MINISTRY OF POWER
1. Sir G. Nabarro
asked the Minister of Power what further curtailment of investment, having regard to the Budget, he now proposes to arrange with nationalised fuel boards, including coal, gas and electricity; and by how much he has reduced investments in these nationalised industries during 1968–69 to meet con[column 2]temporary economic needs and conditions.
The Minister of Power (Mr. R. J. Gunter)
Reductions of £17 million, £10 million and £4 million in the capital allocations for 1968–69 of the electricity industry in England and Wales and the gas and coal industries respectively were announced by my right hon. Friend, the Chancellor of the Exchequer, on 21st December last. A further reduction of £16 million has since been agreed with the Electricity Council and Boards in England and Wales, primarily in the light of revised estimates of the trend of demand.—[Vol. 756, c. 488.]
Sir G. Nabarro
May I be the first on this side of the House to congratulate the right hon. Gentleman on his new appointment? As there is now a good deal of dubiety as to what are the investment programmes of the nationalised fuel boards, changed since 21st December, not further changed on account of devaluation, and with no White Paper republished, could not we have more detailed figures circulated?
I thank the hon. Gentleman for his congratulations. The cuts in the capital expenditure of the nationalised industries announced after devaluation were an integral part of the policy pursued in the Budget of restraining private and public consumption. I will certainly give thought to the hon. Gentleman's suggestion, if he has any doubts.
I, too, congratulate the right hon. Gentleman and express the hope that we shall receive more direct [column 3]answers to direct questions than we did from Richard Marshhis predecessor. My recollection is that part of the £17 million saving for the electricity industry was due to the postponement of one power station. Which one?
I cannot answer that question offhand. I am grateful for the hon. Lady's congratulations.
Domestic Fuels (Price Increases)
2. Sir G. Nabarro
asked the Minister of Power, having regard to the need for stability of prices as set out in the Budget, what steps he is taking to have urgent consultations with the boards of nationalised industries to prevent further price increases for domestic fuels, including coal, gas, electricity, fuel-oil and petroleum products, including paraffin; and whether he will make a statement.
Price changes by fuel producers in the public and private sectors are subject to the criteria set out in the White Paper on Productivity, Prices and Incomes Policy in 1968 and 1969 (Cmnd. 3590). The White Paper lists the products for which arrangements are being continued for fuel producers to give me early warning of proposed price increases.
Sir G. Nabarro
Has not the right hon. Gentleman noted that the nationalised boards, notably electricity and gas, are leading the field in price increases since devaluation and that all these boards are now knocking up their prices steeply? What action is he taking?
The price increases announced by my predecessor were considered justifiable.
3. Mr. Lane
asked the Minister of Power by how many million pounds, and by what percentage, he expects the aggregate capital expenditure of the coal, gas and electricity industries to increase in each of the next two years, compared with the immediately preceding year.
The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)
On present information and at constant prices, I do not expect any increase.
That is gratifying, but will the Parliamentary Secretary keep a [column 4]doubly careful eye on the future trends of these estimates so that there is no tendency for them to slip upwards?
All capital expenditure programmes of the nationalised industries are very closely examined before they are approved.
British Steel Corporation
4. Mr. Michael Shaw
asked the Minister of Power when he expects to lay an order increasing the borrowing powers of the British Steel Corporation.
Probably before the Summer Recess.
Does the right hon. Gentleman realise that there is considerable concern about the amount of money which is being lent to the Corporation? Has he any idea when the first interim accounts will be published?
I am not quite sure of the correct answer to the last part of the supplementary question, but I understand that there will be a report covering July to September, 1967, and then another report later in the summer before we go into the Summer Recess.
Mr. Patrick Jenkin
Does the Minister recognise that this new borrowing will be considerably in excess of what was envisaged at the time the Bill was going through? Does he not recognise, therefore, that it is essential that the House should have accounts before it before it is asked to approve increased borrowing?
I fully understand that there is that degree of interest. My predecessor pointed out in the course of the debate that the £75 million, which I imagine that the hon. Gentleman has in mind, was a very wide estimate.
5. Mr. Michael Shaw
asked the Minister of Power if he will give details of the £252 million drawings of capital by the British Steel Corporation.
