HL Deb 22 January 2004 vol 657 cc373-430GC

(Third Day)

Thursday, 22 January 2004.

The Committee met at quarter past three of the clock.

[The Deputy Chairman of Committees (Lord Geddes) in the Chair.]

The Deputy Chairman of Committees (Lord Geddes)

I remind your Lordships that we are in Grand Committee. The procedure is exactly as if we were in Committee in the Chamber, with the exception that the House has agreed that there shall be no Divisions in Grand Committee. I also advise the Committee, as I am sure is well known, that should a Division be called in the Chamber, I shall adjourn the Committee for approximately 10 minutes in order to let those of your Lordships who wish to vote to do so.

There are one or two preliminaries: first, I am advised that the next meeting of this Grand Committee, which is next Tuesday, will almost certainly be held in Rooms 3A and 4B, and not in the Moses Room. Secondly, I am advised that there has been agreement between the usual channels of a variation of the groupings in that the group led by Amendment No.46A, which runs through to Amendment No.60B, will now be grouped with Amendment No.45A. I shall take that as slowly as Members wish. Amendment No.46 will be taken on its own. So we shall have one grouping comprising Amendments Nos.45A, 45B, 46A, 47A, et cetera. Once that has been dealt with, Amendment No.46 will stand on its own.

I understand t hat the noble Lord, Lord Whitty, has a statement to make.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)

I thought that it might be helpful to the Committee at the start of the debate if I were to return briefly to the issues raised by the noble Baroness, Lady Miller of Hendon, on Tuesday about parliamentary privilege.

The noble Baroness set out her concerns about an atmosphere of anxiety among operators in the nuclear industry that they might face adverse consequences from a government department if they were to provide information to noble Lords opposite. The noble Baroness, Lady Byford, and the noble Lord, Lord Jenkin, expressed similar concerns. These are serious matters. I was obviously concerned, and spoke to my colleagues in the Department of Trade and Industry. I spoke personally to Stephen Timms, and the record of Tuesday's debate has been drawn to the attention of the Secretary of State for Trade and Industry. the Secretary of State for Environment, Food and Rural Affairs and the Permanent Secretary at the DTI. I know that they, like me, will want to ensure that legitimate questions from any Member of this House about important matters which we are discussing in Committee or, indeed, matters relating to any other Bill, are handled professionally and in accordance with the normal practice of this House.

It is clearly important that parliamentarians have the necessary information to engage in constructive debate, not least about the creation of a public authority whose work will span many decades. That said, I think it important that we look into issues such as this when the evidence comes to light. My colleagues at the DTI are in the process of doing just that, and I shall report to the Committee once that process has concluded.

In the mean time, as I said on Tuesday, I shall he quite happy to meet noble Lords outside this Room if they wish to convey any more information to me about that matter, if it would be helpful.

Lord Jenkin of Roding

May I—

The Deputy Chairman of Committees

No, it is the custom of the House that there shall not be discussion on a statement, to the best of my knowledge. I defer to the Clerk for one moment. Not for the first time, I am corrected by the expertise of the Clerk. Lord Jen kin of Roding:

Lord Jenkin of Roding

I listened with gratitude to the noble Lord, Lord Whitty. I am not sure that I entirely caught his last few words; I have a hearing problem and, although I am switched on, I may have missed them. I would have thought that in the light of the gravity of the comments that were made last Thursday, which I am grateful that the noble Lord has recognised, it would be appropriate, in these circumstances, for both Secretaries of State—for Defra and for the DTI—to issue, within the department, a very clear directive. It may be that that is what the noble Lord, Lord Whitty, hinted would come.

The fact is that, over the past few years, a culture has formed. One hesitates to mention names or to suggest where it came from, but one has a suspicion that some of the press people at No.10 have been very ready to lean on departments. I do not know whether the noble Lord read the interview with Alistair Campbell in the Times. It is an immensely disturbing document when one bears in mind that Mr Campbell was in a position to give instructions to civil servants. However, there is no doubt that there has been a culture of what is sometimes called "control freakery", with an implied threat that this must not happen. If that is in fact the case—the noble Lord, Lord Whitty, has gone a long way to recognise that there may well he substance in that complaint—it requires a clear and unambiguous statement from the highest level: from the two departments involved.

Lord Whitty

I shall repeat what I said, which the noble Lord did not catch. I said that if Members of the Committee who raised these issues wanted to have further discussions with me outside the Committee, I would be happy to do so. I also said that both departments were looking into the matter. Clearly, it might be helpful if any further information could be conveyed without necessarily breaching confidentiality on all sides.

In the rest of his comments, the noble Lord took matters a little further than anyone did on Tuesday. We need to discover what we can about what has happened in this respect. There will be grey areas, but I was not proposing an examination into the entire method of government communication. Many of the issues raised by the noble Lord today, as distinct from those raised on Tuesday, take us well beyond what I have undertaken to look into. If the Committee leaves me to consider this particular example and related matters and if it is necessary for a direction from the Secretary of State, I shall so report to the Committee. No doubt we shall return to the matter before the Committee stage is concluded.

Baroness Miller of Hendon

I thank the Minister for immediately taking the matter back. In fact, he spoke to me outside the Committee and pointed out that he had already put some phone calls in process. We are grateful that the matter is being considered and that we shall gain some degree of satisfaction about what happened as soon as possible.

The Deputy Chairman of Committees

I hope that I can assume that it is the wish of Members of the Committee to proceed to the matter in hand before the Grand Committee. I would hate to do that a second time.

Debate on Clause 13, Amendment No.44 resumed.

Baroness O'Cathain

I must apologise for not being present when the amendment was addressed last Tuesday evening, but I had a immovable engagement which I had to attend. However, I have read the Second Reading and Grand Committee debates in the Official Report and I believe that the amendment was ably moved by my noble friend Lady Miller. The contribution of my noble friend Lord Jenkin was also excellent.

It will be no surprise to the Minister that my biggest concern about the Bill is that we seem to be closing down—or, at least, we are not actively opening up or continuing—the nuclear option. We know that this is not a true Energy Bill and that the title is a misnomer. It is a Bill on the Nuclear Decommissioning Authority and other matters which are not necessarily related to the nuclear industry but are related to energy.

The noble Lord is aware that at Second Reading practically everyone spoke of their concern regarding the security of long-term energy supplies in this country—I shall not even mention the word "nuclear"—and how that should be addressed. In order that we do not find ourselves in a completely hopeless position five, 10 or 15 years hence, it is imperative that we should keep options open which will guarantee—in so far as anyone can guarantee anything—the continuity of supply of power for electricity generation in this country.

I shall not go over Second Reading speeches or points that have been made before but in this instance, as we all know, one of the major problems is that of ensuring that we keep the know-how in this country and that we have a commitment to maintain whatever lead we have in nuclear industry expertise. In circumstances where there is very limited commitment, if any, to the future of the nuclear industry in this country, that can be done only by having sums spent on research and development and by maintaining our research and development base.

There will be all sorts of reasons why the Government will probably say, "We have considered this and have put aside X million pounds". I think there is £5 million over five years put aside. When one considers that we are talking about the future of this economy, in particular of industrial and domestic supplies of electricity, that is a derisory sum.

I have been battling in my head as to how I can get further commitment from the Government other than for them to say, "We have it in hand and £5 million is enough". Perhaps I may ask the Minister whether it is possible to have, between now and Report, a table showing how much money is spent on R&D in other sectors of industry which are supported by Government and whether that amounts to more or less than £5 million over five years. That figure may show that not very much is spent by Government on R&D. I do not think they are necessarily tremendously committed to long-term R&D either. That is not a criticism. I do not think that Administrations find themselves in a position of being able to justify large sums of money expended on R&D when there can be no immediate return. In some cases, in particular as regards R&D undertaken by pharmaceutical companies or on transport, there is no hope of a payback within 10 to 15 years. However, this is different; it concerns maintaining and increasing the skills level of the people in this country who are currently employed in the nuclear industry and those who could be employed in it. Indeed, we need our best graduates. I beg to move.

Lord Jenkin of Roding

I shall not repeat what I said earlier this week, which would be tedious in the extreme, but as a couple of days have elapsed, perhaps I may remind the Minister of the question I asked. The audience of the "Energy Choices" conference heard from the Minister's colleague, Mr Stephen Timms, that this research policy is under review. On Tuesday I asked the Minister, and shall ask him again today, whether he is able to tell us any more about that.

3.30 p.m.

Earl Attlee

During an earlier debate in Committee I asked the Minister how substantial was the expenditure on research. Unfortunately, inspiration was not coming fast enough, but I thought I would have an opportunity later on in Committee, and I was right. It now transpires that we are spending only £15 million on nuclear research. I can hardly believe that the sum is so meagre. Certainly, it will not excite academia. At Question Time today in the Chamber, we heard that we are spending £18 million on research into Gulf War syndrome. I shall check that in Hansard but I think that that is what I heard.

Last week my noble friend Lord Jenkin of Roding talked about foreign designs of nuclear reactors. What about the future of the UK heavy engineering industry in building high-technology, heavy engineering plant? Surely, if we are not careful we shall end up importing all that heavy engineering. Is that desirable?

Lord Ezra

While I would agree that it is desirable that the NDA should have a research and development obligation, the question that must be asked is: what would that research and development be about? In my opinion, it should be related to its function; namely, decommissioning. If we are talking about a wider research and development activity into keeping open the nuclear option, it is very desirable that that should be pursued, but in connection with other agencies. We should be clear about what this research and development responsibility is intended to be.

Lord Christopher

I have an interest to declare. I think most people in the room know what it is. It would he boring for me to keep repeating it, and what I have to say is not directly concerned with it.

I hope that the Government can find some way to accommodate the sense of this amendment. Certainly, what the noble Lord, Lord Ezra, said is eminently helpful. Whereas previously Britain was in the vanguard, there is a very real risk that we shall now follow. It will he extremely sad if the long-term future for world energy goes in that direction. Whether it lies in fusion or fission is neither here nor there if we are not maintaining our R&D.

Perhaps the amendment needs a little revision to ensure that there is some working concept with other organisations. But the fundamental issue is that Britain should not fall behind.

Lord Davies of Oldham

I am grateful to noble Lords for their tolerance in a debate that has been separated by several days. I am grateful to the noble Lord, Lord Jenkin, for reminding us of one of the salient points he made last Thursday. He will not be surprised to learn that I checked carefully the official record of our proceedings last time so that I should have fresh in mind not only what he said but also what the noble Baroness, Lady Miller, said in her introduction to the debate.

I apologise for the fact that we left insufficient time last Thursday for the matter. I was under the mistaken apprehension that we had covered a fair degree of general issues on research and that this debate might focus specifically on the NDA. I was proven woefully wrong in that respect. It is not the first time that my predictions have been somewhat inaccurate. Nevertheless, I want to reply to the whole of the debate now.

I begin by expressing my gratitude to the noble Lord, Lord Ezra. He is absolutely right. Are we discussing the wider issues of research with regard to "keeping the nuclear option open"—I think that is the phrase used in this context—or are we, as these amendments are directed at, looking at the issue of the NDA and its research function? In all fairness, we should take the amendments at face value where they appear in the Bill and address first the issue of what "research" means to the NDA because that is the purpose of the amendments, although there are wider dimensions to them.

We have never denied—and, indeed, we have been keen to stress to the contrary—that the research activity is an important and necessary function of the NDA. It cannot fulfil its principal functions without such research. Site licensees cannot carry out many of their activities on site without it. They need access to research output on safety and other issues that are relevant to the safe operation of their site.

The NDA needs access to research output to secure the benefits of increasingly innovative and cost-effective clean up, which is its main function. Accordingly, the NDA could be given responsibility for securing the operation of research facilities on designated sites, for carrying out research into matters relating to the decommissioning and clean-up of installations, sites and facilities and relating to its other functions. The power to make grants or loans to persons carrying out research in areas relevant to the NDA's functions is present in the Bill—significantly in Clauses 7 and 10(2).

The Bill clearly identifies the NDA's responsibilities in respect of research. The amendments relate to specific provisions for the NDA's annual plan and annual report to cover its research activities. The main purpose of the NDA's annual plan, which flows through to the relevant report, is to set out what the NDA has done and will be doing in respect of its principal functions—the decommissioning, clean-up and operation of its installations, sites and facilities—for the year in question. In effect, it is what the NDA will do in any year in order to deliver on its strategy. Progress on clean-up must be the focus of holding the NDA to account. That is its principal function.

By virtue of their inclusion in the NDA's strategy through Clause 12, the other functions and duties of the NDA, which include research, skills development, the promotion of competition, the adoption of good practice and socio-economic support to local communities, must also be covered in the annual plan. That plan sets out what the NDA is doing in any one year to give effect to its overall strategy. The strategy must include the operation of research-designated facilities under Clause 12(1).

The provisions relating to the NDA's annual plan and annual report already require it to cover research. Clause 13 requires the annual plan to cover all the functions of the NDA, which would include the research functions that I mentioned; likewise, Clause 14(3) states that the annual report must cover all activities set out in the annual plan.

The Government do not consider it appropriate or necessary to give any more emphasis to research in this context. The central focus of the NDA must be on the driving forward of the decommissioning and clean-up programme. All other functions are intended to support that primary purpose of the body. While they are an important part of the overall picture, they should not detract or distract from that prime responsibility.

Amendment No.62 seeks to give the NDA financial responsibility for research and development. It is not possible to give the NDA financial responsibility in this way. After all, the amendment sets no boundaries to the proposed responsibility for the NDA. Having said that, I want to assure Members of the Committee that the NDA's financial responsibility under Clause 21, which includes the operation of designated facilities, extends to covering research facilities. This results from the operation of research facilities being a designated responsibility under Clause 4 and from the fact that the definition of "designated facilities" includes the facilities for which the NDA has been given a responsibility.

Therefore, the Government do not believe that the amendments can be supported. However, as noble Lords made clear, the representation has focused rather more on the question of what role research can play in keeping the nuclear option open. I believe that everyone accepts that the NDA is not the appropriate body to lead on this matter. It has research functions, which I have defined, but I hope that we can agree that it is not the lead body.

On that basis, perhaps I may address what the Government are doing to provide the framework for taking forward work in this important area. Such a framework was earnestly sought by those who contributed to the debate. We have already heard something about the new opportunities for fission research—announced as part of the research councils—and a sustainable energy economy initiative that will provide up to £5 million over four years. Perhaps I may say to the noble Lord, Lord Jenkin, that my honourable friend in the other place is aware of the representations that have been made about this figure, and he is looking at it again. Of course, the figure is to be seen more in the context of pump-priming activities. It is not the sole support of research across the board in terms of the nuclear option, but it is an indication that the Government are concerned that certain sums should be specifically allocated to drive forward areas of research.

In developing the programme related to this, the research councils consulted broadly, including with bodies such as Defra, the DTI, the NII, the NNC, UKAEA, Rolls-Royce, the MoD, Nirex and BNFL. The scope covers three key things: maintenance of current generation capacity; fission as part of a sustainable energy economy, covering the socio-economic aspects of fission; and future fission power. This will add to existing research opportunities through the European Union's framework programme for research and development—FP6 EURATOM. Figures now available for the last nuclear fission and radiation protection programme show that the EC funded a total of 289 projects at a cost of 167.2 million euros. UK participations totalled 266, and these participants received 21.6 million euros of the available funding.

Significantly, EURATOM has recently joined the Generation IV International Forum and will incorporate this new research area into its current programme. The UK, along with eight other countries, joined the Generation IV International Forum in July 2001. The initiative foresaw a need for advanced nuclear energy systems in the future to help meet growing international demands for carbon-free energy. To meet public concerns, future systems, wherever deployed, must meet exceptionally high standards of safety, sustainability and proliferation assistance, while operating economically in open markets.

