Perhaps it would be for the convenience of the Committee if the following three Amendments on the Order Paper, also standing in the name of the hon. Member for Worcestershire, South (Sir G. Nabarro) were considered at the same time: No. 2, in page 1, line 13, leave out '£6,500 million' and insert '£5,450 million'.
No. 3, in page 2, line 4, leave out '£950 million' and insert '£875 million'.
And No. 4, in line 4, leave out '£1,200 million' and insert '£1,000 million'.
I am grateful, Mr. Mallalieu. The four hang together and we shall save a great deal of time thereby. I tell my right hon. Friends in advance that no Divisions are proposed on this side of the Committee. I shall not ask your consent to hold separate Divisions.
It is significant that 20 years ago a junior Minister of the Scottish Office, Mr. William McNair Snadden came to the House of Commons and asked for a huge sum of money for the North of Scotland Hydro-Electricity Board in a fashion rather similar to the way in which my hon. Friend the Minister for Industry is today asking for a great increase in the sum of money in capital account for all the electricity boards north and south of the border. Mr. Snadden suffered a severe shock when the then hon. Member for Caithness and Sutherland, Sir David Robertson, and I made critical speeches about the lack of parliamentary accountability over these very large sums of money the House seems to vote, albeit always on a very thin House, for these electricity boards.
I for my pains got put on the Scottish Grand Committee. I held it up so many hours as a Sassenach Member that my right hon. Friends had to move the Whips in to clear me off after the fifth sitting of the Committee. But that is ancient history. Nevertheless, the principle is the same tonight.
I move this Amendment in pursuit of an important principle. The Committee is being asked to approve increases in the borrowing powers of the electricity industry at limit from £4,400 million to £6,500 million—an increase of £2,100 million for the boards in England and Wales and an increase in respect of the Scottish boards from £800 million to £1,200 million, all of which in the aggregate represents what I called during Second Reading a very large sum of money which ought to occupy a few hours of the attention of the House of Commons.
[Miss J. M. QUENNELL in the Chain]
Capital expenditure by itself and in itself is not intrinsically good. What matters is the effectiveness and efficiency with which the capital expenditure is employed. I say that there is a great deal wrong with the electricity undertaking today and that it receives all too little parliamentary scrutiny. It gets away with it.
As long ago as 1956 a group of 23 Conservative Members, including the Minister for Industry, was so dissatisfied with the parliamentary accountability and control over the capital expenditure of nationalised industries that they trooped into the Lobby and divided the House against their own Government. The Minister for Industry was one of them and I was one of the tellers on that important occasion. I moved a reasoned Amendment on the Second Reading of a Coal Industry Bill for exactly the same reason that I am protesting this evening.
It is a fact that we are asked this evening to vote moneys for the Electricity Authority for a period ahead of about six to seven years, which is the best estimate that can be made at the present time by the bureaucrats in the Ministry as to the annual rate of expenditure on capital account for electricity generation and distribution. Not one of those bureaucrats or any Minister representing them in the House of Commons can ever tell us, year by year, seven years in advance, how much of the capital expenditure is to be found from the resources of the industry itself. It varies enormously year by year.
Second, no bureaucrat and no Minister representing the bureaucrats, is ever able to tell us seven years in advance, any more than any commercial concern could tell us seven years in advance, what will be the result of trading, in terms of profit and loss, of the industry concerned. For example, there was a change of £120 million in the fortunes of the Electricity Council as between the years 1969–70 and 1970–71. In the first of those chargeable accounting periods the Electricity Council recorded a profit of £64 million. In the second of those chargeable accounting periods it recorded a loss of £56 million. I am not selecting those two years at random but because they are the last two chargeable accounting periods. I know all the arguments as to turnover in fortunes, control of the Government over the mechanics of the industry and its capital expenditure, and political interference of the Government in the day-to-day conduct of the industry and I am glad to have the hon. Member for Bristol, Central (Mr. Palmer) with me. All this is true and we all know it to he true.
The electricity industry has to parade its bodies before the Minister several times a year to justify what sums it needs in capital expenditure. I am not denying all this, but I am making the simple point that in a single span of two years there was this enormous transformation in the financial fortunes of the industry. It is utterly impossible for the Under-Secretary for Scotland. the Minister for Industry, the Prime Minister himself, or the best statistician in Britain to tell me what surplus or deficit the electricity industry will turn in in 1976–77 and 1977–78. Of course, it is not possible to estimate that far, and if that is not possible it follows that it is not possible to estimate how much of its capital expenditure the industry will find from its own resources; because the amount it finds year by year is most largely dependent upon the profit or loss of the industry.
These are self-evident facts to business men. They are not always so self-evident to politicians because politicians are not business men; and as I have said over and over again, this House is the most ill-informed body in the world and ill-equipped, to boot, to run the affairs of a vast industry, especially when a great majority of the Members of this House know nothing of the affairs of the industry other than as individual subscribers and consumers. What I want to do by this Amendment is to cut the amounts in half and thereby cause the industry to come back to this House and ask for new approvals in about two to three years' time.
Under the Bill as it is at present—and I say this to my hon. Friend with great respect, for he cannot estimate any more potently than I can—they might come back in 1974–75, 1975–76 or 1976–77. It depends on the momentum of expansion of industry and therefore the consumption of electricity without which our industry cannot function. I want to be allowed to stand up in this place, God willing, in the year 1974 and look at the finance of the electricity industry, instead of being expected to gasp along at the mercy of Ministerial statements until 1976. I want the Minister to come back sooner rather than later.
I do not think he should be given this huge authority for something in the order of additional £2,500 million over seven years ahead. I want to look at the books half way, which is not an unreasonable sentiment or one that should not appeal to a Conservative Administration which always said before the last General Election, "We believe in open government. We believe in good husbandry. We believe in good accounting." [Interruption.] I am glad to get a cheer from the benches opposite. Those hon. Gentlemen ought to support this Amendment tonight and enable Parliament to exercise reasonable accountability and control over these huge sums of money. The last time I stood in this place doing this exercise was on 10th May, 1956, 16 years ago.
