Energy Bill [H.L.]

HL Deb 27 January 2004 vol 656 cc67-134GC

Tuesday, 27 January 2004.

(Fourth Day)

The Committee met at half past three of the clock.

[The Deputy Chairman of Committees (Viscount Allenby of Megiddo) in the Chair.]

The Deputy Chairman of Committees (Viscount Allenby of Megiddo)

Before we start the proceedings, I should announce that the next Grand Committee day on this Bill will take place in the Moses Room. I apologise if noble Lords are slightly overcrowded for today's proceedings. I also have to tell the Committee that Schedule 5 has not been amended.

Schedule 5 [Supplementary provisions about nuclear transfer schemes]:

Lord Jenkin of Roding moved Amendment No. 74: Page 141, line 26, after "scheme" insert "and any information or assistance provided pursuant to section 45 shall be provided

The noble Lord said: In moving Amendment No. 74,1 shall speak also to Amendments Nos. 75 and 77. When we ended our proceedings last week and the noble Lord, Lord Lea of Crondall, had moved an amendment relating to Clause 35, the Minister, the noble Lord, Lord Triesman, gave what seemed to me to be a very sensible exposition of the policy behind Clause 35. Although the noble Lord, Lord Maclennan of Rogart, suggested that he may want to return to this matter later, I found that exposition reasonably convincing.

However, Clause 35 does not stand alone because it refers to Schedule 5, which has subsidiary provisions relating to Clause 35. We come to the schedule after having dealt with Clause 35 last week. I believe I can deal with this point extremely briefly. I understood that most of the property that will be transferred under the transfer schemes, for which Clause 35 makes provision, are likely to be incorporeal. It is intellectual property rights and things of that nature that will go. I notice the noble Lord, Lord Triesman, nodding wisely and therefore I hope that I have that right.

If that is the case, there appears to be a gap in the Bill. Clause 45 makes provision for the Secretary of State to give information to assist the transfer. These three amendments simply seek to ensure that, if the transferor has received such assistance and information from the Secretary of State, those will be transferred as well. It seems to me ridiculous that they would not be transferred. I shall be interested to hear what the Minister says. However, I believe that at present there is a gap in the provisions of Schedule 5. Amendments Nos. 74, 75 and 77 are intended to fill that gap and make certain that, when the transfer takes place with the intellectual property rights and other—what I believe are sometimes called—incorporeal hereditaments, the information and assistance are transferred as well. I beg to move.

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

These three amendments seem to deal with what is perceived as the hypothetical risk that BNFL and UKAEA could face claims for damages from third parties as a result of information being provided for a nuclear transfer scheme. I am not sure that the noble Lord, Lord Jenkin, has clarified such a situation where that may arise. Indeed, the formulation here on transfers relates very much to the formula that has pertained for other forms of privatisation in a number of Acts. However, as I understand the amendments, the purpose would be to extinguish such claims and, instead, to provide third parties with statutory rights of compensation for their extinguished schemes.

Unless we can pin down how that hypothetical question will arise, it is difficult to see why that would be necessary. Officials at our departments have spoken to BNFL and UKAEA and recognise that there is an anxiety in the background, but they can come up with no specific situation where such a claim from a third party is likely to arise in practice. It would be difficult to justify a statutory measure without being clear of the kind of situation in which it could possibly arise.

The transfer powers permit contracts with BNFL, including an confidentiality provisions in BNFL's contracts, to be transferred to another person and for references in those contracts to BNFL to have effect as though they were references to the transferee. Therefore, such confidentiality provisions can be protected and third parties would not have a case against BNFL or the transferee company. I fail to see that that is necessary and it is certainly not provided for in equivalent legislation in other circumstances.

Lord Jenkin of Roding

I have listened to what the noble Lord has said. Clearly, I shall want to study his words carefully and perhaps discuss them with the two organisations that he mentioned. It has been made clear to me that they see some difficulty in this matter, unless the information and assistance is included in the transfer process. That is what we are trying to achieve. However, the noble Lord has said that he cannot see any point in the amendment. We cannot press it today, so we shall consider what he has said. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 75 not moved.]

Lord Jenkin of Roding moved Amendment No. 76: Page 141, line 34, after "enactment" insert ", rule of law

The noble Lord said: Amendment No. 76 amends paragraph 2(3) of Schedule 5. The point of this amendment is simple. I do not find this part of the Bill the easiest to understand and it would be helpful if the Minister could go a little wider than the amendment and explain precisely what is intended.

My short point is that the United Kingdom is the country that invented the concept of the rule of law; that is not necessarily the law resting on statute but also resting on judge-made law in the courts, which binds the citizens of this country as much as though it had appeared in an Act of Parliament or in regulations. It is the law until it is changed by further decision in the courts. Therefore, it seems to me that if paragraph 2(3) refers to "enactment or agreement", it should also refer to rights or obligations that are established by the rule of law. I believe that that should be inserted in the Bill so that it is absolutely clear what is intended. I beg to move.

Lord Triesman

We carefully considered all those forms of words. I am inclined to agree that there is a degree of complexity that is probably unavoidable in a piece of legislation that is designed in every respect to cover all eventualities that can be imagined. It is difficult to do that in terms that are a great deal simpler. That is probably unfortunate, but it is the nature of the beast. What is intended here is that the wording that is currently in the Bill, under an enactment or agreement or otherwise", includes the concept of the rule of law. I understand perfectly well the distinction that the noble Lord made between enactments and matters that may result from decisions taken in the courts. However, enactments and the interpretation of enactments are in essence one and the same thing. The word "otherwise" probably covers the matter in any case. We and the lawyers believe that the framing of these words absolutely covers the intentions that the noble Lord expressed in moving the amendment. Therefore, we suggest that the amendment is withdrawn.

Lord Jenkin of Roding

I am grateful to the noble Lord for his assurances on this point. He conceded the point that this is pretty complex legislation. I remember once, as a very young barrister's pupil, sitting in court and the judge leaning over to the counsel on the other side and saying, "I am afraid that I do not understand your argument and therefore I think it must be wrong". I am not sure that I understand this clause but a clause in a Bill that becomes a section in an Act of Parliament cannot be wrong until it has been so held by the courts. However, the assurance that the noble Lord, Lord Triesman, gave to the Grand Committee seems to meet the case. In those circumstances I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 77 not moved.]

Schedule 5 agreed to.

Clause 36 agreed to.

Schedule 6 [Structure etc. of transferee companies]:

Baroness Byford moved Amendment No. 77A: Page 152, line 40, leave out paragraph (b).

The noble Baroness said: I rise to move Amendment No. 77A and to speak also to Amendments Nos. 77B, 77C, 77D and 77E. Amendment No. 77A is a probing amendment. As I understand it, Schedule 6 governs the transfer to a publicly owned company—the transferee company—under a nuclear transfer scheme of property rights and liabilities from a company acquired under that scheme. Once the transfer has been made, the transferee company has to issue securities to the Secretary of State of a nominal value decreed by him fully paid in such amounts as he demands. The Treasury or a Minister may buy securities in the transferee company using money supplied by Parliament. A Minister may in either case dispose of securities acquired from the transferee company provided he has the consent of the Treasury. My question is, what is intended here? Why would the Treasury buy securities that can apparently be obtained quite legally for free? Why would a Minister dispose of such securities, and in this context would "dispose" always mean sell? If it does not, what would it mean? I was very confused by the paragraph.

I turn to Amendment No. 77B. Clause 22 is quite clear. Subsection (3) of Clause 22 states: The NDA must pay to the Secretary of State all sums received by it that are not grants from the Secretary of State. I refer to line 44 of page 21 of the Bill. Subsection (4) of Clause 22 states: The Secretary of State must pay sums received by him…into the Consolidated Fund". Subsection (2) of Clause 5—at line 1 of page 5—opens the possibility that an installation designated as an NDA responsibility may be required to make payments to the Secretary of State. Subsection (8) of Clause 5 is unequivocal that the Secretary of State must pay all the sums received by him into the Consolidated Fund. Clause 39 allows for the transfer to the Secretary of State of the nuclear liabilities investment portfolio from BNFL. The clause also specifies that the cash from all other forms of income transferred in this way must be paid by the Secretary of State into the Consolidated Fund.

In the Explanatory Notes at page 32, note 159 states: At 31 March 2003, the NLIP had a total value of £3.84 billion made up of around £2.34 billion in cash and Government gilts and £1.5 billion in short term fund-managed investments". One way or another, that is a lot of money going in to the Consolidated Fund. We accept that the Bill sets up a system of recording what is owed to nuclear decommissioning activities. However, that is not the same thing as putting the moneys in a segregated fund that can be used only for nuclear decommissioning, unless the whole subject is debated and cleared by both Houses in the form of a new Bill.

On Amendment No. 77C, it is possible to accept that if the Secretary of State is making the loan, he should call the tune on when repayments must be made and how each shall be made. However, there must be an element of discussion and agreement. Moreover, the company in receipt of the loan should be aware of those factors when the loan commences. The fact that recipients of such loans will be publicly controlled companies does not mean that they need or can make do with less control over their fortunes than private companies, most of which would be reluctant to enter a loan agreement without some idea of repayment terms. Will the Minister explain what is intended by the provision and whether in practice guidance would be binding on both the company and the Secretary of State?

On Amendment No. 77D, as with Amendment No. 77, any company in receipt of a loan needs to be confident that changes to the repayment terms will be negotiated, not simply imposed. Will the Minister give examples of existing government loans to publicly controlled companies where the terms include changes to rates or repayment times as may be directed? Also, are such terms frequently used or only in abnormal circumstances?

Lastly, I turn to Amendment No. 77E, which is another probing amendment. Schedule 7, paragraph 7(1) makes it possible for the transferee company to confer on the Minister the right to restrict the power of another company in the group to which the transferee company belongs to borrow money. That seems to imply that, for example, should one of our larger companies decide to allow a subsidiary to enter the nuclear decommissioning business, its own business freedom may be severely restricted. Will the Minister confirm whether that is possible? If so, will he explain the reasons behind the provision and the circumstances in which it may be used? I beg to move.

3.45 p.m.

Lord Triesman

In dealing with this group of amendments, perhaps I can speak to their general purpose taken together and hope to answer the specific questions as best I can in the course of so doing. I think it is more helpful at least to start by setting out the thematic links across the whole piece.

The amendments all relate to technical provisions in Schedules 6 and 7 on the structure, finances and accounts of transferee companies—that is so say, those companies to be formed from BNFL and UKAEA. I assure the Committee that the schedules' provisions follow well established legislative precedents in the field. The Electricity Act 1989 is an example of a precise model in this case, as is the Atomic Energy Authority Act 1995, which covers the matters that we are considering. I turn to the amendments. I shall deal with them thematically, against the background of there being well established precedents.

On Amendment No. 77A, the purpose of paragraph 3 of Schedule 6 is to permit the Government to invest in transferee companies. For example—and I was asked to give examples—the Government may invest in debt securities and so on. The paragraph permits investment before privatisation. If there were a PPP scheme for part of BNFL, that would be another example of when the provision would operate. The standards set in doing that are the standards that have been set in past privatisations and are being followed here as a model pretty exactly.

Amendment No. 77A removes the requirement for the Treasury to consent for the disposal of securities or rights of a transferee company. That is a standard provision, reflecting the Treasury's legitimate interest in the disposal of government assets. As a guardian of the Government's finances, it would be difficult to argue that the Treasury should not be involved in such a transaction. I must be candid in saying that I do not believe that there would be much prospect of persuading our colleagues in the Treasury that they should vary their practice in that regard. Indeed, I would not relish the idea of having a chat along those lines with my right honourable friend the Chancellor of the Exchequer. They are legitimate interests, in which the Treasury would continue to insist that its interest should be represented, as it has in the past and with this Bill.

