BNFL(Public-Private Partnership)

HC Deb 08 November 2000 vol 356 cc358-412

[Relevant documents: Ninth Report from the Trade and Industry Committee, Session 1999–2000, HC 307, and the Government's response thereto, HC 848.]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Pope.]

6.10 pm

Mr. Martin O'Neill (Ochil)

I am pleased to have this opportunity to debate the report. When my colleagues on the Committee and I started work on this subject in June 1999, we assumed that we would undertake a fairly routine but, given the difficulties that people occasionally have following the arrangements of British Nuclear Fuels, somewhat complex operation. Little did we realise that we would be involved with far more controversial subjects, including safety procedures, the organisation and delivery of data, what might be regarded in some circles as the scandal affecting the organisation—that resulted in the departure of several senior staff and the sacking of a number of people further down the line of command—and the questioning of the organisation's whole character.

When we started, our remit was—and, indeed, it remains—to consider the suitability or otherwise of the proposed public-private partnership as a way forward for BNFL. That required us to examine the activities and liabilities of the company, which has four main areas of activity: nuclear reprocessing, the fabrication of mixed oxide fuel, the generation of electricity in Magnox stations, and substantial business involvement in the United States, involving waste management, nuclear facilities and nuclear fuel services. Moreover, we had to set alongside those revenue-generating aspects of the business a consideration of the scale, character and reporting of its liabilities.

To say that we found issues that concerned us in those areas would be an understatement. BNFL is a big company—it employs some 23,000 people who operate in some 15 countries—and in its ranks can be found some of the best qualified nuclear scientists and engineers in the world.

The report contains an interesting section describing BNFL's background and organisation—a short but interesting history of the British nuclear industry. That may be the first time that such a history has been written in a coherent and easily intelligible form. That section is not recommended bedside reading, although anyone who suffers from insomnia would not necessarily find it to be the best cure—it is quite a good read. However, I intend to discuss not so much the report's contents as some of the areas on which the Government's helpful response did not touch.

Some of BNFL's exceptionally qualified people have been involved in the nuclear industry since the outset. Its traditions come from the military and civil nuclear industries and its origins can be traced back to the 1940s. Understandably, great pride is taken in its achievements, but there is still a culture of secrecy, which is often unnecessary in a modern energy-oriented business. Such is the scientific complexity of its operations that there has been a tendency among some staff to patronise mere mortals, such as my colleagues and myself, and query the need for our work. That led to a stridency among some of those who are critical of its operations, which in turn created a tendency towards megaphone diplomacy on both sides of the debate.

We found among all levels of staff at BNFL a willingness and an anxiety to be helpful. They sought to provide us with the information that we wanted. However, the manner in which the accounts were drawn up suggested a degree of opacity that could be explained only by the cynical suggestion that there was something to hide. My colleagues and I had considerable sympathy for Dr. MacKerron, of Sussex university, who sought to get behind the facts and figures, but has been thwarted in all too many ways. I hope that BNFL's new chairman, Hugh Collum, who is a distinguished figure in the world of accountancy and finance, will be able to secure far greater transparency in the recording of the company's affairs.

Dr. Stephen Ladyman (South Thanet)

First, I apologise to my hon. Friend for having missed the first two minutes of his speech, and to you, Mr. Deputy Speaker. I assure you that when I saw my hon. Friend's name appear on the monitor, I broke the world record for running from Norman Shaw North to the Chamber.

My hon. Friend touches on the key point that if we want BNFL to develop, and nuclear technology to become acceptable again, absolute openness in all that the industry does is essential. I refer not only to commercial considerations, but to scientific and safety aspects.

Mr. O'Neill

I completely agree with my hon. Friend, whose apologies I accept. We all suffer such problems, but some hon. Members have heart conditions that are better suited to running like that.

Frankly, there is now a recognition that last year's events, and the public's reaction, mean that a new approach is required. I hope that as well as Hugh Collum, the new managing director, Norman Askew, who was appointed in the wake of the data falsification scandals, will be successful. I stress that what occurred was not a technical failure in the company, but the falsification of data. The major concern was the threat not to safety, but to the company's business integrity and good name.

The company deals with sensitive contracts throughout the world. It was therefore essential to bring in new management—people with a sense of responsibility—and to break with what might be called the mere civil service tradition in BNFL's business culture. That is why several new senior management figures, including the two whom I mentioned and others, are trying to inculcate in the company a radically different culture. I hope that it will embrace openness and a willingness to share technologies.

Although the industry is nuclear, its engineering is not that complex. None the less, the materials that it uses require care and a safety culture, although those have not always been as strong as they should have been. We should face the fact that the nuclear industry is not alone in being affected by such considerations. The north-west of England contains chemical plants of a complexity that requires the highest safety standards. I do not suggest that such an approach is necessary only in the nuclear industry—it has been achieved across British industry and in the most advanced areas of technology.

Mr. Eric Martlew (Carlisle)

On the question of safety, the inquiry was into the proposed public-private partnership for BNFL. My constituency is close to Sellafield and Chapelcross, and we regard safety as paramount. Does my hon. Friend believe that there would be any compromise on safety if we took in a private partner? Obviously, if a private partner comes in, money will go to the Exchequer. There has been disquiet in Cumbria for many years about the fact that even though Sellafield is in the area, money has not come from the Government to improve the infrastructure.

We all realise that there will be a decline in the number of jobs in the nuclear industry, especially on the west coast. Does my hon. Friend believe that money should be given to improve the infrastructure? The road from my constituency to that of my right hon. Friend the Member for Copeland (Dr. Cunningham) is a disgrace, and this is a perfect opportunity to put money in and give us a better infrastructure so that we can encourage other industries to come to the west of the county when the number of jobs at BNFL declines.

Mr. O'Neill

On my hon. Friend's last point, it is easier to get from Edinburgh to Carlisle than to get from Carlisle to Cockermouth. The area is not well served by its infrastructure, but I leave the lobbying for roads to others, as we all have our own agendas on where road funding should go.

My hon. Friend asked about compromising safety. We had lengthy discussions with Mr. Lawrence Williams and his colleagues in the Health and Safety Executive, who were very sensitive to the issues that we raised. We know them and have had dealings with them in relation to other parts of the British nuclear industry. We got the feeling that their concerns about safety will not be compromised by any change in the nature of ownership. The standards that the HSE is now imposing on the nuclear industry will not be changed in any way as a consequence of a change in ownership.

In recent years, the British nuclear industry has had traumatic experiences at Dounreay, Sellafield and other parts of its operation, where there has been overdependence on outsourcing. The problem was that in many cases, the existing management did not know what was going on because the work was being done not by them but by a range of contractors, who sometimes were not as safety-conscious as they should have been, and were not part of the big picture. As a consequence, the nuclear industry is now somewhat chastened.

There are also suggestions that in some parts of the British nuclear industry—not at Sellafield—there was a hint of regulatory capture. Perhaps people had got too close to the organisations and the individuals whom they were supposed to be regulating.

Dr. Rudi Vis (Finchley and Golders Green)

Is it not the case that if subcontractors are not as safety-conscious as they should be, it is BNFL's responsibility to make sure that they are?

Mr. O'Neill

I do not dispute that. However, the previous Government set themselves on a particular road, and if they could not privatise parts of the nuclear industry, they wanted to outsource as much of the maintenance and engineering activities as they could. As a consequence of diktats from Ministers, there was a tendency throughout the nuclear industry to be overdependent on people who did not necessarily always have the safety awareness that they ought to have had, as is well recorded.

We took the question of safety very seriously, and, as I said, we held long sessions and had briefings and visits. When we went to Sellafield, we were briefed by the Health and Safety Executive before we went and saw what was happening. None the less, when we put things together, we came to the conclusion that there was a case for a public-private partnership. There was certainly a case for injecting money into the industry, over and above what was coming in from the public purse for what was, in the past, a fairly profitable business for us as British citizens.

On the other hand, in the increasingly privately owned world nuclear industry, it is essential that proper commercial disciplines are introduced in organisations that still have a legitimate, but irrelevant, civil service tradition of administration. We have to get across to the work force and certain parts of the management of BNFL the message that what was good enough in the past will not be good enough in a globalised market, where there is always a downward pressure on costs and a need for a degree of flexibility in management—which have not always been the hallmarks of BNFL's operation.

People will tell us that BNFL has been extremely effective in cutting costs and has made itself more efficient. I do not deny that, but I get the impression that BNFL and other parts of the British nuclear industry have lived for too long in a kind of cosy relationship and, as we say in Scotland, have been taking in each other's washing. They would do wee numbers for people, and jobs would be done. The point is not about safety; it is largely about sound business practice, which was not always present. Business was conducted by nods and winks, and, as the books were terribly difficult to understand and follow, it was sometimes difficult to track expenditure trails through the morass of the companies' accounts system, as Gordon MacKerron of Sussex University found.

There was a veil of secrecy over the organisation, so there were understandable concerns about security and similar matters. Extremely hazardous materials are being used, so there must be a secure means of dealing with them. Indeed, it was a civil libertarian, my right hon. Friend the Member for Chesterfield (Mr. Senn), who, as Secretary of State for Energy, armed the police who guard BNFL establishments. My right hon. Friend introduced that measure because he recognised that the threat of terrorism was such that security had to be in place.

The Select Committee came out broadly in favour of the PPP, for the reasons that I gave. We were a wee bit bemused by the question of whether the Government had considered the possibility of total privatisation. I realise that the company is involved with military, security and safety matters, and there may well be a case for a PPP, but the terms of the remit given to the accountancy company KPMG, which was called in as a consultant to conduct the exercise, were very narrow. Will my right hon. Friend the Minister for Energy and Competitiveness in Europe explain why the option of full privatisation was not offered? Was that on grounds of principle or practicality? We accept that, as a result of the events last year, the date for the creation of the PPP has slipped. However, will my right hon. Friend give us an indication of when the company will be ready for a widening of ownership?

Mr. Dale Campbell-Savours (Workington)

When I read the part of the report that dealt with those matters, I could not quite work out the motive behind the question. Why would we necessarily want to know whether that issue was included, when there would be open hostility in west Cumbria to 100 per cent. privatisation? An acceptable compromise has been made, so why was that question posed? Did people simply want to put it on the record that the option of privatisation should not be pursued?

Mr. O'Neill

As my hon. Friend knows from his long years sitting on Select Committees and on the Public Accounts Committee, we always try to establish as much of a consensus as we can. Conservative Members on the Committee may want to know the arguments for full-blooded privatisation and Labour Members may want to know the arguments for a PPP. We felt that, as an exercise in open government, there would be no harm in asking the question, and I hope that my right hon. Friend the Minister will provide clarification.

Mr. Askew told us that the targets would not be met this year, which will be important when we get to the practicalities of the PPP. He anticipated that additional, new, more stringent targets would be introduced. When are those targets likely to be published, and what form will they take? Will they be published or will they be put in the Library? We would be obliged if the Minister could give us that information.

Once the company has passed those milestones, any potential investor would like, as a matter of due diligence, to be able to read and understand the accounts. I keep coming back to this issue, because it was a recurrent theme in the Committee. The reporting accountants were instructed to look into the clarity of the accounting procedures. Can the Minister tell us what bill of health they were given?

In the Government's reply to the report, they said that there were opportunities in Japan. Can the Minister tell us what the position is now, and when, if at all, the transportation of spent fuel from Germany will be resumed? What is the state of play on the apparent disagreements between BNFL and its major customer, British Energy? British Energy has sent a document to a number of Members suggesting that it would require an immediate cut in the charges that BNFL imposes for work carried out. It is beginning to rattle the cage on the issue of storage rather than reprocessing after 2006. It is only right that we have a clearer understanding of the difficulty that has arisen between BNFL and its largest customer, British Energy.

Mr. David Chaytor (Bury, North)

Does my hon. Friend agree that the issue of storage versus reprocessing has not suddenly burst on to the scene recently? It has been given emphasis because of the position of British Energy. For many years, a solid body of evidence has suggested that storage is a safer long-term prospect, and cheaper than reprocessing. Does he not think that BNFL should have grasped that nettle long before now?

Mr. O'Neill

My hon. Friend says that there is a body of evidence. There is certainly a body of opinion, but I am not sure whether the two are necessarily the same. I shall give an example. Prior to the privatisation of British Energy, the old Scottish Nuclear Ltd. was in protracted negotiations with BNFL on the processing of the Torness material. There was a debate at that time about whether it should be stored at Torness, and it became clear that that was as much a negotiating tool used by Scottish Nuclear Ltd. as an environmental argument. None the less, we must recognise that storage on site is desirable if we want to avoid worries about transportation.

There is also the question whether appropriate space and facilities are available on site at reasonable cost to provide the storage required. Storing is not a simple process. It is perhaps more attractive than having trains containing waste or spent fuel trundling across the country, and the worries that that would cause some people. Whether those anxieties would be justified is a different matter.

We did not want to get into that issue in any great detail. However, we recognised that it was important, and that, as a revenue stream for a company that may be partially privatised, it would be of more than passing interest to anyone involved. We want to find out the Government's thinking.

Mr. Christopher Chope (Christchurch)

Does the hon. Gentleman agree with me that the Government's response to this particular aspect of our report is complacent in the extreme? They take a hands-off,"nowt to do with us" approach, and consider that this is a commercial matter for the two companies. Surely they should go to the root of the viability of any public-private partnership. We know from the Committee's other work that it is increasingly the practice in industry to work alongside suppliers. BNFL accounts for some 25 per cent. of British Energy's costs, and for them not to talk to each other and reach a common agreement on the issue is ridiculous.

Mr. O'Neill

I would not go quite as far on this issue as my colleague on the Select Committee. I think that there is an appropriate relationship between state-owned corporations that are moving towards partial privatisation. There is an arm's-length relationship, and the decisions and the responsibility rest with the company.

However, there is a problem. In some areas of reprocessing, such as MOX facilities, Ministries other than the Department of Trade and Industry are apparently reluctant to come to a decision about the licensing of the plant. We must question the working of government there. I would be happy for BNFL to have the maximum independence that it can have under the DTI within its present system of ownership. The hon. Gentleman and I agree that a public-private partnership would not be a bad thing. In order to prepare for it, BNFL's management must show that it is capable of running the company in the big, dangerous world with the maturity and independence that it has not always had hitherto.

I want to put down a marker. It is not the demonstration facility for MOX that worries me, because I realise that that is not a major issue any more. However, we need to know what will happen to the main facility that has been constructed and is awaiting licensing. If it does not appear in the corporate plan, there will be a gaping hole in the finances.

I have complained about the fact that we do not know where half the money is or where it goes—but we are now beginning to find out. It would be even more worrying if, when the plan is produced and we start to look for potential partners for BNFL, such issues were not properly dealt with. They must not be handled with indecent haste, but there should be a decision. Governments should not hide behind indecision on such matters. Either we take this step or we do not, and if we do not, we must accept that the company will be that much smaller and perhaps less attractive, although we do not know.

Since the report was published, we have had the rundown table for Magnox, which is helpful. However, we must ask questions about the prospects for fuel manufacture at Springfields and reprocessing at Sellafield, and what the consequences will be for those facilities given that Magnox probably has another 10 or 12 years before it is completely finished as a source of generation. We want to know what alternative uses will be sought for the Sellafield and Springfields sites.

We should also like to know more about the Magnox liabilities. The longer Magnox is in operation, the longer the period over which liabilities can be spread, whereas if the operation period of Magnox stations were contracted, the liabilities would be spread over a shorter period. It is only fair to put that information in the public domain so that the impact of the change in the timetable on those liabilities is on the record.

We should know a little more about the United States business and what has happened about Hanford. Contracts were renegotiated, and it was understandable that the problems of emerging work—as it used to be called in the refitting of British naval ships—were a lot bigger than anticipated, and the price had to be changed. A number of issues are involved, but the Hanford issue must be dealt with.

I should like to deal with another, slightly different aspect of Magnox. What income stream replacement will there be when Magnox is removed from the company's activities? Although those reactors may be the dirty old warhorses of nuclear generation, they provide about 8 per cent. of our energy requirements. They are also linked to the national grid. Therefore, as the wires are there—to put it very simply—do Ministers have any proposals for alternative generation systems that could, if necessary, be connected to the system?

Conversely, have the Government, in partnership with BNFL, considered whether there is a case for further nuclear generation? I am a bit ambivalent about that. Although I realise that, in terms of emissions, it is a very clean energy, I also know that it has problems with back-end costs and with liabilities. Nevertheless, if we want to create and sustain a proper generating mix in the United Kingdom, we have to recognise that, although windmills and wave generation may have considerable attractions, the attractions of alternative forms of generation have probably been exaggerated. I therefore think that we ignore the nuclear element at our peril.

