Official Report of the Grand Committee on the Energy Bill [H.L.]

HL Deb 15 January 2004 vol 657 cc135-90GC

(First Day)

Thursday, 15 January 2004.

The Committee met at a quarter past three of the clock.

[The Deputy Chairman of Committees (Baroness Gould of Potternewton) in the Chair.]

The Deputy Chairman of Committees (Baroness Could of Potternewton)

Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard. The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.

I should explain what will happen if there is a Division in the Chamber while we are sitting. The Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Title postponed.

Clause 1 agreed to.

Lord Ezra moved Amendment No. 1:

After Clause 1, insert the following new clause—

"OBJECTIVE OF THE NDA

1. (1) The objective of the NDA is based upon general environmental principles that must be followed by any person or body in carrying out its functions under this Act.
2. (2) The general environmental principles are—
   1. (a) the health and safety of people and the environment must be protected from the harmful effects of radiation;
   2. (b) the costs of pollution must be borne by the person or body responsible for causing the pollution; and
   3. (c) that international best practice in radiation protection should be implemented.
3. (3) The NDA shall also ensure—
   1. (a) the creation of nuclear waste should be avoided or minimised;
   2. (b) nuclear waste is concentrated and contained rather than diluted and dispersed throughout the environment;
   3. (c) the most hazardous wastes are prioritised for conditioning to put them into a passively safe state; and
   4. (d) there is no unnecessary transport of waste."

The noble Lord said: Amendment No. 1 is grouped with Amendments Nos. 25 and 27. The amendment would lay down the general environmental conditions in which the Nuclear Decommissioning Authority should operate. It follows the recommendation made by the House of Commons Select Committee on Trade and Industry that there ought to be an over-arching clause to start with.

If ever there were an activity that impinged on the environment, it is the activity proposed for the NDA. It is right that the Bill should begin with the environmental obligations. In their answer to the House of Commons Select Committee, which they have kindly sent to us, the Government indicated that some of the points were mentioned in Clause 9. We agree: they are mentioned in Clause 9, if not as fully as in the new clause. However, we consider that Clause 9 is not the appropriate place, and we have, therefore, suggested an amendment to Clause 9 that would bring the environmental obligations together in the new clause. We regard that as something of great importance, and we would be glad to hear the views of the Committee. I beg to move.

Baroness Carnegy of Lour

I did not speak at Second Reading, as there seemed to be a great many speakers who knew a lot more about the subject than I. However, I would like to say that the noble Lord, Lord Ezra, is right to put the question before the Committee.

Reassuring the public about the safety and environmental aspects of nuclear generation, in particular, needs a higher profile in this country from now on. Awareness of progress on decommissioning and waste disposal and the responsibilities of new agencies in respect of effectiveness and mode of working will help the public to come to terms with the longer-term future, which, as became clear at Second Reading, must include a major expansion of nuclear power. We will come to that matter with other amendments.

The amendment is about rebuilding confidence now. Subsection (2) of the new clause proposed in Amendment No. 1 is perhaps reiterating existing law, which makes that part of the amendment unnecessary. Existing environmental law and international agreements would have to be followed. It seems to me that subsections (1) and (3) of the proposed new clause should perhaps appear in the Bill. I do not know what the Government will say about that, but I would say to the noble Lord, with great respect, that that part of the amendment perhaps is not necessary.

Baroness Miller of Chilthorne Domer

I support my noble friend. In a matter of such importance as setting up a new body such as the NDA, it strengthens the Bill to have an objective clause at the beginning—before even the constitution of the body is discussed—so that it is clear to everyone exactly what the objective is. The phrases in the amendment tabled by my noble friend and me about the "polluter pays" principle and to the effect that international best practice should be followed strike me as particularly important.

Baroness O'Cathain

Just for clarification, I ask the noble Lord, Lord Ezra, a question. Subsection (2)(b) of the new clause proposed in Amendment No. 1 states: (b) the costs of pollution must be borne by the person or body responsible for causing the pollution". That is just the point that the noble Baroness, Lady Miller of Chilthorne Domer, has just spoken about. More than anything else, the NDA is to deal with all the legacy waste, and that is what we are talking about. There are still problems with Ministry of Defence nuclear waste; does the MoD have to pay for it? Will people be able to put their finger on who actually caused the waste? I believe that we are talking about legacies going back some 40 years. Is that right? We might not be able to indicate who they are.

Lord Gray of Contin

I support the amendment. It is very important that the NDA starts with the blessing of everyone connected with the energy industry and, in particular, the general public. For those reasons, it is essential that any doubts or reservations are satisfactorily answered.

Decommissioning is not a new venture. We should not be afraid to defend the record of the United Kingdom Atomic Energy Authority and others. We should learn from the experience gained from its activities. It has been successful. Windscale, Harwell, Winfrith and Dounreay have all carried out decommissioning contracts. Those activities have not been without their problems, but it is to be hoped that the industry has learnt from them.

I make no apology for referring to these matters at this stage because they tie up with the proposed amendment. There must be a plan. Something from which the industry has suffered in the past has been an unnecessarily secretive attitude. Anything that we can do in the legislation being put through Parliament to make the industry more aware of that and to make it act in a more open fashion is obviously an advantage.

Public perception of the nuclear industry is that it produces vast quantities of highly radioactive waste material, which is dangerous and a threat to the environment. The reality is that the industry provides a very small quantity of highly radioactive waste and larger, but still modest, quantities of intermediate and low-level waste. Compared with other industries producing toxic waste, the nuclear industry is not exceptional in technical requirements for managing it. However, it is of paramount importance that the industry—particularly the new NDA —is seen to be open and honest in all that it does.

We must learn from the past. Twenty-five years ago, the nuclear industry enjoyed widespread support throughout the country. But, on a number of occasions, it was found to be less than frank and forthcoming with its own supporters, let alone the general public. It paid dearly for that. Nevertheless that confidence can be regained, but the industry must earn that confidence. I suggest that we should in this legislation spell out everything as clearly as possible. For that reason, I support the new clause.

Clause 1 made a start, but in that clause there are a number of references to Scotland, to which we shall have to return later. But I give advance warning to the Minister that we shall want answers to the relationship between, for example, the Secretary of State, the Secretary of State for Scotland, the First Minister and Scottish Ministers. Who will be the captain of the team? Where does the buck stop?

Reading through the Bill, I find that the relationship between those various Ministers is not clearly defined. It is no use saying that this will be a joint effort or that will be a joint effort. At the end of the day, someone is responsible and someone has got to take responsibility. We shall want it spelt out more clearly who that person is.

Finally, concern has been expressed by some companies who see the possibility of the NDA becoming a competitor with them. Powergen, for example, is a little concerned to ensure that the Government's support for the restructuring of British Energy does not damage BE's competitors. If the NDA is to become a public sector operator of a nuclear power plant, for example, that must be very carefully considered.

I raise those points in general because the new clause is in general terms. I wish to register my support for it.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

We are at the beginning of the Bill and, as the noble Lord, Lord Gray of Contin, said, we need clarity. The amendment raises a number of issues as to what should or should not be in the legislation. In effect, while we all recognise the environmental requirements of the NDA, the new clause more or less amounts to a mission statement laying down the objectives of the NDA and covers the "polluter pays" principle.

It is not appropriate to cover a mission statement in legislation. It will properly be for the NDA itself, once established, to determine how it will frame its objectives in line with legislation. It is also normal practice for public bodies. We are discussing one part of a range of public documents that the NDA will issue on how it intends to discharge its responsibilities. They will include, for example, the NDA strategy, the annual plan. the memoranda of understanding with the regulators and its management statement. Together, they will govern the NDA's relationship with others—for example, with the regulators, with stakeholders and with government, whether at Westminster or Edinburgh.

A clause of this kind would be unusual. I can assure the Committee that issues of safety, security and environmental protection will be central to the NDA's activities. That is encapsulated in Clause 9(1), as the noble Lord, Lord Ezra, indicated.

Equally if not more importantly, everything that is done by the NDA must comply with all regulatory and other statutory requirements which are unaffected by the Bill. In particular, the environment agencies and the Health and Safety Executive have regulatory responsibilities and there could be some confusion if we imposed them in this rather general way on the NDA. In other words, we could be guilty of a lack of clarity if we imposed such responsibilities here rather than gaining in clarity and transparency as the noble Lord, Lord Gray, suggests we should. It is a more practical and effective way of ensuring appropriate action than a statement in the Bill of the general principles suggested in the amendment in relation to safety and environmental outcomes.

On the "polluter pays" principle in the suggested new subsection (2)(b) and the adoption of international best practice in subsection (2)(c), we have the same reservations. On the first, of course, the Government are committed to the "polluter pays" principle. However, in this sector we must recognise that, as a matter of public safety, the Government have often in the past stepped in—and we may need to do so in future— in extremis to ensure nuclear clean-up and, where necessary, meet the associated costs. That is already in practice the case with British Nuclear Fuels, for whose sites the NDA will take financial responsibility, and it could be required in other cases—for example, British Energy—in future. At least in initial circumstances, the NDA or the Government might, therefore, have to meet those costs rather than the prime polluter.

That said, Clause 5(3) and Clause 10(3) provide that the NDA can require private sector operators to meet the costs where it is involved in arranging the discharge of its responsibilities. Wherever possible, the Government and the NDA will seek to ensure that the private sector operator meets the cost of the clean-up, but that will not be appropriate in all circumstances. Indeed, there is an additional complication with MoD sites, as referred to by the noble Baroness, Lady Miller.

Proposed new subsection (2)(c) in the amendment on international best practice adds nothing to the way in which the Bill already envisages that the NDA will operate. It is already under a duty to ensure that persons with control of designated installations, facilities and sites adopt good practice. The NDA will not be able to discharge its functions, including research and providing advice to the Secretary of State, without itself being at the cutting edge of nuclear clean-up. As the public body with responsibility for clean-up, it will need to meet all the international obligations. Government policy is that the UK, in that area as in others, should be at the forefront of international best practice.

Proposed subsection (3) of Amendment No. 1, on the handling of radioactive waste, would constrain by statute what the NDA could do in dealing with radioactive material. The NDA is being set up to provide strategic direction, and to be the expert body on nuclear clean-up. We would expect it to be a major contributor to the development of government policy on such matters. Subsection (3) seems to constrain the NDA at the outset, which would be undesirable, not least in view of the very long-term nature of the NDA's task.

I am therefore not in favour of accepting the very general clause in the amendment. As I said, it restates the obvious in some ways and could lead to a lack of clarity on the duties of the NDA and the regulators under whose monitoring it will operate. I therefore hope that members of the Committee will not pursue it.

3.30 p.m.

Lord Jenkin of Roding

I have listened very carefully to what the Minister said, and have studied the report of the Select Committee in another place. I reiterate the thanks of the noble Lord, Lord Ezra, for our having been able to see the Government's response before it has been published in another place. That is rather exceptional, and I thank the official who organised that.

Having thought about the matter very carefully, I am inclined to come down in favour of the Minister's argument. There are elements in the proposed new clause that would constrain the NDA in what will be a very long-term exercise. It would be perfectly proper for the provisions to go into a mission statement, as the Minister said, which could be changed to meet changing circumstances. However, having studied the amendment and heard the arguments both in its favour and against it, I cannot support it.

What particularly worried me was the use of "avoided" in subsection (3) of the amendment. The NDA will he operating nuclear power stations for a good long while. Inevitably, they will produce more waste, albeit in small quantities. It seems very contradictory to start with the proposition that the NDA is to be constrained so far as possible to avoid any waste, while later in the Bill it is given the power to continue to operate Magnox stations in particular and no doubt other facilities. I have enormous respect for the noble Lord, Lord Ezra, who has huge experience in this field, but I cannot help feeling that the amendment is an attempt to give a wholly predominant place to environmental issues —important though they are—in the decommissioning process, which must be thoroughly cost-effective. With apologies to my noble friends, who indicated that they may be tempted to support such an amendment, I cannot support it.

Baroness Byford

I apologise to the Commit tee that I was a few minutes late in arriving. Further to the comments of my noble friend Lord Jenkin of Boding, I. too, have reservations about the wording of the amendment. That does not mean that I do not follow its aim—together we have debated many Bills on which we have tried to get greater clarification.

Will the Minister respond to recommendation two of the Trade and Industry Select Committee's report, which states: We consider that a clear and unambiguous statement of the overarching principles within which the NDA will work would he a useful addition to the draft Bill. Such a statement would have most force if it were given in the main body of the Bill."? Does he have anything further to say on that?

Baroness Miller of Hendon

Before the noble Lord, Lord Ezra, speaks again, and the Minister replies, it might be appropriate to say that, although I have listened very carefully to what my noble friends have said, the Front Bench supports what the Minister said.

Lord Whitty

The Select Committee in another place argued strongly for a mission statement. Both the noble Lord, Lord Jenkin, and I have seen the inappropriateness of a mission statement as such in the Bill. The amendment moved by the noble Lord, Lord Ezra, comes too close to a mission statement for us to be able to accept it. I am not saying that we would not accept anything in that regard, but, by and large, the Bill already indicates clearly what the NDA should do. The amendment tends to go into wide generalities and to confuse the role of the NDA with that of the regulator.

Lord Ezra

I thank all members of the Committee who have participated in what is obviously a preliminary discussion before we get into the nitty-gritty of the Bill. Some have supported the amendment and others, including the Minister, have expressed reservations.

I will deal particularly with the point made by the noble Baroness, Lady O'Cathain, on the "polluter pays" principle. That principle is enshrined, and we are committed to it. Obviously, from time to time, there must be exceptions, but most previous nuclear waste problems have arisen from operations in public ownership, where the polluter is the public body. The case of British Energy is the one big exception, and there has been legislation to deal with it. The principle must apply but, like all major principles, circumstances sometimes mean that we must depart from it.

On the general argument about whether we should have such a clause at the start of the Bill, I still feel that we should. If the NDA is going to issue a mission statement, so be it—it would be excellent, and all companies should do that. In view of the environmentally sensitive nature of its operations, we should have a say right at the start to remind the NDA of its environmental obligations.

A number of important points were made on the detail of the amendment. I would be happy to think again about it and consider whether, in some amended form, it can he brought forward once more at a later stage. However, I feel that any points that are made regarding the environment should be at the start of the Bill and not tucked away in Clause 9, as is done at the moment.

Having said all that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [Constitution of NDA]:

Lord Jenkin of Roding moved Amendment No. 2:

Page 2, line 34. leave out from "Where" to end of line 39 and insert "there are executive members in addition to the chief executive, the total number of executive members shall not be greater than three"

The noble Lord said: I added my name at the last moment to Amendments Nos. 2 and 3, which are taken together, and I will start by offering the apologies of my noble friend Lord Dixon-Smith, who had hoped to be here to speak to the amendments himself. Sadly, he is not well, and he asked me to move these in his place.

