I beg to move,
That this House takes note of Commission Documents Nos. R/1284/77, R/1292/77, R/1294/77, R/1325/77 and R/1417/77 on Energy.
Hon. Members will have noted that of the five Commission documents on energy which we are to debate this afternoon three related to energy conservation. I believe that this indicates the level of concern felt within the Community over patterns of increasing energy consumption in Europe. As Minister in the Department of Energy with special responsibility for energy conservation, I should like to thank the Select Committee on European Secondary Legislation for its assessment of the importance of this major area of energy policy.
The saving and the more efficient use of energy are indeed essential components of both a national and Community energy policy. Without them, we cannot hope to reduce our dependence upon imported energy, particularly oil. That is an important objective now and wilt become more so in the future given the longer-term perspective of declining world oil production.
Energy conservation is of international concern. President Carter's statement of 20th April about energy policy placed heavy emphasis on the need for energy conservation. At the Downing Street Summit in May world leaders named energy conservation as one of the seven most urgent tasks facing the Western industrialised economies. At the Council of Energy Ministers on 29th March Ministers considered a Commission document on an intensification of the Community's programme for energy saving—Document R /479/77—which the House will recall debating on 17th May. The Council stressed the importance of energy saving and urged the Commission to develop its proposals further.
The Energy Council on 14th June had preliminary discussions on these three further Commission documents which deal with energy saving. These are R/1284/77, R/1292/77 and R/1294/77. They have been remitted to officials for detailed examination. The House will appreciate, therefore, that the Commission's proposals are still at an early stage of consideration and I welcome the opportunity afforded by this debate to hear the views of the House.
I cannot answer that specific question. I can tell my hon. Friend—I shall say a little more about this later—that I emphasise the point that I have just made: that we are in the very early stages of discussion of these documents, and I shall be spelling out our view of them in a moment or two. I conclude from that, as he no doubt will, that it will be some time before final conclusions are reached.
Let me take each document in turn. R/1284/77 on a Community action programme for the rational use of energy, comprises a draft directive and three draft recommendations based on the work of various specialist groups in which British experts have played a part and which relate to the performance, maintenance and regulation of heat generators and the insulation of the distribution system in new buildings—in other words, pipe-lagging and such work.
There are considerable problems concerning mandatory measures at this stage in the area covered by the draft directive. It would present administrative and technical problems of harmonisation with existing practices and statutes. The Commission's proposal would, however, be acceptable to us if it were presented as a recommendation rather than a direc- tive. The draft recommendations concern the control of the use of heat in new buildings the rational use of energy in industrial concerns, and the setting up of advisory bodies on combined heat and power and district heating..
We welcome the impetus given to the strengthening of national programmes embodied in the recommendations, which also appear to be generally supported by other member States. We hope very much that they will be submitted to the next meeting of the Energy Council and be approved by it.
The second document—R /1292 /77—proposes a draft directive on energy savings from the modernisation of existing buildings—except industrial buildings—with the aim of reducing total final consumption of energy by 5 per cent. Effective implementation of the measures would require member States to set standards and provide financial incentives in cases where the return on modernisation schemes might not attract private investors. The main aim of the measures proposed is to reduce energy consumption for space heating.
We welcome the objectives of the draft directive, particularly its dual aim of energy savings and job creation. However, again, consideration of its implications is at a very early stage. The proposal would involve significant new public expenditure commitments, and we therefore consider it essential that the United Kingdom should be able to exercise full control over both the speed and degree of implementation of any such measures. As for the Commission's estimates for the job creation potential, our first impression is that they are overoptimistic.
Generally, our view is that further progress in the area of this draft directive must be based on what member States consider feasible and realistic. This apart, it is premature to form any view on the way that the measure should eventually be expressed. Hitherto, measures on energy conservation adopted by the Council of Ministers have been in the form of recommendations rather than directives, and member States still have to consider whether these proposals would be appropriate in a directive form.
Document R/1294/77, from the Commission proposes two new regulations, one covering projects on energy saving and the other on alternative energy sources. Both topics are of major consequence to Europe and to us in the United Kingdom. The effect of these proposed regulations would be to enable the Commission, using Community funds, to assist in the demonstration of new technological advances with the aim of promoting more general use of the latest energy-saving processes and equipment throughout the Community.
We in the United Kingdom are well aware of the risk elements which may inhibit the introduction of new technologies. In considering these two draft regulations with our European partners we recognise that demonstrations, following naturally from research and development work, with support from public funds can be worth while. What is not so clear is which projects really need and merit such support, what is the most efficient way to arrange any such support, and to what extent it should be on a national or a Community basis.
These draft regulations were on the agenda of the Energy Council on 14th June. We agreed then that the proposals deserved careful further study. We need to find the best way to achieve the goal that is, by general consent, worth achieving. We shall particularly need to give further thought to the financial commitment which may be involved. As they stand, the regulations specify no financial limit, and even though the Commission indicates the level of support it envisages, we shall have to consider what budgetary control procedures would be necessary.
Another important area needing further investigation is how projects will be selected and by whom. For example, should we aim to ensure that projects attract Community funds only if they are potentially suitable for application generally in the Community? How best can one manage those projects where, as might well be sensible in some cases, there is a mixture of national and Community financial support as well? These are just some of the questions which require close examination.
Document R/1325/77 gives the Commission's first ideas on fostering the development and protection of energy investment in the Community. After an initial airing, the June Energy Council remitted it to officials for further examination, and again this is still only at a very preliminary stage. The Government have in general an open mind towards the ideas set out in the paper, but we shall wish to have a lot more work done on them. We therefore welcome this early opportunity to hear the views of the House.
The hon. Member is anticipating my next remarks. He is probably aware that that is just what 1 am about to come to. Let me stress to him, however, that we have not abandoned our position on the MSP.
The paper discusses a number of possible methods of support—for example, investment loans, loan guarantees and long-term contracts—and concludes that there will be a continuing requirement for loan finance for energy projects in the Community. It is proposed that loans and loan guarantees should be made to individual projects and that the Commission should be asked to identify such projects. It is also proposed that member States should endorse principles governing long-term contracts.
The question of loans will have to be examined in the general context of Community loans, particularly in the context of the further examination being given by Finance Ministers to the Commission's recent wide-ranging proposals for a new Community loan instrument to finance priority Community structural investments on a substantial scale. We shall certainly consider the need for a new initiative of this sort for energy investment.
We do not yet know how big a share of the funding the Commission envisages for energy. The Commission has agreed to provide more detailed proposals for study by Finance Ministers. These will have to be considered in the context of the Community's overall borrowing policy. Our experience in the United Kingdom up to now is that there is little evidence that investment in energy production is hampered by lack of funds. We must also, of course, bear in mind in this context that the European Investment Bank has decided to expand its activities in energy and its governors will be reviewing the size of its capital next year.
On loan guarantees, we recognise that there could be a stronger case for introducing Community guarantees of loans made under existing Community and national instruments. Again, however, we have not seen any evidence yet that an extension of loan guarantees is necessary. We would anyway need to have a clearer idea of the technical nature of the risks they could reasonably be expected to cover and of the feasibility of assessing and underwriting those risks. We would foresee great difficulties arising in this area of assessing and underwriting risks and, at the very least, we would agree with the Commission's suggestion that the risks taken in guaranteeing loans would have to be limited. The idea of fostering long-term contracts also needs clarification. We need to know much more about the respective obligations proposed for Governments on the one hand and the commercial parties on the other.
We need to bear in mind the commercial realities, because these may vary from sector to sector. For example, in the gas sector the nature of the business makes long-term contracts between the producers and the distribution organisation—in our case, the British Gas Corporation—more or less a commercial necessity. On the other hand, in the case of oil we understand that by and large in present circumstances oil-producing companies are not particularly interested in looking for long-term deals. It would probably be difficult to try to move against what is the prevailing commercial wind in pressing that idea.
As for North Sea oil, there is no shortage of funds for investment and longterm contracts are not required to induce and support investment. In contrast, however, the commercial situation in the coal sector, at a time when the market is depressed, means that the idea could perhaps represent a promising avenue of possible support. These are our initial thoughts on the proposals and we shall need to obtain more information on them and hear hon. Members' views before we come to firm conclusions.
The Under-Secretary of State has been non-committal and has not said very much. Will he help the debate to move forward by at least giving an assurance that the Government are committed to the EEC's recommendation that there should be a 15 per cent. energy saving target by 1985 and that the Government will implement proposals that will ensure that that applies to this country, too?
I was being careful to give the assurance that we were being non-committal in respect of these documents. As for our commitment to energy conservation—
Perhaps I may complete my answer to the point raised by the hon. Member for Derbyshire, South-East (Mr. Rost). I shall give way to my hon. Friend shortly. As for our commitment to EEC energy conservation measures, I assure the hon. Gentleman that this is an area in which we have been keen to make progress. I attended the Energy Council to make that point. We committed ourselves to further work by a new committee within the Community. We look forward to progress in that area. It is one of the areas within Community policy in the energy sphere in which we think that there are opportunities to make significant progress rather more quickly than in other areas.
Am I to understand from what my hon. Friend has continued to say that this country was not consulted on the draft directive in all the months that it has taken to bring it to fruition? Am I to understand that the United Kingdom was not in any way consulted so that its views could be known?