It is rather depressing that the Prime Minister, in an estimable speech to the Green Alliance, completely ignored the nuclear option. It is as if the Government have decided collectively to run away from the issue. I think that it is an abdication of intellectual responsibility to fail to consider one of the great British scientific achievements of the 20th century and to seek to discard it, as some people seem to be doing.

I am not certain that, at this time, nuclear generation is the most economic means of generating electricity. I also recognise that it has environmental costs that are different in character from those associated with gas-fired or coal-fired stations. However—as I have always said, as one who has always acknowledged a constituency dependence on the coal industry—if we are to continue arguing for electricity generated from coal, we shall have to continue using the nuclear industry, for some time to come, to create some space in the envelope. We have not yet found ways of bridging the potential generating gap that will begin to emerge from about the middle of this decade.

Mr. David Drew (Stroud)

Does my hon. Friend accept that part of BNFL's importance lies in its links with Westinghouse and fourth-generation reactors? Does he also agree that if we do not proceed with that technology, the French or perhaps the Americans will lead the way? There is no doubt that we will need new nuclear capacity.

Mr. O'Neill

The worst argument for any form of energy technology is that if we do not build it, someone else will. The history of the British electricity generating industry is littered with mistakes that are the consequence of such arguments. Across the country, we have power stations that were built because boiler suppliers were running out of orders. People have said, "If we try just a wee bit harder, we will have generators"—advanced gas-cooled reactors, pressurised water reactors, and Magnox, although not the latest ones—"with one type or another of the Union flag wrapped around them." We tend to go for such generators not because they provide safe and cheap energy, but because they create a lot of jobs at the same time. I think that we should have a single-mindedness about the way in which we consider power generation.

As I said, in such a complex business there are other problems, such as the continuing anxiety about safety. Whatever happens, people will worry. The Dounreay situation is one of the interesting aspects of nuclear generation that the Committee investigated. Although it is one of the smaller-scale operations, in some ways Dounreay is just as dirty and difficult as others. In Scotland, and especially in the north of Scotland, there was anxiety about the condition of the site, safety procedures, its evident past sloppiness, and the fact that we now have to reap that whirlwind. However, under the United Kingdom Atomic Energy Authority, and particularly with the leadership of John McKeown and his colleagues, there has been a transformation not only of the site but of the public's attitude towards it. Those anxieties have been largely diminished.

There is a very vigilant group of individual critics of many of Dounreay's previous activities, but in evidence taken by the Committee, we saw a noticeable shift in their attitude. They were not embracing the facility, but they were certainly much less worried about it than they had been.

I look forward to a public-private partnership involving BNFL, although I do not know as yet what activities it will engage in. My colleagues and I have as many unanswered questions as answered ones, as the situation was not clear when we were investigating. However, it is fortunate that we are having the debate today, when the Government and BNFL can look at the situation with a rather more detached and cooler eye than was available earlier this year to the new management.

My colleagues and I look forward to a public-private partnership. We think that BNFL can operate at a world-class level in various sectors of the nuclear industry, and that it has a tremendous contribution to make to British technology and science and to the economic well-being particularly of the north-west of England, and especially of Cumbria, where so many good jobs have depended on BNFL for so long.

6.46 pm

Mr. Michael Jack (Fylde)

I congratulate the hon. Member for Ochil (Mr. O'Neill) and the Select Committee on Trade and Industry on their report. His speech and the Committee's conclusions touch on some of the most important issues surrounding the proposed BNFL public-private partnership.

I have a strong constituency interest in the matter, as the Springfields works are just outside Preston. When strangers come to my constituency and see the lovely, low and, in many cases, modern facilities, and ask, "What goes on in there?", to shock them I say, "That is the home of the United Kingdom's nuclear fuel manufacturing capability." It always surprises them. Great investment has gone into Springfields.

I have also had the pleasure of meeting Springfields' work force and management, who are dedicated to quality, cost reduction and competitiveness. Although all those are buzz words, they are also real words that entail efficiency in modern business. They also demonstrate that, mentally, in their approach Springfields' work force and management are very much in the private sector. Although they very much welcome the proposals for a public-private partnership, as the Committee Chairman indicated, some may even be thinking more about full-scale privatisation. However, if the Government wish to pursue the PPP model, it is our job to discuss the industry's needs within that context.

So often when we discuss British Nuclear Fuels, the difficulties of the right hon. Member for Copeland (Dr. Cunningham) and his constituents tend to dominate the debate, whereas the business's front and clean end—the manufacture of nuclear fuel—tends not to receive so much attention. However, BNFL's takeover of Westinghouse Electric Company's business has had great implications. It has absorbed into its midst not only a private enterprise, but the heart of world nuclear fuel manufacturing. It also demonstrates the difference in approach between BNFL's fuel and reactor services division and its other divisions.

As BNFL's latest report indicated, those services are seriously big business: £730 million of BNFL's turnover is accounted for by the fuel and reactor services division. Although there have been natural growing pains as the company has taken on Westinghouse's responsibilities, that is driving the thinking about the fuel division and its future. I shall develop one or two of those points in a moment.

I was grateful to the Select Committee Chairman for sharing his observations on the Prime Minister's speech on the environment. However, I do not want to get into the realm of party political point scoring, as the matters that we are debating are too serious and affect the livelihoods of thousands of people in my constituency whose jobs depend on the nuclear industry. Nevertheless, if we are to ensure that the British nuclear industry is effective and that, in the not too distant future, it will be capable of seriously considering investment in new forms of nuclear generating capacity, we have to address some strategic issues. According to figures supplied to me by the company, in 1999–2000 our nuclear industry, BNFL and British Energy, will together have avoided the emission of about 79 million tonnes of carbon dioxide.

I do not want to strike an unnecessarily controversial note with the Minister at this early stage, but in response to a question I had tabled inviting her to give me some feedback on the impact that the closure of the Magnox stations would have on the Government's meeting of its Kyoto targets, she rather surprisingly said that there would be no impact. There may well be some statistical reason for that, but—in the light of a point that I shall make shortly—I think that it would be useful to have it put on record why there will be no impact, given t;he likelihood of the closure of a major part of our nuclear generating industry over the next decade. We should view the matter in a European context. The nuclear energy generating industry avoids an emission of 800 million tonnes of carbon dioxide, and the European Union's Kyoto target of an 8 per cent. reduction in the emission of greenhouse gases is equivalent to 400 million tonnes of carbon dioxide. That makes clear the importance of the nuclear industry.

When preparing for the debate, I visited BNFL's Springfields plant. I asked members of the work force to come and talk to me, and over 130 did, at two meetings. I told them that the debate represented a fairly rare opportunity for the House of Commons to discuss the nuclear industry, and that I wanted my questions, and the views that I would express, to be theirs rather than mine. A common theme in what they told me was their wish for the Minister to make a clear statement about how the Government see the strategic position of nuclear generation in this country.

We can all talk about the business advantages of a public-private partnership or of full-scale privatisation, but we must ask what is the purpose. Part of it will be to change the business culture of BNFL. In this year's annual report, Hugh Collum said: We have set priorities for each business group to deliver their own short term targets; the continued prospect of a Public Private Partnership will provide a powerful incentive to improve performance. The Chairman of the Select Committee mentioned a number of changes that would have to be made in the management, and the management culture, of the company, but my dealings with the fuels division have shown me that many of those changes are already part of its working approach. If we are to realise the potential of a market which, in terms of nuclear fuel in the world, is worth some £20 billion, the commercial modernisation of BNFL—in terms of the fuels division, the potential for more capital and investment, and the improvements in production techniques that will enable BNFL to build on what is already there—is vital. It is vital if quotations such as the one that I read from the report are to become reality, and if the company's performance is to be improved.

The main message from the work force at Springfields is, "We are as good as anyone in the world at making nuclear fuel, and we want to be given the opportunity to show what we can do." For example, at present they do not make any of the pressurised water reactor fuel. It is a commodity in world terms, but they recognise that through quality comes safety, and that through a combination of quality, safety and excellence comes reduced cost—and an opportunity for them to compete again for parts of the nuclear fuel business to which they currently have no access. If that is to be turned to commercial advantage, the public-private partnership will be an extremely good way of ensuring that the commercial potential of the fuel division is properly realised.

The Chairman of the Committee used the word "openness", and I concur with him entirely. I think that the fuels division is, if anything, more open than the back-end business, by the very nature of the occupation; but I pay tribute to BNFL. Who would have thought a few years ago that tens of thousands, if not hundreds of thousands, of people would go every year to a location next to the most radioactive site in the United Kingdom to learn about the nuclear industry? BNFL has provided for just that with its visitor centre, and efforts are made at the Springfields plant to give the local community a greater understanding of the industry.

That is welcome—it is a way of demonstrating that nothing is happening in the industry of which people should be frightened. When the workers at Springfields are asked about their reaction to what happened at Sellafield, they make the powerful point that they live in local communities and are answerable to local people, and run a safe ship. They deeply regret what happened, but they have pride in their work. Springfields, in Lancashire, is one of the beacon locations for high quality, high-precision engineering.

At a time when our manufacturing industry is under pressure, the advent of a public-private partnership and the opportunity for more investment will prove a very good way to sustain an industry in which the United Kingdom has considerable expertise and demonstrates considerable excellence. The Committee Chairman rightly reminded us of that.

There is, however, a downside of openness. Sometimes BNFL says that it will not do something, for quality reasons. For example, the company—in true private-sector mode—told British Energy, its main customer for advanced gas-cooled reactor fuel—that it was not satisfied with a particular batch of fuel rods, and would withdraw it because it was worried about the weld. It was then vilified in the press because it had taken up an issue relating to safety and quality control.

Let me return to my meetings with members of the work force. They would like us to talk more positively about the company's good points, because most discussion has been about the difficult aspects. Here is a responsible company, which is prepared on occasion to say to its principal customer, "We are not sending you this product because we are not satisfied with it." That is good management. We should encourage it, and the attitudes in the work force that go with it.

I think that it would be helpful to the work force, in the context of the industry's future, for the Minister to address the strategic issues. Those workers asked me, "If we are to see the decline of the Magnox stations, what is the potential for investment in new techniques such as Magrox, a new reactor design such as the AP600, or the introduction in the United Kingdom of the pebble bed reactor system in which British Nuclear Fuels in South Africa has already taken a minority investment stake?"

On my recent visit, I found it interesting to observe the positive attempts that are being made to find ways of developing new designs at an affordable price, commensurate with benefits to the environment. I think that it would be helpful, while the Government own BNFL, to know how they feel about the subject, because I was asked more questions about it than about anything else. We can talk about new business arrangements and other procedures until the cows come home, but the people at Springfields want to know what is their future—and their future lies in the ability to make high-quality nuclear fuel for a long time to come.

The workers are also concerned about the impact on their business of the new electricity trading arrangements. Perhaps the Minister will say a word about that. Does she feel that the system does not properly recognise—as does the climate change levy—the benefits that can be gained from the nuclear industry? There was a feeling among the work force that coal had benefited once again, in terms of the structure of the electricity trading market, to the detriment of clean fuel technology.

Without doubt, the fuels division is ready for the competition that may result from the public-private partnership and the further introduction of private-sector techniques. However, as the Select Committee noted, the fuels division operates in a commercial world and it is right to place it in a commercial environment. That is the best way for it to learn how to react to competition from world companies such as Siemens, and others.

The future business strategy will also be influenced by the public-private partnership. For example, the fuels division will have the opportunity to enter manufacturing for eastern bloc companies with the so-called VVR system of fuel. Another matter to be resolved is the future of hexafluoride production. Such major commercial decisions must be taken in the context of a clear understanding of when the public-private partnership will come into being.

I welcome this debate on the nuclear industry, in the context of the public-private partnership proposal. I hope that the Minister, when she winds up the debate, will say more in response to the many important points raised by the hon. Member for Ochil and by the conclusions of the report from the Committee that he chairs.

My constituents who work at Springfields want to know about the future of their business. They are anxious to take on the burden of more competition. They know that they are good, and they are dedicated to quality. Above all, they are dedicated to safety, but they want this debate to give them a clear indication as to the future of their industry.

7.1 pm

Dr. Jack Cunningham (Copeland)

I, too, congratulate my hon. Friend the Member for Ochil (Mr. O'Neill) and the Select Committee of which he is Chairman on a thorough, positive and concise report that is a vindication of the role of Select Committees in our proceedings. I have always strongly supported that role.

I also congratulate my hon. Friend on his speech, in which he touched on all the key issues that are germane to the debate. In addition, I welcome my right hon. Friend the Minister for Energy and Competitiveness in Europe, and the Government's positive response to the report. Some questions remain unanswered, and I shall come to some of them in a moment.

The BNFL Sellafield site is in my constituency, and I have represented it in the House for 30 years. At present, it employs about 10,000 people directly. It is a huge, complex, advanced, high-technology industrial site, and I am delighted that my hon. Friend the Member for Workington (Mr. Campbell-Savours) is present, as many of his constituents work there.

The influence of BNFL on the economy of the north-west goes far beyond the boundaries of my constituency and of the whole of Cumbria. The north-west region of England benefits hugely from the engineering and other contracts in which BNFL is involved, and from the massive investment that goes into the company every year. The company makes a very considerable contribution to the economy as a whole, and not merely to west Cumbria or the north-west region of England. It is probably still the biggest earner of yen in the British economy.

My hon. Friend the Member for Carlisle (Mr. Martlew) pointed out that, although employment and investment at BNFL brings huge benefits for local people, there are some less positive factors. For example, there is not as much as 100 metres of the A595 from Carlisle to west Cumbria—the only trunk road to the Sellafield site—that is devoted to dual carriageway. That acts as a disincentive. The road is often horrendously congested, especially in my constituency. In addition, its lack of dual carriageway is presented as a reason why we cannot diversify the economy of west Cumbria more satisfactorily and successfully. That is something that we certainly need to do.

I have absolutely no difficulty with the proposals for a public-private partnership in which the Government would retain a 51 per cent. interest. In fact, I welcome it as a positive proposal. It has been seriously delayed by events surrounding the MOX demonstration facility, but getting the company into a position to take that option forward successfully should be a short to medium-term objective of the Government and BNFL.

I welcome, too, the fact that the company has a new chairman, chief executive and board. The Government's response to the Committee's report states: In its role as shareholder, the Government needs to ensure that it is properly informed about, and can support, the company's overall strategy. That has not always been true in the past of the Government's role in respect of BNFL. I am reassured by the deep commitment of my right hon. Friend the Minister to ensuring that the Government is properly informed about the company's strategy and can support it. As colleagues, she and I have had many meetings and discussions about the situation at Sellafield.

I have also had discussions with the nuclear installations inspectorate, which has published reports detailing the changes that it wants implemented at the Sellafield site, and other changes that it wants the BNFL management to implement. I have called before, and do so again, for the full and comprehensive implementation of all the recommendations from the nuclear installations inspectorate. Wide-ranging management restructuring has already been undertaken, at board level and at the Sellafield site, and I am delighted to say that some of the unsatisfactory elements at the site are being corrected.

Earlier, my hon. Friend the Member for Ochil mentioned cost cutting, which is fine if it improves a company's efficiency and productivity. However, the previous board indulged not in cost cutting but in corner cutting, and that has been very deleterious to the successful operation of the company and the site. Many people pointed out those errors at the time: I am delighted that they are being corrected and that the company is recruiting workers in west Cumbria to replace many of the people in supervisory positions who were wrongly removed. That is very good news.

So far, the nuclear installations inspectorate has been very positive about the response of BNFL to reports that were pretty searching, if not coruscating. However, a great deal remains to be done, not least when it comes to the better management of Sellafield's legacy. That legacy originated in the military programme at the site, and was reinforced by other activities more recently. It is good to know that the nuclear installations inspectorate is satisfied with the progress made so far.

Emphatic support has been expressed for BNFL and its future by my right hon. Friend the Minister for Energy and Competitiveness in Europe, and by my right hon. Friend the Prime Minister, who said earlier this year that he believed that BNFL should be left to get on with the job. It is a world leader in many aspects of what it does. 1 agree with what the right hon. Member for Fylde (Mr. Jack) said in respect of Springfields, but it is also true of much of the work carried out at Sellafield. There is massive support for the industry among the communities that my hon. Friend the Member for Workington and I represent in west Cumbria.

In particular, we welcome the support that the Select Committee gives to BNFL's future, and we are pleased that it highlights the need for the company to continue fuel reprocessing at Sellafield. Indeed, we would go further—we hope that there will be an early decision to commission fully the Sellafield MOX fuel plant. That point was also raised in the Select Committee report. Such a decision would, in turn, open up new opportunities for business for BNFL. The global market for nuclear business is increasing. Many other countries, including many of our European neighbours, already have much larger nuclear contributions to their energy generation than we do. There will be business opportunities not only in Europe but further afield, in Japan and elsewhere.

