§ Mr. Speaker
Before I call on the right hon. Member for Wanstead and Woodford (Mr. Jenkin), I must inform the House that I have selected the amendment in the name of the Prime Minister.
§ 7.36 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
I beg to move:That this House, recalling the encouragement given to consumers by the electricity boards 770 to install night storage heating, notes the widespread public dismay at the disproportionate 70 per cent. increase in off-peak charges; deplores the failure of the Government to give any adequate justification for such an increase; and calls for any increase that may be required to be phased so as to avoid hardship to pensioners, the disabled and other hard-pressed householders.There can be few actions by any State-owned industry in recent years which has aroused as much public resentment as the decision to raise the price of off-peak electricity by 70 per cent., and in some cases by even more, at one fell swoop. My hon. Friend the Member for Conway (Mr. Roberts) raised the matter in an Adjournment debate on 24th May. That debate, short as it was, showed clearly the deep concern that is felt on this issue on both sides of the House. The reaction that many of us have had since then from members of the public has greatly emphasised that concern. We return to the subject tonight for a full-scale debate.
The British people are for the most part reasonable and understanding. The huge rise in world oil prices is well understood by them. The need for sharp rises in coal prices, although a little more controversial, is recognised by most. The increased prices of petrol, paraffin and ordinary electricity have been accepted by the people with little real grumbling, despite the fact that the increased price of paraffin, for example, gave rise to some hardship.
In contrast to that mood of what I might describe as long-suffering acquiescence, the public reaction to the increased charges for off-peak electricity has been an explosion of real anger. It was clear from Question Time on Monday that the blast of that explosion has been felt not merely on the benches behind me but on both sides of the House.
There are several reasons for this resentment, but perhaps the one that is most often expressed is that people feel they have been "conned". For years, the electricity industry has based its advertising campaign on what it called "half-price electricity". Now it is no longer to be half price. Indeed, off-peak electricity will cost significantly more than half-price.
771 Again, many people were misled by the Chancellor's statement on Budget day, when he said that the price increases he had announced would meanincreases to domestic consumers averaging about 30 per cent. on bills reaching most of them from the beginning of August "[OFFICIAL REPORT, 26th March, 1974; Vol. 871, c. 301].People simply did not realise until weeks later that the increase of 0.3p per unit across the board for standard and off-peak charges meant that bills were likely to increase within a range of between 10 per cent. and perhaps as high as 55 per cent.
Then again, many people have been very irritated by the case that has been put—notably by the Under-Secretary of State—that the small user was going to be hit much less hard than the large user. The truth is that the size of increase of any individual's bill depends not so much upon whether he is a large or small user, but on the ratio of off-peak to on-peak electricity that he consumes. A small user most of whose electricity is used off-peak will find his bill rising by the higher end of the range of increases.
All this has served to confuse, irritate and infuriate the 2 million consumers of off-peak electricity. Furthermore, they feel that, having been misled in the past, they have now been singled out to bear a disproportionate share of the burden for the future. When one bears in mind what was said in The Times on 15th June, thatnight storage heaters have, in many cases, been fitted by families on a tight budget or by old people because of the low initial installation cost,one can see that a massive increase of the size many of these people now face will fall with great harshness on their domestic budget. Many others live in flats where off-peak heating is centrally provided, and they have no option. All of them have expended sums of greater or lesser amount on installing the system, only to find now that, from being one of the cheapest forms of central heating, it is now one of the most expensive.
These are the reasons why these 2 million families are angry, and they have good reason to be. They are looking to this House for redress, and I hope to persuade the Government that their policy in relation to off-peak charges is 772 misguided and must be modified. Unless we get a firm undertaking of a significant easing of these charges by phasing or some other means, we intend to press the matter to a Division.
But before I come to examine the details of the argument, I should make three preliminary points because I want them to be clearly understood. My complaint is against Ministers and not against the electricity supply industry as such. The industry is entitled to go for the maximum increase in prices and charges that it thinks it is likely to be allowed by the Government.
§ The Secretary of State for Energy (Mr. Eric Varley)
Earlier, the right hon. Gentleman said that the public had been misled by the advertising of the electricity supply industry. He said they had been "conned". He is now saying that all this is the responsibility of Ministers and that he does not blame the electricity supply industry. How does he reconcile these two statements?
§ Mr. Jenkin
It is perfectly easy to reconcile them. It is Ministers who, under the powers they have over the boards, can say "Yea" or "Nay" to a proposal for an increase. The advertisements were years ago. I am now talking about the charges. It is because of this very steep increase in prices that the advertisements are now thought to have been so unfair by the consumers.
§ Mr. David Stoddart (Swindon) rose—
§ Mr. Jenkin
The boards are perfectly entitled to put, as it were, at the top of their priority their own solvency. They will argue, with a great deal of effect, that that is their statutory duty. But Ministers have a wider responsibility and a wider power. They have to have regard to the need to avoid inflation and to seek to control the rise in prices and the impact on the retail price index.
§ Mr. Stoddart rose—
§ Mr. Stoddart rose—
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Order. If the right hon. Gentleman the Member for Wanstead and Woodford (Mr. Jenkin) does not wish to give way, he must not be pressed beyond a certain point.
§ Mr. Jenkin
Perhaps the hon. Member for Swindon (Mr. Stoddart) will catch your eye later, Mr. Deputy Speaker.
As I was saying, in pursuing this policy Ministers have to have regard to the need to avoid unnecessarily harsh increases for particular groups of the population. They should see, furthermore, that if unpalatable measures have to be taken they should be taken in a manner seen to be fair and therefore acceptable to the people affected. It is the duty of Ministers to see that proper explanations are given for any decisions that are taken. I am bound to say, more in sorrow than in anger, that I believe the Ministers in the Department of Energy have failed dismally on all counts. Our charges are, therefore, directed at them.
The second point I want to make is that since the election, and, indeed, more important, since the Budget, I have uttered not one word of criticism of the decisions taken to increase energy prices because, in general, I believe that what has been done was inevitable and not a matter of complaint; but on the question of off-peak prices I believe the decisions have gone sadly awry.
Thirdly, I do not object in principle to some form of fuel adjustment clause for the domestic consumer. The right hon. Gentleman has referred to the fact that I indicated that this is acceptable in principle to the Government. At a time of rapid change in fuel prices, one way of ensuring that such changes are reflected in charges to the consumers without too long a time lag is by some form of fuel adjustment clause. I said so on 13th March. But I made it clear that this was acceptance in principle. The words I used then did not mean, and do not now mean, that the Conservative Government were committed to the precise details of how that might be carried into effect, still less to the precise details of what the Government have done, and even less that this is the only way of applying the fuel adjustment clause. On the contrary, we had not accented the Electricity Council's proposal for a price increase, and I can tell the House that we would not have done so in relation to off-peak charges.
For reasons that I will explain, I hope that the right hon. Gentleman will not be as disingenuous as the Under-Secretary of State was in replying to the earlier 774 debate. I understand that the Under-Secretary of State is not to be allowed to reply to this debate, for reasons that we can all appreciate. The Under-Secretary of State seemed to be arguing that my acceptance of a fuel adjustment clause in principle somehow meant that we were committed to accepting all the details of what the Government have done. That is not so, and had I attempted to pretend that it was I would have been guilty of misleading the House.
The case made in support of what has been done is deceptively simple. It is that the industry's fuel costs have about doubled, adding 0.3p to the cost of producing a unit of electricity; that the cost of fuel to produce off-peak electricity has gone up just as much as for electricity on the standard tariff. Therefore, 0.3p per unit increase across the board is the right response.
My reaction to this "too-simple-by-half" reasoning comes under two heads. I shall deal with them in turn.
First, the argument takes no account of the benefit to the electricity supply industry from spreading the load. I have always understood that a main reason, perhaps even the main reason, why the boards went into the central heating off-peak market, was to reduce the growth of on-peak power by persuading customers to switch to off-peak consumption.
The boards did that because it had distinct advantages for the industry. It reduced the need for new plant to meet the peak load and so delayed the investment which would otherwise have been necessary, saving on capital expenditure. Secondly, it brought in a return which would not otherwise have been derived from electricity generated during off-peak periods from base load plants such as nuclear plants and other power stations which are cheaper to run continuously than to switch off in off-peak periods when consumption falls substantially. If that is right—I do not believe that it is seriously challenged—what will be the effect on this of a significant narrowing of the margin of advantage for off-peak electricity? Of course, one cannot be sure, but there must be more than a slight risk of pushing people back from the off-peak tariff into peak electricity, and this is a message which I am sure I am not alone in hearing from constituents and others, or from reading the newspapers.
§ Mr. Arthur Palmer (Bristol, North-East)
The right hon. Gentleman must not overlook the fact that when an increase in costs is a fuel increase—and this is mainly a fuel increase—it falls equally on peak units as well as off-peak units. There is no difference.
