§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thompson.]
10.41 pm§ Mr. Mike Thomas (Newcastle upon Tyne, East)The nuclear industry in Britain over the past quarter of a century has had, to say the least, a chequered career. I make no apology tonight for raising the matter again. The Minister will know well of my interest and that of my constituents who work at the turbine generator manufacturer NEI Parsons. He will know as well of the industry's importance for the North-East as a whole, where 8,000 jobs will still depend on power plant manufacture by the end of 1981, some 2,300 less than when the Government took office less than two years ago. I make no partisan point on that. Employment in the industry has declined under successive Governments. However, the fact that by the end of 1981 there will be fewer than seven jobs where two years ago there were 10—a reduction of 35 per cent. in the work force in power plant in the North-East—cannot but be of major concern in an area like Tyneside, with its desperate unemployment problems.
However, that is not the main burden of the matter that I wish to raise this evening. After the nuclear order famine of the last decade, the Government, endorsing the approach of their predecessors, announced in 1979 their nuclear thermal reactor policy. I share the Government's view that uncertainty as to the future costs and availability of fossil fuels by the end of the century must dictate a major nuclear programme if long-term energy supplies are to be secured and the energy balance got right. I also share their view that a reconstruction of the National Nuclear Corporation is essential if we are to carry through such a programme successfully.
It is about the manner of the Government's implementation of these decisions that I wish to question the Minister. In December 1979, the Secretary of State announced the Government's decision to build two further AGR stations at Heysham and Torness, to seek to build a PWR station, subject to consents and safety clearances, at Sizewell, and to plan to order, depending on electricity demand, one nuclear power station a year in the decade from 1982 or, in other words, about 15 GW of capacity over 10 years.
As far as the two AGRs are concerned, now that the long delayed orders have been placed, I wonder whether the Minister could first of all tell the House why there was this much protracted delay and in precise terms what he estimates it has cost in job opprtunities in the industry, not only in the North-East. Just as important, why have the Government hardly had a good word to say for their own decision to build on the excellent experience of the AGRs at Hinkley and Hunterston, and allowed those black propagandists who are always ready to run our country down, especially if it is in their own commercial interest, to peddle the myth that the AGR experience has been wholly bad for the British nuclear industry?
Will the Minister confirm tonight that the reasons for the Government's decision were good ones? Will he also confirm that the design the new AGRs will be based on is cheap? In capital terms, Hinkley and Hunterston will have 1008 cost, at most, about £200 per KW in historic cost terms after allowing for interest charges and delays; and operating costs, including capital charges, even during the first two years of commissioning with the inevitable teething troubles in working with a prototype, were only at the level of coal-fired plant, and now that the stations are operating nearer to optimum load they are considerably cheaper. The Minister should have no difficulty in confirming these facts. He only has to consult the CEGB and SSEB published annual reports laid before his right hon. Friend to do so. May I also perhaps tempt him to agree with me that it is a little ironic that those who have been busy building, or rather failing to build, the other two AGRs to these capital cost and operating standards should be those who constantly tell us, even in evidence to Select Committees of this House, that the AGR programme is. a costly millstone around the country' neck?
What do the Government suppose to be the morale and motivation of the highly skilled and dedicated work force in Parsons in my constituency, or at the boilermakers Clarke Chapman in Gateshead—I see that the hon. Member for Gateshead, East (Mr. Conlan) is here on their behalf—if Ministers announce orders and then fail to place them, while jobs are gratuitously lost and carefully built up technical teams threatened with disbandment? What does it do to morale—and, by the way, to export prospects—if in placing the orders the Government fail to speak up boldly and proudly for the merit of their decision and the reasons for it? I hope that the Minister will take the opportunity to put that right this evening.
But none of that is to argue that the Government's decision also to pursue the PWR option is necessarily a bad one, although I must confess I find it a little hard to follow their logic to a satisfactory conclusion. If the objective is, as stated by the Secretary of State, to establish the PWR as a valid option, will the Minister tell us tonight when the Government expect that objective to be achieved? The CEGB talks of major new plant orders awaiting the outcome of the Sizewell inquiry—more delay there no doubt, too. Delay seems to be a special refinement in this game. For Drax B, I seem to remember, the then Government even agreed to pay compensation to the industry for ordering "early" a station which was in fact ordered two years late. But we will pass over that.