That is not what am saying, as I think my hon. Friend well knows. I was saying that we need to be convinced that the two subjects covered by the proposed directives are suitable to be dealt with in the form of a directive rather than as recommendations. We are not alone within the Community in taking that view. Discussions are at a preliminary stage. We shall have to see what views emerge from discussions between officials and at further Council meetings.
There is no reason to suppose that we are not willing to make progress along generally accepted lines. We need to give careful consideration to the subject before we accept directives. My comments represent our initial thoughts 'm all these proposals. We shall need to give further careful consideration to them and to obtain more information about them.
The final document—R/1417/77— is a purely descriptive report by the Commission of the energy situation in the Community during 1976. It also gives its view on the outlook for the current year. By its nature it contains no specific proposals for action. It may be that some will find that some of its assessments of the short-term energy supply and demand situation are open to question.
I draw attention to the view expressed in the document that energy consumption will again rise this year. We need to ask ourselves how much of that increase will really be a function of heightened economic activity and how much will be energy waste. What will be the real level of energy efficiency? Although the document does not propose specific measures, it serves as yet another warning and underlines once again the crucial importance of the energy-saving issues posed by some of the other documents that I have discussed.
The Under-Secretary of State has presented these documents in a competent manner. The hon. Gentleman will forgive me when I say that I have heard more exciting speeches in my time in the House. If I may say so without being unkind, it is the first time that I have been persuaded that there might be some merit in the Congress system of writing notes into the record. He has competently explained what is in documents that we already have.
Although we do not in any sense regret the presence of the Under-Secretary of State, we have some important European documents before us and the absence of the Secretary of State and the Minister of State is to be regretted. The Secretary of State did me the courtesy of explaining why he would not be able to be present.
I know why the right hon. Gentleman is not here but I am slightly surprised at his choice of priorities. However, the fact is that he is not here. It is a European debate, and whenever such debates emerge one wonders whether the right hon. Gentleman is all that keen to be present. On the other hand, the Minister of State could not possibly be accused of holding the same views. I think that it was my hon. Friend the Member for Ross and Cromarty (Mr. Gray) who suggested that the Secretary of State and the Minister of State might be paired for the debate. I am not sure whether the Under-Secretary of State will choose to confirm that in his reply.
Perhaps I might intervene in the hon. Gentleman's rather acid introduction and confirm, as he has somewhat reluctantly stated, that my right hon. Friend the Secretary of State did him the courtesy of seeing him and explaining in some detail why he would not be able to be present for this debate. My right hon. Friend also wrote to the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond). My right hon. Friend is looking after this country's oil interests, those interests which were so woefully neglected by the previous Conservative Government.
I do not want to pursue this matter. Unfortunately, the Minister is on rather weak ground. The debate should have started at half-past three, but because a statement had to be made it did not begin until a quarter past four. As the statement was more important, the Secretary of State was here at half-past three and stayed in the Chamber for 45 minutes. He did not ask to see me to explain why he could not be here for the debate. We met about another matter, and his absence during this debate was mentioned in passing. If the hon. Gentleman thinks that this is an acid introduction, I must warn him that I shall start laying the vitriol when I come to comment on what I consider to be more important measures. I assure him that this is a positively benign beginning.
Whatever one's feelings about Europe, there must be some concern at the way in which energy policy is presented to the House and proceeds through the various stages within the European framework and within the House. The least controversial document is the one to which the Under-Secretary of State referred at the end of his remarks. That is the statistical and forecasting document on energy. It is an accurate record of what happened in 1976 and a forecast of what they expect to happen in 1977.
Forecasts are normally produced in advance of the period about which they are made. This document did not emerge until the middle of June and we are now two-thirds of the way through the year to which it refers. I assume that it relates to a calendar year and not some new European year about which I have not heard. It is odd that we should be debating forecasts when we are already two-thirds of the way through the year.
My hon. Friend the Member for Derbyshire, South-East (Mr. Rost), whom I welcome to the Front Bench, will be talking about two particular papers on subjects in which he has taken a great interest over the years. They concern energy saving and the rational use of energy. I shall, therefore, say little about those subjects except to make one point to the hon. Member for Rother Valley (Mr. Hardy), who also takes an interest in these subjects. He must have been as surprised as I was to hear the Secretary of State say that Drax B will burn coal in the most efficient way that it can be burnt. The hon. Member knows as I do that that is palpable nonsense. The Secretary of State meant to say that it would he burnt as efficiently as it could be burnt in a power station of that type. That is different.
The hon. Member could be a little fairer to my right hon. Friend. The Government are encouraging the National Coal Board and others who might be interested in a more efficient use of energy, as we can see by the fluidised-bed combustion experiment taking place not far from my constituency. The hon. Member will be the first to admit that we are some years away from the application of that developing technology on a commercial scale.
I believe that we shall have a statement shortly on the Plowden Report. That report shows our position as bottom of the league in thermal efficiency in power stations in Europe. I accept that there are reasons for that. This is a technical and complex subject. But it is a matter of concern when the Secretary of State says that Drax B will burn coal in the most efficient way that it can be burnt, because it is not true. The hon. Member for Rother Valley has made a fair point about fluidised-bed research but I was not thinking about that. There are more efficient ways of burning coal than in conventional power stations. We must recognise that if we are to go for the more rational use of energy. We should keep it in mind.
I recognise that the documents are further rather tentative and hesitant steps towards a cohesive European energy policy. I recognise that they are, perhaps, the beginnings of the European response to President Carter's initiatives in the United States.
I wonder whether a Community energy policy is necessary in some areas. I wonder whether it is imperative to have a Community initiative. The snag about Community initiatives is that they can involve considerable delay. They can be taken as excuses for not proceeding with national programmes that may not need Community rationalisation and equalisation. Energy saving is an example.
I shall remove my acid hat and say something kind about the Under-Secretary of State. Part of his job is to promote a greater understanding about the importance of energy saving. From Press releases and cuttings, I know that he moves around the country trying to persuade industry and others of the importance of energy saving. But we still have a long way to go.
The gains in some areas are staggering. One can find companies which are alert to the importance of energy saving which say that the first 10 per cent. of the saving can be made almost without effort. They have only to look at their programmes for a short time and they can save 10 per cent. Some companies find that the saving of the next 10 per cent. is almost as easy. It is depressing to think that the majority of British industry is wasting up to 20 per cent. of its energy as we speak now. I shall not go through the many examples of firms that are successful in saving energy. A firm in my constituency worked continuously throughout the period of three-day week without having to close down because it managed to save 60 per cent. of the power that it normally used.
The documents may delay our national efforts. We know that the pay-back in energy saving is one of the most impressive features of it. Not much in the way of financial inducement should be required. Perhaps financial inducement could be used as a further publicity weapon for a short-term programme. It is interesting that President Carter's proposals contain a taper on tax allowances. The allowances start at a high level for improvements but they taper off the more energy that is saved.
It is interesting to note that the proposals in the documents are close to those which some of my hon. Friends tabled as amendments to the Finance Bill last Thursday but which were not selected. We believe in the importance of giving further encouragement and publicity in support of energy conservation. Whether the European method is the best way to go about it is something that we shall consider when listening to the debate.
The biggest disadvantage of a European initiative is the delay that it involves. Those listening to the Under-Secretary of State and those who have read the documents will have noticed the types of phrases that are used. They include such words as "needing further study", "the Council of Ministers has been meeting for some time", "We reserve our position" and so on. The Government are obviously not sure how effective some of the measures would be. Balls are being thrown backwards and forwards between officials. One has the nasty feeling that they are being bogged down and that nothing will come out of the proposals.
The other main issues involved are those of nuclear safety and the protection of energy investment. The need for a nuclear safety code is outlined. Some of the proposals would achieve widespread agreement, but I am not sure that there is particular benefit in having a European as opposed to an international nuclear safety code. Clearly, there have to be international codes as well. This is an area in which we can claim a proud record. Our standards are as high as anywhere in Europe.
On the question of protection of energy investment, we again have a position of our own. We have different problems from those of other countries in Europe in our energy situation and supply. Support from Europe for the British coal industry is an important factor, and I hope that the Under-Secretary of State will confirm the details of the latest loan or grant from Europe in support of our industry, announced at the end of last week. This latest move is further confirmation of We amount of money that Europe is putting into the British coal industry.
In studying the further implications of some of these proposals, one sees the statement, which the hon. Gentleman repeated today, that there was agreement with the Community that the risks involved in guaranteeing loans should be limited. That is not a world shattering matter on which to reach agreement. If that is the extent of the agreement reached so far, it shows just how difficult it is to make effective progress.
As I have said, my hon. Friend the Member for Derbyshire, South-East will be talking particularly about the rational use of energy and energy saving, in which he has taken so much interest. This is the second occasion this Session that we have been able to debate European energy matters, and we hope that our debates and these documents will help create a feeling of the importance of the collaboration with Europe on energy problems and will impart some much-needed impetus to a move forward both in Europe and in our own direct national interest. I hope that we can look to Ministers to play their part in this process so that we can get the sense of urgency that Europe should start to show if it is to respond in the way that it should to the initiative of the President of the United States.
I have been interested in energy matters since 1958 when I worked in the coal industry—a time when small hills of coal began to appear in our coal fields. Their appearance aroused my particular interest in energy supply and demand. But it seems to me that most people, both in this country and in Europe, gave scarcely a passing thought to such problems until 1973, when we all had the fright of our lives. I thought then, with the increase in the OPEC oil prices, that we could at last seriously get to grips with what had clearly been a certain trend for a long time. Unfortunately, that mood of 1973 quickly vanished.
