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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 6:13 pm on 13th December 1988.

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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.