I may not look a day older but the hon. Gentleman was not here then; he was still at school. But the principle was the same and my hon. Friends, including the Minister for Industry and myself, did wring something from a reluctant, oyster-like Administration. We did wring from it reluctantly a White Paper on nationalised industry investment. That was the origin of it. Then 23 Tory Members voted against the Government and we were able to wring from a reluctant Leader of the House in those far-off days an assurance that we would have three days a year to debate the reports and accounts of nationalised industry. That lasted for three or four years and then the Government gave up.
Ten years have now elapsed without our ever having our parliamentary time apportioned to debate those reports and accounts. Here are last year's reports and accounts, the first of the Central Electricity Generating Board, the second of the Electricity Council. The losses turned in by those two bodies in the year that ended on 31st March, 1971, were £70 million—a £56 million loss by the Electricity Council and a £14 million loss by the Central Electricity Generating Board. It was not the fault of the boards. The Government would not allow them to increase their tariff. The National Coal Board delivered coal of low thermal value and poor calorific quality, with the result that their costs of combustion were substantially higher than they should have been.
I know all these arguments, but the fact is that they lost this huge sum of money, and Parliament has never focused its attention on it, criticised or commended the loss—as I hope it would never do—or in any other way paid attention to it until tonight. As we had only a matter of two hours and 18 minutes on Second Reading, I hope we shall have a little more time tonight.
I am delighted to welcome my hon. Friend the Minister for Industry, who has just arrived straight from his Cabinet Sub-Committee. I must tack back for a moment and remind him of how he subscribed to the principles I am enunciating on 10th May, 1956, when he rebelled against his own Conservative Administration and came into the Lobby with me as one of the 23 Conservative Members who voted for increased financial accountability of nationalised industries. I find
his contribution recorded for posterity in HANSARD. I was a teller on that auspicious occasion with the Viscount Hinchingbrooke. There recorded in the first column of names of those voting against the Government, that is, voting "No" on that occasion, is the name of
Eden, J. B. (Bournemouth, West)".—[OFFICIAL REPORT, 10th May, 1956; Vol. 552, c. 1537.]
So I should receive my hon. Friend's sympathetic hearing for the words I am addressing to him.
Now I turn to the figures. In my first Amendment I seek to reduce £5,200 million to £4,800 million, which is precisely correct statistically. It cuts in half the amount of the basic advances in the capital expenditure and borrowing powers to be authorised of the boards in England and Wales. Amendment No. 2 is to reduce from £6,500 million to £5,450 million the long-stop limit of what the Minister may sanction and approve, subject to affirmative Resolution, when the first limit of £5,200 million, as it is in the Bill, is passed, or £4,800 million, as it is in my Amendment, is passed. My third Amendment turns to Scotland. It seeks to reduce the interim limit, as it is called, from £950 million to £875 million. My fourth Amendment is to reduce the long-stop limit there from £1,200 million to £1,000 million.
Those figures are all carefully worked out to halve the amount and, I presume, halve the length of time it would occupy the boards in the spending of the sums concerned, assuming all other factors to be equal. The Amendments underpin my fundamental argument that I want the Minister back to this House to seek new approvals not in about 1978, as the Bill envisages, but nearer to 1975, which would be the reasonable time.
I know the answer in advance. I never ask questions unless I know the answer—not of Ministers. I have heard it all before. Electricity boards must plan their capital expenditure programmes seven years ahead, and therefore they must have the authority to spend the money seven years ahead, my hon. Friend will say. But that is manifestly false in this context.
I am glad to see the hon. Member for Midlothian (Mr. Eadie), a representative of the National Executive of the National Union of Mineworkers. What
I am about to say to the Committee—and I address myself particularly to the hon. Gentleman—will have a sympathetic reception from every coal mining representative. As I am on the side of the miners—[Interruption.]—It is no good arguing about that; I will not be drawn into any disputation on the miners strike. I will deal with that later. I want to tell the coal mining representatives on the Committee that on Second Reading the Minister uttered a very important statement about choice of fuel for new power stations. He was kind enough to give way to me when I intervened on this very point. I said:
The House has in the past been subject to an impressed settlement on these matters. May we on this occasion have an assurance that there will be laid before the House a White Paper or explanatory memorandum which we may be able to debate, showing how the various considerations are arrived at in choosing a particular form of generation, coal-tired, oil-fired or nuclear fired?
Says the Minister in reply, in his wisdom:
These are other matters which one has to take into account in assessing the relative merits of available fuels for the power stations. This will be the subject of normal ministerial decision, as it has always been in the past."—[OFFICIAL REPORT, 1st February, 1972; Vol. 830, c. 339.]
That is just what I do not want. I think Ministers have been a shower of boobies year after year after year on this issue. I want some coal-fired power stations, but they are not coming.
Take the Financial Times. The Financial Times is an organ which will command the respect of coal mining Members as well as that of other Members like myself on this side of the Committee. Everybody respects the Financial Times. I quote from that splendid article in the Financial Times on 8th February on the coal strike "The damage so far". I will give the copy of the paper to the Minister so that he can check. I apologise for not having given him any warning about this in advance, but his Ministry will no doubt have noted these prophetic words which are somewhat at variance with the Ministry's own pronouncements. This is what the article says:
At the moment the C.E.G.B. has no firm proposals for any new coal-fired units. All those for which it is awaiting a Government go-ahead are either oil or nuclear-powered, while the one outstanding coal station for which consent has been given, Drax B, in
Yorkshire, seems unlikely to be built in the foreseeable future.
If I were a coal mining Member I should rise in my wrath against the Ministry if that statement in the Financial Timesshould be true, because out of 143 million tons of coal mined in a full year—not this year, because of the strike, but last year—approximately one-half goes to power stations, and now there are no more coal-fired stations to be built. Whereas the Government say they are not going to decide the fuel for a power station till the eve of the building of the power station, the Government come to this House and ask for huge sums of money for building new power stations over seven years ahead. Because the coal industry is probably expecting to provide from 50 per cent. to 75 per cent. of all the fuel burned in power stations, surely the coal industry has a vested interest in what is a ministerial decision day by day and month by month as to the type of fuel to be employed in new power stations. If it is right that the electricity industry should be voted money seven years ahead in order to underpin its policies, then it is right that the coal industry should be voted money seven years ahead and be told what fuel is going to be used by its principal customer which takes 50 per cent. of the output of all the coal mines of Britain.