I believe that one of the reasons why it vanished so quickly was that the politicians took no part in leading discussion of energy problems. Indeed, sometimes they seem deliberately to have avoided taking part in such discussion. I have been staggered by the complacency shown by leading politicians in our countries.
When my right hon. Friend the Secretary of State for Energy went to Brussels at the beginning of the year on assuming the presidency of the Council of Energy Ministers, I tackled him about this apparently complacent attitude on the part of his Department. He dismissed my accusation and pointed to the money that we were sinking into North Sea oil. All that was quite correct, but it did not answer my point. The real issue then and now is that what should be done outside the North Sea is scarcely being tackled. Indeed, the whole question of the rational use of energy has hardly been tackled either in the Community or in this country.
The hon. Member for Bridgwater (Mr. King) was right to say that these proposals from the Community are innocuous. Indeed the Community's proposals a year ago consisted of five recommendations which were nothing more than exhortations to people to be careful and sparing in the use of energy. It is depressing that there should be this apparent apathy among politicians and that it has been so prevalent for so long.
My hon. Friend should take heart at the fact that he was able to get a reply from the Secretary of State. When I asked my right hon. Friend in Paris why he was preventing cheap coal from coming into the country for the benefit of the housewife, he promised to write to me. The Minister of State a few weeks ago told me that I would get a letter. I am still waiting. My hon. Friend should, therefore, be honoured to have received a reply.
I shall not enter into the argument between my hon. Friend the Member for Hackney, South and Shore-ditch (Mr. Brown) and my right hon. Friend the Secretary of State. I hope that as a result of his intervention my hon. Friend will get a reply sooner rather than later.
Because of this apparent complacency on the part of the politicians, the vacuum created has been filled largely by citizens' action groups. We see the unusual spectacle of thousands of people marching in demonstrations to do with nuclear power. One of the tragic consequences of their filling the vacuum with such protests is that all kinds of accusations and statements are made which are nonsense and, therefore, rational discussion of the problems flies out of the window.
For example, there is the statement that a handful of plutonium scattered in the atmosphere will destroy mankind, but plutonium is about one tenth as toxic as, say, lead arsonic. This situation has come about largely because of the failure to assess what is actually happening with actuarial certainty. Demand for energy has an actuarial certainty about it so that we can be fairly precise, unless, of course, there were a catyclism that would render the whole thing academic.
Following all the complacency that has been shown about long-term developments, I am grateful to President Carter for having firmly put the whole subject at the top of the agenda. It is surprising that such an initiative should have come from the President of a country so greatly blessed with enormous reserves of coal, oil and uranium. Yet it is Mr. Carter who has begun seriously to tackle the job that we in our countries have failed to tackle for the past 20 years and certainly since 1973.
The hon. Member for Bridgwater was a little critical of the approach on a Community basis, and I think that he was right. It is not easy for the Community as such to start introducing policies for the rational use of energy and going into little details when situations differ from country to country. Yet it is important that on a major issue of principle the Community should try to find and develop a Community policy. It is in this sense that we should look at policies emanating from the Community, considering how effective they can be on a Community basis in tackling major issues of principle.
I want to speak particularly about the breeder reactor. The attack on the breeder reactor is coming from the heart of the American Establishment itself—I suspect that it comes from Mr. Carter himself. He has been logical about it and his sincerity has been matched by his actions. He has halted America's plutonium reprocessing and is re-assessing breeder research in the United States, and so on. While one may say that he can afford to take this action because of America's own resources of energy, there is nevertheless a logical consistency in his proposals.
As a result of Mr. Carter's concern about the proliferation of atomic weapons, we in the Community are rapidly approaching a major issue that ought to be decided quickly. It has been decided in some countries but, apparently, not yet in the United Kingdom.
I read recently a statement by my right hon. Friend the Secretary of State for Energy at a conference organised last December by the British Council of Churches. He was speaking about the difficulty of balancing the conflicting demands for oil, coal, gas, nuclear power, the breeder reactor and so on. It seemed to me that my right hon. Friend had still not grasped that the major issue was whether "to breed or not to breed". That must be decided clearly in principle, and it has already been decided in some countries. I regret that my right hon. Friend does not seem to have grasped that.
I suppose that every sensible man will accept President Carter's approach in regard to plutonium since atomic weapons can be made comparatively easily from plutonium. The President's anxiety is therefore clearly valid and sensible. However, President Carter's approach has immediate consequences for this country and the rest of the Community in regard to our supplies of natural uranium and the fact that our low-enriched uranium supplies are in serious jeopardy. I recently read a report in the Financial Times stating that the two-year stockpile of low-enriched uranium had been halved because of the reluctance of other countries, such as Canada and the United States, to supply us with the essential ingredients for what we call conventional nuclear reactors, such as the AGR and the light water reactor. We should make clear to the American Administration that we are facing a very serious position.
The remarkable thing is that, while the President's attack on the breeder reactor is logical, one hears entirely different sentiments expressed by the United States Congress. It is important for Europeans to know what is likely to happen in American energy policy in the next 10, 20 or 30 years.
I have been listening to my hon. Friend's argument with a great deal of interest. He appears to be putting forward two contradictory points of view. He has spoken in glowing terms about President Carter's energy policy, and he will be aware that that policy has been formulated to meet an expected shortfall in the supply of oil in 1985, giving a time period of six or seven years. How does my hon. Friend expect the breeder reactor to affect that shortfall in any circumstances?
The shortfall in terms of immediate demand is one thing entirely. I am speaking about the long-term actuarial certainty of demand during the next 20 or 30 years. I am not discussing the short-term prospects for the energy situation in the United States or the Community. I am putting forward an important point that has not been tackled by people in this country and some of the other Community countries, although it has been tackled by others.
If we are to decide on a long-term basis how to meet our future energy demands, we have to say one of two things: either we must be assured of supplies of uranium, from whatever source, or, if we cannot obtain guarantees of supply, we have to say that it is a case of
Needs must when the devil drives.
and we shall have to accept the plutonium economy. This is a major issue which must be decided by a great deal of public debate. The matter should already have been decided, because we could have foreseen some time ago what was happening.
I wish to comment on the rate at which we should proceed to carry on with building conventional nuclear power stations, building more and more AGRs and LWRs, or go hook, line and sinker towards the fast-breeder reactor. I do not think that anyone can tell us how much uranium there is in the world.
Even the experts differ. The fact that Canada is still not supplying us is ostensibly on the grounds of concern about proliferation, but it is possibly because of Canada's fears that its supplies are not so enormous, being enough for 24 years ahead. There is also the problem of Australia.
We must try to adopt a responsible attitude. We should not rely on adequate supplies of uranium being forthcoming. If uranium supplies are not available, we shall clearly be driven by the devil and be committed to the breeder reactor. Chancellor Helmut Schmidt has said categorically that the German Government are determined to go ahead with this type of reactor.
The real issue facing us is how to introduce safeguards to ensure that there is no proliferation of nuclear weapons as a result of the proliferation of breeder nuclear power stations. There is a serious practical difficulty here which we have not so far been tackling satisfactorily. I am not sure that the non-proliferation treaty is working as well in its efforts to prevent the spread of nuclear weapons as one would have hoped when the treaty was first signed a few years ago.
Many things need to be done, even in the straightforward technical aspects of the inspection system that is used. I understand that the total number of inspectors is limited to a total of only 50. The inspectors go as a team to assess on a kind of accountancy basis how much fissile material is present and how much should be present. The inspectors do not do anything to stop fissile material from being diverted.
Since it is possible to make a bomb within a matter of days, given a supply of plutonium, this makes the whole nonproliferation treaty a lot of eye-wash. We should give great thought to improving the safeguard agreement in the non-proliferation treaty so as to meet the dangers in the supply of low-enriched uranium and the proliferation from breeder reactors.
I base my arguments on the likely shortfall in 1985 in the generating capacity of nuclear power stations. It is essential for the Community countries to get together about the rational use of energy and statistical material. I take the point of the hon. Member for Bridgwater that we are discussing statistics in the Commission document that are already half a year old. I put a question to my right hon. Friend the Secretary of State 12 months ago about the statistical staff in his Department and asked whether the staff was adequate to provide a sound statistical basis for future forecasts. My right hon. Friend assured me that the number of staff was ample for these purposes, yet the Commission says that it is far from satisfied with the provision of statistical material from this country.
We should not proceed on the basis of that sort of statistical information. We need a fully thought-through and intellectually honest position in regard to the breeder reactor, for it seems that we are now inevitably committed to that type of reactor.
The Secretary of State was kind enough to tell me, too, that he would not be here during the debate, and I am grateful to him for letting me know. I also ask to be excused if I have to leave the Chamber rather early in a debate because there is a vital meeting of what is called the "Liberal Shadow Cabinet". No doubt that will determine the futures of all hon. Members, although I understand that the Government's trousers are held up not only by the Liberal belt but by the Ulster Unionist braces. Therefore, whatever we decide may not matter all that much. However, I apologise in advance for my early departure.
I agree with a great deal of what was said by the hon. Member for Wrexham (Mr. Ellis). I only add that it would be a great pity if the fashionable views of the extreme dangers of a plutonium economy obscured the very important questions that the hon. Gentleman raised. Admittedly the dangers exist and they are serious, but we must look to the future, when oil begins to run down. If the question of what is to succeed oil is to be rationally discussed, we must not exaggerate the dangers that are there.
