ATOMIC ENERGY AUTHORITY BILL

HC Deb 17 December 1970 vol 808 cc1590-657

4.26 p.m.

Order for Second Reading read.

The Minister for Industry (Sir John Eden)

I beg to move, That the Bill be now read a Second time.

This Bill is substantially the same as that introduced into another place earlier this year by the previous Government. It is concerned with the commercial production activities of the United Kingdom Atomic Energy Authority. The Bill makes provision for the transfer of the assets and liabilities of the Authority's Trading Fund to two Companies to be set up under the Companies Acts—British Nuclear Fuels Ltd. and The Radiochemical Centre Ltd.

The idea of transferring the fuel production activities of the Authority to a company is no new one. The Select Committee on Science and Technology in its report for the Session 1966–67 recommended that a new British nuclear fuel supply and manufacturing company should be established. Subsequently the previous Government introduced a Bill for this purpose. It received general support from all parties but lapsed on the dissolution of Parliament. It now falls to the Government to reintroduce the measure in substantially the same form. I am sure, therefore, that, in proposing to hive off these particular activities from a public agency to a more commercially-orientated structure, the Government can count on the support of the whole House.

I propose in this short speech to touch on the reasons for introducing the Bill; then to describe its main provisions and the differences between some of the provisions and those in the previous Bill; then to explain the financial effects of the Bill and finally to make clear the Government's policy on participation of other companies in the shareholding of the two companies.

When the Atomic Energy Authority was set up in 1954 one of its objectives was the application of nuclear power to the economic generation of electricity. Plants to produce nuclear materials for the defence programme had already been established and it was appropriate to use these same plants, and to extend some of them, to produce the fuel elements required for nuclear power stations. By 1965 this civil business had become large enough to warrant the setting up, within the Authority itself, of a Trading Fund. This enabled the business to be run in accordance with financial arrangements similar to those of other public and private industries, separate from the Authority's research and development and other functions.

Comparing the first financial year of the Trading Fund, 1965–66, with 1969–70, the value of sales of nuclear fuel services has grown from £19½ million to £30 million and the value of sales of radioisotopes from £2.3 million to £4 million. The proportion of total sales represented by exports was 9 per cent. in 1965–66 and 15 per cent. in 1969–70. The current financial objectives set for the Trading Fund cover the three-year period from 1st April, 1968, to 31st March, 1971. The targets have been met for the two completed years, the main target being a minimum rate of return of 13 per cent. on capital employed in respect of nuclear fuel services.

As regards the future, it is clear that the domestic and world market for nuclear fuel elements and fuel services is bound to grow at a rapid rate. The Atomic Energy Authority estimates that annual world demand for nuclear fuel, now approaching £200 million, will increase to £1,000 million or more by 1980.

The Authority has already shown great technical and marketing enterprise in securing a growing share of this overseas business. In 1968–69, overseas orders worth some £11½ million were won and the export order book now stands at over £20 million. Particular success has been achieved in breaking into the United States market for conversion of uranium ore into uranium hexafluoride—the starting point for the enrichment process—despite the handicap of trans-Atlantic transportation costs. Contracts have been obtained against international competition to supply fuel to an American-built reactor in Holland, to reprocess fuel from American-designed reactors located at various places in Europe and to provide nuclear fuel services in other parts of the world.

The Radiochemical Centre at Amersham provides an essential service to all users of radioactive isotopes. Its business is on a smaller scale than that of nuclear fuel services but it is no less successful. The products of the Centre are required in fundamental research in the life sciences; in radiotherapy and new methods of diagnoses in medicine. In industry they are widely employed in processing and testing. Since it was established in 1946, the Centre has had a continuous record of growth and profitability. It sells over half its output abroad.

These two success stories add up to a very considerable achievement for the Trading Fund. It is this very success which makes me so confident of their ability not only to hold their own against any competition but also to increase their share of these growing markets. But they will be greatly assisted in this if they are run by ordinary companies set up under the Companies Acts with the normal commercial freedom to raise capital and to enter into international partnerships. Neither company will be accorded any statutory monopoly, but, of course, in setting them up, the Government envisage that the companies will be successful in retaining the present pre-eminent position of the Fuel Production Group and the Radiochemical Centre in their respective lines of business.

Before turning to the main provisions of the Bill, I should make clear that the setting up of the companies does not by itself entail any further modification of the Atomic Energy Authority. The remaining part of the Authority, comprising the Research, Reactor and Weapons Groups, will still be of sufficient size to make it a viable body. Nevertheless the Government are giving thought to the longer term future of the Authority.

The main purpose of the Bill is the transfer of the relevant activities of the Atomic Energy Authority as an on-going business to the two companies. The companies will be set up under the Companies Acts and, consequently, the Bill does not need to provide for their structure and organisation. The companies will be registered before the appointed day on which the transfer is to take place. But this will not be done until each House of Parliament has considered the Bill in Committee. The draft Memoranda and Articles of the companies have been placed in the Library. Hon. Members will see from a study of these that they follow the usual form of such documents. Two points about them may be of interest. First, the objects of the companies have been framed widely enough to avoid any artificial restriction on the employment of their assets to the best advantage. Second, the Articles provide for the majority shareholder to retain control over the issue and transfer of shares and over disposal of any substantial part of either company's undertaking or assets.

Each company will issue shares to the Authority in consideration of the transfer taking account of the difference in value between assets and liabilities. I shall refer later to the question of valuation.

The establishments to be transferred to British Nuclear Fuels Ltd. are Spring-fields, Capenhurst, Chapelcross and the Windscale and Calder Works. At Spring-fields, uranium is extracted from ore and converted to a form suitable for enrichment in the plant at Capenhurst. Springfields is also the centre for manufacture of fuel elements from both natural and enriched uranium. At Windscale, used fuel elements are processed to extract plutonium and other useable byproducts. The power stations at Chapelcross and Calder Hall generate electricity for the national grid but are also capable of being used in the production of special types of plutonium and the experimental irradiation of fuel elements.

The Authority will retain the exclusive use of its research and development laboratories at Springfields and Wind-scale.

The Authority's Radiochemical Centre at Amersham will be transferred to The Radiochemical Centre Ltd. together with certain activities and facilities belonging to the Centre at Harwell.

Although the companies will be set up under the Companies Acts in the normal way, they will be subject to certain special limitations or safeguards by means of some of the provisions in the Bill.

Clause 11 provides for the retention of a majority public shareholding in the companies. Hon. Members may be aware that, when the previous Bill was considered in another place, the then Opposion secured the deletion of the subsection providing for majority control. But, frankly, it is clear that there are strong grounds for ensuring that in the foresee- able future, there shall be a majority public shareholding. In arriving at this judgment, we have in mind chiefly the strategic importance of the fuel company.

Mr. Tam Dalyell (West Lothian)

The Minister referred to the exclusive use that the Authority would retain in relation to Windscale. It occurs to me that that is rather an odd way of putting it, but perhaps I have misunderstood him.

Sir J. Eden

I was referring to the research facilities there. The Authority will retain the use of those research facilities. The facilities themselves will be used, although the land on which they exist will be transferred as part of the assets to be transferred. The choice of phraseology was to identify the facilities. Perhaps I might ask my hon. Friend the Under-Secretary of State to look further into this matter with a view to meeting the hon. Gentleman's point with greater elucidation towards the end of the debate.

Mr. Dalyell

It was simply the use of the word "exclusive" that puzzled me.

Sir J. Eden

I appreciate the hon. Gentleman's point. These research and development laboratories are currently used by the Authority. The use of these facilities will not be transferred. But I will ask my hon. Friend to follow this through more closely for the benefit of the hon. Gentleman and the House.

Clause 11(3), which was the provision that was removed from the previous Bill, has been restored, but in a slightly different and more straightforward form.

The Bill provides for the public shareholding in the companies to be held initially by the Authority. It also contains a provision permitting the Secretary of State at any time to transfer the controlling interest to himself. The decision to do this would be taken later, bearing in mind that the remainder of the Authority will be primarily a research and development organisation. But it will also depend on the timing and scale of private participation in the shareholding of the companies.

A further limitation on the nuclear fuel company arises from the fact that the company will be handling, and in fact generating, information of a particularly sensitive nature. In the absence of special provision, this information will be outside the scope of the Official Secrets Acts as matters now stand. The Bill therefore provides for the application of a schedule of special security provisions very similar to those to which the Atomic Energy Authority is subject.

As the law now stands, only the Atomic Energy Authority may carry out enrichment of uranium or reprocessing of nuclear fuel elements for a purpose other than research and development—that is, as a production business. The Bill therefore provides, in Clause 17, for an appropriate amendment to the Nuclear Installations Act, 1965, to enable the fuel company, or other bodies, to carry on such business, subject to licensing and safety controls.

This amendment is also required before the United Kingdom can ratify the Agreement with the Netherlands and Germany for collaboration in the development and exploitation of the gas centrifuge process for enriching uranium. Hon. Members will doubtless recall that this Agreement, which owed a great deal to the encouragement given to it by the right hon. Gentleman the Member for Bristol, South-East (Mr. Benn) was signed in March of this year by the previous Government. The Agreement provides for collaboration, by means of two international companies, in the designing, building and operation of centrifuge plant. Initially, capacity is to be established in the Netherlands and also in this country.

I am sure that in considering the Bill hon. Members will have particular interest in the Clauses dealing with the terms and conditions for the staff on transfer. Particular safeguards concern the staff who will be transferred with their work from the Authority to the companies. For purely practical reasons it is just not possible to allow staff the option to stay with the Authority. The Government therefore share the view of the previous Government that the provisions of the Bill must go to considerable lengths to protect their legitimate interests.

The provisions in the present Bill are unchanged from those which were in the previous Bill. They lay an obligation on the companies to seek the co-operation of staff representatives in setting up machinery for negotiation of new terms and conditions of service. They lay down that those terms and conditions must conform to the principle that they are, taken as a whole, as favourable to the staff as the terms and conditions enjoyed in the employment of the Authority. They also provide for arbitration on the question whether this principle is adhered to.

The Bill also provides for the staff to remain members of the Authority's superannuation scheme until the companies have introduced schemes of their own. The companies' schemes are to be, in the opinion of the Secretary of State, no less favourable, taken as a whole, than those of the Authority at the time.

Mr. Dalyell

We have all heard from the Institution of Professional Civil Servants that it sees no need to add to the number of superannuation schemes in the nuclear industry as a whole; and that it hopes that the Minister may yet be persuaded to reconder his decision. Can the Minister tell us at some length why this view has been rejected?

Sir J. Eden

That is a matter which can properly be pursued later in our consideration of the Bill, but I am sure that it is right that the companies should set up their own pension schemes. I am equally certain that the reference I have made to the need of the Secretary of State to satisfy himself that these schemes shall be no less favourable than those already in operation will fully safeguard the interests of the staff concerned. The Government believe that these provisions, together with the enhanced opportunities for expansion which the companies will enjoy, will constitute effective safeguards for the staff.

Before turning to the respects in which the Bill differs from its predecessor, I should like to say something about the retention of one Clause—Clause 16—

Mr. Stanley Cohen (Leeds, South-East)

The Minister has referred to the setting up of new machinery for consultation and negotiation. Is he able now to say when such machinery is likely to be established and to be effective?

Sir J. Eden

I said that provision is made for the setting up of machinery for negotiation of the new terms and conditions of service, and this will have to be done as it affects the transfer of the staff. Provision is made for members of the staff to remain members of the existing superannuation scheme until something comparable has been set up within the companies themselves. This aspect, therefore, is covered by the procedure I have outlined.

Before I deal with some of the respects in which the Bill differs from its predecessor, I should say something about the retention of Clause 16 on the treatment of the transferred assets for the purpose of investment grants. In the light of the Government's decision to terminate investment grants the Clause now ensures no loss of investment grants on transferred assets where expenditure relates to assets for which contracts were made by the Authority on or before 26th October 1970. Whether the wording of the Clause is quite appropriate for this purpose cannot be completely determined until the Government have got further with the drafting of the legislative provisions to terminate investment grants. It may therefore be necessary later to table a Government Amendment.

The other differences between the Bill and its predecessor can be briefly summarised. First, there was in the previous Bill a Clause which provided for payment of grants to British Nuclear Fuels Limited instead of investment grants to international companies set up under the Tripartite Gas Centrifuge Agreement. It has been excluded. This is an automatic consequence of the decision to end investment grants.

Mr. Dirk Douglas (Clackmannan and East Stirlingshire)

If I recall correctly, Article 3(3) of the Treaty contains a specific pledge to consult the Joint Committee set up by the Tripartite Agreement in relation to any economic changes affecting the operation of the Agreement. Did the Government consult the Joint Committee before they changed the method of investment incentive?

Sir J. Eden

This is a matter of investment incentives affecting the position of British Nuclear Fuels Limited, the company to be set up, and as such this ultimately will undoubtedly have an effect on the consideration to be given to the development of the gas centrifuge proposals.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

My hon. Friend the Member for East Stirlingshire (Mr. Douglas) is pointing out that, as the Minister will know, there was a lot of negotiation with our Dutch and German partners about the extent to which investment grants were to be taken into account in the financing of the different parts of the Agreement. What my hon. Friend is asking, as I understand, is whether the change in respect of investment grants and the new arrangements proposed in the Bill were the subject of international negotiations in order to be sure that they were covered by the arrangements we have reached before.

