HC Deb 12 December 1989 vol 163 cc932-50 9.25 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Mr. Peter Bottomley)

I beg to move, That the draft Electricity Supply (Amendment) (Northern Ireland) Order 1989, which was laid before this House on 24th October, in the last Session of Parliament, be approved. I welcome Northern Ireland Members and others to this debate. In case one or two other hon. Members are on their way, let me just say in passing that I am grateful to the hon. Member for Bradford, South (Mr. Cryer) for his remarks. Lest he should think that I have changed my interest completely, I would point out that my hon. Friend the Member for Wiltshire, North (Mr. Needham), who would normally be introducing the order, is on his way back from a "boost Northern Ireland" visit to the Far East. I am sure that he would wish me to take his place as best I can.

As we do not always have the opportunity to debate Northern Ireland matters properly, I should also like to declare that it has been eight days since someone died on the roads in Northern Ireland. That is a remarkable change in the normal pattern, and I hope that it will continue.

The purpose of the draft order is to ensure that Northern Ireland Electricity has the authority to take any steps necessary to facilitate the implementation of privatisation proposals that will be brought forward in due course by the Government. It will enable Northern Ireland Electricity to influence the working out of the detail of those proposals.

The order replicates the provisions of section 1 of the Public Utility Transfers and Water Charges Act 1988, which conferred similar powers on water authorities and electricity boards in Great Britain in preparation for the: privatisation of those industries.

Last year the Government announced their intention to privatise NIE. This brought policy regarding the electricity supply industry in Northern Ireland into line with that for the rest of the United Kingdom. It is right that Northern Ireland too should benefit from private sector involvement in the industry.

The benefits are potentially very great. The injection of private sector management skills, a commercial approach that will put a premium on efficiency and economy of operation, the stimulus of new thinking from outside the public sector and the pressures of the capital market will all help to create an industry which performs better and gives the consumer a better deal.

Work on the privatisation has been progressing steadily. Preliminary studies of the major issues involved —structure, regulation, method of sale and so on—has been carried out by consultants and the Government have been looking more deeply into some of the points which those studies have highlighted.

The Department of Economic Development has recently appointed its financial and economic advisers for the privatisation and the other necessary advisers will be taken on board as soon as possible. These, and the industry itself, will assist in the formulation of firm proposals which Government hope to finalise in the first half of next year.

The privatisation of Northern Ireland Electricity will present a unique challenge. There are a number of complex issues to be addressed, mostly arising from the size and nature of the Northern Ireland electricity system.

It is a very small system in European terms and at present it is not interconnected with any other grid. Because of the scattered nature of the Northern Ireland population, NIE's customer density is low and its distribution network correspondingly large.

The industry is somewhat over-dependent on oil-fired generating plant. Its financial performance is therefore vulnerable to movements in world oil prices. The smallness of the system also presents a challenge as regards the introduction of competition. There will need to be a balance between competition and regulation. The more competition can be introduced, the less intensive regulation will need to be. The Government are exploring and considering various ways of dealing with these issues and others that inevitably arise in the privatisation of an essential industry.

In developing our proposals we shall have the benefit of the thinking that has gone into the privatisation of the electricity supply industry of Great Britain. Once they are developed, after full consultation, Parliament's approval will then be sought for the substantive legislation which will be required to put them into effect.

The short draft order does not confer any power to give effect to proposals for the privatisation of Northern Ireland Electricity. That is a matter for substantive legislation—the Northern Ireland equivalent of the Great Britain electricity legislation.

The present order is modest. It is paving legislation.

Mr. Harry Barnes (Derbyshire, North-East)

Is it proposed that the substantive measure which will follow this proposal will be a Bill that is capable of amendment, or will it be a further order which is not amendable?

Mr. Bottomley

It will follow the normal pattern for Northern Ireland. It will not be a Bill in the conventional sense. I do not think that that comes as a surprise to hon. Members.

The order is needed for two reasons: Northern Ireland Electricity needs to be able to make early plans to ensure that once the proposals have been approved by Parliament they can be promptly implemented; NIE needs also to be able to assist in working out the practical details of the proposals, and, where appropriate, argue for modification of these details. Examples include the nature of the regulatory regime or the structure of the successor company or companies.

Northern Ireland Electricity may well wish to commission financial, legal or other expert advice to help it work out the implications of the Government's proposals or suggest alternatives. This order will establish its power to do those things and to incur expenditure on them.

Northern Ireland Electricity already has the power to do things of that kind for the purpose of its statutory functions. This order will remove any doubt as to its power to do them for purposes related to the transfer of its assets or functions.

It is important that Northern Ireland Electricity should make its full contribution to the detailed working through of the Government's proposals and so help to ensure a successful privatisation.

It is right that Northern Ireland Electricity should be able to take any preliminary steps to put itself in a position to implement the privatisation proposals expeditiously, once Parliament approves them, so that there need be no unnecessary delay. This order ensures that there is no impediment to NIE doing so.

The order does not confer powers on the Government. The powers it confers on Northern Ireland Electricity are limited. Northern Ireland Electricity may react only in response to Government proposals and may seek only to modify related proposals giving effect to the basic proposals, not the basic proposals themselves.

The powers are important. It is fair and prudent to ensure that Northern Ireland Electricity is in a position to make a full contribution to the debate about the future form of electricity supply in Northern Ireland. It is vital to the economic and social well-being of Northern Ireland that the privatisation arrangements are such that the electricity supply industry will be reliable, efficient and responsive to consumers' needs. Northern Ireland Electricity's input is essential to achieve that.

I commend the order to the House.

9.32 pm
Mr. Kevin McNamara (Kingston upon Hull, North)

The translation of what the Minister said at the conclusion of his remarks is that Northern Ireland's electricity service will be invited and ordered to arrange its own funeral. Hon. Members are becoming increasingly dissatisfied with the way in which issues of great importance for the future of Northern Ireland are discussed in such a brief and inadequate way. This order, simple though it appears on the surface, and simple though the Minister would have us believe it is, raises many issues of great complexity and importance. We will have no opportunity to amend the order or to give it the serious, in-depth consideration that it deserves—nor, indeed, the succeeding order which will privatise Northern Ireland Electricity.

