The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry) : I believe that the competition created by privatisation will bring benefits to all electricity consumers both in the price and in the quality of service.
Mr. Evans : Does the Minister agree that, now that inflation is climbing towards 10 per cent. and is likely to go even higher, although the price index that he has concocted will mean higher profits for the few, it will mean increased prices for domestic and industrial consumers, particularly in deprived areas such as Merseyside?
Mr. Baldry : The hon. Gentleman is mistaken. Customers consuming more than 1 MW are already benefiting from competition in the market and many have negotiated large price reductions. For those who need more time to negotiate longer-term arrangements, the industry has offered a real terms price freeze this year. For customers consuming less than 1 MW, the average increase this year will be about 9 per cent., but the price controls on the industry should prevent any further real increase until at least April 1993. That is good news for those consumers.
Mr. Hannam : Does my hon. Friend agree that, whereas privatisation usually brings down prices through competition, when new environmental protection measures are to be introduced, they will incur extra costs, and the public must realise that they will add to prices?
Mr. Baldry : My hon. Friend, as ever, makes some very sound points. Of course, competition will be of benefit to the customer and the consumer. It will be for the generators to determine how best to meet the European Community large plant directive, but the capital costs of flue gas desulphurisation will be taken into account in setting the capital structures of National Power and PowerGen.
Mr. Dobson : Will the Minister confirm that, if a distribution company loses trade to other generators that supply power direct, its domestic consumers will find themselves making up the difference? Is not that why,
Column 580under the new scheme, the Merseyside and north Wales company will be entitled in future to impose price increases of 2.5 per cent. above inflation?
Mr. Baldry : Price increases vary among the different companies, as they have in the past, reflecting the fact that they have different costs and earn different rates of return. Of course, it will be for the director general to monitor and enforce the licence conditions. The Opposition would do better to refrain from any comment on electricity prices, because during the last five years of the Labour Government, in real terms industrial prices rose by 1 per cent. and domestic prices by a staggering 22 per cent.
Mr. Skinner : When the Minister meets the chairman of British Coal, will he discuss stocks at power stations? Is he aware that, under the privatisation legislation and the office of fuel security code, the equivalent of three months' worth of coal stocks would have to be kept by a small power station whereas the same does not apply to oil and gas? Surely that cannot be right according to the hon. Gentleman's ideas of fair competition. It means that the market is rigged against coal. When the hon. Gentleman meets the chairman of British Coal, will he make it clear that coal will not be treated adversely compared with oil and gas and other forms of fuel. Otherwise coal will carry a handicap that it does not deserve.
British Coal has negotiated with the generators three-year coal contracts that will give the coal industry a stable future. British Coal is much more optimistic about its prospects than is the hon. Gentleman. The chairman recently commented that the contracts provide the coal industry with a known sales prospectus against which to plan and operate.
Mr. Cummings : When the Minister next meets the chairman of British Coal, will he tell him of the worries and frustrations of the miners and community of the Easington district, which he visited 10 days ago, about the 40,000 tonnes of imported low-sulphur coal that arrived in Hartlepool a week before his visit?
Will he tell the chairman of British Coal of the worries of Easington district council about the proposed use of the Murton colliery spoil heaps, which are of strategic importance to the district's plans for the regeneration of industry and the provision of industrial estates?
Column 581Will he inform the miners of Easington colliery of their worth in terms of productivity and efficiency, even in the most exhausting circumstances that have arisen from recent flooding? Will he--
Mr. Baldry : I welcomed my recent opportunity to visit East Durham coalfield and Easington colliery in particular. It seemed to me that, if Easington colliery continued to be productive, it had a sound future.
The hon. Gentleman asked about coal imports. It is important to put those matters in perspective at all times. In 1988, the major importers of coal were the iron and steel industry and in that year total coal consumption in the power stations was 88 million tonnes, of which only 2.4 per cent. was imported. One has to put the matter in its context.
During my visit to East Durham coalfield, the hon. Gentleman and others showed me areas about which they were concerned--one of which was the surplus land at Murton colliery. As the hon. Gentleman knows, I have pursued the matter with British Coal and, as he also knows, British Coal has sought tenders for the sale of surplus land at that colliery. Once the site is restored, it should be eminently suitable for industrial and commercial development and I know that that will be warmly welcomed by Easington district council.
The hon. Gentleman will be glad to know that the Department of Trade and Industry, with the support of Durham county council and Easington district council, is committed to establishing a task force to co-ordinate activities aimed at the continued economic regeneration of the East Durham coalfield area.
