Tag: Michael Heseltine

The speech made by Michael Heseltine, the then Secretary of State for the Environment, in the House of Commons on 15 November 1982.

With permission, Mr. Speaker, I will make a statement about certain public expenditure programmes for the Department of the Environment. This follows the statement made by my right hon. and learned Friend the Chancellor of the Exchequer on 8 November. Details are being laid in the Vote Office. I shall also announce the designation of new enterprise zones.

As my right hon. and learned Friend said, for the first time since 1977 a Government’s public expenditure plans have not had to be revised upwards from one year to the next. The total of planned expenditure for my own programmes has also remained broadly the same. However, as a result of the considerable success of the programme of sales of council houses and of other assets, significant additional resources are now being realised by local government. In 1983–84 these sales should be worth about £1,750 million. This allows for a marked increase in certain capital programmes.

I deal first with housing. For the current year I have asked local authorities to accelerate their capital programmes in order to spend closer to the national provision. I have offered additional capital allocations for all authorities which need them. Local authorities can increase their expenditure on home improvement grants this year without limit. The Government agree with the proposal—endorsed by The House Builders Federation—that local authorities should buy completed, or nearly completed, low-cost homes direct from house builders for sale, under shared ownership arrangements, to first-time buyers and those on the waiting list. I urge local authorities to promote these schemes.
I have also discussed with the Housing Corporation the effective use of additional resources this year. I have agreed an increase of £150 million in the corporation’s cash imit for 1982–83 to £680 million. This allows additional expenditure on fair rent, hostel and low-cost home ownership schemes and the refinancing of private borrowing guaranteed by the corporation.

For 1983–84 the gross capital provision for housing will be increased from this year’s provision of £3,190 million to £3,243 million. This is about £340 million above the expected outturn for the current year, taking account of the forecast additional spend from my statement today. It will sustain a substantial increase in construction and improvement activity. I have already announced the continuation of the higher improvement grant rates until the end of 1983–84. I shall be taking additional steps to assist local authorities to meet the resulting demand.

I deal now with other Department of the Environment programmes. For the current year, 1982–83, local authorities have been invited to seek any additional allocations they need for derelict land, urban programme expenditure, or other projects. The grant to the Sports Council is also being increased to allow increased capital expenditure, particularly in communities where the needs are greatest and where the development of small facilities can provide a basis for partnership between voluntary organisations and local government. The Minister for the Arts and I are making a further grant of £5 million to the national heritage memorial fund. I will also provide additions to the grants to the Nature Conservancy Council and the Countryside Commission.

A breakdown of Department of the Environment programmes for 1983–84 is shown in the figures placed in the Vote Office. The external financing limit for water authorities will allow capital investment to be increased from £632 million to £677 million. Provision for gross capital expenditure on local environmental services will be £605 million compared with forecast outturn this year of £481 million. Within the smaller programmes there will be an increase in the heritage, conservation and sports budgets from £156 million to £165 million.

I shall be concentrating further additional resources on the urban and derelict land programmes. The House will be aware that I recently launched a new initiative under the urban and derelict land programmes and invited local authorities to submit viable schemes, provided that they attract substantial funds from the private sector. The response from local government and the private sector has greatly exceeded expectations. We have bids of £275 million from the public sector put forward in conjunction with a potential further £900 million of investment from the private sector, spread over a number of years. Our initial appraisal shows that in the first year a public contribution of £85 million could be necessary. I have therefore increased accordingly the £70 million originally earmarked. Substantial private sector funds will flow as a consequence of this injection of Government support. The balance of both public and private expenditure will be invested over subsequent years.

In addition, I am increasing the remaining special budgets for the urban and derelict land programmes. Including the £85 million for the joint schemes, the urban programme will be increased from an expected outturn of —280 million this year to —348 million next year, the derelict land programme will be increased from £59 million to £75 million; and the resources of the urban development corporations of London and Merseyside will be increased from £64 million to £67 million. In total, the public expenditure provision for these programmes next year will be £490 million—an increase of £87 million or 22 per cent. on the likely outturn for this year.

As a further part of our efforts to restore economic health to rundown industrial areas, I can tell the House the Government’s decisions on the designation of new enterprise zones in England.

My right hon. and learned Friend the Chancellor of the Exchequer announced on 27 July that the Government intended to designate 11 new zones, seven of them in England. More than 50 English authorities have submitted bids, many of high quality.

As a result, the Government have decided that, in England, we should go ahead with nine new zones; in Allerdale and North-East Lancashire in the North-West; Rotherham and Scunthorpe in Yorkshire and Humberside; Telford in the West Midlands; North-East Derbyshire and Wellingborough in the East Midlands; Middlesbrough in the North-East; and in North-West Kent, including parts of Rochester, Gillingham and Gravesham. The Government have also decided to extend the existing zones at Speke in Liverpool and Wakefield in West Yorkshire. There will be further detailed discussions.

These programmes give priority to capital expenditure. Significant additional resources arise from the success of local government—which I commend—in selling council houses to their tenants and in realising other assets. The announcements today underline our commitment to the inner cities and to the restoration and improvement of some of the most rundown and depressed industrial areas of our society, and there is an enhanced opportunity for capital investment by much of local government.

The speech made by Michael Heseltine, the then President of the Board of Trade, in the House of Commons on 13 March 1995.

I beg to move, That the Bill be now read a Second time.

The assumption that the supply of gas to the public can best be undertaken on a monopoly basis dates from 1847, when a committee of inquiry led to the passing of the first Gasworks Clauses Act. The conclusion that monopoly was the necessary form of organisation was based on the poor economics of laying competing pipelines and the associated disruption in terms of street works that that was found to entail.

The idea of separating the trading functions from the operation of the distribution pipes has emerged progressively over the past few years. We have an active competitive market in the supply of gas to industrial and commercial customers. These customers have already seen savings of 10 per cent. to 15 per cent. or more as a result of that competition.

The Bill provides a sound foundation for the phased introduction of the benefits of competition to the 18 million domestic gas customers in Great Britain. The Bill will empower customers to demand the levels of service that they want. It will provide a powerful incentive to innovation and efficiency, and it will provide a strong downward pressure on average prices. Already since privatisation, we have seen a fall in the price of gas before VAT of more than 20 per cent. in real terms and an even larger fall in the standing charge. Alongside that, British Gas has invested £9 billion in the United Kingdom since 1986, including a £2 billion programme of mains replacement to improve safety.

Mr. D. N. Campbell-Savours (Workington)

The President of the Board of Trade used the word “average”. Can he illuminate that—[Interruption.] I do not think that the Minister for Energy and Industry needs to tell the right hon. Gentleman the answer. He does not need help in that way. Will the right hon. Gentleman tell us what will happen to low-use consumers of gas? Will their bills go up substantially, as is being argued?

Mr. Heseltine

I can try to help the hon. Gentleman. “Average” is a complicated idea. One has to take the lowest prices and the highest prices, put them all together and divide them by the number of consumers. Out of that calculation comes what we customarily called, when I was at school, an average. I hope that the hon. Gentleman has noticed that I did not need to refer to my right hon. Friend the Minister for Energy and Industry for that remarkable piece of memory of my childhood years.

Mr.Dafydd Wigley (Caernarfon)

I do not want to challenge the right hon. Gentleman on the definition of “average”. He will be aware of the danger that a person walking through a river with an average depth of 4 ft 6 in may drown in the middle. Is he not aware of the danger, within the average charges, to rural areas? If charges are required to reflect the costs of the supply of gas, the charges in rural areas may increase disproportionately, albeit within the average, which will hit some people hard.

Mr.Heseltine

As the hon. Gentleman will know, it has been suggested that because of the transportation charge, there may be a differential of between plus and minus 2 per cent., depending on the area. That has to be set against the forecasts of the companies anxious to enter the market. They can see economies of up to 10 per cent. in overall prices. Those matters will be dealt with considerably in the licences that the regulator will issue. The details of the licences will appropriately be explored in Committee, if the Bill receives a Second Reading.

Mr.Peter Bottomley (Eltham)

Is not the key point that over the past 20 or 30 years, gas has expanded from covering 7 per cent. of households to about 50 per cent.? Many people in rural areas wish that gas could reach them. If the transportation variation is so small compared with the rest—except when oil prices are very low—most people will be glad that gas has been extended to more people.

Mr.Heseltine

That is absolutely right. That is why my hon. Friend will have welcomed the figure that I gave for investment by British Gas in widening and modernising its facilities; that investment amounts to £9 billion since 1986. That money has been obtained without recourse to the public purse because it has been raised in the private market.

Mr.Richard Caborn (Sheffield, Central)

Can the right hon. Gentleman enlighten the House on how he believes that the Bill will proceed in terms of the transportation charge? First, there is the geographical point, which he explained to the House. Secondly, there is the variable and the fixed part of the gas charge which, as he probably realises, the Select Committee on Trade and Industry brought to the attention of the House. Can the right hon. Gentleman give the House any assurances that the average price for TransCo was at the lower end? Both the right hon. Gentleman and the regulator accept the figure of £15. Can he give assurances that the cross-subsidy, which is now built into the price, will continue and that it will not be removed in the near future?

Mr. Heseltine

The hon. Gentleman puts the case very fairly, in asking about the £15 standard charge that is built into the proposals. That matter is subject in the end to the regulatory regime, but obviously there would be no point in changing the regime shortly after it had been introduced. I am sure that the hon. Gentleman will be reassured by the answer that I have given.

In formulating our proposals, we have been careful to ensure that safety will remain a top priority. We asked the Health and Safety Commission for a detailed report on our proposals. That report was published last week and we have accepted it.

It is central to our proposals that every supplier will have an obligation to supply on request any domestic customer covered by its licence. It will charge for gas against publicly available price schedules. There will be a number of measures to discourage cherry picking of the more attractive customers and rules to deal with price discrimination by nationally or locally dominant suppliers. At the same time, market entrants will be allowed to choose pricing structures that meet consumers’ needs. If some new suppliers wish to enter the market on the basis of a standing charge set at zero, as one has suggested that it may, we would not wish to stand in its way.

We shall ensure that the requirement for special services to pensioners, the disabled or the blind and to those who have genuine difficulties paying for their gas should continue. That includes important services such as the free gas safety check for pensioners or disabled people who live alone and the provision of a range of special controls and adaptors to help with the use of gas appliances. The current requirements for service in those areas will be maintained and, in some cases, enhanced. All suppliers will have to bear their share of the social obligations to those customers, but there will be arrangements in the licences for a levy to share the costs of those services in certain circumstances if they fall disproportionately on a particular supplier.

Mr.Peter Hardy (Wentworth)

The Minister referred to social obligations. Does he feel that the Government have any social obligation to the many Sids and Mrs. Sids who were beguiled by Government legislation, persuaded to buy shares in British Gas and who had not expected that, in the short time to which he referred a moment ago, such a dramatic change in their circumstances would be effected?

Mr. Heseltine

The hon. Gentleman has made an important contribution, but is he quite sure that he has the right industry? We are talking about the gas industry this afternoon, not the electricity industry.

Mr.Hardy

Sid was gas.

Mr.Heseltine

I understand that. The complaints of his right hon. Friend the Member for Copeland (Dr. Cunningham) are about the electricity industry, not the gas industry. If I may say so, it is a quite bizarre reversal of fortune for Labour Members to know that there are even things called shareholders, let alone to rise to their feet to defend them.

Dr. John Cunningham (Copeland) rose—

Mr. Heseltine

I thought that the Labour party was interested in customers, consumers and the public. Indeed, the object of this legislation is to reduce prices for the people who buy the gas.

Dr. Cunningham

I am talking about this Bill. The Minister mentioned a levy on all providers. That is not in the Bill and the House has not yet had the advantage of seeing the licences, because they have not been published. Is he telling the House, and is he giving a guarantee, that that matter is agreed between himself and the Director General of Gas Supply?

Mr. Heseltine

When the right hon. Gentleman gets into the detail of the Bill, he will find that the powers to impose a levy are in the legislation.

Dr. Cunningham

Who will decide?

Mr. Heseltine

From the licences around, the regulator would decide whether that was a necessary development. The power to levy a charge to ensure that those services are protected is in the legislation.

Dr. Cunningham

Yes, we understand that, but that was not really the point of question. The power is there, but is the right hon. Gentleman guaranteeing that it will be implemented, and is he guaranteeing that the director general will ensure that that power is used in the way that he suggests?