I part company with some hon. Members on the solution to the difficulty. This issue should be discussed in a devolved Assembly in Northern Ireland. I hope that, one day—perhaps in the near future—the parties involved will be able to agree among themselves so that legislation of this nature will be dealt with in such an Assembly and discussed by Northern Ireland interests, and not be dictated to by a Government from Britain. I hope also that they will be able to discuss such legislation in the context not only of Northern Ireland but of 1992 and the implications of an energy policy for the island of Ireland as a whole.

It has been suggested that Northern Ireland is regarded as a laboratory where new policies can be tested without running the risk of incurring the hostility of the population of Great Britain.

This order is relatively unusual in that we see the reverse —policies that have been rejected by the vast majority of the British people and have already been publicly demonstrated to be failures will now be introduced into Northern Ireland. The Government have learnt nothing from the shambles of electricity privatisation in Britain, and therefore we have this order. However inappropriate electricity privatisation is for the much larger British economy, the effect is magnified in Northern Ireland. In this case, the Government are intent on ensuring that farce repeats itself as tragedy.

Before considering privatisation in detail, it is necessary to look at the order itself. A most defective order has been presented to the House which fails to spell out, even in outline terms, the framework for future regulatory mechanisms for the privatised electricity industry in Northern Ireland. The House will no doubt be surprised that we are considering this order because the Minister has promised to publish a White Paper on this issue next spring. He seems to have inverted the normal timetable for legislation and is asking the House to buy a pig in a poke.

I have two main criticisms about the drafting of the order. First, it gives no indication of the parameters of the investigations that must precede privatisation. It is a piece of enabling legislation that gives us little idea about what we are being asked to enable. Secondly, we are being asked to abrogate our responsibilities for public expenditure by giving a blank cheque to the Northern Ireland electricity service so that it may proceed with arrangements for its own demise. I should think that many hon. Members, even those who are committed supporters of privatisation, would be somewhat worried by the extent of the mandate that the Government are asking them to give to NIES.

As for the substance of the policies represented by the order, there is a striking difference between the position in Britain and that in Northern Ireland. If the privatisation of the electricity industry in Great Britain demonstrates the economic bankruptcy of the Government's position, the proposed privatisation of electricity in Northern Ireland completely contradicts one of the fundamental tenets of the Government's philosophy. We are frequently reminded of the virtues of competition. The Department of Trade and Industry turns out endless streams of propaganda on the theme; the Lord Chancellor wants to strengthen competition in the legal profession; and the Secretary of State for Health talks about an internal market in the National Health Service. For the Government, competition is clearly a principle, not even just even a means to an end.

The Government have made gestures towards the idea of ensuring competition in the electricity industry in Great Britain by the separation of National Power and PowerGen. They have at least recognised that their philosophy of economic liberalism should not allow the natural monopolies to be controlled by private interests. Such private control of the public purse is a recipe for the exploitation of the public by private interests—a sort of legalised, electrified Mafia. But as far as anyone can tell, given the paucity of information from the Government and the Minister tonight, that is precisely what the Government propose to do in the case of the Northern Ireland electricity service. They want to place the monopoly enjoyed by the electricity service in the hands of the private sector. All the signs are that the Government intend to sell off Northern Ireland Electricity as a single entity. That is the germ of what the Minister has said, despite his lip service to the concept of competition.

Such an arrangement is simply a recognition of the economic and technical realities of the Northern Ireland electricity service—realities that would make the National Power-PowerGen type of arrangement impractical for Northern Ireland. As the Minister said, the market is too small to make the operation of more than one firm profitable. Competition within the industry is almost impossible. Given that a larger number of power stations is required than is strictly necessary for economic reasons to guarantee security of supply, it is difficult to envisage a situation in which there would be competing generating authorities.

The monopoly problem is compounded by the position of electricity within the energy industry in general in Northern Ireland. It is correct to say that electricity is not the only source of power. However, its position is substantially assisted by the absence of an equally clean and convenient source of energy, such as gas. This privatisation is particularly appalling given the efforts which the Government devoted in the early 1980s to the destruction of the gas industry and its attendant jobs in Northern Ireland. Now, having given electricity a much stronger position in the energy market than it would otherwise have enjoyed, they intend to sacrifice the future of the electricity consumer in Northern Ireland to the tender mercies of the so-called free market.

This is a classic example of a case where the grounds for maintaining an industry in public hands are overwhelming, even from the perspective of the prophets of laissez-faire.

The next major concern of the Opposition about the practical effects of privatisation on electricity in Northern Ireland is the impact that it will have on the price of electricity to industrial and domestic users—to the manufacturer, farmer and housewife.

The Northern Ireland electricity service suffers from a number of natural disadvantages which ensure that it is a high-cost supplier of electricity. Those factors have little to do with any inefficiency that can be corrected by a more efficient management, whether in public or private hands. In that sense, the arguments in favour of privatization—which, in any case, I do not accept—are a complete irrelevance. It cannot have any significant impact on the costs of the generation and supply of electricity in Northern Ireland.

The NIES is a high-cost supplier because the dispersal of population means higher distribution costs. Outside Belfast, the population is widely scattered throughout the Province, which naturally involves greater cost in delivering electricity to where it is required. Coupled with that are the costs of generating electricity. The NIES must provide a higher margin of reserve capacity because it is a stand-alone system; it cannot import from elsewhere to make up its shortfalls. Therefore, it needs the security of additional generating capacity. In the interest of security of supply, generating capacity must be shared around a number of units so that the system is not over-dependent on the output of a particular plant.

There is a much higher ratio of capacity to average demand. In addition, the lack of a significant number of large industrial users means that the peaks and troughs of demand are more divergent in Northern Ireland than in Great Britain or the Republic. There is a larger gap between the average demand and peak demand. That requires the Northern Ireland electricity service to provide a generating capacity which it would not otherwise need. In addition, the service is extremely vulnerable to rises in the dollar price of oil.

We are talking about differences—this is where the Government are making their great error—between the electricity industry in Northern Ireland and the industry in Great Britain. That fact has been recognised by the institution of the tariff link. The Minister must be aware of the great concern in Northern Ireland about the implications of privatisation for the tariff link. Under the present system, Northern Ireland's electricity prices are linked to the highest prices in Great Britain and any shortfall is made up by a subsidy to the electricity service. Privatisation obviously contains substantial dangers to the tariff link.

