NUCLEAR SAFEGUARDS AND ELECTRICITY (FINANCE) BILL

HC Deb 24 April 1978 vol 948 cc1014-137

Order for Second Reading read.

4.6 p.m.

The Secretary of State for Energy (Mr. Anthony Wedgwood Benn)

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

As the House will know, it was the Government's intention, as indicated in the Queen's Speech, that a wider Bill should be presented to the House. However, there was no majority in the House for such a proposal and, therefore, the proposals that would have been in the Bill have been published as a White Paper and are now being considered by the Select Committee on Nationalised Industries. The White Paper bears upon some of the issues—at least one of them—that arise in the Bill, it being a White Paper dealing with the relationship between a nationalised industry—in this instance the electricity supply industry—and the sponsoring Minister.

One of the purposes contained in the White Paper and the draft Bill within it is that the supply industry should have some regard to the interests of its own supplying industry—the power plant industry. It provided for some special arrangements for combined heat and power which are not able to be included in the Bill. That wider proposal or Bill is for the next and final Session of the present Parliament. I hope that by then it will have been backed by the Select Committee on Nationalised Industries.

The shortened Bill has two purposes. The first purpose is to make provision to give effect to an agreement concluded in September 1976 between ourselves, the European Atomic Energy Community and the International Atomic Energy Agency for the application of safeguards in the United Kingdom in connection with the Treaty on the Non-Proliferation of Nuclear Weapons. It also makes provision for me to authorise, with the approval of the Treasury, contributions to expenditure by the Central Electricity Generating Board in connection with the construction of the second stage of the board's generating station at Drax, the so-called Drax B station.

I feel sure that the objective of the first part of the Bill—the one dealing with safeguards that strengthens our stance on the non-proliferation of nuclear weapons—will command the full and unhesitating support of the House of Commons.

The non-proliferation treaty, of which the United Kingdom is one of the three depository powers, came into effect in March 1970. Each non-nuclear weapon State party to the treaty undertook to accept International Atomic Energy Agency safeguards. As a nuclear weapon State, we were not obliged to be subject to the safeguards but, during negotiation of the treaty, Her Majesty's Government volunteered that, at such time as IAEA safeguards were put into effect in the non-nuclear weapon States, they would be prepared to accept the application of those safeguards in the United Kingdom, subject to exclusions for national security reasons only. That is to say, we still retain our full powers under the provisions that we have as a nuclear weapon State.

However, our object, and the object of our offer and of a similar offer made by the United States, was to encourage non-nuclear weapon States to become parties to the non-proliferation treaty. For example, France, though not a party to the NPT, has negotiated an agreement with the Community and with the International Atomic Energy Agency for the application of IAEA safeguards in France.

A futher reason for our offer—that is, the offer made by the United Kingdom and the United States—was to demonstrate to non-nuclear weapon States that we should be gaining no unfair commercial advantage that we might be thought to have by not submitting our civil nuclear installations to IAEA inspection. Our offer has led to the conclusion of the safeguards agreement between ourselves—that is, the United Kingdom—the International Atomic Energy Agency and the European Atomic Energy Community, EURATOM, to whose safeguards we had already been subject since 1st January 1973 when the United Kingdom joined the Community.

I shall go into these matters in some detail because there is involved an international obligation that we have to fulfil. The agreement was presented to the House on 3rd March 1977 and has been published as Cmnd. Paper 6730. It is an important international obligation for us that we have already undertaken to fulfil. The Bill is a necessary step to give statutory backing to enable the agreement to be implemented.

Mr. Eldon Griffiths (Bury St. Edmunds)

As the right hon. Gentleman has rightly said, this is an important agreement. I hope that he will say a little more about it. As well as being important, it is a complicated agreement. Has the Soviet Union made a similar offer? If it has not, are there comparable arrangements, similar to the agreement, for inspection of its civil nuclear activities so that there is not a diversion to military purposes in that country?

Mr. Benn

The hon. Gentleman's question would appear to be based upon a misunderstanding. There is nothing in the agreement that is embodied or made possible by this legislation that would have any impact upon a nuclear weapon State. Nuclear weapon States—this is understood in the international community—are able to be nuclear weapon States. Therefore, there is nothing whatever for the Soviet Union, the United States or the United Kingdom under this arrangement which would in any way limit their development of nuclear weapons capability.

Under these arrangements, if there is a desire by a nuclear weapon State to withdraw inspection from a civil establishment because of a military interest, that is provided for in the agreement. This is a provision for the inspection of civil nuclear capacity. Therefore, it has no bearing whatsoever upon proliferation. If the hon. Member for Bury St. Edmunds (Mr. Griffiths) wishes to come back on that matter, I hope that I shall be able to answer his question. But the arrangements which the Soviet Union may have made would not fall to a Secretary of State for Energy to answer for. However, I assure the hon. Gentleman that it would have no bearing anywhere on the extent of nuclear weapon capability within nuclear weapon States which had undertaken that their civil capacity should be subject to inspection.

Mr. Griffiths

I appreciate the point that the right hon. Gentleman is making. He fastened on the heart of the matter—that under this agreement there are arrangements whereby the IAEA will be able to verify that nuclear material is not being diverted from civil power-stations for other purposes—presumably military purposes. As this was an international agreement at the beginning, may I ask whether the same procedure applies to other nuclear military States, such as the Soviet Union?

Mr. Speaker

Order. Before the right hon. Gentleman replies, I am quite sure that the House will not mind if he does not resume his seat every time he is interrupted. We wish him a speedy recovery.

Mr. Benn

I was hoping that I had a leg to stand on in answering the hon. Gentleman's question. In view of the precise nature of the question and the fact that responsibility for this matter would lie in hands other than my own, if the hon. Gentleman is willing, I shall ask my hon. Friend the Under-Secretary of State, who will be winding up the debate, to give a precise answer. I do not want anyone to get the impression that the Bill bears upon the balance between military and civil, for it does not. It constitutes a statement made by the United States and ourselves that we would agree to the inspection of civil nuclear facilities. The safeguard for nuclear weapons capacity is unaffected by the agreement. Therefore, although I shall see that the hon. Gentleman gets a precise answer by the end of the debate, I confidently assure him that this does not and is not intended to inhibit our capacity, as one of the nuclear weapon State signatories to the non-proliferation treaty, to work in that area. However, I shall see that a proper answer is given.

I turn now to the safeguards in question. These include the following measures: first, the maintenance of accounts and submission of reports by nuclear operators of receipts, shipments and stocks of nuclear materials; and, secondly, the inspection of facilities to verify these reports and to provide assurance that the relevant material is present at the facility.

The Bill seeks to confer powers of entry on IAEA inspectors for the purpose of making the inspections permitted by the agreement. I must stress that these inspections will be limited—this was the point that I was making—to civil nuclear activities in the United Kingdom and will not in any way prejudice our national security interests. We shall be given full particulars of those inspectors whom the agency wishes to designate to have access to civil nuclear installations under the proposed legislation, and we shall have the right to object to anyone who is not acceptable to us.

In addition, the agreement gives the Community and ourselves the right to have IAEA inspectors accompanied during their inspections by Community inspectors and representatives of the United Kingdom. Therefore, unnecessary duplication of safeguards activities will be avoided as the agreement requires that the IAEA and the Community co-operate with us to this end.

Subject only to the answer which I have undertaken will be provided to the question put to me by the hon. Member for Bury St. Edmunds, I feel confident that the House will support this part of the Bill.

As hon. Members are aware, we wholeheartedly support the safeguards regime administered by the agency. It is the front line of defence against the proliferation of nuclear weapons—that is, the spread of nuclear weapons to countries which do not now have them. We all recognise that international safeguards cannot by themselves guarantee to prevent a country from acquiring nuclear weapons technology, but we believe that safeguards can be made to provide sufficient and timely warning of the diversion of nuclear materials from civil use to enable other Governments to take action.

Mr. Nigel Forman (Carshalton)

As the Government attach so much importance to the IAEA safeguards systems and the people who would be responsible for implementing them, will the right hon. Gentleman confirm, as his right hon. Friend confirmed in answer to me in the debate on Windscale before Easter, that Her Majesty's Government's policy is to beef up both the money and the people that they make available to the safeguards side of IAEA? At present, I do not believe that we do enough in that direction.

Mr. Benn

The civil operations which were being discussed in that debate will be covered in the normal way by the provisions which I have described. Security provisions come at various levels. They are the security provisions which any member State will apply to its own nuclear establishments. Indeed, I introduced legislation two years ago, which the House saw fit to pass, on the arming of Atomic Energy Authority constables. That is what one would call a security system.

There is also a very detailed nuclear accountancy system operating in this country, again to be sure that there is no diversion or loss of materials. Over and above that, there are two other layers. One is the IAEA, which is the United Nations body with which we are entering into this agreement. Finally, there are the Community's safeguards arrangements which attached to us on our signing of the Euratom Treaty which came into force at the same time as we entered the Community. Therefore, we are engaged at three levels. I do not think that any responsible Minister, even if there were no international safeguards of any kind, would do other than apply the most rigid and careful security provisions to installations in his own country.

The international dimension is important. The NPT was designed to prevent the diversion of civil technology into military technology in countries which were not then nuclear powers. To the extent that the safeguards provisions can be made to stick and to be effective, the prospect of expanding the use of nuclear power for civil purposes will be possible without running into the hazard of proliferating nuclear weapons. I hope that answer satisfies the hon. Gentleman.

I forget whether I made this point, but, if so, I should like to make it again before moving on to the other part of the Bill. In offering to submit United Kingdom civil facilities to IAEA inspection, we are participating in a system which we believe will become progressively surer and more effective in deterring other countries from developing nuclear weapons.

I turn now to the second purpose of the Bill, which is to provide authority for contributions up to a total of £50 million towards expenses which the Central Electricity Generating Board will incur in building Drax B. The board advised me that without Government intervention it would not have placed an order for this station before 1980. By 1980 seven years would have passed without a single order for main generating plant either by the CEGB or by the Scottish boards. There would have been an irreversible loss of skills in the power plant manufacturing industry and serious consequences for employment in the North-East and in Scotland.

Perhaps in passing I may be allowed to say that, whatever views there may be about other provisions of the draft Bill for the reorganisation of the electricity supply industry, it is not rational that we should have an electricity supply industry operating without having any obligation to have regard to its supplying industries. We cannot turn on a turbo-generator industry or a boiler-making industry just as and when we want.

It is of vital interest to the CEGB that there should be an industry there. It may very well be argued, as I would argue, that there is something slightly absurd about a Minister having to draw the attention of a generating board to the necessity to maintain an industry upon which the generating board depends for its future supplies. Yet the truth is that this has been handled in the past in a most clumsy constitutional way which, alas has to be repeated in this form, whereas one would expect that this would naturally flow from the broad common sense terms of reference of the industry.

The generating board operates under an Act of Parliament and it feels that its duty is to assess when it needs plant. Therefore, it falls to the unfortunate Minister, myself in this case—but my predecessor had exactly the same problem with the Ince B station—to draw the attention of the board, in a special way and with a slight sweetener in the form of Government assistance, to the need not to let its own supplying industry get into serious trouble. I hope that that will be put right when the reorganisation of the electricity supply industry comes into operation.

There is another provision in that draft White Paper which would assist. Instead of having to go through the very cumbersome process of primary legislation, with its Committee and Report stages, since what is being done is very straightforward, the House could endorse a Minister's request to an industry to order plant and to pay for it. That could be done under a simplified machinery. That is one of the reasons why the White Paper being considered by the Select Committee provides for the House to have the opportunity to endorse a Statutory Instrument containing a directive and, with it, a provision to finance the industry, the CEGB, if it needs to order in advance.

Mr. Frank Hooley (Sheffield, Heeley)

I would have thought that there was an important principle here. The taxpayer is giving £50 million of public money. I would have thought that that was a reasonable excuse for special legislation.

Mr. Benn

My hon. Friend says that there should be legislation. It depends what he means by legislation. I would question whether primary legislation is necessarily the best way of handling a matter of that kind. It may be best handled by delegated legislation with the authority of the House behind it, in the form of a Statutory Instrument requiring the affirmative or negative procedure.

However, when a Minister seeks to intervene in the decision of an industry it is right that he should come to the House for approval. Whether we have to have quite such a complicated procedure is a matter of argument. My own view is that it would be better to simplify the matter so long as the powers of the House remain undiminished. That is almost a procedural point rather than a point of substance.

I come to the second aspect of this matter. As everyone knows, from the hot public debate that occurred over the last few months of last year, the Government would have preferred that the power plant industry should be rationalised before an order for Drax was placed. My right hon. Friend the Secretary of State for Industry made every effort to bring the firms together. The CPRS report on the power plant industry was published and widely discussed. But no rationalisation can succeed if it does not command the confidence of the workers, management and the main customer. Despite many consultations, in some of which I was involved, this was not possible. Although rationalisation remains the Government's long-term aim, and in our view would help the industry to remain internationally competitive, the problem as it finally emerged for a decision by the Govern- ment was that we had to act in advance of the rationalisation that we sought.

The Government decided, therefore—this was the subject of a statement in the House last summer—that further postponement of the decision on Drax would not be in the national interest. The decision to proceed to the second stage of Drax was also taken as a mark of confidence in the future of the coal industry, which in part would answer one of the supplementary questions put by my hon. Friend the Member for Bolsover (Mr. Skinner) a few minutes ago about the Common Market.

Following discussions with the board, the Government have agreed that parliamentary authority shall be sought permitting interest refunds to be made to the board, with two limitations. First, whatever happens to interest rates and power station costs, compensation payments will not exceed £50 million. Secondly, although the decision to order was taken about two years earlier—that is, as compared with the CEGB forecast of need—payments will be based not on two years' but on six months' interest charges. As I am sure the House is aware, the manufacturing contracts for the turbo-generators and the boilers will begin in the summer of 1978. In April 1979 the contracts for the main steelwork will begin, anticipating commissioning in 1984. This will provide about 4,000 jobs—2,000 jobs in Parsons and Babcock and Wilcox, which I know will be welcomed in the areas in which those companies operate, and 2,000 in other industries. There will also be construction work which will provide more employment.

However, it is not only a question of saving jobs, as is sometimes argued. It is a question of saving a capacity to produce this plant, which we know very well will be needed by the home generating boards and will provide the foundation for a world export market which, though slack at the moment, will recover. I do not believe that anybody looking at these two firms, which will be the prime beneficiaries of this arrangement, could see it as the spinning out of a decline. It is a maintenance in being with a view to a development of this industry. It is very important that that note of confidence should be sounded by the House.

In commending this part of the Bill to the House, I should make it clear that the manufacturing work on Drax will be followed by manufacturing work on the nuclear stations to be ordered following the Government's decision on the advanced gas-cooled reactors in January of this year. This, too, will provide the same firms with important employment and will strengthen their home base for export effort. The Government will do all that they can to support the export efforts of the power plant industry. The Drax order will be of substantial benefit to that industry in the United Kingdom and, as I said, will put it in a better position to meet our long-term needs.

As to the market for coal, now that we are moving, albeit slowly, towards the development of a national energy policy, we have to see to it that the investment that we have justified in the mining industry is matched and married by or with an appropriate market for coal. I had a further meeting with the coal tripartite committee, with Sir Derek Ezra and the mining unions this morning and we fully discussed this problem of coal markets.

One of the answers is provided by the Bill. As the House will know, we are expecting the capacity for coal burn in power stations, according to our forecast, to rise to between 85 million and 90 million tonnes in 1990. I have had the opportunity today, which I much welcomed, of talking to the German economics Minster, who is over here with the Chancellor in preparation for the EEC Energy Council meeting on May 30th, when the coal market aspects of EEC energy policy will also be discussed. My hon. Friend the Member for Bolsover mentioned this matter in a supplementary question. I hope that he will read Hansard and see that these matters are under consideration.

Mr. Patrick McNair-Wilson: (New Forest)

Will the Secretary of State assure us that when he holds these meetings he will try to persuade his friends in Europe to stop buying cheap dumped Polish coal when they can have coal from a Community member such as ourselves for their North-West Germany power stations?

Mr. Benn

This point is very forcefully brought forward—the need to develop indigenous resources rather than find those indigenous resources in some way undercut by importations. Some community countries have an import limit on imported coal. But, with the availability of coal that we now expect, we should find a market, as should any reasonable EEC energy policy, for British coal, which is much cheaper to produce than German, Belgian or French coal. I gave the figures to the House the other day in answering a supplementary question.

In connection with the burn in power stations, I add that I, as an Energy Minister, would find it impossible to contemplate the ordering of more oil-fired stations. This is a matter of interest to those who know that some proposals are in the pipeline. I ought perhaps also to add that my hon. Friend the Under-Secretary shortly will announce the result of the research and development study, which is probably of very great importance. This will be announced shortly and will indicate future uses for coal.

That is the Bill in outline. In winding up the debate my hon. Friend the Under-Secretary no doubt will be able to deal with some of the questions raised in the debate, and there will be one or two Committee points which will need to be dealt with at that stage. I hope very much that the full Bill, which would have catered at any rate for half of this legislation, will come forward and that the proposals made in the nationalised industries White Paper which the Government published earlier this month will also change the relationship to some extent between Ministers and nationalised industries so that we have less of the old arm twisting and more open exchanges where the Government have a clear interest, with public support, and seek to win the assent of the industry to work on that basis. On the safeguards side, it is an essential element of the development of nuclear power that we should encourage the wider use of safeguards and, by our own example in this Bill, I hope that we shall achieve that purpose.

I commend the Bill to the House for a Second Reading.

4.32 p.m.

Mr. Tom King (Bridgwater)

I am sure that I take the whole House with me in expressing our sympathy to the Secretary of State about the unfortunate accident which he sustained and in expressing our appreciation that, despite obviously being in some physical discomfort, he has come to the House today to move the Second Reading of this Bill.

I was sorry to see a slightly unkind cartoon in one of our national newspapers showing a gentleman, possibly purporting to be a supporter of the Conservative Party, passing a billboard saying "Benn injured" and commenting "Nothing trivial, I hope." I hope that the right hon. Gentleman will accept that on this occasion we all trust that it is trivial and that he will soon be restored to full vigour again.

We must all be grateful to the right hon. Gentleman that he so quickly allayed any suspicions which might have been aroused by making it quite clear that in no sense did he believe that he was pushed. I see that it was even unkindly suggested that the Prime Minister might have been present on the occasion. I think that he was even asked about it at a Press conference. Those of us who are familiar with some of the background to the matters under discussion today would have been more inclined to seek to know the whereabouts of the hon. Member for Truro (Mr. Penhaligon) on the occasion when the accident occurred. But I am sure that he will be able to account for his movements.

Clearly, this is a be-nice-to-the-Secretary-of-State day, in view of his physical disability, and I hope therefore that he will forgive me, now that he is at least seated and not at such a physical disadvantage, if I warn him that I shall be making one or two minor passing criticisms as we discuss these matters. I know that he would not wish the whole stuff of political controversy to disappear over a chipped ankle on one afternoon.

It is worth remembering—and the Secretary of State fairly made the point—that this is merely the minor remnant of what is a much more major Bill which we had been expecting to see presented by the Government this Session. Therefore, I have to make my first unkind comment to the right hon. Gentleman.

The saga of the electricity Bill is a classic example of how not to legislate in Parliament. The Secretary of State for Energy, or rather, his predecessor, set up the Plowden Committee with a request to report urgently, and that report was produced in a little more than a year, in January 1976. Then there was not a sound from the Secretary of State for Energy or from his Department for a full 18 months until, in July 1977, we had a statement. Then again there was nothing until suddenly a Bill, a draft Bill or whatever we are allowed to call it in constitutional practice, appears and is known to be under discussion with the Liberal Party. There was then a last-minute consultation with the Conservative Opposition, with the whole problem unfortunately leading to this important Bill being unable to proceed.

The Secretary of State said that one of the reasons for the delay was that the widest possible consultations had to be held. Apparently he felt it necessary to consult a very wide range of people. It is somewhat staggering that, despite all the consultations and discussions, when the Bill actually appears it becomes apparent that there are a number of major features in it which were never discussed with the industry or the unions.

The Secretary of State will know that both Mr. Frank Chapple and Mr. John Lyons, as chairman and secretary of the employees' national committee, made it clear that they were quite unaware of and would have been opposed to certain items in the B111. I was interested to see that Mr. John Lyons, writing in the Electrical Power Engineer in his capacity as general secretary of his association, said: … the real responsibility for what has happened rests squarely with the Secretary of State for Energy, Mr. Wedgwood Benn. From the day the Plowden Report was published, he made no secret of his dislike of its main recommendations. It was not simply bad luck that it took two years to arrive at the stage when a Bill was ready for publication. I assume that that was written by someone whom the Secretary of State would claim was one of the people closely consulted on this matter, and I think that the House must take note of his judgment.

Mr. Benn

I saw what John Lyons said. His comment is not unknown to me because he made it clear in the consultations. However, before the hon. Member for Bridgwater (Mr. King) proceeded along that line, it was my hope that he would also recollect that Ministers have responsibilities for promoting legislation to which they themselves are committed and have to be committed and that it is not the task of a Minister in any Government simply to take a committee report and wheel it in a perambulator from the committee which has presented it on to the statute book.

The matter at issue here is whether the degree of centralisation which many, including myself, thought was implied in the Plowden Report was desirable. So that although this argument, which no doubt we shall have in the Select Committee and later when the Bill comes forward, is an important one, clearly a Minister and a Government have to make up their own minds, as we did quite clearly on the recommendation made in the very important Plowden Report. However, we were not in any way obligated to accept what it recommended 100 per cent. Nor do I think that the House would have accepted that the 100 per cent. centralisation recommended would have been in the interests of the industry or acceptable to Parliament.

Mr. King

I do not think that anyone in the House will disagree with what the right hon. Gentleman has said. But that is not what I was talking about Therefore, if I may, I shall quote a further extract from what Mr. John Lyons wrote. He was writing this and, I think, being constitutionally correct in not giving any evidence that he was necessarily aware at that stage of the contents of the Bill. However, his facts are borne out by the White Paper which has been published since. Mr. Lyons said: … as well as for example to give the industry power to undertake manufacturing which, apart from being politically contentious, had neither been asked for by either side of the industry, nor even discussed with them. There is a world of difference between that and not necessarily accepting people's points of view. I accept entirely that the Secretary of State should not be a messenger boy for outside interests, whether they be unions or the industry, and that he has to make his decisions after consultations. My point in this case is that there is a very contentious ingredient in that Bill which, according to the secretary of the employees' national committee representing all the unions, was never even discussed with them.

I should have thought that if the Secretary of State stood for anything in politics it was in giving high priority to the need for consultations and to taking people with him. I do not say that in a derogatory sense. The Secretary of State has just paid tribute to the tripartite arrangements in the coal industry. I thought that he gave the highest priority to discussions with all sides of the industry. However, a major ingredient in this Bill was discussed neither with the industry nor with the unions. That was not the point on which the Secretary of State intervened. Unless the Secretary of State says that it is an error of fact, Mr. John Lyons's comment must stand.

Mr. Benn

That is rather like Drax B which also would have been in the Bill. I cannot honestly tell the House that the Drax B provisions in the Full Bill were at the request of the industry. They were not. It is not uncommon for a Minister to bring forward matters that are of interest to the Government. We must not debate a Bill which is not before us, but manufacturing powers had been provided for in legislation and have been removed. In past legislation the Government have given powers of manufacture. The Government were committed generally—and this has been known to the trade unions from the beginning—that as and when the opportunity to bring in legislation on nationalised industries presented itself manufacturing powers would be added. This matter involves no surprise. We did this in the Post Office Bill in 1968. With the good will of the House, last summer we extended the powers of the coal industry to involve itself with refineries. I do not believe that the hon. Member is making a good case. This is a Government addition to the Bill.

Mr. King

I am sorry to provoke the Secretary of State to rise to his feet in his present condition, but I am afraid that that explanation will not do. He has just told the House that there are certain matters that sometimes cannot be discussed with the industry or about which no requests have been made. I am not suggesting that everything must be agreed by both sides. I thought that the Secretary of State and I were at one about the importance of consultation, in advance where possible, to ensure that the national policy objectives and the political objectives of the Government were achieved in harmony with those who worked in the industry.

The Secretary of State cited Drax B. He said that the Drax B provisions were not necessarily at the request of the industry. But when the Secretary of State made his statement about Drax B I asked whether there would be a need for legislation. He said: Discussions have begun with the CEGB and I cannot in detail answer the question about compensation arrangements, because the discussions are in progress."—[Official Report, 18th July 1977; Vol. 935, c. 1151.] He said that discussions were in progress last July. There was no suggestion that that matter, which is in the Bill now, was not previously discussed in advance of the legislation. I should have thought that that was not a good issue for the Secretary of State to pursue.

