HC Deb 24 July 1963 vol 681 cc1667-80

2.1 a.m.

Commander J. S. Kerans (The Hartlepools)

I beg leave to raise the subject of the Wylfa nuclear power project. This may seem to be somewhat remote from my constituency but it is of great concern indeed to my constituents. As the House will know, this matter was debated in another place on 10th July. An announcement was made by the Central Electricity Generating Board on the day preceding that debate that United Power, of which consortium a firm in my constituency is a part, had lost the contract to English Electric.

This came as a great blow to me. I have been trying for many months to do what I possibly can in my capacity as a Member of Parliament to help the firm of Richardsons, Westgarth to keep its £9 million proportion of this contract as part of a consortium of five companies. I have written to Sir Christopher Hinton, chairman of the Central Electricity Generating Board, to my right hon. Friend the Prime Minister and to my right hon. Friend the Minister of Power, and I have also had correspondence with the noble Lord Hailsham in his capacity as Minister responsible for the North-East. I have tried desperately hard to get the Government to do what they can to help improve the employment situation in my constituency.

The firm of Richardsons, Westgarth is of long-standing in The Hartlepools. It has had a very difficult time in the last few months and even earlier. It spent £2¾ million on refurnishing the works to get the contract for a nuclear power station at Trawsfynydd. The firm hoped to secure part of the Kingsnorth contract butthat was lost, and finally the bitter blow came when it lost the contract for the nuclear project in Anglesey. I have done all I could to help. Unemployment in the constituency now stands at 9.2 per cent. There will be school-leavers coming on to the labour market this month, and over a year ago a shipyard and engineering works were lost to the constituency. Richardsons, Westgarth, having lost this contract, is faced with laying off a design staff of 100 who have been kept on for many months in the hope that the contract or part of it would come to the firm.

I find it hard to understand why the Government have allowed this to happen, because Section 8 (1) of the Electricity Act, 1957 provides that the Minister may give to the Electricity Council and any area board such directions of a general character as to the performance by that Council or Board of their functions as appear to the Minister to be requisite in the national interest. I would have thought that in an area of high and persistent unemployment he could have used his powers. But I gather from an Answer to a Question a few days ago that the Minister of Power has never used those powers since the Act came into force.

I faced a demonstration by the workers of this firm when they walked through the town carrying placards, and I met a large delegation of shop stewards and convenors. I sympathise with them, because for the last six months I have been trying to do what I could to help to resolve their doubts about the future. Many of them are skilled men, and if they leave the area they will not necessarily return. My noble Mend is doing what he can to attract industry to the North-East, and it is a tragedy that this state of affairs has arisen.

This firm received a letter of intent from the C.E.G.B. dated 29th May, 1962. I have read the letter, and although I am not a commercial magnate it appears to me to be full of legal let-outs. I understand that this is the first occasion on which a letter of intent, which is virtually the Government's or a nationalised industry's "go ahead" has been rescinded, and I find this attitude hard to understand. There have been about 150 meetings between the design teams of this firm and the C.E.G.B. and at the last minute, on the day before the debate in another place, the whole scheme crashed in flames.

About fifteen months of intensive work—it having been known in advance that the letter of intent was to be received—was carried out by a large and competent design and engineering team. About 150 Minuted technical meetings were held with the C.E.G.B. team, and the design was developed at all stages with their agreement. U.P.C.—and this firm is part of the consortium—tendered formally in December, and was asked, in common with another tenderer to redesign with a view to reducing the price per kilowatt. It submitted a new price on 11th April, 1963, which price was the absolute minimum for which this station could be supplied. No negotiations were entered into over price, and the tender was turned down by the C.E.G.B. on 6th June for no adequate reason. I find this hard to explain.

I referred earlier to people being laid off and to skilled men leaving the area and not returning. On 9th July the C.E.G.B. said that English Electric hoped to put out about £20 million worth of sub-contract work in the North-East. Is this a worth-while assurance? Is there any guarantee that this firm will be enabled to do the sub-contract work? There is bound to be a delay of several months before the firm receives any orders, and there is nothing in the pipeline to provide work after this year. Is the offer by the C.E.G.B. sincere? Will there be a written agreement guaranteeing this firm certain contracts?

Further, when is the report by the noble Lord on the North-East coming to fruition? There are these doubts about what is to happen in the North-East, and whether these firms will get these orders. Is their future in jeopardy? What is the power of the Central Electricity Generating Board? It seems to me, as a layman, that Sir Christopher Hinton is all-powerful, and can dictate to the various firms in this consortia as to where the contracts will go.