§ Mr. Jenkin
I accept that that is an argument which Ministers have been advancing in letters to hon. Members. However, it, ignores the effect of a narrowing of the differential and as The Sunday Times put it, perhaps with rather stark overstatement that has more than a grain of truth in it,it effectively knocks electricity out of the central heating market at a stroke".Many people have worked out their own figures and have decided that it will no longer pay them to use off-peak electricity for long periods during the night if they have the alternative of using on-peak electricity for much shorter periods during the day. The Rev. Dr. Kenneth Slack, a well-known churchman, said in a letter to The TimesThe wise citizen will invest in thermostatically controlled oil-filled heaters which will turn themselves on just before he rises and use power at the period of heaviest demand".My hon. Friend the Member for Hornsey (Mr. Rossi) had a letter from a constituent which said:If the cost of off-peak electricity is increased as proposed, I, and probably thousands of other people, will discontinue the use of this form of heating.There are many other examples one could quote.
I put this to the Deputy Chairman of the Electricity Council and he said that there was no evidence. I accept that there is no evidence because this is the first time there has been a significant narrowing of the margin and therefore one asks whether the industry is right to risk it. Are Ministers right to allow it to risk it, because the effect of a substantial addition to peak demand could be very grave.
The second argument is perhaps more technical. An increase of 0.3p across the board takes no account of the undoubted fact that the less generating plant that is being used, the higher the overall thermal efficiency of the system—the complicated system of order of merit which the CEGB and other boards use ensures that this efficiency is obtained. The council 776 agrees with this but, somewhat to my astonishment, it says that the differential is only marginal—perhaps a 2 per cent. or 3 per cent. difference. That is astonishing. The nuclear generators, which now represent 10 per cent. of the total generating capacity, are 40 per cent. cheaper to run, on average, than fossil fuel stations. This is part of the base load, and that must have a marked effect on the cost of off-peak electricity. The same is to some extent true with the modern 500–600 megawatt generating sets which have significantly higher thermal efficiences than the older stations.
On 11th April the hon. Member for Ince (Mr. McGuire) asked the Under-Secretary about the range of efficiencies of power stations and was given an average figure for stations built in the last 12 years. For coal-fired stations the range efficiency of cost per kilowatt was 0.40p to 1.69p. On these figures, it is extraordinarily difficult to believe that the margin of thermal efficiency is as narrow as has been said. If it is that narrow does it not mean that the thermal efficiencies of the base load power stations are very much lower than they should be as a whole, perhaps as a result of operational faults or for other reasons, so much so that they virtually wipe out the cost saving they should be providing?
Taking the two arguments about the differences of thermal efficiency and the risks of increasing the peak load, I do not believe the Government should have accepted uncritically as they have the Electricity Council's case for an across-the-board parallel increase in charges. Something less than that for off-peak would have been more appropriate and it would have reduced the risk of adding to the peak load with all the problems that that would entail.
But the case does not stop there, because we must consider the social impact. Even if the Electricity Council had made out its case, so much so that the Government felt obliged to accept it on technical grounds, should the Minister have accepted it having regard both to the background of advertising and the immediate social effect? I am bound to say that the answer must be. "No". Having regard to the tone and content of advertising over the years, a 70 per cent. increase at one go is much too steep to expect consumers to bear, and 777 to force this on people often of limited means deals this class of consumer a much heavier blow than they should have to bear. At the very least this increase could have been phased and it must be phased. A full 70 per cent. increase will bring in, I am told, about £80 million. To defer part of the increase would not, therefore, cost a great deal, and certainly the amount is tiny beside the £700 million-odd that the Government are handing out in indiscriminate food subsidies. If they were to do this, it would go some way to temper the feelings of a large number of customers who are already hard pressed and for whom this increase will provide real hardship to the extent that they will not be able to afford to use this system at all.
I turn to the Government amendment. Most of it is what I would describe as the usual prefatory guff. The meat is in the last two lines. They ask the House to welcomethe Government's decision to review the policy for energy prices in the light of their impact on household expenditure".The remarkable thing about this is that the Government have announced no decision. I assume that the decision has been taken, unless perhaps we are asked to take into account the ructions at the end of last week. I am sorry that the Patronage Secretary has left the Chamber. Perhaps the ructions at the end of last week were to be taken as some form of announcement.
We were told that last Thursday hon. Members on the Government bench rebelled. The rebellion was led by the Patronage Secretary. But by Friday all was well again. The Guardian quoted the Patronage Secretary as saying,I am certain that when the vote is taken the Government will have the 100 per cent. support of Labour MPs.We will see about that. It seems a rather odd way of announcing a decision to carry out a review of energy prices.
What does the contention of the Secretary of State, on its face value, amount to? We want to hear. I must warn him that unless it includes a clear undertaking to mitigate the increase in peak charges by phasing, or by some other form of alleviation, the Opposition, at least, will not be satisfied. Again I quote the right hon. Gentleman as quoted in the Press: he said that the increases 778 represent cheating. In face of that charge, an undertaking to review the Government's policy will not suffice.
§ The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)
The hon. Gentleman must not believe all he reads in the Press.
§ Mr. Jenkin
I have made many similar comments. I shall take note of what the right hon. Gentleman says.
I doubt if a woolly review of the sort which the right hon. Gentleman has indicated in his amendment will satisfy hon. Members in all parts of the House, but that is for them to decide.
Of one thing I am certain. When an issue arises affecting one of our great State industries which arouses such intense resentment as this one has, it is the duty of the House of Commons to give expression to that resentment. It is the duty of Government to give redress. If they do not, I must invite right hon. and hon. Members to express their displeasure in the Division Lobbies.
§ 8.3 p.m.
§ The Secretary of State for Energy (Mr. Eric Varley)
I beg to move, to leave out from 'House' to the end of the Question and to add instead thereof:'whilst deploring the policies of the previous Government which led to the unprecedented deficit of the electricity boards, noting the announcement of the former Chancellor of the Exchequer on 17th December 1973 that it was anomalous to subsidise electricity prices at a mounting rate, regretting that the previous Government did not inform the country of the full size of the prospective deficit, and noting further that the previous Government had accepted the principle of the fuel adjustment clauses which have led directly to increased charges for night storage heaters, acknowledges the action taken by the Government to help those in need through the largest ever increases in pensions and other benefits, and welcomes the Government's decision to review the policy for energy prices in the light of their impact on household expenditure'.This is a short debate—but it is two debates. On the one hand, my hon. Friends—and perhaps hon. Members on the Liberal benches—will voice justifiable and honest concern at the impact on some of their less-well-off constituents of the increase in off-peak electricity charges. We shall listen to them with respect, for they are not open to any charge of double standards.
779 On the other hand, we shall watch the official Opposition—we have had the first unseemly instalment from the right hon. Gentleman the Member for Wanstead and Woodford (Mr. Jenkin)—seeking to squeeze the last drop of cheap political capital out of a price increase for which they were responsible—a price increase which they knew was coming when they were in government; a price formula which they knew was coming six months ago; a price increase which went to the Price Commission when they were in government; a price increase which they deliberately suppressed for electoral purposes. It was their guilty secret, and it surfaced in the official handout issued by the Electricity Council three weeks after they left office.
That is the give away. Every hon. Member in this House knows how long it takes to prepare a tariff adjustment of this nature. I can tell the House that this proposal was one of the first pieces of paper I found on my desk on the very first day I walked into the Department of Energy. It had been ready for ages—and the right hon. Gentleman knows it. What is more, in a rare moment of frankness, he blurted it out in this House.
§ Mr. Patrick Jenkin
I am sure that the right hon. Gentleman is not falling into the elementary trap of confusing a proposal put to the Government by the Electricity Council with a decision taken by the Government. I have already said that the previous Government had taken no decision and that we would not have accepted this increase.
§ Mr. Varley
I find that incredible. The Conservatives never gave us open government when they were in office as they promised, but in a brief blissful moment of open opposition this is what the right hon. Member for Wanstead and Woodford said in the House on 13th March:The electricity boards are pressing for fuel adjustment clauses for domestic tariffs."—[OFFICIAL REPORT, 13th March 1974; Vol. 870, c. 327.]How did he know about it? He knew about it because the Electricity Council cleared with the last Government a submission to the Price Commission on this very matter. We even know the date; it was last December. The right hon. Gentleman was, of course, a Treasury 780 Minister at that time and will have known all about it. What is more, he will fully have approved of it. He was in no position to do otherwise.
His Chancellor, the right hon. Member for Altrincham and Sale (Mr. Barber) said quite flatly on 17th December,At a time of the most acute energy shortage and in our present financial difficulties, it is anomalous—to say the least—that we are subsidising coal and electricity prices at a mounting rate ".—[OFFICIAL REPORT, 17th December 1973; Vol. 866, c. 962]."Ah", the right hon. Gentleman the Member for Wanstead and Woodford will say—he is squeezing every drop of political capital out of this—"but we did not know that this would mean a disproportionate increase for night storage users". If the right hon. Gentleman wants us to believe that, he will have to pull the other one.
§ Mr. Jenkin
The right hon. Gentleman has misquoted me. We knew what the Electricity Council's proposals were. I do not know why the right hon. Gentleman or his hon. Friends should get so excited. I said so in my speech. I said it on 13th March. I have said it again this evening. We knew what the situation was. I said that they had not been accepted by the Government—nor, in this case, would they have been accepted.
§ Mr. Varley
The right hon. Gentleman must not squirm in this way. I have not yet finished. There is more I need to say about this.
I have quoted the Electricity Council's official Press handout which was issued three weeks after the General Election. This is what it says:Increases to the domestic customer will be in the range of 0.3 of a penny for every unit used".I repeat—"for every unit used".