Mr. Benn

I am anxious that the House should know exactly what happened and why. If the CEGB had felt in its judgment that it was right to proceed with Drax B in the timescale that the Government thought necessary, legislation would not have been needed. The legislation is necessary only to provide financial support. In the case of the manufacturing powers, there are statutory limits to what the board can undertake. It was for the Government to determine their approach to all the nationalised industries, including electricity. There is a strong case for a standard practice throughout all nationalised industries.

Mr. King

That was an interesting intervention, but the argument is not about whether Government should take decisions. Clearly, the issue of Drax B and compensation should involve consultation in advance. Mr. John Lyons is saying that in the case of the manufacturing powers in the electricity industry there was no consultation prior to those powers being included in the legislation.

The Secretary of State has pleaded in defence of the delay the massive consultation that there had to be across the board. But I have cited the secretary of the employees' national committee, who said that there was no discussion on that issue. If anyone knew what was going on, surely he would.

I turn from the unfortunate background of the Bill to two provisions which I endorse. Whatever one's view about centralisation, anyone who has studied the White Paper will agree that there are some important improvements in the Bill which should command general assent throughout the House. One of the particular improvements concerns combined heat and power. The modifications of the statute for the industry are important. I accept what the Secretary of State has said about the need to have responsibility for the supplying industries and the wider help of the industry.

I turn to the Bill itself. First, I shall deal with the nuclear safeguard provision. As the Secretary of State correctly anticipated, this commands our support, as far as it goes. My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) identified an important matter in a slightly different context. He may wish to elaborate on that later. This is a voluntary offer by the British Government. We are not really covered as a weapons State by the obligations contained within these safeguards which are designed for non-weapons States under the umbrella of the non-proliferation treaty. This is an excellent example to set, and I understand that that is why we entered into this arrangement.

There is a minor but relevant issue at stake. When I look at the safeguards and consider the issues involved, I find it slightly bizarre that £1,000 is the fine for any breaches of the safeguards. We are not dealing with a rather recalcitrant storeman who refuses to open his store and has to be severely punished. We are dealing with non-co-operation by Governments.

The more important issue, which was mentioned by my hon. Friend the Member for Carshalton (Mr. Forman), is the adequacy of the safeguards. My hon. Friend asked the same question of the Foreign Secretary and received a fairly robust reply that Britain would play her part in beefing up the work on the safeguards. Without being unkind to the Secretary of State, I thought that he gave a full reply in reply to my hon. Friend justifying the existing situation. I wondered whether he had read what Mr. Justice Parker said about this in paragraph 6.6 of his report.

When speaking of the system of safeguards, he said: This system was acknowledged by everyone to be in need of strengthening and improvement. I shall not therefore lengthen this report by describing the system and its shortcomings. It is sufficient to say that it could and should be improved, e.g. by increasing the numbers of inspectors and, possibly, by the development and introduction of improved methods for detecting any diversion of fissile material from peaceful uses. After that unanimous report, based on all the evidence given at Windscale, it was disappointing that the Secretary of State did not make clear the Government's determination to ensure that the safeguard system is beefed up. Perhaps the Under-Secretary of State can clarify the situation. It was a unanimous recommendation of the witnesses at the Wind-scale inquiry.

I turn to what is perhaps potentially the slightly contentious area of the Bill—the clause that deals with the money for Drax. Certainly the background to Drax is a fairly unhappy episode. I would say—although it would be unkind in the present context—that the Secretary of State seems to have an ability to find every banana skin in the business. I would not say that in view of recent events. But this Drax problem has been made into a much more controversial issue than perhaps it need have been if it had been handled in a different way.

I should like to make quite clear our approach to this situation. We are certainly not opposed to advance ordering of a power station, as is being done in this way. If I suggested that we were opposed to that, hon. Members would quickly point out the precedent of Ince B and that we have done this in the past. Clearly, there is justification in certain specific cases where particular problems arise.

As the Secretary of State fairly said, it is difficult to imagine a more acute problem than that which faces an industry when its major customer gives it no business for seven years. The scale of the problems faced by what is a very important industry in this country is very clear and plainly derives from that background.

However, the point that we have always made clear, as on the first statement, when I asked a Private Notice Question of the Secretary of State, is that if the Government seek to attain these objectives, they must recognise an obligation to pay compensation. The original approach, in the letter to Sir Arthur Hawkins, was that there was no question at that time of any compensation.

Perhaps I may quote from what I said to the Secretary of State on 21st April. I said that the proper approach at that time was to bring it openly before the House so that the House can see the costs involved, the matter can be properly debated here, and the Government can receive authorisation for the finance if they can persuade the House."—[Official Report. 21st April 1977; Vol. 930, c. 366.] The House will therefore understand why I am happy that this matter has now been brought forward in what I consider is the proper way for consideration.

Mr. Hooley

Does the hon. Gentleman agree that this is probably a cosmetic exercise anyway as every citizen is a taxpayer and every citizen is an electricity consumer? One pays one way or pays the other way. Therefore, in the end, what does the difference come to?

Mr. King

That seems to be a recipe for anarchy in every nationalised industry if we approach our finances in that way. There may be an element in what the hon. Gentleman has said, but I would not follow him in that all the way.

The next complication that we had in the Drax situation was the CPRS report and the very unfortunate sequence of events in which rationalisation was called for but failed to be achieved, in the turbine generator area in particular. The CPRS report made clear that Drax should be ordered only on condition of achievement of rationalisation, but that was not achieved.

The Secretary of State had something to say about the Government's views on still achieving a measure of rationalisation and the desire to see a strong export industry. It was clearly the view of the CPRS that that would not be possible without rationalisation. I did not hear the Secretary of State—although I may not have caught the particular passage—give any views on the prospects for rationalisation in the turbine generator industry. I know that there have been discussions. The CEGB has been conducting them. I think that it is the right body to do so. If I missed it, perhaps the Under-Secretary could give us the latest position on this matter.

Mr. Mike Thomas (Newcastle upon Tyne, East)

Before the hon. Gentleman leaves the business of the CPRS recommendation, I wonder whether he would accept, looking back on these events in rather calmer times now, that to make that recommendation at a point at which one company had had the most recent order and other substantial orders and when the other company was in serious difficulty was not to play the card—as the hon. Gentleman himself called it on 18th July last year—of the order, for restructuring, in the proper way, because it was a sanction that could be applied to only one side of the argument. The other side was not amenable to sanction at all.

Mr. King

That raises a number of questions why one company had been more successful in getting those orders—for instance, export orders. It is a wide question. I understand, from a comment that the Secretary of State has made that on the question of open tendering, for instance, it would have been an unreal situation because of the issues that were really at stake. There are a number of complications. I still think that the most unfortunate thing about the CPRS report was that its main conclusions could not be implemented. One could not say "these things have to happen" and then fail to achieve them and advertise to the whole world that the CPRS said that there would be no future for the industry unless these things happened, and then leave the industry still fragmented in that way.

Mr. Mike Thomas

Why publish it in the first place?

Mr. King

That is a fair question. But I think that the whole episode was a very unfortunate series of events which certainly did not help the general wellbeing of the industry.

However, a lot of time has now passed since those debates and arguments of the middle of last year. We are extremely critical of the approach and the route taken by the Government, but the fact remains that this order is now under way. The Secretary of State gave authority for it last July. I think that the design con- tract is already well under way. I understand that the companies have been given authority for long lead time materials and are hoping to get the work on to the shop floors within the reasonably near future and, I think, in the middle of the summer.

Against this background, therefore, we are faced with this clause for compensation for advance ordering. It seems to me that there are basically three questions to be answered. Is it early? Is it early enough to justify compensation? If so, how much?

As to the first question whether it is early, this is a two-year-old saga. The Secretary of State may say that it is a lot older than that. He quoted his right hon. Friend the Chancellor of the Duchy of Lancaster who made a statement in 1969 saying that Drax B was firmly in the programme. Perhaps the more recent saga we can call two years old. It was stated in 1976 that this would not be needed until late 1979. Of course, we are now in 1978, and the order admittedly was started last year, so perhaps it is some two years old.

However, I have already made clear to the Secretary of State—he knows that I hold this view—that in outside industry where there is a customer with certain crucial suppliers those customers, whether it be Marks and Spencer, as one clear example of this good commercial practice, recognise a responsibility to their suppliers to try to ensure a smooth flow of orders. This helps to ensure that their supplying companies can operate efficiently and so minimise their costs and charges to the customer. This is a factor that was missing perhaps from some of the earlier discussions, although I think that there is now a more realistic approach in the CEGB to this aspect.

But if we say that there still may be a case for compensation, taking into account the point about responsibility to suppliers, we look at the problem of how much. The Bill says up to £50 million. The Secretary of State gave us a little guidance as to the method of calculation that will be observed. This is obviously a point that we shall want to pursue in Committee. However, as the Secretary of State made clear that this was being treated on a matter of six months advance ordering and not two years, it is very difficult to see how six months, allowing for the fact that no one will pay a cheque for £600 million on the nail tomorrow, and that this will be a matter of progress payments, completion payments, and a very protracted period of payment, comes to £50 million. That is a detail that we shall want to pursue.

Finally, I should like to ask one other question and to make some comments on it. Is it needed? The Secretary of State will know that there are many who doubt the wisdom of our continuing to follow the path of yet more giant power stations. There are even some within the CEGB who have referred to the dinosaur policy which they believe they are following. There is the argument that giant power stations are relatively inefficient in thermal and electrical efficiency since they do not in any way utilise their heat output. We have embarked upon this order at a time of existing substantial surplus of electricity supply. It is anticipated that electricity demand will grow to take up that surplus.

But the Secretary of State will know—I am sure that he is bombarded with as much expert opinion as I am, probably much more—that there are many who challenge those forecasts and suggest that we shall not have such a surplus demand. There are many who comment on the contrast between the capital investment in power station construction and conservation and point to the £600 million capital investment for Drax B when the Government have just announced a programme of £25 million per annum for the conservation of private domestic properties. When we consider that it is not merely a matter of £600 million but that we must add £1,100 million for two AGRs, one sees just how much capital is being invested in electricity generation.

The Secretary of State for Energy has received a letter from the Electricity Consumer Council complaining about the price of electricity, drawing attention to the costs implicit in what that body considers to be the over-ordering of plant, and suggesting how much that may have contributed to the higher cost of electricity. Nobody, no matter how enthusiastic a supporter of the electricity industry, could pretend that it has done other than add to electricity costs. One can argue about the difficulties of forecasting demand, but the fact is that that is a heavy surcharge on electricity demand.

The other issue that arises in regard to Drax is that of coal and the need to provide markets for coal. I have always wondered how valid that argument was, and whether the coming on stream of a 2,000 megawatt modern power station might not put just as much coal-burning capacity out of commission in other sites. I see much more potential for expanding coal markets in the European dimension to which my hon. Friend the Member for New Forest (Mr. McNair-Wilson) referred. I hope that the Secretary of State has rather greater success in his next meeting on that important issue for the British coal industry.

When we examine what has been embarked upon, we must be conscious of the difficult decisions in energy matters, not least the very long lead times. I was struck by the Secretary of State's remark that it would be impossible for him to contemplate approving an order for an oil-fired power station in the current context of energy thinking. Yet the right hon. Gentleman knows that the next three major power stations that he will receive into the grid on behalf of the nation are the Isle of Grain, Ince B and Inverkip—all oil-fired power stations, but none yet in operation—yet they are to be the next additions in the grid. I do not criticise anybody over that. It is the clearest example of the way in which energy policy considerations can change and the penalty we pay for the very long lead times.

I think that this is an issue that must be raised in respect of the ordering in terms of Drax because it is an important issue. It is very difficult to see now how we could proceed differently, but we should be aware of the problems that it may well create for us for the future.

Against that background, it will be clear—not merely to save the Secretary of State the embarrassment of having to hobble into the Lobby—that we shall not divide the House. However, we shall wish to ask some serious questions in Committee both about nuclear safeguards and the compensation question.

5.3 p.m.

Mr. Mike Thomas (Newcastle upon Tyne, East)

I intend to follow closely the remarks of the hon. Member for Bridgwater (Mr. King) and those of my right hon. Friend the Secretary of State for Energy.

I should like to refer to what I describe as the ghost Bill—the 60 clauses or so which are not in front of us today but which are being considered by the Select Committee on Nationalised Industries. This is a good opportunity to inform the House of the work of the Select Committee, and also to take up one or two points which have already been made.

Let me deal first with the work of Sub-Committee B of the Select Committee on Nationalised Industries, under the chairmanship of my hon. Friend the Member for Dearne Valley (Mr. Wainwright). We felt that the White Paper on electricity containing the draft electricity Bill provided a unique opportunity. In normal times a Select Committee of this House whose Members wished to examine legislation through a series of hearings with those concerned with the legislation no doubt would be accused of all manner of heinous crimes—not least of obstructing and delaying the work of the Government, preventing vital legislation being enacted, and so on.

However, as this bucket of opprobrium has already been voluntarily acquired by the Liberal Party, the Select Committee was not put in a position of having to face such difficulties. Therefore, for the first time, so far as I am aware, a Select Committee of this House is examining legislation in a pre-legislative series of hearings. It is an interesting experiment. It is encouraging that my right hon. Friend has welcomed this process, that Opposition Members are playing an active part in that development, and that it has been widely welcomed outside the House.

I cannot yet inform the House of the outcome of our proceedings because we have not yet arrived at any conclusions, but it appears to me that there are a number of possibilities—not least that we shall be able to suggest to a future Standing Committee a number of amendments to the Bill which appear to command a general level of support. Furthermore, I believe that it will also become clear—and I regard this as the most important aspect of our activities—exactly who thinks what about the Bill. Those concerned will have said so in public before us and they will have been questioned about their views.

I do not intend to pursue this line very far, and I shall shortly return to the Bill, but I hope that in two or three sentences I may trespass on the good nature of the Chair in explaining the situation. I believe that this represents a most important development in getting the discussion of legislation away from the "horse trading" in Whitehall where, whatever compromise is arrived at, everyone concerned then has a vested interest in defending it in this House. The former Sir Douglas Allen said at a recent meeting which I attended that the job of a Minister is to deliver the political majority for whatever compromise has been arrived at. That is a process which has rendered our Standing Committee proceedings extremely unsatisfactory and a frustrating process for many years. Through the pre-legislative process we can get that discussion out in the open. I see that my right hon. Friend the Secretary of State appears to be agreeing with that comment, as does the hon. Member for Truro (Mr. Penhaligon) on the Liberal Bench.

One thing we have discovered in the course of our inquiries in the Select Committee is that there seems to be a considerable lack of support among Liberal Members and representatives with whom we talk and correspond on the position adopted by the Liberal Party on the Bill. I understand that in February Lord Avebury resigned his position as energy spokesman rather than pursue the line being taken by the hon. Member for Truro. No doubt that is how the hon. Gentleman arrived in his present position today.

I see that my right hon. Friend is nodding and smiling, but we have not much comfort for him in that it seems that there is a remarkable lack of agreement with some of the proposals that he wishes to put forward. We shall have to see how we progress and what sort of report we ultimately make.

Mr. Benn

There is a conflict about what was said by the hon. Member for Bridgwater (Mr. King), who complains that I did not sew it all up with the industry and the unions.

Mr. Tom King

I did not talk about sewing anything up.

Mr. Benn

Then I withdraw the phrase "sew up" and substitute the word "consult". The hon. Gentleman's point was that this should have all been brought out in consultation with the industry before the Bill was published. That was in contrast to the view expressed by my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas), with which I have a great deal of sympathy, that in the consultative process Parliament has a prime role and not a secondary role. That provocative phrase of Sir Douglas Allen, as he then was, that the Minister is expected to deliver the parliamentary majority for the deal which has been arrived at beforehand is offensive to me, and also no doubt to the House. If the Select Committee permits these discussions to be held in the open, it will be to the greater good of the industry. That is not how we thought it would work out, but it is a very good way of handling these proposals.

Mr. Thomas

I thank my right hon. Friend for those comments. We shall proceed with our deliberations and see what happens. As a Back Bencher, I shall be interested to see whether we shall arrive at proper pre-legislative hearings, and, if we do, I wonder whether the Opposition or those who occupy the Government Benches, who now appear to view such a process with enthusiasm, will still do so. I suspect that they will not.

I wish to deal primarily with Clause 5 of the Bill, for reasons which will be obvious. Let me say a word or two about the importance of the order for the completion of the Drax power station to Tyneside and to the workers at the C.A. Parsons factory at Heaton in my constituency. C.A. Parsons has a long and proud tradition in the turbo-generator industry. Its founder invented the turbine process and eventually applied it to electricity generation, having first applied it to the propulsion of ships.

Just a few months ago, before this matter was resolved, this proud factory was faced with the prospect of imminent disaster. The hon. Member for Bridgwater refrained from any discussion of why that position had been arrived at, and I intend to do the same. We can all take a view on that. There were at Heaton jobs, skills, a proud tradition and a record second to none. I am sure that the hon. Gentleman shares with me the view that it would have been a tragedy if that had all been cast away thoughtlessly as a result of an almost casual industrial decision in a climate of serious electricity demand recession.

I can indicate to the House the importance of this order by saying that I think that my right hon. Friend understated it a little. C. A. Parsons at present employs 5,000 workers, about 500 of them supported by the temporary employment subsidy, for which we are very grateful. Had it not been for the Drax B order and the announcement last July of the decision of my right hon. Friend and his colleagues, we should now be on the way down to 2,000 workers—indeed, on the way down to a number of people working in the plant which would have rendered it unviable in practical terms. We should be on the way down to a reduction of about 50 per cent. in the United Kingdom's turbogenerator manufactuing capacity. I entirely share the views of my right hon. Friend and the Government, arrived at after this very difficult process of debate and discussion, that that was a situation that could not be contemplated and could not be allowed.

I now turn—and I speak as a veteran of this argument, too—to the question whether the order is in fact an early one. I find this remarkable. I looked at the matter carefully again over the weekend to make sure that my mind was not playing tricks. I came to the Chamber today to find that once again various pieces of this jigsaw had been shifted around by those who were putting it down on the table.

When I started in the argument towards the end of 1975, it was about the Drax B power station, which was to be started in 1978, being advanced to 1976. That was the two-year advance that we were talking about at that point in the argument. In order not to deceive the House, I shall quote the exact words in my right hon. Friend's announcement of 18th July last year, when he said: The CEGB had not planned to place an order for the station before 1979".—[Official Report, 18th July 1977; Vol. 935, c. 1150.] At that point we were still talking about a two-year advancement, but it was no longer fom 1978 to 1976. It had changed to become from 1979 to 1977. Today my right hon. Friend spoke of 1980, so we are still on a two-year advancement, but this time it is from 1980 to 1978.

This leads me to ask a question—I do no more—as to exactly what all this advancing orders business is about and how it can be computed with exactitude. We shall want to return to this in Committee, because on computing this matter with exactitude depends the amount of public money that should be provided to the CEGB in compensation. I share the view of my right hon. Friend and the hon. Gentleman that there is no doubt in principle that if the order is advanced the CEGB should be compensated, but the question whether it is advanced, and by how much, is an important one into which the House may wish to inquire further.

I looked very carefully at three other matters that might explain this. First, the CEGB has said on a number of occasions that it does not need any power stations, such is the desperately low level of electricity demand. It has said that the forward look for electricity demand is such that power stations are things the country can manage without almost for the foreseeable future. I said to myself "That cannot be true, because my right hon. Friend has been under considerable pressure to order two more since he made his announcement last July." I do not argue with that, and nor do the workers in Heaton. They will be glad to hear what my right hon. Friend said today about the way in which work for those stations, too, will be looked at in the context of the need to preserve the capacity in the industry.

But the CEGB cannot have it both ways. It cannot say "We do not need power stations, and ordering the Drax power station means bringing forward all this capacty that we do not need ", while spending time lobbying, arguing, going to my right hon. Friend the Secretary of State and making public statements saying "Please order two enormous AGRs." That is not logically consistent. So it cannot be the case that we do not need any power stations.

The second possible explanation that I considered was that power stations were taking longer to construct. That is true. Indeed, there have been considerable industrial relations difficulties at the Isle of Grain and Ince. I do not think that it is reasonable to place blame on any particular group. We know that the CEGB has done some very good work in trying to co-ordinate industrial relations matters, trying to bring everything together and make it happen better.

We all know that any construction operation is bedevilled by such problems where different firms with different rates of pay and different sets of differentials are coming together. However, I think that the British industry's record—Mr. England was frank enough to say this at a Select Committee hearing a few weeks ago—is not good on this front. But, if there are problems with power station construction and they are now taking longer to build, because they are more complicated and there are more problems, that is an argument for bringing power stations forward, not for delaying them or putting them off. It is interesting that we talk only about start dates. In order to complete at the required moment it might well be the case that the Drax power station had to be brought forward anyway, if only in order to insure against such problems.

Thirdly, I asked myself whether it was true that the plummeting of electricity demand was still the same as it was, whether we were still expecting things to be as bad, or whether they had got worse. The answer is provided by my right hon. Friend's own Energy Commission. I quote from Electrical Review of 4th November 1977, which reported on the Energy Commission Paper No. 3 "Short Term Energy Forecasts 1977–78". In the first half of last year electricity sales were running about 4 per cent. above the 1976 level and the Department of Energy was already revising upwards its forecasts of demand and sales for 1978 and 1979. Therefore, it cannot be that electricity demand has got worse in the interim. The prospects appear to be getting marginally better than most of us expected they would.

Therefore, I simply put the marker down. It does not seem to me that the case has yet been made that the Drax power station is advanced all that much. It is interesting that my right hon. Friend appears in a way to have accepted a formula that we shall say that it has been advanced for two years but shall compensate only for its being advanced by six months. We can pursue that matter in Committee. Perhaps six months rather than two years is the reality of the matter.

Before I leave the cost point, I should like to ask whether my hon. Friend the Under-Secretary will be able to give an assurance at the end of the debate about the other aspects of the whole business of costs. My right hon. Friend mentioned interest payments, but, as has been mentioned obliquely in the debate so far, bringing the Drax power station on stream early gives other savings. The National Economic Development Office did some sums on this. When inflation was running much faster than it is now, it said that bringing forward the order for Drax would make a saving and not be a cost at all.

There are savings on construction costs the earlier one brings forward a station, particularly when inflation is running at a high rate. There will also be savings in coal burn and reduction in the use of the more expensive and obsolescent power stations when the Drax power station comes on stream. May we be assured that those savings will be taken into the calculations as well?

Although there has been some oblique criticism from the Opposition over my right hon. Friend's bringing the Bill forward in the way that he has, in my view he is behaving much more properly than the Conservatives did in 1971 and 1972. In the Electricity Act 1972, the product of the Barber announcements of 1971 that certain capital projects would be advanced to help the regions and help with the problem of unemployment, some of the reasons why this power station is being advanced, if it is being advanced, the amount of money to be used to compensate the CEGB for Ince was specifically not included. Indeed, it was not until this Government's Energy Act in 1976, when the outcome of advancing Ince had become clear, that a sum of money was allocated. It was then provided for and paid to the CEGB.

Mr. Tom King

The hon. Gentleman has got that precisely wrong. It was in the Industry Act 1972, and the amount in the Energy Act was a supplementary payment to take account of inflation under a Labour Government.

Mr. Thomas

I shall not quibble on the precise details. The fact is that the final amount was not settled until several years after the original decision had been taken. That is because it is not possible to say, as we stand here on 24th April 1978, with a power station hardly begun, hardly the smallest pieces ordered, what the ultimate compensation costs, if any, are likely to be. My right hon. Friend has been rather more straightforward on this than his predecessors.

I turn to the question whether a power station should have been ordered in the absence of restructuring. I do not want to make a comment on the events of April to July 1977, but I owe it to my constituents and the management of C.A. Parsons to get one or two things on the record. The first thing I should say clearly, as I said on 17th July last year, is that neither the workers nor the management in C.A. Parsons were against restructuring on terms which properly protected their interests. I should also put it on record that at one point in the proceedings it was the case that my constituents, trade unions and the C.A. Parsons management, were prepared to accept a company in which they had only a 25 per cent. stake as long as the NEB held a 25 per cent. share and there was an independent chairman of the company.

