Atomic Weapons Establishment Bill

HL Deb 02 July 1991 vol 530 cc924-58

4.43 p.m.

House again in Committee on Clause 1.

Lord Mayhew moved Amendment No. 2: Page 1, line 23, after ("him") insert ("and in which the Secretary of State shall have a majority shareholding").

The noble Lord said: I beg to move Amendment No. 2. This amendment would inject a much needed element of public service into an excessively commercialised concern. It would require the Secretary of State to own a majority of the shares in the company actually carrying out the contract —probably and almost certainly a subsidiary of the company negotiating the contract. For example, if Vickers had negotiated the contract, it is certainly not the intention of the amendment that the Secretary of State should acquire a majority of shares in Vickers: the shares would be held in the subsidiary of Vickers which would carry out the contract.

It is extraordinary that the Government should decide to hand over this particular industry to private enterprise. I think it is fortunate for them that at the time the matter was dealt with in the other place the Gulf War was on; otherwise there would have been a stronger public reaction against the proposal, which is purely ideological—Thatcherism at its worst and possibly, we hope, at its last gasp.

The amendment does not go the whole way towards public service but it dilutes the element of commercialism. It is a compromise which attempts to get e best of both worlds; and if we had a consensus government supported by the majority of electors that government should welcome a concept such as this. Unfortunately, we have a doctrinaire government, elected by a minority of electors and probably supported by only a third of them at the present moment.

The first effect of the amendment would be to increase the degree of ministerial responsibility. It is the profound conviction of noble Lords on these Benches that the production of weapons of mass destruction and the associated research and development are matters for which Ministers should be answerable in Parliament. This issue was discussed at some length at Second Reading, and I must say that I did not think that the Government made any effective reply to the powerful arguments in favour of it.

The second major advantage of the amendment is that it would dilute conflict between the requirements of security on the one hand and the hopes of profit on the other. This conflict does exist and the Government admit that, because they are offering financial incentives to the contracting company to maintain the highest security standards. They are saying in effect that the contracting company needs financial incentives if it is to maintain the highest standards of safety. However, a company which needs in effect to be bribed to maintain the highest standards of safety deserves to be disqualified on that ground alone.

The amendment would at least ensure that the majority shareholder had no incentive but to produce the maximum security for all. There would be many other advantages. A feature of almost all the privatisation projects has been the excessively generous terms bestowed by the Government on the new private shareholders. Unfortunately, there is no reason to suppose that the Government will not again reward their friends with over-generous terms in the proposed contracts. Our amendment would mean that at least one-half of the excess profits would return to the taxpayer and not to the private shareholders. It also opens the possibility, to which the Government have not referred, of offering shares to the workforce. This is a concept which we on these Benches have been advocating year after year, and it could be applied in this Bill were it not for the doctrinaire approach of the Government.

The amendment also enables the Government to prevent excessive pay rises to the chairman and chief executive of the privatised company. The first aim of a privatised company nowadays seems to be to siphon off its assets into the pockets of its chairman and chief executive. This amendment would prevent that scandal happening in the case of the privatisation of the production of nuclear weapons.

I do not think it is necessary for me to go into great detail on this matter. I admit that it is a matter of principle; but we say that this is not a proper sphere for unrestricted private enterprise. It is necessary to introduce the national interest, the public interest, and that would be achieved by this amendment.

Lord Williams of Elvel

We should like to support the amendment moved by the noble Lord, Lord Mayhew. I do not want to reiterate all the arguments he has brought forward in its support. However, there are two on which I should like to lay emphasis. The first is that, as the Committee will know, my party is wholly opposed to the principle of the Bill although your Lordships agreed to the principle of the Bill on Second Reading. Nevertheless, I shall continue, on suitable occasions, to make clear our opposition to the principle of the Bill.

If the Bill goes forward, the amendment would at least provide for government majority interest in the continuing operation of the Atomic Weapons Establishment. As the noble Lord, Lord Mayhew, has quite rightly pointed out, it would prevent the prime contractor from putting commercial and profit-related interests before concern for safety and security. That must be exactly what the Government want in view of what the noble Earl said in an earlier debate.

My second point is that, furthermore, it would ensure for all time—at least until Parliament decides otherwise—that it will be the British Government who will be responsible for production of our nuclear warheads and for the research into their development and effects. Ultimately it will be the majority shareholder who will make sure that the priorities of the British Government prevail over commercial priorities.

I would add one more word in support of the noble Lord, Lord Mayhew. It is extraordinary how, when any form of privatisation occurs - and this is a form of privatisation —the board of directors immediately receive large increases in salary and the workforce lose their jobs—and we shall come to that point later in the Committee stage. I believe that on a question of national interest such as this the amendment is proper and right. I hope the Committee will accept it.

Lord Kennet

What we propose from this side of the House is a compromise since we realise that rejection of the whole Bill is impossible after it has been through the other place.

Twenty or 30 years ago—when what was then laughingly called Selsdon man began to emerge—we used to make jokes about how far privatisation could go. In retrospect he seems quite pink. At that time I advanced the hypothesis that if we continued long enough in that direction it would not be long before the Army, the Navy and the Royal Air Force were privatised. They have not been yet but the Government appear to be embarking on the slippery slope towards precisely that.

Perhaps I may introduce an element into this debate which has not been mentioned so far and which I hope the Committee will not find irrelevant. I believe it is comparable. At the moment British soldiers are directly employed by a private company, as if they were a workforce picked up in the labour market. That company is Royal Ordnance plc, which has recently been privatised. Royal Ordnance plc has a contract with the Government of Kuwait. The noble Earl sent me a series of Written Answers on that subject yesterday from which it appears that the Government are quite satisfied with the terms of the contract between Royal Ordnance and the Royal Engineers: that is, the British soldiers concerned. That is good. However, the Government are not aware of the contents of the contract between Royal Ordnance and the Government of Kuwait. They are prepared to hire out British soldiers to a British company to work for a foreign government on they know not what terms.

Unless the amendment is passed, the Government would be prepared, on a comparable basis, to hire out the fabrication and design of British nuclear warheads to a company which might or might not be foreign and about which the Government might or might not know anything, under a contract of whose implications they might or might not be fully aware. If they show no more interest in such a contract than they have in the case of the Royal Engineers in Kuwait, that would be the end of the line in the privatisation of British military establishments.

Therefore, I commend the amendment to the Committee as a half-way house which retains an element of public control and introduces the private capital and private skills which the Government judge to be necessary, though we do not.

Lord Jenkins of Putney

Perhaps I may add one word to what my noble friend Lord Kennet said. One cannot be entirely surprised that this most mercenary of governments should finish up virtually converting our soldiers into mercenaries. Therefore, perhaps my noble friend ought not to have been surprised.

The Bill is a triumph of ideology over common sense. What is proposed in the amendment must commend itself to the Committee. I believe that while a number of the Members of the Committee may be enthusiastic about a form of economics about which we on this side of the House have considerable reservations to say the least of it, there may be a point at which they say, "No, it is not right that in this case the sole consideration should be financial". That reservation, which we are endeavouring to assert in the amendment, must, I feel sure, commend itself to some noble Lords on the other side of the Chamber. If that were not the case, it would seem that Thatcherism still rides; and although the face is less aggressive than it use to be underneath, it is much the same. I hope that the Committee will prove that wrong this afternoon.

Lord Chalfont

I must express my puzzlement as to the way in which the nuclear weapon is apparently being separated from all other forms of armament production. Since I have been interested in these matters I have always railed against any suggestion that the nuclear weapon is entirely different from all other weapons. It is a weapon of war. However, let us not become involved in philosophical discussions. I rise simply to make the point that weapons of war for Her Majesty's armed forces have always been made by private companies. Indeed, the company of which I am presently chairman makes the Trident submarine.

Lord Williams of Elvel

I am sorry to interrupt the noble Lord, but is he declaring an interest?

Lord Chalfont

I have declared that interest many times before and I declare it now.

Lord Williams of Elvel

Is the noble Lord declaring an interest today?

Lord Chalfont

Yes, I declare an interest. As chairman of the company which makes our Trident submarines, I point out that it is a public limited company owned, except for one special share, entirely by the public. There is no conflict of interest, in spite of the somewhat minatory attitude of the noble Lord. I simply make a point of fact.

I am not making any special pleading but simply pointing out that for many years, right up to the present, weapons of war for Her Majesty's armed forces have been made by private companies—or by public companies, however one wishes to describe them. In other words, they have been made by companies which are not nationalised companies. I am simply expressing puzzlement that a distinction should be made from those companies which make submarines, guns, or tanks. I am seeking to determine whether in my mind I can create any intellectual difference between the manufacture of those weapons and the manufacture of nuclear warheads. I find that I cannot.

5 p.m.

Lord Wilson of Langside

I do not know whether what I have to say is relevant but I found the statement that the noble Lord, Lord Chalfont, has just made quite extraordinary. I remember the day I was sitting in a train at Victoria Station, or wherever it was, and I heard that the first atom bomb had been dropped. I was returning to Germany after leave. I was half asleep when I heard two fellow soldiers discussing the news. I thought what they were saying was pure invention. Then the following day I learnt all about the bomb. That bomb changed the history of warfare and perhaps the history of the world.

That recollection came into my mind as the noble Lord, Lord Chalfont, made his statement. Perhaps he is right and I am wrong but I considered the atom bomb to be the beginning of the end of the history of warfare. The Committee will have to decide whether the noble Lord is right and whether I am wrong. Members of the Committee will recall the history of that extraordinary weapon and will have to decide whether those of us who are concerned about the concept of different treatment in this sphere are right or wrong.

Lord Chalfont

With the leave of the Committee, I hope I may reply to that somewhat apocalyptic intervention. It was never my intention to suggest that the nuclear weapon has not constituted a fundamental revolution in the history of warfare. I was talking about the matter of public and private ownership of companies producing weapons. In that context I do not see the difference between a nuclear weapon and any other weapon. I am otherwise in full agreement with what the noble Lord said. There is no need for the Committee to decide whether the noble Lord is right or whether I am right. We are both right.

