HC Deb 15 May 1996 vol 277 cc931-2
1. Mr. Eric Clarke

To ask the President of the Board of Trade if he will make a statement on progress towards the privatisation of British Energy. [28355]

7. Mr. Foulkes

To ask the President of the Board of Trade if he will make a statement on progress towards the privatisation of British Energy. [28362]

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang)

Privatisation of British Energy remains on track for July.

Mr. Clarke

Now that the Government have admitted that there is a £3.8 billion cost liability for the Magnox stations, which is causing a £1 billion shortfall in the sale of British Energy, is it not time that the privatisation was stopped because it is a raw deal for the taxpayer and a shady deal for shareholders?

Mr. Lang

It is typical of the Labour party that, while it claims that it is no longer against privatisation, it has opposed, and continues to oppose, every privatisation. The Magnox stations are not being privatised and their liabilities will remain with the Government. The liabilities of the non-Magnox stations will pass with the assets into British Energy and will be privatised. That is an entirely proper and sensible procedure that will generate substantial funds for the benefit of the taxpayer.

Mr. Foulkes

Is not the truth that the Secretary of State has no strategy for energy but is lurching from one decision to another? Will he admit that the sale of British Energy is likely to be postponed by a second inquiry by the Monopolies and Mergers Commission? Since, as my hon. Friend the Member for Midlothian (Mr. Clarke) said, it is a bad deal for the taxpayer and a bad risk for the shareholders, will he agree that the privatisation should not go ahead and call it off now?

Mr. Lang

No, I have no intention of calling it off. As I said in response to the initial question, privatisation of British Energy remains on track for July. The nuclear industry has improved beyond measure in recent years. Nuclear Electric's output has increased by 39 per cent. and Scottish Nuclear's output by 38 per cent. Sizewell B has been constructed on budget and on time and will reach full load in July. The nuclear industry is doing well and will do even better in the private sector.

Mr. Dover

Will my right hon. Friend the Secretary of State confirm that the biggest advantage of privatisation is that the risks and opposing investment priorities disappear? The private investor, or shareholder, will take the risk. We shall ensure that the nuclear industry goes forward rather than backward and ends up paying a lot of corporation tax into the Exchequer.

Mr. Lang

My hon. Friend is right. Before the Government's various privatisations, the nationalised industries were costing the country £50 million a week. They are now generating very much more than that in revenue to the Exchequer. Nuclear Energy, once it is privatised, will help to contribute to that by raising substantial proceeds for the taxpayer, and, by making its own investment decisions in future, it will become even more competitive and productive than was suggested by the figures that I gave earlier.

Mrs. Beckett

Surely the Secretary of State and his colleagues should ensure that people who might buy shares in British Energy are properly warned of the scale of the risk that they are undertaking. The hon. Member for Chorley (Mr. Dover) talked about the risks and liabilities disappearing. They are not disappearing. If the Government stick to their word for once, they will be transferred to private shareholders. Will he confirm that, against liabilities stated by British Energy to be set at an undiscounted figure of £14.6 billion, the only special provision being made is a fund of £16 million a year? Is that not another example of the Government's incompetence and neglect—even of the interests of shareholders?

Mr. Lang

I think that the hon. Lady is getting a little muddled. The liabilities pass with the assets to British Energy. On privatisation, British Energy will make an initial endowment to the segregated fund of £228 million and, thereafter, will make contributions, which will initially be at £16 million a year. That is the result of careful calculation of the appropriate figure necessary to meet on-going liabilities. It will enable British Energy, the nuclear industry, to be privatised. All the details will be set out appropriately in the prospectus. It is typical that the Opposition try to talk down such privatisations and try to undermine flotations, and are thus operating against the interests of the British taxpayer.