Amendment No. 77B would require sums received from the payment of dividends from transferee companies, or from disposal of rights or securities in some companies, to be paid into a segregated fund. I assume that the fund to which Members of the Committee refer was the one originally discussed under Amendment No. 16 some while ago. The Government did not support the proposal to establish a segregated fund. Even if that were to be included in the Bill, it would not be appropriate to earmark all such revenues for the NDA. Some parts of BNFL would be outwith the responsibility of the NDA and transferred to a new holding company. It would not necessarily be right that the sums gained from the future disposal of securities in such companies should then all be allocated to the NDA. The normal arrangement for such disposals is to pay the resulting sums into the consolidated fund. I have mentioned the precedents. The Government see no reason to depart from those standard provisions in that area and in those circumstances.

Amendments Nos. 77C and 77D would require the Secretary of State and Treasury to secure the transferee company's agreement before amending the repayment terms of a loan to the transferee company. I hope that I have understood the intention of what is proposed. The amendments would go against all the precedents in privatisation. The terms of any loan, including the repayment terms on any loan, would be clear at the point at which the transferee company accepted the loan. The ability of the Government to change the repayment terms on the loan would accordingly be clear at the outset, before anyone entered into an agreement. That power is not unlike a bank reserving the right unilaterally to change the interest rate on a mortgage. Once again, the Bill's provisions reflect well established practice in circumstances where the changes were taking place. Everyone from the outset would know what the terms were and would understand that variations in a bank or a mortgage might be events that would occur.

Finally, I turn to Amendment No. 77E, which would reduce the discretion of the Secretary of State to restrict the sums of money that transferee companies can borrow or raise. Paragraph 7(2) limits the restrictions on the discretion of the Secretary of State to the national interest. For example, it removes the potential for arguments that a particular exercise of the discretion of the Secretary of State unfairly prejudices minority shareholders. In short, they must be considerations that the Secretary of State would have in mind. The general rules of good governance would dictate that there are a broader set of concepts that would need to be thought about in the circumstances.

I should point out to the Grand Committee that the power to restrict borrowing set out in paragraph 7 of Schedule 7 applies only where the articles of association of a transferee company confer such a power on the Secretary of State. That can be conferred only when a transferee company is wholly publicly owned.

Should a private investor subsequently acquire a shareholding in such a company, paragraph 7(2) would prevent such a shareholder from complaining about the exercise of such a power by the Secretary of State in the national interest. For example, it would prevent the shareholder complaining that the Government's conduct was unfairly prejudicial to his shareholding. When entering into the contract he would have known from the outset that those were the terms upon which he was trading.

We feel that this is not unreasonable. I apologise for the length, but there are some very important detailed issues at stake. This is exercisable only in the national interest. As I said, a private shareholder would be aware of the Secretary of State's powers in this regard at the point of acquiring the shareholding. There would be no surprises; it would be transparent throughout.

The provisions on transferee companies are necessarily complicated and, as I said in an earlier response, need to cater for a fairly wide range of eventualities. In drafting them, the Government have drawn on well established precedents and, in particular, the Atomic Energy Authority Act 1995, which I mentioned a few moments ago, and which applied to the UKAEA. That approach has proved successful in the past. It is well tried and well tested. Accordingly, I hope that Members of the Committee will consider further before pressing the amendments.

Baroness Byford

I am very grateful to the Minister for giving me such a full explanation. As I said, two or three of them are probing amendments. I was going to apologise but I do not believe that one should apologise for tabling probing amendments. This is a fairly technical area. I should like to read Hansard tomorrow and go through the explanation carefully to see whether I have any more queries. Certainly I believe that this highlights how difficult it is when new legislation is introduced and impinges on older, prior legislation. Some of us have not been dealing with the matter as it has gone through. Therefore, I am very grateful to the Minister for his full explanation. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 77 B not moved.]

Schedule 6 agreed to.

Clause 37 [Transfers with the consent of the transferor]:

On Question, Whether Clause 37 shall stand part of the Bill?

Baroness Byford

I rise to oppose the Question whether Clause 37 shall stand part of the Bill. Again, I seek to probe the Government on this matter but, from what the Minister has just said, the issue may well already be covered. However, perhaps I may still go through it.

The use of the word "transfer" implies something that is not a straight sale; in other words, it is taken on. Can the Minister tell us what kind of company would be transferred in those circumstances? Would there be any form of compensation, if that were necessary, and in what circumstances? Would the employees be covered by the TUPE regulations and, if not, what other safeguards would there be for either staff or the owner? The Explanatory Notes refer to, reasons of public safety or in order to minimise costs to the taxpayer". I am not quite satisfied that the owner of a private company would be sufficiently impressed by the second reason to hand his company over without some form of recompense. Can the Minister give me some more information on the type of circumstances which he believes may operate in order for an individual to hand over his company?

4 p.m.

Lord Triesman

Whether or not the Motion is of a probing nature, I am sure that it is useful and I appreciate it. It is always better be as clear as we possibly can.

Let me start with one straightforward answer and then again try to deal with the big issues thematically, as I described it earlier. The transfer of undertakings issue has been mentioned in discussion of several amendments. My noble friends and I have been able to give assurances that the transfer of undertakings regulations would apply to employees of the relevant companies—indeed, with greater security than has been previously expressed in a legislative sense. I start with that because it is an important issue that deserves highlighting, and shall now set it on one side for the moment.

Clause 37 is a really important part of the Bill. It provides for the transfer by scheme of shares in, or the property rights and liabilities of, a nuclear company in the private sector to either a publicly owned company or the NDA. In practice, that is to enable the Government to transfer responsibility for securing the clean up of private sector sites to the NDA.

There are two important points to note from the outset. First, such transfers may only be made where the private sector company concerned has consented. It must have consented. That provision cannot be used against the interests of private companies. Secondly, that does not necessarily entail the NDA taking on financial responsibility for the decommissioning or cleaning up of private sector installations, sites or facilities. It in no sense undermines the principle, which has been expressed on a few occasions in Committee, that the polluter pays.

The provision is designed to deal with circumstances where, for reasons of public safety or in order to minimise costs to the taxpayer, it is decided that the Government should take responsibility for arranging clean up. The NDA, as the public sector expert, would be the obvious body to arrange for any such responsibilities to be discharged.

As we have discussed on other amendments, that does not mean that the NDA will assume financial responsibility for private sector clean up. Decisions on who pays for clean up will depend on individual circumstances; the ability of the private sector operator to meet the costs; and the need to meet the regulatory requirements for the site, installation or facility in respect of safety, security and protection of the environment.

A transfer scheme offers an efficient way of handling such an eventuality. It would avoid the potentially cumbersome private law procedures that would otherwise need to be followed to transfer the necessary property rights and liabilities. That could prove very useful in the nuclear field, where strong regulatory imperatives demand prompt action. It would help achieve the end goal much more quickly.

In case I misled anyone on the issue of TUPE at the beginning—although I tried to express the provision clearly—I have been asked to clarify that pension protection is not part of TUPE, nor would those employees fall under the protection of Schedule 8, as they are not part of the NDA workforce. However, in other respects, I think I am right to say that TUPE regulations apply to the appropriate people.

I hope that by describing the general purpose of the clause I have made it clear. Employees cannot be disadvantaged—I hope that I have explained why— and, given the protection afforded to private companies, they cannot be disadvantaged. I hope that I have made clear that they are in no sense even possibly in the firing line.

Baroness Byford

I am grateful to the Minister for another full response. Having read the Bill carefully, anxieties were raised about the position of existing employees of the company. I again thank the Minister for having clarified that transfer would occur only when consent had been given; and that the will of the company would be not be overridden in any way.

I shall read what he said, but I do not think that there is a problem, so I shall not oppose the Motion.

Clause 37 agreed to.

Clauses 38 and 39 agreed to.

Clause 40 [Undertakings given by the Secretary of State]:

On Question, Whether Clause 40 shall stand part of the Bill?

Baroness Byford

It is conceivable that a publicly owned company might be due some form of grant and might also be in receipt of services from the NDA. My concern is whether the cancelling of the grant is correct. Clause 21 states quite clearly that the NDA is responsible for all the costs of clean up provided that the publicly owned company was wholly owned on 4 July 2002 and still is.

Will the Minister explain why a grant that is not due to the NDA should be offset against NDA work? In what way would the financial responsibilities of the NDA make it unnecessary for the sums involved to be paid?

Lord Whitty

I hope that I can clarify the matter. Although Clause 40 is drafted in general terms its purpose is to allow the Secretary of State to extinguish what is called the "Magnox Undertaking". When the Magnox stations were transferred to BNFL in 1998 at the time of privatisation of the more modern nuclear power stations—the AGRs and Sizewell—which are now operated by British Energy, the Government undertook to support the decommissioning liabilities of the stations that had accrued before the transfer. The "Magnox Undertaking" was an agreed schedule of payments to BNFL running for over 100 years from 2008.

Now that we are setting up the NDA to secure and finance decommissioning and clean up of sites, including the Magnox sites, it is appropriate that the NDA rather than BNFL becomes the beneficiary of the Government's commitment to finance Magnox decommissioning and clean up. That would be undertaken by the NDA. It would not be appropriate, therefore, for BNFL to receive that money as it is no longer liable. The obligation to pay BNFL is unnecessary under subsection (l)(b) of Clause 40.

In determining the starting balance for the NDFA, we shall credit to the account the value of existing provisions for decommissioning and clean up. As well as BNFL's own provisions in the shape of the nuclear liabilities investment portfolio—the subject of Clause 39— it will also include the discounted value of the so-called "Magnox Undertaking", which at the end of the previous financial year stood at £4.8 billion. The balance of that account will obviously attract interest as provided for in Clause 28(4)(d) so that the NDFA will, over time, record the full value of the undertaking. However, it would be due to NDA rather than BNFL.

If we were to delete Clause 40, we would not only not fund the role of the NDA under the new structure, but we would also in a slightly bizarre fashion leave the Government with a huge commitment to fund BNFL for liabilities that it no longer carries.

Baroness Noakes

I completely understand the Magnox Undertaking and not paying it out when it is no longer necessary because of the restructuring. Why, then, is the clause drafted in this oblique way as though it is trying to catch all kinds of things? Why cannot it be drafted to deal directly with the Magnox undertaking? I should have thought that reference could be made to that specific arrangement. Then we would not have this ambiguity regarding what else Clause 40 applies to.

Lord Whitty

It is true that the Magnox undertaking is the only significant undertaking that may be caught by the clause, but others may arise in the course of time. The situation described in subsection (l)(b), where, the financial responsibilities of the NDA", make the previous undertaking unnecessary, would cover other such contingencies were they to arise. However, that is very heavily qualified by the requirement that the original undertaking is no longer necessary. That clearly covers the Magnox situation, but it could over time cover other situations in which commitments had been made to fund other bodies, responsibility for which was being taken over by the NDA.

Baroness Byford

I am grateful to my noble friend for her question to the Minister, but I am slightly intrigued by his reply. It suggests that Henry VIII powers will be sitting there, which might be used in future in some undefined way. Could I persuade him, although not now, to consider my noble friend's comments and see if it would be possible to address the issue more directly? In that way, the Government might cover what they mean to cover, rather than leaving us with an open-ended goal, into which the Secretary of State, whoever he might be, could put in whatever he wished.

