HC Deb 24 February 2003 vol 400 cc5-7WS
The Secretary of State for Trade and Industry (Ms Patricia Hewitt)

My statement to the House of 28 November set out the basis on which the Government was prepared to support the restructuring plan put forward by British Energy (BE) to address its financial difficulties.

The Government's main objectives, which remain the same today, were: to ensure the safety of the nuclear power stations and the security of electricity supplies to the grid and consumers. In any circumstances, BE's significant nuclear liabilities require safe and experienced management. Because the Government has a responsibility to ensure safety, we had to consider how this goal could be most effectively delivered while protecting the taxpayer's interest. The company's plan, on which the Government imposed tough conditions, was acceptable because it met these tests.

The Government was therefore prepared to play its part in this restructuring by providing financial support for BE's nuclear liabilities—underwriting BE's enhanced arrangements for decommissioning, and contributing significantly to the historic spent nuclear fuel liabilities. We also extended a credit facility of up to £650 million until 9 March.

On 28 November we identified 3 key outcomes that the company would have to achieve by mid-February if the restructuring package were to be successful: agreement from existing creditors to a temporary freeze on payments, and a write-down in the value of what they were owed; agreement to sell its stake in Bruce Power in Canada; and implementation of a new trading strategy.

The company has announced its progress in fulfilling these conditions and I am placing copies of the relevant announcements in the Library of the House: its creditors have agreed to a binding standstill and agreed in principle to a significant write-down in the value of what they are owed as part of this plan; the completion of the sale of its interests in Bruce Power in Canada; and progress on the implementation of its new trading strategy.

The sale process for the company's stake in Amergen in the United States is also underway.

The company has also announced the appointment (with effect from 1 March) of a new Chief Executive, Michael Alexander, formerly Chief Operating Officer of Centrica, who has extensive experience in the energy sector.

On the basis of the company's announcements, I have confirmed that I intend to seek state aids approval from the European Commission for the restructuring plan. I have placed in the Library of the House a copy of the Government's announcement of 14 February to the Stock Exchange.

As I indicated in my statement on 28 November, the Government is prepared to continue to fund BE's operations while the restructuring plan is agreed and implemented. I have therefore indicated to the company that I am willing to extend their credit facility at a reduced level for a period after 9 March. The limit and duration of the facility will be decided and reported to the House in the light of the company's future requirements, and in order to protect taxpayers' interests as well as under state aid rules, will be the minimum necessary. I should like to re-emphasise that it is a temporary loan, and not a permanent grant. The company has received proceeds of £270 million from the sale of its stake in Bruce Power and will use this money to repay the majority of the current amount of the facility outstanding.

British Energy's announcement on 14 February is an important step forward in the implementation of its restructuring plan. But much remains to be done by the company, including effecting the sale of Amergen and securing binding agreements from its creditors to the restructuring.

It remains open to Government to withdraw the credit facility if the company does not continue to make progress in successfully delivering its restructuring plan. We shall therefore continue to be ready with contingency plans to fund the administration of the company. The Electricity (Miscellaneous Provisions) Bill that helps with these contingency plans has been passed by the House of Commons and has now entered the House of Lords. As I said on 28 November, whatever happens, nuclear power stations will continue to generate electricity and will continue to employ staff. Pension entitlements will be met. Trade suppliers will be paid. Customers' lights will stay on.

Finally, I would like once again to express my thanks to the staff at British Energy for their vital contribution in maintaining electricity supplies and nuclear safety.