Sir J. Eden

The changes the Government have decided to make were not the subject of discussion internationally. The changes, of course, had been proposed by the Government and have an impact on this operation, and it is that aspect which is the subject of international discussion.

The second change is that the limits set in Clause 13 for the aggregate of Government loans to, and new share purchases from, the fuel companies are lower than those set out in the previous Bill. The reason for this is the expectation that the company will be able to raise a significant amount of its capital requirements from the private sector.

Third, a new Clause—Clause 18—has been included to ensure that in the interests of security the present arrangements whereby the Factory Inspectorate rather than local authority inspectors exercise statutory functions of inspection at A.E.A. establishments will continue at sites transferred to the fuel company where classified work is carried on. The same arrangements will apply to any such site owned by a company set up in pursuance of the Tripartite Gas Centrifuge Agreement.

The fourth difference is that a new clause—Clause 19—has been introduced to ensure that the United Kingdom can implement the Security Annex to the Gas Centrifuge Agreement with the Netherlands and Germany signed by the previous Government in March this year. The Clause will permit certain of the security provisions of the Schedule to the Bill to be applied to any international company registered in the United Kingdom and established pursuant to the Centrifuge Agreement.

I think that it might be helpful to the House if I were now to say a word or two about the financial effects of the Bill. These are set out in the Financial and Explanatory Memorandum, and require only a brief further explanation. Reference is made in the Memorandum to the two-way trade in goods and services between the trading fund side of the Authority and the rest of the Authority. This amounts to about £6 million annually each way and covers, for example, purchase from the trading fund of fuel elements and components for the Authority's reactor research and development programme and, in the reverse direction, the undertaking by the Authority of research and development for the trading fund.

Once the companies have been set up, trade between them and the Authority will no longer be at cost, but will include a profit element—in either direction. Because the pattern of trade is weighted in favour of the trading fund, this new element will increase the net payment by the Authority to the companies. Further more, although there will be savings to the Authority from discontinuance of certain services for the trading fund, it is not expected that they will match the loss of revenue. Overall, therefore, the Authority estimates that there will be an increase in its net expenditure of about £600,000 a year.

The estimate of not more than £100,000 that might be paid by the Secretary of State to the fuel company in reimbursement of the cost of complying with security directions under paragraph 5 of the Schedule of the Bill is additional to charges that will be borne by the Ministry of Defence in connection with any work on the defence account.

Mr. John Biffen (Oswestry)

As a result of the recasting of the finances under the two proposed companies, and taking into account the adjustment that my hon. Friend has mentioned, will it be possible for the House to know what has been the return on capital employed by the assets which will be allocated between these companies, not merely for the latest available year, but going back over the previous three or four years?

Sir J. Eden

Yes. The Bill provides for presentation to the House of the accounts of the trading companies. This information is already available for past years because the trading fund has been operating on a commercial basis, and accounts have been published separately. They show a successful return on capital employed. I think I am right in saying that for the year 1969–70 it was about 23 per cent.

I come, now, to say something about the Government's thinking about private participation in the two companies. The Select Committee on Science and Technology, in its recommendation in 1967, envisaged that whilst the industrial heart of the proposed fuel company would be provided by the Atomic Energy Authority, other companies should be invited to join. The previous Government endorsed this by expressing the hope that suitable firms in private industry, able to offer relevant expertise, would choose to take up shareholdings.

The Government believe that private industry has an important contribution to make to the continued success and future expansion of the nuclear fuel business. We favour private participation from an early date—preferably from the outset—provided, of course, that we can reach satisfactory agreements on the terms and on the price of shares. In conjunction with the Atomic Energy Authority the Government propose to commission a merchant bank to advise on the problems of valuation and capital structure and to identify prospective participants. The Government will wish to satisfy themselves that whatever the formula to be adopted it will be related not only to the past performance of the Trading Fund, but also to the future profitability of the fuel company. I shall shortly be discussing the terms of reference for this operation with the merchant bank.

Mr. Bruce Millan (Glasgow, Craigton)

Will the terms of reference be made public?

Sir J. Eden

I shall consider that. This is of great interest to the House, and it is the Government's wish to ensure that in discharging the responsibility in this way they are seen to be acting in the best interests of the whole House and of public investment. I shall take into account what the hon. Gentleman has said.

Mr. Douglas

The task which the hon. Gentleman is to give to the private merchant bank was within the orbit, and, indeed, was a direct function of, the I.R.C. which his Government have destroyed.

Sir J. Eden

I am not proposing anything substantially different from what was considered by the previous Government, and it was said by Lord Delacourt-Smith when he introduced the Bill in another place that this was the sort of procedure which would have to be followed, and that the Government would be taking outside expert advice on this matter by people properly qualified to give it. I think that that is the right way to deal with it. We shall follow this course here and a similar course in regard to the Radiochemical Company.

The Government, or to begin with the Authority acting on their behalf, will retain majority shareholdings in both companies. The shareholders will appoint the directors, and the Government, either through the Authority or directly, will thus have a choice in the composition of the boards. It is our intention that, in accordance with normal company practice, the boards should manage their affairs in the interests of the companies and the shareholders. Accordingly, the Government will expect the companies to aim at securing a fully economic return on their capital, bearing in mind that they will have to operate in competitive markets.

Finally, I propose to say something about timing. There is a broad measure of agreement between the Government and the Opposition on the need for this Measure and on the desirability of setting up the proposed companies as soon as possible. About three years have elapsed since the recommendation made by the Select Committee on Science and Technology in 1967.

Mr. Arthur Palmer (Bristol, Central)

I am sure the Minister appreciated that when the Select Committee started its investigation we were told then that reorganisation was urgent.

Sir J. Eden

I understand the hon. Gentleman's point. The Government have pressed ahead as fast as they could with this matter. There is also an urgent need to secure early amendment of the Nuclear Installations Act, 1965 so that the United Kingdom can ratify the Gas Centrifuge Agreement with the Netherlands and Germany. The Netherlands and German Governments are already on the point of ratifying the agreement. Since interim arrangements under the agreement expire in early March, one year after its signature, it is clearly desirable that the United Kingdom should be able to ratify the agreement before March of next year. I hope, therefore, that it may be possible to secure early passage of the Bill. If that can be done, then the Government will be able to set up the companies in time for them to commence trading from 1st April of next year.

In commending the Bill to the House I should like to end by paying tribute to all those in the Atomic Energy Authority through whose efforts and enterprise in the past the future success of these two companies is assured.

5.0 p.m.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

It is a happy thought that I can begin by warmly endorsing what the Minister said about the work of the Atomic Energy Authority. No one who has been involved in these matters, as I was before him and as others have been before me, can fail to be impressed by the quality of the men and women who have worked in the Authority over the years. Whatever else we may want to say on this Bill we must recognise that we are building a new firm, almost a new industry, upon the skills of the people who have worked in the A.E.A. and before that in the Ministry of Supply.

After the clashes that have taken place in the House over the last few days and weeks, to be able to congratulate the Government wholeheartedly upon the introduction of this Bill is a very pleasant duty. I was watching the hon. Member for Oswestry (Mr. Biffen) as the Minister introduced the Bill. I hope that he noticed what was being presented. It was a Bill to establish two new mixed-enterprise companies, one for nuclear fuel and one for radio chemicals, both with 100 per cent. Government holdings at the start and both with a statutory Government majority for all time, reversing an Amendment passed in the other place by the Conservative peers who were referred to rather amusingly as the "then Opposition". I liked that very much, talking about one's own colleagues as the "then Opposition". This Bill entirely implements the pledge in the Labour manifesto of 1964 which I will read to the House in the Christmas spirit. It says: A Labour Government will— Go beyond research and development and establish new industries, either by public enterprise or in partnership with private industry. To have the present Government implementing the Labour pledge of 1964 is very pleasing to me.

In explaining the background to the Bill the hon. Gentleman was rather shy about describing to the House the kind of negotiation that has gone on and no doubt is going on and which has to go on, between Government, industry, scientists and engineers and the public research establishments, the trade unions and other countries to get an operation of this kind off the ground. Although we shall have detailed points to raise in Committee, in supporting the Bill tonight I should like to give some of the background so that at any rate for the Opposition I can perform some function in throwing a light upon how these operations are conducted.

I should like to take the three main streams of policy that have culminated in the publication of the Bill. The first takes us right back to the origins of the Atomic Energy Authority. The nuclear research of this country is a product of war-time need. It was a defence operation. In 1955 when the A.E.A. was set up out of the Ministry of Supply we had the beginnings of the civil programme to which the Minister referred. The A.E.A. was hived off from the Ministry of Supply. Looking back, it was probably a mistake to hive off so much policy making, and the Select Committee under the chairmanship of my hon. Friend the Member for Bristol, Central (Mr. Palmer) drew attention to the weakness of government in the area of policy.

At any rate, into the hands of the A.E.A. were transferred considerable responsibilities. The work that it has done has been in discharge of those responsibilities. At the time the view of government—and this was two or three governments ago—was that science policy was something that had to be handled very much at arms length, through the Lord President of the Council. That was the way that science touched government, in very much an indirect way, and there was no active in- dustrial policy pursued at that time to see that, when the research that was done came to fruition, it could be positively applied and made the basis of an export marketing effort.

When the old Ministry of Technology was formed six years ago—and to this extent its functions have remained within the new Department of Trade and Industry—for the first time the research and industrial policy were brought together into one Ministry under one Minister. When the Ministry of Power was added to that, all the three ingredients in this problem came under the same Minister. The Minister's speech to-day links with the work done in converting a number of consortia—there were three in 1966—and the British Nuclear Executive into the present pattern of nuclear design and construction companies.

The House knows that although we have achieved remarkable feats in nuclear research and in our domestic nuclear programme, we have been notably unsuccessful in selling our reactors abroad. When in the summer of 1966 one of the nuclear consortia came to my Department and asked for money from the Government to support it in a bid, I declined to provide that support and instead began to work on the reorganisation of the nuclear industry and set in hand a re-examination of the industry. I must tell the House, although it probably knows it already, that my initial view was the same as the view of the Committee which sat later, that we should have a single design and construction company, partly because the volume of business at home would not be sufficient to sustain two companies and also because of the very stern competition that the British design and construction companies would face in foreign markets.

Therefore, early in 1967 we met the consortia. They were very hostile to the idea of any sort of inquiry, saying that it would create great uncertainty, and they pleaded with us to keep secret the fact that the meeting had occurred, although a full account appeared in the Sunday papers—but not my account. This was just at the time that the Select Committee began its work. My hon. Friend the Member for Bristol, Central, who did a very close study, drew evidence from many people in industry and Government. I gave evidence. The Committee came up with a very firm recommendation, first bearing on the fuel company which is the subject of this debate and, secondly, recommending that a single design and construction company should be established.

I am glad that the present Government have reappointed the Select Committee on Science and Technology because I believe it to have been a notable innovation in the conduct of affairs of the House, and I should like to pay a sincere tribute to the Committee for the work that it did, not only in this but in other areas.

When the Committee had made its report it was open to us to call in the Industrial Reorganisation Corporation to see whether the recommendation could be implemented. Although the hon. Gentleman brushed aside the I.R.C. rather hastily when he was asked about it, the truth is that it would not have been possible to bring about the two consortia that he is recommending to the House if the I.R.C. had not been available. It is astonishing—and I do not want to make a controversial speech just before Christmas because we are all so cheerful and happy and the Bill is a good one; it is ours—that hon. and right hon. Gentlemen can still maintain their weekend speeches and come forward with a Bill based upon a structure that they have begun to destroy in terms of the machinery which brought it about.

With the I.R.C. we had an industrialist working, not a political supporter of ours. Frank Kearton has very candidly always admitted his Conservative loyalties and subscriptions. [Laughter.] He is an independent person certainly, but no supporter of ours in the sense of political allegiance. He is a scientist, an industrialist, a member of the Atomic Energy Authority, a member of the Advisory Council on Technology, Chairman of the I.R.C., and Chairman of the Advisory Committee on the Industrial Expansion Act, about which I want to say a word later.

He was the man who enabled I.R.C. to go to the consortia and try to see how far it was possible to implement the recommendations of the Select Committee. I said it in the Rolls-Royce debate and I say it again: if Government are to get into this industrial policy area, that is the place where the industrialists should work, not as a substitute for a Permanent Secretary, tucked away in No. 10 Downing Street. Sir Frank Kearton was fully backed by the staff of I.R.C. He set up a further inquiry to see how far this could be implemented. It was not possible to bring about what we wanted and what the Select Committee wanted originally. The fact is that these design and construction companies did a wider range of business than simply nuclear power and therefore they could not be looked at simply as part of the nuclear industry. They were not absolutely dependent on the Atomic Energy Authority designs, although they obviously wanted to make them work if access were made available for them.

So we went for two rather than one, and it was, again, through the work of the I.R.C. that the exceptionally difficult negotiations necessary to bring about the two consortia took place. I say "difficult" because some of the consortia were faced with loss-making operations which they had undertaken in the past. It was a matter not just of bringing about mergers but of dealing with some extremely difficult company situations. The I.R.C. did it, and without the I.R.C. it could not have been done. In the process something else happened: the I.R.C. took a holding in the two consortia and so did the Atomic Energy Authority. Thus we had the beginnings of the mixed-enterprise ownership pattern which is embodied in the Bill. Nobody has said it was wrong then, and nobody has said, not even the Minister, that it is wrong now. Of course it is not wrong in an area in which publicly-financed research figures very highly and is applied in industry. The mixed-enterprise arrangement was right.