With privatisation, the rate of return on the capital employed in the industry will become all-important. Investors will expect a rate of return that compares with equivalent forms of investment. The Government should publish as soon as possible the rate of return that they expect the Northern Ireland electricity service to produce if they wish employers in the Province to make the necessary decisions about their future investment requirements. They must also make clear the valuation of the assets of the service.

One can see two ways in which the Northern Ireland electricity service could gain sufficient revenue to provide a higher rate of return than it does at present. The first would be for the Government simply to increase the subsidy. But if the NIES were in private hands, that would be an extremely peculiar way in which to proceed. Are the Government seriously suggesting that not only should the taxpayer be relieved of an existing asset, but that the new owners should then be given an increased subsidy to take the asset off the hands of the taxpayer? That reveals the absurdity of the privatisation scheme. But then that happened in the case of Austin Rover, so it is not impossible in Northern Ireland.

The second, more fearful alternative would be to increase the cost of electricity to domestic and industrial consumers. The size of the increase will depend largely on the rate of return which the Government will expect Northern Ireland Electricity to yield in private hands. A reasonable assumption is 5 per cent. If, for the sake of argument, the industry was privatised in 1990, an increase in prices of 13 per cent. above the rate of inflation would probably be required. There is some speculation in that suggestion. That is why it is important that the Government make their intentions known as soon as possible. Such speculation is going on in every firm in Northern Ireland and is hampering investment decisions. That is not Opposition scaremongering but a serious issue which will affect the future of the economy of Northern Ireland.

We know that prices will rise, but we do not yet know by how much above the rate of inflation. We shall pose a serious problem for future industrial competitiveness and development in Northern Ireland if we compound uncertain energy prices with transport costs due to the remoteness of major markets. I hope that the Government will accept their responsibility in this respect and act quickly to alleviate that anxiety among firms in Northern Ireland.

Privatisation is bound to increase prices, but any rise above the rate of inflation will place substantial burdens on industrial and domestic consumers. Faced with the prospect of increased competition with the advent of the single European market, rises in production costs will not help industry to meet its difficulties, particularly if it is to compete with lower energy costs in the Republic.

With regard to domestic consumers, we are all too well aware that Northern Ireland is one of the most deprived areas in the United Kingdom. Fuel costs are an important item in most domestic budgets, but they loom larger the poorer the family is. We should not increase the burden by unnecessarily raising the cost of electricity in a low-wage economy and an area with a greater proportion of families dependent on social benefits than anywhere else in the United Kingdom and Northern Ireland. No doubt the Minister is already aware that in recent months there has been a substantial increase over and above the estimated rate of 30 per cent. for electricity disconnections in Belfast.

The privatisation proposals contained in the order raise another problem specific to Northern Ireland. It is the issue of energy problems and energy supplies in the Province. No doubt the Minister is well aware of the widespread anxiety among trade unions and employers about the possible severe problems of energy supplies in the mid-1990s. He will also be aware that the deafening silence of the Department of Economic Development only increases that anxiety. So too is his deafening silence and the shortness of his speech tonight. The East German secret police is a less secretive organisation than the Department of Economic Development is on the question of privatisation and the electricity costs that it expects.

We need to know about the effect of privatisation on electricity supplies in the Province, particularly with reference to the Kilroot 2 project. The costs are escalating, and the need to comply with the EEC directive on gas emissions from power stations will further increase the cost of Kilroot 2. Clearly, there are substantial financial implications which will affect the terms of privatisation and the future of the electricity industry about which the Government have not been sufficiently forthcoming.

I should like to put several points to the Minister which I hope that he will answer at the end of this short debate. Are the Government still determined to go ahead with Kilroot 2? What is its estimated cost and how will it be paid for? Which anti-pollution measures will be adopted? Will low-sulphur content or high-sulphur content fuel be used? How will that particular provision be paid for? When can we expect Kilroot 2 to come on stream, and will the cost be borne by the taxpayers directly or by the new company and thus the consumer? What are the Government's plans for interconnectors or a linked interconnector, either with the Republic of Ireland or Scotland, or both? What effect will the interconnectors have on the cost of Kilroot 2 and the cost of electricity for industrial and domestic consumers?

Will the Minister confirm that the tariff link will be maintained, or will it be broken, as most people expect, at the start of the next financial year? Does he accept the need for action to protect industrial and domestic consumers and to give them reasonable price stability? Which, if any, of the various options of consumer protection does he intend to support—direct subsidy, Government guarantee or nothing?

The Minister has an opportunity to allay some of the fears which the Government's behaviour is inciting, but so far he has not taken it. Unfortunately, the circumstances in which this order has been presented to us do not inspire confidence in the Government's handling of the electricity issue as a whole. The order is a reminder of how remote the Government have become from the economic difficulties of the Province.

Northern Ireland needs an effective and efficient energy policy. The Government should think again and formulate their policies for the 1990s on the basis of economic realities in the Province, not on the discredited dogmas of the Thatcherite 1980s which have caused so much harm to industries in the Province.

Mr. Peter Bottomley

When the Department published the draft order for consultation in May, did the hon. Gentleman or any of his right hon. and hon. Friends respond to it? I should be interested to know. Some of the hon. Gentleman's accusations do not lie full square with the facts.

Mr. McNamara

It is for the Government to produce and justify a scheme, and to give us opportunities to examine it. They should not take action and then cook up ideas to justify it, which is what they are doing now.

Many organisations, including the CBI and the Northern Ireland Committee of the Irish Congress of Trade Unions, hope that serious debate and consideration of the real issues will take place. So far the order has not given us that opportunity. We have not seen the papers before the Northern Ireland electricity service, the discussion documents or the options on which the decision is being made. Until we have them, we shall have an argument about Government suggestions in the dark. We should have had a Green Paper on energy policy for Northern Ireland, not the vague promise of a White Paper after the decision has already been made.

Far from making a genuine contribution to the future of Northern Ireland's energy supplies, the order works actively against the prospects of such a policy. Therefore, I have no hesitation in saying that my right hon. and hon. Friends will invite the House to reject the motion.

9.52 pm
Mr. Roy Beggs (Antrim, East)

The House sits yet again to participate in the charade that continues as we deal with Northern Ireland business through Order in Council procedure. Right hon. and hon. Members know that old and famous quotation, The moving finger writes; and having writ, moves on: nor all thy piety nor wit shall lure it back to cancel half a line, nor all thy tears wash out a word of it. If we replace the word "finger" with "Secretary of State" the words would aptly apply to this objectionable, unacceptable method of dealing with Northern Ireland affairs and to the futility of all our efforts to change this order. The combined efforts of all right hon. and hon. Members present cannot produce the slightest change in this or any other order. That fact has been acknowledged in the past by some Tory Members.