Lord Jenkins of Putney

With the leave of the Committee, I should point out that we are discussing a special type of weapon. If it is a special type of weapon, it needs special protection. That is precisely what the amendment seeks to achieve.

Lord Zuckerman

Knowing the views of the noble Lord. Lord Chalfont, I assume he was not differmitiating between the production of conventional weapons by industry and the production of nuclear weapons, which are not necessarily the same as other weapons. If that is his view—I sincerely hope it is not—I dissociate myself utterly from his comments.

The Earl of Arran

The effect of this amendment would be to provide for my right honourable friend the Secretary of State to hold a majority shareholding in the contracting company. We are, however, far from persuaded for the need of such a requirement. Our aim in contractorising AWE is to allow fully flexible and efficient private sector management of the establishment—

Lord Williams of Elvel

I am sorry to intervene at this stage but the Minister refers continually to his right honourable friend the Secretary of State. That, however, is not the effect of this amendment. The effect of this amendment would be to give a power to the Secretary of State. It is neither here nor there whether that Secretary of State is the right honourable friend of the Minister or any future Secretary of State. We are talking about the Secretary of State.

The Earl of Arran

I take the noble Lord's point. At the moment I am referring to the present Secretary of State but I accept that there will be other Secretaries of State in the future. As I said, we are not persuaded of the need for the requirement in the amendment. Our in contractorising AWE is to allow fully flexible and efficient private sector management of the establishment. We are hardly likely to realise the full potential of that if we insist upon AWE being run by a company in which the Government retain a very substantial shareholding—in other words, a nationalised company. Such an arrangement would also be unlikely to encourage private sector companies to come and bid for the AWE management contract.

In any case, the whole point of contractorisation is to introduce best practice and experience from the private sector, which implies that those managers must have freedom to manage. This will not be achieved by a part government-owned company. I must emphasise that we do not need a government majority shareholding to make the contractor comply with our requirements at AWE. On those issues where it is necessary for us to keep a tight control on what is happening—such as safety and security—we will do so.

The noble Lords, Lord Mayhew and Lord Williams of Elvel, have commented on the fact that the Government, in providing financial incentives on safety performance for contractors, have thereby admitted that there is a conflict between the profit motive and safety. The Government have made clear that the contract will be drafted in such a way as to ensure that the contractor will have no financial incentive to compromise on safety practice. This does not imply any conflict between the profit motive and safety. It simply ensures that the profit motive will reinforce safety.

The Compliance Office has strong sanctions against inadequate safety performance, including the right to order the cessation of any process or facility which the Compliance Director may feel is not fully safe. However, to help ensure that such problems never occur in the first place, the contract will provide that it will not be in the contractor's financial interest to put production or other output requirements before safety. It is for those reasons that I urge the Committee not to accept the amendment.

Lord Williams of Elvel

Before the noble Lord, Lord Mayhew, decides what to do with his amendment, I must press the noble Earl on his statement that it is difficult to have a government-majority owned company which is well managed. I believe I have interpreted him correctly. Is the noble Earl saying that because the Government own a certain percentage of British Telecom that company is not well managed? Is the noble Earl saying that because the government have had a majority stake in BP for almost 50 years that company is not well managed? What point is the Minister trying to make?

The Earl of Arran

This is an extremely important matter as the noble Lord, Lord Williams, stated. It is important from the point of view of national security and the defence of the realm through its nuclear deterrent. The whole point of contractorisation is to introduce best practice and experience from the private sector. As I have already said, that implies that managers must have the freedom to manage. In this case we feel that would not be achieved by a part government-owned company.

Lord Mayhew

I wish to take up the point made by the noble Earl on whether there is a conflict between safety requirements and the hope of profit. I stated that the Government were offering financial incentives to the contracting company to observe high standards of safety. The noble Earl seemed to deny that. He said the Government were ensuring that there is no financial motive for the contracting company not to observe the highest standards of safety. One does not have to be a logician, a grammarian or a barrister to appreciate that if one takes the Minister's statement literally he is saying exactly what I have already said; namely, that to encourage the contractor to observe the highest standards of safety, we must ensure that he has no financial motive for not doing so. That is ridiculous. It is perfectly plain to everyone that safety in the production of nuclear weapons and research and development are all extremely expensive. There is duplication of men and materials and back-up of all kinds to cover contingencies which almost certainly will never occur. A private company is bound to require a financial incentive before undertaking such expenditure. The Government recognise that that is the case and have said so.

However, by recognising that fact the Government are saying that if the financial incentive is not provided we cannot rely on the contracting company to observe the highest standards of safety. No one can deny that that is the position. My simple amendment dilutes that conflict by making the Government the principal shareholder. My amendment does not remove the conflict altogether, but it dilutes it and that is one of its advantages.

I am sorry to find myself in disagreement with the noble Lord, Lord Chalfont. My case is—as I stated in introducing the amendment—that the production of weapons of mass destruction should not be entrusted to a private company. I would feel the same way about weapons of biological warfare and the production of gases. It is highly inappropriate that such production should be undertaken even by such a magnificent company as that over which the noble Lord, Lord Chalfont, presides. I hope the noble Lord would not claim that it would be appropriate for his company or similar companies to manufacture biological weapons. I was delighted with the intervention of the noble Lord, Lord Kennet, who reminded us of an ancient ideological dispute on how far privatisation should go, and how nobody dreamt that it should include the production of nuclear weapons.

I was reminded of an ideological discussion before the war at the Oxford University Labour Club when we debated how far nationalisation should go. It was decided that it should stop short at the nationalisation of ladies' hat shops. What a restrained attitude we had to nationalisation compared with the attitude of the Government to privatisation—privatising the means of mass destruction! It is a ludicrous misjudgment.

I feel that there is a big point of principle involved. We cannot hope to persuade everybody but in view of the magnitude of that principle, I believe that I should ask the House to divide on the amendment.

5.10 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 80; Not-Contents, 124.

Division No.2
CONTENTS
Addington, L.	Graham of Edmonton, L.
Airedale, L.	Grey, E.
Ardwick, L.	Hamwee, B.
Aylestone, L.	Harris of Greenwich, L.
Beaumont of Whitley, L.	Hilton of Eggardon, B.
Boston of Faversham, L.	Hollick, L.
Bottomley, L.	Hollis of Heigham, B.
Broadbridge, L.	Hooson, L.
Brooks of Tremorfa, L.	Houghton of Sowerby, L.
Campbell of Eskan, L.	Irvine of Lairg, L.
Carmichael of Kelvingrove, L.	Jacques, L.
Carter, L.	Jay, L.
Cledwyn of Penrhos, L.	Jeger, B.
David, B.	Jenkins of Hillhead, L.
Dean of Beswick, L. [Teller.]	Jenkins of Putney, L.
Desai, L.	John-Mackie, L.
Donaldson of Kingsbridge, L.	Kennet, L.
Dormand of Easington, L.	Kilbracken, L.
Ewart-Biggs, B.	Kirkhill, L.
Fisher of Rednal, B.	Longford, E.
Gallacher, L.	Mackie of Benshie, L.
Galpern, L.	Mallalieu, B.
Gladwyn, L.	Mason of Barnsley, L.
Glenamara, L.	Mayhew, L.

Mellish, L.	Shackleton, L.
Milner of Leeds, L.	Shepherd, L.
Molloy, L.	Stallard, L.
Morris of Castle Morris, L.	Stedman, B.
Mulley, L.	Stoddart of Swindon, L.
Ogmore, L.	Taylor of Blackburn, L.
Pitt of Hampstead, L.	Thurso, V.
Prys-Davies, L.	Tordoff, L. [Teller.]
Rea, L.	Turner of Camden, B.
Redesdale, L.	Underhill, L.
Richard, L.	Wallace of Coslany, L.
Ritchie of Dundee, L.	Whaddon, L.
Robson of Kiddington, B.	White, B.
Seear, B.	Williams of Elvel, L.
Sefton of Garston, L.	Wilson of Langside, L.
Serota, B.	Zuckerman, L.

NOT-CONTENTS
Aldington, L.	Holderness, L.
Alexander of Tunis, E.	Hood, V.
Alport, L.	Hooper, B.
Arran, E.	Howe, E.
Astor, V.	Jeffreys, L.
Attlee, E.	Johnston of Rockport, L.
Auckland, L.	Joseph, L.
Beloff, L.	Kimball, L.
Bessborough, E.	Kinloss, Ly.
Blyth, L.	Lawrence, L.
Boardman, L.	Liverpool, E.
Borthwick, L.	Lloyd-George of Dwyfor, E.
Boyd-Carpenter, L.	Long, V. [Teller.]
Brabazon of Tara, L.	Lytton, E.
Brougham and Vaux, L.	McColl of Dulwich, L.
Butterworth, L.	Mackay of Ardbrecknish, L.
Caithness, E.	Mackay of Clashfern, L.
Campbell of Alloway, L.	Macleod of Borve, B.
Carnock, L.	Mar, C.
Cavendish of Furness, L.	Margadale, L.
Chalfont, L.	Marlesford, L.
Clanwilliam, E.	Merrivale, L.
Coleraine, L.	Mersey, V.
Colnbrook, L.	Mottistone, L.
Constantine of Stanmore, L.	Mountevans, L.
Craigavon, V.	Mowbray and Stourton, L.
Craigmyle, L.	Munster, E.
Cullen of Ashbourne, L.	Murton of Lindisfarne, L.
Cumberlege, B.	Nelson, E.
Darcy (de Knayth), B.	Norrie, L.
Davidson, V. [Teller.]	Nugent of Guildford, L.
Denham, L.	Onslow, E.
Denton of Wakefield, B.	Orkney, E.
Dilhorne, V.	Pender, L.
Dundonald, E.	Peyton of Yeovil, L.
Elliot of Harwood, B.	Platt of Writtle, B.
Elton, L.	Plummer of St. Marylebone, L.
Flather, B.	Pym, L.
Fortescue, E.	Rankeillour, L.
Fraser of Carmyllie, L.	Reay, L.
Fraser of Kilmorack, L.	Renton, L.
Gainsborough, E.	Rodney, L.
Gardner of Parkes, B.	Sharpies, B.
Gisborough, L.	Sherfield, L.
Glenarthur, L.	Shrewsbury, E.
Gray of Conlin, L.	Skelmersdale, L.
Greenway, L.	Stockton, E.
Gridley, L.	Stodart of Leaston, L.
Grimston of Westbury, L.	Strathcarron, L.
Hailsham of Saint Marylebone,	Strathclyde, L.
L.	Strathmore and Kinghorne,E.
Halsbury, E.	Sudeley, L.
Hardinge of Penshurst, L.	Swinfen, L.
Harlech, L.	Swinton, E.
Harmar-Nicholls, L.	Teviot, L.
Harmsworth, L.	Thomas of Gwydir, L.
Henley, L.	Tombs, L.
Hesketh, L.	Tranmire, L.
Hives, L.	Tryon, L.