They can be dealt with quite briefly. The subsections in Clause 2 which refer to the setting up and the constitution of the NDA are, for the most part, perfectly reasonable and straightforward, until we come to the question of the relationship between the executive directors and the non-executive directors. I shall have occasion during the debates on the Bill to refer back to the House of Lords Select Committee, five years ago, on which I had the honour to serve, and from which an astonishing amount has been carried forward, even though it seems to have taken an incorrigibly long time.

One of the things that we recognised then, in recommending that there should be a commission to take this forward, was that the commission should have among its directors a wide range of skills and experience to serve. Although we did not attempt to make any suggestions as between executive and non-executive directors, it was implicit in our recommendations that the majority of the directors of the commission—which had a different name from this but was the same sort of animal—would have been non-executive directors. That was on the grounds that that is what such an operation calls for.

I entirely agree that it would be inappropriate that we should try to constrain the NDA according to "Higgs principles". That would not be right. At the same time, I also agree that there should be a majority of non-executive directors. However, the Bill goes further and attempts first of all to impose surprising limits on the constitution of the board.

The point of Amendment No. 2 is that the Bill gives the Government a wholly unnecessary power to make various changes. If ever there was a question of wanting to set up something that would have statutory authority from the beginning, it should be in the Bill. Subsection (7) says that the Secretary of State may make a direction to the NDA, and that, the number of the executive members in addition to the chief executive —

1. (a) is not less than the minimum set by the direction; and
2. (b) does not exclude the maximum so set;

and the direction must not set a maximum of more than three".

That is astonishingly convoluted. In place of that, the amendment tabled by my noble friend Lord Dixon-Smith would simply remove everything after "Where" and insert: there are executive members in addition to the chief executive, the total number of executive members shall not be greater than three".

What could be clearer than that? That fulfils exactly the intention of the provision. In the interests of simplicity, I strongly recommend that the words in the amendment should replace subsection (7).

The Committee may have a little difficulty finding Schedule 1; it is on page 130. It provides for quorums and states what will constitute a majority. It will require there to be a majority of the non-executive directors, which I support, but, again, it is a convoluted provision. The whole thing could be much simpler if, after "unless", we inserted the words: it is taken by a simple majority of the membership".

Other requirements could then make it clear that it must be a majority of the non-executive members as well.

Let me say at once that I support that provision. Having chaired a company and sat on a board with a large number of executive directors. I am well aware of the danger of the executives, who, after all, spend their entire career and whole life doing such work, having an influence that it is difficult for non-executive directors to override. So I do not quarrel with the intention; I merely suggest that it could be more simply expressed and that the wording of Amendments Nos. 2 and 3 would achieve that.

I hope that my noble friend Lord Dixon-Smith, who has experience in these matters, would have made much the same speech. I beg to move.

3.45 p.m.

Baroness Miller of Hendon

The words in the schedule are somewhat complicated, and I thank my noble friend for trying to make it simple, using the words tabled by my noble friend Lord Dixon-Smith who, regrettably, is in hospital today and cannot be with us.

Obviously, we do not vote in Grand Committee —we know the rules—and it is always difficult at the beginning of the Bill for a Minister to accept what we say, but it would be so easy for him to accept the amendment, which is simple and only makes this convoluted provision somewhat easier to understand. I hope that he will. I recall from the days when I was involved in marketing that I was taught this silly phrase, which we used to have to write on the board: KISS, which stands for "Keep it simple, stupid". The amendment is one of the easiest ways for us to improve the Bill in a simple way that in no way affects its meaning.

Lord Ezra

I support the amendment moved by the noble Lord, Lord Jenkin, for the reasons stated by the noble Baroness, Lady Miller. This paragraph is a convoluted way of saying, "Whatever path you take, you end up with three". We ought to stipulate three from the outset and be done with it. There is enough that is complicated in the Bill without complicating the simple issue of whether there are one, two or three executive members.

Baroness Carnegy of Lour

It is interesting that it is proposed that, before appointing the chairman and non-executive members, the Secretary of State—presumably, the Secretary of State for Trade and Industry—must consult Scottish Ministers. He must also do so before proposing the appointment of the chief executive. But there is no requirement, so far as I can see, for anyone to consult Scottish Ministers on the appointment of executive members. Why is that?

That matters because the Government have clearly recognised the crucial importance for Scotland of the body and of its ability to work closely with Scottish local authorities and the Scottish Parliament, remembering that planning and environment are devolved matters. The Government have taken account of that; they have taken much account of Scottish matters in the Bill. I commend them for that. The working between the two Parliaments is evolving well. The Bill refers to Scottish Ministers—which probably means the Minister responsible for the environment, although it may be the First Minister. The Scottish Executive must be happy that there is a balance which includes people who understand the circumstances of Scotland. That will give the people of Scotland confidence that the body, when operating in a non-devolved matter, understands the Scottish situation. It would be interesting if the Minister could give a reason for that. There may be a very good one. I do not know.

Baroness O'Cathain

I support the amendments, particularly the first one. As has been pointed out, the clause uses crazy language and is very convoluted. The second amendment is particularly important.

I have studied the text on page 130. It could give rise to a situation where several of the non-executive members of the NDA were abroad, ill, involved in traffic jams and so on and were not at a meeting. That would mean that the majority at the meeting could well turn out to be executive members. That would support the point made by my noble friend Lord Jenkin that the executive members would have to be calmed down a bit, although that is probably not the right word.

The problem is that sometimes there are strains between the non-executive directors and executive directors, and if there is a majority of non-executive directors, it should obviously be the non-executive directors who sway the decision. If it happened that for some reason two or three were missing, it could well be the other way round. So I commend Amendment No. 3.

Lord Davies of Oldham

I am grateful for the way in which the amendments have been moved. I express our wishes that the noble Lord, Lord Dixon-Smith, will soon be back with us to help in our deliberations on the Bill.

In producing what has been referred to as a convoluted section of the clause, the Government are concerned that the NDA should be constituted in a way that is fit for purpose throughout its life, which is expected to be many decades. So there is a case for flexibility, given the perspective that it could last for a long time.

On the issue of membership, the Committee will recognise that the key principle we wish to establish—which is set out in Clause 2(8)—is that the non-executives will at all times be in the majority. That will enable the non-executive members effectively to challenge the executive management team and ensure that the NDA becomes a champion of openness and transparency.

Within that framework, we consider that flexibility on the number of executive members is sensible. While we may all agree that three executive members ought to be the norm, in the early years the NDA will face a substantial challenge in establishing itself, and the systems and processes need to be in place for it to carry out its functions effectively. Our view is that, in those circumstances, there could be a case for four executive members to deal with the full range of responsibilities of the NDA at board level in the early period.

Over the longer term, the need for a large executive presence on the board may indeed be expected to decline. But while we want to leave individual appointments of executive members to the non-executives as a matter of the good use of public funds, it is entirely proper that the Secretary of State should retain an ability to determine the overall size of the board within the limits set out in subsection (1).

I should say to the noble Baroness, Lady Carnegy. with regard to consultation that the non-executives will make these decisions on the board, not the Secretary of State. We have got proper consultation with Scottish Ministers when the Secretary of State is setting up the board, but the executive will be chosen by the non-executive members. It would not therefore be appropriate to write into the Bill a necessity for consultation with Scottish Ministers because the UK Minister will not at that point be directly involved in the choice of executive members.

As to the question of the NDA's procedures, we have limited the statutory requirements to the minimum with the focus on ensuring that non-executives are able to control the strategic direction of the NDA, which I believe is the burden of the remarks of all noble Lords who spoke on the point. Provisions with regard to the NDA's rules of procedure are to be found in Schedule 1, a matter to which the noble Lord, Lord Jenkins, referred.

Lord Jenkin of Roding

May I make one thing absolutely clear at the outset of the Committee? I have no "s" on the end of my name.

Lord Davies of Oldham

That was a sibilant slip, I am afraid, after all the years we have known each other. I do have an "s" on the end of my name and therefore such a slip is not possible in that respect. I apologise to the noble Lord. It certainly will not happen again.

Subject to the requirement that such decisions must be taken when a majority of those present are non-executives, we wish the NDA to have the freedom to regulate its own proceedings. The principle is in place and the board must be expected to regulate its own proceedings. For example, there may be decisions on which the NDA decides that more than a simple majority would be appropriate because of the nature of the decision and the desire to demonstrate the extent to which there is support for such a decision on the board.

As we all recognise, the NDA will last for very many years. We do not wish to impose unnecessary statutory constraints at the outset which might subsequently limit its ability to adapt to circumstances in the future. I recognise that noble Lords opposite have sought to clarify what is perhaps a little more convoluted in the measure than their amendments would indicate, but they will recognise that the terms of the Bill offer a degree of flexibility that we think appropriate for a body that is to last for a long time.

Lord Ezra

Can the noble Lord clarify a point he made a little earlier? He pressed the case for flexibility and said that there may be occasions when it might be desirable to have up to four executive directors. However, my reading of Clause 2(7) is that the Secretary of State will be required to issue a direction with a maximum set at no more than three executives. How does "four" come into it?

Lord Davies of Oldham

Clause 2(7) refers to the non-executive directors, but not to the chief executive, who would be the fourth member.

Lord Ezra

I thought that we were talking about the executive directors.

Lord Davies of Oldham

We are talking about the group representing the management and executive of the NDA, which could comprise four members in total.

Lord Jenkin of Roding

I have listened carefully to what the Minister has said. Who could he more appropriate than a Deputy Chief Whip to talk about the management of a body such as this? He is good at managing all kinds of groups.

It would help if the Minister could give me some idea of how many directors will be appointed in the first instance. I recognise that he has made a case for flexibility, and there may be something in that, but Ministers must have some idea of the size of the initial hoard. I shall carrying on speaking while they consult on this. I do not want to revert to my earlier arguments because they will not be able to spend any money until the Bill has received its Second Reading in another place. However, I am sure that a great deal of thought is being put into identifying people. I certainly hope that that is the case because, if this body is to be up and running by April of next year, they will have to move fast.

Before we leave this matter, it would be helpful if we could be given an idea of the number of people Ministers are considering for appointment.

Lord Davies of Oldham

We estimate that the total size of the body in the first instance will be between nine and 11 people. That will guarantee that the non-executives are in the majority. However, it will be some months before we shall consider moving towards a full complement. Further, it should be recognised that, over the many decades during which the body will establish its procedures and win the confidence of the wider public and all others concerned with its operations, while it might remain the same size, it may be that the number of executives reduces to the minimum. However. the reason why we have asked for flexibility here is that it may be necessary, during the early stages, to have a slightly greater representation.

4 p.m.

Lord Jenkin of Boding

I find that figure surprisingly low. The management will need a range of experience and expertise to play their part. It would not in the least distress me if it turned out that the number was three or four more than that. I know that it is fashionable to cut Cabinets and shadow Cabinets down to size, but we are dealing here with an operational body that will take some extremely important decisions. The whole thrust of the Bill is that the NDA itself will be in charge of its proceedings, subject to directives issued, from time to time, by the Minister. It would seem desirable that there should be enough people on it to ensure a broad range of experience.

If the Ministers present are thinking of the numbers that the noble Lord, Lord Davies of Oldham, suggested, I would have to agree that there must be some flexibility. If they find, as I suspect that they might, that, as the work of the authority proceeds, they would like to have more, they should have the power to do that. That is an argument of some force.

I am less convinced on the question of a majority. We cannot vote on it now, but I dislike the idea of a board deciding, off its own bat, that, for a particular kind of decision, it will rig the ballot, as it were, and say that a majority will not he enough. It would be an odd thing for a company to do, and I am not sure that it would not lay itself open to proceedings in a court if it did, unless there were a clear power in the articles of association to do so. I would have thought that a majority—including, of course, a majority of the non-executive directors, which is what the schedule provides for—would he sufficient. However, I shall consider carefully what the Minister said and decide whether we should come back to the matter. In the mean time, I beg leave to withdraw the amendment.

Clause 2 agreed to.

Schedule 1 [The Nuclear Decommissioning Authority]:

[Amendment No. 3 not moved.]

Schedule 1 agreed to.

Clause 3 [Designated responsibilities]:

Baroness Miller of Chilthorne Domer moved Amendment No. 4:

Page 3, line 9. after "of' insert "redundant radioactive material and waste at"

The noble Baroness said: Amendment No. 4 and the two grouped with it would bring more clarity to the expression "cleaning-up", which we find in subsection (1)(c). It is defined in Clause 34, which deals with the general interpretation of Chapter 1 of Part 1. Clause 34 says: 'cleaning-up' and 'decommissioning', in relation to a site or installation, includes— (a) the treatment, storage, transportation and disposal of hazardous material".

That definition of cleaning-up is not satisfactory. Cleaning up the site means removing the contaminant or radioactive material. It does not necessarily mean, at that stage, the treatment, storage, transportation or disposal of the hazardous material. Cleaning up a site without reference to that might simply mean removing the litter that blows around.

Given the importance of what we are talking about in terms of clean-up of the site, simply to refer to everything that happens after the waste is removed as constituting clean-up is unsatisfactory. I suggest, subject to an explanation from the Minister of his understanding of clean-up, that we would want a much firmer definition. I have not suggested one now, because I am interested to hear his definition. However, it should cover the removal from the site of the hazardous waste. I beg to move.

Lord Jenkin of Roding

I am minded to support the noble Baroness in the amendment. However, I wonder whether she has quite recognised the extent of its effect. One issue that has exercised many minds in the area—again I come hack to our Select Committee five years ago—was that of fissile material that was no longer required and should be declared as waste. There has been a lot of literature about that. I shall start with the Select Committee report, my quotation starting from paragraph 7.47 and coming under the conclusions on reprocessing, plutonium and Mox—mixed oxide—fuels. We said: Our concern is with the waste management implications of reprocessing". Our next paragraph stated: The one current use for separated civil plutonium is in the fabrication of MOX fuel. In the much longer term it may be possible to use plutonium in fast breeder reactors. In the United Kingdom our stocks of separated plutonium far exceed the amounts we could use as MOX in our own reactors or that we might wish to keep as a strategic resource for a future fast reactor programme. We have no reactors which can use MOX at present". I am not sure whether that is still true, but it was then. We continued: The amount required as the initial charge in the core of a 1 GW(e) fast reactor is about 4 tonnes; our stocks of civil plutonium could reach over 100 tonnes by 2010". The figure of 100 tonnes has been very widely cited.

The recommendation that we made on that was that the authorities should determine the strategic need for plutonium, and that the balance should then be regarded as waste. When I read the amendment and looked at its implications, it seemed that we should certainly include the handling of redundant plutonium.

The most recent report that we have had on the matter came from RWMAC, the Radioactive Waste Management Advisory Committee, which reported last March. At paragraph 4.12, it made its most important recommendation, which was at the heart of its press release at the time. It read: One important aspect of radioactive waste management, on which RWMAC has already commented, is that policy should he robust to changes in radioactive materials declared as wastes. There are suggestions in Managing Radioactive Waste Safely "— a government paper— that some quantities of materials currently not classified as waste may, in the future, become waste". That is exactly what the Select Committee of this House had recognised would happen.

