§ Madam SpeakerI have selected the amendment standing in the name of the Prime Minister.
§ Mrs. Margaret Beckett (Derby, South)I beg to move,
That this House notes that the Government has rushed ahead with the proposed sale of parts of the British nuclear industry without proper debate or scrutiny; has not yet found time to reply to or debate the report of the Trade and Industry Committee despite its urgency; has presided over the spreading of uncertainty due to rumours about a trade sale, failure to disclose fully safety issues, and not setting out fully the details of how privatised liabilities will be discharged; believes that the Government's mismanagement of the process has made it impossible for any sale price fully to recompense the taxpayer for decades of investment in the nuclear industry and that the sale should now be called off because of the costs to the taxpayer and the potential hazards to the public.Today we are debating one of the most reckless gambles that the Government have taken: the decision to privatise part of the nuclear power industry. The issue raises a large number of unanswered questions, the first of which is: why? Why are the Government going ahead with the privatisation on this basis and on this time scale? I see that the Government—in their amendment to our motion, which is on the Order Paper—have referred somewhat sniffily to their intention to give what they call a considered response to the Trade and Industry Select Committee report within the normal time scale. I am not exactly sure what that means—it has been known for such responses to take months, if not years. What is quite clear is that, with the publication of the prospectus only a few days away, any considered response seems likely to have been overtaken by events.We have asked: why this sale? Today, we want to hear from Ministers what advice the Government received and, in particular, whether they were advised that the industry should not, in the public interest, be sold into the private sector. I find it extraordinary that the Government have not found time to debate the report of the Trade and Industry Select Committee before continuing to press ahead with the sale—all the more extraordinary because so many of the questions raised by the report remain unanswered. For example, we are still not being told what the Government mean by saying that liabilities will follow the assets into the private sector. We do not know whether the Government intend to go ahead with flotation or are considering a trade sale—which has at least twice been rumoured and in itself is a confession that they may fear a failed flotation precisely because of all the unanswered questions and unresolved risks. Going ahead in this way is all the more strange because of the fresh concern about safety issues.
We argue in our motion that this sale should be called off because of the cost to the taxpayer and the potential hazards to the public. One simple statistic alone gives an indication that the taxpayer is being cheated. The Government have never aimed to raise more than £2.6 billion from the sale, but the reactors they are selling cost the taxpayer £13 billion to build. For example, one reactor alone—Sizewell B, the newest—cost more than £2.6 billion.
839 Quite apart from the poor value for money at the likely sale price, there is the question of the liabilities with which the taxpayer will continue to be saddled.
The stations liable to produce costs in the relatively short term without any long-term counterbalancing revenue are due to stay in public hands. The only stations expected to produce revenue in the long term will be sold, and their revenues will thereby go into private hands. In other words, on balance, liability-generating stations will stay with the taxpayer and income-generating stations will go to the private investor.
No doubt that equation caused the Government's merchant bank, Barclays de Zoete Wedd, to say in its advice to City interests that this privatisation offers the investor £2 billion of what it calls "free" cash in the next five years. Presumably, that advice also reflects assumptions about whether this privatisation, like the others, will be so structured that the privatised company does not, as it properly should, carry on its balance sheet an element of debt, so that the taxpayer and the consumer can expect some further return from the investment that they have funded—and funded more than once. I hope that, when he replies, the Minister will cast light on whether debt will appear on the balance sheet.
I note with dismay that it is intended that, in this industry, like the others, executives will be able to benefit from share options similar to those that have done so much to bring other privatised industries into disrepute. If that precedent is followed, the precedent of not including any debt on the balance sheet may well be followed.
The Government have consistently argued nevertheless that this is not a straight give-away—poor value for money in terms of the revenues raised compared with the cost of creating the assets being privatised—because the long-term liabilities in decommissioning, fuel reprocessing and waste disposal costs will follow those assets into the private sector. In other words, the Government claim that those who today would draw the profits on the taxpayer's investment will later pick up the bill that would otherwise fall to the taxpayer.
The big question is, do we believe the Government? If we do—or rather, if investors do—I suspect that they have no sale, but do we, or can we, possibly believe them? The omens are not good.
The Government have agreed that the privatised industry must set up a ring-fenced fund into which the company will pay money which will in effect be held in trust to meet the potentially huge future costs of decommissioning and closure. The amount that the company needs to set aside if it is to be expected fully to meet those costs is, however, heavily conditioned by technical accounting decisions such as the extent to which the expected liabilities are discounted by being met from money set aside today and invested to build up reserves to meet those future bills.
At the outset, the calculations were sensibly done, on a very prudent basis, discounting the enormous costs of nearly £15 billion thought to be required by about 2 per cent. a year. City commentators have hitherto suggested that that would require the privatised company to set aside sums assessed at between £30 million and £50 million a year.
Yesterday, however, the Secretary of State announced an initial endowment into the fund of £230 million from British Energy, and additional sums of about £16 million 840 a year "initially". It is hard to judge from those figures whether the Government are being unduly pessimistic or optimistic, or whether they are being prudent regarding the amount of provision required, but anyway, if that initial sum is being set aside by British Energy today, when its component parts are in the public sector, that sum is coming from the taxpayer and the consumer.
It was far from clear from the evidence given to the Select Committee by the Minister for Industry and Energy whether that special fund—we agree that a special fund is required—is even intended to pick up the full bill for liabilities resulting from the assets that the company will acquire. There seemed to be a hint in what the Minister said in evidence that only part of those enormous costs will be covered—leaving the rest, presumably, with the public sector and the taxpayer. That would be a disgraceful betrayal of the public interest.
The scale of the potential betrayal is what is so staggering. The Select Committee report suggests that, far from the segregated fund to cover liabilities covering all long-term costs, it is now intended to cover only the direct costs of initial decommissioning, excluding defuelling—which amounts to two thirds of the cost of the first stage of closure—and a variety of other identified costs. Table 1 in the Select Committee report suggests that that may mean that as little as £1.2 billion may be covered by the fund out of total liabilities assessed at £7.6 billion—and that assessment is made on a discounted basis. If we take the figures on an assessment of undiscounted costs, eliminating any bias created by picking different figures to discount those costs, we are talking about a provision of more than £4 billion against total costs of nearly £15 billion—so much for liabilities following assets.
We already knew that the taxpayer would lose out to some degree, because the Red Book for 1996–97 told us so. The Red Book for 1995–96 showed that the industry expected to contribute £560 million in total from this year and next year to public funds. However, it is now expected to receive a total subvention from public funds of £230 million in this year and the next, and a further £160 million in 1998–99. In other words, it is admitted up front that the privatisation will cost the taxpayer £650 million in the first full year following the sale and at least £1 billion in the three years to 1998–99.
Yesterday, when he opened Sizewell B just in time to sell it, the Secretary of State announced that British Energy will place an initial endowment of £230 million in the segregated fund to be established to meet its long-term liabilities with an initial future contribution of £16 million per year.
§ Dr. Robert Spink (Castle Point)Will the hon. Lady say whether Labour would renationalise Sizewell B and the rest of the nuclear industry—yes or no?
§ Mrs. BeckettThere has been no suggestion of renationalising the company or companies if they are privatised. However, whether they will be privatised depends very much on the answers that we and investors get to the questions that will be asked today.
As I was saying, the yearly contribution being suggested now is substantially less than any City analyst has hitherto said would be necessary. The yearly sum may 841 have been reduced as a consequence of the substantial up-front endowment announced by the Secretary of State yesterday. However, by a remarkable coincidence, that endowment is exactly the sum that this year's Red Book shows as the total contribution to the industry by the taxpayer in the next two years. In other words, it looks as though, from the very start, the taxpayer is expected to cough up in advance, and that investors' liabilities will be reduced as a consequence.
Apart from the issue of inescapable costs—which will have to be borne somehow and somewhere as the power stations reach the end of their lives and must be decommissioned and destroyed—there is the issue of the potential risk and cost of accidents. The Government say that the company will have to insure itself against the risk of an accident whose clean-up costs amount to £140 million. All liabilities above that will fall on the Government—although they may be able to share a further £140 million through international agreement. However, anything above that sum would fall straight on the taxpayer.
An assessment of the cost of the Chernobyl disaster, for example, suggests that such liabilities could be very heavy. We have only to look at the potential costs of the present problem of bovine spongiform encephalopathy to see how readily any accidents would cost much larger sums than those for which this industry is required to be covered. There is no reason why the privatised company should not be required to insure itself for much larger sums in the commercial markets. That, too, will make a substantial difference to the commercial outcome and to the prospects of the sale.
In its evidence to the Select Committee, the CBI pointed out that there are many other private sector industries, such as the chemical industry, which have to pay premiums on commercial insurance for far larger sums than this industry is being required to shoulder. So far is it from being justified that it should be required to insure for only such a small amount that private sector competitors argue that unless the industry is forced to carry much heavier insurance, this light insurance regime will itself amount to a large and unfair subsidy to the privatised industry—and I am sure that the hon. Member for Castle Point (Dr. Spink) would oppose that.
This is why the Select Committee recommended that the Government reconsider. The amount of insurance that the industry is required to carry is also relevant to concerns about safety, which are directly linked not just to concerns about the sale but to anxieties about the value of the sale. There is a real worry that, as Scottish Nuclear's former director of safety said in his evidence,
a privatised utility is likely to seek to make small erosions into safety margins for commercial gain.There are also worries that unless carefully monitored and supervised British Energy might, if it follows the path of other privatisations, shed staff purely on economic grounds, in terms of reducing the numbers and costs of those employed without sufficient consideration for what high safety standards would require.
§ Mr. Phil Gallie (Ayr)The hon. Lady has referred to the former safety director of Scottish Nuclear. May I refer her to the operational safety review team—OSART report, independently undertaken by people outside this 842 country, which shows quite clearly that safety standards at the Hunterston plant since the restructuring of the industry have improved beyond recognition—this in the run-up to privatisation. There is no reason why that improvement should not be maintained after privatisation.
§ Mrs. BeckettAs the hon. Gentleman rightly says, the improvement has taken place in the run-up to privatisation, so he would be hard pushed to attribute it directly to a privatisation that has not yet taken place. What he says, while interesting and welcome, in no way impinges on the observations of Captain Killick, who has expressed concern that, in the long term, commercial considerations and safety margins are likely to be offset against each other.
One way in which safety margins may be eroded has to do with the running of the stations and the pressure that we believe is more likely to be exerted in the private sector for unsustainably high output. Part of the assessment of the sale value is based on the use of a load factor—the proportion of the year during which a reactor runs at full capacity. The sale value assumes that the load factor will average 82.5 per cent., but the best ever performance of the advanced gas-cooled reactors in the sale is 80 per cent.—and last year it was 74 per cent. I am assured by industry experts that there is no chance of these stations running at the high load factor suggested as the basis for assessing the value of the investment; and that they are already being run above their design capability.
This would mean that investors judging on the basis of such a load factor might be misled as to the possible value of their investment. One of the Select Committee's advisers, Dr. MacKerron, suggests that a more realistic factor would be 70 per cent., and that on that basis the sale might raise as little as £1 billion. Yet the House will be aware that the Government need to raise at least £2.6 billion in order—even on their figures—to cover the costs of decommissioning and disposal of the older Magnox reactors that are being left in the hands of the taxpayer.
A look at the Government's assessment of these costs suggests that it is optimistic in any case. There is little question but that the power stations being sold have been run for longer periods at maximum power in recent months. Indeed, in the lead-up to privatisation this is being done to try to make the industry more attractive for sale. It has improved the assessment of the value of the industry and hence the sale prospects. That is exactly what might be expected in the future when a private sector owner tries to maximise the return on his investment.
Unfortunately, as we are now all aware, that more intensive period of use has raised fresh fears about safety following an emergency shutdown at Heysham 2 and consequent investigations at Torness and elsewhere. There can be no doubt that if those investigations suggest that, on safety grounds, those stations ought not to be refuelled while in use, all the financial calculations about the sale will be thrown into question. Precisely for that reason, the sale prospectus must include much more detail about those matters if investors are to stand any chance of knowing the implications and risks of the investment that, for financial reasons, the Government desperately need.
There is another risk that the Government need to set out and explore—the regulatory risk. Some of those who gave evidence to the Select Committee seemed to suggest 843 that assurances should be given that no risk could arise to change the operating conditions for the privatised company. Frankly, only a fool would give such assurances and only a fool would believe them.
The regulator himself pointed out that, if he is asked by other generators to review such issues as British Energy's direct access to the market on a preferential basis, he will have to do so. That, too, would change all the financial calculations about the sale. Those who think that it is unlikely to happen, should recall how the market for gas was changed in a way that was not anticipated when the sale was made. The nearer we get to the privatisation date, the more we are on shifting sands.
In the White Paper leading up to the privatisation, the Government said that the nuclear element of the fossil fuel levy would be abolished. It seems that that is no longer the case. It is hard to see anything constant about the privatisation, other than the Government's dogmatic determination to carry it through, irrespective of whether it makes sense, the cost to the taxpayer, the implications for safety and its long-term impact.
There is a merciless logic that casts doubt on the Government's entire case. The wastes and residues from the stations create a responsibility that will last for probably more than 100 years. As James Capel, the city analysts, said in evidence to the Select Committee, such responsibilities are matters for Government. If only by default, liabilities are likely to fall on the Government of the day.
As the Minister says, it would be intolerable for responsibility for liabilities to be separated from the assets from which they arise. As the liabilities are inherently likely to end up with Government, the assets should stay with Government. That simple fact sums up the scale of the gamble on which the Government have embarked. They intend to set up a private company which, in its early years, will accrue substantial revenues on an investment that that company has not made, but was made by the taxpayer. Over the years, the revenues will gradually decline and ultimately cease as the stations reach the end of their usable lives, but there will remain for between 70 and 130 years huge liabilities to be met and, with them, huge costs.
The Government expect that the private sector will continue to meet these costs long after it has ceased to receive any revenues. Even Alice would have thought that she was not in wonderland, but in nightmare land, given such a prospect.
The privatisation is folly of a high order. Even for this Government, it represents unprecedented incompetence and irresponsibility—I say that in the aftermath of the BSE episode. The Government know it, we know it and the industry knows it. Sooner or later, the full consequences of the folly will be borne in on the public, who will be left to shoulder the burdens that the Government are foisting on to future generations. By then, it will be too late to call a halt. Let the House call a halt today.
§ 4.3 pm
§ The Minister for Industry and Energy (Mr. Tim Eggar)I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'congratulates the Nuclear Electric and Scottish Nuclear companies which, with the advent of competition in the electricity market and the prospect of privatisation, have transformed their performance844over the past six years; congratulates the Government on the planned sale of the nuclear power stations of Nuclear Electric and Scottish Nuclear, noting that it is consistent with existing legislation, will fully preserve the vigour of the safety and environmental regulatory system, will benefit the taxpayer through the transfer of liabilities to the private sector and the receipt of sale proceeds and will provide appropriate transparency about liabilities and how they will be met; notes that the Government intend to give a considered response to the Trade and Industry Committee within the normal timescale; and notes that the Opposition have opposed every privatisation, despite the proven benefits which have been recognised by a growing number of countries throughout the world.'.I begin by paying tribute in the House to the late John Collier, who was the chairman of Nuclear Electric. It is due to a great extent to John's skill, leadership and hard work that the nuclear power industry is now preparing for privatisation. He is remembered with great respect and affection by everybody who knew him, in all parts of the House.Let me now turn to the speech that we have just heard from the right hon. Member for Derby, South (Mrs. Beckett)—a speech of doom, gloom and scaremongering, even by her standards. For once I can say something positive about the hon. Member for Leeds, West (Mr. Battle), who until recently has refrained from trying to score cheap party political points about safety. I am sorry that he failed to persuade his right hon. Friend to follow the same route. [Interruption.] I am sure that the right hon. Lady does not realise how responsibly her hon. Friend has behaved with regard to safety. I am only sorry that she did not follow his good example.
§ Mrs. Beckettrose——
§ Mr. EggarOf course I will give way to the right hon. Lady, if she wishes to contradict her hon. Friend.
§ Mrs. BeckettI do not wish to contradict my hon. Friend; it is the Minister on whose remarks I want to comment. He said that it would be irresponsible to draw attention to some of the safety consequences of the problems that are being seen in the nuclear industry. I cannot believe that he does not know what I know: that the industry is seriously alarmed about some of the prospects and some of the consequences of the current investigation of developments in the industry.
The Minister has come to the House before—while the report on Heysham was on his desk—and said that it would be wrong for anyone to raise safety issues and anxieties about the future operation of the industry. All the issues are difficult; all are now being assessed. It would be grossly irresponsible for any hon. Member, even a Conservative Member, not to raise some of them in a debate of this nature.
§ Mr. EggarI suggest that what is entirely inappropriate is for such issues to be raised in the way in which the right hon. Lady raised them. Her speech was no more than pure scaremongering from beginning to end.