But surely we can evaluate the difficulties, cost and success in operation of a British PWR only when we have one running. That cannot be before the 1990s now, and in the meantime the truth is that any assumptions made about PWR in the interim—other than on whether the CEGB can get planning and safety clearances for it in the face of the legitimate concerns of local people and the environmentalists, which the Sizewell inquiry will presumably resolve—will be just as likely to be proved wrong as were the assumptions about the first AGRs or indeed about the Isle of Grain oil-fired station—which is in fact a far greater scandal than any part of the nuclear programme. Yet the Government allow to grow abroad the feeling that they will, come what may, order a series of PWRs. That is not the position of the CEGB or the formal position of the Government, who have till now insisted that the mix will be open to decision for the future. The industry will be more reassured if the Minister takes this opportunity to confirm again that the Government's options are genuinely open. I suspect that he may have some difficulty in doing that—or, conversely, may do so with relief—because the fact is that the Government do not know what they are 1009 doing, and the industry will stagger on with no clear direction, no real support from the Government, and no steady ordering programme.
Against this horrendous background, the National Nuclear Corporation is expected to make the whole thing work. It has a first class and independent chairman and an experienced and dedicated management; and the success of Hinkley and Hunterston owes much to the NNC team at Knutsford, but the NNC and those who work in it are being given an impossible task. They are expected to manage our nuclear programme, but their capital structure is such that they end up as agents of the CEGB. Will the Minister tell us when their capitalisation is to be increased and the whole matter sorted out?
The NNC is expected to supervise the building of the AGRs. Yet, because of the agreement between GEC and the UKAEA not to appoint or remove without joint written agreement any of the seven out of 10 NNC directors whom they nominate between them, the board appears to be dominated by pro-PWR opinions and British Nuclear Associates, with 35 per cent. of the shares and including those most concerned with the design and construction of the AGRs, which are, after all, the major part of our nuclear programme at present, has no independent right to appoint directors and, by any reasonable standards, is under-represented.
How long will the Government allow that to continue? The termination of the GEC supervisory management contract has not made a ha'p'orth of difference to the situation. I make no apology for making the case of the industry in all of this. Wherever one stands, and whatever interest one holds, the arrangement cannot make sense and will certainly ensure that the dismal mistakes of the past will continue to be repeated.
If our nuclear programme is to succeed, we must pursue it, and the Government must pursue it—it is their responsibility and they cannot fob it off on to the CEGB, the NNC or anyone else—with an open mind and defend it with conviction. Why is it, for example, that while the AGRs are denigrated and the Government do nothing to stop that process—indeed, they seem almost to encourage it—the PWR is placed on a pedestal and the Government allow people to think that they have already taken a decision about a series of PWR stations? No one seems to be giving any serious consideration to, for example, the suggestion that it may be a more sensible option for the country to pursue our successful AGR experience rather than getting into more experimentations with the PWRs. The one thing that we know for sure is that every time we start a new form of nuclear project we get into trouble. At the same time as building on our AGR experience, we should work hard to be able to make the next stage a more rapid move into the fast breeder than is planned at present.
I do not know whether that is the right route. No one knows, but it ought to be examined objectively. My complaint is that there is little chance of that in the current climate and with the current structure of the NNC.
No wonder the CEGB struggles to keep the decisions to itself. The NNC satisfies nobody but those who hold on to control it. The industry can never plan its future and is actively encouraged by the uncertainty of will on the part of successive Governments to concentrate more on its internal disputations than on the job of getting the product right and selling it abroad.
1010 Successive Governments have failed to face that problem when pushed from pillar to post by the various barons, especially one particular baron, involved. But it is their uncertainty of purpose that creates the situation. The answer does not lie in a covert preference for one manufacturer over another—export help for one manufacturer presented enthusiastically and export help for another reluctantly—and it does not lie in the restructuring of the industry so that one argument permanently prevails because the other has been shut up by being put out of business.
Nor can the answer lie in the confused hotch-potch of a report from the Select Committee on Energy, with its less than helpful suggestion that overseas competitors should be allowed to obtain work here while there is no chance of the British industry obtaining a single order in their country. The answer can lie only in the Department of Energy and Ministers in the Department taking a firm, constructive and objective hold of the situation. I hope that the Minister will give me and the hon. Member for Gateshead, East, who is equally concerned, some specific evidence that there is some hope of that in the near future.
§ The Under-Secretary of State for Energy (Mr. Norman Lamont)The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) has raised an important subject. It is unfortunate that it has had to be raised in an Adjournment debate late at night. It is a subject that deserves more time for discussion. The three Opposition Members present have a close interest, and I pay tribute to the assiduousness of the hon. Member for Newcastle upon Tyne, East in repeatedly raising this subject and stoutly defending his constituents at Question Time and in debates in the House.
The first part of the motion as it appears on the Order Paper relates to employment in the power plant industry. I shall discuss that first and then answer the questions that the hon. Gentleman raised.
The United Kingdom power plant industry is a high skill, high value-added industry which makes an important contribution to our balance of payments. It directly employs around 46,000 people, with at least another 30,000 employed in ancillary sectors—many in assisted areas. It is a key industry with a track record of success. It has demonstrated its ability to compete by winning major export orders. The recent order to construct the Castle Peak power station in Hong Kong and other recent orders won by the industry in the Middle and Far East are evidence of this.
