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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 7:26 pm on 13th December 1988.

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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.