Thus, as I say, ministerial policy is a booby. It has always been a booby. Ever since the Ridley Committee was set up in 1952 on these very matters there has been constant chopping and changing without the consent of this House. without regard to the true interests of the coal industry which I strongly support. I believe, therefore, that it is very, very important that this evening we try to impress upon the ministerial mind that we do not want to give the Minister a blank cheque seven years ahead in the sum of £5,200 million of taxpayers' money financed from below the line expenditure in the Budget without frequent scrutiny of what he is up to—and there is a new Clause of mine on that point.
I have listened attentively to the hon. Gentleman for many years in coal debates and associated matters and I usually find myself in agreement with him. Would he not agree that Government after Government, including my own, have been driven into the trap, by so-called experts, of believing that nuclear energy would be producing power at a thermal unit of below 0·5 old pence and as a result Government policy has been driven up the wall, to the cost of an indigenous fuel?
That is largely true, but with deep respect to the Chair I do not want to allow this to go too wide into a discussion on the relative merits of individual fuels. I am largely in agreement with what the hon. Gentleman says. I agree that coal is ultimately the cheapest form of all fuels for electricity generation. It is vastly cheaper than oil and nuclear power when every consideration is taken into account—including the loss of miners' lives and the social consequences of shutting down pits and everything else we have heard about in every coal debate since nationalisation. We never take those into account.
If it is worked out strictly on a monetary cost basis it might be found that oil was cheaper and this is the Electricity Board's case for preferring oil. So long as power stations are built in the right places, contiguous to the source of coal, then I believe that coal, having regard to all the other extraneous but related factors, is the cheapest form of fuel.
This Amendment does not seek to deprive a nationalised industry of money. I am very fond of electricity. I claim to have more electrical appliances of different kinds in my household than probably any other Member of the House of Commons. It comes to some vast number.
Splendid. I maintain them myself. They are models of excellent efficiency. I am very concerned about the relatively low load factor of the electricity generating industry, the relatively low thermal efficiency with which the fuel is burned in the industry—my hon. Friend the Minister for Industry must listen to these pregnant words and stop whispering to his P.P.S. He can do that later. My hon. Friend said on Second Reading that between 1961–62 and 1970–71, a period of nine years—I am going slowly for my hon. Friend, I know it is difficult for him to take in the figures late at night—the sales of electricity in this country have increased by 50 per cent.
He will find that in his Second Reading speech. That is an average increase rate, arithmetical progression, of 5½ per cent. per annum. The hon. Member for Bristol, Central and myself through the '50s and into the'60s were working for a condition in our economy whereby electricity sales would increase by 10 per cent. per annum, arithmetical progression, and double every decade.
I am glad to have the assent of the hon. Member. He is the only companion I have in the Committee who is a member of the Institute of Fuel. He labours, I toil. We both agree on this fundamental point that sales have not gone up by 10 per cent.per annum but have gone up by only 5½ per cent. per annum.
As that period of nine years spans six years of Labour rule, and four years of Tory rule, I hope that we shall not have any hanky-panky of party politics, with references to the wicked Tories doing this and the gorgeous Labour Party doing something else. The economy of the country was so badly managed that we fell far short of 10 per cent. per annum and achieved only 5½ per cent. per annum, which meant a huge wastage of generation facilities provided.
That is why I say that is utterly impossible for seven years ahead to estimate with any degree of accuracy the sums of money required by this capital-intensive, money-voracious industry, which consumes more of the taxpayers' money than any other single undertaking in Britain. I am deeply suspicious of the motives of my hon. Friend. He is asking for far more money than he should. He should accept my figures and return to the House in three years time to justify how he has spent that money before he asks for double the amount.
The hon. Gentleman, in one of those commandments which he likes to bring forward occasionally—and I have heard him use this one before—said that politicians are not businessmen. Since he claims to be both a politician and a businessman, in the end he will have to chose on whose side to come down.
I am grateful, and the Committee should be grateful, to the hon. Gentleman for putting down the Amendments which have made it possible for us to discuss this important Bill in perhaps greater detail than we were able to do on Second Reading. I agree with the hon. Gentleman on the importance of this industry, and of all nationalised industries, having full parliamentary accountability. He and I have no quarrel there. I agree that we need much more information about fuel policy and the tests which the Government and the electricity supply industry are making in the choice of fuels.
It is difficult to predict the future of any fuel policy. The hon. Member for Worcestershire, South referred to the Ridley Committee Report of 1952 having been hopelessly out in its predictions. That is not surprising since so much time has elapsed since 1952. Had the hon. Gentleman wished to be more topical, he might have referred to the White Paper on fuel produced by the Labour Government when Mr. Michard Marsh, now Chairman of British Railways, was Minister of Power. A great deal of time and effort went into the preparation of that White Paper, but its predictions are badly out although it was prepared only five years ago.
It is extremely difficult to look ahead and say that the statistical curve will go in a certain direction or that the various projections will be in the form of straight lines. Members of the Committee will know that I have had connections with the electricity industry all my life and I am in touch with the broad opinion as well as with the union point of view in the industry. We in the electricity industry believe that we are right to make some choice between fuels and to have flexibility in our fuel policy.
I argued on Second Reading that if Ince were to go ahead as an oil-fired power station, it was right that we should have some advance notice of any new large coal-fired power station. I feel that we must have a further nuclear-power station, and I propose Sizewell. Electricity supply is, of course, basic to the energy position, and indeed basic to our industrial life. Without electricity, civilisation as we now know it would collapse. Therefore, we must have some choice in the use of fuels for our electricity supply.
Apart from the natural claims of coal—and there is a natural link between the coal industry and the electricity supply industry—it must be remembered that the electricity supply industry is the largest consumer of coal. We must bear in mind that the view of people who are competent to judge is that a time will come when all the possible fuels are exhausted. We shall not develop substitutes unless we begin in plenty of time. It is not a question of the cost of nuclear power but to a great extent a question of the survival of modern industrial economies as we know them. When the fossil fuels are exhausted we must have an alternative source of energy which must be developed to an enormous extent. Every year the demand for energy rises.