Surely nationalised industries must give some thought to the working-class men whose livelihoods dependon these jobs. There are doubts about the future in my constituency. There are doubts whether the Government intend to bring industry to the area and help all these areas of high unemployment. I only hope that I can get some assurance to night that these hopes will not be dashed to the ground, because these people are human; they want to stay in the area if they can. They are keen on their jobs. They do not want to be pushed around. I ask my hon. Friend for some assurance, on behalf of the Government, that the whole matter will be looked into.

2.11 a.m.

Mr. Eric Lubbock (Orpington)

We must all sympathise with the hon. and gallant Member for the Hartlepools (Cdr. Kerans) in the constituency difficulties which face him as a result of the decision to award the nuclear power contract for the Wylfa station to a rival group, but he should look at what has happened in the context of the future of nuclear power in this country in general, because it raises the isssue of how long it will be before nuclear power is competitive with conventional power, and the extent to which this will be determined by the maintenance of harmonious relationships between the consortia on the one hand and the Atomic Energy Authority and the Central Electricity Generating Board on the other.

At the moment, as we have seen from the debate in another place last week, there is a serious difference of opinion between at least one of the consortia and the Board, and we also know that equally serious differences have arisen between the Board and the Authority. It is true to say that the hard words used in the debate in another place are only a sympton of a much wider problem.

The Select Committee on Nationalised Industries, in its recent report on the electricity supply industry, drew attention to the differences between the Board and the Authority. It talked about the resentment which the Board felt about its treatment by the Authority. This does not arise entirely from the pure differences of function between the two bodies. I suspect that it may also be due partly to incompatibility of temperament between the individuals who are responsible for co-ordinating the activities in each. This is not the main problem that we are discussing. We are considering a much more limited matter. Unfortunately, we shall not have a chance of referring to this matter for at least another four months, and it should therefore be made quite clear that much wider issues are involved than merely the awarding of the Wylfa contract.

I read the speech of Lord Coleraine with great interest. I thought that it was a brilliant speech, and that he raised some questions of vital importance which should have been answered by the Government at the time, but which were not answered. Sir Christopher Hinton's story might have been a different one, but Sir Christopher Hinton cannot answer for himself. It is therefore the Government's duty to reply to the allegations which were made.

I hope the hon. Gentleman who is to reply will not tell us that all these matters fall to be reported on by the mysterious Powell Committee, on which we do not seem to be able to get any information at all. We do not know when it was appointed. We do not know who its members are, what its terms of reference may be, or when it is expected to report. When the hon. Member for Edmonton (Mr. Albu) put a Question to the Prime Minister about it the other day he was told that none of this information could be divulged.

While we are waiting for this Report, how are the disagreements which have been revealedto be resolved? We cannot leave the situation as it stands. The importance of continuing work for the consortia, and not only for U.P.C., does not need to be emphasised. It is quite obvious that the design and construction teams which have been built up by these firms must need a minimum amount of work to keep them going.

I ask the hon. Gentleman who is to reply: is it the policy of the Government to encourage further amalgamations between firms in the consortia? That is a very important question. One has to remember that there are large sums of public money involved in the nuclear power programme. The cost of the station at Wylfa is estimated to be £100 million. If we consider it in another way—and I think it should be considered in this way—the capital cost per kilowatt of the Wylfa station is £97 as compared about £34 for a conventional station.

We are spending considerable sums of public money and these stations are much more expensive to erect than conventional stations going up at the same time. I think it was quite inevitable that sums of this order should be expended if the consortia were to be kept alive until the time when nuclear power should become competitive with conventional power. The Ministry spokesman who gave evidence to the Select Committee said that the programme of 5,000 kilowatts by 1968 was the smallest that was con- sistent with keeping together the skilled manpower of the consortia for the time when nuclear power on a large scale would become economic. Another witness who gave evidence pointed out that the Generating Board had already had to take special action to keep one firm in business.

I do not know whether any special action is to be required to keep the U.P.C. in existence bearing in mindits failure to get the Wylfa contract, but the possibility of this happening after the previous case referred to in the evidence given to the Select Committee leads one to the question whether the current nuclear power programme is large enough to achieve the limited objectives which have been outlined. I do not think it good enough for the Government to wash their hands of responsibility for this crisis which has arisen and to say that the consortia in entering this field took a commercial risk which did not come off. It was led into taking that risk by undertakings given to it by the Government.

