Electricity Supply

– in the House of Commons at 12:30 pm on 16th September 2003.

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Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry) 12:38 pm, 16th September 2003

I beg to move,

That this House
is greatly concerned about the security of the electricity supply;
recognises the crucial importance of reliable supplies to every aspect of domestic and business life, including transport;
believes that the Government is neglecting the risk of power cuts this winter and in the longer term;
condemns the Government's Energy White Paper for planning to make Britain dependent on gas imports from unreliable sources and for not balancing the need for secure supplies with environmental responsibilities;
notes that the consequences of the recent power cut on the London Underground may have been worsened by the inadequacies of the Public Private Partnership negotiated and imposed by the Government;
and calls for urgent action to ensure no repetition of the alarming experiences endured by hundreds of thousands of people in London and the South East.

Nineteen days ago, the first that I knew of the chaos that was about to strike London was when the lights flickered in my office here in Westminster—in the middle of the recess, I should add. Over the next hour or so, hundreds of thousands of Londoners and their neighbours in Kent received an unpleasant reminder that the electricity supply, which we have come to regard in the past 20 years as extremely reliable, is prone to failure. Just eight days later, hundreds of thousands of people in the midlands were similarly warned of the fallibility of the system. Last month, New York and much of north-east America were plunged into total chaos as power failed across a wide area. Last autumn, my constituency and other parts of East Anglia suffered power cuts following storms that brought down power lines and left some homes without electricity for over a week. Disgracefully, on that occasion, the then Minister for Energy and Construction refused to act to help many of the victims of that crisis, leaving them without compensation.

Only in the past month has the company concerned—EDF—made a belated gesture in the form of payments to the customers that it let down so badly.

Even though the causes of each failure appear to have been different, this pattern of events is very disturbing, because a continuous, reliable and uninterrupted supply of electricity is essential for domestic and business life. Ensuring that the lights stay on and that power is available to every home and every business is an important duty of Government, alongside defending the borders, policing the streets and ensuring that health care and education are available to all. It is a duty that the Government show every sign of shirking, as Ministers bury their heads firmly in the sand, determined to ignore the problems that loom this winter and beyond, hoping against hope that no major crisis will occur before the next election or, in the case of the Secretary of State, before her free transfer from the Department of Trade and Industry to the Ministry of Defence.

Even more irresponsible than the Government's attitude to these immediate risks is their approach to Britain's long-term energy needs. No wonder they have been so reluctant to debate the vacuous White Paper. Seldom has a document that was so eagerly anticipated delivered so little and disappeared so quickly—a document notable for its wishful thinking on renewable energy and for its utter disregard of the national interest, as Ministers prepare to make Britain dependent on gas imported from Russia, Algeria and Iran—

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

Indeed.

Let us consider the short-term problem first. There are growing concerns about the risk of power cuts in the next year or two. Professor Ian Fells of the New and Renewable Energy Centre at Newcastle university said:

"A black-out could happen here . . . I have come to the conclusion that there is a 20 per cent. chance of power cuts this winter . . . In January and February, there are vulnerable weeks when they"— the National Grid—

"might not be able to meet their obligations . . . The amount of spare capacity has been cut back dangerously."

Generating capacity, according to figures from the House of Commons Library, is almost 15 per cent. less than it was two years ago. The Ofgem fact sheet 31 published last week confirms that the margin of spare capacity is now only 16 per cent., though that will rise to 18 per cent. when the Isle of Grain comes back on stream. Ofgem itself admits that this margin is lower than it has been in the past and a margin of 20 per cent. has previously been considered the minimum acceptable. No wonder the well-respected Dieter Helm, director of Oxford Economic Research Associates and an adviser to the DTI, earlier this month commented:

"I have always been much more concerned about the conventional bad scenario—when there is a cold spell in winter, and there is a failure at a nuclear power station. Suddenly, there is a shortage and you're getting within capacity boundaries you shouldn't get inside. The risk of an outage is very great indeed."

David Porter, chief executive of the Association of Electricity Producers, warned just after the London power failure what might happen if there was a cold snap and a couple of power stations broke down. He stated:

"If something like that happened this winter, the prospects would look considerably blacker . . . I don't think you'll find many people in the industry who will tell you now—at the end of August—that they can guarantee there won't be blackouts this winter."

Jonathan Stern, director at the Oxford Institute for Energy Studies, points out:

"Equipment is just getting old and is getting less reliable."

Despite all these warnings from a variety of authoritative sources, the Government's attitude continues to veer between complacency and carelessness. In the section of the DTI departmental report for 2003 entitled, encouragingly, "Security of Supply", we read:

"Emergency arrangements for the energy sector continue to be reviewed and updated in the light of lessons learnt from the fuel crisis of 2000 and the events of 11 September 2001."

Those lessons are being learned somewhat slowly, as the document was published in May 2003. It adds that:

"the Joint DTI and Ofgem Energy Security of Supply Working Group . . . was established to assess risks to Britain's future gas and electricity supplies: specifically developing indicators for energy security to make information more widely available."

I am not sure how comforting it is to all the customers who may be horrendously inconvenienced to know that the Government are developing indicators to make information more available. For this Government, indicators seem even lower down the pecking order than the targets to which many Ministers are addicted.

The report goes on to state that, after the October 2002 storms, the DTI "launched an investigation"—

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

My hon. Friend will like this one. The investigation

"confirmed that companies which had carried out effective network maintenance and had anticipated the storms well suffered fewer incidents and got customers back on supply more quickly."

Well, there is a bit of rocket science. The Minister might want to step ahead of his civil servants in taking credit for that. The report goes on to assure us that Ministers are not considering undertaking any activity, but

"considering along with Ofgem and the industry the best means of ensuring that the resultant recommendations are implemented."

We do not quite know what those recommendations are.

Of course, the report was published when Britain still had a full-time Energy Minister. Now, the Minister of State, whom I welcome to his place, has to double up as the Minister for Energy, E-Commerce and Postal Services. The latter is another area that may be claiming some of his attention right now.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

Exactly.

As the Minister has so many duties to perform, perhaps it is not so surprising that the written statement about London power cuts that he gave to the House last Monday was pretty thin gruel. However, he said that he was

"determined to ensure that the necessary lessons are learned."—[Hansard, 8 September 2003; Vol. 410, c. 10WS.]

As an action plan for one of the world's greatest capital cities, more than half of whose underground network had to be closed down and where 410,000 electricity customers suffered a power cut, his response fell some way short of what the situation demands. Anxious consumers, and especially those with elderly or disabled people in their families, wonder how they would survive as some of my constituents had to survive last year in coping for eight days without electricity. Single parents out at work wonder what will happen if their children are sent home from schools that are forced to close because of power cuts. No doubt, the Minister's office at the DTI has an emergency generator. Even if it does not, he can always rely on the plentiful supply of hot air from the energy White Paper.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

Is not my hon. Friend being a little too harsh on the Government? Is he aware that I received from the Minister and the Under-Secretary of State for Trade and Industry, Nigel Griffiths, an unusual letter informing me that an energy Bill would be introduced next year and that they were in consultation with the Chief Whip as to whether it would be introduced in January? I thought that that was unusual, as I did not realise that junior Ministers were supposed to tell us what the Queen's Speech would contain. However, we have been told by those Ministers that there will be an energy Bill. The Government are obviously waiting until January as that is when they expect problems to arise. Presumably, that Bill will address all the problems that we are facing.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

The House and the nation have cause to be grateful to my hon. Friend for revealing that information, of which I was aware. I dare say that the Minister will rely heavily on the forthcoming Bill, just as Ministers relied heavily last winter on the forthcoming energy White Paper as the fount of all future wisdom. No doubt, the Bill will contain the solution to all the problems that I have mentioned.

I think that we should draw some reassurance from the fact that the Minister, with his triple responsibilities, is sufficiently on the case to make such an announcement. Those of us who can recall the battles for parliamentary time that occur inside government may also wonder whether he is trying to pre-empt some disagreement in the Cabinet about which Bills are included in the Queen's Speech. Perhaps the Minister will enlighten us later.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

I am glad that my hon. Friend has broadened the subject of security of supply to cover the regular shortages of power that rural parts of the country, including my constituency, suffer. Will he take the opportunity to remind the Government that the problem must be better controlled, and that that applies not only to the impact on residential customers that he has already rightly highlighted but to the serious impact on the rural economy? Significant firms are often located in remote rural locations and they must have security of supply.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

My hon. Friend is right. The issue is extremely serious, especially for smaller businesses, which will not normally have the opportunity to invest in back-up generating capacity. Businesses can suffer not only great inconvenience but harm and severe financial loss when power is cut off. The experience in East Anglia last year was devastating, and my hon. Friend's constituency obviously suffered a similar experience.

Photo of Andrew Robathan Andrew Robathan Shadow Minister (International Development)

The problem does not apply only to rural areas. In Narborough on the edge of Leicester in my constituency, there is a marked deterioration in service. I received a letter last week that complained about the number of power cuts and pointed out that Britain was not Iraq. What responsibilities do the Government have for the deterioration of service and the failure of power supply?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

My hon. Friend makes a powerful point, to which I hope that the Minister will respond. Perhaps it would not be out of order if I referred to my hon. Friend's close interest in the energy industry. When I visited his constituency earlier this year, I had the opportunity of inspecting a possible site for a wind farm, to which, I believe, my hon. Friend is sympathetic.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

Will the hon. Gentleman answer a question about privatisation? He is right that our generation capacity is becoming aged, but it is not surprising that private companies are unwilling to invest heavily in replacing it. Did the Conservative party consider that when it privatised the generating industry? It is an important point.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I thought that it would not be long before the hoary old chestnut of privatisation was mentioned. It would have happened previously had not the Labour Benches been so thinly populated for a debate on an extremely important subject. The disregard of London Labour Members for the devastating effects of last month's power cuts is clearly reflected in the absence of the majority of them. [Hon. Members: "Harry's here."] Of course, there are honourable exceptions. Harry Cohen is in his place, as he is frequently. However, other London Labour Members are absent and the only explanation I can devise is that the Labour party is in a panic about the Brent, East by-election and that Members have been drafted there.

Let me deal with the point about privatisation. For almost all industries, privatisation gave us the opportunity to set in law requirements for higher environmental and safety standards than those that existed when they were in public ownership. All the privatised industries yield example after example of higher standards as a direct result of the transfer of enterprises from public to private ownership. Of course, the issues to which Mr. Hughes referred were considered when the electricity industry was privatised. Evidence clearly shows that, for example, investment in the national grid has increased substantially following privatisation. In the past, successive Chancellors of the Exchequer were keen to find public expenditure savings. The easy way to do that was through axing the capital programmes for public sector industries. That happily no longer happens. However, the Government's ambivalence about specific energy decisions is having an effect in deterring investment.

When the Minister replies, he will doubtless point out that a contraction in generating capacity has occurred through the operation of the market in the form of the new electricity trading arrangements. Of course, NETA has achieved a reduction in the prices that are paid to generators. However, it is worth pointing out that consumers have not enjoyed such a big cut in the prices that they pay. Nevertheless, as NETA metamorphoses next year into something that we may call "better" rather than "BETA", that will provide us with an opportunity to examine Ofgem's remit. In the light of the concerns about security of supply that are now more widely expressed than ever, it is not clear that the current remit gives a sufficiently strong market signal to ensure that long-term investment in, for example, gas storage capacity, will happen.

The Government's inaction in the face of short-term risks is matched by their refusal to rise to the medium and longer-term challenge. We have reached an historic moment in energy policy. For the first time in a generation, Britain faces the prospect of becoming a net importer of gas. In less than a decade, our ability to generate enough electricity to meet the nation's needs will depend on imports. The change is occurring at the very moment when international environmental commitments start to bite more sharply. Given the accumulating evidence of climate change, we should set an example by honouring those commitments. In seven years, half our gas may be imported. By 2020, 90 per cent. is likely to come from abroad, as North sea reserves dwindle.

Increasing amounts of gas will come from Russia, which has an even bigger customer on its doorstep: Germany. The gas that Russia sends to Britain may travel through a pipeline that runs across Germany. There are no prizes for guessing the country that will have priority if there are problems with supply. The Minister will say, "Never mind. There are other countries that can meet any shortfall." Indeed, there are: pillars of political stability such as Algeria and Iran. I suppose that Ministers have cynically calculated that they will have long left office and that the risks that they run with the security of the British economy and the safety and convenience of the British people do not matter a damn because they will not be around to be held accountable.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The hon. Gentleman overlooks the fact that Norway will supply gas to the United Kingdom. I hope that he will not describe Norway as an unstable source. However, the wording of the motion and his point suggest that he believes that there are other sources that we do not propose to access. What are they?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I shall deal with the solutions shortly. The arrangements that could make it possible for us to import more gas from Norway are not fully in place, although I hope that they will be. Even when they are, the need to import substantial amounts of gas from other countries will remain.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

I accept the hon. Gentleman's comments about our future gas supply, but does he agree that it is time to stop wasting natural gas through using it to generate electricity? We do not need to do that and we should deploy it for domestic use.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I am not sure whether the hon. Gentleman's view reflects the Minister's, but I perceive that the point is probably about coal. The dash for gas was driven significantly by environmental considerations. Britain has important commitments, which it needs to honour.

The irresponsibility of the current generation of Ministers may be cursed by the next generation of citizens. As the Institution of Civil Engineers, in its recent, rather damning report, pointed out:

"If future gas supplies were interrupted, this country would have major difficulty in keeping the lights on."

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

Does my hon. Friend agree that there is also a political risk? He drew attention to the fact that we would depend on gas that originated from Russia. As he knows, Russia is a member of the United Nations Security Council and was deeply opposed to the war in Iraq. It would be conceivable for Russia to say that if we went ahead with an invasion, it would cut off our gas supply. Does he therefore acknowledge the political as well as the practical risk of interruption of supply?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I absolutely acknowledge that. My hon. Friend is quite right to point out that exposing Britain's future energy capability to the whim of Governments in countries such as Russia, with whom we might have profound disagreements about foreign policy in relation to different parts of the world, is a reckless policy that only a grossly irresponsible Government would even contemplate.