RWMAC continued: The evolution of the RWI"— the radioactive waste inventory— into a Radioactive Materials Inventory (RMI) would provide a means of identifying all existing and potential liabilities that have significant management costs". One does not need to be an expert in nuclear science to recognise that, if we are to have some tens of tonnes of plutonium declared as waste, the significance of that in dealing with high-level waste is considerable.

The noble Baroness, perhaps inadvertently, seems to have touched on a very important issue. I would not regard it as in the least improper that the NDA should have the responsibility. We will come later to the question of its responsibility for the long-term disposing of waste, but it is right that it should regard what one might call redundant fuel as part of the problem to which it ought to address itself.

I cannot forbear from ending with a short story. There is widespread apprehension—it has been frequently cited by the green movement—that plutonium is the most toxic substance known to man. I was due to speak in a debate at the Cambridge Union—it was long after I ceased to be a student; I was asked to go back as a visiting speaker—to discuss the nuclear industry. I got myself briefed by the UKAEA, and I said, "There is sure to be the question of plutonium". The representative of the UKAEA said, "You are probably right", and handed me a small package, which I opened. There was a small plastic cylinder in it. He told me what it was and said that I should take it with me, and that it would be a good defence.

Sure enough, some young man got up and said that plutonium was the most dangerous substance known to man. I simply turned to him, said, "Catch", and threw the cylinder across to him. He caught it and I said, "That is a heart pacemaker powered by plutonium oxide. May I have it back please?".

The substances are well known, and scientists who handle them well understand them, but I wish that the Government could tell us whether they are to be within the remit of the NDA. I hope that they are; it seems to me that it would have to deal with them. I am not sure whether the noble Baroness, Lady Miller of Chilthorne Domer, quite realised what she was getting us into.

Lord Jopling

I want to add to my noble friend's story. Coming from a constituency in another place that was very close to Sellafield in the Lake District, I remember a public inquiry where, at the end, the inspector said that it was perfectly safe to sit on plutonium, providing that one had a stout pair of jeans.

Lord Whitty

I am not sure that that entirely conforms to best health and safety practice. Throwing a lump of plutonium across the Room might not either; I trust that we shall not see any of that behaviour in Committee.

There is a distinction between the amendment and what the noble Lord, Lord Jenkin, is pointing out. On both counts, the Bill as it stands gives the NDA the responsibility for being able to implement clean-up. Far from making that more effective, the amendments would make it more restricted.

As the definition in Clause 34(1) makes clear, the NDA is required to ensure that all hazardous material and other matter and substances that need to be dealt with or removed to make the site or installation suitable to be used for other purposes is cleaned up. In other words, the NDA is not restricted to nuclear or radioactive waste. Clearly there is a long-running saga about the definition of spent plutonium. Were it to be the policy of the NDA to deal with spent fuel as well as waste, that would fall under the designation as well. Those issues of definition fall into the radioactive waste review, which is currently being considered by Defra. But the first of the two amendments to the clause would restrict clean-up to radioactive material and waste; it would exclude, for example, hazardous chemical material, which the NDA is responsible for removing. In this part of the Bill "clean-up" means clean-up, not simply clean-up of radioactive waste. It would be restrictive to adopt Amendment No. 19 and, in most respects, Amendment No. 20. That is the opposite of what the noble Baroness seeks, but it would be the effect of these amendments.

4.15 p.m.

Baroness Miller of Chilthorne Domer

I thank all noble Lords who have spoken in this short exchange, particularly the noble Lord, Lord Jenkin of Roding. He is quite right; I had not thought about the issue of spent plutonium when tabling the amendment, although I am aware that it is a thorny issue.

Lord Jenkin of Roding

If I may interrupt the noble Baroness, it is not spent. It could be used, but there is more of it than we would ever need.

Baroness Miller of Chilthorne Domer

I bow to the noble Lord's much greater expertise in this subject. But it is effectively spent at the moment—that is my understanding of the definition. An amendment has not been tabled to explore this issue, so I am glad that it could be discussed in debating my amendment.

I thank the Minister for his explanation, but I am still not entirely happy that the definition of "cleaning-up" in Clause 34 is entirely satisfactory. It hinges on whether the site is made, suitable to be used for other purposes". One could do half a job and leave the site suitable for a few purposes, such as storing waste indefinitely, or one might seek to make it suitable to be used for any other purposes, in which case it would have to be entirely decontaminated. The definition is very loose. I look forward to discussing the issue with other noble Lords and seeking their opinions. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 5 not moved.]

Baroness Miller of Hendon moved Amendment No. 6:

Page 3, line 15, at end insert— through the employment whenever reasonably possible of appropriately qualified and experienced persons having regard to the safety, health and environmental expertise of those persons

The noble Baroness said: In moving Amendment No. 6, which relates to Clause 3(1), I shall speak also to Amendment No. 28, which relates to Clause 9(2). Both amendments deal with the same subject—safety and environmental performance. Those two factors must be the NDA's top and overriding priority.

Strangely, however, the Bill does not require the NDA to have due regard to the importance of a strong safety culture among companies competing for contracts or individuals seeking senior managerial positions—a safety culture no less strong than that which currently exists at BNFL.

There is already a highly developed safety culture in the nuclear industry. Over the past 20 to 30 years, discharges from BNFL's Sellafield plant have been reduced to about one-thousandth of their 1970s peak. As my noble friend Lord Jenkin of Roding pointed out in his speech at Second Reading, BNFL has never really been credited for that achievement in the media and elsewhere. We must eliminate concerns, real or imagined, that the introduction of competition to the United Kingdom decommissioning and clean-up market will compromise the current excellent safety culture that is already there.

Sometimes the Government respond to the amendments that I table—the noble Lord, Lord Whiny, has never done so because I have never been on the opposite side of the Dispatch Box from him—with the argument that they are "too prescriptive". On the topic of nuclear safety and environmental factors affecting the nuclear industry, it is impossible to be too prescriptive.

The amendments underline the importance that should be given to the safety, health and environmental record of contractor companies and individuals who will be potential senior managers competing for work under and on behalf of the NDA.

I shall now speak to Amendment No. 28. The NDA will not carry out decommissioning work itself. It will farm out the work to what are called and management and operation contractors. Clause 9(2)(b) requires the NDA to, promote effective competition for contracts to provide it with the services it must secure in order to discharge its responsibilities".

Subsection (2)(d) goes on to command the NDA to, secure value for money".

Those two directives are not necessarily compatible with safety, health or environmental considerations. The temptation could be to go for the cheapest offer. It might be argued by the NDA, especially a cash-strapped NDA, that, on the face of it, that would answer the criterion relating to competition, on the one hand, and that relating to value for money, on the other.

My late grandmother, who always had extraordinarily clever sayings, used to say that to buy cheap was to buy dear. Cheapness is not a criterion that we want to see applied to nuclear decommissioning. We want skill, expertise and a proven track record, especially as it is conceivable that bids for contracts may come from overseas from companies of which we know little. Even in the case of home-grown companies, if I may describe them that way, we need only look at the abysmal safety record of the railways, where contracts have been placed in the hands of companies that have proved not to be up to the mark. Defective rail maintenance can cost several lives; that is bad enough. Poorly done nuclear clean-up can cost lives for generations, cause terrible illnesses and pollute tracts of the country for generations to come.

I am not standing here to promote the interests of BNFL, but it is right, in this case, to point out the world-beating reputation of that company. I would be failing if I did not say that. We are talking about companies that can compete, and we want to make sure that they have the same standards.

BNFL is to be subjected to outside competition, and it tells me that it welcomes that. I guess that it would say that, anyway. It is important that the competition is required to provide no less a standard than we have at present. That applies not only to the companies competing for the work but also to the individuals who carry out the management of the work at senior levels. Skill, expertise and experience are the essential ingredients of effective competition, as is value for money, which the amendment requires to be fully taken into account, when the NDA grants contracts. It is for that reason that the amendment is essential. I beg to move.

Lord Jenkin of Roding

I shall not add much to what my noble friend said. She made the case strongly. I find it surprising that nowhere in the Bill is there a stated recognition that, in the process of what is rather inelegantly called "contractualisation", the qualities of the contracting companies with regard to safety and environmental protection should be regarded as an immensely important criterion for selection.

As my noble friend said, there is clear evidence in the industry that mishandling can have condign effects. Mercifully, there have been astonishingly few such results because of the safety culture that the industry not only in this country but elsewhere, with the possible exception of Chernobyl, has always demonstrated. I remember the row that followed the Three Mile Island incident in America. Senator Teddy Kennedy campaigned against the industry and there was a rash of bumper stickers in New York that pointed out that more lives were lost at Chappaquiddick than at Three Mile Island, which happens to be true.

One consequence follows from this debate on which the Minister may be able to comment. We now have two major organisations that have extensive experience in the field of decommissioning: not only BNFL, which has been mentioned, but the United Kingdom Atomic Energy Authority, which was mentioned at Second Reading by the noble Lord, Lord Maclennan of Rogart. I would be failing in my duty if I did not draw to Ministers' attention the fact that both companies feel that, whereas neither of them is opposed to the concept of competitive tendering for contracts—although they will receive the initial contracts because they are the only people on the spot—they should be regarded as the suppliers of choice until other competitors have shown that they have not only the same skills and ability to deliver competitively on cost but the same culture in their staff, which has meant that the nuclear industry in this country has had such an astoundingly good safety record. That ought to be written into the Bill, which is what the amendments would do.

I also point out that my story about BNFL's reduction of pollutants from Sellafield and the fact that that was owing to the extreme skills of its operators prompted an outside body to ask whether that should apply to others as well. I hope that if the Minister cannot accept the amendments, he will be able to say that he will give them favourable consideration.

Lord Ezra

I, too, support the amendments so ably moved by the noble Baroness, Lady Miller of Hendon. They enter into the spirit of Amendment No. 1, which I moved earlier, which some members of the Committee supported but some did not. The whole point of the culture of safety, health and environmental expertise in the nuclear industry, which the noble Lord, Lord Jenkin, rightly stressed, cannot be overemphasised. As so much of the work will be undertaken under contract, it is vital that when awarding contracts, the NDA should have regard to those matters. Obviously, it will, but, as the noble Baroness, Lady Miller, said, that should be written into the Bill.

Baroness Byford

I shall briefly support my noble friend's amendments. I know that in other fields, the countries entering the EU in May are being given time to come up to our standards. Something that concerns us all is that in this field it is crucial that standards are the same wherever in the world a company comes from. We need the formal assurance from the Minister that in this field there will be no levity. I also hope that he will accept my noble friend's amendments, because they are well supported around the Committee and crucial for the Bill. I am anxious, especially for the environment, because there is to be a phase-in period for those countries in some other forms of industry. I should like the Minister to clarify that those easier rules will not apply here.

4.30 p.m.

Baroness Carnegy of Lour

Further to my noble friend's remarks, have the Government taken into account the impact of European competition and employment law, which will come into play when the new countries enter the European Union? Not long ago, at a nuclear industry conference, I heard a description of what had gone wrong in the old Soviet Union. The Soviet navy was in charge of looking after nuclear waste, somewhere not very far from the sea, and it was leaking into the sea. Of course nobody understood what could happen as a result. There could be tricky incidents if experts from new European Union states—or indeed any country—did not have quite enough experience.

It does not take just the top person in an organisation to make a mistake; mistakes can be made quite low down. During the war I was a laboratory assistant working with nuclear materials, including plutonium. I shall not trouble members of the Committee with stories of what that was like. Not even laboratory assistants were left out of security arrangements; it was extremely important that everybody understood them. It is crucial that the Bill makes certain that account is taken of those matters. Will the Government consider the implications of the new countries joining the European Union and the European law that will apply?

Lord Davies of Oldham

We understand the importance of the points made by several members of the Committee on the crucial issue of the health and safety standards to be employed in such a significant industry. We agree that the NDA must ensure that it has in place the necessary expertise, now and in the future, so that it can decommission successfully, which we recognise is always challenging.

Clause 9(2) recognises that. It places on the NDA a duty to ensure the maintenance and development of a skilled workforce able to undertake clean-up. But that is a means to an end. The NDA's role will be to set the strategic direction for clean-up across the whole United Kingdom; to manage the framework for delivering it; and to ensure that the necessary conditions are in place for it to be carried out successfully. Clause 9(1) specifies the general duties of the NDA when carrying out its functions as: having particular regard to each of the following—

1. (a) relevant Government policy;
2. (b) the need to safeguard the environment;
3. (c) the need to protect persons from risks to their health and safety from activities involving the use, treatment, storage, transportation or disposal of hazardous material; and
4. (d) the need to preserve nuclear security".

The NDA is therefore working within a broad framework that takes on board the enormously important safety issues that the noble Baroness, Lady Miller of Hendon, and other members of the Committee emphasised. It is not just a matter of employing the right sort of people, although that is an important element. To achieve the step-change in nuclear clean-up that we seek, we must not detract from the NDA's focus on delivering on clean-up.

Amendment No. 6 relates to the decommissioning of NDA facilities and suggests that the NDA could in some way manage that more directly. That is simply not the case. Decommissioning facilities will be operated on behalf of the NDA in the same way as nuclear installations. Employees operating and decommissioning NDA facilities will be employed by site operators, with which the NDA will contract, directly or indirectly, to a site management contractor. The facility category to which we refer is designed to capture installations that are not on a licensed site but that ultimately would need to be decommissioned. There are none of those at present but the Bill is designed to establish the NDA over many decades to come. We cannot be confident that there would be no such installations in future.

I accept entirely the representations about the culture that the NDA must establish. As I emphasised, that is part of the remit under Clause 9(1). It is indeed one of the essential tests for anyone involved in the nuclear clean-up. But it is for the regulators, not the NDA, to decide on a contractor's suitability in that regard. It is a very important decision. I hear what the noble Baroness says about new players coming on stream in due course. She suggested that some might not have a track record that meets our specifications.

Those responsible for certain nuclear power stations in the old Soviet bloc must certainly fall short of the specifications. We had an anecdotal moment earlier; let me give another anecdote. I remember standing on the shores of the Barents Sea in sub-zero temperatures of a magnitude that I never want to experience again. I was already a chilled soul when the person next to me pointed out six passing Soviet submarines—this is many years ago when the Soviet Union posed a Cold War threat—and said, "They are not the problem; they arc the safe ones. It is those that are docked permanently in Murmansk that will cause the future problems". We have subsequently realised the truth of that remark.

Let me say in response to the noble Lord, Lord Jenkin, that of course the Government want to continue to see UKEA and BNFL management improve the efficiency of their organisations and their ability to clean up. We are working with them to help them create a viable contractor capability in preparation for any future site management competitions run by the NDA. We expect them to be in a strong position in any bidding. But the rationale for competition is straightforward: as I am sure all members of the Committee will accept, we are looking for the best organisation for the job. We seek the organisation that can deliver the NDA's clean-up objectives and meet its further objectives of promoting, ensuring the maintenance and development of a skilled workforce and securing value for money.