Mr. Speaker : I hope that that response has demonstrated to the House what happens if-- [Interruption.] It was not the Minister's fault. He was asked a number of questions. It would help if hon. Members asked single questions.
Dr. Michael Clark : When my hon. Friend next meets the chairman of British Coal, will he review with him the achievements of British Coal Enterprise, which, in the past five years, has created 1,640 jobs on sites no longer used by British Coal? In particular, will he congratulate the chairman of British Coal Enterprise on the success of Carcroft enterprise park where 60 companies now employ 500 people--more than were employed when British Coal was pursuing activities there five years ago?
Mr. Baldry : My hon. Friend is absolutely right. Only the week before last I had the opportunity to see for myself the work of British Coal Enterprise and its projects in Blyth valley and Newcastle. Through a whole host of schemes, British Coal Enterprise has helped to create several new jobs in areas that previously had coal mining industries. It is important to bear in mind the fact that coal mining is an extractive industry. Ever since the last war capacity in coal mining areas has been closing and the largest closures took place under the Labour Government
Column 582of 1964 to 1970. So what British Coal Enterprise is doing is extremely constructive, in trying to ensure that new jobs replace those that may be lost in the coal industry.
Mr. Brandon-Bravo : Although British Coal has undoubtedly made enormous strides over the past few years and deserves to look forward to a stable future, I am concerned about that future for the east midlands. I am concerned that some of our major power stations may use gas or imported coal to meet existing and future environmental standards. Will my hon. Friend the Minister give us some assurances about that?
Mr. Baldry : There is a question later on the Order Paper about flue gas desulphurisation. However, it might be helpful if I try to deal with my hon. Friend's question on that subject now. It must be borne in mind that under the European Community large plant directive there are three target dates : 1993, 1998 and 2003. We know how much coal British Coal will send to the generators in 1993 because that is part of the coal contracts that have already been entered into and that is a firm contractual commitment. Under that contractual commitment, British Coal has nothing to fear from gas or imported coal because we know the amount that will be used in 1993. The retrofitting to which the generators are already committed--the 8 GW-- will enable them to meet the target under the European Community large plant directive for 1998. It is perfectly possible for generators to burn as much coal in 1998 as in 1993, if they so choose. We must put those concerns into perspective. However, the amount of coal that the generators burn will always depend on the competitiveness of coal in relation to other fuels.
Mr. Benn : How can the Minister justify importing low-sulphur coal, which has a total foreign currency content, at a time when the Government are cutting investment in the scrubbing plant that would reduce pollution from coal produced in this country? Is the Minister aware that if Common Market regulations on sulphur emissions are applied by the end of the century, the coal import bill could be getting on for £2 billion a year against a background of an appalling balance of payments deficit? That would also freeze underground Britain's greatest natural resource.
Mr. Baldry : It is not the Government's policy to prevent coal users from purchasing coal from the source of their choice. However, as I have already explained, only 2.4 per cent. of coal used by power stations is imported. Restricting competition from other coal will not bring long-term security to the British coal industry. The best protection is to produce reliable supplies that are competitive in the world market.
The Minister of State, Department of Energy (Mr. Peter Morrison) : Power generation capacity from waste incineration and landfill gas schemes during 1989 has been estimated at about 36 MW. Of that total, nearly 20 MW was from waste incineration and 16 MW from landfill gas schemes.
Column 583Mr. Moss : In view of the contribution that methane gas makes to the greenhouse effect, is not it vital that that gas is harnessed whenever possible for the generation of power? In that regard, is not the Government's policy on ring-fencing renewables within the non- fossil fuel obligation welcomed by environmentalists and electricity consumers alike and likely to lead to an even greater use of landfill gas schemes in future?
Mr. Morrison : The non-fossil fuel obligation, and its renewable aspect is very important. Our estimate for landfill gas schemes is that the capacity will increase to 60 MW by 1992 and to between 150 MW and 175 MW by the end of the century.
Mr. Haynes : I want the Minister to listen carefully. I agree with incinerating waste for energy purposes, but the Minister must seriously consider cancelling the landfill business because it creates a time bomb for many areas. The Minister knows what I am talking about. I hope that the Department of Energy will take my points on board, with a view to stopping that process.
Mr. Morrison : I assure the hon. Gentleman that I listened carefully --I could hardly do otherwise. However, he and I must agree to disagree on this matter because the production of landfill gas is a useful way of generating electricity.
Mr. Peter Morrison : Energy paper 55 sets out a 10-year programme of research and development worth £360 million with costs shared between Government and industry. This year, my Department expects to spend just over £20 million on renewable energy research.
