§ [Relevant document: Third Report of the Energy Committee of Session 1988–89 on British Nuclear Fuels plc: Report and Accounts 1987–88 (HC 50).]
§ Order for Second Reading read.
6.20 pm§ The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)I beg to move, That the Bill be now read a Second time.
A prime purpose of the Bill, defined in clause 1, is to raise the financial limit imposed on British Nuclear Fuels plc by the Nuclear Industry (Finance) Acts of 1977 and 1981. The limit is currently set at £1,500 million, and clause 1 proposes that it should be increased to £2,000 million.
The financial limit consists of payments for shares in the company, the principal on outstanding Government loans to BNFL, and the guarantees given by the Government in support of BNFL's borrowing from commercial sources. We need to raise the limit so that BNFL can borrow with Government guarantees the sums required to complete its current investment programme.
To keep its place in the forefront of the nuclear fuel cycle industry, BNFL must invest for the future, and it has in hand a massive capital programme amounting to more than £5 billion to the end of the century, mainly in support of its waste management and reprocessing business at Sellafield.
The company raises its finance in the private sector, backed by Government guarantee, and under successive Governments has been classified as a private sector body for public expenditure purposes. Its borrowing is therefore not part of the public sector borrowing requirement. Guarantees are issued only for specific loans, and each application for a loan guarantee is scrutinised by the Department of Energy, the Treasury and the Bank of England before we agree to accept the liability.
BNFL expects to breach the existing statutory limit in 1990. As acknowledged yesterday by the Energy Select Committee, the main reason for this is BNFL's need to finance, up to 1992, £500 million worth of extensions and improvements to the low active waste treatment plants at Sellafield. Those plants ensure that active effluent discharges are kept as low as reasonably practicable. Radiological effluent is already less than 5 per cent. of what it was in 1978, and with this further expenditure should be reduced to near zero by the mid-1990s. Expenditure on the scale required to achieve that level was not envisaged when the current limit was set in 1981.
It is expected that BNFL's total borrowings will peak at around £1,700 million over the next four years, provided that all present income projections are realised. In the mid-1990s, as the plants now being built come on stream and start to generate funds, BNFL expects to have sufficient funds available internally to meet its capital expenditure requirements and progressively to pay off its borrowings.
BNFL has been consistently profitable since its inception, and has provided the Government, as shareholder, with a dividend for the past 12 years. In 1987–88, the dividend payment amounted to £36 million. There is no current expectation, therefore, that we would need to seek any further increases in the limit.
Clause 2 of the Bill will enable the costs of nuclear safety research which the Health and Safety Commission 1104 sponsors to be recovered from nuclear site licensees and licence applicants. The House will be aware that the Secretary of State for Energy announced last year that the role of customer for much of the safety research currently sponsored by his Department would be transferred to the Health and Safety Commission as from 1 April 1990. That will enable the commission to ensure the future adequacy and balance of nuclear safety research programmes. The programmes will be managed by the Health and Safety Executive on the commission's behalf.
The principal objectives which the commission will be asked to fulfil will be set out in agreed guidelines provided by the Secretary of State for Energy. The commission will be charged with ensuring that adequate and balanced nuclear safety research programmes continue to be carried out, and that the results of the research are disseminated to maximise their contribution to safety. This will, of course, require the commission to maintain close collaboration with the nuclear industry and the UKAEA so as to be fully aware of what safety-related work the industry is doing on its own account. The commission is establishing machinery to do that.
The commission will, however, also need to sponsor research on its own account to ensure that the totality of research is adequate and it will need to see to it that a sufficient independent nuclear safety research capacity is maintained.
The present cost of the research being transferred is about £20 million per year. The effect of the transfer will therefore be to reduce Government expenditure by that amount. Clause 2 will enable the Health and Safety Executive to recover the costs which it incurs in connection with its licensing function from nuclear site licensees and applicants for licences.
Costs relating to a licence application are not at present recoverable until a licence is granted, and cannot be recovered at all if the application is refused or withdrawn. The new provisions will enable the Health and Safety Executive to recover its costs before, and whether or not, a licence is granted.
Clauses 3 and 4 make technical amendments to the rules on insurance cover for meeting third-party compensation claims in the event of nuclear incidents. Section 18 of the Nuclear Installations Act 1965 sets out the method for determining the maximum contribution which the Government might make towards meeting the cost of compensation claims. Factors which have to be taken into account are those amounts which are available from nuclear operators' insurance arrangements, and any contributions which may be available from other Governments under relevant international conventions.
At present the UKAEA, because of its position as a public sector body, is not required to cover its liabilities by commercial insurance arrangements. However, following the Atomic Energy Authority Act 1986, the authority's operations are now being undertaken on a more commercial "trading fund" basis, and occasions may arise—for instance, when a trading partner is involved—when commercial insurance is considered a more attractive option than the self-insurance which is normal for Government bodies. This clause will remove any doubt which might exist about whether funds available from any such commercial insurance should be taken into account when computing the Government's contribution. It also removes any possible doubt about whether insurers would have a liability to pay.
1105 Clause 4 is designed to overcome an unintended defect which has come to light in the drafting of the Nuclear Installations Act 1965. It will avoid the need for new insurance cover to be taken out when a new nuclear site licence has to be issued for purely technical reasons—for instance, where the boundaries of an existing site are extended.
Clause 5 makes the necessary changes to our domestic law to enable the United Kingdom to ratify the international convention on assistance in the case of a nuclear accident or radiological emergency, widely known as the mutual assistance convention. That is one of two conventions negotiated under the auspices of the International Atomic Energy Agency following the accident at Chernobyl. The other relates to early notification.
We need to make no changes to the law in respect of the early notification convention, but we intend to ratify both conventions at the same time. The Government have already agreed to act as though bound by the two conventions.
Before ratification of the mutual assistance convention, two changes to our domestic legislation are required. Clause 5 makes the necessary financial provision to enable payments to be made in the event of the United Kingdom responding to a request for assistance and to receive payments if we decide to seek the reimbursement provided for in the convention. It also provides the necessary cover for affording certain privileges and immunities to persons from a state which is providing assistance. The United Kingdom was one of the first signatories to those conventions, which have been in force for some time. It is important that we should be able to ratify them as soon as possible, and the provisions of clause 5 will enable us to do that.
This is a largely technical but nevertheless important Bill. I have made my opening remarks about it essentially factual, but I will answer any points that hon. Members wish to raise if, with the leave of the House, I speak again at the end of the debate.
I should make two comments about the report of the Energy Select Committee which was published yesterday and which Mr. Speaker has ruled is debatable today. The first concerns the question of BNFL's costs. The Committee's report focuses attention on the eightfold increase in costs at the low level disposal site at Drigg. That has been interpreted by some commentators as a general criticism of cost control at BNFL. Clearly, that is a misinterpretation of the facts put forward by the Committee. The Government believe that a privatised electricity industry, in which nuclear costs in particular will be much more clearly exposed, will motivate BNFL further to improve its cost controls, especially as the switch is made from cost plus to fixed price contracts.
Secondly, I believe that the Committee has been grossly misrepresented on the question of the dumping of foreign nuclear waste from the pre-1976 contracts. All contracts for the reprocessing of spent fuel signed after 1976 are subject to clauses requiring the return of waste to the countries of origin. Reports in the press have talked today of 1,500 tonnes of waste from the pre-1976 contracts requiring storage in this country. That has resulted from a 1106 misreading of the Committee's report. In fact, the 1,500 tonnes is spent fuel, 97 per cent. of which is recovered in the form of plutonium and uranium.
About 100 cubic metres, or two bus loads, of high level waste—rather different from 1,500 tonnes—will arise from that reprocessing, which is a small portion of the total waste arising up to the year 2000. All contracts signed since 1976—in particular the vast majority of the £2 billion worth of business signed up with the Japanese, which makes THORP the largest earner of yen in the country—require the repatriation of waste.
Should the House wish me to do so, I will elaborate further on the Government's initial views on the Select Committee report.
§ Mr. Kevin Barron (Rother Valley)I thank the Minister for explaining the provisions of what appears to be an innocuous Bill. As he said, they are designed primarily to raise the borrowing limits of British Nuclear Fuels plc, to tidy up current legislation and to bring us into line with Europe so that we may comply with the convention to which he referred. Opposition Members have no wish to oppose any of those aims. Indeed, from the point of view of the convention and the tidying up of current legislation, we regard the Bill as a step forward.
We applaud the timing of the Bill, for two reasons. First, the measure relates to the privatisation of the electricity supply industry; secondly, it forces us to reiterate many of the doubts that were raised in the report of the Select Committee on Energy which was published yesterday and which Mr. Speaker has ruled is relevant to this debate.
We are told that the borrowing limits must be increased to finance the completion of THORP, the thermal oxide reprocessing plant at Sellafield in Cumbria. The history of that construction, like that of much of the nuclear power industry, is littered with increases in costs and time scales.
When permission was first granted for the THORP plant in 1978, it was to take nine years to complete, at a cost of £300 million. By 1983, the time scale had been extended to 12 years and the cost to £1.2 billion. By the beginning of this year, the start-up was expected to take place 14 years after permission was first granted, at a cost of £1.1 billion more than the first estimate of £300 million. There has been a truly incredible increase in capital cost and time scale. Some, if not all, of those additional costs have occurred as a result of the nuclear installations inspectorate having examined the original plans and decided—presumably because of lessons that were learned about the nuclear industry—that it was necessary to alter the plans substantially.
While all that has been going on, the cost of reprocessing oxide fuels has risen sharply. As a result, there will be an operating loss, certainly on the earliest contracts that were made on a fixed cost basis, a subject to which the Minister referred and to which I will return. May we be told how much the loss is likely to be on those early fixed-price contracts? Who will shoulder the burden of that loss—BNFL, as a result of this measure, or the taxpayer?
BNFL reports that the cost of the construction of THORP will be recouped by about the year 2000, taking into account the early contracts that were signed with the British nuclear industry and some foreign companies. 1107 What the future holds, after those contracts have been completed, one cannot say. After all, the reprocessing plant has a potential life of 25 years. The potential for acquiring contracts after those already signed have expired is questionable because, by that time, there will be continental reprocessing plants bidding in competition. It is clear that, at that stage, BNFL will not be seen as the only organisation capable of handling nuclear waste. Clearly, a number of question marks hang over the future of the reprocessing plant.