Lord Whitty

I do not believe that the provision is open-ended or in that sense Henry VIII, because it is so heavily qualified by the "no longer necessary" provision. As to defining it, it is conceivable that the various undertakings made to British Energy might fall under the clause at some point, were those responsibilities to be transferred elsewhere when decommissioning came into play. There are other possibilities even than can be envisaged at present that might come under the clause. However, it is a heavy hurdle, which would mean that the clause is not open-ended or a Henry VIII clause in the normal use of the term.

Baroness Noakes

I do not want to detain the Committee too long, but can the Minister explain the point about British Energy, as I cannot see what particular arrangements involving that company would come within Clause 40?

Lord Whitty

There may be possibilities of underwriting or providing finances to British Energy in the course of decommissioning, which might in the longer term be taken over by the NDA.

Baroness Noakes

Does the Minister refer to arrangements that have not yet been made with British Energy, which the Government might choose to make in future, which may come within the terms of the clause? My noble friend's point is right in that the provision has a Henry VIII quality about it, although it is not strictly what we would call a Henry VIII clause. It is dealing with things that are completely in the future, rather than things in the here and now. Whereas we can all understand what the Magnox undertaking is about, it is the rest that we do not understand.

Baroness Byford

In addition to my noble friend's comments, I ask who decides what is necessary and what is not necessary? I urge the Minister to consider the matter. I can do no more at this stage, although it is a matter that we shall probably return to. I hope that the Government will think about it, although I am not making any objections with regard to the Magnox undertaking, which is obviously there. The Minister mentioned Sizewell B, which happens to have very close connections to my heart, as he knows. I am not happy with the provision as it stands, but perhaps we shall return to it on Report.

Clause 40 agreed to.

Clause 41 agreed to.

Schedule 7 [Finances and accounts of transferee companies]:

[Amendments Nos. 77C to 77E not moved.]

Schedule 7 agreed to.

Clause 42 agreed to.

Schedule 8 [Pensions]:

4.15 p.m.

Baroness Byford moved Amendment No. 77F: Page 162, line 21, leave out sub-paragraph (2).

The noble Baroness said: In moving the amendment, I shall speak also to Amendment No. 77G. Amendment No. 77F is a probing amendment. Having read through the paragraph, I am not sure what is proposed. The wording does not seem to make sense. It may be that a word or phrase is missing from it—I am not sure. The paragraph says: For the purposes of this Schedule the transfer scheme or transfer arrangements by means of which a person's employment is transferred is or are for NDA purposes"— and then it goes straight to "if his employment". Is there something missing after "purposes"? I have tabled the amendment because I could not follow the logic of the paragraph. Am I reading into the provision something which does not exist? I may simply have misunderstood.

Amendment No. 77G is self-evident. The section allows the NDA to modify a pension scheme, but not if it deprives a scheme member to any extent of the rights that have accrued to him before the modification takes effect.

The modification will be made to the scheme. I am not here talking about an individual's pension transfer value as it is commonly calculated when an employee moves to another scheme. Will the Minister give examples of what "to any extent" means? Would it be 1 per cent, 5 per cent or 10 per cent of the accrued value? Would it perhaps involve rounding entitlements down to the nearest full year? I beg to move.

Lord Gray of Contin

I support the amendments. One of the key factors for the NDA in reaching its objectives must lie in the ability to retain key employees in the decommissioning and clean-up market. Pensions are of vital importance to any employee in any industry.

The White Paper, Managing the Nuclear Legacy—A Strategy for Action, stated clearly: The Government recognises the key role that current employees play in the safe operation of nuclear sites and is concerned to avoid unnecessary changes to terms and conditions". Membership of the United Kingdom Atomic Energy Authority scheme is open only to employees of named organisations. The White Paper stated that provision will therefore be made in the Bill for membership to be extended to staff who transfer to a different employer but who remain within the public sector.

The Explanatory Notes clearly state on page 34: to ensure that in the event of employees being transferred for NDA purposes to the private sector, or within the private sector, and, as a consequence, having to leave their current pension scheme, they have the option of joining a new scheme which (taken as a whole) confers benefits which are no less favourable than those offered by their original pension scheme". The Bill does not appear to deliver on that. Will the Minister give us a counter argument to it? We will have an opportunity of discussing the matter later, but perhaps he could consider that point now.

Lord Ezra

I, too, want to refer to the phrase "to any extent". I find it difficult to understand what it means and it appears to have a threatening tone. That is hardly in the interests of retaining staff who are properly and adequately motivated. I would have thought it highly desirable to leave out that unfortunate phrase.

Lord Whitty

Part of the problem is that we need to clarify which workers are dealt with by the schedule and which are not. Broadly speaking, there are three sets of workers. There are those who are currently employed in public-sector undertakings who would be transferred into the NDA and possibly beyond into contractors for the NDA. For them, the protection in the Bill is very substantial: it is more substantial than any other statutory-based protection we have given in any form of privatisation or change of employment. That would transfer into the private sector.

There are other employees of BNFL who would not be transferred into the NDA—what has been called "new BNFL"—who are not dealt with by the Bill and are therefore not included. However, the normal protections would be provided by the Government in the event of any problem arising on that front.

Then there are those who are new starters to the NDA workforce, probably employed by a private contractor. The provision and understanding there is that the contractor would be required by the terms of the contract to provide one of three options which would be a nuclear clean-up industry-wide scheme— that is, the NDA would establish that scheme; or there would be a contribution from the industry—that is, contractors within the industry; or the contractor individually would provide a pension. The position of those joining new would be somewhat different from the entirely protected position of those who are already public-sector workers in the nuclear industry who will be transferred to or via the NDA.

I am not sure I followed the noble Baroness's view that Amendment No. 77F did not make sense. It may be a case of breathing in the sense of a slightly complex sentence, but it is made clear that we are talking about existing employees who immediately after the transfer takes effect are either in employment with the NDA or a subsidiary of it or is employed by a contractor on an NDA site. This is part of the definition of protection for existing NDA workers. If we deleted the clause, the statutory-based protection would be expanded to new employees. We are providing a level of statutory protection that has not been provided elsewhere—it goes beyond the usual government practice to follow government guidance on such issues—and it would make it statutory.

However, the same argument for protecting existing workers in BNFL and UKAEA does not apply beyond the NDA's workforce. To accept the amendment proposed would create an unhelpful precedent. Subsection (2) provides protection for the NDA but limits the NDA staff—or those who will become NDA staff—but would also limit that protection to those who are already employed by the NDA. By removing the restriction to apply protection only to the NDA workforce, there would be completely open-ended obligations on the public sector that would undoubtedly carry a financial burden whose costs and effect on the pensions scheme would be difficult to estimate. That is why, in terms of new employees coming on site through the contractor, we have a separate provision under the contractual arrangements.

Amendment No. 77G deals with the "to any extent" issue and I am not sure why we would delete the phrase. Clearly, it is intended to give effect to the commitment that there would be no less favourable treatment. Precisely how that worked out would be an actuarial issue on which we would have standards set by the actuaries. The intention is that we ensure that the NDA would not be entitled to alter the entitlements, through accrued pensions or any other former pension entitlement, of the currently existing staff of BNFL or UKAEA. Therefore, there would be no question of the NDA interfering with the accrued rights of any such pension scheme.

That would deal with the intention behind Amendment No. 78, which attempts to add reference to, services rendered, contributions paid". I am not sure what that adds—

Baroness Byford

I did not know that we had got to Amendment No. 78.

Lord Whitty

My understanding is that Amendment No. 78 is included in the group.

Baroness Byford

I apologise: it is.

Lord Whitty

In particular, the inclusion of the phrase, or any other things done", creating a pensions entitlement, is pretty open-ended and not one which would be found in any other pensions law provisions. I do not see the point of it here and I would resist that amendment in particular.

On Amendment No. 80A, I am also unclear about what it provides—

Baroness Byford

It was my mistake. I spoke to the other amendments but not to Amendment No. 80A. Would it help the Committee if I speak quickly to it, and then the noble Lord, Lord Lea, can speak to his Amendment No. 78? We got out of sequence, for which I apologise.

Lord Whitty

Yes.

Baroness Byford

Amendment No. 80A is tabled to ascertain the full meaning of "participate". Would it, for example, mean that an employee could no longer opt for a frozen pension instead of transferring the accrued assets to his new employer's scheme? If that were to be the case, it would not be long before the employees would be leaving in droves before the employers lost their publicly controlled status. Can the Minister explain exactly what is meant by the meaning of "participate" and exactly what the ban would imply for the employees?

Lord Lea of Crondall

It might be convenient if I reserve my remarks to the next two groupings.

Baroness Carnegy of Lour

Can the Minister tell me three things? He referred to sub-paragraph (2) on page 162 as being comprehensible. I am bound to say that I agree with my noble friend; it is a pretty odd sentence. I suggest that a couple of commas might be in order. I shall not try to punctuate here, but in line 22 a comma would assist. That is all that is required.

As regards paragraph 2(2) on page 163, my noble friend suggested that the phrase "to any extent" might be omitted. I believe that if employees are not to lose any of their advantages, which is what the Minister said, that phrase could be omitted and he should think most seriously about that. "To any extent" would fill me with trepidation if I were an employee, so I do not think we will let him get away with that.

Thirdly, the Minister mentioned three groups of employees, but the second group was not even included in the Bill. Can he tell us why?

4.30 p.m.

Lord Whitty

On the last question of the noble Baroness, the Committee will be aware that there are substantial discussions going on about the future generally of BNFL. We are concerned only about those employees of BNFL who are transferred into the NDA. The Bill does not deal with the general future of BNFL. Therefore, issues that relate to it are not relevant to the Bill as it stands.

On the question of the words "to any extent", I shall take further advice. However, the indications are that when we talk about preserving rights to the entitlements of pensioners against any less favourable treatment, clearly if there were an alteration, one would have to balance one part of the scheme against another. That is why the phrase is in the Bill, but it is not intended to dilute the commitment in any way and no less favourable treatment will be given to those employees.

As for Amendment No. 80A, the Bill does not allow the NDA to interfere in any way with accrued benefits. So if people want to freeze their accrued benefits, there is no bar on that. Employees can freeze their accrued benefits and become deferred pensioners, as they can at present. The paragraph as it stands allows them to do that. The change suggested by the noble Baroness would not make that any more or less of a protection. The words "participate in" include participation in their current entitlements, which includes the ability to freeze their pensions.

Baroness Byford

I am grateful for that explanation although, following the very good contribution made by my noble friend Lady Carnegy of Lour, I got slightly worried when the Minister said it was a matter of balance but that whatever was going to happen, the commitment would not get diluted. I need to read very carefully his response.

I am seriously not very happy on Amendment No. 77G. I cannot understand why the Bill needs to contain the three words "to any extent". If the Government are serious about their commitment to make sure that the pension rights will not be diluted in any way, I do not think the words are necessary. I urge the Minister to consider the issue again between now and Report. Members of the Committee have raised some very good points today. I am grateful to my noble friends Lord Gray and Lady Carnegy and the noble Lord, Lord Ezra, for having raised the issue.

On Amendment No. 80A, if the Minister is saying that the words "participate in" mean "contribute to", that, in my humble view—unless it is the normal legal language used for Bills—I should have thought would be more sensible and readily understood by the general public. Perhaps the Minister will come back to me on that issue.

I thank the Minister for explaining who is and who is not being considered by this particular section. Perhaps I may repeat what I understood him to say— that the second group of people who would not be included in the question of pensions were BNFL employees who are not going to be involved and transferred across to the NDA. Otherwise, everyone else who is will be included. Both Ministers are nodding their heads so I assume that I am right.