When discussing the export record of the industry, the hon. Gentleman referred to the Government helping one part of the industry and not another. I assure him that the Government are anxious to help all firms in the industry. The help that was given to GEC and Babcock would be given to other firms exporting to other parts of the world. We shall do everything in our power to help NEI, too. We do want not one sector of British industry to prosper but all of it.
The Government recognise that not all sectors of the industry have shared in recent good fortune. Across the industry, there have been cutbacks and redundancies. Inevitably the current world-wide recession has significantly depressed order books. I repeat that we shall do everything practicable to assist the industry to win export orders, and I am confident that the upturn will come 1011 provided that the industry itself remains fully determined to maintain, and to improve wherever possible, its competitiveness.
Although continuing export orders will be a vital factor in the industry's success, the Government also recognise the industry's need for home orders from which to plan its investment in products and facilities and its competitive assault on world markets. This was one of the important factors taken into account by my right hon. Friend the Secretary of State for Energy when he announced on 18 December 1979 our plans to allow the electricity industry to proceed with orders for new nuclear power stations to ensure that our long-term energy supplies are secure when supplies of North Sea oil and gas decline in the 1990s.
Of these new orders, site work on the two advanced gas cooled reactors at Heysham and Torness is under way, and major contracts have recently been placed with British manufacturers for the supply of key components including the steam boilers and gas circulators. As the hon. Gentleman knows, NEI Parsons, in his constituency, will supply the turbine generators for Heysham, and NEI Clarke Chapman will supply 80 per cent. of the boiler work for both stations. The orders total some £300 million and NEI has received over half the main contracts placed. Heysham and Torness represent the first major home nuclear power station orders for 10 years; and their importance to the nuclear and power plant industry and to regional employment prospects are considerable.
I dissent from what the hon. Gentleman said about the CEGB not wanting to explore the PWR option. The CEGB wishes to proceed with the PWR option, subject to safety and other clearances being obtained, with the ordering of a pressurised water reactor. Our proposal to allow the CEGB to proceed should assist with employment prospects in the industry. Some components will have to be imported, but we shall seek to ensure the maximum contribution from United Kingdom industry. It is our hope and expectation that the industry will see this as a valuable opportunity to add to its existing capability to handle AGRs, which, if grasped, will strengthen its ability to gain nuclear power station orders on a world-wide basis over the longer term.
Looking further ahead, the electricity supply industry's foreseen requirement for further nuclear power station orders over the next decade should do much to ease the uncertainties which have so bedevilled the industry in recent years. Decisions about the precise timing of these future orders, and about the choice of reactor, will be taken in due course and, as my right hon. Friend has made clear, will depend upon the development of electricity demand and the performance of the industry. I must at this point stress the importance which the Government attach to the need for future power station orders to be completed on time, and to cost.
The Government do not want to knock the AGR. I endorse what the hon. Gentleman said about the Hinkley and Hunterston AGRs. They are good investments. They are good engineering projects and great successes. If their example were followed in the British nuclear industry, our problems would be fewer. I pay tribute to the Hinkley and Hunterston reactors. The hon. Gentleman is right to ask me to do that.
The Government's hope is that the benefit of future home power station orders will be felt in all sectors of the United Kingdom power plant industry. However, hon. Members will understand that it would not be right for me 1012 to offer tonight any assurances about specific orders for particular stations since the electricity supply industry and the NNC rather than the Government are responsible for the placing of individual contracts.
I would now like to say something about the role of the National Nuclear Corporation. NNC is the sole design and construction company for nuclear power stations in the United Kingdom. It is a private sector company but with a minority Government shareholding of 35 per cent held through the Atomic Energy Authority. The other shareholders are GEC with 30 per cent. and British Nuclear Associates, a consortium of interests, with 35 per cent.
As my right hon. Friend the Secretary of State announced in December 1979, the Government attach importance to the steady build-up of the NNC into a strong and independent design and construction company, fully able to supply nuclear power stations at home and abroad. The corporation's main tasks are currently to carry forward work on the AGR programme, and to complete work on PWR design, ready for safety scrutiny. In addition, the Government's wish is that the company should take on total project management responsibility for the PWR. I believe that good progress is being made towards that goal.
We consider that this is a great challenge. We believe that the NNC functions for the potential benefit of the whole of the United Kingdom nuclear and power plant industry, and not merely its own shareholders. Indeed, one of the company's considerable strengths is that it operates impartially in the placing of contracts; that is to say, it has an open purchasing policy, and is bound, by agreement, to award contracts solely on merit. The NNC is therefore ideally placed to harness the best skills and technology to Britain's future nuclear programme. We have every confidence that it will succeed.