10. Mr. Ridley
asked the Minister of Power why the British Steel Corporation draw £175 million of Government advances and £77 million of temporary borrowing, in view of the previous estimate that it would only require £75 million of capital during 1967–68.[column 5]
I will, with permission, circulate the details in the Official Report.
Does the right hon. Gentleman realise that there is a feeling that a considerable amount of the money which is being lent to the Corporation is going to cover current losses made by the Corporation; and will he tell the House what is the present net monthly loss being made by the Corporation and its subsidiaries?
The hon. Gentleman's assumption is quite wrong. If he will read the detailed Answer which is to appear in the Official Report, he will appreciate that.
How does it come about that a public corporation can budget for £75 million capital expenditure and then incur £252 million? Is it not lacking somewhere in financial discipline, so that this runaway expenditure can take place on the capital side?
I am quite sure that the hon. Gentleman is wrong in his suggestion about runaway expenditure. The great addition to the figure has been caused by the desire of the Corporation to establish firm financial control. [Interruption.] Just a moment. The Corporation decided to eliminate bank overdrafts and other short-term finance and to replace this finance, which at vesting date totalled £126 million, with borrowing in its own name.
Will the Minister consider that a large part of the money going to the Steel Corporation should take the form of equities rather than fixed interest bearing stock and securities?
I should doubt that, but I do not know enough about it to give the answer.
Following is the information:
Of the £252 million borrowed by the British Steel Corporation to the end of March, 1968, about £57 million was used to finance expenses of the Corporation arising after vesting date, including substantial payments by way of terminal interest and dividends under the revived Section 19 of the Iron and Steel Act, 1949, and by way of interest on the commencing capital debt. The balance of about £195 million was applied in paying off loans and overdrafts and other short term commitments incurred by the companies before vesting date. Refinancing on this scale was not envisaged at the time of [column 6]the original estimate of borrowing from the Exchequer.
32. Mr. Kenneth Lewis
asked the Minister of Power if he will give a direction to the British Steel Corporation to ensure that production continues in the steel industry in spite of the bricklayers strike within the industry.
Why not? Does the right hon. Gentleman realise the very serious situation that could develop not only for the steel industry but for the country as a whole? Is it not justifiable that we should ask him to try to do something to improve the situation so that we do not have a strike?
There is a vast different between asking me to do something an instructing me to give a direction to the Steel Corporation. The handling of the dispute is a matter for the Corporation and I have no intention of directing the Corporation to act against its own judgment. However, if, behind the scenes, can do something to help, I certain shall.
On a point of order. The Minister must realise, Mr. Speaker, that the only way I could table a Question on this matter was to ask him to give a direction.
Mr. Lewis, Question No. 33.
33. Mr. Kenneth Lewis
asked the Minister of Power what proposals he has to reduce interest charges to the British Steel Corporation on its capital commitments.
None, Sir. The terms of the Corporation's commencing capital debt have not yet been settled.
Would the right hon. Gentleman confirm that the Steel Corporation is likely to make a loss this year unless it is relieved of some of this debt. Will he assure us that it will honour the commitments it has?
I can only repeat the Answer I gave; that the commencing capital debt has not yet been settled. When it has been, we will be able to deal with the other matters.
May I again remind my right hon. Friend that, in considering [column 7]this matter, he should remember that the capital debt need not necessarily take the form of fixed interest bearing securities but might take the form of equities on which dividend is payable, if dividend is earned?
In any case, that would involve legislation.
Capital Expenditure (Test Discount Rate)
Mr. Ridley asked the Minister of Power by how much the capital programmes of the coal, gas and electricity industries would be reduced by an increase in the discount cash flow rate of 10 per cent.
An increase in the test rate of discount could be expected to lead to some reduction in capital expenditure, for example, through the effect it might have on the prices of coal, gas and electricity; but nor realistic estimate of the reduction is practicable at present.
As nationalised industry borrowing is giving grave concern not only to hon. Members but to Mr. Schweitzer as well, ought not the Government to know what the effect would be of applying their own policy of raising the test discount rate, when the total gets out of hand? Why do they not know the answer?
Raising the test discount rate would have the effect of increasing supply costs and would, therefore, have certain implications for pricing policy.
Nationalised Industries (Capital Programmes)
Mr. Emery asked the Minister of Power whether, because of the high level of public expenditure, he will give a general direction to the fuel and steel nationalised industries to prepare contingency plans, showing the effect of cuts of 10 per cent. and 15 per cent. in their capital programme.