The order prepares the way for privatisation of the electricity supply in Northern Ireland. The Government's aim in privatising the supply of electricity in Great Britain was to maintain a diversity of supply and to strike a balance between the interests of taxpayers, customers and future shareholders. The Government have had second thoughts on privatising the nuclear energy industry. They recognised that the cost of underwriting the private sector to take over nuclear power stations would have effectively retained those stations in the public sector. Privatisation would have been in name only. As a result, the privatisation of nuclear power stations was abandoned.

As the Government proceed towards privatising electricity supply in Northern Ireland, perhaps the Minister will tell us how he expects to achieve diversity of supply and how competition will be introduced. Can either he or the Secretary of State ensure that Northern Ireland industry and consumers will not be held to ransom on prices for future supplies and on the supply controlled from Dublin by the electricity supply board for the Irish Republic? Will the Minister assure us that there are no plans for the foreseeable future to break the tariff link with Great Britain on electricity prices for Northern Ireland consumers? The tariff link at least held prices in Northern Ireland to the same level as the highest tariff rated region in the United Kingdom.

Will the privatised monopoly supplier, whether it is Northern Ireland Electricity or some other similar body, be required to take up surplus production from, for example, hydro-electric generating plants already in the private sector and at prices fixed at an economic level by an independent body? We would all like to know how competitive private generation of electricity in Northern Ireland will be encouraged and promoted.

Has interest been expressed through the Anglo-Irish Conference about the possibility of the southern Irish electricity board acquiring NIE? There is concern in Northern Ireland about future prices, especially when profit making and profit taking for shareholders primarily motivates those managing the electricity supply industry.

Why are the Government not realising the economies that would arise from the reinstatement of the interconnector with the Irish Republic? Why has there not been an interconnection between Northern Ireland and Scotland such as that which has been provided to the Scilly Isles? An interconnection between Northern Ireland and Scotland would be less expensive a project than the supply of electricity to the Scilly Isles, and many more consumers would benefit.

Why has no decision yet been made for the dual firing for oil and coal conversion at Kilroot phase 2?

What are the reasons for delay in approving a lignite-fuelled power station in Northern Ireland? Would the reinstatement of the interconnector between the Irish Republic and Northern Ireland open up Northern Ireland to competition from the Irish Republic?

Substantial investment is needed now to modernise the electricity industry in Northern Ireland. Environmental pollution should be reduced to European Community standards now, and Northern Ireland should now be connected to cheaper generating sources in Great Britain. The conversion of Kilroot phase 2 should proceed and a decision to utilise the lignite resource should be made now.

Privatising the electricity supply in Northern Ireland without guarantees that we will not become totally dependent on or have our electricity supply controlled by the southern Irish Government or the electricity supply board in the Republic is unacceptable. Without guarantees that the Government through tariff linkage will maintain reasonable prices, privatisation will be harmful to Northern Ireland industry and electricity will become more expensive to consumers.

Like the hon. Member for Kingston upon Hull, North (Mr. McNamara), we feel obliged to vote against the order for the reasons that have been stated. It is an outrage that a matter of such importance to Northern Ireland can be decided by the stroke of a pen and without a full and meaningful debate. Many Northern Ireland Members absent themselves deliberately and will not by their presence give a veneer of respectability to Order in Council debates.

9.59 pm
Mr. Eddie McGrady (South Down)

This flimsy one-page order belies the extent of the powers that it confers on Northern Ireland Electricity and on the Department of Economic Development. In his introductory speech the Minister seemed to be saying that it conferred no new powers, yet the order states: Where the Department is at any time proposing that any assets or functions of Northern Ireland Electricity should be transferred, it may take the necessary powers. Paragraph 3(3) states that it may also do anything which in its opinion is appropriate for the purpose of promoting the interests of … any body corporate to which it is proposed to transfer the assets or functions". I have never come across a piece of legislation that gives such sweeping administrative powers to either a Department or a state industry as those two short paragraphs. They seem to give the Department and the NIES carte blanche to do what they wish in the coming months, in advance of proposed substantive legislation that the House may or may not debate.

We in Northern Ireland have two primary concerns. First, we are concerned about the interests of the taxpayer, and about how public assets are to be transferred to the private sector. Even more important perhaps is the fact that—as other hon. Members have pointed out—the consumer will inevitably be faced with increased costs. While the taxpayer may experience a one-off loss as a result of the actual transfer, the consumer will pay for the transaction year after year.

We now know that the Department has been fattening the calf for slaughter. Over the past few years, percentage increases in Northern Ireland's tariff charges have greatly exceeded both the increase in inflation and the increase in primary fuel costs—which last, in fact, had been decreasing. Our first concern, therefore, must be for the consumer and not for the profit-oriented corporation or company that will take over electricity supply.

Let there be no doubt: there will be a monopoly, and the Northern Irish community will be held ransom to it. Even under state control, that monopoly was exercised under a political banner. In 1972, when Stormont fell, the energy supply was withdrawn from Northern Ireland's private, public and industrial consumers, and in 1974 the so-called workers' strike had the same effect. Subsequent turns of the political wheel caused the state monopoly to exercise its muscle by again withdrawing supply from consumers. What, then, will happen when state control is ended and the private company can exercise the enormous monopoly power that it will gain, not only in terms of trade and prices but in political terms?

Here we have a paradox. In 1973 it was argued that the private electricity companies should be amalgamated for the sake of efficiency, rationalisation and economy; now, 15 or 16 years later, it is argued that for those very reasons NIE should be dismantled. On 21 July, Financial Weekly published an in-depth article stating that Northern Ireland Electricity would be transferred en bloc to a private corporation or company which would generate, transmit and distribute Northern Ireland's total electricity supply.

The Government are making obeisance to the holy cow of privatisation. They are blindly pursuing a dogma that the circumstances do not fit: the circumstances should not allow one and a quarter million people to put up with privatisation aimed—if the Minister's argument is correct —at a diversity of generation, transmission and distribution. By whose authority—if I may be so presumptuous as to ask—is this happening? In a survey carried out by the Northern Ireland Consumer Council, only 4 per cent. of those questioned said that they were strongly in favour of privatisation, and only another 17 per cent. said that they tended to support it. Four out of five people in Northern Ireland oppose electricity privatisation. Who, therefore, in Northern Ireland has authorised such a transfer?