That arrangement was far and away different from the 40–40–20 arrangement which had originally been discussed and was eventually not acceptable to other parties involved. To ask a company to go any further than that in this type of discussion would have been entirely wrong and unacceptable. In the circumstances the decision taken by the Government was the only one that they could take. I make no pretence, nor do any of my hon. Friends who were involved—nor did my right hon. Friend today—that it was necessarily the best decision but it was the best available decision.

The future is certainly still open. I hope that we shall not enter into any new uncertainty about restructuring. I believe that it is profoundly damaging to have such uncertainty. I share the view of the hon. Member for Bridgwater in this respect. I hope that we shall be realistic about the degree to which the technologies of the two companies in the turbo-generating sphere are compatible. It is not possible simply to amalgamate turbo-generator technology, as if it was all one and the same thing, like different sets of Lego to be put in the same box. It is not like that.

Mr. Arthur Palmer (Bristol, North-East)

While I agree with what my hon. Friend has said, may I ask whether he would not agree that there is a great need for the standardisation of design of turbo-alternator sets in this country?

Mr. Thomas

I could not possibly disagree with that as a general sentiment. All that I am asking—and I know that my hon. Friend will agree—is that no one should say that amalgamation would be easy, that it can be done overnight. No one should say that we should pick up what we have at the moment, put it all together and make it work. I know that that is not possible. Some of the discussions that we have had about this matter seemed to contain the implicit assumption that such a thing was possible.

I deal now with the importance of exports. Over the next few years the industry will have to survive with about half of its work—possibly as much as two-thirds—coming from export orders. The state of the world market is not markedly better than it was six or nine months ago. I hope that it will be better in the 1980s and we know that electricity demand is increasing once more. That is a hopeful sign. I hope that we shall be beyond the seven gigowatts to eight gigowatts a year of new orders from early in the 1980s. No one can be sure. Everyone at C. A. Parsons has been glad to see some of the export orders from abroad coming to Britain. Not enough credit has been given to my right hon. Friend and to my right hon. Friends the Secretaries of State for Industry and for Trade. I was glad to see the China light and power order coming to GEC. That is very positive news. There was never any prospect of C. A. Parsons getting that order.

I hope that when we are bidding in markets in which we are favoured—India is one that comes to mind—the Government will help us and give us that sort of support. I am sure that on past experience they will do so. Export assistance is critical because it is received in substantial measure by all of our competitors abroad. Unless we can meet the terms that they are able to get out of their Governments concerning export assistance, financing, interest payments and the rest, we shall not be able to compete in world markets, no matter how good our turbo-generators are, or, looking at the other half of Drax, how good our boilerwork is.

May I ask the Under-Secretary to say a little more than the Secretary of State on this question of steady ordering? We have discussed this matter in the Select Committee on Nationalised Industries with the industries concerned, with Sir Francis Tombs and Mr. Glyn England. We now know that even if we count the Drax 2,000 megawatts as 1978 and the two AGRs as spreading over 1979–80, even on the minimal proposals for a 2,000 megawatt steady ordering programme, we shall run into difficulties again by 1980–81–82 even if there is at that point, and we do not know this, a PWR order knocking about.

Can we have a further indication about the next coal-fired station which, it seems, ought to be ready to come on stream at about that point? Can we also have a commitment from the Under-Secretary on the spares and maintenance and refurbishing front? There is a lot of work that could be reasonably carried out on a cost-effective basis. Exactly the same son of policy is being pursued by the Government in the steel industry, making useful improvements in efficiency by small investments in refurbishing. More of these kinds of things could be done.

I was delighted to hear much of what the hon. Member for Bridgwater said today although, in another way, I was a little disappointed. I spent most of the weekend reading carefully the words of his hon. Friend the Member for Bournemouth, West (Sir J. Eden) and the words of his noble Friend, Lord Barber, as well as a number of other people involved in the Ince affair. I am glad that the hon. Gentleman did not come here today and say that there was something wrong in principle with what the Government were doing. I could have quoted in every instance at least a paragraph or two which would have shown clearly that his party, when in power, took precisely this view in what were similar circumstances. It is nice to be here today and to be able to say that we hope to see no hypocrisy in the House tonight.

5.27 p.m.

Sir William Elliott (Newcastle upon Tyne, North)

I am more than pleased to follow the hon. Member for Newcastle upon Tyne, East (Mr. Thomas). Quite obviously, we have a mutual concern with regard to that part of the Bill affecting employment in the city of Newcastle upon Tyne and upon Tyneside as a whole to a considerable degree. I very much agree with the Secretary of State's phrase towards the end of his speech to the effect that Clause 5 of this Bill sounds a note of confidence for the North-East. It is a very welcome note.

I also suggest to the hon. Member for Newcastle upon Tyne, East that his own efforts and those of many Members of his party, inside this House and outside it, have been considerable. I am in full agreement with him that in principle there is no difference between us in that there is an established precedent with regard to Ince B. The fact that we are not to vote against this Bill tonight gives me pleasure. It does so because of the promise of employment and the maintenance of skill which the Bill holds out for my area. I feel that the same thing will also be said by my right hon. Friend the Member for Renfrewshire, East (Miss Harvie Anderson) should she catch your eye, Mr. Deputy Speaker.

I say this to the hon. Member for Newcastle upon Tyne, East. It has not only been the leaders of the local Labour Party who have campaigned for the completion of Drax B. I was shown a letter this weekend which slightly surprised me, although I fully accept that it was perfectly legitimate. It was from the leader of the Labour Party on the Newcastle City Council. He was writing to the trade unionists employed in C. A. Parsons, encouraging them to work for Labour candidates in the local elections because of the considerable efforts of the Labour Party in obtaining the Drax B continuance decision. May I suggest to the hon. Member that the leader of the Conservative Party on the city council might well send a similar letter since the hon. Member and I have been at one in our desires over this project.

Mr. Mike Thomas

I thank the hon. Gentleman for his kind words, but I wonder whether he is telling the House that, if we had a Conservative Government placed in the same position as are my right hon. Friends, we should have arrived at the same and the right decision. I suspect not.

Sir W. Elliott

As I have said, a precedent has been established. But I think that I can best answer the hon. Gentleman by continuing with what I have to say. I admit at once that I shall not say as much as I had in mind to say since the hon. Gentleman himself has made quite a number of the points I wished to make.

I noted the hon. Gentleman's views on the future handling of legislation—speaking as he did as a member of the Select Committee on Nationalised Industries—and I found them very interesting. I thought, however—returning to the Bill—that he was arguing against himself somewhat when he said that no sum was mentioned with regard to compensation to the board in the Ince B circumstance and at the same time suggested that perhaps the wrong sum was being mentioned—now because of the question of timing. It is feasible enough to argue the complication of construction as being a ground for bringing forward rather than delaying decisions, but the economic arguments are the main arguments.

In company with the hon. Member for Newcastle upon Tyne, East, I argue that there is considerable danger in the suggestion that we have too many power stations, or that we shall have too many power stations in the future. This will, of course, always be debatable. It will always be arguable, and, no doubt, it will be argued during our debate today. But there are suggestions that we could be running short of natural gas in 1990, and there are suggestions that we could be short also of North Sea oil.

I put this question especially to the Under-Secretary of State who is to reply, and I put it as someone who comes from a coal-mining area, having known coal mining all my life. How long will deep mining of coal be socially acceptable? Will it continue to be socially acceptable beyond the end of the century?

In other words, it might be folly to neglect our electrical power industry. As a leader of the power industry suggested to me not many days ago, it might be folly to allow our power garden to become overgrown with weeds.

Therefore, as a Member from the North-East of England, I particularly welcome the provision in Clause 5 of £50 million compensation for the second stage of Drax B. Nevertheless, it is important to have properly understood that, because of the straight employment consequences, it would have been more than tragic, as the hon. Gentleman said, if the firm of C. A. Parsons had been drastically reduced in size, probably going out of existence altogether.

This sector of our industry is located in the hon. Gentleman's constituency but, of course, it employs people from a much wider area, and we have in Parsons a remarkable concentration of skill. I have known this firm for many years, I have recently visited the works. It would be tragic and dangerous if that great concentration of skill were lost for ever.

We are for ever talking of our shortage of skill in the North-East and of the need to train for skill. Many times in debates on regional development, on the problems of the Northern area and on unemployment, I have advocated that more firms should look more carefully at their own activities in training for skill.

The firm of C. A. Parsons has a proud and wonderful record in training for skill. Indeed, no less than 40 per cent. of its work force, a work force of considerable size, today has some form of technical training.

There has already been reference to the CPRS report, and here again I agree with the hon. Member for Newcastle upon Tyne, East. Both management and men in C.A. Parsons have never objected to the idea of a merger and have never regarded a merger as undesirable. In fact, from the beginning of the argument they have accepted that a merger might be desirable, and they have even accepted that a certain amount of redundancy among their own work force might be inevitable.

However—I am sure that the hon. Gentleman will again agree with me—I have always considered that a forced merger has never been desirable and that union insistence on NEB control could do nothing but bring inevitable delay. I am referring, of course, to the Scarborough conference when the unions suggested that there should essentially and inevitably be NEB control of an amalgamated concern.

The all-important need for the North-East remains that the turbo-generator industry should be maintained over the next few difficult years so that full advantage of an indigenous industry may be taken when world trade picks up. I believe that it is picking up. I believe that there is considerable merit in the suggestion made by the Parsons management that whatever employment and orders it can obtain nationally can be matched just about equally with export opportunities which Parsons can thereby gain.

I have argued many times that the North-East must help itself, a great deal more than it has done thus far. We have been inclined to do too much complaining and not enough to help ourselves. Essentially, regional policy must always be designed to bring an area such as ours into economic balance with the rest of the country. That is how I have always seen regional policy, and that is how I have always attempted to develop it.

Such inter-union disputes as we have known recently in other industries—whether in Swan Hunter or in the Seal Sands dispute—have done a great deal of harm, and they were very badly timed for the interests of employment and the prosperity of the North-East as a whole.

C. A. Parsons is helping the North-East and is helping the nation at this time. I believe that, through the passage of the Bill and as a result of being given the go-ahead some time ago on stage 2 of Drax B. this great firm has a launching platform for considerable export orders which will benefit our region and our nation well. I therefore wish the firm—and certainly the Bill—every success.

5.37 p.m.

Mr. Arthur Palmer (Bristol, North-East)

As has already been said, the Bill is the rump or relic of a much larger Bill which many of us—perhaps most of us interested in these matters—were anxious to see, a Bill urgently needed for the restructuring of the electricity industry. The pity of it is that this is the second failure in the past decade. There was an attempt in 1970 to alter the 1958 Act, but that attempt failed because of the intervention of the General Election. It is a great pity, therefore, that there should have been this second failure.

I was interested to hear what was said by the hon. Member for Bridgwater (Mr. King). I thought that he was altogether too harsh on my right hon. Friend the Secretary of State for Energy, but I am glad that the hon. Gentleman has joined the widening circle of readers of the Electrical Power Engineer. that famous journal. I edited it for 25 years, so I know it well.

I do not think that the hon. Member for Bridgwater should have made quite such a song and dance about the inclusion of manufacturing powers in the Bill. I know that he quoted my general secretary—like all good trade unionists, I pay attention to what my general secretary says and writes—but there is nothing particularly novel about electricity supply undertakings having residual manufacturing powers. Indeed, I think I am right in saying that under Conservative legislation still in force the CEGB has certain residual manufacturing powers. Certainly, before nationalisation some of the large power companies which had been set up under Private Acts had the right to manufacture in some circumstances. I do not think that that was a particularly controversial matter to be included in the legislation that never was, so to speak.

Mr. Tom King

The hon. Gentleman will know that I made that reference because the Secretary of State made such a point that all this delay had arisen because he had had to have such full consultation. Although there were a number of interventions, I think it will be accepted that we did not have an answer why there had not been consultation on that particular point. I was interested to see that the general secretary of the hon. Gentleman's union made the point of specifically mentioning manufacturing powers. He said that these had never been asked for and that the union would be opposed to it.

Mr. Palmer

I am not doubting that. The electricity supply unions, of course, are not always so directly concerned in these matters. Certainly the supply unions did not ask for it. Whether the unions more engaged in the manufacturing industry have a point of view on it, I do not know. But I take the hon. Gentleman's point. He was citing this as an example of what had gone on in those consultations.

My own view is that, if anything, my right hon. Friend tried much too hard outside this House to get general agreement before presenting this legislation. Perhaps if there had been rather less effort to obtain consensus outside this House, we should have made better progress in the end.

I think that the Government, after the Plowden Report, should have made up their minds fairly quickly what they proposed to do about the report and presented their ideas to Parliament in the form of a White Paper. Then the House could have had the opportunity for a general debate on the White Paper. After that, once the Government had had time for reflection, consultations should have started in earnest with the outside organisations. I believe that Parliament should always come first in these matters. That is why I welcome very much the work that the Select Committee on Nationalised Industries is now doing in establishing a pre-legislative stage. We did at one time have debates on White Papers on the Floor of the House preceding the presentation of a Bill. If I may say so with my usual modesty, I have advocated that course on several occasions since Plowden but no one seemed to pay much attention.

The first part of the Bill deals with international nuclear inspection. There are those who take the view, as I do, that energy use in the world as a whole will continue to grow. It may be modified somewhat, perhaps, but not greatly, by conservation and the so-called benign sources, if they prove to be practicable. My view is that, in spite of that modification, the total installed nuclear capacity in the world will grow in proportion to general energy advance.

There is also the view—I know that some of my hon. Friends and other Members take it—that perhaps the installed nuclear capacity in the world, because of alleged risks and dangers, will arrive at its all time maximum and that then the curve of growth will flatten out, and that the gap will be filled by the other alternative sources.

Whether people take my view or the second view, I think we can all unite on the need for maximum safety and for the strict control of radioactive substances in all their forms. As these radioactive substances—highly dangerous, I agree, in some circumstances—have a military use, the control of nuclear plants of all kinds must inevitably be intimately bound up with international politics. It is important that the control and inspection should be international, and I therefore welcome the first part of the Bill.

Although there may be a flattening out in the growth of nuclear capacity, the fact has to be faced that the number of reactors in the world is rising fast. In 1960 there were fewer than a dozen altogether in the world. Since that time the number of reactors has risen to 500. Most of them are for power production, electricity production, and the number of countries possessing reactors has grown from five in 1960 to 30 at the present time. Nuclear development is obviously proceeding apace for the present at least.

What is happening to the spent fuel in these reactors which are now dotted across the globe? In many cases—perhaps in most cases—the spent fuel is being left at the ponds at the power stations and is not being reprocessed, as in the United Kingdom. In other words, it is just a once-through cycle. It is for this reason that some people argue that the spent fuel is best left where it is, as the plutonium is then for the time being virtually inacessible, and that is perhaps the safest way of dealing with it. That must be substantially the argument of President Carter's advisers.

But, of course, radioactivity decays and the dispersed plutonium, in time, becomes much more accessible. I think the risk there is that with the growth of the number of reactors in the world, we are creating a considerable number of points at which potentially dangerous spent fuel is available.

Mr. Forman

With regard to the once-through cycle, is the hon. Gentleman aware of the very learned lecture by Dr. Walter Marshall which appeared in a recent issue of "Atom", in which he said that the once-through cycle and storage policy has attractions from the non-proliferation point of view, and went on to say how much he hoped that these attractions would be seriously examined in the course of the international nuclear fuel cycle evaluation?

Mr. Palmer

I was about to say that I was hoping that the Secretary of State and the Under-Secretary have read or are about to read Dr. Marshall's paper. I have read it, as has the hon. Gentleman. It was the Graham Young Lecture, was it not?

Mr. Forman

Yes.

Mr. Palmer

I agree that it is a very fair survey of the whole position. I think that the hon. Gentleman would agree with me that Dr. Marshall made the principal point that the real issue is not always so much reprocessing as such but the recording, collection and the control of the plutonium sources. Dr. Marshall is, of course, not only an eminent scientist. He used to be the chief scientist in the Department of Energy and is now deputy chairman of the United Kingdom Atomic Energy Authority. In his lecture he went on to make an extremely constructive recommendation. He argued for a limited number of international centres for reprocessing and plutonium recovery. He suggests that this would make for tighter control and make effective international inspection much simpler. Therefore, I wonder whether the Ministry agrees or disagrees with Dr. Marshall, or does it feel that the idea is too Utopian or impractical? If the idea has a real future it drops what is happening at Windscale into a much wider international perspective.

I turn to the second part of the Bill. As the Secretary of State said in his opening remarks, the decision to bring forward Drax B and the Government's decision to approve the construction of the station was preceded by considerable debate about the organisation, efficiency and capacity of the electrical plant manufacturing industry.

It is no secret that the electricity supply industry itself—and the generating boards in particular, which are the principal purchasers of home market equipment—is dissatisfied both with the present organisation of the manufacturing side of the industry and with its performance. After all, there is a margin of generating plant and of installed capacity over maximum demand. That will not last for ever, and it is already shrinking. This is a golden opportunity for the electricity supply industry to get rid of some of its out-of-date plant, and to advance the combustion efficiency of the British system.

The question of the performance of the manufacturing side is of great importance to the supply side. The truth is that the poor performance of large sets has led the CEGB to lower its future forecasts for the winter availability of generating plant. One can put into a single large machine the entire capacity of a pre-war generating station. The generating capacity of Battersea is about 500 megawatts. There is now a single machine planned with a capacity of 600 megawatts. To lose a generating machine of that size is no light matter.

It could be argued that we should not have moved so quickly to these large sets. But if anything the tendency in the United States and the rest of the world is to advance to even larger sets. If the British industry is to compete these large sets must be made for the home market as well.

Mr. Mike Thomas

Is my hon. Friend aware that in America and other parts of the world standardisation of 800, 1,200 and even 1,300 megawatt sets is not uncommon although the love affair with the very big sets is starting to come to an end? Certainly to compete in foreign markets we must have a good 660 megawatt set standardised and working abroad, which both British companies have done. This is of immense importance. If we were to go smaller we would restrict our opportunities enormously.

Mr. Palmer

I agree with my hon. Friend. As members of the Select Committee on Science and Technology are aware, when we were looking at the question of the choice of reactor and listening to the arguments put forward—by the CEGB principally—for the American light water reactor, the board was able to bring forward costs that were very favourable to that reactor, but on the assumption that they would be combined with 900 megawatt generating sets.

With this tremendous concentration of so much electric power in one machine, obviously the question of reliability is of utmost importance. It cannot be more important. It is the view of the supply side that the problem of poor availability of some of these large sets, which have given a great deal of trouble, stems partly from the use of varying designs from separate manufacturers.

Some progress has been made in rationalisation of the heavy plant manufacturing industry, but there is still a need for the turbo-alternator companies to rationalise their designs. Certainly the CEGB and the South of Scotland Board hoped that Drax B and the reasonable request of the Government that the CEGB should bring forward the construction of that station would provide a lever making towards reorganisation. But at the end the question of immediate employment took supremacy.

I make this plea. The electricity supply industry is tied to British manufacturers. There has always been a great difference in practice between the relationship of the electricity supply industry with its constructors and that of the airline industry—again a nationalised industry—and its suppliers.

British Airways thinks very little of buying aircraft from the United States but the CEGB would hesitate—in fact it has never been known—to buy plant from outside this country, even if ours is not up to standard. Why there should be any difference between the atmosphere and outlook of these two nationalised industries I do not fully understand.

If it is the view of successive Governments that the nationalised electricity supply industry in this country should stick to British manufacturers, there is a big obligation on British manufacturers to see that their plant does come up to the best international standards. If little could be done at a time when some of us thought there was an opportunity—at the time of the Drax B decision—then the question of organisation of the manufacturing side becomes even more urgent in future—particularly in relation to the nuclear stations.

It is no secret that GEC is anxious to loosen its hold on the Nuclear Power Corporation. Some of us thought that it should never have been given such a hold. To be granted without much argument the management contract was indeed an extraordinary business. The Select Committee on Science and Technology whose reports are read, even by the Government, pointed this out and said that if GEC did, at some stage, wish to withdraw or withdraw in part because return on capital was not good enough, we might be left with a financial structure difficult to hold together.

I have asked my right hon. Friend the Secretary of State what would happen when GEC pulled out in part. Would this mean that there would be a larger State holding, or that other manufacturing companies would be enticed in? I also asked whether the management of the Nuclear Power Corporation is the best that can be obtained. I am very doubtful if this is so. One of the weaknesses in the present system—and I hope that this is receiving attention—is that since the establishment of the National Nuclear Corporation, there has been no true direct consumer-contractor relationship.

When designs were being obtained for the ill-fated steam generating heavy water reactor, it was not the generating boards that placed the orders with the corporation, but the Atomic Energy Authority. In the future construction of nuclear power stations—and this applies also in part to coal-fired stations—we need to move back to a system that gives a direct relationship between those who buy and operate the plant and those who design and make it. There should not be so many middlemen. Certainly the AEA should revert to being more of a research organisation and less of a design-management organisation.

6.1 p.m.

Miss Harvie Anderson (Renfrewshire, East)

I start by declaring my interest in this subject, which is duly recorded.

I do not intend to follow the points made by the hon. Member for Bristol, North-East (Mr. Palmer), who spoke with his usual expertise. We always listen with attention to the hon. Gentleman.

I am glad that we have this mini-Bill because the major Bill to which the Secretary of State referred would have been of considerable controversy and might have delayed many matters in areas where we want to see progress. In supporting the Bill, I am particularly concerned with Clause 5 and its wider implications for the future.

I cannot but reflect that I do not know the views of the Central Electricity Generating Board in terms of need. The evidence of the last few years is so conflicting that the onlooker is left uncertain about the extent of the need and about the question of timing with which I am particularly concerned.

The sentence in Clause 5 to the effect that Drax B is being started earlier than it would otherwise have been was referred to by the hon. Member for Newcastle upon Tyne, East (Mr. Thomas), who drew attention to the fact that it is extremely difficult for most hon. Members to judge which two years are referred to in relation to the two-year early ordering. The terms of cash recompense in the Bill suggest to me that a compromise has been reached and that we are talking about a very much shorter period than the often-mentioned two years.

My concern is about the timing of the order because, from the manufacturers' point of view, the fact that the order is being made solves only a small part of the solution to the continuing problem before us. If we must assume the lower rate of economic growth forecast in the Green Paper of February 1978, Annexe 1, the average ordering requirement is 2,800 megawatts a year. The CPRS and the Government have accepted 2,000 megawatts a year as roughly the annual requirement.

It has been insufficiently emphasised so far that the Drax order is equal to only one year's requirement in those terms. We must emphasise to Ministers that we are dealing with only a minuscule part of the great problem facing them and successive future Governments.

This is the first new order for more than three years. We must reflect that the average ordering over the previous decade was for about 2,000 megawatts a year. The strong political point that must be made is that this is a grave indictment of the total stagnation of our economy in recent years.

The current position in the United Kingdom boilermaking industry is that the labour force has an output capability of 2,400 megawatts a year, but it has not been sufficiently emphasised that about 1,000 megawatts of that annual capacity now is on export work. This is a very high proportion in an industry in which we are looking forward to increased export orders, partly as a result of the Bill.

I was pleased to hear reference being made to the China light and power order, which will make a great difference to boilermakers and to the turbo-generating industry. It is a good example of a major order being secured in the face of considerable competition and it illustrates the capacity of the British industry to gain such orders. By the end of this year, there will be very little work left to be done on home orders. For that reason, every day's delay on the Drax B order, for any reason, will widen that crucial gap.

The CPRS report recommended mergers, but this matter is well advanced in the boilermaking industry and I am sorry that reference has not been made to this fact. The two firms concerned are in areas of high unemployment. The work force, rightly, expects to operate the merger without serious redundancies. There has been general agreement and undertakings have been given.

The industry is aware that, by its very nature, it cannot work at half cock. It cannot drop half its work force today, let the rest get on with their jobs and expect to build a power station next year. We have to contemplate an industry which has to work at peak load in order to get its capacity to match home requirement and export potential.

There is in the industry the skill and the know-how and, particularly important, the will in this highly specialised area. The job of hon. Members and the Government is to encourage consumers and the generating boards, as the middlemen, to hold a work force that is capable of building generating stations.

It is sometimes forgotten that the part of the work in which the boilermaking industry is interested arising from this Bill is worth about £200 million in cash terms. In employment terms, those of us who live in areas of high unemployment know what a significant factor a sum of that order can be.

It is wise to look at the Bill, and especially Clause 5, in the light of the alternatives that may face the industry unless subsequent orders are given. Although we are considering, in effect, a reprieve for the industry, we have to look to the future and resolve that the industry shall continue, because it has a useful, indeed essential, role in this country and because it has been shown to have considerable export potential. If manufacturing plants close, we shall lose the export content and the know-how and we shall have to buy from abroad ourselves.