We must also make clear the fact that even when oil runs down, although energy may be very expensive to get, there is no reason why there should be an absolute physical shortage of energy. There are masses of coal. The difficulty is the expense of getting it. Further, of course, there may be, as the hon. Gentleman said, possibly a rise in demand.
I want to make one or two comments chiefly about energy conservation. The first is, I hope, a friendly word to the Commission in Brussels. I speak as someone who was from the start in favour of us going into the EEC. I am still very keen that we should play our full part in it. However, I am somewhat alarmed by much of the stuff that comes from Brussels. One of the great needs of most Western European countries is to reduce the amount of duplicated government, to reduce the weight of paper that comes out and to reduce the number of bureaucrats who write what appears on it. Much as I have criticised our Government for pouring out the stuff, they are now put in the shade by Brussels.
Many of these regulations that we regularly read are simply duplications of what national Governments already know, and some of them are, to use a homely phrase, simply teaching one's grandmother to suck eggs. Therefore, I hope that the people in Brussels will direct their minds to such subjects that really need European consideration and not simply add to our burdens by unnecessary directives.
I much agree with the Opposition Front Bench spokesman that although there is no doubt a need for a European energy policy, a great deal of what appears in these documents can better be dealt with by national Governments or, if it is on a wider basis, it may well need something even wider than Europe. Here again, Brussels should look at the way in which it is going.
In most cases the proposals are contained in what are called directives, which precisely leave matters to national Governments to implement in the best way they see fit.
That comes under the heading of teaching one's grandmother to suck eggs. National Governments, for whom I have no great respect, have been dealing with things such as double glazing for a number of years. There is no need for a directive on the subject. I say that in passing in a friendly spirit and I am not directing it at our magnificent Government. Also the needs and methods of conservation vary from country to country.
However, by far the simplest way of saving fuel is making people pay for it. Once they have to put their hands in their pockets and pay the bill, they begin to save fuel. Most of the wasters of fuel are public authorities.
One can go around this place turning out lights and one can see cars standing about waiting to take Ministers to important luncheon engagements and so on. So long as one does not have to pay for the fuel, one uses all the fuel that one wants and more. It is putting one's hand in one's pocket that makes one thing about double glazing and turning out lights. That also applies to big companies. Much could be done by them, particularly by way of example, if the top people had to pay for the fuel that they consume.
However, as has been said, there is beyond this a need for a great deal of fuel saving in British industry. I am the last person to say that all the emphasis on fuel conservation is unimportant, but I believe that the first thing to impress upon people is that the example should start from the top, and the top organisations are the public authorities. They are some of the worst wasters of fuel in Western Europe.
I hesitate to delay the right hon. Gentleman's attendance at the meeting of the "Liberal Shadow Cabinet". It must be a nice situation when every Liberal Member is a member of the "Liberal Shadow Cabinet". However, I really cannot let the right hon. Gentleman's last point about an example from public authorities go by. It is a fact that the Property Services Agency of the Department of the Environment has given an outstanding example of energy conservation measures in the United Kingdom. We heartily recommend people in other public sectors, in which, as the right hon. Gentleman rightly says, much energy is used, to look closely at the record of the PSA and to learn from it. It has saved millions of pounds of public money by getting ahead with a very aggressive energy conservation policy, and the right hon. Gentleman ought to recognise that.
I do not underestimate what has been done lately. However, it is a curious commentary on the public services that if they could save millions of pounds, why did they not save it long ago? If the Minister goes into most public offices, not only of central Government but of local authorities, he will not see conspicuous efforts to save energy. In most of them the heating is far above what most people would dream of having in their own homes.
I move on to two particular matters. I understand that as one drills for oil under the North Sea, before one reaches the oil one goes through many seams of coal. I am told that there are vast reserves of coal under the sea. So far the technology has not been invented that will enable the extraction of coal beyond a certain distance from the shore. However, no doubt this will come, although no doubt it will be exceptionally expensive. This seems to be an area in which there is some need for international experiment and research.
Again, I do not understimate the importance of research into wave power, wind power and so on. However, I am advised that this is unlikely to make more than a peripheral, though useful, contribution to our energy supplies, at least within the foreseeable future. However, if the vast reserves of coal can be used in some way, they would make a great difference to Europe.
The other matter to which I want to refer and which I see arising in my constituency is the waste of energy through flaring. I know that the Government are worried about this matter and are trying to persuade the oil companies to find a use for the gas that they are now flaring off. I want to encourage them in this matter, and I hope that they will bring all the pressure that they can upon the electricity and gas boards and so on to make use of the gas now wholly wasted. We used to be told that it was not worth doing anything about it, that it was technically difficult, and that it was expensive. I understand that that is now all being called into question and that, at least for local purposes, we should be able to make use of much of the energy that is flared off into the air.
I doubt whether Commission documents of this sort will have any public impact, but I wholly agree with the Government that it is necessary to have some public impact. The only sort of impact that I believe would be made on the public would be either to ensure that the public authorities are deeply concerned and continue their programmes of conservation, or to have a total disaster such as that which occurred in New York recently. Although the New York disaster is not exactly germane to the matters that we are discussing, it is a very serious warning about what can happen to a big conurbation if we get our energy policies wrong.
Before the right hon. Member for Orkney and Shetland (Mr. Grimond) hastens off to the meeting that is to determine all our futures—so we are told—I should like to put two points to him. It is very easy to attack the Community for the amount of paper that is produced. However, the right hon. Gentleman and I know very well, although it is not a strictly fair comparison, that there are still markedly more people in the Scottish Office at St. Andrew's House than there are in Brussels. There are comparisons and comparisons.
The second thing that I want to say to the right hon. Gentleman is a little more serious. Before saying that there are too many people doing too much in Brussels, let us take the example with which the right hon. Gentleman and I were concerned, in rather separate ways, of uranium mining in Orkney. I think that the right hon. Gentleman will agree that the story, briefly, is that some EEC money was allocated by the Commission for uranium prospecting in Orkney. It is unnecessary to go into the details but, briefly, this gave rise to a good deal of dissatisfaction in Orkney, and when the Commission was actually challenged about this it admitted that it had the services of half a geologist to supervise precisely what was going on.
In some ways one could argue that if European money is to be put into this kind of project, the whole set-up is not too fat but, in fact, is too slim. Brussels will often, and more and more, get the blame for things going wrong when they are perhaps not as well supervised as some of us would imagine they should be. Having given that example, if the right hon. Member for Orkney and Shetland (Mr. Grimond) wishes to intervene I shall give way.
The uranium mining in Orkney was not stopped by the Commission. The South of Scotland Electricity Board, the Government and the local authorities have handled the matter not too badly. I am not suggesting that Europe should do nothing. What I am suggesting is that there should be a larger and broader policy.
That brings me to a point on which in this context we are in some agreement. I wish to repeat a question I put to Mr. Longo and Madame Nadane when they came before the Energy Committee of the European Parliament. I asked them simply whether they were quite sure that this programme of energy-saving was the most suitable project for European as opposed to national action. On that occasion there were two people who were doing most of the questioning. There was myself, from Edinburgh, and an Italian Communist called Mr. Rubinickt, from Bologna. Edinburgh can be covered in snow when Bologna is sweltering. The conditions are different. One accepts the easy reply of the Commission—that there are many things that it has to do and that it has to take into account the different conditions in various Community States. I believe that that response is a slightly easy one and that we ought to ask whether, because the conditions in certain areas are so different a different approach is not needed. This may be an area better left to national Governments.
This brings me to a point made by the Under-Secretary. Like him, I am concerned about these measures ever becoming mandatory. Harmonisation is very difficult in any area. Let me give one example. I do not want to be frivolous, because this is not a frivolous subject. Document PE 49.445 says on page 9, recommendation 16:
As regards the provision of domestic hot water in new buildings, the temperature of the hot water should not exceed 60".
Let us reflect on that for a moment. There are many of us who shave in an old-fashioned way, not with electric razors. At 7 o'clock or 8 o'clock in the morning we want hot water to do our shaving. Some of us like hot water that is a little
over 60 degrees. At 60 degrees it is a bit uncomfortable. Is the Commission really to say that at all times hot water should not exceed 60 degrees? What bothers me is that this is the kind of regulation that conflicts with common sense.
I thought so. My hon. Friend is a technological man.
Item 20 says:
Undertakings employing more than 100 persons are invited to appoint an energy manager to draw up and implement energy savings programmes and communicate the results obtained to the public bodies each year.
If such an appointment is to be made in these firms, we ought to be clear about the job specification.
I should like a British Government comment on what is contained on page 2 of the Commission document. It is said:
The estimated investment needed to implement such measures for the whole of the Community may be put at about 120 to 130,000 million e.u.a. for the planned period. It is estimated that this investment corresponds to some 300 to 350,000 jobs a year, and that the resulting direct or indirect creation of jobs amounts to some 700,000 jobs a year.
I ask the Under-Secretary whether it is the view of the Government that this order of jobs could be claimed. Is it realistic? This is a major programme.
The Under-Secretary raised the question of how projects should be selected and by whom. It is important to know the extent to which national Governments would be consulted and at what stage. Any consultation that did not take in national Governments at the earliest stage would be unrealistic. I take my hon. Friend's point that in this area we do not seem to be hampered by a lack of funds but that there is a problem of the control procedures on finance, which may be touched on in the ensuing debate on the budget.