Not only that, but there were long and exceptionally difficult negotiations with the staff. Some of the staff moved out of the Atomic Energy Authority to the private consortia. Why did they do that? Why did that happen? Because the consortia anticipated that an expansion of effort required staff, and the Atomic Energy Authority, having discharged part, at any rate, of its role to create the technology, was not expecting to require as many people as it had had in the past. Many people moved in this way into a mixed-enterprise arrangement.

This new Bill provides for the fuel company, as I understand, to acquire shares in the consortia with the A.E.A., which will have a holding of shares in the first instance. And we get a treble interest—the interest of the Government, the interest of the Atomic Energy Authority, in its ownership in the first instance of 100 per cent. of the fuel company, and some holding by the private consortia. This is quite right. This is essentially because, of course, the design of the fuel element is the whole heart of the nuclear business, and with cross-representation we want to have co-ordination; and, of course, we need to remember that it is in the fuel business that the money lies far more than in the sale of the hardware itself—just as, in my life, having been a life-long smoker, I have contributed far more money to the tobacco manufacturers than to the pipe manufacturers. It is the same position with the nuclear business.

The consortia being established, we then had the opportunity to have discussions with the new consortia on how the policy would work, and on the developments. I mention this because it will obviously happen again with the fuel company in terms of the relationship between the Government and this type of mixed-enterprise operation. I will tell the House about the way we did it, because it is of some public interest.

We invited both consortia to come separately and to meet not only myself and my own principal officials but representatives of the Ministry of Power, and also there were brought in the Treasury, the Board of Trade, the Export Credit Guarantee Department and the Foreign Office, all looking together to see how it was possible to develop and expand the export business. This export business has considerable relationship to export credits. We had to try to think our way into the future through the eyes of companies, this joint planning was really important.

I get a bit fed up reading articles about Japan Incorporated as though M.I.T.I. in Tokyo were the only department in the world creating co-operation between Government and industry. The truth is that, without any of the political overtones of Great Britain Limited, we can do and did do a great deal of it ourselves. The Government today have to sit down with private industry and with mixed-enterprise firms and plan ahead the expansion of our marketing overseas. That is what the right hon. Gentleman's Department ought to be doing. I do not know whether it is doing it, because it is contrary to all the philosophy pumped out that Government and industry are separate—that unions and managements are separate. I do not believe that we can run modern society on that sort of philosophy.

At any rate, that was the first stream, stream No. 1, industrial restructuring. Next we come to stream No. 2, which culminates in this Bill, and that is the development of the new technology of the enrichment of uranium first by the diffusion process, and largely linked with that is the high enrichment for weapons purposes. In 1965, I think I am right in saying—it is hard to remember everything—we announced Capenhurst stage two, linking with the development of the A.G.R. programme.

But in parallel with the enrichment by the gas diffusion process came the work on the centrifuge itself. The work was very complex, involving development of high skills in mechanical engineering rather than nuclear techniques. Doctor Zippe is recognised worldwide as the father of centrifuge technology. Born in Germany, he went to Russia and to America and then he returned to Germany. The centrifuge technique developed within the A.E.A. was cheaper than the gas diffusion system. It could be built up on a modular basis, but it had certain dangerous aspects, and it was feared that it might make for greater proliferation of nuclear weapons. This work was therefore conducted with great secrecy.

It was about this time that the proposal was made about the smelters. This was a parallel story which I must bring into my account because it is an exceptionally interesting one—the idea that smelters might be provided in the United Kingdom with comparable powers costs to those abroad by linking it with the advanced gas-cooled reactor, necessary to provide power for stage two at Capenhurst. This project was under consideration in the summer of 1966 when centrifuge was coming forward. In the event, it was not done by using A.G.Rs. because the centrifuge was to replace diffusion for enrichment. It was done under the Industrial Expansion Act, and that Act, like the Industrial Reorganisation Corporation Act, has been abandoned by the Conservative Party.

Here was a great import saving venture under the Industrial Expansion Act programme which was made possible in large measure by our legislation which has now been knocked out. I say this in parenthesis because it was an element in the story which led up to the links the Dutch and the Germans had begun. As the House will appreciate, centrifuge work in the early days was carried out with exceptional secrecy because the Government had experience enriching uranium by the diffusion process and when we decided to shift to the centrifuge process, it revealed that that was the better method and bearing in mind what had been done and with the experience of centrifuge, it was thought better that we should be doing it with the Dutch and the Germans and that we should cooperate together. The French were at work at Pierrelatte, hoping to provide enriched uranium to Europe by the diffusion process from there. We made an approach to the Dutch and the Germans and brought about the tripartite arrangement.

If the House will bear with me for one moment, here is another lesson to be learned from the very nature of mixed Government and industrial enterprise. By this tripartite agreement we developed a totally new type of international agreement and co-operation unlike E.L.D.O. We got together and signed an agreement for a new international company to be set up with a long-term programme. The real value of this is that it is an international company working together with a number of companies and bringing together the German and Dutch Governments and the British Government, bringing together the A.E.A., and now the new nuclear fuel company which is to be brought about by this Bill, and bringing in private firms both in Holland and Germany. This was based upon a huge market; the figure given to me was the one the Ministers quoted, £1,000 million by 1980. We planned a tapering subsidy to transfer the research costs progressively to the new company. As Dutch and German firms were involved we had one reason for having private enterprise brought in as well.

I make no apology for this. I profoundly believe that this is an enormously expanding business and involves more than just the A.E.A. capability, because there is here a big trading capacity, and technique, from which British firms do not wish to be shut out. They will be competing with Dutch and German firms, and we want them to be moving into the market. So I think that this was right.

Now we come to the Bill before the House. I did not want to talk, as it were, by giving my memoirs, but there is, I think, a little more flesh and blood, as I think the House will agree, in the account that I have given than there was in the rather skeletal description given by the Minister.

Under the tripartite agreement each nation will own a majority holding in the enrichment plant in its own country, with the minority being held by the three partners together, so that at Almelo and Capenhurst there will be provision for a genuine international operation to work. I believe that this makes sense. It is an international company; it is European; it is mixed enterprise; it is Government; it is industry; it has been negotiated with the unions, and it brings science in on it. It makes sense—and it is utterly incompatible with everything that has been said publicly by the Conservative Party.

I make no more of that. It is obviously right to maintain the Government majority holding. In the House of Lords before the election, in the heady atmosphere when peers were preparing to defend their seats—a thing that worries them immensely—they passed an Amendment which would have taken away the Government majority holding. The technology is so sensitive and the staff requirements are so important—and for many other reasons—that it is obviously right that it should be Government-controlled. In that respect, the Minister has fairly recognised the virtues of what had been originally proposed.

I have described three streams of thinking and action that went into the Bill. But there is one great blank. We have heard nothing, other than the phrase "the Government are giving thought to the future of the Atomic Energy Authority". I look at the hon. Member for Abingdon (Mr. Neave), who has been a member of the Committee and has a great interest in the matter, and has always shown a great interest in the staff of the A.E.A. I wonder how he felt—I wonder how my hon. Friends felt—when they heard the phrase about "giving thought to the future of the Atomic Energy Authority".

Mr. Dalyell

What does it mean?

Mr. Bean

Perhaps my hon. Friend will be fortunate enough to catch Mr. Speaker's eye later.

We could not deal with the future of the Atomic Energy Authority until we had dealt with all the things that I have been describing—until we had dealt with the consortia; until we had dealt with the radio-chemical function; until we had dealt with the production group and until we had brought Aldermaston back into the Government arena as part of the recognition of its particular defence function. Having got to the point that we reached 12 months ago—to the point where this question becomes acutely pressing for the staff—it is disgraceful for the Minister to say no more than that he was "giving thought", when the Green Paper was published in January, and not with major political disagreement in the House. There was some criticism from outside, in the professional associations. There was some highly intelligent criticism of the Green Paper. All that is known to the Minister.

I think that Green Papers should lead to the provision of Pink Papers, which would tell us what the public thinks about the Green Papers. Many comments came in after the publication of the Green Paper. Some of them were critical, but they were immensely helpful. If the House had available to it all the information that we got from those who wrote in about the Green Paper we should be a little nearer to the solution of the problem.

I am utterly convinced that other than in the field of academic science—which never concerned me because it was the responsibility of the Department of Education and Science—technical research and technological work of the kind done in the A.E.A. and the D.S.I.R., sponsored by the N.R.D.C., must be orientated on the basis of need. If that principle had been followed, far from frightening the staff they would have been encouraged to see the relevance of their work.

Secondly, we must bring the Atomic policy back into the ministerial domain. We must create an Atomic Energy Board where all the interests in atomic energy policy can be focused together, bringing in industry, the research people and the power generating people themselves. I greatly regret the fact that six months after they came to office, and having known about the thinking of the previous Government—because the Green Paper was published; it was not a private document—there should have been not one indication of what the present Government intend to do about the Atomic Energy Authority. We had a deathly hush, followers by the classic, immortal phrase, ''The Government are giving thought to the future of the Atomic Energy Authority". That was said only a few months after we were told about the computers at the Conservative Central Office having their policies geared for immediate implementation. None could have been easier than this, because of the thinking that had been made public.

The staff are entitled to know about this, and it is a question on which the hon. Member who is to wind up the debate must say more than that he is "thinking"—because Oppositions think and Governments do things. That is a relationship that we should not forget.

What I have tried to describe is the background to the Bill. I believe that it is the best solution. My hon. Friends and others who are keenly interested in the matter will want to deal with problems of valuation and capitalisation. But staff matters are of supreme importance—such as conditions, wages, assurances that can be given, superannuation arrangements, problems of safety, which was partly dealt with by the Minister, and the interchangeability problems that will arise in connection with the new company and the old A.E.A. They are matters that I hope he will discuss with the staff. I made it my business to do this. I met the staff associations which must not be regarded as being of less than supreme importance. We are not talking about hardware; we are talking about people and their skills.

There are lessons to be learned. One is that we must link research with identifiable needs; another is that the structure of application is much more difficult and in many ways more important than the research that goes into the initial work. If we had learnt that many years ago—and I am not making a party political point—we should all have done better. Research must serve some need—industrial, military, or communal. We cannot make sense of any of these decisions unless Government, management, the unions, and scientists are brought together in partnership. We have had a lot of philosophy put forward by the Government since they came into office. I am in favour of Governments having a philosophy, but if the philosophy of the Conservative Party is the philosophy of scientific apartheid, where the two sides live separately and meet only when it is necessary and where there is no idea of partnership. I condemn it, because I believe that without partnership we cannot make this Bill work.

I know that the Secretary of State and his colleagues are active in developing and applying this philosophy, and I regret that they are demobilising the instrument by which modern Government can interact intelligently with industry and science, when the future of our society depends on our being at least as modern as the French, the Americans, the Japanese and the Swedes. Since in this case, however, they have been able to bring forward a Bill based upon the instruments that we gave them, I commend it most warmly to the House.

5.28 p.m.

Mr. Airey Neave (Abingdon)

I am glad to be able to follow the right hon. Member for Bristol, South-East (Mr. Benn) because I have always supported the operation contained in the Bill. He made a number of provocative remarks to which I shall refer but I must first declare a financial interest in the Nuclear Power Group and in a boiler company which has a shareholding in the group, and also a large constituency interest, in that many of my constituents are employees of the Authority. I shall naturally wish to raise a number of staff matters.

The right hon. Gentleman castigated the Government for not having decided the long-term future of the Atomic Energy Authority in six months. He will be aware that after many years he produced a Green Paper which was demolished by many scientists and which did not contain proposals that found acceptance in any quarter that I know of with regard to the future of the A.E.A., because it proposed to lock it up in a monolithic structure known as the B.R.D.C. We are not supposed to be discussing that in the context of the Bill, but I hope that hon. Members opposite will not make any further points about this Government's having taken too long.

The hon. Member for Bristol, Central (Mr. Palmer) will remember that in the Select Committee we often prodded the right hon. Gentleman and his Department to produce this Bill, in view of the recommendation of the Select Committee that there should be a nuclear fuel company. It does not lie with him to say that the delays are on this side of the House. There were considerable delays in his time.

However, I do not want to spoil the Christmas spirit, in view of what the right hon. Gentleman said in other directions, but I thought I should make that point, even if it sounds a little waspish. It is to the right hon. Gentleman's credit that he prepared the ground for the Bill, and I know something of the negotiations which took place. It is quite clear that nuclear fuel will be very important and very big business in the near future. This is one of the reasons for the Bill and one of the reasons that one wants to know a great deal about the implications of it.

One of the things which I welcome, which is being demonstrated by this Bill, and also by what the Minister said, is that the Atomic Energy Authority has for some time being a thriving commercial enterprise on the production side. I join in the congratulations to its Production Group on its excellent work, particularly in fuel and radio isotopes. It is certainly not the remote body that it has been made out to be in some quarters and on which I have commented in the last Parliament. It is certainly not divorced from industry and commercial practice. For any organisation to have as big an increase as 22.5 per cent, in its export orders is something on which it should be congratulated.

Since these matters are reported in the 1969–70 Report of the Authority, I ask what will happen about the new contracts for fuel which it has with Japan, with Germany and Switzerland? Will they be taken over by the new company? If so, in what circumstances? I assume that the new company will acquire the shares which the Authority has in the Italian nuclear fuel company, Combustibili Nucleari, which is an important point in view of the European links of the Authority. My hon. Friend has rightly described these as success stories and they form a very good basis for the new companies.