The situation cannot be left with the attitude that, because of the needs of one fuel industry, we will not develop the other source of energy for some years because any such development must be spread. In arguing this matter with many of my hon. Friends who represent mining areas, and for whom I have an enormous respect, I have said that those of us who are trade unionists in the electricity supply industry also have our point of view and feel that there should be flexibility in the choice of fuels.
The hon. Gentleman in moving the Amendment spoke of the so-called loss made by the electricity supply industry—I say "so-called" because the loss last year of £56 million was a deficit on financial working. It was the first loss since nationalisation and this should not be overlooked. It has been a highly profitable industry and its return in terms of industry to the Exchequer has been enormous. This has been the first year since nationalisation that the industry has gone into the red. I feel it is no coincidence that we have had to wait for a Conservative Government for this nationalised industry to be forced into this position.
There are reasons for this, some of which have been mentioned by the hon. Gentleman. One is that costs are rising all the time. As a matter of Government policy, under both the present and the previous Administrations, the industry has taken coal where in certain circumstances and in certain places, had it been free to do so, it might have preferred to use oil. I do not offer that as an opinion. Socially it was a sound decision. But it is not the fault of the electricity supply industry.
Then there has been the general slump in the economy. Instead of the increase in the demand for electricity running at between 7 and 8 per cent., on which the calculations were made, there has been only about a 4 per cent. increase. That has been due to general industrial depression and it has gone on for a long time under the Administration of right hon. and hon. Gentlemen opposite. That is not the fault of the electricity supply industry. The prosperity of the industry is a reflection of the prosperity of the economy generally.
Then there has been the control of tariffs and prices. As a Socialist who believes in public ownership and advocates its extension, I take the view that publicly-owned industries must have a fair wind and no favour. It is astonishing that a Government containing Ministers such as the present Minister for Industry, who in the past argued against Government interference with publicly-owned industries and maintained that they should be properly accountable and follow commercial rules, should have interfered with the industry and its internal policies in the way that they have. They have stood in the way of what the industry wanted to do commercially more than any other Administration since nationalisation. No formal directive has been given to the industry not to advance its tariffs but broad hints have been given to board chairmen. It has been said in the Electricity Council's Report that the industry has not been able to adjust its tariffs to proper economic levels because of Government intervention.
In these circumstances it has not been possible for the industry to increase its own reserves. It has had to borrow capital at the fantastically high interest rates which now apply. It is no good right hon. and hon. Members opposite turning on the industry, and I hope that it will not be said in Conservative propaganda at the next General Election that here we have another loss-making nationalised industry. Treated fairly and properly, the industry can show a productivity improvement and a prosperity in relation to the national good which is equal to any other industry in the country, public or private.
If there were time, I could discuss the productivity record and the way in which the industry has reduced its manpower steadily. I do not carry the figure in my head but I believe that in the last decade the number of employees per million units sent out has almost halved. We have had redundancy on a considerable scale in electricity supply, and it has been carried through very satisfactorily.
It is not fair for anyone to say that the industry is in the red for the first time since nationalisation and that it is the fault of the industry. When the Minister for Industry replies to this part of our discussion, I hope he will tell the Committee and, through it, the electricity supply industry for how long the Government propose to go on controlling the price of electricity and for how long they intend to intervene in a way which is not encouraging to those who manage the industry and certainly is not encouraging to workers of all grades in the industry. If this is to become a permanent part of the relationship between the Administration and the electricity supply industry, this industry, in which so many thousands of men are proud to work, will be very much disheartened for the future.
I welcome the opportunity to participate in the debate in consequence of the Amendments tabled by the hon. Member for Worcestershire, South (Sir G. Naharro).
I may be at variance with my hon. Friend the Member for Bristol, Central (Mr. Palmer), but what really prompts me to take part in the debate is what I think was the bad judgment of the C.E.G.B. and the S.S.E.B. I wrote what I thought was a fair and objective letter for inclusion in the columns of Power News expressing doubt about the board's nuclear power policy but I was told "No, we cannot have any other views bar those of the S.S.E.B. or the C.E.G.B." This is nonsense. I believe that the board's judgment was bad. It has been anti-coal. If we had allowed the boards to pursue their policy it would have been disastrous for this country.
I did not want to talk about nuclear power; I wanted to talk about the letter which my hon. Friend wrote to Power News which was refused That was very bad. It should have been accepted. If my hon. Friend will send it to Electrical Power Engineer, which is the paper of my union which I edit, I shall be delighted to publish it.
I have done even better. I sent it to the chairman of the board, and he said:
I am very sorry. I cannot interfere with the editorial direction of the paper.
This shows that we must have a discussion. It is time that we had not only a coal debate but an energy debate, because certain things are happening about which Parliament should know and should debate.
I will now deal with nuclear power, taking it in the reverse order from that which I intended. In talking about money we are talking about nuclear power. That is the reason for the Amendment. We are talking about the money which has to be spent on nuclear power. The boards' judgment has been wrong, because no single Magnox power station is producing electricity cheaper than an equivalent coal-fired station. The Daily Express said that it is not likely to do so. We have spent over £2,000 million on nuclear energy.
I have a vested interest. In consequence of this policy, thousands of miners were flung on the scrapheap. Good, economic pits were closed. The miners were not told that the pits were being closed to give them a more comfortable life. They were not told "We will bring you from underground to the surface because we want to give you a more congenial life and a pleasant environment". No. The miners were told that the pits had to close because coal was too expensive.
We then embarked on a massive nuclear power programme; but, as I said, not one Magnox power station is producing electricity cheaper than an equivalent coal-fired station. It is a monstrosity and an economic madness. Yet the S.S.E.B. and the C.E.G.B. have the impertinence to talk about coal being too dear, to continue to lobby, for example, in favour of oil and to refuse to stand up to criticism whether it be of their policy regarding oil or nuclear power.
I am talking about only the first generation. If anyone wants this to be a party political issue, I can tell the Minister—I hope that he does not mention it—what happened to the vast Magnox station programme, the first generation, after Suez in 1956, when the Government got the wind up about the Suez Canal and whether we should be able to import other sources of energy. But how much will the second generation of nuclear power plants, the A.G.R. type, cost. I doubt whether anyone can tell us. They are riddled with technical difficulties. But as a consequence of talking about this programme, we closed more pits with the same argument, that coal was too expensive.