Substantial cuts have already been made and of course the need for stringent economy will continue to be taken fully into account.
Taking the figures already published, which would work out at over £5,000 million capital expenditure in the [column 8]next five years, does not the Minister think that a 10 or 15 per cent. reduction in this sum would be of major benefit in meeting the capital programme with which this country must deal?
That is a matter for continuing review. When the annual reviews take place the need for stringent economy must be accepted on both sides. I hope that the hon. Gentleman will not give the idea, which I am sure that he does not want to give, that there must be excessive zeal in dealing with this capital expenditure, which is so essential for the future well-being of the country's economy.
Mr. Emery asked the Minister of Power what is the machinery for consultation between his Department and the Defence Department regarding the maintenance of oil supplies to the United Kingdom.
The Department is in constant touch with other Departments, including the Ministry of Defence.
Will the Minister assure the House that in any consultation he makes quite clear the vital rôle that Simonstown has to play in the whole question of getting oil through to this country safely?
Questions of that kind are best directed to my right hon. Friends the Secretary of State for Foreign Affairs and the Secretary of State for Defence. But I would point out, as a matter of information, that tankers sailing round the Cape are not dependent on South Africa for bunkering or repair facilities.
But would not the hon. Gentleman agree that at the moment a large number of oil companies use those facilities, and they are a vital part, from the commercial aspect, of the oil lines to this country through the sea lanes?
I think that I have already answered the question quite clearly. Tankers do not require bunkering or repair facilities in South Africa. If the hon. Gentleman is suggesting some kind of military experiment there, he should direct his attention to other Departments, not the Ministry of Power.[column 9]
Electricity and Gas Industries (Consumer Consultative Councils)
Mr. Gardner asked the Minister of Power what action he intends to take to strengthen the Consumer Consultative Councils associated with the electricity and gas industries following the recent report by the Consumer Council.
My right hon. Friend is considering the recommendations made in the report in consultation with the Consultative Council Chairmen.
Mr. John Hynd asked the Minister of Power why his circular of 18th March, 1968, alleging that inaccurate information was being supplied to his Department and drawing attention to the penalties for knowingly recklessly making a false statement, was circulated to all ironfounders and was specifically addressed at the same time to individual firms implying that these firms were guilty; and what steps he proposes to take to remove the misapprehensions this has aroused amongst reputable firms.
My right hon. Friend's predecessor, and I have written to my hon. Friend and the Department has written to the few ironfounders who complained about the circular to remove any misapprehensions it may have caused.
Will my hon. Friend be good enough to make it quite clear to all concerned that this rather inept circular was wrongly addressed to the wrong people, and that this kind of exercise will not occur again?
We thought that it would be right not to single out particular companies about whose figures there were some doubts. Therefore, there was a general circular, though we agree that a mistake was made in having individual names and addresses added to it at the dispatch stage.
Seaton Carew (Proposed Power Station)
Mr. Willey asked the Minister of Power what are the series of studies being held regarding the proposed power station at Seaton Carew; and by whom the studies are being carried out.[column 10]
These studies cover the need for new power stations to meet the expected load; the relative costs to the economy of producton from coal and nuclear power; and the effect of power station orders on the economy and on the industries concerned. They are being carried out by my Department in consultation withu the other Departments concerned.
In view of the public concern ad debate about this power station, will my right hon. Friend assurs me that when a decision is taken he will make availabel the full facts on which it is based?
Yes. Sir. That will be done.
Is my right hon. Friend aware that we in the North-East are particularly concerned about this projected power station? Is he aware that there exists a strong suspicion that the Government have already taken a decision? Would he deny that and say categorically that such a suspicion is unwarranted?
I assure my right hon. Friend that the suspicion is unwarranted. When the decision is made, I will announce it.
Do the cuts mentioned by the right hon. Gentleman earlier&em:assume that the Seaton Carew power station will not be started in the financial year 1968–69? If so, will he ask the contractors to retender so that advantage may be taken of the technological developments which have occurred in the present year?
I am not sure, to begin with, that I agree with the hon. Gentleman's assumption. I might add that the Electricity Council recently reduced its load forecast and that I am now examining the implications of that.