lend it to any noble Lord who wishes to spend five minutes of unbearable excitement studying its contents—

The Earl of Lauderdale

Summer Recess reading!

Lord Peyton of Yeovil

My noble friend will be first in at the kill. I cannot pretend to have studied the document in any great detail. However, one thing is absolutely clear to me: it leaves the National Grid Company in total command and in absolute control. I have asked the Government on many occasions to whom the National Grid Company is to be answerable. I have been told that, like other companies, it will be answerable to its shareholders. How much weight can we give to that answer? It is to be answerable to its owners, who it operationally commands and with whom it will compete for the business of large users, as well as for contracts with generators.

I do not believe in those circumstances that it is doing anything but violence to language to say that the grid company will be answerable to its shareholders. On the contrary, I believe that its shareholding companies will be very careful before crossing swords with this over-mighty body. The distributing companies may have found the Central Electricity Generating Board a little irksome from time to time, but I would hazard a guess that they will find the yoke of their own child even more uncomfortable.

I am still left—indeed, I think that the House is also—in a state of considerable ignorance as to how the system of payments will work out and how contracts will be reconciled. After all, there will be a considerable mesh of contracts: contracts between the generators and the grid company; between the generators and the public electricity suppliers; and between the generators and large users. There will also be contracts between the grid company and public electricity suppliers and between the grid company and large users. I find it very difficult to look through the mists of all that and understand what will happen in the event. For example, what happens when power is twice purchased under two or more contracts?

I should like to finish by saying something about the way in which Parliament is treated, not by this Government but by all governments. We have before us a Bill. However, we do not have before us a volume the size and dimension of which I am holding, containing much important material. It is true that to a limited extent we have access to the draft licences and to the draft articles of association of the companies which are intended to be set up by the Bill.

From time to time reference is made by Ministers to these documents. But I think that it is sometimes very hard for Parliament, especially for those Members who sit on the Back Benches, to be referred to documents to which access is not always all that easy, which in any event are not amendable and which are not themselves under direct debate.

I conclude my brief remarks by repeating that I have found the experience of the Bill's passage an unhappy one and a discomforting one so far as the future is concerned. I hope that I am wrong in that forecast, but I do not believe that, in parting with the Bill, we shall have heard the last of the problems with which it presumes to deal.

My final utterance—no word is more abused than "final"—is to say that I hope that we shall shortly be hearing from Professor Littlechild an appreciation of the problems that he will face. At the same time, I should like to express some regrets that your Lordships' House has not had the benefit, during all the debates, of hearing so much as a word of guidance or prophecy from the noble Lord, Lord Marshall of Goring, once a champion of the present system, but who now is venturing out into other and, what seem to be, speculative fields.

Lord Renton

My Lords, I take a different view of the Bill from that expressed by my noble friend Lord Peyton for whom I have had such a high regard for so many years. I should like to congratulate the Government on this historic Bill. The 1947 Act—I see some of us who voted against it in one place or another—was an experiment. It was a brave experiment in nationalisation. It was done monolithically. Ten years later, when I had the privilege of being a junior Minister at the Ministry of Fuel and Power, it was found that it was not working to public satisfaction, and so we embarked upon another experiment—the 1957 Act—which I am glad to say established the area boards for the distribution of electricity. I am glad to say that the functions of those boards will remain somewhat similar under the Bill. We shall still have the grid with an area board responsibility for it.

Now we have the Bill. It is a brave Bill and a progressive Bill. It has, I am glad to endorse, been much improved during its passage through your Lordships' House, especially with regard to the environment and consumer protection. It has been a heavy grind. The Bill is now 164 pages long. The 1947 Act, which is far more comprehensive in a way, was 120 pages of Statutes at Large which do not occupy nearly so much space per page: and the 1957 Act was but 60 pages, also of Statutes at Large. I should say that the Bill will work out at about 200 pages if it were put into Statutes at Large in the same form. So, it has been a heavy grind.

I should like to join those who have paid tribute to the Front Benches on both sides. I should like especially to say how much we welcomed the leadership of my noble friend Lady Hooper. We should admire the financial and accountancy expertise which has been given to us by the noble Lord, Lord Williams of Elvel. Quite frankly, I found myself blinded by his science at times. He has great experience and seemed to know what he was talking about.