The environmental picture is also worrying. Britain is already in danger of missing the target of cutting carbon dioxide emissions to 1990 levels by 2010. Under Labour, carbon dioxide emissions are now actually increasing. The energy industry is central to our progress in honouring this important commitment, but the nuclear power stations—the biggest source of non-carbon-dioxide-emitting electricity generation—are due to be phased out over the next few years. Most will have been decommissioned within a decade, and the Government do not have a clue what to do about this. Their White Paper completely ducked the question of whether the nuclear energy industry should have a future. This indecision means that Britain is likely to lose much of its nuclear expertise quite soon. It also means that meeting our Kyoto targets will become very hard indeed.

Instead, the Government plan a massive expansion of the electricity to be generated from renewable sources. I must stress that I wholly share the view that every possible effort should be made to promote greater use of renewable energy. At a time when the need for sustainability is widely recognised, the importance of exercising great care over how the world consumes finite resources, including fossil fuels, is obvious. But that need should not involve the unquestioning assumption that renewable energy is always and automatically environmentally superior.

Wind power is a technology particularly favoured by the Government and, in theory, by the Liberal Democrats. I say "in theory" because, in spite of their slavish endorsement of more wind farms in general, it is almost impossible to find a specific proposal for an onshore wind farm that the Liberal Democrats locally are prepared to support. Furthermore, wind power's lack of reliability means that it will usually require back-up generating capacity, and the remoteness of many offshore wind farms from where the electricity is to be consumed will involve very high transmission costs. The case for renewables must therefore be backed by an honest, hard-headed appraisal of their merits and a careful analysis of their total environmental impact, as well as their effect on electricity prices.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

A large wind farm is about to be sited just offshore near my constituency, and the only people who have opposed that development are the Conservatives. Access to the grid will be approximately half a mile from it. I cannot imagine a more effective use of renewable energy, and I am delighted that the Government have announced an extension of the scheme right along the north-west coast.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

Our position on renewables is exactly as I have stated. We would like to see greater use of renewables, but we do not approach this in some kind of dreamy fashion, imagining that they will always deliver environmental benefits. In some cases, they will not do so. I am not familiar with the proposal that the hon. Lady mentioned, but I have no doubt that the Conservatives who opposed it locally did so for very good reasons, and could not be accused of hypocrisy in the way that Liberals who oppose wind farms locally can, because their whole energy policy is based on a massive and unquestioned expansion of wind power.

We have called this debate for two reasons. The first is to highlight the need for action now, to reduce the risk of repeated power failures in the coming winters. The second is to expose the risks that Ministers are running with Britain's longer-term energy policy. We want to find out what the Minister intends to do about these issues.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

Did I understand the hon. Gentleman to be giving an undertaking that local Conservatives will not oppose nuclear power generators when they are proposed in their areas? That seemed to be the logic behind the point that he was making.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

I am grateful to be given the opportunity to repeat for the third time our position on these issues. It obviously requires quite a lot of repetition for the Liberal Democrats to understand it. When a party says that the energy problems of Britain can be solved only by a massive expansion of wind power, but opposes every single measure designed to achieve that national objective, that party is not fit to be considered seriously as a political organisation. That is the position of the Liberal Democrats on energy.

The Conservatives believe in diverse sources of energy supply. We believe that there is a role for renewables, but that it needs to be justified on environmental and economic grounds. We also believe that there is a role for gas, and that it will involve some imports. There is a role for coal, and, in my view, almost certainly a role for nuclear power. We are not slavishly saying that all energy has to be generated from a single source. Because of that, there will be some areas in which it is suitable to invest in new power stations—of whatever sort—and some in which it is not. I am confident that the attitude of Conservatives in those areas, whether they are for or against the proposals, will be honest, will respect local concerns and will be entirely consistent—unlike that of the Liberal Democrats—with the position that their party takes from the Front Bench in the House.

Photo of Andrew Robathan Andrew Robathan Shadow Minister (International Development)

My hon. Friend has already referred to my enthusiasm for renewable energy. Does he agree that the Government's target of 10 per cent. of electricity generation from renewable sources by 2010, as stated in their manifesto in 2001, is almost impossible to meet?

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

That is certainly my view, and the view of almost any objective analyst with a serious record of studying the industry. The Government go further than that target, however. They also want 20 per cent. of electricity generation to come from renewable sources by 2020. In case the Minister does not wish to refer to this later, I should like to point out that he recently said of the 20 per cent. figure that it was not some pie-in-the-sky figure, but a realistic expectation.

Photo of Tim Yeo Tim Yeo Shadow Secretary of State (Trade and Industry)

Indeed.

I hope that the Minister will now explain to the House what practical steps the Government are proposing to address the risk of repeated power failures. Will he increase the mandatory compensation payable by the industry to the victims of power cuts? Will he tighten up the conditions under which such compensation becomes payable? Does he agree that energy efficiency could still make a much bigger contribution to alleviating the security problems that we have been debating? Will he review the remit of Ofgem to see whether changes are needed to give greater emphasis to ensuring security of supply? Does he recognise that there are serious flaws in the Government's White Paper? Will he remedy them by publishing as soon as possible—ahead of the Bill that we have been promised in the next parliamentary Session—a revised version of that White Paper that addresses the issues of excessive dependence on gas imports, unrealistic expectations for renewables and the damaging indecision over the future of nuclear power?

By their nature, decisions about electricity generation are very long term. Enormous lead times are involved in planning, building and bringing on stream new capacity of any kind. It is not good enough to say that these decisions can be put off until the next Parliament. Dither and delay put British consumers at risk, harm the environment and increase the cost of the measures that will eventually have to be taken. That is a particular anxiety in the light of reports this week that more and more consumers are having trouble paying their bills.

The Minister must know that the figures are not going to change. The Secretary of State for Trade and Industry is not going to return from her fruitless sojourn in the sun like a fairy godmother with a magic wand. The Minister should face up to his responsibilities even if his colleagues are unable to do so. Families, businesses and commuters are all looking to him for answers. Every man, woman and child is a consumer of electricity every day of their lives. What the Minister tells the House today, and what he decides to do or not to do tomorrow, will affect the comfort and safety of every citizen. I commend this motion to the House.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 1:09 pm, 16th September 2003

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"regrets the problems that have recently occurred on the National Grid and the disruption that was caused particularly to transport services;
further notes that the report published by the National Grid last Wednesday shows that the problem was not caused by under-investment on the network, shortage of capacity or its contractual relationship with any of its customers but rather by a local transmission failure;
notes that security of supply is one of the key responsibilities of the regulator, that Ofgem is considering the incident in the light of the National Grid's licence obligations and will be reporting at the end of September;
and further notes that the Government's engineering inspectorate will also be conducting its own investigation."

I welcome the opportunity that this debate gives us. As the House will know, on 14 August a large area of eastern Canada and the north-east United States, including New York, was hit by cascading power cuts. Sixty million people were affected, trains and subways in New York ground to a halt, thousands were left stranded, and some people slept in the streets. No one expected that to happen here, but in the early evening on 28 August electricity supply was lost to parts of south-east London and Kent. What followed was not comparable with the failures in the United States. Here, power was restored everywhere within 41 minutes, but there were serious consequences: disruption to overground and underground rail in particular, but other disruption as well. I agree that it was a powerful reminder of how dependent we all are on electricity. That is why we placed maintaining the reliability of energy supplies at the heart of the energy White Paper in February. Mr. Yeo made some disparaging comments about the White Paper, but people in the energy industry to whom I have spoken have warmly welcomed it, not least for the coherence of its analysis and the fact that it has provided us with a coherent energy policy, which the party that he represented in government never did.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

I am disturbed by the Minister's comment that there was no comparison with what happened in the United States. He went on to say that power was restored within 41 minutes. Does he accept that 41 minutes was a long time for people who were travelling on the underground? The power was not returned to the underground within 41 minutes, because the emergency procedures had to be carried out. The Minister's complacent attitude is not acceptable.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

There will be no complacency in what I have to say to the House. Like the Minister of State, Department for Transport, I shall deal in particular with what happened to the underground. However, to begin with it is important that we focus on the energy issues—specifically electricity.

Supplies were restored within 41 minutes. Nevertheless, it is essential that maintaining the reliability of energy supplies be at the heart of our energy policy. It was one of the four key goals at the heart of the White Paper published in February. The other goals were: promoting competitive markets; ensuring that every home is adequately and affordably heated; and putting the United Kingdom on a path towards a reduction in CO2 emissions of 60 per cent. below current levels by 2050.

Since the publication of the White Paper, much attention has understandably been placed on the fourth of those goals. However, all four of them need to be achieved in order to deliver our aims. I welcome the opportunity that this debate gives us to focus specifically on electricity reliability and supply security.

Competitive and transparent markets are best for maintaining security. We need diversity across the energy supply chain, a mix of fuel types at the generation end of the chain, and diversity in terms of where fuels come from and how they are transported. We need a robust infrastructure. One of the few points that the hon. Member for South Suffolk made with which I agreed was about the need to reduce overall demand for energy through increased energy efficiency, which is another important part of the strategy. We need short-term contingency plans to protect against unforeseen events, and long-term plans to cope with the challenges presented by the change in our fuel mix in the years ahead and to meet our environmental objectives.

Our role is to establish a competitive marketplace, including through good international relations within which liberalised markets will deliver energy reliability. When short-term problems arise, we will, with the Office of Gas and Electricity Markets where appropriate, evaluate what has happened and take action accordingly. At the moment, about 38 per cent. of our electricity is produced from gas. We need flexibility in the gas system to cope with shocks. That is true today while we produce more gas than we consume, and it will be true in the future as we import gas.

Gas storage can help, and so will importing and storing liquefied natural gas and increasing our connections with north-west Europe, where there are large gas storage facilities. There is an encouraging list of major infrastructure projects being implemented by the industry. Growing interdependence means that reliable energy supplies will become an important part of our foreign policy. We need to have diverse sources of supply and a diversity of fuels.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

I agree and accept what the Minister says about diversity of supply, because it is good sense. This island is built on coal and surrounded by natural gas and oil, so why does the White Paper take us towards being a net importer of energy? That bit of the White Paper puzzled me and makes no sense to me at all.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

Gas and oil production from the North sea is reaching a plateau, and it will not grow in the future at the rate at which demand will grow, so we will need to import those fuels. I can see where my hon. Friend's argument is going. I think there is a role for coal in the future, and I shall refer to some of the issues that we need to address to ensure that coal can play its role. As he well knows, there are some big, technological challenges ahead. For the medium term at least, gas will be dominant in electricity generation.

The White Paper set out a vision of a future in which renewables will contribute 20 per cent. to our energy mix by 2020. That is our aim, and the hon. Member for South Suffolk referred to that. Some renewables, such as wind power, will be intermittent, but not all of them. Diversity in renewable fuel sources, such as in the location of wind farms, will allow us to manage the risk of intermittency—for example, when the wind does not blow. Technological developments make it likely that the costs of managing that intermittency will fall substantially by 2020. There needs to be a major programme between now and then to achieve the aspiration that we have set.

The hon. Member for South Suffolk referred to the decline of nuclear power. His argument was that if we really want low carbon emissions and security of supply, new nuclear capacity is the only solution. I am not sure that that is the official policy of his party, but I think that it was at least his own position. The truth is that at the moment new nuclear build is uneconomic, and the vital issue of nuclear waste still needs to be resolved. As we set out in the White Paper, it is right to concentrate our efforts on energy efficiency and renewables for the next few years while ensuring—as we are doing—that we keep the nuclear option open for the period beyond that.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

The Minister made the sweeping statement that new investment in nuclear energy is uneconomic. How can anyone proposing to make that investment possibly know what the cost will be when the Government have not even begun to put a price on the pollution that comes from nuclear-generated electricity set alongside the benefits that should come from electricity that is carbon- free? Until the Government establish that framework, his remark is not testable, and he could not expect anyone to invest in the industry.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The hon. Gentleman has helpfully set out the difficulties and uncertainties, not about Government policy but about the issues around nuclear waste that still have to be resolved. For that reason and others, this is not a good climate for people proposing to invest in nuclear energy. Our view is that we need to keep that option open for the longer term, because at some stage it may become clear that we need new nuclear capacity, but that is not the position at the moment.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

The Minister referred to the uneconomic nature of the nuclear industry. How does he know whether it is economic or uneconomic? In 10, 15 or 20 years, the price levels could be very different. He must have some projections of prices in the future. All the nuclear options could turn out to be economic in the long term.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

Those are precisely the uncertainties that face anyone with a proposal for investment in new nuclear capacity at this stage. Some investment is being made, but there is still a great deal of uncertainty about the economics of nuclear energy, particularly given the nuclear waste issue. I therefore do not consider this a good time to look seriously at such investments, although the position may change.

Many people are concerned about the decline in coal-fired generation. As I told my hon. Friend Mr. Hughes, there can be no doubt of the importance of coal in the generation mix, but I know my hon. Friend will agree that coal generation must be low-carbon if it is to have a long-term future. That is why we are investigating in depth the feasibility of carbon capture and storage, and considering the possibilities of international collaboration to support the substantial investment that it will require.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

Does my hon. Friend agree that the new integrated gasification combined cycle technology—as he knows, there is a proposal for the building of a power plant of that type in my constituency—provides the best way of using coal to generate electricity without the toxic emissions normally associated with that process?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I know of my hon. Friend's interest in that project and that technology, and I agree that there is some promising technology ahead of us, but I think it will be some time before we can say that we have the necessary means to deliver the low-carbon coal-fired generation that will in due course be part of our mix.

Forecasts for generating capacity margins are lower for the coming winter. Total generating capacity is currently expected to exceed forecast peak demand by about 18 per cent. this year—as the hon. Member for South Suffolk said—compared with figures in the low 20s in recent years. There is already evidence, however, that, as would be expected, the markets are responding to the higher price signals. That, and the signals themselves, is why the indicators from the joint energy security of supply working group are so important.

Forward prices for peak power this winter are 60 per cent. higher than they were in early August last year. Higher prices may well encourage some currently mothballed plants to return to the system, and there is plenty of time for that. As the hon. Gentleman said, one generator has already announced the return of a mothballed plant on the Isle of Grain for the coming winter, and there may well be more. I expect the market to deliver adequate generating capacity this winter. With Ofgem, we will continue to monitor the situation closely through the joint energy security of supply working group. The group will ensure that the information is disseminated to the market so that participants can respond appropriately. The hon. Gentleman did not seem to understand the role of the group, but markets need information to function well.