Now my hon. Friends may say, "But an old-age pensioner in Ealing or Nuneaton would not immediately realise the full implications of that statement as far as off-peak charges are concerned". And, of course, my hon. Friends are absolutely right. But the right hon. Gentleman is not an innocent old-age pensioner. He is a former Minister for Energy.
Now we know from that impeccable and authoritative source, the Peterborough column in the Daily Telegraph. 781 that he never really got to know how to do the job. It said recently:Mr. Jenkin had been Minister for Energy for only seven weeks when the election was fought and was still working himself into the job".I am sure that every hon. Member will wish the right hon. Gentleman well in the crash course that he is taking at the Tory Central Office version of the Open University. He has just admitted that he knew that 0.3p for every unit used included off-peak units.
After all, the penny—or 0.3 of a penny—even dropped with the hon. Member for Conway (Mr. Roberts) a month ago. He had an Adjournment debate about night storage heating on 24th May—a golden opportunity for the right hon. Member for Wanstead and Woodford to sound forth a blast of indignation on behalf of consumers of night storage electricity. Six hon. Members spoke in that debate, but the right hon. Gentleman was not one of them.
§ Mr. Varley
Until today, the House has never heard a word from the right hon. Gentleman about the impact of off-peak electricity. His silence up to this moment has been totally disgraceful.
Now, six months after they knew that this price increase was coming, three months after it was announced and a month after the House debated it, the Opposition have finally got around to giving the subject half a Supply Day—the off-peak half. If they believe this to be—
§ Mr. Ivan Lawrence (Burton) rose—
§ Mr. Lawrence rose—
§ Mr. Deputy Speaker
Order. If the Minister does not wish to give way, he must not be pressed to do so.
§ Mr. Varley
If the Opposition believe this to be a matter of such urgent consequence, why did they not slap down a motion of censure against us on their first Supply Day after the Chancellor announced the price increases in his Budget? It is an interesting fact that they did choose energy as the subject for their first Supply Day, and the right 782 hon. Member for Wanstead and Woodford was the principal Opposition speaker. But the topic they chose was North Sea oil, and they did not force a vote. Now, noting the genuine concern felt widely on this matter, they have decided to jump aboard the bandwagon.
It is not even as though the article of faith which has now been annunciated by the right hon. Gentleman is something that the Tory Party has always had. Far from it. Under this proposed increase, the ratio between standard rates and off-peak rates will be 60 per cent., almost exactly what it was 10 years ago when the Conservatives were in power. At that time, it was 58 per cent. That was the ratio when the right hon. Gentleman came into the House, and he never uttered a squeak about it. No wonder, since before that, under his party, the ratio had been 75 per cent. It was only under a Labour Government in 1965 that it came down to 50 per cent.
The Leader of the Opposition has the brass neck to tell us that the phoney war is over. Never have an Opposition been so brazenly attempting to make political capital out of a decision for which they were primarily responsible. I refer not just to the right hon. Member for Wan-stead and Woodford. No fewer than 10 members of the last Cabinet who were accessories to this decision have had the nerve to write to me to protest about it. They include the right hon. Members for Altrincham and Sale (Mr. Barber), Penrith and The Border (Mr. Whitelaw), Carshalton (Mr. Carr) and Lowestoft (Mr. Prior), the right hon. and learned Member for Hexham (Mr. Rippon), the right hon. Lady the Member for Finchley (Mrs. Thatcher) and the right hon. Member for Cambridgeshire (Mr. Pym). What an ignominious roll call of phoney warriors! Their behaviour reveals their opportunism and their obsessive hatred of nationalised industries.
After all, the price for domestic oil consumers has doubled over the last few months, but they have not put down a belated motion asking us to phase the oil price increases for those with oil-fired central heating. I well remember seeing an advertisement not long ago which said:Oil—the cheapest form of central heating.
§ Mr. Tom Boardman (Leicester, South)
How many letters of protest has the 783 Secretary of State received from his hon. Friends?
§ Mr. Varley
I will tell the House this: I have not received one from the right hon. Member for Leicester, South (Mr. Boardman), who was Minister for Industry in December when the Electricity Council asked him whether it could go to the Price Commission with fuel adjustment clauses. If anyone is responsible, he is.
The trouble is that the Opposition detest the nationalised industries but never hesitate to use them mercilessly as instruments of their economic policy. In fact, the workers in the public sector have been the victims of their pay policy. It was the publicly-owned utilities which their pricing policies compelled to accumulate massive deficits. In the case of electricity, the prospective deficit was £500 million. That is the reason for the heavy price increases that we are debating tonight.
The Opposition motion calls for a "phasing" of the off-peak increase. That is Jenkinese for a delay. A delay means a revenue loss and a revenue loss means a subsidy, but the right hon. Gentleman is on record on the subject on 13th March. He said nothing about differential rates, but he said:It is now nonsense to go on subsidising energy prices in a period of energy shortage."—[OFFICIAL REPORT, 13th March 1974; Vol. 870, c. 327.]Now, on 20th June, they demand a subsidy. They actually do U-turns in opposition.
We agree with the right hon. Gentleman's latest incarnation, not his previous one. We are subsidising electricity to the tune of £200 million this year. If the Jenkin of 13th March had had his way and we had accepted that it wasnonsense to go on subsidising energy prices—his words—electricity prices would be going up even more.
The contortions of the Opposition are beneath contempt and I will not trouble further with them. I want to deal with the genuine concern expressed by my hon. Friends. They will share my scorn for the untenable position of the Opposition, but they will want to know, and have every right to know, why the Gov 784 ernment accepted electricity price increases that the Opposition bequeathed to us.
In the Budget, my right hon. Friend the Chancellor announced three priorities for this Government, and my hon. Friends rightly cheered them. One was housing—£350 million extra. The second was food subsidies—£500 million. The third will cost £860 million in 1974–75 and £1,250 million in the twelve months from 22nd July; that is the increase in social security benefits, including the biggest-ever pension increase, and including—please note—an increase in the heating allowance. That was against the background of the biggest post-war economic crisis—my hon. Friends and I fought the election on that—and against a background of a prospective £1,400 million deficit in the finances of the nationalised industries, again bequeathed to us by the feckless mismanagement of the Conservative Party. That is why we had to accept this intolerable price increase.
My hon. Friends will accept this, but they will ask: why did the increase for off-peak users have to be proportionately so much larger than the general increase? They will say, "We understand that this must be so if there is a flat increase of 0.3p per unit, but why cannot the increase for domestic off-peak users be scaled down to soften the blow?"
What has most upset my hon. Friends and those who bought night storage heaters is that the advertising for this form of heating promised half-price electricity. Under the new price structure, night storage charges will be about 60 per cent. of the standard charge per unit. It is a bit confusing, but adding a flat 0.3 per cent. to both rates—the low off-peak rate and the standard rate—brings about that situation.
Off-peak charges were about 50 per cent. of the standard charge, but they will now be 60 per cent. That is where the sense of grievance lies, and that is where any adjustment should be sought. I discussed this yesterday with Sir Peter Menzies, the Chairman of the Electricity Council, and at my request he will be examining urgently what adjustment can be made to give relief to the domestic consumer on the off-peak rate.
I shall be having further discussions with Sir Peter Menzies, and I shall also 785 be reviewing, as the amendment points out, the policy for energy prices. But the House will appreciate that very complex issues are involved and that this will take a little time. Meanwhile, my aim will be to restore the differential, so that the charge per unit for off-peak electricity will once again be 50 per cent. of the standard charge per unit.
That is what consumers have asked for, and the restoration of half price electricity for off-peak users will remove the sense of injustice. I undertake to make a statement about the off-peak tariff before the House rises for the Summer Recess, with the aim of implementing the adjustment as soon as possible, and certainly by the autumn. I am sure that that fruitful season of the year will commend itself to the Opposition and I trust the House will accept that the Government are dealing with this matter fairly and with foresight.
Our amendment is one which will, I know, be acceptable to electricity consumers, combining, as it does, a firm commitment to a review with a repudiation of the shoddy record of the Opposition. I commend our amendment to the House.
§ 8.25 p.m.
§ Mr. Michael Fidler (Bury and Radcliffe)
I welcome the final words of the Minister, though I regret most of what he said in introducing what he regards as a final concession. I am sorry that the right hon. Gentleman spent so much time making a party political issue of this matter. I suppose hon. Gentlemen on the Government benches must welcome any opportunity for amusement in these—for them—rather difficult days.
As a Member of Parliament representing about 77,000 constituents, I am more concerned to see that justice is done to them individually. To me it matters not what history can be quoted by the Opposition or the Government. I have to deal with correspondence from my constituents. and one correspondent says:I hear that some Labour Members of Parliament are criticising the 70 per cent. charge on night storage heaters. I say three cheers to them.….I am not on a high income and live alone and at the time of installation the heaters were what I could afford and I am very satisfied with them. There are many people in my position and the fear of an increase is not very encouraging.786 I selected a number of letters which I sent on to the right hon. Gentleman and I commend his Under-Secretary of State for the courtesy and speed with which he replied, but I am sorry that the replies did not conform to the tenor of the right hon. Gentleman's speech this afternoon. I wrote on 4th June and received a reply on the 14th, which was excellent, but in that letter the hon. Gentleman said:I am not aware of any commitment on their part"—that is, the Electricity Council—to maintain any precise relationships between off-peak and unrestricted rates".All I can say is that the Under-Secretary cannot possibly have read the publicity which continued in the Press right up to the end of 1973.