Mr. Heseltine

The right hon. Gentleman can be absolutely sure that the Government’s intention is to ensure that the services that we are talking about are protected for the benefit of those who depend on them. The power in the Bill therefore ensures that the opportunity to do that exists. If the regulator could find other ways of doing that through the licensing system, that would achieve the same ends. However, that is not in any way a substitute for our determination that those services should be maintained.

Dr. Cunningham

It is the case, then, that it is quite possible that the director general could ensure that those services continue by making their costs fall on the consumers concerned.

Mr.Heseltine

Not in a way that would act adversely against the Government’s intentions in introducing this legislation. That is the point. The Government are determined to preserve the social implications of the legislation, and the powers to do that are there in the ability to levy in the way that I outlined. I do not in any way criticise the right hon. Member for Copeland for pressing me on the point, because it is important and it is one that the Standing Committee will want to consider when we get to the details. I wholly accept and welcome that as the point is very important.

Dr. Keith Hampson (Leeds, North-West)

My right hon. Friend has just said that what we are seeing, or about to see, is a total revolution in the energy industry. Does he believe that one way to stop the scare stories that are being put about by Opposition Members to the effect that those on low income and the disabled will lose out, may be to guarantee to people—particularly during the transitional period—that the present British Gas standards are an absolute minimum and that that will be enshrined in a code of practice, which the regulator will have to follow in the legislation? Would not that shut up Opposition Members?

Mr. Heseltine

My hon. Friend makes an interesting point. However, without committing ourselves to a code of practice, the Government’s intention is to ensure the outcome that my hon. Friend has drawn to the attention of the House: in other words, the standards of British Gas today are the minimum standards. How we ensure that that happens is an issue that we shall have to resolve in detail. However, it is irresponsible and unforgivable for the Opposition to suggest that somehow or other those minimum standards will not be maintained. They will be maintained.

Sir Michael Grylls (Surrey, North-West)

Does my right hon. Friend agree that the scares being raised by the Labour party are very familiar to Conservative Members, because they were raised when we privatised British Telecom? At that time, Labour Members said in the House that all the telephone boxes would be closed after privatisation, but the outcome has been that there are 50 per cent. more telephone boxes and 96 per cent. of them are working.

Mr.Heseltine

My hon. Friend reminds us, if we needed reminding, that every piece of competition-enhancing or privatising legislation put through the House by this Government has been subjected to total misrepresentation, deliberately and cynically, by the Opposition parties in order to try to persuade us not to proceed. When we have proceeded, their forecasts have turned out to be misleading and worrying for the particular groups of people on behalf of whom Opposition Members claim to speak.

Dr. John Reid (Motherwell, North)

What the Minister is saying about the maintenance of minimum standards and social responsibility is utter balderdash. Can he answer my question without reference to all the President’s men beside him? If what he says is the case, why are there 60 fewer home service advisers to visit old people and disabled people, to advise them on the adaption of gas equipment? Without reference to all the President’s men, can he tell me why those minimum standards are being reduced day by day?

Mr. Heseltine

The hon. Gentleman is complaining about the existing situation. We are trying to introduce competition to improve the existing situation.

I have never been ashamed to turn to my right hon. Friend the Minister for Energy and Industry, to seek his guidance on a matter in respect of which he is a well-known authority. Usually we manage to reach an agreed view, which I then present at the Dispatch Box. That is very different from what we see happening in the Labour party, where leading spokesmen fight each other to get to the Dispatch Box to give the different views of the Labour party’s current policy.

We have a bizarre situation in which the Labour party is largely absent from the debate this afternoon because it is now trying to agree its new policy on privatisation. We know perfectly well that when Labour Members have agreed, 53 per cent. will believe that they have won and 47 per cent. will believe that they have lost. If the Labour party ever came to power — which heaven forfend—half its members would sit on the Back Benches opposing the government in which they had been elected to serve. They would then talk to us about divisions in the Conservative party.

Dr. Robert Spink (Castle Point)

Can I bring my right hon. Friend back to the question of special interest groups? He will be aware of my special constituency interest in blind people. Can he confirm that blind people will still be provided with Braille controls by all gas suppliers?

Mr. Heseltine

I know of my hon. Friend’s interest and I am pleased to be able to give him a simple answer, which is yes.

Mr.Nigel Spearing (Newham, South)

Will the right hon. Gentleman give way?

Mr. Heseltine

I have given way enough. We must maintain the high standard of the debate and keep to the intellectually coherent case that I wish to deploy without that case being knocked about by the roughnecks on the Opposition Benches.

Mr.Spearing rose—

Mr. Heseltine

I know that the hon. Gentleman speaks for those roughnecks, but if he will forgive me, I shall try to make some progress.

Mr.Ronnie Campbell (Blyth Valley)

The President has the biggest neck.

Mr.Heseltine

I may have the biggest neck, but there are parts of the hon. Gentleman with which I cannot compete.

The Bill retains the duty to promote energy efficiency. It creates a new environmental duty, which would, for example, require the director general to take into account the environmental impact of losses in the gas transmission system. The licences will extend to all domestic supplies the current requirement on British Gas to produce energy efficiency services and advice.

Perhaps most important, we are sweeping away the requirement that gas can only he sold as a fuel. The Bill will allow gas to be sold as part of an energy package, including a more efficient boiler as well as the gas itself. Suppliers will be able to compete in selling warm houses and not simply in selling gas, and they will have every incentive to compete by offering such added-value services as well as competing on price.

Mr.Spearing

Will the right hon. Gentleman give way?

Mr. Heseltine

The hon. Gentleman’s neck is still as rough as it was a moment ago, and I will not give way to him.
I believe that competition will provide a powerful dynamic for energy efficiency. I know that Labour Members have always taken a cynical view about that. They believe that the only way to promote energy efficiency is through public expenditure or levies on other consumers. But they have always scoffed at what a competitive market can achieve. They have always been proved wrong in the event.

The principal concept underlying the Bill is the division of the various components of the gas industry. In particular, the public gas supplier envisaged by the Gas Act 1986 is to become three separate types of entity.

The first is the public gas transporter, who operates the pipelines through which gas is delivered to premises. The Bill recognises that, at the level of local distribution, that remains a monopoly function. Accordingly, British Gas’s prices for transportation services will remain closely regulated.

The second entity is the gas supplier, who will contract with the customer for a supply of gas and will be responsible for delivering the services that the customer requires.

The third entity is the gas shipper, who performs the specialised function of arranging with public gas transporters for the right amounts of gas to be put into pipelines—normally at the beach—and conveyed to premises. In effect, that is a wholesaling function. The Bill requires that public gas transporters are separate legal persons from suppliers or shippers. However, the Bill allows the supplier and shipper functions to be handled either by the same entity or separately so that companies can organise themselves to fit their expertise.

A memorandum giving details of the principal terms of the licences—to which Opposition Members have drawn the attention of the House—was placed in the Library last week. The legal drafts of the licences are being prepared and will be published as soon as they are ready. We will of course listen most carefully to the views of hon. Members, the industry and others with an interest as we move towards finalising those standard conditions.

The Bill’s detailed provisions largely consist of amendments to the Gas Act 1986 to give effect to the new structure and to provide an appropriate system of licensing. Clauses 1 and 2 adapt the duties of the Secretary of State and the director to the new regulatory framework. Clauses 3 to 8 introduce the new licensing framework for the industry, appropriate to the introduction of full competition. Clauses 3 and 4 and schedule 1 make it a criminal offence, subject to exemptions, to act as a supplier, shipper or transporter without the appropriate licence.

Clause 5 sets out the licensing regime for public gas transporters. Clause 6 sets out the licensing regime for gas supply and gas shipping. Clause 7 provides for the scope of licence conditions and procedures for application. Clause 8 enables the Secretary of State to determine and publish standard licence conditions and provides for their incorporation in licences. The Bill includes a number of other clauses and schedules, which there will be an opportunity to consider in detail at a later stage.

This Bill brings to an end a 150-year period of monopoly in the gas industry. It provides for the change to take place carefully and with fully adequate safeguards, yet it will allow people in the pilot areas to start benefiting from competition from next April. No stronger confirmation could be seen of the popularity of our proposals than the widespread interest that has been shown by people and their elected representatives in participating in the pilot phases. The Bill sets out proposals that have been welcomed by British Gas, by independent suppliers and by the Gas Consumers Council.

Perhaps I can take the House just a little further back in history and deal with the views that the Labour party has expressed on the issue. As we listen to what the right hon. Member for Copeland says this afternoon, we ought to know the judgment, authority and quality of view that lie behind the Labour party’s policies.

In 1985, the right hon. Member for Salford, East (Mr. Orme), who was then the Opposition spokesman, said:

There is no evidence that the Bill will improve efficiency, provide a better service, produce cheaper gas or, least of all, create greater competition. As the House knows, there have been significant reductions in the price of industrial and commercial gas. There has been a significant increase in competition. There is certainly improved efficiency and a wider service.

The next forecast that we were to hear came from the Liberal spokesman, the hon. Member for Gordon (Mr. Bruce). He told us that

the 16 million British gas consumers can expect only one result—to pay increased gas prices, higher than the rate of inflation, for years to come.”—[Official Report, 10 December 1985; Vol. 88, c. 780-93.] The whole House knows that there has been downward pressure on prices. The forecasts are that that will be intensified as a result of the Bill. The average annual gas bill for domestic consumers fell from £392 to £315 including VAT in 1994, in real terms. That is a fall of almost £77 per average domestic consumer.

So what happens? The Opposition forecast inaccurately at every stage. The hon. Member for Clackmannan (Mr. O’Neill) said on 3 October 1994:

The Labour party has no interest or intention in seeking to return British Gas to the public sector. That is not altogether surprising, but it should be contrasted with a statement by the right hon. Member for Salford, East. He told us in 1985:

We shall reacquire the assets, based on the policy of the Labour party conference. The only conclusion is that Opposition Members got their judgments wrong and because their judgments were so wrong, they changed their policy. Now they know that they cannot possibly go back to the electorate with the policies that a few years ago they believed were absolutely essential. That is why the Labour party is in such turmoil on clause IV.

If one thinks that the Labour party’s policy is some sort of muddle based on misjudgments about the gas industry, perhaps I may trespass on the House’s time a little longer.

When the right hon. Member for Sedgefield (Mr. Blair) led for the Opposition in opposing the Electricity Bill in 1988, he said:

what is proposed today is not something radical, evolutionary and new, but something old-fashioned and failed. Yet now he is flogging around the country trying to persuade his party that the things that we did in 1988 are so central to the economic fabric of society that they cannot be changed.

Just to illustrate the depth of knowledge that he brought to the subject, the right hon. Member for Sedgefield had to say:

the idea that we will have an influx of power stations, all competing on the grid, is nonsense. Yet I was at the Dispatch Box a year or so ago when the Labour party condemned us for the dash for gas, which produced precisely the range of power stations that the Leader of the Opposition forecast would not be produced.

The last forecast stands in line. It is from the right hon. Gentleman in the same debate in December 1988:

In exchange for having no choice, we have the reality of higher prices.”—[Official Report, 12 December 1988; Vol. 143, c. 680-84.] Yet everyone knows that the downward pressure on prices has continued throughout that time.

I took the liberty of looking once again at the amendment tabled by the right hon. Member for Copeland and his right hon. and hon. Friends. This is what Opposition Members will vote for tonight, if they get the chance. It says that the Bill

is damaging to the interests of many sections of the population, including elderly people, those with low incomes and those living in South West England, Wales and other parts of the United Kingdom distant from beaching points”. That is clear. That is their opinion. I took the liberty of asking whether any representations had been made by local authorities to be the first experimental area to have the benefits of the competition that will do so much harm to the elderly, those on low incomes and those living in the south-west. After all, if this is so obvious, so important and so devastating for the people for whom hon. Members on both sides of the House have the utmost sympathy —this is going to be a good one—no authority would want to be an experimental area.

The Tories do not come out of this story as well as I would like, if the standard is the imposition of hardship on all those hard-luck cases. Only two Tory-controlled local authorities applied to be part of the first experiment. The Liberal party did rather better. It did 100 per cent. better than the Tories in trying to impose, in the language of the Labour party, hardship on all the most pressurised classes in society. Four Liberal local authorities wanted to be part of the first experiment.

