Electricity Supply

Oral Answers to Questions — Energy – in the House of Commons at 12:00 am on 15th July 1991.

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Photo of Paul Flynn Paul Flynn , Newport West 12:00 am, 15th July 1991

To ask the Secretary of State for Energy what plans he has to meet the chairs of the statutory electricity consumer committees to discuss the regulation of the electricity supply industry.

Photo of Mr John Wakeham Mr John Wakeham , Colchester South and Maldon

This matter falls within the responsibility of the Director General of Electricity Supply, who meets the chairmen of the consumers' committees on a regular basis.

Photo of Paul Flynn Paul Flynn , Newport West

When the meeting with the chairs of the Merseyside and North-Western and the South-Western electricity boards takes place, will they be reminded that the Government knew in advance that the directors' salaries would be doubled and trebled and that the Government deliberately gagged the companies and forbade them to reveal that fact last autumn? Will the Secretary of State take advantage of the fact that today is a day of national penitence to confess the Government's and the Prime Minister's shameful complicity in this orgy of greed which scandalised the whole nation?

Photo of Mr John Wakeham Mr John Wakeham , Colchester South and Maldon

If any penitence is required it is from the hon. Gentleman, who has just made a statement which he knows to be untrue. The statement in the prospectus was the position and that position was set out. What was said at a meeting was subsequently withdrawn by those concerned. The hon. Gentleman should be ashamed of himself.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Will my right hon. Friend confirm that the privatised industries have had much more effective control of their prices than was ever the case when they were in the public sector? Does he agree that privatisation has led to much higher investment, productivity and revenue to the tax authorities than ever occurred when the industry was in the public sector?

Photo of Mr John Wakeham Mr John Wakeham , Colchester South and Maldon

My hon. Friend makes his point well. He is correct.

Photo of Frank Dobson Frank Dobson Shadow Secretary of State for Energy and Climate Change

Will the Secretary of State end this pretence that he and the rest of the Government were not involved in the massive pay increases for electricity bosses? In particular, will he confirm that the Government paid City advisers Coopers and Lybrand no less than £360,000 for advice on the pay and perks of electricity bosses? That sum is so large that it would almost pay for one of the chairmen. As the taxpayers paid for the advice that the Secretary of State received, will he now publish it so that they can see whether they got value for money?

Photo of Mr John Wakeham Mr John Wakeham , Colchester South and Maldon

In recent times we have had a number of exchanges and a debate on these matters and there is not much more that I want to say. I will just add this: Coopers and Lybrand produced one of several reports on executive pay. Naturally, the companies pressed for increases. The Government decided that salaries should be restrained while the companies were in the public sector. Thereafter it was a matter for the companies.

Photo of Simon Hughes Simon Hughes Opposition Deputy Chief Whip (Commons), Shadow Spokesperson (Education)

Will the Secretary of State look again at the regulation of privatised industries, such as the electricity industry? Does he recognise that it is unacceptable for the industries to be able to offer their chairmen and other executives such enormous pay increases when that goes contrary to Government policy? Does he accept that the House of Lords Select Committee, which is about to report, makes it clear that the new structure of the industry adds to the possibility of generation and supply, but goes against energy efficiency? The regulative powers of the new industry are not effective. What will he do about it?

Photo of Mr John Wakeham Mr John Wakeham , Colchester South and Maldon

First, I will not add anything to what I said about directors' pay. I have already expressed my view, as has my right hon. Friend the Prime Minister. I merely add that salary increases do not affect the price to the consumer, because of the regulation. That is important. I disagree with the hon. Gentleman about energy efficiency in the privatised system. Competition in generation is one of the single most important steps that we have taken to improve energy efficiency. The generators now have a direct financial incentive to reduce the costs of producing electricity. As their principal cost is the fuel that they use, they have a powerful reason for wanting to improve efficiency.