Orders of the Day — Electricity Bill

– in the House of Commons at 3:32 pm on 13th December 1988.

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Order read for resuming adjourned debate on Question [12 December], That the Bill be now read a Second time.

Question again proposed, That the Bill be now read a Second time.

[Relevant documents: Third report of the Energy Committee of Session 1987–88 on the Structure, Regulation and Economic Consequences of Electricity Supply in the Private Sector (House of Commons Paper 307), and the third special report of the Committee of the same Session containing the Government's observations on the third report ( House of Commons Paper 701).]

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

There were some inordinately long speeches earlier yesterday afternoon. I propose, therefore, to limit speeches to 10 minutes between 6 pm and 8 pm today. I hope that right hon. and hon. Members who are called after that time will endeavour to keep to that limit, because it enables all who wish to be called to be accommodated.

I must announce to the House that yesterday, I selected the reasoned amendment in the name of the hon. Member for Banff and Buchan (Mr. Salmond).

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office 4:28 pm, 13th December 1988

As I listened yesterday to the opening speech of the hon. Member for Sedgefield (Mr. Blair), I could not help but note that he presented himself as a champion of the consumer and based many of his arguments on benefits that the consumer would enjoy if a Labour Government could be elected or if Labour policies could be pursued.

In the kindest and gentlest way possible, I exhort the hon. Member for Glasgow, Garscadden (Mr. Dewar) not to be tempted in a similar direction. If he sought to present himself as a champion of the Scottish consumer, I should have to remind him that, under the present Government, electricity prices in Scotland have increased by the equivalent of 2 per cent. in real terms, whereas from 1974 to 1979 they increased by no less than 20 per cent. in real terms. That phenomenon was repeated throughout the United Kingdom.

Let us judge the Opposition not by their words but by their deeds, because that will provide us with a fine basis on which to determine the implications for the consumer. An additional factor is that the Bill allows for the first time for compensation to be given to the consumer in the event of an inadequate service being provided. I understand that the Opposition are to vote against that provision, which is unprecedented in this country.

I listened with great care yesterday to the hon. Member for Glasgow, Cathcart (Mr. Maxton) who, having made his contribution to the debate, appears to have decided that it was not necessary to be present for the second day. [HON. MEMBERS: "He is here."] We should be very pleased indeed if the hon. Gentleman could return every time we mentioned his name. He bewailed the fact that there was not to be a separate Scottish Bill and implied that the Government had made an improper and unacceptable decision in that respect.

I wished to be absolutely fair to the hon. Gentleman, so I examined his argument, which I found totally devoid of coherence. He did not at any time explain, for example, why it was acceptable for the Labour Government to bring together 53 Scottish undertakings with 500 English undertakings in a single Act of Parliament in 1947, but unacceptable for a Conservative Government to return to the private sector, in a much simpler way, the consequences of that nationalisation.

I presume that the hon. Member for Cathcart has paid the Bill cursory attention and will know that, of 103 clauses, only five refer exclusively to Scottish affairs. That means that, if we had accepted his advice, we should have burdened the House with two major Bills, largely identical in form and substance.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

The Secretary of State will recall that one of my questions yesterday elicited that response from the Secretary of State for Energy. To read the Glasgow Herald and The Scotsman one would have thought that I was not here yesterday, but we are getting used to that. If the hon. Member for Glasgow, Govan (Mr. Sillars) had asked the question, we should all have read about it on the front page of every newspaper.

Does not the Secretary of State agree that the arguments advanced yesterday by my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) were valid? When the industry was nationalised, we had one Minister and one Department to deal with it. Now, however, the Secretary of State for Scotland has separate responsibilities. The reason that he did not want to have a separate Bill for Scotland was that he would have had to appoint a Scottish Committee to consider it. He does not have the troops to man Scottish Standing Committees, just as he does not have the troops to man the Select Committee on Scottish Affairs. Why does not the right hon. and learned Gentleman come clean?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman said that he was puzzled that his remarks did not get into the press; his most recent contribution provides us with a convincing explanation for that. As I have tried to explain, 98 of the 103 clauses do not refer specifically to Scotland, so to insist on a separate Bill of a comparable size would therefore have been absurd. It was certainly not the policy pursued by the Labour Government when it nationalised the industry, in a much more complex way, in 1947, and I do not recall the Labour party objecting to that decision.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

The Secretary of State has argued positively and specifically that there should be only one Bill. Perhaps he will explain why, when I raised the matter earlier this year, he told the House that he and his right hon. Friend the Secretary of State for Energy had not yet made up their minds.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

We had not made up our minds then because we wanted to identify the extent of the difference between a Scottish Bill and an English Bill. We decided that it would be pretty silly for the United Kingdom Parliament to deal with two major Bills 97 per cent. of whose provisions were identical. I suspect that the hon. Member for Midlothian (Mr. Eadie) might have reached the same conclusion had he thought about the matter. I recollect that, at the beginning of the last Labour Government's period of office, they proposed to introduce provisions for elected assemblies for Scotland and Wales in a single Bill. It took several months, if not years. of argument to persuade them that that was not entirely appropriate. Opposition Members should look to their own record.

I shall concentrate on the elements of the electricity industry that are distinctive to Scotland, but first, I shall comment on the main thrust of the Opposition's arguments yesterday. It emerged clearly from the eloquent speech of the hon. Member for Sedgefield that the Labour party in the 1980s remains wedded to the concept of monopoly. We have known for many years that monopoly, whether private or public, is undesirable if it can be avoided. The Monopolies and Mergers Commission exists precisely to try to prevent the emergence of unnecessary monopolies.

I had hoped that the Opposition would address the matter from the same starting point as the Government: we have had a state monopoly for 40 years and if it is possible in any way significantly to diminish the monopoly element in the electricity industry we should do so. We should not be divided on that on a doctrinal basis.

The Government have never sought to suggest that electricity is an industry that can be considered suitable for the application of classical concepts of competition. Of course that is not possible, and of course aspects of the electricity industry are natural monopolies. Nevertheless, it is clear that under the Bill it will be possible to introduce real competition in a number of sectors of the electricity industry for the first time. For example, independent generators will have the opportunity to come forward, and in various parts of the United Kingdom there will be competition between generators.

In addition, industrial bulk purchasers of electricity will have the opportunity to choose where to purchase their electricity. [HON. MEMBERS: "In Scotland?"] The provision will apply in Scotland. If hon. Members had read the Bill, they would know that provision for common carriage for electric power applies throughout the United Kingdom, and that bulk purchasers in Scotland will not be obliged to purchase all their electricity from the generator in their area. In addition, the opportunity available to Scotland to export surplus electricity will mean considerable competition as regards the best terms for that, which will be of considerable benefit to the Scottish consumer.

No one has suggested for a moment that perfect competition will be available in the electricity industry. The hon. Member for Sedgefield seems to suggest that, if we cannot have perfect competition, a monopoly is preferable. That is totally at variance with the experience of the rest of the Western world, and against the interests of the British public, whether in Scotland or in England.

The Opposition's assumption that the electricity industry under state control has had a perfect record of planning for the future needs to be examined. [HON. MEMBERS: "No one has said that."] I am sorry, but the hon. Member for Sedgefield said specifically that the whole purpose of nationalisation was to get away from 80 per cent. over-capacity in the electricity industry. I have to inform the Opposition that over-capacity is not a problem of the past. In England there is under-capacity and in Scotland there is not 80 per cent. but almost 100 per cent. over-capacity. That offers considerable benefits to the Scottish electricity industry. As a Scottish consumer I am not complaining about that phenomenon, but whether the British taxpayer has benefited from that system is another matter.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

Does the Secretary of State accept that if, at any time in the past three years, with the opening of Torness coming up, he could have doubled the size of the interconnectors, Scotland would be exporting 2 GW instead of 1 GW to England, and the problems of the Scottish coal mining industry in the past two years would have been solved? The right hon. and learned Gentleman must accept responsibility for planning alongside the Secretary of State for Energy in the past two years.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman has misunderstood my point. Electricity consumers in Scotland demand less than 6,000 MW. As a consequence, we have doubled the capacity in Scotland, and it now stands at 12,000 MW.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

The same problem applies in Wales.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman confirms my point, that state control and central planning have not led to a rational distribution in the provision of electricity capacity, which the hon. Member for Sedgefield implied was the purpose of nationalisation in the first place.

The third factor is that, as long as an industry is ultimately controlled by the state and by Ministers, there will inevitably be political interference in the running of that industry. That has been the experience of all nationalised industries, whether under a Labour or a Conservative Government.

One of the electricity industry's crucial requirements is that, as with every other industry in the private sector in the United Kingdom, it should be able to make its own investment decisions based on its investment needs and on the resources that it can raise in order to fund that investment. But the House must be aware that, under successive Governments over many years, the borrowing limits of nationalised industries have in part been determined by their investment requirements and in part by the Government's overall public expenditure policy. It must be the case that the electricity industry, unlike those in the private sector, has been penalised in that it has not been able to plan on the basis of its requirements exactly what its investment requirements may be.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

What else are the provisions in the Bill relating to nuclear power, except a means of preventing the privatised companies from making their investment decisions and political interference by the Government in the industry's investment decisions?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman is right to say that specific powers in certain aspects of the industry remain available to Governments, but I hope that he is not suggesting that complete control over all the industry's investment decisions is preferable.

We have never said that the Government should wash their hands of all matters involving the electricity industry, which has strategic importance in the United Kingdom, as the Bill makes abundantly clear. My point is that, until now, all the industry's investment decisions have been subject to Government control. The fact that in future that will apply to one specific area—nuclear power—is considered a significant improvement by the industry.

Let me deal now with the specific conclusions that we have reached on the implications of privatisation for the electricity industry in Scotland. We start with three specific features that are peculiar to the industry in Scotland. First, Scotland has a diversity of resources for electricity generation hardly to be found in any other part of the United Kingdom. Oil, coal, hydro, and nuclear are in abundance. That is peculiar to north of the border.

Secondly, as I have already said, we have a surplus capacity which is unprecedented in the United Kingdom and which offers substantial opportunities, as the hon. Member for Cardiff, West (Mr. Morgan) said, through the development of the interconnector, for export to other parts of the kingdom which do not have such a surplus.

Thirdly, Scotland has a substantial nuclear capacity. Over 50 per cent. of Scotland's electricity requirements will be provided by the nuclear part of the industry when the Torness power station has been commissioned.

It is against that background that we examined the precise and proper way to privatise the industry in Scotland. The first question that had to be examined was vertical integration. For a number of years, Scotland's industry has been administered on the basis of vertical integration of generation, transmission and distribution. We did not automatically assume that that was essential; we looked at the matter with an open mind to see whether it made sense in the Scottish context to divide generation from transmission and distribution.

We came to the conclusion that that would be inappropriate, for two reasons. First, the size of the Scottish market makes it inappropriate. Electricity demand in Scotland is equal to about the equivalent of one English board. Therefore, to divide generation from transmission and distribution would have created relatively small companies whose prospects of economic viability would have been far more uncertain. In addition, we would have had to take into account the fact that, in the north of Scotland, in the area of the Hydro Board, a proportion of the hydro power is dedicated in terms of distribution to particular parts of the north of Scotland, from which it could not be physically separated. For those reasons, plus Scotland's particular demography, we concluded that vertical integration made sense and should be continued.

The next question was whether there should be a single Scottish private company or two. I am bound to say that our announcement that we had concluded in favour of two Scottish companies was widely welcomed on both sides of the House by all political parties. It was not an easy decision, because, while there was a natural desire to prevent the creation of a single private monopoly in Scotland of the kind that would have been achieved if the South of Scotland electricity board's proposal had been adopted, there was on the other hand a recognition that electricity generation in Scotland had been developed on the basis of a single market and, particularly with regard to nuclear power, on the basis that it would be available to consumers in all parts of Scotland.

It was on that basis that we put forward the proposals that we announced in the White Paper and subsequently —the creation of two companies in Scotland based on the SSEB and the North of Scotland Hydro-Electric Board, but with certain exchanges on a contractual basis of capacity and other such matters. In addition, a nuclear company was to be created, wholly owned by the south company and the north company, in order to ensure availability throughout Scotland of nuclear power in a form that meets the requirements of the Scottish consumer.

We took account of the fact that, until now, there has been a joint generating agreement which has had certain advantages through the application of the merit order scheme, but which has also had certain disadvantages because it has concealed the costs of the two parts of the industry, which is undesirable from the consumers' point of view. Therefore, we sought to develop a system which enabled the merit order approach to continue for the benefit of the consumer, but which created a new transparency with regard to the respective costs of the generation of electricity in the two companies. That can only be to the benefit of the public.

As a result of the decision to create two companies, we have had to consider the role of the regulator. We have accepted from the beginning that in Scotland, as in England and Wales, where there is not proper competition throughout the industry it is necessary to have a director general to deal with regulation and for him to have the primary responsibility of ensuring that, in those aspects of the industry where competition does not apply, the consumer should be properly protected and that other matters should be properly dealt with.

As we have made clear, the director general is a joint appointment by my right hon. Friend the Secretary of State for Energy and me. I noticed that last night the hon. Member for Cathcart expressed some anxiety, incredulity or dubiety about how the director general could be answerable to two Secretaries of State. This is not an unusual phenomenon. The Forestry Commission is answerable to three Secretaries of State in respect of its functions in the various parts of the kingdom. There is no reason why that should not apply in the case of the director general. He will have an office in Scotland, as in England, along with a staff to service the requirements of regulation north of the border. There is no reason to believe that his responsibilities will not be effectively carried out.

To consider, instead of that arrangement, having a separate Scottish director general would have been foolish because, in practice, they would have had to work so closely together as to make the separation of their responsibilities one of form rather than substance. If Scotland is to benefit from the substantial export of surplus electricity south of the border, clearly, the questions of regulation, especially of the interconnector and of matters of equal interest to consumers both north and south of the border point to the sort of system proposed in the Bill.

Photo of Jimmy Hood Jimmy Hood , Clydesdale

Given that there is to be joint responsibility between the Secretary of State for Energy and himself, will the Secretary of State for Scotland say who will have the casting vote if they disagree?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

Which board is the hon. Gentleman talking about?

Photo of Jimmy Hood Jimmy Hood , Clydesdale

If the two Secretaries of State disagree, who will have the casting vote?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

My right hon. Friend the Secretary of State for Energy and I live in almost total harmony from one day to the next. In the improbable scenario to which the hon. Gentleman refers, and on the rare occasions when Ministers do not agree with one another, there are governmental procedures for resolving problems. There are precedents, even if they do not apply in this context. I advise the hon. Gentleman not to worry too much about that. I am sure that we shall be able to devise an appropriate procedure whereby agreement will be reached.

Photo of Jimmy Hood Jimmy Hood , Clydesdale

Will the Secretary of State send me written details of the procedure, because I would be interested to see them?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I shall certainly consider that constructive request, but the hon. Gentleman must appreciate that, as his question is hypothetical, so my answer will be based on an improbable hypothesis.

The role of the regulator is specified in a number of detailed ways in the Bill. I wish to comment particularly on the non-fossil fuel obligation and the attendant levy which is dealt with in the Bill.

Liability for a non-fossil fuel obligation applies in principle throughout the United Kingdom but there is no need in the foreseeable future for an order applying it to Scotland because of the high level of nuclear capacity in Scotland, which will be substantially enhanced when Torness becomes available.

Clearly, there will be no need in the foreseeable future for any additional provision for non-fossil fuel. That also applies to the levy, which is a consequence of the non-fossil fuel obligation. Any exports that the Scottish industry may make to the distribution companies in England—this also applies to exports from elsewhere in the United Kingdom or from France—would be subject to that requirement in order to ensure a proper competitive relationship between those supplying the electricity industry.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

Would it be permissible for an English generating company to build a generating station in Scotland, in particular a nuclear power station?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

It is possible for anyone wishing to introduce new generation to seek to do so. They must obtain a licence from the director general. The rules governing the provision of such a licence in Scotland will be no different from those elsewhere in the United Kingdom. Whether, in the next few years, anyone is likely to wish to invest in a new nuclear power station in Scotland is another example of a hypothetical question. The legal procedure to be followed is clear.

As hon. Members will have seen from the Bill and the information provided with it, the capital restructuring that may be required in Scotland is significant, and different from that in England and Wales. Largely as a consequence of the over-provision of capacity in Scotland, there is a high level of debt there. It stands at £2,700 million at present. As the House will have seen, the Bill provides for the Secretary of State to have the power, if he so chooses, to convert some of that debt into equity or debentures or to alter the capital structure of the companies in question before flotation takes place. No decisions have been reached on that at present, but those matters will have to be addressed in order to ensure that important public assets are dealt with in a responsible and constructive way.

I shall now deal with the opportunities that will exist for Scotland and many English regions as a result of privatisation.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

I hope that I am not interrupting the Secretary of State just as he is about to move on the coal industry and his responsibility, together with the Secretary of State for Energy, for ensuring the future of deep mining in Scotland. Surely, before Christmas, he will say something about the threat hanging over Longannet and other deep mining complexes in Scotland.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

There are opportunities, challenges and concerns facing the coal industry in Scotland. We have seen a substantial expansion of the opencast sector of the industry.

Photo of Dr Lewis Moonie Dr Lewis Moonie , Kirkcaldy

What opportunities are there for deep mining?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

If the hon. Gentleman will listen, I will tell him.

Over the past 10 years, there has been tremendous growth in the opencast sector, so that it is now producing over 50 per cent. of the coal mined in Scotland. The latest decision on the Kilroot power station in Northern Ireland provides further welcome opportunities for coal from the Ayrshire fields. The decision on that was welcomed by Members representing the area as good news for employment.

Clearly, we hope to see a substantial future for the deep mining sector. Exports of surplus capacity provide the best prospects. If the two Scottish companies can export a significant proportion of their surplus electricity, it should be possible to see a significant demand for deep-mined coal in Scotland. Much of the answer to the problem lies with the coal industry through improvements in productivity and the quality of coal produced from the deep-mined pits. I hope, together with the hon. Member for Dunfermline, West (Mr. Douglas), that it will be possible to see real developments which will secure the future of those pits. I cannot give any guarantee, but I believe that it will be influenced by the success in exporting surplus electricity in the way I have suggested.

One of the most difficult aspects of the Opposition's view to understand is the implication of nationalisation and privatisation for regional policy. Over the years, we have seen a policy of nationalisation pursued by Labour Governments. Whatever the doctrinal or ideological reasons for that or whatever economic justification they may feel their arguments have had for the United Kingdom, there can be little doubt that one of the consequences of nationalisation was the diminution of the private sector in Scotland, Wales and many of the English regions.

In successive nationalisations, we have seen the amalgamation of large numbers of private sector companies, many of them in the regions, and, as a consequence, the concentration of control in the hands of the Government of the day in London. Scottish Members, Welsh Members and hon. Members representing the English regions have been concerned that that has been a weakening factor for the economy of their regions.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

Would the Secretary of State care to estimate the percentage diminution of the Scottish private sector during his tenure of office?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

Nothing that the Government have done in terms of legislation has led to the loss of a single private sector company. Under successive Labour Governments, the opposite has taken place. For example, we know that the nationalisation of the electricity industry led to the nationalisation of some 53 separate Scottish undertakings, some of them municipal and others in the private sector. We know that, when British Shipbuilders was nationalised in 1977, it led to the loss of private sector companies such as John G. Kincaid in Greenock, Swan Hunter at Wallsend, Cammel Laird in Birkenhead and other companies in various parts of the United Kingdom.

When British Steel was nationalised in 1967, it led to the transfer of control to London of Dorman Long and Company and of Colvilles, both from Scotland, of Richard Thomas and Baldwins and the Steel Company of Wales, and of the Consett Iron Company in north-east England. On each occasion that there has been nationalisation, one consequence has been the erosion of the private sector in the English regions and in Wales and Scotland. One of the consequences of privatisation will be a significant move in the opposite direction.

It is not just I who take that view. I am sorry that the hon. Member for Gordon (Mr. Bruce) is not present in the Chamber today. Although, as I understand it, there was a limit on the time available to him in yesterday's debate, I am sorry that he did not repeat the remark he made in Central hall, Westminster, on 12 March, when he remarked that the privatisation of the electricity industry would create powerful corporate headquarters in Scotland, Wales and the regions, which could be engines of growth for these economies. I am delighted that that is the view of the SLD's energy spokesman. One must assume that its members will go into the Government lobby this evening to help facilitate the creation of powerful corporate headquarters in Scotland, Wales and the English regions; if they choose not to do so, I shall be interested to know how they reconcile that decision with their own interpretation of the benefits that the Bill will bring.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

If the Secretary of State will not say why he has allowed the diminution of Scottish private sector companies, will he say why, if he is asserting that privatisation means Scottish control, he did not argue for a Scottish Telecom, Scottish Gas or Scottish Steel?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

Since the hon. Gentleman and his party came to slightly greater prominence in the last few months, most of Scottish industry has been pointing out how disastrous it would be for the Scottish private sector if his party's views were ever translated into policy. I would be more impressed by the hon. Gentleman's comments if he were not pursuing a policy disastrous for new as well as existing investment in Scotland.

As to previous privatisation, we always seek to identify where it makes sense to implement separate Scottish or English privatisation, but as most right hon. and hon. Members believe in a united kingdom, it is not always appropriate or sensible to split an existing industry. In the case of electricity, we already have a Government-controlled structure of individual Scottish companies, so privatisation presents an exciting opportunity to see two new major Scottish companies established north of the border. The electricity industry has not been part of the Scottish private sector for 40 years. As a result of the Bill, it will be a major part of it, and those who wish to encourage the growth of Scottish-based companies welcome that.

Photo of Alistair Darling Alistair Darling Shadow Spokesperson (Home Affairs)

Does the Secretary of State accept, that while the companies' headquarters may be in Scotland, Scotland does not have enough money to buy the companies? The lion's share of the issued shares will probably be owned outside Scotland and possibly abroad. The Government are merely transferring an electricity industry that we now own collectively to individuals who have little or no interest in Scotland.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman now uses arguments contrary to those that he used previously. He will acknowledge that the headquarters of the Scottish electricity industry must be based in Scotland. As a consequence, the industry's requirements will be serviced from within Scotland. As to ownership, both consumers and employees of the Scottish electricity companies will have an opportunity to acquire shares. I cannot anticipate, any more than the hon. Gentleman can, how they will respond to that opportunity. The hon. Gentleman will recall making the same criticisms with regard to the privatisation of the Scottish Bus Group. He now has egg on his face because of the response of the group's employees, who wish to acquire ownership of the companies in which they work.

There are 5 million Scottish consumers north of the border who will have an opportunity to acquire shares, as will Scottish financial institutions and those who work for the industry. If the hon. Gentleman takes the view—

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

If the hon. Gentleman will not allow me to finish my remark, I can hardly be expected to give way to him.

I cannot predict what proportion of the electricity industry will be acquired by shareholders resident in Scotland. I can predict that the industry's privatisation will create Scotland's two largest private sector companies and make an enormous contribution to the growth of private sector enterprise north of the border.

Photo of Mr Norman Hogg Mr Norman Hogg , Cumbernauld and Kilsyth

Has the right hon. and learned Gentleman noticed that the headquarters of both Scottish electricity boards are already located in Scotland? Also, where does he get his figure of 5 million consumers? Scotland has a population of fewer than 5 million people, and even allowing for that tiny part of the north of England that is supplied by the SSEB, the boards' consumers cannot possibly total 5 million. Finally, given that the North of Scotland Hydro-Electric Board accounts for only 2·5 per cent. of the nation's consumers, how many of them does the Minister estimate will purchase equity in the new companies?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The creation of a private sector hydro-electric company presents an exciting opportunity to the north of Scotland. It will be by far the largest company there. As hydro-electric power has often been seen as a resource that comes from the north of Scotland, and as a renewable source in the Highlands and Islands, I thought that the hon. Gentleman would welcome the opportunity that the Bill provides for the people of the Highlands and Islands, and of Scotland generally, to acquire at least a proportion of the company providing their electricity.

I conclude by referring to remarks made in the House on 3 February 1947 by the then Minister of Fuel and Power, Mr. Emanuel Shinwell, when moving the Second Reading of the Bill nationalising the electricity industry: Electricity is an all-pervading service, and if it is to be satisfactory we must maintain the closest contact with local requirements, together with a sense of local responsibility … It is far from my desire that problems which can be settled locally shall be taken to London."—[Official Report, 3 February 1947; Vol. 432, c.1410.] Mr. Shinwell's solution, and that of the then Labour Government, was to nationalise 560 separate electricity undertakings and to transfer control of them to London. The Conservative Government of the 1950s broke up that state monopoly to some extent by the creation of the South of Scotland electricity board with headquarters in Scotland and answerable to the Secretary of State for Scotland. It is entirely appropriate that it should be another Conservative Government that propose taking that policy one stage further and creating two new Scottish electricity companies to meet the requirements of Scottish consumers in a more efficient, successful and dynamic way than it has been possible to enjoy for the past 40 years.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden 5:08 pm, 13th December 1988

If at some point during the course of this evening I descend into a strangled squeak, it will not be due to any lack of conviction in the arguments I advance.

I was not greatly impressed by the arguments used by the Secretary of State, and I hope that he will not resent me saying so—although I give him praise for making a better speech than did his Minister of State last night.

Responding to last night's debate, the hon. Member for Galloway and Upper Nithsdale (Mr. Lang), argued, almost as the theme of his speech, that the Government are privatising the electricity industry "because we bother". It would be overstating the case to say that that was a memorable comment.

Photo of Mr Ian Lang Mr Ian Lang , Galloway and Upper Nithsdale

I am grateful to the hon. Gentleman, who has obviously caught my affliction, for allowing me to intervene. If he is to quote me, perhaps he will kindly do so accurately.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

The Minister said, "We bother", and then went on to speak of anything and everything except electricity privatisation. I thought that I would help him by trying to discover why the Government have bothered to take this course. I want to examine the rationale, and to look for some of the answers that Ministers have been unable to provide.

As I understand it, the crux of the Government's argument is that, although privatisation may not produce "classical" competition, it at least produces useful competition. Competition is of course a slogan with which Ministers are at home, but it is not one that is universally applicable, and I consider it particularly inappropriate when applied to the electricity industry.

The Secretary of State for Scotland criticised the industry's record, suggesting that it had either been negligent in some way or had simply not responded properly to market forces, with the result that we had been left with a heavy over-capacity. As one of my hon. Friend's pointed out, that was a rather odd argument, particularly as one of the few props on which it is balanced in Scottish terms is over-capacity in relation to the interconnector and the possibility of sales south of the border.

In any event, perhaps the Minister will agree with me that the electricity industry in Scotland has been—if I may coin a phrase—"efficient, well-managed and successful" in recent years. I use those words because the Minister used them in March this year. This is not a case of the industry having to hang its head in shame; it has done splendidly, and the Minister has said so. We are left with the assumption that, splendidly though it has done, it could do better under what I suppose would be called the spur of competition.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

I am grateful to the hon. Gentleman for giving way, and I hope that he can now rest his voice for a moment.

Why is the hon. Gentleman so fulsome in joining in the Minister's praise of the SSEB, which has built nuclear capacity fat in excess of demand and in defiance of the wishes of many of the communities in which it has been based?

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

I do not know which communities the hon. Gentleman means, but I hold to my general point that the electricity industry has served the communities well in the broader sense. I will not be put off by the hon. Gentleman, who is very much in the second division of the Scottish league.

Let us look at the arguments on competition which the Secretary of State has used, and to which he has very fairly referred today. On 2 March he said: I do not consider that it would be acceptable to create a single monopoly which would place the ownership and control of the entire Scottish industry in a single set of hands, whether or not involving a regional sub-structure."—[Official Report, 2 March 1988; Vol 128, c. 977.] That was a rejection of the case argued by the SSEB, which wished for one company in Scotland with two wholly owned operating subsidiaries. The right hon. and learned Gentleman invited us to assume that, while a monopoly supplier and generator would not do, if by some sleight of hand or alchemy that single monopoly were split into two monopolies, complete in their own right, Scottish consumers would be given the necessary advantages. As an argument, that is rather lame, as I think the right hon. and learned Gentleman recognises.

The Secretary of State returned to the argument on 7 March, however. On that occasion he unveiled for the first time the argument to which he referred today, the argument about non-classical competition. He said: I must advise those hon. Members"—that is, those who had made a mockery of his arguments— "that they start from a false premise, so it is not surprising that they reach a wrong conclusion. They start from the false premise that the Government are somehow maintaining that it is possible to achieve classical standards of competition in the electricity industry… my right hon. Friend the Secretary of State for Energy made it clear that, in transmission and distribution, we are dealing with natural monopolies."—[Official Report, 7 March 1988; Vol. 129, c. 117] I am sure that he did make it clear, and for once he got it right: we are dealing with natural monopolies. Now, with great tenacity but no conviction, Ministers maintain that we are not dealing with natural monopolies, and that a form of useful competition is being achieved. That was given very short shrift by the House and by the Select Committee.

On 2 March the Secretary of State went on to say: The two-company structure will provide competitive pressures within the industry in Scotland. In the short term, there will be potential for competition by comparison—". At that point he was interrupted by laughter, an unusual accolade for one of his efforts. He continued: —by which means customers will have a basis for comparing and assessing the prices and service they receive. By helping to ensure effective regulation of prices, this will be an important gain for the consumer."—[0fficial Report, 2 March 1988; Vol. 128, c. 977.] If the Secretary of State believes that, he is the only person who does. The Select Committee on Energy, chaired by the hon. Member for Havant (Sir I. Lloyd) and with a Conservative majority, pointed out that yardstick competition was largely meaningless. That was a pretty fair and balanced summation.