Both the Secretary of State and the regulator, Ofgem, have duties in law to ensure that reasonable demands for electricity and gas are met. Those duties are carried forward into conditions in the licences held by energy providers, and we look to Ofgem to enforce the conditions consistent with its duties. We also need the right regulatory environment to encourage the market to invest in the right infrastructure. The infrastructure will have to change in the years ahead.

National Grid Transco already has an incentive, through its licence conditions, to invest in the transmission network. It has assured me firmly that under-investment was not a cause of the recent power cut, and its report seems to confirm that. Ofgem will work with National Grid and the distribution companies through the forthcoming price control reviews to ensure that companies are given incentives to invest appropriately in our networks, and to invest in a way that will specifically support the more decentralised generation patterns of coming decades.

The industry has a good record. We are committed to maintaining energy security. The failure of 28 August, however, serves as a reminder that risks to such complex systems cannot be entirely eliminated. On 10 September, National Grid Transco published its report on what happened. I am grateful for its speed, and the report is in the Library of the House.

Normal demands of about 1,100 MW are drawn from the national grid by EDF Energy in south London to supply domestic customers, the underground and other large users, including Network Rail. Four national grid sub-stations were involved. On 28 August scheduled maintenance was under way on one circuit between two of them, Wimbledon and New Cross, and on another between the other two, Littlebrook and Hurst. That level of maintenance is usual during the summer, when demand for electricity is generally lower, and the arrangement had been agreed with EDF Energy well in advance, in July last year.

The sequence of events began at 6.11 pm. Engineers at the electricity national control centre received an alarm indicating that a transformer at the Hurst sub-station was in distress and could fail, potentially with significant safety and environmental impacts. It was what is known as a Buchholz alarm, showing that gas had accumulated in the oil inside the equipment, causing the risk of a major failure. National Grid has some 1,000 transformers with associated equipment, and an average of 13 Buchholz alarms are received each year.

The control centre contacted EDF Energy and asked it to disconnect the distribution system from the transformer. As is normal practice, national control initiated a switching sequence to disconnect the transformer from the system. That left supplies temporarily dependent on a single transmission circuit from Wimbledon to New Cross and Hurst. Under national grid procedures, a Buchholz alarm is serious enough to warrant the isolation of equipment, and reduced security is acceptable for what is known as switching time—a period of five to 10 minutes during which the transmission system is rearranged by the connection and disconnection of circuits so that the affected equipment can be taken out of service.

The switching sequence to remove the transformer began at 6.20 pm, disconnecting Hurst sub-station from Littlebrook. That enabled the transformer to be shut down safely with the alarm, but left Hurst supplied only from Wimbledon via New Cross. Unexpectedly, a few seconds after the switching, the automatic protection equipment on the number two circuit from Wimbledon to New Cross operated, interpreting the change of power flows due to the switching as a fault.

On the national grid there are some 43,000 pieces of automatic protection equipment, each with its individual settings to meet local requirements. The automatic protection relay disconnected the circuit from Wimbledon to New Cross. That disconnected New Cross, Hurst and part of Wimbledon from the rest of the transmission system, causing the loss of supply. Some 724 MW were lost, about 20 per cent. of London's supplies at the time, and 410,000 of EDF Energy's customers were affected.

Photo of Harry Cohen Harry Cohen Labour, Leyton and Wanstead

There was a good deal of distress among Londoners caught up in the power cut. The Minister will know that the London underground had its own generating supply at Lots road for 100 years. When it was closed, assurances were given that the underground's supply would be secure. The Minister tells us that some 43,000 automatic mechanisms could turn off the secondary supply on which the underground now relies. Is there not a case for returning to the argument that the underground should have its own back-up supply in case the national grid fails? If that is deemed necessary, will the Government invest in it?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I agree about the distress and, at the least, great inconvenience caused to a large number of Londoners that night. If my hon. Friend will bear with me, I will deal shortly with the question of the resilience of the underground's power supply.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

Will my hon. Friend take this opportunity to confirm that some emergency capacity is still retained at Lots road for running the underground in the event of a failure, which would allow the escalators and lights to work and the trains to move rather slowly, and that this capacity continues to be maintained?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I shall talk more about that in a moment. The back-up supply is now at Greenwich, not Lots road, but my hon. Friend is right to point out that some back-up for the underground is available.

Returning to the night of 28 August, an incorrect protection relay—1-amp rated, rather than 5-amp rated—had been installed at Wimbledon when the old equipment was replaced in 2001, which was the immediate cause of the loss of supply. Although all supplies were restored in 41 minutes, the consequences, as a number of Members have rightly pointed out, lasted a great deal longer. In particular, there was an immediate loss of supply to some 60 per cent. of the underground, which in effect brought the whole system to a halt. Each London Underground control centre lost the ability to see diagrams of the position of trains for the duration of the failure, so they began to speak to train operators in order to collate positions manually. Some 57 trains had stopped inside tunnels, eight of which—carrying 1,200 passengers between them—were evacuated via the tracks.

Each evacuation, I am pleased to say, was carried out according to standard arrangements, but that of course meant that the underground network could not be switched back on until it was absolutely certain that all passengers and staff were safely away from the tracks. There was no risk to passenger safety, and the whole House will want to express thanks to all those involved for their calm and safe response. Although the emergency back-up power supply available to the underground, to which my hon. Friend Mrs. Curtis-Thomas has just referred, is not of a sufficiently high capacity to keep the trains moving, it did ensure that emergency lighting was available at all the affected stations, and that the evacuation could be carried out safely.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

I acknowledge what my hon. Friend says about the safe execution of the procedures provided by London Underground, but surely one of the main issues is the time that it took to bring the service up to speed. Is he satisfied that the procedures provided by London Underground are effective, as well as efficient?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

They were certainly safe, which was the overriding priority. I shall discuss in a moment the wider question of whether they were necessarily the most appropriate action to take on the day, but we need to pay tribute to the fact that the operation was conducted safely, and that the procedures worked well in terms of protecting passenger safety.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I will give way in a moment, if the hon. Gentleman will just bear with me. I should make it clear that the failure in London had nothing to do with any lack of generation capacity. The National Grid Company pointed out that since 1990 it has invested more than £3.5 billion in nominal terms in the system—a significantly higher rate than before. Its performance, measured against the security and quality standards required by its licence, is reported annually to Ofgem and made public. Performance has improved since 1990, and the level of customer demand lost has been extremely low. It can justly point to a good record in terms of meeting the demands made of it.

My hon. Friend Harry Cohen asked a question that many people ask: why does the London underground no longer have its own power supply, following the closure of Lots road last year? The underground consumes half of 1 per cent. of total UK power consumption. In fact, before Lots road was closed last November, it had been supplying no more that 60 per cent. of the underground's power for some time. Power for the underground has been bought in from the national grid for 20 years or more.

The Lots road power station opened in 1905. At the time, it was the biggest in the world, and when it closed it was the oldest working power station in the world—reflecting the previous Government's woeful failure in terms of investing in the London underground. London Underground had considered options for upgrading it or replacing it since the mid-1980s. It was finally decided— before 1997, in fact—to close Lots road and buy in power from the national grid through the private finance initiative deal. It is worth noting that between 1969 and 2002, Lots road failed 13 times, and the national grid supply to the underground just twice.

London Underground will of course be looking very carefully at how its power PFI worked and what lessons need to be learned. In addition, as part of the investigation that I have announced, the Department of Trade and Industry's engineering inspectorate will look at the London underground's power supplies, and may make recommendations if that seems appropriate in the light of that investigation.

The incident was the biggest loss of supply from the national grid for more than 10 years. I announced on 10 September that the Government and Ofgem will undertake further investigations into the failure's causes and impact. We are determined to learn any lessons that might help us to prevent such distress in future. The joint Ofgem-DTI investigation and the engineering inspectorate's investigation will also look into the power cuts that took place in the west midlands on 5 September, when a loss of power occurred at 10.10 am at the national grid's Hams Hall sub-station, in Coleshill. On that occasion, full power was restored by 10.52, but some 200,000 customers were affected. On that day, I registered my deep concern with the National Grid Company at this second power cut, coming as it did so shortly after the power cuts in London. I am expecting a report from it on that incident shortly.

Photo of Patrick Mercer Patrick Mercer Conservative, Newark

The Minister will be aware that during the weekend before last, the Osiris II exercise, in which a terrorist strike on the Bank tube was simulated, took place. That happened only a few days after the incident that the Minister describes, yet very little reference was made to that real incident that occurred on 28 August; indeed, such reference was passing and jocular. Can the Minister confirm that lessons from that real incident were passed on to inform the exercise? I saw very little sign of that.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

Some of those lessons will take time to crystallise, but it is clear that we will learn all the lessons from what happened on 28 August, for the future of the underground. It is right to draw attention to some of the questions that need to be answered. For example—this question has already been hinted at—was evacuation the right decision for some trains? Were the drivers kept sufficiently well informed? Was there adequate communication between staff and passengers? All of those questions need to be asked and answered. As I said, we need to look at whether the underground has adequate power security, but the Government's London resilience team, working closely with the office of the London Mayor and others, will consider all those issues. Indeed, the London resilience forum deals with all these matters, including the simulated terrorist attack to which Patrick Mercer referred. It has carried out a lot of work on contingency planning for London, and that work will continue.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

As the Minister knows, the question of whether it was appropriate to evacuate some of the trains has attracted enormous interest in London, given the resulting delays in restoring the service, to which Mrs. Curtis-Thomas referred. Will he make it clear whether, under the new arrangements, the final decision on such matters rests with the Government or with the London Mayor?

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

As the hon. Gentleman knows, the Mayor now has responsibility for the underground. As I understand the procedure, however, it is possible for individual drivers to decide whether evacuation is necessary, in the interests of the passengers of the train concerned; indeed, it is right that drivers be able to make that decision. Whether everything worked exactly as it should have on 28 August is a question that needs to be addressed.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

My hon. Friend referred to the national grid and the failings in the west midlands, but does he agree that one significant problem is that that national grid interfaces with an enormous number of electricity suppliers? There is a desperate need to ensure that the standards set by each of those suppliers are commensurate with the standards of the national grid. Sometimes it is labelled as the bad party, but in fact it is generating the supply and passing it on to people who are not capable of managing it adequately.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

By and large they are capable of that, but I agree with my hon. Friend that the investigations conducted by Ofgem, the Department of Trade and Industry and the engineering inspectorate need to examine the whole system, including the distribution systems as well as the national grid. The engineering inspectorate investigation will take account of other transmission failures over the last five years as well, and will examine precisely the point that my hon. Friend has made—how the national grid interacted with its customers and what lessons need to be learned.

Ofgem will formally decide by the end of the year whether any of the companies were in breach of their licence obligations and, if they were, what action should be taken. I welcome the assurance that the national grid will further review its systems and procedures, and will work closely with other operators to improve overall supply, particularly to city centres and transport systems. It is right to highlight the importance of that. I am pleased that the Trade and Industry Committee will investigate the resilience of the national grid, and my Department looks forward to contributing to that work. Quite rightly, therefore, there will be a good deal of follow-up to ensure that lessons are learned from what happened.

In conclusion, I want to reiterate our central White Paper commitment to maintaining the reliability of our energy supplies. That is an absolutely central priority for the Government and central to our energy policy. Together with the work that we are undertaking in the immediate aftermath of the recent failures, I am confident that we shall be able to minimise the risk of similar future failures.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs) 1:42 pm, 16th September 2003

We certainly welcome the debate, but the motion before us is rather rambling and some of the presentations that we have heard were rather dramatically over the top. It is an extraordinary leap from an undersized fuse in Wimbledon to the end of civilisation as we know it, which is pretty much what Opposition Front Benchers have put to us today. There are some important issues and I hope that, despite the soothing and comforting words of the Minister, his Department will take some important questions away after the debate and take any necessary action that is required.

On security of supply, there are questions about generating capacity, about transmission distribution capacity and about supply capacity. I was a bit surprised that the Conservatives confined themselves to the case of the underground because, during the last major international at Twickenham, the overground suffered parallel failures on account of underinvestment in the electricity supply to the rail network in the south-west of London. Ensuring that investment keeps pace with demand becomes a more serious problem the further down the pyramid one goes from generation to supply.

I hope that we can examine the problems more rationally than Mr. Yeo did. The Ofgem briefing paper, which hon. Members have received, is clear and straightforward, so it is sensible to pay some attention to it. It makes the point that the predicted surplus over peak demand of 16 per cent. will rise to 18 per cent. when the Isle of Grain comes on stream later this year. That estimate does not take account of the interconnector with France, from which another 2,000 MW can be expected, or of plant that is more deeply mothballed, which can come on stream comparatively easily to the tune of another 7,500 MW.

I wonder whether Conservative Front Benchers have been taken in on the generation issue by their own spin doctor, because the leading exponent of the view that we are about to run out of generating capacity is Sir Bernard Ingham and his nuclear power forum. Just because they were taken in once when he was operating for Mrs. Thatcher, the Conservatives should not be taken in twice now that he is working for the nuclear industry.

On transmission capacity, the Minister has quite properly drawn attention to the fact that National Grid Transco has a very good record of meeting demand. I believe that the figure is 99.995 per cent. or better each year, so it seems unnecessary to spend too much time worrying about transmission security of supply.

That brings us to the bottom level and final stage of supply to individual users and consumers. We have heard about the dodgy fuse and I guess that, when the final report is produced, we will know more about it. We have heard a little about the London underground back-up system, which was recently handed over to the private sector and did not kick in as planned. One of the companies mentioned is Electricité de France, which is a supplier and distributor of electricity in London. I wonder once again about the wisdom of the Conservatives complaining about the system, when EDF is wholly owned by the French Government and operates as a result of the privatisation of the electricity industry that they commissioned. It is one of the paradoxes of energy debates in the House that we can hold our debates only because the lights are on, and the profits from the lights running in the House go straight to the French Ministry of Finance as a direct result of the Conservative privatisation of the industry.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

Can the hon. Gentleman confirm that the Liberal Democrat party policy is to nationalise the electricity sector?

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

No, I cannot confirm that. The Conservatives have already produced several non-sequiturs in the debate, one of which I have already illustrated and another of which is illustrated by that intervention. I would simply describe the Conservative approach to the electricity industry as bonkers.

