HL Deb 10 October 1989 vol 511 cc138-42

2.49 p.m.

Lord Hatch of Lusby asked Her Majesty's Government:

What is their latest timetable for the privatisation of electricity.

The Minister of State, Department of Trade and Industry (Lord Trefgarne)

My Lords, the Government intend to complete the privatisation of the electricity supply industry within this Parliament. We aim to vest the industry in the successor companies at the end of March 1990. We have decided to float the area boards in the autumn of 1990. Both generating companies are to be brought to the market in the first half of 1991. Precise timings for this and the flotation of the Scottish companies are still to be decided.

Lord Hatch of Lusby

My Lords, can the noble Lord explain to the House why the Government have decided to postpone this flotation? I wish to press the Minister particularly on the nuclear element in the flotation. What do the Government intend to do about the Magnox stations and the AGR stations? Is it the case, as has been reported, that the future of nuclear power will require private electricity producers to be forced to sign contracts with atomic plants for the working life of each station? Is that the case?

Lord Trefgarne

My Lords, so far as concerns the first part of the noble Lord's supplementary question, the Government have decided that vesting the industry on 1st January 1990, as previously planned, would require additional transitional arrangements which would have introduced added complexity to the task and made it more difficult for us to meet our objective.

Regarding the nuclear aspects of the matter, as the noble Lord will recall, the Government have announced that the Magnox stations will not be part of the privatisation package. They will be retained in public ownership, in due course taken out of service, and later decommissioned. The advanced gas-cooled reactors, however, will be included in the privatisation package.

Baroness Oppenheim-Barnes

My Lords, will my noble friend the Minister confirm that for consumers privatisation cannot come quickly enough since there will be far better regulation of prices and competition and they will benefit from a far better consumer protection system than could possibly exist under a public sector monopoly?

Lord Trefgarne

My Lords, my noble friend is quite right. One of the great benefits of the new system will be the injection of a major degree of competition, and hence of choice for the consumer, which can only be to his advantage.

Lord Ezra

My Lords, following on from the remark which the noble Lord has just made about competition, to what extent will there be effective competition in the electricity industry, over the next four years in particular, having regard to the arrangements which the Secretary of State has apparently recently made with the generating and distribution companies?

Lord Trefgarne

My Lords, nothing that my right honourable friend has recently discussed will in any way depart from the fact that following the privatisation arrangements customers requiring in excess of one megawatt will be able to put their requirements out to competitive tender immediately. I believe that that will be of great benefit to them. Later on there will be arrangements for smaller customers to put their requirements out to tender. Furthermore, the area boards will also be able to put their requirements out to competitive bidding straightaway.

Lord McCarthy

My Lords, can the Minister throw light on the "Today" statement by his right honourable friend in another place that: There is no chance, whatever the timetable, of electricity becoming more expensive"? Does that mean that there is to be no increase in money terms, and if so, for how long? Does it mean there will be no increase in real terms, and if so, for how long; or does it mean nothing at all?

Lord Trefgarne

My Lords, all the history of this matter and related matters shows that once one applies the competitive spur to demand and supply arrangements prices at least stabilise and very often come down. Therefore my right honourable friend was entitled to say what he did.

Lord Jenkins of Putney

My Lords, is the noble Lord aware that his faith in the ideology of his party is touching but that some of his right honourable and honourable friends in Blackpool this week will point out, if he is not prepared to do so in this House, that the electricity privatisation proposals are a total cock-up?

Noble Lords


Lord Trefgarne

My Lords, I do not believe that what I have just referred to in any way justifies the words of the noble Lord. The supply and distribution of electricity will be greatly enhanced by the arrangements that we have proposed. As my noble friend just said, for the consumers it cannot come quickly enough.

The Earl of Lauderdale

My Lords, can my noble friend tell us whether we are now to welcome him as spokesman for the Department of Energy? If so, perhaps I may say that I welcome that.

Lord Trefgarne

My Lords, so far as I know, it is just for today.