Since other hon. Members wish to speak I shall not go into the subject of the budget now. I shall simply say that the European Investment Bank will be reviewing its capital policies next year. There is something about which I am not clear. We all know that the Chancellor, like other Finance Ministers, is a formal governor of the European Investment Bank, and many of us have had talks with Sir Raymond Bell and other officials. The general question is whether the Government are satisfied that, if the European Investment Bank is to have more interest in providing funds—for example, for steel-dependent areas, though not necessarily in steel industry areas—we can be sure that its policy will be harmonised in some sensible way with the criteria and desires of national Governments. There is a problem here, especially if it is an issue of fostering long-term contracts.
My general feeling is that there are other issues to which the Commission would do better to turn its collective mind. Instead of going into this matter of energy saving, is it not more important that there should be some European policy on the vexed question of refining capacity. I have seen my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), who is an Under-Secretary of State at the Scottish Office, in the Chamber recently. Many of my constituents work at Grangemouth. There is acute worry there because they are working at about 60 per cent. of capacity. If there are to be other refineries at Nigg, or elsewhere on the European mainland, what are we to say to the trade unions and managers at places like Grangemouth?
Any excess energy that the Commission has might be better devoted to the question of refinery capacity policy rather than messing around with things that are possibly better done by national Governments. Secondly, I shall not go into the issue of JET, but it seems that the whole future process in this respect would he a much better area for Community activity than is encompassed in the documents we are now discussing.
Thirdly, without suggesting that this is the debate in which to resurrect the issue of the Channel Tunnel, some of us would like to see a careful assessment of the energy-saving aspects of the project. Various assertions are made about the energy-saving potentialities of a Channel Tunnel. There ought to be some assessment, because otherwise we are arguing in the dark.
Fourthly, I raise a recondite issue of which I have not given the Under-Secretary of State any warning. I am not sure that it lends itself to a quick answer in Parliament and therefore I ask him to write to me on it. I refer to what has come to be known as the Plombat affair. Other hon. Members have mentioned the safety of the carriage of nuclear materials. My hon. Friend the Under-Secretary of State can be said to represent Windscale in his constituency, and I know that he has given his mind to this issue.
This is neither the time nor the occasion on which to go into the events of 1968. although one might ask how it is that Au Point, Der Speigel, the Sunday Times and a number of other serious newspapers and magazines have been able, in some detail and unchallenged, to go over the events relating to the ship that disappeared with 200 tons of uranium oxide, when the Commission has said time and again that it did not know what had happened. I put that as a side question.
The question that bothers me much more, and which Governments now have to look at, is how it came about that in the respective States of the Community it apparently was not reported to senior Ministers that this event had happened. This raises a number of highly sensitive issues, such as what precisely Ministers are told and what they are not told. It is quite clear that Mr. Emilio Colombo, who was then the Prime Minister of Italy, was not told, in his capacity as a senior Italian Minister, anything about the events of the disappearance of the "Scheersberg" containing the uranium oxide It is also clear—I take it absolutely on trust because my right hon. Friend the Secretary of State said so to the Energy Committee in Paris—that in a previous incarnation, in 1968, he was told nothing about it, albeit that Britain was not then a member of the Community but was a member of Euratom.
The question to which some of us really want an answer is why it is that the political heads of Departments were not told about a very sensitive and important issue. Uranium oxide is dangerous when it vanishes. One cannot say whether it found its way to Dimowa, but it is quite clear that people do not pinch these things just for fun. If it was important in 1968, it is all the more important in 1978, when there could be a theft of plutonium.
What steps are being taken by the countries of Western Europe to make sure that never again can there be a repeat of the Plombat affair and that never again shall secret services, which know the facts, fail to report what has happened to the political heads of Departments or the political heads of Governments? It is intolerable that this information should be kept within the secret services without the responsible Ministers being told.
My final question is of a very general nature, but I think it is legitimate. My hon. Friends have now had six months' experience, between January and June, of the presidency of the Council of Ministers. Some of us doubt more and more the effectiveness of this merry-go-round of having six months in the chair and then passing it to someone else. Is it really a very sensible way to carry on, particularly in regard to technical matters and the discussion of these highly complex and complicated problems?
Although the presidency of the Council of Ministers of Foreign Affairs probably has to revolve, I ask the Government to reflect whether some other way could not be found for ensuring a more stable long-term presidency of the technical departments. If the Community is to be enlarged so that we have 12 member States, the presidency will then be for six months every six years. That does not seem to me to be a rational way of conducting European business.
I remind the House that this is a very short debate. I understand that only 30 minutes are left before the winding-up speeches are due to begin. It is in hon. Members' own hands.
The right hon. Member for Orkney and Shetland (Mr. Grimond) referred a few minutes ago to the plethora of paper which comes to us. I do not mind the quantity, provided that it is leading us in the right direction, but more often than not it leads us into diverse channels and we get into a labyrinth of problems and cannot find our way out.
I shall concentrate on Document No. R/1417/77, which deals with energy. The picture has been portrayed in a Written Answer of 5th July 1977, at c. 527–8. It indicates which nations throughout Europe have what energy. It is rather instructive to note that Britain and Germany are favoured with coal. The reserves elsewhere are equivalent to only about six times Britain's annual production.
Britain is also distinctly favoured with oil and has eight times the reserves of the rest of the European Community. The Netherlands and Britain are favoured with natural gas. British reserves alone are in excess of the combined reserves of all the Community countries, excluding the Netherlands.
France is virtually the only beneficiary of uranium. Little has been located so far elsewhere in the EEC.
This information leads to a second table, which is consequential. It appears in the Official Report of 30th June 1977, at c. 317–8. Who imports most? Obviously, it is those countries that have little energy of their own. Luxembourg and Denmark have to import 99 per cent. of their total energy requirements. Ireland imports 85 per cent. and Belgium 85 per cent. Then come the major countries of Western Europe—Italy, 79 per cent., France, 74 per cent., and Western Germany, 55 per cent.
It is quite clear from these figures that the countries in Europe with a scarcity of energy—the documents before the House are trying to determine exactly where they stand—will go for distinctive policies of their own. It is not surprising that the French, having virtually no energy of their own, except a little gas and a little coal, should go for a big nuclear programme. That is perfectly right.
Looking at the figures for overall energy demand in 1985, we find that the share of nuclear power for France is to be 18 per cent., compared with 10 per cent. for Western Germany, roughly 10·5 per cent. for Belgium, and only 5 per cent. for the United Kingdom. Obviously, we have to make absolutely certain that in the United Kingdom we are not on the wrong path in this respect.
Among our Community partners France and Germany are opting for a nuclear future. Britain is marking time on its nuclear option, with several possible consequences, and I hope that the Government will weigh them up. What will he the price of electricity in the EEC of the 1980s? Owing to the relative cheapness of nuclear power, both France and Germany may have a competitive edge in exports, and this could he of serious consequence for the United Kingdom if we were to keep entirely to coal without wing ahead more on the nuclear front. It could result in our eventually becoming disfavoured on a cost basis.
Britain has been lulled into a false sense of security by its energy options. This may mark an error due to ignoring the long lead times required to catch up should coal not fulfil its targets and alternative European sources should not measure up to expectations.
I am of the belief that the alternative energy options available to us will contribute no more than 35 million to 40 million tons of coal equivalent, or 8 per cent. of our total needs, by 2000 AD. If coal were to let us down, and because of the long lead times required to get our nuclear stations going, we might find ourselves in a very difficult position.
A third possible consequence is that Britain's oil may not turn out to be an entirely British reserve to be utilised according to our wishes. For its part BNOC has mortgaged a significant part of its potential production to support its recent loan. Ministers have not told us very much about that. When the energy crunch comes, it could indeed be regarded as a Community resource to which all of our European partners would have access provided they are prepared to pay a fair market price.
The fourth point is that even in a United Kingdom dimension do the figures add up? I should like the Minister to consider the scenario for AD 2000. That is not very far away. Let us assume that the approximate energy demand of the United Kingdom in 1975—coal, oil, gas, hydro and nuclear—came to 320 million tons coal equivalent. if we look at the scenario for AD 2000 the Department has forecast an energy demand of 525 million tons coal equivalent. On many occasions the miners have told us that they will contribute 150 million tons. Oil will rise to 175 million tons. Gas will remain fairly stable at 60 million tons. Hydro or alternative sources work out at 35 million tons and nuclear works out at 50 million tons. That brings the total not to 525 million tons but to only 470 million tons. Anyone who says that the United Kingdom can do without a nuclear future is just plain daft.
The hon. Member for Wrexham (Mr. Ellis), in an excellent speech, talked about the possibility of the fast breeder reactor. We are, of course, talking about the conservation of uranium. It should be remembered that if one ton of uranium goes into a thermal reactor it has a heat equivalent of 20,000 tons of coal. But if one ton goes into a fast breeder reactor, it has a heat equivalent of 2 million tons of coal. Therefore, if we could move to that stage it would be advantageous.
I sympathise with the hon. Gentleman's view about the need for a nuclear future. But he should not overlook Britain's contribution to the nuclear present. When the AGRs are fully in and when we build the two new thermal nuclear stations that are proposed, we shall probably be getting 25 per cent. of our energy from nuclear sources. That is as good as any European contribution.
I was talking about total energy, which works it out at about 5 per cent. I agree that with regard to electricity we are high up in the list but we have not been told what the next programme will be. I assume that an intermediate one will be AGRs. I hope that the Minister will keep his eye on the longer-term future owing to the long lead times and bring in the CFR 1, which is absolutely essential on the breeder front.