Let us reflect on the serious question about security of supply, which is what happens in the long term. Conservative Front Benchers mentioned the risk of power cuts this winter and in the longer term, so we need to consider the broader issues of substance. One important argument is that the UK economy and its energy industry will be weak in future because we will have to import energy, but that rather overlooks the fact that there are currently only two economies in the world that do not—the United Kingdom and Canada. All the others are net importers of energy, in some cases—the United States and Japan, for instance—on a huge scale. We have a diversity of markets from which to buy.

I was interested to hear the argument that the Russians might seek to blackmail us over Iraq. Of course, the country with the largest dependence of all on Russian supply of energy is Poland, yet Poland willingly and freely joined in the Iraq adventure. Incidentally, I would not have done so, but there is no evidence that any political pressure was imposed. Indeed, the Russians greatly want the money. The idea that Norway is some sort of rogue state that might hold us to ransom is fanciful beyond belief. It also completely overlooks the possibility of liquid natural gas supplies coming to this country from west Africa, south America and a wide range of other international sources.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

As this seems to be a day for non-sequiturs, could the hon. Gentleman make the Liberal Democrats' position clear? He seemed to suggest that it was all right to have the National Grid generating electricity as a private company, but not all right for that to happen lower down the chain of suppliers. Are the Liberal Democrats in favour of private companies being in control of generation or against? Are they in favour of the French being able to control our major system or against the French having control of the movement of gas throughout their company's territory? I am not clear on those points.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

The hon. Lady would be much clearer if she read my book on the topic or if she tuned into the debate on energy policy at our conference next week. I do not wish to be ruled out of order, so I shall just say that we accept the realities of a national and international liberalised energy market. I simply point out to the House that it is extraordinary that the Conservatives are expressing doubts about the ability of that liberalised market to deliver a sustainable energy policy for this country. The hon. Lady may take a different view, and I am sure that she will discuss that with her Front-Bench colleagues in due course.

As for prices, we are all quietly admitting that energy prices will increase in this country over the next decade or two. If we are to achieve our aims, especially in conservation and efficiency, those price signals are important. However, the suggestion that we might be held to ransom by outside suppliers is clearly not tenable. One need only consider the 30 or 40-year history of OPEC to see that stability is likely to be achieved in the longer term. I also refer the House to Ofgem's view, which is that there is no problem with supply of fuel to the UK energy market.

At first, we wondered why the Conservatives had chosen to focus on the issues in their motion rather than on what we saw as some of the more fundamental questions—such as the delay in the Government introducing its policy, as opposed to a White Paper. Where is the legislation? I was pleased to hear the Conservatives' spokesman say that they wanted to see legislation in the Queen's Speech and that is a rare point on which I can agree with them.

We thought that the Conservatives would raise the fact that the Government are now struggling along with their fifth part-time energy Minister, which shows a lack of commitment to this important area. Indeed, I hope that the Minister will take away from the debate a request that he be divested of some of his other arduous duties, so that he may focus effectively on these matters. Or perhaps the Conservatives might have addressed the lack of evidence that the UK is making progress towards its Kyoto targets—emissions of greenhouse gases are rising again—and the fact that we still have no clear long-term plans for the 60 per cent. reduction in carbon dioxide emissions by 2050. However, then we realised that the Tories have no energy policy and have undergone an even more rapid rotation of energy spokesmen.

The Conservatives claimed that they still regard the environment as important. If that is the case, I hope that they will take a second look at what they are saying about the ability of renewables to deliver and the impact that conservation and efficiency can make on meeting demand in the future. We are clear that we need a diversity of fuels, including renewables. We are also clear that an improvement in security is obtained from dispersed sources and comparatively smaller generation sources. One should not have all one's eggs in one basket. Conservatives ask how we can tell whether investment in gas or in nuclear is best, but it is not for this House to decide that. It is for investors and the promoters of projects to decide that, and they have decided it. They have decided that gas is a more profitable and certain vehicle for investment than nuclear power.

Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs)

The hon. Gentleman has said that he would like to see a greater diversity of supply, and we agree. He also said that he would like to see small suppliers generating electricity, but that would of course result in price rises. To what extent would the Liberal Democrats be prepared to tolerate price rises?

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

The words "of course" are the give-away in that question. Smaller does not always mean more expensive. Indeed, in the case of wind generation, which is now competitive on the market with its 3 MW units, it is not the case that smaller means more expensive. People are investing in those technologies because they can now compete in the market.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

Wind energy is only competitive now because of the existence of the renewables obligation, which provides some 70 per cent. of its income as subsidy, with only 30 per cent. coming from the price of the electricity generated. That cannot be the hon. Gentleman's definition of economic.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

If we were in a completely deregulated market, we would have 100 per cent. gas generation. But we are not, and no one in the House believes that we should be. In a regulated market, it is appropriate that regulation should relate primarily to the need to meet environmental guidelines. I do not have a problem with a regulated energy market, and I did not think that the Conservatives did either. Throughout the 1960s, 1970s, 1980s and 1990s, they supported a regulated market that favoured the nuclear industry, so it should not be too much of a problem for me to support one that favours renewables.

If we want 2,000 MW of electricity generating capacity in this country, the cheapest way to provide it is by saving that energy through conservation and efficiency. That is cheaper than gas, nuclear power or renewables. The problem is that in a market environment it is difficult to trigger investment in those areas, because conservation means using less product and therefore provides less cash for those who make the investment. The Minister needs to invest much thinking time and some real policy development in ensuring that conservation and efficiency play a full part, as they can, in a regulated market. It is also necessary to check the maintenance and manpower shortcuts that may be the result of a privatised process. Again, the role of the regulator is vital.

The Liberal Democrats want the Minister to say clearly that the Queen's Speech will contain an energy Bill that goes beyond waste disposal for nuclear power; to give a full-time commitment to this important topic; and to do more long-term thinking, with less short-term panic.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich 1:59 pm, 16th September 2003

I am thoroughly enjoying this debate because it puts me in a unique position. I have been a Member of Parliament for a long time and this is the first time that I have been in total agreement with Opposition Front Benchers. Today, comprehensively, exhaustively and—presumably—after much work, the Conservatives have rubbished the private electricity industry. They have made it clear that that industry has failed in its duty to the nation and is incapable of carrying out the job that it was privatised to do. That seems a very interesting argument, and one with which I rather agree. I hardly like to say this in public, as I know that it will embarrass Mr. Yeo, but I am at one with him when he argues that privatisation of electricity generation has led to a total failure of efficiency. I hope that it will not damage the hon. Gentleman's career if I say that I parted from him only when he appeared to suggest that we should nevertheless continue along that line of confusion.

I was only slightly more pleased with Mr. Stunell, who seemed to be even more confused than me. Even so, it is important that contributions be made to the debate not only by those of my colleagues who, through training, background and effort, have become experts in electricity generation, but by people who, like me, know a little about the use of public services and who are worried about the future of the London underground.

It may come as a shock to Members of Parliament, who like to demonstrate expertise in esoteric and important matters, but the general public are singularly uninterested in the question of who generates electricity. People are interested in what causes them to have to use a form of public transport that broke down on one of the hottest days of the year. The underground system is more than 100 years old, and it can cause considerable discomfort for those trapped in it. As a child, I was trapped in an underground train during an air raid. I have never forgotten the experience. In fact, I suspect that it engendered in me a mild form of claustrophobia, which I never accept or admit.

Our nation sits on a very efficient and basic form of fuel, and seeks to develop industry at every level. How can such a nation find itself in a position where a resource as important and basic as electricity can fail? When that happens, many people are inconvenienced, and it costs industry and individuals a very great deal of money.

I was glad to hear my hon. Friend the Minister say that the Government are investigating the matter. He said that a working party had been set up, that the engineers will be called in, and that different aspects of the problem will be examined. However, I want him to give clearer support for a number of difficult propositions. The phrase "non-sequitur" has been used generously today, and I shall continue that happy trend. I believe that the electricity generation industry in this country, even though it generates more electricity than in the period after the war, is not capable of leaving itself a sufficient cushion of safety so that it can support essential systems.

I see no reason to doubt the accuracy of the account given by my hon. Friend the Minister, but how is it that the failure of a small part of the system—perhaps even something as simple as the use of the wrong fuse—can generate total chaos? In the past, the underground system accepted the need for a back-up system, so how is it possible that only a very tiny part of an alternative is now provided for? Hospitals in the national health service accept their responsibility to provide alternative forms of electricity generation if the main systems fail. Why should not the same obligation be clear in respect of the underground?

When the Lots road facility closed, did the underground management give generalised assurances that all would be well in the future, secure in the knowledge that the national grid very rarely failed? The last really bad series of power cuts happened just after the war, when there was considerable difficulty in generating sufficient supplies. This country needed a co-ordinated and nationalised—as it was called—industry precisely because the private sector was not capable of doing the job. As far as I can see, the private sector has given no indication that it is capable of doing the job now. We need more answers.

The Minister has been very open and straightforward this afternoon. He has told us what he is trying to do, how he is trying to do it and where the information will come from. It is unfair to ask him more questions, but this summer's incident was so major that it must give us pause. Large numbers of people were being carried on the underground system at the time in question. I am worried that many passengers were not evacuated for some time and that they were not given the information that they needed. Many staff had no idea what managers were doing to provide emergency organisation, and it seems that the underground's information about its own system was insufficient.

No one doubts the commitment of railway personnel in an emergency, or the adequacy of their training. Without the staff's discipline and common sense, what happened could have been much worse. The fact that so many people were evacuated safely and in such a disciplined manner is a great tribute to the sense of the general public and to the way in which railway men and women respond under pressure of an emergency.

However, when the trains stopped, operating room staff could no longer see where the trains were. It seems that no alternative system exists to allow them to identify the location of the trains effectively and quickly. When the power came back, they were not able to determine whether people were still in the tunnels—whether they were being evacuated quickly or were still moving down the side of the track. In the latter case, it would have been impossible to restart the system. As a result, the delay was much longer than it need have been.

London Underground must be asked several questions. Why does it not have a back-up system that would allow it to assume, automatically, that trains could remain in operation? Such a system would mean that no interruption would last long, and that trains could at the very least move safely out of the tunnels.

Drivers have responsibility for the safety of passengers on the train. Why were they not speedily given sufficient accurate information about the other decisions that were being taken? Why was it not possible for control room staff to see easily what was happening in the tunnels? Is there no automatic emergency lighting system? That would at least have given some indication of where people were moving and of the dangers that could have arisen had the electricity system been switched back on.

Why did it take so long for the management of the underground to take back complete control of the system? If the problem arises again, what sense of urgency is being engendered to ensure that, between them, the privatised companies and London Underground will be able to know with accuracy where people are, how they can be evacuated, and how long such an action will take?

With so many people being taken off trains in the dark, it is a minor miracle that no one suffered an accident. When large numbers of people are being moved around underground, there is no guarantee that all will be safe. For example, the step down from a train to the level of the rails is a considerable one. The evacuation could have been very dangerous. That is unacceptable: as I said, it is a minor miracle that no one was hurt.

A number of questions have been thrown up by this debate, but the problems go further, as the overground rail system was also disrupted. I sometimes admire the phlegm and self-control of the general public in this country. If people stampeded every time they were inconvenienced by a major incident, we should be in considerable difficulty, but there are so many problems with the railway system that people are in a miasma, almost accepting that such things are sent to try us and that eventually we shall survive them. However, that is not an attitude that the House should find acceptable and nor, certainly, should Ministers of the Crown.

That railway incident was a microcosm of the problems that face us throughout our national systems. I do not want to embarrass the Government by suggesting that the fact that we have not pulled many of those major systems into the state means that we are dependent on private companies; I realise that my colleagues have enormous faith in the efficiency of the management of private companies, although I do not necessarily share it. However, the Government must accept the fact that electricity generation is so fundamental to our economy that any interruption in supply not only destroys work on a particular day but may have a direct and vital impact on the economies of our cities and towns.

That incident gave us a nasty warning. It told us, in effect, that we are dependent on fragile systems. There may be marvellous explanations—that the system is properly controlled and that there are alternative forms of generation—but when it came to the crunch none of those systems worked. It seems that the reason was simple and straightforward, which should give us considerable pause.

I want the London underground to be able to respond not only to that kind of incident but to any emergency with tightly drawn and clearly understood procedures that are openly available to the general public and can be put into operation at extremely short notice. I believe that London Underground has that intent; my remarks are not made as a criticism of the present management, but as a warning to the House that acceptance of inadequate provision is never suitable.

That brings me, finally, to the point that concerns me most. During my lifetime, I have seen changes in electricity generation. Many years ago, as a junior Minister, I had the privilege of sitting on an imaginative committee, run by the chief scientific officer. It dealt with planning for the UK's future fuel needs and considered the forms and use of various alternative fuels. That is where we must show real imagination and ability.

The present system does not work. Whatever the reason and whatever the divisions between us—whether enough electricity is generated or whether the price is reduced—any nation that depends on the workings of the market for the generation of its most important fuel will get into the sort of difficulties that we experienced recently.

We have been given a clear warning and we should heed it. Our entire system is so ramshackle—to put it kindly—that it should concern us. I rely on my hon. Friend the Minister for Energy, E-Commerce and Postal Services and his fellow Ministers to talk to London Underground so that we use our response to that unexpected situation to ensure that we can deal with any future difficulty that arises. First, London Underground should immediately be capable of switching to alternative sources. Secondly, training and controls should be adequate to deal with an emergency. Thirdly, we should tell the various companies that it is not enough to talk about corporate responsibility if, when there is an emergency, they are unable to fulfil the tasks that they have been given by the state.

If the operators, the regulators and the managers of the various companies cannot do their job efficiently, the House must demand that they change their ways and change them with considerable speed.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South 2:15 pm, 16th September 2003

We all listen to Mrs. Dunwoody with respect. I admire the way in which she conducts herself. Although I often disagree with her, I agreed with every word that she said on this occasion. She made important points—I shall talk about the underground later—and I acknowledge the strength of her contribution.

The debate is timely; it is the first time that we have discussed the subject since the publication of the White Paper. Of course, it has fallen to the Opposition to introduce the matter, as the Government, having got it out of the way, seem keen to avoid it.