In the home market, the CEGB—which will become National Power if the Government have their way and nuclear generating is handed to the private sector—and the successor company in Scotland to the SSEB suggested, have no contracts for reprocessing. There is also doubt about whether fuel from the AGRs and PWRs to be built at Sizewell and Hinkley should go for reprocessing.
Nobody questions the fact that Magnox waste must be reprocessed because of its dangerous condition and deterioration after its useful life in a reactor. We must therefore take action on it. Whether or not the reprocessing of AGR and PWR fuels will be necessary in the future has been questioned in the Select Committee's report and several times previously by people who are eminent in this subject, who believe that dry storage of such fuels would perhaps be a safer and cleaner way of handling them once they have come to the end of their useful lives in nuclear reactors.
The market to which reprocessing was to sell its plutonium—the fast breeder reactor market—has currently been suspended by the Government. No doubt the hon. Member for Caithness and Sutherland (Mr. Maclennan) will want to mention that later. It was envisaged that THORP might be a place where fuel could be prepared for the fast breeder reactors, and not just in this country—we do not limit ourselves—because we might have found a market elsewhere in the world. Although it was envisaged that THORP might have played a useful role, the report has brought that into question.
The world price of uranium is lower than the cost of reprocessing recycled uranium, and is likely to remain so. The report also highlighted the fact that, in the past decade, there has not been the increase that people thought there might have been in the cost of uranium. Although the availability of that type of fuel can be limited, at the moment it is still plentiful on the market and hence there has been only a reasonable increase in its cost, which is not as excessive as that of some other fuels.
As the Select Committee report states:
The public perception of the safety record of BNFL and the well-known difficulties here and abroad of accounting accurately for plutonium stocks have not helped the environmental case for reprocessing.It is interesting that the Minister has said that his Department has scrutinised each and every contract entered into by BNFL. One would think that that is only right because the Government are the only shareholder of the company, but if there has been scrutiny at the level that the Minister suggested we must question why we have not had any proper explanation about increasing the cost of the THORP project.More importantly, there is also a question mark over the further use of THORP because the first contracts that were signed on what, until the debate started, we were led to believe was a cost-plus basis have ended and, over their time scale, have presumably paid for all the extra expenses 1108 involved in the construction of THORP. As we are being asked to grant permission for BNFL to borrow more money, it is only right that we ask the Government to justify their already massive investment and that involved in their future plans, especially in view of what I have said about the likely use of the THORP project.
The experience of THORP does not bode well for the planned large-scale thermal mixed oxide fuel fabrication facility that is currently being contracted and built at THORP. From the Select Committee report, we understand that neither the CEGB nor, presumably, its successor, which will comprise the same people in the same business—National Power—nor the SSEB, nor its successor in the Scottish nuclear power industry, has any plans at this stage to use the mixed oxide fuel, which is also known by the abbreviation of MOX. While BNFL says that there will be a price advantage over conventional fuel, the electricity generating companies say that there will not. The fact is that £50 million may seem a small amount now but that money is currently being expended and, as the report rightly points out, there is some doubt about whether the project will produce fuel for the nuclear electricity market in years to come.
As the report stated, perhaps the Government will assess who is correct before the proposals are advanced. That point is worthy of an answer at a later stage in our proceedings on the Bill, if not tonight. I think that we shall wish to take the Bill into Committee, perhaps for just a short time. Hon. Members who served on the Committee on the Electricity Bill will he pleased to know that. Nevertheless, the report has highlighted many questions that need answering and I hope we shall receive answers to them.
Perhaps there will be an opportunity for the Minister to tell us who is to take over the ownership of the stocks of plutonium and whether the private sector electricity companies will police that. In our earlier debates on the Electricity Bill, I used the phrase, "selling off the family plutonium". Without question this important issue concerns many people.
I am sure that people are well aware of the trade in weapons-grade plutonium throughout the world. If we can believe much of the international debate, many countries that we, as a country, feel are unstable are handling such fuels. We have heard on several occasions that publicly owned or part publicly owned companies have not always been too good at handling weapons-grade plutonium. Indeed, we are led to believe that it has left these and other shores that are supposed to be responsible when handling it and that it has ended up on shores which we may not like to be used as a basic material for nuclear weapons. We are concerned about that, and this debate gives the Minister an opportunity to tell us what the Government envisage will happen in the new framework.
That issue also begs the question of some of the strong rumours that we have heard, that BNFL itself may be a candidate for privatisation in the years ahead. If the present ideology continues, perhaps the only thing that is likely to be saved from privatisation is the air that we breathe—[Interruption.] Well, perhaps the Government are considering it, because the Minister is nodding his head. As some of the people who currently advise the Government probably are considering it, we shall have to wait and see what happens. If BNFL were to go into the private sector, that would again raise the question of 1109 exactly who will look after plutonium in the future. We hope to hear one or two comments from the Minister on that at some stage.
As the Select Committee report stated, it seems that the Government have maintained
the profitability of BNFL, a Government-owned plc, butreducedgreatly the profitability of the public corporations which the Government is about to privatise.The Minister will remember the famous draft letter of January—one of many to which we referred in our proceedings on the Electricity Bill—written by Mr. John Baker, the chief executive-designate of National Power, who had grave concerns about privatised nuclear electricity generation and about who would have to pick up what has become, week by week, a growing and expensive bill. That fact was highlighted in the Select Committee's report. Back in January, in the letter that was drafted but not sent, Mr. Baker warned the Government that the flotation of National Power was at risk and that one of the reasons for that was the prices charged by BNFL for the nuclear fuel cycle.Mr. Baker stated:
we do not see how National Power with an arms length contract with BNFL is in any position to put additional incentives on BNFL…if HMG as its shareholder cannot.It appears that Mr. Baker won the argument at the time. At least, we can assume that, because we have not had a statement from the Government. However, on 23 March, The Guardian stated:The Government signalled its willingness to provide a nuclear indemnity after ministers were told that financial institutions would not invest in a venture with as many financial uncertainties as nuclear power.Therefore, if, according to Mr. Baker, the newly privatised National Power is only to meet the costs of nuclear power which, as The Guardian put it, are "within management control", what will be the status of its contracts with BNFL?At the moment, contracts are made on a "cost unknown" basis at the time of signing. Have those contracts been renegotiated as the CEGB and the SSEB have wanted for a considerable number of years? If so, what effect will that have on the reprocessing plant at Sellafield? If those contracts have been renegotiated, how much will the Government give BNFL to buy out the existing contracts? That is very important, because someone will have to pay if the cost-plus contracts are being bought out.
People interested in the nuclear industry, and British taxpayers, will want to know how the change in cost-plus contracts will take place. If they have been renegotiated, are the Government content to see the contracts continue under their present terms? I understand that the overseas contracts have also been made on a cost-plus basis. Will there be a change in the British element in THORP, but no change in the foreign element? The Bill gives us an opportunity to debate those matters and seek answers to those questions.
If we give the Bill a Second Reading, we should also scrutinise the process which has been established for the costs of decommissioning. BNFL's customers' liability for BNFL decommissioning costs has risen more than fivefold despite a 58 per cent. reduction in the present value of the total liability by the use of a 2 per cent. a year discount. 1110 However, that is based on present prices. By the time decommissioning takes place, depending on when the very expensive third phase is finished, the costs are bound to have risen considerably. The history of the nuclear industry suggests that that will happen and that back-end costs are likely to rise in the same way as front-end costs have risen.
We can only assume that BNFL is postponing decommissioning to avoid the costs today. By putting off for 100 years the non-productive high cost end of the nuclear fuel cycle, BNFL reduces the cost for its customers today.
I hope that the hon. Member for Havant (Sir I. Lloyd), who was the Chairman of the Select Committee on Energy which sought oral evidence from BNFL in November last year, will be able to clarify a point for me. I believe that it was the hon. Member for Littleborough and Saddleworth (Mr. Dickens) who asked Mr. Neville Chamberlain a question, part of which was:
Since the nuclear industry has always claimed that decommissioning presents no technical or safety problems, could you perhaps take this opportunity of reassuring the Committee that this delay is not designed to boost short-term profits?Mr. Chamberlain replied:We can certainly give the assurance that it is designed to boost short-term profits.There may be a printing error in that memorandum to the Select Committee. For the year under consideraton, there would have been a difference in terms of annual profits involving £14 million. If BNFL believes that spreading decommissioning over a long period helps its annual costs, we can assume that the CEGB and the SSEB—and presumably National Power—are thinking along the same lines. Their policy will be much the same.My next points relate to the Electricity Bill, which has just completed its Report stage in this House. The Select Committee on Energy and many other people have suggested that the time scale for decommissioning may be brought forward, while Mr. Chamberlain has said that the time scale is an important accountancy factor. Bearing those two points in mind, schedule 12 to the Electricity Bill might be triggered.
In Standing Committee, when we debated clause 88, we asked how the money in schedule 12, which is not Government money, as the Prime Minister often tells us, but taxpayers' money, involving billions of pounds, could be triggered for use in the nuclear industry if the regulatory body or the Government decided to change the time scale.
Mr. John Baker's draft letter revealed his deep unhappiness at having to buy the nuclear part of electricity generation along with a substantial tranche of fossil fuel plants. If Mr. Baker is now satisfied that he will not incur any additional costs, has his satisfaction been gained through the possible use of the triggering of schedule 12 of the Electricity Bill? Has that trigger made Mr. Baker happy about taking on board the nuclear industry, because he was deeply unhappy about it last January? Post-privatisation—in a few years' time—will there be a change in the time scale for decommissioning? Will that trigger schedule 12 and bring taxpayers' money into this very expensive nuclear industry to satisfy the people who will take it over?
We welcome certain aspects of the Bill. We welcome the involvement of the Health and Safety Executive with the nuclear installations inspectorate and the United 1111 Kingdom Atomic Energy Authority. Hopefully, that will improve people's perception of nuclear safety. Obviously, spreading the financial responsibilities is welcome.