I warned the right hon. Member for Copeland that there was trouble coming. What did we discover about the people who were going to damage the interests of many sections of the population, including elderly people and people on low incomes scattered all over the place? Who takes the prize for the number of local authorities that came to my Department and asked to help get the experiment in place? The right hon. Member for Copeland should stand up and be counted. Six Labour authorities, as opposed to four Liberal and two Tory authorities, applied to be part of the experiment. So which is the party that really cares? Which party is in the business of damaging the interests of elderly people and people on low incomes? It is the Labour party.

I say to the right hon. Member for Copeland and to you, Mr. Deputy Speaker, for goodness sake, if you can get away from the Chamber, go back to where clause IV is being drafted and check it against the amendment on the Order Paper today. The Labour party will have to do some pretty fast talking if all the forecasts for which it will vote tonight come right. The Labour party has campaigned most arduously.

We might ask a question or two about the Liberals. The Liberal party will undoubtedly vote for the Labour amendment, abstain or something—anything to keep out of the Government Lobby. That will be the Liberals’ position, because they want to pretend that they are a distinctive party.

On 13 October 1994, the hon. Member for Gordon, who was the Liberal Treasury spokesman, sent a letter to my right hon. Friend the Minister for Energy and Industry. The hon. Gentleman has moved on. The great thing about being a Liberal spokesman is that one never stays in the job for long. One can abandon the position that the party has adopted one month, hand the job to someone else and disown it the next, in any part of the country. In that letter, he said:

I am concerned to read that the Government may be unable to find sufficient space in the Parliamentary timetable to legislate for competition in the gas industry. It is extremely important that the legislative framework for this is put in place as soon as possible”. So that there should be no doubt—even for people like myself who perhaps do not pay as much attention to the Liberals as we should—the letter continued:

`i.e.’ the next session in Parliament. Even I could work out on 13 October 1994 when the next Session of Parliament would be. I have good news for the hon. Gentleman—join us in the Lobby tonight, because this is the legislation that he regarded as so critical just a few months ago.

Mr. Spearing

Will the right hon. Gentleman give way?

Mr. Heseltine

No, he will not.

Mr. Caborn

On a very important point of order, Mr. Deputy Speaker—the security of Government files. I have just been handed a file on the Second Reading of the Gas Bill—a file that obviously should be in the Minister’s hands. All the points that he has mentioned are there—notes on intervention, regional pricing, winners and losers, small customers, cherry picking, direct debit, jobs, safety and the role of the regulator. They are all here in this file and as you will see, Mr. Deputy Speaker, they are marked, “Priority”, “Immediate”, and “Priority” again. I am sure—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. The Chair is not responsible for any sources of reference that hon. Members may have. Clearly, the speech of the President of the Board of Trade has a little way to go yet.

Mr. Caborn

Further to that point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. It is no good the hon. Gentleman standing there and waving papers at the Chair. With the greatest of respect, that was not a point of order for me.

Mr. Heseltine

It is a huge hoot that the hon. Member for Sheffield, Central (Mr. Caborn) should be able to raise that matter today, but if he ever gets into government, he will discover that everything leaks. All that he has demonstrated is that that was a particularly proficient and professional example of the art. Had I organised it myself, I could not have done it faster, and I could not have chosen a nicer hon. Member to do it to.

Another reason why the Opposition will try to persuade the House to vote for their amendment is that the Bill omits any regulatory provision to enable price cuts to consumers where there are unjustified salary and share options awarded to senior employees.

Dr. John Cunningham

Read that again.

Mr. Heseltine

Yes, I will. If the right hon. Gentleman cannot understand that, I shall be happy to read it again. The words are in the Opposition amendment and I thought that Opposition Members could read their amendments. It is clear that the right hon. Gentleman wants an opportunity to discuss recent pay awards and option schemes in British Gas. That is a legitimate thing for him to do and I am not complaining. He did not hear a word of protest from me. I am merely putting that subject on the agenda, so that when he gets up and does so, it will come as no surprise. Indeed, it might even encourage some of my hon. Friends to hang about to hear what the right hon. Gentleman has to say—not that he will not have said it all before.

Nevertheless, I want to deal with that matter seriously. It is suggested that the regulator should be able to impose pressures on gas industry prices to deal with unjustified salary and share options awarded to senior employees. The House will want to know that the turnover for British Gas is £9.698 billion—nearly £10 billion. Total board pay and share options are under £10 million, which works out at 0.09695 per cent. of turnover—less than 1,000th of total turnover. Worked out in terms of the effect on the average domestic customer, it means that if there were no directors, stock options or bonuses, the price to that customer would be reduced by 50p a year. British Gas has succeeded in bringing down prices by 20 per cent., which is £77 for the average domestic customer. So, if one got rid of all the senior directors, bonuses and options and did not replace them, one would save 50p—for a board of directors who have saved customers £77 a year.

I have this question for the right hon. Member for Copeland. Will he not replace that remuneration? Will there be no directors? Where would he recruit them, what would he pay them and how much would that take back from the 50p that he implies would be saved? Does he really think that he could run British Gas and all those other companies with no directors and no cosy soft jobs for pensioned-off trade unionists? He had better not tell them that this side of a general election campaign.

The Opposition are trying desperately to confuse the public about the transformation that they are trying to bring about in Labour party policy on the issue. That policy lacks any credibility because they have had to abandon—or half of them have had to abandon —everything that they have ever believed in on the issue. That is a slight exaggeration, because some Labour Members have certainly not abandoned those beliefs.

I have before me a reference to the hon. and learned Member for Leicester, West (Mr. Janner), who is rather keen on advising people about remuneration. I understand that he is making a killing out of advising directors in the private sector about stock options and remunerative packages—[Interruption.] I am not complaining, but observing that a member of the Labour party is making a killing out of all that. Having done so, in another capacity he is teaching them to present themselves as well as possible, in a friendly and smiling fashion on television, to rationalise and justify to the British people the remuneration packages that he has told them how to get—[Interruption.]

Mr. Deputy Speaker

Order. I hope that the Secretary of State warned the hon. and learned Member for Leicester, West (Mr. Janner) that he intended to refer to him. There is a code in the Chamber, which Madam Speaker has re-emphasised, that if hon. Members are to be referred to, they should be done the courtesy of being forewarned.

Mr. Heseltine

I respect that judgment, Mr. Deputy Speaker. I shall convey to the hon. and learned Member for Leicester, West the fact that

I did not give him warning and that I have referred to that matter. As it has been in national newspapers and as he has set himself up as an authority on the matter, he might have come to the House today to participate in the debate. He is an endangered species—he is hunting with the hounds and with the hares. He jolly nearly got himself outlawed in the House a week ago.

The Opposition amendment reveals that the Labour party has been forced to abandon its opposition to privatisation. It has been forced to recognise that every Government of any significance in the world are moving in the direction that this Government pioneered. Labour Members know that that is in tune with the mood of the people and that is why they have abandoned their long-held views.

Conservative Members have long-held views on the strength of the private competitive world, which offers better services, and is the most effective on quality and prices. We stick to our views and we will stick to this legislation.

The speech made by Michael Heseltine, the then President of the Board of Trade, in the House of Commons on 20 February 1995.

I beg to move, to leave out from “House” to the end of the Question and to add instead thereof: ‘applauds the improvements in performance in the electricity supply industry since privatisation; welcomes the benefits which customers are receiving in terms of lower prices and improved service; supports the continuing development of competition in the electricity market and the maintenance of effective regulation where this is necessary; and notes that the Director General of Electricity Supply will continue to promote competition and protect the interests of consumers.’. In anticipation of this debate, I spent some time looking at the Opposition motion. If I may, I shall take the motion as my text. I hope that the right hon. Member for Copeland (Dr. Cunningham) will forgive me for sticking to the subject as expressed on the Order Paper.

Apparently, the reason for deploring what I have not done is that the bid by Trafalgar House for Northern Electric was unpopular with the majority of Northern Electric’s shareholders who turned up at a meeting on 15 February. That is the first reason.

The second reason is that, apparently, Trafalgar House has no experience of running a private domestic monopoly energy utility”. The third reason is that the concerns of the Director-General of Electricity Supply about his ability to regulate a regional electricity company which becomes subsumed within a larger group were ignored. The fourth point, to which the right hon. Member for Copeland referred, is the ongoing inquiries being made by the Securities and Futures Authority”. The fifth point is the expiry on 31st March 1995 of the golden share held by the Government in the 12 regional electricity companies”. Those are the reasons which the Labour party gave notice that it wished to draw to the attention of the House tonight.

I am at something of a loss to understand the thinking behind those reasons. Perhaps we can explore just what Labour Members have in mind. It seems that, if a company has a meeting at which an undefined, unprescribed number of shareholders turn up, and if a majority of those who turn up hold a particular view, no matter how few they are, no matter the views of the others and no matter whether proxies are registered from the majority, the fact that those who turn up hold a view should be the determining factor. That is a curious constitutional innovation in the way in which British public companies should be run.

I find it fascinating that the Labour party believes that the view of a small number of possibly wholly unrepresentative shareholders should be the basis on which the President of the Board of Trade reaches his judgment. What about all the other shareholders who did not turn up? What about the majority who may not have expressed an opinion? Supposing that they were against the view of the small minority who did turn up? Am I supposed to ignore them? Am I not supposed to listen to their views and to a range of other people’s opinions on the matter?

The fact is—[Interruption.]

Madam Deputy Speaker (Dame Janet Fookes)

Order. There are too many seated interventions. I expect Front-Bench Members in particular to set a good example.

Dr. John Cunningham

I apologise, Madam Deputy Speaker; you are absolutely right.

It is no good the right hon. Gentleman coming out with this fraudulent nonsense about listening to people’s views. He did not want to listen to any views. He did not want to come to the House, and he did not want to make a statement. He did not want to answer a private notice question, and he did not want a debate. The truth is that, with perhaps one or two exceptions, he did not want to listen to views.

Mr. Heseltine

The right hon. Gentleman could have put all that in his motion, in which case I would have addressed it. My point, to which the right hon. Gentleman has no answer, is that nothing is so lacking in intellect or logic as the suggestion that I should take the views of a minority of shareholders as the determining factor in such a matter.

The nearest equivalent I can think of immediately is the mass meeting of the trade union movement at which a minority of vocal militants were able to dominate the scene, which led to strike action. This is the sort of technique that the right hon. Gentleman thinks should be introduced in British public affairs. I am not prepared to have anything to do with such an argument.

Mr. Martin O’Neill (Clackmannan)

Will the right hon. Gentleman give way?

Mr. Heseltine

No, because I want to make a bit of progress.

I move on to the next argument paraded, which is the absence of any experience on the bidders’ part of running a private domestic monopoly energy utility. This is said by the party that, for 40 years, has nationalised industry after industry after industry so that it can put trade unionists, civil servants and politicians in charge of the commanding heights of the British economy. This is the party that, for 15 years, has sat on the Opposition Benches.

Labour Members have never run any serious industry in their lives, yet they now claim the right to run the whole of the British economy. I have never heard—[Interruption.]

Madam Deputy Speaker

Order. Hon. Members must contain themselves.

Mr. Heseltine

If Labour believes that a company making a takeover bid must have had specific experience in the particular industry, it should say so. The fact is that lack of experience has never stopped Labour Members pursuing any policies of any sort in any circumstances. I cannot believe that they seriously believe that this argument should weigh with me.

I move on to the concerns of the Director General of Electricity Supply about his ability. Here I thought that the right hon. Gentleman asked some important questions, but I was intrigued that he managed to avoid any reference to the Director General—

Mr. Allan Rogers (Rhondda)

Condescending.

Madam Deputy Speaker

Order. I am sorry to interrupt the Secretary of State, but I have made the point before that a continual running commentary from a sedentary position is not acceptable.

Mr. Heseltine

I come back to the point. How can the right hon. Member for Copeland pray in aid the views of the Director General of Electricity Supply, important though his views are, without reference to the Director General of Fair Trading? There was a difference between the two regulators, which I freely admit, so I had to weigh the advice that I was given from two different regulators. I chose to follow the advice of the Director General of Fair Trading.

