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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 4:28 pm on 13th December 1988.

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

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.