The aim is to develop a framework for collaborative research and development on Generation IV reactor systems that could be deployed from around 2030. UK participation in the charter is without commitment to building a Generation IV design in the UK, but we are playing our part in keeping that option open.

The framework for international research agreements under this initiative is currently being put in place and the extent of any UK financial commitment to research in this area has yet to be decided as part of the forthcoming Government spending round. It is important that nuclear fission research is seen in the context of wider energy research.

Nuclear fission is a mature technology that has been widely deployed worldwide. The chief scientific adviser's high-level group on energy research, development and demonstration is looking closely at energy research across the board in the run-up to the next Government spending round. It aims to achieve a co-ordinated approach to energy research across government and, of course, the research councils.

In addition, a new UK energy research centre will be established later this year. It will provide leadership and energy research and assist in giving coherence to the UK energy research agenda. It will have responsibility for establishing and co-ordinating a network across the broad spectrum of the energy research community of environmental engineering and economic and social scientists. It will act as the hub of the national energy research network which will link to other centres of excellence.

I turn to BNFL and its research capacity. We should not forget that BNFL's R&D currently employs around 1, 200 people and has an annual turnover of more than £100 million. Its primary role is to carry out essential R&D work to support BNFL's ongoing clean-up and manufacturing activities. It also performs important work for external customers and carries out broader strategic activities that are relevant to keeping open the nuclear option in the UK.

The implementation of the BNFL joint review addressed the future strategy for BNFL's research operation. As I have already indicated, BNFL's existing R&D facilities and a proportion of the associated personnel will remain with the NDA's site licensee companies. Their work will focus on the NDA's decommissioning and clean-up objectives. Beyond that, a new nuclear science and technology service will also be established, initially as a subsidiary of the parent company. It will provide services for the NDA, site licensee companies and third parties on a commercial basis. NSTS will also be a potential resource for research into broader strategic projects in the nuclear field. Those arrangements are consistent with the Government's policies on new build and keeping the nuclear option open.

Finally, notwithstanding my earlier comments, the NDA plays a supporting role in this area. In Clause 10(2) we have allowed the NDA to allow its research facilities to he used by others for any purpose—which could include NSTS, if it wanted to make use of the facilities. Indeed, we expect the NDA to make its research facilities available. In operating those facilities, the NDA has a duty to act in a manner that it considers most beneficial to the public.

Regarding the spare capacity of research facilities, which current usage indicates it has, the NDA will be expected to maximise revenue from third parties for the use of the facilities. That would also contribute to the preservation of the nuclear skills base that might be required for future decommissioning.

I turn finally—

Baroness O'Cathain

That is twice "finally".

Lord Davies of Oldham

This is an important debate of great depth.

The future of the nuclear industry, whether that includes new power generation or not, is not just a question of research capacity. We also need an effective skills base. To that end, in December 2002 we published a wide-ranging nuclear and radiological skills report, and we are supporting the development of a sector skills council to represent the needs of the nuclear industry. The Cogent Sector Skills Council, which currently represents the chemical manufacturing and oil and gas sectors, will be extended to cover the nuclear sector. It will be responsible for taking a strategic view of the nuclear sector to ensure that the education and training base can meet the current and future needs of nuclear employers. The development of Cogent is funded by the Sector Skills Development Agency and the industry.

I hope that that reassures noble Lords on the general issues of research capacity in the UK as far as keeping the nuclear option open is concerned, while at the same time indicating why I am asking for the amendments to be withdrawn. They place upon the NDA a skills responsibility which it ought not to have. We have in the Bill a clear provision for the NDA in relation to the research for which it needs to be responsible—on decommissioning and clean-up—and the amendments add nothing to the Bill. On that basis, I ask for the amendments to be withdrawn.

3.45 p.m.

Lord Maclennan of Rogart

I am extremely grateful to the Minister for that lengthy, careful and studied reply. I do not doubt that his words merit careful sentence-by-sentence consideration, which clearly will follow the debate. Bearing in mind the import of what my noble friend Lord Ezra said, and not wishing to prolong the debate unduly, I think it may be helpful for the Minister to indicate a little more why it will be necessary not to leave the matter entirely as he set it out but to give it careful scrutiny before deciding whether a new formulation might remove prevailing anxieties.

I hope that the Minister will agree that there is a certain artificiality in seeking to divide research into that which is purely connected with decommissioning and that connected with generation, fission and the potential commercial use of nuclear power. The artificiality flows from the fact that the study of decommissioning may well reveal how earlier different approaches to the technology could have made a substantial impact on the economies of the generating method that is being decommissioned.

I put it to the Minister that it is artificial to regard that as merely a by-product of decommissioning. It would help in future consideration if those possibilities were explicitly allowed for by the agency in its work. Too great a compartmentalisation of the research is neither practical, in scientific terms, nor potentially helpful in economic terms. The Minister has done much to remove my anxieties about the total exclusion of that kind of consideration from the work of the Nuclear Decommissioning Agency. However, because directions and strategies are geared, principally, to decommissioning, that is bound to dominate the thinking. If there is not specific, explicit encouragement to express the implications of that original probing work, then we could be worse off as a nation and lose the potential advantage that doing the decommissioning work gives us.

The nuclear cycle is a cycle—it is complete. It is artificial to break into and to split up in the way that the language of the Bill sometimes implies. It would not be a problem if we were still working in the sphere of the Atomic Energy Authority and the sites for which it has responsibility. Its responsibilities, both current and past, have gone far beyond that. It has always been recognised that the nuclear cycle is comprehensive—without a beginning, a middle or an end—and that the appropriateness of utilising some research for different purposes is absolutely necessary.

I hope that the Minister will not consider that those of us who have been arguing for allowing that continued research are simply attempting to twist the Government's words, provoke them or draw out of them a commitment on nuclear rebuild. Even those of us who think that that is almost inevitable have to admit that the arguments are not yet complete and that the nuclear decommissioning exercise is a very necessary part of our case, which we hope the Government are not precluding by bringing forward the Bill.

It has been a wide-ranging debate, but it was necessary because it is about such a central issue. Nothing that is said by Ministers in debates has closed down options that ought to be kept open—I am happy to have heard that. But I still do not believe that the last word has been said on the drafting to reflect the Minister's expressed intentions. I hope that, despite the duration of the debate, we will return to the matter at a later stage.

Earl Attlee

The Minister has been extremely helpful to the Committee. He referred to the nuclear skills report. Does that suggest whether the number of nuclear engineering courses offered at universities are increasing or decreasing?

Lord Davies of Oldham

The skills to which I referred related to the development of the skills body that includes nuclear research, which is one of the 23 sector skills councils being established which we hope to have in place by June this year. That covers a range of skills, many of which are below graduate level. I refer to points that were brought up on Second Reading—which have probably been advanced also in Committee, although I cannot remember where—about the necessity of sustaining skills in case the concept of keeping the nuclear option is realistic. Within that framework, I was seeking to talk about a range of skill that were not necessarily at undergraduate level. But we and the Chief Scientific Officer are looking at that. He and his group have the responsibility of looking at energy provision across the board. Inevitably he looks way beyond the skills sector work into the question of provision in higher education.

Lord Jenkin of Roding

I join other Committee Members who have expressed their appreciation to the Minister for a full reply to the case that had been made. Like the noble Lord, Lord Maclennan of Rogart, I will also want to study his words extremely carefully, because they have filled some of the gaps that were widely felt in the research community outside.

It is only three months since the All-Party Parliamentary Group on Nuclear Energy heard an impressive presentation from Dr Sue Ion, Director of Technology at BNFL. Although I was not able to be there, the noble Lords, Lord Christopher and Lord Lea of Crondall, and my noble friend Lady O'Cathain, were there to hear one of the most distinguished scientists in the field. At that meeting last October she made the point—I shall not quote more than a line or two as there is much here—as raised by the noble Lord, Lord Davies, about participation in wider international research. Speaking from her long experience, she was clear that: Unless a domestic programme of R&D is established, there will not be a seat at the table for the UK, at a time when international programmes worth hundreds of millions of pounds are under way". Coming from her, Her Majesty's Government should treat that very seriously. I am inclined to agree that that would not necessarily be a function of the N DA, although it would have an interest in the matter. It is very much the responsibility of the Government to see that we participate in that work—the Minister mentioned the Generation 4 reactor work, which has enormous potential some years ahead. Unless we have our own programme: there will not be a seat at the table for the UK". She has played her part in the restructuring of BNFL—sometimes called the "new BNFL"—in the joint review that was set up between BNFL and the Government. One of her points was: a new nuclear science and technology company will be formed as a subsidiary, and will provide research and technology services on a commercial basis". But of course it must be funded, which is where the anxiety lies. As I said last Tuesday, the saving of £5 million, which is mentioned as the joint work of the three research councils, is not regarded as a serious contribution.

Some years ago, I worked in the chemical industry. The firm for which I worked had a large and successful research establishment in Great Burgh in south London. It had a good many discoveries, but when I was a young man I asked the director for whom I worked, "What is the real value of the research department?". He said, "We wouldn't even know what to buy if we had not done our own research".

In the chemical industry, there are enormous licensing arrangements, costs and so forth, but unless you have your own capacity from your own people who are totally understanding and keep up-to-date, you are not in the field. Only a few years later it fell to me to put a value on that research department when that part of the company was sold to British Petroleum. I found that a most interesting exercise indeed—but that is by the way.

You cannot participate in joint working unless you are doing it yourself. Perhaps I might leave that message with the Minister.

4 p.m.

Baroness O'Cathain

I thank all my noble friends, the noble Lord, Lord Christopher, and in particular the noble Lord, Lord Ezra, for taking part in the debate. In order to get the tone of my reply right from the start, I can do no better than echo what was said by the noble Lord, Lord Maclennan of Rogart, who said that he listened to the Minister's statement with considerable appreciation.

The noble Lord, Lord Ezra, was right in saying that this is not the ideal place to put these amendments. But I was forced to do it in my own mind because I wondered where else I could do it. When could I do it? When will there be an energy Bill which will deal with the nuclear option? It is important to keep on—I have bad news for the Government—and I will keep hammering on about the point made by Dr Sue Ion; that we will lose our place at the table. That is crazy, because we are well known as being one of the world's drivers in technology advance.

In turning to the Minister's reply, I must first say that I wish I had shorthand. It is a skill that I could have done with. I am looking at my scribbles and will read the Official Report with great interest. The Minister began by saying that it was not appropriate, necessary or possible for the idea of keeping open the nuclear option to be part of the Bill. But the problem is the Government. The Government can do more or less what they like. They could introduce a section into the Bill by bringing forward an amendment to ensure that the nuclear option was left open.

There are ways—all right, I will agree that they are tangential —that the provision could be hooked on to the NDA, not least in the way the Minister conceded and in relation to comments on the nuclear option and clean-up. Indeed, the noble Lord, Lord Maclennan, made the point that by doing the clean up, we could for future nuclear build learn how to avoid some of the problems of creating waste.

However, I suggest that the Government take note of our concerns that the R&D clean-up plan deals only with R&D and that we are looking for more than that in this amendment.

The Secretary of State is looking at the future funding of research and development for nuclear, but he also said that organisations such as BNFL, NII, NNC, UK AEA and Nirex are looking at pump-priming. But what are the pump-priming schemes? Will they be long-term in their efficacy?

The Minister slightly blinded us with statistics about the 289 projects costing 167.2 million euros and the collaborative research going up to 2030. However, he said that the UK's commitment to all of this does not include research into new build but we are still keeping the option open. In the forthcoming spending round, that will be looked at again.

I want to make two points. The first relates to a point made by the noble Lord, Lord Maclennan, about the better ways of revealing how nuclear build should have been done in the first place and the fact that we should not lose that knowledge but build on it. The second point has not been mentioned. During the clean-up responsibilities, which will be conducted by the NDA, it could well be that a certain amount of research funding should be put into these particular sites so that the option of building another nuclear project on those sites should be investigated. After all, it is almost inevitable that we would have to go the nuclear way. In these areas, there is local acceptability of nuclear, which would overcome one of the objections to keep the nuclear option open.

I am delighted with the Minister's response. I will take a great deal of care in reading it and will probably come back at Report. In the mean time, I thank him and all noble Lords who have taken part. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No.45 not moved.]

The Deputy Chairman of Committees

Perhaps I may remind the Grand Committee that the groupings here have been amended from those printed. We now have Amendments Nos.45A, 45B, 46A, 47A, 58ZA, 58ZB, 58ZC, 58ZD, 60A and 60B.

Baroness Miller of Hendon moved Amendment No.45A:

Page 13, line 13, at end insert "which must include the expenditure that will be incurred during that year to secure compliance with the requirements of the Health and Safety Executive, the Environment Agency, the Scottish Environment Protection Agency and the Office of Civil Nuclear Security in relation to those installations, facilities and sites whether in respect of that or prior years"

The noble Baroness said: Fortunately, the Deputy Chairman of Committees read out the list of amendments in the group and I would like to take them together. They affect Clauses 13, 15, 16, 18 and Schedule 2.

I should mention to your Lordships that I had a further amendment on the same subject to Clause 12 at page 11, line 8, but I regret that due to the pressure that I and my colleagues are under in dealing with this large Bill, I was somewhat slow off the mark and missed it as Clause 12 had already been dealt with. So on the assumption—or perhaps I should say in the hope—-that the Minister will accept the principle behind this series of amendments, I shall bring the other one back at a later stage.

The introduction of a new player, the NDA, into the relationships which currently exist in the civil nuclear industry has the potential, if we are not careful, of blurring responsibilities by adding a new tier of direction for operators alongside the existing regulatory bodies. The series of amendments to which I am now speaking have the effect of making it clear that the NDA is not able to direct a site licensee to act in a manner inconsistent with regulatory requirements, particularly those that relate to health and safety. Within the NDA's framework, site licensees must have sufficient freedom to address current safety issues, as well as those that may emerge in the future.

In my Amendment No.29, which I moved on Tuesday, I proposed that the NDA should not be able to give directions which would cause a site operator to be in breach of its licences. I will, if I may, refer to the Minister's response later as it is relevant to these present amendments.

On the one hand, friction between the NDA and the regulators must be avoided at all costs. But on the other hand, site licensees should have sufficient freedom to address emerging safety issues or regulatory requirements without having to refer back to the NDA. The amendments provide that among the duties of the NDA is the duty to ensure that sites are decommissioned and cleaned up not only in accordance with its own policies but in accordance with the relevant regulator's requirements.

Presumably, the regulator's requirements will normally be consistent with the NDA's known policies. It is therefore necessary, as my amendments in effect provide, that the NDA must include in its annual plan its strategy for dealing with foreseeable future regulatory requirements. However, regulatory requirements are rarely black and white. They are sometimes, perhaps often, a matter of interpretation. Failure to address the issue of possible conflicting requirements between the NDA and the regulators could have a deterrent effect on potential contractors and their investors. Such a deterrent could detract from the Government's stated objective of opening up the decommissioning market.

There is, as the Minister told us last Tuesday, a draft memorandum of understanding between the NDA and regulators which was published with the draft Nuclear Sites and Radioactive Substances Bill. But site licensees are not parties to that memorandum of understanding. It is also of course not legally binding, but merely provides that the NDA and regulators will "retain relationships", whatever that means, which are "transparent to site licensees".

The memorandum of understanding recognises the potential for differences of view between the NDA and regulators, including the possibility that they will make differing and conflicting recommendations to the Secretary of State. That possibility could leave site operators caught in the middle of a dispute or, if that is too strong a word, a difference of opinion between the NDA and the regulators.