I am in no doubt, and never have been—I have been a lifelong supporter of civil nuclear power—that the world will need an increasing contribution if we are to have any hope of turning the dangerous tide of global warming. The reality is that we will not meet those challenges without a contribution from civil nuclear power.

The company faces other problems as well, not just those flowing from the falsification of quality control data. Let me say again how pleased I am that the Select Committee has put that properly in context. This was never an issue of safety. It was an issue of falsification, which was quite wrong—indeed, it was devastatingly damaging to the company and to the jobs of those who, sadly, got involved. However, it was not an issue of safety on the site. It went to the heart of the integrity of the company and its products and processes. That is what has been so damaging not only to trade opportunities but to the core finances of the company. We all know how poor its financial results have been.

I am quietly confident that the new management, together with the dedicated, skilled work force, will be able to turn the company around. They should certainly be given the support, encouragement and opportunity to do so, not just from the Select Committee but from the Government.

The targets set at Kyoto for climate change will be challenging enough in themselves with the present contribution of civil nuclear power to electricity generation. If we got rid of that contribution altogether, as some argue we should, the ability to meet those targets would disappear over the horizon. That seems evident, and it is not only my view but that of many others in this debate. I have never argued that we should generate all our electricity in nuclear power stations, and I shall not do so this evening, but as the evidence about the impact of global warming mounts, it is clear that civil nuclear power should have a role as one part of the solution—one option, one contribution—to a balanced energy policy.

The right hon. Member for Fylde pointed out that our modest contribution from civil nuclear power already obviates the production of about 79 to 80 million metric tonnes of carbon dioxide every year. In addition to that, it does not create oxides of nitrogen or sulphur, as does the burning of other fossil fuels. So using nuclear power offers quite a wide-ranging contribution to a better environment.

As I said, my views are not unique but are widely held. They are shared by other Governments and other countries and, in this country, by the Royal Society, the Royal Academy of Engineering and by many British trade unions. They are also shared by at least some European Commission officials who point out that if we are to make progress on global warming targets, about 85 new nuclear power stations will be needed within the European Union. James Lovelock, the creator of the Gaia theory on the environment, has spoken out in favour of a contribution from civil nuclear power to electricity generation. That is widely welcomed by myself and others.

I pay tribute to my constituents and those of my hon. Friend the Member for Workington who dedicate themselves to meeting the highest possible standards of safety and skill that can be achieved. The work force at Sellafield contains some of the leading world exponents of engineering, nuclear physics and environmental science. They are very proud of what they can achieve and of the opportunities that they present for improving the performance of the British economy as a whole. They deserve our thanks for that skill and dedication. They get a little tired of Members of Parliament calling for the closure of the plant willy nilly—not to mention a little angry, since that would mean that about 15,000 families in west Cumbria, and some more beyond, would be on the dole. Of course, it is a ridiculous assertion to make in the first place. Even if some aspects of the activity at Sellafield were to close, for whatever reason, other aspects would have to continue long into the future.

There were exchanges earlier about the storage of irradiated spent nuclear fuel. My hon. Friend the Member for Bury, North (Mr. Chaytor) asserted that that should have been considered. He seemed to be implying that it had not been considered. Well, it has been. It is not that BNFL has not considered dry storage—it has considered the issue and dismissed it, and rightly so. BNFL thinks that reprocessing is the best practical environmental option when it comes to dealing with spent nuclear fuel, and 1 agree. It is rather curious to argue that nuclear sites present a threat to people and the environment and then in the next breath to say that we should nevertheless have more and more nuclear sites around the country as more and more dry stores are built. The people who advocate that never answer the question of what follows dry storage. What happens then? We all know that we cannot dry-store Magnox fuel in any event. Yet nobody ever answers those questions.

Mr. Chaytor

Will my right hon. Friend give way?

Dr. Cunningham

Certainly, in a moment.

No one ever says what happens if we store fuel and 10, 15, 20, 40 or 50 years down the track, there are problems with it. That would lead to proliferation, at every nuclear power station in every part of the country, of potential problems that would almost certainly need to be resolved by moving the fuel, which would then be in a far less safe state than when it comes out of the reactors and can be safely transported to Sellafield, as it has been for decades without any significant accident of any kind involving people or the environment.

Mr. Chaytor

I am grateful to my right hon. Friend for giving way on this point. May I ask him to consider two issues? First, BNFL has always said that it was not possible to store Magnox fuel and that it had to be reprocessed. If that is the case, why is Magnox stored at Wylfa and not reprocessed? Secondly, I take the point that dry storage has a life cycle and that at some point we have to find a permanent solution. However, if we use the same argument, we have to find a permanent solution to the storage of plutonium. The difficulty at the moment is that, through reprocessing, we are creating mountains and mountains of plutonium—the most dangerous substance known to man—and we have no idea what to do with it. In defending reprocessing, my right hon. Friend must say something about plutonium.

Dr. Cunningham

There are two things wrong with what my hon. Friend says—at least two things. I am pleased that he concedes that dry storage is not in itself a permanent solution. However, his assertion that we are creating mountains and mountains of plutonium is simply an exaggeration. The plutonium that is created is all stored in my constituency, quite safely and securely, and presents no problem. It is not a threat to anyone. I can arrange for my hon. Friend to visit Sellafield and see for himself, if he has not already been. He talks about the problem of long-lived nuclear waste accruing from reprocessing. There is nothing like a visual aid when one is discussing these matters. I have one on my desk, and perhaps I should have brought it with me. If all the electricity that I consume in my life were generated from nuclear power, the resultant highly active waste would occupy a cylindrical shape about 2 inches in diameter and 2 inches high. That is the reality.

Of course the waste is a problem and we need to contain and deal with it. We have debated that matter in the past, and my hon. Friend the Member for Workington and I have differed on the best way forward, so I do not want to get into that argument again tonight.

Although I respect the right of my hon. Friend the Member for Bury, North to question and debate the issues, he does not serve anyone's cause by exaggerating the nature of the problem or overstating it. Some people try to scare the public—I do not accuse him of doing this—into believing that we cannot manage these matters: that we are not competent and that we do not have the skills, the scientific know-how and the engineering ability to deal with them. The truth is that we do. We have had nuclear power in this country for a long time. We have a lot of operating experience, and in BNFL we have some of the leading people in their fields in the world. That is one reason why the Americans are increasingly turning to BNFL to draw on its expertise and experience to decommission some of their military bases, such as Rocky Flats and Savannah River. We can make a huge contribution by helping the former Soviet republics to tackle the awful legacy and backlog of nuclear problems that they have. We can make a huge difference to the global environment if we have the courage and common sense to back our nuclear industry and give it the support that it needs.

I hope that the Government will give the go-ahead without too much further delay, as my hon. Friend the Member for Ochil said, to the Sellafield MOX plant, so that we can deal in another way with a problem that my hon. Friend the Member for Bury, North raised: what we should do with plutonium. We can burn it, as mixed oxide fuel, in nuclear reactors. That is what we can do to decrease the stockpile that my hon. Friend rightly says exists. My hon. Friend says that there are mountains of it; I say that there are not mountains, but there is some.

The great thing about nuclear fuel is that 97 per cent. of everything that comes out of a nuclear reactor can be recovered and recycled. Surely that obviates the necessity for mining uranium, which is one of the dirtiest aspects of the operation.

Mr. Chaytor

Plutonium can be burned in MOX fuel, but we have to ask why British Energy does not want to burn it. It is because it is not economic. The second question is why BNFL has only 7 per cent. of the contracts that it needs to justify the operation of the MOX plant. That is because not enough utilities in Japan want to burn MOX fuel. Those are serious questions on which I hope my right hon. Friend will comment.

Dr. Cunningham

A number of people have mentioned British Energy. It is a privatised company and it is in financial difficulties. We all know that. I take no pleasure in saying it, but it is the reality. British Energy has simply said, "Let's abrogate our contracts with BNFL and put them into difficulties too." That is not the way business works. BNFL has lawful, signed contracts and has every right to insist that it be paid for the work that it has been contracted to carry out.

The right hon. Member for Fylde commented on the fact that there are no new-build nuclear power stations. I have always supported that idea and I would love to see it happen. The fact is, however, that after the privatisation of the electricity generating industry, the privatised utilities do not want to build such power stations. I am not saying that they will never want to do so, but they do not want to do it now. In that regard, I am almost on the same ground as my hon. Friend the Member for Bury, North.

My hon. Friend is wrong to say that the Japanese utilities do not want to purchase MOX fuel and use it in their reactors. I think that he will be pleasantly surprised—or perhaps unpleasantly, given his standpoint on these issues. We can recover in the Japanese market. In my constituency in west Cumbria—at Sellafield—we have had a long, profitable and good association with Japanese industries. Japanese people are very welcome in the area. They come regularly to visit my constituency, mainly on business, but sometimes for pleasure, too, since it is one of the most beautiful parts of the world. I very much look forward to the prospect of BNFL at Sellafield doing more business with the Japanese utilities. That would be good news for my constituents and for the Cumberland and United Kingdom economies, and it would enable us to tackle the huge problems and threats that are presented to us by global warming.

I look forward to the Minister's replies not only to my questions but to those of my colleagues. I pay tribute to her for the way in which she has committed herself to work with BNFL to try to sort out the difficulties—they are considerable and I would not want to underestimate them. I give her my wholehearted support. I shall certainly work with her and other colleagues in the Government to ensure that we resolve those problems and that the company can go forward to further successes.

7.27 pm

Mr. Andrew Stunell (Hazel Grove)

I very much welcome the introduction by the hon. Member for Ochil (Mr. O'Neill) to the debate on the Select Committee report and the work that that Committee has done. This is a long-overdue exploration by the House of the state of the nuclear industry and of BNFL in particular.

I am a Member of Parliament from the north-west and I am extremely conscious of the high skill levels in the industry and the large number of jobs that are at stake. I am also conscious of the contribution that it makes to the welfare of that region and the country.

Unexpectedly, I found myself in a deal of agreement with the right hon. Member for Copeland (Dr. Cunningham), in particular with his remarks about the need to pursue vigorously the rectification of problems and to explore diversification. I may have been able to reassure the right hon. Gentleman, as we made the occasional eye contact, that it is certainly not my view that we could or should shut the door and walk away from BNFL or our civil nuclear power programme. Clearly, that programme should be allowed to continue as long as it is safe and economic, as it helps us to achieve our Kyoto targets and it benefits the nuclear industry as it stands. That may provide some reassurance for those working at BNFL's various sites.

In many respects, however, the nuclear industry has been its own worst enemy. It has been secretive and defensive for decade after decade. Often, it seems to have put safety second and cost third, and something rather hazy, called a "national objective" in first position, which seemed to override common sense on many occasions.

The industry has not been scrutinised by the House for many years. We have had a number of notable debates, which seem to come at approximately 10-year intervals. In those debates, my colleagues on the Liberal and Liberal Democrat Benches have marked out the cause of common sense and the need to challenge the unwritten and unstated assertions that have underpinned the industry. Those are all good reasons to welcome the debate; and to welcome both the Committee's report and the Government's response to it.

BNFL, as a significant part of this country's nuclear industry, has received major investment over several decades. It remains a major employer and maintains a major lead in nuclear and other important forms of technology; it is certainly a world leader in the manufacture, control and management of nuclear materials and fuel. The company has world-class expertise in decommissioning facilities and it is using that well.

Those are three major pluses, but there are also some major minuses. The company has experienced major environmental failures. The right hon. Member for Copeland may claim that a huge amount of waste would fit into a tumbler; that is fine, but a fundamental problem with all forms of nuclear material is that, intrinsically, they are highly traceable. An amount far smaller than could be contained in a tumbler could be detected on a beach in Norway 25 years after it was discharged into the sea at Sellafield, and traced back to its source with absolute certainty.

A fundamental of nuclear physics is the traceability of material because of radiation. However secretive people are and however long they resist acknowledging the problems when environmental failures occur, the nuclear signature—the fingerprints, the DNA sign—is always there. Those major environmental failures have dogged the nuclear industry throughout its life.

There are major economic failures too. At present, nuclear power is not an economic vehicle for investment for future civil power generation.

There have been major safety and security failures. Perhaps they are rarer in this country than they used to be; perhaps they are acknowledged more quickly. However, it is clear on some occasions that safety and security are compromised internationally.

The pluses and minuses of the nuclear industry have been well rehearsed and are strongly polarised. That often makes it difficult to hold a rational discussion—it is assumed that one must take an extreme point of view to take part. It is extremely encouraging that the Select Committee has produced such a measured, objective and careful report. The report explores the issues thoroughly and provides much helpful briefing; in the past, there has been much comment on the nuclear industry—some of it polemical and harsh. No doubt, hon. Members will bring that to bear on our debate.

We must realise, however, that BNFL—whatever else it has to do—must refocus its business. The company must repair its reputation, which has taken a severe knocking during the past 12 months—as all those who have spoken so far agree. The company must retire from reprocessing. The House must address those issues. The Government must inform us about them and, as a shareholder, they must take an active role in promoting them.

It is clear that the determination of the Government must be applied to the interests of BNFL in order for the company to refocus its business, repair its reputation and retire from reprocessing. Time and money will be needed.

The deferment of the implementation of the public-private partnership proposal was inevitable, given the problems experienced by the company. However, that deferment is also beneficial and desirable; even the new date referred to in the report will be too soon. If BNFL is to have a role in the future, it is important that the company understands the international context in which it operates. BNFL must refocus its business.

I depart strongly and sharply from the views of the right hon. Member for Copeland; it is not true that nuclear power is expanding worldwide. The number of nuclear reactors in commission in the world has been locked at about 500 for the past 15 years. New reactors are being built and commissioned, but the pattern is that they are in countries that either have authoritarian regimes or a perceived military or strategic need for nuclear power—or both.

Nuclear reactors are being decommissioned in every liberal democracy, and even in some countries that would not qualify as such; for example, Turkey and Taiwan have both recently decided not to proceed with nuclear power. There are complex reasons for growth in some areas and for the decision to restrict and decommission in others.

Dr. Ladyman

There is an alternative way to explain the differences in the commissioning and decommissioning of nuclear power stations. Are they not being commissioned in countries that do not have access to, or the money to buy, fossil fuels? They are being decommissioned in countries that have access to such fuels, where people are prepared to close their eyes to the fate of the world and to global warming.

Mr. Stunell

That is an interesting theory. However, it is always a mistake to ask a question to which one does not know the answer. The theory is not true. India offers an obvious example; nuclear power is being developed there, but it also has huge coal reserves. China is installing nuclear power; it too has large coal reserves and is actually expanding its generation of both fossil and nuclear fuels. Switzerland offers an example for my point about liberal democracies. That country has almost no coal reserves, but has decided to abandon its nuclear programme.

Various arguments can be brought to bear on the subject—I was just about to deploy one of them—but the shortage or the presence of fossil fuels is not a significant reason for nuclear development. A significant reason for a decision not to expand or develop a country's nuclear programme is popular opinion expressed through the ballot box. That is the major constraint—not science or resources or the inability to secure cash: public opinion provides the obstruction.

The UK should not engage in an accelerated decommissioning of our civil nuclear programme, for all the reasons that have been set out in the debate. However, BNFL's plans—I am not sure if that is the right word—or ideas for building two plutonium-fuelled reactors at Sellafield seem to be wholly unrealistic according to those reasons, quite apart from any others that might be adduced.

Dr. Jack Cunningham

The hon. Gentleman says that the use of nuclear power is not expanding. In 1999, according to BP Amoco's world energy review, its use expanded by 4 per cent. However, that is merely a difference of opinion between the hon. Gentleman and me.

The hon. Gentleman refers to the BNFL's plan to build two reactors at Sellafield in my constituency. I do not know where he obtained his information, but the company has no plan to build even one new nuclear power station at Sellafield—let alone two plutonium-fuelled ones. He is categorically wrong about that. The company has not even discussed potential plans to build such a station. Yesterday, I held a long discussion with the chief executive of BNFL about that myth. I have a letter from the director of the Sellafield site saying the same thing; there are no plans and there have been no discussions about plans. I hope that the hon. Gentleman will accept that his information is fundamentally wrong.

Mr. Stunell

I am happy to accept the right hon. Gentleman's assurance. My information was not meant to be an extraordinary revelation, because, as he rightly says, it is taken to be common currency. It has been put to me by several quarters, but not by BNFL. Therefore, I am happy to accept the assurances that I have been given. Perhaps the right hon. Gentleman's alacrity in wanting to state the facts clearly before the House only underlines my point that the chances of expanding the civil nuclear power programme in this country are bedevilled by the problem of persuading the public that that might be a good idea.