The Minister went on to enclose a memorandum, and here I must criticise the right hon. Gentleman and his Ministers for sending out what I regard as misleading information. I am referring to the memorandum headed: "Electricity price increase: May 1974. Note by the Department of Energy" which the Minister sent me in the hope that it would help me in my replies to my constituents.
Paragraphs 1 and 2 of the document admit that increase will still leave losses, but surely that is irrelevant. Nobody has charged that at this stage the Government have an obligation to introduce such increases as will completely cover all the losses in this industry. The question at issue is not the general increase, with which my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) dealt so adequately, but the distribution of the increase to each category of user of on-peak and off-peak electricity.
In paragraph 3 the Minister agrees that the average increase is 30 per cent., but the right hon. Gentleman was good enough to admit today that the increase might be as high as 55 per cent. However, paragraph 4 of the document gives the game away. It says that for persons who are on full rate all the time the increase will be 10 per cent., where one-fifth of the usage—that is 900 out of 4,500 units—is at off-peak rates the increase will be 30 per cent., and where three-quarters of the usage—that is 9,000 out of 12,000 units—is at off-peak rates 787 the increase will be 50 per cent. In paragraph 5 he goes on to concede that the standard rate on its own is 32 per cent. more but the off-peak rate increase is actually 67 per cent. calculated on its own. The right hon. Gentleman referred today to the difference between on-peak and off-peak remaining only 0.5 per cent., with the standard rate going up to 1.25p and the off-peak rate going from 0.45p to 0.75p.
The right hon. Gentleman said tonight that this makes a difference of 60 per cent. between on-peak and off-peak, but before the increase the difference was not 50 per cent.; it was actually less—47 per cent. The difference between on-peak and off-peak was less than 50 per cent.
In the last paragraph of his letter the Minister goes on to refer to improved retirement pensions, sickness benefits and other social security benefits, and personal allowances and child allowances. That is fine, but completely irrelevant, because it ignores the special problem of those duped by false publicity about special advantages which decided people to go for night storage heaters instead of other forms of heating.
§ Mr. Phillip Whitehead (Derby, North)
My right hon. Friend had the political stature today to announce in his speech measures which will meet the quite legitimate outrage of people who felt conned. Cannot the hon. Member have the political stature to welcome the proposals?
§ Mr. Fidler
I have, and I shall, if the hon. Member will have patience.
Adding 0.3p to each unit of on-peak and off-peak electricity produces a gross out-of-balance of electricity costs compared with the previous method of adding a percentage increase to each. Another constituent of mine, Mr. Marsh, has given me details of the effect that the proposed present rates will have. His annual bill under the current rates totals £160.71. On the new basis it will work out at £258—an increase of 61 per cent.
I would have urged the Minister, tonight, instead of having this 0.3p on both on-peak and off-peak electricity, to have made a clear statement that as from tonight, without waiting for some 788 announcement before the Summer Recess, he would restore the old differential percentage between the rates.
I want to emphasise one other thing, and only one other, so as to allow other hon. Members time to speak. With a little knowledge of the industry, having in the past been associated with electricity consumer councils, I know that the great drive has been to persuade people—not necessarily those in unfortunate circumstances—elderly people, or people with little income—but all users—to use night storage heaters to save electricity capacity so that plant could be continually used instead of lying idle at different times of the day and night. To achieve this some inducement is necessary. Even if there were not these differentials in the past, to make the best use of the plant available the right hon. Gentleman should, ab initio, instead of this half rate, be inducing people to use electricity for heating or any other purpose throughout the night hours when demand is at the minimum.
Of course I welcome the announcement he has made—but with this proviso: it is not enough to say that he has asked the electricity authorities to consider the matter favourably; it is not enough, for me, that he should have said today that he hopes to be in a position to make an announcement by the end of July about something to come into operation before the onset of winter. If he is convinced by the arguments not only from this side but from his own side of the House, let him go that extra mile by announcing that he will withdraw the present intention of adding 0.3p and restore the differential, percentage-wise, between on-peak and off-peak electricity, that existed before.
§ 8.34 p.m.
§ Mr. Arthur Palmer (Bristol, North-East)
I want in the first place to congratulate my right hon. Friend on what he has done this evening. Rarely have I heard a case by the Opposition demolished so swiftly by just two very appropriate sentences from the Government Front Bench.
The performance by the right hon. Member for Wanstead and Woodford (Mr. Jenkin)—who has gone—was staggering in its effrontery. We went together to Canada to look at the nuclear production of electricity. He was a pleasant 789 travelling companion—I have no complaint there—but during our trip he did not give any evidence that he was subject to loss of memory, but he has given plenty of such evidence tonight.
He seemed to object to, and to describe in general terms as deceitful, the advertising by the area electricity boards relating to night storage heating. Yet most of that advertising went on when he was a Minister, and when his right hon. and hon. Friends were Ministers, and they raised no objection to it at the time. If Ministers are to be held responsible now for electricity board activities, Ministers were equally responsible at that time.
Also during the passage of the Statutory Corporations (Financial Provisions) Bill the hon. Gentleman said on several occasions that his Government at that time could not continue indefinitely with a policy of subsidising electricity prices and that sooner or later the industry would have to get back to commercial viability. That is what I mean by loss of memory.
During the General Election campaign a number of questions were put to me, no doubt as a result of my known interest in electricity supply, about the effect of coal and oil price increases on electricity prices. The questions came from those who attended meetings, people who were again to be my constituents. I said that the effect would probably amount to a 50 per cent. increase on an average.
There is, therefore, surely no argument between the two sides of the House about the inevitability of increases in the price of electricity, a secondary fuel source, bearing in mind that all other fuel costs have been increasing at the same time. But I hope that the House will not overlook the fact that retail electricity supply prices during the four years from 1968 until 1972–3 went up by only half of the extent of the general rise in the retail price index, which is tremendously to the credit of this nationalised industry.
The question now is whether the inevitable increase in electricity prices is being spread fairly over the various classes of user, and whether the tariff structure is being arranged in the most desirable way. A difficulty arises here because electricity cannot be sold like little apples. There are two main components in electricity tariffs: the charge 790 related to capital costs and the charge related to running costs. Electricity cannot be stored as such—it must be consumed at the moment it is made. Therefore maximum demand charges meet peak costs in the ordinary way and off-peak electricity can be supplied relatively cheaply.
The House may be interested to know that the cost of fuel represents half the cost of peak electricity units, but nine-tenths of the cost of off-peak units. Therefore if fuel costs jump, as they have, then every unit of electricity, whether produced on or off peak must bear an equal burden of cost. That is a fact of life—part of the inherent economics of the electricity supply industry from which we cannot escape.
But having said that, in adjusting their tariffs to reflect the inescapable fuel cost, the industry has done the exercise rather crudely. I suspect that there is a hidden clash between the interests of the Central Electricity Generating Board and the interests of the area electricity boards. The truth is that night storage heating has been so successful in this country that it has succeeded in producing something of an artificial mid-day peak. This is becoming a near embarrassment to the CEGB.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Is the hon. Gentleman not aware that the newer forms of night storage heaters do not reinforce themselves during the day? It is the older ones which do that. Therefore this is not a cumulative effect.
§ Mr. Palmer
The hon. Lady's intervention assists my argument. It is because the peak was building up in the middle of the day that this new provision has been made. With the latest contracts it is true that there is no mid-day boost. That does not apply however to existing agreements. I think there has been a clash of interests between the CEGB and the area boards and the CEGB at heart is now not too enthusiastic about block storage heating. It is not the kind of thing that it necessarily wants and it has succeeded in getting much of its own way.
The right hon. Member for Wanstead and Woodford was, for once, accurate when he said that the plant used at night is not necessarily being used in 791 the best way, and I hope that my right hon. Friend in his discussions with the chairman of the Electricity Council will ask Sir Peter Menzies to look at the whole incidence of the new load curve over the 24 hours. I think that a more sophisticated analysis could then be made of the balance of costs between running and capital costs. It might be found then that a greater relief could be given to the users of storage heaters than my right hon. Friend has announced tonight.
§ 8.43 p.m.
§ Dr. Michael Winstanley (Hazel Grove)
I shall be brief because this is a straightforward, simple issue and the facts are quite clear. In addition, I have a sore throat and I doubt whether I could remain audible for long. This is a much happier occasion for the House than some we have experienced this week. When I came into the House after the last election I honestly felt that we might see this minority Government situation doing something to restore the power of Parliament over the Executive—a power which it seemed had rather disappeared. I have not seen many signs of that since then, but perhaps this debate is such a sign.
This debate is very different from some we have had recently. We are dealing with precisely the kind of matter upon which the House ought to be able to exercise its authority over the Government without precipitating all sorts of violent constitutional crises. It is the kind of issue on which Parliament ought to be able to dictate to the Government. We have a situation in which for a long time electricity boards have been selling night storage heaters in which off-peak electricity was used, on the grounds that people would get that electricity at half price. The advertisements were saying this.