I am prepared to concede that in theory there may be some marginal advantages for large industrial consumers, but only for a small handful, certainly in Scotland. Almost all other industrial consumers, and certainly all domestic consumers, will see the "competition by comparison" argument as empty and rather cruel nonsense. I believe that even in Government circles there is a lack of confidence about it. In their response to the Energy Committee report, at paragraph 62, the Government refer to Indirect competitive pressures… The key role of the Director in analysing and publicising the performances of the two companies"— here they strike a rather anti-climactic and unconfident note— should not be under-estimated. It probably should not be underestimated; it would certainly be very difficult to overestimate it. I should have thought that if it exists at all it is at the margin of the edge of any reasonable argument.

Let us suppose that I am a domestic consumer in the city of Glasgow—part of which I happen to represent—and, following the advice of the Secretary of State, do a comparative study in depth. I get hold of all the regulatory tables and figures and come to the conclusion that the privatised monopoly that services me is not doing the job that it should be doing. What can I do? I challenge the Secretary of State for Scotland to tell me what I can do except continue to take the electricity and nurse my anger to keep it warm.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

May I make two points? First, certainly nothing could be done at present. Secondly, under the Bill, for the first time the consumer will be entitled to compensation if he is receiving inadequate services from his electricity company. I understand that the hon. Gentleman is proposing to vote against the Bill containing those provisions.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

If I can find a chartered accountant who will, on an analysis of financial performance, return on capital, assets and tariffs conclude that the SSEB—or a successor private company—is doing worse than, let us say, the East Anglia board, can I lodge a claim for compensation?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

First, the hon. Gentleman knows perfectly well that we were talking about standards of service. Secondly, he should remember that bulk purchasers of electricity will indeed be able to change their source of supply, which they certainly cannot do now. Again, the hon. Gentleman is saying that, because perfect competition is impossible, we should stick with total monopoly.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

I do not think that for the vast majority of consumers there will be any competition worth talking about. The advantages being advertised simply do not exist, and the Government should face up to that.

The Government have been caught in complete confusion over their arguments. On the one hand they boast that privatisation will be an enormous asset: they have to do that to bolster the competition case. On the other hand they boast that regulation will stop or at least limit the damage that would result if competition actually existed.

The major point that the Secretary of State is making again and again—he made it, fairly, during this debate—is that Government interference in the electricity industry is a bad thing, as are inhibitions placed on managerial judgment; that they should be done away with, and would be at least diminished by privatisation.

On 7 March, the right hon. and learned Gentleman referred to the inevitability that any industry controlled by Government is subject to interference from Government."—[Official Report, 7 March 1988; Vol. 129, c. 116.] There is some truth is that, although interference is a pejorative way of putting it, yet in almost every speech the Minister will be spiriting up as a reassurance the all-embracing omnicompetent registrar, suggesting that he will protect us against the dangers and the damage that could result from competition and from handing over an essential service to a company that is run on the basis of profit and the interests of the shareholders.

Paragraph 29 of the Select Committee report states: There will be a price control formula which will limit the price to be charged to consumers.

We are being reassured that there will be someone to limit the price rises that we would have expected if we merely handed over a natural monopoly to a group of directors with a legal duty to maximise profits for the shareholders. That is the essence of our case. The Government are asking a group of directors, a private company, a profit engine to act in a way not normal to such an animal. On one hand the Government are saying, "That is what we are creating," and on the other hand they are rushing to stop it acting in the way for which it was built by appointing an all-powerful registrar.

Non-classic competition simply will not do. As the Secretary of State for Energy said, it is a natural monopoly, and natural monopolies force up profit margins and prices and have to be regulated. That is the catch 22, the inconsistency in the Government's case which has not been answered properly.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

I am happy to give way to the only Scottish Conservative Member in the House.

Photo of Mr Allan Stewart Mr Allan Stewart , East Renfrewshire

Does the hon. Gentleman agree that, whatever may be the case about distribution, generation is certainly not a natural monopoly?

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

It will be an actual monopoly in Scotland. If the hon. Gentleman dislikes that, no doubt he will table a relevant amendment to the Bill when the opportunity arises.

I now turn to the arrangements for the regulator—a rather odd and distinctive argument. The Bill is silent here, and I take the Minister's point that it is not necessary to spell out which Secretary of State will be in control or which Secretaries of State will have a finger in the pie. However, there is a case for a separate regulator for Scotland. The arguments were set out perfectly well in the Select Committee's report to which I have referred. Paragraph 60 of the Select Committee report makes it clear that there will be a separate office in Scotland and a separate Scottish official who will be responsible to the Secretary of State for Scotland for all he does in relation to the Scottish industry. Logically, there should be a separate regulator. It is not a matter of enormous principle, but that would be the sensible, practical approach. I certainly prefer the views of the Select Committee to those of the Secretary of State.

I am disappointed by what the Secretary of State had to say about the independence of the companies being created in Scotland. I make my point more forcibly because my disappointment was sharpened by the trailing in the press of the important and exciting things that the Secretary of State would say. Today's edition of The Scotsman remarked that he would outline the powers that will be taken to act as a barrier to a takeover from abroad or from England. However, we received only an interesting account of the possibilities of share ownership in Scotland, but no guarantees as to how the control or the independence of the companies would be maintained.

This is not a minor point, and as the Secretary of State knows it is spelt out again in paragraph 14 of the Select Committee report: The electricity industry is of considerable strategic importance. The new companies will therefore be protected from unwelcome takeover by the retention by Government of a special share. We are entitled to a good deal more detail than that. Perhaps the Minister who replies to the debate will say something about it, as presumably it applies in England as it does in Scotland.

The Scottish companies will be small—certainly the northern company will be small by international or United Kingdom standards—and I should have thought that they will be open to a predatory raid. I hope that we shall hear something about the defences that will be put in place and how those defences will be manned. I am sure that the Minister will accept that there is cynicism in Scotland, particularly after the Britoil experience, about golden shares and the reserve of powers to Ministers. It is very important that those matters are spelt out adequately during the passage of the Bill.

Perhaps the Minister, or the Secretary of State for Energy, will say a few words about the terms and conditions of the sale and when the Scottish companies are likely to be on offer. Has a running order been decided? I am told, and there are certain strong rumours, that four English distribution companies will go first, then one of the generating companies and then possibly one or both of the Scottish companies. It would be fair and useful if we were told about those decisions, if they have been taken.

I was also disappointed that the Secretary of State remained pretty mum about the interconnector. We all know that its present capacity is equivalent to 850 MW and that plans or a scheme propose its expansion to 1,600 MW. Obviously that is immensely important in terms of the coal burn in Scotland and the capacity of the Scottish power generating industry. I am told that the cost will be £ 180 million. I am not sure whether it will go ahead before privatisation, or if not, whether the English distribution companies or the Scottish Office will make a contribution to the costs. Again, we should know about that if we are to have an informed debate about the future.

Photo of Mr George Robertson Mr George Robertson , Hamilton

My hon. Friend makes some very cogent points about the Scottish dimension of this important Bill. Will he reflect on the absence from the particularly Scottish dimension of the debate and the previous debate, when Scottish public expenditure was considered, of the brand-new hon. Member for Glasgow, Govan (Mr. Sillars)? The hon. Member for Govan told the House, and constantly has been telling Scotland, about the way in which he would oppose the Conservative Government. He has not been here this afternoon, but I was telephoned by an irate constituent who saw the hon. Member for Govan at 1.30 pm today doing his Christmas shopping in Marks and Spencer in Argyll street, Glasgow. [Laughter.] Is it not amazing that on the very afternoon when the Secretary of State is making his diabolical statement about public expenditure, the man who was going to take Parliament by storm—the hon. Member for Govan—is not here?

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

Occasionally, I think that we hear to much about the detailed doings of the hon. Member for Glasgow, Govan (Mr. Sillars). However, I share my hon. Friend's astonishment, particularly as the hon. Member for Govan might have seen Christmas as an unpleasant English importation into Scottish culture.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

I am having some difficulty with my arithmetic. I was trying to do a quick count of the number of missing Scottish Labour Members. I do not know whether they are doing their Christmas shopping, but perhaps the hon. Member for Glasgow, Garscadden (Mr. Dewar) will help me and give me the official version of where they are?

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. Interventions do not help us get on with the debate. Many right hon. and hon. Members seek to take part in a debate and interventions will have to be taken into account to determine who catches the eye of the occupant of the Chair.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

I promise you, Mr. Deputy Speaker, that it is not my fault. I am doing my best.

I turn back to the much less interesting subject of the debt structure of the SSEB, which is about £2·7 billion. It is not often remembered that the debt of the north of Scotland board is just as heavy pro rata as that of the southern board, which is not surprising as it has pooled generation and distribution costs. Despite what the Minister said about no decisions having been taken, I hope that he will at least note that we expect to have some details of what is intended, at least in Committee. Clearly, the amount that will be written off will affect the price of the share offer and have an impact on people's ability to afford electricity. I hope that the Minister will be more forthcoming.

Last Friday, in The Scotsman under the byline of Mr. Keith Aitken, the industrial editor, there was an interesting report of a meeting in Torness held by Mr. Donald Miller, the chairman of the SSEB. The burden of Mr. Miller's remarks was that the company cannot be privatised unless the Government writes off a large part of the £2·2 billion debts it incurred in building them. He was referring to nuclear power stations. Clearly, the electricity board is as anxious as hon. Members. I hope that in Committee we shall hear more from the Minister.

I turn to the important matter of nuclear power. The Secretary of State has decided that there will be a nuclear company which will hold all the nuclear capacity of the south board and will be wholly owned by the south and the north companies in a 75:25 proportion—there has been some debate about the precise proportion. I understand that the minority position of the north board will be protected in the memorandum and articles of association and that there will be reserved functions—it sounds a little like the voting structure of the EEC. I gather that there will be reserved functions in terms of capital expenditure, pricing policy and so on, where the unanimity rule will apply. Apart from that, the company will run as a normal company. The Minister may want to say something about that point.

I should like the Minister to address his mind to the extraordinarily strong words uttered by Mr. Donald Miller, the SSEB's chairman, when dealing, not with the physical dangers but with the financial dangers of having an electricity board concerned with a substantial nuclear presence. Mr. Miller was blunt, strong and almost brutal on the subject. He said that there were a large number of uncertainties and unquantifiable possible costs which were dependent upon Government policy and the pricing policies of British Nuclear Fuels plc and which could create problems for any private company trying to operate. As the Secretary of State knows, Mr. Miller has good reason for fearing that problem. The SSEB's annual report for the last financial year shows a trading profit of about £13 million, which was promptly converted into a loss of £70 million because of the costs of transferring Chapelcross to Cumbria, the reprocessing costs—which the board had planned to postpone for decades but was told by the Government it could not—and the ever-escalating BNFL reprocessing charges.

Mr. Miller's message to the Secretary of State—it is important in view of its source —is that, unless he gets an undertaking that clause 88 will be fully implemented and the taxpayer will underwrite any of those bills as and when they come and unless he gets what he declares to be the "ultimate insurance", the company will be unsellable. Mr. Miller says that those assurances will have to be signed and sealed before one writes a prospectus—otherwise it will not be worth writing. That is a serious charge, coming as it does from the person who, presumably, will be the chairman-designate of the new private company. He says that his company will be unsellable unless he gets a great deal of information and a guarantee from the Government under clause 88.

Mr. Miller says that the Government must respond now and accept those liabilities on behalf of the taxpayer. If the Minister accepts that, there are serious repercussions for the taxpayer and the scheme's viability and acceptability. If he does not, we should in all honesty have —after all the glitz and the glamour and the wonders worked by the image-makers in the television advertising campaign to sell the company—a Government health warning saying, "Despite all this, the chairman of the company believes that his company is unsellable in the absence of guarantees that we are not prepared to give." If we doubt whether the honesty to give that guarantee and to face up to the problems will be forthcoming, we are entitled to say that there is a fundamental flaw in the scheme.

I ask the Secretary of State for Scotland to respond on this point. That is the bluntest possible warning from Mr. Miller and it is essential that the Goverment respond to it. [HON. MEMBERS: "Come on."]

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

I am sure that the hon. Gentleman has an honoured place in the Conservative kindergarten on Scottish affairs but I am interested in the attitude of the Secretary of State. Does he accept the point made by the SSEB's chairman that the SSEB cannot be responsibly, sold unless we spell out the taxpayers' liability under clause 88? Does the Minister accept that or does he repudiate it, and, if so, on what grounds? [HON. MEMBERS: "Answer."]

The Secretary of State will not be surprised to know that we shall return to this matter at some length during later stages of the Bill. With such an important statement by such a central figure in the public domain, the Secretary of State is letting himself and the House down by refusing to address himself to those remarks.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

As the hon. Gentleman is aware, the Bill already provides for certain guarantees and for certain provision to be made by the Secretary of State in appropriate circumstances. No doubt we shall have plenty of opportunities to consider the precise terms of the clause in question.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

Unless we get further information before we come to the selling point, we are entitled to go around quoting Mr. Donald Miller as saying that the company cannot be prudently bought by a prudent investor I hope that that aspect will be properly represented in the Government's doubtless balanced advertising of the issue.

With the Secretary of State, I have watched with fascination the growth of the energy debate, especially the debate on nuclear power. I am used to Ministers lecturing us. The Minister of State, Scottish Office did so yesterday. We are used to board chairmen courteously instructing us about the "competitive cutting edge" and the absolute advantage for the consumer, the board and the commonweal of Scotland of the nuclear baseload. The message is that every commercial piece of logic would drive any sensible board down the nuclear road. But then I read what is in the Bill—the references to fossil fuel levies and the 20 per cent. statutory obligation on generating companies. Now we have Mr. Donald Miller pointing to the dangers and uncertainties with which industry must live when 60 per cent. of the units sold, as in Scotland, come from the nuclear baseload.

More interesting is Mr. Miller's view that, whether the industry can or cannot live with it, shareholders cannot be expected to do so and the taxpayer will have to take the strain. It is essential that the Secretary of State spell out exactly how much will be available and what it will cost, and that he come clean. He knows, as I do, that the public are nervous—they raise this matter repeatedly with hon. Members on both sides of the House—about the handover to the private sector of such a sensitive aspect as nuclear power. The scramble to reassure people with references to the nuclear installations inspectorate and the control which will be tightly imposed does nothing to eliminate the persistent and clamouring doubt that safety standards will possibly be squeezed in the long run and that we are moving a particularly inappropriate industry out of the public sector and putting it into the hands of the private sector.

The Government cannot walk away from the strategic decisions that must be taken and that dominate this important industry. My hon. Friend the Member for Dumfermline, West (Mr. Douglas) said that vital talks will take place over the next few days on the coal burn in Scotland and the contracts between the SSEB and British Coal. I use the word "vital"—a much misused term—advisedly because the future of the industry and the jobs of thousands of people could be at stake.

The Minister talks about opportunities and challenges in a sort of dismissive way, a pep talk for the young. There has been major investment in our coal industry and designated pits have been sunk, such as those in the area of Longannet, to serve the power stations. Security of supply is still a weighty consideration in this nation's energy planning—or it ought to be. The Peterhead station will take 50 per cent. of its energy in the form of sour gas from the Miller field. British Petroleum is talking about importing coal from Australia and other companies are talking about importing it from Lord knows where else.

In 1987, the South of Scotland electricity board responded to the Monopolies and Mergers Commission audit report by making it clear that it did not think that it was in the long-term interests of its consumers, or in the public interest, to start importing all its coal rather than taking it from the Scottish fields. The board was right then and it will be right now to rethink what we understand to be its present position.

Photo of Mr Keith Mans Mr Keith Mans , Wyre

Is the hon. Gentleman saying that the Scottish industry or Scottish consumers should suffer a coal tax so that Scottish coal can be bought, even though it turns out to be even more expensive than imported coal?

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

No, I am not saying that. I hope that the hon. Gentleman will apply the prejudice that he has just displayed to the fuel tax that is contained in the Bill.

There is a strong national interest in maintaining security of supply. That is what weighed with the SSEB in 1987, and it should not dismiss that consideration now. Of course, the Minister may say that it is different now because the industry is to be privatised and that there is no need to bother about the national interest to the same extent. If that is the argument, it reinforces the case against the Bill a hundred times. We have been trying for months to coax, persuade, or even force the Minister to go beyond the pious hopes that he has expressed that some agreement can be reached. We have not succeeded, but we shall continue to try because this matter is of real and vital national importance. We at least recognise that there is a public interest in the debate. The Government should recognise what we know to be there.

I note that the SNP amendment has been selected for a Division, and I shall advise my right hon. and hon. Friends to vote for that amendment. No doubt the Committee will be selected very shortly. Whatever the Minister's view about a separate Bill and the process of parliamentary scrutiny, he will surely join me in saying that it is important that the distinctive Scottish aspects of the argument to which he properly addressed his attention in his 30 to 40-minute speech are properly examined and echoed in the Committee. This is an important point, although it may sound like a narrow, procedural one.

I hope that he will agree that that cannot be done if the Committee is cast on such a scale that it will contain, at most, two or three Scottish Members apart from a Front Bencher. We shall press, and shall expect to have his support, for an unusually large Committee on which there can be proper representation, not only by my hon. Friends but by hon. Members in all parts of the House. I am glad to see that the hon. Member for Tayside, North (Mr. Walker) is offering his services, as ever, in this cause. What a trooper!

We look at the Bill with growing gloom. I accept that it is attractive to the Treasury and I suspect that it has a great deal to do with the greater glory of the Secretary of State for Energy. Perhaps, if the price is outrageously discounted, there may even be something for a few shareholders looking for a quick profit. However, there is nothing in it for the consumer and nothing for the nation. When we look, for example, at the history of the gas industry since privatisation in terms of consumer experience, we see some of the warning examples that lead me to that conclusion.

I acknowledge that we know a little more about the Government's plans, although we still do not know enough. We have seen some horse trading on assets between the north and south boards. We have seen 600 MW of coal capacity being swapped for the Cruachan pumped storage system and we have seen 50 per cent. of Peterhead up for transfer and bought. All the patching and all the switching does not produce a plausible vehicle that can be offered honestly for sale to the people of Scotland or to people in any other part of the United Kingdom. There are too many ambiguities, confusions and internal flaws for the Bill to carry any real conviction.

The Government are not succeeding in convincing Scotland that its hostility to a measure that offers it nothing should be abated. Tories that I talk to in Scotland see it as driving the privatisation obsession past the edge of reason. The Government are taking a great public utility and turning it into a fragmented private monopoly, but still into a monopoly. It is asset stripping on a grand scale. It is not some sort of mean folly, but massive irresponsibility by the Government. They should think again.

In one of his early press statements the Secretary of State for Energy described the Bill as evolutionary. I think that that means that it has not been thought through properly and he knows that he will have to come back to the House with many amendments to try to get it creaking in some sort of unsatisfactory way. We want none of it, and we shall vote accordingly.

Photo of Mr Allan Stewart Mr Allan Stewart , East Renfrewshire 5:45 pm, 13th December 1988

I reside in the constituency of Glasgow, Govan and welcome the news given to the House by the hon. Member for Hamilton (Mr. Robertson). I am a fairly typical constituent and I have no doubt that all the other constituents of the hon. Member for Glasgow, Govan (Mr. Sillars) will be as appalled as I am at the disgraceful and scornful way in which he clearly regards his duties in the House on behalf of his constituents. [Interruption.]

The Labour party has presented a wholly bogus argument about the need for separate Scottish legislation. However, my right hon. and learned Friend the Secretary of State for Scotland clearly showed the case against that. It would be absurd to have two Bills, each with more than 100 clauses, when about 98 of those clauses would have been identical in both pieces of legislation. Some of the five or six separate Scottish clauses are simply technical.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) made a great deal of his allegation that there would be an absence of control by consumers in the new privatised undertakings. Of course, that is a good argument for him to become a shareholder, because with other shareholders he could exercise his power, if he thought it necessary, to remove the board of directors of the privatised company. He could do that if he and other shareholders were dissatisfied with the board's performance.

In the short time available to me, I should like to make two points. First, we are clearly transferring financial control from the centre to Scotland. The Opposition have not appreciated that. Of course the Scottish Office is the present sponsoring Department for the two boards, but in any nationalised industry, financial control ultimately rests with the Treasury in London. We are now moving towards control being exercised by the boards located in Scotland. A board will be able to make its own investment decisions unaffected by the necessary constraints that the Treasury under any Government must impose for its own reasons. That is true, even under a Labour Government.

Photo of Mr Norman Hogg Mr Norman Hogg , Cumbernauld and Kilsyth

The hon. Gentleman is making a strong commercial argument. How does he account for the fact that Winston Churchill, when he was Prime Minister, invited one of my illustrious predecessors, Tom Johnston, to set up the North of Scotland Hydro-Electric Board?

Photo of Mr Allan Stewart Mr Allan Stewart , East Renfrewshire

I am confused about what the hon. Gentleman is getting at. It is an advantage to have separate boards in Scotland and for the Scottish Office to have an operational overview, but the fundamental point remains that financial control of the electricity industry, as is the case with any other nationalised industry, ultimately derives from the Treasury, and the removal of such control will be a major benefit for those who are trying to run the industry.

My second point is that, since 1979, private shareholding in Scotland has doubled. That is a major achievement and an advance in giving people a stake in industries and businesses, but shareholding in Scotland is at a lower level than elsewhere in the United Kingdom. Surely this is a major opportunity for Scots—for all practical purposes, every Scot is an individual customer of one or other board—to take a real stake in a major Scottish industry.

The hon. Member for Edinburgh, Central (Mr. Darling) has said that there is not enough money in Scotland to take a major stake in industry. He should walk around Charlotte square in his constituency and count the assets of financial institutions such as pension funds and life funds; he will then agree that a massive amount of money is controlled there. I hope that a proportion of it will also go into the new shareholding of the Scottish boards.

I hope that my right hon. and learned Friend will make the share offer favourable. I hope also that he will realise that this is an opportunity to make ownership by the people a reality, not the myth that it is under nationalisation. We hear a great deal from Opposition Members about ownership by the people. They equate ownership by the state with ownership by individual people. It is a myth. The individual has no control over a nationalised industry. Shareholding gives people a real stake.

The hon. Member for Garscadden spoke about the timing of the sale of the new companies. I hope that the Scottish companies will be privatised, if not immediately, which would be ideal, then as quickly as possible. Let us try to take the lead in Scotland. My right hon. and learned Friend has confirmed that there are debt matters and so on to be sorted out. Let that be done quickly, and let Scotland take the lead. This is an opportunity for a major expansion of private enterprise in Scotland and for Scots to have a real stake in a most important industry.

Several Hon. Members:

rose

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

It might be sensible if I remind the House that Mr. Speaker has announced that, from 6 o'clock to 8 o'clock, the ten-minute limit on speeches will apply.

Photo of Mr Stan Orme Mr Stan Orme , Salford East 5:52 pm, 13th December 1988

Despite what the Secretary of State says about competition within the proposed privatised industry, we are to turn a public monopoly into a private monopoly. The consumer will have no choice—there is no argument about it; the point was explored on the Floor of the House yesterday and this afternoon—just as he has no choice in the British gas industry.

One aspect of this privatisation makes it different from any other privatisation that has taken place under this Government. The Secretary of State criticised the people who work within the industry. He implied that the industry is not producing as it should and that, under privatisation, it could be dramatically improved. He ignored the fact that it is one of the safest and most efficient electricity supply industries within the developed world. If it had not been for recent price increases, the industry would be providing electricity cheaper than anywhere else in western Europe—certainly cheaper than in the United States or Japan.

Yesterday, the Secretary of State for Energy and I had an exchange on nuclear power. The central issue is the nuclear dilemma that the Government face. It is not a matter of whether one is in favour of or against nuclear power. Whatever the policy, we are to have some nuclear power into the next century. Under the Government's proposals, how is nuclear power to be dealt with and priced? There is no argument. When challenged, the Secretary of State for Scotland refused to respond to the case of my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) on the cost and control of nuclear power.

With this Bill, the Secretary of State will put a fence around nuclear power. It will clearly state that it is different and will be dealt with and priced differently. Four PWRs are promised by the end of the century. There is also Sizewell B. We shall be faced with the decommissioning of AGRs and Magnox stations, which will cost several billion pounds. We must consider the tiny Calder Hall experiment, which is being decommissioned at the moment, and the problems that it is creating. What will happen when larger AGRs must be decommissioned in the foreseeable future? What about the cost of that?

My hon. Friend the Member for Garscadden referred to Mr. Donald Miller and his trenchant remarks about the saleability of the industry if the cost of nuclear power is not removed from the privatisation. If we were to approach Lord Marshall, we would get a similar argument.

Nobody is more enthusiastic about nuclear power than Lord Marshall.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

The right hon. Gentleman can say that again.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

The hon. Gentleman says that I can say that again.

Lord Marshall's enthusiasm will be tempered when he is answerable to private shareholders, who will ask, "Who will pay for the new power stations and for the present decommissioning?" The Sizewell B inquiry lasted for about four years. The inspector eventually said that, on balance, he thought that nuclear power would be cheaper than coal. What would he say today? The Bill strips away the protection that nuclear power has had in this country over recent years and exposes the fact that, compared with the cost of fossil fuels—coal and oil—nobody argues that nuclear power is cheap. That is the reality we face, but what does the privatised industry, which will be answerable to its shareholders, say about that? It says that it exists to make profits.

That industry will want to use the cheapest coal available. My hon. Friends will be aware that imported cheap coal will be one of the priorities for the privatised industry. Will the British public allow the nuclear part of the industry to be taken out of the Bill, put on one side and completely protected from natural market forces? If that happens, the cost will be borne by the British taxpayer, but not by the shareholders of the privatised companies. They will be excluded. We must face that.

Last week there was an excellent article in the Spectator by Jonathan Davis who spelt out clearly what will happen. He said: Gone, with the stroke of a Parly draftsman's pen", is the previous support for nuclear power. The article continues: Although it does not spell out the message in so many words, Mr. Parkinson's Bill effectively marks the end of that particular hoary game. The prices of oil and coal, nuclear's fossil fuel competitors, have fallen to their lowest level in real terms for many years, and are likely to languish there for some time. In these conditions, even the PWR, the American-designed pressurised water reactor on which so many of the British industry's hopes now rest, cannot expect to compete with coal. No private sector utility would dream of building one in the present climate. Given that the Government have supported nuclear power, have pushed it down our throats and have used every means possible to encourage its development, we now face an extraordinary situation.

I am sure that my hon. Friends will agree that, in an economy which uses a mixed-fuel input —coal, oil, nuclear power, and alternative sources—for our electricity supply, the way in which to deal with that industry, upon which everyone depends for light, food, fuel and work, can only be through public control. That is in the best interests of the consumer.

To take nuclear power out of public control is extremely dangerous. The British people want it kept under firm control. I understand that there is a nuclear power station on the edge of the area that was recently hit by an earthquake in the Soviet Union. Fortunately for everyone concerned, it was not damaged; I am sure that we are all extremely thankful for that.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

Yes, that is correct.

The British public need to recognise that this Government, or any Government, will give them proper protection. The industry must be answerable to Ministers and, through them, to Parliament. In that way we can discuss it.

Given that the Bill proposes a separate unit responsible for nuclear power and that it is to be dealt with in a special way, will the Minister give an undertaking that public accountability, through the parliamentary process, will remain? If it does not, our people will realise that they cannot support the Bill.

The Bill contains a nuclear dilemma, which is unique in comparison to any other development. When the Bill is in Committee, we must explore in detail not just the costs, but the overall management policy for the industry.

It is absolutely criminal that a well-run economic industry, which has produced what the nation needs, should now be broken up purely in the cause of profit. It has nothing to do with competition or improvements in the industry. When we have had an opportunity to debate this matter further, and when the argument is taken out to the public I believe that they will begin to see through the Bill and will discover that it is not in their interests.

Photo of Mr David Harris Mr David Harris , St Ives 6:05 pm, 13th December 1988

I am sure that the right hon. Member for Salford, East (Mr. Orme) will forgive me if I do not follow his arguments now that the ten-minute speech rule is in play. Unlike the right hon. Gentleman, I support the Bill. My remarks about a particular aspect of it should not be taken as meaning that I intend to oppose the Bill. I am in favour of its general principles.

I wish to concentrate on a matter of acute importance to one area of my constituency and I believe that it is important to all constituents in rural areas. I believe that parity of charges between comparable consumers throughout a company's area should be written into the Bill.

My particular interest in this matter stems from the injustice that is suffered by my constituents who live on the Isles of Scilly. For 31 years the Isles of Scilly have had to pay the highest tariff for electricity in the United Kingdom. That stems from the simple fact that, until next year, they must rely on the oil-fired power station on St. Mary's. In April next year all that will change when the submarine cables, which have been laid to the Isles of Scilly, begin to operate. Then, the Isles of Scilly will be connected to the national grid.

Those cables are the result of a long campaign in which I have played a part, but which has been spearheaded by the islanders. I should like to pay tribute to three islanders, Colin Daly, John Poat and Tony Dingley. They are the officers of the Isles of Scilly electricity tariff parity action group.

They have won the battle to connect the Isles of Scilly to the mainland grid and they have won the argument for parity between the tariff paid by the islands and the tariff charged by the South Western electricity board. They now fear, however, that that parity might be snatched from them as a result of privatisation. I trust and believe that the Minister of State will assure me that that is not so. I believe that one of the provisions of the European regional development fund grant, which was given for laying the cables, is that parity should not be taken away once it is given. I do not believe that the islanders have anything to fear on that score.

