Mr Tim Yeo (South Suffolk, Conservative)
I thought that it would not be long before the hoary old chestnut of privatisation was mentioned. It would have happened previously had not the Labour Benches been so thinly populated for a debate on an extremely important subject. The disregard of London Labour Members for the devastating effects of last month's power cuts is clearly reflected in the absence of the majority of them. [Hon. Members: "Harry's here."] Of course, there are honourable exceptions. Harry Cohen is in his place, as he is frequently. However, other London Labour Members are absent and the only explanation I can devise is that the Labour party is in a panic about the Brent, East by-election and that Members have been drafted there.
Let me deal with the point about privatisation. For almost all industries, privatisation gave us the opportunity to set in law requirements for higher environmental and safety standards than those that existed when they were in public ownership. All the privatised industries yield example after example of higher standards as a direct result of the transfer of enterprises from public to private ownership. Of course, the issues to which Mr. Hughes referred were considered when the electricity industry was privatised. Evidence clearly shows that, for example, investment in the national grid has increased substantially following privatisation. In the past, successive Chancellors of the Exchequer were keen to find public expenditure savings. The easy way to do that was through axing the capital programmes for public sector industries. That happily no longer happens. However, the Government's ambivalence about specific energy decisions is having an effect in deterring investment.
When the Minister replies, he will doubtless point out that a contraction in generating capacity has occurred through the operation of the market in the form of the new electricity trading arrangements. Of course, NETA has achieved a reduction in the prices that are paid to generators. However, it is worth pointing out that consumers have not enjoyed such a big cut in the prices that they pay. Nevertheless, as NETA metamorphoses next year into something that we may call "better" rather than "BETA", that will provide us with an opportunity to examine Ofgem's remit. In the light of the concerns about security of supply that are now more widely expressed than ever, it is not clear that the current remit gives a sufficiently strong market signal to ensure that long-term investment in, for example, gas storage capacity, will happen.
The Government's inaction in the face of short-term risks is matched by their refusal to rise to the medium and longer-term challenge. We have reached an historic moment in energy policy. For the first time in a generation, Britain faces the prospect of becoming a net importer of gas. In less than a decade, our ability to generate enough electricity to meet the nation's needs will depend on imports. The change is occurring at the very moment when international environmental commitments start to bite more sharply. Given the accumulating evidence of climate change, we should set an example by honouring those commitments. In seven years, half our gas may be imported. By 2020, 90 per cent. is likely to come from abroad, as North sea reserves dwindle.
Increasing amounts of gas will come from Russia, which has an even bigger customer on its doorstep: Germany. The gas that Russia sends to Britain may travel through a pipeline that runs across Germany. There are no prizes for guessing the country that will have priority if there are problems with supply. The Minister will say, "Never mind. There are other countries that can meet any shortfall." Indeed, there are: pillars of political stability such as Algeria and Iran. I suppose that Ministers have cynically calculated that they will have long left office and that the risks that they run with the security of the British economy and the safety and convenience of the British people do not matter a damn because they will not be around to be held accountable.