§ Mrs. BeckettWe shall see.
§ Mr. EggarThere we are. The right hon. Lady, from a sedentary position, says, "We shall see." What is that except scaremongering?
845 The fact is that the nuclear installations inspectorate is an independent body, which is overseen by the Health and Safety Commission. The right hon. Lady seems to forget that the commission includes three representatives from the trade unions. To suggest for a moment that its members would be prepared to go along with a lowering of safety standards is offensive to them; moreover, it entirely fails to recognise the high and independent standards set by both the commission and the NII.
If the right hon. Lady had bothered to read the NII' s evidence to the Trade and Industry Select Committee, from whose report she quoted extensively, she would know that the NII said that, if shareholder pressure resulted in stronger, more focused management, it would expect to see a safety benefit from privatisation. The Health and Safety Executive has confirmed that relicensing the affected nuclear power stations will ensure that there is no reduction in nuclear safety as a result of restructuring and privatisation. After an exhaustive inquiry, the Trade and Industry Select Committee concluded:
privatisation need not result in any reduction in nuclear safety".Let me repeat the Government's policy once more. Safety is and will remain paramount for both the Government and the industry, and the same rigorous regulatory regime will continue to apply to both public and private-sector operators.
§ Mr. Michael Clapham (Barnsley, West and Penistone)The Minister mentioned the Health and Safety Executive. He will be aware that a letter leaked last week showed that the cut in the HSE's budget was compromising safety, because in future it would not have enough inspectors to ensure compliance. That will clearly apply to the nuclear industry.
§ Mr. EggarThe hon. Gentleman is deducing the position from a draft letter which has never been sent. In any case, I refer him to the White Paper, and to the evidence that I gave to the Select Committee on Trade and Industry, of which he is a member. I made it absolutely clear that the Government will ensure that there are adequate resources for the NH to make certain that it can carry out its responsibilities. I repeat, as I have done many times on the Floor of the House, that the safety of the nuclear industry is paramount, whether it is in the public or the private sector, and nothing will deter us from ensuring that.
§ Mr. Tam Dalyell (Linlithgow)Is the probability that the expected life of the Magnox stations will be extended beyond previous expectations? Are we quite sure—the answer may be yes—that the NH has sufficient resources to cover the extended life of the Magnox stations?
§ Mr. EggarIf additional resources are necessary to take account of that eventuality if it were to happen, they would have to be made available. The Government said clearly in the White Paper that we will not in any way imperil safety standards, and we will stick with that.
§ Mr. Alan W. Williams (Carmarthen)Will the Minister give way?
§ Mr. EggarI will give way to the hon. Gentleman, but I am only at the beginning of my speech, and I have been absolutely categorical on this issue, in front of the Select Committee and on the Floor of the House, time and again.
§ Mr. WilliamsThe Minister mentioned safety. On 29 January, in Heysham, there was a problem with a fuel rod, which got stuck when it was being lowered. That caused an emergency shutdown that lasted 18 days. That has potentially serious commercial implications for the future of the HER programme. Why did not the Government go public immediately on that emergency shutdown? The first we heard of it was six or seven weeks later.
§ Mr. Adam Ingram (East Kilbride)From memory?
§ Mr. EggarYes, because I do not want to mislead the House in any way.
The automatic shutdown mechanism, which is installed for safety purposes, immediately closed down the station. The station manager decided, entirely on his own discretion, that he would stop on-load refuelling. Following normal practice, that incident was disclosed in the site newspaper. which is widely distributed, at the beginning of February—again, I say that from memory. An entirely misleading and over-emotional article appeared on the front page ofThe Guardian—
§ Mr. EggarAbsolutely.
That article referred to meltdown and such possibilities, which was entirely bogus, as anybody who knows the nuclear industry is aware. Nuclear Electric then decided that it would raise the issues with Scottish Nuclear, which decided, for safety reasons—because of the similar design at Torness—not to continue, for the moment, with the on-load refuelling.
The company is now examining those issues and has behaved entirely responsibly. By its actions, it has shown that it will not take any risks with safety of any kind whatever. So, far from raising safety fears, the performance of Nuclear Electric has reinforced the importance that it attaches to the highest possible safety standards in the nuclear industry.
§ Mr. Tom King (Bridgwater)Are not the comments by Opposition Members—which question the standard of safety observance in the industry—an insult to the people working in the industry? I speak on behalf of my constituents at Hinckley Point, whose families and children live near the stations, and I draw attention to the outstanding safety achievement of those two stations.
The role of the nuclear installations inspectorate is obviously extremely important, and I am grateful to the Minister for the firm stand that he has always taken in insisting on the highest levels of safety. However, does he agree that those standards are also due to the cool character and the conscientious co-operation of all those who work in the industry?
§ Mrs. BeckettWill the Minister give way?
§ Mr. EggarPerhaps I may be allowed to answer my right hon. Friend before giving way to the right hon. Lady.
As I say, my right hon. Friend is correct. It is outrageous to suggest that the staff of either Scottish Nuclear or Nuclear Electric would imperil their own safety or that of their families or workmates. I have met many representatives of the work force of both those companies, and I have met the trade unions that represent them. They would see as a considerable slur on them and on their professionalism any suggestion of them risking safety standards.
Quite apart from anything else, the costs in terms of the future profitability of the company and its privatisation of any risk being taken with safety far outweigh any potential benefits. In any case, as my right hon. Friend right hon. Friend the Member for Bridgwater (Mr. King) has said, the nuclear installations inspectorate ensures the highest possible standards.
If the right hon. Member for Derby, South (Mrs. Beckett) wishes to intervene for a second time, I shall give way to her.
§ Mrs. BeckettI am extraordinarily grateful to the Minister. That was an interesting little duet between him and the right hon. Member for Bridgwater (Mr. King), but, of course, it bore no relationship whatever to what I said. I did not cast a slur on the workers in the industry, nor did I suggest that they would be neglectful of safety, and it is disgraceful to say that I did.
With respect, the right hon. Member for Bridgwater was not here for most of my speech, and does not know what I said. I do not wish to be unkind to the right hon. Gentleman and, in fairness, he feels entitled to take the Minister's observations as a reflection of what I said, but he would be unwise to do that.
I said that there were concerns that the stations had been run for longer than would be normal for their design capacity, and that that was done under pressure to maximise proceeds in the run-up to privatisation. The Minister spoke about safety issues that I did not raise. The industry is concerned that this over-running of the stations may have caused problems, which are now being investigated and to which reference has been made. It is in that context that there are concerns about long-term safety. That is not a slur on the people who work in the industry.
§ Mrs. BeckettPerhaps the Minister would allow me to finish my point, which I will do any second now.
There was no slur on the workers. They have to deal with the running of the company in the context of the load factors under which they are required to operate the stations.
§ Mr. EggarI did not hear the hon. Lady seek the leave of the House to speak for a second time. She condemned herself out of her own mouth. She effectively said, by implication, that the management of Nuclear Electric and 848 Scottish Nuclear had decided to run the stations at a level of output that effectively rendered them unsafe. That is what the right hon. Lady said, and I suggest that she studies with great care tomorrow'sHansard.The implication is undoubted, and I hope that she will immediately apologise to the management and the work force in the nuclear industry.
We have differences in the House about the merits or demerits of privatisation of the nuclear industry, but the one issue that should unite us is the common belief in the need to retain the highest safety standards, and the assumption that both management and the work force are determined to do just that.
§ Mr. Martin O'Neill (Clackmannan)rose—
§ Mr. EggarI must make some progress. I have been on my feet for 15 minutes and I have been constantly interrupted. However, for old time's sake, I shall give way to the hon. Member for Clackmannan (Mr. O'Neill), but I must then be allowed to continue with my speech.
§ Mr. O'NeillI shall be brief. I understand that the improved performance of the nuclear industry has been due in large measure to the ability to refuel the rods while keeping the station running. I understand that an inquiry is currently under way. Will the industry and the stations be as attractive to potential investors if that practice is shown to be technically dangerous? Does the Minister not appreciate that the investigative process could undermine the attractiveness of privatisation?
§ Mr. EggarThat was a fair question from the hon. Gentleman. I regret that he no longer contributes from the Opposition Front Bench, as he would undoubtedly raise the tone of the debate.
An issue arose with regard to one particular thin stainless steel sleeve in Heysham. Prior to that, some 150 fuel channels had been refuelled without any problems. Also prior to that, there had been on-line refuelling, which is continuing, at low power, at Hinckley Point B and Hunterston B. There have been no safety problems with that.
Safety cases were then established and accepted by the nuclear installations inspectorate with regard to Heysham and Torness. Although a difficulty occurred with one of the fuel channels, some 150 had been refuelled without any problem.
Clearly, both the NII and Nuclear Electric are studying the implications of the difficulty on the one fuel channel, and a case will be made for resumption of on-line refuelling at those two stations if that is felt appropriate, or not if it is not felt appropriate. That must be the sensible way forward. I am given to believe that that is not likely to have a significant effect on the overall commercial performance of Nuclear Electric or British Energy.
§ Mr. EggarNo, I have been extremely generous with the amount of time that I have given to interventions.
849 It is fair to turn to the benefits of electricity privatisation, because—
§ Madam SpeakerOrder. The Minister has made it quite clear that he is not giving way. Therefore, the hon. Lady should not persist.
§ Mr. EggarThe benefits of electricity privatisation are absolutely clear: costs have been reduced, efficiencies introduced and investment in infrastructure secured. In real terms, domestic electricity prices throughout the United Kingdom have fallen by 7 per cent. and industrial prices by 10 per cent. Domestic electricity consumers in England and Wales have benefited from a £50 rebate on their electricity bills this year, and the average electricity domestic consumer in England and Wales is likely to pay about £90 less for electricity this year than two years ago.
The benefits of privatisation have been coming through fast in gas as well, and gas prices have reduced by about 23 per cent. in real terms since privatisation. I am delighted to tell my right hon. Friend the Member for Bridgwater (Mr. King) that, in the south-west, as a result of the introduction of competition, consumers can look forward to a further 15 to 20 per cent. reduction in their bills. Those are the real benefits of privatisations, every one of which the Opposition opposed—led, in the case of electricity, by the right hon. Member for Sedgefield (Mr. Blair).
The prospect of privatisation has had beneficial effects on the nuclear power industry. With the incentive of privatisation lying ahead of it, in six short years the nuclear industry has transformed its performance. Nuclear Electric's output has increased by no less than 39 per cent., and productivity per employee has risen by more than 100 per cent. At Scottish Nuclear, output has increased by 38 per cent. and unit costs have fallen by a third. Sizewell B, which is up and running, to date has achieved an average load factor of 97 per cent., while it operated continuously in the last quarter of 1995. Those are proven facts. They are solid achievements by the nuclear industry since 1989.
Another benefit that will flow from the privatisation of the nuclear industry is the fact that reductions in the levy and changes to the nuclear energy agreement in Scotland will cut electricity prices for consumers and help to level the playing field for electricity supplies. These are real benefits that will lead to domestic consumers paying less for their electricity from the end of the third quarter of this year. It simply is not true, as the right hon. Lady claimed, that we have abandoned any idea of abolishing the levy in England and Wales.
The right hon. Lady made much of the question of liabilities. She yet again raised the old chestnut of whether the liabilities will follow the assets. Either she is not doing her homework, or she is deaf, or she is simply being mischievous. I have made the position absolutely clear on a number of occasions.
850 For example, in the White Paper last May, I made it clear that we expected nuclear liabilities to follow their associated assets into both the public and private sectors. The hon. Member for Barnsley, West and Penistone (Mr. Clapham) was present when I gave evidence to the Select Committee on Trade and Industry in November 1995 and again made it clear that liabilities would follow assets. I repeat again, for the avoidance of doubt, that liabilities will follow assets. It is as simple as that.
§ Mrs. BeckettAll of them?
§ Mr. EggarThe right hon. Lady, presumably wishing to speak for a third time—this time from a sedentary position—asked whether all the liabilities would follow the assets. I say to her again, as I have said consistently over a period, that the assets that go into the private sector will be followed by their attendant liabilities. It would be quite wrong for the liabilities to remain in the public sector while the assets went into the private sector. The Government's position on that is absolutely clear.
§ Mr. Ken Purchase (Wolverhampton, North-East)I have a simple question. What is the value of the undiscounted liabilities that the Minister feels should follow the assets into the private sector?
§ Mr. EggarThat will become absolutely clear in the documentation that will be associated with the sale of the nuclear industry. Work on it is continuing. The hon. Gentleman knows perfectly well that my right hon. Friend the President of the Board of Trade yesterday announced the terms of the segregated funds. As the hon. Gentleman also knows, that deals with the specific issue of the sites that will be decommissioned, and any on-site fuel storage costs associated with that.
There will be a £230 million up-front endowment, which will be paid by British Energy into the segregated fund. Subsequently, there will be annual payments. The annual payments and the size of the fund will be investigated and considered on a five-yearly basis, subject, of course, to independent advice from independent actuaries. The fund will be in a trust form, and independent trustees will be responsible for maintaining the appropriateness of the fund.
§ Mr. O'NeillWill the Minister give way?
§ Mr. EggarIf the hon. Gentleman will forgive me, I want to press on.
The right hon. Member for Derby, South referred yet again to that old canard, the figures in the Red Book. She should know that she is, of course, completely misconstruing them. We assumed in the previous years that the nuclear industry would remain in the public sector, and therefore, between the two years, made the assumption in the Red Book that a number of assets would go into the private sector. The result of privatisation is that significant potential and actual liabilities will move from the public sector to the private sector, along with the assets that are being transferred. In addition, of course, the Exchequer will benefit from the proceeds of the privatisation.
The right hon. Lady was looking at one part of the public accounts without taking any account of the compensating advantages—the removal of liabilities and 851 the receipt of capital assets. I suspect that even a young lady with a pass in maths GCSE would be able to understand that, if one looks only at one side of the figures, one is bound to misconstrue the situation. It surprises me that the right hon. Lady got it wrong, not only once but repeatedly. To repeat it again on the Floor of the House seems to show a worrying level of ignorance and a lack of homework.
The right hon. Member for Derby, South also decided to re-run the issue of insurance arrangements. Let us be clear about the position. Unlike other comparable industries, either in the public or private sector, nuclear operators are subject to strict and clearly channelled liability. That is because such liability gives certainty to potential claimants and reinforces the operator's responsibility for safe operation of the plant. The nuclear industry is unique—correctly so, in my view—in the way in which strict liabilities apply.
The United Kingdom is also party to the Paris and Brussels conventions on civil nuclear liabilities. Under those international conventions, an operator of a nuclear site, regardless of whether it is in the public or the private sector, is required to have approved cover for nuclear liability of £140 million. For claims over that limit, public funds may be made available, up to a total of £280 million. Some of those funds can be claimed back from other signatories to the Brussels convention, on the assumption that they are ever needed.
Those arrangements are a sensible way in which to deal with low probability events, and in line with the treatment of such nuclear events in other industrialised countries. I other words, we recognise that particular issues appertain to the nuclear industry. International conventions have been signed, and we are abiding by them because we think that it is in the interests of the nuclear industry, regardless of whether it is in the public or the private sector, and in the interests of individual citizens in the UK.
§ Mr. Matthew Taylor (Truro)The Minister has described the international agreements. How appropriate does he think such agreements are to privatisation, given that other industries have private insurance cover for much larger sums?
§ Mr. EggarI am sorry, I thought that I had made myself clear. There is a difference between the nuclear industry and other industries because of the very strict and clearly channelled liability that lies almost uniquely on nuclear operators. It is therefore in a different category in any case.
The hon. Gentleman appears not to have recognised another factor. In many of the other countries that are signatories to those conventions, there are privately owned nuclear companies. The conventions apply to those companies, which are already privately owned, as they will apply to the privatised British Energy. In the European context, private ownership of the nuclear energy industry is not unique, and the conventions already cover a number of private sector operators in other countries.
The truth is that the right hon. Member for Derby, South, for all her criticism and scaremongering, brushed aside the most critical question, which was asked by my hon. Friend the Member for Castle Point (Dr. Spink). He asked what the Labour party would do about the nuclear industry once it was privatised, and the right hon. Lady 852 replied, "Nothing." In other words, the Labour party's commitment on the nuclear industry is the same as its commitment on every other privatisation proposal that the Government have made.
Labour has opposed every privatisation. Labour Members have mocked the benefits that have clearly come from privatisation, but they are not prepared to back their opposition. If, God forbid, Labour Members ever sat on the Government Benches, the right hon. Member for Derby, South would be prepared to preside over a privatised nuclear industry, just as we are prepared to put the nuclear industry into the private sector. She does not even have the conviction of the rhetoric with which she addressed the House a mere 20 minutes ago.
§ Dr. SpinkDoes my right hon. Friend think that a good summary of what he has just said is that Labour says one thing and does another in this matter, as in all others?