I highlight the comments made by my noble friend Lord Gray. I think all noble Lords are concerned that the pension arrangements are seen to be as good—if not better—than those currently being enjoyed by people involved in the industry. Pension provision for the future will be a huge problem, as we all know. The one section of benefits that has been attacked—I have to say—by the Government has been pensions. So, the Minister will not be very surprised that with regard to pension rights we are trying to ensure that people already working within the industry will not be losers when they get transferred to the NDA. I am grateful to my noble friend for reinforcing what I was trying to convey.

At this stage I urge the Government to think about the words "to any extent", before we return on Report. In the same way, I should be grateful if the Minister could drop me a line about why they think the words "participate in" rather than "contribute in" add to the Bill. If that is the normal legal language used in every Bill, obviously I shall quite happily accept it. At this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 77G to 78 not moved.]

Lord Lea of Crondall moved Amendment No. 79: Page 163, line 20, at end insert— (a)

The noble Lord said: We now take two groups of amendments together, which stand in my name and that of other noble Lords. They are Amendments Nos. 79, 80, 85, 86 and 87 and Amendments Nos. 81, 82, 83 and 84. As I shall be speaking to them all, it may be of convenience to the Committee if the Minister responds to them all, unless Members of the Committee have difficulty with that.

By the time a Bill is published and reaches this stage there have been extensive discussions with the industry, including trade unions, on the practical issues which we are largely discussing today. We are not discussing these matters in an ivory tower. So in our briefing we have accounts of the outcome of such discussions between the industry and different groupings, including trades unions and Ministers. We have submissions that some of these understandings are not fully reflected in the Bill. I shall speak to three aspects of Schedule 8 that are dealt with in the various amendments.

I hardly need add that Schedule 8 is the most detailed exposition of the pension arrangements. We have already had some discussions on Clause 8. But there are three core objectives in the minds of workers' representatives and in these amendments, all of which are intended to ensure that the understandings between the unions and Ministers are actually implemented.

First, there is the need for a statutory right to consultation with regard to any actions taken under the Act in respect of pension schemes. Amendment No. 80 to page 163, line 21, and Amendments Nos. 85, 86 and 87 to page 170 would bring this objective into effect. While they clearly do not provide any guarantees in respect of the outcomes of consultation, they do at least provide an assurance to staff and their representatives that the due processes will be followed and that there will always be a route through which concerns can be properly considered.

The second core objective is to try to secure broad comparability of pension schemes. Dangling potential improvements elsewhere in the employment package should not be allowed to compensate for worse pension provision. Amendment No. 82 to page 168, line 23, and Amendment No. 84 to page 169, line 35, seek to ensure true comparability of pensions. They are—and this is a very important point which will emerge more and more in such discussions— consistent both with the Government's fair deal policy and the Local Government Act 2003.

The third core objective is to try to secure protection for transfer of accrued rights. The wording of Amendment No. 78 to page 163, line 18, is the same as that which appears in this context in the Superannuation Act 1972. Amendment No. 81 to page 168, line 19, and Amendment No. 83 to page 169, line 32, also seek to ensure transfer terms. The wording used is the same as that in the fair deal policy. So the amendment seeks to do something which clearly is already government policy, at least in respect of employees who were originally public sector staff.

I know the Minister has differentiated three groups of workers. We may have to return to that point in discussions at a later stage. We are also aware that we are talking about a matter that is outside the scope of TUPE. We have an evolving formula to deal with pensions in these other sets of principles, such as the fair deal policy. It is hard to underestimate the importance, as my noble friend will be aware, to the staff concerned of ensuring that there is some understanding about how these matters are being dealt with. I beg to move.

Lord Whitty

The objectives that my noble friend seeks are already government policy. They are not, by and large reflected in statute, although there are some statutory responsibilities on consultation. For the most part they are the procedures which the Government enter into concerning pension schemes when there is a change of employment for people who are public sector workers.

There is already a significant protection built into statute in relation to current employees who are transferred into the private sector principally to the onsite contractors via the NDA. To put other aspects of both the consultation and the determination of pension entitlements in statute would go significantly further than has ever been the case. It may have been pressed for but it has never been agreed between the public sector and the unions representing the members involved.

In this particular case where we are dealing with the NDA, we are developing an overall stakeholder engagement programme, which will obviously include a significant part of the consultation with employees. That degree of consultation will be laid down in that document, as it generally is in agreements and procedures in all these cases. I do not therefore think that we need to lay down more in terms of the consultation than is already provided for by existing statute and by the normal approach of government to these matters.

The main concern on what was the second group of amendments relates to where we have to transfer into the new licensees—the new contractors on site—and the protection of the terms of those schemes. There is already some significant protection, and we have written that in. The amendments would have the unhelpful effect of defining very clearly how the comparability was to be measured rather than dealing with no less favourable terms. That would mean that there would be a constraint on alternative—but equally or more favourable to the employees—types of schemes being introduced. The policy is clearly to protect the real value of existing employees' pensions. There are well established standards and precedents for doing that which do not need particular statutory reference in order for them to be observed.

On the consultation issue, clearly the NDA would wish to consult with representatives of its own employees and so on, but the terminology could open the door to disputes over who represents potential employees or the employees of the new contractors coming on site. So the NDA Has an obligation, which is reflected in its normal procedure and in the framework document, to consult with the representatives of its employees. But the terminology about employees who could be affected by the modification obviously goes wider and could involve other organisations beyond those which would normally negotiate that employer's pensions. That seems to be unhelpful both to the recognised unions and to the employer.

I recognise what my noble friend seeks to do, but it is either unnecessary or could be restrictive in providing an equivalent pensions package. It is not a question of trading pensions against other benefits; we are talking about equivalent, at least favourable, pension packages. There are different ways to ensure that that happens and different actuarial assessments, which may be constrained if we took literally the amendment proposed by my noble friend.

4.45 p.m.

Baroness Miller of Hendon

My noble friend Lady Byford in moving Amendment No. 77F and speaking to Amendments Nos. 77G and 80A, my noble friend Lord Gray of Contin, and, indeed, the noble Lord, Lord Lea, in moving this present group of amendments, have made some very important points. One advantage of just sitting and listening while having the experts in one's team moving various amendment, is that it is possible to reflect on them and reach a conclusion.

I believe that my noble friend Lord Gray of Contin referred to the White Paper, Managing the Nuclear Legacy—A Strategy for Action. It states: The Government recognises the key role that current employees play in the safe operation of nuclear sites and is concerned to avoid unnecessary changes to terms and conditions. The White Paper clearly gives an undertaking to protect the pension rights of all BNFL employees. That most definitely is not reflected in the Bill. My noble friend asked the question: is it divided? The Minister said, "Well, no, certain ones who are not transferred to the NDA will not be covered by these". The White Paper clearly says they will. It is not reflected in the Bill and it certainly has not been reflected in what I have listened to this afternoon.

Under those circumstances I should like to ask the Minister: when was this changed? Who was told? How has this happened?

Lord Maclennan of Rogart

The broad arguments have been well put by earlier contributors to the debate on this and on the previous group of amendments. I should like to add something simply by way of a footnote. Having heard the Minister's response, it does not seem that the Government may have reflected sufficiently on the degree of disquiet and unhappiness that there has been on sites hitherto. Contractorisation has been extended and has led to considerable differences in the terms and conditions of service between the work force engaged on the same job. In many cases that is because it is employed by, on the one hand, contractors and on the other by the authority, or perhaps also BNFL.

I had understood that what was sought was some greater reassurance, particularly in respect to pension rights, that those who were working on a project on a new agency's site would not be afflicted with such problems of comparability or differences in the rights to which they were entitled.

I acknowledge that this may mark out new ground and that there is no precedent for some of the proposals contained in these amendments. But I think that it would be fair to acknowledge that the reason for that is that existing precedents are not entirely happy. There is a case for reconsidering whether there should be comparability and transferability, regardless of whether it is a public sector owner or a private contractor doing the work at any given point in the process.

From the Minister's first answer to the noble Lord, Lord Lea of Crondall, I infer that the amendment regarding consultation is not necessary because it would be provided for in another way. That seems to be an acceptance of the principle. However, if, as he said—and I noted it—it merely reflected government policy, one must say that government policy has been known to change. It has been known to change whether or not there has been a change of government. I think that it is reasonable to ask the Minister to look again at these matters as in my mind these issues reflect what has been a continuing source of discontent on the sites in question, and one which it would be open to us to address and perhaps to remove in some manner comparable to that proposed.

Baroness Byford

In following the noble Lord, perhaps I can bring the noble Lord, Lord Whitty, back to the difficulty he had to face in the amalgamation of Defra and the old DETR. They were brought together to form a new organisation. There were different rates of pay, although I do not know about the pensions. It has been difficult. In setting up an new organisation, which is what we are doing today, perhaps it would be more sensible to reflect on the many contributions that have been made in this and in earlier debates we have had. I would urge the Minister to look at the issue again and perhaps to return to the matter again.

My noble friend Lady Miller of Hendon was quite right in her remarks. I have exactly the same briefing as her. I am sorry that it had not crossed my path when speaking to my previous amendments or I would have raised the matter then. It is not as though we are starting with something that is already established, it is a new whole business that is being created. It seems a little unreasonable not to reflect on comments made by various noble Lords about their apprehensions on what is set down in the Bill. I support the amendment in that way.

Lord Whitty

I am not sure that anything has been said in this last round that is not already provided for. There have obviously been substantial discussions with the representatives of the current employees. It is the current employees who have—fairly uniquely—a statutory protection when these matters are normally dealt with by negotiated agreements and general good practice.

The employees referred to by the noble Lord, Lord Maclennan—and I accept that there were anxieties on this front—are protected through their transfer to the NDA or any transfer from the NDA to the private sector and the contractors. Their pension entitlement, whether it is ongoing pension benefit or accrued rights, is protected—statutorily in this case. Because of the anxiety that has been expressed, we were persuaded that it was sensible to put the matter in statute.

Members of the Committee have queried whether the provision is in statute. It is absolutely there, and it is there in a way which few employees of any private or public sector have previously received. So, I really think that some of the anxieties are exaggerated.

I turn to the question on who the provision covers, because both the White Paper and the Bill concern managing the nuclear legacy and are not about the totality of BNFL's activity. Clearly, the general approach to BNFL's staff, were there to be a change in their employment, is that the general policy of the Government would continue to apply. The Bill deals with transfer into the NDA. The White Paper and the Bill deal with the people we need to maintain and develop in order to clean up and decommission the nuclear sites. They are all protected through this process of changing employers. That is a very important aspect of the matter and one that clearly has not been fully appreciated by Members of the Committee. The provision is an important and probably unique protection.

I turn to the accrued rights, how they are transferred and the day-to-day definition proposed by my noble friend Lord Lea in that group of amendments. When we transfer into a different scheme—the fair deal policy says this—it would require a bulk transfer agreement to be reached which the government actuaries would certify as fair and reasonable, protecting the interests and giving no less favourable treatment to the employees concerned.

If one tried to enshrine that in legislation, it would be difficult because that assessment can be different in terms of what within the pension scheme is broadly no less favourable. In some cases it would be a straight forward read-across and in others parts of the change would be actuarially assessed as being equivalent or better than equivalent. But to lay that down in legislation would be difficult and unprecedented. In my judgment, we are providing substantial protection in statute for the group of employees to whose anxieties the noble Lord, Lord Maclennan, refers.

Lord Lea of Crondall

It has been an interesting run around this particular racetrack.

