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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 6:45 pm on 13th December 1988.

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

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.