§ Mr. EggarThat is a perfectly fair summary, although I would go further even than my hon. Friend. Labour Members simply hate privatisation, because they are as anti-enterprise and as anti-success now as they have ever been. They hate privatisation because it denies them the opportunity to meddle with and to add burdens on business. Labour has opposed every privatisation we have made.
§ Mr. PurchaseQuite right.
§ Mr. EggarThe hon. Gentleman says, "Quite right." In fairness to him, he would be prepared, if he were on the Front Bench, to say that the Labour party would renationalise the nuclear industry.
§ Mr. Purchaseindicated assent.
§ Mr. EggarYes, he would. He is a man of conviction and a man with backbone, unlike the right hon. Member for Derby, South, who is quite prepared to make elaborate speeches, but not to back up her words with action.
The Labour party is a member of a unique club—a unique club of two. The new Labour party joins North Korea as the only sensible political movement that is still opposed to privatisation in any form and under any circumstances. The right hon. Lady sets an appalling example for her party.
§ Mr. Alan W. WilliamsThe Minister chastises us by saying that we would not oppose privatisation if we were in government. Will he, however, consider public opinion on the matter? What percentage of the general public support this privatisation?
§ Mr. EggarThe hon. Gentleman knows perfectly well that consumers who have benefited from privatisation welcome the advantages of it. How many letters has the hon. Gentleman had from constituents complaining about the £50 rebate on their electricity bill? Does he think for a moment that the rebate would have been given had the electricity industry still been owned by the public sector? Quite the reverse. There would been real increases in electricity prices under state ownership over the past five years, just as there were over the preceding 15 to 20 years.
§ Mr. Phil Gallie (Ayr)Does my right hon. Friend agree that, at the time of the privatisation of telephones, electricity and gas, the public would been have broadly against them, but that, if we had a poll now on a renationalisation programme, the public would certainly be with us?
§ Mr. EggarI agree with my hon. Friend. I think that the right hon. Member for Derby, South agrees, because she is not prepared to renationalise because she knows that privatisation means benefits for taxpayers and customers, lower prices and better standards of service. That is why I urge my right hon. and hon. Friends to vote against the motion and in favour of the Government's amendment.
§ Mr. Ken Purchase (Wolverhampton, North-East)I want to speak not only as a member of the Select Committee that produced the report but because of the absolute importance of the subject—the future of the nuclear industry.
When the Minister chastises the Opposition for not saying that we are immediately willing to renationalise the previously publicly owned utilities, he forgets that the money that was obtained from successive privatisations has been given away. The Government have contrived to give away the receipts from those sales—mainly in tax cuts for their rich friends. Had the Government been prudent, saved the money and invested it wisely, it would have been available to renationalise the utilities that he says we have not given a commitment to renationalise. Of course we have not. We are not stupid. We recognise that we have to have the wherewithal to carry out plans that are important for the country.
It would be prudent for the Government to recognise that there is so much uncertainty about the issue that it is incumbent on them to seek further advice on quantifying many of the things that the Select Committee has brought to notice and that are impenetrable as they stand. An amendment was moved in the Select Committee that suggested that seven of the 17 key recommendations were not properly quantified and should be referred to the Audit Commission for further investigation so that we could have a proper understanding of the value of liabilities before the Government proceeded any further with the auction.
Of course, Conservative members of the Select Committee rejected the amendment for the simple reason that there is an unholy rush to privatise the nuclear industry. It does not seem to matter that, even at the end of March, the industry's inspectorate has not yet completed its work to provide the safety certificates necessary for continued operation. That may be something of a formality, but the purpose of those inspections is to be as sure as one can be in such matters that the industry is fit for its purpose and should be allowed to carry on in the same manner. The Government cannot even wait to find whether those important inspections throw up anything that should be attended to before a decision is taken on privatisation.
It is worth reflecting on the conundrum that confronts us if we try to regard the matter apolitically, in terms of accountancy, value for money and an understanding of what the sale would produce. The Government are 854 reluctant to quantify the costs and benefits properly and are unable to forecast accurately the likely value of the sale. All sorts of figures have been mentioned, from £2 billion to £3 billion. The inability to express that properly before further action is taken creates a considerable problem. The operating costs and future liabilities are as difficult to define accurately.
We must consider the running costs of caring properly for the nuclear waste that is generated by operation. That is properly regarded as a simple cost of operation and does not need to form a future liability. If we put aside that cost and try to estimate, as the Select Committee tried to, the discounted and undiscounted costs of reprocessing and future liability, we find that it is difficult to make economic sense of the matter.
Between Magnox, advanced gas-cooled and pressurised water reactors, there is a combined undiscounted liability approaching £31.6 billion. Of course, that falls due, as my right hon. Friend the Member for Derby, South (Mrs. Beckett) said, over a period of between 70 and 130 years—and even that is difficult to quantify.
It adds a little more point to our debate that we are trying to ensure that proper provision is made, and the industry properly looked after, for generations yet unborn. It has become something of a cliché to talk about our responsibility to future generations, but a special case must be made for the nuclear industry. It is not that our engineers, technicians and scientists are not up to the job. Of course they are; they are world leaders in the technology and have done an excellent job. Our safety record is as good as any in the world and better than most, but that does not alter the fact that a nuclear accident has more potential for destruction than any other sort of mishap that the world has known. There were 20 million dead in the 1939–45 war. [Interruption.]
§ Ms WalleyOn a point of order, Madam Deputy Speaker. I find it offensive that the Government's Front-Bench spokesmen are laughing while we are hearing about the awful consequences of an accident in the nuclear industry. The Minister should take account of what is being said.
§ Madam Deputy Speaker (Dame Janet Fookes)I do not think that it has reached the point where it has become a matter for the Chair to intervene.
§ Mr. PurchaseI give way to the hon. Gentleman.
§ Dr. SpinkI presume that the hon. Gentleman believes in the long-term future of our nuclear industry. Does he accept that he is talking about hypothetical risks and not ones that he expects to come to fruition?
§ Mr. PurchaseOf course they are hypothetical. In trying to forecast outcomes, one must have a hypothesis, as the learned doctor would no doubt say in another arena. Hypotheses are important.
There was a hypothesis in 1936 and 1937 that we would not have a war with Germany. That led to 20 million people being killed. That hypothesis proved to be incorrect. We must recognise that the potential consequences of mistakes 855 and accidents in the nuclear industry are more horrific even than those of the war, including the holocaust. I do not mean to be a prophet of doom. We need not face that scenario. Our excellent safety record is worth hanging on to. A famous ex-Prime Minister once said, "If it ain't bust, don't fix it." We have an industry that is run as well as any nuclear industry in the world.
§ Mr. GallieI agree. Is it not right that we should share our expertise with the world? Does the hon. Gentleman not realise that we have the expertise to help other countries where safety limits and expectations are not the same as ours? By privatisation, which would release our resources, we could assist with the safety of the nuclear industry all over the world.
§ Mr. PurchaseOf course the industry already exports its services, and has an income of hundreds of millions of pounds every year. There is another whole debate about spreading nuclear technology, given the scenarios that I painted a moment or two ago. There is no question but that the talks on limitations on nuclear arms were an important part of the world peace process. It was recognised then that the non-proliferation treaties were an integral and essential part of that process.
I say the same about nuclear technology for the generation of energy. We must be exceedingly careful, and we must recall that the original purpose of the Magnox development—perhaps it is wrong to say its original purpose, but certainly one of its uses—was the production of nuclear materials for bombs. Are we confident that that technology is absolutely safe in any part of the world to which we care to export it?
In some places there are equally advanced or advancing nations with which we can share not only access to nuclear technology and the associated generative processes but the control and safety aspects. If one thing worries me about technology and scientific advance, it is not the way in which they can help humanity—that is beyond doubt—but the fact that sometimes our ability to produce things outstrips our civilisation's ability to control them.
Unfortunately, that can be said about the history of the world in terms of scientific endeavour. We now have in our hands a most powerful instrument, which can be used for good or evil. I can tell the hon. Member for Ayr (Mr. Gallie) that we already trade in the nuclear industry, and we did not have to privatise it to do so—but that the important thing is to trade safely, with proper safeguards to control nuclear power worldwide.
I must return to the financial aspect of the matter. It could be asked, "If the liability is so great, would it not be better to shuffle it off into the private sector?" For a moment, if one does not reflect too hard, that is an attractive proposition. It would seem that an incoming Labour Government would avoid many of the costs associated with the industry. But the truth would be somewhat different.
If the industry were sold, albeit at a knock-down price that did not even cover the cost of building Sizewell B, it would be obliged to return a profit to its shareholders and make a return on capital employed. The industry would find ways to do that, and to add value to its product.
The Select Committee report contains a strong plea that the inspectorate should not be weakened in any way, that reporting should take place at board level and that the 856 reports should be carried through by an inspectorate dedicated to that purpose. We made it clear that the purpose is to ensure that incentives in the industry are not inappropriate.
For example, if we put performance targets in front of people, which they have to achieve to improve their earnings capacity, there is every likelihood that they will find ways and means to do that, both to satisfy their own reasonable demands for better wages and salaries and to meet the company's demands to keep its shareholders happy and to make a proper return on capital employed. There is no point in a company having capital if the capital does not produce something for it.
We must recognise that the history of performance-related pay, or piecework—call it what we may—involves cutting corners and finding ways to enhance performance, not always safely. With industry in general, the number of chaps that we see walking about with their middle fingers missing, so they can no longer play the piano, is legendary. That has usually resulted from people cutting corners and putting their fingers in the way of things that their hands should not have been near in the first place.
That is a simple matter compared with what might happen if the nuclear industry found ways of cutting corners. If the selling price is such that it forces the industry to cut corners, we shall all be at risk—and not only in the United Kingdom.
The Select Committee had considerable discussion about insurance, and finally agreed to ask the Government to investigate what level of insurance could be obtained and was appropriate, over the £140 million suggested to us. As the Chernobyl disaster has now racked up costs of something like £400 million-plus, it defies gravity, so to speak, to suggest that the nuclear industry could ever take on sufficient insurance cover to meets its liabilities should the unthinkable happen.
If the industry had to take sufficient insurance to cover all its liabilities, it would be totally unprofitable. In that situation, any sensible organisation would carry its own insurance, and the only organisation big enough to do that in this case is the Government. No other body could carry insurance sufficient to meet the liabilities if there were such an accident, so on that score, too, common sense says that the nuclear industry should remain a public enterprise.
As a public enterprise, that industry has been doing well and making money for the Government, paying £200 million to £300 million over recent years. I do not believe that the productivity gains are due simply to the fact that the Government have put the pressure on and said that they will privatise the industry. There is a natural evolution of productivity gains throughout technological industries. In that sense, the nuclear industry is no different from the Post Office, telecommunications or other areas in which Britain has shown tremendous expertise, moved to the cutting edge of technology and made appropriate savings.
Finally, I come to the idea of maintaining the enterprise within the public sector. I started by saying that the money gained in all the previous privatisations had since been dissipated—in tax cuts, broadly speaking. If tax cuts are the incentive for the Government, they must know that the sale, even if it raises more than £2 billion, will scarcely give them a penny ha'penny in the pound off tax.
857 Is it really worth putting our consciences and our whole political morality on the line, knowing that risks are involved that have never been seen in the civilised world before? Simply for a penny ha'penny off tax, is it worth rushing into a privatisation that will surely prove one privatisation too many?
§ Dr. Robert Spink (Castle Point)A privatised nuclear industry will be safer than the current nuclear industry—which I shall explain during my speech. I associate myself with the warm tribute paid to John Hollier by my right hon. Friend the Minister for Industry and Energy. It is always a privilege and a pleasure to follow the hon. Member for Wolverhampton, North-East (Mr. Purchase) in debates—even though I disagree with him on this occasion.
We need a balanced energy strategy in this country. Such a strategy must have a nuclear component amounting to 20 or 25 per cent.—that is the medium-term requirement for this country—and I believe that even the Labour party agrees with that sentiment. As evidence of that, I quote the following words:
All forward forecasts for the first quarter of the 21st century indicate a growing role for nuclear power.Believe it or not, they are the words of the right hon. Member for Chesterfield (Mr. Benn).
§ Mr. John Battle (Leeds, West)That surprises me.
§ Dr. SpinkYes, it surprised me too.
In the longer term, I can see a growing need—an expanding need—for nuclear power, along with other forms of alternative power. In fact, I believe that there will be a part to play for new technology and for new nuclear technology. For example, I hope that fusion will come on board, because it will be an inherently safer form of energy generation. However, 10 years ago I thought that I would see it in my lifetime, but I am now beginning to question whether I will.
Today, my first duty is to pay tribute to British engineering. It is as good today as it was when Brunel created his great achievements many years ago. British engineering is world class—in fact, I would go so far as to say that it is world-beating. If hon. Members want evidence of that, they need look no further than Monday of this week, when my right hon. Friend the President of the Board of Trade opened Sizewell B.
Sizewell B is now ready and appropriate for sensible privatisation. It is our first pressurised water reactor. It is a wonderful achievement, and it brings great credit not only to our engineering industry but also to our manufacturing and construction industries. It is an unequivocal success story for Nuclear Electric, and a great international advertisement for all our industrial sectors—particularly for engineering, for operational power generation and for architecture. It also brings—and will continue to bring—great credit to our environmental care strategy.
The Sizewell B performance statistics are remarkable. Since coming into full commercial operation in September 1995, it has achieved an average load factor of 97 per cent., 858 and has achieved 173 days of continuous, safe and efficient power generation. In so doing, it has displaced environmentally more damaging forms of power generation—something of which we should all be proud. However, the British character is that we do not easily celebrate our successes; in fact, we more readily criticise, belittle and deprecate our culture and achievements—that is particularly true of Members on the Opposition Benches.
I hope that this afternoon I have been able to redress that balance a little for Sizewell B. I hope that all hon. Members will join today in sending a message of congratulations and thanks to those who built Sizewell B, to those who commissioned it and to those who are now operating it. I look forward to a future decision—which I think will be easier once privatisation is bedded in; that is one of the advantages of privatisation—to build another pressurised water reactor. This decision will need to be taken in order to maintain the balanced energy strategy to which I referred earlier.
§ Mr. Martin O'NeillIs the hon. Gentleman aware that the first public utterance that British Energy made was to disavow any possibility of building any more nuclear power stations in the foreseeable future? Where has the hon. Gentleman been sleeping these past few months?
§ Dr. SpinkI declare an interest at this stage: I had lunch with the new chairman of British Energy, and he told me that, while there is no decision at the moment—because of the corporate structure development—to go forward with another PWR, he is not discounting the possibility of going forward with a new decision in the future. In fact, I think that most hon. Members received a letter from him yesterday explaining just that. It is in the national interest to have a balanced energy strategy with a 20 to 25 per cent. nuclear component. I do not see any hon. Members jumping to their feet to disavow that.
§ Mr. Alan W. WilliamsIf it is in the national interest to have that 20 per cent. nuclear energy component—I do not agree with it—the way to do it is to keep the nuclear industry in the public sector. That is the only way to retain that percentage.
§ Dr. SpinkI take a different view. As I have already said, I believe that the decision to build a second pressurised water reactor will be more easily taken once privatisation is bedded in—but I shall not repeat myself. It will become clearer, once the new privatised corporate structures are in place, how the balance can be struck rationally between the environmental, economic and operational considerations in the light of the prevailing financial, commercial and market circumstances, not to mention the technological developments I mentioned.
I am reasonably sanguine about the lack of a decision now to build a future PWR, but I do not want to see this country lose its expertise and its capability in this area. This country has excellent expertise—I am sure that all hon. Members will agree with that—and excellent capability to project-manage effectively and efficiently to build new major nuclear power plants. We have the expertise to do so within very strict time, cost and technical limits—and to do so successfully.
Perhaps this would be a good time to return to and to review the benefits of sensible, appropriate and rational privatisation. Privatisation offers many benefits 859 which were set out in the White Paper, so I shall not repeat them all. I believe that the key benefit is that privatisation would impart to the nuclear industry the ability to make decisions to benefit the industry. One of the key things that will benefit the industry is a strong safety record in the future, as it has had in the past.
Privatisation—as with British Airways—will see the nuclear industry build on and improve its excellent safety and environmental record. To be commercially successful, the nuclear industry will have to be clean, careful and responsible—and I trust it to be just that.
§ Mr. Brian Wilson (Cunninghame, North)Will the hon. Gentleman give way?
§ Dr. SpinkI shall give way in a moment.
British Airways, in the private sector, has become more safe, not less so. A number of hon. Members raised concerns before the privatisation of British Airways—there was talk about planes falling out of the sky. The nuclear industry would also become more safe, not less so, because it is in its interests to do so. The crash of a plane is just as catastrophic for the people who are in the plane as the crash of a nuclear power station.