I mention one other matter which is of essential importance. We are going through a period of temporary glut and the price stability may remain for at least a year, if not longer. But the prospects of the seventies will change materially in the eighties. The key to world demand rests on two States—Saudi Arabia and the United States—with the prospect of the USSR playing a demoniacal political game in the background.
I would just mention one or two facts about this. President Carter has indicated what he wants to do. He wants to cut back American imports to 6 million barrels a day. In 1976, United States imports were 7·3 million barrels a day and the trend in the most recent publication indicates that United States imports will be 10 million barrels a day in 1980 and 11·8 million barrels a day in 1985. This will be serious for the Western world because if the American import bill goes up and if the production in the Western world, particularly in Saudi Arabia, does not keep pace with it, it could lead to a wild escalation of prices.
Let us look at the other side of the question, the supply side. There is no incentive for Saudi Arabia to produce another barrel of oil, because it is sitting pretty as it is. Fortunately, it has acted as a very responsible nation up to date. The population is small. Its reserves of oil are vast, probably 177 billion barrels compared with only 17 billion barrels in the North Sea and 31 billion barrels in the United States. The reserve production ratio of Saudi Arabia is 49 years at current rates of extraction, declining to about 16 by 1990.
Saudi Arabia has a small population, vast reserves and a balance of payments surplus. It could reduce production by 50 per cent. and still run a balance of payments surplus. It could thus stabilise output at a certain level without any detrimental effects on economic development, military commitments and aid programme. One has only to look at current production to find that Saudi Arabia is producing 9·3 million barrels a day. It has been indicated that this ceiling has been lifted temporarily from 8½million barrels a day to about 10 million barrels a day. We come to the rather interesting conclusion that with American imports going up very considerably, with the lack of success of the Carter programme, with the possibility of the Soviet Union entering the market to buy more oil and with the possibility of a ceiling being placed too low, this could mean a disaster for the West.
Let us look at three major areas, the United States, Western Europe and Japan. Japan has to import more than 90 per cent. of its oil requirements. Oil consumption in Western Europe is 13·5 million barrels a day, of which imports amount to 11·6 million barrels. This is very heavy stuff. I draw a conclusion from this which was supported by the Workshop on Alternative Energy Strategies in the Financial Times on 17th May 1977. If Saudi Arabia decides to hold its production at 9 million barrels a day, there could be an oil crisis in the early 1980s and prices will escalate. If Saudi Arabia ceilings at 20 million barrels a day, the crisis will be deferred until 1990.
I would have thought that the Commission would be wiser to concentrate on the major issues which must determine the actions of Government. It should say that the general philosophy is not ideal for all the countries of Western Europe collectively, but individually they must have their own particular allowance. Personally I feel that in this country the nuclear future is essential, exactly the same as has been recognised in the United States which has no shortage of oil capacity or natural gas and in Iran which is one of the major suppliers to the United Kingdom. Many countries in the Western world are going nuclear as well.
But when the crunch comes we in the United Kingdom will not be spared. We are members of the Community of Nine and we shall be asked to make our contribution from the supplies that we have in exactly the same way as the Dutch have been asked to contribute some of their natural gas. If that be the case, I hope that the Government's response will point us in the right direction to a solution that will be favourably received. If, on the other hand, it affords no guidance but simply gives us a history, it may be useful for this House to inform our European partners that it is to their discredit and certainly to ours.
Is not my hon. Friend being a little unfair to the European Commission in that the whole purpose of one of the documents before us—R/1292/77 on energy savings from the modernisation of existing buildings in the Community —is to make what it is claimed would be a 5 per cent. reduction in the total final consumption of energy as a contribution towards the 15 per cent. saving which it is hoped to see in the Community by 1985? This is a very good example of a measure—
When we consider what the energy demand will be once Western Europe is through the recession, it is clear that energy savings alone will not do it. It is true that they will make a contribution. But the Minister made a speech the other day in which he asked whether we should look to savings or to new sources of energy. I suggest that he has enough coal and nuclear energy to which he must look first. Savings will not do it and if he rests on savings he will be let down.
But I listened to your advice, Mr. Deputy Speaker, and I resume my seat on that note because I know that other hon. Members wish to speak in this debate.
I am growing accustomed to trying to make brief speeches on energy matters immediately after contributions by the hon. Member for Bedford (Mr. Skeet). This is not the first time in the past few years that I have been called immediately after him, especially when he has been in the mood to provide us with a surfeit of information. On this occasion, I agree with one of his arguments—
It is relatively rare for me to do so. But he was right to point out that, if American oil consumption is not restrained or if its sources do not vary, America and the other oil-consuming nations will face serious problems in the 1980s. No one will dispute that, and most people will welcome the view advocated by the hon. Member for Bedford, which some of us have been expressing for the past five or seven years.
I wish to speak principally on matters which are perhaps of more mundane interest. I also want to direct one or two questions to the Minister, although I must say that I welcomed the speech by my hon. Friend the Member for Wrexham (Mr. Ellis), and that I go some way along the road to accepting that we cannot disregard the development and growing contribution of nuclear technology. However, the hon. Member for Bedford seemed very conveniently to ignore the grave anxiety, public disquiet and sometimes public disorder associated with nuclear energy. That has given some politicians outside Britain cause for hesitation.
I am especially concerned to ask the Minister whether we are quite sure that Britain is seizing the opportunities for financial support which our membership of the Common Market offers. I make no comment about the merits or demerits of our being in the Community. But, so long as we are members, we should take advantage of all that is going. It would be useful if my hon. Friend could give some information to assure us that the flow of money is favourable in this area.
In that regard, I hope that my hon. Friend will tell us whether the Drax proposal will qualify for some of the support from EEC funds. This should be said. If it does, I hope that it is welcomed in Yorkshire.
There is another area where I believe there is available support. It is that of coking plants. I am told that grants are available for investmennt in coking plants, provided that they are not linked directly to coal mines. If that is a qualification, it is an absurd one which should be challenged.
We are very anxious about this in South Yorkshire. There is one coking plant which needs to be replaced. It is served by three collieries. In its existing form it causes a great deal of increasingly unacceptable pollution. National Smokeless Fuels is willing to replace it, but it may be discouraged if there is this restricting limitation on the support available. I hope that my hon. Friend will recognise that this is a serious matter in the area and that it is important to three of our collieries. I hope that he will be able to reassure us about it—if not tonight, in the very near future. It is necessary in my area from the point of view of the Government being open and clearly willing to inform the public.
It is because of my concern about the need for open Government that I refer to document R/1292/77. We have already heard about the need for conservation. I am not sure that the Government have been adequately informative about the need for conservation and the means whereby the ordinary citizen can contribute.
For example, the Government express doubts about the cost effectiveness of double glazing and perhaps of cavity wall insulation, too. The Minister should realise that scores of thousands of people —perhaps millions—are interested. They lack the means of informing themselves properly. At present the detailed information which they could well do with is not always available. Very often, this means that they are at the mercy of the commercial undertakings. The commercial undertakings are providing a valuable service, but the Department should be very much more informative and should give reliable advice so that people can work out for themselves whether it is worth their while going in for these home improvements.
My hon. Friend is being a little less than fair. The Department of Energy produces a wide range of technical information for the general public, especially in the domestic sector. I mention one of the great number of documents which we have produced which is on loft insulation. Another is called "Compare your home heating costs", in which we did a comprehensive and objective review for the first time and made it available to the public. It was an outstanding success and 500,000 copies were taken up. I do not think that his charge that we have ignored the real need to provide the public with information stands examination.
I am well aware that my hon. Friend personally has made a con-
siderable contribution in this area. However, the explanatory document contains the sentence,
There are also doubts about the cost effectiveness of the measures proposed, particularly double glazing.
I accept that that may not be entirely applicable to the domestic market. But the Department should continue to pour out advice. A great many subjects receive a bigger tonnage of newsprint than valuable advice of that kind which can be provided by the Department.
If the Department's studies are soon completed, I hope that it will allow the extension of housing improvement grants to the means by which energy can be conserved. That would be highly desirable, as well as helpful in the creation of employment.
We need basically also to question the Community about its attitude to coal. I am aware that it is giving a great deal of support to the means by which we can produce more coal or maintain our current levels of production. But the Community is in danger of encouraging people to produce coal and then not providing the same degree of encouragement and support in order that they consume it. That may mean that the existing high stocks of coal do not disappear at the rate which is desirable in the interests of the Community.
We have now only two major coal-producing countries in the Community—West Germany and ourselves. But, although the coal industry of Europe has shrunk drastically in the past 10 or 15 years, we are in danger of seeing excessive production from the Community's pits. That would not be desirable. I accept that cheaper coal is available in other parts of the world but I would hate to see Europe a captive of a strip mine prison.
We need to have a capacity within Europe to survive the price increases that we may face one day from producers in other continents. It is essential that the National Coal Board should enter or seek to enter more vigorously the coal market of the EEC. The classic reply to suggestions of this kind is that the West Germans, who have a substantial export market within the Community, are exporting prime coking coal and we are not in a position to compete to that extent. But not all the coal they are exporting to ourselves and other member States is prime coking coal, and I believe that we should compete rather more vigorously. That would enable us to reduce our stocks of coal.
Conservatives have been very critical of the miners and the mining industry in Britain over the last few years. They claim that the miners have not maintained the growth in productivity that they have proudly achieved virtually since nationalisation. But the miners know that there are huge stocks of coal, and as long as they know that they are not likely to be quite so keen to mine a little more and make the stocks larger. The existence of the stocks has been a profound disincentive.
