HC Deb 15 May 1984 vol 60 cc92-4W
Mr. Murphy

asked the Secretary of State for Energy if he will list the main policy achievements of his Department since May 1979.

Mr. Peter Walker

The main objective of the Government's energy policy is that all economic forms of energy should be exploited, supplied and used efficiently.

Building on our important indigenous energy resource base, it is my aim to assist the contribution of British industry to energy development and to energy-related exports. With my visit to China in late 1983, for instance, and that of the Minister of State to India in early 1984, we are pursuing major initiatives to expand exports of United Kingdom offshore supplies and services to these and other important markets.

Last October I launched the energy efficiency office to make Britain the most energy efficient country in the western world. The new initiative is designed to draw the attention of all consumers—from the industrialist to the householder—to the tangible benefits to them of using energy more wisely.

I and my Ministerial colleagues have been personally taking this message to senior industrialists in a series of 40 breakfast meetings around the country and indications are that action is being taken in the great majority of organisations whose executives attend the meeting. We have strengthened our international links in this field.

The Government's general policy in the energy sector has been to set a framework which allows market forces to operate with a minimum distortion and to ensure that those parts of the energy sector which remain in the public sector and enjoy monopoly privileges are subject to compensating disciplines which stimulate efficiency.

To the end of ensuring that the energy market operates as nearly as possible as a free market, we have sold to the private sector Britoil and Amersham International. BGC has made an agreement with the Dorset bidding group for the disposal of its interest in production licence PL 089, which includes the Wytch farm oilfield. Preparations are well advanced for the sale of Enterprise Oil to which have been transferred BGC's licence interest in six offshore oilfields and oil prospective exploration acreage. We have removed BGC's statutory monopoly of the purchase of UKCS gas and greatly reduced the scope of its monopoly over gas sales; and enabled private suppliers to have access to BGC's transmission and distribution system. The Energy Act 1983 has opened the electricity supply industry to private sector competition on fair terms.

It has been our aim, together with the energy nationalised industries, to contain price increases by promoting improvements in efficiency, and by encouraging the industries' efforts to ensure that such price increases as there have been were justified and were allocated correctly among different classes of consumer. For industrial consumers, the electricity tariffs standstill will continue for a further 12 months until 31 March 1985, although the fuel price adjustment clause will continue to operate; industrial contract renewal gas prices rose by 2 to 2.5 per cent. in April following a 2-year price freeze. The latest increases in domestic electricity and gas prices — well under 2 per cent. for electricity and 4.3 per cent. for gas—were both below the prevailing rate of inflation and followed price freezes of two years for electricity and 15 months for gas. The CBI survey of "European industrial energy prices" published in January confirmed that in general United Kingdom electricity and gas prices to industry compare well with those elsewhere in Europe; the available evidence suggests the same is true of prices to the home.

We have encouraged oil exploration and development with the aim of maximising economic oil production over time. Production in each of the last two years has exceeded 100 million tonnes, putting Britain in the top half dozen world oil producers. The record number of licence awards in recent years have given new impetus to activity offshore, which will be continued in the forthcoming ninth round. The number of onshore licences awarded has also reached a record level. So, too, has the amount of exploration and appraisal drilling activity offshore. The rate of gas flared on the UKCS has fallen from an average of 18 million cubic metres (mcm) a day in 1979 to less than 10 mcm a day in 1983. Over the same period oil production has increased by over 45 per cent. Since 1979, 22 development plans for oil and gas projects have been approved. I hope to be able to approve a further half dozen or so in the near future.

The Offshore Supplies Office has encouraged United Kingdom firms to win orders from the development of oil and gas fields on the UKCS and overseas. Since 1979 United Kingdom industry has averaged 72 per cent. of an annual market of about £2.6 billion.

Orders have been confirmed for advanced gas-cooled reactor power stations at Torness and Heysham, and encouraging progress has been made in constructing nuclear stations to time and cost. A public inquiry is under way into the CEGB's proposed pressurised water reactor power station at Sizewell in Suffolk. The Government's commitment to the fast reactor has been re-affirmed. In January 1984 the Government signed a memorandum of understanding with France, the Federal Republic of Germany, Belgium and Italy to carry forward the research and development of fast reactors on a collaborative basis.

I have announced that, in view of many changes in the UKAEA's programmes in recent years and changes in the nuclear industry since 1954, a wide ranging overall review of the UKAEA's role and activities, including the relationship with the Department, is being undertaken.

Following completion of a major programme of work by consultants W. S. Atkins to test the economics and feasibility of combined heat and power/district heating schemes in nine inner city locations, we are proceeding to stage II of the feasibility programme, under which the Government will help fund production of detailed studies for three towns.

While working towards the achievement of financial viability in the coal industry, the Government have assisted the NCB in dealing with its financial problems, with grants of approximately £2.5 billion and payments under the RMPS scheme totalling £350 million since we took office, and have supported investment of £3.8 billion invested in the coal industry in the same period. The coal firing scheme introduced in 1981 has helped industry and commerce wishing to convert oil and gas fired equipment to coal burning.

Expenditure under the renewable R & D programme has been concentrated on wind power and geothermal energy as having the greatest economic and technical promise.