§ Order for Second Reading read.3.48 pm
§ The Under-Secretary of State for Energy (Mr. Norman Lamont)
I beg to move, That the Bill be now read a Second time.
The main purpose of the Bill is to enable the disposal of shares in the Radiochemical Centre Ltd. This is a small company, usually known as TRC, which makes radioactive isotopes for industry, medicine and research. The Bill clarifies the present powers of the Government to dispose of shares held in companies operating in the field of atomic energy in general and clarifies the present powers of the United Kingdom Atomic Energy Authority to dispose of shares in any company. In particular, it will enable the sale of up to 100 per cent of the shares in TRC. I emphasise that TRC is not a company operating in the field of nuclear power. For historical reasons, which I shall explain, it is a company owned by the Atomic Energy Authority.
Before turning to why the Government consider that shares in TRC should be sold, I should like to give the House the background and history of the company. It is a remarkable company, although it is not well known.
The origins of the company go back as far as 1940, when the Government invited a small company called Thorium Ltd to undertake the refining of radium and the manufacture of radium-based self-luminous paint for use in compasses and aircraft instruments. The company started in a small house in Amersham. Much of the early drive came from a young chemist, Dr Grove, an entrepreneur who had the ideas and vision to see the future uses for radio-isotopes and who was to lead the organisation as it grew for some 40 years. From those first modest steps in a house in Amersham grew a company that today is a world leader in its field and is internationally associated with the manufacture of radioactive substances.
Thorium Ltd. initially acted as managing agents for the Government but relinquished that agency in 1946 when the Radiochemical Centre was established within the public sector. Its immediate purpose was concerned with natural radio-elements, but it was also envisaged that, when artificial radio-isotopes became available, the centre would undertake the processing and distribution of them as well.
Although radium and its associated products dominated the work at Amersham until well into the 1950s, artificially produced radio-isotopes became more important as Pharmaceuticals and research chemicals incorporating these materials were developed and manufactured. During this period, the Radiochemical Centre continued to expand.
In 1954, the centre became part of the newly formed United Kingdom Atomic Energy Authority, whose primary purpose was to carry out research and development in atomic energy. TRC has undoubtedly benefited from the growth in general scientific knowledge as a result of research into atomic energy, although—this 746 is a point that should be emphasised in case there is any doubt—the products that TRC produces are not directly relevant to the nuclear power programme.
The Radiochemical Centre took over the functions of the isotope division of the Atomic Energy Research Establishment at Harwell in 1959 and continued to develop its sales. By 1959, sales exceeded £1 million per annum, with over 60 per cent. going overseas to some 50 countries.
The 1960s were a period of further vigorous expansion. New laboratories were built to enable the manufacture of more radiation sources. The export business continued to prosper. The centre received the first of four Queen's Awards for Exports in 1967.
This part of the Atomic Energy Authority's business—the manufacture of radioactive substances used for diagnosis and treatment in medicine—was transferred to a wholly owned subsidiary company, known as the Radiochemical Centre Ltd., by the Atomic Energy Authority Act 1971. When this company was set up in 1971 it was originally envisaged that there should be a private shareholding in the future. When the incorporation was made, the purpose was to see the centre develop as an independently run company and to encourage proper commercial and financial disciplines.
§ Mr. Lamont
It was envisaged by the Conservative Government who introduced the Act in 1971. I am coming to the view taken by an earlier Labour Administration. I am at the moment dealing with the view of the Government in 1971.
Since then, when TRC was set up as a company, it has continued to trade profitably and to expand. It decided in 1973 to open a new green field manufacturing site at Cardiff. Work on this is almost complete and production has already started. The Cardiff plant is planned to be in operation in 1981. Recent capital investments have cost the company some £20 million and will enable it to double its manufacturing capabilities.
Without doubt, TRC has developed into a commercial and manufacturing organisation with a worldwide business and a world-wide reputation. It employs some 2,000 people. Its main markets are in medicine, research and industry. It manufactures radioactive drugs for diagnostic purposes, ranging from biological research to engineering and advanced electronics. In the field of industrial radiation, the company produces sources for industrial radiography, with applications in industry—for example, the examination of pipeline welds.
TRC is a world leader in its field. About 80 per cent. of its sales revenue comes from abroad, an astonishing achievement. In research radiochemicals, it has captured about 80 per cent. of the United Kingdom market, some 30 per cent. of the United States market and roughly 30 per cent. of the Japanese market. This has been achieved by a dynamic management and dedicated work force in the face of tough, international competition.
I hope that this has given the House some idea of the nature of the company. I should now like to explain why it is the Government's view that shares in the company should be sold.
The proposal that private capital should be introduced into the company is not a new idea. When TRC was 747 constituted as a limited company in 1971, the then Government stated that they favoured eventual private participation. This would also appear to have been the view in 1970 of the Labour Administration, which introduced a Bill similar to that which became the 1971 Act, which lapsed with the general election that year. At the time of the 1971 Act it was the intention that the Government and the authority between them would retain a majority shareholding, and this was provided for in the Act.
Early in 1974 the then Conservative Government reaffirmed their intention to sell shares in TRC but deferred any such sale until after the introduction of an improved system of product costing and accounts based upon it. Nothing further has been done since then, and all the shares are still held by the Atomic Energy Authority.
The present proposal to sell shares in TRC is in accordance with the Government's policy of introducing private capital into public sector companies and, in view of the previous proposals, coupled with TRC's outstanding record as a successful commercial operation, TRC is plainly an excellent candidate for privatisation.
The Government have avoided intervention in the day-to-day running of the company and have never provided subsidies. Indeed, its only link with the public sector is the fact that its shares are held by the AEA, and this is now an anachronism.
§ Mr. Arthur Palmer (Bristol, North-East)
The hon. Gentleman has explained the great merits and success of this company. What benefit does he think that the introduction of private shareholding will confer on it?
§ Mr. Lamont
There are no reasons why this company should remain in the public sector. The company can only benefit from having total freedom from Government intervention. The hon. Gentleman will perhaps at least see this point. The time taken up by management and by civil servants reviewing the investment plans, the pay plans and the corporate plan of the company is valuable time given by people who have other things to do. There is every reason why this company should be available for investment by the private sector. We believe that this company can benefit through being fully integrated into the private sector. The company's board has been consulted and agrees with the principle of disposing of shares in TRC.
The proceeds of disposal of shares in the company, less the administrative costs of making the disposal, will be paid into the Consolidated Fund. This is in accordance with one of the Government's other objectives from privatisation—this, too, answers the hon. Gentleman's question—to reduce the size of the public sector borrowing requirement. The reasons for privatisation are, therefore, twofold: to reduce public involvement in a company which will benefit from full commercial freedom, and to lower the Government's need to borrow money.
§ Mr. Edward Rowlands (Merthyr Tydfil)
Is the Minister saying that the board and the staff agree with the power to be taken under the Bill to dispose of more than 49 per cent. of the shares?
§ Mr. Lamont
The board thinks that the Government should retain some holding in the company. I have not said anything that is contrary to that. The board also thinks that it is right that there should be sales by the Government of shares in the company. It welcomes that.
748 I should now like to explain in more detail the provisions of the Bill and why it is necessary. When the company was set up in 1971 it was envisaged that a minority shareholding would be sold off at some time. As a result, the Act provided for a majority of the voting shares in the company to be retained in the public sector. The Government now wish to have the option of selling more than half the shares, and so the Bill removes the provision in section 11(3) of the 1971 Act, which requires that the Secretary of State and the authority between them should hold at least 50 per cent. of the voting shares.
At the time of the 1971 Act it was thought that, subject to this provision, the Secretary of State or the authority could dispose of any shares owned by them. However, the Government have been recently advised that these general powers of disposal are constrained in respect of sales of shares by the Secretary of State in companies operating in atomic energy by reference to his general duties to promote and control the development of atomic energy, and constrained in respect of sales of shares made by the authority in any company by its ability to do only such things as are in accordance with its statutory functions.
Arguments could therefore be advanced that the disposal of part or all of any of the AEA's existing shareholdings would be inconsistent with existing powers, and any such disposal might therefore be challenged in the courts. For this reason, it is essential, if this disposal is to take place—even this sale of shares amounting to less than 50 per cent.—that the general powers of the Secretary of State and the authority be clarified in the case of TRC.
It seems sensible to take the opportunity similarly to clarify the present position of the other two companies in which the AEA holds shares—British Nuclear Fuels Ltd. and the National Nuclear Corporation Ltd.—and any company that the Government or the authority may require in future. The Bill ensures that the Secretary of State has the power to sell any shares that he owns in companies operating in atomic energy, and that the authority has the power to sell shares in any company that it owns.
The Government and the authority have already the power to buy shares. It is surely right that they should have the freedom and power to sell shares as well as to buy them.
One present restriction on the sale of shares is on the sale of more than half of the voting shares in British Nuclear Fuels Ltd., which is specifically imposed by section 11(3) of the Atomic Energy Act 1971. I draw to the attention of the House the fact that the restriction is retained by the Bill. The Government want to have the option, which was previously thought to exist prior to legal advice, of selling up to 49 per cent. of the shares in British Nuclear Fuels Ltd., but I emphasise that at present the Government have no plans to do so. The Government are merely clarifying the powers that it was previously thought the Government had.
Similarly the option to sell shares in the National Nuclear Corporation Ltd. is being kept open, although at present the Government have no plans to make such sales. Should the Secretary of State or the authority acquire shares in other companies in future, they would likewise, as a result of the Bill, have the option to sell them, too.
§ Mr. Peter Rost (Derbyshire, South-East)
The Government now have only a minority holding in the National Nuclear Corporation Ltd. They do not have a majority holding as they have in British Nuclear Fuels Ltd. 749 If it were the Government's intention at some future date to reduce their holding, would it be their intention to reduce it to virtually nil or to retain a small holding?
§ Mr. Lamont
The Government have made no decision to dispose of their shares. My hon. Friend rightly says that the Government have only a minority holding. I believe that it is 35 per cent. at present. However, others have shares and there could be circumstances in which the shares held by others end up in the Government's hands. The potential provisions set out in the Bill are relevant to that. I emphasise that at this moment, at the beginning of the nuclear programme, the Government do not have plans to dispose either of the 35 per cent. holding or of other shares that might come their way. It is, of course, a matter that the Government could consider in future.
§ Mr. T. H. H. Skeet (Bedford)
Is my hon. Friend saying that in this Parliament he will not be disposing of any of the shares of companies other than those of the Radiochemical Centre?
§ Mr. Lamont
At present the Government have no plans to dispose of shares in BNFL. The Bill would allow the Government to do so up to 49 per cent. They have no plans at present to sell shares in the National Nuclear Corporation. As for the latter body, things might change. There is every reason to want to see a strong private sector construction industry building our stations. We must see how the programme develops. First, we must get it off the ground. We have no plans to sell shares at present. That is all that I am saying on that score. I am not going beyond that.
§ Mr. Edwin Wainwright (Dearne Valley)
Is it the Government's intention to give to private enterprise any section of a nationalised industry that happens to be viable and to allow the parts of the nationalised industries that are almost impossible to make viable and profit-making to remain in the nationalised sector?
§ Mr. Lamont
It is the Government's firm policy to reduce the size of the public sector and wherever possible and practical to introduce private capital.
§ Mr. Peter Hardy (Rother Valley) rose—
§ Mr. Lamont
I must get on.
Apart from the provisions that I have mentioned, the Bill covers a few other matters. The requirement for TRC's account to be laid before Parliament is removed once more than half the voting shares are disposed of. Clause 2 makes it clearer than it is at present that, should the authority receive moneys from the sale of shares, the Secretary of State may direct them to be transferred to the Consolidated Fund. Clause 3 provides for the expenses associated with the disposal to be paid for out of sums provided by Parliament.
The Bill also allows for the sale of shares to be made either by the authority or by the Secretary of State. As I mentioned earlier, the shares are at present held by the authority. If the Government wished to sell the shares in TRC directly the Secretary of State would first use his powers under the 1971 Act to transfer to himself those shares which it was intended to sell. It would then sell the shares and the proceeds would be paid into the Consolidated Fund.
750 Alternatively, the Bill gives the Secretary of State the power to direct the authority to make the sale and then to transfer the proceeds into the Consolidated Fund. It has not yet been decided who will actually make the sale, but legislating in this way provides greater flexibility.
The Bill would enable a sale of up to 100 per cent. of the shares in TRC. The Government have not yet decided on the exact timing, the method, or the extent of the disposal, but it seems unlikely that a sale could take place before the end of this year at the very earliest. For the time being we wish to keep these options open.
There is one final and important matter that I wish to make clear. The Government have decided that employees at present with TRC may remain in the Atomic Energy Authority pension scheme in which they are now members.
§ Mr. Lamont
That means that TRC and its employees will continue to make the appropriate contributions to the scheme in the normal way. Employees joining TRC after some agreed date in the future will join a new company scheme which is being set up.
I pay tribute to the employees of TRC, who, through their dedication and hard work, have enabled their company to be so successful and outstanding. I realise that there may be uncertainties about the disposal. However, I assure them that there are no grounds for such anxiety. The Government see TRC as a national asset and would not agree to plans that would endanger the company's future or the livelihood of those who work for it.
§ Mr. Peter Viggers (Gosport)
Does my hon. Friend agree that it would be possible under the joint stock company provisions to have stock options and share options which would enable individual employees in the company to benefit, which is not possible if the company remains parts of a nationalised industry?
§ Mr. Lamont
My hon. Friend makes an extremely important intervention. I am sure that he has referred to one of the attractions of privatisation for many people. When I met the trade unions at the Radiochemical Centre last week, that was one of the very issues that they raised. No decision has yet been made on whether the company will be privatised either by sale to a corporate buyer or through a flotation. A flotation enabling a share incentive scheme and profit-sharing schemes to be devised for the benefit of the work force is clearly a matter of importance. Further, even though Labour Members pooh-pooh it, the workers in TRC favour it.
As I said at the beginning, the primary purpose of the Bill is to enable the disposal of shares in TRC. It therefore takes further the Government's manifesto commitment to roll back the public sector. The Government see no benefit, either to the nation or to TRC, in the Government continuing to own all the company's shares. Indeed, I believe that it is right that such a high technology company, which is both profitable and rapidly expanding, should be allowed to develop in an atmosphere of the fullest commercial freedom. I am confident that the injection of private capital into this company will not only be in the national interest but will benefit management and workers alike. TRC has been successful over the years. The House should give it the means to build on that success in the future.
§ Mr. Edward Rowlands (Merthyr Tydfil)
On a day when a meeting of deep concern to the energy requirements of this nation is taking place, to bring forward such a petty and irrelevant Bill is a waste of legislative effort and time.