Sir Christopher Hinton said in a paper published, I think, in 1961: The 1955 nuclear power programme set as a target the construction of plants having a capacity of 1,800 MW by 1965, and four large firms were persuaded (not without reluctance on the part of some of them) to train staffs to enable them to design and build the necessary plants. Two years later the nuclear programme was very greatly extended and the consortia trained additional staff as a result of that change in the programme.

Sir Christopher Hinton said on the next page of the booklet that one cannot expect to create a large industry by establishing a programme, to destroy that industry by slashing the programme and then to re-create it at one's convenience seven or eight years later". He may have had some foreknowledge of what was likely to happen as a result of this case.

Is it possible that an extension of the current programme for Magnox reactor could be justified on purely commercial reasoning and not merely on the necessity to keep the design teams in business? Lord Coleraine and Lord Aldington, who one must admit are interested parties in the discussion, certainly thought that there could besuch a commercial justification. Their argument deserves more than cursory examination. They have claimed that the life of 20 years, assumed for a nuclear station in the current programme, should be 25 years or even 30 years, and Lord Aldington said that the Wylfa station had been designed with this requirement in mind on the express instructions of the Central Electricity Generating Board.

Since the depreciation charges are a very substantial part of the cost of electricity generated in a nuclear station, this is a vitally important point. The Select Committee on Nationalised Industries tells us that two-thirds of the cost of nuclear power arises from capital charges, compared with only one-fifth for a conventional station, and therefore if one depreciates the station over 30 years it could make a drastic reduction in the cost of electricity.

Lord Coleraine and Lord Aldington also say that irradiation of the fuel to 3,500 or even 4,000 megawatt days of heat per ton is a practical proposition. This has been confirmed in the annual report recently published of the Atomic Energy Authority, in which it is stated: Fuel similar to that loaded into the Berkeley reactors of the C.E.G.B has been irradiated in the Chapelcross reactors to an average irradiation of 3,500 MWd(H)/t without any significant sign of deterioration; the irradiation is continuing. Fuel elements of the Calder type, which have many features in common with the Bradwell fuel elements, have achieved similar irradiation levels. It therefore seems that both the United Power Company and the Atomic Energy Authority believe that the 3,000 MWd(H)/t is too conservative.

Next, the noble Lords say that a load factor of 75 per cent., which is assumed for nuclear power stations, is unrealistically low and that 85 per cent. would be a more reasonable figure. Again, these assertions are borne out by the experience of the Atomic Energy Authority.

If one takes all these factors, together with the reduction in the price of uranium ore which has recently been negotiated, it seems quite probable that nuclear power may already be competitive with that generated by conventional means, and if there were an extension of the Magnox programme there is no doubt that while no further increase in operating temperatures is feasible with this design, there could well be further capital cost reductions due to the increasing experience of the firms in the design and construction of these stations. An increase in the size of the programme would in itself lead to lower costs. The noble Lord, Lord Aldington gave some figures in the debate last week. He said this: If one reactor of a particular new design could be offered at a cost of £105 per kilowatt, the capital cost per kilowatt of four reactors ordered for consecutive building would be about £85—a saving of just under 20 per cent."—[Official Report, House of Lords, 10th July, 1963; c. 1415.] To sum up, we have a situation now of too many consortia chasing too few contracts. It is the Government's responsibility to decide, now that this crisis is upon us, what is to be the future of the nuclear power programme after 1968. To do this on a rational basis they have to make up their minds, on the basis of the factors I have mentioned, how the costs of nuclear power generation are to be calculated and on what factors. That has to be faced. If a decision is not made very soon, the existence of these consortia which have been built up so laboriously over the years will be placed in jeopardy and our nuclear power industry, which at present leads the world, will be incapable of meeting the demands which are certain to be placed upon it in the Seventies.

2.26 a.m.

Mr. Frederick Gough (Horsham)

Like the hon. Member for Orpington (Mr. Lubbock), I am very grateful to my hon. and gallant Friend the Member for The Hartlepools (Commander Kerans) for raising this point. I fully appreciate and understand his feeling for his own constituents. I want to raise a matter of principle. I shall not go into the technical details raised by the hon. Member for Orpington. I feel that there is a very serious matter of principle, which has kept me up till nearly half-past two in the morning. It is where the Government stand in relation to a nationalised industry.

