The Parliamentary Under-Secretary of State for Energy (Mr. Colin Moynihan) : Wind energy is being given an unprecedented opportunity to become established as a commercial source of energy. The 1990 and 1991 Renewables Orders under the non-fossil fuel obligation have required the regional electricity companies to contract for 58 wind energy projects with a total of 94.63MW declared net capacity. We have invested more than £38 million in the Government's wind energy research, development and demonstration programme. That is now beginning to bear fruit, as evidenced by the encouraging response to the opportunity being created by the non- fossil fuel obligation. In addition, we are preparing a planning policy guidance note on renewable energy and hope to go to consultation on the draft later this month. The document will comprise general guidance on planning for renewable energy, with more specific guidance on the environmental impact of wind farms which we recognise to be an important and pressing issue.
Mr. Shaw : Will my hon. Friend confirm that electricity privatisation has enabled wind energy to develop in a way that it could not have without privatisation and is not that good news for all of us who are concerned about the environment?
Mr. Moynihan : My hon. Friend is correct on both counts. It is good news for the environment because the development of renewable energy, which is environmentally sensitive, is essential to security and diversity of supply in this country. Without privatisation, we would not have the non- fossil fuel obligation, which has enabled us to bring two substantial orders before the House.
Mr. McAllion : As Scotland has more than half the United Kingdom's land-based wind energy potential and as even Government agencies such as Highlands and Islands Enterprise are calling for the immediate full extension of the non-fossil fuel obligation to Scotland, will the Minister explain why the Secretary of State for
Column 764Scotland has failed to respond to that call- -or will it require a Labour Secretary of State for Scotland fully to develop the potential for wind energy in Scotland?
Mr. Moynihan : The hon. Gentleman should be well aware that my right hon. Friend the Secretary of State for Scotland responded recently to the importance of renewables by announcing a scheme under which Scottish Power and Scottish Hydro-Electric will contract for renewables projects in Scotland. The Government are considering the longer-term arrangements for Scotland in the current review of the renewables energy advisory group.
Mr. Conway : Does my hon. Friend think it a little curious that the people who argue most fervently for this method of energy production often seem to complain most bitterly at public inquiries about planning applications for this alternative energy source?
Mr. Moynihan : As ever on energy issues, my hon. Friend makes a pertinent and important point. He is right and for that reason we have issued a planning policy guidance note, on which we hope to have further consultation before the end of the month. I hope that we shall manage to reconcile the problems that my hon. Friend has highlighted.
The Secretary of State for Energy (Mr. John Wakeham) : I have had no recent discussions with the chairman of British Gas on the subject of disconnection for debt. This no doubt reflects the fact that the number of British Gas customers who are disconnected for debt is lower than at any time since records were first kept in 1977.
Mr. French : When my right hon. Friend next meets the chairman of British Gas and discusses the subject, will he try to discover why some people receive letters threatening disconnection for non-payment as much as seven days or more after they have made payment? Will he inquire of the chairman whether British Gas's accounts system could be tightened to prevent such aggravation to members of the public?
Mr. Wakeham : Certainly, I shall discuss that point with the chairman of British Gas. Although the number of disconnections has fallen dramatically from almost 61,000 in the year to December 1987 to just over 19,000 in the year ending December 1990, there is a code of practice on disconnections and I want it to be adhered to.
Mr. Harry Barnes : Gas showrooms all over the place are being closed, including those in Clay Cross and Staveley in my constituency. Is there any evidence that indebtedness increases because people have difficulty paying bills which previously they could pay through gas showrooms?
Mr. Wakeham : No. Showrooms are, of course, a matter for British Gas. There is no evidence of additional payment difficulties--indeed, the number of people with difficulties seems to have fallen. That is partly due to the fact that, in the five years since privatisation, gas prices
Column 765have fallen by 14 per cent. whereas, during the last five years of the Labour Government, they increased by 11 per cent.