In response to the noble Baroness, Lady Miller of Hendon, we all recognise that shortcuts can be taken if the sole criterion is value for money. That might put health and safety standards at risk. Value for money in this context includes the effective operation of health and safety standards. Contractors will be evaluated by the regulators. This is not contractualisation for the sake of it; it is using competition to drive up performance. Performance is not just about ensuring the least cost. The least cost represents best value, which includes all the concepts to which the noble Baroness drew attention. Best value does not mean competitors diminishing employees' terms and conditions as a means of driving down costs. If BNFL and UKEA can prove their ability to deliver best value, they will be well placed to compete for the management of sites, as the noble Lord, Lord Jenkin, said they would almost certainly be.

The NDA will want as much comfort as possible that any contractor that it is minded to appoint will be acceptable to the regulators. That is addressed in the memorandum of understanding that will be put in place between the NDA and the regulator, and that has been agreed in generic terms as a draft document. But the regulators will not want to he drawn into detailed consideration of the merits of individual bidders, which might compromise their independence in sanctioning the organisational change that would be necessary on the appointment of a new contractor.

In response to the anxieties that members expressed clearly, we subscribe to the idea that one cannot talk about value for money, effective competition and the exercise of accepting contractors, unless one builds into the concept the necessary role of the NDA and the regulators in ensuring that all the considerations to which the noble Baroness drew attention are part of the concept of value for money. I hope that, on that basis, the noble Baroness, Lady Miller of Hendon, will feel able to withdraw her amendment.

Baroness Miller of Hendon

I hope that the Minister will not take it the wrong way when I thank everyone who supported me. I took comfort in the support given by the noble Lords, Lord Jenkin and Lord Ezra, who are experts in this field. I hope that the Minister will not be offended, as I do not suggest that he is not an expert, but the two noble Lords who supported me are the stars in this debate. They have gone through all the points very carefully.

The Minister spoke a lot about the general duties in Clause 9(1), but they are the duties of the NDA. My two simple amendments concern the duties of the contractors, which is a separate issue. That is an essential distinction. The Minister said that it was a matter for the regulators. I cannot believe that the regulators are involved in the employment of senior management of the companies given this business to do. If that is so, the whole issue is absolutely ridiculous. I was making the point that if the NDA puts the contract out to tender, requiring all those other conditions, the companies that win the contracts will be dealing with the employment of the senior management who will run the operation. It is not the Minister's fault that he did not understand my point; obviously I was not clear enough.

I re-emphasise that that is what my amendment is about; it is extraordinarily important. Although I shall do as the Minister said and withdraw Amendment No. 6 at this stage, we do not feel that his answer was adequate given the seriousness of the issue. The Minister has not told the Committee what are his objections to our two simple amendments other than that they are not necessary. He prayed in aid matters that are nothing to do with the amendment but which relate to the NDA. We were talking about the contractors. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Lord Lea of Crondall moved Amendment No. 7:

Page 3, line 15, at end insert— ( ) In addition, the NDA may, under the direction of the Secretary of State, take responsibility for planning and developing nuclear facilities.

The noble Lord said: Amendment No. 7 states that, the NDA may, under the direction of the Secretary of State, take responsibility for planning and developing nuclear facilities",

That may appear to be well outside the purposes of the Bill, but I shall endeavour to explain why the issues are very pertinent. Some people may say that surely the NDA is there because we are now firmly in the era of closing down the industry. I wish to turn that hypothesis on its head.

On the question of the time-scale, in order to send a signal during the first three or four years of the operational effect of this Bill—which is probably before this or any future government would envisage making firm decisions on new build—it would be useful to acknowledge the possible close identity between many of these sites. They will be within the purview of the NDA, given its responsibilities for decommissioning and waste management, and thus are sites that would certainly be considered if there were to be new nuclear build.

From an engineering point of view, I can imagine that, in planning a site to deal with waste, for example, one would need to be clear about whether to allow for the possibility that new nuclear build might be considered on that site. One does not want to regret making a decision because it is not possible to plan for a possible future use. The famous precept, "Keep the nuclear option open", is brought down to earth in this amendment. In time, we may have to use these sites for new nuclear build. We do not want the NDA to encounter any difficulty when planning for that, and we should avoid it becoming a course that we cannot openly acknowledge.

Members of the Committee have pointed out that, for those of us who see an early need to plan for new nuclear capacity, the NDA would already have earned valuable credibility through its decommissioning role, in the running of safe sites and in managing waste. The noble Lords, Lord Ezra, Lord Jenkin, and others touched on that philosophy.

We are separating the issue of building new nuclear facilities from nuclear decommissioning. I would have made that point in relation to Amendment No. 5, but it was not moved. New nuclear build is not to be one of the principal functions of the NDA; it is a bridge too far. People would say that the Government had changed their whole policy on nuclear power. The Government are not ready to do that in this Bill. Since the question does not arise, the Minister is not in a position to answer it. That is why it cannot be a principal function for the NDA. Nor, politically, is the country ready for it.

Making provision for future nuclear build would be more acceptable if the terminology of this amendment was used. We should refer to "nuclear facilities" rather than "nuclear power stations", the term used in Amendment No. 5. That would offer more flexibility as regards the type of installation.

I close by making a central point. It would not be surprising to find that the NDA needs to protect certain sites which might later be required for new build. It would be short-sighted to waste the opportunity provided by accepting what is proposed in my amendment and precluding the possibility of protecting those sites.

I hope that my noble friend will take the opportunity to think aloud—perhaps I may put it that way—about the connection between the present, the immediate future and the future. I am sure that he will not want to suggest any change of present government policy, but it would be useful to hear what can be said at this stage in an open forum. We could then reflect on what has been said before Report. I beg to move.

Lord Maclennan of Rogart

I welcome the opportunity that this amendment gives to probe, a little, the Government's intention regarding site use during the period when decommissioning is going ahead.

In the case that I know best, Dounreay, it is anticipated that it will be a period of many decades. Although the present clear priority is to return it to a greenfield site, it can be envisaged that during the course of the work that is being done, and done with considerable distinction, attributes of the site will become positively attractive to others who wish to learn from the experience, in which Great Britain is giving a lead. That would be a circumstance which would give rise to questions as to whether it would be open, under the clause as drafted, to the decommissioning agency to entertain contracts on the site for the benefit of decommissioning work being done by other countries. Experimental work, which might flow from cognate developments in other countries, might usefully commercially be entertained in these circumstances. It would not necessarily go as far as building a new nuclear reactor, but would simply exploit the technology that is a by-product of the complex technological developments that are in train.

We should avoid tunnel vision in making the provision for this new agency. Failure to recognise the possibilities of the exploitation of the technology would seem to me to be a great mistake. I hope that this amendment will commend itself in spirit to the Government and that they will use this opportunity of exploring further whether such ancillary work could reasonably be undertaken. It would be in the national interest if it could.

Baroness O'Cathain

I support the amendment on the basis that it very clearly shows the big void in this Energy Bill, which deals solely with clean up—well, not solely, but one-third of it is clean-up—of nuclear facilities. It does not nod in the direction of any further new build, nor in the direction of the security and safety of our supplies of electricity generation in the years to come. This was dealt with very thoroughly at Second Reading. Equally thoroughly, the Minister dismissed it and said it was no part of the Bill. The way in which the noble Lords, Lord Lea of Crondall and Lord Maclennan, have brought the issue into the Bill is very interesting. Immediately I can see that the Minister will say that one cannot possibly put a national decommissioning authority into a position of commissioning.

But there is a real case—I shall deal with it in my later amendments —for preserving the techniques, knowledge and know-how that exist in this country at this stage, and that will be increased by the operations of the NDA, and then asking what we will do in the future. That is one way of looking at the issue in strategic terms. I do not know whether the NDA is the right agency or whether an arm of the NDA could be given that specific responsibility. On that basis, if we are not going to get exposure of the issue, I certainly support the amendment.

Lord Jordan

I, too, want to speak in favour of the sense of this amendment and to follow the theme discussed by the noble Baroness, Lady O'Cathain. The expertise, experience and facilities that inevitably will reside in the NDA mean that such a body should not by statute be confined, limited or even prohibited from making a contribution if and when the Government's policy on nuclear energy changes.

The Government's present energy policy, as contained in the Bill, relies on their predictions—dare—I say, hopes—concerning what renewables will be produced and their ability to import adequate supplies of gas. The security of this country's energy supply cannot rest solely on that well-meant optimism. Government must be in a position to react quickly to unfavourable developments. The oil crisis of the 1970s is within everyone's experience. Such a crisis could loom on the horizon. Should that happen, this amendment proposes to the Government an option, not a requirement. If the Government believe that the intent is worth taking on, perhaps they will find ways of producing more suitable wording that is to their own liking.

Baroness Carnegy of Lour

The noble Lord, Lord Jordan, has made a very telling point. I absolutely agree with him. I am sorry that we did not debate Amendment No. 5 because a number of those points could have been made then. Not only does technological understanding and skill need to be preserved, so does public goodwill. The noble Lord who used to represent the area around Dounreay power station said that it did not necessarily mean that there might be a rebuild on that site. He said that with great care. I do not know the public opinion around Dounreay—I am sure that he does—but I get the impression that, in general, there is a lot of goodwill in areas where there have been well-run state nuclear power stations. It is very important that we do not lose that reservoir that now exists.

If only the Government could take a deep breath and have the courage to put such a provision into the Bill, it would begin to build a bridge between where we are now and where we know we must be—probably not far after the next election. We will not have to wait long for a change in point of view, whoever is elected the next time around. It would be very helpful if people could realise that the process going on through this Bill is preparatory to future development—that might even be on the sites of existing power stations. I am not aware of how the public feel, as I do not live near a power station.

5 p.m.

Lord Maclennan of Rogart

I am extremely grateful to the noble Baroness for allowing me to clarify the point that I made. I was not seeking to say that I ruled out any idea of there being a nuclear power station built on such a site. At this stage, that might not be reasonably foreseeable. What is reasonably foreseeable is that there will be work done at the site that would be of great commercial value to others and ought to be exploitable under the Bill.

Baroness Carnegy of Lour

I am grateful to the noble Lord. He has given me the confidence to make this point as strongly as I can. I believe that it is the case in other parts of Scotland that a good deal of goodwill exists, as well as a great deal of understanding. We must not lose that by saying that all this is about clean-up and greenfield sites, ending up with a great rural scene of farming and sheep and all the rest of it. Certainly, Scotland needs a great deal more than that. I am hopeful that the Government might—maybe not now—reflect on that and perhaps, after a bit of deep breathing, put something in the Bill like this.

Lord Jenkin of Roding

I am sure that the noble Lord, Lord Whitty, will remember—because it was not very long ago—that at Second Reading apart from one or two speakers, there emerged a clear cross-party consensus—I exclude the Liberal Democrat party—that we would need to go to a nuclear rebuild at some stage. But it is widely recognised outside that it is impractical to imagine, however fast the development of renewable sources comes, that one will be able to develop those, keep the lights on and fulfil our Kyoto obligations. I do not want to repeat what was said at Second Reading.

However, I should like to endorse the point made by the noble Lords, Lord Lea and Lord Jordan, that there is a difference to be drawn between embarking on such a programme, on the one hand—he was not here to move his amendment, but I think that the amendment tabled by my noble friend Lord Peyton might have been open to that interpretation—and, on the other hand, of actually making certain that what we are in shorthand calling "the nuclear option" remains viable.

I was looking for the origin of the phrase "the nuclear option", and I turned to the White Paper. Of course, it is not there. There are two paragraphs. I think that it would be as well to put that on the record. It is a clear statement of where the Government stand on the issue. Paragraph 4.67 states: As chapter 1 makes clear, our priority is to strengthen the contribution that energy efficiency and renewable energy sources make to meeting our carbon commitment. We believe that such ambitious progress is achievable, but uncertainties remain". That is the point made very eloquently by the noble Lord, Lord Jordan. It continues: While nuclear power is currently an important source of carbon free electricity, the current economics of nuclear power make it an unattractive option for new generating capacity". Pausing there, I am not too sure that that is right because it leaves out of account the question of what future designs of nuclear stations are likely to be. The paragraph continues: there are also important issues for nuclear waste to be resolved". That is entirely right. I sense that the Government's strategy may well be, although they have been understandably cautious, to move ahead with nuclear waste in order to put themselves into a position to go back to the public and to say, "We solved that. We now need nuclear power stations".

The paragraph goes on to state: This white paper does not contain proposals for building new nuclear power stations. However, we do not rule out the possibility that at some point in the future new nuclear build might be necessary if we are to meet our carbon targets". That is what it says, followed by a short paragraph about what the procedure would be to do that. As I said at Second Reading, it seems astonishing that this is the first major energy Bill following the milestone White Paper—itmay have been criticised; I criticised it myself—but it marked an effort on the part of the Government to set out their energy policy. But in this Bill, the first major piece of legislation, there is nothing that would lend credibility to that paragraph.

We have tabled a number of amendments on this. My noble friend Lady O'Cathain mentioned our amendments that seek to ensure that there will be an adequate number of trained and skilled people available, along with amendments to ensure that that research will continue. Points have been made about existing nuclear sites where all the evidence suggests a much higher level of local public support for nuclear rebuild because those people are familiar with the concept and they look forward to the resultant job opportunities in a continuing nuclear industry. But all this requires a clear view. Are we making the option credible, or are we simply leaving it? With respect, I say to the Ministers opposite that we have the impression that they are just leaving it.

Indeed, evidence given to the Select Committee in another place was at pains to stress that nothing in the Bill deals with new nuclear build. As I said at Second Reading, I find that quite incredible. If this option itself is to become credible, then it needs work.

If we faced an oil crisis of the kind we suffered in 1973, then of course it is not possible to build a new nuclear power station in that kind of time-scale. It probably takes between 15 and 20 years. But the forward outlook of energy generation and supply in this country—looking 15 to 25 years ahead—reflects an enormous fund of outside expert opinion that we cannot do the three things we want—keep the lights on, meet our Kyoto obligations and satisfy energy needs—without nuclear build.

We cannot let the Bill leave this House without writing in some provision either on the lines proposed in the amendment of the noble Lord, Lord Lea, or a more specific proposal on training, graduate staff and continuing research, about which my noble friend Lady O'Cathain will speak later. At present, Ministers appear to take some pride in saying that there is nothing, and that is not good enough.

We shall continue to return to this point. Either that paragraph in the White Paper meant something or it did not. I should say that it has been interpreted in a House of Commons Library paper to refer to renewables. It has simply been rewritten with no mention of the nuclear option. It states only that there are no plans to build any more nuclear power stations. That is how the paragraph is being interpreted.

However, that is not the Government's view. They say that we may have to come to that, but that they are not making any provision. As I have said, that is not good enough.