We welcome clauses 3 and 4, which relate to insurance cover. We assume that the proposals are the right way to proceed, although we hope that the provisions are never put to the test. However, we never know with this industry. There are large questions marks hanging over the nuclear industry, although thankfully not because of anything which has happened on a large scale in this country. But there are questions about liability should a major incident arise on the scale of Three Mile Island or Chernobyl.
Clause 5 provides that the mutual assistance convention should be ratified. While the Opposition are pleased about that, we hope that it is not undermined in a way that was described in The Independent today. A civil servant was giving evidence to the Select Committee on Defence yesterday about the scuttling of nuclear submarines. I think that "scuttling" is the correct term, and I should know because my father served in the Navy for a considerable time during the war. I had understood that the London dumping convention to protect the environment would cover such scuttling and the Government claimed that the signing of that convention was a victory and a major step towards cleaning the world's environment.
However, Mr. Nigel Paren, a senior MOD official, is quoted in The Independent as saying:
The Royal Navy's decommissioned nuclear submarines could be dumped at sea, despite the international convention against sea-disposal of vessels and harmful waste.If that is the case, I hope that, as soon as the convention in clause 5 is ratified, the Minister will tell all his civil servants exactly what that means. I hope that the convention will never need to be used, but these plans need to be made in case there are more incidents of the type that we saw in America and the USSR. I hope that the Government have a strong commitment to the convention. I shall be interested to see how our nuclear submarines are removed. I understand that one of them is in dry dock.I hope that the Minister will attempt to answer my questions either during the debate or later in Committee, because these issues are important for the industry and the British taxpayer. Our electricity generating industry and BNFL have been in public hands and perhaps that means that things are not as transparent as they will be in future.
No matter what happens in future, we are talking about considerable nuclear costs. All the rights given by the Government to BNFL to borrow more money should be accompanied by instructions to use the money in a proper way. Whether or not we build new generators, Britain's nuclear industry will be with us for decades. We must make sure that it is soundly based and that investment in it is for good reasons. We must not invest in forms of technology that do not have a useful life. It is not our intention to move against the Bill, but perhaps we shall discuss it at greater length in Committee. We support much of the Bill, but some of it begs many questions.
§ 7.1 pm
§ Sir Ian Lloyd (Havant)Once again, when one surveys the vast expanse of naked green on both sides of the House, one realises that when the House is tempted to discuss technical matters it is rather inclined to rear like a temperamental horse overtaken by an unsilenced motor 1112 car in a country lane. Perhaps that is not surprising in view of the many technical terms and facts in the Bill and the issues surrounding it. I shall come to that.
I know that the hon. Member for Rother Valley (M r. Barron) prides himself on two apprenticeships that he served in the energy industry. The one in which he probably takes the most pride was his experience as a coal miner. The second, in which I hope he takes some pride, was his service for a time on the Select Committee on Energy on which we were very glad to have him. I was, therefore, pleased to hear him say at the end of his speech that he accepted the undoubted fact that the nuclear industry will be with us, and probably worldwide, for a long time. If some of the preliminary evidence that we have seen on the greenhouse effect, not only in this country but in virtually all the major industrial countries that are examining this issue, proves to be what is suggested, it looks as if there could be a dramatic and major expansion of the nuclear industry.
I am grateful to my hon. Friend the Under-Secretary of State for Energy for raising the two points on which he thought my Committee had been misrepresented. I accept without hesitation or qualification that we were rather misrepresented on the question of the so-called dumping of nuclear waste. That is a highly emotive phrase. and unfortunately when it appears in any Government document or Select Committee report it tends to be the first thing that the press seizes on because I think that i t shares the rather limited public perception of what exactly is meant by the results of the reprocessing of all kinds of nuclear materials.
I cannot go all the way with my hon. Friend the Minister on costs. He suggested that my Committee made an innocent—I think that was the word he used—misinterpretation of the situation at Drigg. That may or may not be so, but later I intend to deal with cost increases that my Committee and I regarded as serious matters. In a sense, the discussion on the Bill, which will increase the borrowing limits of BNFL by £500 million, is purely financial and technical. However, it raises much larger problems and graver issues.
The task of the Select Committee on Energy is to examine annually the major energy industries in the public sector. Our report was both relevant and timely, although I concede and fully understand the dismay that it may have caused to British Nuclear Fuels Ltd. I have the greatest respect for BNFL both as a company and an organisation and for what it is trying to do in and for Britain. I have also the greatest respect for its management. However, if I cannot escape the obligation of scrutiny, BNFL cannot: escape its consequences.
To some extent, both the Committee and BNFL were the victims of tendentious selection in the way that our results were presented. For example, as my hon. Friend the Minister has said, it has apparently been widely reported in the press that the Committee recommended the renegotiation of contracts. We did not do that at all. What we said was carefully considered. We said that we would strongly favour a recommendation that BNFL should renegotiate those contracts "were that practical." That phrase was quite deliberately inserted. We see no prospect of BNFL customers wishing to receive waste when they have entered contracts under which BNFL has undertaken to look at that matter. That is the first and quite serious misrepresentation.
1113 We were told that BNFL has been criticised for accepting contracts that made the United Kingdom a dumping ground for nuclear waste. The Committee strongly supports what BNFL is doing and believes that it is doing it well. There are some aspects of costs, with which I shall later deal, but BNFL's technical capacity is undoubted. We understand that it is immensely profitable for BNFL and for the United Kingdom for BNFL to do this work. However, we call, I think with some justification, for circumspection or caution over contracts that allow the United Kingdom to become, in the words of the Committee,
a repository for waste generated abroad.That was a deliberately low-key phrase and I emphasise the low-key intention of the Committee in reporting it in that way. The reason for that is that BNFL cannot handle it safely and profitability in the public relations sense if the public perception of all the problems surrounding the storage and proper technical handling of nuclear waste are such that the appropriate solutions cannot be adopted for what has often properly been called the "not in back my backyard" syndrome. That is a powerful syndrome when it comes to dealing with anything in the nuclear industry. It is because this public perception of the risks involved is seriously flawed that the Committee reached the conclusions that it did. We have advised caution.In terms of radiation we all live on one planet. It is in the interests of the whole human race for nuclear waste to be skilfully handled by those who have the technical competence to do it, and not many have. About three or four major countries can do it and nothing would be more disastrous than to encourage countries that do not have the skills or technologies to set out on their own.
BNFL believes that we have been inaccurate in referring to very large price increases. That brings me to the point made by my hon. Friend the Minister. BNFL quoted Drigg in its press release this morning. Let us look at the facts. All these are taken either directly from BNFL's evidence or from the evidence that the Committee received from the Central Electricity Generating Board or the South of Scotland electricity board. I shall give the first example by quoting from page 9 of our report.
§ Mr. Michael SpicerIn my speech I did not in any way criticise the Committee for its interpretation of the facts. I said that it concentrated on particular costs and that people outside then generalised on the Committee's arguments.
§ Sir Ian LloydI am obliged to my hon. Friend and I accept what he says.
I shall now turn to the specific instances that justify my Committee's conclusions. On page 9 of the report the CEGB evidence suggested that in three specific areas the increases in price over a short period were 129 per cent., 20 per cent. and 27 per cent. On page 34 of our report there is a memorandum from the South of Scotland electricity board which drew attention to another area where the increase was 75 per cent. On page 36 the United Kingdom Atomic Energy Authority in its memorandum gave the amounts that Harwell paid BNFL for the disposal of low-level waste at Drigg. For the year 1985–86 the cost was £26 million, for 1986–87 it was £29 million, for 1987–88 it was £145 million and for 1988–89 it was £260 million. The 1114 percentage increases available from those figures are 10.8 per cent., 388 per cent. and 79 per cent. Those are dramatic increases. On page 37 of the report the United Kingdom Atomic Energy Authority pointed out that the decommissioning charge for 10 years had been estimated in 1986 at £85 million, but by 1987 it had gone up to £164 million.
I turn to BNFL's own submission to raise much more serious issues. Evidence was taken from BNFL by the Select Committee on 10 December 1986. It estimated the total cost for decommissioning the nuclear facilities in the United Kingdom at £143 million; for Calder Hall and Chapelcross the cost was £30 million per station, and for the CEGB £60 million per station. When we considered the question again in 1987 the CEGB upped its estimate to £330 million and the evidence suggested that the figure lay between, at the most optimistic estimate, £185 million, and, at the most pessimistic, £1,000 million. My Committee recommended that the CEGB clarify its costings.
Meanwhile, roughly at the same time, the Select Committee on the Environment reported. I shall return to that because the inference of its report has been quoted in defence, understandably, by BNFL. BNFL's own figures appear in annex 1 on page 27 of our report. They show that the total liability for decommissioning has grown from £438 million to £4,605 million. Those figures are my major concern. I wish to examine them. The Select Committee has sought, and will be seeking, more information on them.
I should like to give the House a benchmark by which we can perhaps validate my and other judgments on the matter. The Organisation for Economic Co-operation and Development produced an extremely interesting report in 1986 on the decommissioning of nuclear facilities. What comes out of it is an interesting range of costs for decommissioning what one might describe as standard pressurised water reactors and boiling water reactors. It is £140 million to £150 million per reactor. The figures are available for anyone who would like to see them.
The most informative analysis, which is also contained in that report, is from the United States, understandably, because that country has the largest civil reactor industry. Therefore, its analysis is most complete. Here we find some extraordinarily interesting information. The surplus facilities management programme of the Department of Energy in the United States plans to decommission 350 nuclear facilities over 20 years from 1986 to 2006 at a cost in total of $1.4 billion, or roughly $4 million per facility. The 1986 United States budget provision for that was a mere $56 million.
There are three other interesting figures. The stabilisation of uranium tailings piles is to cost a total of $745 million, or $30 million per pile. The West Valley reprocessing plant will cost $136 million to decommission. The Shippingport reactor, which is the world's first commercial reactor to be decommissioned, will cost $98 million.
