HC Deb 17 July 1968 vol 768 cc1428-38
The Minister of Technology (Mr. Anthony Wedgwood Benn)

Mr. Speaker, with permission I should like to make a statement about the reorganisation of the nuclear industry.

In the debate on 23rd May, I summarised the Government's objectives in seeking a reorganisation of the nuclear industry following the report of the Select Committee on Science and Technology on this subject.

I have now had the opportunity of considering the matter further and have had the advantage of hearing the results of the informal consultations conducted by the Industrial Reorganisation Corporation.

I have today written to the I.R.C. to invite it to help in the reorganisation of the industry and I am circulating the text of my letter in the OFFICIAL REPORT. The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.

I am asking the I.R.C. to assist in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. We have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of the nuclear "islands". The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation set up by the A.E.A. which is already operating on a commercial basis.

The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly-owned company under the Companies Acts with the initial share capital wholly subscribed by the Government. In order to emphasise the interdependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two design and construction organisations. Since the establishment of the fuel company will require legislation, I am proposing that initially the Government shareholding should be taken by the A.E.A.

The exploitation both at home and overseas of new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies, whose activities we would seek to concentrate geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.

In addition, when the proposed new industrial structure takes shape, the Government have in mind the establishment of an Atomic Energy Board on which the A.E.A., the design and construction companies, the fuel company and the generating boards would be represented. This Board would concern itself with research and development programming, export co-ordination and major policy matters. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.

As part of these arrangements, the Government will have to consider the necessity for some modification in the organisation of the A.E.A. in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems.

The necessity for these new arrangements arises from the great success that the A.E.A. has achieved in developing commercial reactors. The reorganisation will be designed to secure that the most effective possible use should be made of this great national asset not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology.

These, then, are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent, since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They will need certainty for the future and I hope that we shall soon be able to reach an agreement, at least in principle, which will allow us to exploit our national research and development in atomic energy to the full.

Mr. David Price

Is the right hon. Gentleman aware that his decision to have two design and construction companies rather than one is in line with the minority Report of the Select Committee and will, therefore, be welcomed on this side of the House? Is he also aware that this is a very full statement, that much of the detail has yet to be filled in, and that it is very difficult at this stage for us to examine it closely? Will he undertake—as his implementation of the strategy in this statement matures—to give the House more detail and that we will have an opportunity to discuss it in detail across the Floor of the House?

Mr. Benn

The rôle of the fuel company in relation to the design and construction organisations meets the need which was dominant in the minds of the Select Committee in its considerations and its Report.

On the question of further reports to the House, I shall be guided by the progress made by the I.R.C. in talking to the industry, but there will be opportunities for further discussions and, as the hon. Member knows, there will be legislation later.

Dr. Ernest A. Davies

I thank my right hon. Friend for making this statement and indicating that action is being taken to deal with the nuclear power industry. I welcome that part of his statement dealing with the treatment of nuclear fuel, but can he explain why he has prevented the I.R.C. from considering the need for a single design and construction unit and has specifically asked for it to deal with two, since this, in effect, according to the argument of the major part of the Select Committee on Science and Technology Report, means that we shall have three such organisations and not two?

Mr. Benn

My hon. Friend is wrong on his last point. We shall have two, because the A.E.A. will be working in the two design and construction organisations. As for his first comment, he will recognise that there was also an error in that, because we asked I.R.C. first to go out and seek negotiations on the basis of a single design organisation. This did not prove to be a practicable way of doing it, and the fuel company will meet the need that the Select Committee brought forward.

Mr. Lubbock

Will the Minister confirm that these arrangements will not jeopardise in any way the negotiations entered into by A.P.C. and T.N.P.G. and their European counterparts for the formation of international consortia? Can he say whether it will now become possible for licences to be granted for S.G.H.W. technology? Will it be possible, at a later stage, to consider private participation in the fuel company?