I found it absolutely fascinating, having listened to what I thought at the beginning of the right hon. Gentleman’s speech were to be paeans of praise for the Director General of Electricity Supply, that he provided a catalogue of criticism on how the industry had been badly regulated, how prices—apparently—had been allowed to go up and how consumers had been ripped off. But all that is the responsibility of the Director General of Electricity Supply, the one person who, according to the motion, I am supposed to listen to, as opposed to the Director General of Fair Trading.

Dr. John Cunningham

Of course, the right hon. Gentleman is talking nonsense. The Director General of Electricity Supply can work only within the regulations laid down by the right hon. Gentleman and his right hon. and hon. Friends. The Director General of Electricity Supply is as much a victim of this hopeless, hapless system as are the consumers who are paying the price.

Mr. Heseltine

Now we have—I have not got the words down, but we will have them all in the morning, as they will be carefully recorded—an apparently hapless system that is so unsatisfactory. So I gather that the Labour party, if it ever had the chance, would want to change it. [HON. MEMBERS: “Yes.”] That is very interesting. Would I be right in thinking that that would be the case not only for the electricity industry, but for a range of other industries? [HON. MEMBERS: “Yes.”] Yes, it would change industry after industry after industry. Where would the Labour party stop?

Mr. Stuart Bell (Middlesbrough)

At the utilities.

Mr. Heseltine

It would stop at the utilities. So am Ito understand that the National Freight Corporation, British Airways and British Steel, and all those other privatised companies, have been given a clean bill of health? Are they now safe from the predatory instincts of the Labour party? We are talking only of the utilities. That is what one might call a halfway house. All the utilities are under threat from the Labour party.

Dr. Cunningham

No, they are not.

Mr. Heseltine

No, they are not. Let us not talk about a divided party. Let us not have references to splits. Are we for clause IV or are we against clause IV? Are we dealing with clause IV(a) or clause IV(b)? Who is the great arbiter between clause IV(a), (b), (c), (d), (e), (f) or anything else’? Is it the spokesmen for the party above the Gangway, below the Gangway, on their feet, on their bottoms? Who speaks for the Labour party?

Mr. George Mudie (Leeds, East) rose—

Mr. Michael Clapham (Barnsley, West and Penistone) rose—

Mr. Heseltine

I shall give way to both hon. Members.

Mr. Mudie

Will the President be serious about a matter that may be funny to him, but is of extreme importance to millions of consumers? The man whom the President has to represent consumers, the regulator, advised the President not to allow Trafalgar House to take over 100 per cent. of Northern Electric, and that 25 per cent. was needed for transparency. The man responsible for protecting consumer interest put that position. Will the President take that advice, which would give the customer some protection, or will he sweep it aside?

Mr. Heseltine

I would seriously like to help the hon. Gentleman. The Director General of Electricity Supply has responsibilities, which he is discharging. I understand that he is in conversation with Trafalgar House. Certain assurances have been given, and those are now being discussed by the regulator. It is right and proper that that should be taking place. What the outcome of those discussions will be, I do not know, because that is something within the purview of the director general. But the right hon. Member for Copeland raised some important questions, on which I want to be as helpful as I can to the House, such as the timing of the announcement.

It is perfectly true that, on Monday last week, I left for India. During that afternoon, I reached a judgment about the matter. It followed from that judgment, because I was interested in the assurances that Trafalgar House was offering, that officials in my Department pursued the matter, which they did.

Of course, it was not possible to announce the outcome, because we did not know at that stage whether such assurances would be forthcoming. It is also perfectly true that it fell to my hon. Friend the Under-Secretary of State for Corporate Affairs to make the statement. I would be the first to say that I felt uncomfortable, because I could see how the circumstances were developing. I shall share exactly with the House the dilemma that I faced.

I knew that I was leaving for India. It was a very important trip, as the House would recognise. There was nothing that I could have done, or that I would have wanted to do, to avoid it, and I am sure that no one in the House would have asked me to do so. But I knew that, if I were to have made the statement, it would have had to wait until I had returned on Thursday. I did not believe that information of such sensitivity would hold between Monday and Thursday.

Therefore, I took the initial decisions, and I instigated the consultations that were to lead to the assurances which were forthcoming, and which are now the subject of discussion. I believe that, in that way, I behaved perfectly properly.

Dr. Cunningham

Will the President tell the House whether those assurances are legally enforceable?

Mr. Heseltine

No, they are not legally enforceable. But that is not the end of the matter, because the powers of the director general remain. He has powers first—as he is now doing—to discuss the matters with Trafalgar House; and, secondly, he has powers to refer Trafalgar House to the Monopolies and Mergers Commission, if, in future, he should in any way feel the need to do so. So it is important to understand the balances that exist.

Dr. Cunningham

If the regulator determines that a reference should be made to the Monopolies and Mergers Commission, would the right hon. Gentleman accept that decision, or would he overrule it?

Mr. Heseltine

As the right hon. Gentleman knows, once that process is under way, I am in a quasi-judicial position. [Interruption.] Hon. Members must understand that someone in my position, a position which this House has put me in, as a quasi-judicial authority, is extremely constrained, and rightly so, in their actions. I cannot prejudge matters. I have to listen to all representations, I have to take all such matters into account, and I have to be guided by the very clear legislative framework within which I operate. The judgments are often complicated, finely balanced and difficult, but I reject utterly and absolutely any suggestion that such matters are not carried out in the proper and full way.

Mr. John Gunnell (Morley and Leeds, South)

Will the President comment on the assurances that have been given? Trafalgar House does not have a reputation for being a company in which there is total transparency. It is felt that cash assets are being transferred from one member of the group to another. Have we assurances that such movements will be transparent, so that Northern Electric’s consumers may be sure that they are not paying to prop up some other member of the group?

Mr. Heseltine

The hon. Gentleman raises essential questions, and those exact issues are now being discussed by the director general and Trafalgar House. The director general is bound to do that. It is not for me to say that I support him in doing so. It is his legal duty so to do. I understand, as does the House, that that process is now under way. I also understand the need for that transparency, and the public confidence which would flow from it, to be in place.

Dr. Cunningham

Those are important points, as the right hon. Gentleman says. A question now arises over the apparently independent regulator having a right to make a reference to the Monopolies and Mergers Commission. Is the President of the Board of Trade saying that he would respect that independent right? If the regulator were to act in such a way, would the President intervene again to refuse the reference?

Mr. Heseltine

I have no power to stop the director general referring the matter to the MMC. I have a right to challenge the view of the MMC in the recommendations that it makes, but afterwards. That would be done in public, after public debate, and I would have to account in public to this House or wherever appropriate for any decision that I took. I would hope that, like any Secretary of State from any party, I would exercise that discretion and make those decisions in the way in which the House would expect me so to do.

Mr. Richard Caborn (Sheffield, Central)

Will the President give the House his view on the notice presented by Offer, in terms of changing and varying the licence in relation to section 11(2) of the Electricity Act 1989? If there is an objection in 28 days, there could well be a referral to the MMC.

Will the President give us the Government’s view about that variation of the licence which, I think, was printed in The Financial Times on 10 February, particularly in light of Northern Electric’s position on pricing when it can effectively give shareholders about £380? That point was referred to a little earlier by my right hon. Friend the Member for Copeland (Mr. Cunningham). That was effectively price control, which could now vary the licence conditions that were printed in The Financial Times on 10 February. Will the right hon. Gentleman gives us his view about that?

Mr. Heseltine

The hon. Gentleman raises a complicated issue. It is not a straightforward issue, and I will not give him an answer off the cuff. However, I will ensure that he gets a proper answer, because these are highly complex and technical legal matters, and the House is entitled to be properly informed. Either my right hon. Friend the Minister for Energy and Industry will reply to the hon. Gentleman in his response to the debate, or I will ensure that the Chairman of the Select Committee receives a letter setting out the matter in detail.
We have now dealt with the substance of one of the legitimate concerns. I hope that the House feels that I have dealt with it at some length, and I do not apologise for that.

I was surprised at the suggestion that, if the takeover is successful—I do not know whether it will be successful or not—that is somehow centralising the decision-making in London. As I understand it, Trafalgar House has made it clear that it will leave the headquarters of Northern Electric where it is presently based. It will therefore remain a provincially based company.

I could not understand how the Labour party could argue in that way when, during the last half-century, Labour nationalised provincial company after provincial company and centralised the control of those companies in London. I do not understand why Labour should find it extraordinary that this Government have returned all those companies to provincial headquarters.

The fact that the water and electricity companies and the gas industry now have major provincially dominated headquarters is a very important part of the Government’s process of spreading power throughout the country, as opposed to centralising it in London. It is not in the Labour party’s gift to suggest that we are trying to centralise powers by the back door—

Mr. Allan Rogers (Rhondda)

Will the President give way?

Mr. Heseltine

No, I want to say something else—

Mr. Rogers

The right hon. Gentleman is not telling the truth.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. Did I hear the hon. Member for Rhondda say that the Secretary of State was not telling the truth? If so, I hope that on reflection he will want to withdraw that comment.

Mr. Rogers

I said that the President of the Board of Trade was misleading the House. I will withdraw the remark that he is not telling—

Mr. Deputy Speaker

Order. That will not do at all. The hon. Gentleman must rephrase his comment.

Mr. Rogers

I never said that he was deliberately—

Mr. Deputy Speaker

Order. The hon. Gentleman must withdraw that comment.

Mr. Rogers

I withdraw my comment, Mr. Deputy Speaker.

Mr. Heseltine

We all make such mistakes. However, if I had made that mistake, I would have admitted it more quickly than the hon. Gentleman did.

Mr. Rogers

Will the right hon. Gentleman give way?

Mr. Heseltine

The hon. Member for Rhondda (Mr. Rogers) has just corrected himself. He should just sit there.

Mr. Rogers rose—

Mr. Deputy Speaker

Order. It is clear that the President of the Board of Trade is not giving way.

Mr. Heseltine

Thank you very much, Mr. Deputy Speaker. I am not giving way.

The most distressing feature of the debate, of the speech made by the right hon. Member for Copeland, and of many of the comments made by Labour Members is the relish with which they want to portray a major British company like Trafalgar House in the least favourable light.

Trafalgar House is one of our leading overseas companies. It falls to my Department, and it is my privilege, often to spend a lot of time with the export managers, directors and executives of that company, travelling the world trying to obtain business. I wonder what kind of impact Labour Members feel it makes on the people whose lives are devoted entirely to trying to further British interests when they have to listen to the carping criticism that we have heard from Labour Members.

If by any chance the takeover bid goes through—I have no knowledge as to whether it will go through or not—Trafalgar House will then be able to point to its experience of running an electricity company in the United Kingdom as it bids for major world opportunities to install, run and manage electricity facilities internationally.

In this country, we must understand that fighting in the international marketplace today demands a scale of expertise in an ever-toughening competitive world. If, every time we try to put together a major British company to win in the world, we hear carping criticism from Labour Members who constantly talk about rip-offs, the consumers being robbed, soaring prices and any other slanderous attack they can find, they are simply undermining this country’s ability to win in the world marketplace.

Dr. John Cunningham

Will the right hon. Gentleman give way?

Mr. Heseltine

No, the right hon. Gentleman has had a fair go. He knows full well that he and the rest of those on the Opposition Front Bench never miss an opportunity to undermine the excellence of British exporting companies across the world.

Mr. Clapham

Will the right hon. Gentleman give way?

Mr. Heseltine

No, there is another Opposition Member trying to get in on the same act.

We are now winning in the export markets of the world on a scale which would have seemed almost inconceivable two or three years ago. We should be immensely proud of that.

We heard another classic canard from the Labour party. I do not want to blame the right hon. Member for Copeland for originating it. The canard was that prices have been soaring—

Dr. Cunningham

No.

Mr. Heseltine

If the right hon. Member for Copeland did not say that, I apologise straight away. I turn my attention to where the blame should lie, and that is with the Leader of the Opposition. Obviously, there is another split in the Labour party. The Leader of the Opposition says prices are going up, but the right hon. Member for Copeland does not believe they are.

That is a welcome conversion—[Interruption.] The right hon. Member for Copeland should be quiet for a moment and decide which side of the argument he is on. I want to nail the Leader of the Opposition. When the Electricity Bill was before the House, the right hon. Member for Sedgefield (Mr. Blair) said: outside of the Conservative party and the Department of Energy, it is barely an issue that prices will rise because of privatisation.”— [Official Report, 12 December 1988; Vol. 143, c. 684.] What has happened? Prices to customers have fallen. They are down by 9 per cent. in real terms to domestic users in the past two years. Industrial consumers have also seen falls in real terms. That record compares with a real increase of 5 per cent. in industrial prices, and a 22 per cent. increase in domestic prices under the last Labour Government.