None of the A.G.R.s will produce electricity any cheaper than a coal-fired power Station. That is why Chapman Pincher wrote in the Daily Express, I presume, about £2,000 million being spent on a nuclear power programme, about which we have no information. In the midst of a coal strike it was leaked from the Cabinet that the Cabinet began to see this looming ahead and it began to dawn on it at last that coal had a much more important place in the economy than was thought. Many people in the country are realising that today, because there will be power cuts.
We have been conned about coal. Time and again people have said that coal is out of date. Yet when we have a coal strike and the miners are abused from some sections of the public, from most of the general public they receive nothing but praise for their demands. When the miners are abused, people discover that they do not have coal in this country and that such mismanagement exists.
I am grateful to the hon. Member for Worcestershire, South for putting down the Amendment because it affords the opportunity for debate. I should like to quote chapter and verse on this matter. I have studied the position. The figures cannot be discredited. If the Minister had studied them, he would know that. Blunder after blunder has been made and the miners have had to pay for them, with their lives, their families and their jobs. We are appallingly ignorant about this matter but others in the world seem to realise the future rôle of coal in providing energy.
After the two disasters of nuclear power, the first and second generation stations, we are now considering a third generation station. I agree with my hon. Friend the Member for Bristol, Central that fuels are wasting assets. Nuclear power may have some future many years hence but if we are now talking about the third generation of a water system of nuclear power, who will pay for it? Shall we then say that we will close the pits? There will be no question of contraction in oil and gas. It is the pits, as usual, that will have to be closed if we are embarking on a third generation of nuclear power stations. There should be some accountability by the C.E.G.B. and the S.S.E.B. Their judgment has been bad. They are anti-coal. Their propaganda has been anti-coal. They are on record as making error after error about coal. We are entitled to say that.
As I said, in other parts of the world people are beginning to realise what is happening. I have some official documentation with me. I have had a busy day and have not been able to go into the detail that I wished. For example, it is said that world energy requirements cannot be met without coal and that everything points to coal gaining swiftly in importance for meeting future world energy requirements. That is the conclusion arrived at in a survey carried out by a Brussels financial journal. There is evidence that world reserves of coal are greater than those of oil and natural gas put together. Furthermore, coal has the advantage that its reserves are distributed more uniformly across the world and also tend to lie more in the regions of heavy energy consumption. These are the facts of the situation. This is what the electricity boards do not consider in their talk of so-called commercial judgment. Miners are out of a job because of this kind of talk.
Other industrial countries have not been so stupid about their natural resources. Energy consumption is growing. In the U.S.A., a bastion of modern industrial capitalism, coal still is regarded as important. The United States produced 600 million tons of coal equivalent in 1932 and 2,300 million tons in 1969. Other parts of the world realise that coal is vital, yet our boards say that they must have a choice and use their commercial judgment. We might disagree about the emphasis but we should be grateful for the opportunity to debate these things, the more so when some regions are going to freeze because of the stupidity of the handling of the present dispute.
I have read that, if oil is to maintain its current share in the world energy balance sheets, it will, according to a forecast by British Petroleum, have to supply 9,200 million tons a year towards the end of this century. This means that 160,000 million tons will have to be pumped over the next 30 years, whereas reserves known to exist today amount to only 73,000 million tons. The papers are full of propaganda. We are told that North Sea gas has made a great impact. We should be grateful for these indigenous reserves, but in terms of world consumption this is only a flea-bite. To talk of running down our other natural resource is nonsense.
Someone should ask the electricity boards to cut out their propaganda. I am no enemy of the boards—there are some fine people working in them—but I wish that they could consider the whole country and the balance of payment costs. It is very problematical whether we will be able to get the oil. There is a rapid escalation in price. In its £12 million deal just concluded, the B.S.C. will have to pay £3 per ton for oil. We do not know what agreement it is trying to negotiate at the moment.
There are strategic arguments for coal which do not apply to North Sea gas and oil. In a conflict, if we depended on those fuels we should be very vulnerable.
I have been glad of this opportunity to speak on behalf of the coal industry. I hope that, somewhere, someone will wake up to the fact that instead of contracting this industry we should be expanding it. The Government must wake up to the fact that they will shortly have a fuel crisis on their hands if they do not reach a fair settlement which will satisfy the miners in the struggle in which they are now engaged.
I fear that I must disappoint the hon. Member for Worcestershire, South (Sir G. Nabarro) by telling him that I cannot support his Amendment. Although the hon. Gentleman is alone on the benches opposite in advocating his case, collectively we on these back benches cannot match his oratory, let alone his histrionics.
My hon. Friend the Member for Midlothian (Mr. Eadie) dealt with the subject in detail. I will deal with it in general terms. I oppose the Amendment because it is obvious that we will need much more electricity generation in the near future. America is worried about the extent of its power generation, and one need only note the number of electrical gadgets which the hon. Member for Worcestershire, South has in his home to appreciate how much more electricity will have to be generated as we become more affluent.
Indeed, if everyone in Britain were as wealthy as the hon. Gentleman and could afford all the gadgets he owns, the borrowing requirements of the electricity industry would be greatly increased. This state of affairs is bound to arise when our homes and factories are equipped with more electrical appliances; and America's problem today will inevitably be ours tomorrow.
Arguments rage about the cheapest types of fuel for producing power. My hon. Friend the Member for Midlothian referred to the fossil fuels of natural gas, oil and coal. There is a great likelihood that in the near future—and I mean the very near future—stocks of natural gas and oil will have been completely exhausted. I understand that that point will be reached within 50 years. When it is realised that the world has sufficient resources of coal to last, at the present rate of consumption, for 300 years, it is clear that coal should be the fuel attracting our greatest attention.
Nuclear power has failed to reach expected power generation targets. Coal is, therefore, the answer. Scientists and industrial experts are pinning their faith on the new breeder reactor and they consider that this type of nuclear generation will be available before the two fossil fuels are exhausted.
The Chairman of the National Coal Board said a few months ago that we should be getting ready to introduce more coal-fired power stations. I hope that will come in the near future. This may entail extra costs for the electricity boards, but I am convinced that as an insurance for the future the borrowing powers concerned in this Bill will be necessary. To suggest, as the Amendment does, that they should be pruned is irresponsible and not far-seeing. Power stations are closing down. One closed in Portobello only today and in the weeks ahead more will close down because of the coal strike. Although they closed, certain care and maintenace will have to be carried out. That will mean that men have to be employed and they have to be paid. Reduced receipts from consumers will mean that the electricity boards will have greater difficulty in balancing their accounts.