Mr. Chaytor

Does the hon. Gentleman agree that the trend away from nuclear energy in most liberal democracies is not just a question of public opposition to it—even though it would be interesting to learn how many Members would actively volunteer to have the next nuclear power station built in their constituency? The problem is not just public opposition, because liberal democracies now understand the costs of commissioning, decommissioning and dealing with waste. They have calculated that the cost is unsustainable over the full life cycle of a nuclear power station. In addition, those countries—the United States and Germany in particular—now understand the technology of renewable energy to a far greater degree than ever before and they are investing in hydrogen technologies and photovoltaics.

Mr. Stunell

I thank the hon. Gentleman for that intervention, because his thinking overlaps with mine to some extent.

I referred to liberal democracies and to the problems that are created for nuclear power by democracy. However, the "liberal" element—by that, I mean trade liberalisation—also creates a problem. As the right hon. Member for Copeland rightly pointed out, a future civil nuclear power programme in this country will be seriously handicapped, because the privatisation, deregulation and liberalisation of our electricity services mean that it is not a financially sound prospect to invest in civil nuclear power.

Were the right hon. Gentleman and Ito form a financial consortium and to go to the major banks to ask them to lend us a sum approaching £800 million to build a civil nuclear power station that would be on stream in 10 years' time if we were lucky, the banks would probably tell us that that would not be a sound proposition. If they had £800 million, they would prefer to give it to us to do something that would gain a return in a shorter time, in which the investment was more likely to be realised and, when that investment was realised, was likely to be profitable.

Mr. O'Neill

I missed part of the hon. Gentleman's speech, but I have been following it since I returned to the Chamber. What would his reaction be if the Government of the day—party non-specific—introduced a carbon tax on energy generation? Surely, the economics of that would be transparent overnight and, given the Liberals' enthusiasm for all things fiscal, it is likely that they would not choose to oppose a carbon tax. However, were they to support one, would they go the extra mile and face the consequences of choosing what might then be the cheapest fuel, namely nuclear power?

Mr. Stunell

Serendipity sometimes works remarkably well. I had reached precisely the point in my notes where I had written about the Ochil case. The economics of producing electricity, like the economics of producing anything else, can be tilted by fiscal and regulatory measures, and the Minister for Energy and Competitiveness in Europe might want to comment on that fact. I am sure that she will also remember that, when we served together on the proceedings of the Utilities Bill, I tabled amendments that would have introduced a carbon tax. Far from our opposing the suggestion, it is good Liberal Democrat policy and I have advocated it in the House.

Given that there will be state intervention—either fiscal or regulatory—to tilt the market in favour of one fuel or another, what will the cost of that be? I would be happy to supply the hon. Gentleman with a copy of my booklet on the topic. However, for an equivalent amount of investment by the state, one can obtain more electricity more cheaply, with less environmental impact and with much more certain support from the public by investing in renewables rather than in nuclear power.

You, Mr. Deputy Speaker, might be becoming impatient at the fact that we are exploring an issue that was not covered by the report, so I shall return to a previous point. BNFL's reputation as a company must be repaired. There is common ground in the House that, over 20, 30 or more years, the problems have followed a repeated cycle. Something happens, it is concealed and denied and that is followed by reluctant disclosure and then a promise of reform and change.

About six months before the most recent incident took place, I visited BNFL at the company's invitation in my role as the Liberal Democrats' spokesman on energy matters. I was given an extensive trip round the site and its facilities and much was explained to me. One of the key points that was made in the several presentations that I heard, including separate presentations from senior management and the trade unions, was that everything had changed and that the company now had a safety culture. I was told that the problems of the past had occurred under different managements and different regimes and before the problems had been understood. The company was absolutely focused on safety. However, I now know that, at almost exactly the time that I visited the company, people were filling in last year's numbers on the check sheets and creating the current problem.

Mr. David Rendel (Newbury)

Given that my hon. Friend is referring to BNFL's reputation, does he agree that it was an extraordinary Government decision earlier this year that the company should be put partly in charge of Britain's major nuclear arms centre at Aldermaston? Does he not agree that that is yet another good reason for putting off the privatisation of BNFL?

Mr. Stunell

I thank my hon. Friend for his intervention. It was a strange decision and it is a good reason for delaying the public-private partnership.

I now come to the company's business, how that might be related to what the PPP would deliver, and the risks of going down that route. It is time for the company to refocus its activities and to move on from reprocessing. As a constituency Member, as a former Minister and as a former Opposition spokesman, the right hon. Member for Copeland has been a long-term, dedicated and properly committed supporter of BNFL's work. Equally, Liberal Democrats have been sceptical of the steps that have been taken and the investment that has been made. We think that, at least to some extent, we are entitled to say, "We told you so".

THORP has always been an uneconomic project, but it has been justified in a three-legged way. First, part of it is justified because the fuel is coming through. Burning the fuel is then justified because the reprocessing is coming through and storage cannot take place because it would not be economic to stop the reprocessing. For nearly 40 years, we have had a succession of arguments that have been entirely self-reinforcing. We now have a large facility that is not working and is supplying materials that every one of its customers would desperately like not to have to buy but which they have been trapped into buying by contractual arrangements. One could say the same of Magnox business and MOX business—of course, the MOX demonstration facility has been shut down.

What should happen next? There must be ways of involving and using the work force and the technology that has been developed. There is a major worldwide decommissioning industry, not to mention decommissioning on the site in west Cumbria itself. There is a worldwide need for clean-up facilities. There is also a need for a plutonium immobilisation programme because that will solve the problem of the mountain—or the molehill, as the case may be—of plutonium that is being generated across the world.

Dr. Cunningham

Is not this a rather curious argument for the hon. Gentleman to advance? He is saying that BNFL should use its skills, expertise and know-how to get into the huge global market, but a few moments ago he agreed that it was not fit to operate at Aldermaston. Both arguments cannot be right.

Mr. Stunell

Both arguments can be right. My hon. Friend the Member for Newbury (Mr. Rendel) said that the existing company, with its current skills, is an unusual example of a contractor that one would appoint to run the services at a military installation. The issue of decommissioning relates not primarily to military complexes but to civilian complexes around the world. The right hon. Member for Copeland referred to the former Soviet Union, where leaking reactors in civil nuclear power and associated facilities is a serious issue.

I hope, as the right hon. Gentleman does, that the company will restore its reputation and sell its expertise. The only difference between us is that he thinks that it should restore its reputation and sell its expertise on the next generation of nuclear power around the world, whereas I think that it should restore its reputation and use its expertise on the more significant job of decommissioning, which is, in economic terms, the more realistic option. I do not believe that there is a market for long-term significant expansion in civil nuclear power worldwide, let alone in this country.

For all those reasons, I believe that the prospect of a PPP is—quite correctly—being pushed further and further away by events. Paragraph 19 of the Select Committee's report states: From the published summary of KPMG's work— the consultants who considered the whole issue— it is by no means self-evident that the injection of private sector capital through a PPP is the best way of injecting private sector discipliness, which are supposed to be the benefit that accrues from the proposed partnership. The report also hinted that KPMG had had its wings clipped so that its study pointed towards a PPP because that was what it was expected to do.

My main point about the merit of the PPP—or, in this case, its lack of merit—is that the merit ascribed to it in the report is that it would introduce private sector disciplines. It is hard, however, especially this month, to believe that those disciplines are the same as a better safety culture. Without taking too many cheap shots, one only has to say the word Rai1track, which did not go ahead with the train protection system, did not get its maintenance techniques right and cut back on its investments, to prove that.

Private sector disciplines are more associated with reducing manpower costs, which usually means fewer staff, cheaper staff and not investing in trained staff. It usually means reduced overheads, outsourcing and the use of cheap contractors. It has already been mentioned that there was an over-reliance on precisely those practices. Private sector disciplines usually mean a search for short-term returns and profits. In addition, the House might be concerned to learn that private sector disciplines mean that secrecy would be brought into play even more often because the information would be commercially sensitive.

For those reasons I have doubts about whether private sector disciplines are really what we need, never mind what we would get from such a partnership. There is a further consideration: diversification will need direction and investment that is probably not available from the private sector.

I conclude by asking the Minister some questions and issuing her some challenges. Will she undertake that, as and when the PPP goes ahead, there will be no loss of openness and transparency? That is not a high threshold to reach, given what we have now. Will she undertake to report back to the House and give the House an opportunity to decide on the issue of a PPP so that, unlike many previous decisions, this decision will not be smuggled through without proper parliamentary scrutiny? Will she assure us about her understanding of what private sector disciplines mean as applied to this case? Will she also say something about the Government's commitment to diversification, or not, for the future business of BNFL? Liberal Democrat Members believe that only that diversification will allow us to underpin and guarantee the technology base, the manpower and the skills that the company possesses.

7.57pm

Ms Helen Southworth (Warrington, South)

More than 2,000 people work at BNFL headquarters in Warrington, most of whom live locally. Unsurprisingly, the company's performance and prospects are very important in my constituency and the north-west. Even by excluding investment in external capital and joint ventures, disregarding BNFL's 15 per cent. stake in NNC, which employs 1,000 people at Knutsford, and excluding UrenCO₂ which BNFL jointly owns with Dutch and German partners, BNFL contributes £790 million a year to the north-west economy. It has an incredible impact on the supply chain in my region.

BNFL is extremely big business for Britain. Following the acquisition of Westinghouse and ABB nuclear business, about half of BNFL's £2 billion annual turnover now comes from overseas trade. Those overseas contracts are incredibly significant for the British taxpayer because they help to reduce liability costs. For example, THORP contributes more than a quarter of the Sellafield site overheads, at around £250 million per year. Without THORP' s overseas work, much of that cost would fall on the British taxpayer.

My right hon. Friend the Minister and the Chairman of the Select Committee, my hon. Friend the Member for Ochil (Mr. O'Neill), will not be surprised to discover that 1 am particularly interested in BNFL's impact on the region's science base. It is a knowledge-based company and a number of hon. Members referred to its world-leading skills and technologies that are vital for the United Kingdom. BNFL spent £96 million on research and development in the last financial year, which puts it in the top 20 UK companies that are involved in research and development investment.

BNFL is a major player in science in the north-west. It is encouraging universities there to build on BNFL technological development. Developments, such as chemical vapour deposition technology at Salford University, laser scabbing at Liverpool university and UMIST, auxetic materials technology at the Bolton Institute and radiation neutron selectors at Lancaster university have been mentioned, but are worth considering in more detail. On average, over the past five years, the company has sought patent protection for about 40 inventions a year. That adds up to about 240 individual patent applications pursued over the years. The novel technologies include microchemical engineering, auxetic materials, sensing technologies, new methods of separation, laser technology, biotechnologies and supercritical fluid separation.

The company has more than 100 relationships with 35 universities, most of which are in the United Kingdom, through which it directly invests more than £3 million each year. It has established a radiochemicals centre in partnership with Manchester university and a particle technology centre with Leeds university. It also supports Westlakes postgraduate centre in Cumbria, in the constituency of my right hon. Friend the Member for Copeland (Dr. Cunningham), where nuclear, non-nuclear, environmental, genetic and epidemiological research is undertaken. BNFL makes far more than a minor contribution to the north-west science base. It provides staff and other resources to several university courses and a number of the company's staff hold professorships at UK universities.

BNFL is a high-tech company that is driving Britain forward in the international knowledge-based economy. The prospect of the PPP gives us a timely opportunity rigorously to scrutinise the operations and performance of the company and to ensure best possible value for the taxpayer, within a framework and culture of safety for the public and the environment, while protecting crucial investment in what I and many of my right hon. and hon. Friends believe is the best and most important region in the country.

It is disconcerting that after 30 years in public ownership, it has taken the review of BNFL's status and structure that was decided on early in this Government's tenure, for the shareholders on behalf of the public—Ministers—fully to exercise their responsibilities. The evidence given to the Committee by my right hon. Friend the Minister for Energy and Competitiveness in Europe is extremely welcome, especially her commitment to "shine a light into dark corners" at BNFL. We want the company to succeed and the shareholder on behalf of the British taxpayer must ensure that that happens.

Also welcome is my right hon. Friend's commitment to pursue the achievement of safety and performance targets set for the company, and her undertaking not to take her eye off the ball in respect of BNFL's performance. I am happy to put those statements on the record, because they are extremely important aspects of the evidence taken by the Committee. The Government's reply to the Committee's recommendation that new stringent, but achievable, targets should be set, linked to the company's own objectives and with clear time scales, promises revision in the light of the year's performance and the corporate plan. Will my right hon. Friend state what progress has been made and when the revised targets will be published? We shall continue to take a close interest in the targets, because they can be used to demonstrate whether the company is making progress.

Like many right hon. and hon. Members, I consider the appointment of a new chairman and chief executive who have said that they are determined to make a real and lasting change in terms of reforming BNFL's safety and performance to be a significant indicator of improvement. I especially welcome the creation of a new post, director of operations at Sellafield, the holder of which will have responsibility for safety and operations throughout the whole site.

Sellafield has an unhappy distinction: according to their manifestos for elections to the Northern Ireland Assembly, the only policy on which the political parties within the Assembly agree is their demand for Sellafield to cease operations and to stop discharges into the Irish sea.

I have made it clear before to board members and I say now, on the record, that Sellafield has to clean up its act and, most important, it must be seen to do so. The new team promises that safety and cultural issues are being addressed. Its members say that they recognise that safety is not only in the equipment, but in the mind. They have to be sure that it is in the mind of every person working in and monitoring activities of the business, which includes people who are contracted to carry out work for the company. Public confidence, both national and international, depends on their performance in the coming months.

We all know that safety has huge environmental and commercial significance. It has to be like the lettering in Blackpool rock, running all the way through, so that wherever one cuts it the message is clear. BNFL is a global player in the international energy market and making sure that it is a safe and successful player is the responsibility of the owner—the Government.

The Select Committee investigation clearly stated that BNFL has been allowed to go its own way for far too long. For most of the past three decades, it has been more constrained by regulators and pressure groups than by supervision and scrutiny exercised by Ministers and Parliament. British Ministers have to take seriously their responsibility for a business that has great significance to the British taxpayer. 1 am pleased that my right hon. Friend the Minister for Energy and Competitiveness in Europe has put on the record her commitment to doing so.

One of the most significant opportunities that the PPP will bring to BNFL is swifter decision making on required investment. The company is of major economic importance to UK plc. Business lost by BNFL goes overseas, into a market worth more than £20 billion. The system that has been in operation for the past 30 years has proved to be over-long and cumbersome, and too often disconnected from the demands of business.

The company has reported that nearly half of the forty-odd key action points from the Health and Safety Executive Sellafield inspection report have been addressed—and so they should have been. There must be constant and systematic progress within the company in respect of safety management. Concerns about discharges from Sellafield and other BNFL sites, which the Environment Agency expressed to the Select Committee, are critical in every sense of the word. One of the regional general managers told the head of Magnox generation in November 1999 that the agency has gained an overall impression that the company is not demonstrating sufficient corporate ownership of the problem. BNFL has already begun to tackle the issue with sweeping changes throughout the company, but progress toward a PPP and the parliamentary and ministerial scrutiny that that generates provides an opportunity to ensure that a vigorous and independent regulatory regime can carry out its intended function to the satisfaction of customers and the general public. We have to ensure constant, regular scrutiny—not examinations once every 10 years. The business needs such scrutiny and the British taxpayer has a right to expect it.

It would be helpful if my right hon. Friend the Minister for Energy and Competitiveness in Europe gave an indication of progress on the decision from the Secretaries of State for the Environment, Transport and the Regions and for Health on the full commissioning of the main MOX plant at Sellafield. The PPP offers timely decision making, but the company cannot wait: the delay in full commissioning has been costing BNFL £1.5 million a month.

The Government reply stresses the need to take the decision in the light of the latest assessment of the market for MOX and its impact on the economic case for the plant. That is true, but in an ideal world it would be the responsibility of a more commercially attuned board to decide whether it was prudent to press ahead with the opening of the plant and to assess whether the low level of assured customers made the risk of opening worth while. However, we live in the real world: the issue is urgent and requires a decision to be made.

Safety management at Sellafield has been clarified by the appointment of a director of site operations, and a new team of senior independent safety compliance advisers is being appointed. The company is in the process of demonstrating that all 15 of the HSE's recommendations are being met, and Kansai has lifted its trade moratorium on BNFL. Ministers will retain rights and responsibilities as shareholders, at least for the next few years, and the Select Committee requires progress on a decision on MOX.