The right hon. Member for Copeland cannot deny that he said that the quality of service has not improved. However, there has been an 80 per cent. reduction in the number of domestic customers who have been disconnected. Customer complaints to the regulator are falling. The right hon. Member for Copeland then said that investment was not taking off. However, the electricity industry has increased investment by more than 10 per cent. in real terms since privatisation.

Productivity is also rising. It is perfectly true that the regional electricity companies have reduced staff in comparison to pre-privatisation levels. They have introduced more flexible work patterns and pay bargaining. However, is Labour arguing that we must continue to employ people in companies that could achieve the same results with fewer people? Is that what Labour Members are saying? If they are saying that, how would they achieve productivity gains to pay the real increases in wages, upon which real increasing prosperity depends?

Whenever there were job losses in any industry, Opposition Members never said, “Britain is becoming more competitive.” They tried to pretend that we could freeze—fossilise—our industrial and manufacturing capability in the chaotic world that we inherited from them 15 years ago. That simply is not an option. It was not an option then—that is why they lost power—and it is not an option now. We are winning so much extra export market because we have turned the tide of British productivity.

In this debate, as in all others, Opposition Members cannot come to terms with the fact that it is only within the private sector that we will make the gains upon which the increasing wealth of this country depends. Opposition Members talk about shareholders doing well. I take credit for that and pride in it, because I know that shareholders are the pensioners, the people with the insurance companies, the people who are the savers, and the workers in industry who bought shares in their companies. One should rejoice in that, not condemn it left, right and centre whenever one has an opportunity.

The Labour party cannot come to terms with the fact that, 100 years ago, some lunatic dreamed up the idea called “socialism”. It is bust, it is finished, and that is why Labour Members are on the Opposition Benches, and will stay there.

The speech made by Michael Heseltine, the then Secretary of State for Trade and Industry, in the House of Commons on 18 January 1994.

I beg to move, That the Bill be now read a Second time.

In our election manifesto, we pledged to privatise British Coal. Last spring, in our White Paper “Prospects for Coal”, we renewed that pledge. Before I deal with the specific measures in the Bill, it is worth spending a few moments on the wider issues of nationalisation.

The British coal industry is one of the last major industrial sectors left in the public sector. Nationalisation of our industries was a central feature of post-war Labour Governments. It was resisted fiercely by the Conservative Opposition of the day, and there are few people left who would deny that, as a policy, it imposed intolerable economic and legislative burdens on our country and contributed to the decline of our regional economies.

The policy was designed to transfer the commanding heights of the economy to state control. The naive political rationalisation at the time was that control would be vested in the people. In reality, power rapidly shifted to monopoly providers and monopoly producer unions. What power the people possessed was exercised by civil servants, who rapidly became both protector and confidant of the industries’ self-interest, and, worse, by the political convenience of the party in power.

The traditional—and, in the end, the only effective—disciplines of the marketplace were replaced by ill-disciplined compromises and cash-consuming delay. The objectives of enhanced efficiency, increased productivity and a high quality of service played little part in the day-to-day practices or assumptions.

Industrial management, hitherto widely dispersed throughout the regions of the United Kingdom, was replaced by top-heavy bureaucracies that were located largely in London. Perhaps most damaging of all, in virtually every case our key industries withdrew from or were denied access to the markets of the world. I say this to reinforce the case for the Bill, if such reinforcement were necessary. Today, the concept of state ownership is bankrupt. Across the world, country after country is turning to the discipline of the marketplace as each seeks to dispose of its nationalised industries.

Even the Labour party has lost the will to fight for this arcane concept of industrial organisation and management. Of course it parades and re-parades the weary arguments that a tiny body of its constituents, and of course its union paymasters, want to hear, but it knows that the tide of freedom that we have brought to the nationalised industries is now as irreversible here as it is in so many countries, under Governments ranging from the socialists of China to the right-wing Government in France.

Mr. Dafydd Wigley (Caernarfon)

Does the Secretary of State accept that one of the worries of many ex-coalminers and miners’ widows is that the benefits and agreements that they had with the National Coal Board will not be continued after privatisation? Will he give a categorical assurance on the matter?

Mr. Heseltine

I shall deal with the specific objects of concern case by case, as I consider the detailed contents of the Bill.

Before I leave the overwhelming case in favour of privatisation at large, which rests behind the Bill, I must point out that, as hon. Members will know, the facts are stark. In 1979, the nationalised industries were costing the taxpayer £50 million per week in losses. Today, they pay £60 million per week in taxes on the profits that they earn as private sector companies and, most chilling of all for the Labour party, 6 million shareholders are willing to testify and to vote for the success that privatisation has brought.

What are the facts about the nationalisation of the mines? At the time of nationalisation in 1947, there were 720,000 mineworkers employed by the National Coal Board. By 1980, that figure was down to 230,000—a reduction on average of around 15,000 a year. The rundown was as much a characteristic of Labour as of Conservative Governments.

The number of operating pits also declined throughout that period. Opposition Members will recall, for example, that between 1964 and 1970, and between 1974 and 1979, the number of producing pits fell by 313. Indeed, since 1979, it is a Conservative Government who have injected by far the largest support for British Coal in the history of British Coal—nearly £20 billion.

Mr. Ronnie Campbell (Blyth Valley)

That was redundancy pay.

Mr. Heseltine

Yes, the Conservative Government made very generous redundancy payments. However, the hon. Gentleman is not prepared to face up to the fact that £8 billion of that £20 billion was capital investment in the industry. So, since the war—

Mr. Campbell

I can give the Secretary of State one example of what happened in my colliery. A transport system, which cost £300,000, was bought, put in the timber yard, set up and kept there, and charged to that colliery when it closed. That is only one example. What happened at the other collieries in which the Government invested?

Mr. Heseltine

The hon. Gentleman can quote his £300,000 example, but does the House seriously believe that it stands up against the £8 billion that has flowed into capital investment in the Coal Board since 1979? The Opposition talk as though they cared about the industry, but they ran it down. There has never been such a large investment programme in the coal industry as under Conservative Governments since 1979.

Mr. John Evans (St. Helens, North)

Is the Secretary of State aware that, at Parkside colliery in my constituency, a £6.5 million investment in a new face, which was in production for a fortnight before it was closed down under his regime, is now rotting in the ground?

Mr. Heseltine

The hon. Gentleman might ask himself whether the decision to invest such large sums of money was justified in the face of a falling market for the product. That is an example of precisely the lack of discipline that I have been referring to—a lack that was characteristic of nationalised industries throughout the post-war period.

Mr. Eric Clarke (Midlothian)

The accounts of the National Coal Board show that it repaid to the Government, at a very high interest rate, loans that it had received over some years. The money that the right hon. Gentleman was crediting the Government with investing in the industry was paid back before the so-called profit was decided. The Secretary of State can investigate that fact if he likes.

Mr. Heseltine

The hon. Gentleman must understand that most of the £20 billion invested in the National Coal Board since 1979 will be written off, which means that it will be charged in perpetuity to the taxpayer. I admire the fact, however, that he is now a director of a private sector coal company. I know that the House will wish him all the very best good fortune.

Mr. Clarke

I am not a director of a private company: the right hon. Gentleman has been misled. I am an adviser to a company which has the involvement of the Scottish trade union movement.

Mr. Heseltine

I would not wish to misrepresent the hon. Member. If his advice is successful, however, he might soon be a director of the company.

Since the war and nationalisation, the coal industry has lost its market for producing town gas, it no longer sells coal to the railways or mines coking coal, and it has lost the greater part of sales of coal for home heating and industrial use. During the debates of the past year or so, we have been all too familiar with the fact that British Coal is now very dependent on sales for electricity generation, and we are equally and starkly aware that it is coming under increasing pressure in that market as well.

Mr. Derek Enright (Hemsworth)

If there is no market whatsoever for coal, can the President please explain why five applications are being processed for opencast coal mining in my constituency, when the opencast coal will be dearer than that from Grimethorpe?

Mr. Heseltine

The explanation is entirely a matter for those people who have submitted the applications to carry out the mining. It seems extremely unlikely to me that people are bidding to take on onerous responsibilities for mining coal in an opencast field when they could get it cheaper from the deep-mined industry. However, that is a judgment for those people who are prepared to invest their money in the process.

The Government’s position is clear. We have given an undertaking to ensure that the Coal Board offers to license the deep mines to the private sector, and I am glad that there are a number of cases in which agreements have been reached or the negotiations are well advanced. I much admire all those Opposition Members who are playing a role in facilitating negotiations and encouraging the prospects that those pits might find an alternative life in the private sector.

Several hon. Members rose—

Mr. Heseltine

I cannot give way to three people at once, but the lady must of course have preference.

Ms Joan Walley (Stoke-on-Trent, North)

Will the President tell us exactly why he is not prepared to set up a target for the amount of opencast mining, and why it is that in, north Staffordshire, Trentham and Silverdale have been closed, and we now expect even more opencast mining to go ahead? Why are not environmental issues at the heart of his energy policies?

Mr. Heseltine

The hon. Lady mentions a most important subject, and she must be aware that consultation is now under way on mineral planning guidance 3. It is a matter for my right hon. Friend the Secretary of State for the Environment, but it raises important issues of balancing the environmental and economic arguments that are—superficially at least—in conflict. I have great sympathy with the hon. Lady’s arguments.

Mr. John Cummings (Easington)

The right hon. Gentleman has confused me. I agree with him that successive Governments, Labour and Tory, have invested heavily in the mining industry during the past 30 years. Indeed, with the closure of Easington colliery, tens of millions of pounds of taxpayers’ money have been left in a flooded mine. Is it not obligatory for the President to underpin that £20 billion-worth of taxpayers’ investment by assisting in working a market for the benefit of a British industry, providing British coal?

Mr. Heseltine

The hon. Member has obviously missed the point: that, with the approval of the House, we offered to put more taxpayers’ money behind the production of deep-mined coal if people would come forward and find an additional market for that coal. In some cases, negotiations have been concluded or are proceeding. It would be wrong for me to give artificial assurances that I can sustain economic activities for which there is no market justification.

Mr. Terry Lewis (Worsley)

Will the President explain the logic of taxpayers’ money subsidising the acknowledgedly inefficient Spanish coal industry through the European Union?

Mr. Heseltine

I challenge that logic constantly. My department, as the custodian of much of the trading interest of this country, has the responsibility of constantly challenging the existence of subsidies. The aim is not for us to introduce them into our economy; it is for us to try to eliminate them from the rest of the European Union. That is the task in which we are engaged.

Mr. Paddy Tipping (Sherwood) rose—

Mr. Heseltine

Will the hon. Gentleman forgive me? Madam Speaker, you introduced a ten-minute limit, and I suspect that I am beginning to intrude into rather more speeches than I would wish to do. I must ask hon. Members to allow me get on to the detail of the Bill.
There is one last point that I wish to record about my judgments on the industry. I have not the slightest doubt that our coal industry would be in a much healthier position today if the adjustment which has taken place under every Government, and too late, had taken place in the post-war period of economic expansion, when the diversification of the economy could have proceeded faster and when the highly desirable employees of the coal industry could have found jobs in growth industries of that time.

I will go further. I have little doubt that, if the coal industry had had to face the challenge of the marketplace much earlier, it would have achieved productivity gains which recently, and under pressure, it has begun to achieve, but it would have achieved those productivity gains in time to head off at least part of the dash for gas, and thus it would have secured for itself a larger share of the marketplace than is today realistic.

Mr. Simon Hughes (Southwark and Bermondsey)

If the President is arguing that a secure future for coal required privatisation some time ago, there have been 14 years of his government during which that could have happened. Is not the criticism the same—that a lack of strategic energy policy has been the consistent feature of every year of his Department and its predecessor since 1979? That is why coal is in difficulty; it has never known what place it would have and never been given any security as part of a diverse market supply, as the best resource that we have available.

Mr. Heseltine

That was an interesting intervention by the hon. Member from the Liberal party. I do not pretend to have been shadowing with great care Liberal policy statements for the earlier part of the past decade, but I do not remember, Madam Speaker—perhaps you do, and perhaps I owe the hon. Member an apology—the Liberals making a major demand in all those years that we should privatise the coal industry.