Ullswater, V.	Wedgwood, L.
Vaux of Harrowden, L.	Wise, L.
Waddington, L.	Wynford, L.
Wade of Chorlton, L.

Resolved in the negative, and amendment disagreed to accordingly.

5.18 p.m.

Lord Williams of Elvel moved Amendment No. 3: Page 1, line 24, leave out ("or another").

The noble Lord said: This is a probing amendment. As we understand it, the Bill as drafted would allow another company to become the employer of the existing workforce of the Atomic Weapons Establishment. If that is the case and the Government's intention, we should first of all wish to know it and secondly to warn that such a separation could cause problems. The employing company could be an organisation which exists only as an agency. Anyway, it would be extremely odd for the prime contractor not to employ the workforce as it exists at the moment at AWE.

I am sure that the noble Earl will agree that it is import ant that if there is to be contractorisation the workforce at AWE should be perfectly happy with the terms and conditions under which they will be employed in the future. It is part of a series of amendments that I shall move to try to ensure that. I beg to move.

The Earl of Arran

The effect of this amendment would be to rule out the possibility of transferring AWE's staff to a separate employing company, rather than to the contracting company itself. I believe that the amendment stems from a misunderstanding of the "two company" structure which we propose to operate at AWE. Perhaps it would be helpful, therefore, if I explained the two company structure in more detail.

On vesting day, AWE's staff will be transferred out of the Civil Service and will become employees of a company formed by the Secretary of State for that purpose. The company or consortium which is successful in the competition for the contract to operate AWE will be required, as a condition of the contract, to buy this employing company. For the duration of the contract, therefore, the employing company will be owned by the contracting company and will be indistinguishable from it for all intents and purposes. There is no question of any potential division of executive responsibilities between the two companies—the sole function of the employing company is to be the employer of AWE staff.

The reason that we wish to have a separate employing company rather than transferring AWE staff directly to the contractor is that there might come a time when we wish to change the contractor. If the staff were employed directly by the contractor it might be difficult to remove him—for without him there would be no staff to carry out AWE's work. But the employing company eliminates those problems. If a contract is terminated and not renewed, the incumbent contractor will be required to sell the employing company to his successor, who can thus take over responsibility for operating the establishment with the same staff and minimum disruption. The employing company also makes it possible for the Secretary of State to take back responsibility for running AWE himself should he choose to do so; for example, in the event of a gap between the end of one contract and the beginning of the next.

That is the same arrangement that was adopted when contractor operation was introduced at the royal dockyards. I can assure the Committee that the two company structure has worked well at both Devonport and Rosyth.

The two company structure has considerable advantages, not only for the Ministry of Defence, but also for the AWE workforce, for which it provides continuity of employment. If there were to be a change of contractor, AWE staff would remain employees of the same employing company, but that company would be acquired by the new contractor.

If this amendment were made, AWE staff would have to be employed directly by the contractor. What would happen then if the contractor failed to perform satisfactorily and the Ministry of Defence wished to appoint a new one? The entire AWE workforce would still be employed by the old contractor, who would have little incentive to co-operate with his successor. Similarly, if the Secretary of State wanted to take back direct responsibility for operating AWE in some emergency, the mechanics of arranging it might be difficult. With a two company structure, however, he would simply take back the employing company, and with it the entire staff of AWE.

In short, the one company structure which this amendment imposes on AWE would effectively be handing the AWE workforce to the contractor for good, rather than for the duration of his contract. That would cause difficulties for both AWE and its workforce. For that reason, I urge your Lordships to reject this amendment.

Lord Williams of Elvel

I am most grateful to the noble Earl for his explanation. Did I understand him to say that if the prime contractor were changed for one reason or another the prime contractor whose subsidiary employs the workforce would be required to sell the company which employs the workforce? I hope he will confirm that I heard him correctly. At what price, under what circumstances and for what consideration will the prime contractor sell the employing company to the future contractor? What is the price of the workforce? We cannot treat people like cattle. They have to be properly employed under proper conditions.

Perhaps I may refer to the example of Rosyth. I am afraid that the two company structure has not worked particularly well. There are more redundancies coming up. There was a 50 per cent. loss on start-up of the company. It seems to us that the workforce should be properly protected by being employed by the prime contractor.

If the Government wish to take back the contract from the prime contractor, it follows axiomatically that they take back the contract and the workforce in the same way that they propose to privatise the contract and the workforce. There seems to me no difficulty in writing that into the prime contract.

I am not sure that Rosyth and Devonport are good examples. I am uncertain about the conditions that the Government propose for this putative sale of a company employing the workforce on a change of prime contractor. It is still an area of great uncertainty. I hope that the noble Earl will be able to clarify the matter before I decide what to do with the amendment.

The Earl of Arran

The answer to the noble Lord is, yes, a contractor would be required to sell an employing company to its successor at the same price for which it bought it. At Devonport and Rosyth it was a nominal figure of £50,000.

Lord Williams of Elvel

I am not sure that the noble Earl has fully met all my points. The nominal figure of £50,000 is therefore just a device for ensuring that there should be another employer company other than the prime contractor. What is wrong with having a one company structure? The two company structure in our view does not work particularly well at either Rosyth or Devonport. The noble Lord is hoist by his own petard. If the contractor is required to sell the employer company at the figure for which he bought it,—namely, £50,000—he then says, "This will be written into the contract." It is therefore not a sale but a straightforward transfer. Therefore, why should not the sum be £1? Rather than a subsidiary, why should not the prime contractor be responsible for the whole matter, thus avoiding all those difficulties? I cannot see the logic in the Government's argument.

The Earl of Arran

Perhaps I may repeat and try to clarify that which I have already said. The reason that we wish to have a separate employing company rather than transferring AWE staff directly to the contractor is that there might come a time when we wish to change the contractor. If the staff were employed directly by the contractor it might be difficult to remove him, for without him there would be no staff to carry out AWE's work. But the employing company eliminates those problems. If a contract is terminated and not renewed, the incumbent contractor will be required to sell the employing company to his successor who can thus take over responsibility for operating the establishment with the same staff and minimum disruption. The employing company also makes it possible for the Secretary of State to take that responsibility for running AWE himself, should he choose to do so. The precise terms of the contract have not exactly been worked out. But of course that will be done with considerable care and caution.

Lord Williams of Elvel

The noble Earl repeats what is in his brief. That does not help us. I am interested to know why there should be a separate company when any contract—and I shall offer my services to draft the contract if the noble Earl wishes—can perfectly easily say, "Under such and such circumstances the workforce will go back to such and such". It is a perfectly easy contract to draft. I do not understand why the Government persist in this structure which has not worked well elsewhere.

Furthermore, there are considerable problems. Who will be the directors of the employer company? Will they all be members of the prime contractor company, which is the parent? Will there be employee directors? Will there be union representatives who are directors of that board? Will terms and conditions for the directors of that board be different from those of the directors of the prime contractor? We have no idea of the answers because the Minister continues to refer to the contract which we have not yet seen. Will he consider those points and let the Committee know his feelings?

5.30 p.m.

The Earl of Arran

I shall certainly consider them. As I said, the actual terms and conditions of the contract have not yet been fully worked out. However, all the issues to which the noble Lord draws attention will be taken into account when drawing up the final terms of the contract.

Lord Jenkins of Putney

Before my noble friend makes a final decision about his amendment, perhaps the Minister will clarify a further issue. Would it not be a more simple procedure if upon the change of contractor the Secretary of State automatically became the temporary employer on the same terms that existed with the original employer? Thereby the position of the employees will be safeguarded in the interim period before a satisfactory secondary employer is found. Is not the idea of setting up a company to carry out that task unnecessary? There would be many difficult and dangerous problems which the Secretary of State, acting as pro tem employer, could avoid. Members on this side of the Committee who have knowledge of what has happened in similar situations are filled with considerable perturbation and frankly we do not like it.

The Earl of Arran

The transfer of staff is not as simple as the noble Lords, Lord Williams and Lord Jenkins, make out. I must remind them that TUPE 81 provides for the transfer of staff from one employer to another. It is a complex business which is now being considered. However, as the Committee stage progresses I believe that I shall be able to give clear instances of the transfer of staff meeting exactly the conditions that are now encountered.

Lord Williams of Elvel

I am well aware that TUPE 81 will apply. We shall come to its provisions later in Committee. However, the important point is that the continuity of employer is essential. One simply cannot have staff being shoved around from one employer to another, to another and yet again to another; there must be continuity. If there is a change in the status of the employer company the contracts may well change without knowledge of the trade unions or anybody else. The Government may wish to think about the matter again.