Let me draw attention, however, to clause 3(2) which relates to the provisions for Scotland. It gives, as in so many cases, special and privileged treatment to Scotland. That clause makes it clear that the Secretary of State can make an order under which tariffs shall not distinguish, directly or indirectly, between different parts of the area covered by that order. The Isles of Scilly would certainly like such a provision written into the Bill—

Photo of Mr David Harris Mr David Harris , St Ives

I cannot give way; I have only 10 minutes.

My constituents would certainly like such a provision.

I have been involved in detailed correspondence with my right hon. Friend the Secretary of State for Energy and my hon. Friend the Minister of State on these points while the Bill has been in preparation. I asked my right hon. Friend on 4 July whether he would give an assurance that the new privatised electricity companies will have parity of charges within their areas, so that, for example, there will be no disadvantage to consumers on the Isles of Scilly in my constituency or, indeed, consumers who live in rural as opposed to urban areas within that company's supply system". I am pleased to say that my right hon. Friend replied: We are extremely conscious of the anxiety that is felt in areas such as the Scilly Isles and the south-west. We recognise that it is a serious problem. We are sure that, when we make our proposals, my hon. Friend will be happy with them."—[Official Report, 4 July 1988; Vol. 136, c. 713.] I hope that my hon. Friend the Minister will make my happiness complete and give me the assurances that I seek on this important matter.

At present, my constituents on the Isle of Scilly pay 27 per cent. more for their electricity than the rest of the consumers served by the South Western electricity board. Those with businesses and block tariffs pay 50 per cent. more than those on the mainland. That injustice will be corrected when the cable comes into play, and I hope that this parity will not be snatched away.

This is a point of much wider application than merely to my constituents on the Isles of Scilly. I heartily agree with the Select Committee on Energy; which states: We do not think rural customers should be charged more per kilowatt hour consumed than people living in towns". It is a sad reflection on the Opposition that they have not seized on that point—[Interruption.] At least, they have not done so in this debate. But it is an important point, about which I want a reassurance from the Minister.

I hope that this fear will not be realised. I appreciate that the legislation on this wider point will be exactly the same as the legislation that is now in place. I want something written into the Bill to ensure that there is no discrimination against those who live in rural areas as opposed to those who live in towns, and I confidently expect an assurance from my hon. Friend that the needs of my constituents in the Isles of Scilly will be met.

Photo of Dr David Owen Dr David Owen , Plymouth, Devonport 6:13 pm, 13th December 1988

Electricity generation, unlike water, is not a natural monopoly, and there is no reason why there should not be genuine competition and private generating companies. Indeed, there would be advantages in that.

The problem with this legislation is that part of the generation of electricity in this country is nuclear. How we should deal with the nuclear power industry raises quite separate questions. At this stage, the Government's intentions, if not the Bill, do not match the genuine public anxieties aroused in this respect.

Two generating companies for England and Wales are not enough. I strongly challenge the idea of including nuclear power in the National Power company, with about 70 per cent. of present CEGB assets. The Scottish precedent should be followed in England and Wales, and there should be a separate nuclear generation company. That would provide much greater transparency. and the true nuclear costs would be easily identified.

The nuclear generating companies should not be taken to the market and privatised at this stage unless one of two solutions is adopted. The first is Government involvement, probably through the UK Atomic Energy Authority, in the nuclear generation companies. Initially, that would involve a majority interest in the companies—one in Scotland and one in England and Wales. If the Government reject that, the other option is to keep the nuclear generation companies as franchise companies that construct and run nuclear plants, but the ownership of the nuclear plant and all the rest of the material for storage that is not with BNFL would be owned by the Atomic Energy Authority.

The Government will have great difficulty in floating the nuclear generating company in Scotland. What Mr. Miller has said about that is true. National Power, the big company in England and Wales, will also be difficult to float. The market will be far more sceptical about the true economic costs of nuclear generation.

On environmental grounds, one of the advantages of this legislation and the impetus from it is that we are now beginning to discover the true cost of nuclear generation. I suspect that not a single hon. Member believes that we shall in our lifetime again hear nuclear generation justified on economic or commercial grounds. Yet when one thinks of the continual lies that have been told by the CEGB about the costs of electricity generation, I cannot understand how anyone can defend the status quo. I know of no public body that has distorted the truth over decades more than the CEGB. I experienced that in my own constituency when the board wanted to put an oil-fired power station at Millbrook on the Tamar estuary. The board's "facts" were shown to be incorrect, again and again.

I have no real confidence, either, in the continuation of the existing system of electricity supply. It was vital that the Secretary of State won the battle with Lord Marshall for the separation of the grid from the generation of power, but the Secretary of State was wrong to create a company for transmission which was wholly in private hands. There is a public interest in transmission and I would have preferred the company to be publicly held. However, I must admit that a powerful argument against that can be adduced. Successive Governments have interfered in the pricing of electricity and overridden the market. The last Labour Government, of which I was a member—I take my share of collective responsibility for this—caused a massive increase in electricity charges, but that Government were not the only sinners; Conservative Governments have also used prices as a means of raising revenue from the country.

There is something to be said for the grid being taken out of Government control, but the problem of leaving it to the 12 supply companies is that there may be collusion between them over their pricing mechanisms. That is why even a 10 per cent. public stake in the transmission company would be an adequate safeguard against collusion. The Government should examine that carefully and consider either a Treasury or an Atomic Energy Authority involvement. Either way, the public interest should be reflected by an involvement in the transmission company. That would go a long way to alleviate anxieties about the dangers of the solution that the Government have adopted. There would be no objection in principle to such a move, and I recommend it to the Secretary of State.

The other advantage of taking the Government out of electricity generation in its widest sense is that they can then start to do what successive Governments have failed to do—apply stringent environmental standards to it. Those standards must be applied, first, to the nuclear generation element and, secondly, to the coal-fired and oil-fired generation element. This country has been a massive polluter in terms of sulphur emissions and many people do not yet believe that the environmental standards in nuclear generation are sufficiently tough. If the Government are outside the system, adding those costs to the industry, on the basis of "the polluter pays", that will add to the overall cost of generation, but we will then have a clear view of the exact costs of generation.

The real criticism of the Government is that they have gone against their own basic principles. They have not been prepared to trust the market or commercial judgment and they have rigged the market in favour of nuclear power. If nuclear power is as uneconomic as I suspect most people now believe it to be, the only case for providing nuclear power is strategic. We might not wish to be totally dependent on fossil fuels, but we have not yet built up sufficient alternative sources, through wind power, wave power or, as I should far prefer, barriers. There is far more economic sense in heavy initial capital investment in such projects as the Severn barrier and I hope that they will come through on economic grounds.

However, if we decide, for strategic purposes, that we do not want to be totally dependent on fossil fuels, we should not believe that the only option is nuclear power. The Government also have the option of backing barrage power. We need to hear about that. Let us have a little less talk about a preserved nuclear element. Some of us would like a preserved barrage element. We must bear that in mind.

There is then the question of how we deal with a strategic element. If the Government decide that they need diversity—I do not deny any Government that power since it is a prudent power to hold—it should be justified in this House on every occasion. The Minister should come to the House for separate authority for a nuclear power station to be built, if the Government believe that there is a strategic need, and justify that decision against commercial costings and market forces. Such an installation should not be put entirely within the private sector. It would be better to put it under the overall authority of the Atomic Energy Authority, with its construction and running franchised to commercial companies.

Time is short, and I do not wish to detain the House. We are not opposed in principle to the Bill. We see its merits, but we do not believe that it is yet right, particularly in respect of the nuclear and grid aspects. There should be a greater element of public interest in the decision-making, albeit perhaps in a commercial undertaking. We hear a great deal from the Government about public-private partnerships for the inner city. Why cannot there be public-private partnership for this most important strategic element, the generation of electricity? We have nothing against the structure of the Bill because it allows for three or more generating companies in England and Wales and would thus allow for nuclear generation. There would be no need to privatise nuclear generation and we would have an evolutionary approach to this complex subject that might command a surprising consensus throughout the country.

We shall judge the Bill in that spirit. I hope that it will not be yet more legislation in which the Government resist any fundamental amendment. The Select Committee has already seriously criticised the provisions and the House has the right to influence the legislation, for the good. I hope that the Secretary of State will not close his mind to some significant amendments along the lines that I have suggested.

Photo of Malcolm Moss Malcolm Moss , North East Cambridgeshire 6:23 pm, 13th December 1988

It is a rare privilege to follow the right hon. Member for Plymouth, Devonport (Dr. Owen) and I agree with a great deal of what he said. The House should accept his comments, which have been made in a forthright way.

The right hon. Gentleman is right to say that the electricity supply industry has suffered, as have many nationalised industries, from a combination of Government interference, poor accountability and a lack of market discipline. That has led to inefficient investment decisions being taken, for which the customer has had to pay. This Bill is driven by the needs of customers; we must thank the Secretary of State for underlining that fact when drafting the Bill.

There are three essential benefits to the customer. First, there will be competition in generation. As that generation accounts for some 80 per cent. of the price of electricity, any competition introduced at this level must exert a downward pressure on prices.

Secondly, for the first time in this industry, proper regulation will ensure that the benefits from competition will be passed down to customers.

Thirdly, the consumer will be given a new legal status with legal rights and safeguards that will ensure a better service.

While I was researching for this debate, I came across an article written by the hon. Member for Gordon (Mr. Bruce). He was here a moment ago, but has now disappeared. I was pleased to see him return today after having disappeared in high dudgeon last night. The problem was that he did not have time to say everything that he wanted to say. Perhaps I might help him. He wrote in the Liberal News in October of last year: It is impossible to defend the status quo in the electricity industry. The CEGB has become a centralised monopoly which is closed, secretive and accountable to no-one. The economics of generation and conservation are neither being properly examined nor subjected to market forces. The title of the article was Why I shall be buying electricity shares. I could not put it better myself. I agree with everything that the hon. Gentleman has written. I hope that he will come back to make a further contribution tonight.

We have heard from Labour Members more peddling of the myths and misrepresentations that surround the industry. They would have us believe that the electricity supply industry, under its present organisation, has done the best possible job over the past 30 years. They tell us that there is no alternative to a monopoly and to a vertically integrated generation and distribution system and they claim that it gives the best deal to customers. There is nothing to suggest that an industry under national ownership, such as we have had for many years, will keep a downward pressure on prices.

In the years between February 1974 and May 1979, the average annual increase in electricity prices was 22 per cent., a total of 180 per cent. in that period. To tell us that the present nationalised system will give us the best deal is totally unfounded.

Opposition Members tell us that the management of the present system cannot he better. Why, then, does it take 18 years to construct an AGR station? How can we justify a pricing structure of the bulk supply tariff which has led to increased prices to customers? The Energy Act 1983 was designed to open up competition in the industry. It has been a total failure because the percentage of independent generation has gone down since then. The CEGB has protected its monopoly by redefining those "unavoidable costs". In other words, it has upped the fixed price content, which has increased from 1 per cent. in 1983 to about 30 per cent. today. That means that no independent generator can get into the market.

Then, of course, there is the mystique about nuclear power. I find it strange that, at the Sizewell inquiry, the CEGB told us that nuclear power was cheaper than coal. Now, at the Hinkley C inquiry, it appears that that is not correct and that there has been a 180 deg turnaround in that period. I wonder whether that is simply to muddy the water and sway public opinion about privatisation or whether it is a destabilising ploy for the contract negotiations that it is presently undertaking with the area boards.

As the right hon. Member for Devonport said, for the first time nuclear costs will be exposed to scrutiny. They will be clearly identifiable, as they never have been before. It is not true, however, that nuclear power is intrinsically expensive. We must look to better management to reduce costs within the industry. Schedule 12 will bring into the clear light of day the costs of waste, reprocessing and disposal. Any grants will require parliamentary scrutiny and approval. That is hardly the way to keep information from the public. It is hardly the way to fudge the nuclear issue.

There has always been a nuclear cost component to the CEGB's electricity prices. The cost or levy would continue in future irrespective of whether the industry was privatised, and the so-called nuclear tax is not a new tax. Had the industry continued under the present organisation, the levy would be part of the cost component.

The essential questions are, first, who is paying for the back-end cost of nuclear generation? Secondly, who is paying for future unforeseen costs? Thirdly, who covers the cost risk for new nuclear station construction? The consumer has already paid for the back-end costs. I understand that about £3 billion is already in the kitty for the decommissioning of the Magnox stations and to help with the decommissioning of the AGRs. The Government state categorically in the Bill that they will set aside between £1 billion and £2·5 billion to meet unforeseen costs. For the first time, construction risks for new stations will have three-pronged support, from the taxpayer, the consumer through the nuclear levy, and the shareholders.

Nuclear generation is essential from a strategic point of view. Without it, the lights would have gone out during the coal strike and the oil price hike. It is essential for other reasons as well. With Third-world development, there is a tendency to generate electricity from fossil fuels. That technology is easier for Third-world countries to adapt. If we in the developed countries put pressure on fossil fuels, we either price Third-world countries out of generating electricity altogether or drive them to nuclear generation, which we might not want.

There are environmental considerations which, for the first time, begin to make nuclear generation much more attractive than CO2-emitting fossil fuel power stations. Further, the world energy market is shifting towards electricity. Between 1970 and 1984, energy usage overall increased by only 1 per cent. whereas electricity usage increased by 36 per cent. Surely this means that nuclear-generated electricity will move more into its own, and diversity of generation gives balance and security of price and supply.

Nuclear generation is important, but it is not the overriding consideration in the Bill. We heard from the hon. Member for Sedgefield (Mr. Blair) that prices would automatically increase with privatisation, and Opposition Members made light of the fact that new generating capacity is coming forward. We are told that about 20 major companies are making serious approaches to area boards, but I shall give just two specific examples. In the Eastern Electricity region, which covers my constituency, there are five significant new plant proposals, three of which are close to determination. These are combined cycle gas turbine plants of 500 MW capacity, which will be helpful in the further development of North sea gas resources and new fields. In the east midlands area, British Coal is already negotiating with the area board to build fluid gas desulphurisation plants at the pit heads. These plants will produce electricity at a lower price than some of the medium-sized coal stations. The price of coal is already beginning to come down.

The key to the Bill is competition. We must introduce a third force into generation, and the Government must ensure that, in the critical period of negotiation of contracts, the CEGB, with its duopoly inheritance, does not tie up the market and prevent new generators from entering it.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West 6:35 pm, 13th December 1988

I do not propose to take up the remarks of the hon. Member for Cambridgeshire, North-East (Mr. Moss).

It seems that the argument in favour of having two Bills, and not the one that is before us, has been advanced during the debate. We seem to have been talking about two Bills. Arguments that have been adduced on behalf of England and Wales have had little bearing on Scotland. This afternoon, the Secretary of State talked about the Scottish coal industry and its relationship to the privatisation of electricity, but before referring to his remarks I shall draw the attention of the House to what was said by Mr. Donald Miller, the chairman of the South of Scotland electricity board, in answer to questions put to him by members of the Select Committee on Energy.

On 23 March, my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) raised the issue of the relationship of the SSEB to British Coal, and Mr. Miller's reply to question 555 was illuminating: First of all, we cannot be in the business of conniving with British Coal to charge the Scottish electricity customer on the basis of dear coal and subsidising other users; that is not what our board is paid for. I am sure that his words were carefully chosen. He has said that he is not to "connive" with British Coal. My hon. Friend pressed him further, and he said: On the first point, whether I have discussed with the Secretary of State for Scotland the implications of the Scottish coalfield being wiped out: the answer is 'no', because it does not arise, there is no need for it to arise. Eight or nine months on, we have news for the Secretary of State and Mr. Miller. We are witnessing the possibility of deep-mined coal being wiped out in Scotland because of a slavish, doctrinaire approach to market forces. I have known Mr. Miller for a long time—I do not like talking about personalities in this way—and previously he was an eminently sensible gentleman. It seems, however, that he is being pushed by privatisation into adopting the following posture and statement— this is the effect of what he said—"I am not conniving with British Coal."

Let us not say that Mr. Miller should connive, but let us suggest to the Secretary of State that he should show an interest in the future of a vital Scottish industry. Let him do what his hon. Friend the Under-Secretary of State for Energy did recently and visit the site of a vital investment of about £60 million in the constituency of my hon. Friend the Member for Clackmannan (Mr. O'Neill), just outside the borders of my constituency. The Under-Secretary visited the Longannet complex, and yesterday, in answer to my question, said: Under privatisation, and with our plans to expand the interconnector between Scotland and the rest of the United Kingdom, the coal can produce electricity which can be sold freely into the British system."—[Official Report, 12 December 1988; Vol. 143, c. 639.] As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) asked, what are the plans for the interconnector? Is it the Department of Energy, the South of Scotland electricity board or some other body that will facilitate its expansion and strengthening? My constituents and those of other hon. Members are entitled to know what will happen to the future of a vital industry in Scotland, and they are entitled to know tonight.

If the issue is to be left to market forces, and if Mr. Miller is to be allowed to import 2 million to 3 million tonnes of coal, he may be able to proceed without necessarily influencing and jacking up world prices, although I have doubts about that. Lord Marshall of the CEGB could not import 65 million tonnes of coal without having an effect on world prices. It would seem that my hon. Friend the Member for Garscadden is correct: the interests of the nation lie in security of supply, not the short-run equilibrium of supply and demand.

Mr. Miller, who does not now desire to connive with British Coal, had previously to sit down and reach long-term contractural agreements with British Coal to safeguard the supply. If that is not a vital responsibility for people with the national interest of all Scotland and the United Kingdom at heart, I do not know what is.

I have heard a lot of rubbish about what happened in the miners' strike and how we broke the miners' strike because we had nuclear power. Unfortunately, the breaking of the miners had a lot to do with the public sector. A major reason for the miners being broken in the strike—they were not humiliated, because they preserved their dignity—was the imposition and unification of what was tantamount to a national police force. When it suits them, the Government can misuse the public sector. We are interested in using the public sector for the long-term benefit of the people of this country.

The Secretary of State defended his new desire to introduce to us his views about perfect competition. We know that there is no such thing as perfect competition in the real world —page 1 of Cairncross taught us that. I notice graduates from St. Andrew's university on the Conservative Benches; I am always willing to educate St. Andrew's graduates.

Under the Scottish proposals, two companies will own the nuclear sector. That will create a company with 80 per cent. of the assets and 60 per cent. of the generating capacity. How on earth can that be called competition of any magnitude? That is prostituting competition and duopoly. The Secretary of State cannot defend that on the basis of the consumer. However, we are told that the Scottish board will have the magnificent possibility of selling surplus capacity over the wires. There will be no new capacity in Scotland before the year 2000, but the Scottish board can export it, provided that it goes to the market at a price that will bear the costs.

If the price of the Scottish assets is high, it will be difficult to sell the electricity over the wires. Conversely, that will relate to the low price of the English assets. There is a conundrum. The only way to solve it is to cook the books in pricing terms. We can suggest that here, but that does not mean to say that investors in Charlotte square would be daft enough to be taken in by such action.

We have heard about the criteria for public or private ownership. I am no slavish adherent to the public sector. The public sector should deliver facilities efficiently. I do not believe in feather-bedding any public sector employee. However, there is duplicity on the Conservative Benches.

People in the public sector are sick and tired of being praised when there is an emergency in the North sea, on the railways, or in the Soviet Union. At the Dispatch Box last week, the Prime Minister was pleased to say that the public sector would be the first to respond because London firemen were to fly out. She was cutting those firemen's facilities, but she had the cheek and audacity to praise them. We have a responsibility to the public sector to ensure that the employees are adequately rewarded.

Yesterday, the Minister of State, Scottish Office said that the Labour Government brought the organisations into the public sector with one Bill. Unfortunately, he omitted the North of Scotland Hydro-Electric Board. The test of private versus public is an extreme test when one is in difficulty. In the dark days of the war, Churchill went to Tom Johnston to argue for the creation of a public sector board for the Highlands. I am not going to quote Tom Johnston. Instead, I will quote Lord Airlie. On 9 June 1943, he said: I believe that what will happen is that in certain areas which are at present supplied by private companies, would-be consumers will be unable to get electricity on account of the fact that they will he unable to afford, after this war, to pay the charges which the private companies have to impose…There is only one way it can be done,"— he was talking about the Hydro Board— and that is for the State to do it."—[Official Report, House of Lords, 9 June 1943; Vol. 127, c. 973, 974.] That is what a traditional Tory anxious to preserve the rights of Scotland and the Scottish Highlands said. Today, we see the Tories reneging on Scottish responsibility.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside 6:45 pm, 13th December 1988

Please forgive me, Mr. Deputy Speaker, for jumping in and out of the Chamber so frequently this evening. However, democracy does not prevail only here; it prevails upstairs in the Committee Rooms where many elections have been taking place. For a moment I confess that I wondered whether I had stepped in on what is essentially a Scottish party, with reels and all. As a three quarter Scot who probably draws electricity from the hydro-electric scheme in Scotland when he switches on an electric switch in his house, I think that I am justified in taking part in the debate.

Photo of Mr John Maxton Mr John Maxton , Glasgow Cathcart

How does the hon. Gentleman work that out?

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside

That is how it works.

I welcome the Bill because many of my constituents work in the power generation industry. They will also welcome this proposal to denationalise one of Britain's biggest businesses, thus honouring the 1987 Conservative party general election manifesto commitment to privatise more state industries, and to increase share ownership for employees and the public at large. Almost one in five of the adult population now own shares directly and more than 1·5 million people own shares in the companies for which they work.

My right hon. Friend the Secretary of State for Energy has shown considerable ingenuity in devising the corporate structure for the electricity industry following privatisation. He and the merchant banks that will advise him will have to show great ingenuity in devising schemes to ensure that shares in the 15 electricity companies with £27 billion-worth of assets are spread as widely as possible. There is probably scope there for creating another 1 million shareholders.

Southern Electricity, my local area distribution board, shares my welcome for the Bill. The board favours becoming a publicly owned company believing, in the words of its chairman, Mr. Duncan Ross, that it can look forward to a more diverse and competitive electricity generation market, in which it can shop around to obtain the best buys for its 2·4 million customers.

That is the answer to those who say that following privatisation there will be no competition. The distributors will be able to shop around for electricity and that competition would be lost if the Labour party regained office and renationalised the industry as Opposition Members told us that they would yesterday. So much for the Opposition's commitment to repeal clause IV—the nationalisation clause in their constitution. That must be double-talk.

I represent a very energy-related constituency. It has the largest oil refinery in Europe—the Esso plant at Fawley—which provides fuel for a major power station which stands on an adjacent site. Fawley used to fuel the Marchwood power station further up the Solent. That power station was made redundant a few years ago but the site also houses the Marchwood research laboratory.

The Bill is doubly welcome to my constituents because the public inquiry into the proposed Fawley B power station has had to be shelved, probably indefinitely. That is proof, if it is needed, that competition has an effect on the industry. When the distributing company-to-be, Southern Electricity, was asked to guarantee that it would buy the energy produced from Fawley B, it refused. Fawley B power station would have cost £1·3 billion and would have produced 1,800 MW a year. Somebody would have had to buy it, and that provides the key to the Bill.

The Bill shifts the responsibility for ensuring that the juice is there when we turn on the switch in our house from the generating company—the CEGB—to the distributors, and they can shop around. Southern Electricity is considering other sources and because of the trends today and because of research, will find that many smaller power stations are probably better than the mega-power stations that have been built hitherto. Yesterday, we heard hon. Members talk about alternatives such as combined heat and power as more effective ways of making full use of our fossil fuels.

The Bill is certainly welcome in Romsey and Waterside. It is also welcome to Hampshire ratepayers because it will save them about £1 million, which is the cost of fighting the public inquiry into the proposed power station and jetty.

I am sure that my hon. Friend the Minister will forgive me for not going through the ritual back-slapping exercise that usually prevails in these debates. I intend to be quite critical on three aspects, which are raised not only in the Bill itself, but by the proposal to develop Fawley B. The first is the question of the environment. The second, is the question of coal imports and the third that of research.

Earlier this year, the White Paper on privatising the electricity industry made no reference to the privatised electricity companies having to have any concern for the environment—nor does the Bill. I have read the Bill from cover to cover and it has little to say on a subject that has been of increasing public and political concern in recent years. It simply repeats, in schedule 9, the limited objectives of the Electricity Act 1957 on the protection of flora and fauna. It relates only to the natural beauty of the countryside and the physical condition of any buildings of special, architectural or historic interest. That is riot enough. The Bill does not incorporate other much wider matters of environmental concern that have grown up over the years, such as emissions from power stations, atmospheric pollution, the management of radioactive waste and, of course, other audible and visual pollution of the environment.

I accept that those matters are covered, in part, by the Control of Pollution Act 1974 and, of course, by the recent European Community agreement which implements the large plant directive to reduce emissions from power stations. However, I still believe that the Bill should specifically contain broader environmental provisions and I am sure that in Committee, additional clauses on the environment will be suggested.

My second point concerns coal. The Fawley B proposal would necessitate the building of a jetty for bringing in coal. That coal would not necessarily come from abroad, but might come round the coast. That would require substantial investment, so once the facility was built, there would be strong economic incentives to maximise its use. That applies to coal jetties generally. It is clear from what Lord Marshall and British Coal have said that the importation of foreign coal is an important option in keeping our coal industry competitive. Opposition Members who represent constituencies with coal interests commented on that in considerable depth yesterday.

I want to point out that it would be wholly wrong to proceed with the Fawley jetty—or any other facility for importing coal—without being certain that the inland infrastructure is there for the movement of that coal to other power stations inland, and that it is adequate. In the case of Waterside, where we fought a public inquiry on the proposal for moving oil from Wych Farm in Dorset to Fawley for processing, was refused simply because the railway line was inadequate. The movement of coal, lime, gypsum and all other power station products, is equally impractical because it would require many more trains than the oil proposal. That is a lesson that we must take on board.

My third point concerns research. Section 7 of the Electricity Act 1957—which is due to be repealed in its entirety by the Bill—sets out the mandatory and permissive frameworks that have led to the existing high level of research work in the electricity supply industry. The Berkeley, Marchwood and Leatherhead research laboratories spent £224 million in the last financial year, which has helped our electricity industry to lead the world in so many areas.

What do the Government propose as an adequate replacement for section 7 of the 1957 Act? No framework is provided under the Bill. It has been for the CEGB to decide, following discussions with the Department of Energy, that, subject to the enactment of the Bill, Berkeley nuclear laboratories and the Central Electricity research laboratory—except for the part of the CERL site engaged in transmission-related work—will be owned by the new National Power company—big G. Marchwood engineering laboratories, in my constituency, will be owned by the new Power Generation company—little G. That part of the CERL site at Leatherhead that is already engaged in transmission work will be owned by the new National Grid company.

I question whether the allocation of these research facilities is the right one, especially in relation to Marchwood where 400 to 450 people work, mainly in nuclear power research—on which they spend 60 per cent. to 80 per cent. of their time—and which will be allocated to little G, when it should be to big G. This reorganisation must be considered again because Marchwood faces closure and the loss of 450 jobs. Those research facilities there at present, which are non-nuclear, will probably be moved to Ratcliffe-on-Soar power station, and that could sound the death knell for Marchwood.

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. I am sorry to interrupt, but I must be fair to other hon. Members and the hon. Gentleman has had a little more than the time allocated.

Photo of Mr Peter Hardy Mr Peter Hardy , Wentworth 6:57 pm, 13th December 1988

I shall try not to speak for the whole time that is allocated, although I should have very much liked to comment on the speech made by the hon. Member for Romsey and Waterside (Mr. Colvin). I am very pleased that, unlike most of his colleagues, he has realised that the electricity industry has been responsible for significant achievements, and it was good to see some of his hon. Friends wince when he expressed that view. It is not a view that would have been expressed by the hon. Member for Birmingham, Northfield (Mr. King) who, in an aside, summed up the approach of Conservative Members when he talked about getting £20 billion in the kitty to fight the next election. That is what the Bill is about.

The Secretary of State, who is rather more polished and urbane, would not say that, but he deliberately, or negligently, misled the House yesterday when he said that the Bill would be achieving something enormously important in breaking new ground and giving the suppliers the duty to supply electricity. He suggested that that goes further than any responsibility placed on the public sector. He told us about that part, but he did not tell the House—and perhaps the Minister of State can explain—that the absolute promise that the Secretary of State gave to the House yesterday about the duty to supply seems to be remarkably hedged about in clauses 15 and 16.

If any supplier does not wish to fulfil the terms of clause 3, to which the Secretary of State was referring, clauses 15 and 16 seem to give it every possible opportunity to evade that mythical responsibility. The Secretary of State may not have read the Bill. I hope that he has an enjoyable Christmas, although he may not like the idea of what is to come. He will still be Secretary of State in January and February during the Committee Stage, and he and his Ministers will have to do much more homework than appeared to have been done yesterday.

That was not the only point on which the Secretary of State was somewhat misleading. He implied that he was negotiating with the trade unions and that they were quite happy to talk to him about the distribution of shares. As far as I know, the trade unions have had no contact with him at all. They are probably quite interested in the allocation of shares, but they see it as peripheral compared to the future of an industry that is so important to their members and the country.

It is fashionable for Conservative Members to criticise the industry. We should remember that many of them represent rural constituencies and they should understand that two enormously important developments assisted rural Britain in the 1940s and subsequently. One was the Agriculture Act 1947 which brought rural areas a share in urban prosperity—a Labour Government achievement— and the other was the nationalisation of the electricity industry, which brought light and power to areas of Britain that would not otherwise have been able to afford them. If the decision were left to the private sector now, I doubt whether it would find some of the areas represented by Conservative Members particularly attractive as markets.