Nuclear power may be a cheap alternative but it would be a grave mistake to think that it can make up the difference of the excessive imports of oil or coal. It is very stupid to believe that we could allow increased natural gas consumption or nuclear power to take up the slack if there were growth in Europe in the next 10 years. That would be a prodigal act. It would be prodigal on the ground that reserves of natural gas are much too short and the existing proposals for investment in termal reactors, of whatever kind, could be outrageously expensive.
It is only a couple of years since we had a debate on an energy document front Europe that suggested such a mammoth nuclear investment programme that there would have been very little money left for anything else. Many of us drew the attention of the Government to the fact that Europe had to invest in other things as well as nuclear power. I am not arguing against nuclear power, but I want to maintain a balance in the energy field. I want to see proper conservation combined with an adequate desire and determination to ensure that we maintain the proper balance of energy supplies.
Listening to this debate I am struck by the uncertainty of economic forecasting in general and in the fuel industries in particular. Over the last two or three decades one is reminded how very often we have been told by the pundits that we have too much fuel, then a few years later we are told we have too little. So often the unexpected happens in history.
No one would have guessed in the early thirties—and my family has not been unconnected with this—that nuclear energy would result from the Second World War and the atom bomb. No one could have guessed 10 years or 15 years ago that the advent of North Sea oil and gas would have transformed the economic prospects of this country.
Although I was and remain a dedicated European, I am not sure that it is right to try to have a Community policy on a subject as esoteric and uncertain as the one we are developing—the need to conserve existing reserves. We can assume that these reserves are finite, but new developments, such as the discovery of new resources, could happen so easily.
These initiatives calling for self-sufficiency, coming partly from America, which is self-sufficient, in theory are commendable, and, as I have said, Britain's prospects could be transformed in the long run. But these directives and recommendations from the European Commission concerning fuel, and in the wider context, raise considerable problems for national Governments. Some of these subjects would be better left to individual member States.
These documents are unnecessarily complex, very difficult to understand and there is not sufficient debate on them in the House. Often our debates on these matters take place late at night with only a handful of hon. Members present, although I must admit that this is not the case today. But the fuel question needs a great deal of thought and discussion and, if there is to be an EEC policy on this matter, we should be sunre that we do not rush into it.
I was a member of the Select Committee on the Nationalised Industries which looked at British Rail. One of the arguments put forward for electrification Schemes—including those for Bedford, Liverpool Street and places further north, Crewe to Edinburgh via Weaver Junction, affecting my constituents in Nantwich—was that these wee good on the grounds of pollution and the saving of imported fuels. Hon. Members on the Committee were swayed by these arguments, but maybe in 10 years' time the same Committee will have a different recommendation, because fashions change and very few things last for ever.
We welcome this debate today. I am only sorry that it is so short that we have not had the benefit of contributions from a number of hon. Members who might otherwise have spoken. I am sorry there was not time to hear from my hon. Friend the Member for Carshalton (Mr. Forman), who has made a special study of energy conservation matters, and my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn), who has contributed a great deal to deliberations on EEC energy policy on behalf of the British delegation. Unfortunately, this is one of the pressures under which we have to operate in such a frustrating manner in this House.
Although this has been a short debate it has been useful. These documents are regarded as an important initiative from the EEC, which is now showing that it has teeth, and is prepared to propose policies on a wide range of energy conservation matters in the hope that member countries will take them into account.
It is particularly significant that the documents we are discussing tonight show that the Community is prepared to appreciate the genuine importance of the energy conservation problems facing us —the need to try to reduce import dependence and the need to provide the incentive for longer term self-sufficiency within Europe. By stimulating substitution of energy in the longer term a most useful effort can and must be made to supplement our energy availability by using what we have less wastefully. I regard as realistic, attainable and desirable the Community target of a 15 per cent. reduction in energy consumption by 1985. I hope that the Under-Secretary will give the same commitment on behalf of this country—that the Government are also committed to a genuine attempt to achieve that target.
My hon. Friend the Member for Bedford (Mr. Skeet), in, as always, a valuable and interesting speech, rightly referred to the long lead times in energy policy which will inevitably create problems in filling the gap, particularly when the oil begins to become scarcer. The energy policy that the Community must develop will have to include a greater acceptance of less wasteful use. That means accepting that the provision of our energy in future will absorb a higher proportion in real terms of our gross domestic product than we have been used to in the past. Therefore, value for money is vital.
Economic pricing of energy will provide the most important stimulus—the right hon. Member for Orkney and Shetland (Mr. Grimond), in a valuable speech, emphasised that point—but realistic pricing will not be enough. We also need incentives or, at least, the removal of existing disincentives. Conservation should not have to mean doing without. It should not mean hardship or a restraint on economic growth. Quite the opposite. Investment in more rational use of energy can benefit the standard of living and can be cost-effective by leading to more efficient industrial processes and far less pollution. The policy of providing better value for money can often be achieved through investing in energy conservation rather than by concentrating our resources on energy investment and the provision of additional supplies. It is a pity that we have not been set a better example so far in this country.
I hope that the Under-Secretary will not take my remarks personally. In the Select Committee on Science and Technology, of which I am also a member, he has made valuable contributions to this policy. Unfortunately, since he has taken up his present position, although his determination may remain, he seems to have found it difficult to persuade his colleagues that a national energy policy should have a higher priority. It has not had that priority yet.
It is a pity that there is still too much complacency in the Government about various aspects of policy outlined in these documents. I regard it as a sad reflection on the Government's policy over the last three years that the EEC has to give us guidelines and should be able to show that we are well down the league table in implementing these policies.
One table in these documents compares energy conservation in this country with that in the Community, and shows that in two important areas we are doing very badly. The first is thermal insulation and better heating systems in domestic buildings. That is particularly serious because we are so far behind the rest of the Community in any case. Second, we are bottom of the European league in the application of combined heat and power in industry and the public utilities.
These are serious inadequacies. Table A in the Document 1284 shows that only we and Italy have so far not provided incentives for higher standards of insulation for existing buildings—no tax reliefs or grants. The Minister knows that we have a long way to go. We already have lower standards than the rest of the Community in this area.
I hope that the hon. Gentleman will be a little more specific. He knows that in the industrial sector we give 100 per cent. tax allowances for those who insulate existing buildings and that finance is available in the public housing sector for the insulation of council houses under the Job Creation Programme. It is Tory local authorities which will not get on with the job.
The Minister is fighting a rearguard action in trying to defend an indefensible position. I specified domestic buildings. I am aware that when it comes to industrial buildings, like the rest of the Community, we provide the necessary tax incentives.
This is a serious matter which is causing hardship to those who find it increasingly difficult to pay heating bills and are given no incentive to insulate. The paper which recommends savings on existing buildings says that not enough has yet been done. It does not refer to this country in particular, but it makes it clear that only we and Italy are not providing incentives.
It is all very well for the Government to say that they are not sure whether this would be cost-effective. Plenty of reports prove that it would. The Building Research Establishment report has confirmed it. The Select Committee on Science and Technology in its recommendations presented to the House two years ago, and still not debated, has confirmed that just such investment would be cost-effective.
If the Government are serious about an energy conservation programme, why is VAT still applied to do-it-yourself insulation materials? Why is there not a comprehensive improvement scheme for roof and wall insulation? Why are there no tax allowances for domestic expenditure on insulation and heating systems, as the Community recommends and as other countries have. Why are building regulations still of too low a standard? Why are new buildings being constructed with inadequate insulation standards?
If the Government are using as a pretext the excuse that this would involve public expenditure, it is quite clear that they must look at the priorities. Only this afternoon we had an announcement that the Government will spend £600 million to build a power station that we do not need and that will burn fuel at 35 per cent. thermal efficiency. The money for that, it could be argued, could be employed in other directions that would produce a better return in energy. It could pay for the insulation of 600.000 homes for old-age pensioners or provide a number of fluidised-bed combustion combined heat and power stations. There are all sorts of ways in which the priorities could be thought out again.
In this country we are also lagging behind in the production of combined heat and power. It has been recognised world-wide that combined heat and power electricity generation achieves by far the greatest fuel savings. We are all aware of the problem, but why is this happening elsewhere and not here? Why is the United Kingdom, as the Plowden Committee pointed out and as statistics show, bottom of the European league in electrical power generation thermal efficiency? Why is the amount of combined heat and power produced in our electricity generating system so much lower than that in other European countries? Why is combined heat and power generation developing more rapidly elsewhere?
The EEC paper containing the recommendations and proposals that EEC member States should try to do more to promote more rational use of energy by combined heat and power generation is the most important of these documents. I hope that the Minister will tell us whether he agrees that the recommendations are most important. The Government should try to remove the legal, administrative and price barriers that inhibit combined heat and power generation development. That is what is really holding us up. The Government should do more to promote combined heat and power production.
We know that the, electricity industry is unenthusiastic, but that is not surprising because it has now 30 per cent. to 40 per cent. over-capacity. Therefore, the electricity industry is not keen to see industry generally generating more of its own power. This is not the right approach if we are to use our energy more rationally. We must take a serious look at this and catch up with what is happening elsewhere.
Does the hon. Gentleman agree that the real difficulty is that the electricity authorities and the generating boards have a statutory duty, first and foremost, to produce cheap electricity and that no Government have been prepared to change that?