Of course I shall read what the Minister has said, but I remain wholly unconvinced that the Government are adopting the right solution. Perhaps the Minister has received by courier extra messages that he would like to convey to the Committee. If so, I shall listen to him before deciding what to do with my amendment.

The Earl of Arran

I can finally say to the noble Lord, Lord Williams, that the two-company structure ensures continuity of employment in AWE work.

Lord Williams of Elvel

We are not getting very far. I must read carefully what the Minister has said and take advice. I reserve our position: at a later stage I may wish to return to the matter. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Lord Williams of Elvel moved Amendment No. 5:

Page 2, line 8, at end insert: ("( ) Such a company shall have a duty to consult and agree with recognised Trade Unions as to the establishment and maintenance of suitable machinery for negotiation and consultation on terms and conditions of service, to provide reference to arbitration, conciliation or mediation in the event of dispute, and to discuss other matters of mutual interest to the company and its employees.").

The noble Lord said: Amendment No. 5 is designed to ensure that the workforce is properly treated at the point of transfer. As the Committee is aware, the workforce now within the atomic weapons establishments as part of the Ministry of Defence is within the Civil Service and is therefore covered by the Whitley arrangements. My amendment seeks to ensure that suitable and acceptable joint negotiating and consultative machinery is established by the new companies once they are under commercial management.

The present Whitley arrangements ensure that management and recognised trade unions—both industrial and non-industrial—meet on a regular basis to consider problems of mutual concern and to deliberate on their resolution. That covers health and safety, which is an extremely important issue in the AWE, as the Minister will recognise. Between such formal meetings there are many informal contacts which are possible largely because of the formal framework of the existing procedures.

The Civil Service is also covered by an arbitration agreement which provides for either side to seek to put an issue to arbitration if agreement cannot be reached by negotiation. That is a vitally important mechanism in avoiding industrial conflict and dispute. I am sure that the Committee will wish to enshrine in legislation the avoidance of any industrial dispute or conflict which could jeopardise this extremely important activity.

I have no doubt that in reply the Minister will say that negotiating and consultative arrangements will transfer under TUPE 81. However, two problems arise. The first is that at present TUPE 81 applies only at the moment of transfer. After that, it is all up for grabs. Secondly, negotiation arrangements will have to be changed because there can be no reference to a higher level from the new employer company. One imagines that access to the Civil Service arbitration tribunal will be lost. Therefore the workforce will be considerably disadvantaged by the transfer unless the Government accept the thrust of my Amendment No. 5.

I need not emphasise to the Committee the importance of this issue. As a nation we cannot afford to have industrial disputes at the point of manufacture of our nuclear warheads. On any occasion, industrial disputes are undesirable but in this instance they are wholly wrong. We seek to ensure that the workforce has the proper protection that now obtains and to ensure that proper negotiating machinery is in place after transfer and continues to be in place after TUPE 81 stops operating. I beg to move.

The Earl of Arran

The aim of this amendment is to impose a duty on the AWE contractor to negotiate and to consult with the recognised trade unions on terms and conditions of service. The Government's chief concern is with the welfare of the workforce at AWE as well as its proper management. We believe that contractorisation will benefit AWE as a whole and its staff.

I hope that relations with the unions will be as close and constructive as possible, and I am sure that both AWE management and the trade unions will work towards that end. The fact that AWE staff will no longer be civil servants does not mean that they will no longer be trade unionists. No private sector company in the defence industry has ever done away with the unions. Other major firms in the defence industry such as Rolls-Royce, British Aerospace and Hunting Engineering all recognise the unions. It is firms such as these or others of similar stature which would be involved in running AWE.

We are thus not disposed to accept the amendment. The facts are that under TUPE 81 the contractorised AWE will inherit the establishment's existing consultative machinery and all currently recognised trade unions. Any subsequent change that the contractor may wish to make through the employing company must be by negotiation. If there is to be any change it must involve full consultation with the workforce. Like any good employer, it will be very much in his interests to consult and negotiate with staff. If he does not consult properly and fails to carry through what has been inherited, he can be taken to an industrial tribunal.

The fear lurking at the back of some trade unions' minds might be the possibility, however remote, that the workforce may decide that it does not want to be represented by unions. In fact we believe that the workforce at AWE wants to have a constructive relationships with the unions; but in the end it is for the workforce to decide. We should not impose on AWE any statutory obligation relating to the role of unions that does not apply elsewhere in industry. In the light of that explanation, I hope that I have persuaded the Committee not to accept the amendment.

Lord Mayhew

The amendment does not merely require a company to consult, but it requires it to agree with recognised trade unions. That seems to go a little further than may be regarded as desirable. It is one thing to consult and another thing to require agreement by law.

I am slightly worried too by the feeling that although the future workforce will certainly wish to carry on the excellent traditions of the present AWE, and will be loyal to its unions, it seems to me that if we pass this amendment we are pre-empting its view. It may be that the noble Lord, Lord Williams, can reassure me; but it seems to me that the amendment is imposing on the future staff which I am sure should be and will be loyal to their trade unions but should not be told to be loyal by legislation.

Lord Williams of Elvel

I am grateful to the noble Earl and to the noble Lord, Lord Mayhew, for their comments. My problem remains as it was when I moved the amendment. There is a long-established negotiating procedure. So far as I understand it, that has worked extremely well. At present, that is being by-passed to a certain extent by Hunting-BRAE under phase 1 by means of something called team briefings which are not part of the negotiating machinery.

Furthermore, I am advised that trade unions are finding it difficult to obtain information and hence are finding it difficult to represent the interests of their members.

The noble Lord, Lord Mayhew, raised a point about whether the company shall have a duty. At present the company has a duty to conform to Civil Service arrangements. I do not believe that it is sufficient for the noble Earl to say simply that if unions or representatives of the workforce have a grievance, they can take matters to the industrial tribunal as they can in other industries because here we are dealing with a special case. With numerous contractors about the place, we may well be in a position in which the industrial relations machinery which has worked extremely well to date—and I hope that the noble Earl will agree that it has worked extremely well to date—will be cast aside without some sort of provision of this nature.

I do not wish to press the amendment to a Division. However, I should be grateful if the noble Earl could reassure me more than he has at present that the Government recognise that contractorisation is different from privatisation. The contractorisation of the production of nuclear warheads requires an industrial relations machinery which is smooth, efficient and avoids disputes. That is what I am trying to impress upon the Government. I believe our interests are at one. However, I believe that if the noble Earl says that the matters can be taken to an industrial tribunal, then we shall be in some sort of trouble.

5.45 p.m.

The Earl of Arran

As the noble Lord, Lord Williams, said, this is a special case from the point of view of many aspects. This particular instance is special from the point of view of the transfer of the workforce being smooth and efficient. That is what one hopes will happen. After transfer, the employer cannot change conditions without the consent of the workforce. That is part of the normal consultative process.

Lord Williams of Elvel

When the noble Earl says that the new employer company cannot change the terms and conditions of employment without the consent of the workforce, what does he mean?

The Earl of Arran

I mean that there must be a consultation process in order that the transfer can be agreed, as in all circumstances of this sort. I do not believe I can add to what I have said.

Lord Williams of Elvel

The noble Earl used the expression "without the consent of the workforce". By that does he mean that after TUPE 81, which we agree applies at transfer, any change in those arrangements must have the consent of the workforce? In what form will that consent be expressed? Will that be by a unanimous or majority decision? What does the noble Earl have in mind when he uses the expression "without the consent of the workforce"?

The Earl of Arran

The trade unions will still have a role to play at AWE after contractorisation. The negotiation machinery is in place now in the form of joint consultative committees on which those matters are discussed. The department remains ready to meet the trade unions to discuss any specific issues which may be of anxiety.

Lord Williams of Elvel

Do I take it that the expression "consent of the workforce" means exactly what it says; namely, that the workforce, in some procedure to be discussed, must deliver its opinion and consent to any changes in the arrangements which have been passed over under TUPE 81? If that is the case, will the noble Earl give an assurance that that will be written into the contract?

The Earl of Arran

I have said that a very close consultation process will take place between the workforce and the unions. Every employee must agree any change made by his employer to his terms of service otherwise it is a breach of contract.

Lord Williams of Elvel

I believe we are gradually getting somewhere on this matter. We do not want that consultation, which is always very valuable, to be something like, "We will tell you what you are doing". We do not want it to be said that that is consultation. If the noble Earl says that the consent of the workforce is required—and I noted carefully his words—then we are getting somewhere. I shall study carefully what he said and I may come back to this at a later stage, having received advice on the matter.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 6: Page 2, line 8, at end insert: ("( ) In pursuance of the arrangements made hereunder the Secretary of State shall ensure that the redundancy provisions applicable to all employees of any company shall be equivalent to those presently embodied in the Principal Civil Service Pension Scheme and will set up out of monies provided by Parliament a redundancy fund for the benefit of all qualified employees declared redundant after the transfer of the undertaking.").

The noble Lord said: In moving this amendment, I shall weak also to Amendment No. 7. Amendments Nos. 6 and 7 deal with any possible redundancies which may result as a consequence of contractorisation. At present there is no provision in the legislation for the Ministry of Defence to fund any redundancies caused by its relationship with AWE. That relationship with AWE will be crucial in the future. These will be difficult and important issues. The Ministry of Defence will be the one monopoly buyer of the prime contractor's products. Therefore, there is a monopoly buyer—the Ministry of Defence—and a monopoly provider of the products—the prime contractor.

If the prime contractor or the employer company decides in its wisdom that there must be redundancies, in our view money should be available from the Ministry of Defence to fund any redundancies. The Government should make it clear that they will ensure that that happens.

Amendment No. 7 would allow the setting up of a scheme which will be properly funded. It will ensure that the argument which I have put forward as regards redundancies. If there are to be redundancies, then qualified employees should be properly protected by a funded programme set up by the Ministry of Defence. In our view that is not something that should be left to the private contractor. I beg to move.

