HC Deb 15 January 1971 vol 809 cc403-7
Mr. Bruce Millan (Glasgow, Craigton)

I beg to move Amendment No. 3, in page 13, line 31, leave out '£50' and insert '£70'.

The Chairman

With this Amendment we will take Amendment No. 4, in page 13, line 31, leave out '£75' and insert '£100'.

Mr. Millan

Yes, Sir Robert. If I may say so, I think that that will be very convenient.

We are here dealing with the limit of payments by either the Secretary of State or the Atomic Energy Authority for shares issued by the company and loans that may be made by the Secretary of State. The Labour Government's Measure which preceded this Bill, and which was in all major particulars exactly the same as the Bill, had limits in respect of the Nuclear Fuels Company of £70 million, first of all, and of a sum not exceeding £100 million, with the additional safeguard in the latter case of an Order by the Minister concerned. The Bill reduces the limits to £50 million and £75 million respectively.

When one compares the present Financial Memorandum with that of the previous Measure, one sees that the limits expressed in Clause 13 are in each case described in exactly the same way: The upper figure in each case represents the maximum amount each company is expected to need to raise from the Secretary of State or the Authority in respect of its capital requirements for the first five years after the transfers. That is the wording of the present Financial Memorandum, and in the previous Measure the description of the limits in Clause 13 was in exactly the same terms. Yet we now find that the Labour Government's figures of £70 million and £100 million have been reduced to £50 million and £75 million respectively. The effect of these Amendments, which are probing Amendments, would be to reinsert the limits set out in the previous Bill.

There are, presumably, two possible reasons for the reduction: either the Government have recalculated the likely total requirement of the company concerned over the next five years and have decided that the total requirement is lower than that calculated by the previous Government, or they have come to the conclusion that the total requirements are the same but that the amount of money likely to be contributed by private enterprise over, perhaps, the next five years is greater than had been calculated, say, nine months ago, so that the call on the Treasury either directly or through the Authority is likely to be correspondingly reduced. There is, however, nothing in the Bill to tell us how the change in the figures has been arrived at; whether it is for the one reason or the other, or a mixture of both. We are entitled to be told by the Minister how these figures have been arrived at.

There is in any case bound to be a certain amount of anxiety about these figures, because when dealing under a previous Amendment with the question of the valuation of the assets the Minister also made the point that the question of the extent of private participation in the new companies would be referred to the merchant banks. This is, presumably, not just for the initial stages but is something which will also have some effect on the development of the companies over the next two or three years.

When we talk of private participation, I suppose that we are dealing with not only with the initial establishment of the company concerned but with what is likely to happen in regard to the balance of private and public participation over the next five years. Am I right in understanding from what the Minister previously said that the Government are by no means certain of what the ultimate extent of private participation will be over, say, the next five years, so that there must be a certain element of estimating or guessing, as it were, in regard to the present limits? If the Government will say that that is so, and if the Minister will also say that there is no question of the Government's cutting down in any way what they think the total requirements of the company will be over the next five years, it will be some assurance to at least this side of the Committee.

In looking at these limits, what we would like to be assured of particularly is that if the Government's calculations as to the likely needs for finance over the next five years prove in the event to be under estimates there will be no reluctance on the Government's part about making additional finance available if necessary by taking additional legislative powers. In other words, we would like to see this reduction to be taken as indicating that the intention of the Government will be to make the necessary funds available to the new company.

Obviously, the extent to which the new company will require additional funds will depend not only on private participation, but on its own success, its profitability, the extent to which it can expand its business, and so on. We want to be assured that if the company is successful, as we believe it will be, and if that success requires additional finance from the public as well as from private enterprise, the reduced limits shown here carry no implication that the Government will not be forthcoming in making public moneys available. If we could get that assurance I would not myself consider that the present limits, since they are bound to involve a considerable amount of estimation, were in themselves absolutely important, but before passing from the Clause we should like the assurance for which we ask.

Sir J. Eden

I readily assure the Committee that there is no intention on the part of the Government to be parsimonious towards the companies. The reason for the lower figures is absolutely the same as I tried to make clear on Second Reading, namely, that we expect au earlier and reasonably satisfactory degree of participation from the private market which will make it possible for these figures to be reduced at this stage.

The amounts cover all that is likely to be invested in or loaned to the two companies. Orders raising the limits from the lower figure to the higher figure specified in each case are governed by subsection (3). The upper figure in each case represents the maximum amount each company is expected to need to raise from the Secretary of State or from the Authority in respect of its capital requirements for the first five years after the transfers.

In the case of the Nuclear Fuels Company the figures are lower than those in the Bill presented by the Labour Government. This is because of our hope and belief that there will be a significant financial contribution from the private sector at an early date. Although the figures quoted in this subsection are no more than upper limits, it was considered that the figures quoted in the previous Bill should be reduced to reflect our expectation that the companies will be able to secure this greater degree of contribution from the private sector. These figures cover both the position of the Secretary of State and of the Authority and it will be perfectly possible for the Secretary of State to take up further share subscriptions on behalf of the Government and also to ensure that in that way the public interest is preserved.

In the case of loans, any Government lending to either company will be made only by the Secretary of State. The source of the loans will be the National Loans Fund and the Secretary of State is the only authorised channel for such loans. So the limit provided for in subsection (2)(b) applies only to the Secretary of State.

The limit as regards shares does not include the shares issued to the Authority under Clause 7—that is, those issued in consideration of the transfers effected by the Bill. Similarly, the limit as regards loans does not include any of the sum, which is expected to be about £42 million at 31st March 1971, which is treated as loan capital of the trading fund, and the liability in respect of that will be treated as debts from the companies to the Secretary of State under Clause 5(3).

I can assure the hon. Gentleman that we will be watching the position closely as this proceeds and, if we have to do so, will not hesitate to return to the House of Commons, but I do not expect that we are likely to be in that position, because of our very firm belief that there will be adequate availability of capital from other sources.

Mr. Millan

In view of the assurance given by the Minister, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 13 ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

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