Now I come to a very interesting table which sets out the total picture for the United States. We glean the following facts from the table. There are 77 reactors in a large sample, of which the costs of 65 are known and the costs of 12 are unknown. The total known cost of decommissioning that large amount of nuclear power is estimated at $3.7 billion, or $57 million per reactor. If we take an average of $57 million for each of the 12 plants for which no figures are known, we achieve a total cost for the 1115 whole of this major segment of the United States nuclear industry of $4.42 billion or—I deliberately translate it into sterling—roughly £2.6 billion. That is over the period from 1984 to 2119. It is remarkable that we should even be contemplating anything for 2119 when obviously no one here will have much interest in what is happening. I want to draw the attention of the House to the scale of that: £2.6 billion is roughly the cost of a major new nuclear facility such as Sizewell.
Let us turn to BNFL's figures for the United Kingdom. They have risen from £438 million to £4,605 million. That is a total of $7,800 billion at $1.7 to the pound. Now comes the crucial comparison. Let us consider the size of the respective nuclear industries in the United States and the United Kingdom. Because statistics are so often carefully selected by those who choose to achieve one result or another, I have deliberately taken three bases of comparison—the use of oil equivalent, that is, conversion of nuclear power to oil; megawatts, electric capacity; and terawatt hours. The figures for the first are 124 million tonnes and 11 million tonnes; for the second, 101 million MWe and 14 million MWe; and for the third, 455 TWh and 48.9 TWh.
So the United Kingdom has roughly one tenth of the United States' nuclear capacity and one third of the nuclear capacity which is summarised in the report of the OECD; the decommissioning costs have been estimated at a total of $4.42 billion. That third is now forecast to cost $3.42 billion more than the total estimate for the United States programme, which is three times as great. That is an astonishing figure. It suggests that we are proposing to spend on decommissioning resources of the order of two Sizewells, the Channel tunnel or the Severn barrage. I use those figures to give the House an idea of the scale.
I come now to BNFL'S explanation. It says that it responded to a suggestion made to it by the Select Committee when it appeared before us that it should look more carefully at decommissioning costs. We certainly made that suggestion. BNFL would probably plead in its defence that it took even more seriously two suggestions by the Select Committee on the Environment. That Committee recommended that the industry should do better than the shoestring approach, and then said that the industry should really embrace the concept of a Rolls-Royce solution. It would be very easy to say, "Some shoestring"; I prefer to say, "Some Rolls-Royce".
The whole issue is complex, confused and, because of its scale, alarming. Britain cannot expect to agonise over the budgetary constraints, as we do in virtually every Department of state, and vote almost £4,000 million on the nod of the basis of the information that we have. That is why we must discover much more about the scope and cost of that programme and what raised the estimate by £4 billion.
As my Committee warned, the City's judgment of the whole privatisation procedure is bound to be affected by those figures. How can it be otherwise? Some months ago in the House I warned my right hon. and hon. Friends in the kindest possible way that I suspected that those costs would provide a major obstacle to what I believe they were trying to achieve. I cannot help but conclude that they will prove to be just such a major obstacle.
As to the carriage by air of plutonium, the Select Committee on the Environment made a specific recommendation, which I endorse—particularly after Lockerbie. The Committee stated that that practice should 1116 be prohibited. Has it been prohibited? If not, has the whole question been considered? If it has been considered, what conclusion was reached? My judgment is that if plutonium is to be transported between this country and Japan, or to any other distant part of the globe, the only way that should be done is in a triple-hull, unsinkable ship escorted by a frigate. Even that would present certain dangers.
We are in a sense considering the long-terra implications of our current nuclear industry, which could grow dramatically if, as a consequence of analysis of the greenhouse effect, the developed industrial world—all power-using countries—decides that there must be a significant increase in the use of nuclear power. If that occurs, all the known problems and the whole analysis on which they are based will become dramatically more important.
Public and other misconceptions will arise and grow naturally, and they will often be fed by vested interest groups of one sort or another. Sometimes, the public are fed those misconceptions with great irresponsibility. Nevertheless, those misconceptions must not be allowed to foreclose the nuclear option. That is why we must insist on the most accurate, verifiable information that can possibly be obtained, and that it be made available to the House, where it can be fully discussed. Where there is risk assessment, it must be thorough and realistic. There really is no alternative.
§ Mr. Robert Maclennan (Caithness and Sutherland)The hon. Member for Havant (Sir I. Lloyd) made an extremely important speech to which the whole House will have listened and, more importantly, will read with great attention. However, it must be said that this occasion is not wholly suitable for considering the wider implications of the Select Committee's important report. It is in a sense unfortunate that the debate follows within 24 hours of the report's publication. That may explain to some extent the phenomenon to which the hon. Gentleman drew attention—the emptiness of the Chamber this evening.
The hon. Member for Havant rested his speech on the frail support of this relatively modest Bill—although one recognises that the terms of the Select Committee's report were specifically allowed by Mr. Speaker, and that is welcome. The hon. Gentleman began his speech by drawing attention to the consensus in all parts of the House that the nuclear industry is here to stay and that, whatever decisions may be taken about the commissioning of new power stations, we shall continue to be affected by it for many decades to come. The hon. Member for Bother Valley (Mr. Barron) concluded his speech on that important point.
The Bill deals with three principal, discrete matters—the first of which is the increase in British Nuclear Fuel plc's borrowing powers. That is to some extent a technical matter, but it allows one to raise the wider question as to whether the reasons for BNFL's increased costs are as have been stated by the Minister. I hope that the hon. Gentleman will comment on the argument made by his hon. Friend the Member for Havant about decommissioning costs. However, I realise that the Government must give a considered reply to the Select Committee's report and will not be able to answer in full this evening all the points that have been and will he made.
1117 I want to reinforce a question asked by the hon. Member for Rother Valley. So many questions have been asked that the Minister may be tempted not to deal with them all. However, he ought to say something about the extraordinary report that appeared in today's issue of The Independent of a proposal by a Ministry of Defence official that nuclear submarines could be scuttled as a way of dealing with the decommissioning problem. I hope that the Minister will reassure the House that such is not the Government's intention, because that solution is neither acceptable nor in accordance with our international agreements.
The first principal subject I want to address that is directly related to the Bill is the need for a commitment to long-term nuclear research and development, which arises directly out of clause 2. From 1 April 1990, the Health and Safety Executive will, under the terms of the Bill, assume responsibility on behalf of the Health and Safety Commission for managing certain nuclear safety research currently undertaken by the United Kingdom Atomic Energy Authority and financed by the Department of Energy. It is vital to have a long-term programme of nuclear safety research and development, and it is insufficient to contemplate fire brigade action—turning out a task force of scientists and engineers to respond only when a nuclear safety problem rears its head. Instead, a dedicated team undertaking long-term research is needed, whose advice on safety matters would be immediately available if required, and whose foresight would ensure that sources of concern about nuclear safety are averted.
That view was expressed by the House of Lords Select Committee on Science and Technology, which stated in volume 1 of its report of 22 December 1987, entitled "Research and Development of Nuclear Power":
Companies in commercial production often feel the need to cut back on activities that do not show immediate commercial returns. Long-term research and development is by definition such an activity, but it is nevertheless essential. If the privatised industry fails to make its own arrangements, the Committee believes that the Government should make arrangements for them. It is ultimately the Government who are responsible for the long-term security of the nation's supplies of energy. Privatisation does not change that.Legislation, or at least firm Government policy, may be needed in the context of current plans to privatise the electricity supply industry in order to preserve intact vital long-term research and development programmes. The Minister spoke of a £20 million reduction in Department of Energy expenditure. All the Government propose is a change in the route by which funding from the industry reaches the authority. I fear that that direct use of industry money to fund research and development programmes may dangerously distort long-term safety research programmes, and starve vital projects of funds in that way.My next point concerns an omission from the Bill that is both surprising and significant. I refer to the lack of any provision to make good a defect in the legislation under which the UKAEA handles contracts and consultancy work and the fruits of its research and development. The staff of the Atomic Energy Authority represent a unique national resource—comparable with our resources of coal, oil and gas. It not only founded a major industry in this country, providing half the electricity in Scotland through nuclear power stations but now it is increasingly expanding its non-nuclear research and development 1118 activities. It is able to offer the benefits of its research and development to British industry.
The authority should be able to derive full commercial benefit from the results of the research and development programme which it is permitted to carry out in non-nuclear areas. Its main enabling statutes—the Atomic Energy Authority Acts 1954 and 1986, and the Science and Technology Act 1965—restrict the ways in which the authority can pursue this commercialisation. It is not permitted to carry out non-nuclear manufacturing or commercial service activities based on its research findings, which is a major disadvantage. The Government have known of this for some time.
The House of Lords Select Committee on Science and Technology clearly saw this matter in the same light as I did. Volume 1 of its report on research and development in nuclear power says:
The UKAEA now operates on a trading fund basis. The Government wishes the UKAEA to be managed as far as possible commercially: but it proposes to continue the statutory restrictions which prevent the UKAEA from participating directly in the commercial exploitation of its expertise. The Committee feel this is inconsistent and they recommend that these restrictions be relaxed, providing there is no element of subsidy in tendering for commercial contracts.Why has the opportunity not been taken to include in the Bill that modification of these constituting Acts to allow the Atomic Energy Authority to engage in that commercial activity directly? It seemed the ideal vehicle by which to do so.I shall turn to a wider, third issue—the Bill does not reflect a national policy or strategy concerning the generation of electricity from nuclear power stations. The atomic energy industry is in disarray as a result of the Government's disaggregation of the supply industry—proposed through privatisation and the setting up of new companies. Formerly, the Central Electricity Generating Board had taken upon its shoulders the business of formulating and promulgating a national strategy.
However, present signs are that National Power, the biggest of the companies in the disaggregated supply industry, is not prepared to take the same responsibility for formulating and promulgating a nuclear electricity strategy. The Government recognise this difficulty because they have ring-fenced the nuclear industry. However, that is a sterile, and inevitably temporary, measure. They define the industry as one which has the present size and type of nuclear installation, and offer no plan for adding to, or substituting for, those installations in a systematic way. That is sterile because, as Ministers have acknowledged, the ring fence will remain in place for only a few years. What will happen after that? Ministers have been vague about that in debates on the privatisation Bill. They seem to imply that nuclear power will have to stand on its own feet at the end of that period, or perhaps for 10 years. However, we all know what that is likely to mean—a process of erosion where, as reactors are shut down, they are replaced by whatever is the economic flavour of the day. At the moment, that would be stations fuelled by natural gas.