Are we seriously to consider putting the power generating industry into a situation where, unlike British Airways which still has a choice, it will have no choice, but will have to buy abroad? That would be totally unacceptable to the majority of people in this country, irrespective of their political views or their personal involvement in the industry. We have to consider that as a major factor in future and ally with it the fact that we have to repair and maintain existing power stations. I very much doubt whether that expertise would be available to us if we no longer had the manufacturing capacity. Therefore, we have every reason to wish to hold a work force that is as skilled and responsible as any in the country.

I am glad that my hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott) said how important a contribution the industry makes to apprenticeships. I know that a firm which for many years was in my constituency but which is now in the constituency of the hon. Member for Renfrewshire, West (Mr. Buchan) has made a considerable contribution and has excellent liaison with Paisley Technical Training College.

The alternative is that we must consider bringing forward orders. That is what the Bill is about. However, there are other theories with which we in Scotland are blessed or cursed. There are those who look to the future exclusively in terms of wind and waves. They seem to think that power from those sources will become a reality within the timescale of need. Even the most eager expert appears to put the date at 1984. There are other experts with much experience who would put the date a great many years after that.

It seems that many who seek power from the wind and waves regard it as manna from heaven that will fall and bless us all. A curious feature is that few of them believe in Heaven. It seems that they are sometimes rather confused, but that is by the way. I do not believe that wind and waves will fill a gap in electricity generating. We had better look to the future in more realistic terms. I should be glad to think that I shall live in the era of wind and wave power, but I am pretty sure that I shall not. Therefore, the gap between now and when that happy day comes is vital to the industry and vital to the future of our industrial capacity.

We must look to a forward ordering programme that makes sense as the basis for supporting the industry. In addition, we must take a much bolder step. I have no intention of going into the pros and cons, but we must take quickly the bolder step of ordering the fast breeder reactor. The two decisions should be made without delay. They will have to be accepted by both sides of the House. Today we can take only the modest step of supporting the Bill.

6.13 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I shall concentrate my remarks on the first four clauses. I have no intention of entering into the argument about Drax, important though that is.

The first four clauses deal with a matter that in a sense goes way beyond energy questions and electricity generation and impinges on foreign policy and our relations with other countries. As my right hon. Friend the Secretary of State for Energy said, the Bill derives from our accession to the Treaty on the Non-Proliferation of Nuclear Weapons, which came into force on 5th March 1970. The treaty has been ratified by 102 countries, although two of the nuclear weapon States, France and China, have not acceded to it. France has agreed to observe its provisions in practice.

Over and above the countries that have formally signed and ratified the treaty there are many others to which the safeguards apply. The major exceptions are Israel, South Africa, India and Spain. Those who are always anxious to tell us what a splendid freedom-loving democracy Israel is in the Middle East might sometimes encourage that country to accede to the treaty. Equally, those who are so often apologising for South Africa might likewise encourage the South African Government to observe the safeguards that are spelled out in the treaty.

The treaty poses a fundamental problem. I find within it a contradiction that I do not see how we can resolve. In the first place, it provides essentially that the nuclear weapon States shall not transfer to other States nuclear weapons or material for making nuclear weapons either directly or indirectly. In laying down a fundamental principle the treaty states: The inalienable right of all the parties to the treaty to develop research production and use of nuclear energy for peaceful purposes without discrimination". The problem that faces the United Kingdom and other countries is that nuclear power and nuclear weapons go hand in hand. There is no way of saying that there is not a danger in the production and development of nuclear weapons if any country proceeds along the line of developing nuclear power. There is a fundamental problem. There is no inherent wickedness about it. It is a difficulty that the world faced, for example, when the aircraft was invented and developed. There was no way of countries developing civil aircraft without at the same time developing the technology of the bomber and fighter, with all the developments from that. I suspect that we have a comparable problem in nuclear power.

Mr. Palmer

I do not disagree very much with the general trend of my hon. Friend's argument. However, is it not true that the United Kingdom had the nuclear bomb before it had a nuclear power station?

Mr. Hooley

It is true that we may never have had any civil nuclear power if we had not developed the nuclear bomb. That is the point that I am making. The two things go hand in hand. I am not certain whether we would ever have spent hundreds of millions of pounds and billions of scientific and engineering manpower hours on developing nuclear electricity if we had not originally, for military purposes, developed the technique of nuclear fission. What my hon. Friend says does not contradict my general argument that the two matters go hand in hand. It is difficult to see how they can be separated.

The director general of the International Atomic Energy Authority, Dr. Siguard Eklund, made a speech to the British Nuclear Society on 8th December 1977 in which he said: Proliferation can be prevented only by political consensus translated into legal agreements. In other words, we can have the nuclear power system, the development of nuclear power and all the concomitant technology that goes with it, and we can forestall or prevent the danger of nuclear war and the proliferation of nuclear weapons by what he describes as nuclear agreements—the sort of matter that we are discussing.

I have no opposition to the Bill and no opposition to the agreement that we are, in effect, ratifying or putting into effect by the Bill. However, I very much doubt the basic validity of the argument that Dr. Eklund puts forward. I believe that it will not be possible effectively to prevent many countries from obtaining nuclear weapons if there is a general desire to go along the road of nuclear fission to satisfy the world's energy needs.

Despite Dr. Eklund's claim about the validity of legal agreements, unfortunately the safeguards of the non-proliferation treaty did not prevent India from producing an atomic explosion. Whether it is an effective bomb, we are not sure. I doubt whether the safeguards would prevent a bomb from being produced by Israel or South Africa in due course if those countries put their minds to it.

My view is that we must provide the world with alternative energy systems and lure countries away from what Flowers called the Faustian bargain of a plutonium economy. So long as we insist that we depend on nuclear power, the offshoot of nuclear weapons will continue. So long as nuclear technology looms large in our economy and begins to loom large in the economies of other countries, inevitably that technology will lead to the production of the terribly dangerous substance plutonium, and that in turn will lead to nuclear weapons and the greater danger of nuclear war.

But we are stuck with a situation in which civil nuclear programmes exist. We have a programme of our own and other countries have comparable programmes. Therefore, such safeguards as exist through the non-proliferation treaty clearly must be taken seriously by this country and by other countries.

I want to comment briefly on Cmnd. 6730, which is the text of the agreement that the Bill seeks to put into effect. The House should be aware that the Bill is in many ways an enabling piece of legislation. Presumably a vast number of orders will be laid before the House in due course to cover all the details. How far we are to have effective parliamentary scrutiny over this matter remains to be seen, even if, as I expect, in due course we enact the Bill.

Article 5(a) of the agreement provides that there shall be no obstacle to the international exchange of nuclear material". In other words, according to the terms of the agreement, it would be perfectly proper for this country to shift nuclear materials to Japan if the Windscale exercise were to come into being. I wonder whether this is a wise provision. I should have thought that, on the part of the International Atomic Energy Agency, there might reasonably have been some specific safeguards or limitations on the transport of fissile material from one country to another. But Article 5 seems positively to encourage international traffic in this material. I wonder whether that is wise.

Articles 8 and 42 to 45 provide that the International Atomic Energy Agency shall be given design information about facilities concerned with the processing or manufacture of nuclear materials. Will this cover the Windscale operation and the new thermal oxide reprocessing plant, if it is ever built? Has the design at Windscale been cleared with the Agency?

Article 42 specifically provides that in the case of a new facility or part thereof, such information shall be provided as early as possible before nuclear material is introduced into that facility or part. I take it that the oxide reprocessing plant at Windscale is regarded as a new facility. Has that been cleared with the IAEA? If so, at what stage will it be done and will Parliament be informed about it?

Article 14 talks about the possibility of the withdrawal of nuclear material "for national security reasons", given due notice to the Community and to the Agency. That is the withdrawal of nuclear material from the civil programme. If that is done, what checks, if any, on the use of that material then exist? If we notify the Agency that we are withdrawing so many kilogrammes of fissile material, enriched uranium, plutonium or whatever from our programme, is that the end of it? Does it have any possibility of checking what happens to it? Can we ship it off to South Africa and to Israel and let them use it, because those countries are not parties to the treaty?

In particular, will Parliament be told in detail or in general terms whether this has been done? Shall we ever know whether material has been diverted specifically from the civil programme to other use? The agreement as such permits that. Since it permits it, presumably Her Majesty's Government could at some stage do that. I should be interested to know whether, in addition to the agency, the House would be informed of the reasons for it.

Article 25(b) raises a somewhat different and curious point on which I should like some enlightenment. Part of it reads: any party to this Agreement"— there are three: the United Kingdom, the European Community and the agency— may, upon giving six months' notice to the other parties, terminate this Agreement if after consultation with them that party considers that the purpose for which this Agreement was intended can no longer be served. Termination of this Agreement in accordance with this paragraph shall be effective for, and as between, all parties to this Agreement. Does that mean that the European Community could take a decision to terminate the agreement—a decision which would then be binding on the United Kingdom? In other words, could we, as it were, be overruled by the Community as regards our adherence to this agreement and its effectiveness? If I read that article correctly, if for some reason the Community decided to withdraw from or to cease to observe the agreement with the agency, automatically our adherence to it would also fall. I should be interested to know whether that is correct.

Article 76(d) provides: In the event of the United Kingdom or the Community concluding that any unusual circumstances require extended limitations on access by the Agency"— that is, in its role as inspector—we can apply such limitations, presumably unilaterally. That again is a curious provision. Does it mean that the Community could decide separately that such limitations should be imposed? Presumably it means that we can decide unilaterally, if we wish, that the rights of the agency to inspect certain facilities—for example, at Windscale or elsewhere—should be limited, abrogated or undermined. If that happens, will Parliament be told about it? Will the House be informed that we no longer wish the agency to have access to Windscale or wherever and that, therefore, we have withdrawn the facilities from the inspectors and do not propose to allow them any further to have access to the plant?

Mr. Eldon Griffiths

The hon. Gentleman is raising a very interesting matter. Is not the answer to his question basically that the United Kingdom is volunteering to be bound by this treaty, and therefore it reasonably said that it could unilaterally withdraw from what it had volunteered to do? I understand that the Community could not change its position if one of its principal members—certainly the only one of the two nuclear power States within the Community—did not wish it to do so.

Mr. Hooley

The hon. Gentleman may be right. This country can withdraw from any treaty to which it is a party, but a wholesale withdrawal would have major political implications. There would be a great deal of public debate and debate in the House on that matter.

I am more concerned with the possibility of a creeping decontrol, whereby the Department of Energy or the Ministry of Defence may adduce some reasons for limiting the access of the international agency and the right of inspection of the various facilities. Perhaps Parliament would not even be told about it but might discover it accidentally in the course of Questions, or something like that. Therefore, I am concerned that, if Article 76(d) were to be invoked, the House should be properly informed.

In the United States the Senate and the House of Representatives have paid a good deal of attention to the activities of the IAEA and suggested that in some ways its powers ought to be strengthened. They point out that the safeguards, though written out very clearly, cannot in any way guarantee that the theft or loss of nuclear material would be detected. The safeguards provide no protection against attack or sabotage of nuclear installations. There is no compulsion on States to ratify the non-proliferation treaty. There are no sanctions provided if countries which have ratified it or expressed a willingness to abide by it in practice divert nuclear material for illicit purposes.

There is the question of the physical security of nuclear installations and nuclear material. Is it desirable to set certain international standards in this matter and to see that they are observed?

The United States Senate was concerned also about the question of secrecy. A great deal of the information which is transmitted by the individual countries to the agency is secret because the requirements of the statute make it so. However, this means that public information about the effectiveness of safeguards, of inspection and so forth is limited. In the view of the United States Senate, a reduction of secrecy might increase public confidence.

There is the question that a country which transmits nuclear material to another country does not receive inspection information from the agency about its nuclear exports. Therefore, there is the question whether the country which sends off the exports has an adequate assurance that its nuclear exports are not diverted to military or weapon purposes at the other end.

Does this affect our exports to Japan? Would the House be told if the Government decided that they wanted to export nuclear materials to India, Israel, South Africa, Spain or another country that was not subject to safeguards? I do not think that a sane person would oppose the introduction of safeguards against the proliferation of nuclear weapons.

The query that I have raised, and which I think other people might wish to raise, is whether the safeguards are strong enough. I have no intention of voting against the Bill, though it is in many ways an enabling Bill and the essential provisions will presumably follow in the form of orders placed before the House. However, behind the concern about safeguards is the fundamental question posed by the Flowers Report and studies in other countries on whether mankind should run the risk of having a fully-fledged plutonium economy. It is quite clear that if there becomes a general fear that we shall lack energy resources for our daily needs, or if there is a fear in the world at large—particularly in the Third world—that there will not be access to all the energy resources that the growing economy is likely to want, there will be no stopping the nuclear juggernaut.

Fortunately, other resources exist. There is infinite energy available in the sun, the tides, the wind, the waves and the natural heat of the earth. There is no real energy gap. There is a technology gap. We do not at the moment know how to harness these infinitely renewable sources to our daily needs—at least, not on a sufficient scale. The central aim of energy policy should be to close that energy gap and to diverge from the dangerous road of nuclear fission.

6.37 p.m.

Mr. Patrick McNair-Wilson (New Forest)

I do not want to follow the hon. Member for Sheffield, Heeley (Mr. Hooley) into the part of the Bill that deals with nuclear safeguards, but I shall reiterate what he said in his closing remarks. There are alternative sources of energy, but they are not as convenient as those which are known to us now. It is, therefore, those sources of nuclear energy about which we now know to which I shall address my remarks.

If we are tonight to give a Second Reading to a Bill which will make a present of £50 million to the CEGB, we ought to know in more detail than has been forthcoming so far from where the money comes. When the Ince B station was ordered a figure of £25 million for advance ordering was originally put in, which was subsequently increased to £45 million. However, no reason has been given this evening—I should be surprised if a reason was given in Committee—why £50 million is the figure that has been settled on, apart from the fact that it has been pulled out of the air and considered to be moderately all right.

Clause 5 of the Bill is designed to do only two things: to give support to the coal industry, and to the plant manufacturers. The Secretary of State said towards the end of his speech that he would not sanction the ordering of any more oil stations. One must set that against the fact that it was not so long ago that the Ince B decision was taken. Therefore, the first comment that I make is that energy forecasting is an extremely fallible art. We are considering not a station that will be opened next week but one which will not be coming into operation for many years and which when it has been completed will be with us for many more years after that. Therefore, we are taking a decision which will commit the energy policy of this country to a certain course of action. If we are to take that sort of decision, we must ask why we are taking it and whether it is sensible. We could ask why we are giving £50 million to the CEGB for the building of Drax B and not to the CEGB for the building of an advanced gas-cooled reactor. The answer to that question, we all know, is the National Union of Mineworkers.

In order to set the scene fairly we must consider the two facts known at the moment about energy resources. This fallibility of the art leads different people to draw different conclusions about what we now know. In this country oil will peak out in the 1980s and 1990s. That does not mean to say that new reservoirs of oil may not be found in the North Sea, but most of the predictions, with which I agree, suggest that the period between the 1980s and the 1990s will see the best part of the supply of North Sea oil ended. The alternative energy sources are all very well but they will play a very small role until the end of the 1990s. I have nothing but admiration for my own constituent, Sir Christopher Cockerell, the hovercraft pioneer, who is now doing great work on wave power. I wish him every possible success. But the engineering problems which have to be faced in harnessing the waves and, indeed, with the other forms of alternative energy are so colossal that again we cannot look to early help from that quarter for alternative energy sources—probably not before the end of the 1990s. If we go further ahead to fusion, we are into the second part of the next century.

Looking at the world's known energy resources and their likely lifetime, at present extraction rates, we find 90 years for uranium, 48 years for natural gas, 30 years for oil and 235 years for coal. But the odd quirk is that we as a nation probably have coal which will last longer. Some people are predicting that it will last up to 300 years.

We have to ask ourselves what we are to do when the oil is gone after 30 years and when the natural gas has gone after 48 or 50 years. I believe that we have to face the fact that we may not regard it as sensible merely to burn coal under a boiler. At the end of this period, it may be far too precious to do that with it. At the moment, we have such a glut of coal that the National Coal Board is putting low grade coking coal under boilers. It is not carbonising any coal because the British Steel Corporation does not want it. But, looking not long-term but 30 to 50 years ahead, we may be saying to ourselves that coal is too precious to put under boilers.

If that is true, as I believe, we should be asking ourselves for what purpose we want coal. We know that it can be gasified. We know that it can be liquefied. We know that it can be used as a chemical feedstock and carbonised. Alternatively, it can be used as a crude fuel, to be burnt. However, in supporting CEGB and NUM policy to continue coal burning for electrical generation we are talking about the crudest form of burning coal. We are not even talking about the most sophisticated form.

Only a fortnight ago, I was at a seminar given by the Institution of Mechanical Engineers to look at the developments in fluidised bed combustion. We all know that the future is very promising. But we are still in the early days. Grimethorpe is being constructed and will provide some information. There are small industrial plants in operation. But I do not think that there is any question of the CEGB or anyone else regarding fluidised bed combustion as being a likely part of any power station which will be ordered in the near future. Certainly there is no question of it at Drax.

We are burning this fuel not in a wasteful way, because the furnaces are efficient so far as they go, but they are not the most efficient that we could have if we were prepared to develop our coal technology a little further. I believe that this is leading us to create a number of hazards for the population of which people are perhaps not aware. The hon. Member for Heeley and others have argued—and I know that the hon. Member for Pontypool (Mr. Abse) will raise it if he succeeds in catching your eye, Mr. Deputy Speaker—the dangers of the plutonium society, radioactive fallout and all the terrors that these can bring to our people. But is it realised that there is far more atmospheric radioactivity around a coal-fired power station chimney than there is from any nuclear power station? The level of radioactive fallout around a coal-fired power station is 40 times as high as that coming from a nuclear station.

I should like to ask the Under-Secretary whether he can assure us that the CEGB, which is receiving this very large sum of money as part of this advance ordering package for Drax, will take action to make sure that this dangerous fallout at these levels is not only monitored but minimised. Only recently, a senior station planning officer of the CEGB said: More radioactivity reaches the environment from coal-fired stations than from nuclear stations. I do not think that anyone in the CEGB or the National Coal Board has any idea of the uranium content of coal. Therefore, when we are talking about a Bill which not only envisages the building of this new power station but also talks about nuclear safeguards, we should think of nuclear safeguards in terms which affect the ordinary citizen.

We can leave aside the nuclear fallout and the radioactivity and mention the fact that between 200 and 400 tons of lead fall on the population from the chimneys of coal-burning power stations. Can the Minister say whether the nuclear inspectorate monitors radioactive fallout from coal-burning power stations and what the CEGB intends to do about it? Can any figures be produced to confirm or deny that there is much more radioactivity coming out of the chimney of a coal-burning power station than there is out of a nuclear power station?

We are about to embark on another phase of the development of the CEGB's generating programme. I question how far we should commit ourselves permanently or for the foreseeable future to coal burning as part of that generating policy. I hope that the Under-Secretary, when talking about the financing of this station, can tell us about the European Commission's plan to subsidise power station coal and whether we can get some of this money from the European Commission—which is, I understand, to subsidise it to the tune of $12 a ton—when we order a station in advance in this way.

The Drax power station continues to help the justification of the Selby coalfield. As one who has supported the coal industry and the development of Selby, I cannot therefore say that I do not like the idea of a power station on top of a coalfield. But are not we, in terms of the energy equation, expecting coal to be used for a purpose for which in future it will be too precious?

Although I support the Bill, because it merely confirms a piece of history, when in future the Secretary of State talks about energy policy we have to realise that perhaps the days of pouring coal under a boiler are over and done with.

6.49 p.m.

Mr. Leo Abse (Pontypool)

As the hon. Member for New Forest (Mr. McNair-Wilson) anticipated, it is my wish to concentrate attention upon the early clauses of the Bill.

Like my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley), I agree that we must all welcome any attempt which may be made to increase safeguards which are designed clearly to prevent the proliferation of nuclear weapons. However, I thought that the Secretary of State pitched it rather high when he suggested that as a result of our voluntary relinquishment of our existing position and our submission to an international inspectorate, we were strengthening our stance and, as he indicated, going into the front line against proliferation. I do not believe that our welcome to this Bill should be so overeager.

The hon. Member for Bridgwater (Mr. King) drew attention to that portion of the Parker Report which deals with the lack of efficacy of the existing regulations. More important is the authoritative Fox Commission Report in Australia which categorises eight defects within the existing International Atomic Energy Agency. This concluded: These defects taken together are so serious that existing safeguards may provide only the illusion of protection. When failures to have adequate safeguards are fraught, as they are, with such awesome consequences, there is a temptation to indulge in the illusion that we have sufficient or increasing protection. In the scrutiny of the treaty upon which the Bill is based, the existing difficulties have been identified. Once we face the blemishes of the regulating system it is only painfully to acknowledge that the reality is that mankind is walking along the rim of the abyss. We deceive ourselves if we lull ourselves into the belief that the international agency, undermanned, under-financed and staffed—in the view of many informed people—by too many nuclear enthusiasts, operating tardy warning systems will, in its present form, be capable of pulling us back from the ultimate disaster.

I repeat the question asked by the hon. Member for Bridgwater and my hon. Friend the Member for Heeley: what Government initiatives are there to meet the blemishes in the existing international inspectorate system which were identified by Fox and indicated by Parker? In short, is the beefing up, of which the Foreign Secretary spoke, taking place? I trust that we shall hear an answer since the question comes from all sides of the House.

It is more immediately relevant to ask what use is our commitment to these international obligations if the avid search for profit by our nuclear industry is in practice subverting the attempts being made by President Carter and the Dutch Parliament to prevent nuclear weapon proliferation. Our involvement in the German-Brazil nuclear deal makes a farce of the pretension embodied in the Bill that we are committing ourselves genuinely to international control.

The House will be aware—and I hope that the country will become increasingly aware—of the monster nuclear package worth about £2 million that West Germany is preparing to sell Brazil. Brazil has a military dictatorship and refuses to subscribe to the non-proliferation treaty. The deal not only consists of the supply of eight power stations but includes a reprocessing plant and an enrichment plant. After the understandable endeavour by President Carter to persuade the Germans to stop this transaction, fraught as it obviously is with so many menacing consequences, all the efforts have been of no avail.

Into this notoriously unstable sub-continent of South America, Europe, led by West Germany, is calculatingly and for profit about to inject a capacity for making crude atomic bombs. It is a capacity which cannot in any circumstances be effectively inhibited or invigilated by any inspectorate system.

We must also begin to think or our responsibilities. British Nuclear Fuels, the nationalised atomic concern, is enthusiastically colluding without constraint from the Government or protest from the Opposition, to ensure that not only should Brazil have its power stations—it could be claimed that no country should be denied that—but that it should achieve its declared objective. It is an objective which has been expressed to me in an unsolicited letter from the Brazilian Embassy in London. The letter states: Brazil must be sure not to have to rely in the future on the goodwill of others for the supply of the enriched fuel and must be able to produce this fuel in the country. This is the objective of the nuclear agreement with Germany. This goal, openly acknowledged by a country which is not even prepared to submit to the flaccid invigilation by way of the International Atomic Energy Agency, is to be reached by British Nuclear Fuels building for the Brazilian dictatorship—as Mr. Jeremy Bugler in last week's New Statesman so painstakingly described—a nuclear installation called a "Hex" plant. This goal is also intended to be reached by Urenco, an Anglo-Dutch-German company in which our nationalised company is deeply involved as a partner, supplying enriched uranium to Brazil from Capenhurst in this country.

"Hex", or uranium hexafluoride, is the material that must be acquired before one can start enriching uranium for military or civil purposes. It is reported that for some million of pounds British Nuclear Fuels is offering to sell the Brazilian military dictatorship its design engineering and expertise so that Brazil can have its own "hex" plant. Since sinister consequences could flow from the construction of such a plant in Brazil has British Nuclear Fuels discussed the issues with the Secretary of State? If not, why not? The House is entitled to know. If it has been discussed, have the Government given their sanction and if so, why?

We used to have a slogan "Export or die". The slogan of British Nuclear Fuels is apparently "Export and die". The deaths that are likely to take place will not be those of the avid nuclear salesmen or myself but of their children and mine.

I turn to the question of the supply by Urenco of enriched uranium to Brazil. Although the Brazilian dictatorship has refused to be a signatory to the non-proliferation treaty and has also refused to accept the safeguards proposed by the Dutch Foreign Secretary, van der Stoel, which would have meant that all Brazil's nuclear plant and installations could be inspected, it is claimed that a safeguard agreement is being negotiated. The Under-Secretary has written to me to that effect.