In addition to the future of the rural areas, I am concerned about conservation. The Bill is woefully inadequate in its provision for conservation and the environment. The Government have merely lifted the appropriate part of an Act of 1957, but the fact that throughout their period in office they have ignored its requirements does not give us much hope that the provision will prove satisfactory. The fact that the Nature Conservancy Council has not been consulted and that there is no structure for consultation with public agencies seems to me a woeful omission. The conservation lobby fears that the priority afforded to environment issues will be grossly inadequate.

One begins to wonder about Conservative Members' intelligence in that regard. The other day I did a study of what would happen in Britain if we did not take environmental problems seriously enough, and if the sea level rose. I found grounds for satisfaction. The Government are utterly unconcerned about the environment. They are utterly unworried and remarkably negligent when it comes to support for fluidised bed combustion and so on. They are ignoring anything beyond the next balance sheet and the next election, and history will hold them responsible for the rise in the sea level.

Unfortunately, 90 per cent. of our low-lying areas are represented by Conservative Members. When the sea level rises as a result of Conservative negligence, it will be interesting to see what those attached to private affluence and to the eradication of the public sector will do. Perhaps they will come squealing for public sector support, and when they do, some of us may point out that the Conservative Government whom they support are responsible. That Government may well be quite prepared to obliterate the research capacity to which the hon. Member for Romsey and Waterside referred. I hope that Conservative Members will be consistent enough to say to their constituents, "Build your own sea walls, walk about in your own wellington boots and pay your own electricity bills."

There is another question that the Minister must answer. The Secretary of State forced quite unnecessarily high electricity price increases last year, on the ground that the CEGB needed to invest £1 billion. But the CEGB was about to do that; it was already budgeted for. I ask the Minister to tell the House, therefore, whether the CEGB will be investing an additional £1,000 million in the current financial year—the money that the Secretary of State compelled it to raise. If the CEGB is not to spend that sum, the House and the country will require an explanation.

I should declare an interest; I am involved with NACODS, the National Association of Colliery Overmen, Deputies and Shotfirers, and with the National and Local Government Officers Association. Some months ago, I asked a question in the House about potential redundancies. Only in two ways can a profit be made: first by reducing labour costs and second by reducing input costs. I feared that many jobs would go, as Mr. Alex Henney suggested. The Secretary of State gave me an absolute assurance, not only that there would be no redundancies but that additional jobs would follow privatisation. Can the Minister confirm that pledge? If the Government have retreated from it, he should let us know now. It will be no consolation for the workers in the industry to be given a few crumbs of shares if they then find that the pressure of ruthless privatisation makes them join the ranks of the unemployed.

The Secretary of State referred yesterday to imported coal. He clearly has no understanding of the international coal trade, which could not have sustained a sudden switch from domestic to imported coal. He referred to low-sulphur coal. How can the Government talk about low-sulphur coal or high-sulphur coal when we have shown in recent months that they do not even know which country the coal is coming from? That is a serious point. The miners in the constituency of my hon. Friend the Member for Barnsley, East (Mr. Patchett) have their coal washed at the Manvers site in my constituency. In the last three months we have produced coal at 81p a gigajoule on average and last week they were producing it at 68p a gigajoule.

In destroying that achievement, the Government would not merely bring embarrassment and long-term danger to the electricity industry and to the consumer; they would destroy an important part of the potential for British -industrial growth. The damage that they have already inflicted upon high energy users such as United Engineering Steel in my constituency by an unnecessary increase in prices this year shows that a balance of payments deficit of enormous and hitherto unimaginable dimension is of no consequence to them. Those of us who take a longer view would suggest that the achievements that the hon. Member for Romsey and Waterside has just begun to recognise are about to be sacrificed by a bunch of people whose motivation, like that of the hon. Member for Northfield, is pure greed.

Photo of Mr Michael Irvine Mr Michael Irvine , Ipswich 7:08 pm, 13th December 1988

The hon. Member for Sedgefield (Mr. Blair) is a barrister. His speech yesterday was fluent; it had a certain polish and it went on rather too long. In other words, it was very much the speech of a barrister. Barristers have clients, and I found myself asking just who the hon. Gentleman's clients were. I decided that they were just about every vested interest and every force against progress that is to be found in the industry. The hon. Gentleman's clients are the National Union of Mineworkers, the anti-nuclear lobby, the state corporatists. They are all those who are against the operation of market forces and competition and who recoil with a shudder from the idea of giving the consumer some clout.

The CEGB has much of which it can be proud, and I acknowledge it. I acknowledge that it has achieved and maintained high technical standards, but it is by no means the creature of perfection that many of its apologists would have us believe. Its record on investment shows that it has over-invested far too often. A look at the way in which its power stations have been constructed and supervised reveals an appalling record.

Look at the time that it took the CEGB to construct Dungeness B. Originally it planned to build the power station in five years; it took 20. When it put its hands on Hartlepool, the power station there was expected to take six years. It took 18 years. It was not just the AGR power stations that took such a time. The Isle of Grain power station was planned to take seven years, but it took 13. Ince B was planned to take five years, but it took 10. In some respects, the CEGB has not served the nation well, although in others I acknowledge that it has.

Yesterday, the hon. Member for Clydesdale (Mr. Hood) spent a great deal of time talking about fat cats. He spat out the words with considerable ferocity and frequency. Looking at him, I was moved to reflect that he had a not inconsiderable waistline himself. Apart from the hon. Member for Clydesdale and the fat cats to whom he referred, there are others. Could it not be that the CEGB is a bit of a fat cat? Could it not be in need of slimming down? Could it not be that it occasionally needs to meet the sharp end of competition? If you will forgive the pun, Mr. Deputy Speaker, that would do it a power of good.

This Bill will open the way for many small-scale generating schemes. We shall see many more power and heat schemes. I am convinced that a great number of small gas-generated power stations will open as a direct result of the Bill. Section 5 of the Energy Act 1983 paved the way for such small gas-generated power stations and the like to generate directly into the national grid.

Unfortunately, that section was not the success that was hoped for. The trouble was that the CEGB was in control of the national grid and it had no desire to see small gas and other generating stations move in on its territory. Things will now be different. Following the Bill, the national grid will be under the control of the distribution companies, which will have an interest in encouraging different sources of supply, in diversifying and in seeing competition brought into the generating industry. That will be a considerable force for good.

Labour Members from time to time during the debate have mocked the special status that the Government are according nuclear power in the Bill. Power generated through nuclear fission is, and should be, treated as a special case. The cost of constructing nuclear power stations is heavy, but the great advantage is that, once those costs have been incurred, the running costs are comparatively cheap. Quite apart from that, there is the issue of security of supply.

In his opening speech, my right hon. Friend the Secretary of State said that on several occasions during the past 20 years there had been threats to security of supply. There have been threats to oil and coal supplies to power stations. There has not been the same threat to power supplies from nuclear stations. It is noteworthy that not one Opposition Member has addressed himself to that argument. That shows its force and weight and why it is so important that the Government should have it in mind.

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. I must ask the hon. Gentleman to come to his last sentence.

Photo of Mr Michael Irvine Mr Michael Irvine , Ipswich

The Government's approach to nuclear power is refreshingly pragmatic. They are going forward not with dogma but with pragmatism. In giving nuclear power a special status, they are not showing favouritism but rather indulging in plain good common sense.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party 7:14 pm, 13th December 1988

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: That this House declines to give a Second Reading to a Bill which is ill considered spatchcock legislation; notes that electricity supply, as a basic service, properly belongs in the public sector; that the Bill fails to introduce effective competition into the privatised structure in England and Wales and particularly in Scotland, leaving consumers to face higher bills to finance the doubling of company rates of return; further notes the lack of public provision for the strengthening of the electricity interconnector between Scotland and England and the failure to guarantee that the Scottish companies will not be forced to compete to sell electricity to a monopoly buyer at a loss of some tens of millions of pounds, the effective removal of the social clause from the Hydro-Board operations and the failure to appoint a separate Scottish regulator to oversee the distinctive characteristics of the Scottish electricity system, the Government's failure to respond adequately to the Select Committee on Energy's detailed and robust criticisms, and the continued intent to shelter the nuclear industry from competition at the expense of the coal industry; and considers that Scottish consumers risk being denied the full benefits of the development of hydro power and North Sea Gas, the two cheapest and most environmentally sensitive major sources of electricity generation. There has been some interest in the use of the word "spatchcock" to describe the Government's proposed legislation. That word was used by the Select Committee on Energy. As all hon. Members will know, it means a chicken that is ill-prepared—slaughtered before its time. The word is derived from the Indian army. I can think of no better word than one used by the Indian Raj to describe what the Scottish Raj is doing to Scotland in the Bill.

I was prepared for the fact that the Secretary of State for Energy would know little about the Scottish side of the legislation when he opened the debate. He knew so little that he refused point blank to answer questions on the Scottish issue. But I was not prepared for the Secretary of State for Scotland to display a similar level of ignorance. If I interpreted him correctly, the Secretary of State for Scotland said that only about 3 per cent. of the issues involved in the Scottish privatisation were different and separate from those involved in the privatisation in England and Wales. There can be no better testimony to the Secretary of State's total ignorance of the measure that he is co-sponsoring through the House.

The Scottish and English privatisations are like chalk and cheese. The issues involved in the vertical integration of the Scottish electricity industry and its privatisation are separate and distinct from the issues involved in the different structure south of the border. Such remarks show why, according to the MORI poll published last Friday, 61 per cent. are now dissatisfied with the Secretary of State's performance. That is only 1 per cent. more than the dissatisfaction accorded to the Leader of the Opposition. The Secretary of State is now chasing hard on the heels of the Prime Minister to be the most unpopular political figure in Scotland.

Why are the Scottish public so dissatisfied with the Secretary of State's performance? The major reason is that he persists in imposing policies which have no popular support in Scotland. The Bill is an excellent illustration of that. I defy any Tory Member to tell me where, in Scottish local election results, general election results or opinion polls, there is any sign of convincing support for electricity privatisation in Scotland.

When that point is pursued with the Secretary of State, he says that the companies support privatisation. I can think of nothing more pathetic than being reduced to claiming the support of people whom he appoints or whose future he controls. That displays the Tory party's attitude to Scotland. On so many issues, the Tory party has appointed place people in a failed attempt to reinforce its support in Scotland.

The Secretary of State is unpopular because of the contempt with which he allows Scottish business to be treated. The distinctive nature of the Scottish electricity industry was recognised by the Select Committee on Energy. In the absence of a Select Committee on Scottish Affairs, the Energy Select Committee went into the Bill's Scottish aspect, although it recognised that it could not do the thorough job or do the matter the justice that a Scottish Affairs Select Committee would have done. Now we find that there is to be no Scottish Bill, no Scottish debate and no Scottish Standing Committee, all because the Government lack the troops to man their Scottish Benches. We see another perfect illustration of that this evening.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

No. I am restricted to 10 minutes, so I am not prepared to take information from the hon. Gentleman who has just arrived.

The Government are trying to disguise their lack of a Scottish mandate and to call the English battalions to their rescue by keeping the two Bills together.

The Minister of State, who has just arrived, will remember that one reason why, according to the MORI poll, 61 per cent. were dissatisfied with the Secretary of State was due to the Government's lack of backbone in defending Scottish interests. It was incredible to hear the argument for a separate Scottish regulator described as "foolish" by the Secretary of State earlier. The Select Committee on Energy, which has a majority of English Back Benchers, concluded that the distinctive nature of the Scottish electricity system justified a separate Scottish regulator. There can he no better illustration of the lack of backbone of the Secretary of State for Scotland. He is unwilling to demand for Scotland even that which was recommended by a majority of English Tory Back Benchers.

There are many reasons for opposing the Bill, and many are detailed in the amendment. Because of the shortage of time, I shall concentrate on two of them. First, inevitably, electricity privatisation in Scotland will result in higher prices. There is an argument on the English and Welsh legislation. On one side it is argued that higher rates of return and increased costs through separating the generators from the grid will result in higher prices. On the other side it is argued that pressure and competition in generation will bring prices down. That is an argument, although it is one in which the hon. Member for Sedgefield (Mr. Blair) has the initiative over the Secretary of State for Energy.

In Scotland there is no argument. There is no competition in the Scottish measure and no downward pressure on prices. Rather than relying on the opinion of the Secretary of State for Scotland, we should turn to people who know about the industry. The chairmen of the two companies in Scotland that are to be privatised gave evidence to the Select Committee. Mr. Joughin, the chairman of the Hydro-Electric Board, was not an unimpressive witness but when pressed as to whether competition would be promoted by the Scottish measures, he was unable to give an answer.

The succession of questions ran as follows: he was asked what a consumer was to do when he was dissatisfied with the privatised Hydro Board's cost of electricity. He said: He can come to the Annual General Meeting and chase us. I then asked him: Say he is not a shareholder, but just a customer? Mr. Joughin replied: I would hope he would soon become a shareholder, the same as you would in any other company in which you wanted to take a challenging interest. He was then asked: You are surely not saying that the customers who are not shareholders will not be uppermost in your mind when you move into the private sector? Mr. Joughin replied: Customers will, as they are now, be uppermost in our minds, yes. He was then asked: However, they will not be able to do anything about it if your performance is not very good'? Mr. Joughin's last word on the subject was: With due respect, Sir, this is not our debate. We are the Management, we have a Government which has said that it wishes to privatise, and it is our responsibility to be sure that we make the best decisions possible to enable that privatisation to be as effective as we can for our consumers. In the final analysis, when asked to explain where the competition was in the Scottish measures, the best that the chairman of the Hydro Board could say was, "We are doing what we are telt." In that, he was similar to the chairman of the South of Scotland Electricity Board who completely destroyed the argument that there was competition in supplying to industrial consumers in Scotland when he told the Select Committee: the nuclear company will own, as I have indicated, 80 per cent. of the generation assets, in Scotland and produce 60 per cent. of the electricity, and so a very high degree of co-operation is required between the partners. At the same time, we arc enjoined by the White Paper to compete. That is an unusual situation. To our knowledge, it has no precedent anywhere in the world.

From both the Hydro Board chairman and the South of Scotland electricity board chairman there is an admission that there is no real competition in the Scottish measures. That is why the Select Committee on Energy concluded that the claims of competition by emulation were "largely meaningless".

In the absence of competition and downward pressure on prices, it is inevitable that an increase in rates of return— a doubling is estimated by the Hydro Board—will lead to higher prices for Scottish consumers in the private sector.

There is one area of competition in the Scottish measures, and that is that the two boards will be involved in the cut-throat competition of selling electricity to England and Wales. As yet, we have no absolute guarantee that the English and Welsh distribution companies will not combine to form a monopoly buyer to force down the price at an estimated cost to Scotland of tens of millions of pounds. I am asking for that guarantee now. The one achievement, in competition terms, of the Secretary of State for Scotland is to see that competition between the two Scottish boards forces down costs for consumers in England and Wales. What a triumph for the Secretary of State for Scotland!

I shall deal with the fallacy of Conservative Members' claims of control in Scotland. The Secretary of State for Scotland refused to say how much of the Scottish private sector had disappeared into external ownership during his tenure of office. The estimate from Scottish Business Insider is about two thirds. He also refused to tell us why he did not argue for a Scottish Telecom, Scottish Gas or Scottish Steel.

When the right hon. and learned Gentleman argues that the two major companies will enliven and bring rebirth to the Scottish private sector, we should remember that it was only a year before the elimination of Britoil as Scotland's major private sector company that the Secretary of State for Scotland, at the opening of its new offices in Glasgow, was saying what an asset it was to Scotland. The claim of the Scottish Conservatives that there is something distinctly Scottish in the measures they are suggesting is as bogusly Scottish as the hon. Member for Tayside, North (Mr. Walker) dressed in his latest kilt.V I want to turn—

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. I must ask the hon. Gentleman to come to his last sentence.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

The measure before us betrays the interest of the Scottish people. The enormous generation assets and potential of Scotland in terms of coal, hydro power, and cheap gas are being wasted. We are further than ever from an energy policy for Scotland that would allow those assets to be used for the benefit of Scottish industry and Scottish consumers.

Photo of Mr Keith Mans Mr Keith Mans , Wyre 7:26 pm, 13th December 1988

I should like to make a few comments about the transfer of the electricity industry into the private sector and the need to rely upon a variety of generation systems.

I was struck by the inconsistency of the arguments by the hon. Member for Sedgefield (Mr. Blair) yesterday and his colleague, the hon. Member for Glasgow, Garscadden (Mr. Dewar) today. Yesterday, we discussed the so-called nuclear levy and we were told that prices would rise if the electricity industry was privatised. Today we were told that Scottish coal is a special case and that the Scottish electricity industry should not be allowed to import coal, despite the fact that it might be cheaper. At the same time, it was suggested that prices would still rise in Scotland. That is the sort of inconsistency that has coloured many of the Opposition's arguments over the past two days.

I want to concentrate on the reasons why the industry should be moved into the private sector. Yesterday we heard a great deal about the conditions pertaining many decades ago when much of the industry was in the private sector. It was suggested that the problems of the 1920s and 1930s were good reasons for not moving the industry into the private sector. I am afraid that that argument, like so many others put forward by Opposition Members, looks to the past, not to the future.

I am the first to admit that the creation of the national grid in the 1930s was a good idea. However, I am the last to admit that the nationalisation process that took place after the last war was a good idea. Our generation industry would have been just as efficient, if not more so, with a national grid had we not had that nationalisation measure.

In the public sector, the solutions to the problems of the electricity industry, like in so many other industries, are of a general nature. Quite often the Treasury decides the amount of money that an industry should borrow to fund its investment. In the electricity industry in particular, we can see the effects of that over many decades. Prosperity or the need for the Treasury to spend or save more money has often dictated the investment plans of the industry rather than the needs of the consumer and the needs of the industry itself.

In the public sector, too little regard is paid to alternative methods of generating electricity. Again, we tend to be blinkered. The fashion may be, perhaps according to the Government of the day or to the philosophy of the chairman running the Central Electricity Generating Board at the time, to go for a nuclear, coal or oil option. Little regard is paid to smaller systems of generating electricity that are becoming more popular abroad, and which I suggest will become more popular in this country once the industry is privatised.

It is necessary for the electricity industry's long-term interests, and for those of its consumers, for there to be a number of different systems of generating electricity. More specifically, it is important to retain the nuclear option. One can see what happens when there is no variety of generating systems in a country such as France, where, because of high oil prices, they went overboard in terms of nuclear-powered electricity. The French have saddled themselves with a £20 billion debt as a result.

I was interested in the remarks made yesterday by the hon. Member for Sedgefield (Mr. Blair), although I did not quite understand his logic. I gather that his suggestion was that, whereas electricity costs in France are higher, that country can still sell electricity to the CEGB at a lower price than that at which it can be produced in this country, so the French Government are subsidising our domestic electricity industry.

One element of consistency in the debate on the electricity industry is the inconsistency in estimates of the cheapest source of electricity over a long period. Twenty years ago, oil was in vogue and undoubtedly provided the cheapest source. As a result of oil price increases, coal became the cheapest 10 years ago, but two years ago, when oil prices fell, there was doubt as to whether it would not be feasible to generate electricity from oil again. Today, perhaps coal has the slight advantage.

Throughout all of that, there was the nuclear option as well. Even today it is, in terms of running costs, a cheap way of generating electricity. The drawback is the cost of building nuclear stations. Factors such as interest rates play a large part in decisions on the best way to proceed.

Another important factor is the decisions made by Governments—specifically Labour Governments—over many years, about the nuclear industry. Yesterday, my hon. Friend the Member for Havant (Sir I. Lloyd) rightly observed that, in the past, Britain's nuclear industry has largely been technology-led, which has often taken us up blind alleys in terms of the cost of Magnox stations and, more specifically, the delays suffered as a result of advanced gas-cooled reactors. Today, I believe that, as a result of our decision to change to pressurised water reactors, there is less likelihood of any kind of nuclear levy being applied in future, based on the experience of other countries running PWR stations rather than on our own experience in respect of Magnox and AGR stations.

The relationship between electricity generation and the environment is becoming more important. There is a good case to be made for retaining the nuclear option because, with nuclear power, many of the environmental problems associated with it were taken into account when its cost was calculated. [HON. MEMBERS: "Oh!"] There remains the cost of shutdowns, clearing the sites, and waste storage. I can understand Opposition Members encouraging me to make that point. What we do not yet know are the full environmental implications of having a generating system that is largely or totally based on coal or other fossil fuels.

A coal-fired power station, for example, generating 1,800 MW, in the category into which Drax B falls, produces 11 billion tonnes of carbon dioxide and 16,000 tonnes of sulphur dioxide annually. That can be overcome by fitting fluid gas desulphurisation devices, but that will add to the costs—which is not taken into account when the equation is done. It does not end there. If one has fluid gas desulphurisation, one must also get rid of the gypsum, which amounts to 500,000 tonnes a year, and of 1 million tonnes of ash annually. None of those factors was taken into account in arriving at the cost of coal-fired, as compared with nuclear, power stations. When such costs are taken into account in future, the so-called nuclear levy may not arise.

For too long, many people in this country have believed that the best way of running large public utilities such as electricity was by retaining them in the public sector. In an age in which the interests of the consumers and of the environment are of increasing importance, such a view is no longer appropriate. We need to free the industry from the Treasury's purse strings, and to give both industrial users and regional boards freedom of choice. We must allow the industry to rely on a variety of sources of supply for the generation of electricity throughout the country.

For all those reasons, and because I believe that environmental and consumer interests will be better protected if the electricity industry is in private hands and the regulator in public hands, I welcome the Bill and shall vote for it tonight.

Photo of Mr Terry Patchett Mr Terry Patchett , Barnsley East 7:36 pm, 13th December 1988

I do not propose taking up a great deal of time, as I am anxious to hear the contributions of Conservative Members. This is the second day of debate on the Bill but, as yet, I have heard not one convincing argument from Government Members, including the Secretary of State, for privatising the electricity supply industry. We keep getting a parade of parroting about competition and its benefits to the customer, which, I feel sure, Conservative Members know in their hearts not to be true.

Private power companies may be forced into making deals with large industrial users, such as car manufacturers, who may threaten to build their own generating plants as part of their bargaining power in negotiating electricity prices. No such tactic is available to the domestic consumer. Where industrial users take advantage of the new situation, the power companies' shareholders will expect them to find their profits from elsewhere—and they can come from no other source than domestic users.

Much has been said about competition, but there is only likely to be any between the big City corporations, over which of them is prepared to pay more into the Chancellor of the Exchequer's kitty to reap the benefits of the captive market. They are the "fat cats" to whom my hon. Friend the Member for Clydesdale (Mr. Hood) referred yesterday. They can do so safely, in the knowledge that a great deal of the money that they pay to the Chancellor will be returned to them personally by way of promised tax cuts. So those people will win twice on the deal.

It is ironic that, while the Government appear to advocate competition, they consider it unfair that the nuclear power industry should compete equally with other energy sources, and they insist on its being guaranteed 20 per cent. of the energy market. Not only that, but the Government are prepared to prop up the nuclear industry, given the unknown costs of decommissioning nuclear power stations in the future. The Government leave the nationalised coal industry to fend for itself in its battle against cheap, subsidised foreign coal that is flooding the world now, but which may not be available at a future date, by which time the Government's policies may have annihilated our domestic coal industry.

The Government are not only deserting our coal industry but openly and actively contributing to its downfall, even to the cynical use of private Bills. The North Killingholme Cargo Terminal Bill and others like it were introduced as private Bills, then openly and avidly supported by the Government payroll vote. The last time that the Killingholme Bill came before the House, there was an open if unofficial Whip on it: the Government had put a two-line Whip on the business that followed it, when they knew that there would be no vote on the matter. The two-line Whip was dropped immediately after the vote had been taken on the private Bill.

I deem that cynical politics, and would expect it to leave a nasty taste in the mouths of Members of Parliament who believe in the parliamentary procedures of the House. The only reason for supporting that Bill was to allow easy access for cheap imported coal and to decimate our own coal industry, which would have considerable difficulty in competing with cheap imports born of subsidies and cheap labour—even, in some instances, child labour.

It has been estimated that unrestricted foreign coal imports by privately owned power stations could lead to the loss of 160,000 jobs, of which 65 per cent. would be in the coal industry. That would decimate constituencies such as mine, which are already reeling under high unemployment because of the Government's earlier pit closure programme. The number of collieries is expected to halve. By 1992, British Coal will be reduced to 48 collieries employing 45,000 people and producing between 73 million and 80 million tonnes of coal a year. That forecast is based on coal imports of 40 million tonnes.

The level of import penetration in the electricity industry will ultimately depend on the relative value of sterling. Nevertheless, there are reasons for expecting a massive increase. For example, the coal division of British Petroleum is understood to have held informal talks in Britain about the possibility of buying Australian coal for power generation. Despite the extra transportation costs, BP believes that it could undercut British Coal by quite a margin. While private electricity industry may gain from such deals in the short term, our country will lose. Not only will our balance of payments be affected, but huge numbers of people will be out of work and have to be paid dole rather than contribute from their taxes, as they would much prefer to do.

The Bill has been described by an outside expert on the electricity industry as a mixture of political prejudice and technical ignorance. The industry itself cannot easily forecast supply and demand, which can fluctuate daily. In an emergency, when demand may shoot up surprisingly in a few days, we are told that the various groups would have to co-operate rather than provisions being included in the Bill to control such an emergency.

We are asking companies to compete to benefit the consumer; in a crisis, however, they are expected to co-operate with one another. That seems to me a contradiction in terms. The electricity industry is much too serious a matter for this flippant Bill, born out of pure political dogma and with no concern or benefit for the consumer. It is merely yet another example of the Government's selling off the family silver to prop up their economic policy—which, like the Bill, is a complete failure.

Photo of Mr Ian Bruce Mr Ian Bruce , South Dorset 7:43 pm, 13th December 1988

Many hon. Members have said that they have never believed CEGB statistics before, but suddenly believe them when they suggest that nuclear power is more expensive than coal. Perhaps we should examine that a little more closely. I seem to be the only hon. Member left in the House who believes that nuclear power is the most economic form of fuel, let alone that it is the most environmentally safe.

We must consider like for like. This country has opted for 20 per cent. nuclear power and 80 per cent. other forms of power. Across the Channel, France, a country of similar size, has invested heavily in nuclear power. I must take my hon. Friend the Member for Wyre (Mr. Mans) to task for referring to a £20 billion debt; I wish that we had made as large an investment in our nuclear industry. With its 80 per cent. nuclear power, France can boast the cheapest electricity in Europe—far cheaper than ours.

I am also extraordinarily surprised to hear Scottish Members claim that the SSEB will be so terribly disadvantaged. Perhaps they should have gone and listened to its chairman when he was in London a few weeks ago, speaking of the enormous success of its AGRs and Magnox stations. They have demonstrated how even a small nuclear programme can be extremely effective and profitable.

It is strange that the CEGB should tell us that it is having its costing re-examined, particularly on reprocessing. Reprocessing was always very safe when done at Sellafield. We are all flown up to look at the wonderful THORP reprocessing plant and to be told how many extra billions of pounds will be spent on it, but all that is being back-end-loaded on the Magnox stations and the reprocessing. Of course that suddenly looks bad according to the economics of a "tailing off" industry. The CEGB has made a hash of running its AGRs: two of its stations are a disaster. Yet a few months ago, if asked what its AGR stations were doing, the CEGB would have produced the story that they would come right next year or the year after.

Now the chairman of big G, finding that he is the only member of the English generating industry who must have nuclear power on his side, is trying to talk down the value of his assets, like any sensible man wanting to demonstrate in the future what wonderful profits he is making. Yet in the Hinkley inquiry, the CEGB is putting forward the case today that Hinkley C would have even cheaper electricity than the most modern coal-fired stations. We must look carefully at the statistics that are thrown at us, and ask why the CEGB is suddenly producing such a mish-mash.

Many hon. Members are keen to tell us about the alternatives—wind power, barrage power, oil and gas turbines. I say, "Great: this is what privatisation will allow us to prove." It will not be for the CEGB to say, "Wind power is not an efficient way to generate electricity." Opposition Members, or Mr. Porritt from Friends of the Earth, can go out and invest their own money—or other shareholders' money—to create alternative power sources. They know that they will be able to sell their electricity on to the grid and to any number of people who want to use it. If it is economic, we shall see such development very quickly.

The United States has had the same problem of consumers worrying about nuclear power stations on their doorstep, with the scaling down of electricity generation by that method. Much of that has been brought about by the combined heat and power method. It has proved economic for the present, while being produced in small packages. Industrial companies that wish to use the heat that they are creating on site and can also generate electricity. Unlike the CEGB, which says that, as it is the only customer who can buy it, it will pay next to nothing, they can sell it at a competitive price on to the grid.

We must, however, talk about the environment. It is easy to form a view of a nuclear industry that we have constantly loaded with costs to ensure that it is ultra-ultra-safe. Unfortunately, the coal industry has been creating an enormous amount of pollution, and the chickens are now coming home to roost. The amount of CO2, NOX and sulphur being put into the atmosphere has been a constant environmental problem. I was most grateful to the hon. Member for Wentworth (Mr. Hardy), who stated that the Conservative Government would still be in power in the year 2020, and therefore should be worrying about the possible greenhouse effect and any floods in hon. Members' constituencies when considering the Bill. As I live only 50 ft above sea level, I am most concerned about that.