I am sorry that the Minister for Energy, E-Commerce and Postal Services is no longer in the Chamber as he gave a good reply to the speech of my hon. Friend Mr. Yeo, although it was tragically deficient in answers to the questions posed so admirably by my hon. Friend. The questions were fundamental and went to the heart of the way in which we run our society and our country. The Minister gave constructive replies to those questions that he actually answered, but all my hon. Friend's questions were serious and constructive, as was our motion, so I hope that the Minister of State, Department for Transport, who has a good track record, will respond equally positively in his reply to the debate.

The Opposition and Government opening speeches were in stark contrast to the contribution from the Liberal Democrat energy spokesman, Mr. Stunell. I confess that although I listened to the hon. Gentleman carefully and he generously gave way a few times—once to me—I still have no idea what his policy is and how he would implement it if ever he had the chance to do so.

The Liberal Democrat amendment, apart from being unnecessarily personal about a competent Minister, is wholly contradictory. It states that the Queen's Speech should announce

"a full-time Minister who is charged with mitigating the negative impacts of privatisation", yet the hon. Member for Hazel Grove has just told us that he agrees with that policy. That Minister should implement

"an integrated UK Energy Policy", whatever that means. I think that we already have one. The amendment concludes that the policy should include

"the protection of the security of electricity supply", yet the hon. Member for Hazel Grove spent a large part of his speech telling us that that was not a problem. It was a most confusing contribution, but when the hon. Gentleman's book is reduced in price we can have a look it and then we may be a little wiser.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

I enjoyed that passage of the hon. Gentleman's speech. It was our wish that our amendment be the motion that the House debated; had that been so, I would have spoken in more detail on those points. I assure the hon. Gentleman that the book is relatively modestly priced and I shall put him in touch with the publisher after the debate.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I think that there should be an end to advertising. May I also mention that the Library is usually well stocked?

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

You make a valid point, Mr. Deputy Speaker. It would be a tragedy to have to pay for such a contribution.

The hon. Member for Hazel Grove said that he wished that the debate could have been conducted according to the terms of the Liberal Democrat amendment. It was certainly all things to all people, so anything that he said would have been both in order and in line with his policy. Such is the nature of most Liberal Democrat policies.

Returning to the core of the debate, there were tragic, difficult circumstances on the underground. I am heartened by a letter that I received from London Underground—I am sure that other hon. Members will have also received a copy—saying that it is taking the matter very seriously, reviewing the situation and looking into how such things can be avoided in the future. I wish London Underground well in that endeavour, but the answer is not clear to me. In confirming something said in an intervention by Harry Cohen, the Minister said that there was a back-up supply in Greenwich, but what happened to that back-up supply?

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

I thank the hon. Gentleman for giving way. I, too, await the inquiry's results, but I believe that the management considered that there was no need to use the back-up supply at Greenwich when they discovered that they could get electricity supplies from the grid rather more quickly and that sufficient reserves were left in the batteries on vehicles and in stations to ensure that the most basic safety levels, such as providing lighting, were maintained.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

I am grateful to the Minister for that response, but it sounds as though the back-up is of an emergency nature, designed just to get through the day, rather than to restore supplies, which was the impression given previously. None the less, London Underground is considering the back-up safety systems, and I am comforted by its letter in which it says that only eight trains had to be evacuated via the tracks—as was confirmed by the hon. Member for Crewe and Nantwich—and that all the evacuation procedures worked.

For many years, London Underground has been treated as a political football—in some cases, justifiably so—but everyone would wish it now to have a period of stability, so that the new senior management have a chance to get to grips with the public-private partnership, even though we may disagree with it, and we wish them well in their review and in the future conduct of their operations.

On the security of supply, the central question is whether we have enough supplies in this country now and in the future. What is the problem that we are facing? Why are we concerned about supplies? One of the fundamental and radical changes that the Government made after taking office in 1997 was to introduce a pure market in the electricity generating sector, but, having introduced it, they immediately started to distort it to the extent that it is not a true market. They distorted it by effectively subsidising the nuclear industry, partly through their ownership of BNFL, which contains the most inefficient and ageing parts of the electricity generating sector that are hopelessly uneconomic, and their continued support for British Energy, despite many of us saying that such support probably contravened European Union rules. That subsidy means that the market is not operating properly. Under any normal circumstance, the most inefficient plant would have been shut down, prices would then have risen and the remaining plants could have operated economically.

The result is that, notwithstanding the price rises of the past few months, prices have been at absolute rock bottom for the past several years. There has been no scope for investment. Most generators have operated on a break-even basis. Those operators with large debts have shut down or been sold at heavily discounted prices. As my hon. Friend the Member for South Suffolk said in his opening remarks, the fall in the price of electricity from the generators has not been wholly passed on to the public. Prices paid by consumers have fallen, but there is no comparison with the generators' receipts. In truth, the Government have to explain why. Several rules and the operation of the competition policy are relevant, and there may be cross-subsidies for those companies that are distributors as well as generators.

We have to consider whether it is satisfactory for supplies to be wholly dependent on gas alone. The Government's policies clash. They want to introduce lower prices through market forces, but that desire clashes with their environmental targets, and the Government are storing up trouble for the future. We have never had a genuine, true market in energy, except in the past five years. Previous Government's have always maintained close control over energy, with close intervention, but we now have a free market that has long-term consequences, particularly for future investment—something to which I shall return.

The situation has been transformed over the past 12 years. In 1990, just three companies produced 80 per cent. of this country's electricity. Today, a significant number of companies do so, all of which introduce fresh problems. The heart of any good energy policy should be diversity of supply, and coal cannot be totally ignored in the way that the Government have intended. They have protected the nuclear industry, but coal-fired plants are the next most inefficient, and they have been struggling of late to make ends meet.

The Government want to phase out coal as it is currently used—I am not talking about clean coal—because it represents a challenge to the environment. CO2 emissions from coal-fired generators are unacceptable in a modern society. However, introducing a free market policy clashes with such environmental objectives. That is undermining the energy policy, and it is why we are beginning to experience price shocks and interruptions in supply. I am talking not about the events of 28 August, but about the regular price spikes that are occurring as we get perilously close to capacity.

A great deal of the generating plant is not economic, so many of the maintenance schedules have been reduced and many plants are becoming increasingly unreliable. However, like my hon. Friend the Member for South Suffolk, I welcome the introduction of NETA and the liberalisation of the markets that that has produced. NETA quickly produced falls in prices but, as with any volatile market, it has overshot its target. The Government set a target that represented an aspiration for the level to which they hoped prices would fall, but I understand that prices have fallen considerably below that level and, as a result, the industry is in crisis—instead of investment, there are closures and cuts in maintenance.

Of course, we have to consider what to do with British Energy. I recognise the difficulties that the Government will face in trying to close the nuclear plants if they run the company on an economic basis. I also recognise the difficulties that they have with the European Union, but many of us warned the Government that those difficulties would arise. The Government claimed that they had the answers to those questions, but many of us are still waiting to hear them.

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

I am very much enjoying the hon. Gentleman's challenging speech. As he will know, I was involved with the legislation that introduced NETA. Does he recall that hon. Members on both sides of the House expressed worries about the fact that, under the old pool arrangements, there were serious allegations of high price setting, especially by major generators, and that there was general agreement that something had to be done to try to introduce some fairness and transparency for customers, including industrial customers and the public sector, as well as domestic consumers? Fine judgments have to be made, but the current system at least has greater transparency and even some predictability in some cases than what preceded it.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

The Minister is spot on. The pool arrangements came in after privatisation, and, after moving from a state-owned monolith, liquidity was needed in the sector. The previous Government should not therefore apologise for that. We did not quarrel with the introduction of NETA, however, which seemed to be at the right stage having introduced liquidity into the market. What has gone wrong is that it has overshot, and there is now not enough liquidity in the market. I was comforted that, in the Minister's opening speech, he said that Ofgem's price review will look at ways to encourage investment. I thought that that was probably the most important part of the speech, because without it there will be insufficient funding for investment. Currently, NETA is not producing sufficient liquidity for investment. Building a new power station has a lead-up of three to five years just for implementation, and a payback period of 20 to 30 years. No one in the private sector will invest £1 billion to build a new power station if they do not have some idea of what the price curve will look like during that 10, 20 or 30-year payback period. That is the problem, which is why I welcome the Minister's point about looking at ways to bring in extra investment. That will result in a reform of NETA in a way that I and, I suspect, most people would welcome.

The performance and innovation unit report and the energy White Paper were very important in talking about the trade-offs that had to be made. The bombshell, however, was that there was no commitment whatever in relation to the nuclear industry. How can a White Paper be published that says that it is a blueprint for the next 50 years but leave open the question of the most important part of energy policy? That is beyond me. In truth, the White Paper is already beginning to look dated after just a few months, let alone in the first of its 50 years.

A decision must be made about nuclear energy. If we want to have clean energy in this country, the country may have to be prepared to pay for it. In the long term, looking hundreds of years ahead, we will run out of fossil fuels, gas and oil, and the future will be nuclear energy. The challenge must be how to make it safe so that we do not have another Chernobyl, which I am sure can be done through modern technology and efficient regulation—and we will have to bite the bullet to a degree on cost. Nuclear energy has been a bedrock of the post-war years in this country and I think that it will be the bedrock in the years to come. The White Paper put heavy emphasis on the future of renewable energy. My hon. Friend the Member for South Suffolk spoke about the scepticism as to whether those targets can be achieved. They are dramatic targets and I am sceptical about whether they can be met. Without nuclear energy, the mind boggles as to how the environmental targets that the Government have bravely set will ever be achieved in the long term.

That, of course, brings me to the ugly duckling of the sector—coal-fired generation. The Government have consistently supported coal production because, as the hon. Member for Crewe and Nantwich said, we are sitting on the most tremendous natural resource, which would in one stroke remove the questions that are being posed to the Government about security of supply. There is no question, however, of having coal in its present form. It must be clean coal, and I welcome the clean coal technology papers that the Government have published. I know that they are looking at how to introduce more investment in clean coal technology, but more must be done. Much bigger investment and commitment from the Government to clean coal technology is required if we are to produce the sort of reductions that we need. The Minister will know that the large combustion plant directive starts to bite in 2006, and the present generation of coal-fired generators will have to start shutting down between 2006 and 2015. Unless he has the answers to clean coal technology he will very quickly have a large gap in his diversified energy supplies, which will make the Opposition resolution pertinent, not in the long term but in the medium term.

In my intervention, I raised the diplomatic and political risks involved in making our energy policy totally dependent on imports from Russia, which was described by Churchill as, I think, an enigma wrapped in a riddle. We have no idea of the political future in Russia or of how stable a country it is. President Putin seems to be a solid guy who is building up a coalition around him, and democracy seems to be catching on big time. The Liberal Democrat spokesman said that there was not a problem because Russia needs the money. However, I do not think that we can put our trust in that—we must have alternative, back-up supplies.

We can all remember the pressure and concern in the run-up to the debate on Iraq. Russia and France were being very difficult in the United Nations Security Council and refused to give their support. Tremendous leverage could have been used with the United Kingdom if Russia could say that it was free to turn off our energy supply overnight. We saw that in the oil crisis of the early 1970s. Russia might not cut us off completely, but it might gently reduce supply by 10 per cent., which would push up prices and start to hurt the British economy. It could be a very powerful tool, so it would be folly to be dependent for 70 per cent. of our gas supply on Russia.

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

I have an interesting question for the hon. Gentleman—[Interruption.] His Whip is now telling him off for speaking for too long.

The difference between this country's ability to react in the 1970s to the oil price shocks and the more limited choice that we have now is that, in the 1970s, we still had a considerable coal industry. In the late 1970s and 1980s, it disappeared. A lot of the coal reserves to which the hon. Gentleman refers, and about which he knows a great deal, are now effectively sterilised—we cannot get at them—and trying to access an opencast coal mine is a planning nightmare. From where does he think we will get this coal? I agree that far more diversified coal supplies are available in terms of world trade than gas supplies, but it will still not be easy and the coal will still come from some very politically unstable areas in the world.

Photo of Richard Ottaway Richard Ottaway Conservative, Croydon South

The Minister makes a good point. I remember that when I was Parliamentary Private Secretary to Lord Heseltine—when he was, I think, energy spokesman during debates on the coal industry in the early 1990s—those were just the points being made when we were sitting on the other side of the Chamber. I do not think that we can depend totally on the UK. Most of the coal mines in the UK are uneconomic, but a huge variety of coal is available for import. As most people will know, coal can be imported from, say, South Africa more cheaply than it can be extracted from the coal mines of this country. That was the problem that we had in those debates in the 1990s.

I have made my points. I conclude by recommending to the Minister the NERA economic consulting paper, entitled, "Persuading the Private Sector to Meet the Aims of Energy Policy". It calls for a strategy to introduce more investment in the energy sector. If there were more investment in electricity generation in this country, the questions that we are discussing could be addressed provided that we do not remain wholly dependent on supplies from foreign countries.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby 2:40 pm, 16th September 2003

In addition to being the proud Member for Crosby, I am also a chartered engineer. I am a fellow of both the Institution of Electrical Engineers and the Institution of Mechanical Engineers and I have produced some of the information that I shall provide today in conjunction with my colleagues from those institutions.

The Minister for Energy, E-Commerce and Postal Services talked about the history of the power supply for London Underground. The history is important because it demonstrates clearly some of the problems that have faced this country's large electricity consumers during the past century. A legal requirement was placed on London Underground to provide its own electrical supply, but that choice became less attractive as the industry developed. The necessary equipment was introduced at Lots road in Chelsea and Greenwich in the 1970s but it became more expensive to maintain. The start of the discussion about electricity privatisation caused London Underground to look again at its capacity and make decisions about whether it wished to retain it. As the Minister said, the capacity had failed on numerous occasions for several minutes at a time, although I stress that there had not been a catastrophic failure such as that on 28 August.

At the time of privatisation of the electrical supply, the great cost benefit of switching from self-generation to using a local energy supplier could not be ignored. London Electricity approached London Underground with a deal that it could not resist. The deal was to provide London Underground with its electrical supplies at half the cost of generating its own capacity, so it was a lucrative option. It decided to take advantage of services supplied by London Electricity but retained the capacity to produce some 40 MW of energy itself. I am acutely conscious that 300 or 400 MW does not mean much to a layperson, but the energy that London Underground consumes each day is the amount required to power 200,000 homes or a small city. It is a huge amount of energy and that fact allows us to understand the complex and intensive structure that is required to underpin such capacity.