The agreement is by no means finalised and the documentation has not yet been made available to the House. At best this agreement provides that the plutonium derived from the enriched uranium which Urenco will send to Brazil, and which in a matter of hours could be converted into bombs, will be stored in an international store set up under the International Atomic Energy Authority. But the frightening intention is to agree to submit to the Brazilian demand that this international plutonium storage regime will not come into effect until Urenco fuel is actually reprocessed by Brazil.

The Dutch people, alerted, as they have been, by the Dutch Press and by the Dutch television, to the meaning of this potentially catastrophic agreement, alerted as the Dutch people have demonstrated by their massive demonstrations, have caused the Dutch Parliament to overrule the view of the Dutch Government and consequently to affirm that such an agreement is unacceptable and that not one cylinder of enriched uranium is to go to South America until an agreement on plutonium storage has first been reached. It would have been thought that our Government would not have been laggard in giving support to such a rational demand, but far from supporting the Dutch Parliament's position, the finance director of Urenco, Wilfred Rooke, has openly boasted that if Holland refuses to permit the enriched uranium to be sent from the Dutch plant at Almelo, it will be sent from Urenco's only other plant, that is, the one in this country, in Capenhurst in Cheshire.

Therefore, I put to the Secretary of State this blunt question: are the Government ready to condone the State-owned British Nuclear Fuels acting as the black-leg, frustrating the initiatives by President Carter and by the Dutch Parliament to prevent a nuclear proliferation inside South America? It is increasingly clear that British Nuclear Fuels is aggressively and zealously searching for foreign business by selling expertise on enrichment and reprocessing, and is perhaps hoping to regain the prestige that it may feel it has lost in the export of power stations.

No doubt the directors have their apologia. They may claim that they have a duty to make money for Britain. But that is not the only test. To put at risk the whole future of mankind is no way of conquering a balance of payments problem. By our Windscale project we tell the world that we are ready to sell plutonium to Japan. By our involvement in the Brazilian deal, we tell the world that we are ready to place plutonium into South America.

We do not need to exaggerate the effects of the Bill. It implements a warning system in the event of plutonium being discovered on its way not for peaceful purposes but for weapons. It has been said to have a warning system, however, that is as rapid as the second-class post during a GPO strike; and yet even this inadequate regulatory system would not operate in Brazil.

So far, in comparison with Holland, Sweden, France and Germany, public opinion and the media have been comparatively muted on these issues. Indeed, it is a sad commentary that when it has an opportunity, as it has today again, to discuss these fateful awesome matters, the House is almost empty yet again. But I believe that there is a growing public awareness, and although as yet opinion in this country in comparison with others has been laggard, I believe that there is a growing realisation that there is a need for greater public involvement in the issues, since all human life may be at stake.

Indeed, next Saturday afternoon the first national demonstration in Britain against Windscale will be taking place. I do not doubt that thousands of young people, literally fighting for their future, will be marching from Hyde Park to Trafalgar Square. I believe that this House will be showing a very dangerous insensitivity, as I believe the present Government will be showing, if it continues to go so easily along a path that seems to be taking us inevitably to a holocaust.

7.5 p.m.

Mr. David Penhaligon (Truro)

I am pleased to follow the speech of the hon. Member for Pontypool (Mr. Abse) because I believe that, together with him, I shall be one of the two speakers at the demonstration on Saturday. No doubt we shall be able to use the opportunity to express a few opinions.

For myself, however, the odd job that I have this evening is to talk quite a bit about what is not in the Bill. There may be many people in the country who believe that the arrangement that the Liberal Party entered into with the Government some time ago was not a great success. One can argue that we have had a good effect or that we have had a bad effect, if one so chooses. However, if ever we wanted living proof that we have had some effect, this Bill must be it, more than anything else.

The original Bill as presented by the Government would have contained 50 clauses and nine schedules. This Bill has six clauses. To me it looks a much better Bill for that. The odd thing is that what has happened is really a breakthrough in the way in which we consider reorganisational legislation in this House. The fact that it has gone to a Select Committee is absolutely first class. I hope that this will be a precedent for a procedure through which such legislation in general terms has to go before it is presented to the House. A Select Committee has the time, the ability, to call experts and, to a certain extent, especially on recent form, is less inhibited by party dogma and is able to look at a Bill such as this at slightly more leisure and, therefore, perhaps to come up with something that causes less strife when it is eventually presented.

It is certainly important for the House to start getting its efforts to reorganise matters on a slightly better footing than they have been over the last 10 years. I am hard pushed to think of anything that this House has reorganised in the last decade which many people, five or six years afterwards, defend as being the right and proper thing to have done. In recent years I think of the health care reorganisation, local government reorganisation and the water authorities reorganisation; and I rather suspect that the Community Land Act will come into the same category before long—complicated legislation rammed through the House by whichever party has had a majority at the time, which then sits back afterwards and regrets at its leisure.

With legislation of this sort, to reorganise entire industries, the duty is very much with those who wish to propagate it to convince people that there is a clear and obvious necessity for such reorganisation. Even if they win that argument, they must then win the argument that what they are suggesting would be better than what has existed hitherto.

The Secretary of State said that the reason why he dropped all the clauses was that there was no majority for them in the House. I am absolutely certain that he is right about that. I rather suspect that he might have a job to get a majority in his own party for some of the clauses if his party were given the opportunity to express a view upon them before they came to the House.

I have no doubt that many of the Secretary of State's colleagues would support the first provision that I want to mention—the power to manufacture. If the Bill had been introduced as it was shown to me in draft form, the new corporation would have had powers to manufacture nearly anything it fancied. All that it had to indicate was that it had some connection with the electricity industry, and it could manufacture it at will. It had power to buy shares in any body corporate. It could mine any mineral whatsoever that had any connection with the production of electricity.

I have spent some time sitting on this Bench waiting to be called and trying to think of some mineral that is mined but does not have some connection with the generation of electricity. There must be one, but I have not been able to think of it. Perhaps it is china clay—although no doubt that would be needed for the paper and the sending out of bills and the general bureaucracy.

I am sure that the draft clauses I have mentioned would get no support from the Opposition Benches. I can speak only for the Liberal Party, but I have no doubt that the Conservative Party will agree with me in that statement. Indeed, I should be surprised if such sweeping clauses had been given universal support by the Labour Benches.

There is one change from the draft Bill compared with that which has been published. There was a magnificent populist clause, for the good of everybody, that the new chairman, when fixing tariffs, was to pay due regard to the customer's ability to pay. It had a magnificent sound about it, but what does it mean? Does it mean cheap electricity for grannies—and, if it does, which grannies? Is an appointed chairman of a nationalised board to decide that my granny is to have cheap electricity while some other granny is not to have it?

Many hon. Members are worried about the effect of increased electricity prices on constituents. Many of us might well examine with interest legislation that aims at remedying the situation, but I do not think that many hon. Members would be willing to give to an appointed chairman of a nationalised board power to decide which people should have cheap electricity and which people should not, but that is what was originally proposed in the Bill.

The Bill proposed to scrap all the regional bodies and it envisaged scrapping the CEGB. All its powers and assets were to be put into a new centralised bureaucratic organisation which would have all the powers relating to distribution and electricity generation from that day onwards. It would have been a new centralised monolith of the first order.

There is one gleam of hope in the Bill. There was some talk of further orders having to be put before the House to give back to the regional authorities the maximum power possible. One of the points that was discussed was in whose judgment that decision would lie, and what powers it related to. But we were not told those powers and we had to wait until a later date. We were being asked to vote for something of which we were not very well aware. We were told continually that it was impossible under the present system to achieve an agreed corporate plan. But there is nothing difficult about getting an agreed corporate plan in the present set-up.

What is impossible in the present setup is to obtain from the centre an imposed corporate plan—a plan to be imposed upon those who do not wish to have it and who have power by statute to resist. All this reorganisation gives more power to the centre and provides the ability to produce a corporate plan, such as occurs in the British Steel Corporation or British Leyland. That was the whole argument given in favour of the Bill.

We knew that it was to have a chairman, and we also knew who was to appoint the chairman. The answer is that he would be appointed by the Secretary of State for Energy. The new central board was to have 25 members and we know who was to appoint those people. Again, the answer is the Secretary of State for Energy. We know that if these 12 regional boards were to come into existence each was to have its own chairman. We also know who was to appoint them—the Secretary of State for Energy. We know who was to appoint all the subsidiary members. Again, they were to be appointed by the Secretary of State for Energy.

I welcome the fact that we were to have a consumer body. The Department of Prices and Consumer Protection was not involved in that. The new chairman was to be appointed by the Secretary of State for Energy. It was to have 25 members all appointed by the right hon. Gentleman. It was to have 12 regional consumer bodies, each with a chairman. I did not think there were enough mates to go round at that stage, but each chairman was to be appointed by the Secretary of State for Energy.

We also know from the Bill that each of these regional bodies was to have 10 or 12 members, all appointed by the Secretary of State for Energy. That is the way we do these things now. There are similar set-ups in gas and other nationalised bodies. This is no excuse for taking this course again.

Mr. Mike Thomas

I would in no way wish to argue that; indeed, I have consistently argued the opposite. I am afraid that the hon. Gentleman has made the mistake of reading the Bill wrongly. Indeed, I do not think that he can have read the Bill at all.

In this context the Bill refers not to the Secretary of State for Energy but to the Secretary of State for Prices and Consumer Protection. The Government publicly announced, long before any of this argument began, that all these bodies, with national and regional chairmen, were all to be appointed by the Secretary of State for Prices and Consumer Protection. This has been the case for two or three years in respect of all similar bodies in all the nationalised industries. That is the Government's policy. I hate to spoil the hon. Gentleman's flood of cumulative oratory, but he was wrong, wrong, wrong, wrong and wrong.

Mr. Penhaligon

Wrong I might be, and an excellent intervention that was, but when I spoke about the matter to the Secretary of State for Energy he did not seem to know about that. He was challenged time and again about the extension of patronage.

Mr. Brian Sedgemore (Luton, West)

Withdraw. The hon. Gentleman has got it wrong. He did not talk to my right hon. Friend.

Mr. Penhaligon

It is true that the hon. Member for Luton, West (Mr. Sedgemore) was not invited to the meetings, but I spent a lot of time talking to the Secretary of State for Energy on this issue. I can understand the Government's embarrassment, but we have stopped that nonsense, and I am pleased that the Liberal Bench has had a strong and effective part to play.

Mr. Sedgemore

The hon. Gentleman took his daughter to a pantomime.

Mr. Penhaligon

The hon. Gentleman refers to my daughter. It was in fact my son, who is five years old, and I had promised to take him to a pantomime.

Mr. Sedgemore

Now he has brought the pantomime here.

Mr. Penhaligon

I refused a meeting with the Secretary of State to take my son to a pantomime. The Minister and the Government thought that was an outrageous thing to do. That probably sums up what is wrong with the Secretary of State's attitude.

Mr. Sedgemore

Now he is acting like the Widow Twankie.

Mr. Penhaligon

There are two provisions in the Bill to which I should like to refer. The first concerns the compensation for what is called Drax B. It should be called compensation for the manufacturing industry, because in real terms that is what it is. I accept the argument—and I have accepted it since last August when this matter was first raised in our negotiations—that there is a good case for compensation, and I am pleased to support those clauses. I notice that nobody else opposes them. Therefore, there is a good chance of their going through the House with no trouble.

The reason I support those provisions is not that I have total enthusiasm for the project for which this money is required but because I as an engineer well appreciate that, if we are foolish enough to let this industry and skill disintegrate because of great changes in energy demands which have hit every concept of future demand, the day will come when we want that capacity back. If we let it fall apart, it will be yet something else that we shall be forced to import from some country which has had the sense to keep its industry together.

Mr. Mike Thomas

Although I may disagree with the hon. Gentleman about the structure of the electricity industry and the way in which the hon. Gentleman dealt with the matter, at least on the question of Drax compensation he is being consistent—in stark contrast with the deathbed conversion which we have just seen on the Conservative Benches.

Mr. Penhaligon

I seem to have upset the Labour side of the House enough today. I shall save any upset for this side of the House for another occasion. All I can say is that we have taken our stand.

The other clauses to which I should like to refer relate to nuclear safety. I was most interested to hear the comments of the hon. Members for Pontypool and Sheffield, Heeley (Mr. Hooley). They both implied that the changes were welcome, as indeed I welcome them, but both hon. Members said that they had sincre doubts whether those clauses would overcome some of the major doubts which I have expressed in this House on many occasions about nuclear power.

The hon. Member for New Forest (Mr. McNair-Wilson) mentioned nuclear fallout from power stations. I think that the hon. Gentleman misunderstands the worries and fears of people who take the same line as I do on nuclear power. I have never for a moment doubted that the nuclear-powered station is as safe as, perhaps in some ways even safer than, many other pieces of machinery throughout the world. I have never once denied that. What has always worried me about nuclear power is its obvious jackpot potential. The most that can possibly happen with a coal-fired power station is that it blows up.

Mr. Tom King

The hon. Gentleman is wrong. He implies that he is quite unaware of the environmental implications of successful operation of a coal-fired power station, quite apart from its blowing up.

Mr. Penhaligon

I have long recognised that.

People's fear of a nuclear power station is of its jackpot potential, its potential for an accident on a major scale, whereas the worst that can happen with a coal-fired power station, as the hon. Gentleman suggested, is the possible long-term effects of carbon dioxide, compared with the possible long-term effects of nuclear fallout, depending on how much a power station produces. The fear that many people have over nuclear power is just how big is the potential jackpot accident.

What do the clauses do about that? I suspect that it is very little. What powers would the new European inspectorate have to check security within, say, Windscale, just to mention a matter that has been debated a great deal of late? How will it succeed in checking that there is no movement of plutonium from civil use to military use?

I recall having exchanges with the Under-Secretary during the passage of the Nuclear Industry (Finance) Bill, which provided the money for Windscale. I remember having quite a long discussion with him on just how good a bookkeeping exercise one could do with nuclear materials. After some exchanges, it emerged that it was very difficult to do it with any accuracy better than about plus or minus 2 per cent. If one had a finished burn with plutonium in at plus or minus 2 per cent., one would have little idea precisely how much plutonium one did or did not have. If the bookkeeping is of that sort of order, even when one is genuinely trying to find out how much plutonium one has, the idea that an outside inspectorate can stop a country transferring some of the material from civil to military use is stretching imagination much too far.

On that clause, I should like an answer to the question just how much power the inspectorate will have to comment on one nation's security methods as against another's. It is a difficult area. I can see the difficulties, but will it be entitled to make submissions to various Governments that in its view the type of security of one country is better than that of another country? If it can, it could well act as a body which gradually pulled up by a ratchet effect the standards of security in the various countries in which it inspects, because it will have more knowledge of what various countries are doing than anyone else has.

I have not heard one hon. Member say that he will call a Division tonight, so the chances are that there will not be a Division. But if there were, what is left of the Bill would certainly receive support from my party.

7.23 p.m.

Mr. Nigel Forman (Carshalton)

I do not intend to follow the hon. Member for Truro (Mr. Penhaligon) into his rather exotic area of phantom QUANGOS, Liberal pantomimes and Cornish grannies. I want to concentrate on this important but modest Bill and to pay particular attention to the first four clauses, to do with the safeguards on nuclear material.

I agree with my hon. Friend the Member for Bridgwater (Mr. King) that those clauses should be supported, because they fulfil in law the obligations to which the United Kingdom, Euratom and the International Atomic Energy Agency agreed in the agreement of 6th September 1976. However, as the clauses and the articles of the agreement make clear, the safeguards are to be implemented by the International Atomic Energy Agency, with the minimum of interference with our own peaceful nuclear activities.

I am concerned that the rights of the IAEA inspectors may be too hedged about with limitations. One has only to look at the relevant part of the agreement, Articles 71 to 84, which constitute quite a large chunk of the agreement, to see just how hedged about those rights are likely to be. Indeed, if one turns back to the earlier part of the agreement, where the general spirit in which it is to be conducted is set out, and looks at Article 5 or Article 9(c), one can detect the flavour of the spirit in which it will be carried out.

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said in an intervention that the fact that we were entering into the agreement voluntarily governed to some extent the approach and the safeguards that we build in, by which I mean here the safeguards on the operation of safeguards. None the less, I think that it demonstrates clearly that the effect of the agreement may be more minimal than some of us would wish.

Furthermore, Article 87 appears to exclude the possibility of our handing over operational control of at least some of our nuclear facilities to the IAEA or other international bodies. An idea that is worth pursuing, as it has been commended in public by Sir Brian Flowers and others, is that it might be worth the Government's while considering, as a token of our seriousness in fulfilling our non-proliferation objectives, the placing of certain of the Windscale facilities under multinational control and operation. It seems to me that the IAEA people would be the logical people to come into that act.

Clause 2(2)(b) specifically refers to Article 83, in which there is strong insistence on the idea of the IAEA's giving advance notice of its inspection routines. It is on this point of advance notice that I want to dwell for a moment. This may not matter very much with us in Britain, because with us it should be largely a matter of administrative convenience whether the inspectors give advance notice of their presence. But it matters very much in some of the less reliable places in the world, in which the agreement will be taken as a precedent, and upon which it will be binding through the IAEA.

It is disturbing, to me, at any rate, that only Article 84 of all the 13 or 14 articles I mentioned a few minutes ago appears to allow the IAEA to swoop in without notice to inspect nuclear facilities. Anyone who has been involved in studying these questions of the alkali inspectorate or other inspectorates, in this or analogous areas, will know that the ability to go in unannounced is often crucial to the satisfactory operation of safeguards. It is important that that ability should be preserved and, I believe, extended.

I am also slightly disturbed, contrary to what my hon. Friend the Member for Bridgwater said, by the rather paltry nature of the penalties for infringement of the agreement.

Mr. Tom King

I, too, said that.

Mr. Forman

I misunderstood my hon. Friend.

We read of fines "not exceeding £1,000" and prison "not exceeding two years". When we are talking about offences—if I may call them that—which would affect the survival chances of millions if things went badly wrong and which could facilitate terrorism on a new and almost unprecedented level of horror, the House should be prepared to be more draconian, not less, in the penalties it makes available. After all, we are dealing with State corporations and corporations which have the power and the wealth of the State behind them, and which will be inspired in their actions by Governments in any case. Therefore, we can afford to be more strict with ourselves.

Mr. King

In case there is any misunderstanding, may I put clearly on the record that the point of view my hon. Friend is expressing now is entirely the one I sought to express?

Mr. Forman

I am grateful to my hon. Friend.

One final and wider point on the nuclear safeguard clauses concerns the doubt in my mind whether the IAEA is getting sufficient financial and professional support from the United Kingdom. This is a point to which a number of hon. Members have already drawn attention. According to an answer to a parliamentary Question which I tabled to the Under-Secretary, there are five times as many people involved in the promotional side of the IAEA as there are in its safeguards department. This imbalance must be rectified. It is particularly important that the Government should honour their commitments in this matter.

I hope that the Under-Secretary will make this matter perfectly clear when he replies since his right hon. Friend has failed to do so. I remind the Under-Secretary that I asked the Foreign Secretary in the debate on 22nd March on the Windscale inquiry report, will the Secretary of State give the House an assurance that Her Majesty's Government will back American efforts to see that the staffing on that side"— by which I meant the safeguards side of the IAEA— is substantially increased in the near future to cope with this additional international ressponsibility? The Foreign Secretary replied: Yes, we shall. We are prepared to take any measures in this area which are aimed at the common objective of reducing what we all believe to be a serious risk to the future of the whole world".—[Official Report, 22nd March 1978; Vol. 946, c. 1669.] I would appreciate the same sort of assurance in the same sort of terms from the Under-Secretary.

It is worth drawing to the attention of the House that the United Kingdom contribution to this agency in the latest year for which we have figures was only £1.625 million—not a lot of money in comparison with some of the sums which we vote so freely in this place. We in this country provide only five professionals for the safeguards department, which is only about 60 strong. When we consider the likely projections of the use of nuclear power and facilities over the coming years, it will be seen that the need is to beef up the safeguards side of the IAEA and for the British Government to put their money where their mouth is. They should commit more men and women and more money to this vital side of IAEA active- ties.It is on that agency that we shall be relying so heavily to make these safeguards effective.

I turn to the other aspects of the Bill which interest me as someone concerned with energy, namely the payments to the Central Electricity Generating Board for Drax B. I understand, from what my hon. Friend the Member for Bridgwater said, that my party does not oppose this compensation payment to the CEGB, mainly perhaps because we recognise the need for the CEGB to look after its own suppliers in the power plant industry in a responsible way. Does that mean that the Government have to see that the CEGB is not out of pocket on an occasion like this and does it mean that they have to do it in such a way that the taxpayer has to find the money indirectly to pay for the consequences of his own understandable unwillingness as a consumer to buy more and more expensive electricity?

Somewhere along the line this expensive game of publicly subsidising waste—that is what it is with power stations of this kind—and unwanted energy production must be stopped. I am not convinced that this is not the time to do it. The Government have made clear in another parliamentary Answer in response to a Question tabled by me recently that without this compensation "major orders" would not have been placed before 1980.

My doubt, which I put to the Under-Secretary, is whether these orders will be placed before then, even under the terms of the new, advanced, timetable. I stress the words "major orders", because those were the words used in the reply. How long would it be after the placing of such major orders in 1980 before the manufacturing work would have begun? In other words, had we been on the original timetable, how long would it have taken between the placing of these major orders in 1980 and the beginning of manufacturing work?

Mr. Mike Thomas

I ought earlier—this is perhaps an appropriate time to do it—to have paid tribute to the CEGB for the way in which it has been able to allow the companies, both boilermaking and turbo-generating, to get forward ordering of raw materials, particularly crucial forgings and so on, so that work can come forward on a rather skewed forward schedule. The hon. Gentleman has missed the point entirely of advanced ordering. Not only has it been advanced in terms of the announcements being made; it has been translated into concrete facts. Has it occurred to the hon. Gentleman that the reason why his hon. Friends on the Front Bench will not now oppose the Bill might have something to do with the fact that all of my colleagues might be going round Newcastle saying that the Conservative Party did not care about the jobs that were at stake?

Mr. Forman

On the contrary, I believe that the rather rapid conversion of the senior echelons of the Government to this new policy followed directly on a certain visit by President Carter and the Prime Minister to the North-East, to a number of rather dodgy Labour-held seats.

Mr. Tom King

If we are to have a succession of interventions from the hon. Member for Newcastle upon Tyne East (Mr. Thomas), who made none of these comments in his own speech and who is now having second or third thoughts, may I ask him to consult Hansard on every occasion when this matter has come up? He will find that our attitude has been entirely consistent. If the hon. Gentleman will do his homework and then cares to challenge me, I believe that I can give him chapter and verse for what I have said.

Mr. Forman

The main point that I wished to make is that the whole exercise seems, on energy grounds, to be somewhat expensive and ill-advised when we bear in mind the present energy predicament. It involves forcing a major nationalised industry to do what it has no need to do in an attempt to bail out industries in the private sector which, in the case of the turbine manufacturers at any rate, seem determined to continue resisting the best strategy for restoring them to buoyancy once more. This policy also involves obliging a major energy supplier to use more of one fuel than it might freely choose to do, rather than encouraging it to pursue the more energy-efficient route to which several of my hon. Friends have referred, such as coal gasification and even in the future, liquefaction.

I doubt, and the CPRS report doubted it, too, whether this Bill does not merely postpone for a few years unemployment in a few sensitive constituencies in the North-East and elsewhere. I wonder whether a future Government will not have to come back to Parliament asking for more money for compensation when the cost in present value terms rises because of lower than expected economic and electricity growth rates.

Mr. Hooley

Surely the more important question is whether C. A. Parsons recognises that this Bill is putting off a certain day and giving it time to diversify its activities into those areas which some hon. Members still deride, such as obtaining electricity from waves, wind and other sources. There is an enormous area of technology to be explored, which our competitors are already exploring.

Mr. Forman

I am in favour of such diversification of energy supplies, but I am not sufficiently knowledgeable to know the extent to which it would be possible for Parsons, for example, to be involved in such matters.

The whole Drax B saga raises wider doubts about the conventional wisdom of electricity and energy policy. For example, is it right or necessary for the CEGB to go on ordering such large, remotely sited energy-inefficient power stations, whether coal or nuclear fired?