This is not a strategy, a policy or even a proper response to market forces in an industry in which planning and constructing a nuclear power station takes a decade, and the station may operate for half a century. A national energy policy is needed. Although I cannot expect the 1119 Minister, in replying to the debate, to outline such a policy, the fact that the debate is conducted in this vacuum is striking. The proposals in the Bill do little to show even the way in which Ministers are thinking.
The Minister will remember, because he alluded to it during debates on the privatisation Bill, the views of the County Emergency Planning Officers Society about the need for composite off-site emergency planning. I understand that, in November, the Department of Energy set up a liaison group as a national forum for considering public protection aspects of nuclear emergency planning. When the Electricity Bill was considered on Report, the Minister said that the lack of formal responsibility on local authorities to produce emergency plans for nuclear installations, such as exist for the chemical industry, had been noted. He said that legislative help was on the way for the integration of plans.
The Bill has not been chosen as the vehicle for such help. What prospects are there for such legislation? The Bill ratifies the international convention on assistance in the case of accident or radiological emergency. It seems odd that these further safety measures, which are certainly cognate with the convention, have not been included in the Bill. When will the Minister's deliberations be completed?
The Bill is broadly acceptable and its passage through the House should be supported. I hope that the fact that it has been linked tonight with some debate on the report of the Select Committee on Energy does not mean that this will be the sole opportunity for the House to debate the report of the hon. Member for Havant and his colleagues, because the subject that it covers goes beyond the ambit of the Bill, is important and should not be addressed in a short debate with the short notice that we have been given.
§ Sir Trevor Skeet (Bedfordshire, North)Having listened with considerable interest to my hon. Friend the Member for Havant (Sir I. Lloyd), I believe that he has adequately dealt with the escalation in costs. In defence of British Nuclear Fuels, I say only that it has had to maintain high standards, set by the nuclear installations inspectorate, and to deal with waste disposal to the satisfaction of the Select Committee on the Environment. A Rolls-Royce solution was much too expensive for the low level waste, but it seems to have adopted one. It has also done a remarkable job in cutting down effluent discharges. Those activities have, cumulatively, escalated its costs. In a press release it indicated that one of the principal increases was due to the additional expenditure at Drigg, which is understood.
Paragraph 51 of the report says:
Under the new policy, the estimated current cost of decommissioning all BNFL plant and facilities is £.4.6 billion".A little further on it says:Despite this 58 per cent. reduction due to discounting, customers' liability for BNFL decommissioning costs has risen more than fivefold. Furthermore, BNFL's percentage share appears to have decreased significantly from approximately 23 per cent. to approximately 10 per cent. of the total.That means that over the years money flows into the coffers which could be spent on new plant and equipment. It is paid now, but the liability for BNFL will come a long time later. BNFL has been able to spread some of the risk among its customers.1120 That is one way of looking at the matter, but there is another way. In the Financial Times of 12 October 1988 it was reported that Dr. Harry Lawton, a former head of the laboratories at Sellafield, had said at an international conference that
Decommissioning and disposing of nuclear power stations might cost the equivalent of up to 20 per cent. of the electricity generated over their lifetime.The cost is enormous, and we must not overlook it.Nuclear waste is another source of high expenditure. By the year 2000 the cost of disposing of the quantity of high-level waste, at £495,000 per cubic metre, will work out at £1.6 billion. The disposal of intermediate-level waste, at £18,000 per cubic metre, will work out at £1.08 billion. Because of the Rolls-Royce method of burial at great depth, used for low-level waste of which there is a vast quantity but which tends to be much lower in radiation, disposal will work out at 1.5 billion. The total bill for disposal of British nuclear waste will be £4.2 billion.
Those are big liabilities, and the policy has largely been to pass them on to customers. I agree with my hon. Friend the Member for Havant that the road ahead is nuclear, provided that we do not have to experience technological changes that may require a movement of resources. The way ahead, in my view, involves the fast reactor and, ultimately, fusion. But let us take a hard look at the costs and make them clear to the public.
On cost-plus trading, Mr. Harding said in evidence to the Select Committee:
I am absolutely certain that we will be needing to look at different terms of trading with the privatised National Power, Power Generation and the Scottish boards. We did in fact take some initiative something like two years ago before privatisation was announced to open up discussions.Why, if negotiations were started two years ago, has so little happened? I appreciate that the contracts cannot be completely renegotiated; that would be too expensive, as paragraph 25 of the report makes clear. On the other hand, if it is open to BNFL to pass on most of its costs, that will not be in the interests of efficiency. I think that BNFL will have regard to that. Unless a complete answer can be found, the flotation will be greatly impeded.What man will put his money forward for the flotation of, say, National Power if he feels that some of the commitments are so substantial and uncertain that profitability could later be reduced? We considered that question in the Committee stage of the Electricity Bill; indeed, I brought it up myself. It looks as though lavish expenditure will take place well in advance to ensure that the public are safeguarded against financial risk.
I am satisfied that THORP is a great concept. It has ample orders for the next 10 years, and hopes in the years after that to obtain orders from a number of countries in Europe and probably beyond. It will be able to do that only because the plant will be largely paid off and liberal discounts will be possible. But what are the likely prospects for the United Kingdom industry? What organisation in the private sector will build a nuclear power station above 300 MW? We have been told—we were told in Committee—that at least four nuclear power stations are to be built: Sizewell B, which is in the course of construction; Sizewell C, involved in a planning inquiry; Hinkley Point C, which it is hoped will be available in 1998; and Wylfa, each with a capacity of 1,175 MW.
What will happen if the first is built and the second goes ahead? That will mean that we are not replacing the 1121 electricity derived from nuclear power. We now have Magnox stations with 4,793 MW and AGRs totalling 5,870 MW. That makes a total of 10,663 MW. But there will have to be some retirements. The Magnox reactors which will be moving out in the 1990s have a capacity of 3,500 MW. Hinkley Point B has a capacity of 1,120 MW, making a total of 4,620 MW. Replacements will be needed, and those replacements will be the new power stations to which National Power is committed, totalling 4,700 MW. If those stations are not produced, there will be no decommissioning or reprocessing at a later date.
I think that the Government have made a big mistake in not keeping the nuclear side in Government hands, where investment could be looked after carefully. I cannot see the private sector building nuclear power stations above 300 MW. I envisage the electricity from nuclear power stations falling from 20 per cent. of the total to between 10 and 15 per cent.
§ Mr. MaclennanEarlier, the hon. Gentleman made the welcome assertion that he believed that eventually fast reactors and perhaps even fusion would be the basis of our nuclear programme. Does he base that belief on the expectation that at some stage there will be a change in Government policy? Is that what he is working towards?
§ Sir Trevor SkeetI am entirely persuaded that the Government will change their mind later because they will have to do so. If the amount of electricity derived from nuclear sources is to fall, that will mean less work later for THORP. As I said, the whole logic of THORP was the reprocessing of the fuel elements from the newer stations —the advanced gas-cooled reactors and the pressurised water reactors—for two purposes. One was to recycle a waste product, to take out uranium which could be recycled in a way with which we are familiar. The other was to take out the plutonium, not simply to put it into store, but to use it in fast reactors.
What have the Government done? They say that there will be no fast reactors for the next 20 to 30 years and that we do not, therefore, need to spend such amounts on research. Thus one of the biggest planks for THORP has gone, unless it is brought back again.
The Opposition need not be too jocular. Everyone in the United Kingdom is together in fighting the same problem. Some say that the money could be spent on other things, but dispensing with the fast breeder reactor is not in the long-term interests of United Kingdom energy policy or in the interests of the constituency of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who has a local unemployment problem. It is much more important for the United Kingdom that we should carry on with the policy of developing the fast reactor.
We have the possibility of being able to use the plutonium in store, or we can keep the 26 tonnes in there for ever. I dare say a part of it could be used for military purposes, but not from the peaceful purposes stockpile. It was said in evidence to the Select Committee on Energy that it could be used in mixed oxide fuel, but, as has been said before, there is no market for that in the United Kingdom. It is quite unsuitable for AGRs. It may be used for PWRs, but how many will we have here? One is in the course of construction, but it will be some time before the 1122 programme materialises. I do not know how many more we shall have. There is no mixed oxide plant in the United Kingdom, although the process is thoroughly understood.
It has also been said that there may be a small European market for such fuel. However, West Germany is nervous about such matters, Sweden intends to close down its industry entirely by the turn of the century, Italy has virtually no nuclear power and although Belgium is a big producer of nuclear power it does not look as though a market will develop there. The Japanese are keen on the method and may use some of their own plutonium in PWRs. I fully support reprocessing because it recycles waste materials. One can draw out uranium and use it again in further fuel charges. One can draw out plutonium and then divert it, as a sensible policy, into fast reactors. One can take out the actinides, turn them into solid compounds and take them out of danger to civilisation. At present, however, we are stockpiling the stuff in large quantities. The report and the Government recommend that some of it should be passed over to National Power. I believe that it should never be passed over to the private sector, but should be under the control and scrutiny of the state. It is right for the defence of the realm that it should be so held.
I shall support the Bill. There are some interesting clauses, such as clauses 2, 3 and 5, which will excite much argument in Committee. The Government are doing a major job, but it behoves me to concentrate on clause 1, which deals with British Nuclear Fuels and is an important aspect of the Bill which may need to be refined. British Nuclear Fuels is a spendid and profitable company. It has great confidence in THORP for the future—far more than I have, even though plant will be written off and there will be heavy discounting to secure more contracts. Through its European connections, it has been securing many valuable contracts and earning foreign exchange. We are told today that it is the biggest earner of yen in this country, which is a signal achievement in itself.
Being able to do well today, however, does not mean that a company will be profitable tomorrow. Technological changes can bring abrupt changes of course which may be disastrous to companies. Let us hope that British Nuclear Fuels has a remarkably good course. It is asking for a further £500 million. Let us hope that it never comes back to the House again for additional money and that it will keep to the ceiling of £2,000 million. The coal industry never fails to come back to the House for more because it is greedy for extra money and once it has received the cash it begins to waste it.