Baroness Miller of Hendon

Perhaps I may intervene only because I suspect the noble Lord might withdraw his amendment in one moment. The Minister made it clear that the point I raised was not in the Bill. I raised it because answers were given to questions asked by other noble Lords which contradict something that is in the White Paper preceding the Bill.

In the circumstances, I can understand why the Minister feels that he does not need to give me an answer to my question—according to him, what I asked has nothing to do with the Bill. However, I hope that as I have asked the question, as there is a change from what is in the White Paper, and as a result of other questions asked, the Minister will be kind enough to write to me and place a copy in the Library. All noble Lords will then be able to see what the current position now is and when it changed from what is written in the White Paper.

Lord Whitty

I am sorry, there has been no change from what was written in the White Paper. The White Paper dealt with a nuclear legacy and referred to the people who would be required for that. They are dealt with by the transfer to the NDA in this Bill. There are other people employed by BNFL to whom general government policy will continue to protect them and ensure that they have no less favourable treatment should there be a restructuring or transfer out of BNFL. So not only is there no change in what the White Paper says, which deals with exactly the group of workers we are talking about here, but the general policy would apply to BNFL staff as it would to other public sector staff. There is nothing before us in the Bill in that respect, but there has been no change either from the White Paper or general government policy.

Lord Lea of Crondall

I thank all noble Lords who have contributed in the past half an hour or so. One larger issue which appears is that industrial relations principles in this field are half in and half out of statute law. The Minister is right to draw attention to that, but it does not get us out of the difficulty. During the past 20 years, the trend has been to lead to such a situation. I agree with him that, whereas in the old days we had an umbrella agreement either in the Civil Service or the nationalised industries, and so on, and there were not all the jigsaw puzzle problems on which we now seem to spend a great deal of time, there is now a degree of fragmentation and a perception of, as the noble Lord, Lord Maclennan, said, some anxiety.

Having said that, it is very helpful to have on the record how the Government are currently interpreting these matters. I am not clear how far the Minister's response has met the points raised, but I am sure that we shall all, to use the time-honoured words, wish to study Hansard carefully, as will people who are not Members of this House. Then, I am sure that we shall all decide how best to pursue the matter on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 80 to 87 not moved.]

Schedule 8 agreed to.

Clause 43 agreed to.

Schedule 9 [Taxation provisions relating to nuclear transfer schemes]:

5 p.m.

Baroness Noakes moved Amendment No. 87A: Page 172, line 2, leave out paragraph 3.

The noble Baroness said: We now return to the subject of taxation, which we discussed briefly on our previous day in Grand Committee. When we discussed the amendments that I tabled in relation to the earlier tax position, the noble Lord, Lord Davies of Oldham, whom I am sorry to see I frightened off, said: We believe that, because of the complexity of the situation, we do not have Clause 27 or, indeed, Clause 43 … right".—[Official Report, 22/1/04; col. GC 412.] I assume that on that occasion he was talking about Schedule 9 because Clause 43 merely refers to Schedule 9.

The noble Lord, Lord Davies of Oldham, managed to convey that these tax clauses were under consideration but he also managed to convey absolutely no information about what precisely was under consideration. Therefore, I feel obliged to take a little of the Committee's time to explain Amendments Nos. 87A and 87B in the hope that I may be able to elicit a little more information on what precisely is being considered in relation to the tax clauses. I hope that I shall at least receive confirmation that these issues are still being considered with the intention of producing something on Report.

Amendment No. 87A seeks to delete paragraph 3 of Schedule 9 on a probing basis. Paragraph 3 states that where there is a transfer of an asset under a Clause 36 transfer scheme, that will result in no gain or loss on disposal for capital gains purposes. Clause 36 allows a transfer of the assets of BNFL and UKAEA and some other companies to the NDA or a subsidiary.

The activities of those transferors will basically be taxable, but paragraph 3 allows the transferors to avoid paying any tax on capital gains when the transfers to the NDA take place. However, as likely as not, the transferor will obtain value for those transfers if only because the liabilities will also be transferred under the transfer scheme.

Therefore, my first question to the Minister is a simple one. Why should the transferor not pay tax on any gains and what is the public policy consideration behind that? My second question is rather more technical. Is the effect of paragraph 3 that the transferor also avoids a charge to taxable capital gains which have been rolled over or held over into the chargeable assets which are then the subject of a transfer scheme?

The Minister may be aware that the rollover relief and held-over relief provisions in the Taxation of Chargeable Gains Act 1992 allow gains to be rolled over into chargeable assets from different companies in a group and from different trades in the same company or group. Therefore, if a transferor has rolled over or held over gains from other trades or other group companies, perhaps to the full extent of its capital gains-based cost, it would allow the transferor to avoid paying tax on those capital gains for all time.

Perhaps I may illustrate that. Let us suppose that several years ago a transferor spent £10 million on an asset and that, at that time, it had made a chargeable gain of, say, £8 million on an asset in another part of the group or another trade. It would roll over that gain into the £10 million acquisition cost of the new asset. Normally, when that asset is eventually sold, tax is paid on the gain when one finally realises the proceeds and does not reinvest them—with held-over relief, that comes in after 10 years.

As I understand it, if paragraph 3 means that the asset is disposed of so that there is no gain and no loss, the transferor in this case would escape paying capital gains on the £8 million rolled over capital gains for all time. That seems to me to offer great scope for tax planning, to use a neutral term, in the run-up to a transfer scheme. I wonder whether that is what the Government intended when introducing this provision.

I turn briefly to Amendment No. 87B, which, again, is a probing amendment. Paragraph 4, which the amendment deletes on a probing basis, states that where the NDA has acquired a capital gains asset under the nuclear transfer scheme and then disposes of it, it will receive no deduction for acquisition or enhancement costs. Thus, in effect, leaving aside incidental costs of disposal, it will pay tax on the full amount of the disposal proceeds. Therefore, whether or not the NDA has given value for the transfer, it will be treated as having given no value on the transfer and, whether or not the asset is used in an exempt activity, which would otherwise not be subject to tax. all the proceeds will come within the bracket of charge to tax. I am struggling with the logic of that.

The Explanatory Notes talk about avoiding record keeping, but I have never ever seen that cited as a rational basis for taxation principles. Therefore, I hope that the Minister will be able to be a little more persuasive on the need for, and intent behind, this paragraph. I beg to move.

Lord Triesman

Noble Lords can see why my noble friend Lord Davies is today accompanying Her Majesty the Queen. I do not believe that this was the only reason; he wanted to do that in any case because it was going to be enjoyable. However, when he gets back, I shall tell him that he will not have enjoyed himself half so much as I am about to do.

On our previous day in Grand Committee, I observed, as, indeed, did my noble friend Lord Davies, the considerable expertise of the noble Baroness, Lady Noakes, in this area. Like my noble friend Lord Davies, I cannot match that. I simply hope that one day she will take me up on building algorithms in economics, where I suspect I should have more of a sporting chance.

However, I shall try to deal with some of the key issues and respond to one of the points on what we might expect on Report. As the noble Baroness said, the amendments are concerned with the provisions of the Bill that deal with the tax consequences of the nuclear transfer schemes. The broad aim of Clause 43 and Schedule 9 is to ensure that tax charges or tax reliefs are not triggered by the transfer. That is the aim. In other words, we want the transfers under the nuclear transfer schemes, as the noble Baroness was good enough to acknowledge, to be tax neutral so that both the transferee and the recipient are not penalised and do not receive a windfall gain in tax terms.

I hope that most of the technical detail in the clause achieves that objective, although I want to go on to what we might need to do about it. I emphasise that there is no intention of allowing a tax windfall. We shall return to these detailed provisions on Report, and I hope that we shall be able to answer the question more fully then.

The detail of Schedule 9 is necessarily complex—I am again saying that things are necessarily complex; I hope that noble Lords will forgive me—because it attempts to cater for the flexibility of the various transfer scheme arrangements. As my noble friend Lord Davies said last week, we are looking to table amendments to the tax clauses on Report. I was asked for that assurance and we intend that that should happen. We want to deal with those matters and work is ongoing on the detail of the various contractual arrangements that will exist between the NDA and other parties.

I believe that I can deal with some specific points relating to these two amendments. Amendment No. 87A would remove the provision that allows for assets to be transferred at a value for tax purposes that would give no gain and no loss. The provision ensures that the transferor will not face a tax charge on any chargeable gains as a result of the transfer. I believe we all agree about that.

This is a standard tax provision in Bills that are concerned with public reorganisation and transfers. We are simply legislating to provide for the public sector the equivalent facility that exists under the normal tax rules for groups of companies. Under the normal tax rules, intra-group transfers are deemed to take place at a value that gives no gain and no loss. That is what we are attempting to replicate here.

Perhaps I may emphasise that point. For this purpose—I believe this was one of the questions that the noble Baroness asked; if I am wrong, she will of course tell me—a group must have as its head a company and not the Crown. Therefore, BNFL and its subsidiaries form a group but BNFL and the NDA do not, even though they are both effectively owned by the Crown. None the less, in this sense, they are not a group. Therefore, we need tax provisions in Schedule 9 to allow for tax-neutral transfers because of those group arrangements. I hope that, in general terms, the aim of trying to ensure that we do in the public sector what would be regarded as good tax practice in the private sector is acceptable to the Committee.

Amendment No. 87B would remove a pragmatic computational provision concerning the calculation of any tax on chargeable gains for the NDA. It may well not have been the custom to think of doing things more simply and in ways which do not require over-elaboration in dealing with tax matters. This may be a desirable first, but I believe that that is the specific aim.

The computational provision is included to reduce the disproportionate effort and cost that the NDA would otherwise incur. Without this provision, it would be necessary to maintain registers and associated base costs of assets through potentially numerous nuclear transfer schemes—one after another and over lengthy periods of time as the events that we are trying to cover in this legislation will cover very lengthy periods.

Accordingly, we cannot accept the amendment and I ask the noble Baroness to withdraw it. But, in doing so, I understand that she is probing to ensure that, when we return on Report, these issues will be thoroughly addressed. I hope that I have at least been able to outline the principles that will guide the way in which we address the issues, even if, at present, we are still in the process of doing so.

5.15 p.m.

Baroness Noakes

I thank the Minister for that reply. I shall read carefully what he has said. I understand that the intended legislation may be trying to replicate the group transfers that exist in the private sector, although I am not sure that that has always been followed in the past. But here we are rolling into tax-exempt areas and are therefore not providing for continuity of tax history. Indeed, paragraph 4, which has just been explained in some pragmatic sense, goes against that because, the tax history having been passed over, it is then completely ignored. Paragraph 4 says, "We'll ignore all this past tax history which is being passed on because it is all too complicated".

That is an interesting proposition. I believe that many private sector companies will wish to use it against the Inland Revenue in taking no hostages when it comes to record keeping. I remind noble Lords that companies have been keeping very detailed and extensive records over generations in relation to their chargeable assets, and that is required in every other part of enterprise and commercial activity. There are no excuses there, and I am still struggling a little to see why the computational difficulty forces one into this particular method here.

I shall not labour the point now because I look forward to seeing what amendments are tabled on Report. However, I remind the Minister that I made a point about hold-over relief and rollover relief. I did so in a genuine effort to find out whether the Government intended that to happen because I would find it surprising in the circumstances that we have here. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 87B not moved.]

Schedule 9 agreed to.

Clause 44 [Supplementary powers of the Secretary of State, the NDA and the UKAEA]:

Baroness Byford moved Amendment No. 87C: Page 39, line 1, leave out "or the UKAEA" and insert ", the UKAEA or the NDA

The noble Baroness said: In moving Amendment No. 87C, I shall speak also to Amendment No. 87D. Under subsection (2) of this clause, the NDA and UKAEA each have the power to enter into agreements concerning nuclear transfer schemes. Under subsection (3), the NDA and UKAEA have the power to facilitate a transfer using any method they consider appropriate.