Mr. Mans : I thank my right hon. Friend for his reply. None the less, does he agree that in the medium term, renewable sources of energy will still constitute only a small percentage of our total energy needs and that the further development of other energy sources, such as nuclear power, which is so important to the north-west, should go ahead?
Mr. Morrison : I agree with my hon. Friend about the importance of nuclear power. As I, too, come from the north-west, I know how dependent we are up there on the nuclear industry. However, the necessary development and research into renewables is the right course to take.
Dr. Kim Howells : As the Minister will be aware, on 28 March the EC agreed to a package of aid for this country to the tune of about £2.5 billion to cover our present and future liabilities for the nuclear industry. What sort of package did the Government aim for with regard to renewable sources of energy? Is it of the same order, and if so, what sort of projects will it cover?
Mr. Morrison : The hon. Gentleman cannot have been listening to my reply to the original question when I talked about £360 million of further research and development, shared between Government and industry. The obvious renewable energy sources will be considered, such as wind, wave and landfill gas production.
Mr. Evans : I am grateful to my hon. Friend for his reply. Does he agree that with the closure of 90 pits, and a work force that is halving but with output remaining the same--mainly because of the 75 per cent. increase in productivity--the coal industry is moving inevitably towards privatisation? Does he further agree that the people of Great Britain will ask the Labour party time and again why it did not condemn the miners' strike in 1984-85? Is not it now apparent that the union leaders took Libyan blood money when they should have been looking after the interests of their members?
Mr. Baldry : It remains the Government's firm intention to introduce legislation in the next Parliament to return British Coal's mining activities to the private sector. The way in which British Coal returns to the private sector will, to a certain extent, depend on the increases in productivity that the coal mining industry makes in the meantime. The activities of the National Union of Mineworkers during the strike are a matter for which the leadership will have to answer to its members. The future of the coal industry depends on it increasing its productivity. I believe that the industry has the investment and the technology and, more importantly, that it has the men with the skills, to make that possible.
Mr. Eadie : Is the Minister aware that some of my hon. Friends will think that he was less than candid when he told us that there were no plans for privatising the coal industry? Does he accept that some of us think that plans for privatising the coal industry have already been made? Is he aware that there is great concern about the code of practice and the regulations governing safety in the mining industry and that there is little consultation between all the unions involved? The Minister should know that the Department of Energy has a joint consultative role when deciding on safety measures in the coal industry.
Mr. Baldry : Obviously, I did not make myself clear enough, so for the avoidance of any doubt let me make it quite clear that when the Conservative party wins the next general election, it will privatise the coal industry. Let there be no doubt about that. But let there also be no doubt that Conservative Members are as committed to safety in the coal industry as is the hon. Gentleman, and safety in the coal industry is a matter for the Health and Safety Executive.
Mr. Nicholas Bennett : Has my hon. Friend noticed that some of the best privatised industries have been formed as a result of workers' buy- outs? Therefore, will he assure the House that when British Coal is privatised after the next election, he will welcome offers from the National Union of Mineworkers to run the industry, as it seems to think that it knows better than British Coal?
Column 585forward our proposals to privatise the industry. Clearly, employee participation is one factor that it will be important to consider.
Mr. Baldry : The hon. Gentleman asks where our policies are. Our policy is clearly that we intend to privatise the coal industry. That is clearer than the Labour party's policies on energy generally. If The Sunday Correspondent is to be believed, even such detailed policies as the Labour party has had on energy are now being abandoned as too turgid.
Mr. Morgan : The Minister seems to be giving a display of the old English proverb : When Blackadder is away, Baldrick will play. Will he give serious thought to the fact that coal privatisation has just been put back five years, in part because of the abandonment of the qualifying industrial users schemes, by which large, intensive electricity users were able to buy some of their marginal coal at cheaper world prices? One of the beneficiaries of that practice was Brymbo steelworks, the closure of which was announced this morning, with the loss of about 1,000 jobs in the Wrexham area and of roughly the equivalent of the output of one medium- sized coal mine. That will impose a considerable additional burden on all domestic electricity users in the Merseyside and north Wales area, who will have to pick up the tab for the 200 MW worth of lost electricity sales in that district. Will the Minister confirm that one of the effects of the abandonment of the qualifying industrial users schemes for large coal users has been that users such as the sadly departed Brymbo steelworks expect a rise of 60 per cent. in three years in the price that they will pay for their industrial electricity?