There are three aspects to this question. The first is the welfare aspect, about which bodies like Help for the Aged, the Child Poverty Action Group, Gingerbread and so on, were concerned. There was the feeling that elderly people might get into difficulties and would no longer be able to go on using these appliances. It was felt that many might have recourse to paraffin heaters which are not 792 altogether satisfactory. There were certain dangers.
Secondly, there was the fair trading aspect. Had a private commercial company suddenly changed its policy in this way, had it sold an article with the promise that supplies would be provided at a certain price and then the price had changed, we would all have felt extremely angry. We would have felt that it was a breach of the Trade Descriptions Act.
In fact, I pursued the matter from that point of view. I wrote to the Chief Inspector of Weights and Measures, hoping that he would refer the matter to his inspectors to prosecute. I received a letter from him saying that my letter had been transferred to the Minister of State for Prices and Consumer Protection. Subsequently I had a letter from the Minister saying:If you think that the advertisements contravene the Trade Descriptions Act, you should bring the facts to the attention of the Chief Trading Standards Officer ….But I had written to him in the first place. I began to think that it would go round and round in circles before anything happened.
For that reason, I wrote to the Director General of Fair Trading. He replied:I see no reason to doubt that Electricity Boards will carefully reconsider the manner in which they promote the sale of night storage heaters following the recent price increases"—but what about those people who had already bought them? The letter went on:… and any statements they make will … be subject to the provisions of the Trade Descriptions Act.That is all very well as regards any statements that they make, but what about the ones that they had already made? It seemed clear to me that it was in breach of the Trade Descriptions Act.
Finally, there is the economic and energy aspect. That too is important. The Government want people to use off-peak electricity. If the policy is not changed, there is no doubt that night storage heaters are a dead duck. We have to restore the differential if we want people to use them.
I come now to the speech of the right hon. Member for Wanstead and Woodford (Mr. Jenkin), to which I listened with interest. The first part of it apportioned the blame, and I listened to that 793 with some enjoyment. However, I am concerned not so much with whose fault it is but with who can do something about it and put matters right. Clearly that responsibility rests upon the Government.
If I heard the Secretary of State aright, he undertook to provide something in the way of a safety net for those in special need, rather like the safety net which has been provided already for those in special difficulties, such as elderly people. If that is so, we on the Liberal Bench welcome it and will support it. The Secretary of State also undertook to use his powers in such a way—which he did not outline—that, in the coming few days or weeks, he would restore the differential which existed previously.
If the Secretary of State can confirm that before we rise for the Summer Recess he will announce in the House that the differential has been restored, all that I can say is that, if the House divides on this motion, I shall urge my right hon. and hon. Friends to support the Government. On this occasion that, to us, would be a not uncongenial experience.
§ Mr. Varley
The hon. Gentleman heard me correctly. I shall be having further discussions with the Electricity Council with a view to restoring the differential to 50 per cent. of the normal rates, and before the House goes into recess I shall certainly report to it.
§ Dr. Winstanley
I am grateful to the Secretary of State for his confirmation. Therefore, this has been a happy occasion. It has done something to restore the power of Parliament. I hope that, as long as this place exists, Parliament will maintain that power over the occupants of the Treasury Bench, whoever they happen to be.
§ 8.48 p.m.
§ Mr. Raphael Tuck (Watford)
As one of the leaders of the original revolt against the Government's proposals, I am grateful for this opportunity to explain my position.
I deal first with what happened originally. The Tory Government left us a deficit on our desks of £500 million. They left it there surreptitiously, like something which a dog leaves behind a 794 door and which is very unpleasant to pick up. My right hon. Friend the Chancellor of the Exchequer picked up £200 million of it, but the rest he could not pick up and had to leave to my right hon. Friend the Secretary of State for Energy.
The Tory Government were guilty—perhaps I should not say "guilty"; but the Tory Government had approved the fuel cost adjustment charges. They had taken them to the Price Commission and had them approved. Therefore, they are now trying to blame the Labour Government for something that they would have done if they had remained in power.
§ Mr. MacArthur
What evidence has the hon. Gentleman for making that ludicrous and untrue suggestion?
§ Mr. MacArthur rose—
§ Mr. Tuck
I shall not give way again. I must be brief.
Therefore, I could not possibly vote with the Opposition on this disgraceful motion which seeks to blame us for what they would have done.
Of course, it does not excuse this Government's doing the very same thing. That was the view that I expressed to my right hon. Friend the Secretary of State for Energy, to the Chief Whip, and to other Members of the Labour Party. I know that the absolute increases were the same throughout. However, a small increase on off-peak charges is far more serious to a poor, hard-hit person than is the same increase on the standard charges to a Cabinet Minister. Therefore, I objected strongly to what we were doing. I understood my right hon. Friend's predicament, but I felt that something should be offered by my right hon. Friend or I should have to abstain from voting tonight.
795 Then came the amendment to the motion. That did not seem to rectify the situation. It was a milk-and-water amendment. It made no improvement whatever. Therefore, I came into the Chamber tonight feeling that reluctantly I would have to abstain from voting.
Then my right hon. Friend gave his forthright undertaking. He has undertaken to review the whole situation. His undertaking meets the Opposition's objection. They did not ask us to abolish the whole of the increase. They suggested that it should bephased so as to avoid hardship to pensioners, the disabled and other hard-pressed householders.That is exactly what my right hon. Friend has undertaken to do. He will review the whole situation and bring in this phasing so as to avoid hardship to these people.
I have not so far had reason to doubt my right hon. Friend's word. I have had reason to doubt the words of certain other people—for example, that the United Kingdom would not be taken into the Common Market without the full-hearted consent of the British people—but I have had no reason to doubt my right hon. Friend's word. He has cut the ground from beneath the Opposition. He has pulled the rug from under their feet. He has met their objection. He has undertaken to bring in this phasing before the House rises for the Summer Recess, which will be before the new prices come into operation in August.
I am satisfied with that assurance. I congratulate my right hon. Friend and categorically state that my vote tonight will unhesitatingly be with the Government.
§ 8.55 p.m.
§ Mrs. Jill Knight (Birmingham, Edgbaston)
We are all delighted to hear what the Minister has said this evening. But what the Minister must not do without some rebuke is precisely what he did do. He came to the Dispatch Box as a model of outraged innocence, like some sort of male Lady Bountiful spilling his bright ministerial promises from a cornucopia, when he would not have been saying any of those things had not the Opposition forced him to do so. It is high time for us, in this debate, to look at the sequence of the events.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie)
I am grateful to the hon. Lady for giving way. I really mean that. On 24th May her hon. Friend the Member for Conway (Mr. Roberts) did the House a great favour by initiating a debate on this issue. I refer the hon. Lady to HANSARD for 24th May when, in reply to her hon. Friend, I said:It has been said that we should take cognisance of this point. We have already taken cognisance of that point. I concede that a Government who were not concerned about the important issue the hon. Gentleman raised would be a very foolish Government This Government listen and learn and are receptive to the point of view expressed by hon. Members."—[OFFICIAL REPORT, 24th May 1974; Vol. 874, c. 818–19.]In the light of that statement, will the hon. Lady withdraw the comments that she has just made?
§ Mrs. Knight
No, I shall not so much withdraw them as enlarge upon them. I am sure that the hon. Gentleman will be pleased to hear that.
The story does not begin there. Even if it did, what the hon. Gentleman has read out shows that the fact that my hon. Friend the Member for Conway (Mr. Roberts) raised the matter provided that opportunity. It was only because my hon. Friend raised the matter that it began to come to the forefront. But before that happened, it was my hon. and learned Friend the Member for South Fylde (Mr. Gardner), showing the powers and ability of some sort of political Sherlock Holmes, who winkled out the fact of these electricity price increases. It was only my two hon. Friends, followed by myself when I tabled a motion on the Order Paper, who caused the letters to start to come in, when hon. Members on the Government benches began to get worried. But I wonder how many of them signed my motion on this matter.
§ Mrs. Knight
The hon. and talkative Member has given the game away. The fact is that far too many times in this House hon. Members will not support something that is right simply because they do not like the Member who has put it forward in the first place. That is a great shame.
797 The situation would not have arisen at all had not the Government, when they came to office, given the miners such a huge increase.
§ Mrs. Knight
The present situation indicates how right were the previous Government when they said that because the miners had a dirty, dangerous and horrible job, they should have a bigger rise in wages than anyone else. But they also said that, in allowing a wage increase, 16½ per cent. was the limit to which the country could go without stoking the fires of inflation. How right my right hon. and hon. Friends were.
§ Mrs. Knight
This situation is attributable, to quite a degree, to that enormous and disproportionate wage increase.
§ Mr. Varley
The hon. Lady has now said something that is very serious and not true. The likely increase in the electricity supply industry deficit of £500 million did not all come, as the hon. Lady suggested, from the miners' wage settlement. One-third came from that. The other two-thirds came from the increase in oil prices.
§ Mrs. Knight
The hon. Gentleman must listen. I said that it was one of the things that contributed to the present situation. I am sure that the hon. Gentleman will do me the honour of reading my speech in HANSARD tomorrow, when he will see that that is what I said.