Lord Molloy

My Lords, can the Minister say whether any restrictions will be placed on agencies that will represent foreign governments making purchases under the privatisation of British electricity which would ultimately mean that other countries could have a large share in the ownership of British electricity? Will that be a possibility under the Government's present recommendations?

Lord Trefgarne

My Lords, the detailed arrangements for the flotations to which I have referred have yet to be finalised. I dare say that the fears that the noble Lord has in mind will not come to pass.

Lord Stoddart of Swindon

My Lords, the Minister has just told us that privatisation brings prices down. Is it not a fact that already as a result of privatisation electricity prices have gone up by 15 per cent? Is it not a fact that the new arrangements which have been made with the industry are designed to accomodate its fears of competition and also to accommodate those in the City who fear, particularly with nuclear generation, that electricity will be a bad buy?

Lord Trefgarne

My Lords, I can assure the noble Lord that fear forms no part in our decision-making process.

Lord Williams of Elvel

My Lords, does the noble Lord, today's spokesman on energy, recollect that we discussed the Bill at great length when it was before your Lordships' House? Does he recollect that we were told by government business managers that we had to get the Bill through before the Recess because of the timetable that the Government had set? Are we now hearing something different? I shall not use the expression used by my noble friend, but is this not a humiliating climb-down? Is the noble Lord now giving us a timetable to which the Government will stick? If he is not, will he do his utmost—even as today's energy spokesman—to persuade his honourable and right honourable friends, at whatever seaside resort they may be, finally to see some sense and abort this costly, unpopular and expensive project?

Lord Trefgarne

My Lords, it will be none of the things that the noble Lord suggests. It will be highly beneficial, not least to the consumer. As for the timetable, the commitment which we entered into long ago, and which remains firm, is that we shall complete the privatisation of the electricity supply industry within this Parliament.

Lord Taylor of Gryfe

My Lords, I note that the Minister said that there is no timetable for the privatisation of the electricity industry in Scotland, which is not a very complicated affair. Can the Minister give me an assurance that the Scottish industry will not be treated as a guinea-pig in this matter, as Scotland was treated for the poll tax?

Lord Trefgarne

My Lords, it is never our intention to use Scotsmen as guinea-pigs for anything. I can assure the noble Lord that the great benefits that will flow from the measure in England and Wales will apply equally to Scotland.

Lord Mackie of Benshie

My Lords, the noble Lord mentioned the great benefits to megawatt users. Most people are interested in the miniwatt users. Can the noble Lord say how privatisation will affect them?

Lord Trefgarne

Yes, my Lords. As I said, when these arrangements first come into place consumers of one megawatt or more will be able to put their requirements out to tender immediately. It is intended that smaller consumers should be brought into the arrangements as time passes.

Lord Hatch of Lusby

My Lords, the noble Lord mentioned the desire of consumers for this Bill. Is he aware that the latest opinion poll shows that 73 per cent. of the nation is opposed to electricity privatisation?

Will he answer the question that was put by my noble friend about costs? Is he saying that the cost of electricity will not go up? If so, why have the Magnox stations been taken out of the privatisation and why are market forces not allowed to do what he says they will do, to bring down prices? Finally, is it the case, as again has been reported, that the duty of ensuring security of supply which was to have been imposed on the distribution companies has now been dropped by the Government without any statement being made?

Lord Trefgarne

My Lords, perhaps I may deal with the last of the supplementary questions put by the noble Lord. I think that he referred to a press release issued recently by Mr. Tony Blair, an honourable Member in another place. I am afraid that the honourable gentleman does not fully understand the arrangements, which are admittedly somewhat complex. The claims that he made are without foundation.

Lord Hatch of Lusby

My Lords, will the noble Lord answer my previous question?

Lord Trefgarne

My Lords, I endeavoured to answer a number of the noble Lord's supplementary questions. Shall I deal with the one about the Magnox reactors which he included in his second tranche and also in his earlier tranche? The Magnox stations are of course the oldest of our nuclear power generating facilities. They are all reaching the end of their useful life. The costs of decommissioning those systems and of taking them out of service will be very substantial indeed and would have the effect of increasing the price of electricity to the consumer.