§ Mr. WilsonThe hon. Gentleman's comments are so bizarre that someone ought to intervene and say something, instead of laughing at him from a sedentary position. Is he seriously drawing a comparison between the safety implications of privatising an airline, in which the same staff stay in place, and the safety implications of privatising the nuclear industry? All available evidence shows us that already the pool of expertise that has been built up in that industry is breaking up, precisely because we will not be building new nuclear power stations in the future.
§ Dr. SpinkI am sorry that the hon. Gentleman should resort to being discourteous to me—there is no room in the debate for that. This is a technical debate, and we may disagree, but there is no point in the hon. Gentleman being discourteous to me. Does he not understand that bodies as diverse as the Health and Safety Commission and Greenpeace have said that privatisation does not mean that corners will be cut in safety?
I also welcome—and the hon. Gentleman should welcome—the fact that the Trade and Industry Select Committee, several of whose members I see on the Opposition Benches, said:
privatisation … need not result in any reduction in nuclear safety".That is an unequivocal fact. Has the hon. Gentleman not taken the trouble to brief himself in the Library and bring himself up to date with those matters?
§ Mr. GallieThe hon. Member for Cunninghame, North (Mr. Wilson) has just come in. He has not listened to the debate, and may not have heard some of the comments about safety.
Does my hon. Friend accept that, as I believe, it is fair to return to comments made by Opposition Members when we were discussing the privatisation of British Airways to make comparisons simply to emphasise the fact that scaremongering about safety then had no basis in truth, and that that is the position now?
§ Dr. SpinkYes; and of course I accept that a nuclear power station and an aeroplane have an entirely different 860 scale of risk, but, as I said when I drew the simile, it is as catastrophic to die because of a safety problem on an aeroplane on which one is a passenger as for any other reason.
I believe that British Energy is committed to improving safety performance standards.
§ Mr. John Home Robertson (East Lothian)Will the hon. Gentleman give way?
§ Mr. Home RobertsonYou are cracking up.
§ Madam Deputy Speaker (Dame Janet Fookes)Order. May I remind the hon. Gentleman that he is addressing me always? A few odd "yous" are floating about, which do not really have a proper place.
§ Dr. SpinkI am still a very junior Member, as you know, Madam Deputy Speaker, but learning fast. Thank you for that.
British Energy is committed to improving safety performance and safety standards; it has said so. I also understand that the nuclear installations inspectorate, which would not be weakened, and the newly privatised nuclear industry, would enjoy a more transparent arm's-length relationship than they did when they were both effectively together in the public sector. That may be a healthier, more positive relationship. That is a significant advantage, which has not been spotted or spoken of—at least not by the Select Committee.
As British Airways has cogently demonstrated, profit and safety are not mutually exclusive. With regret and sadness rather than anger, I deplore the fact that the right hon. Member for Derby, South (Mrs. Beckett) sought to scaremonger on the safety issue, but her words will not wash. They stand exposed as simply political rhetoric, and she will rightly be condemned by management and workers in the nuclear industry. I know the hon. Lady to be a decent lady, and I feel that she will want to apologise when she reads her words tomorrow in Hansard.
§ Mr. Home RobertsonWill the hon. Gentleman give way?
§ Dr. SpinkIn a moment.
As I said, privatisation brings many benefits; I shall list them and then give way. First, it enables nuclear generators to raise capital and establish rational investment programmes, reflecting the market and commercial circumstances in which they will operate. It brings increased competition and downward price pressure to the electricity market. My right hon. Friend the Minister cited many fine examples of price reductions that my constituents and the constituents of Labour Members have enjoyed as a result of the privatisation of gas, electricity, British Telecom and so on.
861 Another benefit will be that the nuclear industry will be able to compete successfully abroad, as British Gas does.
§ Mr. BattleRegarding the benefits to consumers in electricity prices, will the privatised British Energy company receive preferential treatment into the grid and the pool?
§ Dr. SpinkThose are detailed matters, on which I am not briefed now, and I should not like to chance my arm in this debate. No doubt my hon. Friend the Minister for Small Business, Industry and Energy has heard the question, and will discuss the subject when he replies.
§ Mr. Purchaserose—
§ Dr. SpinkLet me finish describing the benefits, Madam Deputy Speaker. I have not received any brief on this subject from the Conservative research office or anyone else. These are my personal thoughts on privatisation, so let me finish.
§ Mr. Purchaserose—
§ Dr. SpinkLet me finish listing the benefits.
There will be benefits for the taxpayer, and therefore for the economy and the national interest. Those benefits come by many routes—not least by removing nuclear liabilities and subsidies and by giving a level playing field to the nuclear industry, helping us to achieve the greater goal of making Britain the enterprise centre of Europe.
The decision to privatise must be placed in that context, because it will raise money for the Exchequer instead of taking money from it. As previous privatisations have done, it will enable Britain to generate more wealth. Only by generating more wealth can we care better for vulnerable people, pay better pensions, make necessary investments in health and education, and care better for our environment. We all know that a rich country is generally a cleaner country. Those benefits are not inconsequential or insubstantial.
My hon. Friend the Member for Welwyn Hatfield (Mr. Evans) is not in the Chamber, but I am sure that he would welcome the fact that the workers will have the opportunity to take a direct stake in their future. That is another benefit. From what I heard of my hon. Friend's stakeholder Adjournment debate on 19 March 1996—an excellent debate, which I recommend all hon. Members to read—I judge that he will regard privatisation as the real way to give workers and the people of this country a genuine stake in their society.
I shall now discuss the Magnox reactors, but I give way first to the hon. Member for Wolverhampton, North-East (Mr. Purchase).
§ Mr. Tam Dalyell (Linlithgow)On a point of order, Madam Deputy Speaker. Madam Speaker has expressed from time to time the hope that, in these limited three-hour debates, speeches are not excessively long.
§ Madam Deputy SpeakerI do not think that, by any standards, the length of the present speech could be 862 described as excessive, but I take the hon. Gentleman's point that this is a half-day debate, and I am sure that all hon. Members will bear that in mind.
§ Mr. SpinkWith that in mind, I give way to the hon. Member for Wolverhampton, North-East, and ask him to be brief.
§ Mr. PurchaseI will be expeditious. [Laughter] If it is in order to be—
§ Madam Deputy SpeakerThe onus is on the hon. Gentleman to be brief.
§ Mr. PurchaseI shall try to be helpful and to fill a gap in the hon. Gentleman's knowledge of the detail. Is he not aware that the present arrangement is that the nuclear industry supplies 20 per cent. of base load, and that that is not intended to change? Is it not unique for anyone to be guaranteed anything in a free market, and does it not shoot a hole in his arguments about competition?
§ Dr. SpinkOf course I am aware of that fact. I am not aware of the precise arrangements that will be written into the privatisation documents. I should not like to pretend that I know something that I do not. I do not know, and no Opposition Member knows, what the detail will be.
Magnox reactors are central to the privatisation debate. There will be a complete split between Nuclear Electric and Magnox Electric on 31 March, when the new companies are vested. Magnox Electric will comprise six operating stations, which will produce about 8 per cent. of the electricity in England and Wales. We all know that three Magnox stations have been shut down. The company will transfer to British Nuclear Fuels Plc once British Energy is privatised. I believe that that is consistent with the conclusions of the Trade and Industry Select Committee inquiry, as the Committee found that privatisation must be considered in the context of what happens to Magnox reactors.
Obviously, it is in the national interest for Magnox reactors to continue to generate while it is safe and economic for them to do so. If they were replaced early, new capacity would need to be created to fill the gap. That is common sense. That would have an impact on the environment in the building, commissioning, operating and any eventual decommissioning of that new capacity. There would also be inevitable capital and operating cost implications and implications for the competitiveness of our electricity generating industry, and therefore that of many other industries.
The impact on our economy cannot be denied. We cannot divorce the decisions regarding Magnox plant life, for example, from the general performance of our economy and our ability to care for the environment. Last week, the Leader of the Opposition said that politicians must be tough enough to take the hard, but responsible, decisions. I wonder whether he will act upon his fine words: I suspect that his hon. Friends would not allow him to, so the answer is no.
Having dealt with the macro-economics of Magnox, I turn now to the micro-economics. Magnox reactors generate electricity at a marginal cost of 1.4p per unit. That is a low figure, because the capital costs have been spent and the decommissioning costs are unavoidable, 863 irrespective of when the reactors are finally shut down. The 1.4p unit cost delivers a very good profit margin, as the electricity is sold from the station at 2.5p per unit.
Therefore, closing the Magnox reactors early would not only bring an increased environmental threat and possibly a greater safety risk, but would also cost the country several hundred million pounds. There is no environmental or economic justification for such a decision. The final decision to shut down the Magnox reactors must be taken entirely according to safe operating considerations. That fact is absolutely clear, and I know that the Minister will confirm it.
A few months ago, I spoke about the waste management and decommissioning activities of British Nuclear Fuels plc, about its strength, its excellent management team and work force, its dedication to responsible operations, and of course its considerable foreign earnings, which are very important. I shall not reiterate those points today.
However, I note that the Opposition refused, in reply to my earlier intervention, to pledge to renationalise the nuclear power industry. The people of this country are not stupid: they know that the Opposition have opposed every major privatisation, and that, in every case, they have later conceded that those privatisations are irreversible. On balance, the Opposition now agree that those privatisations are good for the previously nationalised industries and for Britain. Opposition Members say one thing and do another.
§ Mr. Matthew Taylor (Truro)One of the first political campaigns in which I was involved—not as a politician, but as someone concerned about the environment—opposed the building of a nuclear power station in Cornwall. During that campaign, we argued frequently that nuclear power was an uneconomic proposition. We put that argument some 17 or 18 years ago, and now even the Government have been forced to acknowledge that we were right: the sums that were presented did not add up. Listening to the Minister's comments about privatisation and the sums it involves, I have a feeling of deja vu: once again, the Government are offering figures that simply do not add up.
The Liberal Democrats, unlike the Labour party, have not opposed every privatisation measure. We supported privatisation when we believed that it was in the public interest and, when we believed that a different form of privatisation would be more appropriate, we argued against the form rather than the principle. However, in this case I believe that both the form and the principle are wrong. The Government have made a gross misjudgment and, if they live long enough, they may regret it—although, looking at the current political situation, I rather doubt that this Government will have to deal with the problems.
Conservative Members have argued that the figures will stand up, that they have worked through their plans and that they know what direction privatisation will take. The truth is that, so far, the privatisation process has been marked by confusion, chaos and inconsistency. There has been ill-hidden conflict with British Energy about the scale of liabilities that should follow assets into the private sector, the European Commission is investigating whether 864 illegal state aid may be involved in the sale, and the recent Trade and Industry Select Committee report contains serious criticism of the Government's plans.
Perhaps we should expect no better from a Government that have tried to move along the privatisation with the minimum of debate and little parliamentary scrutiny. Quite frankly, it is an insult to our democratic system. The controversy and the secrecy surrounding the proposed privatisation stem directly from the Government's single-minded determination—flying in the face of caution and common sense—to privatise the profitable parts of the industry while leaving the liabilities in the public sector. The Minister's comments do not convince me—or the general public—otherwise. Taxpayers in general are expected once again to subsidise the profits of a few.
The recent Trade and Industry Select Committee inquiry into nuclear privatisation expressed some very clear concerns, and its report makes a series of recommendations designed to safeguard taxpayers' interests. Although it does not say so, the recommendations imply further costs, which raise further questions about the viability of the privatisation proposals. The fact that the report has scarcely been acknowledged, let alone received a reply—that was true also of the Minister's comments this afternoon—will not surprise anyone who has been following the Government's confusion as they struggle to privatise the industry.
The Government now know what they always refused to admit: the nuclear industry is economically unviable. It cannot compete in the open market with other forms of power generation, despite being touted previously as a source of cheap power for the future. Even the Government admit that new nuclear power stations will not be built—at least as things stand currently—because they cannot compete in the marketplace with other forms of power generation.
The Government's White Paper concedes that no new nuclear power stations will be built without Government subsidy—in other words, the private sector will not build new nuclear power stations. I believe that everything that the hon. Member for Castle Point (Dr. Spink) said on that subject—as well as most of his other remarks—was wrong. The Minister and the Government have conceded the point in their publications. Nuclear Electric has said that, given current market conditions and according to purely commercial criteria, the building of new nuclear power stations is unviable. It could not be more black and white.
Despite the Conservative Government's earlier misplaced hopes, the nuclear industry has become nothing more than a white elephant. Therefore, the Government have unwillingly moved the goalposts: their approach to the industry is one of damage limitation. Their political goal is to offload the white elephant and quietly run down the industry. The Conservatives do not admit that: openness is not a charge that can be levelled against the Government. In public, Conservative Members espouse the virtues of nuclear power and argue that privatisation can bring benefits to the nuclear industry while relieving the financial burden on the taxpayer. That proposition does not add up: it is blatantly untrue. It seems that the Conservatives do not always say what they mean—and sometimes they do not even mean what they say.
The Government laid the first myth to rest in their White Paper: there will be no new nuclear power stations in the private sector. The industry's future lies in cleaning up the 865 mess rather than in generating energy. The second myth—that privatising the industry will benefit the taxpayer—can be dispelled just as easily. Conservative Members tell us constantly that the industry's liabilities will no longer fall on the taxpayer.
The potential cost of accidents is enormous, and there are still major questions to be answered on safety and decommissioning. The accident at Chernobyl, in the immediate aftermath alone, cost £200 billion, and long-term costs cannot even be calculated. The private sector incident at Three Mile Island also cost huge amounts of money. Who will be left to pay the price in the event of another accident? The public, of course, will have to pay it.
International conventions, to which the Minister referred earlier, do not make the policy right or justify the Government's continuing with it. They also do not explain the fact that other industries hold public sector liability through insurance schemes that vastly exceeds the amount that the Government will demand of the nuclear industry, despite the fact that the possible costs of a serious nuclear accident would be greater.
Remarkably, the Government appear to be unworried at the prospect of an accident in this country. Threatened cuts to the Health and Safety Commission are putting safety at risk in all privatised industries, and nowhere is that issue more poignantly evident than in the nuclear industry.
The Health and Safety Commission is there not only to investigate large-scale accidents but to make snap inspections in privatised industries, and it has its work cut out for it. Britain's nuclear installations inspectorate has 265 staff to watch over more than 41 reactors. The US Nuclear Regulatory Commission has more than 3,000 staff to monitor 109 reactors, which is more than four times as many inspectors for each nuclear power station. One must ask whether that already low ratio will decline even more after privatisation.
British Energy must be gratified to know that the Government have such enormous faith in it. The public, however, do not have such faith, and their concerns deserve a better answer from the Government than they have so far received.
There is also chaos and confusion in the Government's policy on decommissioning. We have consistently been told that the private sector will shoulder all liabilities as part of nuclear privatisation. The Minister made that statement again earlier in this debate. The private sector will not shoulder the liability in relation to "the insurance issue", in the Minister's own words, so I am not sure how he can make that argument generally. We have also heard rumblings for some time that British Energy found that premise untenable. Once again, shareholders' concerns are being made paramount.
The Government have U-turned, reversing their policy that liabilities should follow assets by pledging £230 million to help cover liabilities. To all intents and purposes, that is a use of public money, and it has been promised to salvage privatisation and to meet the company's concerns. At the very least, that pledge alters the cost-benefit ratio between potential shareholders in the privatised industry and those who will be selling the industry because it changes the ratio of who pays 866 for what in the future. That is a scandalous misuse of money, and it appears to confirm again that the Government accept that nuclear privatisation, in any genuine terms, is unviable.
The liabilities issue is, of course, a unique feature in the economics of nuclear power privatisation. The Trade and Industry Select Committee report recognises that and comments particularly on their enormous size, the large element of uncertainty about them and the fact that some liabilities will not fall due for a century or more. The truth is that we do not know the total cost of decommissioning or when or how that process will end. The segregated fund that is supposed to cover the cost of decommissioning, even with the initial £230 million investment, may not pay those costs.
There must be serious doubts whether there will be enough revenue to cover the estimated £8.5 billion cost of decommissioning British Energy's eight power stations when they become obsolete. If there is a shortfall, who will pay for it? The answer is obvious; it will be our children and our children's children. They will be paying for decades for the mismanagement—before and after privatisation—of the nuclear industry.
Who will pay for decommissioning outside the privatised sector of the industry? Where will revenue be found after the profits to be made in the industry are hived off to British Energy's shareholders? In effect, privatisation is diverting future income into the private sector dividends and away from the important task of discharging liabilities, which, in total, remain underfunded.
The British public have already paid for decommissioning through the fossil fuel levy on electricity bills, but that money went to build Sizewell B. The taxpayer is now expected to provide that money again. That cannot be justified. If this privatisation goes ahead, the question is not only whether the Government will return the £1.8 billion that was diverted to Sizewell B, but, even more important, whether £1.8 billion will be realised in the sale—or whether the Government will get less money in the privatisation than the taxpayer has already provided for use in decommissioning.