We must look extremely carefully at research, particularly research into nuclear electricity as well as other forms of electricity. Money has been spent on the possibilities of fusion rather than fission reactors. Opposition Members, who seem to be so against nuclear power, are keen to preserve the jobs of fast breeder reactor workers in Scotland. We must also consider the smaller nuclear reactors. I heard a very good presentation about the economics of small nuclear power stations, the speed at which they can be produced and the fact that economically they can be much more effective than very large stations. We will be considering an enormous number of questions in Committee. I certainly welcome the light and fresh air coming into the industry. Clearly, without the privatisation of this enormous monopoly, we should not have had such a sensible and sane debate.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 7:51 pm, 13th December 1988

If the hon. Member for Dorset, South (Mr. Bruce) believes passionately in the economic case of nuclear power, why does he not let it take its chance in the free market, which the Government are not prepared to do? The Bill is designed to ensure that the disciplines of the free market never apply to nuclear power.

I shall return to that later, but I wish to register a small matter, which is important in my constituency and which is still not clarified—the question whether the south of Scotland company will be allowed to be a retail electricity company in England. If it is not, that will represent a change in the arrangements under which a large part of my constituency is supplied by the South of Scotland electricity board. It would be useful to know whether we are to continue to be provided with electricity by the SSEB, and if so, whether or not it can expand beyond the areas it currently supplies in England.

I shall concentrate on three reasons why my right hon. and hon. Friends are right to oppose the Bill. First, it gives no priority to energy conservation. Why is there no obligation on the face of the Bill to make energy conservation, and the efficient use of energy, a priority? Why is it not recognised as part of the non-fossil fuel quota? Why are the energy efficiency improvements which could be achieved in other ways not recognised as part of the non-fossil fule quota? If the object of the non-fossil fuel quota is to make the country less dependent on fossil fuels, any measure which makes it less dependent should count towards that quota. Increases in energy efficiency must come into that category, and that should be put right.

The notion of the non-fossil fuel quota is misleading, as it is couched only in terms of nuclear power, particularly in the financial provisions which back it up. There is no mention of dual firing, or any other means by which dependency on any one fuel could be reduced. No priority is given to energy conservation.

Secondly, nuclear power has a protected status. The consumer is taxed so that he shall have nuclear power. The taxpayer is taxed so that nuclear power shall be provided. Companies are placed under an obligation to buy it. It is the most blatant piece of market distortion since the direction of industry in the second world war. It is such a blatant distortion of the free market that it would qualify the Secretary of State to be Energy Secretary in Albania —the country so often used by Conservative Members to describe the attitude of the Labour party. The Secretary of State deserves that categorisation for his incredible departure from the principles that he is supposed to espouse.

The Secretary of State intervened in the speech of my hon. Friend the Member for Gordon (Mr. Bruce) to suggest that one of the advantages of the Bill was that in future there would be a more open debate on nuclear power. Tonight, there has been some focus on the figures for nuclear power and some justified criticism of the CEGB for its grotesque nuclear power figures in the past. We have heard some rather surprising praise of the SSEB from the Labour Front Bench for its record on nuclear power, of which I am extremely critical. It has grossly over-invested in nuclear power recently. How can there be a more open debate on nuclear power if it is no longer possible at a public inquiry on nuclear power stations, such as the one planned at Druridge bay in my constituency, to argue that there is no proven need for the power that that station will generate?

The answer to that challenge will be that Parliament has decided that, whether or not it is needed, we are obliged to have it. That rigs future public inquiries into nuclear power stations. Unless the Minister can demonstrate that there will be a different approach, the argument will be adduced that it is not a question of need, Parliament has decided and the law says that we have to have it whether or not it is needed. It will cease to be possible to argue at a public inquiry that the environmental damage caused by building a nuclear power station is not justified by any overwhelming need for the power that it would generate.

In the context of the Druridge bay power station which the CEGB wishes to build in my constituency, how can the Department of Energy issue fact sheet 11 at the time of the publication of the Bill, which lists a Druridge bay power station as one of those to be allocated to the National Power Company? There is no Druridge bay power station; nobody has applied for planning permission for that power station, no planning permission has been granted and no licence has been issued for it. It is simply a malevolent gleam in the eye of the chairman of the CEGB. Even he recognises that it is well down the track of his own plans, given the overriding need for more power in the south rather than in the north of England.

Will the Minister explain how that power station is listed as an assett to be transferred to National Power when it does not exist? His ministerial colleagues may refuse planning permission for it. Is the Minister prejudicing a later decision on the planning permission for that station by listing it in a fact sheet as if it were a foregone conclusion? My constituents have the feeling that it is all cut and dried and that Ministers have given some behind-the-scenes promise that the CEGB and National Power will be able to build at Druridge bay and that the planning arrangements will be a foregone conclusion. That must not be so. We shall fight it, and we are entitled to know why it was listed in that way.

One consequence of the protected status of nuclear power is that those who object to the building of particular nuclear power stations will have their arguments ruled out by the Bill.

My third reason for being so strongly opposed to the Bill is that it lacks any acceptance of vital social obligations. The Bill allows the vicious penalty of standing charges on pensioners to continue. The SSEB goes one further: it imposes six standing charges a year on its customer. They are quarterly for most of England, but six a year in Scotland. They are very much resented, and the Bill does nothing to remove them.

The Bill does nothing to help those who are not on mains electricity. Many of my constituents and many people in other rural areas do not have mains electricity. The Government are not continuing the present Hydro Board obligation to help people in rural areas, and they are certainly doing nothing like that to help consumers in other parts of the country. It is simply not good enough for the industry to pass out of public ownership with no provision for the remaining people who do not have the benefit of mains electricity.

I and my right hon. and hon. Friends are no enthusiasts for the present structure of the electricity industry. Ministers have quite rightly quoted my hon. Friend the Member for Gordon, who suggested that it would be possible to consider ways of privatising the generation of electricity so as to ensure there was some real competition. But that requires continued public maintenance of the national grid, which is conspicuously lacking in the Bill. It would require much more real competition than the Government are introducing. The Government are putting the electricity industry in turmoil without any hope of increasing competition, without any hope of promoting conservation, without any hope of maintaining the social obligations of the industry and with the express purpose of subsidising, feather-bedding and protecting nuclear power.

I agree with the comments by the right hon. Member for Plymouth, Devonport (Dr. Owen) about the electricity industry. The point of difference between us is that I do not share his apparent belief that the Government have any intentions of putting the Bill right and turning it into the kind of legislation that could reasonably attract wider support. The Bill will throw the electricity industry into turmoil without achieving the objectives which I have set out, and it deserves to be opposed.

8 pm

Photo of Mr Tim Janman Mr Tim Janman , Thurrock

I have great pleasure in supporting the latest element of the Government's denationalisation programme. It will be the most successful element of that programme because there will be more competition than with telecommunications and gas.

I refute the Opposition's absurd allegations that Conservative Members are ideological and dogmatic. In 1947, when electricity was centralised and nationalised under the then Labour Government, the industry was not technically inefficient. There had been no labour disputes between 1926 and 1947. Over a 20-year period, output increased by a factor of 10. The industry had modern, not dilapidated plant and there was within it no high unemployment. There was no case for the electricity industry being taken from private companies and local authorities other than that of spiteful Socialist dogma. That was why the industry was put into the nationalised sector in 1947.

Photo of Mr Frank Haynes Mr Frank Haynes , Ashfield

What is the hon. Gentleman talking about? He was not born then.

Photo of Mr Tim Janman Mr Tim Janman , Thurrock

I can see that the hon. Gentleman was born a long time before me.

It is worth examining the merits of nationalisation which the Opposition would put forward. There is the so-called merit that we all own the electricity industry because it is nationalised. What utter nonsense. If we asked the majority of people in this country whether they own electricity, they would look at us in blank amazement. The state owns it, and it is run by politicians and bureaucrats with their own interests at heart, not those of consumers. Citizens may not own the electricity industry, but we are all consumers, whether at home or because people work for companies which use electricity for industrial purposes. Because of the competition element in the legislation, the entire population, as consumers, will benefit from the downward price pressure that will be brought about in the medium and long term once denationalisation has taken place.

Another myth of nationalisation is that it leads to improved industrial relations. Between 1945 and 1987, 1·928 million man days were lost in the three nationalised industries—gas, electricity and water. That is hardly proof that nationalisation brings about a calmer atmosphere and fewer days lost through strikes. The devil of nationalisation has two heads, of course—that of the monopoly of capital which it brings about and that of the monopoly of labour with its power over consumers, the economy and the nation.

We are told that nationalisation is a guarantee of lower energy prices. Since 1963, there have been seven price increases in a given 12-month period of about double or more than double the inflation rate. The worst two examples occurred under Labour Administrations—in 1974, there was a one-off price increase of 33 per cent., against inflation of 17·9 per cent., and a year later, an increase of 47·1 per cent., against inflation of 24·6 per cent. I am not scoring points off the Opposition but wish to show that nationalisation is no guarantee of low prices. In 1963, under a Conservative Administration, when inflation was running at 1·6 per cent., the price of electricity increased by 8·7 per cent.—more than five times the inflation rate. The issue is not the political hue of the Government of the day but whether the consumer is best served by choice and competition or by a monopoly which the Opposition would wish to impose.

There are two coal-fired power stations in my constituency. Over the past few months, I have taken it upon myself to talk to management and officials of the Transport and General Workers Union. I assure my hon. Friend the Minister that the managements of those power stations are enthusiastic and optimistic about the future of the stations. I should, however, like him to respond to some of the worries that members of the TGWU have expressed to me. They would like information on the likely level of foreign investment in the electricity industry, post-denationalisation.

Given the changes that will occur in the industry, it would be useful to get a commitment that the changes will be handled sensitively. The TGWU officials in my constituency talk about the many existing industry traditions. That is a euphemism for too much demarcation and therefore too much overmanning. If the industry is to become more efficient, as it will after denationalisation, there may have to be some reductions in the work force. I do not, of course, know the circumstances of any one plant. Are there likely to be reductions? If so, I should like a commitment that it will be sensitively handled by generous voluntary redundancies.

Time is short and, because other colleagues wish to speak, I shall summarise my arguments. It is clear that the legislation will mean major changes in the electricity industry. It will mean a change in the way that investment decisions are made. Instead of being producer-led, they will be consumer-led. Investment will be led by the way in which the new distribution companies choose to buy their source of energy. The investment decisions of the new generating companies—there will definitely be more than two such companies—will be affected by market conditions and not by political priorities in Whitehall. There will be much more competition and consumer choice, which will lead to a downward pressure on prices. There will be a long-term future for the energy industry and, in particular the electricity industry. There will be increased flexibility for all concerned on the generating and the consumer sides, with the industry being accountable directly to the industrial consumer and to the domestic consumer via the 12 distribution companies.

This is an excellent Bill, which is long overdue. We should have introduced this measure in the 1950s. I am pleased to support it.

Photo of Mr Allen McKay Mr Allen McKay , Barnsley West and Penistone 8:09 pm, 13th December 1988

I wish that we had more time to develop the arguments advanced by the hon. Member for Thurrock (Mr. Janman) because we could show the House how wrong he is. I shall deal with two of the matters that he raised, the first of which is consumer choice. There is no such thing in the Bill, and the consumer cannot do a thing about it. He has to take the electricity that is supplied to him. The domestic consumer does not have a row of switches enabling him to take his supply from a Scottish board, a Yorkshire board or a board in the south. He must take the electricity from wherever it is distributed. He has no choice in the matter and it is time that we got away from that argument.

I should like to nail the lie about price increases in 1963, 1964 and 1965. I worked for British Coal from the 1950s up to the 1960s, and we said at that time that the Labour Government were wrong in their policies towards the coal industry. We told them that the Arabs would not always live in tents. That proved to be right, because in the 1960s the price of oil was increased not two or three times, but four times. That was the reason for higher prices to industry. The Government were warned then, and we are warning the Government now, to be careful how they treat the electricity industry. In the Army there used to be a saying, "If it moves, salute it, and if it doesn't, whitewash it." That is the Government's idea of privatisation. Everything goes and they are whitewashing the costs of nuclear generation.

The generation and supply of electricity are not marketable commodities. This is a key strategic industry, but what is wrong with it? It is clearly efficient and provides an excellent service and the customer trusts it. I am not convinced by the argument about competition. Perhaps later the Minister will explain where the competition will come from and how it will arise. Perhaps he will also give us an estimate of how much prices will fall. We have been told that prices will continue to fall, but the Minister should say when that will happen.

Electricity is a marvellous commodity. One cannot hear it, touch it, taste it or smell it and it cannot be stored. It must he used at the point of production. The Government are selling something that we cannot hear, smell or touch. This is competition in the industry, because the merit system used by the distribution boards ensures that electricity is supplied at the cheapest possible price. Anybody who goes to the distribution boards to see how they work will see that, if a small pump breaks down and causes an increase in the generation price, it is stopped and the next cheapest one is used. That goes on throughout 24 hours.

The Magnox nuclear power station is nearing the end of its life, and will probably finish in about 10 years. We have five AGRs and three of them are not working properly. Millions of pounds have been poured into those three AGRs to try to get them working before privatisation. The generating boards will tell any hon. Member who wants to ask that Magnox electricity is far dearer than that produced by a coal-fired power station, that AGR electricity is marginally dearer than coal-fired electricity and that the PWR electricity is the only one that is cheaper. However, we have only one of those. It is said that we need four more and that they will cost £6 billion.

Who will pay £6 billion without an assurance that at the end of the investment there will be a sale? That is what it comes down to. Clause 4 of the Bill makes it an offence to (a) generate electricity for the purpose of giving a supply to any premises or enabling a supply to be so given;(b) transmit electricity for that purpose; or(c) supply electricity to any premises unless the Secretary of State gives a licence.

People who talk about small power stations being allowed to operate are fooling themselves. The Secretary of State will not allow small power stations. He wants to ensure that they do not compete with nuclear power stations so that they can be kept. That is what the clause is all about. If that is what the Government intend to do, they should say so. Of course we shall continue to oppose them, but there is far more of a quarrel when they try to cover things up. Who will bring in small generating plants and feed the electricity into the grid? If such small generating stations are allowed, what will happen to the large boys and to the £6 billion that is to be invested? They will not allow small generating stations to depress their profit margins. The domestic customer, not the industrial customer, will suffer.

Prices will not decrease—they will increase. My hon. Friend the Member for Sedgefield (Mr. Blair) was right when he spoke about a 25 per cent. increase in prices. The figures have been worked out and I am sure that my hon. Friend is correct. There will be no competition and no consumer choice and there is no need for the Bill.

Photo of Mr Andrew Hargreaves Mr Andrew Hargreaves , Birmingham, Hall Green 8:14 pm, 13th December 1988

I am grateful for the opportunity to speak in the debate because I have had experience of dealing with foreign power-generating companies and their experience is relevant to some of the proposals in the Bill.

In contrast to what has been said by some Opposition Members, I shall begin by saying that the Bill is long overdue. That is because there are no longer any valid reasons for the provision of power being in the state's hands alone, other than because of a threat to continuity of supply, strategic national interests on security. In peace time and with an increasingly sophisticated generating and distribution system, none of the reasons that I have mentioned is valid.

If one looks to America or nearer home to Finland or Socialist Sweden, one sees excellent examples of private, non state-owned generation and distribution companies providing a superbly reliable service to the customer. I remind Opposition Members that in both those Scandinavian countries even nuclear power generation is in private or non state hands and has a magnificent safety record. They should look at the relationship and shareholding structures of OKG and Forsmarks Kraftgrupp of Sweden and at Teollisuuden Voima Oy and Imatran Voima Oy of Finland. So much for the argument about whether the industry should be state-owned or private.

In welcoming the move to the private sector, I am relieved to see that efforts have been made to ensure that the progress which has been made by the CEGB on the sophistication of the national grid will not be lost in the division and transfer into private hands. I welcome the considerable emphasis on regulation and supervision when normally I would be suspicious of those things. I am relieved that the merit order dispatch system will be preserved, but I know that many hon. Members will want to question the Minister about contracts between generators. They will want to be sure that take or pay contracts, or contracts direct to customers or between supply companies and other generators, will not harm this system or make difficult the concept of a pool of generators. That is important and I am sure that hon. Members will elaborate on it in Committee.

I have already had discussions with one major consumer near my constituency who has been approached with a direct supply contract from EDF of France. The impact of this type of competition, while beneficial to customers in cost terms, should not be allowed to destroy a sophisticated system that benefits all customers, especially domestic customers, and which has taken a long time to evolve. It may place the new supply companies in a less than competitive position, and that might result in higher rather than lower costs to the domestic user.

I support my hon. Friend's contention that competition should be the best guarantee of customers' interests. I am pleased to see that the Bill lays a framework for the industry in which decisions about the industry's future and the supply of electricity should be driven by the needs of all customers and, above all, will give the industry's managers more scope to use their initiative in the interests of their customers. This is, of course, reinforced by the measures in the Bill for giving customers new rights rather than just safeguards. That is important and I hope that it will be expanded in Committee.

This is an exciting opportunity for those working in the industry and I am pleased that my right hon. Friend will ensure, when it comes to the flotation, that those who work in the industry as well as customers will be offered a direct stake in their industry. I hope that my right hon. Friend will make these proposals clear in Committee. Although the Bill leaves open some technical and operating questions which I spoke about earlier and which will need to be clarified in Committee, it is radical yet structured and deserves the support of the House.

Photo of Mr Harry Barnes Mr Harry Barnes , North East Derbyshire 8:19 pm, 13th December 1988

When he opened today's debate, the Secretary of State for Scotland said that there is no such thing as perfect competition in the electricity supply industry. That is a simple truism. He should also have added that there is no such thing as what might be termed imperfect competition in the electricity supply industry, for the notion of imperfect competition is itself an economic theoretical concept. Very little competition is possible within the electricity supply industry. Neither perfect nor imperfect competition possible because masses of competing producers and competing consumers are required. The electricity supply industry's production is termed a natural monopoly. That term has been used by the Minister and it has been used in connection with the water privatisation Bill—that public utilities are natural monopolies. That means that they cannot help but be monopolies.

The idea of natural monopolies was introduced near the end of the 19th century by essentially Conservative theorists to explain certain changes that were occurring in society, so they said that utilities such as the railways were natural monopolies and therefore had to be regulated. That old-fashioned notion is now re-emerging in connection with how the electricity and water industry privatisations are to take place. It is not just that competition is impossible among electricity producers: it is difficult to have anything that amounts to competition among consumers. We cannot easily opt—except at great capital or consumer cost—for oil, gas, coal or electric heating, thereby turning away from the method that we previously used in the home or industry. Theoretically we can do so, and, sometimes, people will.

However, it is much less easy for consumers to opt for other utilities. We cannot have nuclear-powered microwaves—except in the sense that nuclear power can be fed into the electricity industry and used in microwaves. Nowadays, we do not opt for gas street lighting as distinct from electric lighting. We do not opt for oil-driven television sets as distinct from electrically powered ones. We do not opt for coal-fired computers. It is nonsense to claim that there is competition in those utilities.

As utilities are privatised, what is to happen to those who will control and own them? Are we to have special legislation to prevent interlocking directorships when the barons of the energy industry grow up to control what is being done? The little people might initially get their hands on a few shares that give them no control over the industry, apart from being able to ensure that it operates according to what are considered to be market principles, which means that the work force and others will suffer considerably.

In such circumstances, monopolies, duopolies, cartels, or whatever, display considerable similarities. They restrict output to raise prices, control their labour forces by their power, and manipulate demand by advertising. The Government are privatising and doctrinaire. They solidly believe in controlling people by advertising. That is exactly the technique that they use to persuade the electorate to co-operate and to sell off public assets and hand them over to small groups in society.

The only answer to natural monopolies in public utilities is public ownership, but, by itself, public ownership is not sufficient. We also require public regulation to control how the public industry is run. That means that restraint should be exercised upon any monopoly. The only possible restraints that can be operated upon the monopolies that we are talking about —natural monopolies—are those of a democratic nature. That means producer democracy in which workers operate self-management techniques, and it means consumer democracy in which consumers operate, influence and control.

One aspect of consumer democracy should be parliamentary democracy. It should be possible, through the operation of parliamentary democracy, civil liberties and rights, and parliamentary and council elections in this country, to influence what takes place. We have an elected dictatorship, rather than a democratic system. The Government are destroying the possibility of producer democracy and consumer democracy, which are the answers to any problems that have emerged.

The use of private monopoly, duopoly, cartels or whatever we like to call them in the electricity supply industry will lead to massive coal imports from South Africa and Colombia, and the destruction of the remnants of most of the remaining coal industry in this country, especially in north Derbyshire. The north Derbyshire coalfield will be under considerable threat. To try to defend its interest, the Coal Board will react by closures and the development of super-pits and opencast mining techniques. The heart of the constituency of Derbyshire, North-East can be ripped out by opencast mining techniques.

I have a map from the Opencast Executive, which shows that in the rural and Conservative areas of my constituency, which are considerable, there is massive opencast potential. In the working-class areas, where there was a great number of pits, even existing pits will be closed and coal will be mined by opencast methods. That is the approach that the Government will take.

There will also be an attack upon supply industries that have many export markets. They will be destroyed by the import of coal into this country. Shops and services and the local business rateable values will collapse. There are also social implications. In Derbyshire, for instance, 9,700 jobs are estimated by the Coalfield Communities Campaign to be put at risk because the measures that are associated with this development will produce problems. There is also the development of nuclear power and the nuclear nonsense, and the considerable environmental and social dangers that will be created by it. The Government are introducing a dangerous system of private monopoly power to be used against the interests of people.

Photo of Michael Jack Michael Jack , Fylde 8:27 pm, 13th December 1988

I am most grateful for your calling me to speak in this debate, Madam Deputy Speaker. I shall try to limit my remarks.

The Bill is an exciting concept. It opens the electricity industry to a new dynamic. It sets the management of the electricity industry free from Government control for the first time in its life. I can remember, during my days at university, studying economics and, time after time, realising that investment plans for the electricity supply industry had been sacrificed by various post-war Governments on the altar of economic efficiency. That is why we have some of the problems with our electricity supply industry today. The Bill removes obstacles to investment in that vital industry.

In the document "The Generating Game", published by the Central Electricity Generating Board, there are three statements. They are, that electricity is the power behind modern civilised life; that convenient electricity binds together the fabric of 20th century society; and that with this comes the responsibility to ensure reliable electricity supplies. The Bill responds to those three statements.

I shall address the main part of my remarks to the point about reliable supplies. From the conversations that I have had with the chairman of the North-Western electricity board, NORWEB, I sense that he and his staff are excited about how the Bill will open up new forms and new sources of electricity generation in the north-west. New sources of energy will be available from the industrial sector. the proponents of combined heat and light production. New sources of nuclear electricity will also be possible. All those opportunities will be available, as well as giving that management the ability to run its company in the interests of its consumers.

The hon. Member for Banff and Buchan (Mr. Salmond) is unclear about the powers of consumers who are shareholders. Many of those people will beat a path to the annual general meetings of electricity supply companies that fail to deliver.

Some 3,500 of my constituents are, however, concerned about the provisions of the Bill. They work for British Nuclear Fuels plc and make the fuel rods for all our existing nuclear power stations. They want to make the fuel pellets for the PWRs. They strongly believe that what they contribute to the electricity supply of this country is concentrated, reliable energy.

In my hand I have the equivalent of 1½ tonnes of coal. It is a small pellet from an advanced gas-cooled reactor. It provides a vivid picture of the nature of nuclear electricity. [Interruption.] The hon. Member for Cardiff, West (Mr. Morgan), who has just pretended to faint, demonstrates one of the problems we face—the total irrationality about, and lack of understanding of, the intrinsic safety of nuclear electricity.

Those 3,500 workers strongly believe that they made the contribution that kept the lights burning when the miners deserted those who needed electricity supplies. They want to be given the chance to make their contribution to our supply of electricity through a newer, slimmed-down, more efficient BNFL.

When the Bill is considered in Committee, I hope that Ministers will remember the obligations we have to those workers in the nuclear industry in my constituency, at Sellafield and at the other power stations. They must ensure that those parts of the Bill that refer to continuity in the supply of electricity reflect the contribution that nuclear power makes.

On 20 April 1988, the Under-Secretary of State for Energy, my hon. Friend the Member for Worcestershire, South (Mr. Spicer), spoke at the annual luncheon of the British Nuclear Forum. He said: Nuclear power makes a valuable, indeed vital, contribution to diversity in electricity generation and so to the security of supply. It would be folly to rely on a closely related narrow group of fuels for electricity generation. Fossil fuels historically have shown that they are all, in one way or another, highly volatile in both price and availability.

Photo of Michael Jack Michael Jack , Fylde

I will decline the offer of further information as I still have some to give and little time in which to do so.

In 1972 there were rota disconnections to the electricity supply. None of us needs reminding of the events during the miners' strike. To put our dependence on nuclear sources of energy into perspective, it should be noted that only 5 per cent. of the total energy usage in this country —not electricity usage—comes from nuclear sources. I believe that that is almost too low a percentage in a world where our hydrocarbon fuel supplies are always at risk.

I am attempting to advocate the part that nuclear electricity can play in the future of our energy supplies. I am concerned about the Bill because, although, quite rightly, in its later clauses, it reflects the problems of decommissioning our existing Magnox and other nuclear power stations, as drafted, it does not give the same strength of commitment to addressing some of the technical problems particularly associated with the AGRs.

In Committee, it would be good if Ministers could give some consideration to the cost legacy that will be passed on to the large power generating company that tries to bring the Magnox stations and the older AGRs up to power. If we intend to cater for problems at the back end of the industry, it is logical to cater for the problems at the front end of the industry.

In early December on "This Week", a programme on ITV, it was pointed out that Hinkley Point power station generated electricity at 2·64 per kilowatt hour; Drax power station generates electricity at 2·46p. That is a narrow difference, but it does not take into account the environmental consequences of fossil fuel burning to which my hon. Friend the Member for Wyre (Mr. Mans) ably referred.

On 11 December an article in the Sunday Telegraph magazine contained the sentence: The lessons for Earth are frightening. Unless we switch radically from the burning of fossil fuels to nuclear power, temperatures on Earth could double by the 22nd century. We will not be around then, but we have an important responsibility to lay the foundations for an energy policy that is environmentally safe. Nuclear electricity is a safe form of power generation.

My constituents who work for British Nuclear Fuels plc want a chance to play their part. Their company has shown a willingness to modify its procedures and to become efficient. It can also tackle the problems of reprocessing, which is vital to maintaining the security of supply of our uranium assets. It can tackle the problem of decommissioning power stations in an efficient way. It is on record as saying that it welcomes electricity privatisation as it will sharpen up its act. British Nuclear Fuels even has the potential to become a nuclear generator in its own right. That is an exciting prospect, and the Bill affords that chance.

It has been estimated that the cost of removing the oil platforms from the North sea when the oil runs out—nuclear energy can delay that inevitable occurrence—is £6 billion, which is twice the estimated cost of decommissioning our Magnox power stations.

In making a commitment to the role that nuclear power can play in producing electricity for our country, I plead with Ministers to ensure, for the sake of the public, that there is no compromise on safety within the nuclear industry. That would be a folly for which the public would not easily forgive us.

I wholeheartedly support the Bill and the role that nuclear power can play in its objectives.

Photo of Mr George Buckley Mr George Buckley , Hemsworth 8:37 pm, 13th December 1988

I am grateful for this opportunity to contribute to this debate.

We have had two days' debate on the problems contained in the Bill. It appears that Conservative Members talk about everything but the electricity industry and the consequences for the economy. I have listened intently to find out what is behind the privatisation proposals. The hon. Member for Fylde (Mr. Jack) spoke of the environmental consequences of using nuclear power, and that is the only point the Prime Minister has made about privatising electricity. She has said that it will provide environmental benefits for the world. No mention has been made of the economic benefits to the nation of privatising the generating boards.

The Secretary of State has stated four principles to support the Bill. He says that the supply of electricity should be driven by the needs of the customer. That implies that the customer would have a direct input on the supply of electricity. There is no suggestion in the Bill, however, that the customer would have any such influence. Therefore, that reason does not represent a major pillar of principle to justify the privatisation.

The Secretary of State has also said that competition is the best guarantee of customers' interest. Once again, the Government seem to take the view that anything publicly owned is more efficient and better able to meet the best interests of the customer if it is privatised. Nothing in the Bill says that that will be so. I suspect that the Minister had a great deal of difficulty grappling with the complexity of the national grid. His best effort was to come forward with two generating companies, one to generate 30 per cent. and the other 70 per cent.

Such percentages have been proposed more to deal with the nuclear side of generation than for anything else. If the percentages were more equally divided between the two companies, the problems of dealing with the liabilities of the nuclear industry that are beginning to develop would face the companies. National Power has been made as big as it is—70 per cent.—as an inducement to people in the private sector to take on the difficult generating capacity of the nuclear industry.

The Bill outlines a regulatory framework to promote competition, oversee prices and protect customers under the national monopolies that remain. The Government, who are exponents of the theory of the private market, accept in the legislation that it will create monopolies. So regulations will be imposed to protect customers from those monopolies. One of the main points made by Conservative Members is that the public monopoly of the CEGB does not serve the nation efficiently. The Bill provides for monopolies of supply companies in the geographical areas for which they are responsible. There will be no competition in those areas, and no option for customers to choose between different sources of supply. That is a complete contradiction of the Government's philosophy, which is to break up the monopoly of the CEGB.

Another technical dilemma that the Minister must have faced when considering this legislation was that of how to deal with the national grid, a unique technical apparatus that could not be broken down into smaller companies. So the Minister has come up with a mechanism of two, rather than several, companies.