I mentioned the number of pages because my noble friend Lady Hooper mentioned the detail. If I have a criticism of the Bill, it is that it goes into a vast amount of detail. My noble friend Lord Peyton made one or two good suggestions for reducing it a little, but if we had really applied our minds I think that we could have made the proceedings even longer by trying to condense it more.

What about the future? As has been rightly said—and I did not know about the report from the committee of another place until it was mentioned —there is a need for fuel efficiency in this important matter. Clearly, the opportunity to achieve that is in the Bill. Another point that we need to bear in mind for the future is that we must have an extension of nuclear power. Nuclear power does not cause acid rain. It does not attack the ozone layer. Nuclear power has to come in a big way. It is wise that in the Bill we are getting the best of both worlds so far as the experiment with nuclear power is concerned.

We are giving technical genius, whether under private enterprise or using the facilities of the present set-up, a great deal of scope. It is in that way that we shall get nuclear power safely and cheaply. It must be safe and cheap if it is to earn its place in years to come. The Government deserve congratulations, and I wish the Bill well.

6.15 p.m.

Lord Gray of Contin

My Lords, perhaps I may add my good wishes on the passing of the Bill. I agree with what my noble friend Lord Renton has said. I should like to associate myself with all that he said about my noble friend Lady Hooper and her team on the Front Bench. The patience and courtesy which she and her associates showed were commendable at all times. It is also worth saying that the constructive approach of the Official Opposition and the lesser opposition—if I may call them so—was also appreciated on all sides.

It is not unusal for governments to be given a great many suggestions during the passage of a Bill, and this Bill was no exception. However, where the subject of generation is concerned, it would have been unusual had the suggestion not been made that there should be greater competition by the creation of more generating companies. I can assure my noble friend that if the Bill had suggested the formation of four generating companies on the nuclear side and two generating companies without access to nuclear power, the Opposition's reaction would immediately have been, "How ridiculous! Why not just split it down and have one company with access to nuclear generation and one with access to all the other methods of generation?"

It is of course rather more serious for a Minister and a government when they have such a penetrative and inquiring mind as that of my noble friend Lord Peyton casting some doubts upon the decisions that the Government have made. Even in his speeches, although he was extremely forthright and frank, he always tempered his remarks by saying that he hoped that he was wrong. I am sure that we all hope that he is wrong and that the Government have been right, for only one set of conclusions can be included in the Bill, and we all hope sincerely that the Government have chosen the right set.

As regards the Opposition, of course the well-worn phrase, "They would say that, wouldn't they!" might be applied. That in no way casts any doubt upon the sincerity of the suggestions that they made. It is after all the duty of Her Majesty's Opposition to disagree, and they have done it in the nicest possible way. I wish the Bill every success and I congratulate my noble friend the Minister on her success in taking it through the House.

Baroness Gardner of Parkes

My Lords, I wish to congratulate my noble friends on the Front Bench and the noble Baroness, Lady Hooper, in particular for the way in which she has guided the Bill. It has been an extremely complex and difficult Bill and the grasp that she has of the electricity industry during the time in which she has been with the Department of Energy is quite remarkable. I congratulate her.

I also found the Opposition very practical. That is highly relevant in a Bill of this type; there has obviously been a great deal of experience in the subject which has been useful to the House. The noble Lord, Lord Williams, has caused me to undertake a bit of a teach-in on accounting, since I listened to him the other day talking about appreciation. I am now much better able to deal with the subject the next time it comes up on another Bill.

The biggest change that will come out of the Bill concerns those costs which I, as a member of the London Electricity Board, have always described as "uncontrollable", but I understand are actually called "non-controllable" because they were the costs passed on from the CEGB to the area boards. Those costs should now be within the control of the area boards. I hope that that will mean a better deal for consumers. Only time will tell.

To me there is a litle sadness in passing the Bill in that my own time as a member of the London Electricity Board finishes when the Bill becomes an Act, when the new plc or area board or the new supply company, as it will be called, takes over. When that company comes into being, as it is now shadowed, there will be fewer non-executive directors, of whom I shall not be one. Only two of the existing members will continue and I imagine that everywhere throughout the industry there will be similar non-executive directors like myself who are sorry to be ceasing their direct links with the electricity industry. We have enjoyed those links very much and have learned a great deal from them.

I believe that the Bill is in the public interest, otherwise I should not have supported it. Therefore even though I am regretful at parting company with the electricity industry, I shall be interested to see how it develops. I wish the Bill well.

