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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 7:51 pm on 13th December 1988.

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Photo of Mr Tim Janman Mr Tim Janman , Thurrock 7:51 pm, 13th December 1988

I can see that the hon. Gentleman was born a long time before me.

It is worth examining the merits of nationalisation which the Opposition would put forward. There is the so-called merit that we all own the electricity industry because it is nationalised. What utter nonsense. If we asked the majority of people in this country whether they own electricity, they would look at us in blank amazement. The state owns it, and it is run by politicians and bureaucrats with their own interests at heart, not those of consumers. Citizens may not own the electricity industry, but we are all consumers, whether at home or because people work for companies which use electricity for industrial purposes. Because of the competition element in the legislation, the entire population, as consumers, will benefit from the downward price pressure that will be brought about in the medium and long term once denationalisation has taken place.

Another myth of nationalisation is that it leads to improved industrial relations. Between 1945 and 1987, 1·928 million man days were lost in the three nationalised industries—gas, electricity and water. That is hardly proof that nationalisation brings about a calmer atmosphere and fewer days lost through strikes. The devil of nationalisation has two heads, of course—that of the monopoly of capital which it brings about and that of the monopoly of labour with its power over consumers, the economy and the nation.

We are told that nationalisation is a guarantee of lower energy prices. Since 1963, there have been seven price increases in a given 12-month period of about double or more than double the inflation rate. The worst two examples occurred under Labour Administrations—in 1974, there was a one-off price increase of 33 per cent., against inflation of 17·9 per cent., and a year later, an increase of 47·1 per cent., against inflation of 24·6 per cent. I am not scoring points off the Opposition but wish to show that nationalisation is no guarantee of low prices. In 1963, under a Conservative Administration, when inflation was running at 1·6 per cent., the price of electricity increased by 8·7 per cent.—more than five times the inflation rate. The issue is not the political hue of the Government of the day but whether the consumer is best served by choice and competition or by a monopoly which the Opposition would wish to impose.

There are two coal-fired power stations in my constituency. Over the past few months, I have taken it upon myself to talk to management and officials of the Transport and General Workers Union. I assure my hon. Friend the Minister that the managements of those power stations are enthusiastic and optimistic about the future of the stations. I should, however, like him to respond to some of the worries that members of the TGWU have expressed to me. They would like information on the likely level of foreign investment in the electricity industry, post-denationalisation.

Given the changes that will occur in the industry, it would be useful to get a commitment that the changes will be handled sensitively. The TGWU officials in my constituency talk about the many existing industry traditions. That is a euphemism for too much demarcation and therefore too much overmanning. If the industry is to become more efficient, as it will after denationalisation, there may have to be some reductions in the work force. I do not, of course, know the circumstances of any one plant. Are there likely to be reductions? If so, I should like a commitment that it will be sensitively handled by generous voluntary redundancies.

Time is short and, because other colleagues wish to speak, I shall summarise my arguments. It is clear that the legislation will mean major changes in the electricity industry. It will mean a change in the way that investment decisions are made. Instead of being producer-led, they will be consumer-led. Investment will be led by the way in which the new distribution companies choose to buy their source of energy. The investment decisions of the new generating companies—there will definitely be more than two such companies—will be affected by market conditions and not by political priorities in Whitehall. There will be much more competition and consumer choice, which will lead to a downward pressure on prices. There will be a long-term future for the energy industry and, in particular the electricity industry. There will be increased flexibility for all concerned on the generating and the consumer sides, with the industry being accountable directly to the industrial consumer and to the domestic consumer via the 12 distribution companies.

This is an excellent Bill, which is long overdue. We should have introduced this measure in the 1950s. I am pleased to support it.