The Parliamentary Under-Secretary of State for Energy (Mr. David Heathcoat-Amory) : The price of fuel, light and power supplied to domestic households is now estimated to be 6 per cent. lower in real terms than it was five years ago.
Mr. Arnold : Is not that reply an absolute vindication of our policy of privatisation, linked to the operation of the regulators? Is it not good news that, under the new proposal before the House, the work of the regulators is soon to be extended further?
Mr. Heathcoat-Amory : My hon. Friend is right. Privatisation of the industry has brought with it assurances of higher standards of service. For the first time, domestic and smaller industrial customers are protected from unjustified price increases.
Mr. Robert Hughes : Do those figures include the rapid escalation in standing charges, which are, in fact, the industry's poll tax on its consumers? Do those figures include the threefold increase in service charges applied by British Gas, or is this just another way of massaging the figures, as the Government always do?
Mr. Heathcoat-Amory : No. I can confirm that the figures which I gave include all charges to domestic customers. Over the past seven years, domestic prices have fallen by 2 per cent. in real terms, whereas under the last Labour Government domestic prices increased by a staggering 2 per cent. in cash terms every six weeks.
Dame Elaine Kellett-Bowman : The question refers to the real price of energy. That must include environmental considerations such as the disposal of nuclear waste. Will my hon. Friend therefore join me in congratulating scientists at Culham who, through an EC experimental station there, have made a breakthrough with fusion?
Mr. Heathcoat-Amory : Yes. We should take pride in the success of the experiment. However, I should strike a note of caution. There is still a long way to go before fusion power surmounts the engineering and commercial challenges ahead.
Mr. Morgan : Is not it true that the Government and the hon. Member for Gravesham (Mr. Arnold) have been using statistics in a phoney manner which surpasses all understanding, so that a 38 per cent. increase in electricity prices in the past four years somehow becomes a 6 per cent. drop in so-called "real terms"? "Real terms" must be set against the fact that the price of the crude fuels that are being bought, such as coal, oil or gas, has remained stable. In any common-sense meaning of "real terms", a 38 per cent. increase in cash terms is a 38 per cent. increase in real terms as well.
Did not the hon. Member for Gravesham get it right when he said, "Is it not good news"? Indeed, it is not--
Column 766[Interruption.] That is what the hon. Gentleman said. Have not the privatised electricity companies got such a one-sided bargain out of the Government that it has meant the creation not of privatised companies but of pound note machines?
Mr. Heathcoat-Amory : It is a matter of record that, over the past seven years of Conservative Government, the electricity prices charged to domestic customers have fallen by 2 per cent., whereas under the Labour Government they rose by 22 per cent. in real terms. It is not speculation but fact that Labour Governments are bad news for electricity customers.
Dr. Michael Clark : Does my hon. Friend expect the real price of energy to domestic households to rise if an energy tax is introduced? What would be the effect of such a tax on British industry, exports and jobs?
Mr. Heathcoat-Amory : Yes. My hon. Friend makes the fair point that we must be very cautious before we assent to a carbon tax which could increase the price of domestic energy. If that were done unilaterally ahead of the rest of the world, it could put British industry at a severe disadvantage. Therefore, although we are interested in continuing the debate in a European context, we shall not make any premature decisions.
Mr. Skinner : Does the Minister agree that every 1 million tonne of coal imported is roughly equivalent to the closure of a pit of average size and probably results in the redundancies of about 1,000 men, between 67 and 80 per cent. of whom are thrown on to unemployment benefits and other systems of benefit? That means that there is an increase in the amount that the state has to pay for people thrown out of work. Every 1 million tonnes of imported coal is equivalent to £40 million on the balance of payments. If one considers the issue from either angle it must be economic lunacy to continue the import programme.
Mr. Wakeham : I cannot agree with the hon. Gentleman. The best protection for the British Coal industry is for it to produce reliable supplies that are competitive on the world market. I want to achieve the largest competitive coal industry. To consider only the balance of payments effect of imported coal is to consider merely one part of the issue. The buying of more high-cost British coal would increase the cost of electricity which would be bad for competiveness, for the consumer and for the balance of payments.