The point I particularly want to make was briefly mentioned by the hon. Member for Hazel Grove (Dr. Winstanley). It is something about which the House should be concerned. I believe that all the time the present situation continues we are in breach of the Trade Descriptions Act. The chairman of one electricity board has said in a letter:The Board has always sought to avoid misleading … the public … we have never gone further than to assure consumers that the off-peak rates will always be favourable".That is a lie. It was stated not merely that the off-peak rates would be favourable but that they would be half-price. The letter is dated 26th April. I have 798 here a folder from the Midlands Electricity Board headed:Electric central heating using half price electricity".That went out on 6th May, although it was on 27th March that the alterations in pricing were announced. That is a clear contravention of the Act, Section 11(2) of which says:If any person offering to supply any goods gives, by whatever means, any indication likely to be taken as an indication that the goods are being offered at a price less than that at which they are in fact being offered he shall, subject to the provisions of this Act, be guilty of an offence.If the MEB or any other electricity board had withdrawn those misleading advertisements immediately they knew they were misleading, there would not have been a case. But I beg the Under-Secretary to recognise that that folder seems to be in breach of the Act.
A constituent has written to me saying:Night storage appears to have been one long con-trick. Since its inception, it has already been reduced from 10 hours per night to 8 hours, without the mid-day boost that was allowed at the beginning. Thus recent investors lose two hours a night on the cheap rate, in many areas.There can be little doubt that that is in contravention of the Fair Trading Act. Apparently, we are in breach of two Acts. Section 34(1) of that Act reads as follows:Where it appears to the Director that the person carrying on a business has in the course of that business persisted in a course of conduct which:If the actions of the House in directing the electricity boards as to how they shall behave in this regard are, as they seem to me clearly to be, in breach of laws which the House has passed, I know that the hon. Gentleman will feel that that is a serious matter, and it is perhaps one that he will examine.
- (a) is detrimental to the interests of consumers in the United Kingdom, whether those interests are economic interests or interests in respect of health, safety or other matters, and
- (b) in accordance with the following provisions of this section is to be regarded as unfair to consumers."
I warmly welcome what the Secretary of State said. The Opposition have won the battle hands down, and we are delighted. I ask the Minister, in view of 799 the evidence which I have offered, to recognise that there is a real need for extreme urgency so that we shall not be in breach of the law for a moment longer than necessary.
§ 9.5 p.m.
§ Mrs. Maureen Colquhoun (Northampton, North)
First, I congratulate my right hon. Friend the Secretary of State for Energy on his outstanding and lively contribution. I thank him on behalf of my constituents who made the great mistake in the past of buying night storage heaters. It is clear that increased electricity charges can mean the death of night storage heaters. I cannot say that there will be much regret at their passing. They are not a particularly attractive form of central heating. The user is compelled to flood his home with heat once the unit has been topped up, even though the day may be sunny. To that extent I am extremely sorry for those who have lumbered their homes with these units. I do not think that they are a secure form of heating to buy in future.
People cannot be expected to have faith any more in the electricity boards and their claims about cheap off-peak electricity. I fear that night storage heaters may become the most expensive sideboards in the world. They will be a challenge to every do-it-yourself enthusiast to turn into something useful. I understand that the "innards" of night storage heaters are mainly brick. That can be broken into sections to throw at electricity board salesmen. The heaters could then be turned into useful cupboards in the home in which to store, for example, coal scuttles.
If there is a lesson for my hon. Friends, it is that the nationalised industries should not ape the dubious commercial practices of private enterprise. We should no longer allow them to do so. The sales policy of electricity boards in pushing off-peak electricity, knowing in the long run that it would have to rise in price—and we have probably not yet seen the end of price rises—has badly let down the supporters and advocates of public ownership.
One of the great reasons for the indignation caused throughout the nation is that people expect something better than this from the nationalised industries. 800 They think that they should not have the morality of a private enterprise huckster. It is important that in future the sales efforts of nationalised industries should be based on truth. They must resist any temptation to copy the sales practices of the private sector which under the previous Government were applauded.
I consider it extraordinary and almost immoral that the Opposition are now endeavouring to make political capital out of a situation that was created while they were in office. I hope that the House will repudiate their impudent amendment.
§ 9.9 p.m.
§ Mr. Wyn Roberts (Conway)
I welcome without reserve, except the reserve of reading it in cold print, the announcement that was made by the Secretary of State for Energy. I feel partly responsible, along with others, for this debate taking place because I introduced the Adjournment debate on 24th May. The undertaking given today does not perhaps exceed my wildest dream of 24th May, but it is somewhere near it. I sincerely welcome it.
I welcome it, too, on behalf of the more than 2 million users of night storage heaters. Had the debate not taken the turn that it has, I was going to analyse the dozens of letters I have received from consumers of off-peak electricity. My analysis showed me that three out of every five letters came from declared elderly people, or chronically sick people, and very often from people who were both chronically sick and elderly. I have a letter here, which I shall not read, from an 80-year-old couple who are chronic bronchitics. The point made by all the elderly people—I am sure hon. Members who have received similar letters will agree—was that warmth is an essential and that they would not be able to afford night storage heaters next winter. They simply did not know what to do.
We have now had the undertaking to restore the differential. What will this actually mean in percentage increases to the consumer? We know that it was to have been 70 per cent. Can we be assured that elderly people will be able to afford this form of heating? The Under-Secretary of State in his reply on 24th May referred to the special heating 801 allowances which are to go up by 10p, 20p and 30p in their different categories. This does not seem to me a sufficient increase to cover the higher cost of off-peak electricity. I should welcome clarification on that point.
Many of those who have written to hon. Members will not qualify for special heating allowances, yet they are people with very slender means. I ask the Government to pay special attention to those who do not qualify for special heating allowances and also to those, many of whom have also written to us, who regularly look after elderly subnormal people in small residential homes. They, too, are going to face great difficulty.
The question has been raised why the Secretary of State has made this announcement. We heard statements here recently by some of his hon. Friends that they might fail to vote with the Government tonight. We have heard references to various pressure groups on both sides of the House. But I cannot believe that the right hon. Gentleman would give in to pressures of this kind. What he has done is to give in to the pressure of the truth of the case.
In this connection, perhaps we can have an even more happy ending to the debate. I think that the Under-Secretary of State has been perhaps wrongly criticised for his part in the debate on 24th May. He was on top form. It was his case that was weak. It is no wonder therefore that the debate has taken the turn that it has taken.
§ 9.15 p.m.
§ Mr. Frank Hooley (Sheffield, Heeley)
I welcome my right hon. Friend's statement because it seems to be an equitable solution to the difficult problem of maintaining the former ratio between the standard and off-peak tariffs. He seems to have found a formula which is fair and which, hopefully, will not create excessive problems for the electricity industry.
What is disquieting is that, leaving aside the incredible complexities and technicalities of the pricing of electricity, it must have been clear to the Cabinet that in their economic policy the dam against prices is an essential part of the overall strategy, not only as part of the famous compact with the trade unions but in relation to the nation's confidence 802 over prices. It is incredibly difficult to understand the insensitivity of the Cabinet to a 70 per cent. price increase on a vital domestic commodity for 2 million families, and I do not understand why it should have taken massive representation from Labour Members and continual letters and badgering for the Cabinet to come to the view that something has to be done.
There is another more serious point. I welcome the fact that we have a Secretary of State for Prices and Consumer Protection. It is her job to exercise some effective surveillance over the whole spectrum of prices as they affect the domestic consumer, and some effective surveillance over the practices of major suppliers of goods and services. I was staggered that when I received the first representation from one of my constituents on the matter—I have no personal interest in the matter, because my house is centrally heated by gas—on referring it to my right hon. Friend I found that she had no jurisdiction in the matter. The letter was passed to my right hon. Friend the Secretary of State for Energy. I admire him, but his rôle is clearly to explain, defend and promote the interests of the great public corporations which are interested in the supply of energy. He does this with great skill and verve, as we saw tonight, but in the interests of the consumer we need an independent Minister or public body who is from time to time able to tell the public corporation—whether it be concerned with electricity, gas, coal, railways or whatever—that a particular price increase or trading policy might seem all right to them but in the interests of the consumer should be restrained, modified or even cancelled.
If that is not done I cannot see how my right hon. Friend the Secretary of State for Prices can exercise her rôle effectively. She must have a voice in the affairs of these great corporations, which have such a vital impact on our day-to-day lives. If my right hon. Friend had had this authority and had been allowed to exercise her surveillance at the beginning of this unfortunate episode it would never have got this far on the floor of the House.
I am sure that my right hon. Friend would have had immediate discussions and taken immediate action to prevent this incredible disparity between a 30 803 per cent. rise for the standard tariff and 70 per cent. for the off-peak tariff from going through. The debate may have been valuable for redressing the unfairness between the different tariffs, but it has been valuable, too, in drawing attention to the need of the general public for a powerful independent body or Minister to protect its interests vis-à-vis the great public corporations. I have immense admiration for the technical skill and the achievements of these corporations, but I believe they are not responsive enough to personal individual problems which their pricing or trading policies may cause to families and I hope that that lesson will be acted upon by the Cabinet.
§ 9.20 p.m.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
This is the most satisfying debate I have attended since I have been a Member of this House, because by calling it we have achieved exactly what we set out to do. I have had more letters on the subject of night storage heaters than on any other subject, apart from rates and nurses' pay.