I, too, have read very carefully the debate in another place. I have had the opportunity of speaking to my noble Friend Lord Coleraine. I do not think the facts can be disputed. They are these. There was the consortium, which many months ago had a letter of intent. Those who are mixed up in their daily life in commercial affairs, as I am, know what a letter of intent is. A letter of intent is an honourable document, a document between two parties, which means what it says. It is a letter of intent, intent to carry out a contract. That letter of intent was issued by the Central Electricity Generating Board, the chairman of which is Sir Christopher Hinton, which is a monopoly, a State monopoly, a nationalised monopoly. There is only one member of the Labour Party present in this most important debate. I hope that he will take note of this.

That letter of intent was issued. After that, there were no less than 150 plus interviews between the consortium and the Central Electricity Generating Board. At the end of tht time and quite suddenly the matter was stopped. Suddenly the whole negotiations were ended and the consortium was told that it would not get the contract. It naturally asked why. It was told that it was on two grounds. One was design, the other was cost. I cannot believe that after more than 150 discussions which took place after a letter of intent had been handed out the Board could possibly begin to think that the question of design was a proper reason for breaking off the negotiations.

I understand—and I would like the Parliamentary Secretary to put me right if I am wrong—that English Electric, which afterwards got the contract, had not at the time put in a quotation. If so, the question of costs also falls to the ground. My point, therefore, is a simple one. I have come here tonight to fight against nationalisation. I am, for this reason, opposed to all hon. Members opposite—who at present are represented by just two hon. Members. I have always believed that we would at some time come up against this major disadvantage of nationalisation; the concentration of too much power in too few hands.

I will not say anything against Sir Christopher Hinton, but I have heard some unkind things said about him. I have even heard him described in his industry as a little Hitler. I do not believe that any one person in industry should be allowed completely to cancel negotiations—a letter of intent—on such flimsy grounds as have so far been put forward in this case.

Whatever may be said, we return to the initial commercial argument that a letter of intent was made—as near as does not matter to a contract—an enormous amount of work was done, promises of employment to hundreds of thousands of my hon. Friend's constituents were given and suddenly, apparently at the whim of one man, the whole thing was dropped. The whole of the atomic power industry's future is concerned in this and is in jeopardy. I would be grateful if the Parliamentary Secretary would make it clear whether or not the Government support that sort of thing.

My right hon. Friend has power to step in. He can look into this matter. Will he do it? Or will he make himself the lackey to a nationalised industry? I cannot believe that the Government, of which I am a most loyal supporter, would be a party to that. This is a serious matter which demands immediate and careful consideration. I hope that we will be told tonight that the whole subject will be reopened and reconsidered and that the relationship between the Minister and the head of this nationalised industry will be reconsidered.

2.33 a.m.

The Parliamentary Secretary to the Ministry of Power (Mr. John Peyton)

I would not like anything I say in replying to this short debate to give the impression that I have not got great sympathy with those who are concerned, either directly or indirectly, with the problems of unemployment in the North-East. The House will appreciate that I have no responsibility for such matters, which are mainly for my right hon. Friend the Minister of Labour and my noble Friend the Lord President.

It has been suggested that my right hon. Friend has powers to give directions of a general character to the nationalised industries and their boards. I do not believe that any such powers were ever intended to confer on my right hon. Friend the power to intervene in the negotiation of a single commercial contract. The fact that these powers have never been used is, I think, a cause of gratification rather than of blame.

My hon. and gallant Friend referred to the firm of Richardsons, Westgarth, in his constituency, which has a great and legitimate concern—

Mr. Gough

I am rather surprised at what my hon. Friend has just said. If a Minister has powers and never uses them, what is the use of them?

Mr. Peyton

I am only suggesting that if the working arrangements between Ministers and the nationalised industries do not necessitate the exercise of powers to give directives it is a good thing rather than a bad thing. But I do not wish to pursue that argument now.

As I was saying, I recognise that the firm of Richardsons, Westgarth has a legitimate and perfectly fair interest in this serious matter, but it is true that the contract has not been awarded to the United Power Company, As my hon. and gallant Friend must be aware, the Generating Board has announced that it recognises the particular and peculiar position of Richardsons, Westgarth, and in offering the second contract to English Electric the Board made it a term that the English Electric consortium should negotiate with Richardsons, Westgarth in order to place some of the work with that firm. I cannot possibly add to that tonight—

Commander Kerans

Will the question of further contracts for the North-East be a written contract, or legally binding on English Electric?