As the Minister said, the only really significant change that the Bill seeks to make concerns the power to sell off the whole of the Radiochemical Centre. I understand that the provisions governing BNFL do not change the position that we thought existed after the 1971 Act, and that the situation regarding BNFL and the role of the Government's majority shareholding will be fully maintained. So there is no fundamental change of policy in that respect. However, I should like to ask the Minister about some of the extraordinary wording of the Bill in relation to the general power that the Secretary of State is seeking.
The whole case for this two or three-clause Bill, this measly little Bill, rests entirely on the proposal to sell off completely the Radiochemical Centre. The power already exists for shares to be created in TRC. That is not in dispute. That power has existed since 1971. The only reasoned justification for the Bill is to give the Government power to sell off the whole of TRC. The power to create shares already exists, and, if it does not, we shall not dispute that part of the Bill that clarifies the matter. We are appalled with the rotten case presented by the Minister to justify taking the power to sell the whole or the majority of the shares in the centre.
§ Mr. Tim Eggar (Enfield, North)
Is not the hon. Gentleman aware that considerable doubt is cast on the provisions of the 1971 Act by the provisions of the 1946 and 1954 Atomic Energy Authority Acts? Should he not bear those Acts in mind?
§ Mr. Rowlands
I shall certainly bear them in mind, and I hope that we can reach a consensus before I finish my remarks. We support any part of the Bill that clarifies the position and role of the Atomic Energy Authority and the Government with regard to the sale of shares in this company. If that is the purpose of the Bill, we may be able to obtain a consensus.
The hon. Gentleman knows that the Bill gives the Secretary of State power to sell more than 50 per cent. of TRC if he so wishes.
§ Mr. Hardy
May I ask my hon. Friend to deal with the point on which the Minister would not give way a few moments ago? My hon. Friend mentioned that the Minister's explanation left a great deal to be desired. Will he pursue the point that the Minister's explanation gave no assurance with regard to the amount that the Government expected to receive for those shares? The Minister said that £20 million would be reinvested. We have a right to know whether that sum of money will be returned.
§ Mr. Rowlands
That is a pertinent point and I shall deal with it later. However, I should like to deal first with the point that was made about the need to clarify the position.
The problem that the Minister has had in presenting his case today is that the Government are so used to the claptrap about inefficient and badly managed State enterprises compared with the bright-eyed, sharp-eyed private sector, and this company did not fit any of those categories. 752 Grudgingly, the Minister had to admit that TRC had been a wonderful success story—a 100 per cent. Governmentowned success story. He could not say that TRC was losing money or that it had come cap-in-hand to the Government and had made demands on the taxpayer. He did not give the figures—
§ Mr. Norman Lamont
It is wrong to say that my description of the company's success was half-hearted. Over and over again I emphasised the great achievements of the company. In the light of that, will the hon. Gentleman say what he thinks would be gained by retaining this company in the public sector and, at a time of public expenditure restraint, why the money that is tied up in this company should be left there rather than be used for the other valuable purposes for which the hon. Gentleman is always campaigning from the Dispatch Box?
§ Mr. Rowlands
Because it is making money for the Government. The Minister did not give the figures, so I shall give them one by one.
First, since 1971 the turnover of this company has risen from £8 million to £50 million a year—not bad for a socalled nationalised concern. That turnover has been matched by excellent profits—£26 million in that period—and with an average return on group capital investment of 26 per cent. I should like to know how many other companies in the private sector have achieved such good figures.
I turn now to the question that the Minister asked. Why should the Government hold on to this valuable company and why should not the shares be sold? The dividend has been paid to the shareholders—the United Kingdom Atomic Energy Authority. In 1971–72, the dividend was 10 per cent.; in 1972–73, 10 per cent.; in 1973–74, 7 per cent.; in 1974–75, 11.49 per cent.; the same percentage the following year; in 1976–77, 8.2 per cent.; in 1977–78, 22 per cent.; in 1978–79, 12 per cent.; and in 1979–80, 12 per cent. The company is doing very well for the taxpayer and the State. It has been making profits and paying good dividends to the Government.
Has the company made any demands on the public sector borrowing requirement besides being artificially a part of the PSBR? I should be grateful if the Minister would give the figures with regard to the significance of TRC being a part of the public sector and its impact on the PSBR. Has the company made large demands on the Government for its capital investment programme? Besides the initial capital investment of £6 million, which is now extremely profitable to the Government, has it made a huge demand on the public sector borrowing requirement to finance the large-scale £20 million exciting investment at the Cardiff factory? It has not done that. It raised most of it from its profits on its own reinvestment, along with some support from the Government in the form of equity, for which now the Government are receiving a very healthy return.
So the company is not making any demand. In the large scale expansion programme that this company has undertaken it has made marginal, insignificant demands on the public sector borrowing requirement, for which the Government will get a very high and valuable return in the coming years, unless they go through this foolish act of selling the company off to the private sector at the moment of major growth and expansion by TRC.
§ Mr. John Watson (Skipton)
I am sure that the hon. Member does not wish to mislead the House. Does he acknowledge that the £6 million profit figure to which he referred relates to 1979, that last year the profit figure was £4 million, and that this year it is likely to be distinctly lower than £4 million?
§ Mr. Rowlands
I am sorry that the hon. Member is leading with his chin on this matter. The reason why it will be distinctly lower than the £6 million is that, as the Minister pointed out, 84 per cent. of TRC's products are exported, 30 per cent. going to the United States. The high interest rates and particularly the high exchange rate have some effect on the growth of profits of the company. That is the reason. Volume has risen, but the margin has become slighter because of the Government's policy towards exchange rates. I am sorry to report to the hon. Gentleman that the Government's general economic policy has been the chief cause for the slight dip in profits.
I think that anyone who knows about this matter and anyone who has looked particularly at the Cardiff venture—I had the privilege of visiting it, as I shall mention again shortly—will say that the potential now for both expansion and profits is very considerable, as a result of the tremendous initial £20 million investment. If it was partly financed by the Government, they had a happy opportunity for handsome return on such investment.
For the last six years the Government have received a 12 per cent. dividend return on their investment, which we hope will pay the marginal costs of the so-called management review and the corporate plans. It has been such a successful company that it should take about five minutes to survey and to study. In return for that, the Government have had a very large return on their investment.
The next reason that the Minister gives as a case for selling off TRC is that we need private capital to be injected into the company for future expansion programmes, instead of the company having at some time in the future to come cap-in-hand to the Government. As the Minister admitted, already the £20 million investment programme has almost doubled the company's capacity to expand. That is already in place and has been financed. Therefore, we cannot expect a demand of any kind to be made on the Government until the late 1980s for any further expansion.
Anyway, the power exists without the Bill for the Government to allow the injection of private capital into TRC. No one is arguing against that. It will not be the Opposition's case that there is not a case for shares or capital from the private sector to go into TRC. What we are saying is that we do not need the Bill to do it, except in the clarifying sense, and, secondly, that we are opposed most bitterly to the idea of the majority, if not the whole, of the company being sold.
§ Mr. Norman Lamont
Why does the hon. Gentleman think that it is a good idea for private shares to be taken in TRC?
§ Mr. Rowlands
I do not particularly think that there is a good case for that. [Hon Members: "Oh."] What I am saying is that the opportunity has existed since 1971. The Labour Government of 1974–1979 did not remove that opportunity. It can be taken up at any time, if it is judicious and sensible commercially or technologically so to do.
754 I do not think that at present there is any need for such privatisation or the introduction of private capital. But if the Government want to say "What we need is some worker shareholding", they can do so without the Bill. The Minister knows that.
§ Mr. Lamont indicated dissent.
§ Mr. Lamont indicated dissent.
§ Mr. Rowlands
We shall discover further, when the winding-up speech is made, what is preventing worker shareholdings as part and parcel of TRC without the power to take more than 50 per cent. of the shares and sell off the company.
The Minister was very disingenuous about the company's position and that of its staff and workers and their attitude towards the Bill. He said that he had visited them in Amersham. He said that the point that they raised with him was that they wanted some shares in the company. However, that was not the only topic which they raised with him, and it was not the main one. So why did he not tell the House about the main point raised by these dedicated staff, to whom he paid a great compliment, and the dedicated management, who have made such a commercial and technological success of this company, although it is 100 per cent. Government-owned? Why did the Minister not state is the position of TRC staff and workers?
The Minister will know—I do not think that last Friday he found anything different—that their statement made last month expresses the position by which they stood last Friday and stand today. That statement says:We believe that the Government should retain a controlling interest in the Radiochemical Centre.That is a statement of the wishes and feelings of the overwhelming majority of the staff and workpeople at TRC. Why did not the Minister tell that to the House? Why did he just say "Of course, one point that was raised with me was that they would like some worker shareholding of some kind"? That is because it conflicts with all the grand compliments that he has been paying to the company, and he knows that the action that he is proposing to take as a result of the Bill, would conflict with the wishes and feelings of the overwhelming majority of the staff and workers at TRC.
§ Mr. Rowlands
I shall not give way. I have done so a number of times. I want to deploy one or two other arguments. The hon. Gentleman can make his own speech. He will have plenty of time to make his comment. We shall be here for a couple of hours at least.
The Bill is about the power to sell off a company which has commercially and technologically kept more than one step ahead of its competitors in the game. It has made a great deal of money. It has invested very well. It is capable of making even more money as a 100 per cent. Government-owned company, or as a Governmentcontrolled company. Its industrial relations have been marred by only one half day's marginal dispute since 1944. In its industrial relations and its terms and conditions of service it has skilfully blended the best of the Civil Service arrangements with those of industry in the negotiations that have been taking place and evolving over the last year or two.
755 As the Minister admitted, I think, there is an intense and very special commitment to the company by its staff and workpeople. In the brief time that I have spent at the new Cardiff premises, I found that to be a very striking feeling and wish. There is a sense of commitment and of special relationship and identification with the company, which has grown out of its success.
Why impair that? Why even cast doubt on it? Why create any uncertainty about it, as the Bill and its powers could do? Why cast doubt on a very successful ongoing operation? Why create the degree of uncertainty that can flow and is strongly felt by many members of the staff about the possibility of being taken over by some unknown company or organisation, when it is already a remarkably successful outfit, with a marvellously dedicated staff, and is doing extremely well?
There is not a shred of evidence—the Minister brought none to the Dispatch Box today—to suggest that the structure of the company over the last eight or nine years since 1971, the organisation of the company, how it has been managed or how it is owned, have in any way inhibited the growth and development of the company. The Minister cannot produce such evidence, because the figures speak for themselves. There has been no demand from the management for this change. There has been no demand for the Bill from the staff or the workpeople.
If there is a case for this change, where does it lie? In the end, the Minister gave the two reasons: first, party dogma and doctrine; secondly, the public sector borrowing requirement. Let us look at these two so-called reasons for casting doubt on certainty and creating uncertainty and doubts that need not exist about the continuation and development of this very successful company.
Let us look at the public sector borrowing requirement consideration. As has been said, the Bill's main purpose is to enable the Government to realise the assets that they hold in the Radiochemical Centre and to reduce the public sector borrowing requirement. By how much will the public sector borrowing requirement be reduced? How is it to be reduced, and on what time scale? The Minister may say that the Government have taken the option and that they will think about the time later. What evaluation or assessment have the Government made?
If the Bill represents a major item in the Government's policy of reducing the public sector borrowing requirement, the Government should tell us how much money is involved. Is it £50 million? Is it £100 million? This year the public sector borrowing requirement amounts to £12.5 billion. Can it be true that the Government want to create uncertainty and want to cast doubt on the development and continuing success of a company just so that they can knock £50 million to £75 million off the public sector borrowing requirement? That is peanuts in public sector borrowing requirement terms.
The problems and uncertainties that the Bill will create will be far greater than any impact it might have on the public sector borrowing requirement. However, if that is the Government's case, the Minister should tell us what estimate the Government have made for the reduction in the public sector borrowing requirement during the next 12 months or so.
There is a more dangerous and worrying aspect about selling the centre. If the Government desire to raise the maximum amount of money in order to reduce the public sector borrowing requirement, they must sell to the highest 756 bidder. They will, therefore, look for a premium price. Who will pay that price? Which companies are most likely to offer the largest sums of money to the Government? There is a lot of evidence to suggest that TRC will be quickly snapped up by a foreign-owned company, probably by a major American chemical or pharmaceutical company. Such companies will want to buy it because of its tremendous success.
The hon. Member for Enfield, North (Mr. Eggar) seems to be nodding his head approvingly at the idea of an international company purchasing it. He now seems to be shaking his head. I do not mind if the hon. Gentleman has a 180 degree change of opinion about it. I had thought that the hon. Gentleman agreed that it would be nice if a large American international company were to pay a premium price for TRC. That would be absolutely disgraceful.
Fear and worry have led the staff to ask the Government not to sell more than 49 per cent. of their shares in TRC. If the Government wish to reduce the public sector borrowing requirement, they will be sorely tempted to allow the highest bidder to buy the company. That would not be in the interests of those who work there or in the interests of the nation. It would certainly not be in the interests of the development of TRC as an independent company.
Therefore, if the Government intend to reduce the public sector borrowing requirement, I hope that they will give a clear assurance about the sale. Before the Bill is enacted—given the Conservative Party's majority, the Bill will presumably be enacted during this Session—will the Minister give an assurance that the company will not be sold to any international or foreign company? Will the hon. Gentleman also give an assurance that TRC will be maintained as an independent company and that it will be allowed to thrive as it has in the past?
The Bill is the result of Conservative Party dogma and doctrine. The Government are committed to privatise wherever possible. It is sad that a successful concern should suffer from the Government's narrow, blinkered and doctrinaire attitude.
§ Mr. Rowlands
Repetition of the truth does not do any harm. That is the sort of cant that we hear from the Government Front and Back Benches. The worries and concerns of those 1,100 people at Amersham and of those 400 workers at Cardiff who made a success of the company are at stake. We have a right to ask that the Government's doctrinal views should not overcome the views and attitudes of those who—as the Minister admitted—have made the company a success. It seems to be suggested that the Bill has been introduced to clarify the sale of BNFL shares and the sale of shares in the other companies owned by the Atomic Energy Authority.
In 1971 a Bill was introduced by, I believe, the right hon. Member for Bournemouth. West (Sir J. Eden). The debate was wound up by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). They are two purist monetarists and are as good free enterprise freebooters as one could come across. When the Bill was introduced, they both justified the idea that the Government should retain a majority share in BNFL and in TRC. They said that it was reasonable to constitute the two companies in 757 an autonomous way so that they would have commercial freedom within the structures of independent autonomous companies whilst the Government maintained a 51 per cent. shareholding in them.