Mr. Baldry : The proposals to privatise the coal industry have not been set back by one day. The previous Secretary of State made a clear commitment to privatise the coal industry in the first half of the next Parliament. He made that commitment in November 1988--
Mr. Baldry : As the hon. Gentleman says, the historic pledge. That commitment to privatise the coal industry was restated by my right hon. Friend the Secretary of State in a reply on 30 April this year, and again when he was in Nottingham earlier this month. Let me make it clear, because it seems that Opposition Members have not understood it : when we win the next general election, the Conservative Government will privatise the coal industry. That will happen during the lifetime of the next Parliament, and not one day has been lost in that commitment.
Mr. Peter Morrison : Production of oil and gas from onshore fields, most of which comes from southern England, has increased by about 85 per cent. since 1985. The current level is expected to increase fourfold when full
Column 586production from the second stage onshore development at Wytch farm starts later this year. There are no fields currently in production in the English channel.
Mr. Bruce : Will my right hon. Friend assure visitors to Purbeck in my constituency of Dorset, South that when they come to that area, the site of the largest oil and gas field in the European Community, they will have the greatest ease in finding red squirrels, abundant wildlife and beautiful views, and find it almost impossible to see any sign of British Petroleum's oil extraction? Will he further reassure my constituents and visitors that, with the oilfield's expansion, his Department, in partnership with BP, will ensure that that excellent record continues?
Mr. Morrison : I have been one of those visitors. I visited Wytch farm about two years ago and I was extremely impressed by the tremendous care that it takes of the environment. It goes into consultation in minute detail, and I have no doubt that for future stages it will consider everything that it hears and that the environment will in no sense suffer.
Mr. Simon Hughes : Is the Minister aware that there is just as much concern about transportation as about production of oil in the English channel? Will he have urgent talks with his colleagues in the Department of Transport to make sure that there is much better control of ships sailing under flags of convenience? Such a ship appears to have been involved in the spillage of 1,000 tonnes of crude oil in the channel over the weekend. Is he satisfied that the marine pollution control unit is doing its job properly and as quickly as possible? Above all, is he satisfied that the oil producer, or at least the transporter, will pay for the clean-up, not the poll tax payers in the coastal resorts of southern England?
Mr. Morrison : I shall pass on the hon. Gentleman's remarks to my right hon. Friend the Secretary of State for Transport. I have had discussions with my right hon. Friend's predecessor about the marine pollution control unit which led me to believe that the unit and all those involved in it are very professional.
Mr. Baldry : Together with other measures, the 8 GW of flue gas desulphurisation retrofits that my right hon. Friend announced last month will enable National Power and PowerGen to achieve the reductions in sulphur dioxide emissions that are required by the European Community large combustion plant directive by 1998.
Mr. Barnes : As late as last November the Prime Minister said that we were keen to get rid of our "dirty man of Europe" tag and were therefore committed to a 12,000 MW flue gas desulphurisation programme. That has now been reduced to 8,000 MW. Why is that? Is it because there is a commitment to import low-sulphur coal through ports such as those on the Humber? Why are private electricity companies given standards lower than those previously agreed with the nationalised industries?
Column 587Mr. Baldry : The hon. Gentleman is genuinely confused. I make it clear that the Government are determined to meet in full the European Community large plant combustion directive. The 8 GW retrofitting that has already been announced enables this country to meet in full the 1998 target. In terms of the 2003 target, the generators have not ruled out the prospect of further FGD retrofitting, but no decision needs to be taken in the immediate future for a target date that is about 13 years hence, not least because we hope that there will be continuing improvements in clean coal technology.
Sir Trevor Skeet : What does my hon. Friend expect to be the cost of extending the principle of FGD to all coal-fired capacity in the United Kingdom? Does he agree that that would make coal a more economic method of producing power?
Mr. Baldry : It is straightforward. This country is determined to meet the European Community large plant combustion directive. The Environmental Protection Bill will contain powers to ensure that my right hon. Friend the Secretary of State for the Environment and Her Majesty's inspectorate of pollution can oversee the generators to make sure that they comply with the directive. It is for the generators to decide how to comply with it. The 8 GW of FGD already announced will enable National Power and PowerGen to achieve the necessary reductions in sulphur dioxide emissions that are required by the target date of 1998.
Mr. Barron : Will the Minister answer a simple question? Why have the Government brought down the target for retrofitting FGD in Britain, designed to meet the targets agreed with EC, from 12 GW to 8 GW? What are the implications of the importation of lower-sulphur coal for our balance of payments and jobs in the mining industry? Why have the Government stood by while 49 collieries have been closed that could have supplied lower- sulphur coal to the market?