The fifth report of the Energy Select Committee makes two interesting points in paragraph 12 on page 8 that must be dealt with by the Minister. It points out that in Northern Ireland there is no real competition from other fuel sources. Furthermore, there is no piped gas in Northern Ireland, even in the city of Belfast. That will lead to an even greater monopoly by the new body. The Committee recommended that very stringent regulations must be applied and said that strict regulations would negate privatisation. However, the Department says that this is the rational and reasonable way forward. It pays homage to a sacred cow.

Does the Minister intend to privatise sectarian practices in Northern Ireland Electricity? In 1982, 10 years after the imposition of direct rule, 4 per cent. of those who belonged to minority religious groups were in senior management; in middle management there were 3 per cent., only 3.5 per cent. among senior directors and only 9.5 per cent. in all in engineering grades. The Minister is just as aware as I am that substantial lawsuits are pending against Northern Ireland Electricity for sectarian practices and procedures when awarding contracts. I wonder who will inherit that can of worms? Efforts have been made to improve the position, but we are a long way from a real improvement.

Our primary concern is the plight of the consumer. Electricity is expensive in Northern Ireland. However, many people do not yet have electricity. It costs the ordinary householder £3,000 to £4,000 to instal electricity. How much will it cost him when there is a private sector monopoly?

The price of energy will rise under the new regime. The Northern Ireland industry operates on the north-western limit of the European Economic Community. Its margins are tight. As energy costs increase, the number of jobs that will be lost will also increase.

We cannot amend the order. It paves the way for an Order in Council. I question why we should stand here night after night talking about the problems of Northern Ireland if we have no opportunity to amend legislation. Tomorrow we shall debate an order that will affect the education of children in Northern Ireland. Again we shall be unable to change the Order in Council. It is an absolute disgrace that Northern Ireland affairs should be administered in such a way.

For those reasons, all Northern Ireland Members will oppose the order.

10.9 pm

Mr. Harry Barnes (Derbyshire, North-East)

I shall begin with a few brief procedural matters. The substantive issues about paving the way for electricity privatisation in Northern Ireland are important, but they have been mentioned by other hon. Members. I hope that the serious questions posed by those hon. Members will be answered by the Minister.

The hon. Member for South Down (Mr. McGrady) described the order as flimsy, but highly significant. It is a paving measure that is equivalent to the paving measure for electricity privatisation in the rest of the United Kingdom—the Public Utility Transfers and Water Charges Act 1988. That measure was fully debated on Second Reading and followed the full procedure of the House in its subsequent Report stages and amendments. Contrast that with the measure before us tonight, which has had none of those opportunities.

I agree with my hon. Friend the Member for Kingston upon Hull, North (Mr. McNamara) that we want a devolved Government in Northern Ireland, with a Bill of Rights attached to it. In the meantime, while we await that legislation, Northern Ireland measures should be dealt with on a basis similar to other measures in the House. There should be full opportunity for debate, and proper timing of the issues to give us the chance to discuss them.

The paving measure adds provisions to the Electricity Supply (Northern Ireland) Order 1972, which was a complex measure in six parts, with 52 clauses and five schedules.

The schedules cover subjects such as the constitution of the Northern Ireland electricity board, as it was called, superannuation, the Electricity Consumers Council, and an electricity supply code. All those measures will be affected by the paving development, and all of them will begin to be subject to adjustment under the provisions for a future order that may be brought before us. There are 64 pages in the order, and it is as bad as the order that we shall debate tomorrow night on education.

The previous order on Northern Ireland electricity supply was debated on 7 July 1987. The Parliamentary Under-Secretary of State for Northern Ireland at the time, the hon. Member for Gosport (Mr. Viggers), said: This has been described as a most controversial draft order and the forerunner to privatisation of electricity in Great Britain. Those criticisms are utterly misconceived. It is nothing of the sort. Presumably something of the sort would have been thought to have been a bad thing. Therefore, this order should be considered a bad thing. He continued: The draft order works broadly on the lines of the Energy Act 1983 and permits the private generation of electricity in Northern Ireland in much the same way as that Act permits it for Great Britain. Later in the same debate the hon. Gentleman said: The order will enable private generation of electricity and NIE is already under a statutory obligation to acquire electricity at the most advantageous price from the point of view of the consumer."—[Official Report, 7 July 1987; Vol. 119, c. 301–02.] Members of Parliament representing constituencies in Northern Ireland refused to participate in that debate. The hon. Member for Antrim, North (Rev. Ian Paisley) made a point of order stating that they would not be involved, although later they were involved in the Division Lobbies. In that debate, speeches were made by my right hon. and learned Friend the Member for Warley, West (Mr. Archer), the hon. Member for Southwark and Bermondsey (Mr. Hughes) and my hon. Friend the Member for Coventry, South-East (Mr. Nellist). There was also an intervention by the hon. Member for Orkney and Shetland (Mr. Wallace). That was the extent of the debate as hon. Members from Northern Ireland were not there to speak. That shows the low level of involvement in the debate.

The order had 21 articles, covered 16 pages and referred to six other orders or Acts of Parliament, one of which went back to 1933 and was being amended by the order. I hope that tonight the Division Lobbies will reflect the strength of feeling on that occasion, when there were 236 votes in favour and 201 against the order, giving the Government a majority of only 35. I do not know whether we have fallen back in our strength of feeling about Northern Ireland issues since then.

The order is the forerunner of a Northern Ireland electricity privatisation order, not a Bill. It is equivalent to the Electricity Act 1989, which we debated at considerable length. It had 113 clauses, 18 schedules and covered 164 pages. I am confused about how we decide which is to be an order and which is to be a Bill. We have had Northern Ireland Bills such as that which became the Fair Employment (Northern Ireland) Act 1989. It went through the appropriate stages in the House. This measure is equally important and foreshadows something of shattering significance, but it will be dealt with by this wholly inadequate procedure.

I wish that more hon. Members were present when we discuss paving measures that are the stuff of politics and of day-to-day concern in Northern Ireland. Labour Members are often vociferous about the problems of terrorism in Northern Ireland, but do not contribute to debates on day-to-day affairs.