The Earl of Arran

The effect of these amendments would be to write into the statute book that redundancy provision after contractorisation was equivalent to that in the Principal Civil Service Pension Scheme, and should be funded under arrangements made by the Secretary of State. Amendment No. 6 also requires that a redundancy fund should be set up out of moneys provided by Parliament.

We cannot guarantee that no redundancies will ever occur at AWE, or in the Ministry of Defence, or in the Civil Service generally. But the introduction of contractor operation at AWE will not itself cause redundancies. The relevant factor is workload, not the status of the workforce. However, on contractorisation, a new redundancy payments scheme will be set up that will, when taken together with the pension scheme benefits, provide redundancy conditions at least as good as at present. That requirement will be written into the contract and the AWE contractor will be obliged to comply. That assurance has been given previously by Ministers in another place and I am pleased to repeat it today in your Lordships' Chamber. There is no need for legislation on this point; we shall cover redundancy conditions in the contract. I should perhaps add that in this Bill, as with all legislation, we try to avoid including material which is superfluous, however benign its content and intention.

The amendments, moreover, show a misunderstanding of the concept of redundancy. Redundancy money is not paid from a fund as such, as pensions are paid from a pension fund. It is paid as part of a pay and provisions package. I believe, however, that the point behind the amendments is to guarantee redundancy payments should the AWE contractor be unable to meet his obligations to do so. We have already met this point in the Bill, albeit in a slightly different way to that proposed by the noble Lord. Let us suppose, for the sake of argument, that the worst happened and the contractor went bankrupt. I stress that this is a very unlikely scenario, but it is a useful illustration. The employing company, as the noble Lord will recall, is separate from the AWE contractor, so that company would not itself be in difficulties. My right honourable friend the Secretary of State could then simply take back the employing company into his sole ownership. In that way, staff pay, and if necessary redundancy payments would be fully safeguarded.

In summary, my arguments against these amendments are not so much with their aim—we also intend that redundancy benefits should be fully safeguarded—but rather with the means by which they seek to achieve those aims. We have already given assurances that redundancy conditions, when taken with pension scheme benefits, will be at least as good as at present. Similarly, in the very unlikely event that the AWE contractor could not meet his obligations, the Bill already allows the Secretary of State to take back the employing company into his ownership, thus safeguarding pay and redundancy. It is for those reasons that I invite the Committee to reject the amendment.

Lord Williams of Elvel

I am grateful to the noble Earl for that explanation. This Committee appears to be leaving a great deal to the contract. I have no doubt that the contract will do exactly what the noble Earl says it will do. I have not previously dealt with a contractorisation Bill, but I have dealt with privatisation Bills. As with other Bills—indeed two Bills I am taking through your Lordships' House from the Opposition side at the moment—we seem to produce an enabling Bill and everything else is left to the contract, the articles of association or something else which Parliament never sees.

The noble Earl is saying that we shall not see the contract because it is not yet ready. In that case, I can see no problem in including a provision in the Bill. However, I would be perfectly satisfied with what the noble Earl says if he will be kind enough to write to me to that effect and enclose a copy of what he said. That will enable me to advise the trades unions involved that that is the Government's position and that what he said will be in the contract. That is an important matter.

Obviously I accept what the noble Earl says. But I should like further confirmation. It seems to me that the Bill cannot properly be discussed without some sight of a draft contract. Will a draft contract of any sort be available to the Committee before we reach Report stage? If not, we shall have a series of discussions somewhat in vacuo, which could be resolved if we were able to see the draft contract. I do not wish to press the amendment to a Division. However, we need confirmation. I hope that the noble Earl will be able to give us some reassurance in regard to the contract, and that he will use his best endeavours to place it before the House before we reach Report stage.

Lord Harris of Greenwich

Before the noble Earl speaks, perhaps I can say a few words. The Home Office made available a draft contract in regard to the private sector remand establishment in Humberside. There was no difficulty. A copy of the contract was placed in the Library of the House. In my view, that was the correct thing to do. If it could be done by the Home Office, why cannot it be done by the department of the noble Earl? Perhaps he could tell us.

The Earl of Arran

My understanding is that there will not be a draft contract available in the time that the noble Lord, Lord Williams, suggests. I have stood at this Dispatch Box and already given assurances that redundancy commissions, when taken with pension scheme benefits, will be at least as good as they are at present. Those guarantees will certainly be included in the draft contract.

Lord Williams of Elvel

Is there not already a contract for phase 1? Is Hunting-BRAE not already operating under a contract of some sort?

Lord Harris of Greenwich

Perhaps the noble Earl can give me an answer to my question. The noble Earl spoke but he did not deal with my question. It is the expectation of most of us that when questions are asked of Ministers they are answered.

The Earl of Arran

I do not wish to be unforthcoming to the noble Lord, Lord Harris of Greenwich. Perhaps I need not take up the time of the Committee and I can write to both the noble Lords, Lord Harris and Lord Williams setting out our principles and the state of play on the draft contract.

Lord Williams of Elvel

We can do better than that. I intend to continue with the amendments which will no doubt refer to the contract. During the course of those amendments, I am sure that the noble Earl will take whatever advice he feels appropriate and allow us to have information on what the state of play is on the draft contract. I know not whether the question of the noble Lord, Lord Harris, will be answered in the course of this debate, nor my question regarding whether under phase I Hunting-BRAE is operating under a contract. If it is not, is there a contract? All those questions remain for the moment in the air. We shall certainly come to them as we go through the amendments before the Committee.

The Earl of Arran

Perhaps I can be of a little further help to the noble Lord, Lord Williams. I understand that this is a contract of considerable size and length. It is a classified document and it will not be available until the end of next year.

Lord Williams of Elvel

The contract will not be available until the end of 1992. Therefore the noble Earl is asking the Committee to discuss a Bill which enables the Government to do certain things, the realisation and the principles of which will not be known at all, and not known to the participants, until the end of next year. We are at least clear on that matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

6 p.m.

Lord Williams of Elvel moved Amendment No. 8: Page 2, line 21, at end insert: (""premises" means any buildings that are fit for the purpose for which they are constructed.").

The noble Lord said: The amendment refers to "premises", which are referred to at page 2, line 21, of the Bill and are to be designated by the Secretary of State. It is my understanding that there have been some problems with premises, particularly at Aldermaston. The object of the amendment is to ensure that radioactive materials and equipment are stored in proper facilities, with due regard to the full safety standards and requirements which at present exist. We wish to ensure that the contractor is obliged to uphold these standards and that stores, materials and equipment are kept in purpose-built buildings and facilities which are adequately shelled with lead or concrete.

The Committee may be aware that there was an accidental release of tritium gas at Aldermaston. The Atomic Weapons Establishment plans to build special facilities there affording primary and secondary containment which will in theory prevent the release of tritium gas outside the plant. But they will not be ready for about five years. We need to have assurances that that construction will go ahead.

There is some suggestion that substandard materials have been used in the construction of the A90 complex. The substandard items were in the ducting and ventilation system. As I understand it, the complex was not accepted by the Ministry of Defence and subsequently it was refurbished using proper materials. I believe that the noble Earl knows what "proper materials" means. The concern is that the contractor may well accept substandard construction and materials which may not contain the hazardous products. The object of the amendment is to make absolutely certain that the contractor will be under an obligation to continue the work which is being done at the moment and also that he makes absolutely certain that the highest levels of safety will be maintained in the installation in which he is operating. I beg to move.

The Earl of Arran

The amendment states that the premises to which the Act will apply would be, any buildings that are fit for the purpose for which they are constructed". We all recognise that it is important to have the right buildings at Aldermaston and the other establishments. Indeed it is very right. During the 1980s problems of cost escalation and delay were experienced with the Aldermaston capital programme. This is a billion pound programme of investment in new buildings and facilities, the centrepiece of which is the new A90 building for the manufacture and processing of fissile components for nuclear warheads. These matters were considered in detail in successive reports by the Public Accounts and Defence Select Committees in another place.

Against that background, the National Nuclear Corporation Limited was appointed in 1988 as the overall project manager of the AWE capital programme. It has great experience in managing such programmes and in the commissioning of civil nuclear facilities. Its appointment did not imply that staff at AWE were incompetent but rather that nuclear scientists are not adept at managing building programmes; it is not their expertise. Shared responsibility for capital projects between the PSA and MoD also contributed to the difficulties.

I am pleased to say that the A90 problems are now firmly in the past. Construction work is complete. Equipment installation is largely complete and commissioning of the building and equipment is under way. We shall be able to meet the requirements for Trident production, and I am pleased to say that the Trident programme is on course to meet its in-service date of the mid-1990s.

Another major new capital facility at Aldermaston is the A91 building for the treatment of radioactive liquid effluent. Like A90, this is built but not yet commissioned. Commissioning involves running the various treatment processes under simulated operational conditions. No radioactive materials have been introduced into the building. This major step was planned to take place at the end of 1991 following completion of the commissioning programme. However, earlier this year during commissioning some of the stainless steel pipework and filter vessels of A91 were found to be leaking; that is, leaking non-toxic, non-radioactive test fluid. Initial inspection revealed the cause to be corrosion from the inside, mainly adjacent to the welds. Commissioning was stopped and an investigation launched. The detailed report is yet to be completed.

One of the purposes of commissioning is of course to ensure that any such problems are discovered before the new facility is used operationally. There is no connection with previous welding problems with the ductwork in A90 which were reported to the Defence Committee in 1989 and which have long since been solved. We are confident that the A91 corrosion problem will also be solved, and there is certainly no threat to Trident.