Mr. Benn

We have not yet established a fuel company, but the objective is a publicly-owned company in which the initial shareholding will be by A.E.A. and subsequently a Government holding. Existing commitments will continue on the basis on which they have been entered into. I stress this in relation to A.E.A., but it applies to everybody. It follows from the reorganisation that the two design construction teams will have access to the technology developed by A.E.A.

Mr. Brian Parkyn

Will the Minister give I.R.C. a time limit by which it will have to have its plan completed? Has he given instructions to I.R.C. to see what can be done concerning the tremendous future of the H.T.R., and capitalising on it?

Mr. Benn

I do not think that it would be wise to give the I.R.C. a time limit because we are asking it to negotiate with the firms concerned, but since a great deal of work has been done on this matter I should expect that the basis of an agreement probably could very rapidly be found. A certain amount of work is going on in connection with the H.T.R. We attach a lot of importance to the H.T.R., as is evidenced by our support for the Dragon project.

Mr. Michael Hamilton

In the time remaining to him, will the right hon. Gentleman seek to reduce rather than multiply the number of organisations which are known by their initials only?

Mr. Benn

That is a question for others than myself. But it is fairly well-established that the Atomic Energy Authority should be known as the A.E.A. If we have an Atomic Energy Board, it would be hard for me to lay down that it was not to be known as the A.E.B.

Mr. Maclennan

Is my right hon. Friend aware that the decision about the fuel company is unlikely to be welcomed by the Institution of Professional Civil Servants, which has resisted this suggestion all along? Is he further aware that, as a result of his remarks about the geographical grouping of the new work at Risley, there is likely to be considerable concern at the A.E.A's establishment at Dounreay, whose continued existence is of such great importance to the area?

Mr. Benn

I do not think that my hon. Friend should anticipate difficulties. If we are to make a change of this kind, there are bound to be many people who will find that the situation alters for them. The object of this reduction is to exploit the highly successful work being done by the A.E.A. in nuclear research and development. I should hope that these changes could be carried through with the good will of all concerned. Dounreay, which is a very advanced fast reactor development, is likely to be the beginning of the very successful exploitation of that system in this country.

Mr. Neave

Is the Minister aware that the reorganisation of the A.E.A. will create considerable staffing problems? Is he further aware of the need for maximum consultation with the staff side and, in particular, for an early decision on the question of transferring pensions?

Mr. Benn

I recognise that there is a great deal more work to be done in this field. There will be the fullest possible consultation with the staff.

Mr. Dalyell

Is my right hon. Friend aware that some of us who signed the majority Report, after seven months' work, will take a great deal of convincing about his rejection of the single nuclear boiler company? May I ask him two specific questions? First, precisely what are the minority shareholdings? Secondly, what does he mean by "close integration"?

Mr. Benn

I recognised what my hon. Friend says about the case for the single design organisation. It was for that reason that we asked the I.R.C. to go for that first. But, in practice, if we are to have international links between the D.C. organisations and other companies abroad as a result of which we hope to sell our reactor systems, there is a case for not trying to merge into a monolithic organisation in this country. This was one of the dominant considerations in our minds. This is the answer to my hon. Friend's second question about the rôle of the fuel company's holding in the D.C. organisations. We recognised, the longer we thought about this, that it was the fuel which, in the long run, played the dominant rôle in shaping the technical standardisation required.

Sir Knox Cunningham

Will this new structure, particularly the formation of the companies, in any way reduce the opportunities of hon. Members to obtain information about this subject in the House?

Mr. Benn

That is a technical question with which the House will be much concerned later, but it is a bit too early to say what the arrangements will be. They will be contained in legislation which will come forward later.

Mr. Atkinson

The answer which my right hon. Friend has just given would seem to mean that it is impossible for a Socialist structure in this country to cooperate with private interests in Europe. That is a view which would be rejected on this side of the House. Would my right hon. Friend accept that there will be great disappointment that, by choosing this course, he has accepted the Conservative proposals for the future of the industry and has rejected outright the advice given to him in a Motion, signed by 104 Members, to set up a single design authority?

