Departmental Initiatives (Hansard, 25 November 1986)

§ Mr. Peter Walker

The Government's approach to energy matters is necessarily a national one designed to benefit all Britain's energy consumers producers and suppliers, many of whom are situated in the north-east, north-west and Yorkshire and Humberside regions.

Our aim is that energy should be produced, supplied and used efficiently and economically. We need to build on Britain's considerable heritage of coal, oil and gas, and long experience in civil nuclear power to ensure a degree of diversity in supply. We aim to ensure that the energy economy works as efficiently as possible through the discipline of the market place and with suitable financial targets for nationalised industries. A further spur to efficiency will be the privatisation of British Gas.

The improved efficiency of the gas and electricity industries has been shown clearly over the last three years. Domestic electricity and gas prices have fallen in real terms, electricity by 10 per cent. and gas by 7 per cent. In cash terms they have gone up by 2 per cent. per year for electricity and 3 per cent. per year for gas. Under the last Labour Government, electricity prices went up 11 times as fast and gas prices four times as fast. Examples of benefits attributable directly to the three regions are:

(i) I have set up the Energy Efficiency Office and launched a major campaign to promote efficiency in the use of energy. Survey grants of over £1 million have been paid to industrial and commercial consumers in the North and potential savings identified of some £780 million.
(ii) Our efforts to create a successful coal industry have resulted in substantial capital investment in British Coal's North East, Western and Yorkshire areas of some £2.4 billion since taking office. Some £370 million was invested in the 1985–86 financial year, a substantially higher level than in the final year of the Labour Government. We have been rewarded by excellent improvements in productivity of 50 per cent. in the North East and Yorkshire and 40 per cent. in Western Area. Following rationalisation of the industry, we created British Coal Enterprise Limited who have now helped to create new industries and businesses, providing over 5,000 new job opportunities in these areas. This Government has also set up the Coal-Firing Scheme under which nearly 200 companies in the North have been offered and accepted grants totalling £21.3 million to switch to coal boilers.
(iii) We have continued to support the safe and economic development of nuclear power, an industry which is concentrated in the North and is particularly important to its economy. Direct nuclear employment amounts to 24,000. In addition, CEGB's estimated investment of around £1,800 million in its latest Advanced Gas-Cooled Reactor Station at Heysham II alone has resulted in the creation of substantial new jobs in construction and manufacturing sectors over the past five years.
(iv) We have approved large-scale investment in the conventional areas of the electricity supply industry. Drax coal-fired power station complex has now been completed at a cost of around £900 million and three local Area Boards have combined annual capital investment programmes of around £100 million.
(v) The Government is funding a programme of research and development on renewable energy technologies. This includes a grant of up to £400,000 towards the cost of studies into a Mersey Barrage.
(vi) Our stable financial regime has encouraged North Sea investment and maintained interest in new developments and exploration. My Department's Offshore Supplies Office have helped Britain's offshore industry to gain an average since 1979 of 74 per cent. of the United Kingdom's market, worth in total some £3 billion a year. A considerable part of this work has come to the North where the fabrication sites are situated.