The cost of decommissioning power stations is only one of several liabilities—the Minister did not mention the other liabilities. Other costs incurred after a power station has closed and revenue ceases include reprocessing of the final core, disposal of intermediate and high-level waste and decommissioning of British Nuclear's facilities. None of those liabilities is properly met by the Government's plans.
§ Mr. DalyellBefore the Minister shakes his head at the question of decommissioning, the fact nevertheless remains that, when I was at Sizewell yesterday, many serious members of the nuclear community took the view that the Government were still arguing about decommissioning and were in no mood to accept that they should be responsible.
§ Mr. TaylorThe hon. Gentleman is absolutely right. The real issue is that the Government are cutting off the flow of money to the public which would help to meet those—as yet incalculable—liabilities in the future, and that they are doing so while transferring only limited liabilities to the private sector, without proper guarantees that it will meet even those limited liabilities.
867 The Government seem happy to rely on the assumption that, many decades hence, a private company will discharge substantial liabilities long after its existing reactors have ceased producing revenue. As the Select Committee report points out, that is not a sufficiently reliable arrangement—but the Minister chose not to respond to the Select Committee's concerns, let alone to the concerns of Opposition parties.
The Government should listen to the weight of public concern on the issue. This privatisation is not good for the taxpayer. It raises enormous and as yet unanswered questions of safety and cost for the general public, and it should be stopped immediately. If the Government had to clear up the mess that they will cause with this privatisation, I am quite convinced that they would live to regret it. It is more likely that others will, sadly, have to tackle those problems.
§ Mr. Phil Gallie (Ayr)I immediately take the hon. Member for Truro (Mr. Taylor) to task on three issues. On the issue of nuclear industry economics, he said that the Government were wrong in the past to expect cheaper units from the nuclear industry. He is wrong. I shall explain later how the price of nuclear energy—the nuclear unit—has been driven down, disproving his point.
The hon. Gentleman has also ignored the important environmental benefit of nuclear energy. Nuclear energy is certainly clean and environmentally friendly in respect of air conditions, but that causes a great problem for me and for people in Scotland who work in the power industry. Fifty per cent. of our power generation is tied up in very good nuclear plant. Because of the limitations on gas emissions created some years ago, very strict limits were placed on the amounts of carbon dioxide and nitrogen dioxide that could be emitted by fossil fuel-powered stations, and those limits made it impractical to use fossil fuel-powered stations to a greater extent. The nuclear industry provides environmental benefits to this country, and that is why nuclear power stations were very much desired back in the 1960s, 1970s and 1980s, for which we should all be grateful.
The hon. Member for Truro also described the nuclear industry as a white elephant. I do not often quote the words of the right hon. Member for Chesterfield (Mr. Benn) with approval, but I agree far more with his vision of the industry than with the hon. Gentleman's.
The motions on the Order Paper for this debate clearly reflect the differences between the Conservative and Labour parties. The Conservative party's role is to govern; the Labour party's is to form the Opposition. Our motion is positive, appreciative of the industry and forward-looking. The motion moved by the right hon. Member for Derby, South (Mrs. Beckett) is hesitant and—typically—scaremongering. That is wholly unjustifiable. The right hon. Lady protested her innocence in this respect, but she should read her motion again. It speaks of
potential hazards to the public.868 That is scaremongering by any other name. So if she really objects to being accused of scaremongering, she should do the honourable thing and withdraw her motion. It is ill conceived.
§ Mr. BattleWhat is the hon. Gentleman's view of the nuclear installations inspectorate's report on what has happened at Heysham B and Torness?
§ Mr. GallieThe nuclear installations inspectorate has done the job it is there to do, in the public sector or the private sector. It has identified a problem that the industry will have to rectify. That is precisely as it should be. I do not honestly understand the point of the hon. Gentleman's intervention—
§ Mr. BattleThose two reactors have been shut down—it has actually happened. Is not that a legitimate matter for concern?
§ Mr. GallieNot for the future operation of the nuclear industry. This is a question of confidence. If there is a problem with a reactor and a consequent threat to public safety, it must be shut down. That is the same whether it is owned by the public or the private sector. So I do not understand the hon. Gentleman's intervention.
§ Mr. WilsonTry mine. I have no doubt that the hon. Gentleman expresses his confidence in the privatised nuclear industry in good faith, but I do not see why we should accept his word as opposed to that of Captain Richard Killick, a former nuclear submarine commander and thereafter director of safety at Scottish Nuclear. He has warned in specific terms of the increased dangers and risks inherent in the privatisation of the industry.
§ Mr. GallieI have probably spent more time in the electricity supply industry than Commander Killick has. His opinions differ from those of others in Scottish Nuclear. Why should I believe his opinions as opposed to those of other sages who have been involved in the industry for many years and who are highly competent?
During the opening speech of the right hon. Member for Derby, South, I referred to a report on Hunterston station which shows that safety there has recently been improved beyond recognition.
The Labour motion suggests, as usual, that the Government are rushing ahead. What does the Labour party think the Government should be doing? Whenever the Government take a decision, we are told that they are taking it too hastily. We have been talking about this issue since the mid-1980s. The Labour party is great at talking, but I doubt whether it would ever achieve anything if it got into government—which remains a dubious proposition.
§ Mr. Wilsonrose—
§ Mr. GallieI know that other hon. Members, such as the hon. Member for Linlithgow (Mr. Dalyell), want to speak in this debate, and I do not want to be delayed by too many interventions. The hon. Gentleman, however, is most persuasive.
§ Mr. WilsonI do not want to speak in the debate, although I shall certainly listen to it. The hon. Gentleman 869 has missed out some of the history. When this issue was discussed in the mid-1980s, privatisation was rejected. It has only been reborn as a cynical political device to raise money for tax cuts before a general election. If the hon. Gentleman is going to quote history, let him at least quote it accurately.
§ Mr. GallieThe hon. Gentleman will not allow me the opportunity to do so—he keeps jumping up and down and intervening. I shall deal with all the points to which he refers later in my speech.
The nuclear industry has been built on the successes of private industry—of companies such as Parsons, English Electric, AEI, Clarke Chapman, Babcock, Weir, Howden, and John Brown. I could reel off many more names of great British companies that have helped to build up the nuclear industry; all of them private, all subject to the inspectorate, and all meeting the requirements of the inspectorate and delivering the goods. We should therefore entertain no fears about the privatisation of the industry.
One has only to think of the privatisations of British Airways, British Gas, telephones and electricity to recall that, each time, Opposition Members protested and went in for all kinds of scaremongering. With one or two exceptions—I think of British Gas's performance recently—these privatisations have been successful. Safety has never been compromised, and there have been no problems. Nor will there be in the future, whichever sector the industry belongs to.
The British Government have led the way on privatisation, and other nations around the world have followed suit. We have had the courage to do what we believe in. The Labour party, too, has followed our lead and now acknowledges that there is no way back: nationalisation was bad for this country, and Labour would not reintroduce it. New Labour is right at least about that, although I doubt whether some Opposition Members missing from their places below the Gangway would agree with everything that new Labour stands for.
I am one of the few Members of this House to have worked in a nuclear power station. It was in the constituency of the hon. Member for Cunninghame, North (Mr. Wilson). I refer to Hunterston; I have also worked at Torness. At Hunterston, we had Magnox reactors and generating sets which outperformed virtually all the other Magnox stations throughout the 1960s, 1970s and into the 1980s. We in Ayrshire have much to be proud of. The advanced gas-cooled reactors at Hunterston B performed magnificently over the years, as I am sure the hon. Member for Cunninghame, North will agree,
§ Mr. Wilsonindicated assent.
§ Mr. GallieThe hon. Member for Wolverhampton, North-East (Mr. Purchase) said that with privatisation will come pay and productivity schemes. One of my tasks in the electricity supply industry was to introduce pay and productivity schemes in the 1970s and 1980s. They were tools used by the public sector. They are therefore not the preserve of the private sector. The hon. Gentleman's comments bore no relation to the world of work.
My role at Hunterston involved quality assurance. I admit that it was probably one of the worse jobs I have ever had. It buried me in paper, so it could be said that it was 870 good practice for being a Member of Parliament. Although I did not enjoy my work, it helped me to understand the complexity of safety regulations in the nuclear industry.
This is an extremely complex matter that entails going into every detail. Quite honestly, safety regulations are built into the industry in such a way that they can never be shaken loose. Safety is part of the nuclear culture and is instilled into those who operate the stations now and in future.
§ Mr. WilsonI am grateful to the hon. Gentleman for making our case. Everyone I know who works in the industry would agree with everything that he has said in the past few minutes, but would draw a diametrically opposite conclusion. The folly of privatisation is that those who have built up experience in the industry and are steeped in its safety culture are leaving the industry in droves because they see no future in it. What they and Captain Killick see is increasing contractorisation and people coming into the industry without that commendable background in safety to which the hon. Gentleman refers.
§ Mr. GallieOnce again, I disagree with the hon. Gentleman against a background of experience and involvement. I was an employee of the nationalised industry when it was the South of Scotland electricity board. At the time, the employees had the same fears and concerns for safety standards, but when changes were made and the industry entered the private sector, many of the old shackles, particularly on station management, were removed and there was a new freedom within the industry in which individuals could use their skills.
We should take a positive view. Perhaps my views differ from those of people who are currently employed in the nuclear industry, but no one likes change. That is exactly as it was in the old days of the SSEB. However, people absorb change. Things have changed in the electricity industry. The number of employees has decreased because there was little doubt that it was overmanned. That is not quite the same in today's Scottish Nuclear, but there have been changes as we have moved towards privatisation. That is why the performance of the stations has improved so much.
Not only will the employees and the industry benefit—so will the consumers. The hon. Member for Cunninghame, North asked me to look back at the lessons of history. One of the lessons I learned at the time was the sadness in the SSEB that the nuclear industry was to be separated from the new Scottish Power. At that time, there was a feeling that it would have been tremendous if the nuclear stations could have been incorporated in the vertically integrated Scottish Power and Scottish Hydro-Electric, which no doubt would have had a share. People in the industry at the time regretted that omission. On that basis, I suggest that the hon. Gentleman's earlier intervention has been turned on its head.
We should consider the progress that has been made in the nuclear industry. Today we talk about British Energy plc, but it has two components: Scottish Nuclear and Nuclear Electric. Although I recognise the achievements of Nuclear Electric in driving down its unit costs and increasing productivity by 100 per cent., I make no apologies for concentrating on some of the achievements of Scottish Nuclear over the past two or three years.
871 Two or three years ago, Peter Robson, the director of production at Hunterstofn, told me that his target was to reduce the cost of nuclear generation from 3.2p to 2.2p per unit. I was pretty sceptical about whether that could be achieved, but remarkably, it has been achieved in the run-up to privatisation. It has been achieved against the background of a falling roll, an increase in safety standards and an improvement in plant at Hunterston. The hon. Member for Cunninghame, North will confirm that. If he is not prepared to do so, he should look at the report of the operational safety review team of the International Atomic Energy Agency, which demonstrates that safety standards have been improved.
The report states:
Significant improvements have been made in the preservation and material condition of plant systems and equipment through enhanced maintenance and conscientious attention to identifying and correcting equipment problems.That does not suggest that morale is falling in the work force at Hunterston. The report continues:Training programmes have been substantially strengthened".That is a remarkable achievement against a background of falling work rolls. It concludes:A stronger emphasis on nuclear and industrial safety in the station is evident.Yet Opposition Members tell us that we should be concerned about safety. I have no such concerns as those in the industry are showing the way forward.A letter dated 15 May from the British Nuclear Industry Forum states that privatisation will lead to new standards and enhanced concentration on safety matters and export potential can be raised. It stresses the importance of diversity of supply. I have some nagging doubts on the latter point, given that I want to see investment in the nuclear industry. Like the right hon. Member for Chesterfield, I believe that there is potential to expand nuclear generation as we move into the next century. Perhaps my hon. Friend will give us some words of comfort in his reply to the debate.
When I look back at the industry in the public sector, I pay tribute to John Collier and to James Hann, who was part of the nuclear industry for too short a time.
§ Mr. Alan W. WilliamsOn a point of order, Madam Deputy Speaker. We are running out of time, yet we have heard two speeches from Conservative Back-Bench Members that have lasted for more than 20 minutes. As at least four Opposition Members would like to take part in the debate, will you ask the hon. Gentleman to conclude his comments?
§ Madam Deputy SpeakerI have no powers under the Standing Order which can be invoked to shorten speeches. However, I should point out that from the point of view of the Chair, it is possible for the debate to run till 10 o' clock.
§ Mr. GallieI stated earlier, when I gave way to a host of interventions, that I might overrun. I feel passionately about the industry; it is my industry and I want to contribute to it. I am only sorry that so few Members are here today. I would have thought that on an Opposition motion on this issue, the Opposition Benches would have been packed, but that is not the case.
872 I want to make one point on the old public sector and the decision in the 1970s to develop the advanced gas-cooled reactors. I was great fan of the AGRs, but in retrospect it may have been a wrong decision because they were not commercially viable. I wonder whether a different decision would have been taken had the industry been in the private sector. I remain a fan of AGRs, but we have to face reality. We have not sold them abroad and we have not been able to cash in on them and it is unlikely that any further AGRs will be built. That is reality and we have to face up to it, but would it have been different had the industry been privatised from the start?
I had intended to list a host of reasons why privatisation would have been good for the industry, but I shall refrain from that. My hon. Friends have already made some points, so I shall allow other Members to contribute to the debate.
§ Mr. Martin O'Neill (Clackmannan)I realise that the hon. Member for Ayr (Mr. Gallie) faced two problems. First, he was only the second Conservative Member who was prepared to defend the privatisation today; secondly, he has an affection for the industry, which he described as "his" industry. That is understandable—it is the hallmark of many public sector enterprises—but the hon. Gentleman should recognise that, if the motion is defeated, the nuclear industry will no longer be his industry: it will become the possession of those who want and can afford to buy into it.
In investigating the privatisation, the Select Committee dwelt at some length on safety, partly because the Committee was impressed by the testimony of Captain Killick. He was one of those responsible for the dramatic increases in efficiency that took place—consistent with safety—in Scottish Nuclear, and his concern about safety drew the attention of all Committee members to the issue. We also feared that the scheme, which at that time was just an idea, would provide executive perks which might prejudice decisions on critical safety matters.
In the recent past, it has been suggested that decisions relating to the closure of power stations were not made as timeously as they might have been because of wider commercial considerations. I do not make that point lightly; I want to put it on the record. We need assurances about the nuclear installations inspectorate. The hon. Member for Truro (Mr. Taylor) pointed out that the United States had many more inspectors. There is a reason for that: safety has never been an in-house responsibility in the American nuclear industry as it has in the publicly owned British industry, whose different structure led to a different degree of monitoring and regulation. It is wrong to suggest that the United States has more inspectors because the work is more dangerous. We fear that, following a change in the ownership of the nuclear industry and the introduction of different priorities, we may see the collapse of the safety culture that has been at the heart of much of the safety that we have enjoyed.
I do not subscribe to the view that we are just waiting for a Chernobyl to happen, or that Three Mile Island is just around the corner. Such suggestions are irresponsible, degrading and demeaning to people who work in the industry, whose record is as good as those in most other parts of the world—if not better.
One of the problems of privatisation is that the demand for profit will lead to jitteriness at every turn. We have already seen that in relation to the refueling 873 issue. We know that a 1 per cent. drop in output will result in a loss of £140 million, and that, if we do not see an increase from 74.5 per cent. to 82.5 per cent., the privatised industry will be in very precarious circumstances in its first year of operation.
If I "scaremonger", it will not be about safety: it will be about the commercial concerns of potential investors. If they cannot be guaranteed substantial profits over a short time, they will not be interested. We have observed the fickleness of the British public in this regard: we saw the way in which they went off British Gas in a very short time. Throughout the debate, my hon. Friend the Member for Leeds, West (Mr. Battle) has reminded the House from a sedentary position that we have seen the spectre of Yorkshire Water. We know that a number of privatised concerns are not run effectively, and already it is likely that this industry will be sold for less than its asset value. For a time it may well be profitable, but during that time we shall see the building up of share options, the introduction of performance-related pay and all the mistakes that have been made by the other privatised utilities.
At some point, there may well be a case for further investment in nuclear power. I am not one of those who think that the door is locked. I do not believe that anyone need go into the room now, but in four or five years we may have to consider providing additional nuclear capacity in about 10 years to replace the capacity that will be closed down. We shall need that capacity even if we are to have coal-fired power stations, which are by their nature a greater pollutant. If we want a balanced energy policy, and if we want to take advantage of the opportunities open to us, we cannot realistically exclude the nuclear element. The fact is, however, that that element is not an attractive proposition—at least at the present time—to those who will own and run the new British Energy.