We should appreciate that the coal strike will deplete the balance of generating boards. On that basis alone, and in view of the chaos and disruption which will be caused in the industry and to the people of the country, we should demand that the Government should intervene in the dispute and see that the miners get their justifiable demands.
Like other hon. Members, I am grateful to the hon. Member for Worcestershire, South (Sir G. Nabarro) for giving us the opportunity of this somewhat wide-ranging opening discussion. I had not intended to take part in it and I shall speak very briefly, but there are certain questions which have arisen that should be dealt with by the Minister.
My hon. Friend the Member for Midlothian (Mr. Eadie) rightly pointed out that in so far as we exercise price curbs on the industry, inevitably we increase its borrowing needs. I believe the Minister made this point a justification for borrowing powers in the Second Reading debate. The sheer magnitude of the increase in borrowing powers in the Bill means that the Government envisage some control of prices in the industry over a longer term. Is this merely a C.B.I. initiative, or are the Government contemplating, after giving the boards the borrowing powers, exercising control over a longer period? That would go against their doctrines, but nevertheless we should be told about this this evening.
We need guidance on the initial points made by the hon. Member for Worcestershire, South when he took us into interesting discussions which he and his colleagues had in earlier debates about accountability versus undue parliamentary intervention. There is a real problem here which perhaps we have not faced. To some extent in this sector of industry there has been such a change at the technical level in the period since those discussions that perhaps we should look again at methods by which we exercise parliamentary scrutiny. My hon. Friend the Member for Midlothian touched on a fundamental point when he said that it is about time we had a debate on energy. In a sense, part of the difficulty is that we have too many sectional discussions and debates on particular aspects and do not get round to a full and total discussion of the whole energy problem.
This is singularly difficult in discussing the electricity industry, because it is one of the industries in which technical advance is at its most rapid. The Magnox failures were a demonstration that we were carrying out a massive public investment right at the frontier of technical knowledge. One can therefore run into such difficulties as corrosion, which bedevilled Magnox, and these can hold up the future conception of where development should lie. There are several factors in dealing with the energy situation which make what one hon. Member called the extrapolation of statistical trends in order to devise medium and long term plans very difficult. It is difficult to extrapolate not only total demand for energy but relative demand—that is, demand for individual components within fuel supply.
Yet, as has been said, we cannot abandon our attempts to have medium and long term planning. It is too fundamental. My hon. Friend the Member for Bristol, Central (Mr. Palmer) pointed out that it is fundamental to our whole concept of the industrial society. We simply cannot abandon our attempts to improve our planning techniques. The background factors, not only technical but in relation to costs, are continually changing. This point, too, has been brought out in the debate.
The electricity industry, therefore, needs flexible planning—more flexible than perhaps the normal governmental machinery will allow for. It needs continuous revision of planning. This goes against the normal White Paper type of approach in dealing with different aspects of our economy. The danger of the White Paper approach, with the one set debate, is that a Government can produce, say, a White Paper in 1967 and spend the next five years defending it to show that they were not wrong in 1967, instead of recognising—and perhaps this is a fault of the political system in the way we make party points whenever we can—that, if we are to have flexible and continuous planning, as one must when working in such areas of uncertainty, what we need rather than set piece debates every five years is more continuous contact between industry and Parliament, between the planners in industry and back-bench Members as well as Ministers, so that each can assess the importance of changes taking place.
Industry is as vulnerable as the Government—whether the Government be Tory or Labour—to standing by a decision once made and defending it well beyond the time when it is really not defensible. I hope, therefore, that the Minister for Industry can put forward suggestions as to how we can deal with the total energy problem and achieve a closer and more meaningful scrutiny of the cost, technical and demand changes taking place in the electricity industry, with which we should keep in touch.
As hon. Members on both sides have pointed out, one cannot forget that elec- tricity is fundamental to the morale of one of the major fuel sources—the coal industry. The uncertainties have been intimated—for example, in the Financial Times quotation given by the hon. Member for Worcestershire, South. There is also the doubt that has been cast over the proposals in relation to Drax for the coal firing of a power station. The Minister should give us the most up-to-date information he can in relation to Drax, because the miners will want to know if there have been even more changes of policy in relation to future demand for coal.
The handling of the present coal strike has also been brought into the debate. I would only put two points on this. If the Minister and the Government persisted in their endeavour to defeat the miners, then two things would emerge from it. First, the run down of manpower in the mines would become even more rapid than it has been in the past. Secondly—and something at which I should have thought the hon. Gentleman really should look very seriously—if the Government defeated the miners, as they obviously would like to do, that would bring nearer the day when Governments are confronted with a combined public sector wage attack or wage negotiations. If one thinks of the fears that were expressed because of the coincidence—and it was a coincidence—of the timing of the miners' dispute with the dispute that possibly could have arisen this week in electricity supply, and if one thinks that in future if one of these were defeated—if the miners, for example, were defeated on this occasion—we could have the various power unions getting together and putting concerted pressure upon the Government. [Interruption.]
If I may finish this point, then the hon. Gentleman can see why it would be so dangerous, not only in terms of morale but in the long term so far as he is concerned, in achieving the kind of free negotiation I gather he is about to tell us he wants to have taking place.
The hon. Gentleman is making a fairly long reference to the dispute which is currently the subject of discussions which have engaged the attention of my right hon. Friend the Secretary of State for Employment. I would only ask him to accept that it is no part of the purpose of the Government in any sense or form whatsoever to—to use his words—defeat the miners. This is not the approach at all. That is no part of the objective. This really has nothing to do with the subject under debate, I must admit. But the hon. Gentleman having strayed so far into the matter, let me hasten to assure him that that is no part of the make-up or intention of the Government.
I am delighted to have this reassurance. Perhaps our suspicions are ill-founded. Perhaps it is just that we all have memories of the way an attempt was made to achieve [Interruption.]