In 1971 there was a happy consensus in the House. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) supported the Bill, along with the right hon. Member for Bournemouth, West and the hon. Member for Cirencester and Tewkesbury. A trinity such as that should never be destroyed. This Bill will break that consensus. It seeks to cast doubt on and destroy that consensus.
When the Minister replies, he may say that the Bill seeks to clarify the shareholding position in BNFL and TRC and the Government's right to sell a minority shareholding in either of those companies. If he says that, we shall not vote tonight but will give speedy support to the passage of the Bill. However, if the Minister seeks to retain a provision that will allow the Government to damage the company and to create uncertainty by selling more than half and probably the whole of TRC, we shall oppose the Bill in the Lobby tonight.
§ Mr. Patrick McNair-Wilson (New Forest)
The hon. Member for Merthyr Tydfil (Mr. Rowlands) has made extremely heavy weather of a very light brief. He has completely failed to understand the Bill's provisions. He brushed aside the fact that the 1946 and 1954 Acts create problems for my hon. Friend the Minister and for the Government. This Bill provides the Secretary of State not only with the power to acquire shares but with the power to dispose of them. I should have thought that that was a sensible thing to do.
With great respect to the hon. Member for Merthyr Tydfil, he tried to give the impression that those working in TRC would face a very bleak future if the hand of Government were removed from the company. The performance of the hon. Gentleman's party as regards nationalised industries—I refer not least to the Coal Industry Act 1965—probably sent a bigger shiver down the backs of those who work in nationalised concerns than any such prospect. The recent history of British Steel and the associated problems of job security will make those who work at TRC look forward to the day when they can shake off the hands of Ministers. As has been suggested, they probably look forward to the company's expansion in a highly successful industry.
I welcome the Bill not only because it provides for tidying up, but because I hope that it will mark a turning point—albeit a small one—in the fortunes of the nuclear industry. In the 1950s, we led the world in the use of nuclear power for peaceful purposes. Indeed, we were the envy of the world. Since then, regrettably, there have been many stops and starts and many doubts which have created an extremely difficult period for this great industry with inevitably low morale as a result.
I hope that my hon. Friend and his colleagues will ensure that a new impetus is given to the nuclear power industry in this country. We need a clear strategy for the next 20 years. We need a positive publicity and public relations campaign, not merely to allay the fears of those who are, perhaps, naturally concerned, but to show the positive benefits of the industry to the future economy of 758 the country. I hope that the example of the electricity industry in issuing stickers saying "Atoms for Energy" will be followed on a larger scale in future.
I understand from Mr. Speaker that because this measure deals with miscellaneous provisions we can range fairly widely across the whole industry. I am sure that the hon. Member for Truro (Mr. Penhaligon), who complained in a recent debate on energy prices that we had no opportunity of discussing the atomic energy industry, will take advantage of the ruling that has been given. I shall restrict my remarks to a fairly narrow but vital area in the nuclear energy industry. I hope that my hon. Friend will kindly address himself to the question that I posed to him at the end of that energy prices debate.
After an impressive start, we are now floundering. Regrettably, we have had major delays and cost escalations in the thermal programme. The AGR, through no fault of its own, has acquired a bad reputation. In fact, many of its problems relate to contractors' difficulties rather than to design problems. As a result, even now, in 1981, we are beginning to look at another reactor option. We have considered the options in the past. The Labour Administration considered the heavy water option. The Conservative Government stuck very strongly to the gascooled reactor option. I declare an interest in a company which makes graphite.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. I do not want the hon. Gentleman to go too far down that road. I was not here when he spoke to Mr. Speaker, but I think Mr. Speaker meant that the debate was wide in terms of its miscellaneous provisions. The hon. Gentleman must confine his remarks to what is in the Bill.
§ Mr. McNair-Wilson
I shall, of course, relate all that I say to the fact that the Bill gives the Secretary of State powers to sell off holdings not just in the Radiochemical Centre, but in a number of other companies in the nuclear industry. To that extent, I include the company with which I am concerned, which makes graphite. The general nuclear programme is affected by the wording of the Bill. I shall be careful not to stray too far.
Rather than develop a new and costly reactor system in the shape of the pressurised water reactor, it would be wiser to opt for a major leap forward towards the commercial fast breeder reactor. It would make for a better utilisation of fuel and would ultimately have the advantage of providing cheap electricity for our industries.
That is where the nuclear industry, above all, can offer positive gains. Over the years we have seen the whole hydrocarbon market, whether oil or coal, rise inexorably to the point where industry has suffered. If the base load of electricity generation can be carried by nuclear power—ideally by the use of a fast reactor—we shall be able to make a positive contribution to our energy costs and to the success of our economy. Therefore, I ask my hon. Friend to indicate the possible timing for the introduction of such a reactor.
§ Mr. Arthur Palmer (Bristol, North-East)
The hon. Member for New Forest (Mr. McNair-Wilson) raised one or two interesting topics, but they appear to be unconnected with the Bill. I, like him, am an advocate and a defender of nuclear power, but this Bill is a restricted measure.
759 I want to put one or two questions to the Undersecretary. First, why do we have the Bill at all? It is an extraordinary little measure. It deals with the affairs of the Radiochemical Centre, which is a highly successful enterprise. Indeed, the Minister did not deny that. In fact, he went out of his way to emphasise it. The centre is doing work of great technical complexity, work which needs high standards of care and safety in the manufacture and sale of radioactive materials for use in industry, medicine and scientific research.
In no way is this a British Steel situation. A Conservative Member drew a parallel with British Steel, but there is no such parallel. The centre is a prosperous industry by current standards. From my inspection of the ninth annual report, it seems that it pays a dividend of 12 per cent. on invested capital. That is not bad these days. If only all British industry were doing as well there would not be much wrong with our economy. The Radiochemical Centre is acting fully commercially. So I do not understand what the Under-Secretary of State meant when he talked about supervision in detail by civil servants. They should not be doing that. The shares are held by public agencies, but there is no reason for civil servants to butt into an enterprise of this kind that is working well. Such interference should be stopped, and I hope that the hon. Gentleman will do something about it.
The Radiochemical Centre is, as I say, acting commercially. It has a high standard of scientific research and development, and its products are distributed throughout the world. It is helping our exports. So what is its fault or crime? I cannot see what it has done wrong. The only fault which it appears to have, because of its very nature, is that all its shares are held by State agencies. Apparently, that is the only charge against it.
§ Mr. Dalyell
Its crime is the fact that it is a suitable and convenient sacrificial lamb to be sacrificed on the altar of demands that are made on the Department of Energy and every other Department by Downing Street.
§ Mr. Palmer
I am obliged to my hon. Friend. I shall come to the matter of Downing Street in a moment. The explanatory memorandum says, sadly, that the public custodians of the shares, the Atomic Energy Authority and the Secretary of State,are not free to dispose of shares to mere investors with no expertise in the field".In my opinion, they should not be free to do so. Those who have a say in the control of this work should surely have an expert knowledge of it. That, as a principle, was accepted by previous Governments, and I think that it should be accepted now. Indeed, my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) pointed out that the old Select Committee on Science and Technology which looked into these matters on an all-party basis in the late 1960s and early 1970s—I was Chairman of the Select Committee at that time—suggested this system of ownership with these safeguards. The Select Committee pointed to the importance of the industry to public welfare and to the community generally.
I am sorry to repeat this, but I am driven to the conclusion that the reason for the birth of this little wretch of a Bill is doctrine. There can be no other explanation. It represents that view of society and industry which believes that all public ownership, big or small, is 760 undesirable and, hence, should be restricted and, wherever possible, the assets sold off whatever the merits in a particular case.
I should like to see a better understanding between the parties on the mixed economy and ownership in industry. But if the time of the House is given to a measure which makes not the slightest practical difference when there is so much else to be discussed—for instance, of unemployment and inflation—any hope of getting any working understanding between the parties on the future nature of the mixed economy seems remote indeed.
§ Mr. Rost
Will the hon. Gentleman explain why he believes it is any more doctrinaire to argue that because an industry is in the public sector it should be allowed to be released from the public sector than to say that because an industry is in the public sector it should always stay in the public sector, which is what he is arguing?
§ Mr. Palmer
I suffer from the fault—a fault for which I can be blamed by hon. Members on both sides of the House—that I am a pragmatist. I believe that that which works best is best. I make no apology for that view. Here what is working best should be kept.
My hon. Friend the Member for West Lothian (Mr. Dalyell) referred to Downing Street. The Prime Minister, in the television interview that she gave to Mr. Brian Walden—an interview which is notorious for many remarks that she made—referred to a number of countries in Europe which she thought had done better than we have done in recent times. Those countries were presumably, she thought, close to her political ideals. The right hon. Lady mentioned Austria approvingly. Austria has a Socialist Government who operate an incomes policy in co-operation with the trade unions; it has also more nationalisation than any European country this side of the Iron Curtain. Socialism, nationalisation, an incomes policy are all things the right hon. Lady hates. Yet the right hon. Lady said that Austria was an example for us, apparently not knowing the nature of the economy of that country. It is certainly not a free enterprise economy.
But here I am not making points one way or the other. I am arguing that State-owned enterprises, if well managed, can be as efficient as the best private enterprise, and in this instance even more efficient.
I shall simply leave—
§ Mr. Palmer
No, I am not saying that. It will probably remain as efficient as it is now, so why do it? What is the gain from change?
§ Mr. Palmer
I thought that I had already given the House that answer. We have more important matters to deal with than to give our time to this unnecessary measure. Certainly I believe that the House deserves a better explanation of the reasons for the Bill than has so far been given.
§ Mr. D. A. Trippier (Rossendale)
I shall confine my remarks to the Bill and try to be brief.
The hon. Member for Bristol, North-East (Mr. Palmer) asked why we needed the Bill. The answer is fairly straightforward. I hope that hon. Members on both sides of the House recognise the necessity for the passage of the Atomic Energy (Miscellaneous Provisions) Bill both because of the legal and legislative precedents for such action and because of the advantages which would ensue from its passage.
At present, the sale of a minority stake in the Radiochemical Centre Limited is allowed under the Atomic Energy Authority Act 1971, although the sale of a majority stake is prohibited. The transfer of stock from the public to the private sector has many precedents, which are widely welcomed by Conservative Members.
In July 1979, the National Enterprise Board disposed of all of its 50 per cent. holding in Ferranti. We widely applauded that at that time. Plans have been announced to float shares in British Aerospace in the near future. Part of our policy is to encourage privatisation, and we do not in any way apologise for that. We intend in legislation to dispose of the minority interest in the British Transport Docks Board and provide disposal powers for Sealink, Seaspeed Hovercraft and British Transport Hotels—all subsidiaries of British Rail.
The British Telecommunications Bill will make possible a liberalisation of the Post Office monopoly on telecommunications and posts. Also, enabling powers will soon be taken to introduce private equity into the British National Oil Corporation and to dispose of both a majority interest in the National Freight Company and a minority interest in British Airways. All told, numerous attempts have been made to replace Government money with private capital and to increase the role of individual enterprise in the economy. The passage of the Bill would follow the precedent set by the actions that I have just mentioned.
Although the sale of a minority stake in the Radiochemical Centre by the United Kingdom Atomic Energy Authority is allowed under the 1971 Act, other existing legislation clouds the issue. Indeed, the framers of the 1971 Act, as well as the framers of similar legislation in the 1970 Labour Government, intended that a minority stake would eventually be sold to the public. However, the Atomic Energy Act 1946 imposed restrictions upon the disposal of shares by the Secretary of State in companies in the atomic power sphere. Furthermore, the Atomic Energy Authority Act 1954 may prohibit the sale of the shares by the United Kingdom Atomic Energy Authority if it is decided that such action is not consistent with the statutory functions of the authority.
The apparent conflict between the provisions of the 1971 Act and those of the 1946 and 1954 Acts seems to have been unintended and undermines the 1971 Act. It has not been decided whether the two earlier Acts affect the later one, but it is essential that all such unintentional restrictions be dealt with. These restrictions have the potential to cause further problems in the future as the Secretary of State would not be able to dispose of the shares in atomic power companies which the United 762 Kingdom Atomic Energy Authority is allowed to acquire and the authority would similarly be unable to sell shares after it had bought them.
The Bill would remove any possible uncertainties about the 1971 Act and would ensure that the spirit of the legislation remains unaltered. That is very important.
In addition to clarifying the position of the United Kingdom Atomic Energy Authority in relation to the disposal of its shares in the Radiochemical Centre, I welcome the fact that the Bill clarifies the position with regard to the centre's holdings in British Nuclear Fuels Ltd and in the National Nuclear Corporation. Although there are no present plans to sell shares in either of these companies—indeed, clause 1(6) specifically retains the 1971 prohibition on the disposal of more than a minority share in British Nuclear Fuels—the Bill prevents any future complications from arising. The only specific change regarding the disposal of shares affects the Radiochemical Centre, whereby the United Kingdom Atomic Energy Authority is allowed to sell up to 100 per cent. of its shares in the company.
The removal of uncertainty is not the only advantage of the Bill. All those involved with the Radiochemical Centre will benefit from its full integration into the private sector. The radiochemical industry is growing and changing extremely rapidly. The company will be able to react to the changes more quickly and efficiently if it is more a part of the industry. The employees of the company will benefit from the freedom of the private sector. Those benefits will extend to consumers, as radioactive isotopes are used in medicine and industry, in addition to scientific research. The House will not be surprised to hear me say that eventually all taxpayers and the economy will gain.
The provisions of the Bill will radically alter the connection between the Radiochemical Centre and Government. The majority of the company's finance is raised without Government guarantee and the management of the company is independent of the Government. Two loans made to the Radiochemical Centre from the Consolidated Fund represent the company's sole involvement with the Government, apart from the shares held by the United Kingdom Atomic Energy Authority. The proceeds of the sale of the Radiochemical Centre's stock would go to the Consolidated Fund to eradicate that debt.
§ Mr. Trippier
I do not have very much time. Many of my hon. Friends wish to speak.
As the company is not part of the nuclear industry, the Government loses no control of that industry by selling part or all of The Radiochemical Centre. Control over the supply of such chemicals as are produced by the Radiochemical Centre is not necessary, as countless other equally vital chemicals are produced by companies in which the Government have no direct interest. Such control is also absent in other industrially advanced nations including Japan, Germany and the United States.