BNFL's importance to the north-west is not only economic. The company has a large presence in community initiatives in the region: last year, it put £5 million into local projects. I should like to thank the 120 BNFL graduate recruits who worked in Westy, the most deprived ward in my constituency, last month. They have made a real difference. Last Saturday, I visited the community centre at St. Margaret's and saw how they have transformed it. People coming to my constituency surgeries now have a wonderfully pleasant environment in which to wait to be heard.

BNFL makes a great deal of difference in the north-west in many ways. The clean-up across Westy has really improved things for the local community. BNFL is a local and national asset. It needs the active interest of the shareholder and a businesslike attitude from the Government. The taxpayer needs the Government to make timely and effective decisions about the future of BNFL. The company needs to perform excellently in addressing business and safety in the public interest. There should not merely be talk about safety, it should be demonstrated. Systems should be sufficiently transparent to enable people to believe that that is happening.

The debate allows me to refer to the significance of nuclear energy in achieving our Kyoto targets. The reality of weather changes from global warming have been brought home to hundreds of homes in Britain in the past few weeks. There have been headlines such as, "Chaos As Storms Return", "Storms Batter UK", "Sandbag Sales Rise Along With Water" and "Severe Flood Warnings For More Than 40 Rivers".

Wild weather in Britain causes misery to people and destruction to property. In the developing nations, thousands die and hundreds of thousands are made homeless. It is a catastrophe in human and economic terms. Hurricane Mitch, which ransacked Nicaragua and Honduras in 1998, caused more than 9,000 deaths. The two tropical cyclones in Mozambique at the beginning of the year left 1 million people homeless and more than 1 million cattle dead, the main form of the economy and the sustenance of people in that country.

The impact of global warming is not academic. It costs too high a price, and it is people who pay it. Thanks to the evidence of temperature records for 150 years, and information stretching over a millennium from ice caves, corals, tree rings and historical documents, there is no longer a serious argument among scientists about whether the earth is heating up. During the past 100 years, global temperatures have risen by more than half a degree. The seven warmest years on record were in the 1990s, and 1998 was the warmest year in the warmest decade in the warmest century of the millennium.

Higher temperatures mean that more water evaporates from the earth's surface. Water vapour is an energy source. It cranks up the heat engine that drives the weather. It leads to increasingly violent storms and gives greater energy to hurricanes and cyclones. Indeed, the news becomes worse. If rainstorms are more intense in one place, that means that there is less rain elsewhere. Terrible suffering is caused by drought in some parts of the world. Scientists are predicting that some areas will become steadily dryer as the world warms.

Nuclear power accounts for about 25 per cent. of Britain's electricity supply. In the past financial year, nuclear energy in the UK avoided the emission of about 79 million tonnes of carbon dioxide. That is equivalent to 50 per cent. of the carbon dioxide emitted by transport on the roads. The industry is critical in managing the balance between demand for energy and protection of the climate.

As a member of the Select Committee, one of the stranger things that I have seen this year is the Greens in Sweden managing a bizarre political coup. They closed a nuclear power station a decade earlier than planned. What is the most likely way in which they will replace that energy source? The answer is coal-fired production. We must have a realistic energy policy and an investment strategy for the future. Covering our eyes does not make global warming go away, and it is the poorest people on the planet who will pay the highest price.

8.13 pm

Mr. David Drew (Stroud)

First, I welcome you to the Chair, Madam Deputy Speaker. I am delighted to be able to contribute to this important debate. Various interests have been disclosed, and I should make it clear that I do not come from the north-west. I come from the glorious south-west. The old Magnox headquarters at Berkeley is in my constituency, and the British Energy plant at Barnwood, which is not a million miles away. Another interest is that I went to Denmark a couple of weeks ago, a trip which was paid for partly by the British Wind Energy Association. It may seem strange that I choose to put that on the record. I do so because the Opposition spokesman, the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), was also on the trip.

I welcome the Select Committee's report, which is balanced, incisive and thought-provoking. The Chairman of the Committee, my hon. Friend the Member for Ochil (Mr. O'Neill), put the case well. I am sorry that there was a slight disagreement about my view that the UK should have something in particular to offer to nuclear energy. I was not trying to play the nationalistic card. We have an international obligation that I want to see delivered.

I shall not speak for long because I know that other Labour Members wish to contribute to the debate. However, I wish to outline two over-arching themes that demonstrate why it is important that public-private partnership for BNFL is debated, and to consider that within the context of the wider nuclear industry.

One theme has been well rehearsed already, and that is global warming. That being so, I shall not talk about it at length. However, it is important. There is the integral link between the nuclear industry and renewables. I have always been a supporter of the nuclear industry, and that is not necessarily because I represent many people who work in it. I like to see myself also as a keen supporter of renewables. That is why I went to Denmark. I see my hon. Friend the Member for Bury, North (Mr. Chaytor) in his place, and I think that he and I share an interest of the Globe UK group in that we want to advance renewables. It is important that we try to understand the course that energy provision will take and the way in which the nuclear industry and renewables can be tied within it.

More important is the reason why I welcome the debate and welcome the Government's increasing commitment to the nuclear industry. It is necessary to retain the basic integrity of the industry. That involves the people who work in it, those who could do so and those who may choose to work in it in future. If we do not keep it buoyant and alive, even at a minimal level of provision, we must consider how decommissioning will take place in the UK and abroad.

It is essential that we attract the best, the brightest and the most committed people to the industry. I am saddened when the industry is subjected to easy digs. Its very fabric is attacked, including the people who work in it, who support it and are committed to it. That approach is reprehensible because we need these people. I take any opportunity to support them and to speak on their behalf. We are also talking about valuable sites and it is important to consider how we use them and develop them, and not only for nuclear purposes.

As my hon. Friend the Member for Warrington, South (Ms Southworth) said, we are talking about a massive industry that accounts for billions of pounds each year, and we underestimate that at our peril. It is a key player in the global provision of energy. Perhaps that has not been made clear so far. We can feel rather proud about the way in which we are working with the Americans through Westinghouse and the new ABB link-up. Within the industry, we have an opportunity to influence what is happening in the developed world and in the less well developed world.

The debate is about how we can take BNFL to PPP. My hon. Friend the Member for Ochil, the Chairman of the Select Committee, made it clear that PPP has been delayed, but not indefinitely. I am sure that the Minister will talk about timetables. We need to make that clear, if for no one else, for those who are linked to the company: the work force and other stakeholders, one of whom are the Government themselves.

There is another issue that has not really been brought out: the Government are not only the owner of the company, but the regulator of the industry. It is not crucial to this debate, but it is important that we again put on record that there are not many industries that have two regulators: in this case, the Health and Safety Executive and the nuclear installations inspectorate. There are occasions when tensions between the regulators can grow.

One of the things that the Minister might want to comment on is: if we move towards the PPP, what will be the regulatory outcome and how will the regulator work in relation to the new company?

Quite simply, the industry needs to be carefully regulated. We know already that a degree of argument has been advanced—I think that it is fair—about the need for greater transparency. We must build on that, but that can be done only if we have an effective relationship between the company, industry and regulator.

Increasingly, there is a debate about what way forward we take our energy policy. I feel strongly that one of the things that the Government could do—this was a failure of the previous Government—is to make clear what our energy policy is, and what the different component parts should be. Again, I pay tribute to the Trade and Industry Committee. In one of its earlier reports, it intimated how crucial it was that we took that debate forward and were clear about the different component parts.

We cannot have it every which way. We must be clear that, if we are going to move from the current component parts—approximately speaking, one third is nuclear, one third is fossil fuel via coal, and one third is fossil fuel via gas, with a small amount made up of renewables; thankfully a growing amount—and to look forward to the next 20 to 30 years, we must make up our minds. If we are not going to be able genuinely to get renewables into some acceptable framework, so that they are a genuine contributor of some size to energy provision, we will have a massive shortfall. The advantage of nuclear is that it gives head room, not just in this country, but in the wider world, on how to think our way through the way that we need to go.

I totally oppose the idea that gas alone can pick up the shortfall. There are projections that, if we do not get it right, gas will grow to potentially 60 per cent. of provision. For all sorts of reasons, it will not deal with the global warming problem or, more particularly, with the problem of our misuse of a valuable resource. We need to recognise how—if can move forward—nuclear has an important part to play, but we need to link that with renewables.

I would like to see the day—I have mentioned it to the company, so it is nothing new—when, alongside nuclear provision, we have wind turbines and perhaps some biomass not far away, linking that with solar energy, so that we can genuinely see that energy can be provided efficiently, effectively, safely and in an environmentally acceptable way. If we can do it in this country, it can happen elsewhere.

From the company, we are looking for a clear statement of its strategy. In its last report, it provided that. It has begun to reveal the ways in which it wishes to take things onward. As has been mentioned, it has a new chairman and a new chief executive. It is restructuring itself, so that it can move forward in such a way that it achieves not only the trust that needs to be built, but the efficiency that it needs to be able to prove. In that way, it can show that the industry has a future.

This is also about the way in which the Government have to respond. As I have said, the Government wear several different hats. They are not just the owner of BNFL, but BNFL's regulator and the employer of many thousands of people. That puts many obligations at their door. As I have intimated, they must also look at their international obligations.

We can be critical about some of the things that have happened in the nuclear industry, but one of the things that we have done that is pleasing—again it is not widely known—has been to help the Ukrainians, formerly the Soviet Union, through the disaster of Chernobyl. I know that the Government have made available considerable sums of money to help the industry there to work through its obvious difficulties.

We cannot pretend that, if we do not get our energy policy right, the rest of the world, particularly the less developed world, can do anything other than copy our mistakes. Therefore, it is important that we have—as we are having today—a full and fruitful debate and look at the ways in which we can genuinely move the debate forward, not just here, but internationally.

I want us to have high environmental standards. The whole point about the industry is that, although it can be criticised in many respects for some of the things that have gone wrong, anyone who goes on to a nuclear site can never fail to be impressed by the degree of safety, the security and the way in which it takes seriously its environmental obligations. We must recognise that we must meet the obligations under the Ospar—Oslo and Paris—convention. We must deal with the problem of technetium and so forth, but that can be done only if the industry is given time and space to move forward appropriately, rather than being continually pushed down and out.

That is the obligation that we have. It is an obligation that we should have to the work force and to the rest of the stakeholders. That is why it would be useful if the Government, even if they would not go as far as to say that they would consider new build, looked at the options—in the next 20 to 30 years, we must get an effective policy together in terms of energy provision. That is something that we can begin to do now. I am sure that the Minister will think hard about that and make an appropriate response.

8.27 pm

Mr. David Chaytor (Bury, North)

I welcome you, Madam Deputy Speaker, to your new appointment.

I found the Select Committee report extremely interesting. It reflects great credit on my hon. Friend the Member for Ochil (Mr. O'Neill) and his colleagues on the Committee. I pay tribute to him, to the way in which he introduced the debate, and to the measured way in which he balanced the various arguments that must be considered.

My first point is little to do with the BNFL PPP itself; it is to do with the process by which Parliament has considered the issue of BNFL and the whole nuclear industry over many years. I find it remarkable that, given the size of the industry, the number of people employed in it and the economic impact in many parts of the United Kingdom, particularly the north-west, where my constituency is located, there has been so little debate about and scrutiny of BNFL and the rest of the nuclear industry in the past 30 years.

I think that the rot set in—it must be said—in 1979. In the 1970s, under Governments of both parties—the 1970–74 Government and the two Labour Governments who followed—there was considerable debate about the industry, but once we got into the 1980s it was almost as if Government and Parliament abdicated their responsibility completely. That is important. It says something about the way in which we as a nation and as a Parliament deal with questions of science. I would draw analogies with the way in which we have dealt with BSE, and the way in which we are struggling to deal with GM technology, and perhaps even with stem cell research.

There are serious lessons for the Government—who are, I know, taking the matter seriously—for Parliament and for all of us as Members of the House about how we deal with scientific issues. We have tended to find them difficult and to run away from them. We have tended to assume that science was best dealt with by the scientists. That has been the root cause of many of the problems of public policy in recent years—certainly in the case of BSE—and of many of the difficulties that BNFL and the nuclear industry have experienced.

There is a wider issue relating to public policy. In Britain, our tendency is to exclude debate once a line has been agreed. If we look back at the history of BNFL, particularly the history of THORP and reprocessing, there is no question but that a consensus was established, arguably driven by the needs of the Ministry of Defence to generate stocks of plutonium in the earlier years of the cold war. The consensus was established by the figures that mattered—the scientific establishment, the MOD and the sponsored department of the Department of Trade and Industry—that THORP and reprocessing were the way forward.

Because that was an investment of such enormous size and scale, even though other voices were arguing against it, the juggernaut of the political, military and industrial establishment could not be stopped. If we look back now over the past 20 or 30 years, we will see that that was one of the most gigantic mistakes of public policy that any Parliament has made. If we were going back to the 1970s, would we go ahead with THORP and start again with reprocessing? I suspect not. There are serious lessons to be learned about the way that we, as a democracy, handle complicated issues of science.

Representing a constituency in the north-west, I know that this is an important and sensitive issue for many of my hon. Friends, particularly my right hon. Friend the Member for Copeland (Dr. Cunningham). I have the luxury of not having a nuclear establishment in my constituency, although I have companies that supply the nuclear industry. That luxury perhaps allows me to be a little more detached and dispassionate about some of the issues relating to BNFL than might otherwise be the case.

There is an enormous paradox about BNFL. As many of my hon. Friends have said, the company undoubtedly contains one of the largest concentrations of scientific expertise anywhere in the world. As a hugely enthusiastic supporter of British science and of the need continually to extend the boundaries of scientific research, I want that body of expertise to thrive. The proposal that we are considering, for a PPP with 51 per cent. of the shares remaining with the Government, is an effective way of achieving that, subject to certain conditions.

However, the industry has been incredibly dishonest, hugely damaging in environmental terms, and hugely profligate with public funds. We must recognise that billions and billions of pounds of taxpayers' money have gone into subsidising the nuclear industry over the years, and will continue to subsidise it throughout the next century. That is an extremely important point. It explains why BNFL has liabilities of £27 billion in its accounts.

There is, therefore, the paradox of that aspect of the industry, and the enormous technical expertise attached to it, which is vital to the future of this country, to the many employees in the north-west, and, to many countries throughout the world, because nuclear clean-up and decommissioning is a burning issue not only in the United Kingdom and parts of western Europe, but particularly in the United States and, most worryingly of all, in the former Soviet Union. British Nuclear Fuels has the potential to be a leading player in the programme of nuclear clean-up and decommissioning that is getting under way.

I do not believe—in this, I agree completely with the hon. Member for Hazel Grove (Mr. Stunell)—that the future of the company lies in reprocessing or in the international plutonium trade. The Select Committee report identified some of the assumptions on which the nuclear reprocessing industry was initially established: the need for plutonium because of the cold war—that may not have been specifically mentioned in the report—the expectation that the price of uranium would rise, and a scenario in which nuclear power would continue to expand, possibly because of concern about oil prices after 1973–74.

One by one, all those assumptions have been proved obsolete. In 2000, it is difficult to see the rationale for nuclear reprocessing. Why do we take spent nuclear fuel from power stations at the other end of the planet, ship it across the world, separate it out and store the plutonium in the north-west of England? I understand that that gives us some advantage in terms of foreign currency, and that it creates employment for many people in the north-west, especially in the constituency of my right hon. Friend the Member for Copeland, but we must ask ourselves what we are doing it for, particularly now that the consensus is that plutonium is not an asset, but waste.

The end of the cold war changed the value of plutonium at a stroke. That is why the Science and Technology Committee of the House of Lords last year recommended that much of the British plutonium stock should be declared waste, with only a small strategic reserve being kept.

We have spoken of mountains of plutonium and molehills of plutonium. Let us get the facts right. We currently have a stock of 60 tonnes of plutonium. By 2015, that stock will increase to almost 120 tonnes. It is all in the north-west of England, on the edge of the Lake district, and it is the biggest concentration anywhere on this planet of the most dangerous substance known to human beings.

Dr. Ladyman

I must tackle my hon. Friend on that point, which he has mentioned twice. There is absolutely no objective criterion according to which plutonium can be described in that way. I can give him the name of naturally occurring, growing substances called lectins that are even more toxic than plutonium. He exaggerates. If he wants constructive scientific debate, as he said earlier—and I fully agree with him about that—we must conduct it on the basis of the facts, not on the basis of exaggeration.