Mr. Eadie : Did the right hon. Gentleman read a report in the Sunday Post two or three weeks ago which stated that Colombian imported coal was being subsidised by the drug barons? Is he going to examine the question of
Column 767imported coal in a broader sense, as there have been complaints about unfair competition and we are doing British coal miners out of jobs by importing foreign coal?
Mr. Wakeham : The question of unfair imports of coal is a matter for the European Commission to investigate. It is for the Commission to consider British Coal's complaints. The hon. Gentleman must keep these matters in perspective. Colombian coal is a relatively small amount of the total coal used in this country. The most important task for British Coal is to be competitive.
Mr. John Marshall : Does my right hon. Friend agree that it is significant that the Opposition refuse to speak for consumers? Do not coal imports help those, such as old-age pensioners, who consume coal and are not they good for employment in energy-intensive industries? They are objectives that most people would share.
Mr. Wakeham : My hon. Friend is absolutely right. A low and competitive price of coal used in power generation will reduce the price of electricity. That is the most important issue that the coal industry must face.
Mr. Strang : Is not it clear from the Rothschilds studies that the re-election of a Conservative Government would sound the death knell of this country's coal industry? Does not the Secretary of State recognise that to close more than two thirds of the pits to facilitate privatisation- -as envisaged by Rothschilds--would mean subjecting electricity supplies and prices in the long run to the vagaries of international markets, do enormous and permanent damage to our balance of payments, wipe out billions of pounds of productive investment and mean the loss of thousands of jobs? Is not that a policy of economic sabotage and one more reason why the country needs a Labour Government?
Mr. Wakeham : The privatisation of coal in Britain will not close one pit and Opposition Members had better face that fact. The real question that must be faced is how the coal industry can best become competitive, because, whether it is in public or private ownership, it will not be able to sell coal to the generators if it does not. I am optimistic about the coal industry's ability to adjust itself to the market that exists and to be a thriving and growing industry.
Mr. Andy Stewart : Does my right hon. Friend agree that the initiative of the Union of Democratic Mineworkers and its decision to instruct its bankers to prepare a bid for the British coal industry is the mark of a forward-looking trade union? Will my right hon. Friend's Department co-operate fully with the president of the UDM, Roy Lynk, and his bankers in preparing that bid?
Column 768so that I may give him all the information that I can. I am anxious that the UDM should play a part in the eventual privatisation of British Coal because I believe that that union and its members recognise that coal has a future, but only if it can be operated on a profitable and economic basis.
Mr. Dobson : Why will not the Minister publish the secret reports that he is receiving on the future of the coal industry from Tory merchant bankers Rothschilds, whose privatisation unit is headed by the Tory candidate for Hampstead and Highgate? Are not the 60,000 miners and their families and those living in the coalfield communities, whose lives, livelihoods and communities are at stake, entitled to know? Is the right hon. Gentleman ashamed of what is in the reports? Is he frightened of them? If not, why cannot he come clean? Or will we have to rely on my getting the reports in plain brown envelopes a week or two after he has received them?
Mr. Wakeham : If the hon. Gentleman gets something in a plain brown envelope, we can rely on him to issue a press release putting the worst possible complexion on the matter from the point of view of British coal. Those who seek to speak for British coal must recognise that they do the industry great damage by their Jeremiah, sour remarks. The advice that I am receiving from Rothchilds about the size of the coal industry is neither accepted or rejected by me. The size of the industry will be determined by the facts and will depend on the contracts that British Coal can obtain in the renegotiation of contracts with the generators which is due to start in April 1993.
Mr. Wilkinson : Will my right hon. Friend do everything in his power to encourage not just buy-outs by the UDM or by management, but employee buy-outs in the coal industry, as the long-term commitment of the work force is crucial for employment and for the industry's prosperity?