The passage of the Bill will not weaken the Government in any way and will benefit the country greatly. Existing legislation will be clarified and the spirit of the 1971 Act will be preserved. The company will benefit from a more central place in the industry. Most important of all, strong advances will be made in the Government's efforts to strengthen the private sector of the economy.
§ 5.4 pm
§ Mr. David Penhaligon (Truro)
I must confess that when I see a Bill with the words "atomic energy" written across the top I am likely to be against it. That is true today as on previous occasions. I regard the Radiochemical Centre as very much the more acceptable face of the nuclear industry. It is a company which has a great deal to be proud of and a number of people owe their lives to the genius and expertise which has been demonstrably displayed by that company. I have no wish to lessen the company's impact.
The company has won four Queen's Awards to Industry. A number of references have been made to its financial viability and the fact that it is a successful enterprise. When we consider the argument about who should own an enterprise of this size, I take the Government's view, in that I see little virtue in such an enterprise being State-owned. The Government will know that my colleagues and I have supported a number of measures to dispense with Government ownership of various enterprises.
We know that, no matter what the Government propose to sell, the Labour Party will oppose them, whether the enterprise concerned makes a lot of money or no money. That is not my party's position. We take a rather more pragmatic view. However, I am worried about selling this company and the implications of the sale. I shall explain why.
I should be willing to argue for a Government monopoly or near-monopoly in atomic energy. I am worried about the safety of the industry, as I know are great swathes of the British public. The public are confident in the knowledge that the Government are in charge of safety standards, own the company and will have to answer the questions about any incident happening anywhere.
Anyone who read the Three Mile Island report will know that the further involvement of the Government in maintaining standards and instructions has a great deal to do with the better safety record of the nuclear industry in this country compared with that of the United States.
§ Mr. Penhaligon
I shall explain that. The British Government, who have a near-monopoly of the entire industry from A to Z, have set up and maintain a number of standards of reporting and safety and general investigation which for a long time they have been able to swap between one aspect of the nuclear industry and another. That has produced a high level of engineering expertise in safety. If bits of the industry are to be sold off to different owners—I shall come to that—there will be a division of the great attempt to maintain high standards and a tendency not to swap information that each has gained between one branch and another
§ Mr. John H. Osborn (Sheffield, Hallam)
Is it not the task of Government to regulate, control and deal with health and safety at work rather than to own and run operations of this type?
§ Mr. Penhaligon
I do not argue with that in general, but in the exploitation of the potential of atomic energy I take a different view. I was disturbed about the implication 764 of what the Minister said. I am unsure about what the Bill allows the industry to sell. I should like a clear guarantee that the understanding is that nothing but the Radiochemical Centre can be sold without the direct and specific approval of the House. I have no wish to see the control of atomic power stations or any other nuclear installation put in private hands.
§ Mr. Deputy Speaker
Order. I have listened carefully to what the hon. Member for Truro (Mr. Penhaligon) has said. He has been relating his argument to what is in the Bill. But I must ask him to keep to what is in the Bill and not to go too wide, which is likely to happen if he seeks to answer the hon. Gentleman.
§ Mr. Penhaligon
In my view, general safety standards are important throughout atomic energy. If that matter is maintained within a Government monopoly, the standards are likely to be higher than if it is diversified into a number of camps.
The Minister explained why further legislation is required. If there is a desire to put private capital into the enterprise, I cannot see why the sense of the 1971 Act could not be implemented even if slight modification is required because of the point made by the hon. Gentleman. I did not understand his explanation why the 1971 Act was defective, but if that was his argument the sense of the measure could have been implemented by a minor change to the law.
I argue strongly that if the company is to be sold a massive effort should be made to ensure that the shares are diversified among a large number of people so that no individual group or multinational organisaton succeeds in gaining control. The arguments for the employees virtually to be given a large stake in the capital appreciation of the company are strong. It is their genius, energy and enthusiasm which has made the company a great success. One hopes that that genius and effort will be maintained and will continue to add to the success of the company. As one who believes in an asset-sharing society, I see this as a good chance for the Government to demonstrate that they want to see a wide property and asset-owning society. They have a real chance to do something about it with the Bill. We have had this discussion before and I should have liked the Government to go even further with one or two of the Bills that are before us.
A number of people in the industry are concerned that an American company, New England Nuclear, which employees of the British company say is of a size similar to the Radiochemical Centre Ltd., has been taken over on the American stock market by Du Pont, which paid £150 million for it. That is considerably more than figures that have been mentioned for the valuation of the British company, though those in the industry do not believe that the American company has more assets than the British company and they would therefore expect a similar price to be paid for the Radiochemical Centre Ltd.
They are disturbed that they may become a mere branch of a giant chemical company. Despite what the Minister said about civil servants being endlessly involved in 765 various decisions, I understand that the freedom of those in the industry to practise and develop their expertise has been much appreciated and should be maintained.
My objection to the Bill and to the sale of the company is that they are to do with atomic energy. It is the strong view of the Liberal Party that the Government monopoly of the exploitation of the possibilities of atomic energy should be maintained.
We want to know what else in the nuclear arena the Government intend to sell. Do they look forward to the whole industry being privately owned? If so, there will certainly be opposition from the Liberal Party and from those who fear the industry, and the Government will have every conservationist in the nation on their back. I do not accept that the British people believe that the principle of a private enterprise economy, which Liberals support, is so important that it must be extended to small enterprises such as the Radiochemical Centre Ltd.
§ Mr. T. H. H. Skeet (Bedford)
The hon. Member for Truro (Mr. Penhaligon) put forward a threadbare case. There are not many Liberals left, and they do not make up for their lack of numbers by any strength of argument.
Opposition Front Bench Members repeat many things in an attempt to get the truth across. Unfortunately, it is not the truth that they are spreading, but never mind: they are entitled to make their utterances in the House from time to time. I wonder whether the new political party will have the same nuclear policy as the Labour Party. I always thought that Labour's policy was simply to advance the cause of coal, but we learn new things every day.
I fully support this interesting Bill. Under clause 1, the United Kingdom Atomic Energy Authority may dispose of any companywhose activities include the development of atomic energy or research into matters connected therewith or the production, treatment, storage or disposal of radioactive substances.That is a broad provision and it will include all the subsidiaries not merely of the Radiochemical Centre, but of British Nuclear Fuels Ltd. and the National Nuclear Corporation.
In a debate on the Atomic Energy Authority Bill in 1970 the right hon. Member for Bristol, South-East (Mr. Benn) said:It was a Bill to establish two new mixed-enterprise companies, one for nuclear fuel and one for radio chemicals, both with 100 per cent. Government holdings at the start and both with a statutory Government majority for all time".It is the "for all time" that has created difficulties, and that is why we need the present Bill.
The right hon. Gentleman continued:Thus we had the beginnings of the mixed-enterprise ownership pattern which is embodied in the Bill. Nobody has said it was wrong then, and nobody has said, not even the Minister, that it is wrong now. Of course it is not wrong in an area in which publicly-financed research figures very highly and is applied in industry. The mixed-enterprise arrangement was right."—[Official Report, 17 December 1970; Vol. 808, c. 1602–6.]The Minister has indicated that he has no present plans for BNFL or the NNC, in which the Atomic Energy Authority holds a minority interest. I should have thought that it would be in our interests to dispose of those companies at the earliest opportunity, though I am prepared to agree that a time limit should be put into the Bill. We have another 766 Bill coming forward shortly dealing with the British National Oil Corporation in which powers will be taken. But will they ever be exercised? That is why I asked the Minister whether he intended to exercise the powers during the lifetime of this Parliament.
The Opposition argue that there is no case for the Bill. They ask why a public asset should be disposed of. But the assets are owned by you and me, Mr. Deputy Speaker, and if we wish to dispose of them to private enterprise, for any reason, it is a good move.
If the hon. Member for Merthyr Tydfil (Mr. Rowlands) were in Government and were prepared to run the Radiochemical Centre Ltd., he would be prepared to run every company in the country. If he were to put the profits into the Consolidated Fund they would be used for a number of miscellaneous Government purposes or to discharge the losses incurred by British Leyland and the British Steel Corporation.
I should like to see the close monitoring and interventionism of the Government removed from the three companies that I have mentioned, particularly in view of the poor record of Governments over the past 35 years. The managements of the companies share my view. Furthermore, why should the taxpayer provide additional funds and capital for any of those companies? If they want additional funds they can go to the market, the banks or any shareholders that they can find.
§ Mr. Palmer
On a point of order, Mr. Deputy Speaker. The hon. Member for Bedford (Mr. Skeet) is dealing with the affairs of the National Nuclear Corporation. The Bill has nothing to do with the NNC.
§ Mr. Skeet
It is interesting that the informed and erudite hon. Member for Bristol, North-East (Mr. Palmer) should have made a speech without, apparently, having read the Bill. I must take him to task. Clause 1 states:This section applies to the power of the Atomic Energy Authority to dispose of shares held by the Authority in any company and to the power of the Secretary of State to dispose of shares held by him in any company whose activities include the development of atomic energy or research into matters connected therewith or the production, treatment, storage or disposal of radioactive substances.When dealing with treatment and storage, we are concerned with BNFL. When dealing with research, we are concerned with the AEA. I am surprised that the hon. Member for Bristol, North-East, who has such an acute mind, should have overlooked the elementary matters contained in clause 1. Perhaps he would like my copy of the Bill.
§ Mr. Palmer
The point that I was making is that the Bill is related essentially to radioactive substances.
§ Mr. Skeet
No. I should like the Bill to be entitled The Radiochemical Centre Limited (Disposal and Miscellaneous Provisions) Bill. However, the Government have made it even broader. Fortunately, we can dispose of all the companies. We could even dispose of the AEA with the Minister's assent. However, the Government have been wise. They have provided that disposals may take place only if they will promote the national interest. That is the safeguard. I should not like the hon. Member for Merthyr Tydfil to complain about the national interest. The number of things done by the Labour Party in the national interest is legion. One thing can be relied upon. Conservative Ministers take it very much into account.
§ Mr. Penhaligon
The hon. Gentleman and I often meet in these debates, and we know each other's views about atomic energy very well. Can the hon. Gentleman tell us how much he would like to see sold off? Would he like to see it all sold off? Does he look forward to the idea of a private enterprise nuclear waste dump in the middle of Wales? As one of the great advocates of the industry, what does he see the Bill leading to? How much does he want sold off?
§ Mr. Skeet
The hon. Member for Truro can ask me all sorts of questions. For my part, I am only too glad to give him an indication. Two years ago I had a Private Member's Bill setting up a nuclear waste disposal corporation which would be 100 per cent. Government owned. It would never have been profitable. I think that there is an argument for keeping a State holding in the Atomic Energy Authority for some years to come.
I believe that the three companies that I mentioned could suitably be sold off in the course of time. The market has a unique way of looking after such assets. I can deal with this point more fully by considering the situation abroad. The New England Nuclear Corporation, to which the hon. Gentleman referred, dealt with radio isotypes in the United States. That enterprise has now been acquired by a chemical company. I do not see President Reagan and others getting excited that that may let down the national interest. Far from it—all these matters can be referred to the appropriate authorities at the appropriate time. If the undertakings abuse their authority, they can be taken over.
In France, apart for Amersham France SA, which is a subsidiary of TRC, the comparable body is the International CIS company which is owned by the CEA and Sorin Biomedica. There we have the State largely controlling the company. But when one moves a little further, to the comparable situation of British Nuclear Fuels Ltd., one finds the following situation in France. I mention France because it is one of the leading nuclear countries of the world.
The company in France is Franco-Beige de Fabrication de Combustible. That is owned by a number of enterprises—Framatome, Pechiney-Ugine Kuhlmann, Westinghouse Electric—I understand that that holding is probably being returned to local private enterprise—and Creusot-Loire. Those companies, with a few others, hold an interest in the nuclear fuel manufacturing enterprise. So, even with their philosophy, the French believe in and tolerate having the shareholding of the company very broadly distributed. That is the position in France compared with that of British Nuclear Fuels Ltd. in the United Kingdom.
Let us consider the National Nuclear Corporation, which we hope will build a number of nuclear power stations here. The French one is Framatome. I do not think that anyone doubts that that has been successful. It has about 60 reactors either built or under construction. That company is owned by the Empain Schneider Group, through a subsidiary, Creusot-Loire, 55 per cent., the CEA, which is the State body, 30 per cent., and Westinghouse, which has now been retired, held the other 15 per cent. The current position is 70 per cent. private enterprise and 30 per cent. held by the national body, the Commissariat a L'Énergie Atomique.
What France is doing—and this is what I recommend that the United Kingdom should do—is gradually phasing out the State enterprises or at least some of these 768 enterprises, particularly the three with which I am primarily concerned. Let the private sector come in and gradually take them over and manage them. What is left for the Government to do is to lay down safety regulations, to see that they can be properly monitored, as all private companies can be, even in a sector of this nature, and to see that they are properly administered.
§ Mr. Skeet
I did not say that, because I have said to the hon. Member for Truro that I would not sell the lot. I should keep an interest in the Atomic Energy Authority because I think that it is important that we should do so, but I should be prepared to dispose of those companies—BNFL, NNC and the Radiochemical Centre Ltd.
I say that because I am very interested in the fuel cycle, and that is what British Nuclear Fuels is concerned with. That is an enterprise that I should dispose of over a term of years, in phases, but I should certainly get it despatched fairly quickly.
We know that the French have been very successful with regard to their nuclear costs. In the United Kingdom, I believe that the Minister himself made a comparison between Hinckley Point 'B' and Drax. The cost of nuclear power is 1.35p per kilowatt hour as compared with Drax, where it is 1.52p. That is comparing relatively new stations. If we could have all this advantage in nuclear costs, we should go via the nuclear route. If we go by the nuclear route, integrating backwards, this comes back to British Nuclear Fuels Limited. It is vital that we allow other people to participate in the companies' development.
One could also consider the newer power stations. I shall not weary the House by dealing with all of these. [HON. MEMBERS: "Oh".] My hon. Friends have a great appetite for hearing things that come out of various publications. However, I have given an assurance to you, Mr. Deputy Speaker, and I am mindful of the fact that I wish to speak next Monday on the gas levy. I fear that if I overstep the mark today, Mr. Deputy Speaker, you will be looking over your glasses rather earnestly and saying "Skeet, you have forfeited your position next Monday". I must therefore be disciplined and abide by the rules.
To sum up, I believe that the Government have been courageous in bringing the Bill forward. They have argued their case very realistically on one company at Amersham, which has another plant in Wales, and a number of overseas subsidiaries—in the United States, France, the Netherlands, Germany and elsewhere. It is a very profitable company which could be adequately placed in the private sector without interfering at all with the nuclear power programme. It should be the Government's policy to have relatively cheap transport and energy costs. The French have given a lead. It might be a wise idea to follow the lead that they have established if we are later to enjoy economic prosperity.