Mr. Benn

I think that my hon. Friend is wrong in two respects. First, if we are to sell our reactor systems abroad, some industrial collaboration is absolutely essential, and that is why we have maintained this option. Secondly, I am somewhat surprised that now that a new publicly-owned, science-based industry is to be built up on the basis of public research and development, which is what the fuel company will be, he should find this so unwelcome.

Mr. Evelyn King

Is it possible to infer from the Minister's statement that the possibility of a rundown in the level of employment at Winfith is more or less likely?

Mr. Benn

I think that it would be foolish of me to try to answer a question of that kind without proper consideration. The A.E.A.'s success in developing a number of reactor systems has now opened up the possibility of a new organisation geared to the idea of exploitation. I think that everybody has always recognised that as the success of the A.E.A. became greater the emphasis would tend to be on the exploitation side. The object of the new organisation which we hope to set up is to give this new emphasis real form.

Mr. Hooley

Is my right hon. Friend aware that the creation of a publicly-owned fuel company is entirely acceptable to hon. Members on this side of the House, but that the idea that private enterprise should control the activity of the other two companies is not so acceptable? Is he arguing that in order to collaborate with other countries, complete public ownership is not possible?

Mr. Benn

It is not part of my object to argue that at all, nor is the proposal which I put to the I.R.C. confined solely to the creation of a new publicly-owned fuel company. The point is that we should try to build mixed enterprise arrangements inside the two D.C. organisations. If my hon. Friend reads the statement carefully, he will see that this is a balanced proposal designed to get the best out of the A.E.A. combined with the greatest possible prospects of selling reactors abroad, which is the only way in which we shall get a return on the many hundreds of millions of pounds which we have spent on atomic energy research in the last few years.

Sir Ian Orr-Ewing

Would the right hon. Gentleman remind his hon. Friends that this was not only the solution of the Conservative Party? The creation of two design companies was also the solution which was strongly recommended by the biggest customer—the Central Electricity Generating Board. Therefore, this will be very acceptable to the majority of people in this country.

Could the Minister be a little more forthcoming about the question put by the hon. Member for West Lothian (Mr. Dalyell)—why it is necessary to inject public money into the two design and construction companies? They have operated perfectly satisfactorily up to now. It was not clear from the right hon. Gentleman's earlier reply why the Atomic Energy Authority should lend money to the new public fuel company to take a minority shareholding in these two private enterprise companies.

Mr. Benn

I would dispute what the hon. Gentleman says about the arrangements having worked very well up to now. If they had worked very well up to now, we should not have devoted two years to considering how to improve them. [HON. MEMBERS: "Oh."] We have not sold a reactor abroad for some years, as the House knows very well.

On the second point, about why there should be a link between the fuel company and the two D.C. organisations, under the proposed reorganisation some of the A.E.A.'s staff and assets will be brought into the design and construction organisation in order to achieve the maximum concentration of effort and exploitation of the system.

That is one reason. The other reason is to meet the need which was very strongly pressed by the Select Committee that we want to get the maximum concentration of effort and the minimum of wasteful competition or design competition in a field in which this could be decisive in selling reactors abroad. This matter has been settled not on an ideological basis, but on the basis of finding a consensus of agreement between the public agencies involved and the companies which have to exploit them.

Mr. Rankin

Will the reorganisation of the industry and the creation of the new board be followed by a bigger intake of technologists, scientists and engineers on the administrative side?

Mr. Benn

The object of the exercise is to change the emphasis from nuclear research and development, in which we have done very well, to the exploitation of our reactor systems. I should very much hope that more scientists and technologists working in the field would find themselves on the exploitation end, because it is here that we have so much more to do.

Mr. Fortescue

In view of the Government's recent decision, taken against the advice of every nuclear physicist in the country, to withdraw from the proposed European 300 GeV nuclear accelerator programme, how can the Minister be so confident in our long-term export potential for nuclear reactors?