Mr. Wakeham : I agree very much with my hon. Friend, but I believe that we should address the problems in the proper way. The first step is to determine the best size for the coal industry and that will depend on the market that the industry can obtain in sales to generators. After that, questions of privatisation will be determined--after the next general election.
Mr. Moynihan : My Department sees no general case for restricting the use of natural gas for electricity generation. Gas generation offers efficient primary energy conversion and significant environmental benefits and can lead to lower energy prices to final users.
Mr. Pike : Does the Minister accept that his answer shows why the Government need to be voted out of office? Is not it totally wrong to leave to the private sector, market forces and short-term profit motives matters connected with the use of energy which are so crucial to the nation's future? Should not the Government be making policy on energy supplies, which are essential to both domestic and industrial consumers?
Column 769Mr. Moynihan : No, Sir. My answer shows exactly why this Government will continue in office throughout the 1990s. The hon. Gentleman should know that to achieve lower prices and efficiency the gas market should be determined by prices in the marketplace and not by bureaucratic intervention.
Mr. Hannam : Does not the attitude of the Opposition show that they are not concerned with the care of the environment? Will my hon. Friend confirm that a combined cycle gas generating station produces half the amount of carbon dioxide that a coal-fired power station produces and none of the sulphur dioxide that causes acid rain?
The Minister will be aware that there is a price for gas over and above the economic. Has he had an opportunity to study the findings of Sheriff Principal Ireland in the fatal accident inquiry into the death of Timothy Williams on the Ocean Odyssey? In view of the sheriff's expression of regret that the terms of the inquiry were not wide enough to take into account all the evidence of the risks involved in deep sea drilling, what steps will the Minister take to examine the matter further? In the light of the sheriff principal's report, is the Minister satisfied that deep drilling in the North sea is safe? Will he confirm whether, in the award of licences to explore in the North sea, he takes into account the safety record of the oil companies involved?
Mr. Moynihan : The hon. Gentleman will appreciate that we have just received that important and significant report. I give him an undertaking that I will reply to the important issues that he has raised in the House this afternoon.
Mr. Wakeham : Good progress has been made by the ministerial group during the past year. The group's annual report, published on 16 October, outlines the main initiatives being taken forward by the Government to promote energy efficiency in all sectors of the economy. Copies of the report were placed in the Library of the House.
Mr. Wakeham : Yes, Sir. The autumn statement confirmed that the Energy Efficiency Office budget for 1992-93 is £59 million, which is a 40 per cent. increase in resources for EEO programmes. Further increases are planned--to £70 million in 1993-94 and to £75 million in 1994 -95.
Column 770unused sources of energy? There is a pilot programme in Birmingham to develop tyre incineration as an energy source. Will the Secretary of State introduce a full-scale national programme to use the 1 million surplus tyres that are created every year?
Sir Ian Lloyd : I congratulate my right hon. Friend on the excellent document that I received this morning entitled "Making a Corporate Commitment"--on energy management--in which my right hon. Friend points out that the public sector could, if my arithmetic is correct, yield a saving of £560 million. He also suggests, properly, that all sectors should set performance improvement targets and he suggests a list of ministerial responsibilities. In setting a lead from the top, which is correct and proper, will that list include the Lord President of the Council and the House?
Mr. Wakeham : I am sure that the Lord President of the Council and his Department will be playing their part in trying to reduce energy bills. The Government have set a target of saving 15 per cent. of their energy bill over five years and 1990-91 forms the base year. We believe that the amount that can be saved is enormous. About 20 per cent. of all the energy that we use in this country could be saved with the best forms of energy efficiency.
Mr. Dobson : What progress have the Government made towards their 15 per cent. savings target? Did not the consumption of energy of the Secretary of State's Department increase by 60 per cent. last year? Is not it true that half the other Government Departments also increased their energy consumption, that the Department of the Environment got rid of its only post of energy manager and that half of Government Departments do not meet the Government's target of investing £1 in energy saving for every £10 spent on energy?