§ Mr. Tim Eggar (Enfield, North)
I feel very humble in following my hon. Friend the Member for Bedford (Mr. Skeet), whose knowledge in these matters is well known to the House. I shall be brief, as I, too, am interested in speaking on Monday and I do not wish in any way to impair my chances of catching your eye at that time, Mr. Deputy Speaker.
769 I welcome the Bill as the initiation of a programme of privatisation in the energy sector. We are dealing today with a relatively small company. I hope that this beginning will fire the imagination of the Government so that a BNOC Bill will speedily be introduced to ensure that shares in BNOC are sold as soon as possible. I trust that there is no question of that Bill slipping behind. I hope that the Government will then turn their attention to the British Gas Corporation. I believe that there is a great deal which could be sold on the periphery of that corporation, and I hope that in time we shall see the introduction of private capital into the core business of BGC.
I return to the main purpose of the Bill, which is the privatisation, as it were, of the Radiochemical Centre. First, I am sure that Conservative Members recognise the points made from the Opposition Front Bench. We are dealing with a well managed, profitable and well run company. It is a tribute to the management and staff of that company that it has such a fine record to lay before the House. The fact that it has been so successful is no reason to keep it within the public sector. In May 1979, the Government were elected to bring back private enterprise and to denationalise wherever possible. It is therefore quite correct for them to be fulfilling a manifesto pledge on something which many Conservative Members regard as an important part of Conservative Party policy.
We should go a little further. Inevitably, when boards of companies which are controlled by the Government make decisions, they must look towards their ultimate shareholder. The example has already been given of the £20 million that was raised for the new Cardiff plant. It is true that, apart from a small equity injection, the Government did not have to put money into that development. Nevertheless, in the planning and financing of that plant the management concerned must have asked, "What will the Government say? Will they be prepared to come up with the necessary finance? What will their angle be?"
Exactly the same situation pertained when considering the possible positioning of a plant overseas to manufacture radio isotopes. Such management would have to ask "Whatever our commercial judgment may be, would the Government go along with it? Would they as a shareholder inject the necessary equity?" It is therefore right for the Bill to come forward so that the element of uncertainty which must have played a part in the decision taking of the board can be removed.
There is something further that we Conservatives should say. Rightly, in my view, the Government have a coherent industrial strategy which in a number of specific cases involves the provision of aid to help companies in certain positions and, indeed, in certain geographical areas. Just as it is right for Government to put money into private enterprise companies which have certain temporary problems or even major problems—British Steel is an example—so also is it right that part of that coherent industrial strategy should be to return public sector companies to private enterprise. There is absolutely nothing wrong with that. I welcome it. I should have thought that the Labour Party would have accepted it. In a modern, complicated, industrial society there must be a movement between the public sector and the private sector. I see that as a two-way street.
770 I therefore regret the dogmatic view which has been taken by the Opposition Front Bench. Their argument is that this company was owned by the State and, therefore, it should stay owned by the State. But the same argument is not advanced when private sector companies get into difficulty. We Conservatives are quite prepared to say "All right, we accept that public sector money should help private enterprise firms in difficulties". I wish that Labour Mambers would display the same pragmatism in reverse.
We must also look to the ultimate destination of the ownership of the company.
§ Mr. Palmer
In principle, I do not disagree that in a mixed economy there should be a two-way traffic. But surely the practical test is the success of the enterprise. In other words, one leaves well alone.
§ Mr. Eggar
That is an extraordinary argument. What particular reason is there to keep this company in the public sector? One simply cannot say "It is working fine at the moment". That does not mean that it should always stay in the public sector. Indeed, it is a justification for returning it to the private sector. The company's very success shows that by selling it the Government will raise funds. I have no idea exactly how much. That must depend on the timing of the issue of shares and the sale of shares. However, the sale of a successful company would result in a good return on the Government's investment which could then be used to help companies which are in difficulties.
§ Mr. William Waldegrave (Bristol, West)
Does not my hon. Friend agree that the Government have recently given a good example of this two-way street by investing considerable sums of money in Cambridge in the latest advanced technology of microbiological techniques? By doing so, they are doing what we did just after the war in regard to nuclear matters. At that time we helped the industry get off its feet so that it could become self-sufficient and then reinvested the money in the new frontier technology.
§ Mr. Eggar
I could not agree more. The whole point is that an industrial strategy is not a strategy to help lame ducks. It is a strategy for picking winners and for moving companies in and out of the public sector. It is unfortunate that the Opposition should be so totally dogmatic in their statements today.
§ Mr. Rowlands
Perhaps the practical argument will appeal to the hon. Gentleman. Surely the wishes of the staff, management and scientists who have made this such a success story should be high, if not paramount, in the Government's thinking, especially as it cannot be proved that the wish of the overwhelming majority of the staff at the Radiochemical Centre is that the Government maintain a majority shareholding. Would the hon. Gentleman observe those wishes?
§ Mr. Eggar
Of course. We should pay attention to the wishes of the staff. The Government must give some weight to them. When I refer in a moment to how the shares should be disposed of, I shall comment further on that point.
We cannot have a situation whereby a company which happens to be 100 per cent. owned by the Government can be completely inviolate from takeover by any other company so that the staff achieve the position of civil servants and have long-term job security which they would 771 not have in the private sector. Such a company should be subject to the variations and movements of the market, just as a similar company would be in the private sector and just as the United States company has been relatively. If such companies are successful, and many of us think that they are, no doubt they will be given additional freedom of operation and additional opportunities by becoming part of the private sector.
Obviously, while the hon. Member for Merthyr Tydfil (Mr. Rowlands) has been sitting down, he has been thinking of a lot more arguments which he was unable to deploy in his speech. When he spoke, he merely reiterated the same argument about five times.
I hope that we will give some consideration to the way in which we dispose of this company. I accept the point made by the hon. Member for Merthyr Tydfil. I believe that we should follow what I hope will be a successful precedent set by the sale of shares in British Aerospace. In other words, we should make it quite clear that we do not wish control of this company to fall into foreign hands. It is easy to ensure that by limiting the percentage of shares which can be held or registered by foreigners.
Secondly, I hope that it will be a public offering rather than a private sale to one other company or conglomerate.
§ Mr. Eggar
I am sorry, but I wish to develop my argument. I have been extremely generous in giving way.
We must try to give priority to British ownership. We must also try to ensure that the shares are held as widely as possible. By that, I do not mean that they should be held by one or two pension funds. I do not want to see them placed with one or two institutions. I hope that we shall follow the sytem used for British Aerospace where preference has been given to small allotments. In that way, ownership would be spread to individuals, which would be genuinely welcomed. I hope that the Government will also consider whether it would be appropriate to set a maximum percentage shareholding for any one company, institution or individual so that we achieve wide, and largely British, share ownership.
I fully support the Bill. It is a welcome development from the Department of Energy. I hope that the precedent that it sets will be taken further, and that we shall see the same forthright and powerful application of Conservative policy in our dealings with the British National Oil Corporation and the British Gas Corporation.
§ Mr. John Watson (Skipton)
The main purpose of the Bill is to give the Secretary of State power to remove the Radiochemical Centre Ltd. from the tender loving care of the Atomic Energy Authority and to place it in some form of private ownership. The Bill has been referred to as an insignificant measure. It may be insignificant in volume, but emotionally it strikes at the heart of the difference between the two major political parties. One can tell that from the terminology that has been used. If the Opposition wish to nationalise anything they do so as a burning matter of principle. Whenever the Conservative Party wishes to denationalise anything, it is accused of doing so because of party dogma.
This year, the Radiochemical Centre Ltd. will have sales totalling almost £50 million. Last year, it made a profit of £4 million. It has 2,000 employees. It raises most 772 of its own finance. It is a manufacturing company selling to the medical, chemical and pharmaceutical markets throughout the world, and 83 per cent. of its products are sold overseas. It is an ethic of Conservative political existence that there is no earthly reason why such a successful company should remain in the public sector. There may be strategic reasons why, at certain phases in a company's development, public ownership has some relevance. But if ever that was the case with this company, that moment has long since passed.
The hon. Member for Truro (Mr. Penhaligon) said that there might be a strategic need for the company to remain in the public sector. I was briefly entertained by his speech. He informed the House of what his Bench would need to know. It might be churlish of me to observe that at that moment there was a certain similarity between his Bench and the opinions that he put forward—namely, they were both empty. Has he read the list of products manufactured by the company? What does he consider to be the strategic need of radioimmunoassay serum ferritin, or rabbit reticulocyte lysate? That is a challenge to the Hansard Reporters, if ever I heard one.
If it is considered strategically necessary for such substances to be manufactured by a company within Government control, why is it not considered necessary for such substances as dynamite, TNT or even penicillin similarly to be manufactured by companies under Government control? The United States finds no problem in having the equivalent company on that side of the Atlantic in private hands. The Japanese and the Germans have no problem in avoiding the existence of such a company at all.
I take slight issue with my hon. Friend the Member for Bedford (Mr. Skeet)—I hope that I am not trespassing on a dangerous minefield—because I do not think that the same arguments can be extended to companies such as British Nuclear Fuels Ltd. That company, which buys almost all of its inward goods from the nuclear industry, and sells most of its outward goods to that same industry—with the goods being at least potentially capable of making nuclear bombs—provides a substantial strategic case for a company remaining within the public sector.
I question the possible future contribution that the Radiochemical Centre Ltd. can make to the Government and to the public sector borrowing requirement. That point was put with some power by the hon. Member for Merthyr Tydfil (Mr. Rowlands) in his opening speech. Last year the company made a profit of £4 million—£2 million less than the previous year. In his forecast for future years, the chairman said:Although 1980/81 will be another difficult year, thereafter a strong upward surge in profitability into the mid 1980s is planned and expected, provided that an appropriate adjustment of sterling's international value takes place. As a result of measures already taken or in hand the necessary production capacity will be available.The appropriate adjustment in the international value of sterling has not taken place. It may be that the profits, not only this year but in future years, will be somewhat less than they were in the immediate past. That should not detract from the "saleability" of the company in any way, but it might detract from the contribution that it might otherwise make to the public sector borrowing requirement.
I wish to support my hon. Friend the Member for Enfield, North (Mr. Eggar). If we are to dispose of the company we must give serious thought to creating as wide 773 a franchise of share ownership as possible. I say that for a number of reasons. A wide flotation through the Stock Exchange will probably produce at least a realistic price, and possibly the best price. We have heard references to the morale and motivation of the company's staff. Clearly, with a high technology company, such morale and motivation are of paramount importance. One could almost say that the assets of the company go up and down in the lift every morning. If the staff will feel more content because it is holding a certain percentage of the shares—with the great majority of the remaining shares held by the British public and not, therefore, vulnerable to a takeover by an American company—so much the better.
There may be some risk of an individual company, possibly not in Britain, buying the company as a defensive measure. We have had experience of companies taking defensive licences for products—in other words, taking a licence without any intention of exploiting the product but simply to keep it off the market so as to preserve the sales of other goods. That problem could best be obviated by wide share ownership.
The accounting policies of the Radiochemical Centre Ltd. have been correctly pursued in a cautious manner. An individual company buying that company might, by dint of acceptable creative accounting, generate a greater degree of profit than has been the case to date. For example, the company spends about £5 million a year on research and development. All of that sum, quite correctly, is written off as revenue in the current year. Much of it relates to laboratory equipment, which would be available for capitalisation if the management so wished.
The company operates a stock policy on the basis of FIFO—first in, first out. Through constraint of circumstances, most of British industry is currently operating on the FISH principle—first in, still here. With the auditors' permission, some ameliorative adjustments could be made in that connection, thereby adding artificially to the bottom line figure of the company.
I wish to refer to what was said at the outset of the debate. The Government have been accused of dogma in wishing to dispose of the company. I refute that charge. I ask Opposition Members to accept that it is not dogma that makes us wish to sell the company. Instead, it is a pure, simple and fundamental part of our philosophy as a party. I appreciate that the philosophy of Opposition Members may not be in line with that which I have articulated. I humbly remind them that our philosophy is the one that has been most recently endorsed by the British electorate.
§ Mr. Peter Hardy (Rother Valley)
I have listened to the debate because of my interest in energy, but I did not intend to take part in it. I do not wish to challenge the integrity of the hon. Member for Skipton (Mr. Watson) by contradicting him about dogma, but he spoke not about dogma, but about dreams. If the Bill took back rather than handed over, not so many Conservative Members would be eager to see where the opportunities lie. We are grateful to the hon. Member for Skipton for spelling out another of the company's attractions for people who wish to get 774 their hands on it, namely, that it is fiscally attractive. A company that wishes to pay a little less to the public purse will be able to do so by acquiring this asset.
§ Mr. Rost
Will the hon. Gentleman explain why it is greedy for employees in nationalised concerns to be given the opportunity to get their hands on the shares of firms for which they work, and why it is not greedy for the Government to take their grubby hands off a company when it is denationalised?
§ Mr. Hardy
The hon. Gentleman describes his own Government's hands as grubby, and I agree with him. We do not have such tight dogmatic beliefs as do the Government. If the Government were determined to reduce the State's hold on the company, it might be a good idea to set up a co-operative. As the hon. Member for Skipton said, the assets of the company basically are the skills and abilities of the people who work for it. Why do the Government not establish a co-operative, rather than put the nation at risk by handing the company over to the Arabs, the Japanese, the Germans or the Norwegians? I refer to the Norwegians deliberately because of the privatisation of a company in my constituency. A national asset is likely to be handed over in the name of privatisation to a publicly owned firm based abroad. Conservatives in other parts of the world might raise their hands in horror at the Government's reckless profligacy.
I take a reasonable and balanced view. It is that a company with the record of success achieved by the Radiochemical Centre Ltd. is doing so well that we should leave well alone. The hon. Member for Skipton referred to the company's profound achievements. The Minister talked about its commendable record of 60 per cent. export output—and he referred to the four Queen's awards for export achievement. If a company is doing as well as that the Government should pause before they apply their dogma. If they want to demonstrate that they are modern and progressive, they should consider the co-operative approach and allow those who represent the assets of the company to have a greater stake in it. That would demonstrate an absence of dogma and be a worthwhile experiment.
How much would the taxpayer receive from the sale of the Radiochemical Centre Ltd.? The Minister suggested that in the seven years since the Cardiff development began in 1973 £20 million had been invested. That suggests that the real value of the Cardiff investment exceeds £50 million and that the value of the total activity at the Amersham base must exceed £100 million. It is reasonable to assume that the real value of the company's equity is in excess of £150 million. Given the profits declared in the last few years, that seems to be a modest estimate.