Why is it not, apparently, necessary for the NDA to have the consent of the Treasury and the Secretary of State to enter into an agreement in the exercise of those powers when such consents are required by UKAEA? That is a very simple question. I beg to move.

Lord Triesman

As ever, it is the questions that are described as "simple" that hide the greatest complexity. I hope to be able to explain how this element of the Bill works. The amendments would make the NDA subject to the same consent procedures as UKAEA—that has been explained to us—before it could exercise the powers provided for it in Clause 44 to enter into agreements relating to nuclear transfer schemes. The Government's intention is to allow agreements which accept or impose contractual obligations, as outlined in Clause 44(1) and (2), to be entered into in relation to transfer schemes under the Bill. It is modelled very directly on the transfer scheme provisions in the Atomic Energy Authority Act 1995, which apply to the UKAEA. Those provide for Treasury and Secretary of State consent to be necessary before the exercise of the power.

In applying the 1995 Act provisions in the context of the NDA, we concluded that it was not necessary or appropriate to impose the powers of the Treasury and the Secretary of State's control on the NDA itself. The NDA's job is different in this respect. It is to provide strategic management and direction to the UK's clean-up programme. The making of transfer schemes by the Secretary of State and agreements associated with such schemes will be a central part of the NDA's execution of that responsibility in that this process could, inter alia, set up the framework for the NDA to promote effective competition for contracts to manage the new site licensees established by the transfer scheme.

The NDA's strategy and annual plan are subject to ministerial oversight and control through the approval process set out in Schedules 2 and 3. We consider that to be a sufficient and appropriate level of control and we do not want to burden the NDA with an additional requirement to secure consent in this regard. On that basis, the Government decided that it was right to omit the NDA from the provisions of subsections (5) and (6) of Clause 44.

For the UKAEA, the Bill makes no change to the consents required. The making of agreements with respect to transfer schemes will not be a central function of the UKAEA as it would be for the NDA. While it would need the power to conclude agreements to give effect to such transfers by way of imposing or accepting contractual obligations, it is appropriate that this is subject to ministerial control in the way that we have proposed. The UKAEA should not enter into such agreements other than at the behest of the NDA and with the agreement of the Ministers, and that is where the agreement facility at that level comes in.

Baroness Byford

I am grateful to the Minister for that explanation. However, I do not know that I am fully happy with it. From what I understand of his response, he is saying that it is not necessary to have the same restraints between the two organisations. Obviously I understand that they have different jobs and different roles. The Minister suggested that it is enough of a check in itself for the strategy and annual plan to have to come back to Parliament. Therefore, was it ever considered whether the UKAEA should be given exactly the same freedom? Why continue to restrict the UKAEA in the way that it was restricted previously? Was that considered or was such a restriction simply carried over willy-nilly because it was not thought that it was necessary to make a change? It seems slightly strange that two different rules apply to the two businesses. I do not know whether the Minister wishes to comment on that.

Lord Triesman

I shall try to comment on it. The noble Baroness has just made the point that there is a degree of supervision in relation to Parliament. Perhaps I may add that it is also the case that the NDA's strategy and annual plan will be subject to ministerial oversight. Therefore, there will be direct ministerial oversight and control through the approval processes.

I was trying to indicate that the differences are, in major part, due to the relationship between the NDA and UKAEA. It is because of the nature of the relationship that they are subject to different provisions. As I said, the UKAEA should not enter into an agreement, other than at the behest of the NDA and with the agreement of Ministers. Therefore, at the first level in relation to the NDA, where the agreement of Ministers is required, the UKAEA must act on the basis of that having been done. In short, as one goes through the layers, one finds all the controls and consents that the noble Baroness has asked about. I believe that it would probably be something of a burden to insert a further level of control into such a process.

Baroness Byford

The Minister is reasonably new to this brief and he handles it extremely well. I am not criticising him on that. However, I am saying that, whereas one matter is under ministerial control, the one that we are discussing is laid down in the Bill. The noble Lord, Lord Whitty, is shaking his head. But we try to ensure, whenever we can, that if there is a need for provisions, they are written in the Bill. I would rather see them on the face of the Bill than in regulations or subject to ministerial approval. That is the difference that lies between us.

That is the point I am explaining; not that he is inadequately coping with his responses to us; he is coping extremely well. I would like to look at his response and at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 87D not moved.]

Clause 44 agreed to.

Clause 45 [Duty to assist the Secretary of State]:

Lord Jenkin of Roding moved Amendment No. 88: Page 39, line 40, at end insert— (2A) In any case in which subsection (2) would require the transferor to disclose to the Secretary of State information the disclosure of which (otherwise than under any enactment) would constitute a breach of confidence actionable by any person—

1. (a) the Secretary of State shall consider, having regard to any representations made by the transferor during the period referred to in subsection (2), whether the provision of the information is strictly necessary for the purposes of, or in connection with, the making of the scheme and shall require the provision of the information only if it is strictly necessary; and
2. (b) the transferor shall have no duty to disclose the information to the Secretary of State unless or until the Secretary of State has agreed to be bound by confidentiality obligations in substantially the same terms as the confidentiality obligations which are binding on the transferor in relation to the information."

The noble Lord said: I had some doubt as to whether the enforced absence of the noble Lord, Lord Davies of Oldham, was due to the fact that he had escaped having to deal with tax or whether he has escaped having to deal with another amendment concerned with disclosure. It is no secret that the noble Lord felt himself in some difficulty in both the previous debates we had on the subject of disclosure. We wish him well with Her Majesty the Queen, but I also wish the noble Lord, Lord Triesman, well in seeing whether he will be able better to satisfy the Committee about the disclosure of confidential commercial information.

Clause 45 is a short but direct clause. Where the Secretary of State proposes to make a nuclear transfer scheme, The transferor shall have a duty … to provide the Secretary of State … with all such information and other assistance as the Secretary of State may require for the purposes of, or in connection with, the making of the scheme". It then goes on to state that that is enforceable by civil proceedings. I shall not try to deal with Section 45 of the Court of Session Act because I know nothing about it.

Nothing could be more direct than that. The Secretary of State can require the transferor to provide all such information and other assistance as he may require. When we have previously discussed the disclosure of commercial information, we have done so in the context of, first, the publication of reports and, secondly, the publication of the NDA's plans and strategy. In those cases, we were talking about the possibility of disclosing information to the public.

One can understand that, in those circumstances, on the first occasion references were made to the Freedom of Information Act. However, for the life of me, I am still unable to understand why that Act, which will come into effect and be enforceable at the time when this legislation takes effect, has to have different rules. I gained the impression that the Minister's colleague, the noble Lord, Lord Davies of Oldham, was not sure either.

On the second occasion, he changed his tack and said that it all had to be dealt with by agreement under the contracts which were to be signed between the NDA and the contractors. We are not dealing with that one here. We are dealing with a very much more direct and, if I may say so, a more dangerous question of disclosure of sensitive commercial information.

This matter concerns the NDA requiring a transfer. The Secretary of State will be invited to make such a transfer from a company which is currently undertaking a decommissioning business to a competitor company which has been more successful. One has to postulate a particular case. Supposing BNFL on one of its sites incurs the displeasure of the NDA for whatever reason, and the NDA has decided that perhaps it would be better to bring in a foreign competitor; and suppose it goes out to tender and a foreign competitor wins. The Secretary of State will make the transfer order and, under Clause 45, will require BNFL to transfer—again I quote the words— all such information and other assistance as the Secretary of State may require". Suppose the transferee is one of the companies that has been advising the NDA or the Secretary of State. The company whose name I have heard mentioned most frequently in that context is the very well known and greatly respected American consulting contractor, Bechtel, which has done enormously valuable work all over the world. If, at the end of the initial two years, it is decided to transfer a BNFL site to Bechtel, Clause 45, as it stands, can require the Secretary of State to demand of BNFL that it hands over all the information referred to in the section to a company that has hitherto been seen as its competitor.

That cannot possibly be right. The purpose of Amendment No. 88 is to provide the Minister with a way out of that dilemma in a way that he may find difficult not to accept. By adding a new subsection (2A) to apply wherever there is a requirement on the transferor to disclose information, the disclosure of which (otherwise than under any enactment)"— we have seen that phrase before— would constitute a breach of confidence actionable by any person— (a) the Secretary of State shall consider, having regard to any representations … whether the provision of the information is strictly necessary for the purposes of … the scheme and shall require the provision of the information only if it is strictly necessary". That imposes one test. There cannot be a general fishing expedition; the process has to be regarded as strictly necessary. The amendment then states: (b) the transferor shall have no duty to disclose the information to the Secretary of State unless or until the Secretary of State has agreed to be bound by confidentiality obligations insubstantially the same terms as… are binding on the transferor". It is a two-stage process: the first is to impose on the Secretary of State an obligation to decide, in the light of the representations made to him, whether or not it is necessary; and, secondly, if he considers it is necessary, he has to require that the information does not have to be disclosed unless the Secretary of State is prepared to subject himself to the same obligations of confidentiality as those that are binding on the transferor.

By those who find themselves in such a position, the matter is considered as an enormously important protection for what can be extremely valuable confidential commercial invitations. The Secretary of State must not take powers simply to require a firm that may have built up extremely useful and valuable information over many years to hand it over to a successor in the circumstances of Clause 45.

I do not want to go over the matter again as we covered it when dealing with earlier amendments, but this amendment relates to a different context and a different procedure is set out. There is, first, the requirement of necessity and, secondly, the requirement of similar obligations being undertaken.

I believe that the Government would be wise to recognise the sensitivity of this matter and to accept that something, whether on these lines—I never claim to draft amendments correctly—or something similar, would be a valuable reassurance to those who are to participate, as the Minister has said, over a very long period of time, during the course of which there may be many such transfers. I beg to move.

5.30 p.m.

Baroness Miller of Hendon

As noble Lords will know, my noble friend has tabled a series of amendments to protect confidentiality. With this amendment we are trying to protect commercial confidentiality of companies that have dealings with the NDA.

In the ordinary world of commerce, when two companies have dealings with each other, it is possible for one party to protect its industrial secrets by contract. However, when dealing with the NDA, the parties do not negotiate on equal terms. In some cases, the NDA has power to demand information or co-operation and, in all cases, the NDA is the only source of business and may deal with competitors at the same time. The party having to disclose confidential information to the NDA is entitled to have that confidentiality respected. That is the very least that should be done. I hope that the Minister will treat this serious problem carefully.

Lord Whitty

Although noble Lords suggest that all issues of confidentiality are the same, they can be very different. The example quoted of decommissioning and cleaning up a nuclear site deals with the transfer of responsibility. Different issues arise from those that we discussed earlier.

The amendment has two parts. First, it requires that the Secretary of State shall give consideration to whether confidential information is strictly necessary. The second part, to which I have some objection, enables a transferor to refuse to disclose information unless the Secretary of State agrees to be bound by the confidentiality obligations that exist for the transferor.

On the first part, it is difficult to object to a provision stating that the Secretary of State must determine that something is necessary. If it were not necessary, it would be unreasonable. The Secretary of State must operate with care and diligence and must act reasonably within the powers. Certainly in areas of very sensitive information and commercial confidentiality, the general requirements on actions taken by the Secretary of State apply very acutely and do not, therefore, need to be repeated in statute. I agree that one would accept the objective of ensuring that the Secretary of State takes seriously whether it is necessary or not that such information be disclosed to her.