On Tuesday I entertained a party of old-age pensioners from one of the villages in my constituency. I explained the customs of the House of Commons, and after tea I said, "Would you like to ask me any questions?" Immediately from all over the room they all said, "Can you not do something about night storage heaters?" That was not the sort of question I had expected. I had expected questions about the history or methods of Parliament. But electricity was clearly the subject that was uppermost in their minds.
Those people had already played their part. They had written to me. I had passed on their letters to the Minister and the Board. We are all very grateful to my hon. Friend for Conway (Mr. Roberts) for having brought things to a head during the Adjournment debate at the end of May.
I cannot believe that the Secretary of State for Energy, pleasant thought he is, would have had that meeting with the chairman of the board yesterday and come out with the very satisfactory assurance he has now given us if it had not been for my hon. Friend the Member 804 for Conway and for those many hon. Members on both sides who have pressed for the righting of this injustice.
I do not agree with the hon Member for Northampton, North (Mrs. Colquhoun) in her dislike of storage heaters. I strongly disagree. I believe that storage heaters provide the safest form of heating for elderly people, and I should not like to see them go out of use. I am very glad, therefore, that the Minister has recanted. With good sense he will now give these people the fair deal they were promised by the electricity board, of which, if it had not been for the action taken by hon. Members on both sides, they would have been cheated.
§ 9.23 p.m.
§ Mr. William Molloy (Ealing, North)
Having heard the speeches of Conservative Members, knowing they had listened to a speech of the right hon. Gentleman, I am forced to conclude that the later speeches would constitute a doctor's precription to facilitate a vomit.
The essence of this debate is a triumph for the House of Commons. I agree with the hon. Gentleman who spoke from the Liberal bench. He said that backbench opinion would be listened to. Hon. Members on this side have the advantage of Tory Members, in that our opinions are very well listened to and have cognisance taken of them.
The Trade Descriptions Act 1972 has been referred to. The electricity industry is a publicly-owned industry, which might have been liable for action under that Act. This is remarkable, because the Act was introduced to deal with the shyster lawyers and the twisters in private enterprise who have been conning ordinary people for years. No one expected that this would come from a publicly-owned industry. This must be a talking point. It would appear they have slipped a little below their very high standards.
The right hon. Gentleman may have made a Freudian slip in his opening statement when he referred to our great publicly-owned industries. They are great, and they are publicly owned. That is why the Tories will not denationalise them, despite all we heard earlier today.
Members on the Government side were indignant. When the hon. Gentleman the Member for Conway made his speech during the Adjournment debate, one 805 would have thought that hon. Gentlemen who have occupied important positions in this sphere should have been in the House of Commons to have made it transparently clear that they, too, have had a responsibility in this. They waited for this debate in the hope that they could do a "Pontius Pilate"—wash their hands of the whole affair and advance themselves in white sheets as pure and innocent.
My right hon. Friend's announcement is the result of the pressure that we on the Government side have been applying over the past few weeks. We have the great advantage over the Tories that we can apply pressure to Cabinet Ministers. We demand that they come to our meetings. They cannot descend once in a blue moon, as the Leader of the Opposition does on the 1922 Committee.
We should not forget that vital part of my right hon. Friend's speech which exposed the hypocrisy of Conservative Front Benchers. This debate arose because it concerned a public industry. It would have been impossible if a massive private organisation had been concerned. It is the voices of the people, through their Members on both sides, which have encouraged my right hon. Friend to re-examine this problem. I am confident that he will restore the balance.
I should be less than honest if I did not say that a proper examination should have been made and that this debate was unnecessary. I expect much more thorough examinations from Labour Ministers than from others. A wrong is to be righted, because the industry was accountable to this House. The debate has completely justified the principle of British public ownership.
§ 9.28 p.m.
§ Mr. A. P. Costain (Folkestone and Hythe)
A prominent feature of both debates today has been the way in which, when Labour Members and Ministers want to get off the subject, they start attacking the 1922 Committee. One would think that they had been at one of its meetings. I know that they are jealous of the facilities that we have there. We heard a lot about it from the Prime Minister, and the. hon. Member for Ealing, North (Mr. Molloy) obviously could not find a good argument and so followed in his master's footsteps. The more he does so, of course, the more 806 likely he is to get on the Front Bench—although it will be on this side of the House.
I welcome this opportunity to intervene in the debate because I, too, have received many letters on this matter, particularly from the elderly, who have relied so much on this type of heating, and some real distress has been caused by the announcement of this huge increase in price.
The hon. Member for Ealing, North said that if a nationalised industry had not been involved we should not have been debating this topic tonight. I do not accept that. It could be said that had it not been for the fact that the increases were necessitated because a nationalised industry was involved we should not have had this debate.
I do not want to belittle the efforts of the Electricity Council. This is an efficient industry, it does a good job of work. It is trusted, and it provides a good service to our constituents. That is why it was a shock to learn of this increase after such a successful advertising campaign for the use of storage heaters.
The fact that by a debate in this House we can put right what we regard as wrong shows that democracy works. The changes would not have been quite so enthusiastically accepted by the Minister if there had not been certain happenings last night and earlier this evening, but I shall be out of order if I develop that theme any further.
§ 9.31 p.m.
§ Mr. Peter Hardy (Rother Valley)
When I entered the Chamber I had no intention of participating in the debate, but after hearing the hon. Lady the Member for Lancaster (Mrs. Kellett-Bowman) I feel that her comments deserve support from this side of the House because my home is heated by storage heaters. I like them, and find them convenient. Perhaps I should declare an interest. I am delighted, both on my own behalf and on behalf of my constituents, that my right hon. Friend has taken the decision that he announced this evening.
It may be that those who purchased storage heaters some years ago assumed that conditions would never change, but such an assumption would have been rather foolish. Circumstances have a 807 habit of changing. Anyhow, I shall keep my storage heaters despite the criticisms that have been made of them, and I repeat that I am grateful to my right hon. Friend for his statement tonight.
I do not know whether the hon. Member for Conway (Mr. Roberts) was seeking to suggest that my right hon. Friend was guilty of an excess of flexibility, because that is not so. It would be foolish if Opposition Members sought to uphold as a political virtue the excessive obstinacy with which this country was inflicted for a large part of the previous administration's tour of office. I am delighted that my right hon. Friend is in consultation with the industry to make sure that the impact of the change is not severe.
I feel sure that my right hon. Friend will have at the back of his mind a thought that has occurred to me, and that is that there is a grave danger in seeking to depress the revenue of the energy-producing industries in order to cushion society against the costs of fuel, light and power. Those who are interested in the mining areas know that one of the major reasons for the weakness of the coal industry in the late 1960s and early 1970s was that during the 1950s coal was very much under-priced. Because of that, the nation did not foot the bill for the subsidy which the coal industry was providing. The industry and those employed in it bore the brunt of the cost of the subsidy which the nation enjoyed.
It was foolish for Britain to have such a sustained period of cheap coal or cheap energy, because cheap energy may have many serious disadvantages for the country during the years following a period of subsidy. I am sure that my right hon. Friend will have had that thought in his mind, and I trust that he will not be persuaded that the electricity industry—or the coal industry for that matter—should be expected to cushion society from the effects of inflation by taking upon itself an extremely heavy burden.
The hon. Member for Folkestone and Hythe (Mr. Costain) suggested that Government Members had little knowledge of the 1922 Committee. I rather thought he was hoping that some of us might at some time seek to belong to that organi 808 sation. I do not think that it has much attraction for myself or for any of my colleagues, because it is now 1974. As I said, circumstances change, and circumstances affecting consumers of electricity are bound to change.
I am delighted therefore that, while change is severe, and the former change would have been extremely painful to many people, my right hon. Friend has taken the decisive and flexible and very happy decision he has been able to announce tonight.
§ 9.35 p.m.
§ Mr. John Hannam (Exeter)
I welcome indeed the change of heart of the Secretary of State and the reintroduction he has promised of the half-price system of future tariffs. I can understand why he has done his own U-turn. After two successive defeats in the Lobbies the Government had to respond to the pressures which have built up in the House and in the country.
I regret the tone in which the Secretary of State spoke in this debate, especially in the first half of his speech. I regret the personal attack he made on my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). His attack was based on a false assumption that the proposal to increase off-peak prices by the 70 per cent. figure which had been placed before the last Government would have been allowed. The Secretary of State implied that neither my right hon. Friend nor my hon. Friend the Member for Leicester, South (Mr. Boardman)—a former Minister for Industry—would have resisted such an increase. I reject and I resent that accusation of double standards, because throughout the period of the last administration one thing we were doing was to restrain electricity prices in order to fight inflation. I could quote numerous examples—
§ Mr. A. J. Beith (Berwick-upon-Tweed)
What the hon. Member has said confirms the impression which many people had that the depression of electricity prices at a crucial stage during the previous Government was one of the factors which occasioned so large an increase at this stage.
§ Mr. Hannam
Certainly we sought to restrain prices because of the priority we 809 gave to the battle against inflation. We accepted that an increase in electricity prices had to take place, but what I am saying is that we would certainly have resisted and prevented such an increase as this, so disproportionate an increase in off-peak charges.