Lord Whitty

I expected a wide-ranging debate on this. Two levels of discussion have emerged as a result of the amendment tabled by my noble friend Lord Lea. One concerns energy strategy as a whole and the viability or otherwise of the energy White Paper, while the second concerns the role of the NDA.

I know that the noble Lord, Lord Jenkin, and my noble friends Lord Lea and Lord Jordan, do not entirely agree on the viability of the energy White Paper and the calculations made in it, which depend on delivery on the renewables front and, even more crucially, on energy efficiency measures, and various other aspects of policy outlined in it. However, it is the Government's view that if those measures can be delivered, then the figures will add up without requiring any new nuclear component. That is not to say that we should close any contingency arrangements either because we fail on our other provisions or because of a more cataclysmic event, as suggested by my noble friend Lord Jordan. We would reopen the issue should there be a need for nuclear build. But the strategy and, therefore, the assumptions on which current policy and the legislation are based is that the energy White Paper provisions will form the basis of our energy policy over the coming years.

We are concerned about our electricity supply and therefore we must keep open the possibility that we might need to return to the nuclear option within the terms of the energy White Paper. A decision on nuclear power generation may well need to be made in the future, but that is not the focus of the activities of the NDA. Our White Paper, Managing our Nuclear Legacy, published before the energy White Paper, spells that out. The focus of the NDA—or the LMA, as it was known then—is to concentrate exclusively on decommissioning and clean-up; that is, to deal with the consequences of our nuclear past whether or not we create new nuclear waste at some point down the line by reverting to the nuclear option as part of a future energy policy.

The role of the NDA is to deal with nuclear waste, decommissioning and clean-up. It is not to provide the facility whereby, even if we needed to do so, we could build new nuclear capacity. In those circumstances that would be the responsibility of other organisations, not the NDA.

I agree with the secondary or tertiary point made by my noble friend Lord Lea: some of the sites that the NDA will deal with over rather a long term should not be prevented from providing nuclear facilities at some future time. No doubt that will be one of the considerations resulting from government direction to the NDA which might have to be taken into account. However, the NDA itself will not be a part of the planning, commissioning or delivery activities surrounding future nuclear build.

To an extent I agree with the point made by the noble Lord, Lord Maclennan. The expertise that the NDA will rightly be expected to acquire in order to deal with decommissioning and handling hazardous material needs to be recognised. It may be that certain sites which it is managing for decommissioning purposes might be appropriate for other facilities directed at enhancing a nuclear capability. Indeed, reference is made in Clause 9 to the need to preserve and enhance the skills relating to the areas for which the NDA is to be responsible. That means that some of the NDA sites which will need to continue to be licensed for some considerable time for use as storage or disposal might also be used for other purposes—including for research purposes undertaken by the NDA or other bodies. A decision would need to be made on that on a case-by-case basis, but nothing in this Bill rules that out.

Clause 10(2)(d), (e) and (f) will allow the NDA to use facilities for research and other purposes to generate funds—or to allow others so to use them. For example, the nuclear science and technology service of BNFL could in its present capacity he located on a site managed under the NDA and use that site for future research. There is nothing in the Bill to prevent that; indeed, under the requirements of Clauses 9 and 10, the NDA would be obliged to help to facilitate it.

So nothing prevents the NDA from facilitating those activities nor, should the Government revert to the nuclear option, from using those sites for nuclear facility purposes—whether power station or other. But the NDA will not be carrying out those activities, as the noble Lord's amendment suggests and as many others have suggested. Under the amendment, the NDA would be a much broader body than envisaged in the Bill—it would be closer to a nuclear power commission, which was envisaged in some contributions to previous energy policy debates, rather than a facility that specialises in the difficult and substantial area of decommissioning and dealing with the storage of nuclear waste.

That distinction needs to be made, even by those who favour a significant nuclear component in future. It will be needed partly for purely operational and focus purposes and partly for the purpose referred to by the noble Baronesses, Lady Carnegy and Lady O'Cathain, which is to ensure public confidence. One reason why the Government are not disposed to maintain a significant nuclear component over the long term is precisely because we have not worked out how to deal with long-term waste and do not have public confidence in our ability to do so. If the same body was dealing with waste under the Bill as was responsible for creating new waste, public confidence in the objectivity, cost-effectiveness and priorities of the NDA would be undermined.

So even for those who want a bigger nuclear slice in our energy policy, it is not sensible to give the NDA responsibilities beyond those in the Bill. The noble Lord's amendment would provide that, or at least the ability to provide that.

5.15 p.m.

Baroness Carnegy of Lour

I understand what the Minister said, but is there anything to prevent members of the Committee tabling an amendment of this sort to another part of the Bill—not relating it to the NDA? The Long Title includes the words, to make provision relating to the civil nuclear industry". That seems to cover everything. Is there anything to prevent our tabling an amendment in a different context?

Lord Whitty

The noble Baroness has a wider experience of Committees of the House of Lords even than I do, so she will know that when a Long Title has a fairly wide definition, members of the Committee are prone to table all sorts of amendments. If she is giving us forewarning that such an amendment may appear later in our proceedings, I do not have the power to resist it procedurally. I may resist it in argument, but I suspect we may return to this argument later, if I understand her correctly.

Lord Lea of Crondall

I am gratified by the range and quality of the contributions made in response to the amendment. Things have been said from all parts of the Room that suggest that we seek to keep within the Bill's scope but to spell out the consequences of the philosophy, which is to keep the option open. Especially with the NDA, we want to do nothing to close off any contingency arrangement—I think that was my noble friend's phrase. Another phrase that he used about which I am not so sure was that nothing prevented the NDA from doing X, Y and Z. That is one reason for the amendment: the vires of the Bill must be pellucidly not preventing that.

What I think my noble friend referred to as the tertiary subsidiary point at the centre of the matter is the locus of the NDA on the sites. It will be the principal responsible agency on the site. It may be that someone else should be doing X, Y or Z, but the NDA will nevertheless have broad responsibility on those sites, will it not?

I am not making another speech, so I had better conclude. We are not looking for any change of policy in the Bill from that of the White Paper—not because some of us do not seek that; self-evidently we do, but we recognise that that is not the Bill's purpose. I hope that we have given each other food for thought about what can be done before Report. On that hopeful note, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Jenkin of Roding moved Amendment No. 8:

Page 3, line 24, at end insert "after consultation with representatives of the industry, the NDA itself and the person in charge of the site where the installations or facility are located"

The noble Lord said: This is another amendment in the name of my noble friend Lord Dixon-Smith. It concerns a comparatively small question: whether there should be consultation with various people in the industry and the NDA before the Minister makes a direction. I cannot believe that that would not happen. That, no doubt, is the answer in the Minister's brief, in which case why not write that into the Bill? I beg to move.

Lord Davies of Oldham

I can give the noble Lord the assurance that on most occasions consultation would take place for all the best reasons. However, we are anxious that the amendment would introduce a mandatory requirement to consult. We can foresee the possibility of the kind of emergency where swift—or immediate—action would be necessary and it would be inappropriate to require the NDA to engage in consultation procedures.

The noble Lord will recognise that subsection (4) already requires the Secretary of State to secure the consent of the person with control unless that person is a public body, as defined in paragraphs (a) to (d) of the subsection. Beyond the legitimate interest of the NDA and the person with control of a particular installation or site, it is unclear what role representatives of the industry would play—or, indeed, who those people might be.

It would certainly not be possible to envisage who should be consulted when the NDA may have to move with considerable dispatch. So, although we recognise the intention behind the amendment—which is to tease out the extent to which we are committed to consultation—to make consultation mandatory would create difficulty in certain circumstances. On that basis, I ask the noble Lord to withdraw the amendment.

Lord Jenkin of Roding

I am not sure that I am convinced but at this stage I shall withdraw the amendment. We shall study what the noble Lord said and he should not be surprised if we decide to return to the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Ezra moved Amendment No. 8A

Page 3, line 32, at end insert ", provided that person has taken the necessary steps to ensure that decommissioning work and liabilities are funded through the establishment and maintenance of a fully financed segregated fund for that purpose"

The noble Lord said: A number of amendments have been grouped with this one. Many members of the Committee who are present today were involved in discussions on legislation affecting British Energy. We had to face up to the problem that, for various reasons, that company had been unable to build up a fund to meet its nuclear commitments. Therefore, those substantial commitments, totalling no less than £3.3 billion, had to be taken over by the Government. The powerful argument that the Government advanced was that we had to keep those facilities running in the wider interest of the nation.

None the less, none of us wants that situation to recur and the purpose of the amendment is to avoid that. Clause 3(4)(e) refers to, a person who has consented to the giving of the direction", to deal with that nuclear waste—that person presumably being an organisation, body or company outside the public sector. The purpose of the amendment is therefore to make clear that that person will have set aside sufficient funds to deal with that operation so that it does not have to be taken over by a public organisation. That is its simple purpose. It is a highly desirable objective that should be stated.

In no way should it he implied in the Bill that any future operator in the private nuclear sector should feel that his liability to deal with nuclear waste would automatically be taken over by the public sector. We need a safeguard to ensure that the British Energy situation which we had to face recently does not recur. I beg to move.

Baroness Miller of Hendon

With the permission of the Committee and for its convenience—I am sure that the noble Lord, Lord Ezra, will not mind—we have noted that Amendment No. 8A deals with the segregated fund, although in his wording it says a "fully" segregated fund. We have tabled two amendments, Amendments Nos. 16 and 64, which deal with the segregated fund. It may be for the convenience of the Committee if I speak to our two amendments at this stage. It would be silly to repeat the debate, even though the word "fully" does not appear in our amendments.

Clause 5(2) deals with income received by the NDA from directions which it gives to anyone in relation to a nuclear installation site or facility in which it does not have a financial responsibility under the financial provisions of Clause 21. Subsection (2) enables the NDA to make what are described as, payments to the Secretary of State". Subsection (3) also deals with charges to be imposed by the NDA. There is no indication in the Explanatory Notes about what those charges may be for, but that is not important at this stage.

The clause entitles the NDA to charge someone for something. Clause 22 relates to expenditure and receipts by the NDA and includes a provision for the Secretary of State to make grants to the NDA. In both cases, the Bill requires the NDA to pay its income—other, of course, than the grants from the Secretary of State—to either the Secretary of State or the Consolidated Fund.

The Consolidated Fund could be described as being a euphemism for the bottomless pit or black hole operated by the Treasury, into which money somehow disappears, never to re-emerge in exactly the same form. Money paid into the Consolidated Fund is totally controlled by the Treasury, and there is no certainty that it will be available for the purpose for which it was intended if the Treasury has other calls upon it. Your Lordships may recall the pre-privatisation days when British Telecom, with its monopoly of telephone services, was a kind of milch cow for the Treasury, earning vast amounts annually but starved of funds for expansion of the service and new technology, and when there were waiting lists of weeks or months for a new line.

The work of the NDA is too important, too vital, to leave its funding in the hands of the Treasury in that way. The Treasury may have a different set of priorities for the use of the money. It is too important to allow the Treasury to take the money with one hand, to give it back with the other and, with a classic piece of creative accounting, to claim credit for all the money that it is providing—in other words, funding the NDA partially with its own money. Let me draw the Committee's attention to a few facts. BNFL has pointed out, among what it calls "key messages" in its recent brief, that: The creation of NDA proposed by this bill will lead to a transfer of assets and liabilities and a subsequent restructuring of BNFL's balance sheet". I do not doubt that more liabilities than assets will have to be transferred, but we must be sure that those assets are used to meet the liabilities.

There is also the question of the cost of the new Civil Nuclear Constabulary. We still await a clear commitment from the Government that they will fund the transition costs of the current non-statutory police force. Those costs are estimated at about £1 million. The new civil constabulary is estimated to cost between £30 and £40 million a year, which is around 30 per cent more than at present. That money has to come from somewhere. Incidentally, BNFL thinks that the Treasury may be tempted to merge the new nuclear constabulary with the MoD force, possibly to save on costs. Although I am not debating that, it is clear that it is the Treasury and not the NDA that will have a large hand in policy making.

The Bill provides for the work of the NDA to be funded directly by the Government in the form of an annual grant. Over the years, the nuclear industry has set aside significant sums to discharge its nuclear liabilities. Nirex claims that a considerable proportion of those assets were provided for long-term waste management, as distinct from decommissioning and clean-up costs. Nirex then points out that funds for long-term clear-up must not be diverted into short-term waste management. Those funds must be ring-fenced and kept clearly separate from the £48 billion of liabilities that the NDA must address in the short term.

Depending on what the Minister may say—I am not sure which of the Ministers I am addressing on this point—I shall be pleased to hear from him by letter if he cannot deal with my points today. Later, either I or my colleagues in the other place may have to table a further amendment on the matter.

We are not talking about trivial sums here. Nirex is responsible for up to almost 14 per cent of the discounted BNFL liabilities. Those amount in total to between £700 million and £1.24 billion. While that marks a slight digression from the two amendments I am now addressing, I seek to make the point concerning control of the NDA's own income, generated by its own activities. My amendments would provide for that net income to go into a ring-fenced fund, still controlled by the Secretary of State, but freed from the grasp of the Treasury. Thus, the Treasury would be relieved of the great temptation to use that money for some purpose for which it is not intended. I hope that the Treasury would like that.

5.30 p.m.

Lord Jenkin of Roding

Perhaps I may add a few words to what my noble friend said. I preface by saying that, as a former Treasury Minister, I did not entirely recognise what my noble friend had to say. The Consolidated Fund is not a bottomless pit and it is very much subject to parliamentary control. However, the main point that my noble friend sought to make is right.

There is a long history of this. The Select Committee report contains words of wisdom about this. Paragraph 6.41 states: We have sympathy with the proposal for a segregated fund". The point had been made to us, and that was our recommendation.

The argument has gone on since then. It was dealt with at some length by the Select Committee in another place towards the end of last year. I would not dream of reading out every paragraph, but it is interesting to look at the evidence on which it based its recommendation that there should be a segregated fund. It is attached to the report in the same volume.

The committee heard evidence from BNFL, which stated: Given the restricted funds available to the NDA and the fact that it has no power to borrow, it seems very likely that BNFL or any other M&O"— that is management and operating— contractor would be looking for NDA commitments to be backed by government comfort". That is the point of the exercise. Very large sums of money will be dispersed over the years to the contractors carrying out the work of decommissioning. It is clear that the Government recognise—this is their argument for the separate account—that there needs to be, as it were, words of comfort; there needs to be an assurance that when the money is required to be spent it will be there.

There is some suggestion in the report that perhaps in the light of the Government's assurances the objections of BNFL and the objections made on behalf of the industry by the Nuclear Industry Association—several paragraphs in the report refer to this—had been set at rest. That is not entirely the case. The current position is that the Government have said that they would prefer an account, whereas the industry still would prefer a segregated fund, the subject of the amendment tabled by the noble Lord, Lord Ezra. But, in relation to the account and how it will be funded, the Government have yet to finalise and publish the mechanism for determining the initial and subsequent annual contributions.

