Electricity (Privatisation)

Part of the debate – in the House of Commons at 6:20 pm on 7th March 1988.

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Mr. Bruce Milian:

The right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith) started by giving a general welcome to the Government's proposals, but it was a pretty tepid welcome by the end of his speech. Almost everything that he said contained either explicit or implicit criticism of the Government's proposals. The Opposition welcome his remarks about the future and importance of the coal industry, especially in relation to the present crisis in Scotland.

I shall relate my remarks exclusively to Scotland. Last week, the Secretary of State for Energy gave no convincing argument for upsetting the present arrangements and introducing privatisation, but we were at least promised two companies in Scotland. In view of the behaviour of the South of Scotland electricity board during the past few weeks, I am happy that there will be more than one company in Scotland. I would not trust the present SSEB and its leadership with anything.

But we have heard no details. There will be adjustments in generating capacity between the northern and southern companies. The right hon. Member for Kincardine and Deeside mentioned adjustments of geographical areas. That was not discussed in the White Paper, and we do not know whether it will form part of the Government's proposals. There was an odd proposal for the joint ownership of the nuclear industry in Scotland, but the implications of passing the nuclear industry into private hands have not been properly explained by the Government. Indeed, it may pass into foreign ownership, because we have heard nothing about the protection of the national interest.

We have heard completely unconvincing arguments about competition, and the new concept in Scotland of competition by comparison. The ordinary domestic consumer in Glasgow can compare the accounts of the two companies to see which is more efficient, but he will still have to take his electricity from the southern company because of where he lives. What will be the good of his having all that information—which, incidentally, he can obtain now?

Private generation in Scotland would be a non-starter because we have such an excess capacity. The argument that the major industrial users can choose between the two competing companies does not bear serious examination. In Scotland, we shall have an arrangement different from that south of the border. We shall have two private monopolies set up with little regard for the public interest and an undefined role for the regulator on prices and other matters.

The present problem of excess capacity in Scotland will be worsened when Torness comes on stream later this year. In 1978, when I was Secretary of State for Scotland, I gave permission in principle for the building of Torness, although the decision to go ahead with the construction was not made until April 1980 by the former Secretary of State for Scotland, now the Secretary of State for Defence. At that time, there was a good case for deferring its construction for several years, but I shall not make too much of that point, because I have always supported nuclear power as part of our generating capacity. Now that I am outside Government, I shall not change the views that I held then, although there are now more public worries about the nuclear generating industry, in the light of Chernobyl and other incidents.

The problem of excess generating capacity in a publicly owned system, with the possibility of selling excess capacity to England, is entirely different from the problems that will arise under these proposals, when we shall have to sell electricity not to the CEGB but to a distribution company south of the border. That will be much more complicated, and I believe that it forms part of the background to the recent extraordinary behaviour of the SSEB. When the industry is privately owned, it will be landed with the problem of excess generating capacity, which is not a problem now, given the fact that there is no excess capacity in England and Wales.

This afternoon, the Secretary of State for Energy had the impertinence to say that it was a myth that the privatisation proposals pose any dangers to the Scottish coal industry. In view of the present crisis in the industry, he would be lynched if he made such a statement at a public meeting in Scotland. Here we have two nationalised industries in a public dispute that has gone to the courts. The SSEB denies that it has received a tender offer from British Coal at the price which British Coal says it has tendered. British Coal accuses the SSEB of telling lies. Last week, Lord Prosser, granting an interdict to British Coal in relation to coal supplies for Longannet and Cockenzie, said that if the SSEB went ahead with its present intention to buy all its coal from abroad, it would be catastrophic and irreversible for the Scottish coal industry.

The chairman of the SSEB, Mr. Donald Miller, says that he will abide by the court decision—that is very generous of him—but that he will evade it as much as he can. Despite what the court has said, he will buy no more coal from British Coal. If necessary, he will use Kincardine power station to its full capacity, burning foreign coal. He will use the maximum amount of oil generating capacity. Indeed, he will do anything rather than use the produce of the Scottish coal industry.

The head of a nationalised industry in Scotland is behaving outrageously, and the Secretary of State for Scotland has stood by and done nothing about it. In this case, standing by is an act of deliberate treachery to the Scottish coal industry. We learn from statements made on Sunday that the Secretary of State is now worried about the matter. When he made his statement in the House last week, and during Scottish Question Time, he was pressed many times to take action to bring the two parties together, find out what was happening and do something to resolve their differences.