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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 7:14 pm on 13th December 1988.

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

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—