In the debate of 7 July 1987, my right hon. and learned Friend the Member for Warley, West described the problems with this procedure far better than I can when he said: I want to begin by placing on record the view that this is not a responsible way for a democratic Government to behave. The procedure places everyone under an impossible pressure of time and it discourages some hon. Members from contributing. It offers no opportunity for discussions on detail. It manifests a contempt for Northern Ireland and for this House. And it strips away all pretence that the Government retain an open mind to the arguments."—[Official Report, 7 July 1987; Vol. 119, c. 302.] I fully endorse those sentiments and look forward to the day when Northern Ireland issues are given correct consideration in the House and in Northern Ireland itself.

10.19 pm
Mr. Peter Bottomley

With the leave of the House, I should like to reply to the debate.

After that slashing attack by the hon. Member for Derbyshire, North-East (Mr. Barnes) on his colleagues who do not seem to be interested in the social and economic welfare of Northern Ireland, may I say that, in view of the remarks of some Opposition Members, I am grateful to my hon. Friend the Minister for Health for coming in to ensure that no patching is needed.

The hon. Member for Antrim, East (Mr. Beggs) asked whether we intend to sell off Northern Ireland Electricity to the electricity supply board in the south. The answer is no. There is no intention to sell it to a publicly-owned utility in another country. The Government's clear aim is to privatise the business.

The right hon. Member for Strangford (Mr. Taylor) and the hon. Member for Belfast, North (Mr. Walker) have been present throughout the debate, but they have allowed most of the comment to be made by their colleagues. There may be some sedentary interventions from them as I speak, but I hope not to provoke too many.

The Government believe that lignite is certain to be used for electricity generation in due course, but after more economic projects. Last year the Government decided that Kilroot 2 was more attractive economically than a new lignite station, so that should be carried out first. One of the essential elements of privatisation is to make sure that decisions are taken in the best interests of private consumers rather than as a result of political pressures. Those who had the opportunity of watching the "Counterpoint" programme will agree that that was one of the points it left out. It is important to recognise the interests of consumers throughout, rather than to use a researcher's good notes.

I pay tribute to the hon. Member for Kingston upon Hull, North (Mr. McNamara). His researchers provided him with some good notes, although they took no account of what I said, apart from refering to the fact that he spoke for longer than I did. That was predictable, which is no doubt why it was part of his speech.

Mr. McNamara


Mr. Bottomley

I seem to have provoked the hon. Gentleman. Perhaps he should think twice before intervening.

Mr. McNamara

I spoke for longer than the Minister did because I had more and better things to say than he did. Will he answer the points that I raised about the future of Kilroot? Is it going according to plan? Are the costs as originally envisaged or are they greater? What will be done about the gas emissions? The Minister has to answer those questions. They are not matters of research; they are matters of environmental concern in Northern Ireland, the United Kingdom and Europe. They affect the quality of life and the standard of living of people in Northern Ireland.

Mr. Bottomley

Perhaps the hon. Gentleman decided to intervene before I had got through more than two lines of my speech so that he could repeat some of the points he made in his own speech. That may be his way of operating, but if he can wait perhaps I shall give him some answers.

I have dealt with lignite. Perhaps the most important point is the separation between the order and what will follow. I was asked whether the Government still intend to produce a White Paper on the privatisation proposals. The answer is yes. It is important to ensure that Northern Ireland Electricity should be able to contribute to the process of deciding what the proposals should be. If only part of article 3 is considered it provides wider powers than are currently available. I refer to part of the speech by the hon. Member for South Down (Mr. McGrady).

The hon. Member for Kingston upon Hull, North asked about the cost of Kilroot 2. The power station will cost about £215 million at 1989 prices, about £95 million more for the flue gas desulphurisation if required. I was asked who will pay for Kilroot 2. The customer will pay, whoever owns the electricity service, whether it is private or public.

I was asked about the tariff link. The changes to area boards in England and Wales and the way in which Northern Ireland has derived tariffs under the link arrangements mean that it is right to review the link. When the companies produce the conclusions to that review, they will make them public. It would be wrong to anticipate the results, in the same way as it is wrong to assume that the link always works in the interest of consumers.

The hon. Member for Antrim, East asked about the reinstatement of the interconnector with the south. I do not think that that interconnector has proved durable in the past, so we should not automatically replace it. The question arises whether it is better to have an interconnector or whether to bring forward Kilroot 2 early. The preliminary results of a current study suggest that there may be advantages to providing new capacity by means of an interconnector with the Great Britain grid. The Government must try to make the most beneficial arrangements for electricity supply in Northern Ireland. We propose to consider that option in more detail before deciding on the timing of Kilroot 2. In the meantime, the action which Northern Ireland Electricity is taking on Kilroot 2 will ensure that construction can begin at short notice if required. That is a comprehensive and proper description of the situation. Nothing should be done which works against the consumers of electricity in Northern Ireland.

Mr. McGrady

Except privatisation.

Mr. Bottomley

People keep talking about privatisation and accusing the Government of trying artificially to distort the decisions that the electricity industry has to make. One of the advantages of privatisation is that we move away from that to a clear regulatory system, which makes up for any deficiencies there may be in terms of competition. A decision has not been made as to the form of privatisation. I give way to my hon. Friend the Member for Newbury (Sir M. McNair-Wilson) who has been here throughout the debate.

Sir Michael McNair-Wilson (Newbury)

Before my hon. Friend leaves the point about the possibility of an interconnector with the national grid, will he say who will pay for it if it is decided to go ahead with it?

Mr. Bottomley

In essence, the consumer, but if there were commercial advantages to the Great Britain grid—if it could sell electricity that would not otherwise have a customer—one assumes that the balance would be worked out between the two supply networks. It is wrong to assume that Northern Ireland will carry the cost of commercial advantage to people outside Northern Ireland.

The hon. Member for Kingston upon Hull, North said that privatisation was bad and unpopular, but I remember the same remarks being made a week ago about water privatisation; we are hearing a little less about that now. I suspect that privatisation will be popular in Northern Ireland with consumers, potential shareholders and those who work in the industry, who should like to have a chance of owning part of their own business. It is worth remembering that there are now more shareholders in the United Kingdom than trade union members, and I speak as someone who is rather more of a trade union member than a shareholder.

I do not intend to go into the issues about private monopolies that the hon. Member for Kingston upon Hull. North raised.