Not much has been said about the Radiochemical Centre. This has a close connection with Harwell, and is based at Amersham. It had an exceptional year's trading last year and its increase in sales was up 60 per cent, in exports. That is a remarkable record. I have noticed the way in which they exercise quality control. I am sure that this will be followed in the new radiochemical company. I know of the work that they have been doing with the isotope production unit at Harwell and I assume that those links will remain the same as they were. As I say, they are sound foundations for the future. They have excellent staff with which to carry out the work of those companies in this fast-growing industry with a considerable export potential.

These companies will, of course, with this very considerable growth, be able to make commercial decisions. This is not to say that the previous organisations could not or did not make commercial decisions. They certainly did. There has been a lot of misunderstanding about this, but I think that the structure is better for the future with the growth potential.

I think that it is absolutely right that the Government should have a majority shareholding. Although it may not be for all time, and these things may have to be reviewed in the light of private investment, this is absolutely the right structure at the moment—although my hon. Friend may tell us how far this question will apply to the Radiochemical Centre Ltd. as distinct from British Nuclear Fuels Limited. I was not clear from the Minister's speech about that.

I turn now to the staff effects. I have had a brief from the Institution of Professional Civil Servants, as has the hon. Member for West Lothian (Mr. Dalyell). They have supplied us, as usual, with extremely valuable information. I understand that there are 3,700 non-industrial staff to be transferred, and 2,400 others. Therefore, future prospects of these companies, particularly the nuclear fuel company, are very important to them.

My hon. Friend discussed the terms of reference of future negotiations for these companies and said that we would bring in the merchant banks. This is a perfectly normal method and there should be no real dispute about it. The net surplus of the trading fund, of the Authority, it is said, is expected to continue. This flat statement does not mean much unless we look into the actual working of the new companies.

I want to know whether any forward estimate has been made of the profits and the dividend policies of the companies. It is important for the staff, who are very skilled people, to know what sort of company they will join. If the likely market is as high as £1,000 million by 1980, as the Minister said, what share will the nuclear fuel company and the radiochemical company get of that market? Has there been a forward guess in his Department on this matter?

We are dealing with some of the most brilliant people in the field of reprocessing nuclear fuel in the world and they are entitled to know what sort of company they are joining. While I wish the company well, these are relevant questions to us.

What study in regard to our present negotiations with the E.E.C. has been made, for example, about the economics of large-scale reprocessing nuclear fuel plant in Europe? This will be important because, were we to join Europe, we would want to know the effect on the economics of the new company.

Clause 13—this again is a financial question—says that the maximum contribution out of public funds is to be reduced in the case of the fuel company from £100 million to £75 million, without recourse to Parliament. After that, there has to be recourse to Parliament. What is the significance of this? Is it because part of the capital is to be obtained from the market? If so, that might be a perfectly sensible way of doing it.

A subject which concerns me a good deal and which I have discussed very often with Members of the Select Committee on Science and Technology and with the right hon. Member for Bristol, South-East when he was Minister, and with my hon. Friends, is the relationship between the authority in future—I assume that he will retain the Authority as a viable organisation: that is certainly my wish—and the design and construction companies in regard to this nuclear fuel company.

The right hon. Gentleman mentioned the A.E.A. shareholdings in those companies. At all times, I have been very much in favour of these shareholdings although I am connected with the private enterprise side of the industry, and they have proved to be very valuable to the design and construction companies.

I assume that these A.E.A. shareholdings will be transferred to the nuclear fuel company. If so, the Authority will continue with some of its R. and D. work on nuclear fuels and there will be a direct link. I would not like to see that link disappear by this transfer, and it is therefore to be hoped that some of these A.E.A. shareholdings will continue. This link is valuable to those of us who work in the industry on the private enterprise side.

Mr. Dalyell

Would the hon. Gentleman agree, from his great experience of this subject, that the problem of valuation is likely to prove extremely difficult, especially in the long-term?

Mr. Neave

I think so, although I am not equipped to answer that. It is obviously a matter which my right hon. Friend will wish to consider when examining the whole question of assets. I am dealing with the tricky point of the need to maintain the link of which I have spoken because most design work will now be outside the A.E.A., and that Authority will be the main research body for the industry.

The I.P.C.S. has told hon. Members of its suggestion—I put this forward as its suggestion rather than mine—that the total shareholding of A.E.A. in the design and construction companies should be divided between the nuclear fuel company and the A.E.A. I refer, of course, to the holding of the A.E.A. and the I.R.C. The suggestion is that that should be jointly held by the A.E.A. and the nuclear fuel companies, and I hope that a decision on this point will be taken shortly.

Under Clause 8 we see that no option is given to the staff to remain with the A.E.A. because, of course, they automatically become employees of the companies on the appointed day. This makes it necessary for the Government to give the firmest assurances about terms and conditions of service. I made this point to the Labour Party when they were in office, and if the principle enshrined in Clause 8 is accepted, the Government have a clear responsibility in this matter. The I.P.C.S. wrote to the Minister for Industry on 9th December asking for certain assurances on this point, and I hope that they will be forthcoming.

This brings me to the question of superannuation. I have been pressing Governments on this issue for some time because I envisaged the day when the Authority would be, certainly to some extent, separated from the fuel side and from the design and construction companies. I have maintained all along that there should be a system of interchange between the A.E.A. and the Companies. I am not sure how far this process of interchange is being effected by this Measure, but I trust that the need for it will be borne in mind.

It has been asked why there need be three different pension schemes. I, too, pose that question. We are here forming two companies and two schemes, in addition to the A.E.A.'s superannuation scheme. I could understand the need to set up different pension schemes if we were not concerned with the public service, but although this may not be the public service as such, I see no reason why this difference should exist. If there is a reason, may we be told it? I remind the House that the nuclear power group, which is primarily a private enterprise group, has amended its scheme to provide benefits comparable with those offered by the A.E.A. scheme. We did this when staff were transferred to us.

Clause 20 appears to say that the Secretary of State must have regard to this pensions aspect, and this denotes that the interchange of staff about which I spoke will be facilitated. However, it seems that the Authority does not envisage what one might call a "mid-career" transfer of staff from one employment to another.

I have always held that this type of interchange should exist, and I hope that the Government appreciate the need for it. The I.P.C.S. has made this point, and as far back as the days of Frank Cousins I was pressing for a greater degree of interchange. We do not appear to have made much progress along these lines since then.

Clause 20(6) has a considerable bearing on the transfer of staff. It seems that the Science Research Council will not be able to apply the A.E.A. superannuation scheme to its new employees at the Culham laboratory. The subsection clearly says: In addition to any person to whom any pension scheme maintained by the Authority is applicable apart from this subsection, any such scheme may also apply to any person employed by the Science Research Council who— (a) immediately before 1st April 1969 was an employee of the Authority engaged in research … at the Authority's laboratory at Culham". What happens after that—to the new employees of the Science Research Council at Culham? We do not want to pass legislation which will make it impossible for the Council to adopt as good a pension scheme as the A.E.A.'s scheme. This important point has been made strongly to me by the staff side of the Whitley Council at the Rutherford laboratory.

Is the Minister satisfied that he has taken account of the representations of the staff side about safety? There is a fear that with the creation of these companies—there seems to be no reason for this fear—there will be less of a contact with the A.E.A.'s health and safety branch, which keeps a watch on radiological safety. In view of the amount of responsibility that outside industry will have for these new projects, we should be told what safety arrangements are being made.

The I.P.C.S. has suggested that a new Clause should be introduced to make it necessary for the companies that we are setting up to consult the Authority's safety division. I am not sure that we need go that far, but certainly adequate assurances should be given by the Minister on this issue.

I welcome the Bill. I congratulate the Minister for Industry on the clear way in which he introduced it. I trust that he will remember that many people, in ad- dition to hon. Members, require an early statement about the future of the Authority. We would also like a Green Paper to be published, though not the one which we were discussing six months ago. These matters are in the best interests of what has been a most successful career from the point of view of the Authority's Production Group.

5.50 p.m.

Mr. Arthur Palmer (Bristol, Central)

As the hon. Member for Abingdon (Mr. Neave) said, the Select Committee on Science and Technology in the last Parliament, to which kind references have been made in the debate, devoted a great deal of time and thought to the nuclear power industry. There were a number of reasons for that, but I shall content myself with giving three. First, the industry is a vast spender of public money. When we were carrying through our investigation as a Select Committee, we asked for an estimate of how much public money had been spent from the beginning on nuclear energy development for civil purposes. Tucked away in the Report somewhere there is an estimate given. I cannot give the exact figure—it is not altogether relevant anyhow—but it is awe-inspiring in its extent.

Second, we had a strong instinct throughout our investigations that the United Kingdom must keep ahead of the times in the further development of complex technologies. This is not just an economic question to be measured by the return on invested capital; it is a human question as well. There is no greater mistake than to suppose that we can treat scientists and engineers as interchangeable units who will work just as happily on water softeners or electric typewriters as they will on reactors or in aerospace. If they cannot do what they want to do and what they have been trained for and are interested in, they will move, perhaps, to other countries or pass too early in life into more profitable management jobs. Therefore, in looking closely at the progress of this advanced technology, we thought that, in the long run, we were probably helping the country's general industrial future.

The third reason has already been mentioned in the debate, that it was common ground at the end of 1966 that changes in the organisation of the nuclear industry were urgently necessary. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) told us at that time, nearly four years ago, that he was on the verge of making recommendations and that our views as a Select Committee, since we had given notice that we were to investigate this subject, should be brought forward without delay in order to assist him. We produced the first Report to the House by the end of 1967. One of our major recommendations which is now taken up in the Bill, was that there should be an independent nuclear fuel company. We made no recommendation on radiochemicals, so I shall not deal with that.

Nearly four years have passed, and, at last, legislative action is being taken. Looking back, one cannot help thinking that, in the end, it has turned out to be a very leisurely reorganisation in practice. I am not apportioning blame. It might have been due to the difficulties of placating and consulting all the interests concerned but it is a bad delay nevertheless.

It will be said that the sale of nuclear fuel is going on anyhow, and that it is an established branch of the Atomic Energy Authority's business. That is true, but delay has the unfortunate consequence, to which the hon. Member for Abingdon referred, that it is demoralising for the staff when they know that a change is to come but not when it will come. That anxiety is always there. It is unsettling, bad for morale, and does not help in the slightest.

The Institution of Professional Civil Servants gave us a great deal of useful evidence, to that effect, as can be seen in the Select Committee's Report. I am, therefore, glad that the Government have decided to wipe out the consequences of the Amendment made to the earlier Bill in the other place and to give once again a majority shareholding to the Atomic Energy Authority. That is important because, since the staff have to come from the Atomic Energy Authority, it will give them confidence as to their future, as they can feel that their previous employers are still in command of the situation.

The Select Committee was so concerned about the leisurely way in which the reorganisation was being carried through that it decided, perhaps to speed things up, to conduct a second inquiry. On the pace of the reorganisation, we said this in 1969: The Minister declared over twelve months ago his intention of introducing legislation to establish a fuel company in place of the Authority's present fuel business. A Bill has not yet appeared but much depends on speedy action. We went on to give a number of reasons why that speedy action was essential and I am sure we were right.

My right hon. Friend the Member for Bristol, South-East was most helpful in the evidence which he gave to the Select Committee at every stage, and most helpful in the memoranda and documents which were placed before the Committee, and I pay tribute to him. I was glad that he used again his illustration of the difference between nuclear fuel and nuclear reactors. I am a non-smoker. He is a notorious pipe smoker, which, on the whole, goes down rather well in Bristol. He used a similar illustration in his evidence to the Committee. He said—this is Question No. 955— … just as tobacco manufacturers make more money than pipe manufacturers, probably there will be a very great export market in nuclear fuel. Under questioning, he explained to the Committee a little later that he did not mean that it was still not important to export reactors, and I confess that that qualification was to our great relief. It is estimated now that by, say, 1980 there may be will be an international market for nuclear fuel to a figure of £1,000 million. It is, therefore, important that the new company should be fully ready to take the maximum advantage of that market. Nuclear energy for power production may be having its temporary setbacks in most industrial countries just now, but it will go ahead again in a big way in the long run, never fear.

It is never easy in this country in public utility circles for those responsible for the management, to break away from what I call the municipal engineer's outlook. This outlook always requires a cosy domestic market in which the purchaser decides the specification and prefers to have a choice among as many makers as possible so that he may obtain comparative tenders and reach a decision on purchase suitable to him. That may still be perfectly sound for many articles of equipment, but in nuclear fuel it is the international market and international standards of comparison which count, and this will be increasingly so if our economic links with Europe become closer.

I think it excellent, therefore, that there is to be just one British nuclear fuel company. There is no nonsense here about the need for competition in the domestic market so that one can make a choice between one type or style of nuclear fuel and another. There is to be one nuclear fuel company because it is correctly recognised that the true competition here is international competition.

I still think it a pity that a similar line of reasoning was not followed in regard to the principal recommendation of the Select Committee, to which my right hon. Friend has already referred, that there should be one British design and construction company for reactors which would have developed its own international subsidiaries not just for fuel but for the main product itself, the reactor. It would have been dominated, the Select Committee proposed, by the Atomic Energy Authority, but, again as we suggested, private capital would have been welcomed as a component.

