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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 8:37 pm on 13th December 1988.

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Photo of Mr George Buckley Mr George Buckley , Hemsworth 8:37 pm, 13th December 1988

I am grateful for this opportunity to contribute to this debate.

We have had two days' debate on the problems contained in the Bill. It appears that Conservative Members talk about everything but the electricity industry and the consequences for the economy. I have listened intently to find out what is behind the privatisation proposals. The hon. Member for Fylde (Mr. Jack) spoke of the environmental consequences of using nuclear power, and that is the only point the Prime Minister has made about privatising electricity. She has said that it will provide environmental benefits for the world. No mention has been made of the economic benefits to the nation of privatising the generating boards.

The Secretary of State has stated four principles to support the Bill. He says that the supply of electricity should be driven by the needs of the customer. That implies that the customer would have a direct input on the supply of electricity. There is no suggestion in the Bill, however, that the customer would have any such influence. Therefore, that reason does not represent a major pillar of principle to justify the privatisation.

The Secretary of State has also said that competition is the best guarantee of customers' interest. Once again, the Government seem to take the view that anything publicly owned is more efficient and better able to meet the best interests of the customer if it is privatised. Nothing in the Bill says that that will be so. I suspect that the Minister had a great deal of difficulty grappling with the complexity of the national grid. His best effort was to come forward with two generating companies, one to generate 30 per cent. and the other 70 per cent.

Such percentages have been proposed more to deal with the nuclear side of generation than for anything else. If the percentages were more equally divided between the two companies, the problems of dealing with the liabilities of the nuclear industry that are beginning to develop would face the companies. National Power has been made as big as it is—70 per cent.—as an inducement to people in the private sector to take on the difficult generating capacity of the nuclear industry.

The Bill outlines a regulatory framework to promote competition, oversee prices and protect customers under the national monopolies that remain. The Government, who are exponents of the theory of the private market, accept in the legislation that it will create monopolies. So regulations will be imposed to protect customers from those monopolies. One of the main points made by Conservative Members is that the public monopoly of the CEGB does not serve the nation efficiently. The Bill provides for monopolies of supply companies in the geographical areas for which they are responsible. There will be no competition in those areas, and no option for customers to choose between different sources of supply. That is a complete contradiction of the Government's philosophy, which is to break up the monopoly of the CEGB.

Another technical dilemma that the Minister must have faced when considering this legislation was that of how to deal with the national grid, a unique technical apparatus that could not be broken down into smaller companies. So the Minister has come up with a mechanism of two, rather than several, companies.

One of the most appalling aspects of the legislation is the demanding commitment that 20 per cent. of the electricity supply be drawn from nuclear power. That is almost to impose on the privatised supply industry a commitment to take 20 per cent. of its power generation from nuclear energy, even though it is now proving to be one of the most expensive sources of energy produced by the CEGB. The signs are that the private monopolies—that is what they will be—will be only too pleased to invest in nuclear energy; but the experience of development of nuclear energy leaves much to be desired. The Magnox stations, the first nuclear power stations, were built with an overrun of two and a half years. The AGR at Dungeness B had an overrun of 10 years. Private industry would be reluctant to invest capital in nuclear projects with such large overruns.

The Government's position accords more with their philosophy of privatisation than with improving the nation's electricity supply. The Government's fourth principle is that security of supply must be maintained, but such security depends more on diversity of supply—by coal, oil, gas and nuclear power—than on the privatisation of the CEGB. The Bill owes more to dogma than to any desire to improve the efficiency of the supply system, and I feel sure that the Committee will amend many of the proposals in the Bill to make it comply with the industry's needs. Some of its clauses are ill thought out.

Another thing that disturbs me about the legislation is that the privatised supply industry will not be committed to complying with the EEC regulations on environmental standards. Numerous hon. Members have expressed their concern about the environmental effects of coal and oil —the problems of acid rain, and so on. The regulations on refurbishing and replacing existing plant require no investment in ensuring that that is done in accordance with EEC standards. So, while the nation—and even Conservative Members—express concern about the consequences of coal burning for the environment, the legislation does not commit the private companies to doing anything about them.

The CEGB has been a major innovator and has conducted much research into the development of electricity. Its technology has been at the forefront of power generation. The suggested private companies that will take over from the CEGB will be more reluctant to invest in research and development for the nation's future generating capacity.

The new private monopolies will be more likely to make domestic consumers pay high prices than to make major industrial consumers do so. I can foresee pressure being applied by the larger consumers to privately owned monopolies to reduce the costs to British industry.

The burden imposed by the Government with this Bill may be mainly offset by the importation of so-called cheap coal, which will put our indigenous mining industry in jeopardy. Any private enterprise worth its name is more concerned about its investors than its customers. It is a myth put about by Tory Members that the legislation is mainly designed for the consumer, who will have no influence on the privatised industry, and who will be given no safeguards in the legislation.

The major regulatory factor imposed by the Government was enacted recently by the Minister of State, who imposed 9 per cent. and 6 per cent. increases on CEGB supplies. That regulatory factor will be used by the Government under the Bill to impose higher prices on the industry.