When London Underground chose to opt out of supplying its own energy, it entered a world in which it would be only one part of a chain that invariably started with National Grid Transco, which supplied power to local electricity companies that supplied it to the end market. It has been established today, although it needs repeating, that the failure in London had nothing to do with lack of capacity. There was sufficient capacity in the grid but the transmission of the capacity to the end user failed.

National Grid has a regular maintenance programme, which is undertaken during the summer because the demand on the system is less than at any other time of the year. The system is already geared to accommodate two major failures such as a complete transformer going down and a pylon falling over. Such huge failures have been planned for and considered but have never arisen thus far. However, the failure of a contractor had not been planned for. We have heard that London's catastrophic power failure happened because a contractor who was working for an opted-out company had installed the wrong fuse.

The failure of the system was one thing, but I shall now talk about the relevant parties' response to it. London Underground put in place its emergency plan. I am not terribly sure about the plan—I have not seen it—but I assume that it includes a scenario in which there was a complete power failure to the underground. Although I have made that assumption, I want reassurances that such a plan has been developed. How was the plan disseminated and communicated to the operatives in London Underground?

I worked for Shell Chemicals for several years and was responsible for the transport of all its products throughout the UK. The products included some pretty awful stuff. We discussed what would happen if one of our tankers fell over at the junction of the M6 and M5 in Birmingham because we would have had to notify the emergency authorities that the evacuation area had to be 12 miles. Hon. Members can imagine that we were talking about a pretty serious product and a serious emergency incident if a tanker containing 20 tonnes of product required an evacuation area of 12 miles.

We had difficulty mocking up such a huge exercise because it required turning a tanker on its side, bringing all emergency services into play at the same time to get the tanker back up and getting the place managed in a safe and orderly fashion. Patrick Mercer asked whether the lessons learned from 28 August had been incorporated into the recent emergency planning exercise in London. I must ask a similar question. When does London Underground have the opportunity to instigate such an emergency exercise? We can all appreciate that it would be highly desirable for such time to be available but the exercise would be conducted at substantial cost. The problem for London Underground and suppliers of energy to the arena is how to accommodate such an exercise without huge disruption and cost.

Photo of Patrick Mercer Patrick Mercer Conservative, Newark

The hon. Lady makes a good point. If she had been at the exercise 10 days or so ago, she would have seen that it was wholly unrealistic. How does one plan such an exercise without providing financial compensation for ruining the City's trade for at least a day? If we are ever to get our heads around the problem, however, such a thing must be done. I hope to ask later whether such an exercise will be held realistically.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

The hon. Gentleman clearly illustrates the problem at hand but there are solutions. The whole transport system would not have to be taken down because one could choose to fail aspects of the system to discover the readiness of a working unit to deal with it. Many different industries use such a system and, although I am not an expert, I do not understand why it could not be used for the underground. I am worried about London Underground's response because although it was safe, it was not especially effective. I do not understand what the company will gain from the learning exercise.

I also have real worries about London Electricity. When London Underground was operating its power supply, it had its own staff, which was absolutely essential. They were highly qualified and experts in delivering power to the system. They knew that system intimately because engineers know the systems with which they are involved and can usually pinpoint a problem within minutes of it arising before taking appropriate action. But when power provision was transferred to London Electricity, one of the first problems that arose was that of communication between London Underground, as the users of the electricity, and London Electricity, as its suppliers. As we know from the significant arguments that took place here about the privatisation of electricity, inadequate communication between party A and party B can be a significant problem following the fragmentation of an industry. I do not know what London Electricity has done to plan for disasters and emergencies and what correspondence and joint planning exercises it has conducted with London Underground, one of its major customers. Did they sit around a table together and say, "How do we plan for catastrophic failure of the underground? What is going to be our response and what is going to be your response?" My hon. Friend Mrs. Dunwoody alluded to the failure of various parties to talk among themselves and to agree coherent plans. In this case, there is little evidence of the existence of a co-ordinated plan.

The other element is the national grid. We have a three-party supply line consisting of the national grid, the local supplier and the end user. National Grid has developed a significant number of scenarios for power failure. That is impressive, and it is evidenced not least by the fact that per head of the population we have fewer power failures than any other country. That is an extraordinary position to find ourselves in: we should be grateful.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

Like my hon. Friend, I, too, am a chartered electrical engineer. What is her opinion on the recent power failures in the United States? I was in the US when the power failure occurred in London. There is still great debate over there about that failure and the qualities of a system that is even more fragmented than that of the UK.

Photo of Claire Curtis-Thomas Claire Curtis-Thomas Labour, Crosby

If anything should happen to my hon. Friend and me with regard to employment in this place, we will be safe in America, which has a desperate shortage of appropriately qualified staff to manage not only transmission, but integration. Two factors in the US failures were states failing to pay bills to providers and lack of capacity. I am pleased to say that capacity is not an issue in this country; it was certainly not a factor in the failure on the London underground. In fact, it was caused by human failure—the whole system was brought to its knees by the failure of one contractor. It is not the first disaster to be caused by the failure of a contractor: Hatfield was an example that had not only economic consequences, but caused devastating loss of life.

Speaking as a member of the engineering community, we have huge concerns about the shortage of adequately trained staff. The incident on the underground could have been caused either by an inadequately trained individual who simply made a mistake—human error is perfectly admissible and permissible—or by an individual who had received very little training in a very important system. That is not unusual. I started my engineering career in the 1970s; the world of the next 20 years was one of reduction, not expansion, in the UK's engineering capacity. When I was the dean of an engineering department, I had to preside over the closure of parts of it. I became increasingly concerned that, as a nation, we were not producing sufficient skilled tradespeople, incorporated engineers or chartered engineers to be able adequately to manage the infrastructure that exists today. There is an acute shortage of power engineers and heavy electrical engineers. Those are not glamorous professions, but we desperately need such individuals, who are essential to companies' safe operation.

Following the Hatfield disaster, there was much discussion about whether the rail industry would be able to hang on to its professional engineers, who were desperately worried about the lack of investment and the possibility that they would ultimately be left carrying the can. We now have massive expansion in public sector investment, but that cannot be sustained without adequately trained staff. I hope that the review will reinforce what came out of the Hatfield review—namely, that in order to continue to provide safe systems we need adequately trained staff. That means that we have to assess our capacity to produce those people and to make engineering and the activities of engineers attractive to a population of young people who are not interested in that enormously rewarding and exciting work.

That concludes my comments; I look forward to the Minister's response.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate 2:56 pm, 16th September 2003

It is always a pleasure to listen to an authoritative speech from a Member who is very well informed; I congratulate Mrs. Curtis-Thomas on her contribution. It is extremely important that she drew to the House's attention, in relation to the London underground incident, the importance of differentiating the issue of capacity and the way in which the power shortage occurred in the transmission system. Her discussion of engineering capacity in the United Kingdom could have been delivered so effectively only by the former dean of an engineering department. That issue must be addressed through the reward structure and the way in which we view engineers in our society. Our engineering capacity has been central to our economic success for a matter of centuries.

The hon. Lady's point about the resilience of the national grid was also well made. If her figures are correct, the national grid is delivering electricity for the United Kingdom with the greatest degree of reliability in the world—although one or two tiny little countries may well seek to challenge that.

I congratulate my Front-Bench colleagues on raising the subject for debate. Security of the electricity supply is an immensely important issue. Mrs. Dunwoody said that the general public are interested only in the consequences when things go wrong—and, boy, is that right! It is our duty as elected representatives to ensure that we do not put the general public in a position where they have to endure the consequences of our failure to look ahead. The greatest problem, which the Government still have to confront, is the failure of the energy White Paper to deliver a proper framework for energy policy.

This is the first opportunity that I have had to speak on the subject from the Back Benches since I ceased to be the Conservative party spokesman on energy in May. I congratulate my hon. Friend Mr. Robertson on taking on those responsibilities. I hope that he finds them equally stimulating and that he finds working for the shadow Secretary of State just as enjoyable. We agreed about many things and I very much appreciated the partnership. However, having departed the scene, there are one or two lines in the motion tabled by my hon. Friend the shadow Secretary of State to which I take slight exception.

The Minister for Energy, E-Commerce and Postal Services replied to my hon. Friend and, outstanding as he is, it is too much of a burden for him to look after e-commerce and the Post Office as well as energy. It was not very long ago that energy had its own Department, with a Secretary of State in Cabinet. Given the challenge that the security of electricity supply will pose to the United Kingdom over the next few decades as we become a net importer of fuel again, it is important that we should have a Minister as talented as the Minister for Energy, E-Commerce and Postal Services but whose sole responsibility focuses on energy matters. The Government face serious challenges because of the sad lack of framework in the energy White Paper.

As for the security of supply and the Conservative motion, like the hon. Member for Crosby, I am reasonably reassured by briefings and information from the National Grid that any short-term problems in supply and capacity can be tackled, as it has 18 per cent. overcapacity, enabling it to meet the point of highest demand. Even in difficult circumstances, it has further tools available to it—for example, asking major electricity consumers such as aluminium factories and so on not to use electricity at certain times and to reduce their output by 10 per cent. In the short term, that gives the national grid the capacity to establish the required safety margin.

The Minister also drew attention to the fact that the price mechanism is now starting to operate. However, my thesis is that it must operate within a framework. It is our job as parliamentarians to examine the Government's framework and make sure that it is robust. Having studied these matters for nearly a year as my party's spokesman, I wish to elaborate on my proposals for that framework. In the motion, my hon. Friend Mr. Yeo draws attention to concern about the Government's plans

"to make Britain dependent on gas imports from unreliable sources".

My hon. Friend Richard Ottaway also drew attention to his concerns in that area. Problems are unavoidable, as gas is used to generate 38 per cent. of the electricity that we consume and is the fuel supplied to the vast majority of the domestic sector. We will continue to rely on it in one form or another for the foreseeable future—indeed that trend will continue upwards. Gas will constitute an increasing share of the fuel that we require. From 2005 to 2006, we will no longer be self-sufficient in natural gas and, as has been pointed out, from 2020 we may be importing up to 90 per cent. of our gas.

When I became shadow energy spokesman, one of the first issues on which I wanted to satisfy myself was the question of how much gas there is in the world and the security of supply risk to our major fuel. The simple answer was present in the Government's own analysis, initially from the performance and innovation unit and then in the energy White Paper. There is lots of gas out there—the Russians have about 30 per cent. of the world's supply and so far 100 years' worth of gas supplies around the world have been identified. As we become a gas importer, we will have to address the issue of security of supply by having as many different sources of natural gas as we can reasonably achieve.

That is why, in the wake of the White Paper, I watched with approbation the journeys made by the former energy Minister, Mr. Wilson, around the world as he tried to secure the gas supplies that are vital to our future interests. He was in continual negotiations with Norway over the delivery of gas from the north Norwegian sea, and went to Moscow, Algeria and Iran. I do not know whether he went to Qatar, but it is thought to have 8 per cent. of the world's gas supplies, so it may be another important gas source for us. I very much welcome proposals to create a Northern Natural Gas terminal to bring liquefied natural gas into the United Kingdom from areas where it is uneconomic to pump compressed gas.

I particularly welcome proposals for pipelines direct from Russia, thus avoiding the concern expressed by my hon. Friend the Member for South Suffolk that supplies from Russia will have to go through Germany before reaching the United Kingdom. The Government have made all the right noises about policy on the supply of fuel, particularly gas, being part of our European and diplomatic policy, and it is necessary that they keep up the pressure on that issue. It must be a high priority for everyone up to and including the Prime Minister whenever he is in discussion with Heads of Government, particularly President Putin of Russia, which has a large share of gas supplies, and other Heads of Government in the region. That priority is also central to our wider security and foreign policy in Iran and the middle east. It is important to ensure that the new Saudi gas deals—the Saudis have hitherto ignored their substantial natural gas resources, which are about four times as large as the North sea's—are concluded successfully so that western oil and gas companies can translate those deals into production and widen the sources of gas available to the UK.

Our energy shop is based on gas, whether we like it or not, so for the foreseeable future—certainly for at least the next two or three decades—we have no choice but to deal with the issue of getting gas from what the motion calls "unreliable sources". I am not convinced that we can be quite as complacent as Mr. Stunell, who said that there is no risk to our security of supply. These matters must be kept under review, and that is properly the function of the review set up by the Government. However, we must also consider the national security aspects of the issue—ensuring the security of fuel supply will be an important part of our defence policy. The threat may be limited, but if it becomes a reality it would be catastrophic for the United Kingdom. These matters must therefore be kept under permanent and constant review. All the signs are that the world is becoming a more interdependent place. Using the interdependence of Russia and the United Kingdom as an example, that country needs our money as much as, if not more than, we need its gas. The lessons that we can learn from the oil price shocks of 1974 and 1980 and the way in which the Organisation of Petroleum Exporting Countries has since managed its policies are that it suits countries with natural gas to ensure that the world is reliant on a constant supply of natural gas. If our industries become reliant on cheap and constant supplies of gas we will not start looking around for other fuels. The oil price shocks stimulated huge investment in the search for alternatives to oil, and in the end that did not do the oil producers themselves any favours. I believe that they have learned that particular lesson.

The reference in the motion to the concern about gas imports from unreliable sources is intended to draw the Government into a debate about the fuel mix, which they have previously resisted. It is clear from the energy White Paper that they do not believe that that is a proper decision for government, and I agree with them. If we start going down that road, we are obliged to consider the alternatives to gas. The main source of fuel for electricity generation is coal, but the future of that is not frightfully bright—indeed, it is bleak. The large-scale plant combustion directive will make uneconomic a large proportion of the electricity supplied from coal-fired power stations, and once the emissions trading regime comes into operation and proper pricing of carbon dioxide emissions begins, it is hard to see how almost any form of coal-fired electricity production will be economic, compared with gas or alternative sources.

The Government are investing in carbon sequestration and trying to find a way of rescuing what is left of the electricity generating industry. We must consider carefully the scale of investment that might be required to keep coal-fired electricity generation staggering on. The investment may not be worth the candle. Any Government dealing with energy policy must recognise that the No. 1 requirement is to go on delivering secure and economic electricity supplies, because the wealth of our industry and our quality of life depend on that achievement. Privatisation has contributed greatly to the economic supply of electricity in the United Kingdom, as well as an extremely reliable source of supply in normal circumstances.