One of the most appalling aspects of the legislation is the demanding commitment that 20 per cent. of the electricity supply be drawn from nuclear power. That is almost to impose on the privatised supply industry a commitment to take 20 per cent. of its power generation from nuclear energy, even though it is now proving to be one of the most expensive sources of energy produced by the CEGB. The signs are that the private monopolies—that is what they will be—will be only too pleased to invest in nuclear energy; but the experience of development of nuclear energy leaves much to be desired. The Magnox stations, the first nuclear power stations, were built with an overrun of two and a half years. The AGR at Dungeness B had an overrun of 10 years. Private industry would be reluctant to invest capital in nuclear projects with such large overruns.

The Government's position accords more with their philosophy of privatisation than with improving the nation's electricity supply. The Government's fourth principle is that security of supply must be maintained, but such security depends more on diversity of supply—by coal, oil, gas and nuclear power—than on the privatisation of the CEGB. The Bill owes more to dogma than to any desire to improve the efficiency of the supply system, and I feel sure that the Committee will amend many of the proposals in the Bill to make it comply with the industry's needs. Some of its clauses are ill thought out.

Another thing that disturbs me about the legislation is that the privatised supply industry will not be committed to complying with the EEC regulations on environmental standards. Numerous hon. Members have expressed their concern about the environmental effects of coal and oil —the problems of acid rain, and so on. The regulations on refurbishing and replacing existing plant require no investment in ensuring that that is done in accordance with EEC standards. So, while the nation—and even Conservative Members—express concern about the consequences of coal burning for the environment, the legislation does not commit the private companies to doing anything about them.

The CEGB has been a major innovator and has conducted much research into the development of electricity. Its technology has been at the forefront of power generation. The suggested private companies that will take over from the CEGB will be more reluctant to invest in research and development for the nation's future generating capacity.

The new private monopolies will be more likely to make domestic consumers pay high prices than to make major industrial consumers do so. I can foresee pressure being applied by the larger consumers to privately owned monopolies to reduce the costs to British industry.

The burden imposed by the Government with this Bill may be mainly offset by the importation of so-called cheap coal, which will put our indigenous mining industry in jeopardy. Any private enterprise worth its name is more concerned about its investors than its customers. It is a myth put about by Tory Members that the legislation is mainly designed for the consumer, who will have no influence on the privatised industry, and who will be given no safeguards in the legislation.

The major regulatory factor imposed by the Government was enacted recently by the Minister of State, who imposed 9 per cent. and 6 per cent. increases on CEGB supplies. That regulatory factor will be used by the Government under the Bill to impose higher prices on the industry.

Photo of Quentin Davies Quentin Davies , Stamford and Spalding 8:48 pm, 13th December 1988

The most striking aspect of the Bill is the boldness and originality of the concept that it embodies. Until now, only two models for the organisation of electricity generation and distribution, or variations or combinations of them, have been practised in the Western world. The first is the model of the public or private sector vertically integrated utility company with an effective regional monopoly. That is the model which obtains in Germany and the United States and household names in those countries, such as RWE and Con-Edison, are excellent illustrations of it. The other model is the nationwide, vertically integrated, publicly owned monopoly, of which EDF in France and the CEGB in England and Wales are among the most distinguished examples.

My right hon. Friend the Secretary of State has launched today a completely new departure which represents a third option that has never been tried before. Its novelty and originality appeared to the hon. Member for Sedgefield (Mr. Blair) as a condemnation in themselves. That may be an interesting sidelight on the intellectual state of the modern Labour party, but it is a short-sighted view to take. I am convinced that, in a number of respects, the new model represents a real advance on previous thinking in this important area of industry.

I shall highlight three of the aspects in which the Bill represents such an advance. First, for the first time, we shall have real competition in power generation in this country. That means that for the first time the British public will have the assurance that resources in this area are being used efficiently, and they will be the first public in the world to have that assurance. The CEGB, unique among monopolies in world history, may have been able to avoid generating any monopoly costs of its own. It may be that it does not suffer from overmanning, from feather-bedding of any kind or from cosy relationships with particular suppliers: we shall see. There are two possibilities: either we shall have the evidence that, until now, electricity has indeed been generated as cheaply as possible, or we shall succeed in saving those monopoly costs.

The second important benefit that the Bill will bring is the assurance that all existing generating capacity in this country will be used efficiently, including that standby or surplus primary capacity that exists at present in British manufacturing industry. Under the present regime, there is no way that that existing capacity can be used efficiently, since, effectively, the electricity produced by it can be offered for sale only to the CEGB, which is itself the major competitor of these potential suppliers. That anomaly will be removed by the separation of the national grid from the generating industry.

The third great advance represented by the Bill, which has not been mentioned in the debate so far but is worthy of the attention of the House, is that, for the first time, we shall achieve real diversification among suppliers of electricity in this country. I do not just mean diversification between alternative sources of energy. Theoretically, we can achieve that even with a single monopoly producer. That has already been achieved under the CEGB regime, although arguably to a very inadequate degree. Diversification between suppliers does not just mean diversification between alternative sources of energy. It does not just mean the benefit of achieving the cost reductions through competition that I have already mentioned. It means that we shall also be diversifying those investment risks that are so crucial in the electricity generation business.

At present, only one body of men takes the key investment decisions about where and how new generating capacity will be constructed. In future, a whole range of companies will take those decisions. Precisely because the uncertainty of the assumptions that need to be made when investment decisions are taken in this sector is so high, particularly the uncertainty of the assumptions that must be made about the future costs of energy, and because the lead times in respect of construction and commissioning in this sector of industry are so long, those risks are inordinately high and anything that we can do to reduce those risks is well worth while.

I have no doubt that, left to itself under the present regime, the CEGB, if decided as it apparently has, that we shall need approximately 12,000 MW of additional power between now and the end of the century, it would proceed in its normal way to construct four or five conventional thermal or nuclear power stations. Perhaps we should invest more in alternative renewable sources of energy, or in gas turbine-generated energy which, as the House knows, has the highest thermal efficiency of all, about 56 per cent. Thermal efficiency, unlike energy prices, does not vary, except very slowly with improvements in technology.

However, it would be wrong for any individual or single body of men to reserve to himself or to themselves the decisions that will need to be taken in this area. It is important to diversify the source of those decisions. Diversification of risk in this area, as with diversification of risk in any area, means reduction of risk. Over time, reduction of risk means reduction of cost. Here again, we are scoring a real advance in the Bill.

Finally, I wish to say a few words about the distribution companies. It is utterly absurd for Opposition Members to hint, as they have done in the debate, that we should somehow attempt to break the natural monopoly in distribution. Surely they do not seriously mean to say that we should duplicate or triplicate the enormous fixed assets involved in a domestic distribution network.

In the Bill, we have gone over to a concept that has not been mentioned by Opposition Members, but which they would do well to contemplate. It is the concept of yardstick competition, the ability of both the market and regulators to assess the economic performance of a distribution company by reference to the performance of other comparable companies in the same sector of activity. It is an entirely new concept to be introduced into the electricity industry. It is full of promise and makes me confident that I can commend to the House as much the proposals on distribution as those on the generation of electricity.

I am convinced that, in years to come, the British public and the British media will give accolades of gratitude to my right hon. Friend the Secretary of State both for the boldness with which he has conceived the structure of the electricity industry as enshrined in the Bill and for his courage in putting over, and, I believe, already successfully persuading a great part of the establishment in the generating and distribution sectors of the industry to accept, the merits of his new concept. I believe also that in the coming months we shall see his success in persuading the House of the merits of that concept also.

9 pm

Photo of Dr Lewis Moonie Dr Lewis Moonie , Kirkcaldy

When wind power becomes a commercial proposition, I shall be first in the queue to buy shares in Tory Back Benchers. We have just heard one of the most flatulent contributions from a Conservative Member during a debate in which the contributions from those on the Conservative Benches have rarely risen above the banal. They seem to think that we are talking about self-evident truths. They suggest that privatisation must mean competition and a better deal for consumers. No one has yet provided us with the slightest piece of information that might support that contention.

What are the United Kingdom's electricity needs? We need a cheap source of power, a secure supply, environmental safety and regard to the satisfaction of increased demands in future. After privatisation, however, the industry will have one aim only, and that will be to maximise profitability on behalf of shareholders. It will seek to maximise the return on the capital that is deployed. It will pursue that aim through minimal price competition, through the development of a cartel, as we see in so many industries that are dominated by a few producers. It will seek the cheapest source of supply. In doing so, it will have minimal regard to strategic issues such as future investment in plant. It will show minimal concern for the consumer and minimal regard for indigenous sources of supply. Unemployment and misery will be caused as a result.

The need for profitability will lead the industry to sell as much electricity as possible. There will be no incentive for it to save energy and it will use all that is produced. It will minimise the drive for the creation of new plant, as it will wish to maximise the return of capital. This may lead in future to under-development, gaps in provision and shortages for consumers. Consumers will face increasing prices, increasing insecurity and probably a reduction in safety.

The main problem is that the power requirement in future will increase, and all methods of generating it have environmentally deleterious effects. We have heard nuclear power described so glowingly by Conservative Members, but perhaps that is an inappropriate term. There is the problem of low-level emission radiation, which is generally accepted by my profession to be a bad thing. There is the more unlikely but finite possibility of catastrophic accidents at nuclear plants. In a crowded country such as ours, such accidents would sterilise a large section of our land.

There is the problem of storage of spent fuel and its processing. There is the problem of decommissioning power stations when they have reached the end of their useful life. There is the problem also—it has not been mentioned by Conservative Members—of difficulties in the supply of fuel. We do not produce our own fuel for nuclear power stations, and there is no guarantee of stability in price or in supply. The fuel comes from South Africa, Namibia, Zaire and Bolivia, for example. These are countries which have poor safety records for their workers, and the likelihood of stable future political conditions cannot be guaranteed.

At present, nuclear power is not a good option. We have that admission from the lips of the director of the South of Scotland electricity board, Mr. Miller. There is no doubt, however, that there are future possibilities for the supply of nuclear generated electricity. We have the fast breeder technology and the developments at Dounreay. There is also the possibility of nuclear fusion. I shall return briefly to these possibilities and developments at the end of my speech.

The other main source of supply is coal, of which we have vast indigenous supplies. At present, it is relatively cheap, and it is likely to remain so. Coal-fired power stations are cheaper to build than nuclear stations and are generally safer and more economical. Smaller coal-fired power stations are suitable for combined heat and power projects, especially when the fluidised bed method of burning the stuff is used, which offers a more efficient utilisation of fuel.

Of course there are problems with coal. Burning coal emits sulphur and nitrous oxides which can be removed by burning low-sulphur coal which ex-miners in my constituency, if they were given the chance, would be delighted to produce, because my constituency sits on about 12 ft of such coal. Alternatively, and more expensively, the emissions may be treated by scrubbing the noxious gases on a sluice.

Carbon dioxide is also a problem. Conservative Members have made much of that problem, but we must recognise that burning coal does not produce much carbon dioxide compared with the burning of fuel generally and the loss of the biomass in the tropical rain forest. It is interesting that an American company which is about to build a power station has agreed, as part of the deal, to replace a proportion of the biomass in the tropical area, thereby reducing the contribution of the emissions to the overall load of carbon dioxide in the atmosphere. We must surely consider that, but it has not been considered so far in this country. It is possible to diminish the effects of carbon dioxide release if we are prepared to take action.

Sadly, other alternatives like wave, wind, tidal power, geothermal or solar sources are not yet commercially viable. Bearing in mind cost and feasibility, such alternative power supplies can only be considered in future. What are the needs for a national strategy? We must consider the long-term need for cheap, secure and expanding supplies of energy. At present, coal is undoubtedly the cheapest option.

Nuclear power is currently too expensive and too risky, even if we consider the pressurised water reactor programme. which I believe should be abandoned. Perhaps, in future, nuclear energy will have a part to play. We should continue to invest very heavily in research into ways to make that a reality, particular in fast breeder technology and nuclear fusion. Sadly, the Government are reducing their investment in those areas. We must also study the safety aspects more carefully, particularly with regard to the decommissioning programme on the Magnox stations. Nuclear power may well have a role to play in future, but it has very little role to play at present other than in providing expensive electricity for a hapless consumer.

The main alternative must be to maximise the efficiency of utilisation of supplies. There will be no incentive for a privatised electricity industry to do that. Its incentive would be to sell as much as possible. As responsible politicians, our incentive should be to minimise consumption through better insulation and utilisation and through the use of energy-efficient appliances and storage systems like those used by the North of Scotland Hydro-Electric Board. We must consider the development of alternative sources and carry out feasibility studies on wind, wave and tidal power. If we do that, we can be certain of a secure supply of energy in future. The Government's proposals do not offer us that option.

Photo of Mr Frank Haynes Mr Frank Haynes , Ashfield 9:07 pm, 13th December 1988

I have listened to this debate over the past two days, but I have not yet heard anyone raise the question of safety and nuclear power. I have heard many contributions, particularly from Conservative Members.

I am perhaps nearly the oldest member in the Chamber at the moment—and I am not speaking about you, Mr. Deputy Speaker. I am not trying to drag you into this argument. I remember the days as a lad when we had candles and oil lamps. I was born in 1926 so I remember all that. We also had gas, but we did not have electricity. It was around but only if one could afford it. It was there, but what happened? The electricity suppliers were not bothered about expansion; they were concerned only about pouring money into their pockets through profits.

The Secretary of State for Energy wants to take us back to the Victorian era, and we ain't going. I will tell him that straight. The Secretary of State had better watch out when the Bill goes upstairs to Committee because I will be a member of that Committee. I will be whipping that Bill for the Opposition and I want to see the Secretary of State in his place every time we sit. I am sure that we shall have a good argument in Committee.

Competition has been mentioned time and time again, but it has not yet been proved to me where the competition will be. There will be one industry that provides electricity, as there is today. I welcomed the election of a Labour Government in 1945, and they were a marvellous Government. They saved the electricity industry and they expanded it nationwide, so that everyone who wanted electricity could have it.

The hon. Member for Stamford and Spalding (Mr. Davies) spoke about electricity. All he knew about it when he was a baby and had nappies on was that he put his hand on the wall and switched on the light. That was not the case when I was a kid. All he had to do was to switch on an electric heater, but we had to hug ourselves to keep warm. I remember the days of trams. When the track was being relaid, we would get the wooden blocks to burn for warmth. These lads do not know anything about that because they were not born then. The Secretary of State can take the grin off his face or I shall knock it off in Committee—by God, I shall.

I have had few moments to myself over the past two days because I have been busy on the Front Bench whipping the Bill. The House will hear the reports of the success that we shall have in the argument in Committee. We shall not win the vote, but we shall win the argument, and the Secretary of State and his team will see that what they have produced in the Bill is not what the British public wants.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change) 9:12 pm, 13th December 1988

It is good to follow such a stirring speech by my hon. Friend the Member for Ashfield (Mr. Haynes). His stirring contribution was short, but his contribution in Committee may be longer. It may be longer than the Secretary of State's contribution —but we shall have to wait and see.

First, I want to thank my hon. Friend the Member for Midlothian (Mr. Eadie) who, for 16 years, has given great service to the Labour party as my predecessor on the Front Bench energy team. With his customary elegance, he showed once again in his contribution yesterday his skill in highlighting the contradictions in Government policies. My hon. Friend said that the Government's blatant preference for the use of nuclear power cannot be argued on price. The Bill has certainly given up the ghost of arguing that. I, like him, resent the attempts to build up the case for nuclear power by attacking the coal industry—which he highlighted yesterday.

The real effect of the Bill will be felt in every shop, office, factory and home in Great Britain. That was pointed out by the right hon. Member for Selby (Mr. Alison) who is not in his place now—who said that the coal and electricity industries are inextricably linked. The issue is inseparable from the future of many industries such as the railways, power engineering and major industrial energy users such as the steel, glass and chemicals industries.

I have a briefing, which the Chemical Industries Association Ltd. sent to me. It comments on the effects of the Bill on the prices that those industries, as big consumers of energy in this country, will have to pay.

Under the heading "Prices and Price Control", the CIA explains that it does not accept the reasons given for increasing electricity prices by more than 8 per cent. this year, by a further 6 per cent. next April and possibly the same again in 1990. It goes on to say that it believes that any price control formula should take 1987 as its base year —excluding the privatisation sales booster increases that the Government imposed earlier this year.

The proposals have already affected electricity costs; there is no doubt about that. The price increases that the Government forced on the industry last April, together with next April's price hike amount to an increase of more than 15 per cent. Those added costs are all directly related to the substance of the Bill.

On 3 November 1987, the Secretary of State for Energy tried to dismiss the price increases by saying that they were to do with raising revenues in the industry. He said: In considering the targets for these years, the Government have had to take into account the fact that, although in the recent past the electricity supply industry has had surplus capacity, that position is now changing. On current forecasts, the Central Electricity Generating Board envisages that at least 13 GW of new capacity will be needed to meet demand by the end of the century."—[Official Report, 3 November 1987; Vol. 121, c. 801.] The Government moved into funding privatisation of the electricity supply industry in November 1987.

For many years the medium-term development plan that was used by the CEGB was the one thing that set prices for the electricity supply industry that took into account all the costs of new build, and so on. The report dealing with the period from 1986 to 1993 said: On the assumptions upon which these forecasts are based, retail tariff increases over the plan period will be below the rate of general inflation. I put it to the Secretary of State that that is certainly not what happened in April this year or what is planned for April next year.

Perhaps the Secretary of State can be forgiven. He has great difficulty in understanding the price implications. The House will recall that yesterday, when my hon. Friend the Member for Sedgefield (Mr. Blair) said that private sector electricity in comparable industrial countries was expensive, the Secretary of State said: Prices in Japan are almost twice ours, and prices in West Germany are about 50 per cent. higher."—[Official Report, 12 December 1988; Vol. 143, c. 689.] That shows what a muddle the Government are in. It is obvious to most informed commentators that under private ownership the price of electricity will rise, although we shall have to wait and see whether prices will be as high as in Germany and Japan.

Photo of Dr Michael Clark Dr Michael Clark , Rochford

The hon. Gentleman has been talking about prices. Will he take into account the fact that, in the five years to October this year, electricity prices have risen by 2·8 per cent. per annum whereas during the five years of the last Labour Government they rose by 22 per cent. every year?

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

That may have had something to do with the cost of base fuels to the electricity supply industry, but I shall consider that question later in my speech.

I was referring to the position of the Secretary of State as regards the price of electricity and suggesting that it would rise under private ownership. This will happen mainly as a result of the Government's obsession with nuclear power—an obsession which, to be fair, was not entertained by the current Conservative Government alone, but an obsession that has failed the nation in its promise of fuel so cheap that it would eventually not be worth printing electricity bills requesting payment for it.

The reality of that obsession has been the failure to meet construction targets on costs, times and production levels. At their peak, Magnox stations have only ever produced 3·8 GW, compared with an expectation of 5 GW. The AGRs, which by 1975 were planned to provide some 8 GW, have a current output capacity of 2·7 GW. After many years we have learnt the truth about the economic cost of Britain's nuclear power programme.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

The hon. Gentleman says that the Conservative party has an obsession with nuclear power. He seems to think that, by definition, nuclear power is much more expensive than electricity generated in any other way. Why is it that in France, which has much more nuclear power than we have, electricity is much more cheaply produced than here?

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

Let me direct the hon. Gentleman's attention to the Library note on the cost of electricity generation in Britain compared with that in France. He will see from that independent assessment that the cost of electricity generated by privatised nuclear power in France is far higher than that generated in the public sector in Britain.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

May I continue?

In October 1987, in a television interview, Lord Marshall described the British nuclear power industry. For perhaps the first time since the nuclear industry had been set up in Britain, people who knew about it were beginning to tell the truth.

In "Brass Tacks" on BBC—I hope it is not too difficult for Conservative Members to accept that we still have a British Broadcasting Corporation—the interviewer referred to a letter that had been sent by the CEGB to the "Stop Sizewell B" campaign in December 1986 which said that Magnox stations had been saving consumers about £250 million a year. In answer to a question, Lord Marshall said: You are correct to say on the Magnox stations as a whole, whether or not Magnox has been an economic bargain or not in the narrow sense does depend on their performance in the future and the price of coal in the future, so in that sense it's jam tomorrow. The interviewer then said: And that's also true of the AGRs? Lord Marshall replied: That is bound to be the case because we've only got some of them working just in the last few years. If even the most ardent supporter of nuclear power accepts its failure, why will not the Government?

The Bill contains a nuclear levy and tax. Will the Secretary of State for "Nuclear" Energy tell us exactly what the nuclear levy in clause 31 is for? Is it to finance the expensive Magnox and AGR costs now and the PWR costs in future? Does it also include the cost of building the new family of PWRs? What is clause 31 for?

Photo of Mr Cecil Parkinson Mr Cecil Parkinson , Hertsmere

Clause 31 is straightforward. At the moment, a cost for nuclear energy is built into an electricity bill. It is being paid now. It has been paid for the past 30 years. We are isolating it and demonstrating exactly what it is. If there is a difference between that and fossil fuel prices, we shall spread it over all fossil fuels. It is not a new tax or anything invented; it identifies the expense.

Let me make one other point. The hon. Gentleman has probably forgotten that the AGR programme was imposed on Britain by a Labour Government.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

I acknowledged that earlier. I am sure that the Secretary of State for "Nuclear" Energy did not miss it.

What the right hon. Gentleman has said is that this is to pay for a nuclear programme. It is to pay for the PWR programme that the CEGB has said in evidence is more expensive than British coal. It is the penalty that consumers will have to pay for the Government's obsession with nuclear power.

As the debate got nearer, the sound of the bugle of retreat was heard louder and louder. We are now led to believe that the nuclear levy is to pay for the nuclear programme. In The Observer on Sunday, the Department of Energy said: the levy would not, as expected, go to subsidise the multi-billion pound construction of a new family of nuclear reactors. A department spokesman said National Power, the new generating company responsible for nuclear energy, will be expected to raise the finance on the market like everybody else. If that is so, why the levy?

We are led to believe that the reason for that decision is, according to the Secretary of State in his speech yesterday to maintain a strong nuclear industry. Yet the British nuclear industry has never been strong, either in security of supply or economics. It is not the diversity of supply that concentrates the minds of industrial and domestic consumers, but security of supply, and it is that which the Bill puts at risk.

The current forecast of demand by the year 2000 is 56·9 GW. Between now and then, over 5,000 MW of coal capacity is to be closed together with over 1,000 MW of oil and nearly 3,000 MW of nuclear power.

It is predicted that necessary capacity for the year 2000 will be between 12 or 15 GW. We are led to believe that nuclear power, if it comes on stream, will provide us with about one third of that need. We have heard from the Association of Independent Electricity Producers that the maximum capacity that could be supplied by private generators would be about 4 GW.

Another option that could be used to meet future demand—I do not know whether it is being considered —is the refurbishment, rather than retirement, of coal-fired power stations. A decision on that should be taken as soon as possible, since a programme of refurbishment would be carried out over years, not overnight.

Opposition Members would welcome the addition to our electricity supplies of the long overdue combined heat and power schemes. Their contribution will of necessity be small. Given that the applications for new generators, which are talked about but never named, are likely to be top-up stations rather than for baseload generation, there must be a major question about whether the short-termism of the newly privatised industry is adequate to ensure the efficient replacement of retiring stations.

Replacing baseload capacity that is being lost involves many "ifs". We cannot risk any shortfall in supply and, therefore, the building of a big coal-fired power station is imperative. That should not be on a green-field site because we have seen the problems at Fawley, but it could be built somewhere like West Burton. That is necessary if the Government are to show that they are concerned about security of supply. It would bridge the gap between the supply and demand forecast and would enable the CEGB to do what it is good at. No matter what its critics have said, it is good at using proven technology to guarantee security of supply in this country, and a new coal-fired power station in the midlands coalfields would be able to do that.

The Secretary of State has a problem in his reluctance to discuss the strategic role to be played by the British coal mining industry. The Government have chosen to ignore a major fuel supplier in electricity generation. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) said in his contribution to yesterday's debate that British Coal's half-year operating profit was £119 million—the best half-yearly figure that it has reported in 20 years. Unfortunately, the press conference and the debate surrounding that result had an atmosphere more like that of a wake than a celebration, and talk by media pundits of a rundown in British coal mining on top of the 10,000 to 20,000 jobs that have already been lost was totally uncalled for—yet it was not contradicted by British Coal or the Secretary of State for Energy.

Instead, we must grow used to indifference and the perpetual stance taken by the Tory Government to the domestic coal mining industry. Of course the Secretary of State speaks of investing large sums of taxpayers' money, to ensure that we have a modern and competitive coal industry. However, the right hon. Gentleman gave evidence to the Select Committee, which commented that such observations avoided the real issue.

The issue is simple. Today, the British coal industry simultaneously faces two major problems: first, the need to establish a new commercial relationship with the electricity supply industry; secondly, the unprecedented low level of international seam coal prices. To ignore them, and to suffer more job losses while having increased dependency on imports, will be of no use to this country.

At the heart of the matter is the Government's involvement in the historic pledge argument. The Secretary of State for Energy made an historic pledge at this year's Conservative party conference. I have some experience of historic pledges, and I say to the right hon. Gentleman that there are few occasions on which they are worth the paper they are written on. In my experience, few historic pledges have ever come true. We shall have to wait to see whether that of the Secretary of State does.

The Select Committee on Energy, with its majority Conservative membership, clearly summed up the Government's attitude in its conclusions. The Select Committee said that it was disturbed at the uneven treatment being given by the Government to coal and nuclear power. The problems of nuclear power have been glossed over, while there has traditionally been emotional hostility towards coal mining. Such hostility does not go back just to my time in the industry but for generations; the Tory party's hostility to it is well known.

It must be difficult for the Secretary of State for Energy to accept that in the last few years the British coal industry has lowered prices by 20 per cent. in real terms, reduced costs by 30 per cent. in real terms, and increased productivity by 75 per cent. in real terms. All that has been done at some economic and social cost to mining communities, with every one of them still having an unhealthy share of the nation's unemployed—very much so. And in his speech yesterday, the right hon. Gentleman said that he did not know the projected likely fossil fuel costs for years to come.

The Electricity Bill is not born out of consumer needs, it does not argue the case for privatisation of the electricity supply, and its claims to introduce competition are fictitious. Most Conservative Members have had to apologise when, having trawled through the Bill, they failed to find where it introduces competition.

In his speech on 12 October to the Tory party conference in Brighton, the Secretary of State claimed that this was the first privatisation to be regionally based. He said: In privatising the area boards, we shall be creating 12 powerful companies, each with its headquarters and decision-making in the region that it serves. He gave the example, and I am pleased that he did, of the Yorkshire electricity board. He said that the decision that governs the quality and price of electricity supply to my home will be made in Yorkshire by Yorkshire men answerable to the people of Yorkshire, and that domination by London will be a thing of the past.

The Secretary of State obviously has plans to move his Department up to Yorkshire. He is obviously going to appoint a director-general and/or agent who comes from Yorkshire and has offices in Leeds, London and Edinburgh. That must be his master plan, because he knows as well as I do that any major decisions on electricity will be made by the Secretary of State for Energy and the director-general. They will decide the price of electricity; they will set the nuclear tax and levy; they will set the costs of transmission; they will issue the licences for generators and supply boards; they will be responsible for security and sufficiency of supply.

As has been pointed out by many hon. Members and highlighted by the hon. Member for Havant (Sir I. Lloyd), Chairman of the Select Committee on Energy, the Secretary of State will be involved in detailed obligations in no few than 67 distinct and separate parts of the Bill. The Bill does not offer consumer choice, but says, "Take it or leave it." It has not satisfied the concerns of industries whose energy costs are a major part of their expenditure. It has not satisfied the needs of consumers, nor has it quelled the doubts of the 55 per cent. of the British public who want the electricity industry to stay in the public sector. We shall speak for them tonight, and vote against the Bill.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy) 9:36 pm, 13th December 1988

Let me begin by asking the hon. Member for Rother Valley (Mr. Barron) a question. In answer to an intervention by my hon. Friend the Member for Rochford (Dr. Clark), who asked why electricity prices had gone up by 180 per cent. under the last Labour Government, I believe that he said, "Fuel costs." Does that explain why postal charges went up by 147 per cent., rail charges by 171 per cent., bus fares by 150 per cent. and water charges by 150 per cent? He need not answer now; a letter will do.

The gist, as I have understood it, of what the hon. Member for Rother Valley was saying when he was not talking about coal—the gist, indeed, of much of what Opposition Members have said over the past two days —is that the British electricity supply industry operates in a state close to perfection. In the imagination of Opposition Members, electricity consumers, distributors and the one producer apparently pull together in almost perfect harmony. Investment decisions planned and executed by that one producer flow through with such precision as to ensure that costs are at a minimum, power stations work with total efficiency, electricity is priced as low as it can be and service can only be described as pastoral.

That imagery has only one flaw: it is not true, and many of my right hon. and hon. Friends have spoken eloquently to that effect over the past two days. Yesterday, particularly good speeches were made by my right hon. Friends for Selby (Mr. Alison) and for Guildford (Mr. Howell) and by my hon. Friend, the Member for Birmingham, Northfield (Mr. King). Today we heard from my hon. Friends the Members for Cambridgeshire, North-East (Mr. Moss), for Eastwood (Mr. Stewart), for Ipswich (Mr. Irvine), for Wyre (Mr. Mans), for Dorset, South (Mr. Bruce), for Thurrock (Mr. Janman), for Stamford and Spalding (Mr. Davies), for Romsey and Waterside (Mr. Colvin), for Fylde (Mr. Jack) and for Birmingham, Hall Green (Mr. Hargreaves). The first part of what my hon. Friend the Member for St. Ives (Mr. Harris) had to say was also eloquent and excellent. All those speeches were in favour of radical change in the industry.

