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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 9:12 pm on 13th December 1988.

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Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change) 9:12 pm, 13th December 1988

It is good to follow such a stirring speech by my hon. Friend the Member for Ashfield (Mr. Haynes). His stirring contribution was short, but his contribution in Committee may be longer. It may be longer than the Secretary of State's contribution —but we shall have to wait and see.

First, I want to thank my hon. Friend the Member for Midlothian (Mr. Eadie) who, for 16 years, has given great service to the Labour party as my predecessor on the Front Bench energy team. With his customary elegance, he showed once again in his contribution yesterday his skill in highlighting the contradictions in Government policies. My hon. Friend said that the Government's blatant preference for the use of nuclear power cannot be argued on price. The Bill has certainly given up the ghost of arguing that. I, like him, resent the attempts to build up the case for nuclear power by attacking the coal industry—which he highlighted yesterday.

The real effect of the Bill will be felt in every shop, office, factory and home in Great Britain. That was pointed out by the right hon. Member for Selby (Mr. Alison) who is not in his place now—who said that the coal and electricity industries are inextricably linked. The issue is inseparable from the future of many industries such as the railways, power engineering and major industrial energy users such as the steel, glass and chemicals industries.

I have a briefing, which the Chemical Industries Association Ltd. sent to me. It comments on the effects of the Bill on the prices that those industries, as big consumers of energy in this country, will have to pay.

Under the heading "Prices and Price Control", the CIA explains that it does not accept the reasons given for increasing electricity prices by more than 8 per cent. this year, by a further 6 per cent. next April and possibly the same again in 1990. It goes on to say that it believes that any price control formula should take 1987 as its base year —excluding the privatisation sales booster increases that the Government imposed earlier this year.

The proposals have already affected electricity costs; there is no doubt about that. The price increases that the Government forced on the industry last April, together with next April's price hike amount to an increase of more than 15 per cent. Those added costs are all directly related to the substance of the Bill.

On 3 November 1987, the Secretary of State for Energy tried to dismiss the price increases by saying that they were to do with raising revenues in the industry. He said: In considering the targets for these years, the Government have had to take into account the fact that, although in the recent past the electricity supply industry has had surplus capacity, that position is now changing. On current forecasts, the Central Electricity Generating Board envisages that at least 13 GW of new capacity will be needed to meet demand by the end of the century."—[Official Report, 3 November 1987; Vol. 121, c. 801.] The Government moved into funding privatisation of the electricity supply industry in November 1987.

For many years the medium-term development plan that was used by the CEGB was the one thing that set prices for the electricity supply industry that took into account all the costs of new build, and so on. The report dealing with the period from 1986 to 1993 said: On the assumptions upon which these forecasts are based, retail tariff increases over the plan period will be below the rate of general inflation. I put it to the Secretary of State that that is certainly not what happened in April this year or what is planned for April next year.

Perhaps the Secretary of State can be forgiven. He has great difficulty in understanding the price implications. The House will recall that yesterday, when my hon. Friend the Member for Sedgefield (Mr. Blair) said that private sector electricity in comparable industrial countries was expensive, the Secretary of State said: Prices in Japan are almost twice ours, and prices in West Germany are about 50 per cent. higher."—[Official Report, 12 December 1988; Vol. 143, c. 689.] That shows what a muddle the Government are in. It is obvious to most informed commentators that under private ownership the price of electricity will rise, although we shall have to wait and see whether prices will be as high as in Germany and Japan.