As the noble Lord, Lord Williams, mentioned, a tiny amount of the radioactive gas tritium was released at Aldermaston on 19th February. That has nothing to do with A90, A91, NNC Ltd., Hunting-BRAE, contractorisation or this Bill. There is no tritium in A91. The release occurred in a research, not a production, facility. The work within this facility and the personnel employed there have not been e langed or affected in any way by the interim management contract. The release was minor and the maxim urn dose that could result to any member of the public would be less than one microsievert. Members of the public receive every year on average over 2,000 times as much radioactivity from natural and background sources. The resultant dose to the workforce would also be extremely small; no greater than that to the public in this instance.

In summary, there is no need for this amendment as all buildings at AWE are fit for their intended use. For that reason I seek the Committee's rejection of the amendment.

Lord Kennet

Before my noble friend decides what to do about the amendment, can the noble Earl say whether these matters in general—that is to say, the fitness of the buildings for the purposes for which they are constructed, what they are lined and roofed with, the question of tritium and so on—will be within the province of the director of the Compliance Office, or will they remain under the direct jurisdiction of the Secretary of State as the owner of the premises throughout the establishments?

The Earl of Arran

Our plans are that land facilities and other assets—namely, capital facilities—will remain in Crown ownership but they will be operated by the contractor. The Government will ensure that capital facilities are appropriate for the task.

Lord Mayhew

In what way will these matters come under the control and monitoring of the compliance officer? Can the noble Earl say whether the report on corrosion will be published and, if so, when?

The Earl of Arran

The compliance officer will be absolutely insistent on and very much responsible for matters such as safety and security during the operation. That will certainly be the case, as is most appropriate.

Lord Kennet

Will the Secretary of State have any source of information on such matters as these other than the Compliance Office?

The Earl of Arran

I am not absolutely certain of the answer to that. It is a good question. Perhaps I may write to the noble Lord and make sure of the duty of the Secretary of State in these particular circumstances.

Lord Williams of Elvel

I am grateful to the noble Earl for saying that he will write to all of us. We all enjoy letters from him.

Serious questions need to be addressed about the premises which are now under consideration. The noble Earl quite rightly referred to the A91 stainless steel pipework. He was right to say that there was a corrosion problem. It had been reported to the local press so it was no particular news to anybody. Is this corrosion problem to be patched up before contractorisation, or will it be properly repaired to the highest standard required in the industry before contractorisation? Who will pay for that? Will it be the Ministry of Defence, or will it be a charge on the new contractor when he takes over these desirable premises? That is what he wants to do.

Before the appointment of NNC, the facilities project management contractor, it is my understanding that this package of work was in the hands of the PSA and not the nuclear scientists at Aldermaston. Can the noble Earl confirm that? Finally, if the A90 complex is delayed, will not production work continue in outdated buildings? The example, from the United States, is terrifying about what happens when production of these very important and difficult products takes place in outdated buildings.

The Earl of Arran

I do not wish to be patronising, but these are obviously important and sensible questions which need to be addressed very carefully. The Compliance Director will monitor everything a contractor does, including anything which relates to the premises. If there are questions which I have not answered I shall advise the noble Lord, Lord Williams of Elvel, as soon as possible.

Lord Williams of Elvel

I am most grateful to the noble Earl. I do not wish to hold up the Committee. We have to get on with business. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

Clause 1 agreed to.

Lord Williams of Elvel moved Amendment No. 10: After Clause 1, insert the following new clause:

("Inspection of accounts by Comptroller and Auditor General

Subject to section 1(2) above an account of the contractor shall be open to the inspection of the Comptroller and Auditor General.").

The noble Lord said: This is a very simple but really quite important amendment. If approved, it will allow continuing parliamentary scrutiny of AWE's finances and the finances of the prime contractor. This is particularly important because of the valuable work that has been carried out by the Public Accounts Committee in another place in its scrutiny of these premises, as of the whole establishment, and the fact that AWE's work will be derived entirely from the Government. Again we get back to this thought that the Ministry of Defence will be the sole purchaser of the product of the prime contractor. It is therefore of vital interest that the taxpayer and the taxpayer's interests should be properly protected. I beg to move.

Lord Kennet

Before the noble Earl says that the Bill will be all right without this amendment—which I expect it will, though I hope it will not—perhaps I may ask whether he or the Secretary of State has called for a detailed account of all the reasons why things went wrong in the United States on the environmental pollution front and on the fraud front. The United States Government are the victims of massive fraud and massive malpractice. That has called for the most heroic remedies by the incoming Secretary of Energy. Every one of those malpractices, frauds and mistakes—no doubt some honest mistakes, too—could have been found out, prevented or, learnt about in advance, or at any rate at the moment that they were happening, if there had been a sufficient and sufficiently immediate auditing procedure in the United States. Clearly there was not, otherwise those disasters would not have occurred. What steps have the Government taken in advance in preparing the Bill and in preparing their minds for operating it to ensure that we do better when we have to cope with private contractors here?

6.15 p.m.

The Earl of Arran

The effect of this amendment would be to open the accounts of the contractor to the inspection of the Comptroller and Auditor General. The facts are that the Comptroller and Auditor General can currently look at the MoD's relations with any defence contractor to ensure that the taxpayers' money is being wisely spent. He already has the right to do this, and to have access to departmental papers, without specific legislation in every case. Consequently, we do not need this Bill to give him that right in respect of our relations with the AWE contractor.

The amendment relates specifically to access to the contractors' accounts. These will, naturally, be prepared in accordance with the Companies Act and thus publicly available. Once again, we do not need the Bill to specifically provide for that to happen.

If, however, the amendment is seeking a wider remit for the Comptroller and Auditor General in respect of the contracting company, to enable him to see all their internal papers, then I must say that I believe it would be wrong to attempt such an effect. The contractor operating AWE will be in the same position as any other defence contractor. It would be inappropriate and unfair to provide for any greater access to background, or commercially confidential information, than is currently available to the Comptroller and Auditor General. Furthermore, the wording of the proposed amendment does not parallel that of the National Audit Act 1983 so it would not, in any event, have that effect.

However, under the National Audit Act 1983 the Comptroller and Auditor General does have rights of access to documents in the control or custody of the Ministry of Defence, including those originated elsewhere. It will therefore be up to him to use the power that he already has to go into the Ministry of Defence and obtain the papers that he requires. These arrangements work satisfactorily in other cases like the royal dockyards and there is no reason why they should not do so in this instance.

I conclude, therefore, that the additional powers envisaged by this proposed amendment are superfluous, in so far as the contractor's accounts will be published in accordance with the requirements of the Companies Act and the necessary powers already exist for the Comptroller and Auditor General to consider the MoD's relations with the AWE contractor. If, however, the principle behind this amendment is that the contractor should be subject to audit by the Comptroller and Auditor General then I see no reason for putting him in a different position from any other defence contractor, including the dockyard contractors, in respect of whom such a requirement does not exist. It would be unfair to insist that it did so in this case. It is for that reason that I urge your Lordships not to accept this amendment.

Lord Williams of Elvel

I am grateful to the noble Earl for his response. It is my belief that the prime contractor to be set up as a result of the passage of this Bill is in quite a different position from any other defence contractor. Other defence contractors have other business; they can sell their products elsewhere. This is a contractor which is to be set up for the unique purpose of running premises owned by Her Majesty's Government, for no other purpose, and, it will have no other business whatever. Therefore, I do not accept the argument that this is to be treated as any other defence contractor. Nevertheless, I shall read very carefully what the noble Earl said. I may well wish to come back to this matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 [Provisions applying to the transfer of certain employees]:

Lord Williams of Elvel moved Amendment No. 11:

Page 2, line 29, at end insert: ("(1A) The Transfer of Undertakings (Protection of Employment) Regulations 1981, in their application to the transfer of the undertaking or any part of it, shall have effect as if, for regulation 10 (duty to inform and consult trade union representatives), there were substituted the provisions of subsections (2A) and (4) below, and the remedies by way of complaint to an industrial tribunal provided for by, and the other provisions of, regulation 11 shall be available and shall apply in relation to those subsections as they would in relation to regulation 10 or any corresponding provision of it. (1B) Long enough before the transfer to enable consultations to take place between the Secretary of State and the representatives of the independent trade unions recognised by him in respect of the employees, the Secretary of State shall inform those representatives of—

1. (a) the fact that the transfer is to take place, when approximately it is to take place, and the reasons for it;—
2. (b) the legal, economic and social implications of the transfer for employees;
3. (c) the measures which he envisages he will, in connection with the transfer, take in relation to those employees or, if he envisages that no measure will be taken, that fact; and
4. (d) the measures which the company which is to become their employer envisages that it will, in connection with the transfer, take in relation to those employees or, if the company envisages that no measures will be so taken, that fact.

(1C) The company which is to become their employer shall give to the Secretary of State such information at such a time as will enable him to perform the duty imposed on him by virtue of subsection (1B) (d) above. (1D) The Secretary of State, where he envisages that he will, in connection with the transfer, be taking measures in relation to the employees in respect of whom an independent trade union is recognised by him, shall enter into consultations with the representatives of the trade union and in the course of those consultations shall—

1. (a) consider any representations made by the trade union representatives, and
2. (b) reply to those representations, and, if he rejects any of those representations, give his reasons.

(1E) If in any case there are special circumstances which render it not reasonably practicable for the Secretary of State to perform a duty impressed on him by subsection (1B) or (1D) above, he shall take all such steps towards performing in the circumstances.").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 13. The noble Earl will have recognised the purpose of this amendment. It is to put the Transfer of Undertakings (Protection of Employment) Regulations specifically in the Bill. I believe that was done, although I have not checked, in the Dockyards Services Act 1986. I think it was the successful initiative of the noble and learned Lord, Lord Denning, that brought that about. The noble Earl might wish to consider that proposal.

I turn now to Amendment No. 13. Although the Bill says that TUPE 81 should apply to the transfer, there is at present no effective remedy if there is a breach of TUPE. This amendment would give the trade union concerned the ability to take the Secretary of State to the court to challenge any breach. That is an extra protection which the trade unions, because of the sensitivity of this industry and the sensitivity of contractorisation, need and deserve. I beg to move.