Yardsticks in a monopolistic state-controlled industry are, of course, hard to find. But if efficiency is to be measured, for instance, by the rate of return on capital, it must be realised that this is so low in the electricity supply industry that it falls short even of the rate of return rules for new investment in the public sector laid down by the last Labour Government.

When the Government have insisted that rates of return are raised to a realistic level to prepare the industry for the massive new investment in plant and machinery that will be required over the next 10 years, the industry's main response has been not to cut costs but to raise prices. Nor should we be surprised that that should be so, because 80 per cent. of the costs of producing electricity in England and Wales are at present associated with a single producer which is allowed to pass its costs, whatever they are and however they are set, straight through to the customer. We have no real way of judging whether those costs are defensible. It is intrinsic to the system that there are few benchmarks by which we can judge efficiency within the

Contrary to what has been said by the Opposition, the British electricity supply industry has been operating for several years with expensive excess capacity, with power stations which have not been built to time and cost, and several of which in England and Wales still do not produce electricity efficiently. The Opposition do not appreciate it, but we know that all that is paid for by the customer. The repeated bleat has gone up throughout the debate from the Opposition Benches asking us why we wish to restructure the industry and why we wish to privatise it. It is because, by a process of introducing competition where it most directly affects costs, of regulating the monopoly sectors in support of the consumer, of encouraging employees to own their own shares and of launching great new regional centres of power, we mean radically to improve the system. That is the answer to the question: "Why privatise?".

In a moment I shall answer some of the other questions raised on both sides of the House about how much competition and how much regulation. Let me deal first with some of the specific points which have been touched on in the debate. [Interruption.]

The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked about special shares. Arrangements will be put in place to safeguard the independence of the area boards, National Power, Power Gen, the national grid and the two Scottish companies. The articles of the companies will restrict individuals and companies from building up a shareholding of more than 15 per cent. That will be reinforced by a special share to be held by the Government.

Questions have been asked, in particular by my hon. Friend the Member for Romsey and Waterside, about the effect of the Bill on the conservation of electricity and the environment. A number of hon. Members have raised that issue. The answer is that the Bill is likely to have a highly beneficial effect on conservation and the environment. That is partly because the Director General of Electricity Supply will have a specific statutory duty to promote energy efficiency, partly because access to the system will encourage on to it generators with smaller, less polluting, highly modernised stations—CHP has been mentioned several times in the debate, and of course that will be one source of energy that will be encouraged—and partly because a special arrangement for non-fossil fuel sources will benefit renewable energy such as the Mersey barrage which has been mentioned by the right hon. Member for Plymouth, Devonport (Dr. Owen), the other barrages, and wind power which has been mentioned on several occasions. I am informed that clause 30 is the first time that wind power has been mentioned specifically in any statute.

The effect of privatisation on prices was also raised. The Opposition quite falsely have suggested that the privatisation process will raise prices. Our judgment is the reverse. The presence of competition is bound to create greater efficiency in that part of the industry which currently comprises three quarters of its costs—in other words, generation.

Photo of Alex Salmond Alex Salmond Deputy Leader, Scottish National Party

The Minister keeps referring to the British electricity supply industry, but how on earth can the argument he has just made be applied to the Scottish electricity industry, where there is no competition whatsoever in generation?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Nine tenths of the industry is English and Welsh electricity. It is worth making that point in the context of all the barracking by Scottish Members. It is rubbish to say that there will be no competition in Scotland and, if the hon. Gentleman will allow me, I shall tell him precisely why.

It is true that the massive investment programme which lies ahead will have to be paid for. In the present circumstances, the bills for that can be shared only between the consumer and the taxpayer. Someone has to pay for this massive investment. In future, the shareholder will join in the risk and, of course, will expect to receive dividends in return for doing so. We shall certainly not permit the supply companies to pass through into prices all the cost increases that they incur. They will therefore have the incentive to contract as efficiently as possible for future generating capacity.

Several hon. Members have argued that we should not have made special provisions for nuclear power. [Interruption.]

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. Hon. Members should not carry on private conversations in the middle of an important speech.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Some Opposition Members have simply been confused, but I am sure that others have been perverse. The provision that the Government have made for the making of grants, loans and guarantees relates in particular to future costs which the industry could not have been able to forsee, arising, for example, out of changes in Government policy or changes in the policy of the responsible regulator. This would be true, for instance, if a policy were introduced rapidly to speed up the process of decommissioning. The industry will certainly be expected to continue to make full and proper provision for all foreseen decommissioning, reprocessing and waste management costs. It does so at present for England and Wales at a cost of between £2 billion and £3 billion.

We have said that, while the consumer will pay, as he does now, for the benefits of diversity which nuclear-generated electricity provides, in future—the Opposition have consistently failed to understand this point—he will pay on a transparent basis and not, as now, on the basis of accounts which confuse nuclear and other fuel sources in such a way as to make them unidentifiable.

We expect—unlike the right hon. Member for Devonport—that the introduction of modern and highly efficient PWRs will lead in time to the need for special treatment for the nuclear industry falling away. It is certainly our desire that all forms of power generation should ultimately compete on the same footing. The argument that coal is being unfairly treated compared with nuclear—the theme of the speech of the hon. Member for Rother Valley—is absurd when one considers the £9 billion of taxpayers' money that has been spent in the past nine years and add to that the enormous amounts—currently running at £550 million a year—which consumers of electricity have been paying, over the odds, for British coal.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

The basis of that figure has been widely disputed, even by the CEGB. How much money will be spent on the nuclear levy which the Bill introduces?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

The CEGB's estimate is much higher—the hon. Gentleman is right to say that the figure is disputed. We take a rather modest figure.

Since the war—this matter is not disputed—the equivalent of £19 billion in today's money has been paid by the taxpayer to the coal industry. To say that the coal industry is being unfairly treated in these circumstances is bizarre.

The question has been raised as to why Scotland is being treated differently from England and Wales in the Bill. The answer in part is that the vast majority of the Bill covers Scotland, England and Wales identically. The differences apply where the nature and structure of the two industries are different. In England and Wales, nuclear accounts for only 16 per cent. of the electricity produced—

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

The hon. Gentleman may know this, but many people have asked this question.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

The Minister, who is a pleasant gentleman, should try to understand that the root of the objection is not that Scotland is being treated differently, but that because it is different it should have a separate Bill.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

My right hon. and learned Friend the Secretary of State for Scotland spent a great deal of time explaining that, but perhaps the hon. Member for Dunfermline, West (Mr. Douglas) was not in the Chamber at the time. [Interruption.] I understand that he was. There are some differences. Proportionally, Scotland has four times as much nuclear power as England and Wales, has a vastly greater amount of hydro-electricity and is a different market place. It is clear that we had to cater for some differences north of the border.

The hon. Member for Ashfield (Mr. Haynes), who is sitting on the Opposition Front Bench, raised the question of safety. I can tell him categorically that the industry will be safe in private hands. All hon. Members accept that safety standards, especially in the nuclear industry, are excellent. They will remain precisely the same after privatisation and nuclear safety will continue to be policed after privatisation by the nuclear installations inspectorate. Some hon. Members have argued that in future the industry is to be too heavily regulated.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

The Minister says that nuclear safety will remain in future as it is at present. Will the commission be answerable to Parliament in the way that it is presently answerable?

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Yes, of course it will. I am glad that the right hon. Gentleman reminded me about that specific question.

As I say, some hon. Members have argued that we are to regulate the industry too heavily and other hon. Members have argued just as vehemently that we have put the industry on too loose a rein. The House may therefore feel that we have got it about right. The principle that has guided us has been that those parts of the industry where it is most difficult to inject competition, for instance the grid company and the supply companies, should be the most rightly regulated. It is fairly natural for us to do that, but even here the role of regulation will be to bring as much competition into the industry as possible.

For instance, we expect that the Director General of Electricity Supply will particularly have in mind, in his approach for example to the grid company, the need to allow maximum access to new entrants commensurate with the well-being and safety of the system. On the other hand we think that there is little need for economic regulation at the generating end of the industry.

Contrary to what the Opposition have said, we think that we will achieve growing and genuine competition by splitting the CEGB into two companies, by allowing distribution companies up to a maximum of 15 per cent. own generation and by encouraging new companies to come in.

I now turn to the word that the Opposition dare not speak—renationalisation. In answer to questions yesterday from my hon. Friends the Members for Lewisham, West (Mr. Maples) and for Rochford, the hon. Member for Sedgefield (Mr. Blair) said of the electricity industry: When we come to power it will be reinstated as a public service for the people of this country, and will not be run for private profit. Later, when pressed by my hon. Friend the Member for Rochford, he said: We will reinstate it as a proper public service under public control."—[Official Report, 12 December 1988; Vol. 143, c. 689-696.]

I must ask him what that means. If it is Socialist yuppy-speak for renationalisation, then one day I suspect that he will be bound to have to tell the electorate the terms on which he will buy out the shareholders, particularly those shareholders who are also employees of the industry. If he does not mean renationalisation and is just putting up token opposition, I must tell him that we understand—it is what he is there to do—but I fear that it will not exactly improve his credibility.

I refer next to what has perhaps been the essential thrust of the Opposition's Front Bench attack on the Bill in the past few days. Opposition Members have argued that, under the terms of the Bill, there will be insufficient competition. At least, that is what I understood the hon. Member for Sedgefield to imply. In bringing competition into the forefront of the debate, Opposition Members have taken the debate on to our territory, and for that we must be grateful.

I am not sure what the Labour party knows about competition. Yesterday, the hon. Member for Sedgefield said: The truth is that there is no competitive pressure in this structure at the point of consumption, which is the only competitive pressure that matters."—[Official Report, 12 December 1988; Vol. 143, c. 692.] When, as in the case of electricity, three quarters of costs are at the point of production, that is manifest nonsense, and the hon. Gentleman knows it. He does not believe it himself—he is grinning. Of course he cannot believe that competition in three quarters of the industry has no effect on the consumer—[Interruption.]

The hon. Member for Sedgefield says that the consumer does not pay. The consumer ultimately pays the costs. He is saying that, because we cannot have 100 per cent. perfect competition, we should have no competition. That is precisely what he and other Opposition Members have said throughout the debate. The hon. Member for Rother Valley is nodding his head.

Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change)

The Opposition simply say that, in 1983, the Government brought in an Energy Act that was to introduce the same competition, and it singularly failed, and we are arguing about that here tonight.

Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy)

Conservative Members would go some way with the hon. Gentleman. It is interesting that we are having this discussion about whether we have given enough competition. That is a perfectly reasonable debating ground, and we are delighted to have it. The 1983 Act, for various reasons—notably that the CEGB was left as a monopoly—did not work. That is why we are bringing in this replacement. I am glad that the hon. Gentleman mentioned the 1983 Act. Of course we were not pleased with it. It was a step in the right direction, but it was not far enough. It left a monopoly in place, and that monopoly, in effect, was able to control the rules.

We say that where we cannot have perfect competition, we should regulate to protect the interests of the consumer. The truth is that, philosophically, a member of the Labour party—whether or not he is a member of the new yuppy Labour party—would not know a consumer if he saw one. The Labour party owes its very existence to producer interests. One never hears about common ownership of the means of consumption. Socialism was founded on the unholy alliance between producers and trade unions. The market place simply does not feature in Opposition Members' thinking. The truth is that the interests of the consumer are the essence of the Bill which, for the first time, imposes an obligation on the industry to supply all consumers, unless it is technically impractical to do so.

The consumer will not only benefit directly if some three quarters of his costs are subject to the force of competition, but he will have the chance, if that is what he wishes, to buy his electricity from an alternative supply company. The hon. Member for Rother Valley was wrong about that.

It has been said that the Bill is radical. That is precisely right. It is extremely radical. To change the whole emphasis of an immense utility away from one that is dominated by a single producer towards one that reflects the interests of the customer is an enormously ambitious undertaking. We are under no illusions about that. For the time being it may not appeal to the myopic imagination of the Opposition, bent on driving this country back into the past, but I am sure that it will receive the support of the mass of the country.

Question put, That the amendment be made:

The House divided: Ayes 239, Noes 316.

Division No. 12][10 pm
AYES
Abbott, Ms DianeBennett, A. F. (D'nt'n & R'dish)
Adams, Allen (Paisley N)Bermingham, Gerald
Allen, GrahamBidwell, Sydney
Alton, DavidBlair, Tony
Anderson, DonaldBlunkett, David
Archer, Rt Hon PeterBoyes, Roland
Armstrong, HilaryBradley, Keith
Ashdown, PaddyBray, Dr Jeremy
Ashley, Rt Hon JackBrown, Gordon (D'mline E)
Ashton, JoeBrown, Nicholas (Newcastle E)
Banks, Tony (Newham NW)Brown, Ron (Edinburgh Leith)
Barnes, Harry (Derbyshire NE)Bruce, Malcolm (Gordon)
Barron, KevinBuchan, Norman
Beckett, MargaretBuckley, George J.
Beggs, RoyCaborn, Richard
Beith, A. J.Callaghan, Jim
Bell, StuartCampbell, Menzies (Fife NE)
Campbell, Ron (Blyth Valley)Hughes, Robert (Aberdeen N)
Campbell-Savours, D. N.Hughes, Roy (Newport E)
Canavan, DennisHughes, Sean (Knowsley S)
Carlile, Alex (Mont'g)Hughes, Simon (Southwark)
Clark, Dr David (S Shields)Illsley, Eric
Clarke, Tom (Monklands W)Ingram, Adam
Clay, BobJohnston, Sir Russell
Clelland, DavidJones, Barry (Alyn & Deeside)
Clwyd, Mrs AnnJones, Martyn (Clwyd S W)
Cohen, HarryKaufman, Rt Hon Gerald
Coleman, DonaldKennedy, Charles
Cook, Frank (Stockton N)Kilfedder, James
Cook, Robin (Livingston)Kinnock, Rt Hon Neil
Corbett, RobinKirkwood, Archy
Corbyn, JeremyLambie, David
Cousins, JimLamond, James
Cox, TomLeadbitter, Ted
Crowther, StanLeighton, Ron
Cryer, BobLestor, Joan (Eccles)
Cummings, JohnLewis, Terry
Cunliffe, LawrenceLitherland, Robert
Cunningham, Dr JohnLivingstone, Ken
Dalyell, TamLivsey, Richard
Darling, AlistairLloyd, Tony (Stretford)
Davies, Rt Hon Denzil (Llanelli)Lofthouse, Geoffrey
Davies, Ron (Caerphilly)Loyden, Eddie
Davis, Terry (B'ham Hodge H'l)McAllion, John
Dewar, DonaldMcAvoy, Thomas
Dixon, DonMacdonald, Calum A.
Dobson, FrankMcFall, John
Doran, FrankMcKay, Allen (Barnsley West)
Douglas, DickMcKelvey, William
Duffy, A. E. P.McLeish, Henry
Dunnachie, JimmyMaclennan, Robert
Dunwoody, Hon Mrs GwynethMcNamare, Kevin
Eadie, AlexanderMcTaggart, Bob
Eastham, KenMcWilliam, John
Evans, John (St Helens N)Madden, Max
Ewing, Harry (Falkirk E)Mahon, Mrs Alice
Fatchett, DerekMarek, Dr John
Fearn, RonaldMarshall, David (Shettleston)
Field, Frank (Birkenhead)Marshall, Jim (Leicester S)
Fields, Terry (L'pool B G'n)Martin, Michael J. (Springburn)
Flannery, MartinMartlew, Eric
Flynn, PaulMaxton, John
Foot, Rt Hon MichaelMeacher, Michael
Forsythe, Clifford (Antrim S)Meale, Alan
Foster, DerekMichael, Alun
Foulkes, GeorgeMichie, Bill (Sheffield Heeley)
Fraser, JohnMichie, Mrs Ray (Arg'l & Bute)
Fyfe, MariaMitchell, Austin (G't Grimsby)
Galbraith, SamMolyneaux, Rt Hon James
Galloway, GeorgeMoonie, Dr Lewis
Garrett, John (Norwich South)Morgan, Rhodri
Garrett, Ted (Wallsend)Morley, Elliott
George, BruceMorris, Rt Hon A. (W'shawe)
Gilbert, Rt Hon Dr JohnMorris, Rt Hon J. (Aberavon)
Godman, Dr Norman A.Mowlam, Marjorie
Golding, Mrs LlinMullin, Chris
Gordon, MildredMurphy, Paul
Gould, BryanNellist, Dave
Graham, ThomasOakes, Rt Hon Gordon
Grant, Bernie (Tottenham)O'Brien, William
Griffiths, Win (Bridgend)O'Neill, Martin
Grocott, BruceOrme, Rt Hon Stanley
Hardy, PeterPatchett, Terry
Hattersley, Rt Hon RoyPendry, Tom
Haynes, FrankPike, Peter L.
Healey, Rt Hon DenisPowell, Ray (Ogmore)
Heffer, Eric S.Prescott, John
Henderson, DougPrimarolo, Dawn
Hinchliffe, DavidQuin, Ms Joyce
Hogg, N. (C'nauld & Kilsyth)Radice, Giles
Holland, StuartRandall, Stuart
Home Robertson, JohnRedmond, Martin
Hood, JimmyRees, Rt Hon Merlyn
Howarth, George (Knowsley N)Reid, Dr John
Howell, Rt Hon D. (S'heath)Richardson, Jo
Hoyle, DougRoberts, Allan (Bootle)
Hughes, John (Coventry NE)Robertson, George
Robinson, GeoffreyTaylor, Matthew (Truro)
Rogers, AllanThomas, Dr Dafydd Elis
Rooker, JeffThompson, Jack (Wansbeck)
Ross, Ernie (Dundee W)Turner, Dennis
Rowlands, TedWalker, A. Cecil (Belfast N)
Ruddock, JoanWall, Pat
Salmond, AlexWallace, James
Sedgemore, BrianWalley, Joan
Sheerman, BarryWardell, Gareth (Gower)
Sheldon, Rt Hon RobertWareing, Robert N.
Short, ClareWelsh, Michael (Doncaster N)
Sillars, JimWigley, Dafydd
Skinner, DennisWilliams, Rt Hon Alan
Smith, Andrew (Oxford E)Williams, Alan W. (Carm'then)
Smith, C. (Isl'ton & F'bury)Wilson, Brian
Smyth, Rev Martin (Belfast S)Winnick, David
Snape, PeterWise, Mrs Audrey
Soley, CliveWorthington, Tony
Spearing, NigelWray, Jimmy
Steel, Rt Hon DavidYoung, David (Bolton SE)
Steinberg, Gerry
Stott, RogerTellers for the Ayes:
Strang, GavinMrs. Margaret Ewing and
Straw, JackMr. Ieuan Wyn Jones.
Taylor, Mrs Ann (Dewsbury)
NOES
Adley, RobertCarlisle, Kenneth (Lincoln)
Aitken, JonathanCarrington, Matthew
Alexander, RichardCarttiss, Michael
Alison, Rt Hon MichaelCartwright, John
Allason, RupertCash, William
Amery, Rt Hon JulianChalker, Rt Hon Mrs Lynda
Amess, DavidChannon, Rt Hon Paul
Amos, AlanChapman, Sydney
Arbuthnot, JamesChope, Christopher
Arnold, Jacques (Gravesham)Churchill, Mr
Arnold, Tom (Hazel Grove)Clark, Hon Alan (Plym'th S'n)
Ashby, DavidClark, Dr Michael (Rochford)
Aspinwall, JackClark, Sir W. (Croydon S)
Atkins, RobertClarke, Rt Hon K. (Rushcliffe)
Atkinson, DavidColvin, Michael
Baker, Rt Hon K. (Mole Valley)Conway, Derek
Baker, Nicholas (Dorset N)Coombs, Anthony (Wyre F'rest)
Baldry, TonyCoombs, Simon (Swindon)
Banks, Robert (Harrogate)Cope, Rt Hon John
Barnes, Mrs Rosie (Greenwich)Cormack, Patrick
Batiste, SpencerCouchman, James
Beaumont-Dark, AnthonyCran, James
Bellingham, HenryCritchley, Julian
Bendall, VivianCurrie, Mrs Edwina
Bennett, Nicholas (Pembroke)Davies, Q. (Stamf'd & Spald'g)
Benyon, W.Davies, David (Boothferry)
Bevan, David GilroyDay, Stephen
Biffen, Rt Hon JohnDevlin, Tim
Body, Sir RichardDickens, Geoffrey
Bonsor, Sir NicholasDicks, Terry
Boscawen, Hon RobertDorrell, Stephen
Bottomley, Mrs VirginiaDouglas-Hamilton, Lord James
Bowden, A (Brighton K'pto'n)Dover, Den
Bowden, Gerald (Dulwich)Dunn, Bob
Bowis, JohnDurant, Tony
Boyson, Rt Hon Dr Sir RhodesDykes, Hugh
Braine, Rt Hon Sir BernardEggar, Tim
Brandon-Bravo, MartinEmery, Sir Peter
Brazier, JulianEvans, David (Welwyn Hatf'd)
Bright, GrahamEvennett, David
Brittan, Rt Hon LeonFavell, Tony
Brooke, Rt Hon PeterFenner, Dame Peggy
Brown, Michael (Brigg & Cl't's)Field, Barry (Isle of Wight)
Browne, John (Winchester)Finsberg, Sir Geoffrey
Bruce, Ian (Dorset South)Fishburn, John Dudley
Buck, Sir AntonyFookes, Miss Janet
Budgen, NicholasForman, Nigel
Burns, SimonForsyth, Michael (Stirling)
Burt, AlistairForth, Eric
Butcher, JohnFowler, Rt Hon Norman
Butler, ChrisFox, Sir Marcus
Butterfill, JohnFranks, Cecil
Carlisle, John, (Luton N)Freeman, Roger
French, DouglasLilley, Peter
Fry, PeterLloyd, Sir Ian (Havant)
Gale, RogerLloyd, Peter (Fareham)
Gardiner, GeorgeLord, Michael
Garel-Jones, TristanLuce, Rt Hon Richard
Gill, ChristopherLyell, Sir Nicholas
Glyn, Dr AlanMcCrindle, Robert
Goodhart, Sir PhilipMacfarlane, Sir Neil
Goodlad, AlastairMacKay, Andrew (E Berkshire)
Goodson-Wickes, Dr CharlesMaclean, David
Gorman, Mrs TeresaMcLoughlin, Patrick
Gorst, JohnMcNair-Wilson, Sir Michael
Gow, IanMcNair-Wilson, P. (New Forest)
Gower, Sir RaymondMadel, David
Grant, Sir Anthony (CambsSW)Major, Rt Hon John
Greenway, Harry (Ealing N)Malins, Humfrey
Greenway, John (Ryedale)Mans, Keith
Gregory, ConalMaples, John
Griffiths, Sir Eldon (Bury St E')Marland, Paul
Griffiths, Peter (Portsmouth N)Marlow, Tony
Grist, IanMarshall, John (Hendon S)
Grylls, MichaelMarshall, Michael (Arundel
Gummer, Rt Hon John SelwynMartin, David (Portsmouth S)
Hamilton, Hon Archie (Epsom)Mates, Michael
Hamilton, Neil (Tatton)Maude, Hon Francis
Hampson, Dr KeithMawhinney, Dr Brian
Hanley, JeremyMaxwell-Hyslop, Robin
Hannam, JohnMayhew, Rt Hon Sir Patrick
Hargreaves, A. (B'ham H'll Gr')Mellor, David
Hargreaves, Ken (Hyndburn)Meyer, Sir Anthony
Harris, DavidMills, Iain
Hawkins, ChristopherMiscampbell, Norman
Hayes, JerryMitchell, Andrew (Gedling)
Hayhoe, Rt Hon Sir BarneyMitchell, Sir David
Hayward, RobertMoate, Roger
Heddle, JohnMontgomery, Sir Fergus
Heseltine, Rt Hon MichaelMorris, M (N'hampton S)
Hicks, Mrs Maureen (Wolv' NE)Morrison, Sir Charles
Hicks, Robert (Cornwall SE)Morrison, Rt Hon P (Chester)
Higgins, Rt Hon Terence L.Moss, Malcolm
Hill, JamesMoynihan, Hon Colin
Hind, KennethMudd, David
Hogg, Hon Douglas (Gr'th'm)Neale, Gerrard
Holt, RichardNelson, Anthony
Hordern, Sir PeterNeubert, Michael
Howarth, Alan (Strat'd-on-A)Nicholls, Patrick
Howarth, G. (Cannock & B'wd)Nicholson, David (Taunton)
Howe, Rt Hon Sir GeoffreyNicholson, Emma (Devon West)
Howell, Rt Hon David (G'dford)Onslow, Rt Hon Cranley
Howell, Ralph (North Norfolk)Oppenheim, Phillip
Hughes, Robert G. (Harrow W)Owen, Rt Hon Dr David
Hunt, David (Wirral W)Page, Richard
Hunter, AndrewPaice, James
Hurd, Rt Hon DouglasParkinson, Rt Hon Cecil
Irvine, MichaelPatnick, Irvine
Irving, CharlesPatten, John (Oxford W)
Jack, MichaelPattie, Rt Hon Sir Geoffrey
Jackson, RobertPawsey, James
Janman, TimPeacock, Mrs Elizabeth
Jessel, TobyPorter, Barry (Wirral S)
Johnson Smith, Sir GeoffreyPorter, David (Waveney)
Jones, Gwilym (Cardiff N)Portillo, Michael
Jones, Robert B (Herts W)Powell, William (Corby)
Jopling, Rt Hon MichaelPrice, Sir David
Key, RobertRaffan, Keith
Kirkhope, TimothyRedwood, John
Knapman, RogerRenton, Tim
Knight, Greg (Derby North)Rhodes James, Robert
Knight, Dame Jill (Edgbaston)Rifkind, Rt Hon Malcolm
Knowles, MichaelRoberts, Wyn (Conwy)
Knox, DavidRowe, Andrew
Lamont, Rt Hon NormanSackville, Hon Tom
Lang, IanSainsbury, Hon Tim
Latham, MichaelScott, Nicholas
Lawrence, IvanShaw, David (Dover)
Lawson, Rt Hon NigelShaw, Sir Giles (Pudsey)
Leigh, Edward (Gainsbor'gh)Shaw, Sir Michael (Scarb')
Lennox-Boyd, Hon MarkShepherd, Colin (Hereford)
Lester, Jim (Broxtowe)Shersby, Michael
Lightbown, DavidSims, Roger
Skeet, Sir TrevorWalden, George
Smith, Tim (Beaconsfield)Walker, Bill (T'side North)
Soames, Hon NicholasWalker, Rt Hon P. (W'cester)
Spicer, Michael (S Worcs)Waller, Gary
Stevens, LewisWalters, Sir Dennis
Stewart, Allan (Eastwood)Ward, John
Stradling Thomas, Sir JohnWardle, Charles (Bexhill)
Summerson, HugoWarren, Kenneth
Taylor, John M (Solihull)Watts, John
Taylor, Teddy (S'end E)Wells, Bowen
Thatcher, Rt Hon MargaretWheeler, John
Thompson, D. (Calder Valley)Whitney, Ray
Thompson, Patrick (Norwich N)Widdecombe, Ann
Thorne, NeilWiggin, Jerry
Thornton, MalcolmWilkinson, John
Thurnham, PeterWinterton, Mrs Ann
Townend, John (Bridlington)Winterton, Nicholas
Townsend, Cyril D. (B'heath)Wolfson, Mark
Tracey, RichardWood, Timothy
Tredinnick, DavidWoodcock, Mike
Trotter, NevilleYeo, Tim
Twinn, Dr IanYoung, Sir George (Acton)
Vaughan, Sir GerardYounger, Rt Hon George
Viggers, Peter
Waddington, Rt Hon DavidTellers for the Noes:
Wakeham, Rt Hon JohnMr. Michael Fallon and
Waldegrave, Hon WilliamMr. David Heathcoat-Amory

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 60 (Amendment on Second or Third Reading):—

The House divided: Ayes 304, Noes 238.