Mr. Wakeham : The one thing that one can rely upon is that the hon. Gentleman would not give up a point by being told the facts. He makes the point about the Department of Energy's bill and claims that it shows a 63 per cent. increase. He does not compare like with like. My Department has had its own energy bill only since it moved into its present headquarters in August 1989. Consequently, the hon. Gentleman is comparing the energy used in a 12-month period with the energy that was used in a seven-month period. If that is a sample of his research and logic, I wonder about the rest of it.
Frankly, I am not satisfied with the progress that the Government have been making over the years. That is why we set the targets. Also, 1990-91 forms the base year, so the first year under the new targets has not yet ended. All the reports that I have received show that we are making very good progress.
Mr. Michael Morris : May I congratulate my right hon. Friend on the forward-looking report and, perhaps more importantly, on the financial commitment that goes with it? Is he aware that in the recent issue of Building there is a comment to the effect that house builders are resisting improving insulation standards in new homes? Should not there be some further consultation to ensure that they take on board the clear message?
Mr. Wakeham : My hon. Friend may know that, last week, my right hon. Friend the Secretary of State for the Environment and I launched a new campaign--energy in the home--to improve understanding of global warming and energy use and to encourage families to adopt energy efficiency measures. It is one of five recent initiatives. My hon. Friend the Member for Havant (Sir I. Lloyd) referred to one initiative--"Making a Corporate Commitment". Tomorrow, with the regional electricity companies, we will launch an energy labelling initiative so that those who buy refrigerators will see what is being used. There are many more, but I will not mention them all today.
8. Dr. Godman : To ask the Secretary of State for Energy how many contracts for the construction of offshore oil and gas structures and vessels were awarded to United Kingdom fabrication yards and shipyards in each of the past four years.
Dr. Godman : Naturally, I am extremely pleased with the orders that were won in recent months by Scott Lithgow and other yards, but may I point out to the Minister that there is a massive skills shortage in the industry? Will he impress on his ministerial colleagues at the Department of Employment and the Scottish Office the need to encourage and finance relevant skills training courses that are run in technical colleges and other training places? The James Watt college in Greenock and other colleges are providing important training in, for instance, coded welding skills. They are precisely the skills that are in demand and are in short supply. Encouragement must be given to our colleges and other training centres in Scotland, and indeed south of the border.
Mr. Moynihan : The hon. Gentleman will no doubt be pleased to learn that addressing skill shortages is a major priority for all involved in offshore oil and gas, and particularly for those in the yards. However, the hon. Gentleman will realise that part of the success of Scott Lithgow in recent months and the support that it has had through intensive marketing efforts by Trafalgar House, building up its work force quite rapidly to 300 men, has been because of the quality of the men and because we have been addressing skill shortages and enhancing the ability of that yard to win important contracts.
Mr. Michael Brown : Is my hon. Friend aware that following the passage of the Associated British Ports Act 1990, it is now possible for the South Humberside Engineering and Fabrication Services company, which is based in my constituency and which I visited only last week, to build a bridge that will join that company to the docks, thus enabling it to export the offshore vessels that it has been manufacturing for several years? Will my hon. Friend take this opportunity to advise the hon. Member for Greenock and Port Glasgow (Dr. Godman) that even if there is a skills shortage in Scotland, there is certainly not one in south Humberside and that any company that requires the type of vessel that is associated with the offshore oil and gas industry will find them available in south Humberside?
Mr. Moynihan : The yard to which my hon. Friend refers has in recent months demonstrated its productivity, its advanced capabilities, its excellence in terms of safety, its reliability and, above all, its technological edge. That is what we need if we are to have a package that will beat other countries' export potential in that market and if we are to keep the United Kingdom right at the forefront of export orders for United Kingdom oil and gas activity.