Those people are not concerned with national energy matters; they are preoccupied with the need to secure a return for their investors. They are not concerned about the country's energy priorities. Some of us, however, are concerned about those issues and we believe that there should be some planning and foresight. No kind of power station can be built in the short term; it is not possible to sign up exclusively to a single energy source, such as gas, and then a few years later build a couple of coal-fired power stations or a nuclear power station. In about 10 years, there may be a drop in generating capacity, and in about four years we must be capable of making choices. I do not think that a privately owned nuclear generating industry will be interested in a form of energy which—although it may be environmentally attractive, and important in terms of national economic priorities—cannot generate electricity at prices that will attract the market. If national energy priorities are to be met, nuclear energy generation must be publicly owned.
Perhaps the Government are leaving a way out in the form of Magnox Electric. I know that there is a good deal of ambition in British Nuclear Fuels plc and in Magnox Electric, but neither body is integrated at present. I have the impression that they are not even speaking to each other, although they will both be under the BNFL umbrella. I also have the impression that the Government could not give two hoots: suspect that they do not see 874 this as a means of generating electricity but that, according to the "stand on your head" approach that is a hallmark of nuclear economics, it is better to keep the Magnox stations running because it is more dangerous and expensive for them to lie idle or to be abandoned. They must therefore be sustained until the end of their natural lives, which may last a bit longer than we think. Beyond that, we have no clear indication of what will happen to the Magnox stations. We know that BNFL's main role will be in decommissioning.
As for the long-term prospects for future generating capacity, the Government have made it clear—the Minister certainly made it clear in his evidence to the Select Committee—that they are not interested in a new public sector for nuclear power. I consider the deal to be very short sighted. It is regrettable that the Minister has made little or no attempt today to address any of the recommendations in our report. We are three days away from the vesting date of the new companies, and we were led to believe that a prospectus would appear after 1 April. We were told that there was a good deal of work to be done, but that the Government were confident that that date would be met. I do not think that 6 pm on 26 March, four working days before the end of the month, is too early to expect Ministers to come here and tell us how they would deal with the questions that we have put to them.
The Government have signally failed on every issue. Yesterday's statement served only to confuse the situation. We are not sure what the £230 million is for. Perhaps when the Minister for Small Business, Industry and Energy winds up the debate he will tell us whether that sum is a provision for the defuelling of the nuclear core in the abandoned reactor. If not, will that sum be included in the segregated funds? What will the discount rate in the segregated fund be? Those are the critical points that investors will want to know. Ministers may have to wait until April fools day before they tell the world because they have not worked it out, but the House is entitled to know the answers.
The purpose of Select Committees is to monitor and to ask awkward questions. Sometimes they get embarrassing answers, but we have yet to get any answers from the Minister for Industry and Energy. I thought that it was personal because for years I have been abused by the Minister and I thought that he did not like me. I now realise that that is how he treats everyone who speaks in the House on energy matters. He substitutes insult and bluster for argument, logic and fact.
I know that the Minister for Small Business, Industry and Energy is the junior Minister and he is more constrained. I hope that tonight he will confirm that three months of work by the Select Committee—I came into the investigation later in the proceedings, but I speak for my colleagues on the Select Committee from both sides of the House—was not in vain and that the Government have taken it seriously. I hope that the report has been addressed in a way that respects the status of the Select Committee and its serious conclusions.
I doubt whether we shall get that confirmation, such is the desperate desire of the Government to get rid of nuclear power and to sell anything that they can to raise money for tax cuts. The money would have been used for tax cuts, but now it will probably be spent on compensation for farmers. That is perhaps even more 875 regrettable because it is yet another example of the short-sightedness of the Government and their refusal to pay proper attention to regulatory responsibility.
That is the core of the safety argument. If effective regulation of the nuclear industry is not forthcoming, investors in the industry will be so worried that they will withdraw their money and they may not even invest in the initial float later this year—if it happens.
§ Mr. Michael Clapham (Barnsley, West and Penistone)I wish to answer some of the points raised by the hon. Members for Ayr (Mr. Gallie) and for Castle Point (Dr. Spink). The Government's proposals are ill conceived and, indeed, flawed. That is not just my view, but that of the Select Committee on Trade and Industry, which identified several of those flaws. If the Minister for Small Business, Industry and Energy cares to spend some time on the Select Committee report, he will note that those flaws are clearly set out in the 18 recommendations made by the Select Committee.
I wish to deal briefly with the myth that seems to drive much of the Government's thinking—the myth that public is bad but private is efficient and good. The idea that the maximisation of shareholder value is best for the consumer has been shown to be shallow in case after case. In this instance, it is plain barmy, because profit and plutonium do not mix. A serious incident could arise from that ill-conceived mixture, and in my book that is just too great a risk to take.
Making profit the objective can result in corners being cut, to the detriment of all concerned. I draw the Minister's attention to the coal industry, which had a sound safety culture. It was the safest deep-mined coal industry in the world; yet this year we have seen an increase in fatalities and in the number of serious accidents. A change can be seen in the culture of industries when they are privatised, and that change is not for the better but to the detriment of the community.
The privatisation package consists of seven advanced gas-cooled reactors and one pressurised water reactor. The Magnox reactors, which are the dirtiest stations in the world, will remain in the public sector. In my view, the entire industry would be better off in the public sector. The nuclear industry's contribution to the generation of electricity is 28 per cent. of the United Kingdom's electricity needs. In Scotland, the figure is as much as 43 per cent. of the need. The contribution is all base-load electricity. In other words, it is bid into the pool at zero so that it can get on to the wires. That will ensure a constant income stream for the investors in the part of the industry that is to be privatised. That is why the Government want to privatise it. In logic, that part should remain in the public sector so that the taxpayer can get the benefit of an industry that has increased its productivity to a level comparable with other components of the energy industry.
Until 1990, the generation of nuclear electricity was very costly. The advanced gas-cooled reactors produced electricity at about 5.2p per kilowatt hour, but that figure has significantly improved and is now down to 2.7p per kilowatt hour. That has been achieved in the public sector and the industry has proved itself to be innovative, efficient, safe and cost-effective. That is another reason why the Government now want to privatise it.
Much has been said about safety. I do not want to scaremonger, but I draw the attention of the hon. Member for Ayr to some of the submissions made to the Trade and 876 Industry Select Committee. Much has been made of the submission from Captain Killick, the former director of safety and quality for Scottish Nuclear. He said that an industry in the private sector
is likely to seek to make small erosions into safety margins for commercial gain.We have seen that happen time and again in the utilities.Other submissions referred to the incident at Wylfa in Wales, when the station was not closed down for eight hours after a problem which could have caused real difficulties had been identified. The judge who fined Nuclear Electric said that he did not believe that commercial considerations had taken precedence. Had the industry been in the private sector, he could not have been so sure.
The Health and Safety Executive made the point in its submission that there was a tendency for the privatised industries to improve safety. I take that on board, but a leaked letter which appeared in the press last week pointed out that the cut in the budget of the Health and Safety Executive would result in a reduction in the number of inspectors and that they would therefore not be able to ensure compliance, as they had previously, in a number of industries, including the nuclear industry.
The hon. Member for Ayr will be aware of the informal network among nuclear engineers by which information on problems at one station is passed to another. I suggest that when the industry is privatised that informal networking will not take place because the different companies will see it as a breach of commercial confidentiality for one group of engineers to pass information to another group. That could cause safety problems.
Much has been said about the Heysham incident. There is no doubt that the prolonged running of the advanced gas-cooled reactors is causing concern. Perhaps the problem that was identified at Heysham is a design fault and that is what has resulted in distortion in the fuel channels. If that is the case, it means that in future the stations cannot be refuelled while they are generating electricity, which means that they will not be as viable as they have been in the past. Perhaps in his winding-up speech the Minister will elaborate on the Heysham incident and tell us whether there is a design fault.
The Select Committee was told in evidence that the liabilities amount to a massive £32 billion in undiscounted terms. The undiscounted liabilities of the package that is to be privatised are almost £15 billion. The Minister said that the liability would follow the asset, and he confirmed that today. In evidence, the Select Committee identified areas of those liabilities that were not covered. They were, for example, the reprocessing of spent fuel and the management and disposal of radioactive waste on the decommissioning of stations. Those matters were not to be covered by the segregated fund, which therefore falls far short of meeting the liabilities that the industry will have to face. The Select Committee on Trade and Industry was specific on that point. It did not think that the proposed funds were sufficient to meet the needs of the industry and it asked the Minister to look again at the segregated fund with a view to covering the gaps.
We are told that the privatisation will raise £2.6 billion, but some people suggest that it will raise only £2 billion. Perhaps the Minister will elaborate on that and give us his view of the valuation, as £2 billion is just two thirds of 877 the cost of building the pressurised water reactor that was officially opened only yesterday. As my right hon. Friend the Member for Derby, South (Mrs. Beckett) said, it was opened just in time to be privatised.
I urge Conservative Members to support the Labour motion because this will clearly be a bad sale. It will not be good for the consumer and it will certainly not be good for the taxpayer. If Conservative Members truly wish to represent their constituents, they should vote with the Opposition.
§ Mr. Alan W. Williams (Carmarthen)I am grateful for the opportunity to make a few comments in this important debate. I start from a strongly anti-nuclear position, although I would rather see the nuclear industry in the public sector. The industry has a virtually lifelong history of loss making, and privatisation is nonsense when we consider that reactors cost about £13 billion to build and are now to be sold for just £2 billion. Decommissioning costs are projected forward 100 years, which is fairly arbitrary. If this debate were being held in 1986, we would not be speaking about a period of 100 years but about decommissioning at the end of a reactor's useful life. Perhaps in 10 years' time the policy will change again. People discount the time to a manageable figure, but it is all creative accounting.
My main concern is safety. I cannot help but feel that, when cuts are made and there is great commercial pressure, safety will be compromised. Nuclear Electric's productivity record over the past five years has been excellent, and I accept that electricity is cheaper now than it was five years ago, but that has largely been achieved by a 32 per cent. staff loss and it is projected that there could be anything up to a further 20 per cent. staff loss post-privatisation. Will that compromise safety?
My hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) spoke about the incident at Heysham, the importance of which could have a great bearing on the future of advanced gas-cooled reactors. The 70 ft fuel assembly became stuck during on-load refuelling because there were distortions in the channel. If those distortions were caused by the AGR being run flat out to make more profit for Nuclear Electric, they may occur in other AGRs. That poses questions about the future of on-load refuelling, and that means that the load factor falls substantially and eats into the economics of the privatised nuclear industry.
My hon. Friends the Members for Barnsley, West and Penistone and for Leeds, West (Mr. Battle) spoke about base load supply. The nuclear industry has a decisive competitive advantage in having 24-hour access to the national grid. Should that remain in the private sector? It is not genuine free competition. It is obvious that electricity produced by coal or gas would be much cheaper if plants could be run flat out over 24 hours.
I strongly challenge the economics of the privatised industry. Will it survive? There were serious problems with some AGRs over the winter at Dungeness, Hartlepool and Heysham. If they have effectively to be derated because of the problems of distortion, if the load factors start to fall, if the base load accessibility is taken away and if the nuclear levy is phased out, that will be the scenario for British Energy's becoming bankrupt early in the next century.
§ Mr. Tam Dalyell (Linlithgow)I have four questions, to which the Minister might wish to reply in writing.
The greatest nightmare for many of us in relation to safety is what could happen at Kozloduy in Bulgaria. at any of the Czech stations, or at some of the Soviet stations such as Smolensk. The Minister will know that I met the Minister for Industry and Energy, the right hon. Member for Enfield, North (Mr. Eggar) and Dr. Walker in the Department about a year ago. In the past, considerable technical help was given by the British nuclear industry to try to prevent a catastrophe that would have mind-boggling effects, which would be the case if there were a Chernobyl 2 or anything like it anywhere in the world.
First, in the follow-up to privatisation, how can we be sure that British help to eastern Europe will continue when private industry may not have the same financial imperatives to help eastern Europe and the Soviet Union?
My second question concerns decommissioning. The Minister said that liabilities follow associated assets. I went to Sizewell yesterday for the opening, and spoke to many people in the nuclear community who were under the strong impression, rightly or wrongly, that talks about decommissioning were continuing. They had by no means thrown in the towel in their struggle to prove that decommissioning should not be their responsibility. There may be gross misunderstandings about that, but they exist none the less. Are the Government sure that the nuclear industry understands that liabilities follow the assets? There must be some grave misunderstanding on that issue, which should be cleared up tonight.
Thirdly, as I understand it, one of the Government's arguments is that, if the industry were privatised, it would have greater access to capital markets and therefore be in a better position to undertake work overseas. Why have the French, who have a nationalised industry, had no difficulty securing work overseas? If they can do it, why has the British industry found it so difficult? It really does not take privatisation to secure those important markets overseas, or at least to be considered for them. I ask the Government, why was this privatisation necessary from the point of view of orders abroad and the capital market?
I was told, again at Sizewell, and elsewhere, that a legal cottage industry has sprung up—a lawyers' paradise—around this privatisation offer. I shall give just one example. I am told that, in the prospectus for the Hartlepool power station, it was suggested that Hartlepool power station was in an industrial area on Teesside. My hon. Friend the Member for Middlesbrough (Mr. Bell) on the Front Bench is a Teesside Member of Parliament, as is the hon. Member for Stockton, South (Mr. Devlin). I am told on serious authority, and I have checked this, that the lawyers came back and said, "Prove that Hartlepool is an industrial area," because that would be the kind of advertising that it should not undertake. I gather that this kind of thing can be repeated more and more and that legal costs, because of so-called obligations under the Financial Services Act 1986, are spiralling. It is becoming an enormous added cost.
Are the Government in any position to do anything about the lawyers' paradise that is developing around the privatisation process?
§ Mr. John Battle (Leeds, West)This is the first debate that we have had on the nuclear industry since the death, in November last year, of John Collier of Nuclear Electric. I am sure that we would all wish to pay tribute to his contribution to the development of the British nuclear industry.
On 4 March this year, the marketing programme and presentations for stockbroker analysts, fund managers and the financial press were publicly launched. The programme, managed on behalf of the Government by Barclays de Zoete Wedd, their financial adviser, and Dewe Rogerson, publicity advisers to the Government and to British Energy, will pave the way for the newly privatised company to be.
We are in the final countdown of the sale, which is to take place in the mid-summer, yet there is, as has been made clear tonight, widespread confusion, speculation and less clarity than ever as the Government struggle to sell British Energy to the City. There are unanswered questions that focus on the financing of the deal. The Government's nuclear sums do not add up, as my hon. Friend the Member for Linlithgow (Mr. Dalyell), in his excellent summary questions, put it pertinently to the Government.
On 9 November 1989, however, the Government were crystal clear. The nuclear industry was withdrawn from the proposed privatisation of the electricity industry. The Minister at the time declared that retaining the nuclear industry in the public sector was
the best way of ensuring a long-term future for nuclear power in this country."—[Official Report, 9 November 1989; Vol. 159, c. 1174.]That rather contradicts some of the comments of Conservative Members.The then Secretary of State for Energy, now Lord Wakeham, announced:
The Government told the House on a number of occasions during the passage of the Bill that the arrangements for nuclear power would strike the appropriate balance between the interests of the taxpayer, the electricity consumer and the shareholder. In the event, unprecedented guarantees were being sought. I am not willing to underwrite the private sector in this way."—[Official Report, 9 November 1989; Vol. 159, c. 1171.]I hope that we would all agree with that, so we are entitled now to ask: what has changed since then?In May 1994, the Government set up the nuclear review, which reported in May 1995. It was set up to examine the possible options for introducing private sector finance into the nuclear industry—a precursor to the private finance initiative. The Government went further and said that they were prepared to consider without commitment representations on whether privatisation could, in principle, be feasible.
The accountants KPMG were asked to look at the management of substantial nuclear waste and decommissioning liabilities in the same year. We all know now that the compound liabilities of Nuclear Electric, Scottish Nuclear, British Nuclear Fuels plc and the United Kingdom Atomic Energy Authority amount to well in excess of £40 billion according to the Government's White Paper. Decommissioning alone accounts for some £18 billion—undiscounted—of that figure, according to estimates published by the National Audit Office as far back as June 1993.
880 KPMG's report was about the management of nuclear liabilities. We should remember that liabilities are defined as costs associated with the reprocessing of spent nuclear fuel, the decommissioning of nuclear plant, and the management, treatment and final disposal of radioactive waste, all of which are irradiated liabilities. KPMG favoured privatisation of all the generators and British Nuclear Fuels plc and as many of their back-end liabilities and associated risk as possible; in other words, pushing the whole lot into the private sector.
What did the Government choose to do? As usual, they went for a half-baked deal, a partial option. They privatised seven modern advanced gas-cooled reactor stations and the new pressurised water reactor, Sizewell B, leaving nine aging Magnox stations and BNFL with all their liabilities in the public sector. The Government propose to strip out the current revenue-generating end of the business for privatisation, leaving behind in the public sector as many of the liabilities as possible.