The Earl of Lauderdale

My Lords, it will not surprise some of my noble friends and noble Lords opposite to learn that I take a rather different view from that expressed by my noble friends Lord Renton and Lady Gardner. I am not sure that the Bill has been greatly improved in the course of our debates. It will have occurred to my noble friends on the Front Bench that I am not greatly enamoured of it anyway.

I believe that it is important not to let the Third Reading close without recapitulating one or two points which have not really been answered, at any rate to my understanding; we all know that I have a very low threshold in that regard! Even now I do not understand why the vertical integration which is good for Scotland is bad for the poor English and Welsh. I am not satisfied that the vertical and horizontal disintegration of distribution and generation is suitable for a tightly packed little island like ours. My mind is still obscure about the management of the grid. When we are told that the same people will do the same job as they have done before, I have to say that there still remains a crucial difference between price and marginal cost.

I and others have been accused of not having read the papers. There is a limit to what I can absorb, especially if one does not receive the documentation in good time. I obtained what was available in the Library and went through it but there was always more to come.

If there are any future Bills of such complexity (and no doubt there will be) I hope that the Government will take on board that it makes a great difference if a government can make some sort of presentation both to their supporters and, for that matter, their critics of what it is all about before the Bill reaches the Floor of the House, In business it is quite common for a company to make what is known as a presentation of its problems to another company which may be dealing with them. It may take an hour or two and require the use of videos, designs and so on. But so far as I know there was no great teach-in on this Bill before we received it. Or it may be that there was and I perhaps missed my invitation to it. At any rate, I hope that in the future, when a complicated Bill comes before the House, the Government will provide some sort of teach-in beforehand on a friendly basis for those peers who are likely to be interested.

We have been told many times that the top people in the industry are all in favour of the Bill. Those who have been cited in my hearing are people who were originally appointed by the Government. To that extent, they are still Government place-men. I happen to know several of them personally and what one hears in private does not always accord with what one is told in public. A number of those people describe themselves as still being agnostic about the idea that the Bill will lead to a reduction in energy prices.

I was sorry, and I think that time will probably cause others to share my sorrow, that a very constructive proposal to put nuclear power separately in the hands of a different company modelled on the BP structure did not succeed. I believe that that would have given the Government and the industry a better chance than they will have, both of raising funds on the one hand and of reassuring public opinion on the other. However, all we can say is that that did not go through.

For myself, I do not think that we ever received a proper answer to the questions we asked about long-term research, either as regards the fast reactor or fusion. We were perhaps told what we already knew. It was because what we already knew was unsatisfactory that we asked our questions.

My noble friend on the Front Bench has maintained the most marvellous, agreeable and charming composure throughout all the proceedings. Talk about, The slings and arrows of outrageous fortune"— she has taken a lot and has still smiled. I do not know how she does it. However, I think that the department might take on board that it is no good producing briefs of Ciceronian prose—Ciceronian in their density—without Ciceronian clarity as well. Sometimes one felt that the briefs were read, not very comprehendingly and certainly not very comprehensibly.

Having said all that, one does not wish to spoil the summer holiday. I think that my noble friend on the Front Bench should be congratulated certainly on her stamina, if not on the Irlovernment's inflexibility. I hope that the summer holidays, when they come, will bring my noble friend the relief that she deserves and to which we all look forward. So on a personal basis I wish her the best of British luck.

Viscount Hanworth

My Lords, I had not intended to speak but there have been so many speakers from the other side that I felt I ought to say a few words. The House must congratulate itself on its patience and energy in trying to produce a better Bill. I feel that it has done that. However, we must remember what many of us said at Second Reading, that we heartily disliked the Bill. We believe that to upset the industry at the moment is a disaster and that it cannot possibly lead to cheaper electricity or be in the consumers' interests.

I mentioned the reasons why the Government did this at Second Reading. I hope that I am wrong. I wish the Bill every success but I think that what I said should be said, after all the rather congratulatory remarks made on the other side about the merits of privatising electricity. I end by thanking everybody and saying how well I believe the Government and everybody else have done on the Bill. I hope that I am wrong.

Lord Carmichael of Kelvingrove

My Lords, perhaps I may say a few words on the Scottish attitude to the Bill. I notice that the noble Lord, Lord Sanderson, who played a big part during the passage of the Bill, will wind up.