Mr. Baldry : I again make it clear to the hon. Gentleman that the Government have not reduced the amount of retrofitting to take place in the industry. The position is straightforward. The Government and the country will meet the EC large plant combustion directive in full. How that directive is met will be the responsibility of the generators and they will have a legal and statutory obligation to do so. The 8 GW of retrofitting already announced by National Power and PowerGen will enable them to meet the 1988 target in full. With regard to the 2003 target, they have not ruled out the prospect of further retrofitting, but it is not necessary now to make decisions on a target date some 13 years hence.
Column 588to the domestic consumer has also fallen if one does not take into account the rate of inflation, is a direct result of competition? Does he agree that the more competition increases the more likely we are to have lower prices?
Mr. Morrison : I agree with my hon. Friend. Competition has played an important part, as have the policies that the Government have pursued. That contrasts with what happened under the previous Labour Government ; during their five years in office, prices increased substantially.
Mr. Doran : One method that the Government are using to increase competition in the gas industry is the diversion of gas supplies to electricity generation. As there are genuine fears that that diversion will lead to increased costs for domestic consumers and an increase in the already large import bill of 15 million tonnes of gas in equivalent terms, is that method under review? Surely such a review is necessary given the two major difficulties that the Government face--inflation and our balance of trade problems.
10. Mr. Dykes : To ask the Secretary of State for Energy if he expects to attend future meetings of the European Community Council of Energy Ministers for discussions on energy saving and anti-pollution measures.
Mr. Dykes : I thank my right hon. Friend for that answer. Although, in future, energy saving will be more voluntary while anti-pollution measures are more compulsory, does my right hon. Friend agree that a package of such measures should be associated with the creation of the single market as well as the more commercial things to be done by the Department of Trade and Industry? When does my right hon. Friend believe that we shall catch up not only with the Community average on energy saving and anti-pollution measures, but with the best examples in Germany and elsewhere?
Mr. Morrison : I agree with my hon. Friend that energy saving and anti-pollution measures are not just Community matters, but worldwide ones. Therefore, it is important that Community members agree among themselves the best and most effective way ahead. I hope that my hon. Friend agrees that the lead we take on the Intergovernmental Panel on Climate Change, which is all to this end, is the proper way to go about things because of their global nature.
Column 589Mr. Baldry : I have received no representations on this matter.
Mr. Coleman : Now that the closure is inevitable, which does not seem to worry the Prime Minister as she regards Welsh people as "a load of old tripe"--her words, not mine--will the hon. Gentleman say what future the coal industry has in south Wales? What is the future of the Aberthaw power station, since the industry and the power station are dependent upon coal from Blaenant for blending?
Mr. Baldry : It is for the coal industry to decide its manpower requirements in the light of the tonnage that it can properly produce and sell in competition with other fuels. Decisions on the future of individual pits are taken by British Coal only after exhaustive review with the work force and the unions. I understand that Blaenant coal has a low volatile content and needs blending with coal from other sources to bring it to the required specification. The power station at Aberthaw can be supplied with such coal from other mines in south Wales.
Mr. Carlile : Does the Solicitor-General agree that the heavy turnover of staff in Crown court offices is unacceptable? Does not he recognise that that is partly due to the reduction in the more senior management posts which have made a career in the Crown court unattractive?
The Solicitor-General : I recognise the problem, particularly in London and parts of the south-east. I am not sure that I agree with the hon. and learned Gentleman about the cause, and it is worth remembering that the burden on the Crown court is down, with the number of cases committed for trial decreasing from 104,000 last year to 100,000 in the year just ended. Furthermore, the Crown prosecution service has taken on the job of drafting indictments. Obviously the career structure as a whole within the Government legal service is important.
Mr. Lawrence : Of course, this is not the easiest time for the Treasury, but will my right hon. and learned Friend make it absolutely clear to the Chancellor of the Exchequer that the excellent reforms, transferring work from the High Court to the county court, which the Government are proposing will have important ramifications for staffing and cannot take place if the resources are not available?
The Solicitor-General : My hon. and learned Friend makes a good point. He should bear it in mind that over the past five years expenditure on the court services has increased from £145 million in 1984-85 to £261 million in 1989-90, and that there is an extra £70 million in the current year for the Lord Chancellor's Department although not all of it is for the court service.
Mr. Madden : Will the Solicitor-General give an assurance that however much the Government want to save public expenditure on the courts they will in no way assist the National Front to become a limited liability company and possibly a charity, thereby enabling it to continue to publish material that incites racism behind a legal smokescreen which the Secretary of State for Trade and Industry seems to be anxious to assist?