My right hon. Friend rejected that suggestion, in spite of the weight of opinion in its favour. As he knows, there were some eminent people in the industry—Lord Penney was one—who were in favour of the single design and construction company.

Mr. Benn

I think that the word "rejected" slightly misrepresents what happened. What I told the House—my hon. Friend knows this—is that I personally wanted it before the Committee recommended it, but, on examination, I found it not to be practicable. Whether that constitutes rejection may be an interesting question of semantics.

Mr. Palmer

I often read what my right hon. Friend said on the subject before he was the Minister. The trouble was that he converted me but he did not in the end convert himself when Minister. If "rejected" is too strong, I am sorry, but I think that that is what it came to when he had to make a decision as Minister.

Instead, it was agreed with the Industrial Reorganisation Corporation and the three previous consortia that the industry should, so to speak, be reduced to two new groupings, with some small extra injection—20 per cent, in each case, I think—of public capital from the Atomic Energy Authority. I am still open to conviction that that compromise was satisfactory, but, if one looks at the number of overseas orders for reactors, one can only say that the export trade is still making very slow progress. In spite of the initial advance which we had in this technology, we are not selling reactors abroad in the way we should, and there seems to be a great deal of muddle and confusion about who is the selling authority for British reactors.

On this issue, my right hon. Friend and I had a little exchange in the columns of that volatile political journal, the New Statesman. He said then—he said much the same again today—that the Select Committee's solution was unworkable. I thing that that was the work which he used. I very much doubt that. I think that what stood in the way was the business interests of the companies concerned in other fields. They had many other things to do and many other heavy engineering products to sell.

I think that my right hon. Friend and I differ a little on the question of inter-ventionism, and I should put the matter in this way. The real trouble was that his Department had become so much involved in details and in the restructuring of private companies that he had lost that independence as a Minister which was necessary for action by the State.

Mr. Benn

I must intervene again, because that is a serious charge to make. What powers would it have been open to me to use to bring about a merger between companies which were independent, short of introducing legislation to take into public ownership all the companies I wished to join? My hon. Friend has often made that point, but he has never told me by what powers such a solution could have been implemented, and he ought to explain now.

Mr. Palmer

The Select Committee suggested that, in the long run, it could be done on the basis of voluntary co-operation—that is true—but I think personally that in the end it would have meant legislation.

Mr. Benn

To nationalise all of them?

Mr. Palmer

To bring their relevant business into public ownership probably.

Mr. Benn

All the companies?

Mr. Palmer

That is one of the difficulties of course. I hold strongly the view that, if a Minister takes interventionism beyond a certain point, becoming greatly involved and committed to the fortunes of the companies concerned, in such circumstances he is bound to lose that independence and impartiality which the State must always retain if it is to take action in the public interest. That was the fundamental difficulty here.

Mr. Benn

A moment ago, my hon. Friend was urging me to bring all three into one by voluntary co-operation. That would have involved a degree of intervention going far beyond what was necessary to bring three into two. He has now said for the first time—I have never heard him say it before—that he thinks that the whole of the industry should have been brought into public ownership, if necessary, to create the single design and construction company, and that would have included—for the industry was not concerned just with nuclear power—the whole manufacture of electric plant and all the plant and equipment for conventional power stations as well. This is a striking advance in his own policy thinking, and I feel that my hon. Friend ought to tell the House more about it.

Mr. Speaker

Order. The right hon. Gentleman should address the Chair. It helps the reporters to hear.

Mr. Benn

You were in my mind, Mr. Speaker, though my face was elsewhere.

Mr. Palmer

This is a Second Reading debate, and we can discuss matters widely, but we have to do so in accordance with the rules of the House. I said that the Select Committee—I want to be precise about the Select Committee—did not suggest legislation because we hoped there that it could be brought about by voluntary co-operation. I would prefer that but I would not shrink from legislation. I am putting forward the perfectly reasonable suggestion that the method now being used of a legislative Measure to bring about the fuel companies could also have been used for the amalgamation of the reactor interests into one group.

Mr. Neave

Will the hon. Gentleman make it quite clear that the Select Committee of which we were both members never advocated public ownership in this case at all but did advocate a joint organisation of private and public enterprise?

Mr. Palmer

That is a perfectly fair comment. I have said already that the Select Committee thought that this could be brought about on a basis of voluntary co-operation of public and private enterprise assisted and inspired by the Ministry. At no stage could we have obtained the general assent of the members of the Select Committee had we suggested any expansion of the frontiers of public ownership. I simply say that if legislation had been introduced later involving an expansion of public ownership I would not have gone against it in order to obtain the single design and manufacturing company.

However, this is now all in the past, and we have here a Bill which takes a very sensible step forward. A Bill for an independent nuclear fuel company had the advocacy of the Select Committee of which I had the privilege to be Chairman, and I wish the Bill and its outcome all success.

6.11 p.m.

Mr. Tam Dalyell (West Lothian)

I had intended to make some remarks on the structure of the industry, but things have been so much better put by my right hon. Friend the Member for Bristol, South-East (Mr. Benn) and my hon. Friend the Member for Bristol, Central (Mr. Palmer) that on the general issue I have only three questions to ask of the Minister.

The Minister stated that by 1980 fuel services would be reaching a value of about £1,000 million. This is a very interesting statistic and I should like to know something of the basis on which it is calculated, because it may go to some extent to settling the worries expressed in the I.P.C.S. document we have all had.

The second issue has already been referred to by the hon. Member for Abingdon (Mr. Neave), to whom we listen with great care on these matters: it is the whole difficulty of valuation. If the Government come forward with what we hope are thought out proposals at least they will have some clear idea of the criteria on which valuation is to be made. All of us who are interested in the subject know that it is extremely difficult to carry out any kind of valuation, and we want to know precisely how the Government think it is to be done.

The third general issue that concerns me a little is the Minister's reference to commercial freedom to raise capital. I do not make too much of a party issue of it at the moment, but I do wonder precisely what it involves. Does it mean that the companies can ask certain favoured merchant bankers to raise capital in the City, or am I completely wrong in supposing that it might be very difficult to raise on a commercial basis capital in the quantities needed for what is necessarily seen by the City as something pretty speculative?

Before I quite bluntly argue the case that has been given to us all by the I.P.C.S., I want to ask about procedure. I understood the Leader of the House to say during business today that the remaining stages of the Bill will be taken on the first Friday after the Christmas Recess. I am not of a disposition to offer any kind of threat about talking for a long time on that Friday, but I must tell the Ministers that our speeches will be shorter if we get answers to some of the questions raised this afternoon. Whether the Bill is given them early or whether it takes a long time depends, I say it in all humility, on whether the Government Front Bench is prepared to meet the very real worries of live people who work in the industry as well as dealing with the technical issues that have been raised this afternoon.

Since this is what we might call a working day in Parliament, when we are making speeches for a limited number of people working in the industry rather than speeches designed to have great public effect outside, I make no apology for going through with some care the document which the Ministry and those of us who have been interested in the subject for a long time have had given to us by the I.P.C.S.

Paragraph 5 of the document refers to (i) the likely market during the next 5–10 years. I should be grateful to be told something of the likely size of the market.

The document then refers in the same paragraph to (ii) the share the new companies can expect to obtain; (iii) the implications for the size and character of its staff. On that issue we would welcome any information that can be given, at least before the Committee stage.

Paragraph 6 states: The Institution also notes that the new Bill differs from the previous Bill in that the maximum contribution of capital out of public funds which can be authorised without further legislation has been reduced, in the case of the Fuel Company, from £100 million to £75 million. Presumably this is because it is now expected that the company will raise part of any capital it needs from the market and other non-Government sources. The staff would therefore welcome a statement from the Government as to the significance of this provision and the likely timetable for the introduction of private capital into the company. The question of a timetable is quite important—

Mr. Neave

The hon. Gentleman said that the raising of capital would appear to be rather a speculative matter. If the estimates of growth of this potential market are right—going up to £1,000 million by 1980—it could be a case where private capital could be quite easily raised.

Mr. Dalyell

If there is success, yes, but given the stale of the capital market and its fluctuations I am just expressing some slight doubt whether we can have the certainty of success. If private capital is not forthcoming, and it is a possibility, what happens? It is in this context that I become extremely concerned about the Minister's throwaway phrase, quoted by my right hon. Friend: "The Government is giving thought to the long term future of the Authority."

I cannot believe that such a statement was spatchcocked into the Minister's speech just for the fun of it. Ministers do not make statements like that just for fun. I interpret it as an important statement made after due consideration. We therefore ask what it means. I may say that the Minister will find some of us very awkward indeed unless we get a full explanation of this sentence. If it does not worry the hon. Gentleman it certainly will wory a great many people who work in the Authority.

Since the Minister made that statement I have not been able to get in touch with the I.P.C.S. but my guess is that the Institution, and other unions involved, will take that statement very seriously. My right hon. Friend's question should be answered later in the debate and we should be told precisely what those words mean. I confess that I would be very shocked if no comment was made on it because that would mean that the wording was terribly ill thought out.

I have to say to the Minister that I am slightly concerned at his inability—I know that he has many other things to do—to answer questions put to him during the course of his speech, because to come forward with proposals like these presupposes that they been thought out by the Minister and the Department. Therefore, we deserve the answers fairly soon.

Paragraph 8 of the document contains this passage: There is a need for the Authority, as the organisation which will continue to undertake research and development on nuclear reactors and nuclear fuels, to have a direct link with the design and construction companies They must all work closely together to maintain and extend an integrated programme from reactor research and development to production and sales. The two companies have already expressed their appreciation of the value of the U.K.A.E.A. shareholding in the evidence they gave to the Select Committee on Science and Technology in 1969", as my hon. Friend the Member for Bristol, Central (Mr. Palmer) will remember. This direct linkage cannot be retained with anything like"— this is the important part— the same effect if the U.K.A.E.A. loses its entire shareholding in the two companies". I am not saying that I agree with that piece of evidence, but it is a substantial point which I do not think was answered in the Minister's speech. Here again, the Minister who winds up should tell us what the Government's view is.

Paragraph 9 of the document says this: The safeguards which have been written into the Bill relate only to the initial negotiations on terms and conditions in the companies. They are ambiguous in relation to the interim period whilst new agreements are being negotiated, and silent as to the longer term intentions. The Staff Side has therefore written to the Minister of State asking for certain supplementary assurances and a copy of this letter was sent to all concerned.

I again return to the Minister's phrase, which I must harp on—that the Govern- ment are to give thought to the long-term future of the authority. If our fears on this kind of thing are to be dispelled, it is obligatory for the Minister to say exactly what is meant by that phrase.

Paragraph 12 of the document concerns pension schemes. This point has already been raised by the hon. Member for Abingdon. From talking, not only to the I.P.C.S., but to people whom we have all met and who work in different establishments, one knows that there is considerable difficulty and worry on this score. Having been for 2½ years P.P.S. to a pensioner, my right hon. Friend the Member for Coventry, East (Mr. Crossman), and having perforce had to learn a lot about pension schemes which I did not know before, I cannot understand why there is any reason why the Government should not stick to the A.E.A. pension scheme, especially as—the hon. Gentleman pointed this out—it was worked out by mutual consent with considerable satisfaction in the case of the T.N.P.G.

If the Government are to get our good will—I am not threatening; I am merely saying this—in getting their Measure through quickly, I should have thought that this was the sort of point on which they could say, "Yes, it can be done. We will give you that"; because, as the Minister knows, in this kind of argument everything is part of the package. Surely this is an element of the package which is certainly expendable from his point of view but rather important to those who work in the industry.

I wish it were possible to insert whole paragraphs into HANSARD so that Members did not have to make speeches which were too long. As we know, however, in our Parliament that is not possible. Therefore, I am bound to read paragraph 15 in full, so as to enable sense to be made of this passage of my speech if it is read outside.

Paragraph 15 reads: It has become clear from the discussions which have already been held with Ministers that very little interchange of staff is envisaged between the Authority and the companies whether on secondment or on a permanent basis. I would hope that that is not so. The Authority itself is on record as saying: 'We frankly do not regard it as realistic to envisage that there would be a great deal of mid-career transfer from one employment to the other'. The most the Authority has been persuaded to say is that the companies will be recommended by the present managements to accept the principle that if they can assist in resolving an Authority surplus by aiming to get the bulk of any additional staff they may need in the category concerned from the Authority while the surplus persists they should do so, subject to review of the arrangements after five years. This seems to the Institution to be an unnecessarily restrictive view and it hopes that the Government can yet be persuaded to recognise the desirability of the maximum interchange of staff both between the Authority and the companies and with the nuclear industry in general. I suppose that on this matter of mobility of staff it is the question of pensions as much as anything which is important. My hon. Friend the Member for Bristol, Central will remember very well that on a visit that the Select Committee made to Windscale and Risley this point in various forms was emphasised time and again by different people to whom we talked. Paragraph 15 is very important.

The hon. Member for Abingdon stressed the safety aspect. Here again, I should have thought that the Government could have gone some way, on the matters raised in paragraph 18 onwards of the Memorandum, to meet what we are putting forward and perhaps to meet the requirements of the I.P.C.S.

I have spoken a great deal over the last few weeks and do not want to make another long speech. Can the Government tell us what their intentions are on the Friday when we return? They will find that a number of us are wholly co-operative if we think that the Government are co-operative on the points that we have put forward. Let us hope that at any rate some of the issues which have been raised can be settled before the Committee stage on the Friday on which we return.