In those circumstances, the people who will look to the NDA to pay their contracting charges will require to be assured that as they incur the expenditure so the NDA will pay the bill. That is not yet the position. As my noble friend said, if there was a segregated fund, where the money was clearly there, there would be greater reassurance.

No doubt the present Chancellor of the Exchequer is even now wrestling with the problem—the results of which will appear in the next budget survey—of how he will meet his priorities for public spending on, for instance, health and education. If there turns out to be a hole, it would not be difficult to say that perhaps some of the nuclear decommissioning can be deferred for a while. In the mean time, what would the contractors do? If there were a fund, as has been powerfully argued by a number of bodies, including the Select Committee in another place, that assurance would be there.

That is the case made by the noble Lord, Lord Ezra. He quoted the example of British Energy, but that rather caught up with the Government at short notice, and they had to deal with the issue under considerable difficulties when we were debating the Bill last year.

We are looking at a long-term programme. It has had some years in preparation and build-up, with the original White Paper and the draft Bill that the committee considered in pre-legislative scrutiny. With the evidence that one has, there can be no excuse for the Government being caught short. It is the presence of a segregated fund rather than an account that relies on annual subvention from the Treasury that will provide the necessary reassurance.

It is an argument that must be taken seriously. I understand the difficulty that Ministers in the DTI and in Defra have convincing their Treasury colleagues of the weight of the arguments that are being made. If I had been sitting on the other side of the fence, I might have taken some time to be convinced. It is so important. The Government have, perfectly properly, made the whole decommissioning process the centrepiece of this stage of their energy policy. I argue strongly that they must make sure that it works and that, three or four years down the line, other pressures on public subvention do not stop the programme working as Ministers now wish. I support the amendment tabled by the noble Lord, Lord Ezra, and the amendments to which my noble friend spoke.

Lord Whitty

This is a difficult area. The amendments deal with various aspects of the charging of third parties for work carried out by the NDA, including the very large costs of decommissioning.

Amendment No. 8A would set a condition on the Secretary of State's ability under Clause 3(4)(e) to direct, with the operator's consent, the NDA to take over responsibility for private nuclear sites. It would require, as has been said, the operator to have a segregated fund to cover the costs of decommissioning its sites. In an ideal world, the Government would support the principle that any future operators of nuclear sites should be able to pay the costs of decommissioning. In reality, those costs are substantial, and we do not necessarily believe that it is appropriate for decommissioning funds to be held in advance of need.

It is not possible to establish an independent fund that is sufficient to support what appears to be the NDA's long-term programme, unless we get the operators to set aside billions of pounds to meet those decommissioning costs. To establish such a fund now, if it came from the public purse, would hardly be a prudent use of public funds. To require current and, indeed, if there were new nuclear build, future operators of nuclear power stations to do so would have a substantial effect on the economics of nuclear power.

I did not respond to the earlier thrust of what the noble Lord, Lord Jenkin, said to the effect that the economics of nuclear power work out. Certainly, if we were to do it, the economics of nuclear power would not work out, whatever arguments we may have without this. Indeed, in the only example that we have before us now, the amendment would, in effect, prevent the Government meeting their commitment to stand behind British Energy and their liabilities to the extent that British Energy is unable to pay for them itself. Under the terms of the solvent restructuring agreement with British Energy, the company will pay moneys into a nuclear liabilities fund, and that fund is to meet the costs of the decommissioning of BE's nuclear stations and the costs of uncontracted liabilities. As part of that restructuring deal, the Government will have to underwrite that fund, in the event that that fund proves insufficient.

Unfortunately for Treasury Ministers, and for DTI and Defra Ministers, it is ultimately the responsibility of government to ensure the safe operations of the sites. Therefore the agreements with BE provide the Government with an option to acquire BE stations which BE has concluded it intends to close, and the costs of decommissioning will have to take that option into account. The ability to require British Energy or any future operator to establish comprehensive funds now would not he completely feasible. As the noble Lord, Lord Jenkin, acknowledged, if the amendment were taken literally it would also prevent us dealing with emergencies such a nuclear train crash. Clearly the NDA would have to take over such a site immediately. I am sure that no one intended the amendment to have such an effect.

The amendments tabled by the noble Baroness, Lady Miller, seek to establish a new fund that would ensure that the NDA itself controls all commercial receipts, rather than their being paid into the Consolidated Fund. Grant income would also be paid into that nuclear liabilities fund. I assume that the concern is that future Treasury Ministers—not the noble Lord, Lord Jenkin, in his time, I am sure—might look to use the fund for other purposes. Again, that fails to recognise the dimensions of the problem. The costs of clean-up activity and of decommissioning will far outstrip any likely income to the NDA from its commercial activities.

The annual cost of clean-up may he predictable in the short to medium term, but it is not in the long term. As an example I cite the commercial revenues of operating plants such as the Magnox power stations. The NDA would therefore be wholly dependent on an annual grant from government to discharge its responsibilities. The idea that it would hold those moneys to meet the future costs of decommissioning is difficult. The NDA will be funded by the Government within the usual public spending plan.

The Nuclear Decommissioning Funding Account, by recording the NDA's expenditure and income and being maintained at a sufficient level to support a rolling 10-year programme of activity by the NDA in accordance with the agreed strategy, would provide sufficient confidence from the public and markets for the NDA to have the necessary resources to drive clean-up forward and encourage competition for clean-up contracts. However, to require the NDA to keep a fund that would meet all future contingencies would be difficult.

The intention of Amendments Nos. 13, 15 and 33 is to strengthen the interpretation that, in most if not all circumstances, third parties would be required to meet the costs of clean-up carried out by the NDA. That goes back to the "polluter pays" principle. The Government support that principle but there may again be circumstances in which a private sector operator cannot meet its nuclear obligations. In those circumstances, the Government's ultimate responsibility for human safety and the environment means that we must retain the possibility of the Government meeting such costs.

That will apply whether the Secretary of State decides to charge in a direction to the NDA or whether the NDA is carrying out its established function. Amendment No. 33 would impose a similar obligation on the NDA to charge for anything for which it does not have formal financial responsibility under Clause 21.

The amendments would not have the desired effect. Although I can see why people are reacting to the use of "may" in the circumstances—it seems to cut across the "polluter pays" principle—it recognises that there needs to be an element of discretion, the exercise of which will be subject to the normal requirements of administrative law. Replacing it with "should" would in practice introduce another level of uncertainty about what happens when the private operator's funds are not sufficient to meet the costs of the clean-up. That uncertainty is precisely what we want to avoid in the Bill.

Amendment No. 18 would prevent the Secretary of State giving the NDA the function of acting on his behalf in relation to agreements with third parties for nuclear decommissioning and clean-up activity. An example would be the NDA undertaking a similar arrangement to that made by the Government in respect of British Energy.

While I understand the argument, to proscribe the Government from using the NDA to fulfil such obligations would deprive them of the expertise and experience of the public body best equipped to deal with, for example, British Energy. If they were prevented in that regard, the Government would have to develop other expertise, thus duplicating the capacity of the NDA. That would not he in the best interests of the taxpayer or represent good value for money.

That is not to say that the Government's responsibility for funding these activities will be in any sense different because, as I have said, the commercial income of the NDA would not cover them. But using the NDA as a conduit or interface for any future British Energy-type crisis should not be prevented by this legislation.

The legislation should allow the NDA to take over not only responsibility for the clean-up of private sector sites—that is central to its function—but, in extremis, to meet the costs of those activities and to act on behalf of the Government in various ways to ensure that those activities are carried out and paid for.

This is a complicated group of amendments, all of which address the issue of the costs of clean-up and decommissioning. However, some of the suggested changes do not fully reflect the enormous costs involved or the reality that, in certain circumstances, it is inevitable that the operator will not have sufficient funds to cover those costs. Ideally, we would want to see all such costs internalised and any nuclear component of our future energy requirements to be so covered. However, the real world is not like that; it is certainly not like that now, as the position of British Energy demonstrates.

It is also difficult to envisage such a situation in the future, even for those members of the Committee who want to see a large nuclear sector. Were the economics to work out in the short term, there would still be a real problem if we restrict payment for decommissioning and clean-up either to segregated funds for the operator or to our pre-established fund for the NDA itself. Ultimately there may be some liability to he borne by government, but that is simply to recognise the reality of these matters.

5.45 p.m.

Baroness Miller of Chilthorne Domer

I wish to apologise on behalf of my noble friend Lord Ezra. He deeply regrets the fact that he has had to leave the Committee to attend an urgent appointment at five o'clock. He is extremely sorry to have missed the debate and the Minister's response, but he will read carefully the report. Under any other circumstances, he would not have left the Committee.

I thank all noble Lords who have spoken in this debate. I was pleased to hear the noble Lord, Lord Jenkin, say that this issue must be taken seriously. It is an enormous subject. In his response the Minister stressed that we must look at the reality of the situation. Of course we must do that, but it is also our duty when considering legislation of this kind to consider what should happen in an ideal world.

One of the difficulties of the Government's stance is that it does not recognise the problems of the past that we are trying to resolve so that we can approach the future on a more ideal footing. It is interesting to note that both the pro-nuclear build lobby and those members of the Committee who represent the antinuclear build lobby are agreed that this is something we want to see included in the Bill.

The amendment is desirable, first, for the reasons set out by my noble friend on introducing it and, secondly, because without it the whole of the rest of the private energy market will be skewed in favour of any future private nuclear operators. They will not have to consider seriously the costs of decommissioning.

I should also refer the Minister to what the then government said in their July 1995 policy review of radioactive waste management. They declared that segregated funds should be established for decommissioning. I wonder whether this Government have actively changed that policy, or whether it has been altered without any discussion anywhere other than in this Committee. I realise that a different government said that, but it seems to be a change of policy that slipped through.

Grouped with the amendment were our objections to Clauses 32 and 74 standing part of the Bill.

Lord Whitty

I apologise to the noble Baroness. I have not replied on the Question whether Clauses 32 and 74 shall stand part of the Bill. Perhaps the noble Baroness will wish to return to the issue when we reach those clauses.

Baroness Miller of Chilthorne Domer

That will suit me admirably. I hope that by then my noble friend Lord Ezra will be here to speak to them.

I did not understand what the Minister meant when he said that the segregated fund would not be any good in emergencies. An emergency is a peculiar situation, and legislation could never cover every eventuality. We should aim at least to cover non-emergency situations, for which a segregated fund should be seriously considered.

Given the support that we have received from the other Benches, we shall return to the issue on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon

I spoke to Amendment No. 8 and would like to comment further. I thought that I had the opportunity to do so. It would seem that I do not. I was told that I could, but never mind. I am afraid that I was misinformed.

The Deputy Chairman of Committees (Baroness Thomas of Walliswood)

We were dealing with Amendment No. 8A, which has just been withdrawn.

Baroness Miller of Hendon

That is all right.

Lord Jenkin of Roding moved Amendment No. 9:

Page 4, line 6, at end insert— (8A) The Secretary of State shall exclude—

1. (a)from what he lays before Parliament and publishes under this section, and
2. (b)from what is to be laid before the Scottish Parliament by the Scottish Ministers,

anything the publication of which (otherwise than under any enactment) would constitute a breach of confidence actionable by any person.

The noble Lord said: As I understand the rules, my noble friend would have to wait until we reached the amendments that she spoke to.

In moving Amendment No. 9, I shall speak also to Amendments Nos. 10, 11, 56, 57 and 58. The amendments address an issue that the industry feels is extremely important and crucial—confidentiality. It refers not only to existing companies—although, naturally, they are primarily concerned—hut also to any future potential contractors, some of which are major companies, and perhaps companies from overseas, which may be interested in participating in this market.

The first group of amendments relates to the publication of the directions by the Secretary of State, and the second group relates to the publication of the annual report. They are two separate groups, but it is sensible that we discuss them together.

The point can be stated very shortly. Under the Bill, information provided to the NDA—or, indeed, any material that the NDA may already possess—may be excluded from publication on grounds of national security but not on grounds of commercial confidentiality. That is felt to be a nonsense.

The whole point of creating the NDA is to drive down costs through competition. We have already discussed that, so I do not need to dwell on it, but competition requires competing contractors. Contractors will not come forward if they feel that, by doing so, their commercially sensitive knowledge and information will become unprotected and liable to be put in the public domain. As my brief puts it—it is another rhetorical question—if you were in their shoes, would you?

We are going to try to attract some of the leading companies in the world—many of which may come from the United States, but others have experience of decommissioning—to come forward and play their part in a major UK programme. By the time that the Bill comes into operation, the Freedom of Information Act 2000 will be in force, but the Bill does not recognise the conditions and protections allowed by that Act. The Bill appears to confine itself merely to national security.

I made a considerable point at Second Reading that we all recognise that openness and transparency are key to the success of the NDA, but that must take account of real commercial confidentiality issues, as does the Freedom of Information Act 2000. What is the difference? Why should that Act protect commercial information while the Bill does not? I am advised that our amendments are consistent with the Act and would not fall foul of it.

Existing contractual commitments always include confidentiality obligations. The Bill now requires disclosure of that information and provides no protection for companies—BNFL or UKAEA, for instance—in relation to breach of contract or other legal liability resulting from disclosure of information. In this industry, as in many others, operational information is commercially confidential. It has a commercial value and, in an environment that will be increasingly competitive, that factor must be taken into account. Information disclosed in that way would be of significant value to competitors.

As I said, that applies not only to the existing firms, but to those that may be looking at the opportunity of coming into the industry. In the absence of protection for their commercial information, they will see a considerable no-no. We have an opportunity in the Bill to put that right. The disclosure duties placed on site licensees by the Bill, and the related duties placed on the NDA to publish the material that it receives, could deter prospective contractors from taking up site licences or investing in site licensee companies where that would expose them to excessive obligations and potentially to third-party claims for breach of confidentiality. That point was made to me very forcefully.

The very broad disclosure obligations in the Bill severely restrict the NDA's ability to secure value for money, which Ministers have today reiterated is part of the purpose of the whole exercise. They would also restrict the NDA's ability to act in the manner that it considers most beneficial to the public and to obtain value for taxpayers. I cannot help feeling that that argument must have been raised with Ministers by the industries concerned, and I am rather puzzled about why Ministers have not seen fit to respond to the argument as must be necessary. The whole process will not work unless there is proper protection for commercial information. I beg to move.

6 p.m.

Baroness Miller of Hendon

As my noble friend pointed out, this is a very serious matter. I regret the time that I spent writing my speech in support of his amendment because he covered every issue that I could possibly think of. There is virtually nothing left for me to say, other than that the issue is so important that I do not understand why it has not been catered for anyway. The problem is that, when one tables an amendment—one can do nothing in Grand Committee other than to raise an amendment—invariably the Government say that it is not necessary or give some such response. This amendment is totally necessary. There is no reason why the protections given by the Freedom of Information Act should not extend to these extraordinarily important matters.