Earlier in my remarks, I referred to the response by the noble Lord, Lord Davies of Oldham, last Tuesday to my Amendment No.29. What he said then is to be found in col. GC278. In essence, he told your Lordships that, the regulatory requirements under a licence are statutory obligations that flow from the Nuclear Installations Act 1965". He went on to list other statutory requirements affecting nuclear sites and then gave what he called a clear assurance that: the NDA cannot require a person with control [of a site] to contravene such obligations". —[Official Report, 20/1/04; col. GC278.] This whole series of amendments relates to different statutory obligations from those listed by the Minister in his reply to Amendment No.20 where he lyrically referred to a "golden triangle" of the NDA, site licensees and contractors. Fine, but triangles, even golden ones, have three sides and, as I have said, the site operators are not party to the memorandum of understanding.

The Minister told us that the Government, have devoted considerable efforts to ensure that the regulators are comfortable with what we propose". —[Official Report, 20/1/04; col. GC279.] But there is a gap between what the NDA and the regulators may agree or understand and what the site operators may need or understand. These amendments are to clarify and simplify the framework for those undertaking decommissioning and clean-up work at NDA sites.

It is unacceptable that in doing so they could be faced with conflicting and inconsistent requirements, especially when those conflicting requirements may have the intention of ensuring safety as their number one priority. I beg to move.

4.15 p.m.

Lord Whitty

This is quite a range of amendments. The first two—Amendments Nos.45A and 45B—relate to the content of the NDA's annual plan. Amendment No.45A would require the NDA to include separate cost summaries for regulatory compliance at the installation of facilities it operates. Amendment No.45B would require the NDA to maintain year-on-year cumulative accounts of capital expenditure.

Both these amendments seek to impose rather more detailed information requirements on the NDA's plan and, to be frank, the content of the plan to be required is already fairly detailed. I am not entirely clear from what the noble Baroness said what the use or the relevance of prescribing that additional detail would be. As regards Amendment No.45A, much of what the NDA's site licensees will be doing will be driven by environmental security safety considerations. To identify what is determined or otherwise affected by the need to meet those requirements and what is part of the normal operational requirement would be very difficult. Any distinction between that and compliance with specific regulations would be quite artificial. Meeting regulatory requirements is an integral part of the overall safe and secure operation of nuclear installations. It is difficult to isolate what is required by regulation from natural prudence and the requirements on an industry such as this. That is not to say that we would leave out of the annual plan anything relating to the regulatory framework. Clearly, that would be part of the report on the activities of the NDA and its licensees. Specific cases where there had been regulatory intervention requiring a new project or a change in plan would undoubtedly warrant a specific mention. However, the basis should be what the NDA intends to be done at the sites rather than the identification and breakdown of all the costs and drivers for particular activity.

The amendment regarding cumulative accounts of capital expenditure would require capital expenditure to be separated from running costs. The government budgeting process treats those kinds of expenditure quite differently. The strategy is probably the right place to identify the overall costs of capital projects over a number of years while the annual plan should focus on what the NDA needs to spend in that year and has spent in the previous year and provide the basis for parliamentary approval to supply the estimate for the NDA. Many of these projects will span a large number of years. Therefore, it would be more appropriate to refer to their costs in the strategy rather than in the annual plan although there is nothing to preclude the NDA from giving more information than is statutorily required. Therefore, the kind of detail required by Amendments Nos.45A and 45B is over-prescriptive, as they say.

I turn to the amendments to which the noble Baroness devoted a large part of her speech which relate to the relationship between the NDA and the regulators. As we have said before—I repeat it in connection with these amendments—the regulatory framework that governs the operation of these sites is unchanged by the creation of the NDA and unchanged by the fact that the NDA will recognise licensees, particularly of its sites.

The regulators are regulating the same thing. The fact that there are different operators does not change that situation. The independence of the regulators is also unchanged by the Bill. The powers of the regulators are unchanged and the duties of the regulators are unchanged. I understand where the noble Baroness is coming from in the sense that she feels that the creation of the NDA as opposed to the regulators would create another conflict and the proverbial meat in the sandwich between decommissioning and clean-up and the regulation of those activities. Clearly in one sense that deserves some consideration but it is actually no different from the current position. By and large we are dealing with public bodies operating these sites which are controlled by a number of public regulators. I shall not repeat the basis of the regulators' powers but none of those powers is changed. The NDA cannot change them. The NDA cannot require one of its licensees to breach such obligations or to put such pressure on them that they feel forced to breach such obligations.

The noble Baroness said that conflict between the regulators and the NDA had to be resolved by the Secretary of State. However, there is no way that the Secretary of State can instruct the regulators not to carry out their function or allow the NDA or its licensees to act in contravention of the statutes. None of those things could happen under the existing arrangements between, say, the UKAEA and the regulators and nor could they happen under the Bill. The Bill contains a number of provisions that highlight regulatory considerations; for example, in Clause 9(1) the NDA is placed under a duty to have particular regard to the need to protect the environment, ensure safety and preserve security. In a sense, Clause 17(2)(b) places a negative duty on people with control of the installation, site or facility to ensure that in discharging their responsibilities to the NDA there is no contravention of other statutory obligations. That, of course, includes the regulatory ones. Neither the NDA or the Secretary of State can direct otherwise. That must be right. Clause 18(7) states that the NDA, cannot authorise a contravention … of any obligation to which the person with control … is subject by or under an enactment". There is no way in which the NDA will seek to contravene the regulatory requirements.

Having said that, effective working relationships are important. The NDA, its site licensees and contractors need to operate within what my noble friend called the "golden triangle". Arrangements and relationships need to be in place to enable everyone's point of view to be recognised. However, the regulators still have their existing powers. They are comfortable with what we propose in this respect. As the noble Baroness recognised, there will be a memorandum of understanding between them and the NDA to ensure effective co-operation. However, that does not alter, and is not itself, a statutory power or obligation. In that sense nothing is changed by this Bill. The regulators will work with the NDA and with the operators and licensees to produce work plans for the sites in the same way as they do with the UKAEA or BNFL.

Therefore, this raft of amendments is unnecessary. Some of the specifics of the amendments are unnecessary. For example, Amendment No.47A prevents Ministers from directing the NDA to modify its annual plan in respect of regulatory obligations. The Minister cannot do that. No Secretary of State can override the obligations of the NDA in a way that breaches the regulatory requirements.

Amendments Nos.58ZC and 58ZD are also unnecessary. I believe I have already said that Clause 17 prescribes that persons in control must comply with the regulatory requirements. There is no way in which the NDA can override that. Amendment No.60B simply repeats the standing legal position that if something is unlawful no person can be obliged to do it. That is a general legal position and does not need to be repeated explicitly in this context.

The idea that the creation of the NDA leads to more confusion and that contractors in particular will be caught in the middle of a row between the NDA and the regulators is simply not correct. It is misguided in the sense that the relationship remains as it was and the responsibilities remain as they were. They are simply delivered through the NDA and through its contracting of the site operators. We are confident that there is nothing in this Bill which would enable the NDA or the Secretary of State to dilute or thwart any of the regulatory requirements. Indeed, the intent of the Bill is quite the opposite, as is spelt out in the earlier clauses.

The anxiety that has been expressed is unnecessary. I can see why it has arisen in that we are creating a new public body in what already seems to be a crowded field and we are allowing it to contract. Nevertheless the essential relationships do not change. It would be a serious mistake for the Government to try to change them by statute or by direction. There is no way that we can ultimately so do. Although I accept everything that has been said about good working relationships and so on, the actual statutory responsibilities should remain as they are. I do not accept that we need these amendments.

Baroness Byford

Before my noble friend responds to the Minister, I hope that I may ask three very simple questions. Obviously we are establishing a new public body, which I quite understand. Secondly, the Minister said that some of my noble friend's suggestions should not be included in the annual plan but should be included in the strategy. That brings me to my third point. Are the regulations that are being applied to the NDA being transposed from existing wording or jurisdictions or have new areas been brought in because the NDA is a new body?

Lord Whitty

No, the powers of the regulator, the Environment Agency in Scotland and the Nuclear Inspectorate for the OCNS are unchanged by the creation of the NDA. The Bill is silent, as it were, on something that it does not intend to change. The NDA will be the body that is responsible for delivering compliance with those regulations. The NDA itself is not therefore specifically regulated; it is the operation on the site that is regulated. The site licensee, the site operator, will need to carry out the duties that are currently being carried out, for example, by the UKAEA on its sites. The NDA and, as I have said, by extension the Secretary of State cannot authorise or otherwise require the site licensee to contravene those regulatory requirements. There is no change in the regulatory requirements. It is just that someone else will be operating according to those regulatory requirements under the new structure.

Lord Jenkin of Roding

I hope that I may make one more point on this because I am not sure that the Minister has wholly grasped the additional complexity that the creation of the NDA will give rise to. I refer to a visit to Harwell last week. Perhaps I was stupid and had not appreciated this matter previously. The noble Lord just referred to the UKAEA. The UKAEA is currently a site operator, or whatever one calls it. It employs contractors to do the work. In one or two cases we saw the names of extremely well regarded international companies who are actually doing the work and employing the staff. The point was made to us that with the arrival of the NDA there will be a three-tier system. The NDA is given all these statutory responsibilities by the Bill. The NDA then appoints the site operator who may be UKAEA, BNFL or whoever, and those operators in turn do not necessarily employ the people—they employ contractors. Therefore, we are already starting with a three-tier system. We shall want to study carefully what the noble Lord has said but there is anxiety out there that difficulties will arise regarding the number of regulatory bodies mentioned in these amendments and in the speech of my noble friend Lady Miller coupled with the three-tier system. It will be at least three tiers because obviously some of the contractors will have sub-contractors. One needs to be absolutely clear what responsibility rests where. As with previous amendments that we have discussed, it may well be that these matters can be dealt with under the contract that the NDA awards to the site operator and the contracts which the site operator will then have with the engineering companies that will actually carry out the work. That may be the case. Clearly that matter will need to be addressed.

In addition to that the regulatory bodies will impinge at every level of the process. I am mildly apprehensive that we are somehow setting up a complex system without actually spelling out in the Bill how it is to be resolved. It may be capable of being resolved by contract, I do not know. However, I leave Ministers with the thought that the matter may be a little more complex than the noble Lord's reply suggested.

4.30 p.m.

Lord Ezra

The issue that has now been raised seems to me to be of prime importance because the nuclear industry is so complex and the decommissioning operations could be one of the most complex parts of it. It is very important that those who do the work—the contractors or subcontractors—are fully aware of the regulatory framework under which they operate. The Minister said that the measure would involve no change in those regulatory responsibilities. But that is not the way it might appear with the creation of the NDA. I have looked carefully at the amendments of the noble Baroness, Lady Miller of Hendon. It seems to me that although it might appear to the noble Lord that she is stating the obvious, nevertheless there are occasions when the obvious needs to be stated. The burden of many of her amendments is that the NDA should have regard to the regulatory functions of the other bodies. I can see no harm in this area of extreme importance and complexity in restating that. I hope that the Minister will have some regard to that.

Lord Maclennan of Rogart

Before the Minister replies—if he intends to reply—perhaps he will consider a particular case that may help to elucidate some of the principles which seem to me to have been raised in this connection. There is at present a problem of contamination with irradiated particles that are periodically found on the beach, but with increasing frequency, at a place called Sandside in Caithness near the Dounreay site. As I understand it, the body currently regulated by SEPA via the Nuclear Installations Inspectorate is UKAEA. If this Bill is enacted, that position would seem to me to be changed because the responsibility for this programme will have been transferred from the UKAEA to the new agency. The UKAEA will merely be acting as the contractor to the new agency. Is the contractor managing this work or the agency? Which is to be subject to the regulation by the NII and, in this case, SEPA? The answer may be very straightforward and simple, but it does not seem to me that this situation is precisely the same as it was before.

Lord Whitty

The NDA is obliged to take account of the role of the regulators but the regulators will be regulating what goes on on the site. So the site operators will be the main interface with the regulator. In the example of Dounreay, were the NDA to award the contract back to the UKAEA, the regulators would regulate how the UKAEA and its subcontractors operated on that site. As the noble Lord, Lord Jenkin, said, the contractual arrangements would in effect govern the carrying out of the responsibilities to the regulator. However, it is already the case—I am not sure whether this applies at Dounreay—on BNFL sites, for example, and at Harwell, as I think the noble Lord, Lord Jenkin, implied, that there are already subcontractors on site. Those subcontractors have to carry out the duties of the UKAEA or BNFL in respect of the operation of that site. So the site operator would be regulated. The NDA would have to take into account the responsibilities to the regulators and ensure that the site operator, in the terms of its contract, carried out its operations in conformity with those existing and continuing obligations of regulation. If the UKAEA was the site manager under an NDA licence at Dounreay, probably the management there would not notice a huge amount of difference in terms of its relationships with SEPA or the nuclear inspectorate.

Baroness Noakes

I did not intend to take part in the deliberations of the Committee at this stage but I do not feel that I can stay seated any longer. The Minister's words concerned me because I had thought that we were replacing the existing tier with the NDA. However, the Minister said that we would have the NDA, then we would have the UKAEA or BNFL and then we would have contractors. At the moment there are contractors but they are not subcontractors. They are contractors to BNFL or to the UKAEA as I understand it. If we are putting in another layer, we are adding a layer of complexity that does not currently exist in the way that clean up is managed, as I understand it. If that is the case, it seems to me that all the points raised by my noble friend in introducing her amendments are very pertinent and need to be addressed.

Lord Whitty

We are dealing here with the NDA's responsibility for the clean up and decommissioning of sites. At the moment, for example, on BNFL sites there are senior BNFL management and site managers. The NDA will take over the strategic responsibility for clean up and decommissioning operations for BNFL sites, UKAEA sites, sites relating to decommissioned power stations and other nuclear sites across the country that need cleaning up. The NDA would be the strategic authority for all of that and would have the opportunity to learn from each of those different sites which currently are under different management and different companies and have different histories and different contractual arrangements. The NDA could generalise that expertise and best practice and direct decommissioning and clean up in a strategic way. However, it is already the case—this applies within BNFL for example—that there will be a strategic management and a site management. The strategic management will now—so far as decommissioning and clean up are concerned—be run by the NDA. The site management or BNFL may well—and probably would, certainly in the first instance—be the site manager under an NDA licence. Any contracting out of that would be done on the same basis as it is now. Therefore, I do not think that the situation has become more complex in terms of actual operation. The people operating on site would have the same relationship with the regulators as is currently the case. They would be obliged to meet the same regulatory outcomes.

Baroness Byford

I am becoming more confused by the minute. Does the Minister's response mean that the people who are currently doing the work will be sacked and a new set-up established, or will they remain in place and be joined by yet more people from the NDA?

Lord Whitty

No, that is not the case. We discussed this matter during debate on an earlier part of the Bill. The NDA would decide who was the best manager of the site. If it decided in the cases of UKAEA sites that UKAEA should retain the responsibility for running those sites, I have no doubt that that would occur. Should the NDA decide that another contractor should have that responsibility, the issue of who is employed in that regard on that site would be a matter—as would the cost involved—for the new contractor. However, as we discussed earlier, in the early days those who were running BNFL and UKAEA sites would be likely to obtain the licence on those sites. It is a different situation when we are talking about the clean-up of other generation or other types of nuclear facility, where probably the previous operator would not be the company that took over the licensed site. It is possible that the UKAEA might take over one of those.