Mr. Peyton

I was just saying that I cannot add to that now, and I must make it absolutely clear that neither my right hon. Friend nor I give contracts of any kind.

I must remind both of my hon. Friends that the nationalised industries and their boards—in particular, the Central Electricity Generating Board—have a great responsibility to users; in this case, the users of electricity. While I have the fullest sympathy with those in the North-East who are affected, it would be wholly wrong for the Government and for Ministers to seek to intervene at every stage in the negotiation of commercial contracts, no matter how large or how important.

Quite frankly, I do not think that the hon. Member for Orpington strengthened my hon. and gallant Friend's case. He gave his views on the general question of the future of nuclear power, and I do not propose to follow him at any length there. He made it perfectly clear that while he had read the speech of the noble Lord, Lord Coleraine, and that of Lord Aldington as well, he had not greatly studied the speech of my noble Friend, Lord Carrington. I hope that he will read that speech, because Lord Carrington stated the Government's position, and I have nothing to add—

Mr. Lubbock rose—

Mr. Peyton

No, I shall not give way to the hon. Member. I must also disappoint him by saying that I have nothing whatever to add to the reply given by my right hon. Friend the Prime Minister on the subject of the Powell Commitee, nor have I anything to say about whether or not the Government have views about there being too many consortia.

I realise that my hon. Friend the Member for Horsham (Mr. Gough) is very concerned indeed to oppose the whole principle of nationalisation. This, of course, is an attitude which is shared by Conservative Members of Parliament, whether they be in the Government or not, but I really do think that we must be fair and realistic here. It would be very odd—I hope that my hon. Friend is not counselling it—if the Government were to seek to make the rôle of these industries, which is difficult enough, even more difficult or, indeed, quite impossible. Sir Christopher Hinton has upon his shoulders an immense responsibity. The problems of the electricity industry are vast and the problems of this new nuclear development are enormous. It would ill become us if, at every turn, we were to seek to nag and to obstruct him in the performance of his most difficult task.

Of course, my right hon. Friend can always look into these matters. I do not like that horrible phrase, so regularly used, about keeping things "under review"; but he is always reviewing these matters, and, of course, he is in close consultation with the Central Electricity Generating Board. It is most unfair and unjustified for my hon. Friend the Member for Horsham even to raise the possibility or suggestion that my right hon. Friend might be the lackey of a nationalised industry. I can only say that my right hon. Friend, together with the chairman of the Central Electricity Generating Board, has very much in mind the heavy responsibilities which lie upon them both.

Mr. Gough

Before my hon. Friend concludes, will he allow me to say that, in my opinion, his reply is derisory and insulting. I remember well that my hon. Friend, when he was sitting as a private Member for Yeovil, used to battle for his own constituents and their gloves. I tell my hon. Friend now that the gloves are off, and I am not prepared to accept his reply tonight. He has said nothing about the letter of intent or the 150 meetings which took place afterwards. More than ever before, I feel that I have been brushed off with a very poor reply, and I am very angry about it.

Mr. Lubbock

Before the Parliamentary Secretary answers that point, will he take note of this one also? He accused me of not having read the speech of the noble Lord, Lord Carrington. In fact, I have read it very carefully, and the only thing which the noble Lord said about the future of the nuclear power programme after 1968 was that it was to continue. Does not the hon. Gentleman realise that that might quite easily mean that it would continue with the advanced gas-cooled reactor and not with the continuation of the Magnox programme? That was the point of my question. Does not the hon. Gentleman think that he had better read his noble Friend's speech before making sarcastic remarks across the Floor about whether or not I have read it?

Mr. Peyton

I have already said that I do not propose to follow the hon. Member for Orpington in discussing the whole of the future nuclear power programme.

In response to my hon. Friend the Member for Horsham—I am sorry that he has left his place already—I say this about the letter of intent. No one denies that there was the letter of intent, but, like most letters of intent, it was issued subject to certain conditions. In the opinion of those who wrote that letter, the conditions were not fulfilled. I do not think that I can fairly be asked to say anything further than that.

Commander Kerans

I am not entirely in agreement with what my hon. Friend the Parliamentary Secretary has said, and—

Mr. Deputy-Speaker (Sir Robert Grimston)

Order. The hon. and gallant Gentleman has exhausted his right to speak. He may ask a question before the Parliamentary Secretary sits down, but he must not make another speech.

Forward to