In a statement on the conclusions of the nuclear review, on 9 May, the then President of the Board of Trade made it clear that the Government intended to press ahead with privatisation on that basis. He said that no primary legislation would be needed, that the Government would not need to come back to the House, and that full and proper parliamentary scrutiny would not be necessary. During questions on the statement, my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) posed a critical question. He asked:
Was not The Economist magazine right when it said that it was a short-term financial fiddle to help the Tories but not the country? Why should the Government cherry-pick the nuclear industry so that a few individuals can make a great deal of money, while the vast majority of the British people are bribed with their own money in the short run and have to face higher taxes to pay for decommissioning costs in the long run?"—[Official Report, 9 May 1995; Vol. 259, c. 576–77.]Needless to say, the President of the Board of Trade, now the Deputy Prime Minister, brushed the question aside—as usual. That devastating critique—in The Economist, of all places—bears another glance. The editorial declared:The privatisation of part of the nuclear-power industry set out in a white paper on May 9th looks likely to be a particularly creative example of the well-honed technique of bribing the voters with their own money. In this case, the bribe may be financed not just by selling assets that the taxpayers have paid for once, but by money borrowed from future taxpayers too.What has happened since then? Nothing, except that the Government have pressed ahead in defiance of those comments.The Select Committee on Trade and Industry, in the absence of any full parliamentary scrutiny, set up an inquiry into the plans to privatise the nuclear industry. It focused in particular on the scale of the liabilities, how they would be covered, Government guarantees to the private operators and questions of safety and insurance. According to Gordon MacKerron, the special adviser to the Select Committee, the key argument in favour of privatisation was the raising of the proceeds for and the removal of the AGR-PWR liabilities from the taxpayer. The funds raised would have to compensate for the loss of future income from the privatised reactor.
In his paper, Mr. MacKerron concluded:
The Government seems optimistic both about the size and the uncertainty of the Magnox liabilities, and about the cash sums likely to be available to the public sector as credit against their eventual 881 discharge. And the contribution that the sale of the most profitable parts of the nuclear industry is likely to make to the notional funding of these public sector liabilities will probably be small both in relation to the public money expended on nuclear power in the past and in relation to the net present value of the assets to be sold.In other words, the special adviser to the Select Committee doubted whether there was scope for further significant cost and efficiency improvements following privatisation, given the nuclear companies' record over the past five years.More important is the question of guarantees that a private company would meet. The key questions concern the real costs of decommissioning the pressurised water reactors and the advanced gas-cooled reactors and how much the private nuclear power companies would be required to set aside for the long-term storage of the nuclear waste produced by its reactors.
On 8 June 1995, in a written answer, the Minister said:
The Government will ask all nuclear operators to draw up strategies for decommissioning their redundant plant … The precise level of the liabilities to be met will be a matter for the companies and their auditors in due course."—[Official Report. 8 June 1995; Vol. 261, c. 1269–70.]As usual, we are not to know until after the event, when it will be too late.It is notable that, when the Government first brought the privatisation proposal to the House, the then President of the Board of Trade—now the Deputy Prime Minister—confused us by saying that there would be segregated funds to cover public and private liabilities. He quickly had to correct the Government's position—but the confusion remains. As hon. Members have said, how can the public-private liabilities—decommissioning, reprocessing, waste management and future storage—be clearly separated out so that everyone is clear about where the assets and the liabilities lie?
The independent segregated fund, set up to cover British Energy sites and the longer-term post-closure costs of decommissioning, has now been announced at £230 million. However, as my hon. Friend the Member for Clackmannan (Mr. O'Neill) said, the key question is whether that will be a payment for reprocessing the core. We do not know what the fund is for. What we do know, however, is that that £230 million, plus the £16 million a year that has been set aside, comes to the exact figure included in the two-year provision in the Red Book for future years. In other words, the figure was already built in to cushion the sale.
The exact nature of the transfer of AGRs and Sizewell B liabilities to British Energy was one of the main issues studied by the Select Committee. Seventeen of its recommendations referred to the cost uncertainties. Those uncertainties will remain until there is a full debate on the report. The general proposition that, whatever the level of liabilities, they should follow the assets, is accepted by the Government, but every time we press the Minister on whether that means all the liabilities or some of the liabilities—and if so, exactly which ones—we get an evasive answer. Neither BNFL nor Magnox knows what liabilities it will have to pick up in future. They could be left holding the irradiated nuclear liabilities.
Mark Baker of Magnox said in his evidence to the Select Committee that he was not fully aware what the eventual shape of his balance sheet would be. In the light 882 of increasing Government obscurity, it is tempting to say that the discharge of liabilities is being accelerated now to push towards privatisation and provide a cushion in the City. As the European Commissioner suggested, it practically amounts to illegal state aids to get the industry into the private sector. It is a rescheduling of the AGR liabilities, which are being loaded into the public sector as a sweetener for privatisation. Estimates for the annual contribution to the segregated fund would double if all the post-shut-down expenditure were to be covered. There is a real risk that the assets will not be sufficiently profitable to pay for inherited and future liabilities.
The Select Committee said that it was difficult to envisage how the fund could cope with a fourfold increase in a major part of the liabilities, especially if the increases occurred after existing stations had ceased to produce any revenue. The liabilities cannot be covered if stations are shut down.
I do not have time to go into detail on the fact that the Government have changed the notional discount from 2 to 3 per cent., effectively cutting one third of the liabilities and wiping out £7 billion. We saw the bullish BZW report—I believe that it is called "The Cash Generator". It says that privatisation offers investors £2 billion of free cash over the next five years. It is a revenue cash cow and a potential cash bonanza reminiscent of the lottery.
We speak of safety, but in the end this privatisation is Treasury driven. Like every other utility privatisation, it is being forced through the House. It is half-baked and not thought through. The Government want to push the industry into the private sector, grab the cash and leave somebody else to pick up the pieces. It is the fag end of a privatisation programme by a Government who are absolutely desperate for cash to buy back their long-lost popularity. [Interruption.] The Minister may mock, but in the Select Committee he said that he would have to be able to answer for the decisions that were taken. The reality is that he will not have to answer for them—he has decided to go before the ship sinks and to leave the liabilities to everybody else. That is why our motion should be supported and the privatisation halted.
§ The Minister for Small Business, Industry and Energy (Mr. Richard Page)It is customary at this stage of a debate to say that it has been interesting. However, apart from the dynamic speech of my right hon. Friend the Minister for Industry and Energy, and the penetrating observations of my hon. Friends the Members for Castle Point (Dr. Spink) and for Ayr (Mr. Gallie), this debate has been par for the course. It has shown that the Labour party, like old Adam, has old Labour still lurking beneath the surface. Occasionally, through the thin veneer of new Labour, one or two honest souls popped up. For example, I found the speech of the hon. Member for Wolverhampton, North-East (Mr. Purchase) refreshing and enjoyable, although I do not think that it will do his career prospects any good.
If, somehow, we could have used the marvels of technology and each time the word "nuclear" was used put a line through it and used the words "British Telecom", the debate would have been indistinguishable from the debates of the early 1980s. I served on both the Committees concerning that privatisation, and they lasted 883 for more than 100 hours each. We split the telecommunications part from the Post Office, and then we privatised BT and created Mercury. The then hon. Member for Newcastle-under-Lyme spoke for more than 100 hours in Committee. What did he do? He promised, like the rest of the Opposition Members, that privatisation would mean the end of the known world, that there would be cherry picking and a collapse of rural services. One got the impression that people would have to lay in green wood in order to communicate by smoke signals. What has happened? We have one of the most successful telecommunications companies in the world.
Not to be outdone, the right hon. Member for Salford, East (Mr. Orme) said that public telephone boxes would be threatened with extinction. Surprise, surprise, the number of telephone boxes has risen from 67,000 to 130,000, and 96 per cent. of them work, which would have been most unusual in the early 1980s.
I have found it rather distasteful that the role of the nuclear installations inspectorate has been continually queried in comments that have bordered on the insulting. The implication has been that the inspectorate would use the Nelson touch—turn a blind eye to the shortcomings and short cuts, and condone shoddy work practices.
§ Mr. PageWith respect to the hon. Lady, there are only a few minutes remaining and I shall not give way, unless hon. Members want the debate to last until 10 o'clock; I have enough material to talk until then if necessary.
What is new? When we privatised the regional water authorities, we were told that we could not trust the private sector. What has happened? The very opposite: prosecutions went up, the quality of water went up, and we now have some of the best quality water in Europe. There are more blue flags on our beaches than ever before. There has been a general rise in the standard—delivered by the private sector, where the public sector failed.
Some people accuse the Labour party of U-turns. I am not one of those, but I would say that it is exceedingly flexible. I know, for example, that, in government, it set in train a massive programme of building nuclear power stations. Now, in opposition, all that has changed. It is against nuclear power and tries to undermine the industry by scaremongering. Nothing that has been said today by Labour Members would give me confidence if I were working in the nuclear industry.
The Labour party has, however, been consistent in one aspect: it has consistently opposed every privatisation that could possibly have been implemented, from British Airways to British Energy. Labour has set itself against privatisation. It has always been against it, and always will be, because it is against free enterprise. Old Labour re-emerges time and again through the thin, sophisticated veneer that has been applied by the right hon. Member for Sedgefield (Mr. Blair).
Rather than praising British companies and their success, the Labour party has sought to decry them. Instead of praising the remarkable benefits to consumers of privatisation, it has wilfully ignored them, which is par for the course. The Leader of the Opposition said that it 884 was barely an issue that electricity prices would rise because of privatisation. As we all know, electricity prices have fallen in real terms. It is worth reminding the House that, under Labour, electricity prices rose by 2 per cent. in cash terms every six weeks. Labour said that there was no evidence that the Government's Gas Bill would produce cheaper gas, yet gas prices have fallen by about 20 per cent.
The hon. Member for Glasgow, Garscadden (Mr. Dewar) was foolish enough to say that a privatised British Airways would be the pantomime horse of capitalism if it were anything at all, yet British Airways is one of the most successful airlines—if not the most successful airline—in the world. Examples of such scaremongering roll on and on, but the facts show them to be wrong. It beggars belief that a party of dinosaurs has the nerve to call itself new Labour. Privatisation has been an enormous success.
Before I turn to nuclear privatisation, I must say that it is interesting to note that the Labour party's paymasters recognise a good thing when they see it. The GMB, which sponsors the odd hon. Member, and one or two of their Lordships in the other place, has £107,000 invested in British Aerospace, £201,000 in British Steel and £131,000 in Cable and Wireless. There are plenty of examples of where, having fought and argued against privatisation, the Labour party has joined it.
To build on that schizophrenia, the Labour party accuses us of rushing nuclear privatisation through, yet in the next breath it criticises us for taking time to consider properly the very thorough Trade and Industry Committee report. We will be replying to that report in the normal time limit allowed. We believe that the future of the nuclear industry deserves careful consideration rather than the instant, superficial soundbites favoured by the Opposition parties.
What are the Labour party's policies on nuclear power? I am afraid that I am no wiser after today's debate. In the view of Conservative Members, nuclear privatisation will encourage further improvements in efficiency and competitiveness and, like other privatisations, will produce real benefits to taxpayers through reductions in the levy, which in turn will produce further benefits for the consumer.
The Opposition have tried in every way possible to scaremonger about safety and have refused to accept the assurances of the independent regulator that there will be no reductions in safety standards. My hon. Friend the Member for Ayr quite rightly took the Labour party to task on that scaremongering. The hon. Member for Cunninghame, North (Mr. Wilson) prayed in aid the words of Captain Killick. It might help hon. Members if they knew that the good captain did not at any time raise concerns about safety with the company, the NII chief inspector or any of the staff directly responsible to him when he was employed by Scottish Nuclear as director of safety. It is only since he left the company that those concerns have suddenly surfaced. As Captain Killick knows, Scottish Nuclear has an excellent safety record. In fact, he helped to achieve it. Safety is paramount at Scottish Nuclear, and will remain so.
885 The NII, the Government and the industry have all made it clear that safety will continue to be paramount and that the same rigorous regime will continue to apply after privatisation. I endorse the sense and sensibility of my hon. Friend the Member for Castle Point.
§ Mr. PurchaseGive him an Oscar.
§ Mr. PageIf only.
In reply to the question about access to the pool after privatisation, I can say only that matters will continue as they are at present.
The Opposition have gone on and on about liability without making a single reference to the tremendous cost reductions that have been achieved in recent years. It is estimated that the UKAEA decommissioning and waste management operational programmes—Drawmops—for the three years after 1994–95 have been reduced by a staggering 40 per cent. My hon. Friend the Member for Castle Point also referred to the savings that have been achieved by British Nuclear Fuels. I hope that that encourages the hon. Member for Wolverhampton, North-East, who also chipped in a few points about the savings achieved by the decommissioning programme.
The Magnox liabilities are currently in the public sector, and that is not going to change. What will happen, though, is that, through restructuring, there will be much a clearer focus on costs. I have every confidence that the creation of an independent Magnox company and its eventual integration into BNFL will cause a significant reduction in cost through greater efficiency in the management of liabilities. Has that not happened with all privatisations?
The hon. Member for Clackmannan (Mr. O'Neill) asked about the segregated fund. The fuel treatment that he mentioned will be included in the normal operating costs of the station. The initial endowment fund for the segregated fund, as announced the other day, will be £230 million and the annual contribution will be £16 million. The fund is expected to achieve a real-rate return of 3.5 per cent. on its investment policies.
The hon. Member for Linlithgow (Mr. Dalyell) kindly me gave me an offer I cannot refuse—to write to him on the subjects he raised. I am equally concerned about the situation in eastern Europe and I will write to him to answer—
§ Mr. Nicholas Brown (Newcastle upon Tyne, East)rose in his place and claimed to move, That the Question be now put.
§ Mr. Deputy Speaker (Mr. Michael Morris)I will not accept the hon. Gentleman's request at this point.
§ Mr. PageThank you, Mr. Deputy Speaker. This debate can go on until 10 o'clock if we feel so minded—[Interruption.] I am quite prepared to keep going because the Government have a good story to tell.
This afternoon, we have heard of the key role that the nuclear industry plays in our environmental policies. We have seen the schizophrenia of the Labour party. I have no doubt that when the industry moves into the private 886 sector, it will be yet another success story. The unions will invest in it to earn funds to help the Labour party to keep going. I ask the House to support the Government amendment.
§ Question put, That the original words stand part of the Question:—
§ The House divided: Ayes 261, Noes 293.