Lord Maclennan of Bogart

I hesitate to intervene again on the same point, but I do so only because I remain unclear. I hope that the position might become clearer by the end of the Bill's progress. I remain unclear as to who is subject to the regulations and what part the NDA has. I think the Minister said that the agency had to take account of the regulations, but he seemed to suggest that the regulatory process was between the site manager and the regulators and, in a sense, that the responsible body which we are bringing into being would be viewing such matters as res inter alia acta— not something that binds the authority. If true, it would be a very strange outcome if the body that is ultimately responsible is not the body chat is ultimately bound by the regulation—with all the consequences that flow or might flow from breaching the regulations, including damages, stopping activities on the site, liability for hazard to the public or anything else.

Is the Minister really saying that the NDA can step back and say, "It's nothing to do with us, it's all to do with our agents who are operating the site". The answer is, no doubt, clear and I am sorry if I am slow on the uptake, but I should be grateful for the Minister's reassurance.

Lord Whitty

The NDA's contract system will obviously require the site operators to conform to the regulations. Any site operator that is not doing so will not be complying with the contract. As for anywhere else, the regulation is enforced on those who are running the site. The relationship of the Environment Agency's inspectors and health and safety inspect ors is with those who are running sites, whether it is a nuclear site or anything else. In this case the site operators would have the contractual responsibility as well to the NDA to meet the requirements of the regulation. But the regulators would deal with the people running the site.

Baroness Noakes

Earlier the Minister talked about the NDA having strategic responsibility. I cannot see that in the Bill. It seems to me that the responsibilities of the NDA are described not in strategic terms but in operational terms. We are talking about a body with operational responsibility, because we are adding a layer of that in some way, thereby making the whole operation much more complex—a point that was made earlier.

Lord Whitty

The NDA is responsible for operations. But it is responsible for securing the outcome of those operations, not for doing them. The NDA will deliver, clean up and decommission a site by designating and contracting site licensees for that purpose. That is the NDA's responsibility in its contracting arrangement and its choice of contractor must be deployed in order to achieve those objectives.

4.45 p.m.

Baroness Miller of Hendon

It is quite a long time ago since I moved this amendment. The Minister gave a very long answer, and more or less ended up by saying, "These things are just not necessary". It is quite clear from the comments of the Committee that we all feel something that something is necessary.

I was comforted when the Minister said, halfway through his reply to my amendment, "I do understand where the noble Baroness is coming from". When he started, he said, "I really don't understand why the noble Baroness thinks this is necessary", so I was quite pleased to hear that, somewhere along the line, he had changed his view.

As my noble friend Lord Jenkin pointed out, it was not until we actually went to Harwell that we realised quite how many tiers there would be. Perhaps we should have done, but we did not understand that—and that is the truth of the matter. That is one reason why, when I started moving my amendment, I talked about another amendment which I had but could not table because we had passed the space. The more we got involved in the subject, the more complicated we found the structure to be. I believe that the Committee thinks that, too.

We shall read carefully everything that the Minister has said, but I do not think that at the end of the day, that will be the end of the matter or that we shall push it away as something that is not necessary. Most of us are of the view that something is necessary, although it may not be my amendment. At some stage we shall return to the issue. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No.45B not moved.]

Lord Jenkin of Roding moved Amendment No.46:

Page 13, line 29, at end insert— () For the purposes of this subsection, an activity shall be deemed to be significant if it entails the expenditure of £25, 000 or more within the financial year or the expenditure of a total £50, 000 or more in that year and the succeeding financial year.

The noble Lord said: The amendment stands in the name of my noble friend Lady Miller, myself and other noble friends. It is a probing amendment. When I discussed the matter with someone outside, it was suggested that a very low figure should be mentioned when the NDA deals with the other functions—which is what the clause refers to. A figure of £2, 000 a year was mentioned, and £4, 000 over two years. I took the view that that would be wholly restrictive, and thought that we should float a figure of £25, 000 a year as being of sufficient significance that it needed to be referred to in the plan. That is what I have put. I am not going to hang my hat on that figure, as it might be quite wrong, but it would be helpful if the Minister could indicate the sort of function and amount depending on it which he would regard as "of significance", in the words of subsection 5(a). I beg to move.

Lord Whitty

It would be right to leave the NDA some discretion as to what it puts in the annual plan. There is of course a stakeholder engagement, and if the stakeholders feel that there are things missing from the proposed plan, they can discuss that. The process of approval requires the NDA to have regard to the representations that it would make.

There are two sorts of problems with prescribing by threshold. It would a include amount of back-office function that probably does not need spelling out in the report. There might also be subordinate services in the bigger sites, such as a car park, which cost £25, 000 a year to run. Certainly a canteen would. I do not know how much detail we want to put in the annual plan for activities such as that. On the other hand, if the NDA were to be involved in an entirely new area of research that cost significantly less than £25, 000, it would be sensible for the NDA to record it. The stakeholders would be interested if the NDA got involved in a new activity that might change the technological options or the way in which it operated.

The threshold of £25, 000 is arbitrary. It would cover things that were not of interest and not cover others that were of interest. I am not suggesting an alternative threshold to £25, 000 because I do not believe that one can define it in such a way. It should be defined by the importance of the activity and, if an activity were omitted, the thorough stakeholder engagement would ensure that that activity was probed and reflected in the annual report, if not for that year then for the following year. We need some flexibility. In terms of the objective of ensuring that we know what the NDA is up to, I do not believe that putting in such a threshold would particularly help.

Baroness Miller of Hendon

I wish to make one point. Subsections (1) to (4) of Clause 13 give the detailed plans, and nobody could have any objection to that. However, as my noble friend Lord Jenkin said, subsection (5) creates a slight problem. It is a sweep-up clause that refers to the NDA's "other functions", requiring the NDA to set out all significant activities that it proposes to carry out during the year and then to estimate their cost.

The Minister, in his response to my noble friend, said that of course we should leave the NDA with some flexibility. However, the activities of significance are not defined in any way whatever, and there is no indication of who would do the defining. From the Minister's comments, I presume that the NDA would have the flexibility and would do the defining. If it defined things for which the expenditure could be very appreciable, the sums of money would not be insignificant—they would be most significant.

The situation arises when a large commitment is put down and described in the phrase, by the accountants, as "sundry expenses". Here we are talking about very serious matters, and there should be somewhere along the line some kind of definition of what is significant. As my noble friend Lord Jenkin said, he was not putting his hat on a figure; we just had to put a figure down to make the point. I do not know whether there could be a definition of "significant" in that sense. Would the NDA have to discuss the matter with the Secretary of State? The Minister made the point that the NDA has all the flexibility in this matter. Does it?

Baroness Byford

If the Minister requires flexibility, do we really need the words "of significance" in the Bill, as they are not going to be defined?

Lord Whitty

We are not talking about accounting practice here, but about giving a flavour of what the annual report—

Lord Jenkin of Boding

The Minister has called it an annual report several times, but it is a plan.

Lord Whitty

Sorry, it is an annual plan. We are talking not about an annual account but about an annual plan that looks both backwards and forwards and should give a flavour of the significant things that the body intends to do and has done over the course of 12 months and beyond. That requires the NDA to cover everything significant, so I have no objection to saying that in the Bill. What it does not require is for everything that costs £25, 000, which can be identified as a separate activity that could be defined, to be identified separately in the plan. If one removed the words "of significance", the default position would be that one would have to report on everything, which would clearly be absurd.

Lord Jenkin of Roding

I understand the difficulty. There was a famous case in court when an item was described as a "sundry special account". The judge remarked that it was possibly an account and that it was certainly very special but that whether "sundry" was the right word he did not know. The fact was that someone had gone off with a very large sum of money, but that was how it had been recorded. I am not for a moment suggesting that anyone in the NDA would be up to that.

One has to ask the question, what is "of significance"? Perhaps that just has to be left to the NDA. That may be the sensible thing to do. The main functions are set out in the previous subsections, and then one comes to subsection (5), which refers simply to "other functions". I do not suppose for a moment that the NDA will set up a facility for selling degrees in a garage, as one reads about in the papers. It is not going to be that. The NDA may embark on a new training function that is outside the terms of the other ones. If it is significant, it ought to appear in the plan, and not just come under expenditure. However, I have heard what the Minister said and we cannot continue to press the matter, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 agreed to.

Schedule 3 [Procedural requirements applicable to NDAis annual plans]:

[Amendments Nos.46A to 50 not moved.]

Schedule 3 agreed to.

Clause 14 [Annual reports]:

[Amendments Nos.51 to 54 not moved.]

Baroness Miller of Hendon moved Amendment No.55:

Page 14, line 38, leave out subsection (6) and insert— ( ) The Secretary of State must also arrange for a copy of the report or a fair summary thereof to be published—

  1. (a) directly on paper to every person whom he believes or knows to be likely to be affected by it, and
  2. (b) on the Department of Trade and Industry website.
() The Secretary of State must make a copy of the full report as laid before Parliament to be available at reasonable cost to every person who may request it.

The noble Baroness said: The Bill quite rightly provides for the NDA to publish annual reports and, under subsection (5), for those reports to be laid before Parliament. However, simply doing that is not enough to ensure the widest possible dissemination of the annual report. To those of us who are privileged to work in Parliament, having a report laid before it is usually sufficient. However, persons outside the Palace of Westminster and parliamentary journalists—and indeed the parliamentary advisers or lobbyists of various interested bodies—may very easily miss the ceremonial process of laying a report before Parliament.

My amendment does not impose an onerous duty on the Secretary of State but asks for three simple and inexpensive actions. The Secretary of State must send a copy of the report to everybody whom he actually knows or believes to be affected by the report. That will not be a very long list and it will be in the department's records anyway. He must publish the report on the DTI website, which can be done in a matter of a few key-strokes on the department's computer. Lastly, a print of the report must be available to the public at reasonable cost.

It may very well be argued that the Government would be doing these simple and perfectly reasonable things without being ordered to do so by an Act of Parliament. That is possible or even probable. But there is no reason why, for the sake of the 100 or so words in nine lines of the amendment, the Bill should not say so. The Government often claim to be a protagonist of open government. Accepting this amendment will enable them to practise it. I beg to move.

5 p.m.

Lord Whitty

The requirement of an annual report would be an unusual one to impose on a public body. We should have some regard to whether we are treating the NDA differently from other public bodies and, if so, why.

The terms of the requirements are to prepare a summary of the report and send a paper copy to everyone who might be affected by it. That is a fairly wide-ranging and open-ended commitment. One could argue that every employee, site contractor or sub-contractor has an interest, and no doubt the surrounding community would also be covered by such a general requirement. It could be argued that that would be highly desirable, but it is not something that we impose on public or private bodies in legislation. It would be a little odd to apply it to this new body when it does not apply to bodies that have a wider ramification in many respects than the NDA is likely to have.

As to the prescribing of the website, we have had that argument in many different guises on different pieces of legislation, including a discussion on the Floor of the House on vellum. There have been previous debates about prescribing in Bills technology for communication. I have no doubt that the report would appear on the DTI's and NDA's websites under current technology, but whether that will be the technology in 50 years' time we do not know—it certainly was not the technology 10 years ago. We have tended to resist prescription of technology in requirements for annual reports, and I would not wish to depart from that in this case.

Baroness Miller of Hendon

The Minister gave a very brief answer, which was somewhat amusing in certain parts. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos.56 to 58 not moved.]

Clause 14 agreed to.

Clause 15 [Duty to decommission and clean up installations and sites]:

[Amendments Nos.58ZA and 58ZB not moved.]

Clause 15 agreed to.

Clause 16 [Duties to operate installations and to provide treatment etc]:

[Amendments Nos.58ZC and 58ZD not moved.]

Baroness Miller of Hendon moved Amendment No.58A:

Page 16, line 2, at end insert— (5) In discharging that responsibility and in performing its designated responsibilities under section 3, the NDA shall place no restriction on the United Kingdom Atomic Energy Authority or British Nuclear Fuels or any other suitably qualified and experienced British or other European Union company from tendering for and (if appropriate) being awarded contracts for the decommissioning of installations or the cleaning up of sites.

The noble Baroness said: I should like to quote a passage from the Government's White Paper, Managing the Nuclear Legacy. It says: Whilst UKAEA and BNFL will have the opportunity to demonstrate that they should be the suppliers of choice to the LMA"— we are now of course talking about the NDA— the management of clean up will be opened up to competition". That is on page 13, in paragraph 1.23. On page 50, in paragraph 5.39, this Government, whose leader proclaims that he has "no reverse gear", contradict themselves by saying: The Government does not consider that it would be appropriate for UKAEA as a pubic sector body to compete for additional site management contracts against firms from the private sector". The first question I should like to ask is where that doctrine came from. Secondly, why do the Government consider it inappropriate for public sector bodies to compete for publicly funded contracts? Are we are not talking about a Labour Party that fought tooth and nail against the first, and highly successful, privatisation of British Telecom, and a futile and increasingly rearguard action against subsequent privatisations?

Lord Davies of Oldham

What about the railways?

Baroness Miller of Hendon

I beg the noble Lord's pardon. I am very happy to give way if he wants to make some political point against me.

The White Paper, in a highlighted box on page 12, proclaimed that the guiding principles of the LMA—or the NDA, as we can now call it, focus on getting the job done to high safety, security and environmental standards … best value for money consistent with safety, security and environmental performance … openness and transparency … competition—so as to make the best possible use of the best available skills". That specification could have been the job description of BNFL or UKAEA.

Those organisations are acknowledged world leaders—indeed, possibly they are the actual world leaders in the field of nuclear decommissioning and clean up. There is no reason to suppose that, with the advantage of being already established on the spot on nuclear sites, they will not offer prices that amount to the best value for money, consistent with safety, security and environmental performance. By attempting to exclude them—or indeed any other qualified and experienced company from the tendering process—the Government have simultaneously excluded openness and transparency.

By excluding a world leader in the field, not only are the Government restricting competition but they are particularly preventing themselves, making the best possible use of the best possible skills". For all the high sounding "guiding principles" announced on page 12, the Government, clearly suffering from short-term memory loss, totally contradict themselves just 38 pages later.

I have no doubt that if asked, the two companies would say that they welcome competition. Well, they would be bound to say that, wouldn't they? But the White Paper does not merely subject the two companies to competition. It totally and unequivocally excludes them from it, even though the White Paper acknowledges that, UKAEA and BNFL have made steady progress in recent years in managing the nuclear legacy". It excludes them on the basis of an entirely specious doctrine that it is inappropriate for a public sector body to compete.

There is only one doctrine that should apply to the massive task of nuclear decommissioning and the clean-up of high, medium and low level waste. That is that safety, skill and proven track record, coupled with value for money, are the only criteria to be applied. Apart from that, putting such a restriction on which qualified companies may tender for contracts is a breach of Article 85 of the Treaty of Rome, which outlaws anti-competitive actions. It is also a breach of at least one EU Directive, which requires open-market tendering for public sector contracts.

I do not know what hidden agenda the Government have, or what strange philosophy they are following in imposing that totally unnecessary, and as it happens, illegal, restriction on the tendering process. It is a restriction that can serve only to negative the Government's so-called "guiding principles". In the circumstances, we believe that the NDA must conduct the tendering process and must award contracts on the basis of those guiding principles. We insist that the Government do not place any unreasonable and purely doctrinaire obstacles in the way of the authority doing so. The amendment would prevent the Government from interfering in the way in which the NDA will carry out the mandate that the Bill will give them. I beg to move.

Lord Whiny

It is clearly true that the objective of site competition is to get the best person and value for money for the site, subject to all the regulatory and quality requirements. There will obviously be a pre-selection process in which some companies will be excluded. The amendment would threaten the ability to exclude people from a pre-selection process, which does not seem a very sensible approach to competition. It is important that the NDA should be in a position to sift companies to ensure that they are capable of delivering a contract. Some of that sifting would exclude some people. The final competition would be based on value for money and the ability to do the job.

