Gas Prices

Oral Answers to Questions — Energy – in the House of Commons at 12:00 am on 11th February 1980.

Alert me about debates like this

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham 12:00 am, 11th February 1980

asked the Secretary of State for Energy what level of surplus arising from the sale of gas during the financial year 1980–81 is expected.

Photo of Mr David Howell Mr David Howell , Guildford

The precise level of forecast profits is a matter for the British Gas Corporation, but on the basis of the recently announced financial target I expect profits in the coming financial year to be of the order of £600 million before tax.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

That answer means that the Minister took a decision in total darkness, having no idea what the estimates would be. Does he agree that now that he has imposed the tax upon gas, this is tantamount to a declaration of war against both gas consumers and the gas industry, and does it not contradict his whole energy policy when at this moment he is attempting to increase the amount of gas consumed, especially for growth in industry?

Photo of Mr David Howell Mr David Howell , Guildford

The hon. Gentleman should be under no illusion but that the increase in the figure for the coming year which I have just mentioned is in line with what the British Gas Corporation recognised as necessary at the very least to overcome the danger, of which we were warned, that without increases in price of the size proposed for the coming year there would be a clear possibility of supply interruption. That is the danger that we face. Over and above that, the sort of profit that we are talking about for the coming year is needed and is in line with the colossal investment required to put in the new transmission lines and to meet the vast backlog of those who wish to have gas, which at present for both homes and factories is twice as large as normal—70,000 homes and 4,000 industrial concerns all waiting for gas. The money is needed to meet that demand, which, as I say, has been allowed to develop in recent years, apparently with the unrestrained blessing of the previous Government.

Photo of Mr William Clark Mr William Clark , Croydon South

Will my right hon. Friend confirm that the bulk of the profit comes from the industrial sale of gas rather than from domestic sales, that until now the domestic sale of gas has shown a loss, and that even with the increased prices for domestic gas the British taxpayer will be getting a return of only about 9 per cent. on his money, whereas the Government are borrowing at some 14 per cent. or 15 per cent.? Is it not about time that we stopped looking on nationalised industry as part of the welfare services?

Photo of Mr David Howell Mr David Howell , Guildford

For domestic gas sales the position is precisely as my hon. Friend puts it. In this present year there would broadly speaking, be a breakeven or zero profit position on sales of domestic gas. If there had not been permission to increase the price in the way that the British Gas Corporation believes to be right for the coming year, domestic gas would have been sold at a loss. If the Opposition are now arguing for subsidised energy prices in an age of energy shortage, this is taking us beyond even the usual level of perception of Socialist economics.

Photo of Mr David Stoddart Mr David Stoddart , Swindon

Does the Secretary of State realise that the public are beginning to think that the Government have a one-track mind on conservation, which means that they have only one conservation policy, namely, to price energy out of people's reach? Will he give an assurance that some of the excess profits made by the gas industry will be used for genuine conservation methods?

Photo of Mr David Howell Mr David Howell , Guildford

A conservation policy involves both price and encouragement, with the right information about how to respond to that price in the future. One of this Government's aims has been openly to explain to people the realities of the high-cost energy era so that they may know how to plan for the future in order to use energy efficiently instead of being led in a dance from year to year without ever being told the truth about price increases.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

Is my right hon. Friend aware that he has no powers under the Gas Act 1972 to take back the windfall profits of the industry, and should not this be considered extremely carefully since these moneys could be deployed for the future energy requirements of the United Kingdom?

Photo of Mr David Howell Mr David Howell , Guildford

My hon. Friend is right. The present system under which the moneys are returned to the national loans fund is the one for which there are powers, and there are no powers to take them back in tax. If the latter were to be the arrangement, new powers would have to be taken.

Photo of Mr Joe Ashton Mr Joe Ashton , Bassetlaw

Will the Secretary of State confirm that it is the Government's policy to tax gas? Why has there not been any suggestion of a scheme, either from him or from the Treasury, to give massively increased grants for insulation? Has the right hon. Gentleman seen the reports in the press that the insulation industry is scared that even the existing grant will be reduced? Can he promise any increased grants for industry or domestic users, in order to carry forward a genuine conservation programme?

Photo of Mr David Howell Mr David Howell , Guildford

The Government have recognised, as have the nationalised industry consumer councils, that while it is the right aim to move towards economic energy pricing, for those in hardship there should be extra help to meet that hardship, to encourage both consumption and conservation. That is recognised. On the broader question of how much people should be given in additional grant or incentiveto do what it is anyway in their interests to do, that is a matter which the hon. Gentleman should consider carefully before proposing that hard-pressed wage earners and taxpayers should pay money to others for things that they would do already for themselves.