The Earl of Arran

The effect of Amendment No. 11 would be to enshrine in the Bill a statutory duty on the Secretary of State for Defence to consult and inform the trade unions on the scheme for transfer of the staff; to consider their views; and, if rejected, to explain why. Amendment No. 13 also allows a legal challenge by the trade unions to the High Court on the adequacy of such information and consultation.

The amendments rightly draw attention to the need for close consultation with AWE staff as contractorisation proceeds. In replying to the debate, it may be for the convenience of the Committee if I outline our approach to consultation and then explain why the Government believe the proposed amendments to be unnecessary.

We are committed to consultation and have established joint consultative committees with the trade unions to discuss, prior to vesting day, those matters which affect their members. These act as the fora for discussion between MoD management and the national trade union sides on all matters which affect AWE staff. We remain ready to meet the trade unions to discuss any specific issues which may be of concern to their members.

We also issued, on 5th December 1989, a consultative document detailing the Government's proposals for AWE. The trade unions commented on this, and we issued a second consultative document responding to their comments. A further document was issued to the industrial and non-industrial union sides on 10th January 1991 dealing with pensions and redundancy arrangements. This has been made available to all staff through an in-house newsletter Insight which has been set up to keep staff informed of progress towards full contractorisation.

Insight is an important part of our consultation programme and shows how seriously we take our obligations in this respect. It is produced by the implementation group at AWE, which reports to the compliance director. Its aim is to explain and present the facts so that staff have a clear view of developments. Any member of staff is welcome to put questions or suggestions to the editor so that Insight can respond to them. In addition, a number of letters have been sent to AWE staff giving detailed information on matters which affect them.

The requirement for consultation between employer and staff is set down in the Transfer of Undertakings (Protection of Employment) Regulations 1981. Paragraph 10 of those regulations imposes a duty on the employer to inform and consult trade union representatives on the details of the transfer. These regulations have been laid before Parliament and represent the Government's considered approach to the question of transferring staff.

Clause 2 of the Bill already makes it clear that the safeguards of TUPE 81 will apply to the transfer of AWE staff and so we are obliged to comply with them. Amendment No. 11 duplicates requirements which are already enshrined in TUPE 81—indeed, much of its wording is lifted directly from TUPE 81 itself—and which we do not need to spell out any further; to do so would be unnecessary and potentially confusing. We do not need to cover the point twice in the same legislation.

We acknowledge that a similar requirement for consultation was included in the Dockyard Services Act 1986 following consideration in your Lordships' House. That does not, however, alter our view that it is unnecessary in this case; indeed, the fact that it has made no difference in practice to the consultation procedures in the dockyard contractorisation exercise provides a sound reason, based upon experience, not to insert it in this Bill.

Amendment No. 13 also provides for the unions, where they allege failure by the Secretary of State to fulfil his duties in consultation, to bring an action in the High Court to seek a declaration as to whether or not this is so. Similar provision was inserted in the Dockyard Services Act 1986 and was used by the trade unions to pursue a High Court case. They lost, having spent a lot of their members' money in the process. The Government consider that such a provision is, in any event, misplaced because Paragraph 10 of TUPE 81 provides for such a complaint to be presented to an industrial tribunal, with the right of appeal to the Employment Appeal Tribunal. The same regulation provides for "appropriate compensation" to be awarded if the tribunal finds the complaint well founded.

I presume that the noble Lord may be seeking to use these amendments and the suggestion of High Court action as a kind of threat over the Government. But staff at AWE need have no fear. We are committed to consultation on all detailed aspects of contractorisation as our record shows. The requirement to consult is laid down in TUPE 81 and we shall adhere to those rules which are the laws of the land. We do not need a gun held to our heads in order to play fair. If anyone wishes to allege otherwise, their remedy is already there in TUPE 81, through the industrial tribunal. With that explanation, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Williams of Elvel

I am grateful to the noble Earl for his reply. I am sure he recognises that these are complicated matters—indeed, his reply demonstrated that. The whole question of TUPE 81—how it will apply and what will be the status of the staff in terms of their employment—needs to be digested fully before we continue the debate. I should like to read what the noble Earl has said. These are complicated matters and I do not want to continue to move amendments which are centred around the same point. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 12 to 15 not moved.]

Clause 2 agreed to.

Clause 3 [Privileges and immunities: application of certain enactments]:

Lord Williams of Elvel moved Amendment No. 16:

Page 3, line 8, leave out subsection (3) and insert: ("(3) No order shall be made under subsection (2) above unless a draft thereof has been laid before and approved by a resolution of both Houses of Parliament.").

The noble Lord said: This amendment stands in my name and in the name of the noble Lord, Lord Mayhew. Clause 3(3) refers to the power given to the Secretary of State under Clause 3(2). This is an exceptionally important order. We believe that such an order should be fully discussed in Parliament before it is made. I beg to move.

Lord Mayhew

From my reading, the provision in the Bill will cover rather wider matters. I entirely support the idea behind the amendment. We have not had sufficient discussion and knowledge of the contract and of the possible future actions of the Government in relation to the schedule. I therefore warmly support the idea that, before any changes are made in the schedule and in the orders issued by the Government, Parliament should have another chance to discuss it.

Lord Kennet

Irrespective of its merits as a whole, and indeed of its merits piece by piece in the various clauses, the Government will agree that, as Bills go, this is rather a sketchy one. It is a bit of a skeleton. There are a good many areas not yet filled in. For instance, as we shall see in a moment, the compliance office does not appear anywhere in the Bill. A new regime is to be launched on the basis of primary legislation which is fairly skeletal. In that case it seems to me, as it seemed to my noble friend, that the case for not relying on a take-it-or-leave-it yes or no order to determine the situation as history unfolds is a strong one. The more skeletal a Bill is, the stronger is the case for insisting that amendments to its schedules or to the regime that it sets up should be debatable and amendable in Parliament. I strongly support the amendment.

6.30 p.m.

The Earl of Arran

The amendment before the Committee would require defence Ministers to return to both Houses of Parliament for approval to make an order repealing or amending the schedule. The current wording of the subsection allows such changes to be made through the statutory instrument and negative resolution procedures.

The schedule confers a number of privileges and immunities upon the contractorised AWE. These are necessary for security, and in some cases for practical reasons. However, as I said during the debate on Second Reading, it is the Government's policy that immunities and exemptions from legislation should only exist where absolutely necessary. I am sure that Members of the Committee will support that view. The schedule to the Bill was examined in detail during its passage through another place, and a number of amendments were passed which reduced its provisions considerably.

The schedule as it now stands has been reduced as far as we consider possible at the present time. However, should development occur in the future which might enable us to reduce the schedule still further without adversely affecting security or any other major concerns, we would still wish, in principle, to do so. The purpose of Clause 3(2) of the Bill is to enable us to do just that.

Clause 3(2) enables the Secretary of State to repeal any item in the schedule. It also allows him to amend the schedule's provisions, but states clearly that this power shall not be exercised so as to extend the application of privileges or immunities. In other words, under Clause 3(2) we could not add to the list of exemptions or immunities even if we wished to do so. The only changes that we can make is to delete, or reduce, a provision.

I am a little surprised that, in such circumstances, the noble Lords, Lord Williams and Lord Mayhew, should table an amendment requiring us to come back to Parliament for an affirmative resolution. It would be quite unnecessary and a waste of parliamentary time. For those reasons, I urge Members of the Committee not to accept the amendment.

Lord Williams of Elvel

It is all very well for the Minister to talk about, a waste of parliamentary time". But we on these Benches have to try to find out what the Bill is all about. If we do not get the chance to do sox—and we know that the contract will not be produced until the end of next year—it makes life on the Opposition Benches rather difficult.

However, I accept, as I hope the noble Earl does, that we have a genuine problem on this side of the Committee in understanding the full purport of the Bill. It is most important that we should be given opportunities to understand what is going on as it goes on. However, at this stage, I certainly do not wish to press the amendment. I hear what the noble Earl says; but, nevertheless, I must express some dissatisfaction that are not being given all the details about how the whole process will operate before this Bill receives Royal Assent. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 17: Page 3, line 10, at end insert: ("(4) Schedule (Compliance Office) to this Act shall have effect for the purpose of providing means of monitoring and supervising the designated and other activities of any contractor appointed under section 1 above, and providing advice to the Secretary of State on the incurring of expenses under section 5 above.").

The noble Lord said: In moving this amendment, I shall, for the convenience of the Committee, speak also to Amendments Nos. 18 and 19. All these amendments stand in my name and in that of the noble Lord, Lord Mayhew.

There has been a good deal of debate about the Compliance Office. At present, I am quite unclear as to what the responsibilities of the Compliance Office really will be, what authority it has and what its size will be. Further, I am worried that the Compliance Office may be contractorised at the end of the day if that is what the Government are set on. In our view, it must be firmly within the Ministry of Defence and responsible only to the Secretary of State. If the noble Earl can help us with some views on what the Compliance Office might have as its responsibility, what authority it might have and what size it will he, we may perhaps be able to make some progress. I beg to move.

Lord Mayhew

We have had considerable discussion both on Second Reading and today in Committee on the question of safety. I believe that a study of Hansard would show that the noble Earl in fact agreed this afternoon that there is a conflict between the requirements of the highest standards of safety on the one hand and the hopes of profit on the other. For that reason, it is of the utmost importance that we should embody in legislation the duties, the obligations and the constitution of the Compliance Office.

Frankly, I do not know even now—although perhaps the noble Lord, Lord Williams of Elvel, knows more about this than I do—what the Compliance Office is, what it does and how many people belong to it. I should like the Minister to tell us something about it. It should certainly be mentioned in the Bill. We should know something about the duties and the size of the Compliance Office. The Minister may well say, "Well, you can trust us. We will see to it. We have said over and again that we shall look after the safety of the new contracting company". We do not doubt the Government's goodwill on the matter. However, this is not a matter that Parliament should devolve. It is not a matter that we should shuffle off and leave to Ministers and their orders; the duties and constitution of the Compliance Office should be stated quite clearly and fairly in the Bill.