Have we reached a point where there may be increasing dis-economies of scale in power generation, as I believe we see in Drax B, Isle of Grain and Dungeness B, to take three examples using different fuels? Should we not be encouraging the electricity industry down the different and more energy-efficient route of cogeneration and combined heat and power? Are there not, in short, other more sensible ways of using the valuable output of the planned Selby coalfield with which this power station is meant to be synchronised?

Many of these concerns were brought out in the recent letter written by Mr. Barnes, the chairman of the Electricity Consumers' Council, to the Secretary of State for Prices and Consumer Protection, with a copy to the Secretary of State for Energy. Since that expression of concern was supported also by the National Consumer Council and has been given significant support in the Chamber today, I only hope that the Government will see whether they can mount an investigation into this important matter.

All these questions underline the need for us to go into these matters in much greater detail in Committee, since there is much to examine. However, in company with my hon. Friends, I am content that the Bill should have a Second Reading today.

7.40 p.m.

Mr. John Hannam (Exeter)

I am grateful for the opportunity to speak in this debate. I shall not take up many of the points so far made regarding Clauses 1 to 4, because I shall concentrate on the Drax B situation and other aspects of the Bill. In my view, the earlier clauses dealing with the nuclear safeguards proposals represent some very sensible steps towards setting up the international monitoring system for nuclear plants.

This is just a wisp of a Bill compared with the original reorganisation of the electricity supply industry. It is really the remains of legislation which foundered on the hidden rocks of the Lib-Lab pact. I am sorry that the hon. Member for Truro (Mr. Penhaligon) has now departed, having engaged in some rather pantomime activities during his speech. It has been said that the biggest Labour-saving device in use at the moment is the Lib-Lab pact. I think that recent by-elections have shown that it is also working in reverse, because the most effective destroyer of the Liberal Party is the present Labour Government.

What has in fact been destroyed in the present virility struggle by the Liberal Party has been the long-awaited reorganisation of the electricity supply industry. What we have before us today is, in effect, an electricity industry remnants Bill, and those engaged in this vital energy sector are rightly angry and up in arms at the way their highly technical industry has been kicked around by the Secretary of State and his side-kick, the hon. Member for Truro.

The trouble is that both the right hon. Gentleman and the hon. Member for Truro are wrongly motivated. One of them is anti-nuclear and therefore adopts a hostile approach to a pro-nuclear industry. The other is a political fanatic who uses each and every piece of energy legislation to further his objective of total State control and participation, and those parts of the original Bill which have been opposed by hon. Members are, of course, those which he has used to promote his objective.

However, I confess that I should not have supported all the proposals in the lost electricity Bill. Basically, I accepted the broad anlysis of the Plowden Report but objected to the centralisation proposals which were being advanced. Nevertheless, the failure of the Secretary of State to consider the implications of his aborted Bill concerns me greatly.

The electricity supply industry cannot possibly achieve unity of purpose until some kind of reorganisation takes place. Many of the energy saving requirements and responsibilities which were to be placed upon this industry are now left in limbo. The only good thing to come out of the whole affair is the examination now taking place in the Select Committee which is looking at the original Bill. I agree completely with the remarks of the hon. Member for Newcastle upon Tyne, East (Mr. Thomas), who is a member of that Committee. As one who wants to see a new system of parliamentary government in which legislation is pre-examined in a Select Committee at a White Paper stage, I welcome this somewhat accidental opportunity for that pre-legislative examination to take place at the hands of Back Benchers. I only hope that it is the forerunner of things to come.

I come now to the Drax B clause. I am a long-term supporter of the Selby coalfield development, as are the Conservative Opposition. I must tell the hon. Member for Newcastle upon Tyne, East that, together with my hon. Friend the Member for New Forest (Mr. McNair-Wilson) and others of my hon. Friends, I have taken part in the consideration of successive coal Bills since 1971, and I have consistently argued for and supported the case and the finance for these developments and for the construction of the Drax B power station. Moreover, when the matter came before the House, my hon. Friend the Member for Bridgwater (Mr. King) supported compensation for the early ordering, if that was necessary. It is, therefore, quite wrong for the hon. Gentleman to say that we are showing inconsistency in the debate today.

However, I wish to make clear that I do not support the indefinitely continued construction of large remotely situated power stations, and I hope that this will be the last of that: kind.

Mr. Mike Thomas

rose—

Mr. Hannam

I hope that the hon. Gentleman will forgive me if I do not give way. There are others who wish to speak, and he has had a fair crack at the whip so far.

In my view, our future use of coal should be in the other directions to which my hon. Friend the Member for New Forest pointed—the new developments in industrial and chemical uses, together with combined heat and power schemes.

My hon. Friend the Member for New Forest spoke of the radioactivity and pollution which come from coal-fired stations. He did not mention the sulphur pollution. In the edition dated 10th March of the Electrical Review, the Under-Secretary of State is reported as giving statistics for this other form of pollution, namely, sulphur pollution, from power stations. The report tells us that the Under-Secretary of State said that he was advised by the CEGB that Drax A power station consumed 3.6 million tonnes of coal in 1976 and emitted about 66,000 tonnes of sulphur. The second part of the station, Drax B, was expected to consume 4.7 million tonnes of coal during the first year of full operation and to emit between 70,000 and 90,000 tonnes of sulphur. That degree of pollution is plainly a matter of great concern, and I hope that the Under-Secretary of State will give us some details of the way in which that sort of pollution also is to be dealt with when the power station is constructed.

I wish to see more flexibility in the electricity generating industry. I hope that we shall have more flexibility in the reorganisation so that we have smaller units giving a more flexible use of our fuels, so that we thereby create better thermal efficiency and we overcome some of the plant engineering problems which inevitably result in higher-cost electricity for the consumer.

In my view, any reorganisation of the industry should be aimed at creating decentralisation, moving to a more flexible system of local competing power boards. This would ensure maximum opportunities for the development of the smaller but more efficient local electricity systems, using every possible avenue for greater thermal efficiency and more rational use of energy. It is that latter concept which seems to be forgotten whenever we talk about power station construction.

I accept that we should still require some kind of co-ordinating central body to administer the grid and to plan the overall strategy for electricity generation.

Reluctantly, therefore, I accept the constructionu of Drax B. It is something which I have always accepted as being an inevitable link between the Selby coalfield and the production and use of that coal in the production of electricity. But I am not at all happy about the way in which this whole affair has been conducted, following the Prime Minister's intervention in the advance ordering, because it seems to have destroyed the chance of an early rationalisation of the boiler and turbine manufacturing industries.

As it appears at present—this was confirmed by the hon. Member for Newcastle upon Tyne, East—we have reached a kind of halfway stage on rationalisation. We have a single merged boiler-making group for the large contracts and we still have the two turbine groups operating, one of which, namely, GEC, is an exceptionally successful exporting firm, with recent large orders in Iran and Hong Kong.

If, as is officially forecast, we shall need an estimated construction programme of upwards of 2,000 megawatts a year, it is vital that we have a construction industry ready and able to carry out such a programme. But I am not convinced that the precipitate early ordering of Drax B was so imperative last year that the rationalisation of the industry had to be forgone. I hope that we shall have more evidence of this need and more details of the implications of the early ordering when we go into Committee.

However, since we have taken the plunge and advanced the order, I accept that compensation should be paid to the CEGB for the extra costs involved in ordering what is in fact at this stage an unwanted power station at a time of surplus capacity. Whether the £50 million maximum allowed for in Clause 5 is the correct figure is for us to discover by cross-examination and debate when we examine the facts in Committee.

I shall support the Bill tonight, although I greatly regret the confusion and dismay caused by the loss of its parent Bill. I deplore the drift over which the Government are presiding in all our affairs, but especially do I deplore the hiatus now created for the electricity industry, which is preventing the development of more efficient energy systems and hence, of course, preventing the supply of lower-cost electricity for the consumer.

I trust that the Under-Secretary will answer some of the important questions which have been raised in the debate. In particular, I hope that he will respond to some of the queries hanging over the future of the coal industry and its relationship with the Central Electricity Generating Board, and thereby ensure the support of the House for his Bill.

7.50 p.m.

Mr. George Thompson (Galloway)

It mostly happens on nuclear matters that I come here to criticise the Secretary of State, and it is rather a pleasure once in a while to be able to agree with him and congratulate him. It would be churlish of me to let the occasion pass.

I welcome the Bill in both its parts—the nuclear safeguards and the provision for Drax B. I very much welcome the decision of the Government to accept inspection by the International Atomic Energy Agency of peaceful nuclear activities. The Government are to be congratulated on setting a good example, and I hope that it will be followed by others. I believe that the more the whole international community is involved in regulating nuclear matters, whether civil or military, the more likelihood there is that reason, humanity and good sense will prevail over the insanity which appears to me to characterise both these scenes at present.

It is infinitely sad and quite crazy that mankind should be spending so much money on armaments—especially nuclear weapons—when people still die of hunger and of sickness that could be cured. In addition, precious unrepeatable resources are lavished on such armaments. I hope, therefore, that Governments throughout the world will learn little by little how to lower their own suspicions, to the extent of eventually permitting inspection of military nuclear activities as well as civil nuclear activities.

The House is well aware of my continuing concern at the production of high level radioactive wastes, at a time when we still do not know how to cope with these wastes over the long period that they will remain dangerous. Admittedly, the provisions of the Bill do not concern themselves with these wastes, and we shall have to await other debates—on the Windscale special development order, and possibly some day on the Flowers Report—before we can deal with them. But I cannot help welcoming every effort towards international inspection in any field.

The hon. Member for Sheffield, Heeley (Mr. Hooley) suggested that the safeguards may not be strong enough, but I think that we can only start where States and Governments are willing to start. There is no way in which we can force them to it, and from humble beginnings we do not know how far we may be able to go in the end.

The hon. Member for Pontypool (Mr. Abse) expressed his concern at what is happening in regard to nuclear development in Brazil. On occasions, when I hear these concerns evoked, I cannot help remembering that in my lifetime, and in the lifetime of all hon. Members present, two of the great States of Europe were governed by men who were quite certainly mad. We always face the possibility that some madman in charge of a State may decide to use nuclear weapons.

I welcome the decision to go ahead with Drax B, partly because of my interest in nuclear energy. I am certain that we should proceed with coal-fired power stations rather than hasten down the nuclear road until we have had full consideration of all the factors involved. I take the point made by the hon. Member for New Forest (Mr. McNair-Wilson) that coal-fired stations produce their own hazards, but in my judgment these hazards are not so great as the hazards of the high-level long-life radioactive wastes.

The Bill will enable the industry which constructs power stations to remain in existence for our future needs. That is bound to be welcome in Scotland as well as elsewhere in the United Kingdom.

For these reasons, I commend the Bill to the House.

7.53 p.m.

Mr. Peter Rost (Derbyshire, South-East)

It is rather puzzling that we have had no proper explanation today why the Secretary of State for Energy has deferred the important measure to reorganise the electricity industry. I suspect that he is sulking because he could not extend nationalisation in the way that he wished, but that surely is no justification for rejecting a reform which is overwhelmingly agreed to be urgently needed and on which there could have been some consensus within the House.

The truth would appear to be that the Secretary of State for Energy has funked the reorganisation. Despite the very powerful case made by the Plowden Committee, and the subsequent delay of two and a half years, he has still refused to introduce a measure which could have received the support of the House.

Most of us would agree that there is need for a single authority rather than the two authorities that we have at the moment. Most Conservative Members would argue that we urgently need more regional autonomy, so that we can have greater flexibility to provide for innovation and the reduction in the energy waste which is accepted in the industry at the moment. Instead, what we are offered tonight does not begin to remedy the problems. It just continues the uncertainty, and in fact creates further uncertainties. It will, in my view, damage very seriously the future viability of the electricity industry and also of the coal industry.

It is for this reason that I find myself very much out of tune with the rest of the House tonight. I do not support the construction of Drax B and therefore, of course, do not support the subsidisation of it. I challenge in principle the whole strategy upon which the Government have given their consent to the electricity industry for the construction of a coal-fired power station which, even if it is the most efficient in the system, will still only burn its fuel at a 35 per cent thermal efficiency.

Drax B is no solution—not even an interim solution—to the problems of the construction industry and the electrical supply industry. It will only defer the problems, which are structural. Drax B will be no solution for the coal industry. On the contrary, I believe that it will seriously damage the long-term viability of the coal industry. Drax B is no solution for the electricity industry and certainly is no solution for the consumer. I regard it as a folly to accelerate towards a dead end by perpetuating an outdated conventional power station technology when the world trend is moving in an opposite direction.

I am not opposed to coal burn. On the contrary, it is because I am concerned about the viability of the coal industry that I believe that Drax B is a ghastly error, unless it is combined with cogeneration of heat and power, but there is no talk of that. I believe that it will prove to be uneconomical, probably even before it is fully commissioned, and this will be so unless it is designed and planned to utilise the reject heat.

Twenty per cent. of the primary energy consumption in this country is wasted in our electrical supply industry. That is equivalent to throwing away over £2 billion a year at current energy costs. Far more seriously, it is an energy wastage equivalent to the total contribution made by natural gas to this country's energy supplies. Put another way, it is throwing away over half the coal consumed in this country, extracted at great hazard to those involved.

Drax B, even at a 35 per cent. thermal efficiency, represents an appalling waste of finite resources, and yet here we have a marvellous opportunity to prevent squander. The Plowden Report in several places highlighted the need for a rethinking of the way in which we produce our electricity so that we can do so more efficiently. Even the Government's own Green. Paper on energy strategy, published recently, strongly recommends that we should make an early start on combined heat and power.

The Government's Energy Paper No. 20—the report produced by Dr. Walter Marshall on combined heat and power—shows that it is cost effective even if we allow a 10 per cent. discounted rate. In this way we could proceed with district heating and combine heat and power to a larger extent than we have done so far. Now the Government recommend in the new White Paper on the nationalised industries that in long-term projects of this kind a 5 per cent. discount rate should be applied. That makes it even more cost effective to cut out wasteful burn of fuel in our power stations.

The folly of perpetuating an outdated and wasteful system of electricity production will cause great economic damage, not just to the electricity industry but to the coal industry as well. We are already bottom of the league in thermal efficiency in Europe—by a substantial amount. Drax B will not help to lift us from the bottom. We are bottom of the league in combined heat and power production, and we produce less electricity by co-generation than most other European countries.

The Under-Secretary himself has been to Sweden and he has seen co-generation there. In Denmark 36 per cent. of electricity is produced in co-generation. In Belgium it is 29 per cent., in Germany 21 per cent., in the Netherlands 15 per cent., in Italy 13 per cent., in France 12 per cent. and in the United Kingdom only 6 per cent.

I do not believe that it will prove to be economically viable for electricity to be produced for much longer, bearing in mind the rising cost of energy in real terms, unless we use that energy and extract more than 35 per cent. from it by converting it into electricity.

Instead of using the subsidy proposed for the Drax B early ordering, and the £600 million plus for constructing the station, the Government should take a broader longer-term view and should use the money to provide incentives that are necessary to reduce this massive 20 per cent. wastage of our total energy resources by stimulating localised co-generation and encouraging partnerships in industry and with local authorities. We should be converting, not closing down, the older low merit order power stations, particularly those in urban centres where they could be converted to pollution-free and high thermal efficiency stations.

The Government should encourage the construction of a heat grid in the infratructure to utilise waste heat. The institutional immomentum which is the main handicap to the promotion of co-generation, compared with our competitors, is being perpetuated by this measure. The Government are encouraging yet another power station's construction—a power station of low efficiency standard. Instead, they should remove the statutory restraints on the nationalised industry and encourage in the private sector, if the public sector refuses to do it, the cogeneration of electricity and heat by changing the tariff structure and giving a fair deal to those who produce electricity and heat more economically than the nationalised industry does today.

Only by encouraging less centralisation in the public sector and allowing the regional electricity boards to get on with it, as the West Midlands is already doing, shall we break out of this chicken and egg cycle. More money should be spent on encouraging the new technology, not just the fluidised bed which is already progressing at Grimethorpe, but the gasification which is under development by GEC in America. This is an advanced type of Lurgi system, on which the National Coal Board already has an agreement on technical development.

A pilot plant is being built there which will gasify coal into electricity producing a 44 per cent. rate of thermal efficiency. The technology that is moving in America and elsewhere based upon gas turbines and coal burn, using Rolls-Royce gas turbine engines as manufactured in Derby, will raise thermal efficiency from 35 per cent. to more than 50 per cent. This is not just a marginal percentage. It represents a massive saving in energy and it is time that the Government gave it some encouragement.

The overwhelming evidence and opinion of those who have authority on these matters is that the future for smaller energy centres is economically viable and that companies in the supply industry and the power plant industry, such as Clarke Chapman at Derby, have a future only if they are prepared to adapt to the way the world trend will force them.

At Derby, where smaller boiler systems are made, the potential market at home and abroad could be vast if we moved away from the concentration on only large power stations. Of course, we must continue to build 1,000 and 2,000 megawatt stations, but these should be nuclear only. As far as conventional fossil fuel power stations are concerned, we should concentrate on the far more efficient combined heat and power energy centres. Unless we move away from the wasteful system that we have now, the coal industry will be the biggest loser.

Because I am a supporter of the coal industry, I am against Drax B. I believe that electricity will price itself out of the energy market in the public sector unless we are prepared to convert coal into electricity more efficiently. If the public sector electricity industry prices itself out of the market, the coal industry will suffer because it is its main customer.

The alternative option, therefore, is for the coal industry to recapture a substantial part of the market that it has lost in the past two decades. It can do this if it gets encouragement from the fluidised bed process and if coal bum and energy efficiency can be increased. Because it will be too costly to burn coal in a few years' time—apart from being too wasteful in energy terms—I am against Drax B.

I want to see a prosperous future for coal, which will be our main fossil fuel when reserves of oil and gas run out. Unless the nationalised electricity industry can adapt itself to that, it will not just price itself out of the market; it will endanger the market for coal. The answer is to convert our electricity in a more efficient way. The technology is there, and it is being done in the rest of the world. It is time we did it here.

A short-sighted solution for short-term political reasons will only lead to the decline of the electricity industry, the coal industry and the power plant industry. The Government are wrong to underwrite the institutional inertia which has existed in the industry for too long. By subsidising outdated and wasteful conventional technology, the Government are encouraging the survival of this inertia which will lead to the rundown of the coal industry.

It is tragic that once again British inventiveness in gas turbines and coal technology is being wasted. If our skill and ability were turned to reducing the waste of energy, we could make a major contribution to the conservation of energy in the world context, but once again this is being rejected. What is even worse is that the damage it will do to the power supply industry in the long term, as well as to the coal and electricity industries—not to mention the consumer and the national interest—is a price that we shall all have to pay and live to regret.

The missed opportunity of encouraging Drax B rather than moving to alternative combined heat and power systems will be a major mistake. Once again we shall be playing a part in missing an opportunity to support innovation and will instead have to watch the rest of the world showing us how to prepare for the twenty-first century.

8.10 p.m.

Mr. Eldon Griffiths (Bury St. Edmunds)

The Bill incorporates an international treaty and, in the second paragraph of Clause 1, is rather badly drafted. I dislike legislation by reference and it is difficult for the House to follow all the complicated terms of the Vienna agreement which is an inherent part of the Bill.

I also want to complain at the start about the inability of the House to deal with the legislation because the Secretary of State, in his perfectly sound speech, hardly gave us a full description of the complex treaty. The treaty contains 92 articles and the attached protocol has an additional 24 articles. With the greatest respect to the Under-Secretary, I doubt whether he has read them.

I hope that this deficiency will be remedied in Committee, because where an important international treaty is annexed to a Bill and will become part of an Act, it is incumbent upon all hon. Members to examine the treaty which we are, in effect, ratifying through the Bill.

I wish to deal with three questions arising on the international front. First, are we, through the Bill, submitting our nuclear power industry to a one-sided international inspection which is not being applied to the Soviet Union's nuclear industry? This may prove to be yet another example of the Soviets agreeing to this type of international inspection in the non-proliferation treaty and not doing it, while we, having also agreed, will bring it into effect in very great detail.

Secondly, in applying these arrangements, may we not be opening the door to international inspectors moving in and out of our nuclear installations and obtaining information which, if it were leaked, could be damaging to the public interest? I have in mind here the problem of nuclear terrorism.

Thirdly, when talking about safeguards, why is there not one word in the legislation about safeguards for the environment?

On the Russian connection, the whole Bill arises from the non-proliferation treaty which established an international regime for inspection. The United Kingdom and the United States, as nuclear weapon States, volunteered to submit their industries to that treaty, partly to encourage non-nuclear States to sign the treaty and partly to give them some assurance that their competitive position in peaceful nuclear development would not suffer.

Why has the Soviet Union not adopted the same approach? This is relevant to the Bill, because the agreement makes clear a number of matters, including, for example, that the inspectors will have a duty to check on the dispersion of nuclear material from our power stations. The inspectors will be able to ask where the stuff is going. If we can demonstrate that it is going abroad for peaceful purposes, presumably the inspectors will be satisfied under the terms of the treaty. If the fissile material is plainly going for civil power or for certain non-nuclear industries, for example, into alloys or ceramics, the inspectors will presumably be satisfied.

However, if the material is diverted for other purposes and the inspectors are not clear where it is going, we must suppose that it will be going for our weapons development. I am in favour of that, but any scientifically trained inspector who can establish how much of the material is going to civilian power, non-nuclear use or export will automatically be able to establish how much of the material is going into our weapons industry. This provides the inspectorate with a means of establishing precisely what level of nuclear weapons we are able to develop in this country.

It may be that the Government intend the international inspection of civilian nuclear power to be a back door to the examination of military nuclear installations, but I doubt whether that is their intention. The House should be aware that within the treaty and the Bill there is a means of international inspectors being able to form a judgment of the United Kingdom's military nuclear power industry.

In those circumstances, I am worried about the possibility of leaks. I do not know how many inspectors will be appointed. As this is a large industry, the number may run into scores or perhaps hundreds. In many cases, they will need to be specialists—physicists, metallurgists and so on—and people with ample training in nuclear power of all sorts.

The protocol provides ample scope for the United Kingdom to reject inspectors whom it does not trust, who are of the wrong nationality or background or who, perhaps, have the wrong training. Equally, the treaty provides that we can put off limits any part of our industry. Having volunteered to accept the treaty, we retain the unilateral power to put certain parts of our sensitive installations outwith inspection if we judge it right to do so.

My anxiety is that if we have a significant number of highly trained international inspectors poking about our nuclear power stations, conducting random tests, there is a possibility of highly sensitive information—which is highly relevant to the security of our weapons industry—being dispersed into a large number of hands. Information will be carried around in the brief cases of a significant number of international inspectors.

It may be that the Minister will say that there is nothing to worry about, but we live in an age of international terrorism and I fear that the day will come when an organisation such as A1 Fatah, or some other group prepared to stop at nothing to achieve its political aims, will not be satisfied with kidnapping an ex-Prime Minister of Italy or hijacking an aircraft but will take the next step of seizing whatever weapons it can lay its hands on in order to blackmail and threaten lawful Governments. That possibility must exist because a young man in the United States has already made a nuclear device. It must exist because information about the technology is widely spread.

My anxiety is that in the Bill we are permitting, nay encouraging, large numbers of highly trained international inspectors to have access to our nuclear technology and secrets and that this information is bound to be more widely dispersed and therefore more capable of being purloined by those into whose hands it should not fall. Therefore, there must be a danger in that regard.

When he replies, I hope that the Under-Secretary of State will say that in Committee he will make it his business to give some assurances that the security checks carried out by the international inspectors who come to the United Kingdom will be, rigorous and that we shall not accept Russian inspectors on the international inspection team. The very least that the Soviet Union can do is itself to agree to the same sort of open inspection that we are placing upon our industry. Until the Soviet Union has done that, I do not see why we should accept Soviet citizens among the inspectors who will be carrying out this important work. I hope that the hon. Gentleman will give such an assurance in Committee, and that he and his right hon. Friend have addressed their minds to the problem of espionage and the theft of technical information that could be useful to the international terrorist.

For some years I had responsibility at the Department of the Environment for all forms of pollution control. I was shocked to hear from my hon. Friend the Member for New Forest (Mr. McNair-Wilson) that the radioactive fall-out from coal-fired electricity stations can be 40 times higher than that from nuclear generating stations. It may be that that is a measure of how little fall-out there is in nuclear stations.

During the period for which I was responsible for the alkali inspectorate I am bound to say that I was never advised that the fall-out from coal-burning electricity stations was anywhere near as dangerous as that. If it be that there still is from our coal-burning stations the amount of radioactive debris of sulphur and other impurities that has been suggested by my hon. Friend, the Secretary of State owes it to the House and to the coalmining industry to demand that the alkali inspectorate—it is an estimable body and one of the most expert in the world—reapply its mind to the problem and advise the Committee how dangerous, if there is a danger, is the policy of pursuing more and more coal-fired electricity stations.