I asked the Minister a legitimate question, which should be answered. For how much do the Government intend to sell the company? If the figure is too low, in addition to being dogmatic, the Government will be grossly irresponsible in failing to serve the interests of the British taxpayer. If the Government sell the company to foreigners, widows, pension funds, or whoever, for less than a reasonable and honest sum they will act not merely irresponsibly, but in a manner that could be called criminally conspiratorial. In order to demonstrate that the Government are not embarking on a criminal conspiracy, or something that smells like it, the Minister should provide an estimate of the benefits to the PSBR.
§ Mr. Waldegrave
The hon. Gentleman is a believer in the mixed economy, as I am. I am driven to my feet by his constant use of the word "dogma". The Government are investing large sums in new technology, such as Inmos and biotechnology. Surely it is sensible to float successful operations in which the Government have invested in order to roll the investment over into new technology.
§ Mr. Hardy
I take the view that the National Enterprise Board was a useful development which should have been expanded. People running such boards should be given freedom to move in and out of companies and to indulge in experiments. However, I am not sure that I can approve of this development, since it is not left to the judgment of the NEB, for example, or to that of those who have proved their capacity for business and their concern for the nation's interest. Such action has not been taken by the present Administration. If the people who are concerned for the welfare of the British people were involved in such decisions, I should be prepared to be more generous.
The Minister justified the need for the word "dogma" by talking of rolling back the frontiers of the State. If Britain is to move forward in high technology, where its future lies, the State's role is essential. Without it the fruits of entrepreneurial investment will be delayed by 8 to 12 years. If the State invests, it is wrong to require the taxpayer to pay out the initial investment, to wait and sustain the investment in the years before it bears fruit, and then to roll back the frontiers of the State so that others can make profits.
The hon. Member for Sheffield, Hallam (Mr. Osborn) will understand why I am present today. I am as much concerned with the special steel industry as with the atomic energy industry. Today I tabled an early-day motion to congratulate the people in the special steels division in Rotheram, and at the Thrybergh Bar mill in particular, on breaking yet another set of world records last week. They have done that, not merely because they want their pay at the end of the week, but because they have a pride in their activity and want to see the steel industry in Britain succeed. If they believe—and this may apply to the workers in Amersham and Cardiff—that their endeavours, their improved relationships and their activity and devotion to work are merely to put profits in the hands of perhaps even a minority of shareholders who may be Arabs or Japanese, their incentives and motivation will be affected.
If this country is to survive, it is time that the Government began to understand that motive and incentive in British Industry do not depend upon the carrot or the whip. They lie in the hearts of people. They lie in the hearts of the steel workers in South Yorkshire, as I believe they lie in the hearts of those operating for this company in Amersham and Cardiff. That is why I suggested to the Government that instead of selling off the company and pretending that it will go in small lots to widows—who would be better advised to put their money in building societies, which would be in the national interest—they should show us that they are flexible and that they have vision, perception and imagination. Let the workers share with the taxpayer the future benefits, which should accrue to the worker and the taxpayer. The handing over of those benefits on what I suspect is less than a reasonable market valuation justify the taunt or accusation of conspiracy and crime.
§ Mr. John H. Osborn
The hon. Member referred to State involvement in the steel industry and special steels. At the moment, Government funding of the British Steel Corporation is putting in jeopardy the firms that are left in the private sector. Therefore, the State must know when to put its foot in and when not to.
The hon. Member also referred to taxpayers' money and the interest of those working in an industry. One of the aims of a society, such as the free enterprise society in Japan, is to put the pension funds and the insurance of ordinary citizens into the wealth-creating activity of the country. Is that not something that we have missed out on over the last 25 years?
§ Mr. Hardy
Successive Governments have used the taxpayers' money in the way that the hon. Member for Sheffield, Hallam has commended its use in Japan.
As the hon. Member knows, the Rotherham works are an important part of the British Steel Corporation. I accept that the special steels section may be making a loss and may have done so exclusively as a result of Government policies over the past 18 months, but the hon. Member, being a Sheffield Member of considerable experience, is aware that during the post-war period that part of the British Steel Corporation made substantial profits. I am not prepared to accept that the taxpayer has forked out large sums of money for the British Steel Corporation in South Yorkshire, because that is not true. Since nationalisation, much money has been earned by that profitable sector. However, a great deal of money has been invested at Aldwarke, Roundwood and Thrybergh with the continuous casting at Templeborough.
Without being offensive to the private sector, I suggest to the hon. Member that if it had devoted a sufficient share of its profits in the past to ensuring that it, too, had modern kit and plant in every particular it might not be in such difficulties today. I am not saying that we should not assist and sustain industry. The role of the Government, like that of Governments in Japan, America, Australia, France, Germany and everywhere else where there is sanity in administration, is to provide that sustenance. The sad fact is that the Government, faced with an appallingly critical industrial situation and the certainty of 3 million unemployed in 1981, are wasting their time, our time and the country's time with this sort of frivolity.
§ 6.5 pm
§ Mr. Peter Rost (Derbyshire, South-East)
I shall not take up the comments of the hon. Member for Rother Valley (Mr. Hardy) because I want to get back to the Bill. Like my colleagues, I welcome the Bill, but the reaction of the two or three members of the Labour Party who have been in attendance has been predictable and typical. They say that because the company is part of the public sector, and because it is nationalised, it must remain so, irrespective of the circumstances. When the company was formed, it might have been justified to have State support, but the argument that that might not apply today, is neglected and overlooked. It is regarded as doctrinaire if we take a pragmatic view of individual pieces in the public sector and decide that the justification for them staying in the public sector is no longer valid.
The Labour Party regards nationalisation, State control and domination as a one-way ratchet which must never be a two-way process. It does not seem to occur to it that there 777 are arguments, which we have put in the debate, to justify the sale to the public of industries in the nuclear sector which are now State controlled.
I shall emphasise the main arguments why the Bill should be supported. It has been suggested by Opposition Members that, because of the profitability of the Radiochemical Centre and other nuclear companies, such as British Nuclear Fuels, which come within the category of the Bill for denationalisation, one should leave well alone. That is a valid point. However, it completely overlooks the argument that they could be more profitable if they were given the commercial freedom of the private sector instead of having to come cap in hand for every piece of borrowing which they have required over the years.
It could be argued that if those companies had total freedom to take commercial decisions instead of being overrun by men from the Ministry, their profits could be more substantial, they could be employing more people than they are today and they might develop their export potential more successfully in the areas of high technology in which they operate. I cannot say whether that is so. One must speculate about it. One can only speculate that it could be so. That is a valid argument for suggesting that it is not necessarily justifiable to argue that, because those firms are doing relatively well, they should be left alone.
The argument is comparative. One could cite many more examples in the private sector where, released from the control of politicians and civil servants, commercial freedom has given a new impetus to a company. That impetus is given not only by denationalisation, but by the possibility of private shareholdings and the accountability which that produces.
I shall give the obvious follow-through example of that. If a company which has now one shareholder, namely, the State, were to redistribute its shares widely—as my colleagues have suggested should be done, which I support—and were to give a generous allocation of those shares to the employees who have helped to build up the success of that company, as we are doing with British Aerospace this Friday, who is to say that that would not provide a stimulus? It would provide an incentive and a new motivation for such companies to surge forward, improve their productivity and profitability, their export markets and their employment opportunities. Evidence exists to support that argument, although I do not expect the Opposition to accept it. Wider share ownership—democracy—should be applied to individual firms. It can be an added incentive in helping to create wealth. That is a fundamental argument in favour of the Bill.
My hon. Friend the Under-Secretary was a little too timid. Under pressure, he admitted that there was no immediate intention to dispose of the shares in the Radiochemical Centre. He was even more hesitant about the disposal of part of the State's holding in British Nuclear Fuels, which is a larger company than TRC, with higher profits. It has an extremely good record in its advanced technological field of processing nuclear waste from Japan and other European countries, as well as from our own nuclear industry. It has tremendous potential to develop the technology in world markets. Like RCL, that company has to some extent been undercapitalised, because the men from the Ministry vet its every move. 778 With more privatisation, commercial decisions could be taken to raise money from shareholders or on loan finance, which would allow development and expansion with less restriction. That is an important consideration, which should make my hon. Friend less timid.
We are proceeding with our manifesto programme successfully in other measures that the Government have introduced to reduce State control and nationalisation. I hope that the Minister can assure us that this proposal will proceed without delay.
The Bill will enable us to proceed with the sale of part of the equity of British Nuclear Fuels to the employees who have helped to make the company a world renowned success. We could also use the powers under the Bill to reduce the State's holding in the National Nuclear Corporation. There is no justification for the State to retain a major stake in that corporation. It would proceed more successfully and dynamically if some of the shares could be redistributed, with preferential and beneficial participation for its employees.
I welcome the Bill. It is in line with Conservative philosophy. We believe in genuine public ownership and not State monopoly ownership. Wider share ownership and employee participation are major incentives for wealth creation. By privatisation and reducing the State sector where justifiable, we can provide greater opportunities for companies to grow more rapidly and profitably. That argument applies particularly to such companies as the Radiochemical Centre, British Nuclear Fuels and the National Nuclear Corporation, which deal with advanced technology, where this country has to excel if it is to survive.
§ Mr. Bob Cryer (Keighley)
Dogmas have been mentioned. Every hon. Member is elected on the basis of some sort of dogma. The difficulty for the Conservatives is that their dogma is palpably failing. We have the highest unemployment level since the war, productivity is low, production is falling year by year and profitability is at an all-time low. Capitalism, which is the Conservative beacon, does not seem to be the success that they claim. In June 1979 the Chancellor of the Exchequer gave tax concessions to entrepreneurs so that they could invest that money and provide jobs. Where are those jobs?
Public enterprise has been successful in the sectors covered by the Bill. Because of their own failings, and to satisfy their friends, who have not been able to develop their dogma satisfactorily, the Government are pushing through legislation to enable them to get rich pickings from the public sector. The Conservatives want it both ways. On future election platforms, when they mention nationalisation they will talk about failure, debts and the cost to the taxpayer. Not one will mention the successful side of public enterprise, which makes handsome profits and provides a public service. It is those sections that they are concerned to sell off. They have not considered legislation to sell off rural branch lines, which cost the taxpayer a great deal. They have not introduced legislation to sell off part of the steel industry. The cost is too great for private enterprise. Thay are interested only in selling off the rich pickings. Profit and greed are the dogmas of the Conservatives. They elevate them to a principle.
I have two points to make about the Bill. First, the Government are stepping into murky waters. This industry is not like any other. It is potentially hazardous. Private 779 enterprise tends to cut corners in order to boost profits. Conservatives may say "Tut-tut, that is totally wrong", but over the past 100 years or so successive Conservative Governments have introduced legislation to ensure certain operational standards for private enterprise, even before a significant public sector came into being, post-1945. They were concerned about short cuts. They also know that private enterprise safety standards are not necessarily the best.
Secondly, we have the experience of America—that Valhalla of capitalism—where the man on the white horse from the B movies is now holding the reins, metaphorically and occasionally literally for press cameras. Private enterprise in the atomic energy industry there has not been found to have entirely satisfactory safety standards. We should remember Three Mile Island. It is generally felt that private enterprise standards of safety in America have been very much behind those of public enterprise here.
The hon. Member for Derbyshire, South-East (Mr. Rost) talked about accountability to shareholders. Will shareholders prod and poke around the works to ensure that safety standards are applied? Of course not. They are looking for their profit. If that profit is returned, they will presumably be satisfied. What about public accountability in this Chamber and in this Parliament for safety standards? As soon as these companies become private, the right of accountability to this House, although not totally ended, is severely diminished.
§ Mr. Rost
I am grateful to the hon. Gentleman for allowing me to respond to the naivety of his argument that shareholders who had invested their savings in a company would not be concerned about the safety of the factory that happens to be producing the products in which they have invested. The opposite is true. They would be most concerned that the company should remain in business. It would not remain in business if it had a serious accident of the sort that the hon. Gentleman describes.
§ Mr. Cryer
I take an example. Where would a group of shareholders turn? They would turn, possibly, to the Nuclear Installations Inspectorate, a public body with some degree of supervision. If they did not go there, they would go to the company. But it is the company that is involved in the operation that is causing them concern. Public accountability means that the shareholders can turn to a publicly elected body such as Parliament and raise questions, either written or oral, or through other means known to hon. Members. That is public accountability. We can turn the spotlight on something far more effectively if it is in public ownership because it is publicly accountable. In this industry, that is a most important and crucial element.
I am concerned about the atomic energy industry. I am not a supporter of further development of atomic energy generation. One of the tiny consoling factors about atomic energy in this country is that it is located in the public domain and is, therefore, accountable to the House and the public at large. Clause 1 drives a coach and horses through a number of statutory requirements that the Atomic Energy Authority has to supervise. If the Secretary of State says that selling off a company is in the national interest, that is a decision for him. He has the power so to do, but it is lamentable that that should be so. He is given powers that are far too wide.
780 The Secretary of State does not have to come to the House for an order. All that he needs to say is that, in his view, the decision is in the public interest. That is a complete erosion of democracy, in the interests of a tiny number of shareholders making a profit or receiving a dividend from a profit that has been made. I very much regret the introduction of the Bill.
I wish to refer to the Radiochemical Centre Ltd. Selling off sections of the atomic energy industry is one thing but selling off a specific company should also be considered. I regret that I did not hear the Minister's comments. I was chairing a Select Committee at the time. I cannot, unfortunately, be in two places at once, much as I should like to be. The Radiochemical Centre Ltd. is highly successful. There is no provision whatever in this legislation for protection against multinationals and international competitors buying into this sphere. There has been reference from the Conservative Benches to the need for limitations, and I agree with that. Presumably, however, the sale of any shares will be subject to the usual company legislation. That legislation does not give sufficent access to nominee shareholding to enable us to determine precisely the purchasers of any given block of shares.
There is no provision in law at the moment to ensure that this company, with a department at Harwell, can be retained even if one accepts the notion "All right, it is going to private enterprise, but let us keep it British". Even then there is no protection. An international purchaser will not only get the company; it will also get a channel into the heart of our atomic energy industry because of the connections of Radiochemicals Centre Ltd. with such areas as Harwell. The difficulties are real. A similar argument was not answered with regard to British Aerospace when we raised the matter on the Bill that is now an Act. The same is true now. There is insufficient protection against purchase by foreign nominees who wish to buy into our international atomic energy industry. I turn to another aspect.