However, the amendment goes further and gives rights to a transferor to deny the Secretary of State information, which, if disclosed, would constitute a breach of confidence actionable by any person". Clearly, on disclosure in the first instance to the Secretary of State, the Government act sensitively in relation to commercial activity. So, as a general principle, the Secretary of State is under an obligation not to use or disclose information to anyone pursuant to statutory powers and only to use information for proper statutory purposes.

Of course, it is for Ministers to judge how to determine that it is necessary to disclose confidential information in such circumstances. When dealing with the operation of a decommissioning site, certain information would be available. As the noble Lord, Lord Jenkin, mentioned in his example, BNFL, in beginning to clean up and decommission the site, would have taken certain measures which would have involved the use of certain materials and labour, and certain costs would have been incurred. Certain contractual arrangements would have been entered into with subcontractors and others on what would be a potentially seriously dangerous site.

It is reasonable that the Secretary of State and the NDA should have information about what has been done and the commitments that have been made in order for a transfer to take place. Otherwise, one would be bringing in a new contractor, presumably following a fairly rigorous competitive process, to a potentially highly dangerous site where he would act without full information. In relation, particularly, to the management and decommissioning of nuclear sites, there is an argument that the Secretary of State should have the ability to demand the information and pass it on to whoever takes over the responsibility. It is a power that would have to be exercised reasonably and judiciously, but it is one that statute should not deny to the Secretary of State.

In addition, the provision about making transfers follows fairly well established precedents in that privatisation legislation in general has used transfer schemes to give effect to new organisational structures. That has involved disclosure of some information that had previously been with a previous operator, which, in most cases, was the public sector operator. The Electricity Act 1989, for example, contains a similar provision. The basic principle is that all clean-up-related intellectual property and other similar information is ultimately the NDA's and the NDA should be able to allow the contractors to use its intellectual property rights for clean-up purposes without cost to them.

The treatment and ownership of any such property that is generated while working on an NDA contract should be specified in the contract, but it is transferable. The aim is to ensure that we do not get into a situation where for safety and procedural reasons the new contractor is deprived of vital information on what has already happened on the site or where the taxpayers are faced with a double cost in the event of a transfer.

The other issue relating to the example raised by the noble Lord, Lord Jenkin, is that there was a slightly erroneous assessment of the situation with BNFL. If we talk about BNFL as a site licensee, site licensees will remain in place throughout the process and their position will be competed for but not on a competitive basis. Therefore, it is right that the person taking over the transferred responsibility should be properly informed and should be able to operate. I do not believe that the situation will be quite as the noble Lord suggested. Nevertheless, it is right that ultimately the responsibility should be on the Secretary of State, involving judgments and reasonable behaviour. The basic principle is that the Secretary of State should have the option not only to require the information to be disclosed but also to be able to pass on that information to the transferee company.

I accept that there will be anxieties about that and I accept that reassurance needs to be given, but I do not believe that, in effect, a veto being given to the transferor company is the way to achieve such reassurance. After all, the new contractor may well be in the same situation in a few years' time and may have to face the same problems.

5.45 p.m.

Lord Dixon-Smith

Perhaps I can explore the point further with the Minister. If the transferring company has embarked on a clean-up process, I completely understand the need of the NDA to know what that company has been doing on the site. That is a sine qua non situation. However, I do not understand whether the transferor would need to disclose the method by which he had undertaken the clean up. That is a slightly different point.

Let us suppose that he had devised a novel method of deactivating a reactor that no one had ever used before, and it worked. That would be a piece of intellectual property of very real value. I understand the need for the NDA to know what has been done, but I do not yet understand the need for the transferring company to disclose how it has done what it has done. That is a slightly different point. There may be a necessity—I do not know. Someone may develop something which is a piece of intellectual property that has real commercial worth. I believe that that point needs to be explored further.

Lord Whitty

There are two issues here. To start with, in most cases when talking about intellectual property, the NDA will own that intellectual property relating to clean-up technology and not the contract or. The contractor will be operating on behalf of the NDA. However, in the example indicated by the noble Lord, the contractor may have a novel way of dealing with the material that he would not wish to disclose to a competitor or someone taking over responsibility for the site. When dealing with nuclear material, it is important to know what method has been employed and what are the possible effects.

One can envisage circumstances where, if a different method were applied to complete the task or the next task, serious mistakes could be made if one did not know what had been done with the material at an earlier stage. One could argue that one does not have to know every last detail of the process, but one would need to have a good idea of how fissile material had been dealt with under the previous contract. That would require the method to be available and disclosable, should that be necessary. I am not saying that in all circumstances it should be disclosed, but it would be wrong for statute to prohibit the ability of the Secretary of State to require such disclosure.

Lord Dixon-Smith

The joy of a Grand Committee is that one has some flexibility to speak again. I believe that we are in danger of discussing two separate points. If someone is under contract to the NDA, I entirely understand that the rights to a particular piece of intellectual technology would belong with the NDA. I take that out of the equation. However, we are discussing someone who originally had no arrangements at all with the NDA. Let us suppose that such a person devises a piece of intellectual property and that it is absolutely necessary for the NDA to know exactly what has been done. He may have devised a different and novel method of dealing with the material, which is an improvement. The issue concerns the commercial worth of the new technology that was devised before the NDA was involved. How far is it necessary to disclose that at the point at which one is beginning negotiations with the NDA or when the NDA is beginning negotiations with the company? That bothers me.

Lord Jenkin of Roding

I am grateful to my noble friends who have spoken in support of the amendment. It seems that we are leaving out of account one very crucial aspect, which is that anything that a site licensee does on the site, or that he requires his contractors to do, will have to be approved by the regulator—the Nuclear Installations Inspectorate. It maintains the closest watch over what is done.

I hark back to when my noble friend Lady Miller of Hendon and I were in Harwell. We saw what the UKAEA had done with its sites, which, for the most part, were far smaller than a large power station. We asked, "Do you have the regulators, as it were, peering over your shoulder?" The answer was, "Absolutely— all the time. They are resident on the site. They have to approve everything we do". So it is not as though safety is in jeopardy.

If a regulator says, "You cannot make the transfer unless you transfer this information", clearly that is a matter that the Secretary of State would have to take into account. It may well be that processes are in place or that discoveries have been made, approved by the NII, concerning the best way to handle material, whatever it might be. It may say, "That is one way of doing it; there may be other ways". In those circumstances, it would be unduly harsh to require the information to be passed on automatically.

Looking further ahead, the Minister is quite right to say that there will be a whole series of other contractors—but not BNFL—who have been successful and who, in their turn, will need to pass on the information. This kind of clause might be more acceptable to the Minister and to the department if there were a clear requirement—this provision may require some redrafting on Report—that safety should at all times be one of the paramount considerations in deciding whether or not something is necessary. If that were the case, one would have to accept that it was necessary. We shall need to think about this matter but, to my mind, it is clear beyond peradventure that something needs to be done.

I am grateful to the Minister because he recognised that there is a problem here. I believe that we can deal with this matter when we return to it on Report. Meanwhile, I think that both parties should brood on the matter. Perhaps there should be more negotiations. All I can say to the noble Lord is that it has been impressed on me that this is a matter of great importance to those who will be participating in the processes set up under the Bill. I do not believe we should just let the matter go; we shall need to return to it and try to satisfy ourselves that there is a workable way of protecting valuable commercial property while ensuring the integrity and safety of the systems used.

Lord Tombs

Perhaps I can help a little on the subject. It is not of course a new problem. It applies throughout manufacturing industry. The problem lies with paragraph (b), which is rather extreme. It includes the possibility of not transferring the information. The absolving of that duty goes a long way. In order to operate the system, the new company will need access to previous practice and technology. I believe that the solution lies in restricting the access for that purpose and not for commercial exploitation. Perhaps that route might be explored.

Lord Jenkin of Roding

That is a valuable suggestion. If the Minister wants to respond to it, I shall not withdraw the amendment at this point. As I well know—I have referred to it on previous occasions—the noble Lord, Lord Tombs, has vast experience in this field. We should listen carefully to his suggestions.

Lord Whitty

I am happy to take away some of the points made in the debate. In responding to the noble Lord's amendment, I particularly resisted mentioning the clause to which the noble Lord, Lord Tombs, referred, which effectively concerns the right of the transferor, without serious qualification, to deny the information. There are issues here and we may well return to them.

The noble Lord, Lord Jenkin, used the term "automatically allow disclosure". The provision does not automatically allow disclosure; it is only when it is necessary for the Secretary of State to require it that the information goes to her. Another hurdle then arises when the Secretary of State must decide whether it is necessary for that information to be passed on to the incoming company. Those are both substantial hurdles which already exist either by the terminology of the Bill or by the general requirement on the Secretary of State to act reasonably in these circumstances.

There are issues here and I suspect that we shall return to them. We may have a discussion in the interim to which the noble Lords, Lord Jenkin and Lord Tombs, may wish to contribute.

Lord Jenkin of Roding

I am grateful to the Minister for that reply. Perhaps the key words in it were "in effect". I remain to be satisfied that they would be there without being stated on the Bill. We have all recognised that a problem exists that needs to be dealt with. No doubt we shall wish to consult widely and I have no doubt that those outside will wish to continue their consultations in order to provide what must ultimately be an acceptable solution. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 45 agreed to.

Clauses 46 and 47 agreed to.

Schedule 10 [The Civil Nuclear Police Authority]:

Baroness Anelay of St Johns moved Amendment No. 89: Page 181, line 38, at end insert "at least four of whom shall be representatives of the civil nuclear industry

The noble Baroness said: In moving Amendment No. 89, I shall speak also to Amendments Nos. 90 and 91. We now reach that part of the Bill which creates a new nuclear civil police authority to oversee a reconstituted nuclear constabulary which will be directly accountable to the Secretary of State. It might be helpful if I briefly set out our approach to this part of the Bill. It may save time in avoiding later repetition and it gives the new team time to settle in their place to advise the Minister.

As my noble friend Lady Miller of Hendon made clear at Second Reading, at col. 840, we believe that it would be more appropriate for the Secretary of State concerned to be the Home Secretary who is accountable to Parliament for the vast majority of police forces in the UK. But that aside, we support the thrust of the provisions for setting up the new police authority.

My amendment has been tabled to ask the Government to put on the record the reason behind their drafting of these proposals. It is not tabled with any hostile intent—at least, not at this stage—because, as ever, there may be hidden dangers in the Government's proposals that come to light during our debate. I hope not, but we shall wait and see.

I would in particular like to thank the DTI officials who took time to meet me about 10 days ago to discuss this part of the Bill. That was most helpful. I would also like at this early stage to put on record my appreciation of the dedication and expertise of those who have worked heretofore as special constables and UKAEA constabulary and who as the consequence of the Bill will now become constables with the appropriate powers. It is important that the provisions of the Bill enable their important work to continue seamlessly and safely into the new structures imposed by the Bill.

It is true to say that little, if any, attention has been paid to this part of the Bill by outside organisations, so I felt it important to give the Government the opportunity to state clearly on the record why the non-departmental public body structure they have adopted is considered to be the most effective and, indeed, why they have chosen this particular model of NDPB.

I had a look at the reports that followed the Quinquennial Review and it is apparent that other models had been considered previously and subsequently rejected. For example, the first report on the review on the DTI website refers to one option being the use of local Home Office and Scottish Executive forces.

Among other options, the second report introduces the idea of an independent force along the lines of that in the Bill. Clause 41 and Schedule 10 between them establish the Civil Nuclear Police Authority as a corporate body, and Schedule 10 sets out the rules governing the appointment of the members of the authority and the good governance provisions for its operation.