6.25 p.m.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

It is very pleasant to take part in a debate in which so many knowledgeable right hon. and hon. Members have participated. I was particularly struck by the knowledge and experience of the hon. Member for Abingdon (Mr. Neave), who distinguished himself as a former Member of the Select Committee on Science and Technology. Both sides of the House welcome his accession to the Chair of that Committee. My hon. Friend the Member for Bristol, Central (Mr. Palmer) is a former Chairman of that Committee. The work which that Committee has done indicates the value of the constitutional innovations made in recent Parliaments for the benefit of the House, the benefit of hon. Members, and the benefit of the community at large.

One can accept the general background of the Bill, which is the foraging but not at times too economically successful work of the Atomic Energy Authority and British industry since the establishment of the Authority in 1964. Both the Minister for Industry and my right hon. Friend the Member for Bristol, South-East (Mr. Benn) have naturally—or perhaps unnaturally—reached a measure of agreement on certain provisions of the Bill. This is because there is a very close similarity between the Bill now before us and that which received its Second Reading in another place on 4th April.

I shall spend a little time examining the general strategy of the Bill before I come to one or two points of detail which I shall ask the Minister to examine.

My right hon. Friend the Member for Bristol, South-East likened the Bill to a three-stage rocket. The first stage was the desirability of achieving general agreement on the basis of a consortium to be used for the construction and sales techniques of British nuclear reactors. Unfortunately, the first stage could not be a single stage in itself. It had in many ways an unfortunate take-off, in that we could not achieve a single company and had to resort to two companies to undertake this process.

However, I do not think that it was unnatural that the Select Committee, in examining this structure, should have used these words in paragraph 8 of its Report: The process of reorganisation of the industry had produced two companies substantially little different in appearance from the two previous consortia. There has been some disagreement in the House between the right hon. Member for Bristol, South-East and the hon. Member for Bristol, Central on the basis of why this should take place. I have a certain sympathy with both points of view, and I declare an interest in this, having spent a considerable amount of time in the engineering industry. I have considerable sympathy with the idea that there should be one consortium to take Britain's leadership into the actuality of sales and the construction of nuclear power plants abroad. I also have some sympathy with the right hon. Member for Bristol, South-East in his view of the ramifications of the industry which would be needed to get together three types of organisation into a consortium. There would have to be an organisation capable of constructing boilers of the high temperature and high pressure necessary, an organisation capable of constructing the electrical engineering generating equipment, and an organisation capable of doing the public works construction. Although my preference is for one consortium, I can see difficulties, in forcing that to its ultimate conclusion, of achieving any measure of public ownership or public compulsion. I would not like to envisage the nature of the Bill which would be necessary to achieve that. We have made the best of a difficult job, and it remains to be seen whether British industry is capable of selling nuclear power stations of the next generation.

In an analysis of the association between private and public enterprises, I am not sure that we require an alteration in the mixture rather than clear and definite managerial leadership and control. This is what we are trying to set in stage 2, but I am not certain that this mixture of private and public ownership is the most desirable one.

On Second Reading of the Atomic Energy Authority Bill in 1954, the then Minister of Works said: Already, the British investment is changing its character. The programme is becoming less like a laboratory and more like an industry. In arguing for the particular type of organisation envisaged in that Bill he said: It was then necessary to look for a form of organisation which combined the advantages of Parliamentary control with those of independent management."—[OFFICIAL REPORT, 1st March, 1954; Vol. 524, c. 846–48.] Having departed significantly in two stages from this form of organisation, will the Minister be more forthcoming than the Bill is about the nature of the parliamentary control? I recognise that some form of parliamentary control is envisaged in Clause 14, which requires the accounts of the company to be laid before the House, but we require a little more than that. A large amount of public money is involved, and these organisations will play an important part in research and development, and sales of a fuel which will have such a large international market.

My second point is on the relationship between private and public funds, in a company which will initially be wholly publicly financed. It is a little surprising to see from the articles of association that both companies have 100 £1 shares. I know the technicalities involved, and we have to look at it in terms of market valuation, but what procedure does the Minister envisage to secure parliamentary oversight of the buying-in valuation of private industry? There is no account of that in the Bill. If private enterprise wants to participate in this company, as was thought desirable by people who examined the matter in detail, Parliament, knowing that the essential good will of the company has been almost entirely publicly created, has a right to know what procedures the Minister will adopt. He has mentioned the merchant bank, but he has not said what would be the requirements of stability of the companies who want to buy in.

I do not want to embarrass any company by mentioning names, but some companies which might be involved are already being substantially publicly sub-vented. Those companies might be using public money to buy shares in a public company, which strikes me as farcical, and I should like some clarification.

Clause 16 refers to investment grants under the Industrial Development Act 1966. If I understood the Minister aright, the Clause merely regularises the existing position. The Minister said that the Government might have second thoughts about the Clause and might redraft it in view of the changes in investment incentives. I apologise to the House for bringing forward again my point about the tripartite agreement, but that point is still valid. Article III (3) of the tripartite agreement states: The contracting parties shall inform each other, through the Joint Committee of technical or economic developments which might affect significantly the commercial exploitation of the gas centrifuge process by the joint industrial enterprise. Will the Ministry responsible discuss with the Joint Committee the changes in investment incentives, and the effect of those changes on the location of future plants? That is extremely important in relation to development area policy, and I should like clarification on that.

The third stage of the rocket which my right hon. Friend the Member for Bristol, South-East envisaged in his Green Paper was the organisation for research and development in Government laboratories. Research and development is where the real break-throughs will take place. It is not good enough to leave areas like Dounreay in an indeterminate position. We have seen today's figures of 103,000 unemployed. The future of the prototype fast reactor and the research being done there cannot be subjected to fears about centralising all the foraging powers and the "sexy" aspects of sales techniques in these new companies. It cannot be left like that, because these people feel insecure.

It is early days for the Government and it might be a little unfair to press the point, but people in the far North of Scotland will be concerned about what has been said today. I ask the Government, in view of the uncertainties, to take urgent steps to clarify the position, if possible, before the Committee stage of the Bill.

6.40 p.m.

Mr. Bruce Millan (Glasgow, Craigton)

It has been made clear that the Bill is in a party sense, non-contentious. Basically it is the Bill which the Labour Government introduced, and for that reason we have welcomed it. However, as my right hon. Friend the Member for Bristol, South-East (Mr. Benn) made clear, it is only part of a number of steps which the previous Government had taken and were intending to take to deal with the Atomic Energy Authority's activities as a whole. Therefore, it was rather remiss of the Minister to confine his remarks so narrowly to the provisions of the Bill without setting the matter in its very much wider context. I do not see how one can understand the impact and implications of the Bill without setting it in this wider context. Therefore, the House is indebted to my right hon. Friend the Member for Bristol, South- East for supplying, in such a fascinating and candid way, the background to the Bill which the Minister had failed to supply.

It would be presumptuous of me to go over the background to the Bill in the way in which my right hon. Friend did, but I wish to remind the House of three developments or potential developments at issue: the one dealt with in the Bill—the establishment of the nuclear fuel and radiochemical companies—the question of the design and construction companies, on which action had already been taken by my right hon. Friend, and the question of the future of the remainder of the Atomic Energy Authority on which a Green Paper was published by the previous Government and about which we have had no indication of the Government's thinking.

I should like to comment briefly on what my hon. Friend the Member for Bristol, Central (Mr. Palmer) said on the question of the design and construction companies. The reply to my hon. Friend was very effectively made by my right hon. Friend the Member for Bristol, South-East, because he explained very frankly the difficulties which he, starting with a prejudice towards a single design and construction company, found in practice in implementing the Select Committee's recommendation and the process by which he was brought to the solution which he propounded and which has now been implemented of two design and construction companies.

My reading of the Select Committee's Report and the subsequent debate on it in the House led me to think that there were no deep ideological divisions between the Labour and Conservative members of the Select Committee in making this recommendation. I had the impression that, although there was eventually what amounted to a party split on the matter, the balance between the recommendation for one design and construction company and the minority recommendation for two design and construction companies was quite fine, and it was really a question of approaching the problem, not from any ideological preconception, but simply from the point of view of the most effective solution to improve the effort of the industry, particularly in selling reactors overseas.

Mr. Neave

Will the hon. Gentleman make clear that the real question concerned who should do the reactor design—whether there should be competition in the design of the reactor?

Mr. Millan

That was another important issue. It is also relevant to point out that the Central Electricity Generating Board, as the sole purchaser in the United Kingdom, apart from the South of Scotland Electricity Board, was very anxious that there should be two design and construction companies.

One recommendation of the Select Committee which I thought was rather unrealistic was the corollary recommendation to the single design and construction company, that the C.E.G.B. would obviously be entitled to look abroad for subsequent nuclear power stations.

Mr. Palmer

My hon. Friend is quite right. The emphasis of the Select Committee, and certainly my emphasis, was that true competition is international competition and that international competition would apply within our own boundaries and outside.

Mr. Millan

I do not approach the idea of international competition within our own boundaries with a great deal of enthusiasm considering the vast amounts of public money spent on nuclear research and development in this country.

I do not wish to reopen that argument. I thought that I would simply comment on the Select Committee's Report and make the additional comment that, the decision having been made to have two design and construction companies, with the Government now operating with that decision, the important thing is to see whether we can make the two companies successful in the export field. We are entitled to some indication from the Government about how they view the prospects now that the two companies are working and what is happening concerning exports. That seems to me a much more important question than discussing again whether we should have one or two design and construction companies.

We all had very much in mind a number of considerations when we previously discussed the question of the design and construction companies. First, we had in mind the very large element of public expenditure by the Atomic Energy Authority and that the tremendous success which it had achieved in many fields should be exploited to the fullest economic and industrial extent in this country and overseas. Secondly, we thought that the public should get some kind of commercial and industrial return on this very large element of public expenditure. Thirdly, recognising that the matter could be dealt with only as a partnership between public and private enterprise, we believed that the operation should be carried out on the basis of a contribution of effort and finance by public and private enterprise. The same kind of considerations apply when we are discussing the two companies to be set up under the Bill.

The background is however different in this sense. Whereas unfortunately we cannot say that we have had any conspicuous success, or indeed any success at all, in exporting plant over the last 10 or 12 years, the background to the export of nuclear fuel and radiochemicals is, in the Minister's words, a success story. In 1969–70 exports of fuel and isotopes amounted to £6.8 million compared with £3.8 million in 1968–69. The value of the contracts during 1969–70 was considerably higher than even the deliveries in that year. Therefore, these companies are starting on a very firm basis of successful operation by the Atomic Energy Authority over the last few years and we should recognise the tremendous efforts which the Authority has made in building up this very important business.

We are, however, very much more concerned with what the future holds in the world market as well as the home market and how successfully we can obtain a substantial share of that market.

The figures were given by the Minister today. I understand that by 1980 we expect the home market for nuclear fuel, for example, to go up about fourfold from £25 million to £100 million and that overseas we expect the figures to go up from something which he described as approaching £200 million to £1,000 million. There is a tremendous market and we really are concerned with establishing the proper kind of industrial and commercial arrangements which will be able to exploit that market to the full.

There are very strong arguments as to why the combination of public and private enterprise, decided upon by the last Government and confirmed by this one, is the most effective way of producing the result we require. My right hon. Friend described the history of the centrifuge project and the various discussions which led up to the Dutch-German-United Kingdom agreement. There is no doubt that the projected combination of public and private enterprise in this country, which will marry and match with the projected combination of industrial and public enterprise in each of these other two countries, is much the most effective way of getting this kind of international co-operation off the ground.

There is the further consideration that many of the problems in the development of the centrifuge project are problems of engineering, and so on, which are not necessarily strictly relevant to many of the things which the Atomic Energy Authority has been doing over the years but where there is a good deal of experience in private industry in this country, which we should be drawing upon and which I think we can most effectively draw upon if private enterprise has a financial stake in the whole of the arrangement for the development of this project.

Then, of course, we have to have regard to what has already happened in the establishment of the design and construction companies. Once having accepted the principle there of a partnership between private and public enterprise, it is difficult to resist the conclusion that this is also the right kind of partnership for the nuclear fuel and radio-chemical industries as well.

Having said all this, I welcome the fact that the Government have been converted to the view that a majority holding should be held by public enterprise in these new companies. I think that this is absolutely inevitable in any case for security reasons, and I imagine that it was the security reasons which weighed most heavily with the Government in reversing an attitude which it seemed originally they would adopt. I feel that this proposition is absolutely right at present for commercial reasons as well. It safeguards, in a way which is important, the public participation at a significant level, and that is right in view of the way these developments have been financed by public enterprise over the last fifteen or sixteen years. I would have found it objectionable on commercial grounds, as well as on security grounds, if the Government had not stuck to the Labour Government's Measure in this respect.

If we are to have private enterprise involved here, obviously it has to be attractive for it to come in, and I think that the record of the Atomic Energy Authority in these two activities over the last few years will make this a very attractive proposition. Indeed, the hon. Member for Abingdon (Mr. Neave), from his own considerable personal experience of the industry, thinks that private enterprise will be only too willing to participate in these new projects, and this is something we are all glad to hear.