The hon. Gentleman asked me about reactor choice. It is a momentous and important decision. Decisions will depend, first, as the Secretary of State said, on demand for electricity at the time and on the experience with AGR stations which are being constructed and with the PWRs—that is, on the experience of PWRs world-wide and our experience. That does not mean, as the hon. Gentleman suggested, that the PWR will have to be completed.
Considerable experience will be obtained from the design and the preliminary work; and decisions could be taken at that point as well. I give the hon. Gentleman the assurance that he asked for that no decision has been taken by the Government on this matter and that the Government will take the decision later in the light of the experience that is gained. It is wrong to suggest—I do not think the hon. Gentleman went as far as this—that a decision has already been taken.
The hon. Gentleman also asked about the shareholding in NNC and whether it would he increased, As I said, it is our intention that NNC should be allowed to develop into a free-standing company able to do the project management on its own. The Government are a shareholder but a shareholder along with other bodies, and they want a commercial approach to be taken essentially on these matters. The hon. Gentleman will know that there has been some concern recently about the contractual relationship between the CEEB and NNC and about whether NNC would have to act as an agent in future 1013 contracts. This is a matter on which there is legitimate argument on both sides. A resolution of this question is being pursued urgently.
Another matter referred to by the hon. Gentleman was the GEC and AEA shareholding in NNC, the relationship between their directorships and the agreement about directorships. If he will forgive me, I think it would be wrong to describe the NNC as a body biased towards the PWR option, or as lobbying for the PWR or the AGR. There is considerable experience of the AGR in NNC and it is determined that the AGR programme should be persisted with. A very large part of NNC's resources is being devoted to the AGR.
§ Mr. Mike ThomasI want to make a distinction. Certainly the staff and many of the technical people in NNC are absolutely adequate; there is no question in my mind about that. They are not biased in any way. They are running the AGR programme at Knutsford extremely well. The question is whether the board, structured as it is, is biased towards the PWR. It seems to me undeniable that it is. That is very unreasonable for those who are trying to build AGRs under the NNC's instructions.
§ Mr. LamontI do not think that the history of what has happened recently bears out what the hon. Gentleman has said. I repeat what I said to him earlier, that the position remains open for the future. The AGR has a very good chance. If the Hinkley and Hunterston pattern of success is pursued, obviously the AGR will be a major success, and I hope it is.
The hon. Gentleman also referred to the alleged delay in the confirmation of the two latest AGR stations. The orders for the two AGRs represent the first orders for home power stations placed in 10 years. They have followed within only a year of the Government taking office. When we came into office in May 1979 it was appropriate that we should review our strategy towards nuclear power, as we reviewed other important parts of our energy strategy. After only seven months, in December 1979, we made the initial statement, and our commitment to order two AGRs was announced. The orders were confirmed early in 1980. Site work commenced shortly after and all the major contracts have now been let. In regard to what the hon. Gentleman called delay, NEI does not attribute any redundancies to any slippage in the AGR programme. That is the information that it has given us.
1014 In conclusion, I reiterate that the Government regard the question of employment in the power plant industry as a most important one. We believe that the twin pillars of our approach are right—encouraging and assisting the industry to obtain overseas orders and embarking on a further home power station programme—and provide a real chance for recovery in the industry's fortunes. The NNC has an important role to play. Ultimately, however, the onus rests on the United Kingdom power plant industry as a whole to demonstrate that it can produce to cost and on time, and to develop further its technological skills. If it meets this challenge, as the Government believe that it can do, the outlook will be bright for British companies and British workers.
§ Mr. Bernard Conlan (Gateshead, East)I am grateful to the Minister for giving way. Does he not appreciate that the Government's policy of ordering one station a year is bound to fail unless the PWR is subsituted for an AGR? The argument about planning, the public inquiry and all the rest is bound to defer the PWR decision, and many years will be lost. Therefore, it might be better for the Government to order an additional AGR in its place.
§ Mr. LamontI appreciate what the hon. Gentleman has said. However, we must take account of the situation in the electricity industry and bear in mind the planning margin as well as the existing surplus capacity. We have gone much further than the Labour Government in giving a steady commitment to the future. We have taken a bold step which previous Administrations have missed. I appreciate what the hon. Gentleman has said, but I do not think that we could take further orders. The decisions that we took resulted in considerable controversy and criticism from some quarters.
The hon. Member for Newcastle upon Tyne, East referred to the Select Committee. He disagreed with it, but that shows that there is another side to the argument. We believe that we have got the balance about right and that in the interim to the 1982 programme, whatever the reactor choice, the two AGR orders will give the industry—
§ The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at eleven minutes past Eleven o'clock.