I shall not say more about the right hon. Gentleman's speech, especially the first half of it, because it was not really typical of him. I hope he does not revert to that style on too many occasions. I do warmly welcome the undertaking he has given to reinstate the half-price tariff and I hope he will carry out this change as quickly as possible, because, contrary to the views expressed by the hon. Lady the Member for Northampton, North (Mrs. Colquhoun), I believe that storage heaters have a long-term future and I believe that they will satisfy that demand, and especially in older Victorian houses where modern systems of piped central heating cannot be installed.
There are several occasions during each Parliament when in this House we turn from set pieces of political confrontation, and this debate has been such an instance. The House has turned away from all the statistics and logistical arguments put forward by experts and we have experienced the full-blooded reactions of hon. Members on both sides reacting to the needs of a substantial section of the population who appear to have been unfairly treated.
During the last 24 hours we have been engaged in two major political confrontations and tempers have run fairly high and, if I may be excused for saying so, a certain amount of heat was generated—especially by the Secretary of State for Employment, the right hon. Member for Ebbw Vale (Mr. Foot) who, roughly at this time last night, we might consider was storing up heat for off-peak use, perhaps for a kind of mini-foot-warmer.
In this debate we are in a lower key because the subject of off-peak electricity charges transcends party differences and indeed some 2 million householders have been anxiously awaiting this debate and its decision in the hope that the arguments put forward by hon. Members on both sides might convince the Government that immediate action must be taken to reduce the level of off-peak tariff increases to a bearable level. It has been as simple as that.
810 What we required was action by the Secretary of State to reduce the disproportionate increases in the charges being levied on a group of people, consisting predominantly of pensioners, the disabled and low-income families, who look to us, as their constituency representatives, to stand up and fight for them. Tonight the will of the House of Commons has succeeded in bringing about a change of heart by the machine of Government, which with all its power, has had to listen and bend to the wishes of hon. Members who have spoken from their hearts about a situation which could and should have been avoided.
Many different aspects of the problem have been touched on in speeches from both sides. In the previous debate this afternoon we heard discussed the dangers inherent in extending the area of nationalised, non-market uncompetitive monopoly industry. The off-peak electricity dispute points out the danger where, however hard Governments try to stay out of the day-to-day administration of the public sector, they are inevitably drawn back into decision making because of their ultimate responsibility to the taxpayer and the consumer, who can be left high and dry at the mercy of monopoly decisions on pricing and supply.
I cannot deny, nor can the Government deny, that we are involved, however reluctantly, in certain management decisions of the nationalised industries. In coal, gas, electricity, the railways and steel, variations on the theme of intervention are constantly taking place. Electricity prices are allowed to rise by 20 to 30 per cent., but gas prices are held back. Government investment is related to productivity in one case, but not in another, as we heard in the statement on coal on Tuesday.
Therefore, we have to accept that at this time of rapid inflation and the energy crisis threatening our national standards of living, the Government are involved in the mechanics of management of the public sector. We on this side would like to restrict that involvement to the least amount. However, it is our duty to protect the needy and low-income families of our community.
Therefore, when we have a clear case like that under consideration tonight, a case of a sudden, disproportionate 811 increase in the cost of one of the basic essential commodities of life, the heating of our homes, we could normally expect action to be taken to spread the load of such increases and to avoid too heavy a burden falling on one helpless section of the community.
The present Chancellor of the Exchequer, and his predecessor my right hon. Friend the Member for Altricham and Sale (Mr. Barber), both stressed in statements on 17th December and 26th March that, although it was a matter of urgency that electricity prices should be increased, the amount of the increases would be limited. I can assure the House that a 70 per cent. increase would not have been approved by the previous Conservative administration, just as the Secretary of State has now decided not to do this. I do not believe that the present Chancellor of the Exchequer intended such a jump in price, although since March his handling of the economy has caused such economic depression that his room for manoeuvre is obviously severely curtailed.
In our motion we asked for a phasing in of off-peak tariff increases. We did not argue against fuel cost increases having to be passed on. We did not dispute that every effort must be made to reduce the losses being made by the electricity boards.
I am sure that in what we have been saying we have had the support of most Members of the House. We have said, "Let us help those hard-pressed members of the community by limiting the rise in prices to a bearable level in any one year and if possible enable the half-price system to continue." That is what we have achieved tonight. The Secretary of State has, in effect, accepted the terms of our motion. [Interruption.] He says he has gone much further. He has done exactly what we asked him to do.
Because of the pressure exerted during the past few weeks from this side of the House, as well as from Members on the Government side, the machine of Government has had to bend to the will of Parliament. This is exactly what should happen in Parliament in a case such as this.
I was looking forward to a Division tonight. I should like to point out some 812 thing which the Secretary of State for Social Services said when speaking in the debate on 28th March. She said:A massive increase in electricity charges can be a body blow to an old-age pensioner."—[OFFICIAL REPORT, 28th March 1974; Vol. 871, c. 644]I thought that that was sufficient indication that we would have the right hon. Lady with us in the Lobby tonight. However, in view of what the Secretary of State has promised, it will be my right hon. Friend's intention to ask leave to withdraw the motion. The procedure of the House requires prior withdrawal of the amendment. If the Secretary of State withdraws his amendment, I undertake that my right hon. Friend will seek leave to withdraw the motion.
§ 9.45 p.m.
§ Mr. Varley
By leave of the House, I will seek to reply to some of the points that have been raised. I can reply in just a few minutes, and, to assist the procedures of the House, I will withdraw my amendment.
The hon. Member for Exeter (Mr. Hannam) seemed to suggest that I ought not to have attacked his right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and his hon. Friend the Member for Leicester, South (Mr. Boardman) in my opening remarks. I do not want to rake over that ground, now that we have reached such a happy state of affairs. I have to tell the hon. Gentleman, however, that his right hon. Friend told us on 13th March that he had accepted the fuel adjustment clauses. If he had understood the consequences of those clauses and how they would apply to night storage heaters he could have added a sentence or two about the effect which they would have. That was 13 days before my right hon. Friend the Chancellor made his Budget Speech. I have given the House an undertaking—
§ Mr. MacArthur
I listened with interest to what the right hon. Gentleman said earlier. He did not say to what extent this undertaking would apply to the massive increase in off-peak heating charges for Scotland, which are on a different scale from those in England. Can he make some comment on that?
§ Mr. Varley
I can only say that the situation is not comparable. I have the sponsorship, if I can put it that way, of 813 the fuel industries in England and Wales. My right hon. Friend the Secretary of State for Scotland has some statutory responsibility for the electricity supply industry in Scotland. In the light of what I have said today, he will be looking at that situation to see whether any changes need to be made.
§ Mr. Beith
The right hon. Gentleman may be unaware—although he has responsibility for the fuel industry in England—that it is partly supplied by the South of Scotland Electricity Board—in parts of England which I am privileged to represent. May I press the right hon. Gentleman to ensure that the Secretary of State for Scotland deals with those parts of England affected by the South of Scotland Board?
§ Mr. MacArthur
It is intolerable that the House should not be told tonight what the position is to be in Scotland and some parts of northern England following his statement. All I can assume is that he has rushed into a decision in face of the strength of the opposition to these proposals, and that no consideration has been given to this point whatever. We must demand a statement tonight.
§ Mr. Varley
Throughout my speech and throughout most of the debate my hon. Friend the Minister of State, Scottish Office, has been present. He has noted everything that has been said. I assure the hon. Gentleman that the point he has raised will be taken into consideration. It is not an easy matter to make adjustments. The hon. Member for Bury and Radcliffe (Mr. Fidler) suggested earlier that a direction could be issued. That is not the case at all, and it will be necessary to engage in detailed discussions with the Electricity Council, which in turn will have to consult the Electricity Boards in order to implement the arrangement that I have made. That will take some time. Hon. Members will recall that I said that, before the House went into recess, I should come back and make a statement about progress.
There are one or two other misconceptions to which I would draw attention. 814 The point was made forcibly by my hon Friend the Member for Ealing (Mr. Molloy) that the motion was an attack upon a nationalised industry and that the Opposition would not attack private industry in the same way. There is a great deal of truth in what he said. One has only to look at oil prices and at oil advertising to realise that perhaps there are matters there which could be made subject to procedures under the Trade Descriptions Act. I have before me a wodge of papers referring to oil central heating, issued not all that long ago. One paper points out that oil-fired central heating by Esso is 10 per cent. cheaper to install and 15 per cent. cheaper to run than gas-fired central heating. That is no longer the case, of course.
The Opposition decided to base their motion upon the increase in the price of off-peak electricity. In their present skittish mood, I am not sure that they will not move a motion next week on oil prices and the 100 per cent. increase in the cost of oil-fired central heating. The right hon. Member for Wanstead and Woodford may even suggest that the Government set up a State buying agency to buy up all the oil at the docks. One can never tell, given the present mood of the Opposition.
A number of other points were made in the debate, but I think that I have dealt with most of them. Before I withdraw the amendment, it only remains for me to repeat that I shall get down to urgent discussions with Sir Peter Menzies, the chairman of the Electricity Council. We shall be examining the situation as quickly as possible. We have conceded what the consumers asked for—that is, to remove their sense of injustice and to restore half-price electricity for off-peak users. When all the necessary discussions have taken place, I shall come to the House and report progress.
I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Motion, by leave, withdrawn.