As for BNFL sites and the UKAEA, it is clear that the NDA will establish competition for the management of the site licensee companies. The site licensee companies themselves—BNFL and UKAEA—with their workforces will remain in place as site licensees throughout the clean-up process. To the extent that BNFL and UKAEA initially manage the site as an integrated entity, it is only the strategic or senior role of the management function of those organisations that would be subject to competition in relation to what are currently their own sites.

As for the ability of BNFL and UKAEA to compete on other sites, I recognise that the noble Baroness is using the European law in one direction as an objection to some limitation on that, but actually it works the other way round. Public sector bodies competing through public funds in areas that are supposed to be subject to open competition would be in breach of European competition rules. If they were to do so in some circumstances in conjunction with a private sector company and the private sector company covered the cost of the bid, we would be in a slightly different situation. It is not possible for us to prescribe that the UKAEA and BNFL could compete with their own resources in markets that are supposed to be subject to open competition. Therefore, the European law cuts in the opposite direction to the way suggested by the noble Baroness. That is the only restriction that is indicated here; otherwise, anyone who is up to the job would be able to compete for the contract.

Baroness Miller of Hendon

Of course, I shall read carefully the Minister's comments, but it is a very unsatisfactory position and I shall most definitely return to the matter. In the first quote that I read from Managing the Nuclear Legacy to the Committee, where it said that the UKAEA and BNFL should be the, suppliers of choice to the LMA"— or the NDA, as we now call it, one would assume i hat that is what it meant. But of course, under the competition laws and so forth, other companies would no doubt be allowed to tender. I have not heard much more about the letters of comfort that were going to be issued but which have not been, as far as I know.

Page 13 of the White Paper was quite comforting, with the quote that I gave about the UKAEA and BNFL. However, when we get down to page 50, which is not much further on, we understand that the UKAEA, as a public body, is not able to compete for the "additional site management contracts". I suppose that that might refer to the time when Magnox comes into the field. People must be able to compete with the UKAEA and BNFL for their own sites, where they are based and doing wonderful work, but they are not in a position to go out and compete for any other business. That is what it looks like to me.

It may be that I have got my facts wrong. However, the doctrine that a public company is not allowed to compete with a private sector company for public business seems to me an extraordinary new doctrine. I have never heard of such a doctrine. However, I shall look it up and take further advice. In any case, we have to withdraw amendments here, but it is an unhappy situation and I shall look into a way of bringing the amendment back in a satisfactory manner. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 16 agreed to.

Clause 17 agreed to.

Clause 18 [Directions by NDA to the person with control]:

[Amendments Nos.59 to 60B not moved.]

Clause 18 agreed to.

Clause 19 [Designation as a related site for the purposes of s.18]:

[Amendment No.61 not moved.]

Clause 19 agreed to.

Clause 20 agreed to.

Clause 21 [Financial responsibilities of NDA]:

[Amendments Nos.62 and 63 not moved.]

Clause 21 agreed to.

Clause 22 [Expenditure and receipts of NDA]:

[Amendment No.64 not moved.]

Clause 22 agreed to.

5.15 p.m.

Clause 23 [Borrowing by the NDA]:

Baroness Miller of Hendon moved Amendment No.65:

Page 22. line 17, leave out "also"

The noble Baroness said: I should like to speak to Amendments Nos.65 to 71 together. These are amendments to Clauses 23, 24 and 25, which relate to borrowing by the NDA.

I think that it will be simpler if I first speak to the whole group in general terms to explain the principle that I would like to establish. The option chosen by the Government as their funding option for the NDA is a statutory segregated account. Clause 23 makes it clear that the principal or at least one of the sources of funds will be loans from the Secretary of State on such terms as the Secretary of State sets, including rates of interest.

Although I believe that at the moment there is a genuine intention to keep the funding at a sufficient level to support a rolling programme for the NDA, there is, however, no certainty that this will always be so. Funding pressures and consequent cut backs of annual plans can lead to uncertainty not only at the NDA, but may also inhibit commercial concerns from taking on one of the management and operation contracts.

There is also some doubt whether the NDA will be able to enter into contracts for the management of major sites on a competitive basis without the assurance of government funds or guarantees.

It is a welcome reality that the Government have in Clause 23(4) allowed the NDA to borrow from, persons other than the Secretary of State", by which we can assume the Government mean commercial banks. However, the subsection contains a drafting error which needs correcting. The words "also" and "temporarily" are redundant and confusing. They are the subject of Amendments Nos.65 and 66. Amendment No.65 asks for the word "also" to be removed because that subsection is entirely disconnected from the statutory borrowing. Amendment No.66 asks for the word "temporarily" to be removed.

What does the word "temporarily" mean? How short is a short-term loan? What happens if the NDA cannot repay by the specified date?

Amendment No.67, in new subsection (4A), gives the NDA power to, enter into other transactions which have the commercial effect of a borrowing". The ingenuity of the City is such that it is not possible to define what all these transactions could be. I can, however, perhaps suggest a few: the issuing of bonds; derivative transactions to protect against price or currency fluctuations; and indemnities and counter indemnities. It is by no means clear that Clause 23 gives power to enter into what are ordinary commercial transactions at the level of finance in which the NDA will be involved.

The proposed new subsection (4B) makes it clear that without actually borrowing money, the NDA may give pledges in the form of guarantees and indemnities. Amendments Nos.68 and 69 are consequential on Amendment No.67 by making an appropriate adjustment to the next subsections—(5) and (6)—in Clause 23. These two subsections, as drafted, require the consent of the Secretary of State and the Treasury respectively for different types of borrowing transactions.

Amendments Nos.68 and 69 make the proposed new transactions subject to the same consents. Amendment No.70 is consequential on new subsections (4A) and (4B). It amends Clause 24(4), which gives the Secretary of State power to increase the NDA's borrowing limit. The amendment adds the other forms—the new forms—of borrowing that I have just proposed to those whose limits the Secretary of State can increase.

Finally, I turn to Amendment No.71. It amends Clause 25, which gives the Secretary of State power to guarantee NDA borrowing. The amendment makes it clear that the guarantee can extend to the other forms of transactions, including, other transactions which have the commercial effect of a borrowing", which I have just proposed in Amendment No.67.

Amendment No.71 makes it clear that the Secretary of State may himself guarantee the NDA for obligations that may not be directly related to actual borrowing. That means the raising of money by means other than overdraft, as I have just described.

If I have to summarise the effect of this series of amendments, it is that they are necessary because there is concern about the effect of Clause 23 on the NDA's power to give indemnities. The Bill must provide for the NDA to be able to give an indemnity to site licensees in respect of the cost of future decommissioning and clean up work.

Let me make it clear that these amendments do not—I stress—provide for the Secretary of State to guarantee the NDA's ordinary contractual obligations. But there will be many other potential liabilities in respect of which site licensees may require a contractual indemnity from the NDA.

Any inability of the NDA to give suitable indemnities, if and when they are required, or doubts about any indemnities that the NDA may actually give, will severely restrict the NDA's ability to enter into contracts in a competitive market.

Those concerns about the funding of the NDA are likely to be shared by most companies in the market. Without these guarantees, and without the ability of the NDA to enter into what would be ordinary financial and commercial transactions by a company of NDA's size, the NDA may not be able to secure competitive terms for its site management and operations contracts.

The real question is whether the NDA is to have the ordinary commercial authority to get on with its statutory duties with a reasonable degree of independence, or whether it is to be tied to Whitehall's apron strings. I beg to move.

Baroness Noakes

I raise one specific question in relation to borrowing by the NDA that relates to the private finance initiative. Do the Government regard private finance initiative transactions as borrowing for this purpose, the NDA therefore being unable to carry them out under the terms of Clause 23? Or, is it the case as in some parts of government—namely, foundation hospitals—that whether or not something is "borrowing" depends on how the accountants treat it. I should be grateful to know how the Government think that private finance initiative transactions will dovetail into Clause 23.

Baroness Miller of Chilthorne Domer

I should like to raise a question on the NDA borrowing limits. Does the limit that has been set take into account the fact that the borrowing limit is likely to be very much loaded to the front end—to the early part of its work? The Government have laid out the projected figures for spend in Managing the Nuclear Legacy. Does the Minister feel that that limit for the beginning part of its work and operation is likely to be sufficient?

Lord Davies of Oldham

In responding to this debate, I make it clear that we were aware of the concerns to which the noble Baroness, Lady Miller, has given voice this afternoon. The amendments reflect a number of the representations that were made to us. So we had them in mind in drafting the Bill. We feel that we have met the concerns she was addressing with regard to her amendments.

I make it absolutely clear that it is not Clause 23 but Clause 10 that gives the NDA the power, for the purpose of carrying out its functions, to enter into transactions which do not have the legal form of borrowing, but might have similar accounting consequences to borrowing.

The Government cannot see the need for the NDA to have extensive borrowing powers. It will be funded by grant by the Government to carry out its functions. Clause 23 provides for borrowing powers in the conceivable—and, after all, we are making arrangements that will obtain for a very long time indeed—and we consider unlikely event of them being needed in some connection with the NDA's commercial operations.

Therefore, Clause 23 is concerned with conventional borrowing. It does not cover a transaction entered into under Clause 10 for the purpose of carrying out the NDA's functions—which I think was the burden of the anxieties of the noble Baroness—just because the accounting consequences of the transaction are similar to the consequences of borrowing.

The Bill as drafted takes account of the concerns that are being voiced in several parts of the Committee today. We consider that the funding arrangements proposed by the Bill meet the financial requirements of the NDA.

I should like to respond directly to two questions that have been put to me. In response to the question of the noble Baroness, Lady Noakes, we regard PFI as borrowing. It is one of the reasons why the powers to borrow are in the Bill. We want to make that absolutely clear. Clause 23(2) states: The NDA may borrow from the Secretary of State". Clause 23(4) states: The NDA may also borrow". from others. But we would expect that that borrowing from others would be temporary and short term. The costs of the NDA will be met by the Secretary of State.

Circumstances can be conceived where the N DA is involved in activities where an element of borrowing in the short term might obtain. I take the most obvious situation. The NDA might have received payment for a service which it has not delivered. It pays the contractor interest on the amounts rather than returning the money paid, and it might be contended that that is a form of borrowing. That would be short term; it would be quite specific; and very limited. We do not regard the NDA as being involved in borrowing because of the provision in Clause 10 that it receives the resources which it needs for its functions from the Secretary of State.

I hope that on that basis the noble Baroness will recognise that we anticipated some of the concerns she has adumbrated today, and we have provided the requisite answers to them in the Bill.

On the question of the borrowing limit, it is the same as for BNFL. The NDA's responsibilities are less than the total of BNFL. Therefore, it is entirely reasonable that we should set up a similar structure.

Baroness Noakes

Perhaps I may further clarify the point on private finance initiative. The Minister said that PFI was treated as borrowing. That is a welcome statement from the Government as often they try to pretend that PFI is not borrowing. Does that mean, therefore, that the NDA cannot enter into a PFI transaction? The only power to borrow is from the Secretary of State for short-term purposes and, by definition, a PFI transaction is not a short-term or temporary phenomenon.

So, do I understand the Minister is saying that PFI is ruled out in all circumstances for the NDA?

Lord Davies of Oldham

The noble Baroness is taking me down paths where I do not often tread. Therefore, I am trying to be as circumspect as possible with regard to this matter. I think that she will recognise that the Bill does not rule out PFI. That is why I answered her question as I did. I am trying to emphasise that the concept between the relationship of Clause 10 and Clause 23 is that this is not a body that we expect to be a borrower. It may get itself involved in limited transactions. I gave an illustration, which was that it has access to resources that are not its own, which are in excess of its own at that point and on which it might even pay interest for late payment. That could be construed as a form of borrowing.

However, we regard that as exceptional, as short term and as minor in terms of the overall provision of resource for the NDA. The actual source of support for the NDA is from the Secretary of State.

5.30 p.m.

Baroness Miller of Chilthorne Domer

The noble Baroness, Lady Noakes, raised a very interesting point. Does that mean that if the NDA has, say, £l, 000 million worth of PFI contracts, its limit would be only £1, 000 million in cash terms?

Lord Davies of Oldham

I really need notice of such a specific question. I apologise to the noble Baroness. I shall consult on that issue and either find an opportune moment in Grand Committee to reply or I shall write to her about it.

Lord Dixon-Smith

The problem we now have is that Clause 23 is inconsistent with Clause 10. If the Minister is correct in saying that the authority will be funded by the Secretary of State then—other things being equal—it does not need powers to borrow. If he is saying that it needs powers to borrow, he is calling into question his own ability to fund it. There is an inconsistency there, which requires at least some explanation or needs to be dealt with.

Personally, I can understand the NDA requiring a borrowing facility. I completely agree with my noble friend that we do not need the word "temporarily" in the clause because, with the possible exception of the national debt, all debt is temporary. That is absolutely true. It may outlast our lifetimes. We are not infinite. It is a question of how one regards the word "temporarily". One does not need the word "also" either. It is just legislators slipping in words. I am quite happy about them.

However, what bothers me is the inconsistency between the Ministers words when he says, "On the one hand we are going to fund it" and "On the other hand it will need to borrow". One or other of those statements cannot be true.

Lord Davies of Oldham

I was trying to emphasise that the resources for the NDA are to be provided by the Secretary of State. We dare not rule out circumstances where the NDA might be involved in a transaction that could be defined as some form of borrowing. We conceive that as being short term, relatively marginal to its activities and thrown up by the nature of its regular operations. It does not need it. It will be funded properly for the projected budget that it will require over a period of time.

Clause 23 is there to give effect to a provision which we regard as being on the margin of the operation of the NDA in normal circumstances. That is the only point I was seeking to make. The transactions under Clause 10 are the crucial ones so far as the NDA is concerned. Clause 23 is more limited in its impact.

Baroness Noakes

Does the Minister accept my noble friend's contention that all borrowing is temporary, other than the national debt? Therefore, Clause 23(4) says in effect that one can borrow from almost anywhere. I ask that in particular because the Explanatory Notes state: Subsections (4) and (5) allow the NDA to borrow from other sources so that it could consider entering into PFI arrangements". Clearly, the concept of "temporary" in the minds of those drafting the legislation appears to be much longer than I have ever encountered in any other case. It is important that we should have clarity about what "temporarily" actually means in Clause 23(4).

Lord Davies of Oldham

I cannot put a specific time limit on any form of borrowing. I am trying to defend legislation that is set up to create a body, which is to be substantially funded by the Secretary of State and which will be funded for its operations by the Secretary of State. There is a recognition that in carrying out its actions it can from time to time be involved in something defined as "borrowing". We are trying to put that properly into the context of a very limited function in a separate clause different from Clause 10, which relates to the significant operation of the body.

Baroness Miller of Hendon

In the first instance I have some sympathy with the Minister for having had to tread water on those last few points. At least he had the benefit of lots of notes being passed from behind him, which I hope were helpful.

I thank my noble friend for highlighting the whole issue of the PFI. I thank also the noble Baroness, Lady Miller of Chilthorne Domer, my half namesake, for coming in with her useful point. The Minister's response was quite interesting. I thought that Clause 23 was extremely important until I heard him say that I had missed the point and that it was really Clause 10. That is quite extraordinary. We were talking not to Clause 10 but to Clause 23.

However, in view of what the Minister said and the concern that has been shown around the Committee, we shall obviously read his answer extremely carefully. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos.66 to 69 not moved.]

Clause 23 agreed to.

Clause 24 [Limit on NDA borrowing]:

[Amendment No.70 not moved.]

Clause 24 agreed to.

Clause 25 [Government guarantees for NDA borrowing]:

[Amendment No.71 not moved.]

Clause 25 agreed to.