I am well aware of that, and that is exactly what I mean when I say that statutory and legal restraints must be removed.
One could go into these important papers and their recommendations in further detail. Unfortunately, we have no time to delve into them tonight. However, there are a number of questions that I want to put to the Minister. We have had three years of complacency from this Government, with some action but a lot more talk. The EEC is showing us that we are not as good as we thought we were in terms of our policies on energy conservation.
Are the Government committed to the EEC objective of a 15 per cent. saving in energy by more rational energy use by 1985? If so, and if the Government welcome these initiatives, are they prepared to outline constructive programmes for action as recommended in these documents? Is the Secretary of State prepared to suppress his anti-EEC obsession enough to co-operate with the EEC and to implement more rational energy use policies? Even more important, are the Government prepared to give a positive lead to the Community instead of dragging their feet on these proposals?
We have much good will to repair in the EEC and the fanatical prejudice of Ministers against anything that comes out of the Community does not help to maintain good will. The Minister should answer clearly and say that he and the Government are now committed to playing their part in the Community proposals for a more rational use of energy.
Even a Government now struggling in their last dying days and gasping to keep themselves in office for a little while longer should do at least one thing. The least that they can do for the British people and our Community partners is to commit themselves to a future energy programme somewhat more enthusiastically, to show a little less procrastination and a little more positive action. Otherwise the Government and the Secretary of State will deservedly have as their epitaph "three wasted years of wasted energy", and future generations will pay for that dearly.
I congratulate the hon. Member for Derbyshire, South-East (Mr. Rost) on speaking for the first time from the Opposition Front Bench. However, he was toiling a little in speaking about the cost of energy, because I remember that during the Standing Committee on the Coal Industry Bill his main criticism was that gas was too cheap, and he argued on that basis. I do not think that the hon. Gentleman carried the majority of the House or even most of his hon. Friends with him. Nevertheless, I congratulate the hon. Gentleman, although I wish that he had been less political and had concentrated on the issue of conservation, to which we all know he has devoted much work and time and to which he has made contributions in the House.
I am sure that hon. Members will agree that we have had a worthwhile and interesting debate this afternoon. We have covered a wide area of important energy issues. This is not surprising, given the range of subjects in the five Commission documents—from energy conservation, which must be one of the key elements, along with nuclear energy and coal in our own total energy strategy, to far-reaching proposals by the Commission for new loans in the energy sector. These latter are just one part of the larger initiative for new Commission loan operations which are to be considered by EEC Finance Ministers.
I should like to emphasise once again the importance which the Government attach to energy conservation and the efficient use of energy. We are pursuing these twin aims effectively here in the United Kingdom, with our partner States of the EEC, and also in the wider forum of the International Energy Agency. The United Kingdom has made and will continue to make a positive contribution to international co-operation in these fields. We welcome the further impetus to the Community conservation programme which is proposed in its latest documents.
I should also like to say a few words about the document on investment development and protection. The Commission indicates that investment in the energy sector over the next 10 years could well represent about as much as a quarter of all industrial investment in the Community. Clearly, the questions dealt with in the document are important. We find the Commission's paper a useful basis for consideration, but a lot of further work needs to be done on the paper that the Commission has described as "first reflections", and I repeat that the Government have reached no firm conclusions on them.
One of the threads running through the debate was whether the documents should be mandatory or permissive. The significance of the debate is that we wanted to listen to what hon. Members had to say, because their views on the documents are important. It is important that we get hon. Members' views on complicated issues such as conservation, and a number of approaches have been articulated in the debate. I shall try to take up the most important issues and I hope that no hon. Member will consider it a discourtesy if I do not refer to some aspects of his speech.
A reference has been made to President Carter's energy message. We must get this in perspective. President Carter presented his proposals for energy policy to the Unted States Congress on 20th April. Its main aims are to halve the annual increase in energy demand by 1985 from 4 to 5 per cent. to less than 2 per cent. per annum and to reduce oil imports from nearly 10 million barrels a day to nearly 6 million barrels a day by 1985. The hon. Member for Bedford (Mr. Skeet) mentioned this. The proposals are of two complementary kinds —conservation and supply. In general, the proposals for conservation are more positive and detailed than are those for expanding production and developing resources.
President Carter underlined the considerable importance that he attaches to conservation during the Heads of Government meeting on 7th and 8th May. America is a democracy and a speech is no more than a speech. Giving legislative effect to the President's proposals is another matter.
The hon. Member for Bridgwater (Mr. King) knows that we went over this matter thoroughly in our discussions on the Coal Industry Bill recently. The hon. Member for Ross and Cromarty (Mr. Gray) made the point that I am making. The speech has great significance, but we shall have to await its legislative implementation.
This is the point that I was making. It is one thing for the President to try to persuade Western European countries not to develop a fast breeder reactor, assuring them of supplies of uranium, but it would be a different matter if Congress prevented him from supplying uranium.
My hon. Friend was one of those who dealt with this question. Some people have given the impression that the President's proposals have been given legislative effect. We welcome the proposals, but they are only proposals. I shall come to the fast breeder reactor later. This subject played an important part in the debate, though it is not mentioned in detail in the documents.
The big question now is how far President Carter's proposals can be expected to survive the United States legislative process. He mounted a massive campaign to sell his ideas both to the American public and to Congress, but they have already met substantial opposition. For instance, the proposals to tax gasoline would not, even if fully implemented, bring the price up to European levels. Even so, the proposals seem unlikely to survive scrutiny by Congress. Proposals to give rebates to purchasers of small cars have also met opposition in committee. On the other hand, the proposals to increase prices of crude oil to roughly world levels seem more likely to survive. I could deal with the President's proposals in more detail, but we must be realistic and consider the position as it is.
I am grateful to the hon. Member for Bridgwater for referring to nuclear power, because this gives me the opportunity to make a correction on behalf of my right hon. Friend the Minister of State who, in a debate last month, was asked whether exercise of the return of waste option under the proposed Japanese reprocessing contract would lead to the transport of highly active waste in liquid form. I can tell the House that I am advised that, under the proposed contracts BNFL has the option to return any waste in a form suitable for safe transportation. This would not lead to its transport in liquid form.
The hon. Member for Bridgwater also asked about the ECSC loans—not grants —of up to £53 million that were announced recently. These are to be made available to the NCB in tranches and related to specific projects. It is not possible yet to say which projects are to be supported.
The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to energy conservation and seemed to suggest that price levels would have a greater impact than conservation policies. Not all hon. Members share this view and to pursue solely price policies would be an excuse to do nothing about conservation.
The right hon. Gentleman said that there had to be conservation policies, and, with other hon. Members, said that we should not be tied to a national identity and specific energy conservation policies or directives but we should have an overall policy or a European policy that applied to every country with the conditions and traditions that every country considered appropriate.
The right hon. Gentleman mentioned gas flaring. The object of our gas flaring policy is to ensure, by means of the consents required under licence, that all possible measures are taken to eliminate or to minimise the wastage of associated gas by flaring. I know that the right hon. Gentleman is very knowledgeable about this subject in the sense that he has a near interest in it.
This is the only tenable and sensible policy that we can and should adopt against a background of world shortage of fuel resources. Each application for consent to flare is considered in detail and on its merits. But long-term consents are being issued only in cases where the amounts of gas are too small to justify delivery on shore or any other practical means of utilisation.
Consents for the shorter term may be issued in certain circumstances, for example, until the gas transmission facilities are completed. But this is a detailed matter and I should like to write to the hon. Member about it.
I told my hon. Friend the Member for Wrexham (Mr. Ellis) that I should like to come back to some of his comments about the fast reactor and President Carter. The hon. Gentleman asked what was the policy of the United Kingdom. I have said in the House before that we are considering the next stage in the development of the fast reactor—whether to have a full-scale demonstration reactor. We are conducting a thorough review of policy, taking into account the prospects for international collaboration as well as the issues raised in the Report of the Royal Commission on Environmental Pollution and by President Carter's recent statement.
No decision has been reached. It is within the recollection of the House that the recently published White Paper setting out our acceptance of the bulk of the recommendations of the Royal Commission included recognition of the importance of its proposal that there should be a special procedure ensuring full public consultation on major questions of nuclear development. We are considering the best way of achieving that.
My hon. Friend also commented on the statement by President Carter. President Carter made a major statement on nuclear policy on 7th April this year. One of the main features of the statement was a decision to restructure the United States breeder reactor programme to give greater priority to alternative designs of the breeder and to defer the date when breeder reactors are put into commercial use in the United States.
I understand that President Carter's proposals are currently being considered by Congress and that the outcome of its deliberations is unclear. But there are two comments that I want to make in response to my hon. Friend. First, despite the cut-back in the American programme, the United States Government still intend to spend an enormous sum of money—about $500 million—on the fast reactor this year. This is a much greater amount than we are spending in this country. Secondly, unlike the United States, we do not enjoy large indigenous reserves of depleted uranium. Our circumstances are rather different. We must take this into account in our policy review.
I was also asked about JET. The Prime Minister told the House on 30th June that the European Council had decided to remit the question of choice of the site of JET to Foreign Ministers with a view to reaching a final conclusion before the end of July. When the Foreign Ministers meet on 26th July my right hon. Friend intends to continue to press the claim for Culham. I mention this issue because it was raised by my hon. Friend the Member for West Lothian (Mr. Dalyell). I shall write to him about the three other specific points that he raised. In the course of the debate—