890| Division No. 86] | [19.00 pm |
| AYES | |
| Abbott, Ms Diane | Cummings, John |
| Adams, Mrs Irene | Cunliffe, Lawrence |
| Ainger, Nick | Cunningham, Jim (Covy SE) |
| Ainsworth, Robert (Cov'try NE) | Cunningham, Rt Hon Dr John |
| Allen, Graham | Dalyell, Tam |
| Alton, David | Darling, Alistair |
| Anderson, Donald (Swansea E) | Davidson, Ian |
| Anderson, Ms Janet (Ros'dale) | Davies, Bryan (Oldham C'tral) |
| Armstrong, Hilary | Davies, Chris (L'Boro & S'worth) |
| Ashdown, Rt Hon Paddy | Davies, Rt Hon Denzil (Llanelli) |
| Ashton, Joe | Denham, John |
| Austin-Walker, John | Dewar, Donald |
| Barnes, Harry | Dixon, Don |
| Barron, Kevin | Dobson, Frank |
| Battle, John | Donohoe, Brian H |
| Bayley, Hugh | Dowd, Jim |
| Beckett, Rt Hon Margaret | Dunwoody, Mrs Gwyneth |
| Beith, Rt Hon A J | Eagle, Ms Angela |
| Bell, Stuart | Eastham, Ken |
| Benn, Rt Hon Tony | Etherington, Bill |
| Bennett, Andrew F | Evans, John (St Helens N) |
| Bermingham, Gerald | Ewing, Mrs Margaret |
| Berry, Roger | Fatchett, Derek |
| Betts, Clive | Faulds, Andrew |
| Blair, Rt Hon Tony | Flynn, Paul |
| Blunkett, David | Foster, Don (Bath) |
| Boateng, Paul | Foulkes, George |
| Bradley, Keith | Fyfe, Maria |
| Bray, Dr Jeremy | Galbraith, Sam |
| Galloway, George | |
| Brown, Gordon (Dunfermline E) | Gapes, Mike |
| Brown, N (N'c'tle upon Tyne E) | George, Bruce |
| Bruce, Malcolm (Gordon) | Gerrard, Neil |
| Burden, Richard | Gilbert, Rt Hon Dr John |
| Byers, Stephen | Godman, Dr Norman A |
| Caborn, Richard | Godsiff, Roger |
| Callaghan, Jim | Golding, Mrs Llin |
| Campbell, Mrs Anne (C'bridge) | Gordon, Mildred |
| Campbell, Menzies (Fife NE) | Graham, Thomas |
| Campbell, Ronnie (Blyth V) | Grant, Bernie (Tottenham) |
| Campbell-Savours, D N | Griffiths, Nigel (Edinburgh S) |
| Canavan, Dennis | Griffiths, Win (Bridgend) |
| Cann, Jamie | Gunnell, John |
| Chidgey, David | Hall, Mike |
| Church, Judith | Hanson, David |
| Clapham, Michael | Harman, Ms Harriet |
| Clark, Dr David (South Shields) | Harvey, Nick |
| Clarke, Eric (Midlothian) | Hattersley, Rt Hon Roy |
| Clarke, Tom (Monklands W) | Henderson, Doug |
| Clelland, David | Heppell, John |
| Clwyd, Mrs Ann | Hill, Keith (Streatham) |
| Coffey, Ann | Hinchliffe, David |
| Cohen, Harry | Hodge, Margaret |
| Connarty, Michael | Hoey, Kate |
| Cook, Frank (Stockton N) | Hogg, Norman (Cumbernauld) |
| Cook, Robin (Livingston) | Home Robertson, John |
| Corbett, Robin | Hood, Jimmy |
| Corbyn, Jeremy | Hoon, Geoffrey |
| Corston, Jean | Howarth, Alan (Strat'rd-on-A) |
| Cousins, Jim | Howarth, George (Knowsley North) |
| Howells, Dr Kim (Pontypridd) | O'Brien, Mike (N W'kshire) |
| Hoyle, Doug | O'Brien, William (Normanton) |
| Hughes, Kevin (Doncaster N) | O'Hara, Edward |
| Hughes, Robert (Aberdeen N) | Olner, Bill |
| Hutton, John | O'Neill, Martin |
| Illsley, Eric | Pearson, Ian |
| Ingram, Adam | Pendry, Tom |
| Jackson, Glenda (H'stead) | Pickthall, Colin |
| Jackson, Helen (Shef'ld, H) | Pike, Peter L |
| Jamieson, David | Pope, Greg |
| Janner, Greville | Powell, Ray (Ogmore) |
| Jones, Barry (Alyn and D'side) | Prentice, Bridget (Lew'm E) |
| Jones, Ieuan Wyn (Ynys Môn) | Prentice, Gordon (Pendle) |
| Jones, Jon Owen (Cardiff C) | Prescott, Rt Hon John |
| Jones, Lynne (B'ham S O) | Primarolo, Dawn |
| Jones, Martyn (Clwyd, SW) | Quin, Ms Joyce |
| Jones, Nigel (Cheltenham) | Radice, Giles |
| Jowell, Tessa | Randall, Stuart |
| Kaufman, Rt Hon Gerald | Raynsford, Nick |
| Keen, Alan | Reid, Dr John |
| Kennedy, Charles (Ross,C&S) | Rendel, David |
| Kennedy, Jane (L'poolBr'dg'n) | Robertson, George (Hamilton) |
| Khabra, Piara S | Robinson, Geoffrey (Co'try NW) |
| Kilfoyle, Peter | Roche, Mrs Barbara |
| Kirkwood, Archy | Rogers, Allan |
| Lestor, Joan (Eccles) | Ross, Ernie (Dundee W) |
| Lewis, Terry | Ruddock, Joan |
| Liddell, Mrs Helen | Salmond, Alex |
| Litherland, Robert | Sedgemore, Brian |
| Livingstone, Ken | Sheerman, Barry |
| Lloyd, Tony (Stretford) | Sheldon, Rt Hon Robert |
| Llwyd, Elfyn | Shore, Rt Hon Peter |
| Lynne, Ms Liz | Short, Clare |
| McAllion, John | Simpson, Alan |
| McAvoy, Thomas | Skinner, Dennis |
| McCartney, Ian | Smith, Andrew (Oxford E) |
| McCartney, Robert | Smith, Chris (Isl'ton S & F'sbury) |
| Macdonald, Calum | Smith, Llew (Blaenau Gwent) |
| McFall, John | Soley, Clive |
| McKelvey, William | Spearing, Nigel |
| Mackinlay, Andrew | Spellar, John |
| McLeish, Henry | Squire, Rachel (Dunfermline W) |
| Maclennan, Robert | Steinberg, Gerry |
| McMaster, Gordon | Stevenson, George |
| McNamara, Kevin | Stott, Roger |
| MacShane, Denis | Strang, Dr. Gavin |
| McWilliam, John | Straw, Jack |
| Madden, Max | Sutcliffe, Gerry |
| Maddock, Diana | Taylor, Mrs Ann (Dewsbury) |
| Mahon, Alice | Taylor, Matthew (Truro) |
| Marek, Dr John | Timms, Stephen |
| Marshall, David (Shettleston) | Tipping, Paddy |
| Marshall, Jim (Leicester, S) | Touhig, Don |
| Martin, Michael J (Springbum) | Trickett, Jon |
| Martlew, Eric | Turner, Dennis |
| Maxton, John | Tyler, Paul |
| Meacher, Michael | Vaz, Keith |
| Meale, Alan | Walker, Rt Hon Sir Harold |
| Michael, Alun | Walley, Joan |
| Michie, Bill (Sheffield Heeley) | Wardell, Gareth (Gower) |
| Michie, Mrs Ray (Argyll & Bute) | Wareing, Robert N |
| Miller, Andrew | Watson, Mike |
| Mitchell, Austin (Gt Grimsby) | Wicks, Malcolm |
| Moonie, Dr Lewis | Williams, Rt Hon Alan (Sw'n W) |
| Morley, Elliot | Williams, Alan W (Carmarthen) |
| Morris, Rt Hon Alfred (Wy'nshawe) | Wilson, Brian |
| Morris, Estelle (B'ham Yardley) | Wray, Jimmy |
| Morris, Rt Hon John (Aberavon) | Wright, Dr Tony |
| Mowlam, Marjorie | Young, David (Bolton SE) |
| Mudie, George | |
| Mullin, Chris | Tellers for the Ayes: |
| Murphy, Paul | Mr. Joe Benton and |
| Oakes, Rt Hon Gordon | Mr. Malcolm Chisholm. |
| NOES | |
| Ainsworth, Peter (East Surrey) | Duncan-Smith, Iain |
| Aitken, Rt Hon Jonathan | Dunn, Bob |
| Alexander, Richard | Durant, Sir Anthony |
| Alison, Rt Hon Michael (Selby) | Dykes, Hugh |
| Allason, Rupert (Torbay) | Eggar, Rt Hon Tim |
| Amess, David | Elletson, Harold |
| Arbuthnot, James | Emery, Rt Hon Sir Peter |
| Arnold, Jacques (Gravesham) | Evans, David (Welwyn Hatfield) |
| Arnold, Sir Thomas (Hazel Grv) | Evans, Jonathan (Brecon) |
| Ashby, David | Evans, Nigel (Ribble Valley) |
| Atkins, Rt Hon Robert | Evans, Roger (Monmouth) |
| Atkinson, David (Bour'mouth E) | Evennett, David |
| Atkinson, Peter (Hexham) | Faber, David |
| Baker, Nicholas (North Dorset) | Fenner, Dame Peggy |
| Baldry, Tony | Field, Barry (Isle of Wight) |
| Banks, Matthew (Southport) | Forman, Nigel |
| Banks, Robert (Harrogate) | Forsyth, Rt Hon Michael (Stirling) |
| Bates, Michael | Forth, Eric |
| Batiste, Spencer | Fowler, Rt Hon Sir Norman |
| Bellingham, Henry | Fox, Dr Liam (Woodspring) |
| Bendall, Vivian | Fox, Fit Hon Sir Marcus (Shipley) |
| Beresford, Sir Paul | Freeman, Rt Hon Roger |
| Biffen, Rt Hon John | French, Douglas |
| Body, Sir Richard | Fry, Sir Peter |
| Booth, Hartley | Gale, Roger |
| Boswell, Tim | Gallie, Phil |
| Bottomley, Peter (Eltham) | Gardiner, Sir George |
| Bottomley, Rt Hon Virginia | Garnier, Edward |
| Bowden, Sir Andrew | Gill, Christopher |
| Bowis, John | Gillan, Cheryl |
| Boyson, Rt Hon Sir Rhodes | Goodlad, Rt Hon Alastair |
| Brandreth, Gyles | Goodson-Wickes, Dr Charles |
| Brazier, Julian | Gorman, Mrs Teresa |
| Bright, Sir Graham | Gorst, Sir John |
| Brooke, Rt Hon Peter | Grant, Sir A (SW Cambs) |
| Brown, M (Brigg & Cl'thorpes) | Greenway, Harry (Ealing N) |
| Browning, Mrs Angela | Greenway, John (Ryedale) |
| Bruce, Ian (South Dorset) | Griffiths, Peter (Portsmouth, N) |
| Butcher, John | Grylls, Sir Michael |
| Butler, Peter | Hamilton, Rt Hon Sir Archibald |
| Butterfill, John | Hamilton, Neil (Tatton) |
| Carlisle, John (Luton North) | Hampson, Dr Keith |
| Carlisle, Sir Kenneth (Lincoln) | Hanley, Rt Hon Jeremy |
| Carrington, Matthew | Hannam, Sir John |
| Carttiss, Michael | Hargreaves, Andrew |
| Cash, William | Harris, David |
| Channon, Rt Hon Paul | Haselhurst, Sir Alan |
| Chapman, Sir Sydney | Hawkins, Nick |
| Churchill, Mr | Hawksley, Warren |
| Clappison, James | Hayes, Jerry |
| Clark, Dr Michael (Rochford) | Heald, Oliver |
| Clarke, Rt Hon Kenneth (Ru'clif) | Heath, Rt Hon Sir Edward |
| Clifton-Brown, Geoffrey | Heathcoat-Amory, Rt Hon David |
| Coe, Sebastian | Hendry, Charles |
| Colvin, Michael | Heseltine, Rt Hon Michael |
| Congdon, David | Hicks, Robert |
| Conway, Derek | Higgins, Rt Hon Sir Terence |
| Coombs, Anthony (Wyre For'st) | Hill, James (Southampton Test) |
| Coombs, Simon (Swindon) | Hogg, Rt Hon Douglas (G'tham) |
| Cope, Rt Hon Sir John | Horam, John |
| Cormack, Sir Patrick | Hordern, Rt Hon Sir Peter |
| Couchman, James | Howard, Rt Hon Michael |
| Cran, James | Howell, Rt Hon David (G'dford) |
| Curry, David (Skipton & Ripon) | Howell, Sir Ralph (N Norfolk) |
| Davies, Quentin (Stamford) | Hughes, Robert G (Harrow W) |
| Davis, David (Boothferry) | Hunt, Rt Hon David (Wirral W) |
| Day, Stephen | Hunt, Sir John (Ravensbourne) |
| Deva, Nirj Joseph | Hunter, Andrew |
| Devlin, Tim | Hurd, Rt Hon Douglas |
| Dorrell, Rt Hon Stephen | Jack, Michael |
| Douglas-Hamilton, Lord James | Jackson, Robert (Wantage) |
| Dover, Den | Jenkin, Bernard |
| Johnson Smith, Sir Geoffrey | Norris, Steve |
| Jones, Gwilym (Cardiff N) | Onslow, Rt Hon Sir Cranley |
| Jones, Robert B (W Hertfdshr) | Oppenheim, Phillip |
| Jopling, Rt Hon Michael | Page, Richard |
| Kellett-Bowman, Dame Elaine | Paice, James |
| Key, Robert | Patnick, Sir Irvine |
| Kirkhope, Timothy | Patten, Rt Hon John |
| Knapman, Roger | Pawsey, James |
| Knight, Mrs Angela (Erewash) | Peacock, Mrs Elizabeth |
| Knight, Rt Hon Greg (Derby N) | Pickles, Eric |
| Knight, Dame Jill (Bir'm E'st'n) | Porter, Barry (Wirral S) |
| Kynoch, George (Kincardine) | Porter, David (Waveney) |
| Lait, Mrs Jacqui | Powell, William (Corby) |
| Lamont, Rt Hon Norman | Rathbone, Tim |
| Lang, Rt Hon Ian | Redwood, Rt Hon John |
| Lawrence, Sir Ivan | Renton, Rt Hon Tim |
| Legg, Barry | Richards, Rod |
| Leigh, Edward | Riddick, Graham |
| Lennox-Boyd, Sir Mark | Robathan, Andrew |
| Lester, Sir James (Broxtowe) | Roberts, Rt Hon Sir Wyn |
| Lidington, David | Robertson, Raymond (Ab'd'n S) |
| Lloyd, Rt Hon Sir Peter (Fareham) | Robinson, Mark (Somerton) |
| Lord, Michael | Roe, Mrs Marion (Broxbourne) |
| Luff, Peter | Ross, William (E Londonderry) |
| Lyell, Rt Hon Sir Nicholas | Rowe, Andrew (Mid Kent) |
| MacGregor, Rt Hon John | Rumbold, Rt Hon Dame Angela |
| MacKay, Andrew | Ryder, Rt Hon Richard |
| Maclean, Rt Hon David | Sackville, Tom |
| McLoughlin, Patrick | Sainsbury, Rt Hon Sir Timothy |
| McNair-Wilson, Sir Patrick | Shaw, David (Dover) |
| Maitland, Lady Olga | Shaw, Sir Giles (Pudsey) |
| Major, Rt Hon John | Shephard, Rt Hon Gillian |
| Malone, Gerald | Shepherd, Sir Colin (Hereford) |
| Mans, Keith | Shepherd, Richard (Aldridge) |
| Marland, Paul | Shersby, Sir Michael |
| Marlow, Tony | Sims, Roger |
| Marshall, John (Hendon S) | Skeet, Sir Trevor |
| Martin, David (Portsmouth S) | Smith, Tim (Beaconsfield) |
| Mates, Michael | Smyth, The Reverend Martin |
| Mawhinney, Rt Hon Dr Brian | Soames, Nicholas |
| Mellor, Rt Hon David | Spicer, Sir James (W Dorset) |
| Merchant, Piers | Spicer, Sir Michael (S Worcs) |
| Mills, Iain | Spink, Dr Robert |
| Mitchell, Sir David (NW Hants) | Spring, Richard |
| Moate, Sir Roger | Sproat, Iain |
| Monro, Rt Hon Sir Hector | Squire, Robin (Hornchurch) |
| Montgomery, Sir Fergus | Stanley, Rt Hon Sir John |
| Needham, Rt Hon Richard | Steen, Anthony |
| Nelson, Anthony | Stephen, Michael |
| Neubert, Sir Michael | Stem, Michael |
| Newton, Rt Hon Tony | Stewart, Allan |
| Nicholls, Patrick | Streeter, Gary |
| Nicholson, David (Taunton) | Sumberg, David |
| Sweeney, Walter | Walker, Bill (N Tayside) |
| Sykes, John | Waller, Gary |
| Tapsell, Sir Peter | Ward, John |
| Taylor, Ian (Esher) | Wardle, Charles (Bexhill) |
| Taylor, John M (Solihull) | Waterson, Nigel |
| Taylor, Sir Teddy (Southend, E) | Watts, John |
| Temple-Morris, Peter | Wells, Bowen |
| Thomason, Roy | Whitney, Ray |
| Thompson, Sir Donald (C'er V) | Whittingdale, John |
| Thompson, Patrick (Norwich N) | Widdecombe, Ann |
| Thornton, Sir Malcolm | Wiggin, Sir Jerry |
| Thurnham, Peter | Wilkinson, John |
| Willetts, David | |
| Townend, John (Bridlington) | Wilshire, David |
| Townsend, Cyril D (Bexl'yh'th) | Winterton, Mrs Ann (Congleton) |
| Tracey, Richard | Winterton, Nicholas (Macc'fld) |
| Tredinnick, David | Wolfson, Mark |
| Trend, Michael | Wood, Timothy |
| Trotter, Neville | Yeo, Tim |
| Twinn, Dr Ian | Young, Rt Hon Sir George |
| Vaughan, Sir Gerard | |
| Viggers, Peter | Tellers for the Noes: |
| Waldegrave, Rt Hon William | Mr. Simon Burns and |
| Walden, George | Mr. Richard Ottaway. |
§ Question accordingly negatived.
§ Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.
§ MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.
§ Resolved,
§ That this House congratulates the Nuclear Electric and Scottish Nuclear companies which, with the advent of competition in the electricity market and the prospect of privatisation, have transformed their performance over the past six years; congratulates the Government on the planned sale of the nuclear power stations of Nuclear Electric and Scottish Nuclear, noting that it is consistent with existing legislation, will fully preserve the vigour of the safety and environmental regulatory system, will benefit the taxpayer through the transfer of liabilities to the private sector and the receipt of sale proceeds and will provide appropriate transparency about liabilities and how they will be met; notes that the Government intend to give a considered response to the Trade and Industry Committee within the normal timescale; and notes that the Opposition have opposed every privatisation, despite the proven benefits which have been recognised by a growing number of countries throughout the world.