Indeed, if the Liberals had ever come forward with any firm demand at all, especially one that might contain any element of controversy, it would have come as a surprise to me. The Liberals would demand privatisation of the coal industry only in sections of industry, or of the electorate, where there was no coal industry, for fear that otherwise they might offend someone. That is a classic example of the Liberal Democrat party waiting until all the policy options have been closed, and then asking, “Why don’t you do it some other way?”

Mr. Dennis Skinner (Bolsover)

Will the President of the Board of Trade give way?

Mr. Heseltine

I cannot resist.

Mr. Skinner

The right hon. Gentleman has not been following Liberal policy closely enough. I know that he has been ill and has been missing, and that for a long time he was not a Cabinet Minister. However, if he would check the facts, he would find that, in true Liberal Democratic fashion, that party was in favour of privatisation before the general election, but is now against it.

Mr. Heseltine

The hon. Gentleman reveals the sort of inconsistency on doctrine that we have come to expect from the modern Labour party. I congratulate him on having read the documents. It shows that he is preoccupied with “back to basics”, and has learnt to read effectively after all this time.

Mr. Bill Etherington (Sunderland, North)

I took great note of the right hon. Gentleman’s long diatribe against nationalisation. Is he prepared to tell the House how many private companies have made as many gains in productivity as the Coal Board has made over the past two years?

Mr. Heseltine

The hon. Gentleman will know that British Steel is now a world-class company, that British Gas is trading in more than 45 foreign countries, that British Airways is now one of the most successful airlines in the world, and that our electricity, our power and our telecommunications industries are straddling the world in the best interests of Britain.

Why? It is because we privatised the companies that have made that possible. Let us remember that we did that in the teeth of the opposition of the Labour party. If it had had its way, we would still have huge bureaucracies of politicians and civil servants suffocating the entrepreneurial zeal that the Conservative party has let loose on the world market.

Mr. Jack Thompson (Wansbeck)

Will the Secretary of State give way?

Mr. Heseltine

For the last time.

Mr. Thompson

I have followed the right hon. Gentleman’s argument closely for the last few minutes, and he rightly claims that £20 billion has been put into the industry in the period concerned—£8 billion in capital investment. But does he recall that the Conservative party has been in power for the past 15 years, and that he and his predecessors were responsible for policy? Surely policies could have changed over those 15 years so as to accommodate the situation that has developed now.

Mr. Heseltine

If I had to plead guilty to the hon. Gentleman’s accusations, I would have to say that I wish that we had privatised the coal industry in the early 1980s. I must make that clear. However, the implication is that, in doing so, we would have gained the serried support of the Labour party, whereas actually it was encouraging the National Union of Mineworkers in any obdurate political action that it could devise to stop the modernisation of the industry. The coal industry has found itself at the end of the queue. More’s the pity, and, I suspect, more’s the price that the coal industry has paid as a result.

The Bill contains the Government’s proposals for restructuring and privatising British Coal. It sets out the necessary provisions for safeguarding pension rights and concessionary fuel entitlements, and those affected by mining subsidence. It also reflects our determination to ensure that the high safety standards in the industry are maintained or improved in the light of the advice of the Health and Safety Commission.

We believe that a competitive energy market is the best guarantee of secure, diverse and sustainable energy supplies in the forms that people and companies want, and at competitive prices. Electricity and gas privatisation have changed the nature of the energy market from a producer-led to a consumer-led market. We have made it a priority to establish a range of substantial privately owned energy companies free to take strategic decisions within a proper framework of regulation. The time has come for the coal industry to enjoy the same freedom.

We examined the prospects for coal within the energy market very carefully during the coal review. On the basis of all the evidence that was presented to us, we had to conclude that there was every prospect that the market would continue to be difficult.

Despite that, it remains the case that coal accounts for over half of all fuel used for electricity generation. On any calculation, coal will continue to be one of the chief sources of energy for the electricity supply industry in the years ahead. The House will remember that we accepted the key recommendation of the Select Committee and have introduced a subsidy for additional sales for electricity generation from deep mined coal. However, the real test is the rate at which the industry can improve its competitiveness.

The industry, as Opposition Members have said, has made considerable strides in improving productivity over recent years. It is only by building on those gains that the industry will compete effectively in future. Privatisation will best ensure that prospect. Time and again, privatisation has demonstrated the ability of industries which had previously lagged behind their international competitors to catch up and, increasingly to set the pace. That is true whether one looks at the docks, at steel, or at a whole range of public utilities. There is every reason to expect that the coal industry will do the same.

Mr. William O’Brien (Normanton)

Will the President give way?

Mr. Heseltine

If the hon. Gentleman will forgive me, I think that I have given way enough.

Our intention is to offer British Coal’s assets for sale in five regional businesses. Those will be based on Scotland, Wales, the north-east, and two parts of the central coalfield. Potential purchasers will be able to bid for one or more packages, and all bids will be considered on their merits. Our proposals will attract new outside management, and they will give the industry’s existing managers and employees the chance to make proposals to take over their own industry.

The Government have made it clear that we are prepared to offer financial support to help potential management and employee buy-out teams to carry their proposals forward.

Mr. William O’Brien

Will the President of the Board of Trade give way?

Mr. Heseltine

No.

On receiving Royal Assent, the Bill will end immediately the existing statutory restrictions that limit the scale of operations of private sector mines that can be licensed by British Coal. It will provide for a new Coal Authority to carry out those functions of British Coal which would not be appropriate for the private sector.

The new Coal Authority will be based in Nottinghamshire. Its main functions will be licensing of coal mining, owning and granting access to our coal reserves, carrying out British Coal’s responsibilities for the physical legacy of past mining to the extent that they are not taken over by the private sector, and making available mining records and geological information.

The Coal Authority must be fully impartial in carrying out its licensing duties, so it will not, therefore, be allowed itself to participate in commercial mining. British Coal will become a licensee of the Coal Authority prior to privatisation. The Bill contains scheme-making powers, similar to those in previous privatisations, for the transfer of property, rights and liabilities of British Coal to other parties as necessary for the privatisation of the business. The Bill provides for the dissolution of British Coal in due course.

I turn now to the critical issue of safety. The coal industry in the United Kingdom has one of the best safety records in the world. I made it clear as soon as I arrived at the DTI that I would do nothing to prejudice that record. I repeat that pledge today. In 1992, we sought—

Mr. Ronnie Campbell

Will the President give way?

Mr. Heseltine

The hon. Member has had a go.

In 1992, we sought the advice of the Health and Safety Commission on the safety implications of privatisation. The commission’s full and considered advice was received in October. The Government published that advice, and accepted it in full.

The essence of the commission’s advice is that it should continue to be the health and safety regulatory body for the coal industry, that the Health and Safety Executive should be the enforcement authority, and that the framework of legislation must be sufficiently robust to command the continued confidence of the industry and to ensure that health and safety standards are maintained or improved.

Mr. Ronnie Campbell

On that point—

Mr. Heseltine

The commission’s advice is that there is already a comprehensive framework of law governing the mining industry, with a rigorous inspection and enforcement regime. The commission believes that the work that it has been doing since 1983 to modernise that framework will make an important contribution to ensuring that it is adequate to the demands of a privatised industry.

The commission has also taken steps to ensure that the best practice in British Coal’s existing owners’ instructions continues to be applied throughout the industry. The work to achieve that is now largely completed. Draft regulations were laid by my right hon. Friend the Secretary of State for Employment on 1 October last year to give legal status to a number of the most important requirements of British Coal’s safety instructions.

The commission has also recommended that there should continue to be a national rescue service. The commission will consult widely about the way forward. The Bill reflects the advice that we have received from the commission.

Another issue of fundamental concern to employees and former employees of British Coal is pension provision. I am determined that the pension entitlements of those who have given their working lives to the industry, and their dependants, should be fully respected and safeguarded in the process of privatisation. A consultation paper on proposals for British Coal pensions after privatisation was published in September last year. Comments were received from the trustees of the British Coal schemes, from the corporation, from industry unions and from more than 1,000 individuals.

After careful consideration of all the responses to the consultation paper, on 2 December we announced our decisions. All pensioners and deferred pensioners of the mineworkers’ pension scheme and the staff superannuation scheme and all currently contributing members will be able to leave their past service entitlements in the schemes, which, on privatisation, will be closed to new members. New industry-wide pension schemes will be created for employees of British Coal and its subsidiaries who are transferred to employment in successor companies.

The Bill provides for the closed schemes to be given a Government solvency guarantee that will ensure that pensions and deferred pensions are increased annually after privatisation, in line with the retail price index by reference to their level at privatisation. In addition, beneficiaries will be able to benefit from any fund surpluses through pension payment increases over and above RPI levels. The new industry-wide schemes will provide the same package of benefits as the corresponding main scheme. Employees transferred to the new schemes will be given protected person status under the Bill.

The Government believe that those proposals meet in full our commitment to protect pensions under the two existing schemes. The proposals will provide security for pension entitlements earned from service with British Coal and will provide protection for pension entitlements from future service with successor companies. The Bill provides the necessary statutory underpinning for all the- safeguards proposed.

Next, I refer to concessionary fuel entitlements. I am again determined that they should be properly safeguarded. A consultation paper on this subject was published in October. My hon. Friend the Minister for Energy yesterday announced our conclusions. Responsibility for meeting the entitlements of former employees and their dependants will be transferred to the Government. Successor companies will be responsible for the entitlements of British Coal employees who transfer to them.

I believe that our policies for the treatment of pensions and concessionary fuel fully meet the Government’s commitment to safeguard entitlements, and are fair to beneficiaries and to taxpayers. They will provide welcome and essential reassurance to many mining families that their hard-earned entitlements will not be jeopardised.

Mr. Eric Illsley (Barnsley, Central)

Will the right hon. Gentleman give way?

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the right hon. Gentleman give way?

Mr. Heseltine

No. I have given many times.

The Bill addresses the issues of subsidence. There must be proper protection for the rights of householders and others who may be affected by coal-mining subsidence. A large part of the Bill is devoted to establishing a strong regulatory regime for that purpose.

The Coal Authority will take over all British Coal’s existing responsibilities for subsidence, except in clearly defined areas where licensees will be responsible. Householders will therefore be in no doubt against whom to claim. It is an enabling power. We have yet to take final decisions as to the extent of the areas for which licensees will be responsible. Obviously, that will need careful consideration, bearing in mind the interests of the industry, the taxpayer, and, of course, the claimants.

The Coal Authority is given a strong duty to ensure that licensees make proper financial provisions for meeting claims, and the power to require that security, possibly in the form of a trust, is provided.

Mr. Foulkes

Can the President give an assurance that the beneficiaries of concessionary coal will continue to receive coal if that is what they wish, and will not be forced to take cash in lieu?

Mr. Heseltine

The answer is yes. But as happens now, there will be arrangements for a financial exchange of those rights if it is agreed with the individuals concerned. The hon. Gentleman’s point is well made.

After nearly 50 years in the public sector, the coal industry has acquired exactly the same myths as those that used to haunt other nationalised industries. It is commonly suggested that they can never match the efficiency of their competitors; that their future lies only in an endless continuation of taxpayers’ subsidies of one sort or another; that somehow or other they cannot attract significantly worthy management for the task in their control; and that, in the end, only politicians are fit to take the strategic decisions affecting their future. Time and time again, all those myths have been exposed and exploded. In case after case, they are myths.

This Bill will give the coal industry the opportunity to demonstrate that it can compete, it can stand on its own feet, it can attract managers who are the best in the world, and it is fit and able to take control of its destiny. I do not have the slightest doubt that the industry will make good use of that opportunity.

I look forward to the day when private sector coal companies will join other privatised companies as free-standing, competitive enterprises, carrying a new entrepreneurial spirit into the marketplaces of the world. To enable that to happen, we will privatise the coal industry. We will set the industry free to meet the challenges of the marketplace, to innovate, to compete and to win its rightful share in the diversified energy market in the years ahead. That is the Government’s policy, and I commend the Bill to the House.

The speech made by Michael Heseltine, the then Secretary of State for Trade and Industry, in the House of Commons on 9 March 1993.