In the Bill the specific Scottish dimensions have been changed very little in either House. I think that is because it was recognised from the very beginning that Scottish electricity generation and supply was on a quite different footing from that of the rest of the country. We in Scotland, between the HIDB and the SSEB, have socially conscious service boards. That was shown particularly at the time of the great storm in 1968. The boards had to cope with an extremely difficult territory, particularly in the West of Scotland, the islands and some of the wilder parts of Argyll. The SSEB and the hydro board combined extremely well without worrying, certainly at the time, about how the cost was to be divided. The important consideration was service.

In Scotland we tend to moan, or as we would say, gurn, about our public services rather than praise them. However, I am sure that the general conception of Scots is that both the boards have, by and large, given a very good service. The use of the water resources of Scotland, nuclear power, coal, then later oil for our power stations, has given the people of Scotland a real sense of independence in the supply of power. I believe that, because of the structure of the industry in Scotland, the people of Scotland have received a very large measure of public accountability.

Profits and the need for profits were always recognised by the boards. I have met representatives of the various boards in Scotland on different occasions, and I can confirm that profit was not sought at the expense of the consumer in order to pay dividends to shareholders. According to various company reports that have been issued recently, extremely large remunerations have been paid to board members. However, profits in the Scottish electricity industry were used for the benefit of the people, either directly by investment in the industry or as a direct return to the Treasury. For the sake of the consumer, we on this side of the House hope, particularly in Scotland, that the tradition of the provision of services and the supply of electricity at reasonable cost will be maintained.

However, the experience of other industries does not show that that is always the case. The jury is still out on the bus industry. I think it has almost come in on the telephone industry, and it has not been all that positively in favour of the privatisation of that industry. We hope that the hopes of the Government will be fulfilled because at the end of the day we want the best possible service for people at the lowest cost. We also want accountability to the people as regards the industry and the suppliers, however it is operated.

Lord Sanderson of Bowden

My Lords, I shall begin by taking up the words of the noble Lord, Lord Williams of Elvel, who asked on Second Reading: "Will it work in favour of the consumer? Will it benefit the environment? Will anyone invest in the industry at a fair price?" He then said "I have no doubt that the answer is a resounding no".

I am very glad that in the speech we have just heard, the noble Lord has given the Government some credit for listening in this House and for moving and accepting amendments involving the consumer. I hope that what the noble Lord said on Second Reading has, to a certain extent, been modified as regards the consumer, and that perhaps the same applies as regards the environment.

When it comes to the investor, the noble Lord said there was no reason to suppose that the investor would benefit and that the investor would be pleased when the flotation took place. I believe it was the noble Viscount, Lord Hanworth, who said that the jury was out. The words of Mr. Asquith will be familiar to noble Lords on those Benches. He said, "we shall have to wait and see". Indeed the noble Lord, Lord Ezra, said he had doubts on competition grounds. In that regard, we shall also have to wait and see.

I say to my noble friend Lord Peyton that I hope in time he will come to realise that there are some benefits to the privatisation of this industry. I am afraid I have to say to him in particular in relation to Clause 61(3), vive la différence! However, I wish to thank my noble friends Lord Renton, Lord Gray of Contin and the noble Baroness, Lady Gardner of Parkes, for their contributions during the passage of the Bill through your Lordships' House. To my noble friend Lord Lauderdale I should say that I had noticed that he, in his own words, has not been agnostic during the course of this Bill.

In conclusion, I wish to say a few words about Scotland and take up what the noble Lord, Lord Carmichael of Kelvingrove, has said. We, too, wish to see privatisation go ahead in Scotland on a sound basis. We who live north of the Border are always very pleased to see ownership move from Whitehall to north of the Border. That will indeed happen. The strings that have been attached up to now will exist no longer. The two plcs which will be created, with their nuclear subsidiary will be sizeable companies in Scottish terms. We hope that they will succeed and that many Scots will take shares in those companies. I wish to say how much I am indebted to the work and the patience that my noble friend Lady Hooper has shown during the course of this Bill, and for the amusing references that my noble friend Lord Dundee has at times been able to contribute.

On that note, I should say to the noble Lord, Lord Williams of Elvel, in the phrase that was used in another context by my noble friend Lord Dundee, that I very much hope that in his remarks about the passing of the Bill and the privatisation of the electricity industry in the United Kingdom he will prove to have been barking up the wrong pylon.

On Question, Bill passed, and returned to the Commons with amendments.