Mr. Chaytor

If plutonium is not dangerous, why have all the leading nations signed the nuclear non-proliferation treaty precisely to reduce stocks of plutonium and to eliminate the risk of the theft of plutonium and the obtaining of plutonium stockpiles by terrorist groups? Other substances may well be equally dangerous, but plutonium remains one of the most dangerous substances on the planet, which all the leading nations of the world, including the United Kingdom, are determined to ensure is stored safely to avoid proliferation. It is difficult to appeal to other countries to control their stocks of nuclear weapons while we generate more and more stockpiles of plutonium.

Reprocessing does not have a future. The Select Committee's report is right to recommend that the Government make their policy on reprocessing clear. It would have been better had the previous Government done so, in which case we might not have been in quite the mess that we are. On the other hand, it would make sense for the Government not to do that, and simply to allow market forces to take their course. If anything will bring the reprocessing industry to an end, it is the partial privatisation of BNFL.

Dr. Jack Cunningham

My hon. Friend talks as though successive British Governments had somehow been reckless. With regard to the nuclear non-proliferation treaty, all the safeguards in respect of that and Euratom are in place at Sellafield and have been for a long time. My hon. Friend also talks as though only Britain did reprocessing, and that if we stopped doing it at Sellafield, reprocessing would somehow go away. He should bear in mind the fact that the Japanese have just awarded 650 tonnes worth of reprocessing business to the French at Cap de la Hague.

Mr. Chaytor

I understand that perfectly well. I understand that only Britain, France and Japan, and possibly Russia, are interested in reprocessing, or see it as a valuable activity. It is significant that the United States withdrew from reprocessing some years ago. In Japan, the question of reprocessing is hugely problematical. The Japanese have been attempting to build their own reprocessing site for many years, and it will be some years before it is completed. Public opinion in Japan, as in western Europe, is steadily turning against the further expansion of nuclear power, and is certainly increasingly critical of the reprocessing industry and the international plutonium trade.

I do not deny the points that my right hon. Friend makes. I simply say that we must put the matter in its international context. At the moment, the United Kingdom and France are the only countries seriously committed to reprocessing. I suspect that market forces in the United Kingdom will gradually lead to the winding down of the reprocessing industry. Part of the evidence for that is the memo from British Energy in its submission to the Committee's inquiry, and the further briefing papers that British Energy distributed before the debate.

There has been some criticism of British Energy. I hold no brief for British Energy, but there has been some criticism to the effect that it must understand that it cannot abrogate contracts. In its defence, that is not what I understand it to be saying. It is saying that it wants to renegotiate contracts. There are perfectly respectable precedents for the renegotiation of contracts, particularly when there are mutual advantages.

That brings me back to the point made by my hon. Friend the Member for Ochil in reply to my intervention, when he said that the comparative costs of reprocessing and storage are matters of opinion, not evidence. I must disagree with him, because there is now a body of evidence, part of which was produced by Dr. MacKerron, who made an important submission to the Committee and whom my hon. Friend mentioned earlier in glowing terms.

Dr. MacKerron's work at Sussex university has demonstrated that the renegotiation of the reprocessing contracts as storage contracts would have a mutually beneficial result. There would be money for British Energy and for BNFL. In that sense, renegotiation of existing reprocessing contracts seems to be a win-win situation. It is a sign of our collective political and industrial inertia that we find it so difficult to accept criticism and to accept that we have made mistakes, so it is difficult to turn policy round, even when the facts are staring us in the face.

I understand the urgency with which hon. Members who support the Sellafield MOX plant want the Government to respond, and the interest in the matter. There have been a number of consultations and inquiries into the viability of the MOX plant. I understand that the Government's position is that approval for the MOX plant, which is the responsibility of the Deputy Prime Minister, will be granted purely according to the criterion of commercial viability. As of four weeks ago, the MOX plant was not commercially viable. BNFL had committed £300 million to building it in advance of obtaining authorisation to operate it.

That in itself raises interesting questions about the provisions of the Radioactive Substances Act 1993. It is astonishing, and I cannot think of a parallel in any other industry. What other industry would allow a company to build such a plant without approval to operate it? The sum of £300 million was committed, but, because of the errors at the MOX demonstration facility, and the falsification of fuel data, we are committed to spending another £100 million to bring fuel back from Japan.

Huge amounts of what are essentially public funds have been committed in advance of any evidence that the MOX plant will be commercially viable. I recollect that the inquiry by the PA Consulting Group argued that there was a commercial future for MOX only on the assumption that the £300 million initial capital investment would be regarded as sunk costs. That is crazy economics, and all too typical of the accounting procedures in British Nuclear Fuels for many years.

I understand the reasons for the company's strenuous efforts to secure the Japanese business, but it would be amazing if it got the 100 per cent. of contracts that it needs for commercial viability. Even if it succeeded, and announced in a few weeks that it had a full work load for MOX, that contracts had been signed and sealed and that the Government should therefore grant approval, there is an overwhelming argument against the international plutonium trade that MOX represents.

The issue should be debated more widely, and the public should be fully aware of the implications of the plutonium trade. We are shipping spent fuel from Japan to the United Kingdom, separating the uranium and the plutonium, mixing them together in ceramic pellets, and shipping it back halfway across the planet so that it can be burnt again in Japan. It then generates more spent fuel and more high-level waste, which is shipped back to the United Kingdom. That is the energy policy of the madhouse. In relation to the environment, or a rational energy policy, there is no argument for constructing such an elaborate, expensive, complicated and dangerous process simply to keep the nuclear industry going.

Let us consider the Oslo and Paris convention, which some hon. Members have already mentioned. Every member of the European Union in the Ospar convention—except, understandably, Britain and France—voted for the recent recommendation that reprocessing should be phased out. We should bear in mind the strength of feeling against reprocessing in all the other European countries. It is not surprising. Countries such as Iceland and Norway depend to a large extent on the purity and clarity of the waters of the North sea, because so much of their economy is based on fishing. When they find that, hundreds of miles north of Sellafield, technetium-99 is contaminating their fish stocks, it should not surprise us that they support an end to reprocessing. All the parties in Northern Ireland, and Ireland itself, also support that, because of the impact on their waters and fish stocks.

Let us consider the BNFL response to Ospar. When the Ospar conference at Sintra in Portugal reported its decision to aim for discharges that were close to zero by 2020, the management of BNFL issued a statement that that would be no problem. It said that it was possible to achieve that through abatement technology, and that it intended to meet the target. However, 1 understand that more recently, the BNFL position has changed, and that its submission to the current Environment Agency consultation on discharges takes a more hawkish line. It claims that it cannot possibly meet the Ospar requirements on discharges. I should be grateful if my right hon. Friend the Minister could comment on that; if she cannot do so now, perhaps she will say something later. The BNFL view of Ospar is important. Can the company comply, and what will it cost to do so? If it says that it cannot, where does that leave reprocessing?

Several hon. Members have argued that we should continue, or expand, the use of nuclear energy because of the Kyoto protocol and because burning uranium does not directly lead to CO₂ emissions. That is perfectly true, but the fact that there is no direct link does not mean that the nuclear industry is not responsible, through its other processes, for a considerable volume of CO₂ emissions. We need to view the situation in a wider context.

I am sceptical about the sudden conversion of BNFL and other parts of the nuclear industry to being clean and green. The industry's history shows that different justifications have been used in different decades to defend the industry's future. As each decade passed and the initial justification was undermined, it was quietly dropped and a new justification emerged. Arguing that nuclear power is needed to meet the Kyoto targets is the latest of those justifications.

Interestingly, when the conference of the parties to the Kyoto protocol meets next week and the week after in The Hague to discuss the precise ways in which the protocol will be implemented, the EU position in the negotiations on the clean development mechanism, which is supported by the UK Government, will clearly state that nuclear energy has no role whatever in that mechanism. I welcome that and hope that our and the EU negotiators will stick to it. It clearly demonstrates that the understanding throughout the EU is that although the nuclear industry provides fewer direct CO₂, emissions, it does not represent a solution to the problem of reducing carbon dioxide and other greenhouse gas emissions.

We briefly discussed the renewable nature of nuclear energy. Some people argue that nuclear energy is renewable, but they forget that its renewable dimension involves the fast breeder reactor. Research on the fast breeder reactor stopped in Britain in 1994 and in France shortly thereafter. Worldwide, only Japan continues with such research. Conceivably, the fast breeder reactor could, perhaps in many decades' time, produce a completely renewable form of nuclear energy.

When it is argued that renewables cannot take the place of nuclear energy, we should remember that nuclear energy currently provides 20 to 25 per cent. of our electricity. The Government have a target of getting 10 per cent. of electricity from renewables by 2010, by which time the closure of the Magnox stations will be reducing the total proportion of power generated by nuclear energy. The likely scenario in 2012 or 2013 is that there will be no reason why we cannot meet our renewables targets. In view of the enormous increase in renewables technology in recent years, I suspect that those targets will be easier to meet than was previously thought. By the early years of the next decade, the proportion of electricity generated by nuclear energy and that generated by renewables could be more or less the same.

We must accept that nuclear energy has a role to play, but that it is likely to be significantly smaller. The growth in energy use will unquestionably involve renewables, hydrogen, photovoltaics, biomass and the exploitation of wind and waves. To defend, or to justify an expansion of, the nuclear industry on the ground that renewables cannot replace the existing proportion of electricity generated by nuclear energy is simply not sustainable.

I support the Government's approach to BNFL. They deserve enormous credit for advancing the PPP plan, which is not revolutionary—it was envisaged when the company was established under the Atomic Energy Authority Act1. The 51–49 per cent. split meant that primary legislation was not necessary to establish such a partnership, which meant that the matter could be approached slightly more secretively than would otherwise have been the case. I hope that our Government will not do that, and that there will be ample opportunity to debate the details of the partial privatisation in the months ahead.

The key question is: what is going to be privatised? My concern is that when the PPP is constructed the taxpayer should not be left with all the liabilities. The temptation, especially if there is little interest in the City because of the enormous liabilities attaching to BNFL, will be to do some hiving off and separation. The taxpayer will pick up the liabilities and the new PPP company will gain all the assets and lucrative work for the future. In my view, and in the view of an increasing number people across a wide spectrum, the future for BNFL is not in reprocessing, the international plutonium trade or attempting to expand what is rapidly becoming obsolete technology, but in the massive task of nuclear clean-up and decommissioning across the world.

If I may come back to where I started, I believe that there will be a reduction in nuclear energy in the years ahead. I do not want nuclear technology to be shut down—far from it; keeping all scientific options open is far too important for that. Prolonging the life of 50-year-old nuclear reactors will not significantly increase our scientific knowledge. Nevertheless, I want to maintain those high level skills in Britain and I want British scientists to work on ways of finding more efficient and safer forms of nuclear power, if that is possible. I am sceptical about that, as there have been 50 years of nuclear power, and unlimited public funds have gone into it. Although I want to keep that option open, I recognise that the way forward for the company is to focus on clean-up and decommissioning work.

Finally, I shall comment briefly on one or two details in the report and ask for a response from my right hon. Friend the Minister. First, paragraph 45 on page xix states: In the course of our abbreviated inquiry, we have not sought to explore the relationship between BNFL and the Ministry of Defence…and its agencies. That is an enormous pity, as the original driving force for BNFL was the relationship with the Ministry of Defence, which is one of the most interesting and secretive areas of public life. Sooner or later, someone should cast a little light on that relationship. The MOD's imperative of generating a national plutonium stockpile, long after that was justified by the demands of the cold war—if it ever was—has led us into an enormous error of public policy through the focus on reprocessing.

Secondly, paragraph 47 on page 20 refers to the study by Touche Ross in 1993, which was supposed to be among the evidence that led to the approval of THORP. As I recollect, the Touche Ross study did not exist, and nobody has proved that it did. People working under the auspices of Touche Ross may have considered such matters, but there was no written report that could conceivably be described as a study. I should be grateful if my right hon. Friend would comment on that.

Paragraph 72 on page xxvi states: Reprocessing of Magnox fuel—to which it is now …generally accepted that there is no safe alternative. I do not think that that is true, as a number of scientists accept that it is possible to store Magnox fuel, although not indefinitely. I understand that Magnox fuel is stored on at least one of the nuclear sites in Britain—presumably safely.

I am interested in a contradiction in the report. Section C, on page 81, mentions the THORP order book and refers to over half of the second decade quantity contracted, whereas on page 103 it says that that amounts to a little over 40 per cent. I think that the "over half' reference is the figure from the company, and the "little over 40 per cent." figure is from Dr. MacKerron of Sussex university. It would be helpful if at some point—I am sure that my right hon. Friend will not be able to deal with it tonight—that contradiction between the exact quantity of fuel contracted could be resolved.

The report has done a service to the cause of open debate about energy policy in the United Kingdom. It has done a service to the company, because the secrecy in which it has operated for some years has done it and the industry no good. I echo the call by other hon. Members for greater transparency and openness in the future.

The report is a substantial and measured document. It forces the Government to announce their policy in various key areas. We cannot merely leave matters to drift, and I welcome the fact that the Government have now taken their shareholder responsibilities seriously. I hope that my right hon. Friend will give detailed responses to all the points that have been raised when she replies to the debate.

9.2 pm

Dr. Rudi Vis (Finchley and Golders Green)

I add my congratulations to you, Madam Deputy Speaker.

I enjoyed listening to the Chairman of the Select Committee on Trade and Industry, my hon. Friend the Member for Ochil (Mr. O'Neill). I am pleased to be called to speak in the debate because I have strong feelings about these issues, and because I have been vilified in many BNFL internal memorandums concerning the protracted fight about the parking of carriages containing spent nuclear fuel in Cricklewood in my constituency.

I shall make a few introductory comments to explain my views about the proposed public-private partnership. BNFL does four things: cleaning up and decommissioning, storage, research and nuclear reprocessing. The Committee's ninth report spells that out. It is good at cleaning up and decommissioning and research—it could be a world leader in that highly profitable area of its work. It could do better and more on storage. However, it is without doubt guilty of covering up errors in some of its work on nuclear reprocessing. It treats the public with contempt; it has compromised safety and security; it cheats and worse; it is secretive; and it suffers from a corporate arrogance that has no match in this country or abroad. It is also apparent that the nuclear installations inspectorate—the industry's regulatory body—is weak.

BNFL's public affairs department, which advises the board on how to pull the wool over the public's eyes—and, I believe, over the Government's eyes—has a budget of £18 million a year. I am sorry that my right hon. Friend the Member for Copeland (Dr. Cunningham) disagrees with me, but I believe that the jury is still out on any real improvements in management.

If I had to declare an interest, it would be that I am a lifelong member of the Campaign for Nuclear Disarmament, and I am proud of it. However, it may come as a surprise to learn that I wish an open and accountable BNFL the very best, but only on condition that it stops nuclear reprocessing at the earliest opportunity. In other words, if that condition were met, I would vote in favour of a public-private partnership for BNFL, but, if it were not, I would vote against it. I believe that, although it is the Government's responsibility to have total control over nuclear reprocessing, fundamentally—as we heard earlier in the debate—there is no rationale for nuclear reprocessing.

My entanglement with BNFL started in late summer 1998. I was informed through the grapevine—not directly—that BNFL would start parking spent nuclear waste in trains in sidings in Cricklewood. I was alarmed about that, as were those who lived there and would see the trains parked 30 yd from their homes. I therefore contacted BNFL at its stall at the Labour conference and I invited its representatives to come to a meeting in my constituency for discussions.

BNFL's representatives came to the meeting, on 13 October 1998. However, they came not to discuss the matter, but to railroad it through. I told them exactly what I thought of them, and I had the full support of a very angry meeting. Since then, thousands of residents have become involved in the matter, under the magnificent leadership of Mrs. Linda Hayes, a local resident who has worked tirelessly on the issue for many years. The anger was enhanced because clearly we had not been told the truth.

I shall explain how I believe that events developed, and, later, I shall ask my right hon. Friend the Minister some questions on some details. The English, Welsh and Scottish Freight Rail Company—EWS—was born of the chaos created by the Tories on privatising rail freight. EWS won the contract to transport spent nuclear waste via its compound in Willesden, in north-west London, to Sellafield. Some time later, BNFL set up a wholly owned subsidiary company—Direct Rail Services, or DRS—which, most surprisingly, won the contract to transport spent nuclear waste, beating EWS.

The EWS board must have smelt a rat, because it suggested to BNFL and to DRS that it was minded to throw DRS out of the controlled compound in Willesden. BNFL panicked and, in a hurry, found wholly unprotected, massively large railway sidings in Cricklewood. BNFL thought that it could just walk over the people in Cricklewood, and merely informed the wrong Member of Parliament—the hon. Member for Brent, East (Mr. Livingstone), who is now London's Mayor—of what it was going to do. To this day, the hon. Gentleman denies that he was informed by BNFL.