Clause 26 agreed to.

Clause 27 [Tax exemption for NDA activities]:

Baroness Noakes moved Amendment No.71A:

Page 25, line 33, leave out paragraph (b).

The noble Baroness said: In moving Amendment No.71A, I shall speak also to Amendments Nos.71B and 71C. The three amendments deal with different aspects of the tax regime prescribed by the Bill. Taking them together may be challenging for me and, possibly, for the Minister, but it may be efficient for the Committee if I try to kill three birds with one stone.

I should say at the outset that I do not claim any expertise as a tax expert. I am a chartered accountant. While many people believe that chartered accountants are tax experts, that is not true. Tax under any government is too complicated nowadays for someone like me to claim particular expertise in it. That is a rather long-winded way of apologising if I get the matter wrong, which I almost certainly will.

Amendment No.71A is a probing amendment. I should say that all these are probing amendments. It is designed to find out what organisations other than the NDA and its subsidiaries would qualify for the exemption from corporation tax that is granted by Clause 27. The amendment knocks out paragraph (b) from subsection (4), which is the part of the subsection that gives a tax exemption to a relevant site licensee which is not owned by the NDA. I can quite see that the NDA and its wholly owned subsidiaries, which are carrying out exempt activities, should not be within the tax net. I am querying extending that to site licensees who are defined in subsection (5), but who are not part of the NDA group.

Paragraph 130 of the Explanatory Notes states: It is Government's intention that private companies will not be able to realise tax-free profits through the tax exemption". How exactly do the Government think they will achieve that, given the wide definition of a "relevant site licensee" in Clause 27(5)? We agree with the Government that private sector enterprises should not be able to make tax-free profits. I find it difficult to understand why they are brought within the tax exemption in the first place, which is what the drafting of this part of the Bill does. Can the Minister say in what circumstances a site licensee would be within the tax exemption? Can we have specific examples of that?

The amendment's solution is to knock out relevant site licensees, so that if one is not the NDA or a subsidiary one cannot have a tax exemption. My challenge to the Minister is for him to say why that simple approach is not good enough and in what circumstances, therefore, a body other than the NDA would be allowed to have a tax exemption on these activities.

Amendment No.71 B is a probing amendment in relation to Schedule 4. It deletes paragraph 3. The paragraph deals with charges on income, which is a long-standing technical term used in tax legislation for certain kinds of deductions from income for tax purposes. My question relates to what kind of charges on income we are talking about. If one is dealing with corporation tax, as opposed to the taxation of individuals, most charges on income have disappeared. Interest payments went out, I think, in 1996; royalties went out in 2002; and, I am told by people who know more about this than me, virtually the only transaction in a corporation tax sense that counts within charges on income is a charitable covenant. Is the paragraph here because the NDA will be paying charitable covenants? If so, what are we talking about? If it does not relate to charitable covenants, what charges on income are we talking about? Therefore, why do we need this provision?

The last amendment in the group is Amendment No.71C. On a probing basis it deletes subparagraph (a) from paragraph 4(1) of Schedule 4. Paragraph 4 is about finance leases. It is designed to restrict the claim for capital allowances. I find it difficult to understand. It applies when, under subparagraph (a), the lessor is the NDA or an NDA company and under subparagraph (b) the lessee is the NDA or an NDA company. So we are dealing with finance leases that are wholly within the NDA and its subsidiaries. That seems to be designed to ensure that the NDA cannot create artificial structures in order to get some kind of tax relief within itself to shift tax allowances from its non-taxable activities to its taxable activities. That is all within the public sector, so I am not sure that much turns on it and we would not object to it.

Following on from that, if the Government think that finance leasing within the NDA group is unacceptable, which is what paragraph 4 is about, what is the Government's approach to finance leasing that we would conventionally come across; that is, finance leasing with a lessor, which is actually a finance house in the City? That is what most finance leasing is about. It is taking the capital allowances and getting the benefit of them in an area that would not otherwise attract capital allowances. That seems to involve a real tax leakage, which is not prevented by paragraph 4. Curiously, that is about this closed loop of finance leases within the NDA group. my question for the Minister is: what is this all about? Why is it about this rather odd internal finance leasing and not real finance leasing, as operated in the real world?

I appreciate that these are rather dry technical issues in tax terms. As I said earlier, I do not pretend to be a tax expert; but they could involve large amounts of taxpayers' money, which is why I think these issues are worth addressing. I beg to move.

5.45 p.m.

Lord Davies of Oldham

If the noble Baroness, Lady Noakes, is being deferential about her competence in this area, in expectation of receiving a blast of expertise from this side, she will find me sadly wanting in that respect. She can rest assured that she will have a relatively comfortable time over the next few minutes. However, I shall try to meet her points and explain our thinking with regard to our current position. I shall explain why we are not prepared to accept the amendment, with a message at the end that may be of some reassurance to her.

I shall deal, first, with the issues of detail. Clause 27 allows Treasury regulations to be made that would exempt from tax certain of the NDA's activities. The activities that we have in mind are those of Thorp and SMP, which are expected to be loss-making for tax purposes. I do not believe that many people would contest that analysis.

Baroness Noakes

Perhaps I may intervene at this stage. I intend to cover that point when I speak to whether Clause 27 shall stand part of the Bill because I consider it interesting that SMP and Thorp are given as examples of activities that would be included. As I understand it, the whole sweep of activities involved in decommissioning work are included, and Thorp and SMP are given as a specific example. I shall certainly raise this matter again when speaking to the Question whether Clause 27 shall stand part of the Bill. Perhaps the Minister will elucidate why those are treated as loss-making activities.

If we cast our minds back to when the Thorp and Mox plants were established, they were seen very much as national activities. Their purpose was not viewed as only for the clean-up of the Sellafield site; they were seen as income generators. They would not otherwise have been able to justify the very large sums of capital that were involved in them. My question may be short-circuiting what we do with regard to Clause 27. However, is that really true? And why has the commercial future that was once seen for Thorp and Mox evaporated?

Lord Davies of Oldham

I have already been guilty of entertaining the Committee for a very long time in one answer this afternoon. If the noble Baroness is now inviting me to spend a considerable amount of time on the prospects of Thorp and SMP, on why they are not making a profit and on why we foresee that situation obtaining for a considerable period, we may be here for a very long time. I shall not follow the noble Baroness down that particular avenue, and I imagine that, as a result, there will much relief all round.

However, I want to emphasise that, in any case, computing the tax position of Thorp and SMP will be very tricky if their activities are bound up with the decommissioning and clean-up activities of the NDA. Surely, on pragmatic grounds, it makes sense to exclude them from tax when they are involved in work which is carried out to the benefit of the NDA. Where the activities might be carried out on behalf of the NDA by site licensee companies, depending on the detail of the contractual arrangements between the NDA and the site licensee companies, it might still be appropriate for them to be exempt. That is exactly what Clause 27(4)(b) does: it allows site licensee companies to be included within the potential scope of this exemption.

Amendment No.71B would remove the ability to disallow tax charges on income to the extent that they are referable to exempt activities. We contend that that would be inequitable as it would allow charges that are linked to the exempt activities to be deducted against other taxable income. If certain activities are to be exempt, surely it is right that their associated charges should not qualify as a deduction for tax. That is why we do not believe that Amendment No.71B is acceptable.

With regard to Amendment No.71 C, where matters become even more difficult, we recognise that the noble Baroness has a point. We are seeking to strike a balance here. We want to ensure that the NDA does not have its cake and eat it. I believe that the noble Baroness was referring to one side of that—the having of the cake. I am now saying that the NDA cannot eat it as well by enjoying the benefit of the exemption on its income while obtaining tax allowances available against its non-exempt income for expenditure relating to the exempt activities.

The noble Baroness's amendment would take this provision even further by preventing companies outside the aegis of the NDA making use of those tax allowances. The problem is that that would interfere with ordinary commercial transactions between suppliers of capital equipment and the NDA. However, they are not driven primarily by tax considerations but by providing a service for which they make an appropriate charge. I merely say to the noble Baroness that the amendment may be going too far and may upset the balance that we have sought to strike. By ensuring that the tax exemption is not abused, I am not interfering with the NDA's commercial freedom. Therefore, we are looking to strike a balance.

In response to all three amendments, we have laboured long and hard in the vineyard in order to get these issues right. Some real interests are at stake and these are not easy issues. Only this morning a further meeting took place between interested parties on these exact points. We believe that, because of the complexity of the situation, we do not have Clause 27 or, indeed, Clause 43 absolutely right at this point. I undertake that on Report the Government will table amendments to take account of the latest discussions on these issues, which partially revolve around the points that the noble Baroness has made.

I merely suggest to the Committee that, in a very difficult Bill with some very difficult matters at stake, this is one of the most complex issues. We recognise that on Report we may need to table government amendments, and we shall give the noble Baroness the opportunity to press us further when we have listened to what she has said today. She has identified some of the issues which are currently the subject of intense discussion. I congratulate her on that fact. I merely say that we put the provisions of the Bill into place on the basis that we thought we had them right. We have heard strong representations on why some of the balance—this is an issue of balance—may not he entirely satisfactory at present, and we shall return to the matter on Report.

Lord Jenkin of Roding

My first reaction is not to be too cruel to the noble Lord by asking him to paraphrase briefly what he has just said. I shall not ask him to do that because he is likely to say that it is a complex matter.

My second point is that I believe my noble friend Lady Noakes has scored a notable first. A number of us have been labouring in the vineyard for many hours and she has—if I may mix my metaphors—struck gold. I congratulate her on that. I can understand the difficulties with which the noble Lord and his advisers have been struggling on this matter.

My mind goes back to the creation, under the Petroleum and Submarine Pipelines Act, of the British National Oil Corporation when the then Labour government seemed determined to nationalise—or to take a substantial stake in—the North Sea oil and gas activities. One of the most difficult discussions that we had during the passage of that Act, when it was a Bill, was when we debated a clause to exempt the BNOC from tax. The issue that arose was that, even under that regime, partnership arrangements would still be in place under which the private sector partners would be subject to tax through corporation tax, petroleum revenue tax and so on, whereas its public sector partner would be free from tax. All sorts of difficulties would have arisen if that had happened. In fact, it did happen but, admittedly, not for very long before the regime was changed.

This is the problem that you face when you try to exempt a public body, or part of a public body, and then you extend the definition of what, in this case, is to be regarded as a public body, which exists alongside ordinary businesses going about their lawful occupations and paying their lawful taxes. As the noble Lord indicated, not only does that open avenues for—I am sure my noble friend will forgive me—clever accountants to find ways to channel the exemptions through to the companies that should pay tax, but one can end up with the extremely unfair position in which, in a complex arrangement, some parties pay tax and some do not. This has been tried before and it caused huge unhappiness in the North Sea oil and gas industry.

I can say only that I believe that the noble Lord and his advisers are being very wise in saying that it may be necessary to reconsider this matter. However, I beg him to consult his colleagues in the Treasury who dealt with the petroleum revenue tax to see whether they can delve into their considerable memories and remember the great difficulties that they faced over that issue. We shall await the next stage of the Bill with great interest to see what the Government produce. In the mean time, I congratulate my noble friend.

Baroness Noakes

I was very grateful for the concluding remarks of the Minister in which he said that he would return to the matter on Report. I look forward to seeing what he brings back then. Perhaps I may briefly set out the concerns. Relevant site licensees might not pay tax on profits. The Minister said that it was right that they should be capable of being exempted. However, I am not at all clear why a private sector body should be made exempt if it is making a profit out of this activity.

I shall leave the issue of charges on income because that is a very technical point. I hope that the Minister or his advisers will read what I said and look into that matter. The Minister said that he was keen to ensure a balance. I am not sure that I see a balance where one allows expenditure by the NDA to be used as a vehicle for creating tax leakage elsewhere when we have a specific prohibition on some internal transactions. I shall not labour those points now, but I hope that the Minister and his advisers will read carefully what I said and try to understand in more technical detail the ideas that I was trying to put across. I thank him for his comments and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 27 shall stand part of the Bill?

Baroness Noakes

We have already covered one of the aspects that I was intending to raise at this point: that is, to probe why Thorp and SMP were suddenly transformed into cost centres on the Sellafield site instead of what they were always seen as previously—as part of some bright commercial future that BNFL promised. I fear that I shall not receive an answer to that today. That was one reason that I gave notice of my intention to oppose Clause 27 standing part of the Bill.

Another reason was to try to obtain some clarity about what will be exempt and what will be taxable within the NDA. Much will turn upon the regulations that will be laid by the Treasury. Those regulations are subject only to the negative procedure—and then only in another place. Therefore, unless draft regulations are available, your Lordships' House will have no opportunity to see what the exact boundary is between exempt and non-exempt tax activities. I find it difficult to gain a real understanding of what the Government intend in this respect, with the exception of the portfolio of investments.

Is the Minister able to illustrate what is intended by Clause 27 and what its underlying thrust is in terms of the activities that could generate income which are regarded as taxable and what is to be left outside the corporation tax net? It is not that we challenge the fact that there should be exempt activities because those will involve net costs. I find it difficult to focus on where the boundary is. For example, earlier the Minister talked about research and development activities, some of which would involve third-party income. Does that income contribute to the cost centre or does it become part of the taxable profit? Is it some kind of profit centre? There will be many other such activities. If there are significant partly taxable and partly non-taxable activities, what about shared costs? In any complex activity, there are always shared costs—for example, management costs. If we are looking at the Sellafield site, is the visitor centre part of the exempt activity or is it part of the overall cost?

I have many detailed questions. Neither the Bill—quite rightly, without the regulations—nor, perhaps more importantly, the Explanatory Notes explain that issue in a way that one can understand. That was the purpose of tabling my intention to oppose Clause 27 standing part of the Bill.

6 p.m.

Lord Davies of Oldham

If I may pick up the metaphor again, the noble Baroness is having her cake and eating it. In the debate a few moments ago, we discussed, and I indicated in my response, some of the principles behind Clause 27. I set out why we would bring forward some amendments on Report. Now I am being asked to defend the clause as it stands, having already acknowledged that we see that some changes are necessary.

However, the principles behind it are quite straightforward. We consider a great deal of the activity of the NDA, particularly at Thorp and SMP, to be loss-making. A great deal of decommissioning and clean-up will not make huge amounts of money for anyone. However, we wanted to make it clear that we are prepared to exempt those areas. For example, we would not treat the Magnox electricity-generating business, which is perfectly capable of making a profit, any differently from any other business. Any commercial activities that are not directly intertwined with clean-up and decommissioning will not be exempt from tax. That is what we set out to establish in Clause 27.

I have already acknowledged that we are not quite there yet with regard to the arrangements that we need to make. This is the first opportunity that I have had to speak since the noble Lord, Lord Jenkin, spoke. I am grateful for his indication that these trials and tribulations have been faced before in the energy world. We learn significantly from the past. Although the principles are straightforward, as everyone knows, the issues and the detail are not always easy to adumbrate. It is aspects of the detail that we must still work out. That is why I am hopeful that the noble Baroness will withdraw her objection to Clause 27, and it will come back in more perfect form on Report.

Lord Jenkin of Roding

Before the noble Lord sits down—I am sure that he will press this matter further with his Treasury colleagues—I should tell him that the episode to which I referred took place 30 years ago. Whether any people in the Treasury still have any recollection of it, I do not know. However, I remember it.

Lord Davies of Oldham

The noble Lord will recognise, first, that the noble Lords, Lord Barnett and Lord Sheldon, are present and well. I have to confess that I can think of someone who was their PPS for a very short period of time, but clearly I did not learn much three decades ago.

Baroness Noakes

I thank the Minister for his reply. I was not trying to overstretch him on this matter, bearing in mind the affirmation that amendments would be brought back on Report.