The hon. Member for South Down asked about competition for fuel. Northern Ireland Electrictity reckons that 50 per cent. of its load in things such as space heating and water heating is open to competition. Consumers—not every individual consumer—have other fuels available, and in general bottled gas, coal and oil are competitive with the supply of electricity.

Mr. McGrady

Is the Minister suggesting that the consumer in Northern Ireland should go back to gas light?

Mr. Bottomley

I was not suggesting that. I was trying to give the information that Northern Ireland Electrictity has supplied.

I want to emphasise that the order is not a substitute for the privatisation proposals but a way of ensuring that Northern Ireland Electricity can contribute to the development of them.

Many more people are moving to the use of electricity. I shall give an example that may be small to the House, but it is important to the 60,000 consumers who over the past six years have moved to Economy 7 for their space and water heating. Electricity is important to people in Northern Ireland, its industry, its domestic consumers and its agricultural sector. I am giving much attention to electricity supply in the rural sector under the rural policy initiative, which I hope will be welcomed throughout the House.

I commend the order to the House. It is an important paving order so that privatisation can go forward.

Question put:-

The House divided: Ayes 212, Noes 171.

Division No. 15] [10.27 pm
Adley, Robert Carrington, Matthew
Alexander, Richard Chapman, Sydney
Amess, David Chope, Christopher
Amos, Alan Clark, Sir W. (Croydon S)
Arbuthnot, James Clarke, Rt Hon K. (Rushcliffe)
Arnold, Jacques (Gravesham) Colvin, Michael
Arnold, Tom (Hazel Grove) Conway, Derek
Ashby, David Coombs, Simon (Swindon)
Atkinson, David Devlin, Tim
Baker, Nicholas (Dorset N) Dorrell, Stephen
Baldry, Tony Douglas-Hamilton, Lord James
Banks, Robert (Harrogate) Durant, Tony
Batiste, Spencer Emery, Sir Peter
Beaumont-Dark, Anthony Evans, David (Welwyn Hatf'd)
Bellingham, Henry Evennett, David
Bennett, Nicholas (Pembroke) Fallon, Michael
Benyon, W. Favell, Tony
Bevan, David Gilroy Fenner, Dame Peggy
Boscawen, Hon Robert Field, Barry (Isle of Wight)
Boswell, Tim Finsberg, Sir Geoffrey
Bottomley, Peter Fishburn, John Dudley
Bottomley, Mrs Virginia Fookes, Dame Janet
Bowden, Gerald (Dulwich) Forman, Nigel
Bowis, John Forsyth, Michael (Stirling)
Boyson, Rt Hon Dr Sir Rhodes Forth, Eric
Brandon-Bravo, Martin Fox. Sir Marcus
Bright, Graham Franks, Cecil
Brown, Michael (Brigg & Cl't's) Freeman, Roger
Bruce, Ian (Dorset South) French, Douglas
Buck, Sir Antony Gale, Roger
Carlisle, Kenneth (Lincoln) Garel-Jones, Tristan
Gill, Christopher Neale, Gerrard
Glyn, Dr Alan Neubert, Michael
Goodlad, Alastair Newton, Rt Hon Tony
Goodson-Wickes, Dr Charles Nicholson, David (Taunton)
Gow, Ian Nicholson, Emma (Devon West)
Grant, Sir Anthony (CambsSW) Norris, Steve
Greenway, Harry (Ealing N) Oppenheim, Phillip
Greenway, John (Ryedale) Page, Richard
Gregory, Conal Paice, James
Griffiths, Peter (Portsmouth N) Patnick, Irvine
Grist, Ian Patten, Rt Hon Chris (Bath)
Hague, William Patten, John (Oxford W)
Hamilton, Neil (Tatton) Pawsey, James
Hanley, Jeremy Porter, Barry (Wirral S)
Hargreaves, A. (B'ham H'll Gr') Porter, David (Waveney)
Hargreaves, Ken (Hyndburn) Portillo, Michael
Harris, David Raison, Rt Hon Timothy
Haselhurst, Alan Redwood, John
Hayes, Jerry Renton, Rt Hon Tim
Hayhoe, Rt Hon Sir Barney Rhodes James, Robert
Hayward, Robert Riddick, Graham
Heathcoat-Amory, David Ridsdale, Sir Julian
Heddle, John Rossi, Sir Hugh
Hicks, Robert (Cornwall SE) Rowe, Andrew
Higgins, Rt Hon Terence L. Sackville, Hon Tom
Hind, Kenneth Sainsbury, Hon Tim
Hogg, Hon Douglas (Gr'th'm) Scott, Rt Hon Nicholas
Howard, Michael Shaw, David (Dover)
Howarth, G. (Cannock & B'wd) Shaw, Sir Giles (Pudsey)
Howe, Rt Hon Sir Geoffrey Shaw, Sir Michael (Scarb')
Hunt, Sir John (Ravensbourne) Shelton, Sir William
Hunter, Andrew Shephard, Mrs G. (Norfolk SW)
Irvine, Michael Shepherd, Colin (Hereford)
Jack, Michael Shersby, Michael
Janman, Tim Sims, Roger
Johnson Smith, Sir Geoffrey Skeet, Sir Trevor
Jones, Gwilym (Cardiff N) Speed, Keith
Jones, Robert B (Herts W) Speller, Tony
Key, Robert Spicer, Michael (S Worcs)
King, Roger (B'ham N'thfield) Squire, Robin
Kirkhope, Timothy Stanbrook, Ivor
Knapman, Roger Stanley, Rt Hon Sir John
Knight, Greg (Derby North) Stern, Michael
Knowles, Michael Stewart, Allan (Eastwood)
Knox, David Stewart, Andy (Sherwood)
Latham, Michael Stokes, Sir John
Lawrence, Ivan Stradling Thomas, Sir John