Mrs. Margaret Ewing : Given the importance of those orders to the fabrication yards and the communities in which they are based, has the Minister given any consideration to the position of the suppliers of the raw materials that are used in those yards? Is he aware, for example, that since the closure of part of the Lanarkshire steel mills, there has been a delay in delivering steel to the Ardersier yard, which I know that he has visited several times? Indeed, Ministers seem to be some of my constituency's main tourists. Does he agree that there is a cause for some concern and will he look into that matter in conjuction with the Department of Trade and Industry?
Mr. Moynihan : I hear what the hon. Lady says. It is always a pleasure to visit her constituency, not least because that gives me the opportunity to see why the value of the contracts that were won by United Kingdom yards last year amounted to £759 million, which is 36 per cent. up on the previous year's figure and five times the 1987 value.
Mr. Murphy : The Minister is no doubt aware that a fortnight ago the Penallta colliery in the Rhymney valley closed, meaning that there are now only three pits in the whole of south Wales. Bearing in mind the increasing use of heavily subsidised imports and the impending privatisation of the coal industry, what guarantee is the Minister prepared to give the House and the people of Wales about the future of the Welsh coal industry?
Mr. Heathcoat-Amory : The future size and success of the Welsh coal industry depend on its ability to control costs and to continue to improve its productivity. If it can do that, it will win a large part of the market to supply the British electricity generating stations when the present contracts expire in 1993.
Mr. Barron : The Rothschild report, which is currently with the Department of Energy and which was paid for by the Government and produced by discussion with working groups in the Department of Energy and British Coal, envisages the end of deep mining in the south Wales coal field by 1993-94. Even if the Minister and the Secretary of State do not want to say whether they have accepted or rejected that report, if they truly believe in the market will they now reject it so that the British coal industry can continue to work towards improving its productivity as it has during the past six years?
Column 773Mr. Heathcoat-Amory : The report to which the hon. Gentleman refers was advice to my right hon. Friend. We have already made it clear that no decisions on the way to privatise the British coal industry will be taken until after the next general election.
10. Mr. Corbyn : To ask the Secretary of State for Energy what is his Department's expenditure on (a) renewable energy research and (b) fossil fuel energy research in 1990-91 ; and what is the equivalent figure for 1978-79.
Mr. Moynihan : Expenditure in 1990-91 on renewable energy research was £20.8 million, and on coal research £11.4 million. The equivalent figures for 1978-79 were £3.6 million and £1.2 million respectively.
Mr. Corbyn : Given that the Government have now launched a campaign to try to offset the effects of global warming by the use of non-fossil fuels and renewable energy sources, does the Minister accept that there should be a substantial increase in research into renewable energy sources, of which this country has many? Secondly, will he give us--
Mr. Corbyn : This is part of the same question, Mr. Speaker. While the Minister is replying to the earlier part of my question, will he give the House the figures for the amount of money that is spent on nuclear research, which takes up 75 per cent. of his Department's research budget, is a deeply pollutive form of energy generation and which, frankly, is something which he should be more keen on phasing out, so that he can transfer those resources and invest them in research on renewable energy sources for the future?
Mr. Moynihan : I reject the hon. Gentleman's comment about nuclear power. There is absolutely no reason why expenditure on renewables research and development should bear any proportional relationship to nuclear expenditure. Each energy technology requires a different level of investment to carry out the necessary R and D and to develop it for commercial use. However, I am grateful to the hon. Gentleman for asking this question, because it has provided the House with an opportunity to learn that we have record levels of R and D expenditure on renewables.
Mr. Heathcoat-Amory : Initial experience in operating the home energy efficiency scheme has confirmed that it meets a real need and is being well received. More than 95,000 insulation jobs were carried out under the scheme between 1 April and 30 September.
Mr. Evennett : I thank my hon. Friend for his reply. How much more is being spent in the current financial year on the scheme? Are the Government on track for the target of implementing 200,000 schemes during the current year?
Mr. Heathcoat-Amory : This year, some £26 million has been allocated to the scheme and we are on target to do 200,000 insulation jobs. I am pleased to say that as a result of the autumn statement, the budget for the home energy efficiency scheme will increase by 50 per cent. next year.