I believe it does, in that we are discussing future proposals for the expansion of the electricity industry, and that expansion inevitably depends upon whether it continues to have a 50 per cent. fuel supply, namely, via coal. I was about to leave that point with one sentence, if you will allow me, and to say that our suspicions on this side, if ill-founded, are probably a hangover from the Government's intervention in relation to the Post Office workers a year ago. I have listed the various points in the two Amendments to which I feel the hon. Gentleman should give attention in his heply. I hope he will make a point of dealing with these.
I must apologise to the Committee and especially to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) for the fact that I missed the opening part of the debate. I hope I did not miss too much of his contribution to the Committee. I was glad to be able to hear what I did and particularly glad that he reminded me of those happy carefree days year ago when together we marched side by side—or rather I marched under his whipping—into the Lobby to vote on a particular Motion which he had introduced. Of course, that was not the only occasion on which we found ourselves together. There were many such occasions, and I recollect them with great pleasure.
The hon. Gentleman was absolutely right to take the opportunity of this debate to remind me of the point of view which by my vote in support of his Motion I then represented. He will recollect, having looked most carefully at the wording of the Motion on which we voted, that it was concerned with a particular situation in the coal industry. The terms of the Motion were that
this House … declines to give a Second Reading to a Bill which will extend the ability of the National Coal Board to borrow without adequate parliamentary control, and which permits a large increase in public expenditure upon an undertaking which has made continual losses despite heavy capital investment."—[OFFICIAL REPORT, 10th May, 1956; Vol. 552, c. 1452.]
A number of factors there single that out and put it in rather a different context from this debate. The major difference is the reference to the continual losses in spite of heavy capital expenditure.
The hon. Member for Bristol, Central (Mr. Palmer) was right to remind the Committee that last year was the first in which the electricity supply industry had made a loss. It is true that it has had enormous sums of capital expenditure invested in it. But, as has been fairly recognised by all hon. Members, it is a highly capital-intensive industry, and we should not have electricity supply on tap to the extent we have but for the continual annual substantial investment of capital in new plant and facilities and in developing the system. That is essential in the industry. It consumes capital at a tremendous pace.
But I understand my hon. Friend's major point, which was to ensure that there is adequate parliamentary scrutiny of these matters and that Parliament is given an opportunity to debate regularly the affairs of the industry, which is in receipt of such a large sum of publicly-provided finance. The principle my hon. Friend enunciated is absolutely right, and I am sure all hon. Members share his view. But there are a number of different ways to achieve what my hon. Friend wants. It need not be done by means of an annual order. It certainly should not be done by means of an annual Bill, because that would be impossible. An opportunity is provided by what has become an annual feature of our proceedings, the regular debates on the capital expenditure White Paper, in which forecasts of the capital expenditure requirements of the electricity supply industry are given. It covers a four-to-five-year span and gives as far as possible the rolling programme ahead, anticipating the annual tranches of capital that will be required by the industry. It would be perfectly possible, and wholly appropriate, for a debate on that White Paper to be concentrated on the electricity supply industry if that were the choice of the House. It constitutes a major debate.
I must address my mind not only to some of the very interesting points raised during the debate but also to the Amendments——
I am sorry to interrupt the hon. Gentleman, because he has listened very patiently to a fairly long introductory debate, but before he leaves the point about an annual debate I must say that I am not sure that the set-day debate is the right sort of occasion for the very detailed analysis which hon. Members on both sides want. With all good will, a full day's debate is inevitably somewhat superficial. The Minister in winding up cannot deal with all the points. It would often be helpful to have the technical experts. We require something more interrogatory than an annual day's debate.
It is very difficult to get the formula absolutely right for the sort of scrutiny to which the hon. Gentleman referred. I agree that the Committee stage of a Bill like this gives hon. Members a golden opportunity to examine the detail. Of course, what the hon. Gentleman has said is right, but the tendency of these debates is to cover such a wide range of detail as to make it almost impossible to answer each point when replying to a debate. Incidentally, if that should be the case with me in this debate I hope that hon. Gentlemen will understand. If there is any particular point I omit, I shall do my best, of course, to follow it up. There are also published by the C.E.G.B. itself excellent statistical booklets containing all the detailed information, and I know that they are available in the Library of the House. They constitute a great source of information.
They are available to the hon. Gentleman and I know that he is perfectly capable of looking after himself.
One thing which will have been noted by looking at the statistics is the extent to which coal consumption has increased—I think it is something like three times—since the end of the war. This has been the trend of the way things have gone. The tendency is to imply that less coal is being consumed by the electricity industry at the present time. Obviously, by comparison to what it was in the early post-war years, the annual rate of consumption has grown very substantially indeed, until we are talking now of almost 70 million tons, a very considerable proportion of the total output of the Coal Board itself, and it is obviously right, in these circumstances, that the supply industry needs to ensure a reasonable balance.
It recognises the degree of its dependence on coal—certainly at the present time, unfortunately; but it recognises it at any time. I speak of it as a sort of neutered industry; I am thinking of individuals who run that industry. I know they recognise their social obligations towards sustaining or assisting in sustaining the mining industry, but equally they have a very difficult job to do, and that is to ensure that their own industry's books are balanced, that they show a proper return from the substantial sums of capital invested in the industry, and so they have to watch costs very closely indeed and get a reasonable balance.
One of the points my hon. Friend the Member for Worcestershire, South has proposed in his Amendments is that the interim borrowing limit to be made available to the boards and the Electricity Council in England and Wales should be reduced to what would become a level of £400 million above the present limit. The present limit is £4,400 million and my hon. Friend is suggesting that it should be £4,800 million. Quite honestly, that would be fairly quickly taken up.
The effect of that Amendment would be that the Electricity Council's borrowing powers would be fairly rapidly consumed. It was expecting to need to borrow £250 million in 1972–73, and it will need a further £300 million by 1st April, 1973, in order to redeem compensation stock. Under the Amendment an order raising the borrowing limit would then be needed before the end of March, 1973. This would be an unusual step to take. It is a step which I recognise my hon. Friend may well wish to have taken but it would mean that what has been, I think, fairly well accepted as reasonable practice in the past would give way to a regular annual debate on an order of that kind. It might—I do not rate this very highly in my argument for my own case—make it more difficult for the industry itself to plan ahead with any degree of certainty and security.