As I discussed in an earlier amendment, and as my noble friend —and indeed the Minister—mentioned, one of the NDA's duties is to ensure that it seeks competitive tenders. But one cannot have competitive tenders if nobody is prepared to put their hat in the ring and compete because they cannot keep confidential any information that they should be able to withhold.

I noticed that the Minister turned around to have a big chat with one of his officials. My noble friend said that he could not believe that other people had not discussed the matter with the DTI. Although we cannot divide in Grand Committee, I hope that we will have the pleasure of not having to bring back the amendment on Report and that it will have been agreed here; otherwise, we will most certainly bring it back.

Lord Davies of Oldham

The noble Lord emphasised the great significance that he attaches to the amendment. He remarked that foreign companies might submit bids and mentioned those from the United States. He will probably recognise that if such companies are used to making submissions in the United States, they will have been subject to American legislation, which is as extensive as any statutes in this country. I am not sure that such companies would necessarily be deterred by the situation here.

Of course the Government understand the concern to protect certain information related to the interests of organisations and individuals, but that must be balanced against the interests of openness and transparency. We should surely think carefully before imposing wide-ranging restrictions on publishing or laying before Parliament information.

It is hard to see who might be affected by the information in directions containing designations. The directions will identify what is to be designated to the NDA. They are therefore likely to include little more than a description of what the NDA is required to clean up. It is in everyone's interests, as a matter of effective parliamentary scrutiny and public confidence in the NDA, that that information be made available.

As the noble Lord said, the Bill contains national security restrictions. I have difficulty in accepting why commercially confidential information should require the same degree of protection. In respect of the NDA's annual report, the Bill provides for a discretionary restriction on matters of national security, but what it will describe in terms of the NDA is surely information that will be necessary for the wider public and Parliament. The NDA will inevitably, and necessarily, hold commercially sensitive information on operators and contractors. The noble Lord and the noble Baroness, Lady Miller, are right to emphasise that fact. Before making any such information publicly available, as a matter of normal practice the NDA will be expected to seek the consent of the organisations affected.

In the event that agreement cannot be reached, the Freedom of Information Act provides for the matter to be referred to the Information Commissioner for a determination on whether the information should be made public. There is also a right of appeal to the courts, should a party feel dissatisfied with a determination. Given our clear commitment to ensure that the NDA becomes a model of openness and transparency, we should not rush to impose additional restrictions on it. Excessive secrecy is seen as having been one of the failings of the nuclear industry in the past. We must change that culture, if the NDA is to command public confidence. That approach to openness has been central to our efforts to carry all stakeholders, employees, local communities, trade unions and environmental groups with us.

The explicit provisions proposed in the amendments would not inspire confidence that the creation of the NDA will make a significant change to the management of nuclear clean-up. I recognise from the strength with which those points were put by the two noble Lords that my reply may not entirely satisfy them at this juncture. Therefore, I would be verging on the excessively optimistic if I thought that this was the last that we would hear of the argument in the context of this Bill. There are other stages at which issues may be more fully pressed.

I emphasise that we must protect national security, but we must also ensure that, when commercially sensitive information is released, efforts are made in consultation to secure the agreement of those who supplied the information. The NDA must be free to use information on commercial activity in pursuit of its functions. It will need to promote competition and will not, therefore, release information that compromises the duty of ensuring that competition is fair. The NDA will not release information that would give unfair advantage to others in the competitive situation that we seek to create, with as secure, sound and level a playing field for competitors as is possible and consistent with the objectives that we discussed earlier. By the same token, we have a clear objective in the Bill: aspects of the operation of the NDA will need to be as open as possible for parliamentary scrutiny and public confidence. We know that problems relating to the industry have sometimes flowed from the excessive withholding of information that ought to have been in the public domain.

Baroness O'Cathain

Will the Minister put himself in the mind of a company that would be prepared to bid for a contract for the NDA work? There are such things as intellectual property rights. If that organisation were to read the Minister's speech and be told that, if it did not like what was happening, it could go to the Information Commissioner and that, if it did not like what happened then, it could go to the courts, would it be bothered even to tender for the contract?

Lord Davies of Oldham

As I said, first of all, the NDA would be concerned to encourage as many participants in the bidding process as possible and to create fairness between them. That means that it would have due regard to commercially sensitive information. However, in order properly to inform Parliament and the wider public about how it carries out its duties, the authority's first recourse would be to ensure that it consulted the organisations that had submitted such information before using it in the reporting process. So, there would be consultation at that stage.

Secondly, as I said, under the Freedom of Information Act 2000, aggrieved parties have other means of redress against the NDA, if the consultation has broken down and they feel that the process is operating unfairly in respect of one organisation or bidder. That would, in any case, be contrary to the effective operation of the NDA, and we would expect it to carry out its functions and guard against such an eventuality.

6.15 p.m.

Baroness Carnegy of Lour

I am a little confused. The Minister started by saying that what was contained in the clause would be laid before Parliament and the Scots Parliament and that it would not contain confidential information. He then went on to give a long argument, which was not particularly well informed, about the confidentiality of sensitive matters from the company's point of view. Either we do or do not consider that the amendment applies to the clause. Can the Minister inform the Committee whether or not sensitive and confidential matters will be laid under the clause?

Lord Davies of Oldham

I was seeking to illustrate that in the annual report which the NDA will make to Parliament—and given the necessity of making its processes as open as possible—it will seek to provide the requisite information which, as I have indicated, will not substantially involve information of commercial confidentiality. It will describe the functions it has carried out and its responsibility for carrying them out. Within that framework a very limited amount of information would relate to the competitive bidding of organisations seeking to obtain contracts.

We recognise that the NDA will be in possession of confidential information—it cannot fail to be, on the basis of such bids—but if the NDA feels that any aspects of the situation require it to produce such information in its report, its first duty would be to consult the organisations concerned to establish which parts of that information they were prepared to see made public. If the consultation is successful in those terms, the NDA will reach a position where anxieties are allayed. If not, and the NDA has to proceed further, I have indicated the ways in which, under our freedom of information legislation, organisations have recourse to law if they believe the NDA has acted unfairly.

Baroness Byford

Before my noble friend replies, as an amateur among professionals I must say that I am appalled by the Minister's ability to accept the thrust of the argument made by other noble Lords and then to suggest that perhaps the NDA would not use such information, but perhaps it would. He then said that if the companies agree the information can be printed quite happily. But if they do not agree, it would not be a question of keeping out the information; it would be put in and the companies would have to seek recourse in another way. But, by then, all the information will be out in the public domain.

I apologise for being such an amateur but I find it an extraordinary situation. The horse will have bolted; the problem will have occurred. The Government do not seem to be willing to address the issue. I can see that one or two of the people sitting behind the Minister are busily writing. This is a matter to which he should give urgent and greater thought. I hope that he will do so.

Lord Jenkin of Roding

I am most grateful to those of my noble friends who have joined in this important argument. As I listened to the Minister's reply, I was reminded of the architectural feature outside ancient Roman houses called a Janus figure, which looks both ways. The first part of the Minister's response was a perfectly reasonable plea. He said that we are all arguing for transparency, disclosure of information and so on, and therefore this is a part of that. If that meant that secrets had to be disclosed, so be it.

The second part of the Minister's reply was, "Mind you, by the time that the Freedom of Information Act is enforced all kinds of remedies will be available to contractors to keep information out of the public domain". My noble friend Lady Byford has just raised the important point of whether the information has to be published before they can go to the commissioner and the courts under that Act. If so, the whole thing is pointless. If the FIA procedures are open to contractors who are in a position where commercial information is threatened to be disclosed, in either a designation or an annual report, and if the contractors can then get a decision on that before any disclosure happens, why can that not be put into the Bill? Why do we have to have two separate pieces of legislation that say different things?

If the noble Lord is right that there will be a remedy under the Freedom of Information Act, for goodness' sake, let us have the same remedy here. I cannot for the life of me understand why the Government are resisting this. If it will be there as soon as the FIA comes into force—and I am told that it will be in force by the time the whole process starts—let us have it in the Bill. Why not?

Lord Davies of Oldham

I hear what the noble Lord says. The whole point of the Committee stage is for us to think seriously about such representations. However. I emphasise to him and to everyone who has articulated the argument that we are seeking to extend the openness of the NDA's activities in order to build up public confidence with regard to that aspect of its operations. That will develop public confidence in its judgments and policies.

I thought that I had identified that the areas where commercially sensitive information was involved would be very limited indeed in respect of the NDA's accountability to Parliament and the way in which it must describe how it has fulfilled its functions. Where there is the possibility of information that is commercially sensitive being disclosed, the NDA would need to consult the companies and organisations so affected.

The NDA has to protect its process. It will want the strongest competitive position possible, of course. Anything that frightened off commercial organisations from applying because they believed that, by doing so, they would automatically give an advantage to competitors through such information, would he totally against the NDA's interests. It would seek to reach agreement on how it would use commercially sensitive information. The consultation process is there to safeguard the interests of those who submit themselves to the competitive process.

Baroness Byford

I hear what the Minister says. He refers to very limited use but, ultimately, someone—presumably the NDA—decides. Let us imagine that my noble friend's company objects to confidential information being published. Once the NDA had made the decision she would be in no position to appeal or to go anywhere else before the information was put into the public domain. I do not think the Minister has addressed that aspect of the matter we are trying to put forward very clearly.

Earl Attlee

The Minister has nearly got the point. Surely the risk is that a commercial concern will not take any risk; that it will not get involved for fear of losing its intellectual property rights.

Lord Davies of Oldham

If such a risk were manifest the NDA would be vitiating its capacity to fulfil its functions in terms of ensuring that bids were successful for the work that it needed to carry out. Of course the NDA has to act with very considerable sensitivity. I merely seek to emphasise that we do not think that the annual report—the necessary reporting of the NDA to Parliament—and the aspects that naturally go into the public domain with regard to designation will involve commercially sensitive information. But if it were thought that there was a danger, the NDA's obligation would be to talk to the companies or organisations concerned with the information to reach an agreement with them. If it failed to do that, it would risk real alienation of bidders in terms of property rights and of intellectual property rights. Loss of confidence in those terms would mean that the NDA could not discharge its functions to the nation.

Baroness Miller of Hendon

I apologise to the Minister for stopping him in full flow. When he started to answer on the amendment, the Minister said that it would not be "substantially included in". I am not asking how much "substantially" is, but once he says that it will not be "substantially included in", it means that part of the confidential matter will be in the public arena. No member of the Committee can understand how the Minister thinks that that is appropriate, when even the Freedom of Information Act 2000 would not allow that. So what is the difficulty? He is quite right: we will return to the amendment, but we should not need to; it should be accepted now.

Baroness O'Cathain

May I suggest a nice way for the Minister to get out of this? That is to send the Bill back to the lawyers, together with all our contributions, to say "This is the problem; do they have right on their side? If they do, just change the Bill".

Lord Jenkin of Roding

I cannot add anything to that. It is a tough vote on this occasion. Indeed, I thought I detected a glimmer of hope in the Minister's first reply that the Government would look at it again. Without trying to be unkind, I think that the Minister found himself on exceedingly shaky ground in trying to draw a distinction between the Bill and the Freedom of Information Act 2000. If the remedies of the Freedom of Information Act are open to the contractors as he asserted, then it would be sensible to put that provision in the Bill. The Minister may be sure we shall come back to that. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 10 and 11 not moved.]

On Question, Whether Clause 3 shall stand part of the Bill?

6.30 p.m.

Lord Jenkin of Roding

I tabled this Motion to provide a peg for what I hope will be a reasonably brief debate. We have debated various aspects of Clause 3 at some length and it may well be that other members of the Committee will want to make different points from me. I want to raise only one point at this time.

This is an opportunity for the Government to clear up what are widely perceived as uncertainties about the NDA's role in the disposal of long-term waste. As I said on Second Reading, when the Bill was first published, and at a meeting that the noble Lord, Lord Whitty, was kind enough to call upstairs, there was widespread doubt in the industry as to whether we should expect some other body following the CoRWM report or, as the noble Lord, Lord Whitty, has, I think, subsequently said, that that may become a function of the NDA.

We had an exchange at Question Time. The Question was originally asked by my noble friend Lord Attlee about the Committee on Radioactive Waste Management. CoRWM, and the exchanges continued about geological disposal. Then the noble Lord, Lord Ezra, asked: My Lords, reference has been made to the length of time we have already spent on this subject and the length of time we may still spend on it. Can the noble Lord indicate whether he thinks that as a result of some slight speeding up, this could be resolved when the proposed Nuclear Decommissioning Authority comes into office?". In response, the Minister said: My Lords, the Nuclear Decommissioning Authority will not deal with the kind of waste we are talking about here—it is about cleaning up sites. The timescale envisaged in the Energy Bill, which we debated last week, for the establishment of the NDA would probably be before the committee had completed its work".— [Official Report, 16/12/03; col. 1054.] Defra is the department to deal with nuclear waste; that Question was not for the DTI.

We raised the matter at the meeting on 6 January, and I came down from that meeting to find in my pigeonhole in the Attendants' Office a copy of a letter originally addressed to my noble friend Lord Attlee and copied to several of us that appears to correct what the Minister said on 16 December. In it, the Minister cited his Answer to the noble Lord, Lord Ezra, and went on to discuss the different kinds of waste. We are primarily discussing high and medium-level waste, but it is clear that the NDA will deal with low-level waste because, as I said on Second Reading, the Explanatory Notes refer to the Drigg repository.

The Minister states in his letter of 16 January: It is also taken to include those proportions of spent fuel, plutonium and uranium which are likely to become regarded as waste during this period. In practice, the NDA's responsibility will be for the operational management of the wastes—including the 'higher activity wastes'—that arise or are held on the sites it takes over. This is provided for by clauses 3 (NDA functions) and 34 (clarifying definitions) of the Energy Bill. The NDA must manage its waste in line with Government policy. And this includes policy for the very long-term management upon which CoRWM will be delivering its recommendations. This is the key distinction between the role of the NDA and CoRWM which I was seeking to delineate. Also, in referring to the long-term solution needing to be good for 'centuries', the meaning intended was until there was no further danger from the waste, which may of course, in practice, be many centuries. That is why above I have talked of the very long-term management policy above". With the greatest respect to the noble Lord, Lord Whitty, that is about as clear as mud. It is not yet clear whether, following the CoRWM report—we have already referred to the fact that that will mark the next stage in the process of long-term disposal of intermediate and high-level waste—it will be that body that does that. The Answer in Parliament said, "No"; I think that the letter attempts to say. "Yes".

I have received legal advice to say that the answer to the question that I asked on Second Reading—is the Bill intended to cover the disposal of medium and high-level waste?—is "Yes", in which case we can all go home. Well, we cannot yet, because it is not yet time, but I must say that the Government have been speaking with forked tongue on the matter. It is not yet clear.