I hope that the Under-Secretary of State will take these matters seriously. I hope that the Committee will be able to give the treaty the scrutiny that it requires. I hope that the hon. Gentleman will meet the point that I have made about the dangers of international terrorism from too wide a dispersal of information.

8.23 p.m.

Mr. Peter Brooke (City of London and Westminster, South)

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) knows a great deal more about the subject of the debate than I do. Therefore, to follow him is a humbling experience as well as a pleasure.

I must declare an interest, as I did a fortnight ago, in the British Leyland debate. I have earned my living as a management consultant. My firm has served Babcock and Wilcox for more than 10 years. The General Electric Company has a robust attitude towards consultants, as in many things, and my connections with it have been tangential. However, GEC, like Babcock and Wilcox, had its headquarters in my constituency. I must make it clear at the beginning of my remarks that there has been no contact with me by GEC, as there has been no contact by me with GEC, on this subject. Nor did Babcock and Wilcox make any approach to me other than the letters written by individual constituents, which I dare say other hon. Members received, at the time of the Drax B order.

I shall speak only about Clause 5. The background to last July's decision is well known to everyone in the House and has been adequately covered already. In the CPRS report Drax B was to be the trigger to the rationalisation of the power plant manufacturing industry. In July, 1977 the Government claimed that the rationalisation was in the event impossible. When the merger between Reyrolle Parsons and Clarke Chapman was announced last June, it was stated that union disagreement was preventing the rationalisation of the industry along the lines suggested in the CPRS report. I am conscious that the Confederation of Shipbuilding and Engineering Unions moved to veto any resulting company arising out of the rationalisation that was not under NEB control.

In passing, it is worth remarking that no such veto was deployed when in February the merger was announced between Babcock and Wilcox's large boiler interests and those power plant boiler interests formerly belonging to Clarke Chapman and now part of the Northern Engineering Industries located at Gateshead. The merger went through Without any NEB participation being involved.

Before leaving the issue of what prevented the rationalisation of the turbine generating industry, I remark that it seems unfair to suggest that the unions alone were responsible for blocking it. I assume that the Parsons management had something to do with it as well.

Mr. Mike Thomas

First, the hon. Gentleman is not quite right about the union position. The union said that there should be no company in which the NEB did not hold the balance of power. It was prepared to have a 50–25–25 company or a 40–40–20 company or whatever. However, it was not prepared to have a company in which one of the existing companies had more than 50 per cent.

Secondly, the hon. Gentleman is quite wrong about what made a new company unacceptable. It was nothing to do with the union. It was nothing to do with the Parsons management. It was that one of the parties to the deal, GEC, would not accept any company other than on its terms.

Mr. Brooke

I accept the hon. Gentleman's first gloss, but his second gloss seems to be a rationalisation of series and strands of discussion going backwards and forwards.

Mr. Thomas

No.

Mr. Brooke

Now that the Drax B decision has been taken, I share the misgivings about the precise logic of the compensation that is being paid, although I recognise that the CEGB may commercially have had the Government at its mercy in the way that the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) suggested that the Government had his constituents at Parsons at their mercy after the CPRS report.

The track record in constructing major power stations world-wide over the past 15 years, and the delays at the Isle of Grain, which have already been mentioned, which form the latest case in point, do not encourage us to think that the CEGB's respective time frames of six years and seven and a half years, depending on the definition that is followed, will be met.

The hon. Member for Newcastle upon Tyne, East argued ingeniously that the delays were themselves an argument for early ordering. However, that argument of itself does not justify compensation if Drax B is not to be generating power before it is needed.

On my understanding there will not be a standard design. I can readily understand that the great engineering department at the CEGB would want to take advantage of the first major order placed since 1973 to advance the state of the art. However, that does not encourage us to think that that will accelerate the delivery of the station rather than delay it. I believe that my hon. Friend the Member for Bridgwater (Mr. King) was right when he said that the £50 million will need considerable scrutiny in Committee, even though the limit to six months to which the Secretary of State referred is an encouraging start. But the £50 million and the reasons for it remain an element in the development of the power plant manufacturing industry, even though some of us may feel that the decision to spend the money last year could have been invested to greater effect on behalf of the industry.

We are left with the turbine generator industry in an unrationalised and still potentially unsatisfactory state. The CPRS called for two measures with shorter-term aims. Both were to be triggers to the rationalisation. One was to be Drax B and the other the provision of additional assistance to exports.

At the time of the Reyrolle Parsons—Clarks Chapman merger, Reyrolle Parsons was said to be contributing to that merger 14 per cent. of its assets devoted to power plant engineering on which it was earning 20 per cent. of its profits on 40 per cent. of its turnover. In the light of the CPRS reference to machine tool capability in turbine generator manufacture, Parsons would look to be under-capitalised for world competition. I acknowledge that I am not sure whether those figures include Parsons' investments in Canada and Australia, which are partly held and which would distort the picture, but the basic point still stands.

Before leaving this issue of capital resources, it is worth remarking that, though Clarke Chapman employed 20 per cent. of its work force at Gateshead—I am quoting from the map on page 39 of the CPRS report—and was said to have 20 per cent. of its turnover in boiler-making for power stations as against 40 per cent. in power engineering overall, only 3 per cent. of Clarke Chapman's assets were in this area of manufacture. Some of the 1,560 employees at Gateshead were employed on heat recovery boilers—Gateshead also sheltered the advanced technology division, which comprises Clarke Chapman's research and development and the headquarters for its power engineering division—but the majority were presumably employed on the manufacture of power plant boilers. Therefore, 3 per cent. of the assets being deployed would not seem to be the right ratio to the number of people involved. I appreciate that machine tool capability in boilermaking is less important than in turbine generator manufacture.

It looks as though the case for rationalisation in the industry remains. I note that at the time of the Reyrolle Parsons—Clarke Chapman merger, Reyrolle announced that the company intended to run down the sector of activities devoted to power plant manufacture and that Drax B would enable this to be done in a controlled and orderly manner". All this is against the background of the export situation to which the CPRS devoted much study. The principal export market for Parsons has been Canada, which has taken 55 per cent. of Parsons' exports in the years 1961 to 1975. One of the worrying things about this concentration on Canada is the vulnerability of Parsons to it as against the orders which GEC has been securing in Korea, Hong Kong and South Africa. Anyone who does business in Canada knows the preference of the Canadians for dealing with Canadian companies. For many years Parsons has derived great benefit through Howden Parsons, in which it owns 49 per cent., being a preferred supplier with Canadian General Electric to Ontario Hydro, which has been Parsons' largest overseas customer.

The loss in the comparatively recent past by Parsons of possible orders both in Calgary and in Eastern Canada worries one about Parsons' present competitive strength in Canada. That anxiety is compounded by the knowledge that Brown Boveri has now bought its way into a Canadian supplier, with all that that implies as a tenderer in that market.

Of course, nothing that the Government can do will overcome a manufacturer who is fundamentally uncompetitive. I certainly am not suggesting that Parsons globally is uncompetitive. But the most worthwhile contribution that the Government can make in the export sphere is to help our industry to deliver a turnkey capability.

It could be said that the industry and the Government have failed in the past—I am taking a 20-year look—to identify the trend towards turnkey projects throughout the world while other countries and companies have overtaken us in their collaboration between Government and manufacturer. The Government have lost the chance of using Drax B to help nationalise the industry. I hope that they will not likewise waste the similar opportunity which export collaboration affords, and I hope that the Minister, in summing up, will be able to give us encouraging news about the further conversations which are said to have been taking place.

8.35 p.m.

Mr. Dennis Skinner (Bolsover)

I have listened to a speech from another Tory Member attacking workers in the heavy manufacturing industry. I have been consulting the Daily Mail about its latest list and I notice that there are pretty much the same names in the list as those who are missing from the Chamber today. It is as well that I, as one of the people who come here more regularly than most, should make representations about what is known as the idle brigade.

Mr. Rost

Did the hon. Gentleman consult the Daily Mail about how many minutes a day that newspaper's representatives attend the Gallery?

Mr. Skinner

I am pleased that the hon. Gentleman has raised that point because we do not agree on a great deal.

Mr. Deputy Speaker

(Mr. Bryant Godman Irvine): Order. We are discussing the Second Reading of a Bill.

Mr. Skinner

I have started to speak on the subject raised by the hon. Member for the City of London and Westminster, South (Mr. Brooke), and I should have thought that I would be allowed to comment on what he said. During the course of the hon. Member's speech there were some asides from the Tory Front Bench. As they were serious remarks I thought that it was my duty to reply. It has taken me two minutes to say what I have just said. I am now in the course of replying to the hon. Member for Derbyshire, South-East (Mr. Rost), one of my Derbyshire—

Mr. Deputy Speaker

Order. I have tried to indicate to the hon. Member for Bolsover (Mr. Skinner) that the remarks to which he was trying to reply were not related to this Bill.

Mr. Skinner

I appreciate that, Mr. Deputy Speaker. However, if everybody in the House was pulled up because he did not relate his remarks to the Second Reading of a Bill, the Daily Mail would be right five times over. The debate would be finished by about 4 o'clock.

Mr. Deputy Speaker

Order. The hon. Gentleman ought to try to relate his remarks to the Second Reading of the Bill.

Mr. Skinner

It seems clear, Mr. Deputy Speaker, that you are to be firm about how the debate is to be continued at this hour. Therefore, I will make the point that I had started to make earlier about what was said by the hon. Member for the City of London and Westminster, South. Here is another Tory Member attacking workers who work by and large in the blue collar industries—in heavy manufacturing. The hon. Gentleman used euphemisms and spoke about rationalisation and so on. What he was really saying was that people in the power construction industry are idle. I am fed up with hearing this.

Mr. Brooke

I assure the hon. Gentleman that that was not my purpose or intention.

Mr. Skinner

That is what came across to me. I am fed up with hearing talk about rationalisation and about people who work hard for a living. Before I became a Member I was engaged in heavy industry and I am able to draw comparisons. I know which is the soft job. It is not the job that I did in the pits and not the job in which Reyrolle Parsons is engaged. I am referring to my job in the House of Commons. There are many volunteers for jobs in Parliament and similar jobs outside. There are not so many volunteers for a job that entails starting work at 5 o'clock in the morning and working three shifts.

It is high time that Conservative Members and Liberal Members who speak about these matters outside—they very rarely come into the Chamber to speak about them—

Mr. Penhaligon

I am present.

Mr. Skinner

There is one Liberal Member here. The hon. Member for Truro (Mr. Penhaligon) has almost disappeared from view. Tory Members and Liberal Members should curb their tongues and realise that the people who produce the wealth of this country are people such as those who work for Parsons and who will be responsible for Drax B, which is referred to in Clause 5 of the Bill.

Mr. Mike Thomas

I think that my hon. Friend the Member for Bolsover (Mr. Skinner) will be even more upset when I tell him what I have to say. While I pay tribute to the right hon. Member for Renfrewshire, East (Miss Harvie Anderson) and the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) for their support in the matter of the Drax B order, I reserve my position on the hon. Member for Bridgwater (Mr. King). My hon. Friend has said that he has been a consistent supporter of the advancement of the Drax B order all along and has asked me whether I can find any evidence that he had not been such a supporter. This is what passes for unalloyed enthusiasm in the book of the hon. Member for Bridgwater on the matter that we are debating on Second Reading today—

Mr. Deputy Speaker

Order. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) has already made one speech.

Mr. Thomas

I think that my hon. Friend wants to hear this.

Mr. Deputy Speaker

That may be, but the hon. Member has the right to make only a short intervention.

Mr. Thomas

Then may I intervene again, briefly? On 18th July, referring to the announcement for which we are voting compensation today, the hon. Member for Bridgwater said: his announcement has been taken in the teeth of the advice of the CPRS, the National Enterprise Board, the CEGB, the Secretary of State for Industry and the Department of Industry … what hope is there for British companies in the export market?—[Official Report, 18th July 1978; Vol. 935, c. 1151.] Now he asks us to believe that he was and is a committed supporter of advancing this order.

Mr. Skinner

I have been present during all the statements about Drax B and about the future of the coal industry, so I have heard the hon. Member for Bridgwater (Mr. King) speak about these matters many times. However, I have noticed a deliberate change of policy on the Tory Benches in only the last few days towards jobs such as those in Leyland. Therefore, I am not surprised that there has been this sudden turn of events in relation to Selby and Drax. It is not all that long ago that the Tory Benches cheered an Opposition Member who attempted to stop a Private Member's railway Bill going through which would have assisted the Selby coalfield and thereby enabled the Drax B project to be more useful when the Selby coalfield was exploited.

I have noticed not only a change of emphasis but a distinct change of policy, and it may be that the Tories have been conducting some market research with the assistance of the advertising firm which they have engaged. It has a foreign-sounding name. It sounds a coloured name to me—Saatchi and Saatchi. Certainly it does not sound very English.

Mr. Rost

Skinner and Skinner.

Mr. Skinner

That is very English. Therefore, I am not surprised by what my hon. Friend the Member for New- castle upon Tyne, East (Mr. Thomas) said.

I welcome this Bill, especially Clause 5. I have a few doubts about some of the other provisions, which I believe my hon. Friend the Member for Pontypool (Mr. Abse) has raised from time to time. Therefore, I am a little hesitant about them. However, I know that the Wind-scale problem is not a matter that we are dealing with at the moment.

The decision about Drax is a welcome move, although a bit belated. The whole project was held up by the intervention of none other than Arnold Weinstock, who seemed to be running various Government Departments at the time. I was getting very upset by this man's meanderings through the various Departments. It seemed to me that he was wielding tremendous power, notwithstanding the fact that the Tory civil servants were doing their best as well to try to wreck Drax B.

I believe that civil servants should be tackled on these matters. I do not agree that they are apolitical and do not become involved. They were very much involved in this matter, and in my view this Bill represents a victory over those civil servants who tried to prevent Drax B from coming into existence. We should remember that. It was not just the politicians and Mr. Weinstock who tried to delay it and to ensure that Parsons men did not get any additional work. It was these civil servants as well, and their role in this affair needs to be put on the record.

Hon. Members should look at this problem more closely. I know that my hon. Friend the Member for Luton, West (Mr. Sedgemore), who is now chief monitor to the Secretary of State, has been involved in looking at the problem of Civil Service power. I think that we should be doing it quite openly and not be mealy-mouthed about it, and I take this opportunity to do precisely that.

Earlier, I referred to the Liberals. This Bill has been delayed not merely because of Arnold Weinstock and the civil servants but because of the Liberals.

Mr. Penhaligon

Will the hon. Gentleman give way?

Mr. Skinner

No. I have not got to the gist of the matter yet. There was a moment when the Liberals fleetingly, between prolonged by-elections, believed that they were wielding some power. At that time no opinion polls showed how badly they would do and no by-elections indicated that they would lose deposits.

In that intervening period they began to develop muscles. The Liberals decided to start flexing those muscles over the Bill which should have come before us. The Bill that we are now considering has been brought to our notice as a result of the Liberals saying that they did not want the package as a whole. It is interesting to note that as soon as we had a further by-election and we could see how the Liberals were doing in the country they began to tell a different story.

Mr. Penhaligon

I recognise that the hon. Member is a constant seeker after truth. The Government dropped 52 of the 60 clauses in the original Bill. We indicated our support last August of the clauses that remain. Never in any negotiations have we wavered in our support of the clauses that remain.

Mr. Skinner

For the past two or three years, apart from the nonsense trotted out by the hon. Member, the Liberals have been engaged in a simple exercise known as a job creation scheme—saving their own jobs.

Mr. Rost

They saved yours.

Mr. Skinner

Mine? The hon. Member would be interested to know that I have spent a great deal of time trying to look after the jobs of those of my hon. Friends who represent seats with narrow majorities. As a result of pressure that I have brought to bear on the Government, we have been able to keep these hon. Members in a position from which they will be able to escape. Perhaps the Tories are now beginning to revise their industrial strategy because they know that the General Election will be decided not in rural Britain but in the industrial areas where the majorities are small. That is why I have been assisting.

Mr. Deputy Speaker

Order. The matter that we are discussing is the Second Reading of a Bill.

Mr. Skinner

I was interrupted by the Liberal Member. I noticed that he was not here at Question Time. I was explaining why we should safeguard jobs of this kind. Every day we hear talk about the need to expand manufacturing industry and save jobs. We hear about the 1½ million people who are unemployed. The right hon. Member for Worcester (Mr. Walker), who is not here today, was on television at the weekend rightly complaining about the amount of money that it costs to keep the unemployed.

Mr. Deputy Speaker

Order. Did the right hon. Member for Worcester mention this Bill?

Mr. Skinner

The right hon. Member was talking about the need to create additional jobs in manufacturing industry. That is what the Bill does. It provides £50 million to ensure that labour-intensive jobs are brought on stream more quickly than the Tories would want, despite their change of attitude. I welcome the Bill in that respect. It will bring about vital additional jobs in certain areas of the country.

It is no good for the Government or anyone else to complain continually about the lack of manufacturing jobs when there are opportunities to make inroads into the serious unemployment problem. This is an example. That is why the Liberals were wrong to delay the Bill. We needed it sooner so that these jobs could be brought on stream more quickly.

This Bill, and Clause 5 in particular, will result in Drax B burning coal. As we know, it is associated with the Selby coalfield. It is at this point that I deliver a word of warning, for which my hon. Friend the Under-Secretary is probably quite well prepared. It is in respect of the question of the expansion of the coal industry. I want to see not only Drax B but many more such power stations as well. My hon. Friend and our hobbling right hon. Friend know that the power station take of solid fuel, even if there is no change, and even taking into account Drax B, will drop during the next two decades from about 60 per cent. to about 50 per cent. That means that, if nothing else is done, there will be pit closures as a result.

My hon. Friend should bear in mind that Drax B should be the forerunner of many more such stations and that we should not get hooked up on the nuclear thing. We ought to expand our coal industry's production from its present 180 million tons, and get it up to 250 million tons.

Mr. Forman

Is not the answer new markets for coal in terms of both new technologies and exports to the rest of the EEC?

Mr. Skinner

Absolutely. The hon. Gentleman was not a Member of the House when we had that disgraceful episode of the Tories, assisted by some of my hon. Friends, dragging an unwilling Britain into the Common Market. Now we have the galling situation of actually selling less coal to the rest of the Common Market after the referendum than we did before it. It is less than 2 million tonnes a year. We must take into account the fact that we are having to take all their skimmed milk and sheepmeat regimes, and all the other products. I am talking about the Bill and the question of expanding the coal markets, and we need to expand them inside the Common Market.

Therefore, I hope that my hon. Friend is paying some attention to this matter and that he will tell the Secretary of State. I know that the Secretary of State is not keen on his Common Market colleagues, and he might be using his recent accident as another excuse not to go to Brussels. However, it is important that the Secretary of State and the Under-Secretary should tell people inside the Common Market that as long as Britain is a member, which I hope will not be for long, we shall demand that they buy more of our coal instead of buying coal from third countries. We are told that we must take their products and refuse to take products from third countries.

Mr. Deputy Speaker

Order. Under which clause in the Nuclear Safeguards and Electricity (Finance) Bill does this come?

Mr. Skinner

It gets on to the question of Drax B and £50 million of taxpayers' money. I am speaking in terms of trying to ensure that taxpayers' money, similar to the £50 million, is used in the future, as well as now, in a way that will assist the indigenous coal industry and will keep our own employment and not export employment. I think that in general terms the Bill is trying to do that, and I am trying to do it in this debate.

Mr. Mike Thomas

I wonder whether my hon. Friend is aware that on the coal argument the Drax power station is being built late, because the two boards agreed, according to the NCB's annual report for 1976–77—and I quote exactly— The two boards concluded that, if the station were to be commissioned in phase with coal output fom Selby, it should be ordered in 1977".

Mr. Skinner

My hon. Friend has been dealing with this matter very closely for a considerable time. It grieves me to think that we have not dealt with it before. I am trying to stress the point that this is only a one-off job and that we need to do more if we are to safeguard the industry's future. Therefore, my hon. Friend the Under-Secretary should not be thinking in terms of the Selby coalfield being used as a reservoir for manpower from pits that have closed in Yorkshire. Arthur Scargill and many thousands of his members, and myself as well, will not stand for that.

The same applies to the coalfield in the Vale of Belvoir. We believe that it is not right that certain Notts pits should be closed, including perhaps Teversall, which would eventually mean a massive movement of miners away from the traditional coalfields to the Vale of Belvoir. We want to see all those pits expanded and we want to see more Drax B type stations taking up those markets. There are more than 30 million tons of coal lying on the pit top. We need to sell that coal and I have given a few examples of how that can come about. Drax B is one of the ways in which that coal may be used.

That is my principal reason for taking part in this debate. I welcome the limited opportunities that exist within he Bill for the coal industry, All I am saying is that we need to do more.

8.56 p.m.

Mr. Hamish Gray (Ross and Cromarty)

We had a very good debate until 20 minutes ago. It is a pity that the hon. Member for Bolsover (Mr. Skinner) was not free this afternoon to sit in and listen to the debate. He might have been able to make some constructive comments. It was a pity because the hon. Gentleman has a great deal to contribute. I have served on Committees with him during which he has made many constructive suggestions. It is sad that at times the privileges of the House are abused by situations such as we had tonight in which the hon. Gentleman did not come out of this engagement in his best light. His remarks this evening are best forgotten and I shall not comment upon them.

This Bill was introduced by the Secretary of State, and we fully accept the reason he cannot be with us tonight. He has a very important engagement and he did us the courtesy of advising us that he was unable to be here for the Government reply.

The right hon. Gentleman dealt first with the original Bill and then dealt with the Bill we are now discussing. The first part of the Bill deals with nuclear safeguard clauses and the second part with Drax. The original Bill did not meet with general approval even before it was presented. The comments made by the Liberal Party and by others who were privileged to see the Bill indicated that those involved showed considerable concern for the electricity supply industry and that they were disturbed by the Government's failure to produce a Bill implementing some of the recommendations of Plowden. I wish to highlight the point by drawing attention to the fact that the hon. Member for Bolsover, having come in and interrupted a constructive debate, has now seen fit to leave. No doubt he will return later, but we shall deal with that situation when he arrives.

My hon. Friend the Member for Bridgwater (Mr. King) criticised the way in which the Government had dealt with the original Bill. I do not think there are many people in the House who would disagree with him. This was a peculiar original Bill. We were led to believe that it would deal with a variety of items including the reorganisation of the electrical supply industry. In fact, it did a great deal more than that and contained certain aspects which were clearly unacceptable to many hon. Members.

One interesting fact is that the members of the Plowden Committee were among the first to voice reservations about the original Bill when devised. Let me quote from The Daily Telegraph of Thursday 13th April referring to the members of the Plowden Committee. I quote from an article by Mr. Roland Gribben: They felt the proposals undermined the reforms they suggested and were highly critical of a decision that would allow Mr. Benn, Energy Secretary, to retain patronage powers to appoint members of area electricity boards. This was substantiated by none other than Mr. Frank Chapple of the EEPTU of whom the same article said: Mr. Chapple said that suggestions from Mr. Benn that civil servants should be appointed to the new body would add bureaucratic nonsense to bureaucratic nonsense. Obviously this Bill was not a starter from the very beginning. It is a pity that the Secretary of State for Energy wasted so much time over his consultations with the Liberal Party, because it was obvious that it would use this as a means of justifying this sordid piece of political intrigue commonly known outside as the Lib-Lab pact. Even if the Liberals had supported it, it was doubtful whether the whole of the Labour side of the House would have gone along with it.

The three principal unacceptable proposals have already been dealt with, and I shall not deal with them further at this stage. However, I repeat what was said by my hon. Friend the Member for Exeter (Mr. Hannam) and the hon. Member for Newcastle upon Tyne, East (Mr. Thomas), that the Select Committee is now playing an important part, one which many of us would like to see enlarged, in pre-legislation proceedings. I think that for the first time Members from all parts of the House can comment on the merit of a Bill in its very early stages, so that the Government know the views of the various parties and people outside the House about a measure before they introduce a Bill.

As my hon. Friend the Member for Bridgwater said, what we really face today is the remnants of the original Bill. The clauses dealing with the right of entry to civil nuclear installations of inspectors of the IAEA, together with provisions relating to the United Kingdom obligations in respect of the nuclear non-proliferation treaty, are very important. They are not matters with which we would take issue, nor are they the kind of stuff likely to pack the Press Gallery. They are perhaps lacking in a certain amount of political sex appeal, but they are typical of the many energy debates that we have, on Bills which usually involve the spending of millions of pounds and the future of thousands of jobs. When the Bills concern the nuclear industry, we as the elected representatives of the people must consider them with the greatest care.