A few years ago the House passed the Atomic Energy Authority (Special Constables) Act which recognised the special and dangerous characteristics of atomic energy. We gave Atomic Energy Authority constables the power to carry arms in pursuit of people who they thought intended to interfere with fusionable and fissionable materials. That was an indication of the concern felt about atomic energy. The materials are dangerous in themselves. They are more potentially dangerous than any material that we possess because of their use in fusion and fission processes. To what degree will that security be protected in the future? The Bill does not make that clear. It is a real cause of concern.
The Radiochemical Centre Ltd. is successful. The staff, by and large, are content with their status as a public sector concern. Why disturb them? Why not leave a public sector organisation that has a good turnover and provides a public service in the provision of radio isotopes, medicines and a wide variety of applications? It is a public service. It is accountable. It is a serious, potentially highly dangerous area of activity that is best kept in the public sector.
All in all, the Bill will do no good. Public ownership actually protects. Dunlop, a large British-based multinational company, was recently the subject of takeover bids in international share dealings on international stock exchanges. Dunlop was so worried that it met a group of hon. Members from both sides of the House. It could do 781 little to protect the drift away from control in this country, which could spell serious difficulty for the many thousands of people who work for Dunlop in the United Kingdom.
If shares are floated internationally, and if ownership goes abroad, very little protection can be offered to prevent the slow erosion of the shareholding, leading to the building up of a majority purchase. A final purchase may be prevented by the Industry Act 1975, which contains provisions to prevent the removal of the ownership of a company from this country if the Secretary of State for Industry believes that removal of such ownership would be against the national interest. Has the Minister consulted the Secretary of State for Industry about the matter? Is he prepared to use the powers in the 1975 Act if a situation is reached where he thinks that foreign ownership threatens control of this company? That is something that we would very much like to know.
I hope that from this oak panelled Chamber the message will go out that we are talking about a part of the public sector that is successful. It is buoyant, it is developing and it is providing a useful and important social service. It employs hundreds of people who are satisfied to be in the public sector, yet the Tories are selling off this concern because they detest the public sector and want to see it fail. Where it is successful, they are prepared to hand it over to their friends for what they fondly imagine are rich pickings. Let them beware. The Labour Party's policy is renationalisation without compensation. Any potential share purchasers had better bear that in mind.
§ Mr. John H. Osborn (Sheffield, Hallam)
"Renationalisation without compensation" epitomises the dogma that still divides Britain. I begin my speech with those words in mind.
The debate reminds me of one that I listened to in the early 1970s when the then Minister of Transport, my right hon. Friend the Member for Yeovil (Mr. Peyton), decided to withdraw Thomas Cook from the clutches of British Rail. I have not re-read that debate today, but all the arguments as to why Thomas Cook should not go into the market place were deployed at that time. It is 10 years after the event, 10 years after the first denationalisation party celebration that I was able to attend in the Minister's office, and Thomas Cook in its new form is more vigorous and more effective now that it is outside the clutches of the State.
Clause 1(5) contains some important references. It states:Where a disposal by the Secretary of State would in his opinion be inconsistent with promoting or controlling the development of atomic energy, the disposal may only be made if in his opinion it would promote the national interest.Many reservations have been expressed by the hon. Member for Keighley (Mr. Cryer). I hope that my hon. Friend the Minister will spell out how the Bill's provisions will be operated in practice.
When I read the Bill, I asked myself, bearing in mind the previous experience, "Is the Bill bold enough?" There are many problems in the energy industry that should be tackled. We have had a useful debate on when the State should and should not be involved. The hon. Member for Bristol, North-East (Mr. Palmer), for whom I have respect in his involvement in the Select Committee on Science and 782 Technology, asked, "If it is successful, why should we sell it?" The hon. Member for Rother Valley (Mr. Hardy), in a speech dealing with many issues, said that we should leave well alone.
Surely, the State, the banks and the institutions should devise means to assist something that is new, but once something is successful, the State, and especially the banks, should withdraw and let the entrepreneur take over. There has been a debate on the extent to which the State should control health and safety at work. I hope that my hon. Friend will assure me that State supervision of safety in this area will continue and that there is no question of it not continuing. That is an issue entirely unrelated to the one with which we are dealing.
I remind the House, that we are dealing with the Radiochemical Centre Limited, which had group sales of over £41 million last year, of which £34 million were overseas sales. It has assets of nearly £34 million and it has about 1,900 employees. The British Nuclear Fuels Ltd. operation has a turnover of £283 million, net assets of £393 million and employs over 14,000. That is the scale of the operation. Obviously, we are dealing with the smaller part of the industry.
It seems sensible, as my hon. Friend the Minister said, to reduce the size of the public sector because of the public sector borrowing requirement. It is even more sensible that the proceeds should go to put into balance the Consolidated Fund. Over the past 25 to 35 years, Conservative Governments have found themselves the caretakers of the legacies, of the follies, of previous Socialist Governments.
A feature of the debate has been the statement that is likely to be made about further funds going to the steel industry. Perhaps it will be £1 billion as against £30 million. The write-off is £3,000 million. Even the possibility of giving a face-saver of £100 million to the steel industry indicates how large a Conservative Government's expenditure has to be in one area and how small is the sum that will flow back as a result of the Bill.
The hon. Member for Merthyr Tydfil (Mr. Rowlands) makes me wonder whether his approach is that of a Left-wing Marxist or a Social Democrat. Having spoken to Social Democrats in France, Germany and elsewhere, some of whom have been Members of the European Parliament and others in the Council of Europe, it is clear that they do not believe in excessive State involvement or the corporate State. For instance, the corporate State is anathema to Social Democrats in Germany.
When the hon. Member for Rother Valley commented on taxpayers' funds, I had in mind the fact that last night, but for our whipping, I would have spoken to the life insurance and pension managers of Sheffield and South Yorkshire. They gave me papers and material that indicated their concern that pension and life insurance funds should be invested in the wealth-creating activities and assets of tomorrow. I had to comment that they would not have access to the North Sea oil and nuclear industries and that they would not be able to invest the pension funds of those employed in agriculture, industry and commerce throughout the country in those sectors, because the State is there already and drawing in the taxpayers' money. I shall not elaborate on the speech that I did not make last night, but the points are relevant to my intervention in the speech of the hon. Member for Rother Valley.
When the Japanese developed their free enterprise system and their concept of consortia, which many of us 783 have had a chance of seeing, their concern throughout was to put the savings of ordinary people directly into industrial wealth-creating activity without channelling it through the grubby hands of the State. The tragedy that has happened in Britain is that the State has been the funnel through which the funds of private individuals have been poured to finance the activities of the State. The State, including the Select Committees—members of the Select Committee on Energy have participated in the debate—have not been able adequately to monitor this method of handling the funds of private individuals. Therefore, it is better to find some way of enabling private funds to go into activities of the sort that we are discussing and to put those funds into activities that are successful rather than trying to draw them into unsuccessful activities.
The Bill is a move in the right direction and I have no hesitation in supporting my hon. Friend the Minister in putting the Bill before the House. It is a small step in the right direction, and with BNOC and other organisations in mind, I hope that my hon. Friend will be more courageous next time.
§ Mr. Peter Viggers (Gosport)
I am pleased to be able to give my wholehearted support to the Bill and to the Minister.
I yield to no one in my respect for the House of Commons, but there are certain limitations on its ability. One is that it should not run a company that is responsible for the manufacture of radio isotopes. Ultimately any company that is owned by the State has the House of Commons as its court of appeal. Ministers who are responsible for taking decisions are subject to political pressure, and such political pressure does not lead to good business decisions. Therefore, I applaud the movement of this company from public control to control that is equally public but which is channelled through private funds. In marketing and entrepreneurial matters, there is no substitute for private enterprise. Neither Whitehall nor Westminster has the ability to run a company in a proper and economic manner.
One point of advantage is that it will now be possible for the company to introduce share incentive schemes that will give real shares and incentives to the workers in the company. In theory, it is possible for any company, public or private, to introduce such schemes, but it has been found that it is necessary to have a Stock Exchange listing in order to value the shares, for the share options to work well and for the individuals within the company to see the value of the shares that they have been given. For that reason, it is important that the company should be listed.
§ Mr. Dalyell
A Stock Exchange Listing is all very well, but some companies, such as ICL today, may deeply resent being ludicrously underrated on the Stock Exchange, with all the difficulties that that causes.
§ Mr. Viggers
Indeed, there are fluctuations in value on the Stock Exchange, and British companies are substantially under-valued. However, the individuals who hold the options have the timing in their hands, and they can decide when they wish to take the benefit of the options.
Had I been called to speak earlier, Mr. Deputy Speaker, I would have given a paean of praise to the Bill, and I hope 784 that the Minister will not think that I am seeking to carp by picking up one point. I hope that it will be taken in perspective in my support for the Bill. Many people, both inside and outside the House, would like to know more about the manner in which we are to ensure that the control of the centre will remain within the United Kingdom. It is one thing for the Dorchester hotel to be acquired by people living outside the United Kingdom, but it is another matter for a company that has such central significance to the United Kingdom economy—a company that manufactures isotopes—to be potentially controlled outside the country. A British company is British because its workers are British, its ownership is British and its control is British. I have no doubt that the workers will remain British and that the control, in the safety sense of radioactive matters, will remain British.
If ownership is not to be within the United Kingdom, there will be something missing from the company. I share the views of those who expressed concern that the workers in TRC should feel that they are working for themselves and for the country, and that the control should not drift away. It has been possible to find a way of controlling the ownership in British Aerospace. However, I am particularly concerned, because even such a magnificent company as British Aerospace is valued at only £300 million, which is not very much in terms of the international cash flow of oil and gas magnates in Middle Eastern countries and elsewhere. It is important that we should not allow our British assets to be picked up at low rates by bodies outside this country.
§ Mr. Rowlands
With the leave of the House, Mr. Deputy Speaker, I should like to respond to this interesting debate, which has been dominated to an extent by references to dogma and doctrine.
I should like to comment on areas of agreement. First, it is agreed that there is a need for clarification of the 1971 Act. We would support any Bill that clarifies that Act. Secondly, it is agreed that the Bill is principally concerned with the power of the Secretary of State to be able to sell the whole or the majority of the shares in TRC. Thirdly, it is agreed that the story of TRC is one of success, dedication and dynamism by skilled and professional people.
There is certainly a measure of disagreement on the point raised by the hon. Member for Derbyshire, South-East (Mr. Rost) that the men from the Ministry are running all over the company and that the company could have had better commercial and technological skills. From all the evidence that is available, we know that the company has been extremely successful, has promoted its products and has gained major markets in this country and overseas. We are talking about a wonderful success story of a company that is 100 per cent. Government owned.
There is not very much disagreement about exploring further the possibility of employees having a share in the company. The 1971 Act, clarified by this Bill, would allow the Government to encourage employee participationin the company, without the Government relinquishing their majority control.
It is also undisputed—I hope that the Minister will confirm it—that the overwhelming majority of the staff at TRC would like the Government to maintain a majority control in the company. That is the simple statement that is cautiously presented by the staff and workers of TRC.
785 It would still leave wide opportunities for a minority shareholding to be sold off to private investment if necessary, and to encourage employee participation.
The major difference, which is practical rather than dogmatic or doctrinaire, is that all Labour Members have said that we should leave well alone, and that the people who created the success should be left to get on with the job. They should be given full support.
If the Minister is not willing to amend the Bill in the way that I suggested, which would create a consensus—I judge from his remarks and from those of the zealots behind him that he is not—we have to conclude that the argument from the Conservative Benches is that if a company is successful it is a crime, and that it must then be sold. The reason why it must be sold is that no evidence must be left to show that public enterprise works and is profitable. Unless the Minister offers some assurances, we shall oppose the Bill.
§ Mr. Norman Lamont
Before I turn to the question of TRC, Mr. Deputy Speaker, I should like to reply to my hon. Friend the Member for New Forest (Mr. McNair-Wilson). Since it was in order for him to put the question to me, I imagine that it is in order for me to reply to that question. What I say to my hon. Friend, briefly, about the fast reactor is simply that this is something that we are actively considering. We do not expect to be in a position to make any announcement for some months. But we do not share the view, which I know my hon. Friend put in the debate a few weeks ago on energy prices, that it would make sense to jump straight from thermal reactors now to the fast reactor, and we foresee a continuing need for thermal reactors in this country. I am afraid that that is all I am able to say at this stage in reply to my hon. Friend's question.
I had hoped and, indeed, rather expected that this Bill might have been not a very controversial measure. I thought that there might have been even a measure of agreement and interest from the Opposition. I was a little surprised to hear wild phrases. I think that I even heard the phrase "the erosion of democracy" thrown in from the hon. Member for Keighley (Mr. Cryer).
The hon. Member for Merthyr Tydfil (Mr. Rowlands) talked about the fears of those who worked in the company. At times, it seemed as though he was doing his very best to stir up those fears, rather than doing what I think we in this House should do, which is to reassure those people, because the Government have the future of the company and of those who work in it very much at heart. We do not believe that what is proposed in the Bill will in any way endanger the company's future or the livelihoods of those who work in it.
§ Mr. Dalyell
May we be clear on this point? What does the Minister think that the staff at Amersham actually said to him about the issue? Does he believe that they agreed to it?
§ Mr. Lamont
When the hon. Gentleman made his speech he accused me of misrepresenting the views of the staff at Amersham, because when replying to a specific question from my hon. Friend the Member for Gosport (Mr. Viggers) about shares for employees I referred to the fact that the staff at Amersham had raised that matter with 786 me. But I did not say—I am sure that my hon. Friends will bear me out—that that was all that they had said to me. In my speech, I specifically referred to the fears—in my view, groundless, unnecessary and unfounded fears—and the anxieties of people who worked in the company. I know that the view of the staff and the trade union people is that it should not be a majority of shares that is sold off. I am not making any pretence that it is otherwise, but I am sticking to my argument that fears on those grounds are not well based.
The hon. Member for Rother Valley (Mr. Hardy) asked what the proceeds from a sale of TRC would be. He did a rough back-of-an-envelope calculation. He worked out that the new plant near Cardiff was worth so much; there had been so much invested elsewhere; so therefore, on a back-of-an-envelope basis, TRC must be worth about £150 million. There are such things as loans to be taken into account. The Cardiff plant was financed out of loans and those loans would remain with whoever were the new owners of the company.
I am afraid that I cannot give a precise answer about the valuation of the company. Quite apart from the fact that this would be a matter for negotiation and a matter on which there would be many views, the price for the company is bound to be based on its profits in the past, its record—which has been very good—and the prospects for the future. It is also bound to take into account what the hon. Member for Keighley said tonight—that a future Labour Government would renationalise the company without compensation. That is bound to be taken into consideration. The price for the company must be based on its track record.