Residents in the area established Cricklewood Against Nuclear Trains—CANT. After feverish activity led by Mrs. Linda Hayes, and with exceptional support from many others, including me, BNFL panicked again and asked us if we would agree to discuss matters with an intermediary green group, the Environment Council. We agreed to discussions, but we were not going to give in. After a year and a half of meetings, in March 2000 BNFL withdrew its plans to park spent nuclear waste trains in Cricklewood. Cricklewood Against Nuclear Trains was renamed, Communities Against Nuclear Trains.

BNFL withdrew to the former EWS compound in Willesden—about which I shall ask a question in a moment. I do not know what price BNFL had to pay to EWS to persuade it to allow it back into the Willesden sidings. However, to my mind, no community should have to put up with the fear of such trains being parked in densely built-up urban housing areas. Those trains should not be allowed to pass through London, or, for that matter, through any urban area. Better still, we should get rid of nuclear reprocessing, which is totally unnecessary. BNFL would be a healthier and more profitable company if, over time, it were to abandon all reprocessing. There are now national negotiations to reach agreement on how to improve BNFL's environmental performance.

Both BNFL and CANT learned a lot, and, after the Cricklewood saga, we parted much wiser, friendlier and relieved. Therefore, it was with surprise that, a few months later, I received a whole wad of internal BNFL memorandums, which were probably leaked by a concerned BNFL employee. I was mentioned many times in those memorandums, and not in a very flattering way. It is now my particular pleasure to record the contents of only one of those bizarre memos in Hansard. It was sent by Mr. Rupert Wilcox-Baker, the public relations head of BNFL, to the then BNFL chairman, Sir John Guinness. It is dated 16 March 1999. It is, as I have said, only one of many: I have them all.

I shall have to make one change when I read out the memo. A Member of Parliament is mentioned by name, so I shall have to refer to him by his constituency.

The memo reads: Thank you for your memo dated 15 March concerning Rudi Vis MP. We have had a number of meetings with Rudi Vis and he has made it very clear that he is determined to get us out of Cricklewood and to stop us transporting spent fuel. The memo goes on to say that the "insight" of my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) into Vis's rationale is interesting but I suspect what he is seeing is a hangover from Vis's "old Labour" background. He is a long-time member of CND and has stated privately to us his abhorrence of all things nuclear. Regarding the suggestion that we try to get a senior local Jewish figure on side and then arrange a meeting, I have some doubts. However valid our arguments and those of the potential third party advocate I suspect Vis will find it hard to alter his position. All we might hope for is perhaps the development of a more respectful hostility! Whilst Rudi Vis is not himself Jewish his father helped Jewish families during the last war in Alkmaar, Holland, where Vis was born in 1941. Therefore, with that in mind and the make up of his constituency the Jewish influence will be strong. I would propose that we ensure that this section of the local community is fully represented in the dialogue process and I will check this point with the Environment Council which is managing the process. In this way, if we can satisfy the local community representatives, through the dialogue process, then this should have included all important sectors of that community. Will the Minister tell me why BNFL seems to need £18 million annually for its public affairs department, and whether the Government can call in internal memos from that department? Will she also tell me whether she can look into why Direct Rail Services, a wholly owned subsidiary of BNFL, won the contract over EWS—without having had any way of carrying out the work before—to transport spent nuclear waste? Finally, will she tell me what BNFL/DRS now pays to EWS following the return to Willesden?

I am not the only Member of Parliament whom BNFL has secretly tried to undermine. I wonder what the costs of such activities have been to BNFL, but I am not annoyed. I wish BNFL the very best—with the proviso that, if we had come to the end of the line in regard to nuclear processing, we would become a much safer country in a much safer world.

9.15 pm

Dr. Stephen Ladyman (South Thanet)

I, too, welcome you to the Chair, Madam Deputy Speaker.

Perhaps I should begin by declaring an interest. I have no constituency interest, but in my younger days I was a radiation biologist, and my PhD is in radiation in the environment; so I think I can claim some technical knowledge of some of the issues we are discussing.

My hon. Friends the Members for Bury, North (Mr. Chaytor) and for Finchley and Golders Green (Dr. Vis) were right to speak of the need for openness and debate, but we must have that debate on the basis of the facts, without exaggeration, and ensuring that everyone knows all the issues. I do not know about the shunting of trains in Cricklewood, but I can tell my hon. Friend the Member for Finchley and Golders Green that the moving of radioactive material through his constituency poses zero risk to any of his constituents. I can also tell him that radioactive materials have been transported for more than 16 million miles over the last few years without causing one serious life-threatening incident.

My hon. Friend the Member for Bury, North spoke of the threat posed by technetium in the North sea. An eminent Danish scientist has calculated that if a Danish fish-lover ate 50 kg of fish and 20 kg of shellfish each year that had been caught in the Danish seas, where the concentration of technetium is highest, he would experience an annual radiation dose of 0.14 millisieverts. One is exposed to 0.3 mSv of radiation by staying in a Danish house for one hour. That is the relative risk from technetium in the seas around Scandinavia.

Mr. Chaytor

Will my hon. Friend give way?

Dr. Ladyman

No, I am afraid that there is too little time.

My hon. Friend the Member for Bury, North said that plutonium was the most toxic chemical known, but that is simply not true. I can extract from kidney beans a compound that is more toxic than plutonium, but people will still be happy to eat kidney beans with their chilli con carne in the restaurant tonight.

There is no doubt that plutonium is toxic, but for people to be affected they need to be near it, or ingest it, or breathe it in. Alpha radiation has such a short range that it cannot even pierce skin. If we are to have the rational debate that this matter deserves, we need to place such facts in the public domain.

Before I go on to the main points in my speech, Madam Deputy Speaker, may I apologise to the House on behalf of my hon. Friend the Member for Dumfries (Mr. Brown)? Parliamentary business means that he cannot be here tonight, but his constituents at Chapelcross are very anxious that new nuclear capacity be built there, as the local Magnox station is licensed only to the end of the decade.

I want to focus on the environmental issues. My hon. Friend the Member for Bury, North said that there were no environmental justifications for nuclear power. I completely disagree, and a look at the royal commission report into climate change will show why. The report presented four ways in which we might address the problem of global climate change by 2050.

First, the report suggested that this country hold energy consumption at 1998 levels for 50 years. That would be a huge task, but it is the easiest of the four scenarios that the report postulates. Even so, it requires that nuclear power be used to generate some of the energy that would be needed in 2050.

Two of the other three scenarios would require a reduction in energy consumption of 36 per cent. from the 1998 level. No one has any idea of how that might be done. One of those two scenarios proposes that, if we did not use nuclear power to provide the needed energy, we would have to increase the use of renewables by a factor of 18—and no one has a clue about how to do that.

As an environmentalist, I can tell the House that such an increase in the use of renewables would have environmental consequences. Tidal barrages create huge environmental problems: silt settles and fish die when the energy is taken out of waves.

Mr. Malcolm Savidge (Aberdeen, North)

Will my hon. Friend give way?

Dr. Ladyman

I am afraid that there is too little time left.

The royal commission's fourth scenario does not require nuclear power, but it does call for a reduction in energy consumption of nearly 50 per cent., and even the commission said that it could not see any way to achieve that.

Anyone who has studied global warming has accepted that, on the balance of probabilities—and some scientists believe that the matter is beyond reasonable doubt—global warming is caused by greenhouse gases. We can meet our Kyoto reduction targets only by retaining a significant nuclear element in our energy production.

Mr. Savidge

Will my hon. Friend give way on that point?

Dr. Ladyman

No. I am sorry, but my hon. Friend the Member for Bury, North spoke for 34 minutes. That is why I must rush now.

The simple fact is that, if we want to tackle global warming, we have to have a nuclear element in our energy mix for the foreseeable future. That means that we need new nuclear build.

So far as the public-private partnership is concerned, we have in BNFL a world-leading team. I am the first to say that it has made some huge mistakes. I have been saying for the past two years that its watchword should be"openness". BNFL should tell us everything in future. If it tells us that it has made a mistake, that is bad; if Greenpeace or some other environmental group finds out and tells us, that is a disaster. BNFL has to be open in everything that it does. We have to get the private discipline into that organisation so that we have some real, solid, good management techniques to make sure that it is building for the future.

Not only do we need BNFL's expertise if we are to replace our nuclear capacity, but there is a huge task to be performed in the former Soviet republics. There is a bill to be picked up for cleaning the former Soviet countries of £1 billion. By that I mean a British billion, because when I was little I was told that a billion was a million million and then the Americans said that it was a thousand million. Well, I am talking about a million million pounds worth of clean-up to be done. We have only just scratched the surface. The only company in the entire world with the expertise to show us how to do that and to capitalise on it is BNFL.

For goodness' sake, let us start moving on building the public-private partnership. Let us accept that many of the errors discovered at BNFL were discovered because of the preparations for the PPP. Let us make sure that BNFL is equipped for the future, to make sure that we really can have the option of new nuclear capacity, because I believe that it is the only way to address global warming.

Global warming will not kill the environment of the world. It will happen because we leave environmental policy either to the ostriches, who would like to pretend that global warming is not caused by greenhouse gases, or to the witch doctors, who refuse to accept that science and technology is the way to think ourselves out of this problem.

Several hon

. Members rose—

Madam Deputy Speaker

I call Mr. Gibb.

9.22 pm

Mr. Nick Gibb (Bognor Regis and Littlehampton)

Thank you, Madam Deputy Speaker. I should like to add my welcome to you to the Chair.

As the hon. Member for Stroud (Mr. Drew) pointed out, he and I, and other members of the renewable energy group, went to Denmark recently to see wind energy at its best. We went at the expense of National Wind Power, a subsidiary of National Power. Denmark produces 13 per cent. of its power by wind. I also spent two days recently at Sellafield, where I received from BNFL the same briefing as the hon. Member for Hazel Grove (Mr. Stunell).

I congratulate the hon. Member for Ochil (Mr. O'Neill) and other members of the Trade and Industry Committee on an excellent report on BNFL. It was both balanced and well informed, and follows other reports by the Select Committee focusing on energy issues. The report published in June 1998, in particular, focused specifically on energy policy.

It is commendable that the Select Committee is taking energy policy seriously. These issues matter. They go to the root of our industrial competitiveness and to the heart of our environmental policy. That is in sharp contrast to the Government, whose energy policy is in complete disarray. Their only major pronouncement on policy was the 1998 energy White Paper. Everyone knows that that was simply an exercise in trying to justify—albeit unsuccessfully—the gas moratorium, a decision now reversed, which was motivated entirely by internal Labour party considerations. It has cost industry millions of pounds in higher electricity prices and will lead to millions of tonnes of additional CO₂ emissions.

Nuclear power today provides 30 per cent. of our electricity consumption. It does so without emitting CO₂ and is thus a highly environmentally friendly source of energy. As my right hon. Friend the Member for Fylde (Mr. Jack) and the right hon. Member for Copeland (Dr. Cunningham), whose constituency includes the Sellafield site, pointed out, nuclear energy saves 79 million tonnes of CO₂ being emitted into the atmosphere every year.

The concerns about nuclear energy are focused on safety and on what to do with nuclear waste. We share those concerns.

The Select Committee recognised in its earlier report on energy that it would be wrong to allow those concerns to lead to a dogmatic abandonment of nuclear power. As the hon. Member for South Thanet (Dr. Ladyman) explained well, if we are serious about our international commitments under Kyoto to reduce greenhouse gas emissions to a level 12.5 per cent. below 1990 levels by 2008–12and—this is the important point—to keep them at that level beyond 2012, it would be foolish to rule out nuclear energy.

Our goal must be to have a balanced and secure energy policy, which enables us to meet our carbon dioxide targets. At present, 30 per cent. of our electricity comes from nuclear sources, 30 per cent. from gas and 30 per cent. from coal. The switch from coal to gas in the past 10 years will enable us to achieve a 15 per cent. reduction in CO₂ emissions by the end of this year. From this year onwards however, the Government's figures show an increase in greenhouse gas emissions. From 2010, the increase will become steep.

The key factor, as other hon. Members have said, is the decommissioning of the old Magnox power stations in the next decade, as they account for about 8 per cent. of electricity production. Replacing that plant, even with gas, will still result in significantly higher carbon dioxide emissions.

Huge increases in the demand for electricity are also expected. Any notion that we can reduce our demand is nonsense. The increases will principally be caused by the internet. The Financial Times recently reported that demand for electricity in London alone would increase by 20 per cent. in the next four years, solely due to the building of 10 internet hotels there.

The draft climate change programme published by the Department of the Environment, Transport and the Regions showed that, far from our achieving a 12.5 per cent. or a 20 per cent. reduction, CO₂ levels would be at or just below 1990 levels by 2020, which would represent a significant increase compared with the present level.

Therefore, we have a significant problem to tackle—a problem that is made worse by the decision to delay for three years the building of new gas-fired plant. It is encouraging to note that in a written answer on 30 October the Government abandoned any pretence that the gas moratorium was linked to reforms in the electricity market, when they said that the stricter consent policy would be lifted this month, notwithstanding the fact that the new electricity trading arrangements would not be up and running until March next year.

We need a serious and considered energy policy from the Government—one that is balanced and secure, taking into account the decommissioning of the Magnox stations, recent hikes in the price of gas and new developments in clean coal technology such as integrated combined cycle gasification, and tackling the nuclear issue without any ideological baggage.

The core of the debate is that if we as a nation are serious about fulfilling our long-term international CO₂ obligations, we have a choice between pushing up the proportion of electricity generated from renewable sources to way beyond the Government's present targets, which would result in significantly higher electricity prices, and dealing with the nuclear issue.

Mr. Savidge

Members of the Environmental Audit Committee asked a number of leading experts from this country, such as the Round Table on Sustainable Development, and from Europe—for example the European environment committee—for their views on what is most environmentally friendly and economic. They put energy efficiency first, followed by renewables and fossil fuels in order of carbon burning, and they regarded the nuclear option as the worst from both points of view.

Mr. Gibb

That is their opinion and they are entitled to it. It is an opinion that we should hear in this debate, although it is not necessarily one that is shared by many people. It is not realistic to assume that we can make up for the 8 per cent. of electricity that will be lost as a result of the closure of the Magnox stations through energy efficiency—3 per cent. is the maximum that that would save—and demand for electricity is increasing hugely. The figures do not stack up.

The Government's policy—to the extent that they have a coherent policy at all—appears to be, by default, abandoning their Kyoto targets after 2012. That lack of coherence has infected the Department of the Environment, Transport and the Regions in its equivocation over the decision to approve the commissioning of the main Sellafield MOX plant. That facility has been ready for more than two years, but still no decision about full commissioning has been made.

Paragraph 70 of the Trade and Industry Committee report cites a report by the PA Consulting Group, noting: It warned that "any significant delay to the commissioning start date" could affect customer confidence and "place BNFL at a competitive disadvantage". The PA Consulting Group report was published in 1997. In November 2000, a decision has still not been made. The Select Committee report concluded: The delay in deciding on whether to permit full commissioning of the Mox plant has gone on long enough. So it has.

Delay, dither and incompetence are the hallmark of policy making by Ministers on this issue—never more so than in the mishandling of the whole MOX data falsification affair by the Minister for Energy and Competitiveness in Europe. The House is aware that the matter first arose in September last year—as the right hon. Member for Copeland pointed out—when it was discovered that data records of secondary safety checks on a batch of MOX fuel pellets for a Japanese client had been falsified. As a consequence, operations at the facility were suspended—rightly so.

Despite initial statements to the contrary, it was later discovered that the pellets had already been shipped to Japan by the time the data falsification became known. As the House is also aware, the pellets were in fact perfectly safe. The secondary safety check was just that—an additional check on the size of the pellets, requested by the client. As the hon. Member for Ochil pointed out, the issue was one of contract compliance and not one of safety.

The Minister for Energy and Competitiveness in Europe (Mrs. Helen Liddell)

It is important to make it clear to the House that the checks that were carried out were for quality assurance; safety has never been in question. Indeed, the nuclear installations inspectorate made that absolutely clear. It is most important that the hon. Gentleman gets his facts right; jobs are riding on this matter—as is the reputation of an important industry.

Mr. Gibb

It is very important that the right hon. Lady listen to what I am saying. My point was precisely that: it was not a safety issue—solely one of contract compliance. The right hon. Lady repeated what I said; I have no disagreement with her on that point.

However, the issue became one of how not to treat our most important business relationships. In February this year, just before the nuclear installations inspectorate report into that incident and into other management matters at Sellafield, a team of DTI officials visited Japan with a copy of the draft NII report to discuss the incident with the Japanese Government and the Japanese electricity industry. After those consultations, the British embassy in Tokyo—whose officials were closely involved with the negotiations—was firmly of the opinion that the MOX fuel that had been shipped out to Japan would have to be returned to Sellafield.