I raised the specific question of when draft regulations would be available, given that your Lordships' House is excluded from the process. I understand why that is—because it is related to taxation. It is a pity because by understanding how the exempted activities will be defined we are able to understand the clause, whether in its current form or a renewed form. I expect that when the clause comes back and is amended on Report, it will continue to contain that element, which I would understand. Trying to understand what is meant by "exempt" and "non-exempt" crucially depends on what comes out of the regulations.

Lord Davies of Oldham

The noble Baroness ought not to overplay her hand. She has played it brilliantly so far, but it is an old trick to suggest that at this stage we produce draft regulations to explain what we are doing. We are not in a position to do so just yet.

Clause 27 agreed to.

Schedule 4 [Supplemental taxation provisions for exempt activities]:

[Amendments Nos.7IB and 7IC not moved.]

Schedule 4 agreed to.

Clauses 28 to 31 agreed to.

The Deputy Chairman of Committees (Viscount Simon)

I should advise the Committee that if Amendment No.71D is agreed to, I cannot call Amendment No.72.

Clause 32 [Power to modify Chapter 1 of Part I]:

Baroness Buford moved Amendment No.71 D:

Page 29, line 30, leave out paragraph (b).

The noble Baroness said: I think there will be a sigh of relief from the other side of the Committee that I am on my feet and not my noble friend Lady Noakes again. I seek clarification on three small points. The amendments speak for themselves. On Amendment No.71D, Section I 1 contains a widely drawn duty on the NDA to prepare a strategy for its operation and to revise that strategy. It also lays down in broad terms how that strategy should be applied to each new decommissioning responsibility. My concern is that the modifications to Section 11, as it is currently drafted, could weaken those. Is that so? Will the Minister give a couple of examples of modification that might apply in this section?

On Amendment No.72A, Section 13 deals with the NDA's annual plans. It specifies that they relate to financial years and that they must be submitted not less than three months before the financial year to which they relate. It sets out various factors, financial and otherwise, that must be included relating to the work that is planned to be done. One of the ways in which transparency is achieved in any organisation is by the year-on-year comparison of plans and outcomes. This is strengthened by comparison across the number of years. I am concerned that the modifications to Section 13 may result in changes to the way in which information is presented such that comparisons of one plan with another is either made very difficult or prevented altogether.

On Amendment No.72B, having read the section again I may be asking for something that is already there. If so, I apologise. I have looked at Clause 32(4) and wonder whether that covers the issue, but perhaps I may go through it anyway. Nuclear decommissioning has always been a subject of great anxiety for members of the public. Nevertheless, there is great concern over local dangers of decommissioning.

The escape of radioactive materials is feared by many, mostly by those who live within easy reach of nuclear installations. The plans of the NDA must be easily understood, open to scrutiny and consistent year on year. I am sure that that is the intention of the Bill.

It follows that they must also be easily compared and assessed for the reassurance of the local population. This is why I have asked that the judgment should be placed before Members of both Houses. If Clause 32(4) covers that and I am asking for something in addition to that, I apologise to the Minister. I do not think that it does, because I am referring to paragraphs (a), (b) and (c) rather than to the remainder. I beg to move.

Baroness Miller of Chilthorne Domer

We have considerable reservations about the clause. Indeed, my noble friend and I questioned a stand-part amendment. It does not add to my assurance that the Government have already tabled an amendment to add yet another clause to those which may be modified by the Secretary of State. Now the Secretary of State will have powers to modify not only the constitution but also the duties under the strategy, the strategy itself and the annual plan.

I agree with the noble Baroness, Lady Byford, that the disquiet of the community living nearby has been great, especially when they do not know what is happening. I thought that in bringing forward the Bill, the Government wanted to be as open as possible and to ensure that communities will have a good chance of seeing what is planned for the future and how the previous year's work has gone.

I am worried that the clause, with sweeping powers to amend so much of Chapter 1, is included. We know of the difficulties even if it is subject to affirmative resolution. We have spent almost three days discussing Chapter 1, but with the best will in the world, affirmative resolutions give one nothing like the same chance to discuss things in depth.

Referring to what was said by the noble Lord, Lord Jenkin of Roding, in our last session, one of the difficulties nuclear industries have had is transparency. Any erosion in the Bill of that principle would be most serious and I hold serious reservations about the clause.

Lord Skelmersdale

There appears to be a curious logic in the provisions as the Government wish to amend them in Clause 32. I can understand why they might need to take subordinate powers to change the constitution of the NDA by, for example, bringing it up to date or whatever. I can also understand the proposals in Clauses 11 and 12—the strategy for carrying out the functions and the contents of the strategy. But what about annual plans, once they have been established? Is it necessary for them to be dealt with by statutory instrument?

Lord Whitty

The central task of the NDA—of cleaning up and decommissioning nuclear sites—will last decades. The idea that we can legislate precisely now and it will be valid for all time on what should he covered by an annual plan and its exact constitution, for example, is not sensible. We must provide some flexibility for future governments to ensure that the NDA can carry out its central task. The situation will change in relation to the component or otherwise of nuclear power in 20 years' time; it will change in terms of technology; it will change in terms of sites that are being designated; and it may change in terms of the international situation. It is therefore prudent for us to provide within here a means of changing not only the constitution, which I think the noble Lord, Lord Skelmersdale, accepted, but also the way in which the annual plans are conducted.

In answer to the point raised by the noble Baroness on the third of her amendments, it is clear that subsection (4) applies to the whole section. Therefore, it is all subject to affirmative resolution. The noble Baroness, Lady Miller of Chilthorne Domer, is not content with the affirmative resolution procedure, but that is a somewhat wider issue. It is a procedure in which the House has the ability to stop the Government in their tracks, should it so choose. So it is a substantial power and can be used, if it is felt that a future Secretary of State is abusing the powers in this clause, to alter the provisions in those sections and schedules to which it refers.

The amendment proposed by the Government, which we shall shortly debate, does not indicate a change of policy; it is simply a consequence of the way in which the Bill is now drafted. So it is not an additional provision in that sense.

There is then the question of how we measure the NDA's performance and whether Amendment No.72A is necessary to ensure that we have one of the benchmarks by which we can judge such performance. I believe the amendment is unnecessary. Clearly, any government will want to be able to measure the performance of the NDA. As one goes through annual report by annual report, even if the content changes, one can measure performance. One may want to change slightly what the annual report covers. We have discussed the kinds of activities that should be covered in the annual plan, the strategy and the annual report and in various documents the Bill requires the NDA to produce. In changing circumstances over a long period of time that is prudent. It is also prudent to have a fairly heavy safeguard, which is what the affirmative resolution on all of this provides. The Select Committee on Delegated Powers and Regulatory Reform considered that provision and felt that it was sensible.

6.15 p.m.

Baroness Byford

The Minister has not answered my question on the original point on Amendment No.71D. Perhaps I might bring him back to that. I am concerned that what is laid down and requested would be weakened, and I asked what kind of modifications the Government have in mind. I have not received a reply to that and would be grateful for one.

Lord Whitty

I am afraid that the noble Baroness will not receive an answer to that. The position is that we cannot possibly envisage a situation that would require us to change the constitution of the NDA. That would depend on how the industry develops; what kind of sites the NDA might have to deal with in 20 years' time; and the experience which results from that. It may mean a change to the designation of sites or a change to the range of sites which the Secretary of State would be able to designate for the NDA to take over, as technology, or possibly the failure of technology, produces different situations; for instance, a nuclear legacy problem which needs cleaning up and which is not covered by the current clauses. It is that type of situation that we may need to tidy up in future. I cannot envisage all such situations nor how this power might be used. However, it would be used where there is a changing situation either in terms of how the NDA acts or in how industry and technology develop.

Baroness Noakes

Is there any precedent for this form of power in relation to a public body? I have been involved with a public body for quite a long time and I cannot remember a power which makes such sweeping changes because we cannot think at the moment about what we might want to do in 10 years' time. There are many examples of public bodies that have lasted a long time. Sometimes, when certain circumstances arise, there has been a need for a further statutory process to bring things up to date. But as far as I am aware, it has never been done in this way. Just because nuclear has a long timescale does not mean that Parliament should reduce its ability to scrutinise how a body is set up and will operate in order to deal with a problem. I am mystified as to why we should go down this route for this particular public body.

Lord Whitty

There is a range of precedents for details of the composition or scope of public bodies to be changed by secondary legislation. Certainly, as regards composition, frequently there is a clause which states that changes can be made, for example, to the representation of a board by adding categories up to a certain level. There is a range of areas in which clauses define a scope of activity to which the Secretary of State may add by regulation. In animal health legislation, which is not a very popular example in this Committee, one can add particular diseases which are not known of at present. The same regulations which apply to existing diseases can be designated by the Secretary of State by secondary legislation to achieve those ends. I am sure that there are other examples where it is not possible at present to be able to identify precisely what kind of circumstances would require such changes. So, I do not think that this is unprecedented.

The noble Baroness said that this is not subject to any statutory procedure. It is subject to parliamentary approval. It is less than primary legislation but nevertheless one House has the ability to block a Secretary of State exceeding his powers in relation to the affirmative resolution procedure. I would not say that that was a negligible power or negligible constraint, but one which any future Secretary of State would have to take very seriously before thinking of abusing.

Lord Jenkin of Roding

I have listened carefully to the debate and share the unease expressed by the noble Baroness, Lady Miller of Chilthorne Domer, and by my noble friends. The Explanatory Notes are perhaps more frank than the Minister, who spoke about some flexibility. One word I do not accept there is "some". Paragraph 144 of the Explanatory Notes states: It provides the flexibility to make any amendments to those provisions which might be necessary or desirable without the need for primary legislation". Nothing could be blunter than that. It is simply taking the power to legislate, which is normally the prerogative of Parliament. The fact that it is subject to the affirmative procedure gives it the one imprimatur and then after that it stands for all time.

I am coming to the conclusion that we may need to think about this more carefully between now and Report. This entire set up requires a more regular scrutiny by Parliament than seems to be currently envisaged. Yet again, I go back to the Select Committee of this House which looked at the treatment of nuclear waste. We recommended there, quite firmly, that because this was to be a long-term policy—nothing could be more long term than what we envisage with the NDA—there should be a provision which would require the whole process to be positively approved by Parliament at least once in every Session. The Government should come forward with a summary report—not just the annual report— which could then be the subject of a full debate in both Houses so that all the implications could be considered.

Certainly, I shall want to consider carefully between now and Report whether the addition of such a clause would greatly strengthen parliamentary control over this process. This clause weakens parliamentary control. It gives the Government power to amend by order. I accept that it is subject to the affirmative procedure, but at the same time the whole process rolls on. Of course, it is open to either House to decide to have a debate. However, I believe it is right to have an obligation on the Government to bring the whole process before both Houses of Parliament for a full debate at least once in every Session. I should like to consider that between now and Report.

Lord Whitty

No doubt the noble Lord will consider his amendment at a later stage. However, I think that that would be much more unprecedented than the powers we propose. Nevertheless, for the record, clearly the Select Committee on Delegated Powers and Regulatory Reform considered the potential of these clauses and accepted that potentially the power could be used to remodel the NDA in significant ways. They went on to state We have concluded however that the delegation of power is in this instance appropriate. We reached this conclusion on the grounds that the basic functions and powers of the NDA do not fall within the scope of the power and that the delegation is subject to the affirmative resolution procedure". We normally take great heed of that Committee. Indeed. in almost all cases with which I have dealt, the Government have accepted its recommendations if indeed, we need to tighten controls in the light of such recommendations. The same applies the other way, and I would hope that before noble Lords pursue any changes they would weigh the judgement of that committee in this respect.

Baroness Byford

I am grateful to all noble Lords who have spoken. In moving the amendments, I did not realise that it would open another hornets' nest. I am grateful to the noble Baroness, Lady Miller of Chilthorne Domer, for her comments. Certainly, I believe that there are concerns and apprehensions outside this place which it is enormously important to allay as we take the Bill through its stages. The noble Baroness spoke of her abhorrence of the affirmative resolution and certainly she knows of mine, so perhaps I may say to the Minister that I shall add mine to hers. I believe that this process should be subject to primary legislation.

I am grateful to my noble friend for reminding the Committee that the recommendation was for this process to be subject to primary legislation. I failed to bring my copy with me, so I am grateful to my noble friend for pointing that out. I do not want to delay the Committee. However, the Minister tempts me, having mentioned the Animal Health Bill. He will know very well that we spent long fraught hours on that Bill. Many times we objected there and then to the fact that so much could be done through affirmative resolution rather than primary legislation. I digress, but as the Minister digressed, I shall do so again. I do not think that that was a. fair comparison. Certainly, an outbreak of animal disease is urgent and has to be dealt with at that moment. The Minister will probably argue that if something went wrong with a nuclear site or with decommissioning that would be equally as important. However, I shall not argue the toss.

I am glad to have raised the amendments. I am grateful to all noble Lords who contributed for their support and for expressing their concerns about flexibility. My concern is not that that will be strengthened but that it may be weakened. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No.72:

Page 29, line 30, leave out "section 11" and insert "sections II and 12"

The noble Lord said: Amendment No.72 would allow the Secretary of State to modify by order, subject to affirmative resolution, those provisions which deal with the content of the NDA's strategy.

We could have the same argument over this amendment. In reality, it was assumed that this would come under the previous section. However, during the course of the drafting, clauses became separated and therefore we needed to table the amendment. I explained that at our last meeting when the noble Lord, Lord Jenkin, raised a procedural issue as to whether we should wait until the Select Committee on Delegated Powers and Regulatory Reform had seen it. However, as I said on Tuesday, we have contacted the chair of the committee and he was of the opinion that there is no need to call a meeting of the committee to consider the matter, although of course it will need to be reported to that committee.

The amendment deals with the strategy dimension of what was dealt with by the last group of amendments. I suspect, therefore, that noble Lords have similar reservations about this amendment. However, the adoption of this clause would mean that we would have the full range of powers to change it. From what noble Lords have said just now, no doubt we shall return to this issue later in the proceedings. However, we might as well do that in a tidy way, which would be to include discussion on this clause as well as those we have already discussed. I beg to move.

6.30 p.m.

Baroness Noakes

Given the debate on the previous group of amendments, the amendment should possibly be carried over to Report stage, because the concept itself does not have the agreement of the whole Committee. Perhaps the amendment ought not to go through in the way that the Minister might have expected.

Baroness Miller of Chilthorne Domer

The noble Baroness has voiced exactly my feelings. I had planned to speak on the matter under the Question that the clause stand part, but as she has raised the issue I will speak now. I noted the Minister's comments that the Grand Committee would normally accept what the Delegated Powers and Regulatory Reform Committee said. I am sure that we have all taken into account the fact that it felt that way, but perhaps the authorities would like to draw the debate to the attention of the Delegated Powers and Regulatory Reform Committee and, perhaps, ask the chairman if he feels he should reconsider the issue—not necessarily come to another conclusion, but simply to look at our concerns.

Lord Jenkin of Roding

I was the first to raise that point by spotting that the amendment was tabled after the Delegated Powers and Regulatory Reform Committee had reported. At Second Reading, we had an extract of the report circulated to us, which recognised that most of the Henry VIII clauses, as they are known, were regarded by that committee as acceptable. But there is a point of propriety here that goes beyond just a communication with the chairman of that committee. The Government have failed, as the noble Lord, Lord Whitty, has frankly and decently admitted, to spot that it had not been put before the committee until I drew it to the attention of his office. Then they moved very fast. I think that there are others that we ought to look at. We have a procedure and we ought to stick to it.

