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Orders of the Day — Electricity Bill

Part of the debate – in the House of Commons at 9:36 pm on 13th December 1988.

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Photo of Michael Spicer Michael Spicer Parliamentary Under-Secretary (Department of Energy) 9:36 pm, 13th December 1988

Yes, of course it will. I am glad that the right hon. Gentleman reminded me about that specific question.

As I say, some hon. Members have argued that we are to regulate the industry too heavily and other hon. Members have argued just as vehemently that we have put the industry on too loose a rein. The House may therefore feel that we have got it about right. The principle that has guided us has been that those parts of the industry where it is most difficult to inject competition, for instance the grid company and the supply companies, should be the most rightly regulated. It is fairly natural for us to do that, but even here the role of regulation will be to bring as much competition into the industry as possible.

For instance, we expect that the Director General of Electricity Supply will particularly have in mind, in his approach for example to the grid company, the need to allow maximum access to new entrants commensurate with the well-being and safety of the system. On the other hand we think that there is little need for economic regulation at the generating end of the industry.

Contrary to what the Opposition have said, we think that we will achieve growing and genuine competition by splitting the CEGB into two companies, by allowing distribution companies up to a maximum of 15 per cent. own generation and by encouraging new companies to come in.

I now turn to the word that the Opposition dare not speak—renationalisation. In answer to questions yesterday from my hon. Friends the Members for Lewisham, West (Mr. Maples) and for Rochford, the hon. Member for Sedgefield (Mr. Blair) said of the electricity industry: When we come to power it will be reinstated as a public service for the people of this country, and will not be run for private profit. Later, when pressed by my hon. Friend the Member for Rochford, he said: We will reinstate it as a proper public service under public control."—[Official Report, 12 December 1988; Vol. 143, c. 689-696.]

I must ask him what that means. If it is Socialist yuppy-speak for renationalisation, then one day I suspect that he will be bound to have to tell the electorate the terms on which he will buy out the shareholders, particularly those shareholders who are also employees of the industry. If he does not mean renationalisation and is just putting up token opposition, I must tell him that we understand—it is what he is there to do—but I fear that it will not exactly improve his credibility.

I refer next to what has perhaps been the essential thrust of the Opposition's Front Bench attack on the Bill in the past few days. Opposition Members have argued that, under the terms of the Bill, there will be insufficient competition. At least, that is what I understood the hon. Member for Sedgefield to imply. In bringing competition into the forefront of the debate, Opposition Members have taken the debate on to our territory, and for that we must be grateful.

I am not sure what the Labour party knows about competition. Yesterday, the hon. Member for Sedgefield said: The truth is that there is no competitive pressure in this structure at the point of consumption, which is the only competitive pressure that matters."—[Official Report, 12 December 1988; Vol. 143, c. 692.] When, as in the case of electricity, three quarters of costs are at the point of production, that is manifest nonsense, and the hon. Gentleman knows it. He does not believe it himself—he is grinning. Of course he cannot believe that competition in three quarters of the industry has no effect on the consumer—[Interruption.]

The hon. Member for Sedgefield says that the consumer does not pay. The consumer ultimately pays the costs. He is saying that, because we cannot have 100 per cent. perfect competition, we should have no competition. That is precisely what he and other Opposition Members have said throughout the debate. The hon. Member for Rother Valley is nodding his head.