I beg to move, to leave out from ‘House’ to the end of the Question and to add instead thereof: ‘recognises the importance of the manufacturing base to the wealth creation process in this country; congratulates Her Majesty’s Government on setting in place the basic framework for economic recovery—low inflation, low interest rates, good industrial relations and a low tax regime—supported by measures in the Autumn Statement; applauds Her Majesty’s Government on its success in attracting more inward investment than any of the United Kingdom’s Community partners; acknowledges the widely reported signs of recovery in business confidence; recognises the unparalleled opportunities to help individuals to get back to work; and looks forward with confidence to the prospect of a return to sustained growth.’. It is not possible to overstate the trivialisation of the critical issues that the House is debating to which the hon. Member for Livingston (Mr. Cook) returns time and again. Everybody knows that the trading world—our major customers—has been experiencing a significant and prolonged recession. The political complexion of the Government of our trading partners makes no difference—whether it be America, which has gone through a very difficult period but is now recovering; Germany, which is now heading down; right-wing Governments; or France and Spain, which have considerable economic difficulties. No nation broadly the equivalent of our own has been able to stand apart from that recession process.

As the House knows full well, with a nation such as ours, which has such a high proportion of its gross domestic product exported, it is utterly naive and totally irresponsible to try to give the impression that somehow this country’s economy can stand apart from the impact of that recession across the world.

It is characteristic of the systematic policy of the hon. Member for Livingston of undermining this country that he seeks to parade our problems as uniquely British and uniquely related to the late 1980s. The hon. Gentleman has become one of industry’s greatest salesmen. The problem is that it is the industrial interests of France, Germany, America and Japan that he is selling—and selling at the expense of British industry, British investment, and British jobs.

In the emotional end to his speech, the hon. Gentleman drew our attention to the problems of Leyland DAF. I will apologise to no one for the concern that we share for the problems of Leyland DAF. The hon. Gentleman totally fails to understand that the Dutch and Belgian Governments had to act so quickly because under the rules of receivership in those countries, it is not possible for the receiver to use money that is the product of the business. Instead, the receiver must look for outside funds. In this country, the receiver can use the funds of the business to keep it in existence.

A British bank provided the money that enabled the receiver to continue the activities of those businesses, whereas the hon. Gentleman’s contribution to the position taken by the British banks was to suggest that they had pulled the rug from under Leyland DAF. There he was again, undermining the British banks—just as he undermines British industry.

The most dispiriting aspect of today’s debate is the wording of the Opposition motion. It contains not a word of praise for British companies, and no recognition of a single person out there who is selling, manufacturing, marketing or exporting to help Britain to win. Nothing at all—except the carping, whingeing criticism of the hon. Member for Livingston, whose closest experience of the entrepreneurial society was his role as campaign co-ordinator in 1985, when he tried to sell the Labour party to the British people—and laid the foundations for the second worst defeat in the party’s history. The hon. Gentleman’s capacity to exploit the electorate’s fears in the search of profit for the Labour party is utterly staggering.

There are no credible policies left for the left. I reject absolutely the gross distortion of the 1980s that the Opposition motion parades before the House, because it is not true. It is not true to say that our manufacturing industry is collapsing. Despite the recession, output remains more than one fifth higher than at the bottom of the last recession in 1981. [HON. MEMBERS: “Oh!”] The only fair comparison is to take the bottom of a recession with the bottom of a recession, the top of the peak with the top of the peak.

Investment is more than one third higher, productivity is two thirds higher, and exports are four fifths higher.

Mr. Michael Brown (Brigg and Cleethorpes)

Does my right hon. Friend recall that, in the early 1980s, south Humberside suffered massive structural unemployment from the decline in the fishing and steel industries? Will my right hon. Friend share with the House and with the hon. Member for Livingston (Mr. Cook) his visit to my constituency just 10 days ago, when he performed the topping-out ceremony for the new Kimberly-Clark factory, which has £12 million of DTI finance, and at which 700 people will be newly employed with effect from next year, rising to 2,500? Is it not the case that unemployment in my constituency has fallen from about 6,000 in 1987 to 4,500 and that it is now below the national average? Is not that an example of the achievements of the regeneration of British industry?

Mr. Heseltine

That is what I call speaking for England. [Interruption.] I am certainly not prepared to share my experience of visiting my hon. Friend’s constituency with the hon. Member for Livingston, who would be embarrassed to hear of the success that we saw there.
Much more important, the motion reveals how little the Labour party understands the achievements of the past decade—how little it understands the realities of world competition, or the degree of change that the 1990s will continue to demand. Let us remember—although it is a sickening prospect—the end of the 1970s. Then, this country had a reputation as the sick man of Europe. We had been losing our share of world trade in manufactured goods for 30 years, and probably longer; we were overtaxed, and we were over-nationalised. We had failed to regenerate our small industrial and commercial companies, we had inadequate training, we were under-educating our children and we were gripped in an inflationary spiral.

To make matters worse, we had an appalling industrial relations record. Our managers could not manage: they faced strikes in their own factories, in the factories of their suppliers and in the public services. In the starkest terms, British industry was uncompetitive. That was the inheritance that our party came to deal with in 1979.

Today, all that the hon. Member for Livingston can say, half apologetically, is, “I had my doubts about the record of the last Labour Government.” At least I said what my doubts were when I was on the Back Benches; it took the hon. Gentleman a long time to work out what his were.

Dr. Keith Hampson (Leeds, North-West)

Does my right hon. Friend recall that, at the very end of the 1960s —after a long period of Labour government—Michael Shanks, the guru of the Labour party, published a Penguin book called “The Stagnant Society”? That book bore true testimony to Labour’s period of office.

As my right hon. Friend may have noticed, the hon. Member for Livingston (Mr. Cook) completely ignored the underlying legacy with which British industry was faced: the appalling reforms forced on our school system during that period of Labour Government and the fact that the proportion of 18-year-olds in higher education had fallen under Labour—the only time since the war when it had done so.

Mr. Heseltine

My hon. Friend is absolutely right to point out Labour’s critical failure to improve our education standards.

In 1979, the problems that we faced were deep seated and long term. In large measure, they were a deliberate consequence of the Labour party’s policies. We always made it clear that the Labour party, its policies, its manifestos and its dogma were a disaster; now, even Labour itself has come to recognise that those policies are a disaster. The party leader himself has realised that change must come, simply because his party’s policies have proved to be a disaster. The problem for him is that his party now thinks that he is a disaster as well.

Mr. Malcolm Chisholm (Edinburgh, Leith)

Will the Secretary of State give way?

Mr. Heseltine

No.

How can the hon. Member for Livingston possibly have the nerve to come to the House and lecture us on industrial policy, when the whole House knows that the closest thing to an industrial policy in the Labour party is an apology for the past and a promise that it will not do the same all over again?

Let me set the 1980s in context. I shall begin wall industrial relations. Labour resisted every step of reform as it fought to preserve the privileges of the trade unions which provided its funds. What is the result? The result is that this country has the best industrial relations for 100 years.

Then there is privatisation. There was never a policy more calculated to destroy the motivation and resilience of an industry than the policy of transferring that industry’s ownership to the state. In state hands, industries are subsidised by taxpayers, suffocated by political and bureaucratic control and denied the chance to compete overseas. Their investment programmes are curtailed to meet the public expenditure constraints of the national Government. That was our inheritance—and the greatest single justification for all the criticisms that we have made over the years is the fact that Labour now has not the nerve to say that it will ever introduce nationalisation again.

So unaware is the hon. Member for Livingston of the damage that nationalisation did to this country that he points to my Department’s budget which has been cut. Why has it been cut? Because the losses of the nationalised industries have been turned into the profits of the privatised industries. What are those industries doing? I will tell the House what they are doing.

Mr. Chisholm

Will the Secretary of State give way?

Mr. Heseltine

In 1979—

Hon. Members

Give way.

Mrs. Alice Mahon (Halifax)

On a point of order, Mr. Deputy Speaker. Is it not customary, and polite, for Ministers to give way to Back Benchers?

Mr. Deputy Speaker

It is entirely up to the Member who has the Floor to decide who to give way to.

Mr. Heseltine

I am, as a matter of custom, always polite. I will give way to the hon. Member for Halifax (Mrs. Mahon).

Mrs. Mahon

I thank the right hon. Gentleman. He will remember Mr. Catton, from Eliot Machine Tools in Halifax, who wrote asking whether he could intervene when Customs and Excise—quite wrongly—fined the firm. It is struggling in the present climate.

That happened just after the right hon. Gentleman made his speech about intervening before breakfast, dinner, tea and so forth. Will he now tell us why he wrote back to Mr. Catton saying that he could not possibly intervene? The company has now had to be taken over.

Mr. Heseltine

As I am sure the hon. Lady knows, if Customs and Excise pursue outstanding bills, that must be a matter for them. It would be utterly wrong for Ministers to interfere with the course of their legal processes. [Interruption.] This is a novel development. The Labour party clearly believes that it is right for Ministers to intervene in the course of justice. That is a chill warning of what we might expect if it ever returned to power.

I was speaking of the transformation of the loss-making nationalised industries. In 1979, those industries cost the Exchequer £3 billion, some 1.5 per cent. of gross domestic product. Last year, the privatised industries paid £2 billion in taxes. That is why my Department’s budget has changed so dramatically.

Moreover, those companies—now in the private sector—are out in the world trading place, winning contracts for Britain. In 1982, the United Kingdom produced 14 million tonnes of crude steel and exported 3 million tonnes of finished steel. Last year, we produced 16 million tonnes of crude steel and exported 8 million tonnes of finished steel. We now have a trade surplus of about 3 million tonnes, compared with a deficit in 1982. Not the least reason for that is the fact that British Steel now produces a tonne of steel in under five man hours, compared with over 13 in 1979.

Many of the privatised industries tell a similar success story. We do not hear about that from Labour.

Mr. Chisholm

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I am not going to give way. I am going to tell the House how well the privatised industries are doing. British Gas, in partnership with Agip—[Interruption.]

Mr. Deputy Speaker

Order. The hon. Member for Blyth Valley (Mr. Campbell) must not half get up and shout across the Chamber. [Interruption.] Order. The hon. Gentleman has been in the House a long time.

Mr. Heseltine

That is characteristic of Opposition Members. All that I want to do is to parade before the House the success of British companies. All that the Opposition want to do is to make sure that nobody listens.

Mr. Chisholm

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I am not going to give way. I am going to explain to the House the success of British companies. I do not mind how much the Opposition like or dislike it—I am going to do it.

British Gas, in partnership with Agip, is investing over £4 billion in the next 10 years on the exploration and development of a huge new gas field in Kazakhstan. British Telecom is now one of the world’s foremost telecommunication companies. Last year, it won a contract worth £350 million to run a telecoms network for the New South Wales Government.

Mr. Chisholm

On a point of order, Mr. Speaker. I have been in the House for about a year, and I seek your guidance. When I was elected to this place I thought that I was coming to a debating Chamber. Can you please tell me how I can turn this House into a debating Chamber? I have never seen anything like this throughout the past year.

Mr. Deputy Speaker

The House is in order. We are having a fulsome debate.

Mr. Heseltine

The problem, Mr. Deputy Speaker, is that there have to be two sides to a debate, but the Opposition have no case to make.
Thames Water, as part of a consortium, has won a £448 million Turkish water plant construction contract. Instead of monopolistic Government ownership, in addition to the profits and the contracts, there are now some 9 million individual shareholders—three times the number there were in 1979. The privatisation programme was the second major change that was brought about in the 1980s, to the immense benefit of the national economy.

My responsibilities include one of the last of the nationalised industries. The hon. Member for Livingston referred to the coal review. I have always made it clear to the House that there are no easy solutions to this intractable set of problems.

At the end of January, the Trade and Industry Select Committee produced its report on British energy policy and the market for coal. I pay tribute to the amount of detailed work that the Committee put into its report. The Government will publish their detailed response shortly. [HON. MEMBERS: “When?”] The Select Committee has recognised that the central issue is the market for coal. It makes no sense for British Coal to continue to produce coal that no one wants to buy.

The stark facts are these. Over 30 million tonnes of coal are stocked at the generators. Over 10 million tonnes are stocked at the pithead. There is enough coal for the rest of this year without another tonne being mined. Well over £1 billion of coal is stocked in mountains that get bigger with every shift that is worked.