Lord Kennet

After the two amendments upon which the Committee divided, this amendment is, in my opinion, by far the most important left for us to decide. We heard just now that the contract will not be available until the end of next year. I do not know what "available" means in this context. However, it is to be a classified document so, presumably, it will never be available to Parliament. Therefore, it must mean that the contract will only be available to the contractor at the end of next year.

I cannot quite remember, but I believe that the noble Earl told this Chamber on one occasion that the programme is that the contract, which does not yet exist, will go out for tender in the middle of next year. In other words, a contract competition will take place in the middle of next year and the Government hope to award the contract to someone at the end of next year. However, it will be a difficult competition if the text of the contract is not available to competitors. Like much else, this aspect of the matter requires further thought by the Government.

I turn now to the question of the Compliance Office. It is amazing that a Compliance Office (which is an American phrase) should be part of the scenery without being mentioned in the Bill. We only have the Government's word for it—which of course we accept; but governments change as has been said a thousand times—that there will be a Compliance Office. It ought to be mentioned in the Bill. Therefore, in general, this amendment ought to be accepted. That much is very clear.

However, as regards greater detail, "compliance" with what? We have not even been told about that yet. Will the Compliance Office monitor only the compliance of the contractor with the terms of his contract, or will it also monitor the compliance of the contractor with the law of the land? That will be quite a job as most of what the contractor does will be classified as top secret and the ordinary inspectorates, the police and so on, who one would expect to enforce compliance with the law of the land, will not be able to go in and do so.

Let us assume, for example, that the compliance director will be responsible for both compliance with the contract and compliance with the law of the land. I believe that that is more likely to be the case. Where will his staff come from? He will need a very large staff. It may be that the size of his staff will approach in magnitude the staff that the contractor will bring to the job. It is important that we should have an answer to that question. Further, who will pay for this large staff? Of course, one assumes that it must be the Secretary of State as there can be no question of it being the contractor because that would mean the privatisation of the Compliance Office. Moreover, and perhaps most important of all, how is this important and, in certain respects, supreme authority at Aldermaston going to fit with the existing authorities which will govern the place and the contractor? I have in mind, in particular, the chief scientist of the Ministry of Defence and the head of the Defence Procurement Executive.

Further, who will talk to the Americans? I refer now to the American administration. Who will talk government to government on behalf of the Secretary of State and the Cabinet about day-to-day questions on the procurement and design of nuclear warheads? Is it, as it was always going to be, the chief scientist who will know everything and control most things? Will he still be the chief adviser to the Secretary of State and the Prime Minister?

Alternatively, will it be the head of the Defence Procurement Executive? If so, will that official have sufficient clearance to enter into such matters fully and freely with the American Defense Department as an equal, or will he not? We need to have an answer to that question. Or, is it conceivably in some respects going to be the director of the Compliance Office? Moreover, what security clearances will the director and his staff have and how far down the heap will that extend?

On the relationship between these three men, who are all servants of the Secretary of State, will depend the efficient functioning of the design and production of nuclear warheads in this country, far more, I submit, than on any question of whether it is a private company that undertakes the management or direct state employees as has been the case hitherto. Perhaps we shall be lucky enough to have some answers from the Minister before we leave the amendment.

The Earl of Arran

The effect of Amendments Nos. 17, 18 and 19 would be to write the functions and powers of the Compliance Office on to the statute book and to bind the Secretary of State for Defence to comply with any of the Compliance Director's recommendations for payments by the ministry to the contractor. I must resist the amendments not because I have any fundamental disagreement with the noble Lords, Lord Williams and Lord Mayhew, about what the functions and powers of the Compliance Office should be, but because provision in the Bill is neither necessary nor appropriate in order to define them.

In so far as the amendments reflect the noble Lords' concern that the contractor should be regulated effectively by the Compliance Office, I am in full agreement with them. We have always intended that the Compliance Office will have thorough oversight of the contractor's activities and the power to enforce environmental, health and safety standards and compliance with the terms of the contract. That has been made clear in repeated public statements.

The Secretary of State already has the power to establish a Compliance Office and define its functions. After the repeated statements that I and other Ministers have made of our commitment to establish a strong Compliance Office, I am surprised that the noble Lords, Lord Williams and Lord Mayhew, feel that we cannot be trusted to fulfil that commitment without a statutory obligation to do so. The Secretary of State for Defence is constitutionally responsible for all that happens within the sphere of his department's function, including the activities of AWE, for which he will remain accountable irrespective of the fact that its operation will be contracted out, and he will be called to account before Parliament if the Compliance Office fails to regulate AWE satisfactorily.

The Compliance Director is, and will remain, a senior MoD civil servant responsible to the Secretary of State. Consequently, it would be inappropriate to give him statutory powers enabling him to force upon my right honourable friend a particular course of action, such as withholding contractual payments. The constitutional position is, and must remain, that civil servants are responsible for offering advice to Ministers, who take the decisions and are in turn answerable to Parliament. Although I should find it hard to conceive of a situation whereby my right honourable friend would not accept the advice of the Compliance Director, it is MoD Ministers and not civil servants who are answerable to Parliament for the activities of the department. Ministers will remain accountable for what happens at AWE and for meeting the nuclear weapons programme, irrespective of contractorisation. It would be quite wrong to bind Ministers to accept a decision of their civil servants.

It is misleading to draw parallels with the statutory bodies, such as Oftel and Ofwat, which have been set up to regulate privatised industries. When an organisation is sold off completely, the Government's responsibility for it is discontinued, and therefore, if the organisation is to be regulated at all it must be by statute. But that will not be the case at AWE. I must repeat that we are not privatising AWE as the gas and electricity industries were privatised. The Government will continue to own the assets and the property, and will still be ultimately responsible for the establishment. All that we are doing is bringing in a contractor to carry out the activities of AWE for a fixed period of time and under strict contractual control. It would be wrong to attempt to qualify by statute the Secretary of State's continuing constitutional responsibility for the establishment, as the amendment seeks to do.

I do not propose to discuss the content of the proposed schedule in detail, since my main objection is to the principle of making the Compliance Office a statutory body. I will merely say that in some respects, the duties which the amendment seeks to impose by statute upon the Compliance Office correspond approximately with those that it will actually fulfil. In particular, I stress that the Compliance Office will ensure that when a particular activity is covered by an exemption under the existing schedule to the Bill, the contractor must not only achieve safety standards at least as good as those required by statute, but will also maintain the higher standards which it is the ministry's policy to achieve. On the other hand, there are parts of the proposed schedule which would be objectionable even if the principle behind it could be accepted. In particular, I note that it seeks to wrest responsibility for the enforcement of health and safety legislation away from the Health and Safety Executive. In fact, the HSE is already responsible for enforcing the Health and Safety at Work etc. Act and associated enactments at AWE, and will continue to be so after vesting day.

We are also considering Amendment No. 18, which would prevent the Bill from coming into force until six months after a Compliance Director has been appointed. I have to say that I believe the amendment to be seriously misconceived. There is already a Compliance Director at AWE, who is presently monitoring the performance of the interim management contractor, Hunting-BRAE, and establishing the methodology and staffing requirements for the larger Compliance Office which will monitor full contractor operation. The Compliance Director was appointed at the commencement of the interim management contract, which began on 1st October 1990, so he has already been in office for more than six months. The amendment would therefore make no difference to the date upon which the Bill would come into force, since the condition which it lays down has already been met.

To sum up, the Government have made abundantly clear their intention that a strong Compliance Office will regulate the contractor-operated AWE, with particular attention to environmental, safety and health considerations. It is completely unnecessary to write the terms of reference of the Compliance Office into the Bill. Moreover, it would be wrong to interfere with the Secretary of State's continuing constitutional responsibility for AWE, or to give a civil servant statutory powers over the Secretary of State. Finally, to delay the date on which the Bill will come into force until six months after the appointment of a Compliance Director would be pointless since the Compliance Director has already been in place for more than six months.

I shall deal with the points made during the debate. Compliance relates to compliance with the contract, but the contract will require the contractor to comply with all relevant statutory regulations. Except where the contractor is exempt from legislation, legislation will be enforced by the normal authorities as it is now—the Health and Safety at Work etc. Act will be enforced by the Health and Safety Executive.

The Compliance Office will be adequately staffed fully to undertake its responsibilities. It will be staffed and paid for by the Ministry of Defence. With those explanations, I hope that I have persuaded the Committee not to accept the amendment.

6.45 p.m.

Lord Williams of Elvel

That reply does not take us very far forward. The Minister said that we lack a certain amount of trust by trying to have the provision included in the Bill. If I may say so, we do lack a certain amount of trust, because time and time again the Government have said that there will be a Compliance Office inside the MOD which will be strong and powerful. They continually refuse to give to either House of Parliament any details about the size and authority of that Compliance Office. We are aware that the Compliance Office in the dockyards is a one-man affair. That is not a Compliance Office. It is one man in the MoD. We know that the only person who has been trained in safety at AWE who has been asked to participate in the existing Compliance Office left the safety section some 10 years ago. That is not even the bare bones of a Compliance Office. It is a nothing.

In the amendments we want to ensure that the safety standards, through the Compliance Office about which the Government keep trumpeting, are no less rigorous than they now are at AWE. That is the principle of the amendment. The Minister must consider carefully what I and my noble friend Lord Kennet and the noble Lord, Lord Mayhew, have said. When we return on Report, we shall need much more detail about this supposedly strong Compliance Office than we have had this today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clauses 4 and 5 agreed to.

Clause 6 [Short title, commencement and extent]:

[Amendments Nos. 18 and 19 not moved].

Clause 6 agreed to.

Schedule agreed to.

House resumed: Bill reported without amendment.