When I spoke to the Minister's private office, I suggested that he might be wise not to move the amendment in those circumstances. He is entitled not to take my advice. I may have knocked about a bit, but he is in charge of the Bill. He must decide what he must do. I would have thought that my suggestion would have been a wise move. My noble friend Lady Carnegy is not here, but she sits on that committee and expressed some surprise that apparently it was sufficient that the chairman should have looked at it and said, "That seems OK", when he knew nothing about it. That is not right. It is an important procedure; it is an important parliamentary safeguard, which I value. The work of that committee is extremely valuable and it works hard. To bypass it in this way is not right. I hope that in the light of the debate, even at the last moment, the noble Lord, Lord Whitty, might think it wiser in the good name of the Government, to say that, having heard the debate, he will not press the amendment now, but bring the clause back at Report stage after it has been considered by the delegated legislation committee.

Lord Dixon-Smith

I support my noble friend Lord Jenkin of Roding, particularly his last remarks. Surely, there is a point of procedure regarding the whole purpose of our Committee. One of the main purposes of taking Bills off the Floor of the House is that nothing controversial should be inserted into them. We deliberately withdraw all our amendments to facilitate that procedure. I accept that it is unusual for the Government to find themselves in that position in Grand Committee, but if there is clear controversy and dissent over a government amendment, then it would be imprudent, at the very least, for it to be pressed. That would begin to establish a dangerous precedent if, on a committee where we do not normally vote, there is a clear indication that we would like to vote on an issue that the Government none the less press, because they could operate force majeure. In this instance I plead with the Minister not to do it, because it would be wrong and dangerous as regards the increasing use of Grand Committees.

Lord Skelmersdale

While I understand this argument, I am afraid that my noble friend Lord Dixon-Smith has got matters slightly wrong. Under Standing Orders of this House, there are no Divisions in this Committee. In the circumstances, with the complaints that have been made beside me and from behind me, I would recommend to the Minister that he does not seek to press the amendment at this stage. Otherwise he will cause a "mega" riot throughout the establishment, and I do not think that would be wise.

Baroness Miller of Hendon

In view of the concern from various Members of the Committee and following the comments of my noble friend Lord Skelmersdale, I would simply say to the Minister that perhaps it would be wise not to press the amendment at this point. It would be prudent to withdraw it and bring it back on Report.

Baroness Byford

I understand that if, in these circumstances, one Member of the Committee objects, it cannot be passed, and I would formally object.

The Deputy Chairman of Committees

There is no need for that.

Lord Whitty

I suspect that more than one person might formally object. I do not accept a lot of the arguments that have been put forward, given that we made the first mistake that we did and engaged in the proper procedure. It is a matter for the Select Committee on Delegated Powers and Regulatory Reform as to whether that procedure was right in its terms. It was certainly right in the Government's terms to deal with it that way. Nor do I accept that it would be sensible to take the whole batch of amendments back to that committee in the way that the noble Baroness, Lady Miller, suggests. Clearly, again, that is up to that committee. This matter will need to be considered by that committee, which will need to comment on it.

I was trying to be helpful to the Committee. If we passed this amendment, at the next stage we would then be able to consider, all in one, the whole range of amendments which relate to the ability of the Secretary of State to amend earlier parts of the Bill. That would have been a tidy way to proceed on Report. However, in view of the threat by the noble Baroness in which no doubt she would be backed up by at least one or two of her colleagues—only one would be needed, at any rate—and despite the temptation by the noble Lord, Lord Skelmersdale, to cause a riot in the establishment, to which I am quite attracted, I beg leave to withdraw the amendment. We shall return to it on Report.

Amendment, by leave, withdrawn.

[Amendments Nos.72A and 72B not moved.]

On Question, Whether Clause 32 shall stand part of the Bill?

Baroness Miller of Chilthorne Domer

I consider that I have spoken to this clause already so I do not feel that further debate at this stage would be useful. However, I shall obviously return to the matter on Report.

Clause 32 agreed to.

Clause 33 [Meaning of "nuclear site" etc. and "person with control]:

Baroness Byford moved Amendment No.72C:

Page 30, line 20, leave out "or before it became one"

The noble Baroness said: I thank the noble Lord, Lord Whitty, for doing the gentlemanly thing. However, the trouble is that when we come back to the matter on Report, we shall then be able to speak only once to the particular amendment or group of amendments. Will the Government consider whether we can reach an understanding before Report for that matter to be discussed as if we were in Committee? If that does not occur, we shall be limited in the extent of our discussion on that matter. As the Minister well knows, on Report one can speak to a matter only once. I put that on the record. I should be grateful if the Government would consider that. I am not asking for the same concession regarding the next two provisions.

In moving Amendment No.72C, I wish to speak also to Amendment No.72D. Amendment No.72C is a probing amendment designed to elicit the circumstances in which a site may be contaminated before it becomes used in one of the ways laid down in the preceding subsections.

I am particularly anxious to determine whether the Minister intends that areas of land contaminated by fall-out, past or future, from nuclear accidents will be included under this definition. It could be very important in respect, say, of land affected by Chernobyl where steps are, or have been, taken to monitor the situation, control the effects and restore the land as soon as possible to its former uses.

I turn to Amendment No.72D. Subsection (2) of Clause 5 specifies that the direction which gives the NDA responsibilities for a site may require the person in control of that site to make payments to the Secretary of State. This subsection specifies that in the case of installations in the sea, the person deemed to be in control is the Secretary of State.

I should be grateful for a fuller explanation of the effects of these two subsections. It would aid understanding if the Minister gave an example of an underwater nuclear site that might be made an NDA responsibility. Will he then state what sort of payments might be required and from where he would obtain the money?

Is it something that would come from the Consolidated Fund in the reverse of the process whereby he has to remit to that fund any payments received by him? Or would it, for example, in the case of a nuclear installation belonging to another department come from the ministry concerned? I beg to move.

Lord Triesman

These two amendments seek to alter the definitions in Clause 33 of a "principal nuclear site" and a "person with control". Amendment No.72C would remove the possibility under subsection (2) of Clause 33—the key paragraph here is paragraph (e)—that a disused nuclear site—that is, one that used to be a principal nuclear site but is no longer—that has been contaminated by activities carried out on it or in it before it became a principal nuclear site could be considered a principal nuclear site for the purposes of this Bill and designated to the NDA for clean up. In short, paragraph (e) in this context is what I would describe as a safety net—a paragraph that deals with all contamination that exists.

It is our goal that the NDA should do the fullest possible job in cleaning up the United Kingdom's nuclear legacy. The provision in Clause 33 allows the NDA to tackle all historic contamination at a site for which it takes responsibility. The provisions in subsection (5)(a) of Clause 33 which defines, contaminated as a result of nuclear activities as contamination arising directly or indirectly from activities carried out at a site which was or became a principal nuclear site, were included to allow for this.

We would not want the NDA to be prevented from cleaning up chemical or radiological contamination on a now disused site which was caused before that site became a principal nuclear site. On occasions it may be technically difficult to determine which parts of the contamination being cleaned up at any particular moment resulted from which process. That could lead to a situation in which the NDA would be required to clean up the contamination arising from the site's history as a principal nuclear site, but could leave behind pockets of contamination which were ca used before that stage in the site's history.

I was encouraged to give an example in another case, but let me give one here as well. An MoD site designated to the NDA which, in addition to any contamination caused by virtue of being a principal nuclear site, contains, for example, disused ordnance, mustard gas, high explosive or the like, which may have leached into the soil or even the groundwater. We would, of course, want the NDA to deal with that in the process of clean-up—we would not want it to leave the job half done. The NDA would be dealing with our nuclear legacy in the interests of future generations and not leaving any contamination for future generations to deal with. There would be little purpose in the activity as a whole if what was left was a certain amount of noxious inheritance.

Amendment No.72D would add an unnecessary complexity to the process of dealing with any contamination at sea that arose as a result of nuclear activities. Of course, that is to be avoided and the Environment Agency works hard to prevent such an eventuality. But in the undesirable event that contamination occurs at sea, we need to be able to designate a person with control in order to get the clean-up under way. There have been occasions when contamination has leaked into the sea in Cumbria. The noble Lord, Lord Maclennan, spoke earlier about particles found on a beach at Caithness which might have been found further seaward had they moved in that direction. I took careful note of what he said.

The territorial sea adjacent to the UK—that is, within 12 nautical miles—is within the territorial sovereignty of the Crown. The Crown, through the Estate Commissioners, is responsible for managing the territorial waters. To avoid having to designate the Crown Estate Commissioners or another Crown body as the person with control, who would then doubtless ask the Secretary of State to act on their behalf in the event of nuclear contamination at sea—as a result of a shipping accident, for example—we have drafted the Bill to allow the Secretary of State to take responsibility for control of any site of contamination at sea caused by nuclear activities. That would mean a rapid response—for example, by a direction from the Secretary of State to the NDA—to any incident that happened in territorial waters without having to go through a further loop.

I therefore ask the noble Baroness to withdraw the amendment. Both proposals are aimed at controlling something which is better controlled by the process described in the Bill.

6.45 p.m.

Baroness Byford

I am very grateful to the Minister. Perhaps I may formally welcome him to a speaking part, nearly two-and-a-half days after the start of our proceedings. We welcome him to his new position.

I am also grateful to the Minister for his detailed explanation, particularly his helpful example of the MoD site. Does he see any difficulty with the responsibilities falling between different government departments? Some could be the responsibility of Defra and some could be maritime—Defra again, I suppose. Some would come within the scope of the Crown, some would come under the DTI and some, obviously, under the MoD. I do not know if I am asking something that is unnecessary, that is not in the Bill. As I have raised the issue, it would be quite helpful to have clarification from the Minister. If he cannot give it now, perhaps he might write to me later.

Lord Triesman

I hope I can clarify at least part of the question. The person with control does not have an implication for who pays—that is established by the designation direction. The assumption will be that the polluter pays. That is the way in which who is responsible will be determined.

Baroness Byford

That is very helpful. As I have already said, I am grateful to the noble Lord. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No.72D not moved.]

Clause 33 agreed to.

Clause 34 agreed to.

Clause 35 [Nuclear transfer schemes]:

Lord Lea of Crondall moved Amendment No.73:

Page 34, line 2, at end insert— () A transfer under subsection (5) should only take place as a consequence of failure to deliver a set standard of performance agreed in advance with the NDA.

The noble Lord said: The purpose of this probing amendment is to obtain a clearer explanation about the practical effects of Clause 35 and the very substantial Schedule 5 associated with it. The Explanatory Notes, which have already proved useful this evening, make it clear on page 31 that this clause and the related schedule are not simply about the transfer of property but the transfer of employees, hence the reference to the Transfer of Undertakings (Protection of Employment) regulations.

There was, I believe, a preliminary discussion on this sort of question on Clause 12. Should there be some criteria in place when it comes to the legislation providing that these transfers of nuclear undertakings can take place? Key players in the industry need to have an assurance that, subject to meeting necessary performance standards, their operations will enjoy some degree of security. There is a feeling that the sword of Damocles is hanging over them. The amendment would provide that assurance. It clearly would not provide an absolute assurance that operations will continue as they are for ever. However, it would provide an assurance that is conditional upon some criteria such as service delivery. In any event, it would be very useful to have on the record the way in which Clause 35 is perceived, particularly with regard to employment.

Lord Maclennan of Rogart

There is perhaps little need to add to the eloquent contribution of the noble Lord, Lord Lea of Crondall. However, I confess to finding Clause 35, the subsequent clauses related to it under Chapter 2 and the schedule opaque in the extreme.

The circumstances in which it might be regarded as appropriate to sever the property, rights and liabilities of the United Kingdom Atomic Energy Authority from its operations as a site licensee are hard to envisage. The Minister may well be ready to spring to the provision's defence with precisely such an example. I know from the Explanatory Notes which are, as the noble Lord, Lord Lea, has said, a helpful guide, that this is not entirely without precedent. I believe it may be indicating that the development of AEA technology was brought about by some similar device. However, the circumstances in which that happened were very different from those which are now envisaged.

The United Kingdom Atomic Energy Authority is not a contractor of choice without opposition in the field, but is becoming, by institution of the Bill, merely a player to compete with all corners in the future. The thought that it would be possible to hive off, even in advance of the transfer of the licence, property which may be intimately associated with the delivery of the services which will subsequently be judged not at the behest of the authority but of the Secretary of State, is pretty remarkable.

I hope not to sound in any way alarmist, but I think that the fears that have been expressed to me are reasonable, and I hope that the Minister's answer will lay them to rest.

Lord Triesman

Let me deal first with the very direct question of my noble friend Lord Lea. I do not believe that anything in the clause or the Explanatory Notes would remove the security of the transfer of engagement arrangements were members of staff to be moved from one company to another. That can be said very directly.

The problem with the amendment as a whole is that it runs contrary to government policy on the use of competition to ensure that the best available skills are brought to bear in the clean-up task and are used to the greatest possible effect. It would restrict the circumstances under which the NDA could introduce competition for individual UKAEA sites or groups of sites.

While there is no intention to introduce competition simply for competition's sake, the NDA needs to ensure that it is getting best value for money—that must be in everyone's interests. The NDA needs to ensure that it is doing that. Indeed, it will have a statutory duty to do so. That means being able to test the market even in situations where the UKAEA is meeting its performance targets.

The NDA must be able to seek out the best available skills and new ways of doing things so that it can achieve real advances in the clean-up programme. By restricting this ability, the NDA would not be able to deliver against its fundamental obligation to offer best value for money to the taxpayer.

I simply make the observation that there is an inevitable connection between trying to achieve the best possible performance and standards—the notion that that is one of the tests—and the notion of getting the best value for money. Those two things are always intrinsically linked in a strong competitive environment.

Lord Maclennan of Rogart

It is not for me to conclude what, ultimately, should be the fate of this amendment, although I had some hand in the drafting of it. I am bound to say that I do not feel that the questions that I raised were fully answered, although I am perhaps unreasonable in expecting them to be fully answered following such a short debate.

I remain puzzled about why it is considered necessary to have this provision to sever the property, rights and liabilities of the site operator during the currency of the licence to operate. That appears to be the implication of this clause. It sounds to me like opening the door to the Secretary of State to make a scheme which would be capable of hamstringing the operator in the conduct of its business for reasons which, frankly, are hard to envisage. However, I may be simply lacking imagination because I cannot see in what circumstances that might be done.

None the less, if there is some necessary purpose behind the provision, I hope that, although this debate might better take place on clause stand part than under the amendment before the Committee, the Government will feel able to realise what that purpose is. It has given rise to concern; it suggests that steps may be taken to split up the Atomic Energy Authority, to take just one of the affected parties. Indeed, the Explanatory Notes say at paragraph 151, the powers may also be used to split new site licensee companies out of … UKAEA". In what circumstances would that be done? There may be a very simple answer, but it does not spring to mind. It suggests that those who are not part of the company that is split off for the purposes of being a new site licensee company may simply fall by the wayside. their interests unprotected. I think that a clause and a schedule that run to many pages might have been clearer in the drafting. This is not the most transparent aspect of the Bill.

Lord Lea of Crondall

I think that this brief discussion has demonstrated that it was quite useful to have this probing amendment on this afternoon's agenda. I take it from what has been said that the employer can change. TUPE covers it, but this is not just to do with changing property; there can be a change of employer. I think people in the industry will want to study Hansard carefully and see whether more clarity can be introduced into the matter before Report. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 35 agreed to.

Lord Davies of Oldham

This seems a highly convenient moment to suggest that the Committee do now adjourn.

The Deputy Chairman of Committees (Lord Carter)

The Committee stands adjourned until Tuesday, 27 January at 3.30 p.m.

The Committee adjourned at one minute past seven o'clock.