The saddest thing about the White Paper was its failure to address the future of the nuclear-generated electricity industry. The Government are doing the country a huge disservice by delaying a decision about that. They must put in place a framework within which future investors will be able to decide whether to invest in new nuclear power stations. Plainly, the Government will not build new nuclear power stations. I believe there is a way to achieve that, as part of an overall energy policy.

We need to create a proper free market in energy within environmental constraints. The vast majority of scientific opinion is agreed that the greatest threat to the planet is atmospheric pollution and climate change. The Government and the European Union are moving towards emissions trading for carbon dioxide. Sadly, that scheme will apply only to large-scale emitters. It will not be comprehensive and will cover only about 30 per cent. of carbon dioxide emissions. I hope to publish in the near future my detailed proposals for an energy policy for the United Kingdom that would provide a comprehensive environmental framework and would, as far as possible, price all greenhouse gas emissions associated with electricity production, transport and domestic use of power. We could then begin to price the comprehensive environmental consequences of what we do.

We have failed to produce a system that does that. The result is that the Government are giving huge support to renewable electricity generation, for example, although its cost is astronomic. The wind farms that are now attracting investment in order for investors to take advantage of the subsidy available from the Government are hopelessly uneconomic. They will be a huge cost to the country. There will be far better ways to achieve the environmental objectives associated with reducing greenhouse gas emission than the production of electricity from wind power.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

The hon. Gentleman referred to the Government's White Paper and their position on nuclear power. Will he tell us his party's position on the future of nuclear power?

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

I am grateful for the invitation. I shall not trespass too long on the time of the House, even though the subject of energy is vast and all-consuming. I hope that we will have more time to debate it in the House. Briefly, in the same way as we should find a mechanism to price the atmospheric pollution caused by carbon dioxide and other greenhouse gases, we should price the future pollution that will be associated with nuclear production. It is not unreasonable to expect new designs of nuclear power stations to allow an estimate of the cost of dealing with the fuel that will come out of those power stations, and the final cost of decommissioning them. Then one can impose an environmental charge against those power stations, in accordance with their expected lifespan.

On top of that cash stream, which in the United States has been set at 0.1 cent for the past couple of decades, which has produced the money that is now paying for the disposal of spent nuclear fuel in the US, some form of insurance premium could also be charged in case those calculations turned out to be hopelessly wrong, as was the case with the first generation of nuclear power stations, which turned out to be vastly more expensive to clean up than anyone ever anticipated. That would also produce the funds to deal with the problem that we face now—the problem of the environmental pollution created by radioactivity. The Government cannot escape their responsibilities in that regard.

There is a way for those costs to be priced in, and if that is done for each design of nuclear power station, and if the costs associated with carbon dioxide and greenhouse gases are also priced in as far as possible, investors will be able to decide whether to invest in wind farms, gas-fired electricity stations or clean coal technology. That is the way forward. It provides investors with a framework in which to make decisions and will then allow the market to operate. It will also be possible to price in factors such as security of supply. As soon as it becomes clear that the supply is under threat, the price of electricity will be almost infinite. People will pay an enormous amount if they think they will be denied supplies of electricity. That is a commodity for which an effective market can work. The challenge facing us and the Government is to create the framework that will enable that market to function and to produce clean, cheap electricity on which we can all rely.

Photo of Patrick Mercer Patrick Mercer Conservative, Newark 3:17 pm, 16th September 2003

It is a privilege to follow my hon. Friend Mr. Blunt. I am grateful to Mrs. Curtis-Thomas for making one or two points on which I hope to expand. I shall confine my remarks to the security aspects of the London underground, with particular reference to the exercise that took place about 10 days ago.

I shall pose a number of questions. I apologise in advance to the Minister if that causes him confusion. I realise that most of the questions could be answered by various Ministers—the Home Secretary, the Minister with responsibility for the Cabinet Office, the Minister for Local Government, Regional Governance and Fire, or the Secretary of State for Transport. Who knows who will answer the questions? The Government do not have one central point to which to address questions relating to homeland security. If they did, perhaps some of my questions might receive a proper and coherent answer.

Almost 10 years ago, there was a sarin attack on the Tokyo underground. I do not need to remind the House of its effect. Since then, every terrorist group worth its salt has promised a similar attack somewhere in the world. Even before 11 September, there was the threat of an attack on the British underground. Most recently, a home-grown bunch of terrorists told us that that would happen. We had a warning from the head of MI5, as well as a warning about suicide bombers from one of the Metropolitan police's most senior officers.

Despite all those events, it has taken more than two years since 11 September for such an emergency to be practised in any realistic way. While I am grateful that there has been a practical exercise rather than a table-top, procedural, telephone or computer exercise, my first question to the Minister is: why has it taken so long? Where is the energy and the determination to protect not only our underground travellers, but the people of London? Where is the drive to ensure that the threat is being taken seriously?

For instance, why was the exercise planned and conducted on a Sunday, when there was no traffic and few people, few trains were running and it was easy to close the affected part of the underground system? I understand the points made about the financial implications for the City, but why was the scenario practised in such an easy way? Two thirds of the problem relates to other traffic and congestion, but that element did not arise. Why were the emergency services in position before the exercise? Why were the police and the fire and ambulance services in place? Why was the civil contingencies reaction force not present? Why were the armed forces not involved?

Why was the whole exercise so mechanistic and procedural, two years after 11 September and almost 10 years after the Tokyo attacks? It was good to see policemen, firemen and others donning those ghastly and uncomfortable suits and masks and getting down into the underground, but it was clear to me, as it would have been to the Minister if he had been present, that they were wholly unfamiliar with what they were doing. I could have understood that unfamiliarity if the exercise had been conducted in the weeks following 11 September, but I could not do so two years afterwards.

When will such an emergency be practised outside London? When will such problems be physically rehearsed on other rail networks and in other tunnels? When will we next see such an exercise in London? More to the point, when will it be practised at a realistic time of day and with all the associated problems? That prompts the question of why so little account was taken of what happened on 28 August. Why were not the lessons carried forward immediately, clearly and with the energy and impetus that I would have expected? Surely, every sort of chance disaster, if that is the right phrase, must be used to teach lessons. The lessons must be implemented quickly and effectively; otherwise we will not be bothering or taking the matter seriously.

I have already asked about the next practical exercise—in the armed forces, it would be called a field training exercise—and asked when one is next planned for London, but answer comes there none. When will the emergency services be given a run in proper conditions, so that they can improve their reactions and so that London and the rest of the country get a proper crack of the whip? There is little doubt that such an emergency is coming. People far more knowledgeable than me have already warned that that is the case.

Some very fine words about the exercise were broadcast by the Liberal party. It was highly critical and made some suggestions and observations. Yet as far as I could see, not a single Liberal spokesperson or Member of Parliament was present. It is interesting that the Liberal Benches are so empty today. I say to the Liberal party that if it wants to comment, it should put its money where its mouth is by getting on the ground and seeing what the problems are.

In summary, valuable lessons were learned a couple of weekends ago that may help with the London underground if and when an emergency arises. However, I say to the Minister that if what happened in Tokyo happens in London, the Government will never be forgiven, and any of us with half a conscience will never forgive ourselves. I urge him to act and to do so in a realistic rather than a wholly unrealistic manner.

Photo of Tom Brake Tom Brake Opposition Whip (Commons), Shadow Secretary of State for Communities and Local Government, Liberal Democrat Spokesperson (Communities and Local Government), Liberal Democrat Whip 3:24 pm, 16th September 2003

I welcome the opportunity to contribute briefly to this debate.

Like other hon. Members, I wish to focus on electricity supply and the London underground. We understood from the Minister that evacuation procedures were carried out according to standard arrangements during recent events. That may well have been the case, but, if so, one wonders why it took up to 90 minutes to evacuate some people. He also said that there was no room for complacency. I think that we need to look back at some of the problems that arose during evacuation of the Central line in January to see whether the lessons have been applied.

For instance, problems arose in respect of emergency lighting on the train and mayday calls being broadcast on the intercom, which meant that passengers could hear them. There was a potential problem with regard to passengers descending an escalator into Chancery lane station while the emergency was under way. Problems also arose when passengers involved in the incident did not receive counselling. A large number of issues arose from the Chancery lane incident, and I should like some reassurances that they will be considered, that the lessons have been learned and that the evacuation following the recent interruption to power supply went smoothly.

Communications also need further investigation and were a significant problem at Chancery lane station. It appears they were also a problem in relation to the more recent incident. I understand that the National Grid Company knew that there was no terrorist cause and immediately advised EDF to that effect, but that there was a delay in passing on the information. Presumably—the Minister may be able to clarify this point—the information would have had to go through Seeboard Powerlink before it arrived on the desk of London Underground Ltd. If the need for different organisations to be contacted sequentially is a problem, it must be addressed.

Similarly, the issue of communications outside London Underground must also be addressed. That involves what commuters knew about the incident. Furthermore, after the incident, broadcasters were unable to provide much information about the reasons for the problems that commuters were experiencing. There was almost a communications blackout in terms of people travelling on the tube, and that issue must be looked at.

Other hon. Members have mentioned the back-up power supply. I shall not go into the history of Lots road, but the Minister must reassure us that commuters are not in a worse position now than they were previously with regard to a back-up power supply that could provide traction for the tube. I hope that the Minister can explain what consideration was given to a back-up power supply when the closure of Lots road was examined and why it was eventually decided not to pursue the option. I also hope that he can say whether it is intended to hold discussions involving the Government, Transport for London, the Mayor and the national grid about the potential need for such a supply.

If action is taken on the key issues—communications, ascertaining whether evacuation procedures for the London underground worked as effectively as they could, implementing the lessons from Chancery lane, conducting a review of back-up power supply arrangements—something positive will emerge from a disaster that affected hundreds of thousands of Londoners.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale 3:29 pm, 16th September 2003

It is a well worn cliché on such occasions that those who make the wind-up speeches say how excellent and informative the debate has been. However, I genuinely believe that that applies today. As a humble transport spokesman, I have learned more about energy supply this afternoon than I ever expected I would.

I pay special tribute to my hon. Friend Richard Ottaway, who spoke with a depth of understanding about and interest in NETA, and to Mrs. Curtis-Thomas, who spoke, as a former dean of an engineering department, with great knowledge of the technical background to events on 28 August. She also made some wider points that I hope the Government will take on board in the longer term.

My hon. Friend Mr. Blunt made an interesting contribution. He has studied energy supply in great depth in recent months. I shall revert shortly to the remarks of my hon. Friend Patrick Mercer, who speaks for our party on homeland security and posed the Government some important challenges.

I make it clear at the outset to both Ministers that no one believes that the issues that they confront and that we have been debating are easy to resolve or require the mere waving of a magic wand or the exercise of political will to cause all difficulties to disappear. Of course, that is not the case. We are dealing with challenges that have built up over many years. The decisions that we make will have consequences for many more years and decades.

I shall begin with some comments about our general energy debate before concluding with a few specific questions to the Minister for Transport on transport matters. Although I look forward to his response because he is one of the most entertaining speakers on the Government Front Bench, I regret the absence of the Secretary of State for Transport. We understand the absence of the Secretary of State for Trade and Industry—she is returning from the Cancun deliberations, which it was perfectly appropriate that she should attend. However, the Transport Secretary is absent because he has been attending a party to celebrate the first stage of the channel tunnel rail link. Some would say that it was a little premature to celebrate any part of our transport infrastructure, but we shall await the Minister's comments.

Many speeches paid tribute to the skill and ability of the Minister for Energy. We find it curious that he is also Minister for E-Commerce and Postal Services, just as it is curious that the Secretary of State for Transport doubles as Secretary of State for Scotland.

Events in London and the south-east on 28 August and in the west midlands on 5 September—and in many parts of East Anglia last year, as my hon. Friend Mr. Yeo pointed out—harked back to the past. In an entertaining speech, which I shall shortly consider in greater detail, Mrs. Dunwoody said that the last time we had serious power failures was shortly after the second world war. She may be right about the scale but, as someone who grew up in the 1970s under Governments of both parties, the events to which I referred were reminiscent of the period when many of us enjoyed our childhood. There were repeated power failures and power cuts. Eighteen years of Conservative government consigned them to memory and perhaps it is not coincidental that, after six years of a Labour Government, we appear to be reverting to some unfortunate old patterns.

The hon. Member for Crosby rightly set out in almost as much detail as the Minister—who reads a brief that is put in front of him—the exact technical nature of the failure on 28 August. I am not qualified to challenge her and I am sure that her description of what happened practically is accurate. However, what occurred was described by the hon. Member for Crewe and Nantwich as a clear warning of what might happen if we do not have security of supply in the future. That is the context in which the wider points about the Government's energy policy and the sad deficiencies of their energy White Paper were made by a number of speakers, not only on this side of the House.

There is a general sense of disappointment that the Government, who had placed such great stress on the quality of their energy White Paper, its all-embracing nature and the courage with which various options were going to be assessed and decided in it, have none the less come up with a document in which, in the view of many experts, they have ducked more decisions than they have made. That point was made by my hon. Friend the Member for South Suffolk, but was not adequately addressed by the Minister, who made the best of a rather sticky wicket. I do not blame him for the difficulties in which he finds himself, but many people seriously question what the status of energy supply will be in 2020 and whether it is credible to believe, as the Government do, that by then 20 per cent. of our energy will come from renewable sources. Very few people dispute the desirability of that outcome, if it is deliverable, but many have reservations about whether it can be done.

It seems curious, given that the Government have chosen to produce this White Paper, that it should be in Opposition time that the House first gets the opportunity to debate the issues arising from it. As my hon. Friend Mr. McLoughlin pointed out, it also seems extraordinary that it should be through private correspondence that we receive a commitment from the Government to place an energy Bill in the next Queen's Speech. It would be helpful to find out whether the Minister is prepared to say on the Floor of the House what we understand a couple of Ministers have said in correspondence: namely, that there will definitely be an energy Bill in the Queen's Speech. If so, what areas it will cover?