Since however this is potentially a very profitable industry, there is no case for putting the public assets into the new companies at anything other than a fair commercial valuation. The question of valuation is very important and is something that we shall have to get clarified, either tonight or at a later stage. Anyone who has read the remarks of the Comptroller and Auditor-General on the revaluation of assets at Windscale, in the Atomic Energy Authority's accounts for 1969–70, will have some appreciation of the very considerable difficulties involved. I do not wish, in a Second Reading debate, to go into this matter in detail, but there is an interesting passage in pages 109 to 111 of the Report by the Comptroller and Auditor-General on some revaluations of assets of the Authority which, it is not unfair to say, he was really rather doubtful about. I simply make the point that very difficult issues are involved.

Nor do I particularly wish to take up the question of how the professional advice should be obtained. This is something which the Labour Government might very well have looked at the Industrial Reorganisation Corporation for, and perhaps the I.R.C. itself would have taken outside professional advice. But as the Government are winding up the I.R.C, there is no point in my trying to argue that the I.R.C. should be doing its job.

Mr. Douglas

Does not my hon. Friend agree that if there is now to be discussion about valuation they should be publicly presented?

Mr. Millan

My hon. Friend is anticipating me. I am coming to that. I am not going to object personally to the proposition that a merchant bank should be called in for advice, although it does not strike me that a merchant bank by itself has any particular expertise in valuation of the assets of the Atomic Energy Authority. But I think this matter must be clarified. I am anxious, first, to establish the terms of reference on which the professional advisers, whoever they may be, are to operate; and, secondly, to know in detail the results of the study of the problem. In other words, it would not be suitable that we should simply be told that a merchant bank or other professional advisers had been asked to give advice on this difficult problem, that they had reached certain conclusions and that we should have no means of knowing how they reached them. I think we must be able to see how these advisers tackled the problem and what led them to their conclusions. This is very important, since very large sums of public money are involved, and we need assurances which I hope we shall get tonight. If we do not get them, we shall have to press this point very strongly.

I would also like a more elaborate and clearer explanation from the Government about why, in Clause 13, they have reduced the limit of payments by the Government to the new companies from, in the case of the nuclear fuel company, £70 million … or such greater sum (not exceeding £100 million) …". to £50 million … or such greater sum (not exceeding £75 million) …". The Minister said that this was because they expected private enterprise to be contributing at an early date. But I understand that the previous limit was put in by the Labour Government on exactly the same assumption—that private enterprise would be participating from an early date.

Comparing the Financial Memorandum to the Bill with that of the Labour Government's Bill—and this is rather remarkable—we find that the sums, contained in Clause 13 in each case, are described in exactly the same terms. They are based on the Government's estimate of what are likely to be the capital requirements of the companies for the first five years after the transfers. The calculations seem to have been done on exactly the same basis, but they have produced considerable differences.

If the Government say that this is because they now confidently expect a substantially increased capital contribution from private industry as compared with what the situation was even six months ago, that will be a reasonable explanation, but before accepting it as reasonable we shall have to have the explanation elaborated, and one must have some confidence that that is the position and that this is not just another means of cutting down a public expenditure commitment, which the Government are anxious to do. I am not satisfied with the explanation which we have had so far and I hope that we will have a clearer explanation. Otherwise, this will be a matter which we shall have to press in Committee.

Another important matter, and it is not just a point of detail, because so many people are involved, is the dissatisfaction of the staff, particularly as represented by the Institution of Professional Civil Servants, with the present Bill. I have some sympathy with the Government in this respect, because they have clearly basically repeated the provisions of the Labour Government's Bill. I would not necessarily object in principle to the Bill's provisions, but it is not only the principle of what might be written in the Bill, but whether the Government can successfully persuade the staff that behind the Bill there is a firm guarantee on the various matters which have concerned the staff so much. Clearly, whatever the Government may have done in this respect over the last few months, and some attempt has clearly been made, they have not persuaded the staff that their interests are satisfactorily met by the Bill as drafted.

I shall not attempt to go over the controversial issues, because that has already been admirably done by the hon. Member for Abingdon and my hon. Friend the Member for West Lothian (Mr. Dalyell). I simply say that many people are involved, nearly 10,000 employees altogether, including about 3,500 non-industrial staff. They are being compulsorily transferred and there is an obligation on all of us to see that, so far as we can, we satisfy their legitimate interests, suspicions and doubts before our proceedings on the Bill are completed. We attach considerable importance to this and we need clearer explanations than we have had so far.

My own feeling is that some of the apprehension of the I.P.C.S. comes not just from the Bill, but from the uncertainty about the long-term future of the Atomic Energy Authority as it will be once the new companies are established. This makes it all the more important to have a clear statement from the Government about how they intend Government research and development establishments, particularly the A.E.A., to be dealt with organisationally and in other ways in the years to come. This is becoming increasingly urgent and I am sure that lack of a clear lead from the Government has much to do with staff dissatisfaction with the Bill.

There are a number of other detailed issues which may be raised at rather greater length in Committee. For example, I am interested in the investment grants, a subject raised by my hon. Friend the Member for East Stirlingshire (Mr. Douglas). I was very much concerned with what my hon. Friend said about the development areas. I remind the Government that the Green Paper on Research and Development which the Labour Government published at the beginning of the year included a pledge that whatever happened to research and development establishments the Government would have very much in mind the need to see that a satisfactory proportion of the effort put into this was made in development areas.

I shall not discuss in any detail the problem at Dounreay, for example, which I mention because I have a Scottish interest, but which is illustrative of the general problem. The Government should recognise that in this difficult period, when the long-term future of the A.E.A. has not been settled and there is no clear guidance from the Government as to what its future may be, these apprehensions and worries are very important. It is necessary for the Government to do everything possible to assuage the worries of the areas concerned, particularly where there are special difficulties from staff apprehensions or development area policy.

I hope that the Minister will be able to give us some reassurance. I do not wish to make the development area position a matter of contention between us, because I hope that the Government attach as much importance to it as the Labour Government did, although the unemployment figures do not make me confident that the Government are fully seized of the considerable difficulties of the development areas. However, that is something which I shall be delighted to expand upon in another context.

We have to have something from the Government about some of the issues raised by the Green Paper published in January, 1970. There may be legitimate differences of opinion about the Labour Government's Green Paper solution. My right hon. Friend expected legitimate differences of opinion when the Green Paper was published. The whole purpose of publishing was to stimulate discussion without getting the Government into a posture of absolute commitment to a particular solution to difficult problems, but rather to allow those who, by background and experience and professional outside interests, had points of view to express to do so. The intention was that the Government might subsequently reach a solution which was a distillation not only of Government wisdom—and we all know that Governments, particularly the present Government, do not have a monopoly of wisdom—but that of interested outside bodies.

Whatever feelings might be about the solution of the Green Paper, there was widespread acceptance of its aims. Paragraph 26, for example, said that three of the basic purposes of the Government in publishing the Green Paper were the need to rationalise programmes in the Atomic Energy Authority and Ministry of Technology establishments, the need to link Government laboratories more closely with industry so that they could better understand and more readily help to solve some of its problems, and the need for work to be undertaken increasingly on a contractual and commercial basis. There was widespread acceptance that these were legitimate aims for the Government to follow. There is also widespread acceptance that we are not very successful in meeting any of these aims at present.

Whatever the view may be about the particular solutions in the Green Paper it is now becoming increasingly urgent that we have changes in policy and organisation which will more effectively help us to meet these aims, clearly stated in the Green Paper. I am not asking, as the hon. Member for Abingdon somewhat unfairly suggested my right hon. Friend was asking, for a cut and dried solution from the Government tonight. This is not necessarily the most appropriate occasion to give us any conclusive views on these difficult problems. We are entitled however to some indication as to how the Government's mind is working on this issue or even on how they hope to tackle these important matters, for example by the publication of a pink paper or some other kind of Government document, letting everyone see the reactions by interested outside parties, most of them constructive, many critical, so that we would know not only what the Government felt the issues to be but what those outside felt.

All of us would then have some firm basis on which to make up our minds about the problems. I do ask that, if the Government are not willing to take us into their confidence about their thinking and I would like to think that they are thinking about these matters they would at least give us a commitment tonight that this kind of information will be made available to the House and the country generally so that we can all see what are the issues and more effectively judge whatever the Government's ultimate solutions might be. We need this broader context. We need to consider these broader issues before we can fully appreciate the background to the Bill and the purpose which it sets out to achieve and the prospects it has of achieving that purpose.

Having said all of this, and I hope encouraged the Government to be a little more forthcoming on some of these wider issues, I repeat that we very much welcome the fact that the Government have brought this Bill forward at an early stage. We shall certainly, as far as we can, give the Bill an easy passage. In slightly different terms I must however repeat the words used by my hon. Friend the Member for West Lothian and point out that whether the Government get this Bill as quickly as they obviously want it and as quickly as we would like them to get it, will depend very much upon how satisfactorily they are able to give us the answers to the various points raised in the debate and to those likely to be raised in Committee. I hope that they will be able to give us some satisfaction. Again I repeat we welcome the Bill.

7.14 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)

I want to start by acknowledging the debt that the House owes to the Select Committee on Science and Technology which published a Report, which it has been said in all quarters of the House, was exemplary. The hon. Member for Bristol, Central (Mr. Palmer) can feel some sense of paternity in what is going on. I would also like to add my congratulations to those of my hon. Friend the Member for Abingdon (Mr. Neave) over the choice of the Chairman of that Commitee. It would also be right to pay tribute to the right hon. Member for Bristol, South-East (Mr. Benn) for the part that he played in the negotiations leading to this Bill and the coming to fruition of the gas centrifuge project.

I cannot quite say that about the long piece of background which was put into his speech. He fought again the old battles, armed with the sword of the I.R.C. and the buckler of the Industrial Expansion Act—the instruments of intervention. This is ground which we shall tread again on the Industry Bill which had its First Reading today. I was amused when I heard him having to defend himself strongly against his hon. Friend the Member for Bristol, Central, explaining why he had been totally unable to achieve one nuclear construction company. Despite the powerful weapon of the I.R.C. and the Industrial Expansion Act, his Bill was frustrated.

Mr. Benn

We did it by consent; we did everything by consent.

Mr. Ridley

The hon. Member for Glasgow, Craigton (Mr. Millan) asked me how I viewed the prospects of this company. I would be wrong to be drawn on such matters. The company is not included in the Bill and we are touching upon wider matters about the whole future of the atomic energy policy, to which I will refer later.

Rather than dwell on the background it would be better if I were to move to the foreground and try to reply to as many of the important and useful contributions which have been made by hon. Members on both sides. To start with financial matters and my hon. Friend the Member for Abingdon and others asked why the amount of money which it was possible to lend under the Bill had been reduced from £100 million to £75 million.

I would say first of all to the hon. Member for West Lothian (Mr. Dalyell) that there is no question of the Atomic Energy Authority having power to go to the market. This power is entirely reserved under the Bill to the two new companies and we are not talking about the Authority at all in this respect but only about the possibility of the company being able to borrow money from the private capital market. The sum in the Bill, whether or not increased by Order, applies to the amount which the Government may lend either for the purchase of shares or the advancing of loans. It does not apply to the initial transaction of shares.

It is our belief that a certain amount of capital can be raised by the sale of equity shares to private companies participating and that, as the company gets under way, and develops a healthy record, further funds can be raised from the market by way of loans. It is by taking account of the needs of the company over the next five years, which is the longest foreseeable period, less the amount we believe can be raised from the private capital market, that the Government have arrived at the figure in the Bill. It is a reduction on the figure in the last Bill because we are optimistic about the chances of this being brought about.

The hon. Member for East Stirlingshire (Mr. Douglas) asked me what degree of parliamentary accountability would be applied to the new companies. There will be no more accountability than attaches to any private company, which is what these companies will be, except that through the National Loans Fund the hon. Gentleman can ask Questions about or debate the taxpayers' contributions. The companies are in a similar position to B.P. and other companies with a public shareholding. It is therefore right that we should remove any suspicion or suggestion that Parliament will attempt to interfere in their day-today management or direction. This is the right degree of accountability for the companies to have. The hon. Gentleman also asked me whether the economic changes which the Government have made in investment incentives will in some away affect the position vis-à-vis our partners in the gas centrifuge Tripartite Agreement.

The hon. Member quoted the phrase "economic developments"—that we have to consult our partners concerning economic developments. Under the meaning of the agreement, a general change in investment incentives in one or other of the countries concerned does not amount to an economic development. These are not the sort of matters which the people who made the agreement had in mind.

The hon. Member asked about location of plants and investment incentives. The change in investment incentives will apply to the new companies. They will have free depreciation in a development area or the other incentives in non-development areas, the same as any other companies. Although this certainly will change the economics in some respects, I remind the hon. Member that one of the plants was in any case to be built abroad and that the other, at Capenhurst, is fixed in its location. It is not easy to see, therefore, that any of this has much relevance to regional policy.

The important question of the valuation of the shares of the company was raised by several hon. Members, including the hon. Member for Craigton, and I will try to say a word about this. In passing, I would remark that the noble Lord, Lord Delacourt-Smith, who introduced the similar Bill in another place in April, had no more to say about the matter than this: Of course, when that time comes professional advice will be taken."—[OFFICIAL REPORT, House of Lords, 14th April, 1970; Vol. 309, c. 330.] That seems to me to go far short of the strident demands of the Opposition for full information about the basis of valuation, how it will be done and whether we shall publish the report of the professional advisers who will advise upon valuation.

