§ The Secretary of State for Trade and Industry (Ms Patricia Hewitt)I wish to inform the House about the Government's decision on the future of special shares held in the British Energy Group, Nuclear Generation Decommissioning Fund Limited, National Grid Transco plc, Viridian, Phoenix Natural Gas, Scottish Power, and Scottish and Southern Energy.
The Secretary of State for Scotland and I jointly hold a special share in British Energy plc. I hold a special share in British Energy's English operating subsidiary, British Energy Generation Limited, and the Secretary of State for Scotland holds a special share in the Scottish operating subsidiary, British Energy Generation (UK) Limited. I also hold a special share in the Nuclear Generation Decommissioning Fund Limited (NGDF) that would be subsumed into the new Nuclear Liabilities Fund (NLF) being created as part of the proposed restructuring of British Energy. In addition, I also hold 78WS a special share in National Grid Transco plc. The Secretary of State for Northern Ireland holds special shares in Viridian and in Phoenix Natural Gas. The Secretary of State for Scotland holds special shares in Scottish Power, and Scottish and Southern Energy.
Special shares in these companies require the consent of the relevant Minister for certain significant decisions affecting shareholdings, the structure of the company or disposal of certain assets. In particular, Government consent is required for any move that would allow a single person to own more than 15 per cent. in any of the companies.
We have been considering carefully the future of these shares that date back to the original privatisation of the companies in the light of the European Court of Justice (ECJ) judgments on special shares (including BAA) on 13 May 2003, and, in the case of British Energy, the proposed restructuring of the company. The Government have concluded that the current legal and regulatory framework now provides adequate protection of the public policy objectives, which the special shares were initially set up to cover. We will maintain only those that can be justified and are necessary in the public interest.
Taking account of the ECJ judgments, the Government have decided to redeem the special shares held in National Grid Transco plc, Viridian, Phoenix Natural Gas, Scottish Power, and Scottish and Southern Energy.
The Government have decided, however, that it would be justifiable to retain two key provisions of the British Energy special share: first, to require anyone who has purchased more than 15 per cent. of the issued shares of British Energy to obtain the Government's consent; and, secondly, to require the consent of the appropriate Secretary of State for any disposal of a nuclear-station by British Energy. It is proposed that both provisions will be amended to provide that Government consent may be refused only on national security grounds. The nuclear security regime operated by the Department's Office for Civil Nuclear Security is robust and comprehensive, and is designed to prevent unauthorised access to nuclear stations or nuclear material falling into inappropriate hands. But in the context of nuclear energy we believe it is justified and proportionate to the risks involved to retain these two particular special share provisions in the companies of the British Energy Group.
Other provisions of the special shares in the British Energy Group would be given up on the same basis as for the conventional electricity companies. In the light of the ECJ judgment in would not be justified to retain general powers over the commercial operations of the company. These rights have not protected, and will not protect, the Government's economic interest in British Energy. This interest arises from the Government's ultimate responsibility to ensure safe management and funding of BE's nuclear liabilities, which would always fall to the Government in the last resort given their duty to safeguard nuclear safety, security and environmental protection. For the future, it is the contractual arrangements we are putting in place as part of the restructuring that would compel British Energy to 79WS contribute to its liabilities and help minimise demands on the taxpayer, and enable us to monitor the performance of the company.
The special share in the NGDF will be retained and carried forward into the NLF if British Energy's restructuring is successful. The special share contributes to the protection of the Government's significant interest in ensuring that the NGDF/NLF Company achieves its purpose of receiving, investing and ultimately paying out moneys for the decommissioning of British Energy's nuclear power stations.