§ Dr. Kim Howells (Pontypridd)I have the advantage of not having to be as generous in my assessment of the management at British Nuclear Fuels and its performance as the hon. Member for Havant (Sir I. Lloyd), whose contribution I admired greatly, as I did the contribution of the hon. Member for Bedfordshire, North (Sir T. Skeet).
Clause 1 asks the House to approve another £500 million of taxpayers' money being made available to bail out the management of a company which, over the past decade, has regrettably become a haven for smugness, complacency and arrogance, a management encouraged, moreover, by the willingness of successive Ministers 1123 throughout the period to sign virtually open cheques in lieu of that rarest of modern British commodities, hard cash for energy research and development.
I shall give one small but immediate example of the incompetence of the management at British Nuclear Fuels. On page 10 of the minutes of evidence in the report of the Select Committee on Energy, the chairman of BNFL, Mr. Harding, is reported as saying:
The price of raw uranium moves in a fairly direct relationship with the world price of coal and oil. The fact that both those have come down has brought down with it the price of uranium.Yet on page 25 of the same report, a memorandum from British Nuclear Fuels in answer to the Committee says:BNFL is not aware of any direct links between uranium prices on the one hand and coal or oil prices on the other hand.Considering the short time lapse between the delivery to the Committee of those two opinions, it is difficult to avoid the conclusion that the management at BNFL has either undergone one of its sudden and apocalyptic reassessments of operational costs or that its senior managers are not speaking to each other—or perhaps both. Whatever the real reason, it is clear that a lame duck rescue such as the one we are being asked to approve here has encouraged in BNFL an air of smugness instead of vigilance, complacency instead of readiness to respond to the realities of a changing world and arrogance, which derives from the sure knowledge that its cost—plus contracts, which the Central Electricity Generating Board and the South of Scotland electricity board delayed signing until 1982, would cushion it from the real world.The whole point of BNFL being set up was to recover uranium for thermal reactors and plutonium for fast reactors. As the hon. Member for Bedfordshire, North stated most eloquently, recent developments pose serious questions about those aims. Fuel prices, both existing and projected, have therefore played a crucial part in any assessment of BNFL's business. They are a crucial assessment in terms of our judgment of the Bill. If it appears that we in this House judge that traded world uranium prices are unlikely to rise significantly in real terms over the next 20 years, or that our nuclear stations are unlikely to require the service capacity offered by BNFL, or that the much-lauded BNFL foreign contracts are unlikely to prove the kind of bonanza that BNFL tells us they will be, then there is little point in stuffing another £500 million into the mouth of that company.
Perhaps, however, the Government do not care about the odd £500 million. Perhaps they have failed to notice that BNFL's own graph in the Enregy Committee's report shows clearly that, in constant money values—indexed to the starting date of the graph, 1973—uranium ore prices are lower now than they were over 15 years ago, averaging at the moment around $12 to $15 per pound on the spot market. Perhaps they have also failed to notice that for a number of reasons the world's available reserves of uranium yellowcake are ample to meet current and projected demand and highly unlikely to decrease markedly in the foreseeable future.
Part of the reason for low prices and abundance of supply has been the failure of the nuclear industry worldwide to expand as people expected it to expand, in the aftermath of the Three Mile Island and Chernobyl accidents. In this country we have witnesed that failure of expansion first hand and, with it, the raison d'etre for much of BNFL's operations.
1124 Let us examine for one moment the performance of the advanced gas-cooled reactors—our AGRs that were mentioned by the hon. Member for Bedfordshire, North and upon which rest so much of the THORP project's hopes and aspirations. The CEGB has four AGR sites —Hinkley, Dungeness, Hartlepool and Heysham. However, a closer examination of that list reveals that only Hinkley B and one of the Dungeness reactors have put any electricity into the national grid. Hinkley is credited with a load factor of just 49.6 per cent. and the Dungeness reactor with a minuscule 1 per cent.—a kind of electronic spasm and a little like the Minister's hand as I imagine him signing the cheques for BNFL, year after year. The other Dungeness reactor is still not working after construction overruns that seem to have lasted decades. The state of the Hartlepool and Heysham reactors is as ropey as ever it was—Hartlepool especially.
So where is all BNFL's business to come from? Is it to come from the Scottish AGRs? Well, it had better, but it is by no means a certainty that it will. The conspicuously un-knighted chairman of the South of Scotland electricity board, Donald Miller, has made his views about BNFL's performance perfectly clear by signalling the premature closure of the Hunterston A station and at the same time by spreading the word that the SSEB's operational profits were nullified by the increased charges that he was forced to pay BNFL under the terms of its cost-plus contracts. Donald Miller's tactics may have given us an insight into the frosty state of relations between the generators and BNFL, but it will not have done his chances of a knighthood much good.
So where is THORP's great future to come from? From its foreign contracts, we are told. But what degree of certainty do we have that even they will prove to be anything other than a means of turning this country into the world's nuclear dustbin? The West Germans, for example, have decided that they do not need a nuclear reprocessing plant, despite the size of their nuclear generating industry. The Wackersdorf reprocessing plant project is being abandoned and there are well-founded rumours that the West Germans will use France's Cap Hague facility and not BNFL's THORP plant at Sellafield for future requirements.
The nuclear generating industries of the United States of America, Canada and Sweden have all decided that they will not go down the road of reprocessing. They have opted for direct storage technologies. The Swedes especially, with a much smaller economy than ours and an electricity supply industry that supplies, proportionately, a much larger amount of electricity to the grid than does ours, have taken some hard and revolutionary decisions that will no doubt make them world leaders in the planning and practice of handling depleted nuclear fuel and waste.
What decisions are we being asked to make in considering the Bill? We are being asked to pour more good money after bad—and for what? So that we can continue to draw upon ourselves the opprobrium of the world for irradiating the Irish sea with Japan's nuclear waste? So that we can continue to find our requests kicked into touch every time we approach a foreign Government about allowing over their territories future flights by BNFL's plutonium-carrying aircraft? What a joy that little procedure has been. The Canadians have indicated their unwillingness. The Governor of Alaska has refused 1125 permission. I am sure that if polar bears could communicate with BNFL, they would refuse permission, too.
It is hard to imagine any species on earth daft enough to argue that plutonium should be flown from Prestwick to Japan. After the flight has headed north and over the pole, avoiding Iceland, Greenland, Ellesmere island, Alaska and eastern Siberia, of course, it heads south—past the Soviet Kamchatka missile bases and those of Sakhalin and the ones littered along the coast near the huge Vladivostok naval installations—before swooping down towards the Japanese mainland, one of the most densely populated areas on the face of the earth. What an eventful voyage each of those little beauties would have. I can just imagine the Soviet missile commanders not noticing the odd half tonne of plutonium drifting towards them every time there is a high easterly wind blowing in from the Pacific.
Why is BNFL not keen on transporting its plutonium by sea? Is it because it thinks that the Japanese may want it in a hurry when business starts up? That is highly unlikely, I should have thought. I cannot imagine that the Japanese want to manufacture miniature nuclear bombs. One cannot use plutonium for much else if one does not possess a commercial fast breeder reactor, or if one is not prepared to compromise the economics of thermal reactors by running them with some version of a mixed oxide fuel. Knowing the Japanese reputation for business acumen, that is highly unlikely.
Why, therefore, the BNFL proposal to fly it out? I would hazard a guess that it has dreamt it up as a means of cutting costs and of preventing yet another escalation of projected prices. If plutonium is sent by sea, the USA and other nations will demand, as they have already demanded, that it is escorted by an armed vessel that is capable of warding off attacks by hostile nations or terrorists or of aiding a ship that has got into difficulties so that there is no repeat of the tragedy that we have just witnessed in Alaska—but the tragedy of a plutonium escape, not oil.
There are Administrations throughout the world, such as the American Administration, who have become extremely concerned at reports of missing parcels of nuclear fuel and who will continue to insist that, no matter what the financial cost, no more should go missing. It is obvious that the cost of seaborne cargoes will be very high indeed if each one has to be guarded by the Royal Navy or by a privatised version of that service.
BNFL's motives are clear. It favours airborne transportation of fuel because it imagines that it will be cheaper than seaborne transportation. I warn the Minister not to trust BNFL's judgment. Its judgment has not been very good in the past. The accumulated risks and the potential costs of the kind of airborne error that we have witnessed all too often and all too tragically lately will be beyond calculation. BNFL's transportation ventures until now have been far from distinguished. Its peripheral involvement—however innocent it may have been—with the notorious Nukem-Transnuklear affair in West Germany has done nothing to improve its international image, however blameless it may have been over the whole issue.
It is a company that deals in the most dangerous substances known, and particularly in plutonium. Perhaps 1126 its plans to rush plutonium away from these shores by air are governed by an overwhelming desire to rid itself of the material as quickly as possible rather than because of Japan's desire to receive it. It already possesses 25 useless tonnes of plutonium at Sellafield. Nobody wants it. After all, what can anyone do with it, except spend millions on storing and guarding the stuff throughout the next millenium? The chairman of National Power does not want it. Mr. Baker's leaked letter makes that perfectly clear.
I have no doubt that the £500 million that we are being asked to underwrite in clause I will serve only to encourage BNFL to continue to underuse and waste the enormous reservoir of talent that it has assembled at Sellafield and at its other stations. I urge the Minister to exercise financial prudence, which this Government have done so often over the past 19 years in their administration of our other major energy concerns. For the sake of both common sense and responsible government, he should consider withdrawing clause 1, which provides for this extra funding.
§ Mr. Harry Barnes (Derbyshire, North-East)I apologise for not having been present for the entire debate and, in particular, for having missed the contributions of the hon. Members for Havant (Sir I. Lloyd), for Caithness and Sutherland (Mr. Maclennan) and for Bedfordshire, North (Sir T. Skeet), especially that of the hon. Member for Havant, who was Chairman of the Select Committee that produced the report which is relevant to this debate.