The advice from the embassy stated that we feel that we have no choice but to look very seriously at the option of agreeing to return the fuel. And agreeing sooner rather than later so as …to avoid serious long-term damage to our relations with Japan in the nuclear field. My understanding is that the advice from the embassy was strongly in favour of returning the fuel and warned Ministers of the consequence of not doing so.

Mrs. Liddell

Will the hon. Gentleman help the House to get to grips with how factual his position is? On which date was that advice given?

Mr. Gibb

The date of the advice was 14 February. It states: Grudging agreement to return of the fuel after half-hearted attempts to find alternatives could be very damaging to BNFL and more widely. The most effective—possibly the only—way of restoring confidence and securing business for BNFL in a reasonable time scale would be to agree soon to return of the fuel. Clear advice was given in February. Why did the Minister not accept that advice? Even without the advice, it was perfectly clear that the fuel would have to be returned. There were clear signals from the Japanese that they would not—indeed, could not—accept that the fuel remain in Japan.

Mrs. Liddell

Will the hon. Gentleman give way?

Mr. Gibb

I shall give way to the right hon. Lady in a minute, after I have asked a few questions. Why did she and her officials continue to refuse to allow BNFL to take back the fuel? Why did it take until July before the decision was changed and it was agreed that BNFL could take back the fuel? Will she reply to those questions?

Mrs. Liddell

I am grateful to the hon. Gentleman for allowing me to intervene because it gives me an excellent opportunity to set the record straight. The House will recall that the hon. Gentleman said that the alleged document to which he has referred was published on 14 February. I regret the fact that he has not done his homework, because on 10 February, Mrs. Anna Walker, the director-general of energy at the Department of Trade and Industry, issued a press release following her discussions on the return of the fuel with the Japanese authorities. The hon. Gentleman should have gathered from our debate that this is a serious issue, so he should get his facts right and do his homework. This is not rocket science; it is common sense.

Mr. Gibb

It is rocket science, and I have got my facts straight. The advice from the embassy is absolutely clear and it was not from Anna Walker. The British embassy in Tokyo told Anna Walker on 14 February that it was its firm advice that the MOX fuel should be returned to Sellafield from Japan at the earliest possible moment. BNFL was stopped from allowing the fuel to come back. It was only in response to pressure and in July this year that the fuel was allowed to come back. It was that grudging acceptance to take back the fuel in July that caused the damage to our relations with Japan.

Conservative Members understand the great importance to BNFL of its relationship with its Japanese customers and attach enormous importance to the UK's relationship with Japan. Japanese utilities have been an important factor in BNFL's commercial success, particularly the operations at Sellafield, which is the biggest employer in west Cumbria. BNFL is a world-class company with 23,000 highly skilled and competent employees worldwide with a proven track record in dealing with waste management and decommissioning. There are huge markets for those services here and overseas.

The right hon. Lady has done nothing to address my points other than to say that the DTI issued a press release on 10 February—so what? All that she has achieved so far is to misjudge totally the handling of the MOX falsification issue and thereby damage the relationship with BNFL's principal customer. Therefore, for the benefit of the House, will she tell us what will now happen to the returned MOX fuel from Japan?

The right hon. Lady and the Secretary of State have also managed to criticise the management of BNFL in public and in such a way that it has caused further damage to BNFL's reputation overseas, particularly in the United States, a crucial market for BNFL's decommissioning skills and experience. The Secretary of State's comment in The Independent on 17 February that there is a fundamental flaw in the management at BNFL has done incalculable damage to the company's reputation overseas.

Despite such language and the other statements by the right hon. Lady about root-and-branch reform of management, is she confident that all the managers and senior managers with direct responsibility for the data falsification issue have been moved and that the inherent problems that led to it happening in the first place have been dealt with? Indeed, my understanding is that one particular senior manager, with direct responsibility for this matter, was actually promoted, with the right hon. Lady's assent, to the board of BNFL. Is she confident that the Sellafield culture that many felt was at the root of the data falsification problem has changed? Those concerns echo the comment in paragraph 80 of the Select Committee report, which says that the extent of change in managerial arrangements is rather less than appears. The Government's track record on energy matters is lamentable. They have disastrously handled the Utilities Bill, which was incompetently drafted and badly taken through Parliament. That is an appalling policy basis that will burden our energy sector with millions of pounds of unnecessary costs, as will the disastrous climate change levy and the hefty duties on fuel. The Government have no coherent energy policy to deal with rising CO₂ levels, and now we have the crass incompetence of their handling of the problems facing BNFL. They could so easily have been sorted out—indeed, they still could.

If the right hon. Lady had understood the validity of the advice from the British embassy in Tokyo about taking the fuel back; had used more considered language in responding to the NII report; and had understood the management issues at Sellafield and tackled them as a senior Minister should, BNFL would undoubtedly have ridden the MOX storm by now and established new and lucrative contracts with the Japanese. As it is, the Japan Times reported on 16 October that 10 Japanese electricity companies had recently awarded a £500,000 reprocessing contract to COGEMA, BNFL's French competitor. That is the legacy of the right hon. Lady's stewardship.

These are serious matters and this has been a serious debate. I hope that the Minister will address the issues raised by all Members with that seriousness in mind.

9.40 pm

The Minister for Energy and Competitiveness in Europe (Mrs. Helen Liddell)

As this is the first time that I have participated in a debate before you in your present capacity, Mr. Speaker, may I say what a great pleasure it is to see you in the Chair? I will try very hard to avoid incurring your wrath for as long as possible.

I have often thought that the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) inhabits a parallel universe, and tonight we have had proof of that. He made spurious allegations that he punted in The Times this morning before the debate. He admitted that the date on the letter that he claims to have received is 14 February, although the issues were dealt with on 10 February. I thought that the hon. Gentleman was an accountant; perhaps I should ask him to do my tax returns.

Mr. Gibb

Will the right hon. Lady publish all the advice that she received from the embassy in February, to put the matter straight?

Mrs. Liddell

Some of the advice given to me is of a commercial nature.

Mr. Gibb

Ah.

Mrs. Liddell

Well, the hon. Gentleman has pointed out that other companies are involved. I am interested in securing the jobs of people at BNFL, and the hon. Gentleman should have taken into account the points made by the right hon. Member for Fylde (Mr. Jack) about the significance of those issues for continuing employment in an important industry. The hon. Gentleman has altogether missed the point of the debate and completely failed to take into account the serious issues that we are addressing.

I shall seek to respond to all the points that have been made, but contributions have been lengthy and time is limited, so I will write to hon. Members about points that I do not have time to tackle.

This has been an excellent opportunity to debate BNFL and the proposed public-private partnership. I have listened with great interest to the views that have been expressed. My hon. Friend the Member for Ochil (Mr. O'Neill) set the issues in context when he introduced the debate. It is important to note that openness was a recurrent theme of the debate for Labour and Liberal Democrat Members. The key to the future of British Nuclear Fuels in a PPP is the opportunity for openness that will be provided.

There is a wide range of views on nuclear power and reprocessing, but there is consensus in the recognition that BNFL is a major UK company, playing a unique role in some of the most challenging areas of the United Kingdom energy scene. Following the acquisition of Westinghouse and ABB, BNFL is now a global company operating in 15 countries and employing 23,000 people worldwide. BNFL's fuel manufacturing and service business, which includes fuel manufacturing sites in the United States, and the highly regarded Springfields site to which the right hon. Member for Fylde referred, has the expertise to supply fuel solutions to the world's nuclear reactors. I should point out that the right hon. Gentleman has apologised for his absence; I understand that he has another engagement.

The right hon. Gentleman and my hon. Friend the Member for Ochil spoke about the future of Sellafield and Springfields, as did my right hon. Friend the Member for Copeland (Dr. Cunningham). Few Members of Parliament have shown a greater commitment to a major employer in their constituency than my right hon. Friend has demonstrated for many years. His advice to me has been extremely important in enabling me to get to grips with the complexity of the issues, and I should like to put on record my gratitude to him.

The future of the sites depends on BNFL getting contracts with its customers. The critical issue was summed up by my hon. Friend the Member for Ochil: it is not about taking on some of the more spurious attacks on BNFL, but about restoring its business integrity. That has been the main aim of the Government and the companies throughout the challenges and difficulties that have beset BNFL. As my hon. Friend the Member for Warrington, South (Ms Southworth) pointed out, the company often operates at the very forefront of science, it is a major export earner, it makes a significant contribution to the United Kingdom economy and it is the dominant employer in west Cumbria. It is extremely important that we get our policies right.

The last year has been difficult and the outlook remains challenging—everyone acknowledges that. However, I commend the substantial efforts and real progress that have been made throughout the company at every level in recent months. Led by the company's new management team of Hugh Collum and Norman Askew, a wide range of actions has been taken to get the company back on track. When we got to grips with what had happened, we realised the significance of the MOX data falsification issue, so I commend the speed with which Hugh Collum, the new chairman, took charge and responded to my right hon. Friend the Secretary of State and me by making the necessary management changes. The report of the Select Committee on Trade and Industry is an important part of getting BNFL back where it belongs.

The public-private partnership is not a Treasury-driven means of raising finance. It is designed not to raise money, but to bring into the company private sector commercial disciplines to help it to arrive at sound commercial judgments about business opportunities and investment decisions, to introduce sound business practice and to end the cosy relationships to which my hon. Friend the Member for Ochil referred. The hon. Member for Hazel Grovey (Mr. Stunell) spoke about the lack of openness and transparency, and other hon. Members mentioned BNFL's accounts appearing impenetrable—now, they are far more transparent. It is for those reasons that we want to introduce the PPP.

I was asked why we had decided on a PPP, not full privatisation. One of the reasons is that we want to proceed with consensus, and a consensus surrounds the idea of a PPP—the need to introduce private sector disciplines is recognised and the proposal has been warmly welcomed by the company's management, its staff and their unions.

Mr. O'Neill

My right hon. Friend says that the exercise is not Treasury driven, but I imagine that it will involve the new partners bringing some money to the table—a sum that the Treasury will not have to underwrite through the public sector borrowing requirement. Therefore, there is an aspect of Treasury involvement, although we do not yet know how much money will be involved.

Mrs. Liddell

My hon. Friend's second point is the more significant. Now, the important thing is to get BNFL back on track as the significant global player that it should be. In view of BNFL's problems, let me emphasise that there will be no PPP before the second half of 2002, at the earliest. It is also important that no rigid timetable is connected with the PPP, because we have to ensure that we get the fundamentals right.

The report mentions the Government's role as an effective shareholder prior to the introduction of the PPP. My right hon. Friend the Secretary of State for Trade and Industry and when dealing with BNFL from day to day, are highly aware of the importance of that role. In the past, under the previous Administration of whom the hon. Member for Bognor Regis and Littlehampton is so proud, the policy was largely that of absentee landlordism. However, as my hon. Friend the Member for Ochil said, occasionally scientific principles were used to divert attention from some of the significant issues that there was a need to grasp because of the technical complexity.

I believe that it is critical that the Government be an intelligent shareholder, but it is not the task of the Government to run the business. Governments do not run businesses. That is the responsibility of the new management. However, we do not have carte blanche to operate as an absentee shareholder.

There have been references to British Energy and contracts between it and BNFL. These are commercial issues between the companies. If we insist that BNFL operates in a proper commercial manner, we cannot dash in and intervene. That is important.

Mr. Stunell

rose—

Mr. Chaytor

rose—

Mrs. Liddell

I shall take two more interventions. I must then make progress.

Mr. Stunell

The Minister has talked about a commercial decision. Would the move to a PPP be a commercial decision, or would the matter come back to the House?

Mrs. Liddell

The issue of a PPP is some way away, because there are many fundamentals to get right first.

It cannot be earlier than the second part of 2002. I can assure the hon. Gentleman that it is not necessary to have a crystal ball to know that we shall be discussing BNFL much more in the House between now and then. The House must be confident that BNFL has met important safety targets as well as its financial and other targets. I, or whoever is the Minister with responsibilities for energy, must be confident of that on behalf of the Government.

Mr. Chaytor

Does my right hon. Friend accept that when one party is the sole shareholder, it is difficult to argue that these are commercial issues with which we have no involvement? In any ordinary company, the sole shareholder would be involved in commercial decisions.

Mrs. Liddell

Part of the difficulty that we face is in encouraging BNFL now, and encouraging the two significant business lanes that lie ahead of it. We must encourage BNFL to operate as a commercial entity. That means that those who deal with BNFL must also be prepared to deal with those matters.

I believe that we have a much greater understanding of the company now as a consequence of the PPP process. I said before the Select Committee on Trade and Industry that I wanted to shine a light into every corner of the company. I am not confident that I have yet got into all the dust balls. However, a light is being shone into every part of the company. I have a regular schedule of meetings with the chairman and the chief executive. I have also met the new non-executive directors who are being appointed to the board, and there is on-going contact.

Our objective is to focus on the major strategic issues and to ensure that we work together on specific problems, such as the difficulties with the data-falsified fuel shipped to Takahama. We are a much better informed and much more intelligent shareholder.

As a shareholder, we want to see the new management team at BNFL succeed in getting the company back on course. We want BNFL to make the most of the scientific and engineering excellence within the business, but that must be allied to real commercial acumen. That is why I am so encouraged by the position that senior management takes on examining its strategy, thinking forward, asking questions and being realistic about the answers.

I have been asked about the strategic review. I imagine that it will be the spring of next year before the company will be in a position to come forward with it. Many difficult issues have to be addressed, not least of which is getting customers back.

I have also been asked about targets. The Government have a key role in encouraging target setting and target meeting. As we did last year, we are setting the company a range of targets in key areas of operation. Safety, health and environmental performance remain paramount. We want the company to achieve improved standards in all those areas. Norman Askew is monitoring the company's performance against four key measures: conventional safety, nuclear safety, environmental performance and dangerous occurrences. That will capture events that were not tracked under the former environmental, health and safety index. The company intends to publish an annual assessment of its performance on those issues in its environment, health and safety report. That is a big move forward and it is the sort of openness for which right hon. and hon. Members have been asking.

Those targets, which are being discussed with the regulatory authorities, will help the Government to track the improvements. They will complement, but not substitute for, normal regulatory processes. I assure the hon. Member for Hazel Grove that the introduction of a PPP will in no way change the relationship with the regulator. The regulator must continue to have a strong influence on performance in BNFL.

I say to the work force at BNFL that their skills and productivity have a crucial part to play in the company's future. BNFL and the trades unions representing the work force have agreed to work together to develop a competency framework to measure the performance of individuals and to identify and meet particular training needs. We will monitor that and check the implementation of the programme.

There was a realistic response from the trades unions when the MOX data falsification issue arose—a more realistic view of the situation than was displayed by the hon. Member for Bognor Regis and Littlehampton. Such involvement is critical. I want real improvements in relationships throughout the company. I believe that something has been created that can be built on to create a company that has the potential for excellence, but that company must be prepared to be realistic about some of the challenges that it faces.

Specific financial performance targets are in place. Part of the issue for BNFL is the effective management of liabilities, which is central to its business. Therefore, we have set it a target based on effective delivery of several significant decommissioning and waste management projects to time and to cost.

I could not agree more with the hon. Member for Hazel Grove about BNFL seeking the opportunity to move into different sectors. Several hon. Members have talked about new build, and that is why ABB and Westinghouse are so important. Their purchase gives the company access to the technology and expertise. However, the Government believe that it is for the generators to decide the nature of the future generating capacity. That will be based on whether that technology can meet the expected high safety and environmental standards at an economic cost. Once again, that comes back to the need to ensure that decisions are taken coherently and effectively.

Several hon. Members spoke about the Sellafield MOX plant. That matter will be resolved by the Deputy Prime Minister and the Secretary of State for Health. I cannot say when that decision will come, but I make a straightforward, common-sense point. Giving authority for the Sellafield MOX plant also requires knowing that there are customers.

BNFL is working hard to restore Japan's confidence in it—it is essential that that happens. I met the president of the Japanese utility, Tokyo Electric Power Company—TEPCO—last Thursday to discuss the issues. A very good co-operative relationship exists, but it is for BNFL and the utilities companies in Japan to come to contractual arrangements. I understand that BNFL and Kansai Electric are discussing the next steps, including practical arrangements, for return of the fuel. The issues involved are not easy to address and the Government will do what they can to assist.

We have had a long debate tonight about the corporate strategy and reprocessing. As a shareholder, the Government are committed to reprocessing, but there must be a proper analysis of the prospects for the company. The debate has been useful. There are many issues still to be resolved, but we have made a start, and one of the greatest achievements is the recognition on the part of the company that openness must be all.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.