Lee, John (Pendle) Sumberg, David
Leigh, Edward (Gainsbor'gh) Summerson, Hugo
Lennox-Boyd, Hon Mark Taylor, Ian (Esher)
Lester, Jim (Broxtowe) Tebbit, Rt Hon Norman
Lilley, Peter Thompson, D. (Calder Valley)
Lloyd, Sir Ian (Havant) Thompson, Patrick (Norwich N)
Lloyd, Peter (Fareham) Thornton, Malcolm
MacKay, Andrew (E Berkshire) Thurnham, Peter
Maclean, David Tracey, Richard
McLoughlin, Patrick Twinn, Dr Ian
McNair-Wilson, Sir Michael Viggers, Peter
McNair-Wilson, Sir Patrick Walden, George
Madel, David Walker, Bill (T'side North)
Major, Rt Hon John Waller, Gary
Malins, Humfrey Ward, John
Mans, Keith Wardle, Charles (Bexhill)
Maples, John Warren, Kenneth
Marshall, John (Hendon S) Wheeler, John
Marshall, Michael (Arundel) Whitney, Ray
Martin, David (Portsmouth S) Widdecombe, Ann
Maxwell-Hyslop, Robin Wilshire, David
Mellor, David Winterton, Nicholas
Miller, Sir Hal Wood, Timothy
Miscampbell, Norman Woodcock, Dr. Mike
Mitchell, Andrew (Gedling) Yeo, Tim
Mitchell, Sir David Young, Sir George (Acton)
Monro, Sir Hector
Montgomery, Sir Fergus Tellers for the Ayes:
Morris, M (N'hampton S) Mr. John M. Taylor and
Moss, Malcolm Mr. David Lightbown.
Mudd, David
Allen, Graham Davies, Rt Hon Denzil (Llanelli)
Alton, David Davies, Ron (Caerphilly)
Anderson, Donald Davis, Terry (B'ham Hodge H'l)
Archer, Rt Hon Peter Dewar, Donald
Ashley, Rt Hon Jack Dixon, Don
Ashton, Joe Dobson, Frank
Banks, Tony (Newham NW) Doran, Frank
Barnes, Harry (Derbyshire NE) Duffy, A. E. P.
Barron, Kevin Dunnachie, Jimmy
Battle, John Dunwoody, Hon Mrs Gwyneth
Beckett, Margaret Eadie, Alexander
Beggs, Roy Eastham, Ken
Beith, A. J. Evans, John (St Helens N)
Bennett, A. F. (D'nt'n & R'dish) Ewing, Harry (Falkirk E)
Bermingham, Gerald Fatchett, Derek
Bidwell, Sydney Faulds, Andrew
Blair, Tony Fearn, Ronald
Blunkett, David Fields, Terry (L'pool B G'n)
Boyes, Roland Flannery, Martin
Bradley, Keith Flynn, Paul
Bray, Dr Jeremy Foster, Derek
Brown, Gordon (D'mline E) Fyfe, Maria
Brown, Nicholas (Newcastle E) Galloway, George
Brown, Ron (Edinburgh Leith) Garrett, John (Norwich South)
Buchan, Norman George, Bruce
Buckley, George J. Godman, Dr Norman A.
Caborn, Richard Gordon, Mildred
Callaghan, Jim Graham, Thomas
Campbell, Menzies (Fife NE) Griffiths, Win (Bridgend)
Campbell, Ron (Blyth Valley) Grocott, Bruce
Campbell-Savours, D. N. Hardy, Peter
Clark, Dr David (S Shields) Henderson, Doug
Clay, Bob Hinchliffe, David
Clelland, David Hogg, N. (C'nauld & Kilsyth)
Clwyd, Mrs Ann Home Robertson, John
Cohen, Harry Hood, Jimmy
Coleman, Donald Howells, Dr. Kim (Pontypridd)
Cook, Robin (Livingston) Hoyle, Doug
Corbett, Robin Hughes, Roy (Newport E)
Corbyn, Jeremy Ingram, Adam
Cousins, Jim Jones, Barry (Alyn & Deeside)
Cox, Tom Jones, Ieuan (Ynys Môn)
Crowther, Stan Jones, Martyn (Clwyd S W)
Cryer, Bob Kaufman, Rt Hon Gerald
Cummings, John Kinnock, Rt Hon Neil
Cunningham, Dr John Lambie, David
Darling, Alistair Lamond, James
Leadbitter, Ted Robertson, George
Leighton, Ron Rogers, Allan
Lestor, Joan (Eccles) Ross, Ernie (Dundee W)
Litherland, Robert Rowlands, Ted
Lofthouse, Geoffrey Salmond, Alex
McAllion, John Sedgemore, Brian
McAvoy, Thomas Sheerman, Barry
McCartney, Ian Shore, Rt Hon Peter
Macdonald, Calum A. Short, Clare
McGrady, Eddie Skinner, Dennis
McKay, Allen (Barnsley West) Smith, Andrew (Oxford E)
McLeish, Henry Smith, C. (Isl'ton & F'bury)
McNamara, Kevin Smith, J. P. (Vale of Glam)
Madden, Max Soley, Clive
Mahon, Mrs Alice Spearing, Nigel
Marek, Dr John Steinberg, Gerry
Martin, Michael J. (Springburn) Straw, Jack
Martlew, Eric Taylor, Mrs Ann (Dewsbury)
Maxton, John Taylor, Rt Hon J. D. (S'ford)
Michael, Alun Thompson, Jack (Wansbeck)
Michie, Bill (Sheffield Heeley) Vaz, Keith
Mitchell, Austin (G't Grimsby) Walker, A. Cecil (Belfast N)
Moonie, Dr Lewis Wall, Pat
Morgan, Rhodri Wardell, Gareth (Gower)
Morley, Elliot Wareing, Robert N.
Morris, Rt Hon A. (W'shawe) Watson, Mike (Glasgow, C)
Mullin, Chris Welsh, Andrew (Angus E)
Murphy, Paul Welsh, Michael (Doncaster N)
Nellist, Dave Williams, Rt Hon Alan
Oakes, Rt Hon Gordon Williams, Alan W. (Carm'then)
O'Brien, William Wilson, Brian
Parry, Robert Winnick, David
Patchett, Terry Wise, Mrs Audrey
Pendry, Tom Worthington, Tony
Pike, Peter L. Wray, Jimmy
Powell, Ray (Ogmore) Young, David (Bolton SE)
Prescott, John
Quin, Ms Joyce Tellers for the Noes:
Randall, Stuart Mr Frank Cook and
Rees, Rt Hon Merlyn Mrs. Llin Golding.
Reid, Dr John

Question accordingly agreed to.

Resolved, That the draft Electricity Supply (Amendment) (Northern Ireland) Order 1989, which was laid before this House on 24th October, in the last Session of Parliament, be approved.