Electricity Consultative Council (Hansard, 26 May 1977)

§ Mr. Benn

This letter and my reply are set out below.

The Rt. Hon. A. W. Benn, MP,
Secretary of State for Energy,
Department of Energy,
Thames House South,
Millbank,
LONDON, SW1P 4QJ.

24th February 1977

Dear Mr. Benn

CPRS REPORT ON "THE FUTURE OF THE UK POWER PLANT MANUFACTURING INDUSTRY"

My colleagues and I have met to consider the CPRS Report on "The Future of the UK Power Plant Manufacturing Industry" and its likely effect upon the electricity consumer. We were fortunate enough to have at our meeting advice from both Sir Kenneth Berrill and Sir Arthur Hawkins, and we were pleased to note that the area of difference between the CEGB and the CPRS was not so great as we had been led to believe. My purpose in writing to you is to acquaint you with the conclusions which we reached at our meeting and perhaps it would be helpful if I were to set these out seriatim. First, we weclome the view that the United Kingdom should maintain an independent power plant manufacturing industry and should not come to rely upon foreign suppliers: we did not consider ourselves competent to comment upon how best the industry may be rationalised Second, we would not dissent from the opinion that an independent industry should have a stable home market as a basis for a successful export performance and would welcome Government assistance to the industry—particularly in view of the reputed assistance given to foreign power plant manufacturing industries by their governments. Third, we accept that the ordering of Drax Stage II in advance of its economic date may be necessary to sustain an independent industry. Fourth, we accept the proposition that it may be necessary for the industry to manufacture a prototype 1300 MW high speed turbine generator in order effectively to compete in export markets. Having outlined our substantial agreement with the Report, I now turn to the critical question of who is going to pay for the early ordering of Drax Stage II and the prototype manufacture of the 1300 MW high speed turbine generator, which on past performance may well, I believe, prove to be a costly exercise. There would seem to be two possible sources of finance, the CEGB (the electricity consumer) or the Government (the taxpayer). Conventional wisdom has it that since most taxpayers are electricity consumers, the distinction is an academic one, but I believe conventional wisdom in this case to be superficial. If the electricity consumer is to bear the cost, which is likely to be an average 3 or 4 per cent. increase on electricity bills over the period 1978–84 for the early ordering of Drax Stage 536W II alone, without taking the 1300 MW prototype into consideration, then the cost will be spread according to consumption of electricity which is, as you will know, no criterion of ability to pay—quite apart from coming perilously close to appearing to constitute the venial sin of hypothecation. If the taxpayer is to bear the cost, then there would be a direct correlation between the spread of the cost and ability to pay. To sum up: we accept the Report but we believe that if it is to be implemented, it will result in a considerable cost which should, in equity, be borne not by the electricity consumer but by the taxpayer. In considering the Report, I trust that you will bear our views very much in mind and venture to hope that they will be evident in your eventual decision.

Yours sincerely

Mr. T. Young
Mr. T. Young, OBE, C.Eng, FIEE, FIHVE,
Convening Chairman,
Electricity Consultative Councils,
Room 154,
4 Broad Street Place,
Blomfield Street,
LONDON, EC2M 7HE.

10th March 1977

Dear Mr. Young Thank you for your letter of 24th February and for the conclusions of the Electricity Consultative Councils on the CPRS Report on the power plant industry. I note your agreement that the UK should maintain an independent power plant industry and that this needs a stable home market as a basis for a successful export performance. As you will know, Ministers are currently considering the report and it is helpful to have these comments. The questions of a steady home ordering programme, and of the possible advancement of Drax 'B' naturally form part of Ministerial consideration; and decisions have still to be taken. I can assure you however that what you say about the attribution of any extra costs which may arise from measures to assist the power plant industry will be borne in mind.

A. W. Benn