The Minister and the hon. Member for Havant, whose first few words I did hear, described the Bill as technical. As someone who cannot change a light bulb or a plug, or keep his own accounts, I think that the term "technical" is liable to make people like me dive for cover. Actually, there are two different interpretations of the word—it can be used to create two different impressions. The first is that the issue being described is minor and non-political. Clearly, this Bill is not that; it is concerned, in the first clause, with extending the borrowing requirements of the nuclear industry by one third, and with advancing that industry's capability and capacity. If provisions such as clause 1 were not agreed to, the industry would be halted in its development. If the industry could not borrow, it would not be able to live quite as well as is intended.
Then there is the other interpretation of "technical": that matters so described are non-understandable, that the issues are too complex for people such as me, and are understood only by civil servants and accountants and that we should therefore let it go through. But this is clearly not the case, for it is understandable—if not in terms of some of the detail, clearly in terms of the principles involved. At least it provides those of us who do not have a technical bent an opportunity to make some anti-nuclear noises.
The borrowing requirement is to be extended for the thermal oxide reprocessing plant at Sellafield—THORP. Permission for its construction was given in 1978, when it was estimated that the cost would be £300 million. The plant was to come into operation by April 1987. By 1983, the capital costs had risen to £1,280 million, and the start-up was put off until December 1990. BNFL now says that the capital costs will be almost £1,500 million and that the start-up date will be late 1992. Are we sure that the borrowing requirements will not need to be raised? The 1127 record is not inspiring, and as greater account is taken of safety measures, extra costs may be imposed on the industry.
Added to this, although estimates have undoubtedly been partly involved in it, is something that is likely to be extended in the future—decommissioning processes for the whole industry. Paragraph 41 of the report says:
future potential customers, when placing new reprocessing contracts, can hardly find very attractive the rise of THORP's costs in real terms and the delay in its start up. NII requirements were the principal reason on both accounts. Customers must wonder whether safety requirements in the future will occasion even more delays and cost escalations.I hope that that will be the case, and that we are becoming more and more safety conscious, for reasons such as those spelled out by my hon. Friend the Member for Pontypridd (Dr. Howells).The commercial insurance factor in clause 3 is quite fascinating. What actuarial considerations are involved? "Actuarial" is a technical term, but what we are concerned about are the factors that have to be considered and the chances of various things going wrong. In the context of the nuclear industry, there are the meltdown possibilities, problems of prevailing winds, and problems of airborne disasters, which were mentioned by my hon. Friend the Member for Pontypridd.
If a disaster involving plutonium in transit were to occur in a place such as Malta, which is a small island, it could be disastrous for the whole nation. At present Malta is going for the development of new power station provisions. Thankfully, because it is such a small nation, nuclear power is not financially feasible. If an accident were to occur in such an area, it would devastate not only the island but the whole of the Mediterranean. That consideration must be extended to our own island. Although our area and our population are vastly greater than those of Malta, this is still an island. What liabilities have to be taken into account? What, for instance, about dead sheep? How is the accountancy aspect going to be related to that?
Should we not be putting a brake on nuclear development, given that at present there is a great deal of scientific speculation about nuclear fusion—what methods of fusion can be used, and whether these can take place, for instance, at room temperature? I do not know whether, if we were to be told that it could take place at room temperature, we would give the impression that it was as safe as a front room. Or will we have the same problems as I imagine are associated with the current industry—except that some of the problems of meltdown then begin to disappear?
The hon. Member for Havant criticised press interpretations of the Select Committee's report. It is not surprising that the press has responded to the report in what some people may see as a sensational fashion. Paragraph 46, which deals with the transporting of plutonium to Japan by air or sea, states:
We are concerned about the proposal to fly plutonium to Japan in future, and especially about the use of Prestwick airport…In the wake of the Lockerbie disaster, the consequence of a similar air accident—or terrorist outrage—involving plutonium are too horrific to contemplate.The movement of toxic, hazardous and nuclear waste across national frontiers and seas, in particular, seems to me to be especially worrying. A nuclear equivalent of the Karin B, oil spills or of the Lockerbie air disaster is well understood by ordinary people. The thinking may be sensational, but there are very good reasons for having 1128 sensational considerations of that type very much to the forefront of our minds. We must be worried by provisions in this Bill. They are technical, but they are technical forms of treachery so far as the wellbeing of people is concerned.
§ Mr. BarronI do not intend to delay the House long, but I ought to comment on one or two of the speeches that we have heard.
The hon. Member for Caithness and Sutherland (Mr. Maclennan), who is not in his place at the moment, shares with me the view that people are slightly alarmed by the newspaper report about the scuttling of a nuclear submarine. Although I know that the Minister has no departmental responsibility for defence, he may want to comment on that.
The hon. Member for Bedfordshire, North (Sir T. Skeet) never ceases to amaze me by his support for the nuclear industry. The industry must be terrified every time he gets to his feet. I am even more amazed by his thoughts on low-level nuclear waste. Only a few years ago the hon. Member for Bedfordshire, North was a major voice in the "Bedfordshire Says No" campaign when it was proposed to dump nuclear waste in that county. I am told that he led that campaign well. He now says that the Rolls-Royce solution which has increased the cost is not the answer. When the Select Committee on the Environment published its report on that matter, I am not sure that it was totally convinced by the solution. My opinion, for what it is worth, is that it is better than what was happening at Drigg at that time. It is now in concrete trenches in steel boxes and is retrievable if anything goes wrong.
That has increased the cost to BNFL or at least to its customers since most of the contracts are on a cost-plus basis. However, it makes people in that area and in the country in general more confident about the disposal of low-level nuclear waste.
The rest of the speech by the hon. Member for Bedfordshire, North consisted of his customary promotion of the flotation of National Power. He pointed out what everybody knows and what will make John Baker and others happy, which is the tie-up of the cost of the nuclear fuel cycle as it is at present.
The hon. Member for Havant (Sir I. Lloyd) and my hon. Friends the Members for Pontypridd (Dr. Howells) and for Derbyshire, North-East (Mr. Barnes) raised an important question about decommissioning. I should like to ask the Minister about the increased cost of decommissioning. As I understand the information in the report, decommissioning is now the total liability of BNFL and will cost £4.6 billion for the new decommissioning policy. Under the old policy, the total liability was £438 million. As I understand it, most of the costs in the cost-plus contracts are passed on to the customers of BNFL which at present are the CEGB and the foreign companies which are sending waste here.
I am interested to note that that does not deal with the decommissioning of all generators in Britain. It is the cost of decommissioning BNFL's plants, and BNFL has only two generators. Therefore, the decommissioning costs of Magnox and other power stations when they come to the end of their life will be in addition to that £4.6 billion. Therefore, we are talking about a much greater threat to the public purse. I do not expect the Minister to comment on that immediately, but I give him notice that we will 1129 want to probe that issue further. We will want to discover the total cost of decommissioning Magnox and AGR power stations, and PWR stations if they are fuel-fed in years to come.
The hon. Member for Havant and my hon. Friends mentioned the transportation of plutonium. I understand that it is a major issue in the Prestwick area. I believe that the hon. Member representing that area is the Secretary of State for Defence. In some instances he has no argument about plutonium flying around in airborne craft. I wonder what his position is in relation to the concept of moving tonnes of plutonium to the other side of the world by aircraft flying out of his constituency.
I agree, as I am sure do many others, with the comments made by the hon. Member for Havant about his Committee's feelings on the issue. Perhaps it is an issue on which we should go no further than we have already. However, we still do not have an answer to the question raised by my hon. Friend the Member for Pontypridd about what we shall do with the tonnes of reprocessed fuel that we have on our hands now. We are told that a clause in the recent contract says that the waste should return to the country of origin. At present, we have no programme for the movement of that fuel so that we can complete that clause in the contract. It would be interesting to hear the Minister's comments on that.
§ Mr. Michael SpicerIn his opening remarks the hon. Member for Caithness and Sutherland (Mr. Maclennan) asked whether the Government intend to make a full response to the Select Committee's report. I can confirm that that will be the case. In the meantime, the House might wish me briefly to give our initial answers to some of the points that have been raised.
The hon. Member for Caithness and Sutherland asked about long-term research. In my opening remarks I said that the Health and Safety Commission will need to sponsor research on its own account to ensure that the totality of research is adequate. Therefore, there will be research independent of the immediate requirements of, for example, the nuclear installations inspectorate doing its safety checks and the research associated with that. There will be ongoing research in parallel with that.
The hon. Gentleman asked about my comments during the Report stage of the Electricity Bill on emergency planning procedures. The Health and Safety Commission has asked the Health and Safety Executive to bring forward regulations which will require local authorities to have plans available for dealing with emergencies at nuclear installations. Those regulations will be made under the Health and Safety at Work etc. Act 1974 after full consultation with interested bodies. Therefore, an intense consultation process is taking place. It is for my right hon. Friend the Secretary of State for Energy to bring the regulations forward. There is a promise that those regulations—GMAH-type regulations—will be brought forward.
The hon. Gentleman also asked about the relationship between the Atomic Energy Authority and the private sector, whether there could be an extension of that relationship and why it had not been done in the Bill. That is an extremely difficult issue which poses problems that we 1130 are currently considering. It raises the question of how far one can allow a public sector body to trade in the private sector. There are arguments both ways. No doubt we shall tell the House our thoughts when we have considered that matter further.
§ Mr. MaclennanI thank the Minister for those answers. Can he give me any idea of the time scale he has in mind for considering that matter?
§ Mr. SpicerNo, I cannot. Obviously, with the changes that have taken place in the AEA, the issue is likely to be in the front of our minds when we think about its future. It would be implicit in the changes that are taking place in the organisation as a result of the various decisions we have taken in the past few months.
The theme of the debate was raised by my hon. Friend the Member for Havant (Sir I. Lloyd), the hon. Member for Rother Valley (Mr. Barron) and particularly by the hon. Member for Pontypridd (Dr. Howells). In the context of the additional finance limits for which the Bill makes provision, the hon. Member for Pontypridd said that the Bill represented a lame-duck rescue. I do not think that he could have been in the Chamber when I said that BNFL has been consistently profitable since its inception, had paid dividends over the last 12 years and aims to pay off all its borrowings by the mid-1990s. He made a comparison with the coal industry. I only wish that it was a true comparison, because, if that were the position facing the coal industry, a lot of our problems, certainly with respect to the coal industry, would not exist. It was a speech that was unusual for the hon. Gentleman. It was full of hyperbole and not, I think, fully worthy of him.