By our decisions we must assure the population that what we are doing is in their best interests. Yet, regrettably, it is all too often only when the miners decide to have a strike, or when the power workers cannot agree a wage settlement, that the subject of energy receives from the Press the attention that it deserves.

When he was translated from being Secretary of State for Industry to the Energy Department, many people suggested that the Secretary of State had been demoted. Those of us who take an active interest in the subject of energy know that it was in fact a promotion, because no subject dealt with in this House is of greater importance than energy. Whether or not we like the right hon. Gentleman's interpretation of his remit, he occupies probably the most important position for this country at present.

The IAEA has two main objectives—to enable nuclear energy to make a maximum contribution to world energy and to prevent the spread of nuclear weapons. I should like to quote briefly from a speech by Sir John Hill at a forum on nuclear power on 11th-12th October last year, when he outlined the second requirement in as succinct a way as possible. He said: the Agency has the great advantage that it is recognised as a promotional organisation endeavouring to find a machinery which will enable civil nuclear power programmes to operate and expand while stopping the spread of nuclear weapons, and not one concentrating on denial measures and with little concern for the effect these might have on nuclear nower programmes. That is precisely what is intended, and it is purely in this light that we are asked to approve Clauses 1 to 4, which deal with inspection of our nuclear establishments by the inspectorate.

Later in his remarks, Sir John said: The Agency maintains records of all source and special fissionable material, that is thorium uranium and plutonium, held by a country for its civil nuclear programme. Checks on these figures are carried out by the Agency's Safeguards Inspectorate". Those who express worry on this subject would find that most of their reservations would be removed if they read this speech in detail.

The nuclear inspection clauses are relatively non-controversial. The nuclear argument was, I thought, well highlighted by my hon. Friend the Member for New Forest (Mr. McNair-Wilson). He put the issue into perspective and asked a number of important questions of the Government Front Bench with which I hope the Under-Secretary will be able to deal in his reply. If not, I hope that he will, as is his custom, write to my hon. Friend. The Minister is one of those Ministers who always carry out their promises to write to hon. Members about matters raised in debate.

My hon. Friend the Member for Carshalton (Mr. Forman) drew attention to the safeguards and the contribution which the United Kingdom can make. This point was reiterated by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), who also drew our attention to the subject of nuclear terrorism. He questioned the requirements of the treaty. It is not for me to explain the terms of the treaty. No doubt this is something with which the Minister can also deal.

Information regarding our own position would also be useful. It is important that the international monitoring of nuclear installations to detect possible withdrawal of material from civil activities should be supported to the full. I welcome the safeguards to protect commercial and industrial confidentiality. We realise the importance of this and fully support it.

There are, however, a number of questions which we shall wish to pursue in Committee. In a few moments I shall deal with the issue of Drax, because this is probably the part of the Bill which causes at least some controversy. While talking of our nuclear establishments subjecting themselves to inspection, I draw the attention of the House, not for the first time, to the excellent safety record which the British nuclear industry has achieved. Our nuclear establishments are already subject to the most stringent examination. They have much of which to be proud. The first report of the Nuclear Installations Inspectorate, entitled "Health and Safety in Nuclear Establishments, 1975–76", is summarised in the March issue of Atom. I should like to quote three small passages.

The first passage stated that: no worker in nuclear power stations in Britain during 1975–76 received a radiation dose in excess of the annual limit set by the International Commission on Radiological Protection. That is a most important statement when we consider the number of people involved and the high standards demanded. The report also referred to the important role played by the major licensees such as the generating boards and British Nuclear Fuels Ltd. in setting and maintaining safety standards. Third, the report said: Details are given of the stage by stage supervision by the Inspectorate of all nuclear projects from early design through construction to commissioning and operation. This role is not complete until de-commissioning and site clearance or closure. That is both interesting and extremely significant for us.

It is noteworthy that the organisation and administration of the nuclear industry in this country has been subject to the most rigorous examination not only by the inspectorate but by every conservation body in the land, from the Friends of the Earth downwards, and it has withstood in splendid fashion the attacks and criticisms which have been directed upon it.

I have no doubt whatever that the cause adopted by those who advocate the nuclear power option for the future is one which this country can back without fear. Although I wholly respect the views but forward today and on other occasions by those who have severe reservations about nuclear power, I say to them now, as I have said in the past, that it is all very well to cast doubt upon nuclear power but, when their arguments are satisfactorily answered by the experts and when they have no reasonable alternative to present within the necessary timescale, I see no purpose in their continuing their argument.

The truth is that, although alternative sources of energy may be available, they are unlikely to be available within the timescale that we require, and a responsible Government or responsible Opposition must at all costs keep the nuclear alternative available. I do not suggest that we should wholeheartedly and without reservation support the nuclear industry to the detriment of all others, but I say to those who cast such doubts upon it that they must produce something more credible than any alternative which they have offered thus far.

A good deal of attention has been directed to Clause 5, which deals with the whole question of Drax. In a very good speech, my right hon. Friend the Member for Renfrewshire, East (Miss Harvie Anderson) told us again why she believed in the future of Drax. I have something to say now to hon. Members on the Government Back Benches, and I am sorry that the hon. Member for Bolsover, who made such a brief visit to the Chamber this evening, has not waited to hear the rest of the debate.

Mr. Mike Thomas

The hon. Gentleman should be grateful for small mercies.

Mr. Gray

I suppose that we should be grateful for small mercies, as the hon. Gentleman rightly suggests, but if the hon. Member for Bolsover stayed he might learn something, and that could only be an improvement.

My right hon. Friend the Member for Renfrewshire, East has been a resoluts, defender of the Drax project for many years. In this connection I mention also my hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott), who, despite a serious illness recently, never allowed those of us on the Opposition Front Bench to forget the importance of this project and continued to fight hard for it.

It must come as rather distasteful to my right hon. Friend and my hon. Friend to hear suggestions from the Labour Back Benches that it was the Labour Party only which was pressing for the Drax project. I see the hon. Member for Newcastle upon Tyne, East getting restless in his pew, but I shall not give way to him. He has already had a fair deal in this debate. He made a lengthy and constructive speech, and he has since made more interventions than one cares to remember. Nevertheless, I acknowledge that he must be itching at the moment to shoot me down.

My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) expressed considerable doubt about the Drax project. Although I fully respect the reservations which he holds, I must tell him that I believe it to be beyond doubt that we on this side have given the Drax project our support, despite all that has been said from the Government Benches. Notwithstanding what has been said about my hon. Friend the Member for Bridgwater, for example, the truth is that we have at no time voted against the Drax project. We have been as much in support of the principle of Drax B as have Labour Members. This has been a nonparty issue, and we are just as entitled to claim credit for what has happened as are Labour Back Benchers.

My right hon. Friend the Member for Renfrewshire, East also raised, quite justifiably, the question of compensation. I think that we would all agree with her on that issue because a number of changes have taken place since the original order was made.

The hon. Member for Newcastle upon Tyne, East made some very interesting points in his contribution when he raised the question of the year-to-year period and the two-year period. We shall need to explore this further in Committee, and the amount of compensation—if, indeed, compensation is to be paid—should also be considered. The £50 million mentioned in the Bill must be taken as a ceiling. I think that we would all like to have that figure fully justified before agreeing to the passing of the clause. No doubt we shall have many more opportunities in Committee of discussing these points.

On the question of compensation, I refer to an article in The Times of 2nd October 1977 in which it was stated that The order now appears to be necessary much sooner than the late 1979 date put for ward by the CEGB during negotiations with the Government". In the same article it was also stated that experience suggests that an early start is necessary merely to get Drax finished on time. I think that we would all agree with that. Experience has taught us that every station has been late. When a major station such as Drax is built, inevitably changes have to be made for which, presumably, the work force cannot be held responsible. There may be design changes or, indeed, changes in technique in the building of the station. It is highly likely that there will be changes in this case. In these circumstances, it is reasonable to suggest that the case for compensation should be examined very carefully indeed.

We have allowed ourselves this evening to get into a general debate about nuclear energy. These questions were thrashed out fairly fully in the Windscale debate. There will also be other opportunities when we shall again be able to debate these questions. I do not, therefore, want to say anything more than I have already said on that aspect.

We shall want to look very carefully in Committee at Clause 5, which relates to Drax. By then we shall no doubt have the advantage of further information and suggestions from those who are most closely involved.

Although it may have been for the convenience of the Government and of the Liberal Party that the original Bill was set aside, it has caused a great deal of apprehension outside this House. There is no doubt that the thousands of people who earn their living day by day in the electricity supply industry feel very let down. They were given to believe that a Bill was to be introduced implementing at least some of the recommendations of the Plowden Report. I do not say that their future has been jeopardised but certainly they have been left in the unfortunate position of wondering what will happen to them.

Mr. Palmer

Would the hon. Member say whether the Conservative Party would have voted for it, either in its entirety or in a modified form?

Mr. Gray

The Conservative Party would have been unlikely to vote for it in its original form. As I mentioned earlier, there were at least three requirements that we found objectionable—Clause 3, for example. But as is the case in these things, had we not been able to defeat the Bill on Second Reading, we would have tried to amend it in Committee. But we did not get the opportunity. Had the Government consulted the Tribune group instead of the Liberal Party they might have found some support. What the nationalist parties would have done, I cannot imagine. I can only speak for the Conservative Party and I can say that we would very much have liked the reorganisation of the electricity supply industry but not at the cost of certain requirements that the Secretary of State wanted to include in that Bill.

I wish this Bill well. We shall look at it closely in Committee and there may be some amendments that we shall hope to make.

9.22 p.m.

The Under-Secretary of State for Energy (Mr. Alex Eadie)

As the hon. Member for Ross and Cromarty (Mr. Gray) has just said, there are aspects of the Bill which I am sure are more suitable for discussion in Committee.

The nuclear safeguards clauses in the Bill have one purpose and one purpose only—to enable us to bring the IAEA-Euratom-United Kingdom Agreement into force. The Bill accords to IAEA inspectors rights of entry to our nuclear facilities, and rights of access to information to enable them to carry out their duties. That is the sole purpose of Clauses 1 to 4.

Perhaps I may go over very briefly the sequence of events which have led up to the need for this part of the Bill. During the negotiations leading to the conclusion of the non-proliferation treaty in 1968, the United Kingdom announced that it would submit its civil nuclear installations to IAEA inspection. The IAEA-Euratom-United Kingdom agreement of 1976 was made in fulfilment of that voluntary offer by the United Kingdom. Euratom became a party to the 1976 agreement as a result of our joining the Community in 1973, after our offer had been made, but an agreement would have been made in any case between the United Kingdom and the IAEA in fulfilment of our offer.

The Bill now before the House will, when enacted, enable us to inform the Community and the IAEA that the internal requirements have been met to give effect to the agreement.

As my right hon. Friend the Secretary of State said in introducing the Bill, its second purpose is to seek parliamentary authority for payments to the Central Electricity Generating Board in recognition of its having advanced the decision to proceed to the second stage of the Drax coal-fired power station.

The Government's decision to ask the CEGB to proceed early with the completion of Drax and the board's response to that decision were made with a view to meeting the immediate needs of the United Kingdom power plant industry. As a result of the Drax decision and the thermal reactor decision announced in January, the industry has in prospect a work load of 4.6 gigawatts for Great Britain in addition to any export orders it might gain. The House will be aware that GEC has recently won an order to supply 700 megawatt generating plant to Hong Kong after negotiations in which the Government played a leading part. We are confident that the Drax order will safeguard a great many jobs over the next few years in the power plant industry at Parsons in Newcastle and Babcock and Wilcox at Renfrew, in the suppliers to these companies and in the construction industry.

The Drax decision is a mark of the Government's confidence in the future of the British coal industry which will be investing in the ultra-modern mining project nearby at Selby.

In acting as we have to safeguard the future of the power plant industry, we are following the previous Administration who asked the board to bring forward its order for the Ince station and agreed to compensate the board for doing so. Both parties have thus had occasion to conclude that early ordering of a power station would serve the national interest.

On the question of the coal for Drax B, I must correct an assumption of the hon. Member for Derbyshire, South-East (Mr. Rost), who spoke about tremendous expense in the use of coal and generating of electricity at Drax B. When my right hon. Friend and I met the CEGB, we were told, unsolicited, that the electricity from Drax B would be among the cheapest generated electricity in the world. In the interests of the power plant industry and the people who mine the coal, I make that correction because it would be unfair to allow the hon. Gentleman's remarks to go unchallenged.

The hon. Member for Carshalton (Mr. Forman) asked about the designation of the IAEA inspectors. The safeguards agreement provides that the agency shall give the United Kingdom and Euratom details of each inspector proposed to be designated to visit United Kingdom facilities and the United Kingdom and Euratom will have the right to reject any proposed designation. In addition, Euratom and the United Kingdom will have the right to have IAEA inspectors accompanied during their inspections by Euratom inspectors and by representatives of the United Kingdom.

The hon. Member for Bury St. Edmunds (Mr. Griffiths) raised a number of issues, some of which, as he conceded, are more appropriate for detailed examination in Committee. I do not blame the hon. Gentleman for not being in the Chamber. He has been here for six or seven hours, and I do not complain about his absence now.

The hon. Gentleman asked about the scope of the inspections. Design information on the civil nuclear facilities in the United Kingdom will be sent to the IAEA safeguards inspectorate. This information will detail the type and flow of nuclear material in each facility and the nuclear material accountancy and control methods applied. This data will be studied by the agency and in conjunction with Euratom and the United Kingdom, it will draw up a facility attachment for each individual facility which will set out in detail how that facility will be safeguarded—that is, record keeping, reporting procedures, the scope and frequency of inventory taking and the methods of inspection and the frequency and intensity of inspections.

On large plants the amount of nuclear material processed may be sufficient to allow for continuous inspection, but, on smaller plants, inspections may be at intervals. Here an inspection would consist of visiting the plant, updating the most recent report, visiting the process areas to sample, measure and count items as appropriate to establish the physical presence of the nuclear material detailed in the accounts. If there is a continuous inspection regime, there will be a continuous system of verification.

I felt that it was necessary to deal with those procedures, as the hon. Gentleman spoke at great length about accountability, and about checks and balances. I therefore felt that it was in the interests of the debate that I should answer those questions. I have noted some other questions that he asked and I shall answer them by letter.

Mr. Forman

Article 84, on which I laid some stress, deals with non-notified visits by the inspectors to our nuclear facilities. There is an apparent paradox in the article whereby it lays out the possibility of non-notified visits by the inspectors and then states that the agency shall advise the United Kingdom and the Community periodically of its general programme of announced and unannounced inspections, specifying the general periods when inspections are foreseen. Does that mean that the inspections are announced or unannounced?

Mr. Eadie

I should prefer to write to the hon. Gentleman about the procedures he is questioning. I may come to the point this evening, but I give the undertaking that I shall write to him.

I promised that I would answer on behalf of my right hon. Friend the question of the hon. Member for Bury St. Edmunds about the USSR. Has the Soviet Union made a similar offer to submit to the IAEA safeguards? The answer is that it has not. We should welcome it if it did. However, a nuclear weapon State is not required to accept safeguards. The purpose of the United Kingdom's and the United States' offer to place their civil activities under the International Atomic Energy Agency safeguards is to show that the non-nuclear weapon States would not suffer any commercial disadvantage by becoming party to the NPT and being subject to International Atomic Energy Agency safeguards. The offered agreements do not affect the national security or defence interests of the United Kingdom or the United States.

The hon. Member for Bridgwater (Mr. King) indulged in some remarks about the legislation that never was, if I may put it that way. I do not want to deal with that, because I think that it has been adequately aired already. I may deal later with some of the assertions made by the hon. Member for Truro (Mr. Penhaligon).

I noted that the hon. Member for Bridgewater gave positive support to the power plant industy. When introducing a Bill of this sort it is necessary to realise that the confidence of the industry means a great deal. I think that there should have been a commitment by the hon. Gentleman of support for the power plant industry. In the course of replying to the debate I do not want to say who did what, who is stronger or who is weaker. It is better that the industry should know that it has support.

In the course of his remarks the hon. Gentleman mentioned the question posed by his hon. Friend the Member for Carshalton, drawing attention to the passage in the Parker Report which stated that safeguards could and should be improved. The question was what is being done to beef up the safeguards. The United Kingdom is extremely interested in the beefing up of the International Atomic Energy Agency's safeguards as are the other member States.

We are certainly seeking ways in which to help the agency: for example, training inspectors, providing equipment and making available advanced nuclear faci- licities in which to develop improved safeguard techniques. The IAEA is now putting forward proposals to member States for an increased budget and a significant increase in the numbers of inspectors. The United Kingdom is sympathetic to these requests and will work towards meeting them.

The hon. Gentleman mentioned the question of coal exports and the Community. We have had these exchanges across the Floor of the House before. I have always made it perfectly clear that we are a member State of the EEC and that we have the largest coal industry and the cheapest coal in Europe. I think that, in the interests of all countries, we should have learned the lesson of the 1973–74 Yom Kippur war when countries were placed in great difficulty because they lacked supplies of indigenous sources of energy.

If the Community is supposed to mean anything, I believe that it should develop its own indigenous sources of energy. I could probably devote all the time at my disposal to the question of what the Community should do about sources of energy. It would be a pity if the memories of the member States were so poor that they could not realise that it is in the interests of the Community that, to use the hon. Gentleman's words, we should beef up our indigenous sources of energy and that coal should play a predominant role. We know that probably 40 million or 50 million tonnes of coal are coming in from third countries.

The hon. Gentleman asked whether I could assure the House that the Department of Energy would pursue this matter. I certainly give that assurance. We shall certainly pursue the matter. Indeed, I have already made two speeches at the Council of Ministers on this issue.

I hope that the hon. Gentleman does not mind my spending time on dealing with his speech. It was an important speech, and I hope that his hon. Friends do not think that I am spending too much time on it. The hon. Gentleman mentioned research and development. I am replying to him on behalf of my hon. Friends and on behalf of the Department of Energy.

I agree that we should be looking for other markets for coal. I am pleased to be able to tell the House that I hope at the beginning of next month to publish a working party report on research and development—coal technology. I have been chairman of this working party. I know that the report has the support of the Labour Party, but I should like it to have the support of the Conservative Party. The report deals with the question of other markets for coal. We do not believe that coal should be used simply in industry and power generation. It is in the best interests of the nation, as was said by the hon. Member for New Forest (Mr. McNair-Wilson) and by the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott), that we should be considering other markets and examining the question of coal derivatives.

In the report we propose to deal with the efficient burning of coal, how we can use coal better and how we can deal with some of the environmental factors that have been mentioned during the debate. We also deal with the question of synthetic natural gas.

The hon. Member for New Forest mentioned the expected lifespan of fossil fuels such as oil and gas. The working party report will try to signpost the road along which the nation should go on the question of the liquefaction of coal. My hon. Friends will be interested in that. I had it drawn to my attention that the Labour Party first suggested the idea in 1934.

We are told that we owe some of our financial strength to the fact that we have oil. The hon. Member for Ross and Cromarty understands what I mean. It has been suggested that we have enough coal to last 300 years. If we consider the liquefaction of coal, the financial strength does not any longer become financial strength simply because we have got oil. There can be a continuity of this financial strength if we adopt the proposals in the report.

My hon. Friend the Member for Bristol, North-East (Mr. Palmer) mentioned the recent lecture given by Dr. Walter Marshall, in which Dr. Marshall suggested that in the interests of nonproliferation nuclear facilities such as reprocessing should be concentrated in a limited number of countries. There would be advantage in that kind of development. The International Atomic Energy Agency has recently published a report on multinational fuel cycle centres which would fulfil that role. This proposal is being examined in the international fuel cycle evaluation. We are very interested in it and are playing an active role in that part of the evaluation.

Perhaps I might now take up a comment of the hon. Member for Bridgwater when he asked about orders under the 1972 Act. I have a note before me to the effect that under the 1972 Act the main order was Ince B. However, whereas the argument was that it was only Ince B, in fact one of the Inverkip units was also advanced, as was the Leicestershire gas turbine station. I do not make that as a debating point. I mention it only for the record.

Mr. Tom King

The Minister is actually making the point to his hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas), who suggested that there was no provision made for compensation for advanced ordering. The Minister has very kindly confirmed my point.

Mr. Eadie

I am not too sure that the hon. Member made his point there at all. In the course of our exchanges it was suggested that only one was involved. I think that I have demonstrated successfully that there was more than one—[Interruption.] Perhaps we ought to leave it at that.

The hon. Member for New Forest referred to the level of background radiation which can be attributed to coal-fired power stations, a point taken up by some of his hon. Friends. Clearly the level of background radiation varies from place to place in the United Kingdom. Some part of the background radiation can be attributed to residues from the burning of fossil fuels in power stations and elsewhere. I can assure the House that levels of emission from power stations are monitored carefully and are known to be well within established safety limits.

Mr. Patrick McNair-Wilson

Can the Minister confirm or deny my statement to the effect that the level of radiation coming out of a coal-burning power station is 40 times greater around the power station than that coming from a nuclear power station?

Mr. Eadie

I noted the hon. Gentleman's point. It can sound worse than it really is, and it requires some qualification. I expected the hon. Member to respond to the explanation which I made, and I shall ask the chairman of the Central Electricity Generating Board to write to the hon. Member.

My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) quoted from the report of a recent address by Dr. Eklund, director general of the International Atomic Agency, about proliferation. I should like to quote a further passage from that address which puts nuclear safeguards in the right perspective. Dr. Eklund said: This of course raises the next question as to how effective these safeguards are. Without going into details I would like to state that the International Atomic Energy Agency safeguards provide a reasonable degree of assurance that the inspectorate is carrying out its NPT obligations. This degree of assurance is constantly being enhanced as we gain experience in this pioneering endeavour of applying international controls to a particularly sensitive area of the industries and research establishments of so many countries. Those remarks sum up well the way in which we should regard the steady improvement which we hope to see in the effectiveness of the safeguards.

It has been drawn to my attention that I have been speaking for more than 26 minutes. I do not wish to take up more than the time that was agreed. I should like to write to many hon. Members—

Mr. Abse

I trust that the Minister is not suggesting that the issues that I raised should not be publicly answered and that he should not address his mind to them. There is a sinister connection between the Brazilian contract and this country. This requires an answer. It must not be dodged by letter writing or by filling up the time when there is nearly another ten minutes left of the debate.

Mr. Eadie

I have no objection to speaking for another 10 minutes. I have never dodged anything in my life. I was trying to accommodate the House. I have not been filling up time, and I have answered some important questions. I hope that my hon. Friend the Member for Pontypool (Mr. Abse) will withdraw his remark. I have carefully noted what he said. I hope that on reflection he will withdraw his remark.

Mr. Abse

Let us deal with it.

Mr. Eadie

I thought that my hon. Friend would take that attitude. He spoke at length about the various nuclear contracts that are under negotiation with Brazil. The United Kingdom is party to two of those contracts. The first is the contract between BNFL and Brazil for a "hex" conversion plant. That contract will be subject to the conclusion of a safeguards agreement which is satisfactory to this Government. The Secretary of State for Energy and the Foreign Secretary are aware of these negotiations with Brazil, and I can assure my hon. Friend the Member for Pontypool that the contract will not go through unless the conditions on which we are insisting are fully met.

The second contract is between Urenco and Brazil for low enrichment of uranium for Brazil's nuclear power programme. That contract also will be subject to safeguards, but, in addition, as the Foreign Secretary said during the debate on the Parker Report, the plutonium eventually derived from that enriched uranium will become subject to some form of internationally controlled storage.

I said that I would try to conclude my speech within the time set. I therefore commend the Bill to the House. As hon. Members know, we support wholeheartedly the safeguards regime administered by the International Atomic Energy Agency. These are the front line of defence against the proliferation of nuclear weapons. We recognise that international safeguards cannot by themselves guarantee to prevent a country from acquiring nuclear weapons technology. But we believe that safeguards can be made to provide sufficient and timely warning of the diversion of nuclear materials from civil use to enable other countries to take action.

By offering to submit United Kingdom civil facilities to International Atomic Energy Agency inspection, we are participating in a system which will, we believe, become progressively more effective in deterring other countries from developing nuclear weapons.

As regards the Drax provision, I invite the House to support the confidence that the Government have shown in the future of two key British industries, namely, the coal industry and the power plant industry.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).