Division No. 13][10.16 pm
AYES
Adley, RobertBrowne, John (Winchester)
Aitken, JonathanBruce, Ian (Dorset South)
Alexander, RichardBuck, Sir Antony
Alison, Rt Hon MichaelBudgen, Nicholas
Allason, RupertBurns, Simon
Amery, Rt Hon JulianBurt, Alistair
Amess, DavidButcher, John
Amos, AlanButler, Chris
Arbuthnot, JamesButterfill, John
Arnold, Jacques (Gravesham)Carlisle, John, (Luton N)
Arnold, Tom (Hazel Grove)Carlisle, Kenneth (Lincoln)
Ashby, DavidCarrington, Matthew
Aspinwall, JackCarttiss, Michael
Atkins, RobertCartwright, John
Atkinson, DavidCash, William
Baker, Rt Hon K. (Mole Valley)Chalker, Rt Hon Mrs Lynda
Baker, Nicholas (Dorset N)Channon, Rt Hon Paul
Baldry, TonyChapman, Sydney
Banks, Robert (Harrogate)Chope, Christopher
Barnes, Mrs Rosie (Greenwich)Churchill, Mr
Batiste, SpencerClark, Hon Alan (Plym'th S'n)
Beaumont-Dark, AnthonyClark, Dr Michael (Rochford)
Bellingham, HenryClark, Sir W. (Croydon S)
Bendall, VivianClarke, Rt Hon K. (Rushcliffe)
Bennett, Nicholas (Pembroke)Colvin, Michael
Benyon, W.Conway, Derek
Bevan, David GilroyCoombs, Anthony (Wyre F'rest)
Biffen, Rt Hon JohnCoombs, Simon (Swindon)
Body, Sir RichardCope, Rt Hon John
Bonsor, Sir NicholasCormack, Patrick
Boscawen, Hon RobertCouchman, James
Bottomley, PeterCran, James
Bottomley, Mrs VirginiaCritchley, Julian
Bowden, A (Brighton K'pto'n)Currie, Mrs Edwina
Bowden, Gerald (Dulwich)Davies, Q. (Stamf'd & Spald'g)
Bowis, JohnDavis, David (Boothferry)
Boyson, Rt Hon Dr Sir RhodesDay, Stephen
Braine, Rt Hon Sir BernardDevlin, Tim
Brandon-Bravo, MartinDickens, Geoffrey
Brazier, JulianDicks, Terry
Bright, GrahamDorrell, Stephen
Brittan, Rt Hon LeonDouglas-Hamilton, Lord James
Brooke, Rt Hon PeterDover, Den
Brown, Michael (Brigg & Cl't's)Dunn, Bob
Durant, TonyJones, Gwilym (Cardiff N)
Dykes, HughJones, Robert B (Herts W)
Eggar, TimJopling, Rt Hon Michael
Emery, Sir PeterKey, Robert
Evans, David (Welwyn Hatf'd)Kirkhope, Timothy
Evennett, DavidKnapman, Roger
Favell, TonyKnight, Greg (Derby North)
Fenner, Dame PeggyKnight, Dame Jill (Edgbaston)
Field, Barry (Isle of Wight)Knowles, Michael
Finsberg, Sir GeoffreyKnox, David
Fishburn, John DudleyLamont, Rt Hon Norman
Fookes, Miss JanetLang, Ian
Forman, NigelLatham, Michael
Forsyth, Michael (Stirling)Lawrence, Ivan
Forth, EricLawson, Rt Hon Nigel
Fowler, Rt Hon NormanLeigh, Edward (Gainsbor'gh)
Fox, Sir MarcusLennox-Boyd, Hon Mark
Franks, CecilLester, Jim (Broxtowe)
Freeman, RogerLightbown, David
French, DouglasLilley, Peter
Fry, PeterLloyd, Sir Ian (Havant)
Gale, RogerLloyd, Peter (Fareham)
Gardiner, GeorgeLord, Michael
Garel-Jones, TristanLuce, Rt Hon Richard
Gill, ChristopherLyell, Sir Nicholas
Glyn, Dr AlanMcCrindle, Robert
Goodhart, Sir PhilipMacfarlane, Sir Neil
Goodlad, AlastairMacKay, Andrew (E Berkshire)
Goodson-Wickes, Dr CharlesMaclean, David
Gorman, Mrs TeresaMcLoughlin, Patrick
Gorst, JohnMcNair-Wilson, Sir Michael
Gow, IanMcNair-Wilson, P. (New Forest)
Gower, Sir RaymondMadel, David
Grant, Sir Anthony (CambsSW)Major, Rt Hon John
Greenway, Harry (Ealing N)Malins, Humfrey
Greenway, John (Ryedale)Mans, Keith
Gregory, ConalMaples, John
Griffiths, Sir Eldon (Bury St E')Marland, Paul
Griffiths, Peter (Portsmouth N)Marlow, Tony
Grist, IanMarshall, John (Hendon S)
Grylls, MichaelMarshall, Michael (Arundel)
Gummer, Rt Hon John SelwynMartin, David (Portsmouth S)
Hamilton, Hon Archie (Epsom)Maude, Hon Francis
Hamilton, Neil (Tatton)Mawhinney, Dr Brian
Hampson, Dr KeithMaxwell-Hyslop, Robin
Hanley, JeremyMayhew, Rt Hon Sir Patrick
Hannam, JohnMellor, David
Hargreaves, A. (B'ham H'll Gr')Meyer, Sir Anthony
Hargreaves, Ken (Hyndburn)Mills, Iain
Harris, DavidMiscampbell, Norman
Hawkins, ChristopherMitchell, Andrew (Gedling)
Hayes, JerryMitchell, Sir David
Hayhoe, Rt Hon Sir BarneyMoate, Roger
Hayward, RobertMontgomery, Sir Fergus
Heddle, JohnMorris, M (N'hamptpon S)
Heseltine, Rt Hon MichaelMorrison, Sir Charles
Hicks, Mrs Maureen (Wolv' NE)Morrison, Rt Hon P (Chester)
Hicks, Robert (Cornwall SE)Moss, Malcolm
Higgins, Rt Hon Terence L.Moynihan, Hon Colin
Hill, JamesMudd, David
Hind, KennethNeale, Gerrard
Hogg, Hon Douglas (Gr'th'm)Nelson, Anthony
Holt, RichardNeubert, Michael
Hordern, Sir PeterNicholls, Patrick
Howarth, Alan (Strat'd-on-A)Nicholson, David (Taunton)
Howarth, G. (Cannock & B'wd)Nicholson, Emma (Devon West)
Howe, Rt Hon Sir GeoffreyOnslow, Rt Hon Cranley
Howell, Rt Hon David (G'dford)Oppenheim, Phillip
Howell, Ralph (North Norfolk)Owen, Rt Hon Dr David
Hughes, Robert G. (Harrow W)Page, Richard
Hunt, David (Wirral W)Paice, James
Hunter, AndrewParkinson, Rt Hon Cecil
Hurd, Rt Hon DouglasPatnick, Irvine
Irvine, MichaelPatten, John (Oxford W)
Irving, CharlesPattie, Rt Hon Sir Geoffrey
Jack, MichaelPawsey, James
Jackson, RobertPeacock, Mrs Elizabeth
Janman, TimPorter, Barry (Wirral S)
Jessel, TobyPorter, David (Waveney)
Johnson Smith, Sir GeoffreyPortillo, Michael
Powell, William (Corby)Townsend, Cyril D. (B'health)
Price, Sir DavidTracey, Richard
Raffan, KeithTredinnick, Daivd
Redwood, JohnTrotter, Neville
Renton, TimTwinn, Dr Ian
Rhodes James, RobertVaughan, Sir Gerard
Rifkind, Rt Hon MalcolmViggers, Peter
Roberts, Wyn (Conwy)Waddington, Rt Hon David
Rowe, AndrewWakeham, Rt Hon John
Sackville, Hon TomWaldegrave, Hon William
Sainsbury, Hon TimWalden, George
Scott, NicholasWalker, Bill (T'side North)
Shaw, David (Dover)Waller, Gary
Shaw, Sir Giles (Pudsey)Walters, Sir Dennis
Shepherd, Colin (Hereford)Ward, John
Shersby, MichaelWardle, Charles (Bexhill)
Sims, RogerWarren, Kenneth
Skeet, Sir TrevorWatts, John
Smith, Tim (Beaconsfield)Wells, Bowen
Soames, Hon NicholasWheeler, John
Spicer, Michael (S Worcs)Whitney, Ray
Stevens, LewisWiddecombe, Ann
Stewart, Allan (Eastwood)Wiggin, Jerry
Stradling Thomas, Sir JohnWilkinson, John
Summerson, HugoWinterton, Mrs Ann
Taylor, John M (Solihull)Winterton, Nicholas
Taylor, Teddy (S'end E)Wolfson, Mark
Thatcher, Rt Hon MargaretWood, Timothy
Thompson, D. (Calder Valley)Woodcock, Mike
Thompson, Patrick (Norwich N)Yeo, Tim
Thorne, NeilYoung, Sir George (Acton)
Thornton, MalcolmYounger, Rt Hon George
Thurnham, Peter
Townend, John (Bridlington)Tellers for the Ayes:
Mr. David Heathcoat-Amory and
Mr. Michael Fallon
NOES
Abbott, Ms DianeClwyd, Mrs Ann
Adams, Allen (Paisley N)Cohen, Harry
Allen, GrahamColeman, Donald
Alton, DavidCook, Frank (Stockton N)
Anderson, DonaldCook, Robin (Livingston)
Archer, Rt Hon PeterCorbett, Robin
Armstrong, HilaryCorbyn, Jeremy
Ashdown, PaddyCousins, Jim
Ashley, Rt Hon JackCox, Tom
Ashton, JoeCrowther, Stan
Banks, Tony (Newham NW)Cryer, Bob
Barnes, Harry (Derbyshire NE)Cummings, John
Barron, KevinCunningham, Dr John
Beckett, MargaretDalyell, Tam
Beggs, RoyDarling, Alistair
Beith, A. J.Davies, Rt Hon Denzil (Llanelli)
Bell, StuartDavies, Ron (Caerphilly)
Bennett, A. F. (D'nt'n & R'dish)Davis, Terry (B'ham Hodge H'l)
Bermingham, GeraldDewar, Donald
Bidwell, SydneyDixon, Don
Blair, TonyDobson, Frank
Blunkett, DavidDoran, Frank
Boyes, RolandDouglas, Dick
Bradley, KeithDuffy, A.E.P.
Bray, Dr JeremyDunnachie, Jimmy
Brown, Gordon (D'mline E)Dunwoody, Hon Mrs Gwyneth
Brown, Nicholas (Newcastle E)Eadie, Alexander
Brown, Ron (Edinburgh Leith)Eastham, Ken
Bruce, Malcolm (Gordon)Evans, John (St Helens N)
Buchan, NormanEwing, Harry (Falkirk E)
Buckley, George J.Ewing, Mrs Margaret (Moray)
Caborn, RichardFatchett, Derek
Callaghan, JimFearn, Ronald
Campbell, Menzies (Fife NE)Field, Frank (Birkenhead)
Campbell, Ron (Blyth Valley)Fields, Terry (L'pool B G'n)
Campbell-Savours, D. N.Flannery, Martin
Canavan, DennisFlynn, Paul
Carlile, Alex (Mont'g)Foot, Rt Hon Michael
Clark, Dr David (S Shields)Forsythe, Clifford (Antrim S)
Clarke, Tom (Monklands W)Foster, Derek
Clay, BobFoulkes, George
Clelland, DavidFraser, John
Fyfe, MariaMitchell, Austin (G't Grimsby)
Galbraith, SamMolyneaux, Rt Hon James
Galloway, GeorgeMoonie, Dr Lewis
Garrett, John (Norwich South)Morgan, Rhodri
Garrett, Ted (Wallsend)Morley, Elliott
George, BruceMorris, Rt Hon A. (W'shawe)
Gilbert, Rt Hon Dr JohnMorris, Rt Hon J (Aberavon)
Godman, Dr Norman A.Mowlam, Marjorie
Golding, Mrs LlinMullin, Chris
Gordon, MildredMurphy, Paul
Gould, BryanNellist, Dave
Graham, ThomasOakes, Rt Hon Gordon
Grant, Bernie (Tottenham)O'Brien, William
Griffiths, Win (Bridgend)O'Neill, Martin
Grocott, BruceOrme, Rt Hon Stanley
Hardy, PeterPatchett, Terry
Hattersley, Rt Hon RoyPendry, Tom
Haynes, FrankPike, Peter L.
Healey, Rt Hon DenisPowell, Ray (Ogmore)
Heffer, Eric S.Prescott, John
Henderson, DougPrimarolo, Dawn
Hinchliffe, DavidQuin, Ms Joyce
Hogg, N. (C'nauld & Kilsyth)Radice, Giles
Holland, StuartRandall, Stuart
Home Robertson, JohnRedmond, Martin
Hood, JimmyRees, Rt Hon Merlyn
Howarth, George (Knowsley N)Reid, Dr John
Howell, Rt Hon D. (S'heath)Richardson, Jo
Hoyle, DougRoberts, Allan (Bootle)
Hughes, John (Coventry NE)Robertson, George
Hughes, Robert (Aberdeen N)Robinson, Geoffrey
Hughes, Roy (Newport E)Rogers, Allan
Hughes, Sean (Knowsley S)Rooker, Jeff
Hughes, Simon (Southwark)Ross, Ernie (Dundee W)
Illsley, EricRowlands, Ted
Ingram, AdamRuddock, Joan
Johnston, Sir RussellSalmond, Alex
Jones, Barry (Alyn & Deeside)Sedgemore, Brian
Jones, Ieuan (Ynys Môn)Sheerman, Barry
Jones, Martyn (Clwyd S W)Sheldon, Rt Hon Robert
Kaufman, Rt Hon GeraldShore, Rt Hon Peter
Kennedy, CharlesShort, Clare
Kilfedder, JamesSillars, Jim
Kinnock, Rt Hon NeilSkinner, Dennis
Kirkwood, ArchySmith, Andrew (Oxford E)
Lambie, DavidSmith, C. (Isl'ton & F'bury)
Lamond, JamesSmyth, Rev Martin (Belfast S)
Leadbitter, TedSnape, Peter
Leighton, RonSoley, Clive
Lestor, Joan (Eccles)Spearing, Nigel
Lewis, TerrySteel, Rt Hon David
Litherland, RobertSteinberg, Gerry
Livingstone, KenStott, Roger
Livsey, RichardStrand, Gavin
Lloyd, Tony (Stretford)Straw, Jack
Lofthouse, GeoffreyTaylor, Mrs Ann (Dewsbury)
Loyden, EddieTaylor, Matthew (Truro)
McAllion, JohnThomas, Dr Dafydd Elis
McAvoy, ThomasThompson, Jack (Wansbeck)
Macdonald, Calum A.Turner, Dennis
McFall, JohnWalker, A. Cecil (Belfast N)
McKelvey, WilliamWall, Pat
McLeish, HenryWallace, James
Maclennan, RobertWalley, Joan
McNamara, KevinWardell, Gareth (Gower)
McTaggart, BobWelsh, Michael (Doncaster N)
McWilliam, JohnWigley, Dafydd
Madden, MaxWilliams, Rt Hon Alan
Mahon, Mrs AliceWilliams, Alan W. (Carm'then)
Marek, Dr JohnWilson, Brian
Marshall, David (Shettleston)Winnick, David
Marshall, Jim (Leicester S)Wise, Mrs Audrey
Martin, Michael J. (Springburn)Worthington, Tony
Martlew, EricWray, Jimmy
Maxton, JohnYoung, David (Bolton SE)
Meacher, Michael
Meale, AlanTellers for the Noes:
Michael, AlunMr. Allen McKay and
Michie, Bill (Sheffield Heeley)Mr. Robert Wareing
Michie, Mrs Ray (Arg'l & Bute)

Question accordingly agreed to.

Bill read a Second time.

Motion made—[Mr. Lofthouse]—and Question put, That the Bill be committed to a Special Standing Committee.

The House divided: Ayes 234, Noes 299.

Division No. 14][10.31 pm
AYES
Abbott, Ms DianeEvans, John (St Helens N)
Adams, Allen (Paisley N)Ewing, Harry (Falkirk E)
Allen, GrahamEwing, Mrs Margaret (Moray)
Alton, DavidFatchett, Derek
Anderson, DonaldFearn, Ronald
Archer, Rt Hon PeterFields, Terry (L'pool B G'n)
Armstrong, HilaryFlannery, Martin
Ashdown, PaddyFlynn, Paul
Ashton, JoeFoot, Rt Hon Michael
Banks, Tony (Newham NW)Forsythe, Clifford (Antrim S)
Barnes, Harry (Derbyshire NE)Foster, Derek
Barron, KevinFoulkes, George
Beckett, MargaretFraser, John
Beggs, RoyFyfe, Maria
Beith, A. J.Galbraith, Sam
Bell, StuartGalloway, George
Bennett, A. F. (D'nt'n & R'dish)Garrett, John (Norwich South)
Bermingham, GeraldGarrett, Ted (Wallsend)
Bidwell, SydneyGeorge, Bruce
Blair, TonyGilbert, Rt Hon Dr John
Blunkett, DavidGodman, Dr Norman A.
Boyes, RolandGolding, Mrs Llin
Bradley, KeithGordon, Mildred
Bray, Dr JeremyGould, Bryan
Brown, Gordon (D'mline E)Grant, Bernie (Tottenham)
Brown, Nicholas (Newcastle E)Griffiths, Win (Bridgend)
Brown, Ron (Edinburgh Leith)Grocott, Bruce
Bruce, Malcolm (Gordon)Hardy, Peter
Buchan, NormanHattersley, Rt Hon Roy
Buckley, George J.Haynes, Frank
Caborn, RichardHealey, Rt Hon Denis
Callaghan, JimHeffer, Eric S.
Campbell, Menzies (Fife NE)Henderson, Doug
Campbell, Ron (Blyth Valley)Hinchliffe, David
Campbell-Savours, D. N.Hogg, N. (C'nauld & Kilsyth)
Canavan, DennisHolland, Stuart
Carlile, Alex (Mont'g)Home Robertson, John
Clark, Dr David (S Shields)Hood, Jimmy
Clarke, Tom (Monklands W)Howarth, George (Knowsley N)
Clay, BobHowell, Rt Hon D. (S'heath)
Clelland, DavidHoyle, Doug
Clwyd, Mrs AnnHughes, John (Coventry NE)
Cohen, HarryHughes, Robert (Aberdeen N)
Coleman, DonaldHughes, Roy (Newport E)
Cook, Frank (Stockton N)Hughes, Sean (Knowsley S)
Cook, Robin (Livingston)Hughes, Simon (Southwark)
Corbett, RobinIllsley, Eric
Corbyn, JeremyIngram, Adam
Cousins, JimJohnston, Sir Russell
Cox, TomJones, Barry (Alyn & Deeside)
Crowther, StanJones, Ieuan (ynys Môn)
Cryer, BobJones, Martyn (Clwyd S W)
Cummings, JohnKaufman, Rt Hon Gerald
Cunningham, Dr JohnKennedy, Charles
Dalyell, TamKilfedder, James
Darling, AlistairKinnock, Rt Hon Neil
Davies, Rt Hon Denzil (Llanelli)Kirkwood, Archy
Davies, Ron (Caerphilly)Lambie, David
Davis, Terry (B'ham Hodge H'l)Lamond, James
Dewar, DonaldLeadbitter, Ted
Dixon, DonLeighton, Ron
Dobson, FrankLestor, Joan (Eccles)
Doran, FrankLewis, Terry
Douglas, DickLitherland, Robert
Duffy, A. E. P.Livingstone, Ken
Dunnachie, JimmyLivsey, Richard
Dunwoody, Hon Mrs GwynethLloyd, Tony (Stretford)
Eadie, AlexanderLofthouse, Geoffrey
Eastham, KenLoyden, Eddie
McAllion, JohnRobertson, George
McAvoy, ThomasRobinson, Geoffrey
Macdonald, Calum A.Rogers, Allan
McFall, JohnRooker, Jeff
McKelvey, WilliamRoss, Ernie (Dundee W)
McLeish, HenryRowlands, Ted
McNamara, KevinRuddock, Joan
McTaggart, BobSalmond, Alex
McWilliam, JohnSedgemore, Brian
Madden, MaxSheerman, Barry
Mahon, Mrs AliceSheldon, Rt Hon Robert
Marek, Dr JohnShore, Rt Hon Peter
Marshall, David (Shettleston)Short, Clare
Marshall, Jim (Leicester S)Sillars, Jim
Martin, Michael J. (Springburn)Skinner, Dennis
Martlew, EricSmith, Andrew (Oxford E)
Maxton, JohnSmith, C. (Isl'ton & F'bury)
Meacher, MichaelSmyth, Rev Martin (Belfast S)
Meale, AlanSnape, Peter
Michael, AlunSoley, Clive
Michie, Bill (Sheffield Heeley)Spearing, Nigel
Michie, Mrs Ray (Arg'l & Bute)Steel, Rt Hon David
Mitchell, Austin (G't Grimsby)Steinberg, Gerry
Moonie, Dr LewisStott, Roger
Morgan, RhodriStrang, Gavin
Morley, ElliottStraw, Jack
Morris, Rt Hon A. (W'shawe)Taylor, Mrs Ann (Dewsbury)
Morris, Rt Hon J. (Aberavon)Taylor, Matthew (Truro)
Mowlam, MarjorieThomas, Dr Dafydd Elis
Mullin, ChrisThompson, Jack (Wansbeck)
Murphy, PaulTurner, Dennis
Nellist, DaveWalker, A. Cecil (Belfast N)
Oakes, Rt Hon GordonWall, Pat
O'Brien, WilliamWallace, James
O'Neill, MartinWalley, Joan
Orme, Rt Hon StanleyWardell, Gareth (Gower)
Patchett, TerryWelsh, Michael (Doncaster N)
Pendry, TomWigley, Dafydd
Pike, Peter L.Williams, Rt Hon Alan
Powell, Ray (Ogmore)Williams, Alan W. (Carm'then)
Prescott, JohnWilson, Brian
Primarolo, DawnWinnick, David
Quin, Ms JoyceWise, Mrs Audrey
Radice, GilesWorthington, Tony
Randall, StuartWray, Jimmy
Redmond, MartinYong, David (Bolton SE)
Rees, Rt Hon Merlyn
Reid, Dr JohnTellers for the Ayes:
Richardson, JoMr Allen McKay and
Roberts, Allan (Bootle)Mr. Robert N. Wareing.
NOES
Adley, RobertBonsor, Sir Nicholas
Aitken, JonathanBoscawen, Hon Robert
Alexander, RichardBottomley, Mrs Virginia
Alison, Rt Hon MichaelBowden, A. (Brighton K'pto'n)
Allason, RupertBowden, Gerald (Dulwich)
Amery, Rt Hon JulianBowis, John
Amess, DavidBoyson, Rt Hon Dr Sir Rhodes
Amos, AlanBraine, Rt Hon Sir Bernard
Arbuthnot, JamesBrandon-Bravo, Martin
Arnold, Jacques (Gravesham)Brazier, Julian
Arnold, Tom (Hazel Grove)Bright, Graham
Ashby, DavidBrittan, Rt Hon Leon
Aspinwall, JackBrooke, Rt Hon Peter
Atkins, RobertBrown, Michael (Brigg & Cl't's)
Atkinson, DavidBrowne, John (Winchester)
Baker, Rt Hon K. (Mole Valley)Bruce, Ian (Dorset South)
Baker, Nicholas (Dorset N)Buck, Sir Antony
Baldry, TonyBudgen, Nicholas
Banks, Robert (Harrogate)Burns, Simon
Barnes, Mrs Rosie (Greenwich)Burt, Alistair
Batiste, SpencerButcher, John
Beaumont-Dark, AnthonyButler, Chris
Bellingham, HenryButterrfill, John
Bendall, VivianCarlisle, John (Luton N)
Bennett, Nicholas (Pembroke)Carlisle, Kenneth (Lincoln)
Bevan, David GilroyCarrington, Matthew
Biffen, Rt Hon JohnCarttiss, Michael
Body, Sir RichardCash, William
Chapman, SydneyHeseltine, Rt Hon Michael
Chope, ChristopherHicks, Mrs Maureen (Wolv' NE)
Churchill, MrHicks, Robert (Cornwall SE)
Clark, Hon Alan (Plym'th S'n)Higgins, Rt Hon Terence L.
Clark, Dr Michael (Rochford)Hill, James
Clark, Sir W. (Croydon S)Hind, Kenneth
Clarke, Rt Hon K. (Rushcliffe)Hogg, Hon Douglas (Gr'th'm)
Colvin, MichaelHolt, Richard
Conway, DerekHordern, Sir Peter
Coombs, Anthony (Wyre F'rest)Howarth, Alan (Strat'd-on-A)
Coombs, Simon (Swindon)Howarth, G. (Cannock & B'wd)
Cope, Rt Hon JohnHowe, Rt Hon Sir Geoffrey
Cormack, PatrickHowell, Ralph (North Norfolk)
Couchman, JamesHughes, Robert G. (Harrow W)
Cran, JamesHunt, David (Wirral W)
Currie, Mrs EdwinaHunter, Andrew
Davies, Q. (Stamf'd & Spald'g)Hurd, Rt Hon Douglas
Davis, David (Boothferry)Irine, Michael
Day, StephenJack, Michael
Devlin, TimJackson, Robert
Dickens, GeoffreyJanman, Tim
Dicks, TerryJessel, Toby
Dorrell, StephenJohnson, Smith, Sir Geoffrey
Douglas-Hamilton, Lord JamesJones, Gwilym (Cardiff N)
Dover, DenJones, Robert B (Herts W)
Dunn, BobJopling, Rt Hon Michael
Durant, TonyKey, Robert
Dykes, HughKirkhope, Timothy
Eggar, TimKnapman, Roger
Emery, Sir PeterKnight, Greg (Derby North)
Evans, David (Welwyn Hatf'd)Knight, Dame Jill (Edgbaston)
Evennett, DavidKnowles, Michael
Favell, TonyKnox, David
Fenner, Dame PeggyLamont, Rt Hon Norman
Field, Barry (Isle of Wight)Lang, Ian
Finsberg, Sir GeoffreyLatham, Michael
Fishburn, John DudleyLawrence, Ivan
Forman, NigelLawson, Rt Hon Nigel
Forsyth, Michael (Stirling)Leigh, Edward (Gainsbor'gh)
Forth, EricLennox-Boyd, Hon Mark
Fowler, Rt Hon NormanLester, Jim (Broxtowe)
Fox, Sir MarcusLightbown, David
Franks, CecilLilley, Peter
Freeman, RogerLloyd, Peter (Fareham)
French, DouglasLord, Michael
Fry, PeterLuce, Rt Hon Richard
Gale, RogerLyell, Sir Nicholas
Gardiner, GeorgeMcCrindle, Robert
Garel-Jones, TristanMacfarlane, Sir Neil
Gill, ChristopherMacKay, Andrew (E Berkshire)
Glyn, Dr AlanMaclean, David
Goodhart, Sir PhilipMcLoughlin, Patrick
Goodlad, AlastairMcNair-Wilson, sir Michael
Goodson-Wickes, Dr CharlesMcNair-Wilson, P. (New Forest)
Gorman, Mrs TeresaMadel, David
Gorst, JohnMajor, Rt Hon John
Gow, IanMalins, Humfrey
Gower, Sir RaymondMans, Keith
Grant, Sir Anthony (CambsSW)Maples, John
Greenway, Harry (Ealing N)Marland, Paul
Greenway, John (Ryedale)Marlow, Tony
Gregory, ConalMarshall, John (Hendon S)
Griffiths, Sir Eldon (Bury St E')Marshall, Michael (Arundel)
Griffiths, Peter (Portsmouth N)Martin, David (Portsmouth S)
Grist, IanMaude, Hon Francis
Grylls, MichaelMawhinney, Dr Brian
Gummer, Rt Hon John SelwynMaxwell-Hyslop, Robin
Hamilton, Hon Archie (Epsom)Mayhew, Rt Hon Sir Patrick
Hamilton, Neil (Tatton)Mellor, David
Hampson, Dr KeithMeyer, Sir Anthony
Hanley, JeremyMills, Iain
Hannam, JohnMiscampbell, Norman
Hargreaves, A. (B'ham H'll Gr')Mitchell, Andrew (Gedling)
Hargreaves, Ken (Hyndburn)Mitchell, Sir David
Harris, DavidMoate, Roger
Hawkins, ChristopherMontgomery, Sir Fergus
Hayes, JerryMorris, M (N'hampton S)
Hayhoe, Rt Hon Sir BarneyMorrison, Sir Charles
Hayward, RobertMorrison, Rt Hon P (Chester)
Heddle, JohnMoss, Malcolm
Moynihan, Hon ColinTaylor, Teddy (S'end E)
Mudd, DavidThatcher, Rt Hon Margaret
Neale, GerrardThompson, D. (Calder Valley)
Nelson, AnthonyThompson, Patrick (Norwich N)
Neubert, MichaelThorne, Neil
Nicholls, PatrickThornton, Malcolm
Nicholson, David (Taunton)Thurnham, Peter
Nicholson, Emma (Devon West)Townend, John (Bridlington)
Onslow, Rt Hon CranleyTracey, Richard
Oppenheim, PhillipTredinnick, David
Page, RichardTrotter, Neville
Paice, JamesTwinn, Dr Ian
Parkinson, Rt Hon CecilVaughan, Sir Gerard
Patnick, IrvineViggers, Peter
Patten, John (Oxford W)Waddington, Rt Hon David
Pattie, Rt Hon Sir GeoffreyWakeham, Rt Hon John
Pawsey, JamesWaldegrave, Hon William
Peacock, Mrs ElizabethWaldenm, George
Porter, Barry (Wirral S)Walker, Bill (T'side North)
Porter, David (Waveney)Waller, Gary
Portillo, MichaelWalters, Sir Dennis
Powell, William (Corby)Ward, John
Price, Sir DavidWardle, Charles (Bexhill)
Raffan, KeithWarren, Kenneth
Redwood, JohnWatts, John
Renton, TimWells, Bowen
Rhodes James, RobertWheeler, John
Rifkind, Rt Hon MalcolmWhitney, Ray
Roberts, Wyn (Conwy)Widdecombe, Ann
Rowe, AndrewWiggin, Jerry
Sackville, Hon TomWilkinson, John
Sainsbury, Hon TimWinterton, Mrs Ann
Scott, NicholasWinterton, Nicholas
Shaw, Sir Giles (Pudsey)Wolfson, Mark
Shepherd, Colin (Hereford)Wood, Timothy
Sims, RogerWoodcock, Mike
Skeet, Sir TrevorYeo, Tim
Smith, Tim (Beaconsfield)Young, Sir George (Acton)
Spicer, Michael (S Worcs)Younger, Rt Hon George
Stevens, Lewis
Stewart, Allan (Eastwood)Tellers for the Noes:
Stradling Thomas, Sir JohnMr. Michael Fallon and
Summerson, HugoMr. David Heathcoat-Amory.
Taylor, John M (Solihull)

Question accordingly negatived.

Bill committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).

It being after Ten o'clock, MR. SPEAKER proceeded to put forthwith the Questions which he was directed by paragraph (1) of Standing Order No. 53 (Questions on voting of estimates &c.) to put at that hour.