The right answer may well be that NDA will have responsibility in the course of its decommissioning exercises to ensure that wastes are handled safely and properly in the interim. There is surface storage at most nuclear power stations; some activities involve transport of that waste to Sellafield. Do we need a definition of "disposal" in Clause 34, to which the Minister referred? There is no definition there.

Having received the letter, for all its obscurity, I got the impression that a separate definition might not be necessary, but it is appropriate in a clause stand part debate specifically to pose the question: does the N DA have the power to deal with the matter, when the time is right, after the CoRWM report and after the Government have made up their mind and made their announcement in Parliament? Will it be for that body, or will there have to be another one?

Lord Maclennan of Rogart

Perhaps I may take this opportunity to enquire about the Government's intention regarding issuing directions containing a designation. Until now, the emphasis of the debate has been on the possibility of the Government disclosing more information than the NDA or its contractors might wish to have disclosed. But, so far as I can see, nothing in this clause requires the Government to disclose anything at all. It would be reassuring to have an indication that the reasons for the designation might at least he advanced as a requirement in making statements and laying them before Parliament.

Lord Whitty

In response to the noble Lord, Lord Jenkin, my response to the question put by the noble Lord, Lord Ezra, might inadvertently have caused confusion. I thought that his question related to longterm management of high-level waste. I think that other members of the Committee drew the impression that I meant that the NDA would not he responsible for high-level waste. That is not the intention; the NDA is responsible for all levels of waste at those sites that it manages, and under any designation. It is therefore carrying out government policy in that respect—there are sites that it manages and others that are designated. But that does not mean that all high-level nuclear waste is the NDA's responsibility.

CoRWM has been asked to look at the long-term management and disposal of high-level waste and at intermediate and low-level waste that is unsuitable for disposal at Drigg. We await the report of CoRWM recommending government policy on what the long-term aim should be—we anticipate that it will be published at the end of next year. The Government's response to the report will determine what the NDA's role will be in that regard. After all, the NDA carries out government policy; it does not make it. The Bill reflects current government policy that the NDA will be responsible for the management of the sites allocated to them. The CoRWM may recommend that the NDA should take over all responsibility for the long-term disposal and management of high-level waste in general, but we are not at that point. The Bill would allow the NDA to take on that responsibility, but it does not determine that the NDA take on wider responsibilities. The government policy determined in the light of the CoRWM advice will specify the NDA's role at that point.

On defining "disposal" of radioactive waste, the disposal and discharge of radioactive waste through air, water and land are regulated by the Environment Agency under Chapter 12 of the Radioactive Substances Act 1993. That is not altered by the Bill; therefore, we do not propose substituting a new definition of "disposal". Obviously, the NDA will work closely with the nuclear regulators in England and Wales to ensure that it adheres to the regulatory framework. The CoRWM report may also cover the long-term strategy on that. The noble Lord may think that that does not clarify things totally, but I hope that it indicates the difference in time scale. The NDA is responsible for the sites allocated to it, and CoRWM will make recommendations on the long-term management of radioactive waste.

The noble Lord, Lord Maclennan of Rogart, made a point about issuing directions on designations. In making designations, the Government will indicate their reasons for them. In most cases, they will be apparent, but there is no requirement for any vast amount of detail in the Bill. Obviously, there will as ever be a responsibility on the Government to act reasonably, and, in such circumstances, that includes making clear the reasons for the designation.

Baroness Miller of Chilthorne Domer

Before the noble Lord, Lord Jenkin of Roding, replies, can the Minister tell me whether there is any difference between the NDA having a "responsibility" and the NDA having a "duty"? Frequently, in legislation, we find that a body has a duty to do something, but here, all the time until much later in the Bill, there is reference to a responsibility. Clause 9 refers to a duty.

Lord Whitty

The responsibilities are as set out largely in this clause and, to some extent, in Clause 9. They are the areas for which—I do not wish to be tautologous—the NDA is responsible. The duties are laid on them either by Act of Parliament or by designation by the Secretary of State. There are duties laid on it in both respects. Future designations could spell that out more clearly than the Bill. That could arise in the light of the CoRWM recommendations and the Government's response to them. Further duties could be laid on the NDA at that point, which would not be inconsistent with the Bill.

Lord Jenkin of Roding

I have heard what the Minister has said, and I shall read it carefully. My impression of what he said was that it was a little clearer than the letter. I think that he said, as did the noble Baroness, Lady Miller of Chilthorne Dorner, that there was no such duty on the NDA yet. If the Government decide, in the light of the CoRWM report, that the way is open for all the processes that will be needed for long-term disposal, the NDA could be the body that is charged with the duty of taking the matter forward, but that is not necessarily so. Is that right? If it is to be the relevant body, it has or could have sufficient power under the Bill. The noble Lord, Lord Whitty, nods assent, having consulted his oracles, so I think that I have got that right.

We must consider this carefully. We have until the end of 2005 before CoRWM is expected to report. I understand that, and I fear that a lot of time has been lost on the matter already since the House of Lords report. Nevertheless, I think that there is a view now that it is time to get on with things, particularly if the public are to be reconciled to the idea that we need new nuclear build, for all the reasons that have been discussed. The way ahead on the problem of waste must be sufficiently clear to reassure the public. I am grateful for the noble Lord's response.

Clause 3 agreed to.

6.45 p.m.

Baroness Miller of Hendon moved Amendment No. 12:

After Clause 3, insert the following new clause—

"DUTIES IN RELATION TO NEW AND POTENTIAL NEW NUCLEAR PLANTS

1. (1) In addition to the responsibilities placed on the NDA by section 3 of this Act, it shall have the responsibilities provided for in this section.
2. (2) For the avoidance of doubt, the obligations of the NDA imposed by this Act shall apply equally to any nuclear installation, site or facility commissioned after the commencement of this Act.
3. (3) Within Five years from the passing of this Act, the NDA shall submit a plan ("the plan") to the Secretary of State on the subject of the feasibility of building and commissioning new nuclear power plants to replace those becoming or likely to become obsolete within the ensuing fifteen years.
4. (4) The plan shall include projections as to the economies of such plants and their eventual decommissioning and as to the effect on the supply of electricity to the various parts of the United Kingdom in the absence of new nuclear facilities, and may include such other material as the NDA may consider to be relevant to the subject.
5. (5) The Secretary of State shall lay the plan before Parliament within one month of its receipt, and after consultation with such persons or bodies as he deems appropriate shall publish his response."

The noble Baroness said: The amendment is slightly more abstract and theoretical in concept than others that I shall table. That is why I need to explain it at slightly greater length than normal. I ask for the indulgence of the Committee.

First, I shall deal with proposed new subsection (2) in the amendment, which seeks simply to remove a drafting ambiguity by making it clear that the duties of the NDA extend not only to existing nuclear power plants but to any which may be built in the future. In other words, the amendment makes it clear that what is being set up by the Bill is not an authority that will die a natural death when it completes the immediate task before it of ensuring the safe decommissioning of the 20 nuclear power plants currently in service or already in the process of decommissioning.

I should make it clear—emphatically—that if the Government accept the proposed new subsection, as I hope they will, we will acknowledge that we do not consider that they are committing themselves in any way to any new nuclear build. The subsection is simply intended to ensure that there is no end to the role of the NDA as long as—however long—there is a nuclear power industry.

The main substance of the proposed new clause requires the NDA to prepare a plan within five years of the passing of the Act to cover its duties and responsibilities in the event that any new nuclear plants are built. Of course, in preparing that plan the NDA will have to have regard to every aspect of the feasibility of building such new plants, both economically and from the point of view of the need for them and the effect they will have on our electricity supplies.

The energy White Paper, which one might have thought would have something to say on the subject, was non-committal, except to the extent that it predicted that only one plant would still be in operation by 2025. That is just 21 years away. I raised the point at Second Reading but the Minister said in reply: The policy has been set out in the White Paper".—[Official Report, 11/12/03; col. 918.]

And what did the White Paper say on the question of future nuclear build? It stated: We do not propose to set targets for the share of total energy or electricity supply to be met from different fuels".

If the Government are not going to set targets, who is?

What has the question of whether we build any further nuclear power stations got to do with the NDA? It has everything to do with it because the last of the present nuclear stations will still be operational until, as I have said, 2025—or perhaps until 2035, according to the noble Lord, Lord Davies of Oldham, in answer to a Question. To decommission each of the plants will take decades. I hope that the noble Lord realises that I listen very carefully and read what has been said afterwards.

The NDA has to plan for that and for the future in case new plants are built. It has to be involved in the planning of new plants for which later on it may ultimately be responsible. It has to make sure that the mistakes made in the 1940s and 1950s, when the earliest plants were built, will not be repeated. Those mistakes were not including in the plans for a new plant the facilities necessary for its ultimate decommissioning and waste management.

Currently—and here I quote from the brief that I and many Members of the Committee have received from BNFL—in the case of older plants, the biggest challenge is not how to tackle a particular task, but determining exactly what has to be dealt with".

I also draw attention to the fact that the skills and expertise in decommissioning need to be preserved intact, both for our own purposes and to enable those skills to be exported in the future.

The NDA has to be involved from the outset in all the necessary planning of any future nuclear plants. The amendment makes sure that it will be part of the equation if and when the Government make any decision about future nuclear build. It is certainly not my place—nor is it my intention—to repeat the arguments that members of the Committee have heard many times, especially in the course of recent debates, about the place of nuclear energy in our power equation. The Minister of State told the All-Party Group on Nuclear Energy on 3 December that, we need the possibility of new nuclear build".

He did not say that to Parliament. No doubt, in due course we shall be told whether or not that is government policy. If it is, the NDA needs to plan and prepare for it. That is all this amendment would require it to do.

Again, let me make it absolutely clear that I am not at this time asking the Government to announce a policy either for or against nuclear power. Indeed, at Second Reading, the Minister stated that: It is not appropriate to provide in legislation a commitment to nuclear build".—[0fficial Report, 11/12/03; col. 918.]

All this amendment requires is for one of the players in the field—the NDA—to make some plans during the next five years and for the Government to consider them at whatever point they think it necessary and appropriate to do so. I ask nothing more and seek no commitment either way. I beg to move.

Lord Maclennan of Bogart

I recall that, in answer to an earlier amendment, the noble Lord, Lord Whitty, said that it was not necessary. Do we assume that if, in the future—which he was not prepared to look at too closely—a decision were taken to pursue nuclear build, the NDA would necessarily be the body to discharge that role? I am equally dubious about whether it is the body to pronounce on the issues that this proposed new clause suggests. Essentially this is a policy matter, one which could he interestingly and helpfully illuminated by factual information of a kind more at the disposal of a Royal Commission or some other body not engaged in something as hands-on as the decommissioning of existing reactors. I would hope that the personnel engaged in that task are particularly suited to it. I am not at all sure whether they would be suited to evaluating the kind of evidence relating to whether there should be replacement plants—I agree that it ought to be considered within the next five years.

I agree with the underlying thesis of this amendment—that there is an unacceptable and, in a sense, unnecessary uncertainty. The independent collation of the best evidence that is undoubtedly available on the pros and cons of what is described as the "feasibility" of commissioning and building a new nuclear power plant ought to be given urgent consideration. However, I doubt that this is the right body to do that.

Lord Whitty

To a certain extent we are going over the ground covered in our debate on the amendment tabled by my noble friend Lord Lea. The noble Baroness rightly said that this amendment does not presume a shift to nuclear build. The secondary point just referred to by the noble Lord, Lord Maclennan, is that if we did have nuclear build, whether the NDA should be responsible for planning and assessing such a project.

I do not need to rehearse the argument. The energy White Paper does not envisage the need for additional nuclear build, but even if the Government were minded to revert to the nuclear option, we do not consider the NDA to be the appropriate body either to run such a power station or to produce a plan on the feasibility of building a new power station.

As the noble Lord, Lord Maclennan, made clear, that is an issue of policy and the assessment of the practicality of any proposals which may emanate from the generating industry to produce such a power station. Such proposals would be subject to a whole range of assessments by regulatory authorities both here and under European law, as well as to the Government's assessment of the economics. It would not be appropriate to divert—and it would be a diversion— the NDA to deal with such planning and feasibility issues. Its focus must he on how to deal with the consequences of our nuclear past.

Subsection (2), which the noble Baroness says is for the avoidance of doubt, is unnecessary because Clause 3(1) does not differentiate between current or future nuclear facilities. It means that the NDA could deal with the waste and decommissioning of future facilities, were they to be built, as well as past ones. Therefore any avoidance of doubt is not necessary. There is no inhibition on the NDA dealing with future nuclear build.

The focus of the NDA must be on clean-up and decommissioning. Indeed, that focus was widely supported by all stakeholders and was central to the proposals for the creation of the NDA. It one of the reasons why people with differing views on the future of nuclear power have all supported the concept of the NDA. It should not be diverted into issues of policy, new build and the running of nuclear facilities. If the NDA were to be given the responsibilities suggested in the amendment, it would have to develop a new tranche of expertise and skills which could only divert it from its central task.

The NDA has been given the crucial and very important task of carrying out the secure and cost-effective clean-up of our nuclear legacy. That in itself is a massive task. The estimated cost currently stands at £50 billion and the estimated time-scale is 100 years. The noble Baroness suggested that after the NDA had done all that, it might move on to something else. She did point out that that was a theoretical suggestion, but we may assume that future governments will take a view when the current task is finished. However, we must focus on the present task. To divert and dilute the NDA's focus would be wrong and would not deliver the advantages we see in creating the NDA in the form proposed by the Bill.

Baroness Miller of Hendon

As an aside, when referring to new nuclear build, the Minister said "We do not envisage it". Given that, I wonder why we hear continually that the Government are keeping the option open. In answer to a question last week, I believe the noble Lord, Lord Davies, said that, "It will not be necessary", or something of that ilk. If necessary, I shall look up the exact reference.

I understand entirely what the Minister is saying; that the NDA is not necessarily the correct body to undertake preparing plans because it has too many other things to do. I shall certainly read carefully what the Minister has said, but this issue is extraordinarily important. It may be that at some stage the Government will say, "Perhaps we do need some new nuclear build". We do not know. We certainly heard one Minister remark at a dinner not too long ago that he envisaged it would be necessary to have some new nuclear build.

All I am trying to do is to help the Government by providing a vehicle. I should say that it is always my intention to help the Government. My noble friends know that, as do noble Lords on the other side of the Committee. It would be terrible if the Government woke up one morning and decided that, "Gosh, that is what we need. What a pity we did not think it through and prepare a plan".

Perhaps I have used the wrong vehicle to achieve that—the noble Lord made the same point—and we shall have to rethink. We may be in a position to come back to the issue at a more appropriate stage. At this point, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Lord Triesman

This may be a convenient moment for the Committee to adjourn until Tuesday at 3.30 p.m.

The Deputy Chairman of Committees (Lord Brougham and Vaux)

The Committee stands adjourned until Tuesday 20 January at 3.30 p.m.

The Committee adjourned at seven o'clock.