The question of valuing the shares is a difficult and highly professional matter. The earning capacity in the future has to be assessed, and this will be difficult without there being a record of continuous management in the past. The Government do not conceal that the task of valuation is difficult. It therefore seems right to employ people who are skilled and practised in valuation and entirely unbiased. That is why my hon. Friend the Minister for Industry said that we would seek the advice of a merchant bank.

I think that the House will agree that the only way to deal with this is to put it in the hands of unbiased professionals and for both sides of the House to assess the value placed upon the shares. I assure the House, however, that we have no intention of concealing anything in this matter and that within the proper and prudent confines of commercial practice, we shall be frank with the House as is right when the question of valuation is discussed at a later date. Nothing has been done at the present time and, therefore, there is nothing of which I can inform the House today.

The hon. Member for East Stirlingshire asked why only a nominal amount of capital was specified in the draft articles of association. The answer is that it is intended at the beginning to set up a shell company and that this will take place before the appointed day. It must be in existence before the Bill is passed. The appropriate increase in the capital will be made before the transfer of the Authority's undertaking takes place. It is merely a convenient arrangement for making the changeover.

My hon. Friend the Member for Abingdon asked whether the fuel company will take holdings in Italian companies and other overseas enterprises at present in the hands of the Atomic Energy Authority. The answer is that it will do so and that the fuel company will take over all the relevant assets and liabilities of the A.E.A. Trading Fund. My hon. Friend also asked what progress was being made in matters of reprocessing fuel in various European countries. Discussions are taking place between the major European countries with a view to agreeing on reprocessing capacity, in which, I am certain, our own national fuel company will be interested.

There is no need, as my hon. Friend the Member for Abingdon said, for the Government to maintain a majority share in the radiochemical company, as opposed to the fuel company, for reasons of defence and security. The whole House is agreed that the Government should maintain a majority share in the fuel company, but those reasons do not of themselves apply to the radiochemical company.

We believe that it will facilitate the smooth transfer of activities from the A.E.A. to the companies to treat both companies alike. This is a measure of the Government's desire to make sure that those who are affected by these transfers—the staff—will have any justifiable fears allayed. When I come to the points dealing with staff, I think that I shall be able to demonstrate that we have gone as far as could ever be expected of the Government and exactly as far as the last Government went—there is nothing whatever between us—to dispel all these worries which the staff have put forward. I hope that I shall be able to convince the House that the treatment of those concerned throughout by the Government is exactly as they would like it to be.

The hon. Member for West Lothian asked why the Authority would still retain exclusive use of the facilities owned by the fuel company at Windscale and Springfields. The answer is that the bulk of the land and buildings will be required by the new fuel company at those two sites but that certain laboratories at those sites will continue to be required by the A.E.A. Therefore, an arrangement has been made whereby the land and buildings will be transferred to the new companies but the laboratories will remain for the exclusive use of the A.E.A., because it is the Authority which wants them and needs them and they are of no interest to the fuel company.

The first question which I was asked concerning the staff related to the chance of there being transfers to and fro between the Authority and the new companies. The arrangements envisaged appear to be reasonable in this respect. I do not think that there is much scope for permanent transfer on more than a limited scale. The previous Government said exactly the same thing and referred specifically to the transferability of pension rights. We believe, therefore, that a limited amount of transfer will be possible, but we do not foresee the need for large-scale transfers. My hon. Friend will be delighted to have further discussions with, or take further points from, the staff side on any difficulties which arise over transferability.

The question of safety has been raised. I should like to give the House a strong assurance that there is no reason whatever why the new companies should not have every incentive to obtain the best advice they can get at the design stage of an installation and in putting it into practice. They are likely to continue to use the specialist services of the Authority's health and safety branch. The companies can choose what they will do in this matter—it is not for the Government to lay it down—but the House will, I think, recognise that those who will run the company have, perhaps, more incentive than anyone else to make sure that they are regarded as being above any conceivable suspicion in these matters, and I am sure that that will be the case.

Mr. Palmer

Would the hon. Gentleman agree that the companies will be subject in any event to the provisions of the Nuclear Installations Act?

Mr. Ridley

It will be necessary for companies to have licences under the Nuclear Installations Act, and if the arrangements are not perfect they will not be granted a licence and will have to make their arrangements better.

Next I should like to deal with the question of terms and conditions for the staff. There will be an interim period between the companies being set up and the new contracts being signed for the staff, and during that interim period, during which negotiations on terms and conditions can take place, staff are deemed to be employed on terms and conditions corresponding as nearly as the circumstances permit to those they enjoy at the present time with the Authority. It is impossible, obviously, to lay down identical terms and conditions when the employer is different, and the nature of the company is different, but I think anybody should be satisfied with the assurance, that in the interim period the terms and conditions will be as nearly as possible identical to those which exist at the present time.

Later, the companies will negotiate new contracts with the staff. The Government are well aware of the undertaking given in 1954 that the terms and con- ditions of service in the Authority will not be less favourable than those enjoyed by staff in the Civil Service, and the Bill provides, in Clause 9, that the new terms and conditions are to be negotiated in accordance with the principle that they are to be no less favourable than those enjoyed by the staff whilst in the employment of the Authority. The Bill even goes so far as to provide for arbitration on this point. It would be impossible to specify that the terms and conditions of service must be perpetually in line with those of the Civil Service. The companies we are thinking about will be new, independent companies and they will naturally want to develop their staff contracts and their staff relationships in the way they think best. We have, I think, in this Bill guaranteed that intially contracts will be at least as good as Authority contracts, and it will be up to the consultative machinery of both sides of the companies to see how these contracts develop in the future, and it would be quite wrong to bind the companies for all time to provide terms identical with those in the Civil Service.

This brings me to the question of the pensions. The point has been pressed upon the Government that there is no need to change the entitlement of the staff to the Atomic Energy Authority's present superannuation scheme. The companies will inevitably at some stage have to set up their own superannuation schemes for the purposes of recruiting new staff and, of course, expanding their staff, because it is very likely that in 10 years' time there will be a totally different number of people employed in the companies alongside those who transfer on the day when the companies are set up. So one would have the situation whereby in the companies there would be two different sorts of pension scheme, one of the original A.E.A. type, the other the new companies' pension schemes, and this would make for division within the companies, an unsatisfactory state of affairs. Therefore, one would very much prefer that the whole of the staffs of the companies should start life upon a new pension scheme negotiated between the employees of the new companies as soon as practicable.

My right hon. Friend the Secretary of State has already informed representatives of the staff that it is to be expected that the companies will wish to set up their own pension schemes for the reasons which I have just given, but there are very strong safeguards in the Bill in respect of these pension schemes. They are just as effective as the safeguards in respect of terms and conditions of service which I have just mentioned. The only difference lies in the fact that whereas other terms and conditions are subject to arbitration, it is the Secretary of State himself who has responsibility, under Clause 20, for satisfying himself that the provisions of the pensions scheme are no less favourable than the Authority's scheme itself. So there is a safeguard written into the Bill that a new pension scheme must be no less favourable.

Mr. Dalyell

Why is it that the arrangements between the Authority and the T.N.P.G., to which both the Under-Secretary's hon. Friend the Member for Abingdon (Mr. Neave) and I made reference, is not thought very satisfactory? It has worked perfectly well.

Mr. Ridley

I am just coming to that point. This is the point which my hon. Friend raised, that some of the staff of Culham transferred from the A.E.A. to the Science Research Council and yet were allowed to remain in the Authority's pension scheme.

Mr. Neave

That is a different point. The hon. Member for West Lothian (Mr. Dalyell) is referring to the transfer of the A.E.A. at Risley, and the T.N.P.G. point, and I raised the Culham point, which is a separate issue.

Mr. Ridley

I do not think I am wrong, because I think the point is the same in both cases. They are two instances of the same sort of point. The Culham staff have been transferred but allowed to stay in the A.E.A. pension scheme from which they came. The situation arose whereby some staff would have been on one type of pension scheme and other staff on another type of pension scheme. This would have made it more difficult to recruit staff. That is why we have changed the practice in this respect, because it has been found that it was not a very suitable situation and one which should be avoided in future by those responsible for management in these various enterprises which hon. Gentlemen have mentioned.

Mr. Dalyell

We are not quibbling here. There is a substantial issue involved, and it is the whole issue of mobility between one organisation and another. There is the danger that we have been referring to that those organisations will become so stratified that it will be to the great disadvantage of the whole of British industry in this field. It is not just an issue of pensions, but a deeper issue—the issue of mobility—and that is what is worrying the T.N.P.G.

Mr. Ridley

I would say that one would like ideally to have a situation where all industrial pensions were immediately transferable, in and out of public and private enterprise, in and out of every company, but this is not a subject which we can raise on this Bill at this time, nor is it a subject for which my Department is responsible. I can only say that till the general problem is solved and—I very much hope that it will be—it is much better to have a separate pension scheme in an expanding business like the nuclear fuel field, one where there is likely to be more and more staff taken on, than it is to have also an Authority pension scheme when one would have two classes of staff existing side by side with different pension rights or prospects.

I must now turn to the question of the future of the A.E.A. We have in the Bill set out plans to transfer the production activities from the Authority. That will involve 9,500 staff; on the other hand, about 20,000 staff will remain with the Authority. This is a sizeable organisation, and there is no doubt about its future viability. Nevertheless, the Government appreciate the need to study the longer-term future of the rest of the Authority. It is important to bear in mind that this remaining part will be an organisation with a complex of activities, not only in the field of reactor research and development but in applied nuclear and non-nuclear fields, and the best way of organising these activities in the longer-term is not a matter in which easy, snap judgments should be made.

In July, in answer to a Question, my hon. Friend, at that time Parliamentary Secretary to the Ministry of Technology, said: We are considering the future of the Department's research establishments in the light of the many constructive comments on the previous Administration's Green Paper. We will make a statement as soon as we have completed the review."—[OFFICIAL REPORT, 13th July, 1970; Vol. 803, c. 1125.] I think it is recognised by hon. Members who asked us what our plans for the Authority were that it would be quite wrong to rush out with answers before we are entirely ready; in fact, the hon. Member for Craigton said that it would be only right for us to take time before making up our minds. The previous Government took five-and-a-half years for the job. They published their famous Green Paper, and were met with a barrage of comments—mostly, but not all, critical. They were in the strange position of having gone to Press with proposals which, on the whole, were not well received, and therefore they will probably agree that their own record of progress in the matter was nothing for them to be pleased with.

The hon. Member for Bristol, Central, in his ding-dong battle with the right hon. Member for Bristol, South-East, said that the Government had been proceeding in a leisurely way about the whole matter. The Government are not yet in a position to make any announcement about their ideas for the future of the A.E.A. As soon as we are we shall tell the House what our views are, in the most appropriate way. It would be wrong to say now whether the paper will be white, green or pink, or whether it will be in the form of a statement or a speech by my right hon. Friend the Secretary of State. I ask the House to be patient in this respect because we have not finished the review.

Mr. Benn

On the question of the way in which the Government should proceed, may I put one point to the hon. Gentleman. It is right that our Green Paper was much criticised, but the hon. Member will know that any proposal for dealing with the A.E.A. will be criticised, because this is a very difficult area. I very much hope that he will not tell us that when the Government come forward with their proposals they will not give the same opportunity of public debate that we gave by way of the Green Paper; I hope that they will not come along with a firm statement and say, "This is our view", because that would be totally unsatisfactory.

Mr. Ridley

The right hon. Gentleman would also agree that it would be rash of me to say how we will handle the presentation and discussion of our proposals until we have decided what they are. We have not yet come to a conclusion as to what the proposals are. I am certain, however, that my right hon. Friend will take into account what the right hon. Gentleman has said. We intend to be as open and frank as possible, and to invite such discussion as is proper, but it would be quite wrong for me to express myself in advance as to the right way of achieving that object.

We have been asked about the future The figure of £1,000 million for future world sales of nuclear fuel is a large one. The hon. Member for West Lothian asked how it had been arrived at. The answer is that it results from an estimate made by the A.E.A. of the growth in electricity and the proportion of that growth that will be met by nuclear power. It is not a precise figure—it is an order-of-magnitude figure—but it indicates the large size of the future market.

It would be impossible to say just what share of that market we are likely to get and even to say, therefore, just what profits or dividends the new nuclear fuel company is likely to make; that depends upon its ability to compete, and in the success of its investments and of all who work in it. But the present forecast shows that a great potential lies in this field, and the past history of the trading fund of the A.E.A. will give the House every confidence that the new fuel company will achieve a good share of this growing and important world market.

The same is true of the radiochemical company. My hon. Friend the Member for Abingdon has been about the only Member to spend much time on that company. It is right that I should end on its prospects. The demand for isotopes is growing throughout the world. and over the next five years The Radiochemical Centre expects to double its sales and to reach £9 million worth of sales a year, over half of which will be for export.

These two companies will therefore be launched in a very favourable atmosphere. The whole House has welcomed the Bill, the two major parties are lying down like lions and lambs together to give the companies a welcome, and they are all hoping that the companies will be entirely successful and that all who work in them will feel that the arrangements that have been made for their transfer from the A.E.A. to the companies have been fair and reasonable.

My hon. Friend the Minister for Industry and I will be delighted to receive representations, and will try to meet any points that hon. Members feel have not quite been dealt with satisfactorily either before the Committee stage or in Committee. There has been extensive consultation and we are satisfied that everything possible has been done to meet all

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Humphrey Atkins.]

Committee tomorrow.