§ Mr. Dennis Skinner (Bolsover)The hon. Gentleman did not like it.
§ Mr. SpicerThe hon. Member for Bolsover (Mr. Skinner) has just rushed into the Chamber and is coming to the defence of the coal industry. It is not a question of not liking it; I was not passing a value judgment on it. It was factually inaccurate to talk about a lame-duck rescue. The hon. Member for Bolsover backs his hon. Friend's judgment no doubt because he shares his prejudices. The hon. Member for Bolsover is full of prejudices; he is riddled with them. Therefore, it is wholly unproblematic that he would support his hon. Friend the Member for Pontypridd's prejudices. I am not surprised that he backs his hon. Friend against me. In fact, I would be rather unhappy if the hon. Member for Bolsover's prejudices were on my side.
I turn now to the question of costs at BNFL because undoubtedly there have been cost overruns in the past. I concede that to my hon. Friend the Member for Havant, who particularly raised this point, but I think that my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) also raised it. Because of cost-plus contracts, the effect of these overruns has been the almost automatic increase in prices paid by the CEGB; and because of the monopolistic position of the CEGB in the market place it has in turn been able to pass these cost increases straight through to the electricity consumer.
With the passage of the Electricity Bill—which is relevant in this context, Madam Deputy Speaker—all this will change. The privatised successor companies to the CEGB will no doubt wish to put far greater pressure on BNFL when contracts are struck between them for further 1131 reprocessing and related work. What is more, these contracts will be fixed price in nature. BNFL will therefore be under pressure to continue the process of tightening the control by its management of the vast capital projects in which it is currently engaged. And, in answer to my hon. Friend the Member for Bedfordshire, North, the Government will ensure that the contracts finally signed are fair as between BNFL and the electricity supply industry. It will be a difficult operation, I concede.
§ Sir Trevor SkeetI am heartened by this. These will be fixed price contracts from now on. From what date will this be so? They will not antecede the current date covering the past? This is where the generating companies could fall into difficulties.
§ Mr. SpicerThe practice of entering fixed price contracts has already been started, so they are nothing new. All I am telling my hon. Friend and the House is that, particularly as the ESI prepares for privatisation, the contracts it will need to strike for its reprocessing arrangements will in all probability be on the basis of fixed prices.
§ Mr. BarronI think that the Minister has nearly answered my question, but I want to ask it again. What the hon. Member for Bedfordshire, North (Sir T. Skeet) is asking and what I am asking is this: is the Minister saying that any fuel that is currently under the old cost-plus contract signed for reprocessing will be moved to a new contract with the flotation of the electricity supply industry?
§ Mr. SpicerIf what I say now is wrong, I will certainly write to the hon. Gentleman about it. The answer really depends on the precise terms of the contracts, I suspect. I do not think it will be possible simply to renegade on the existing contracts; they will be part of the assets and liabilities of the successor company.
§ Mr. SkinnerRenegade? Does he not mean renege?
§ Mr. SpicerThe hon. Member for Bolsover is on form this evening. I fully concede that he is absolutely right; I used the wrong word at that point. I hope that will be the only point on which I shall have to agree with him for the rest of the evening.
I have to say in response to my hon. Friend the Member for Havant that the rise in unit prices in BNFL's main businesses over the past three years amounted to less than 7 per cent. annually for enrichment, were virtually nil for Magnox fuel manufacture and were 8.5 per cent. annually for reprocessing. In fact, AGR fuel prices decreased between 1984 and 1987.
As to the cost increases in the THORP project, increased costs of £200 million to a total of £1.8 billion were due to a requirement to meet more rigorous safety standards and to escalations arising from a delay of over two years in the project. BNFL has now carried out a major review of the THORP project and is increasingly confident of its ability to complete the plant within the latest costs estimate. The first stage receipt and storage facility is now on stream and the main plant is on schedule for completion in 1992.
As to the anxieties which have been expressed by, in particular, the hon. Member for Pontypridd but also by my hon. Friend's Committee about THORP's long-term business prospects, all I can say is that I would not mind 1132 having a business which had 10 years' profitable contracts in the bag amounting to some £4 billion. As the House knows, by far the largest component of these contracts is contracts with Japan, which amount to around £2 billion and will make THORP the largest earner of yen in the country. The Japanese contracts are even contributing to the present development of THORP, which will have been fully written off by the time the first 10-year contracts come to an end.
I turn next to the second major point which has been recurring throughout this short but, I think the House will agree, interesting debate, the question of the significant misrepresentation which, as my hon. Friend the Member for Havant has acknowledged, has been given to the Committee's report on the question of the dumping of foreign nuclear waste in this country.
All contracts, for the reprocessing of spent fuel signed since 1976 have contained clauses for the return of waste. Nowhere in the report is it suggested that the pre-1976 contracts should be renegotiated. They were freely entered into and it would be impossible for any Government to step in now and attempt to get them amended retrospectively. Paragraph 30 of the report of the Committee has been particularly misrepresented in this context. The report talks specifically of waste from 1,500 tonnes of spent fuel as being the result of pre-1976 contracts. In the newspapers this morning this has become 1,500 tonnes of waste. In fact, 97 per cent. of this is recovered in the form of uranium and plutonium. About 100 cu m of high-level waste.that is, as said earlier, about two bus loads, which is rather different from the 1,500 tonnes mentioned in the press today—will arise from the reprocessing. This is less than one tenth of the expected high-level waste arising to the year 2000. The vast majority of the billions of pounds of business which lies ahead will be subject to the condition that the waste is returned to the country of origin.
Turning to another set of questions, about decommissioning, which hon. Gentlemen have raised during the course of the debate, a question was raised in particular —I think by the hon. Member for Rother Valley—about the wisdom or otherwise of leaving nuclear plant for a long period after it has been shut down before it is removed. Our primary concern is always to ensure that nuclear plant, whether operating or closed down, is safe in terms of both men and the environment. I will come to the specific question about the triggering of schedule 12 to the Bill in a moment, but there is no doubt that it is technically possible to decommission plant on a much shorter time scale than the industry at present plans. Indeed, we are demonstrating this with the Windscale AGR. However, the difficulties of doing that are considerable. In any reasonable commercial terms, it makes much more sense to leave dismantling work until radioactive decay makes it easier to meet required standards of worker and environmental protection.
The NII and the various authorities are quite clear that 100 years is the best period. Were somebody suddenly to impose a new regulation upon the industry to carry out the third stage of decommissioning sooner, it is quite possible that the provisions of schedule 12 might be triggered off and implemented.
The Select Committee made the interesting suggestion that the companies legislation should be amended to make decommissioning costs the first charge in the event of 1133 liquidation. I certainly cannot be expected to make an immediate response to that suggestion today, but I have noted it.
§ Sir Ian LloydHave the Government received what my hon. Friend would describe as a convincing and complete explanation of the vast difference between the two figures which I gave, the original figure of £468 million and the current figure of £4,600 million?
§ Mr. SpicerMy hon. Friend was the Chairman of the Select Committee which recommended that the definition of "decommissioning" should be changed from plant on site to a return to a green field site. That redefinition of what was implicit in decommissioning has been a major reason behind the escalation in the provisions for decommissioning which BNFL is now making for its plants. My hon. Friend may have to pursue that point.
Several questions have been raised about the ownership, control and transportation of plutonium after privatisation. I assure the House that the privatisation of the electricity supply industry will make no difference to existing strict controls which govern the ownership and use of all civil materials. Plutonium and other nuclear materials will continue to be subject to Euratom safeguards and the terms of the United Kingdom-Euratom-IAEA safeguards agreement. Reports on plutonium production are supplied to the safeguards authorities by the reactor operators when the irradiated fuel is sent to reprocessing plants. Further reports are made at each stage as the plutonium works its way through the nuclear cycle.
Those procedures are administered by Euratom, whose safeguards inspectors have access at all times to the facilities in question to check that the reports are correct. The present restrictions on the transfer of nuclear material abroad will also continue after privatisation. Civil plutonium can be transferred abroad only on assurances covering its peaceful use, physical protection and controls on retransfer, and it will remain subject to the safeguards arrangements that I have already mentioned.
§ Sir Trevor SkeetWho is to pay for the storage of plutonium? The companies cannot use it. Mixed oxide fuels are not used in the United Kingdom. Plutonium will be stored somewhere.
§ Mr. SpicerWhen I refer to ownership, I may implicitly answer my hon. Friend's question. The hon. Member for Rother Valley also referred to ownership. I stress that it is normal international practice for generators of nuclear power to own the products of their reactors. Therefore, it becomes their responsibility and their cost. At present, plutonium derived from United Kingdom generating boards' fuel is stored at Sellafield, and that is likely to continue to be the practice after privatisation.
My hon. Friend the Member for Havant and the hon. Member for Pontypridd were particularly forceful about transportation. I will draw the attention of my right hon. Friend the Secretary of State for Transport to the comments that have been made.
Nuclear materials in transit are subject to very rigorous 1134 international safety standards and regulations laid down by the International Atomic Energy Agency. Those international regulations require substantial safety margins to be built into containers so that they can withstand even the severest accident without causing a significant public hazard. A recent study by the advisory committee on the safe transport of radioactive materials concluded that the safety and security risks in transporting nuclear materials were negligible. BNFL and other nuclear operators have been transporting nuclear materials, including plutonium, safely and securely for over 30 years.
I re-emphasise that the Government are committed to retaining nuclear power to provide essential diversity in fuel supplies. The Government's proposals for electricity privatisation should secure a healthy future for BNFL, at least until the end of the century. BNFL's prospects in the longer term will depend on how competitive it can make the services it offers, including reprocessing. The Select Committee's report is relevant in that context. Negotiations are currently under way between the company and the generating boards on new fixed price trading arrangements. That will undoubtedly mean increased risks for BNFL, but it will enable the company to reap the benefits of improvements in efficiency and revised work practices which it is introducing.
From the Government's point of view, it has been an interesting debate. We shall further consider the technical and detailed points and certainly give full attention to the Select Committee's report, which reached us only yesterday.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of bills).