I apologise to my hon. Friend for intervening. I am not sure whether he had returned from his Cabinet papers at the point where I quoted the intervention I made in his Second Reading speech when I referred to Ministerial decisions being impressed as a settlement on the House of Commons. That is what I am objecting to. I want the House to be able to debate Ministerial decisions. To reduce it to its most obvious example—the case given by the hon. Member for Midlothian (Mr. Eadie)—if the C.E.G.B. goes on preferring nuclear-powered and oil-fired stations to coal-fired stations, I want to be able to challenge the Ministerial decision. At present there is no available parliamentary method of doing that. I have to wait six years to 1977–78 for another Bill or I can do it on an affirmative Resolution a couple of years hence. On that system we have an hour and a half between 10 o'clock and 11.30 at night which is wholly inadequate for matters of this magnitude.
My hon. Friend can debate the industry on the affirmative Resolution procedure before the end of the six-year period and this is the purpose of having the interim limit arrangement. It is an arrangement which owes a great deal to my hon. Friend who is largely responsible for ensuring that it was not done in a single tranche but that there was this step-by-step approach. We need to be fairly reasonable and rational and not to do it too frequently but we should ensure, by other means, that a careful watch is kept over the affairs of the industry which is in receipt of such a large amount of money.
The maximum borrowing limit is also to be reduced through an Amendment tabled by my hon. Friend. On its own the Amendment does not really serve any particularly useful purpose. The Bill provides for any increase in the borrowing limit beyond £5,200 million to be made by order subject to the affirmative Resolution procedure. In that way it will be taken up and will provide an opportunity for debate. It may be claimed by my hon. Friend that there is a large gap between the interim limit and the ultimate limit. I am sure we accept that it does not follow that the first borrowing powers order extending the limit to beyond £5,200 million would extend it to the whole of the extra £1,300 million. We have had experience of this before when it has taken more than one step to do this.
There are fairly regular opportunities for Members to question Ministers about the discharge of their responsibilities for the money spent in and through the industry. The hon. Member for Swansea, West (Mr. Alan Williams) returned to the point he made on Second Reading about the impact of the C.B.I. initiative on the finances of the electricity boards. There is no doubt that tariffs are lower today than the industry would wish. This is certainly in recognition of the initiative taken by the C.B.I.
It is true that the Government have no statutory powers over electricity tariffs, which statutorily are the responsibility of the electricity boards, subject to the normal consultative processes with consultative councils for the areas concerned. It has been the long-established practice under all Governments for each board to consult the appropriate Minister before introducing major price changes, and where Governments have tended to exercise a degree of influence this has been made clearly known. It was certainly so in the period from October to December, 1970, when the Electricity Council came to the decision to recommend a limitation in the increase of domestic tariffs. That undoubtedly will have had some effect on the total revenue of the boards.
It is hard accurately to quantify this effect. I have been trying to get out figures which might help the Committee in relation to the impact of the C.B.I. initiative but it is not a straightforward process. I have rough figures of the possible effect of restraining prices, but they ignore any economies in cost which have come about at the same time.
If the price increases of 5 per cent. which the boards are now introducing, 12 months after the previous price increases, had been six months earlier, the electricity boards might have expected extra revenue of about £25 million in the present year. Alternatively, if the price increases had been twice as large, they would have brought in an extra £50 million in a full year. These are rounded figures which do not precisely meet the point which hon. Members had in mind, but they give the order of magnitude as far as I can judge.
My right hon. Friend the Chancellor of the Exchequer when announcing the C.B.I. initiative in July indicated that he would take into account its effect on public sector industries. Accordingly, we are seeking detailed information from the industry about the likely impact of price restraint on its finances, with a view to determining what financial arrangements may be needed to restore the industry to a commercial footing. I cannot spell out the future more closely, but I hope what I have said gives an indication of present thinking.
The electricity boards are members of the C.B.I. It therefore perhaps would not be unreasonable, given the assumption of the C.B.I. restraint, for electricity boards to adhere to it. Are the boards subject to additional Government pressure on prices as well?
I was referring back to 1970–71 when there was a proposal, which I think was generally known, to raise domestic tariffs substantially. At that time, in the normal processes of consultation with Ministers, the view of the Government was made known and accepted.
While I certainly approve of what the Minister has said—and obviously this financial process is now due, if not overdue—he must couple with his statement a realisation that the industry is required by the Treasury to show a return of approximately 10 per cent. on the net capital employed. Surely that Treasury requirement must also be abandoned if there is to be continuing price restraint. Obviously, the industry cannot show a return of anything like that figure if we continue to confine tariff advances within certain limits.
My hon. Friend is developing an extremely important point which grew out of the words he heard me use when I spoke about examining the impact of price restraint on the finances of the industry with a view to determining what financial arrangements may be needed.
If my hon. Friend prefers that, I am prepared to go along with him and he can have his corollary if he wants it.
The hon. Member for Midlothian asked about the fuelling of power stations. He knows well enough the extent to which initially this lies with the Generating Board and it is proper that that should be so. They have to determine in their own judgment the best way to run the industry and to deploy the vast amount of capital resources invested in it to ensure the most efficient distribution of electricity. This does not mean to say that, in arriving at a final decision, although broad consents are given other factors than the straight economic case are not taken into account. They certainly are and always have been in the past. This was so during the period of office of the Labour Government and of the previous Conservative Government.
It was in the period of the previous Conservative Government that the decision was taken to keep Kincardine, Cockenzie and Longannet as coal-fired power stations. But other factors no doubt influenced the Labour Government when they came into office in deciding to go ahead with Inverkip as an oil-fired power station. These matters have to be balanced out. Security of supply is one consideration, economic cost is another, and the social impact of decisions by a major buyer of coal in mining areas is a third consideration.
I am aware that we have a number of other debates still to come, and I hope I have been able to answer some of the points which have been raised. I hope my lion. Friend will agree that we have had a helpful and interesting short debate so far, and that we shall have regular opportunities to study the affairs of this industry during the next few years.
It would be churlish of me not to pay a tribute to the way in which my hon. Friend has dealt with this important series of Amendments. I would express my gratitude to him. In view of the civilised and rational way in which he has spoken, I beg to ask leave to withdraw the Amendment.