My hon. Friends the Members for Enfield, North (Mr. Eggar) and for Gosport made their views very clear when they said that they felt there should be employee shareholdings. For that reason, they very much favoured the route of the Stock Exchange flotation, because that would enable people to participate in the shares of the company. Certainly we shall bear that very powerful point very much in mind, although I must say, as I said in my opening speech, that as regards the method of sale no decision has yet been made by the Government.
The hon. Member for West Lothian (Mr. Dalyell) asked about my talks with the trade union people at Amersham. I said to them what I am saying to the House now—that no decision on this matter had been made; that I was quite prepared to talk to them again about it; that we would not take steps which would jeopardise the company's future; and that I would be fully prepared to take their views into account and to have further talks with them.
The hon. Member for Merthyr Tydfil also asked how the sale would affect the public sector borrowing requirement. It is right, as he said, that the company's borrowings do not count towards the PSBR, other than some loans from the Consolidated Fund, and those loans, by being repaid, will reduce the PSBR, and the proceeds from the company go towards reducing the PSBR.
§ Mr. Rowlands
I appreciate that the Minister is anwering the points, but, if he has left the question of the future and who might purchase the company, will he at least give an assurance for which all hon. Members have asked—that every effort will be made to ensure that this company is not bought by companies outside the United Kingdom? That has been the unanimous request from both sides of the House.
§ Mr. Lamont
I was intending my remarks to be a reply to that. I assure the hon. Gentleman that that view will be taken fully into consideration, because it has been expressed strongly on both sides of the House.
There was some confusion on the question of how much intervention there had been by the Government in this company. I did not wish to give the impression that the Government had intervened in the detailed day-to-day business of the company. The Government have not done that. But it is a fact that a certain amount of time of management is taken up by having to submit a corporate plan and investment plans, and a certain amount of time is taken up in Whitehall. That is not a good thing. There is always the possibility of interference on pay negotiations, for example.
Through speaking in debates on nuclear power, I have learnt that no subject is more surrounded by mythology and demons. Despite the fact that the Radiochemical Centre is not actually a company that operates in the field of nuclear power, before the debate I took a bet with someone that there would be bound to be a speech in the debate which misrepresented the Bill and said that what we were doing was lowering the standards of safety around nuclear power stations, and that someone would say that we were putting at risk the safety of the public because of nuclear power. I took a bet that it would be the hon. Member for Truro (Mr. Penhaligon) who would say that—and he did.
The hon. Member for Truro even managed to drag in Three Mile Island. As my hon. Friend the Member for Enfield, North pointed out, Three Mile Island nuclear power has nothing to do with the provisions that affect the radiochemical company in the Bill. The Radiochemical Centre is not part of the atomic power industry. It is owned by the Atomic Energy Authority. It is a spin-off from it.
§ Mr. Palmer
Will the Minister clear up the point about whether the Bill covers the National Nuclear Corporation? I should have thought that any readjustment of the shareholding there would not require legislation. If it is intended to cover the NNC, this would be of some interest in the City of London at present.
§ Mr. Lamont
As my hon. Friend the Member for Bedford (Mr. Skeet) pointed out, the Bill refers to the National Nuclear Corporation but it refers to that corporation in precisely the same way as it to refers to British Nuclear Fuels. It is not altering the position as it was thought to be. It was always thought that the Government had the powers to sell shares, both in BNFL—up to 50 per cent.—and in the NNC. But, as I explained in my opening speech, the Government have received legal advice that the Government do not clearly have the power to sell shares in those two companies. All that the Bill is doing, as regards both BNFL and the NNC, is clarifying the position and putting it back to what everyone originally thought it was.
In reply to the hon. Member for Truro, I stress that we are leaving the prohibition on selling more than 49 per cent. of the shares of BNFL. If the Government wish to sell more than 49 per cent. of the shares, we shall have to introduce a specific measure. My hon. Friend the Member for Sheffield, Hallam'(Mr. Osborn) asked about the safety of nuclear power stations and installations. Their safety is entirely unaffected by the Bill.
The hon. Member for Keighley suggested that selling shares in TRC would give foreigners access to our nuclear 788 power technology. That is fantasy of the highest order. I must say that I admired the hon. Gentleman's style. I could not have done it. He managed to speak—for reasons that he explained—although he had not been in the Chamber earlier. The hon. Gentleman has misunderstood the Bill. It will not affect the atomic power industry in the way that he believes.
As the hon. Member for Merthyr Tydfil said, TRC is very successful. Conservative Members have asked why the company should remain in the public sector. A company with such a history of success should be allowed the freedom of the private sector. It is doctrinaire and dogmatic to say that the company should for ever remain in the public sector. Even the Labour Government envisaged that shares in TRC would be sold. It is extraordinary that the hon. Gentleman should say that we should not sell shares in a company that is successful. I assume that the hon. Gentleman means that we should sell only the shares of companies that make losses. That will not get us far. As my hon. Friend the Member for Bedford said, that seems to be an argument for nationalising everything and for turning the Government into an investment trust. Indeed, it is an argument for nationalising ICI.
That is not the route that we want to take. We are committed to reducing the public sector. We believe that the Bill will benefit TRC. There is no reason why those who work in that company—on either the management or union side—should fear the future. The introduction of private capital can only benefit the company. Therefore, I urge my right hon. and hon. Friends to support the Bill.
§ Question put, That the Bill be now read a Second time.
§ The House divided: Ayes 181, Noes 136.789
|Division No. 67]||[7.2 pm|
|Adley, Robert||Cranborne, Viscount|
|Aitken, Jonathan||Critchley, Julian|
|Alexander, Richard||Crouch, David|
|Ancram, Michael||Dean, Paul (NorthSomerset)|
|Arnold, Tom||Dorrell, Stephen|
|Atkins, Robert(PrestonN)||Douglas-Hamilton, LordJ.|
|Atkinson, David(B'm'th, E)||Dover, Denshore|
|Baker, Nicholas(NDorset)||du Cann, Rt Hon Edward|
|Bell, SirRonald||Dykes, Hugh|
|Bendall, Vivian||Eyre, Reginald|
|Bennett, SirFrederic(T'bay,)||Fairgrieve, Russell|
|Benyon, Thomas('T'bay)||Faith, Mrs Sheila|
|Berry, Hon Anthony||Fenner, Mrs Peggy|
|Best, Keith||Fisher, SirNigel|
|Biggs-Davison, John||Fletcher, A. (Ed'nb'ghN)|
|Boscawen, HonRobert||Fookes, Miss Janet|
|Braine, SirBernard||Forman, Nigel|
|Brinton, Tim||Fowler, Rt Hon Norman|
|Brooke, Hon Peter||Gardiner, George(Reigate)|
|Brotherton, Michael||Garel.Jones, Tristan|
|Brown, M. (BriggandScun)||Glyn, Dr Alan|
|Bryan, SirPaul||Goodhart, Philip|
|Budgen, Nick||Goodlad, Alastair|
|Bulmer, Esmond||Gorst, John|
|Butcher, John||Gow, lan|
|Carlisle, Kenneth (Lincoln)||Gower, SirRaymond|
|Carlisle, RtHonM.( R'c'n)||Greenway, Harry|
|Chapman, Sydney||Grieve, Percy|
|Churchill, W.S.||Griffiths, Peter Portsm'thN|
|Clark, Hon A. (Plym'th, S'n)||Grylls, Michael|
|Clark, Sir W. (Croydon S)||Hamilton, Hon A.|
|Clarke, Kennetn(Rushcliffe)||Hampson, DrKeith|
|Cockeram, Eric||Hannam, John|
|Colvin, Michael||Haselhurst, Alan|
|Cope, John||Hawkins, Paul|
|Corrie, John||Hawksley, Warren|
|Heddle, John||Porter, Barry|
|Henderson, Barry||Prentice, RtHon Reg|
|Higgins, Rt Hon Terence L.||Proctor, K. Harvey|
|Holland, Philip(Carlton)||Renton, Tim|
|Howell, Rt HonD. (G'ldf'd)||RhodesJames, Robert|
|Hunt,John(Ravensbourne)||Rhys Williams, SirBrandon|
|Hurd, HonDouglas||Ridley, HonNicholas|
|JohnsonSmith, Geoffrey||Rifkind, Malcolm|
|Jopling, RtHonMichael||Roberts, M. (Cardiff NW)|
|Kaberry, SirDonald||Rost, Peter|
|Kershaw, SirAnthony||Sainsbury, HonTimothy|
|Kimball, Marcus||Shaw, Giles (Pudsey)|
|Lang, Ian||Shepherd,Colin (Hereford)|
|Langford-Holt, SirJohn||Shepherd, Richard|
|Lee, John||Skeet, T. H. H.|
|LeMarchant, Spencer||Speller, Tony|
|Lester Jim (Beeston)||Spence,John|
|Lloyd, Ian (Havant& W'loo)||Spicer, Jim (WestDorset)|
|Loveridge, John||Squire, Robin|
|Luce, Richard||Stainton, Keith|
|Lyell, Nicholas||Stanbrook, lvor|
|Macfarlane, Neil||Steen, Anthony|
|MacGregor, John||Stevens, Martin|
|MacKay, John (Argyll)||Stewart, lan(Hitchin)|
|Major, John||Stradling Thomas,J.|
|Marlow,Tony||Taylor, Teddy (S'endE)|
|Mates, Michael||Thomas, Rt Hon Peter|
|Mather, Carol||Thompson, Donald|
|Maude, Rt Hon Sir Angus||Thornton, Malcolm|
|Mawhinney, DrBrian||Trippier, David|
|Mellor, David||Waddington, David|
|Meyer, Sir Anthony||Wakeham, John|
|Miller,Hal(B'grove)||Walker-Smith, Rt Hon Sir D.|
|Mills, lain(Meriden)||Wall, Patrick|
|Moate, Roger||Waller, Gary|
|Moore, John||Ward, John|
|Mudd, David||Warren, Kenneth|
|Murphy, Christopher||Watson, John|
|Needham, Richard||Wheeler, John|
|Nelson, Anthony||Whitelaw, Rt Hon William|
|Osborn, John||Wickenden, Keith|
|Page, John (Harrow, West)||Winterton, Nicholas|
|Page, Rt Hon Sir G. (Crosby)||Wolfson, Mark|
|Page, Richard (SW Herts)|
|Pattie.Geoffrey||Tellers for the Ayes:|
|Pawsey, James||Mr. Tony Newton and|
|Percival,Sirlan||Mr. Selwyn Gummer.|
|Allaun, Frank||Cowans, Harry|
|Alton, David||Craigen, J. M.|
|Archer, Rt Hon Peter||Crowther, J. S.|
|Ashton, Joe||Cryer, Bob|
|Beith, A. J.||Cunningham,G.(lslington S)|
|Booth, RtHonAlbert||Davis, T.(B'ham,Stechf'd)|
|Campbell-Savours, Dale||Dixon, Donald|
|Canavan, Dennis||Dormand, Jack|
|Carmichael, Neil||Duffy, A. E. P.|
|Carter-Jones, Lewis||Dunwoody, Hon Mrs G.|
|Clark, Dr David (S Shields)||Eastham, Ken|
|Cocks, Rt Hon M. (B'stolS)||Edwards, R. (W'hampt'nSE)|
|Concannon, RtHon J. D.||Ellis, R. (NED'bysh're)|
|Conlan,Bernard||Evans, John (Newton)|
|Cook, Robin F.||Ewing,Harry|
|Fitch, Alan||Newens, Stanley|
|Foot, RtHon Michael||Palmer, Arthur|
|Forrester, John||Park, George|
|Foulkes, George||Pavitt, Laurie|
|Garrett, W. E. (Wallsend)||Penhaligon, David|
|Gilbert, Rt Hon Dr John||Powell, Raymondf(Ogmore)|
|Ginsburg, David||Prescott, John|
|Gourlay, Harry||Race, Reg|
|Grant, George(Morpeth)||Roberts, Albert(Normanton)|
|Grant, John (IslingtonC)||Roberts, Ernest (Hackney N)|
|Grimond, RtHon J.||Roberts, Gwilym(Cannock)|
|Hamilton, James(Bofhwell)||Robertson, George|
|Hamilton, W.W.(C'tralFife)||Rodgers, Rt Hon William|
|Hardy, Peter||Rooker, J.W.|
|Harrison, Rt Hon Walter||Roper, John|
|Haynes, Frank||Ross, Ernest (Dundee West)|
|Heffer, Eric S.||Ross, Stephen (Isle of Wight)|
|Henderson, Barry||Rowlands, Ted|
|Hogg, N.(EDunb't'nshire)||Sever, John|
|Hooley, Frank||Sheerman, Barry|
|Howells, Geraint||Sheldon, Rt Hon R.|
|Hughes, Mark(Durham)||Silkin, Rt Hon S.C. (Dulwich)|
|Hughes, Roy (Newport)||Skinner, Dennis|
|Janner, HonGreville||Soley, Clive|
|Jay, Rt Hon Douglas||Spriggs, Leslie|
|Johnson, James (Hull West)||Steel, Rt Hon David|
|Jones, Barry (East Flint)||Stewart, Rt Hon D. (W Isles)|
|Lambie, David||Stott, Roger|
|Lamborn, Harry||Summerskill, Hon Dr Shirley|
|Lamond, James||Thomas, Dafydd(Merioneth)|
|Leighton, Ronald||Thorne, Stan (PrestonSouth)|
|Lewis, Arthur (N'ham NW)||Tinn, James|
|Lewis, Ron (Carlisle)||Wainwright, E.(DearneV)|
|McCartney, Hugh||Wainwright, R.(Colne V)|
|McElhone, Frank||Welsh, Michael|
|McGuire, Michael(lnce)||White, Frank R.|
|McKay, Allen(Penistone)||Whitlock, William|
|McKelvey, William||Wigley, Dafydd|
|Maclennan, Robert||Willey, Rt Hon Frederick|
|McWilliam, John||Williams, Rt Hon A.(S'sea W)|
|Marshall, D(G'gowS'ton)||Wilson, Gordon (DundeeE)|
|Marshall, DrEdmund(Goole)||Wilson, William (C'trySE)|
|Maynard, Miss Joan||Winnick, David|
|Millan, RtHon Bruce|
|Miller, Dr M. S. (EKilbride)||Tellers for the Noes:|
|Morris, Rt Hon C. (O'shaw)||Mr. Joseph Dean and|
|Morton,George||Mr. Donald Coleman.|
§ Question accordingly agreed to.
§ Bill read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).