The Select Committee’s central conclusion is that it should be possible to find a market for an additional 16 million tonnes of deep-mined coal in each of the next five years. It suggests that the Government should require the generators to contract for an additional 5 million tonnes on top of that.

The Select Committee is right to see the size of the market as the central issue. It estimated total electricity demand in England and Wales over the next five years as equivalent to 586 million tonnes of coal. Caminus, the consultants who advised my Department and whose report I have published, puts the figure at only 565 million tonnes. British Coal puts it lower still—at 563 million tonnes. These differences may seem small, but they remove one quarter of the additional market of 80 million tonnes which the Select Committee believes that it has identified.

No one can predict with accuracy the precise scale of a market five years ahead. The Select Committee’s figures are at the very top of the range. The critical question that we face, therefore, is the extent to which private sector companies will contract for coal. Those companies will form their own judgment about the size of the market.

The fuel mix is equally important. I note that the Select Committee had considered carefully the extent to which the market for coal could be increased by interfering with gas or nuclear. I have noted with interest that the Select Committee has come out against that. This has no doubt been greeted with relief by many hon. Members’ constituents whose jobs would be put at risk. I have said it before and I shall say it again: we cannot interfere to protect jobs in one part of the economy without losing jobs and investment elsewhere.

One of the most attractive of the Select Committee proposals to many hon. Members is to restrict electricity supplied from France via the French interconnector. I have looked into that issue extremely carefully. I myself shared with the Select Committee the concern to examine again the extent to which the scope for additional sales of coal rests upon reducing imports of electricity. I have also taken legal advice on the matter, a summary of which I intend to make public.

The position is clear. As I am sure the right hon. Member for Chesterfield (Mr. Benn) will remember, measures to restrict imports of electricity across the interconnector would be contrary to article 30 of the treaty of Rome. It would also put the Government at considerable financial risk in relation to indemnities given at the time of electricity privatisation and reported to the House.

The effect of removing Electricité de France’s non-leviable status, as the Select Committee recommends, would be highly uncertain and may lead to EDF being allowed access to the same premium prices available to Nuclear Electric and financed through the levy. The regional electricity companies would in turn have to be put under an obligation to purchase electricity from EDF. Far from reducing imports from France, this would reinforce their position, and our consumers would end up paying more for their electricity.

I therefore have to tell the House that the proposal by the Select Committee to reduce the amount of electricity coming across the interconnector from the present 6.5 million tonnes of coal equivalent to zero, or anywhere near that, is not an option, but we are still looking at whether anything might be done. To this end, my hon. Friend the Minister for Energy will go to Paris tomorrow to follow up the conversations that we have been conducting with the French Government.

Dr. Michael Clark (Rochford)

Will my right hon. Friend give way?

Mr. Heseltine

No, not at the moment.

I now turn to the suggestion that the additional tonnages that the Select Committee believes that it has identified can be purchased through a subsidy at a total cost of £500 million. This is intended to reflect the difference between British and world prices. It is an interesting approach. The Select Committee suggests that this could be achieved at a cost of no more than £5 per tonne, but I regret that I cannot agree with the Select Committee’s assessment of the likely costs. I am continuing to discuss these matters with the generators.

Finally, I turn to the proposal that we should legislate to require the generators to take coal at a price and in a quantity that they would judge to be against their commercial interests. I have to say, at least to my hon. Friends, that this is not an attractive proposition. I have never hidden my regard for the immense amount of work that the Select Committee undertook, but many intractable problems remain to be resolved. The Government have to weigh all the consequences. I expect to set out the Government’s reply to the Select Committee and to publish the White Paper shortly.

Dr. Michael Clark rose—

Mr. Heseltine

I give way to my hon. Friend.

Dr. Michael Clark

I am grateful to my hon. Friend for giving way. Of course, the detail of the Select Committee report will be debated at another time, but my right hon. Friend referred to the legal position on importing electricity from France—we shall consider that matter later—and I therefore invite him to consider the legal position on our using the French grid system, within the Common Market spirit of good will, to export electricity to Italy and Spain. If that does not happen, the French will have the prerogative to export electricity to us while we are denied the opportunity to export to France and Spain, because the French will wish to keep that market, too.

Mr. Heseltine

My hon. Friend is well informed on such matters. I assure him that my hon. Friend the Minister for Energy will discuss that and a range of other matters with the French Government tomorrow. I also reassure the House that there have already been consultations and discussions with the French on that matter.

Mr. Malcolm Bruce (Gordon)

To take up the point of the hon. Member for Rochford (Dr. Clark), does the President of the Board of Trade accept that nobody suggests that we should terminate the interconnector with France or reduce its use—certainly the Select Committee does not suggest that? The suggestion is that it should be operated as was intended in the first place, as a two-way exchange of electricity, which provides us with a market that would substitute up to 6 million tonnes of coal equivalent a year. Does the right hon. Gentleman accept that he is being asked simply to negotiate free and fair trade rather than allowing the French to have it all their own way?

Mr. Heseltine

I am sure that the hon. Gentleman will wish to consider the point that he is pursuing in the light of the legal advice about the exact position. The contracts are long standing and subject to the law. The hon. Gentleman will want to consider the matter further.

I will go back to what I was saying, dealing with the record of the 1980s—

Mr. Andrew Mackinlay (Thurrock)

Will the right hon. Gentleman give way?

Mr. Heseltine

Is it about coal?

Mr. Mackinlay

No, it is about the fact that the right hon. Gentleman is going backwards.

Mr. Heseltine

No, I shall not give way. I must make progress.

Mr. Derek Enright (Hemsworth) rose—

Mr. Heseltine I must now make progress.

A critical component of a healthy economy is the vibrancy of the small and medium-sized company. Today at last, Britain is generating small and medium-sized businesses. When the Government were elected in 1979, there were 1.75 million of them; today there are 1 million more, which grew and developed in the 1980s. Even during the recession of 1992 about 400,000 business start-ups took place.

Why did that happen? It happened because we changed the tax regime to enable it to happen. Changes in corporation tax, in inheritance tax and in income tax made it pay to invest, to hold on, to take risks and to start businesses. It left discretionary wealth in the hands of people who were prepared to invest it in the enterprise culture. It is from the small and medium-sized company sector of the economy that jobs come.

The hon. Member for Livingston made a great deal of the issue of unemployment—but let us consider the facts. Let me remind him that, over the last economic cycle, in 1979–90, the work force in employment grew by 1.5 million, twice as fast as in the rest of the EC. Even in recession, employment now is almost 1.5 million higher than it was 10 years ago. We still have a higher proportion of the adult population in work than almost any other European country.

Mr. MacKinlay rose—

Mr. Heseltine

Let me put the heart of the matter to the hon. Member for Livingston. Has he any idea of the dilemma that our companies face? When he visits large companies, does he ever even look to see the changes that are there staring him in the face? He can walk round any company and ask any management; he can talk to the people employed there. There will be only one story, one explanation, one option. Fewer people are employed, in the drive for those companies to survive in an ever more competitive marketplace. Fewer people are employed as investment—the very investment that the hon. Gentleman keeps talking about—replaces people’s jobs.

For example, we are producing 300,000 more vehicles a year than we were 10 years ago—but 100,000 fewer people are employed in the industry producing them.

Mrs. Angela Browning (Tiverton)

Although I have been in the House only for a few months, I worked in business for the previous 18 years, 15 of which—during the 1970s and 1980s—I spent selling the products of British manufacturing industry against the competition. I totally support what my right hon. Friend says about the competitiveness of British manufacturing industry. Is he aware that only last November the shadow Chancellor said in The Guardian that in Labour’s view the public sector would be the engine of growth? How out of date can the Labour party get?

Mr. Heseltine

My hon. Friend makes a telling point. Let me add to it: the other day the shadow Chancellor, looking at the success of the privatised utilities, argued that there should be a windfall tax. The Labour party does not have the money to renationalise businesses, so now it wants to tax them into subjection. It is the old story—when Labour Members see success they want to tax it—before breakfast, before lunch, before tea, and before dinner. Then they get up the next day and start taxing it all over again. That is when Labour Members are really happy, destroying success at every turn, every day, all the time.

It is our duty to tell companies that they have our support in the battle to survive, even if that means telling the people the truth about the nature of change and the process of moving from job to job. Let us be clear—

Mr. Mackinlay

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I shall not give way.

The Government strategy is clear.

Mr. Mackinlay

What about the south-east?

Mr. Heseltine

What about a bit of silence, for a minute?

We must set the conditions for growth and pursue competitiveness over the whole range of Government policy. That means low inflation, low interest rates, a competitive pound and support for exports, higher education, research and development and for training.

Now I come to the next great success of the 1980s. The United Kingdom received one third of all inward investment into the EC in 1991. We have 41 per cent. of Japanese inward investment and 36 per cent. of the investment from the United States. It has been estimated that inward investment in 1991–92 created 23,000 jobs and safeguarded 29,000 more. That is success on a massive scale and the Labour party would do well to remember it.

Several Hon. Members rose—

Mr. Heseltine

The hon. Member for Livingston called for an industrial strategy—

Mr. Mackinlay

Will the right hon. Gentleman give way?

Mr. Deputy Speaker

Order. I should be most grateful if the hon. Member for Thurrock (Mr. Mackinlay) would recognise that the Secretary of State is not giving way. [HON. MEMBERS: “He is frit.”] That may be hon. Members’ view, but the Secretary of State is not giving way to the hon. Member for Thurrock.

Mr. Heseltine

The hon. Member for Livingston called for an industrial strategy. What is the cornerstone of that strategy? It is to impose the social chapter of British industry. Spain, under a socialist Government, has 18.3 per cent. unemployment; companies are leaving France to bring jobs here, away from a socialist Government; German industrialists are shifting manufacturing to central Europe; as a result of the Maastricht treaty, Britain has the opportunity to attract inward investment on a growing scale. We now have the chance to restore the manufacturing base that the Labour party did so much to erode over 40 years—and what is Labour’s policy? It is to impose the social chapter.

Jacques Delors says that Britain can be a paradise for Japanese investment. Good. Today, not tomorrow, please. And thank you.

The Labour party says that it has changed; it will never change—because change requires courage, guts and vision. Change requires the will to stand up to vested interests and the Labour party is nothing except the representative of—

Mr. Jimmy Boyce (Rotherham)

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. I am sorry to stop the President of the Board of Trade in full flow, but there is a point of order.

Mr. Boyce

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Is it for me?

Mr. Boyce

Yes, it is. I wonder whether the President of the Board of Trade could—[Interruption.] Would you be kind enough to ask the President of the Board of Trade to lower his voice a couple of octaves because we can hear his ranting through the microphones on this side of the House at the same time as his ranting from the other side of the House?

Mr. Deputy Speaker

Neither the content nor the volume are the responsibility of the Chair.

Mr. George Howarth (Knowsley, North) rose—

Mr. Deputy Speaker Order.

The hon. Member only came into the Chamber a few minutes ago and he has been leaping up and down ever since. He must resume his seat.

Mr. Heseltine

I hope, Mr. Deputy Speaker, that I have not offended you by the scale of my voice. I tend to adjust the volume depending on the penetration of the Opposition that I must make.

I think that the House will wish me to extend a note of sympathy to the hon. Member for Livingston, because the 829disaster scenario to which he clings becomes less credible every day. Survey after survey shows confidence and recovery. The latest surveys by the Confederation of British Industry and the Institute of Directors show that British business knows that the recovery is coming and is under way. The surveys all have the same message—that Britain is moving ahead.

In the three months to January, retail sales were 1.5 per cent. higher than a year earlier. In February, car registrations were 16 per cent. higher than the year earlier. In the fourth quarter of 1992, manufactured exports were at record levels, excluding oil and erratics, and were up 6.5 per cent. on a year earlier, and manufacturing investment was 5.5 per cent. up on the start of the year.

The poor old hon. Member for Livingston is stuck where he was a year ago—he is the only person whose performance has not improved during the past 12 months—when he was talking about health service trusts. The Opposition—led by the hon. Member for Livingston—engaged in a scandalous campaign and exploitation of public concern about the national health service. Yet what has been the Government’s record under their stewardship of the NHS? More than 1 million more patients are being treated.

The hon. Member for Livingston is now in the business of undermining British industry, but let me tell him that British industry is already making a commendable job of undermining him. I hope that the House will finish the job tonight and will support the Government.