Mr. Stunell, speaking for the Liberal Democrats, rather unfairly attacked the splendid speech made by my hon. Friend the Member for South Suffolk, who spoke with characteristic panache. The hon. Gentleman accused him of over-reacting and of warning that the whole world was going to come to an end. I would point out to the hon. Gentleman that it is his party's amendment that says that Government policy has

"left the electricity generation industry in crisis", and that it was his speech, not that of my hon. Friend, that ended by accusing the Government of acting in panic.

Some of us also found it curious that the hon. Gentleman spent some time saying how wicked and evil it was that the Conservative Government had created a relationship between the power driving the lights in the House and the French Government, given that his party believes that our European neighbours should rule every aspect of our domestic lives. It was even more curious that he thought it a problem to have an energy relationship with the French Government, but perfectly all right to be dependent for large parts of our future energy supply on the Russian Government. That seemed an odd position to take. He did, however, tell the hon. Member for Crewe and Nantwich and my hon. Friend the Member for Croydon, South that all problems would be solved if we were to purchase a copy of his book. All I would say, in the kindest possible way, is that if he writes as well as he speaks in the House, I do not think that J. K. Rowling will have any real competition or difficulties with her sales figures.

The priority that has emerged from many of today's speeches is that we must ensure that lessons are learned from what happened on 28 August and subsequently. In that context, I would like to press the Transport Minister on a matter that I raised earlier with the Minister for Energy, E-Commerce and Postal Services. Who, precisely, will be responsible for learning the lessons, particularly about evacuation procedures—a point also raised by Tom Brake and others—and about the general handling by London Underground of incidents relating to power cuts? Who will be in charge of implementing any ensuing recommendations?

As a result of the £500 million that the Treasury spent on the negotiations over the public-private partnership for the London underground, we now have an extremely complicated and long series of contracts, but it is still not clear to many London commuters who will be responsible for implementing any recommendations on these issues. Will it be the Government, Transport for London, the Mayor of London or the individual train companies? Or will it, as the Minister appeared to suggest earlier, be up to individual drivers to decide what to do in particular circumstances?

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

My hon. Friend the Minister for Energy, E-Commerce and Postal Services was right to say that the practitioners, whether on the trains or in the underground stations, will have to take those decisions in the light of all the circumstances. Ultimately, the Mayor of London takes responsibility for the conduct of the underground.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

That was a helpful reply as far as it went, but the Minister will know that, although responsibility for London underground has, rather belatedly, been devolved to the Mayor of London, responsibility for health and safety legislation, security and a range of associated issues have not been devolved. They remain the Government's responsibility. What about issues relating to what happened on 28 August? The Minister said that 57 tube trains were stuck in tunnels—passengers were kept on 49 of them, but 1,200 passengers were taken out of the carriages of eight trains and put on to the surface of the tunnel, where they walked along beside the rails. As a result, the problems took longer to resolve than they otherwise would have done.

I am not expecting the Minister to have a definitive answer this afternoon, but Londoners expect greater clarity about the overlap, especially between the homeland security issues to which my hon. Friend the Member for Newark referred and the responsibilities of the Mayor of London and others.

Understandably, there has been huge publicity in the London and national media, as a result of what happened on 28 August, about which precise electricity substations in which precise geographical locations provide power to the primary transport mechanism for the capital city of the fourth largest economy in the world. It is not being unduly paranoid to say that among those who will have read those details are people who do not bear this country and its citizens any good will. What additional steps have been taken to protect those electricity substations to ensure that, now that it has become more obvious how fragile some of these arrangements are, people will be deterred and detected should they attempt to threaten them? Many of us share the view expressed by my hon. Friend the Member for Newark. Like others, I was making that point two years ago when I was shadowing the Cabinet Office. We need a homeland security Department, like that in the United States, to provide a single focus, so that someone can be answerable to the House for questions on these matters.

We do not for a moment believe that it is easy or simple to provide energy security for the future of this country but, in the words of my hon. Friend the Member for South Suffolk, we believe that that is one of the first duties of Government. We hope and expect that the Government will introduce legislation on this matter in the Queen's Speech, that they will provide answers to some of the issues that they ducked in their energy White Paper, that they will accept that this matter is of supreme national significance—not just in London but especially in London—and that they will give us a sense that they recognise that fudge and delay in this area can no longer be tolerated. Clear decisions, clearly announced and clearly implemented, will alone meet the demands of this hour.

Photo of Kim Howells Kim Howells Minister of State, Department for Transport 3:43 pm, 16th September 2003

May I echo the words of Mr. Collins? This has been an excellent and challenging debate. Like him, I was particularly impressed by the contribution of my hon. Friend Mrs. Curtis-Thomas, and by those of his hon. Friends the Members for Croydon, South (Richard Ottaway) and for Reigate (Mr. Blunt). In fact, we have not heard a speech that has been less than interesting. I shall not join in the cracks about Mr. Stunell[Interruption.] The hon. Member for Westmorland and Lonsdale has nicked my line. I was about to say that when it is remaindered, I may have a look at his book.

The Government share the concerns expressed by hon. Members about the temporary loss of power in south London and Kent on 28 August, and the subsequent impact on and disruption to travellers. When I heard about it, I immediately thought of the confident statements made in the aftermath of the blackout in north-east America by our own energy regulator and many others, who said that it could never happen here because our system was too robust.

As my hon. Friend the Minister for Energy, E-Commerce and Postal Services explained, some 410,000 customers in south London and parts of Kent lost electricity. Power was restored through the transmission system within 30 minutes, and within another 11 minutes the local distribution system was re-energised and normal power was restored in all areas. As at least one Member has said, however, there is no room for complacency. Our aim must be to ensure that there are no interruptions to such a vital system. We should also bear in mind the potential danger of conveying people through what may be long and deep tunnels in London.

The power failure did, of course, have far-reaching consequences. The hon. Member for Hazel Grove mentioned the heavy rail network. We must draw lessons from the extent to which that network was affected, and I shall ensure that the investigations take it into account—along with the fact, not mentioned so far, that hundreds of traffic lights went out in London. We should bear it in mind that only 6 per cent. of journeys in this country are made by rail. A huge number of vehicles were held up in traffic jams. As was pointed out by Patrick Mercer, we have many lessons to learn. Security involves a range of aspects of our lives, not just the economic aspect. Being able to negotiate the streets is certainly one of the most important.

The power cut caused disruption to surface rail services, the underground, street lights and traffic systems, as well as electricity users in homes and workplaces. Although London's critical infrastructure has back-up arrangements, there was significant and worrying disruption to the transport service in general. All the agencies involved are reviewing their back-up plans in the light of difficulties caused to passengers after the power cut. Following the publication of National Grid's report on 10 September, my hon. Friend the Minister for Energy, E-Commerce and Postal Services announced that the Department of Trade and Industry and Ofgem would conduct their own inquiries, and we hope that the results will be published by mid-November. The DTI's engineering inspectorate will conduct its own detailed investigation of all the technical and operational issues involved in the security of our electricity supply.

As my hon. Friend explained at the beginning, the cause of the power cut has now been traced to two faults that affected the same section of the network at almost the same time; but we will not hear this Minister blame some individual for putting a fuse with the wrong ampage into a box. As Members on both sides of the House have said, there are lessons to be learned and serious investigations to be conducted, involving the whole range of electricity generation and supply. The hon. Member for Reigate and others have reminded us of the seriousness of these issues, and they will be taken fully into account.

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

I hope the hon. Gentleman will forgive me if I do not. I have very little time left.

Risks to complex systems such as the energy supply cannot be eliminated, but we are determined to use this experience in a way that will enable us—along with other agencies, the regulator and the companies involved—to minimise and, where necessary, manage those risks. The Secretaries of State for Trade and Industry and for Transport are also determined to ensure that the necessary lessons are learned, because the Government share the House's feeling that what happened on 28 August must not happen again. Our transport providers need secure, reliable supplies and an effective and appropriate means of handling disruption, if and when it should occur.

In answer to a point raised by the hon. Member for Westmorland and Lonsdale, London Underground draws its power from the national grid under a private finance initiative deal—it was finalised in 1998 but began long before then— with Seeboard Powerlink, which manages, maintains, develops and finances the London underground power supply system. The PFI deal stems from a decision first taken by London Underground in 1985: that the Lots road power station, which was by then 100 years old and reaching the end of its life, should be closed in favour of supply from the national grid. I understand from London Underground that that decision was reviewed several times before finally being confirmed through the award of the PFI contract in 1998. During that period, consideration was given to several options, including refurbishing the Lots road station.

There seems to be consensus among experts that resilience is better secured by having access to the wider supply possibilities of the grid, rather than through over-reliance on an individual power plant such as that at Lots road. Well, we may yet have that debate, as a consequence of the investigations that will take place.

I want now to deal with some of the points raised by my hon. Friend Mrs. Dunwoody, who has looked at these issues particularly closely. I never thought that I would live to hear her say that she associates herself completely—completely—with the comments of Conservative Front Benchers. It was a wonderful moment, but I should warn the House that she can be more than a little mischievous from time to time. I suspect that she was seeking to tease out of Mr. Yeo some firmer statements on Tory policy on electricity generation supply and demand. She is one of the House's most accomplished performers, and I want strongly to commend to some of the younger Members—on both sides of the House—the hon. Gentleman's decision not to take her on. I certainly would not do so.

Photo of Kim Howells Kim Howells Minister of State, Department for Transport

I am trying to answer the questions. My hon. Friend the Member for Crewe and Nantwich concentrated, quite properly, on crucial issues such as passenger safety and the provision of constant electricity supplies to the underground.

The PFI power contract was put out to tender in 1996 and was signed in 1998 with Seeboard Powerlink, which is owned primarily by Seeboard. The contract has been subject to safety and risk analysis. The PFI covers four main features: the provision of back-up supplies from a gas turbine generator at Greenwich; the provision of emergency battery lighting at stations; the purchase and supply of power from the national grid; and the operation, maintenance and renewal of London underground's high-voltage network.

The PFI contract is drawn so as to incentivise Seeboard Powerlink's maintaining a high level of resilience and security of power supply. The PFI will provide a new control system, known as SPIDER—I do not know why—for London underground's power network. I am told that it will enable faster high-voltage system reconfiguration in the event of loss of supply from the grid.

I want to reassure the House and the hon. Member for Croydon, South in particular that as part of its review of the handling of the power failure, London Underground will examine how its power PFI worked, and identify improvements that can be made to communication between it and Seeboard Powerlink, and between the latter and EDF Energy, which is the local distribution supplier. Indeed, that issue was also of concern to Tom Brake. London Underground will particularly investigate its operational and customer service response to the power supply problems of 28 August—especially internal communications and the CCTV network, which Patrick Mercer rightly noted was important. The evacuation protocol, which seems to have worked well on this occasion, will also be assessed.

As the hon. Member for Westmorland and Lonsdale reminded us, people got out safely and no one was hurt. We need to learn from what went well as well as from the difficulties. The reopening of stations and the restoration of services is also important. The electricity may be brought back on supply, but we have to ensure that no one is on the lines and that no part of the system will be damaged as a consequence of turning the juice back on. Communications with the world beyond the underground system will also be examined. We must ensure that everyone knows exactly what is happening to prevent crushes from crowds of people trying to enter stations on the underground when they should stay well out of them. Those are serious issues.

London Underground's key problem, as several hon. Members have pointed out, is decades of under-investment. I want to assure my hon. Friend the Member for Crewe and Nantwich that the public-private partnership is delivering unprecedented levels of long-term stable funding to enable the tube to be brought up to modern standards. The Government are providing £1 billion a year for the next seven years. In all, the PPP will save more than £1 billion a year spent on maintenance and upgrades over the next 15 years. That will give the tube a chance to recover and to become a much better system. The underground, of course, remains publicly owned and is publicly accountable to the Mayor of London, and the private sector consortiums that are contracted to deliver the improvements face heavy penalties if they fail to do so.

My hon. Friend the Minister for Energy, E-Commerce and Postal Services openly and candidly dealt with the hugely important issues that the hon. Member for Westmorland and Lonsdale focused on about the future of electricity generation and supply in this country.

Before I reach the requisite part of the winding-up speech, I want to add my praises—my hon. Friend would have done so if he had had time—for the hard work of London Underground staff—drivers, the station staff, the controllers and so forth—in handling such a difficult event. They did it very well indeed, particularly evacuating passengers from stations so quickly, and later getting the trains into the right positions to resume services as efficiently as possible.

We should not forget the bus drivers and conductors who had to deal with the influx of passengers, nor the managers of the bus companies who instructed their drivers and conductors to accept tickets in order to help the thousands of people denied access to the tube to reach their destinations. It was a major exercise and it was done very well. The people working on the railways, who worked hard to ensure that services ran once the power was restored, should also be thanked. We often knock the transportation services in this country, but they are staffed by extremely professional and excellent men and women. In this instance, under exceptionally difficult circumstances, they did a tremendous job of ensuring that services continued.

My right hon. Friend the Secretary of State for Transport and I will take great interest in the lessons that emerge from the various reviews and will ensure that they are acted on. In the unlikely event of a repetition, we trust that London Underground will respond even better and restore services more effectively.

In the few moments remaining, may I turn to the issue raised by my hon. Friend the Member for Crosby? It is extremely important that the appropriate skills exist to ensure that the tasks can be carried out. Those skills are held by the existing highly knowledgeable and good work force, but my hon. Friend is right that we must incentivise young people to work in the sector. If we do not, many of the predictions of doom that we have heard in today's debate will certainly come to pass. That is a primary responsibility of Government and I assure my hon. Friend that I will talk to my right hon. Friend the Secretary of State for Education and Skills to ensure that measures are taken to try to provide incentives for people to enter such employment.

We have had an excellent debate today and I assure the House that we will learn the lessons of the outage that occurred on 28 August.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 124, Noes 332.

Division number 312 Electricity Supply

Aye: 124 MPs

No: 332 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.

Madam Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House regrets the problems that have recently occurred on the National Grid and the disruption that was caused particularly to transport services; further notes that the report published by the National Grid last Wednesday shows that the problem was not caused by under-investment on the network, shortage of capacity or its contractual relationship with any of its customers but rather by a local transmission failure; notes that security of supply is one of the key responsibilities of the regulator, that Ofgem is considering the incident in the light of the National Grid's licence obligations and will be reporting at the end of September; and further notes that the Government's engineering inspectorate will also be conducting its own investigation.