Mr. Benn

I do not think that the two issues are connected. At no stage whatever was the 300 GeV accelerator brought forward on the basis that it contributed to the exploitation of the atomic reactor systems developed by the A.E.A.

Mr. Dalyell

On a point of order. In view of the long-term importance of the Minister's statement, may I ask the Leader of the House whether, before the Summer Recess, he can provide time for a debate?

Mr. Speaker

There is a stage in the House on Thursday afternoon when business questions may be asked.

Following is the letter from the Minister of Technology to Sir Frank Kearton, Chairman of I.R.C.:

I am writing to you, as Chairman, to ask whether the I.R.C. would be ready to help to carry through a reorganisation of the nuclear industry, which has now been under discussion for well over eighteen months.

In our earlier talks about this, you were kind enough to advise me personally from your own long experience of atomic energy matters, as a part-time member of the A.E.A. Board. Later you and your I.R.C. staff also took informal soundings from all the parties involved both on the recommendations of the Select Committee and on the development of their thinking in the light of the Committee's report. All this has been most helpful.

We have, of course, discussed this very fully with the A.E.A. throughout and have now had an opportunity of considering your suggestions in the context of the Government's objectives which I summarised in the House of Commons on May 23rd as follows:

First, to make the best possible use of all the existing resources in this field, cutting out overlapping and duplication, of which there manifestly is some;

Second, to allow those who have worked in the Atomic Energy Authority full scope for carrying their work forward into the exploitation and sale of the systems which they have developed;

Third, to get the maximum possible advantage of the technical standardisation, coupled with the. most effective design competition in engineering detail and construction method;

Fourth, to try to link and co-ordinate the efforts in such a way as to relate reactor systems to the fuel elements and reprocessing business at which the A.E.A. has excelled, both technically and commercially, through its fuel production group;

Fifth, to create an organisation which permits the sort of international industrial links which will be of critical importance in all sectors of advanced industry and not just in atomic energy;

Sixth, to do this with a special eye upon the future of the European nuclear industry in co-operation with our partners in Europe;

Seventh, to change the emphasis of our national effort in such a way as to increase it on the exploitation side and see that future nuclear research is guided and shaped more directly by the needs of the market at home and abroad;

Eighth, to establish a creative partnership between the public and private sectors as far as possible by reaching a consensus of agreement so as to allow all the other objectives I have described to be achieved.

With these in mind, I am writing to invite the I.R.C. to assist the industry in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. I have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear "islands". The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure of the industry. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.

The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation built up by the Atomic Energy Authority, which is already operating on a commercial basis. The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly owned Company under the Com- panies Acts, with the initial share capital wholly subscribed by the Government. In order to emphasise the inter-dependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two new design and construction organisations.

The establishment of the fuel company will require legislation, and I would propose therefore that initially the Government shareholding should be taken by the A.E.A.

Exploitation both at home and overseas of the new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies. The design units of these two new firms, together with the fuel activities, should be, so far as is possible, concentrated geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.

When the proposed new industrial structure takes shape, the Government have it in mind to set up an Atomic Energy Board, including representatives of the A.E.A., the fuel company, the two new design and construction companies and the Generating Boards. This Board would concern itself with the composition and financing of R & D programmes (to which the two new design/construction companies, and the fuel company, would be expected to contribute), the co-ordination of activities in the export field and major matters of policy. These proposals have already been the subject of discussions between our respective officials. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.

The Government, as part of these arrangements, will have to consider the necessity for some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the re-arrangement of responsibilities for the exploitation of reactor systems. This reorganisation would be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology. The necessity for these new arrangements arises from the great success that A.E.A. has achieved in developing commercial reactor systems.

These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They need certainty for the future and I hope that the I.R.C. will be able to achieve an agreement, at least in principle, as soon as possible.