Paragraph 172 of the Explanatory Notes states: The Government intends that the rules on appointment set out by the Office of the Commissioner of Public Appointments", and that, the membership will consist of independent members and representatives of the civil nuclear industry". The amendments have been tabled specifically to ask the Government to put on record their view of how the balance of representation on the authority should be achieved. The Explanatory Notes acknowledge that the Bill does not prescribe the detailed composition of the authority. However, it is more usual for a Bill to give at least some indication of the proportion of the total number of members who are to come from a particular area of expertise.

I call to mind the Courts Act 2003, which described the minimum number of members with particular expertise to become members of the Courts Board created by that Act. Do the Government intend to ensure that the majority of members of the authority will come from the civil nuclear industry itself? What kind of skills will the independent members be expected to bring to the authority? How will the Secretary of State make those decisions in the first place? Importantly, how will Scottish interests be covered? Will the Secretary of State consult Scottish Ministers? What will be the procedure?

Throughout the Explanatory Notes and Home Office press releases, there are repeated reassurances that the provisions of this part mirror those for other Home Office police forces. We need to know from the Government just how closely they mirror them: when they copy them exactly and when the provisions deviate from those that cover other Home Office forces.

The Bill ensures that members can be reappointed over and over again without restriction once their initial term has expired. Does the Minister agree that that can have both useful and limiting consequences for good governance? Of course, one needs and values experience, so it is unwise to fail to reappoint a member or chairman as a matter of course. On the other hand, it can be unwise to reappoint someone for several terms who ceases to have the direct experience of the civil nuclear or security industry that made him the right appointee in the first place.

Turning briefly to the text of the amendments, Amendment No. 89 would ensure that at least four members of the authority would be representatives of the civil nuclear industry. Amendments Nos. 90 and 91 would ensure that the members of the authority could serve for a maximum of 10 years. What kind of member would the Government expect to serve for more than 10 years? I beg to move.

6 p.m.

Lord Bradshaw

In speaking to the amendment, I must declare an interest as a member of the Thames Valley Police Authority who has served for 11 years, which perhaps deals with the final point raised by the noble Baroness. I may be incompetent; I freely recognise that.

I fully support the proposition that in this specialist police force, we need people with knowledge of the industry, as we do in the case of the British Transport Police, which we dealt with not long ago. The amendment provides that there should be representatives of the industry. However, I doubt whether, if the number appointed is as low as seven, as it may be under the Bill, we should appoint four people from the industry, because that would be more than half and over-representation, not allowing for representatives from Scotland, and so on. I support the proposition that there should be representatives from the industry; but not that they should form a majority.

On Amendments Nos. 90 and 91, there is no good reason for not appointing a competent person for more than 10 years. From my experience, it takes nearly three years really to understand how an authority works. Such authorities are complicated organisations, because they derive their funding from other sources and have complex budgets. It takes a long time for someone who is not bred in the police world to understand exactly what the force is about and to begin to exercise some sort of control over the chief constable, so far as he is able—for example, over the budget. It takes many years to gain the experience necessary to exercise that control.

Otherwise, I generally support the idea behind the amendments, but not the majority of membership nor Amendment No. 91, which sets a period of 10 years as the maximum.

Baroness Carnegy of Lour

Reference was made by my noble friend and the noble Lord, Lord Bradshaw, to the Scottish interest. In the operation of the new police authority across the United Kingdom, there is bound to be interaction with local people and services—I do not know the extent to which there will be interaction with local police. It is clear that the authority, which will decide on what the constabulary does, on its conditions of service, and so on, must be sensitive to all parts of the United Kingdom.

At the least, the Government should provide that the Secretary of State should consult Scottish Ministers before deciding whom to appoint. Perhaps there should be a member who is based in Scotland; I do not know. I should have thought that the Secretary of State should consult Scottish Ministers before appointing the chairman. Those people must be acceptable. It would be interesting to know what my noble friend Lord Gray of Contin, who has experience of how the nuclear industry works in Scotland, thinks about that. To leave Scotland out completely may be a great mistake.

When we reach Clause 59, there are other questions on the same point; we have tabled an amendment, but I put it to the Minister now in passing.

Lord Gray of Contin

I support my noble friend's amendments. They are probing amendments; I am sure that she is not adamant about having four members from the industry. That could be flexible. The amendments have been tabled more to find out a little more about the Government's thinking. My noble friend Lady Carnegy mentioned the relationship between local police and the UKAEA police. As far as I am aware—certainly during the years when I represented Ross and Cromarty in the Commons— there were no occasions when there was any difficulty or friction whatever. The forces always worked well together.

More than 40 years ago, I was chairman of a police committee in local government. That was before Dounreay was the great nuclear power development that it became. Local police committees are sensitive bodies. They are highly aware of their own responsibility. Sometimes one might wonder whether they would work well with a similar body elsewhere. But in answer to the question of my noble friend Lady Carnegy, I have certainly never heard of any difficulty whatever.

We all want the new police authority to continue where the existing one left off, carry on in much the same way and try to maintain the good relationships that it will inherit all over the country where it operates, so far as I am aware. We all wish the new body well. My noble friend was wise to table the amendment to give us a chance to hear a little more about the Government's thinking on the matter.

Lord Whitty

First, I agree with the noble Baroness, Lady Anelay, and the noble Lord, Gray, about the work of the constabulary hitherto: it has been exemplary both internally and in its relationships with outside bodies. It is important that the benefits of that inheritance are assumed by the new body. The provision concerns the status and powers of the body; it does not make any significant change in its function or role.

The Government's objective for the authority was set out in the White Paper, Managing the Nuclear Legacy. The intention is to achieve a balanced membership with an independent chairman, which is new, while retaining the expertise of the site licensees whose sites are covered by the constabulary.

The Bill provides for a minimum of seven and a maximum of 13 members, all of whom are to be appointed by the Secretary of State. As for Scotland, although the authority will be a UK body and will be the responsibility of UK Ministers, we would expect them to take account of the views of Scottish Ministers in deciding on appointments. However, at the end of the day, there will not be a joint appointment or separate appointment for Scotland or Wales. The rules for appointments will be covered by the public appointments' code of practice.

The Bill does not stipulate the detailed membership. Let us assume that we have seven members on formation. We then intend to have an independent chair and two other independent members, one of whom will need to be an expert advisor on policing matters. We envisage that the main licensed site operators would appoint the remaining four members. That would run into the objection of the noble Lord, Lord Bradshaw, because they would form a majority, but it more or less mirrors the existing structure of the board, where the industry provides the chair and four of the seven other members. The change concerns the chair.

The site operators should have significant representation on the authority. They are responsible for the safety and security of their sites and have a critical interest in the constabulary's performance. They also meet 100 per cent of the cost. The relationship between the constabulary and the general public is much more limited—in fact, almost non-existent—because they operate only within and around sites.

The amendment would stipulate that in all circumstances we should have a minimum of four members appointed from the industry. The reason why I am unhappy with that, albeit that the intention would be to establish a membership such as I described, is that we require flexibility here.

Without wanting to impugn the motives or expectations of the site operators, one can envisage circumstances in which having the site operators in a majority or significant position of influence over the board could go wrong. Although there are other safeguards built into the Bill, one is to be able to vary the structure of and number of appointees to the board, which could dilute the site operators' influence. I do not believe that that facility will be necessary, because we are discussing responsible organisations, but statute should not prohibit it being available to the Secretary of State, should it prove necessary or desirable. The amendment would constrain the ability of the Secretary of State to vary the membership in certain respects.

As for the number of appointments, I am not sure whether the intervention of the noble Lord, Lord Bradshaw, was designed to convince us all that we did or did not need a prohibition on anyone serving more than 10 years. I suppose I should consult the Thames Valley Police on that.

The noble Lord is right: expertise and continuity are important. There are safeguards in the code. As I said, we will observe the code. Any appointment beyond 10 years would require the agreement of the commissioner—it would be referred to her and she would have to agree that in those exceptional circumstances, she would allow an extension beyond the 10-year limit. Normally, that would be subject to full and open competition. In other words, the person could reapply for the job beyond 10 years but would not automatically be reappointed.

Likewise, on the possibility of being reappointed more than once, a third term in office is recognised as rare, but in exceptional circumstances that could apply to members as well as to the chair. We would need to take account of those exceptional circumstances.

So I regret that I am not prepared to let the detailed amendments tabled by the noble Baroness on to the statute book. That would reduce flexibility and be more stringent than the code currently provides. As for the industry's representation on the board, again we need to retain a degree of flexibility.

6.15 p.m.

Baroness Anelay of St Johns

I am grateful to my noble friends Lady Carnegy of Lour and Lord Gray of Contin for their support, and also for the words of the noble Lord, Lord Bradshaw. The noble Lord was absolutely right to say that I am not wedded to the drafting of the amendments. They were intended as a peg on which to hang some questions. However, my objective, the principle behind them, is serious. I was trying to obtain the beginning of a picture of what this new animal, this new police authority, would be.

I was also seeking the assurance described by my noble friend Lord Gray: that there will be a seamless transfer; that the new authority will be able not only to continue the work but maintain the good relationships that have been established. When one looks at the bare bones of the provisions in the Bill, it is difficult to see the thinking behind that structure. We have begun to put some flesh on the bones in the Bill.

As ever, the Minister puts forth the argument of governments down the centuries: that one wants flexibility in any Bill. As ever, we in the Opposition say, "Flexible? How far? Is it so far that we break the back of the organisation we are trying to create?". The Government have helpfully started to give us a picture of how that flexibility should be for the benefit of the authority and its operation. We will need to test that further.

I was interested in the Minister's comments about the make-up of the board—especially the membership of the operators themselves. I had chosen the number four specifically to go over the 50 per cent mark to spur the kind of response made by the noble Lord, Lord Bradshaw. As the Minister said, the operation will be funded by the operators. That is rather different from a normal police authority, so they would expect to have a greater part to play than would be the case in other police authorities.

We had interesting responses from the Minister-nothing to which I initially object, but I will want to pursue further how Scotland will be consulted. I noticed that he said that Ministers would take account of the views of Scottish Ministers but that appointments would naturally be made by the Secretary of State herself. We will need to tease that out as we examine the clauses. In his contribution, the noble Lord, Lord Bradshaw, seemed to assume that Scotland would be represented. Not in the Bill, it is not; nor is Wales. We must consider more closely what kind of representation is to be provided and whether it is likely to be effective. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 90 and 91 not moved.]

Baroness Anelay of St Johns moved Amendment No. 92: Page 184, line 3, leave out "appear to him to" and insert "he has reason to believe

The noble Baroness said: I am of course aware that earlier the Committee debated Schedule 8 and amendments to it concerning UKAEA pensions, but my amendments cover slightly different territory.

Part 3 of Schedule 10 empowers the police authority to employ people and set out their employment and pensions conditions. The Explanatory Notes tell us that the Government's, intention is that employees of the Police Authority will be eligible for membership of the UKAEA pension scheme, but there is also power for the Authority, with the Secretary of State's consent, to set up a new pension scheme for its employees". Paragraph 7 deals with the UKAEA pensions for employees of the authority, and stipulates that before giving a direction under the paragraph, the Secretary of State must consult the UKAEA, the police authority, the Treasury and, such persons as appear to him to represent the employees likely to be affected by the direction". My amendment is simple. It questions the Secretary of State's right to choose the consultees by the subjective test of those that "appear to him" to represent employees. Why have not the Government used the objective test in my amendment: those who he "has reason to believe" represent the interests of employees? Which organisations do the Government have in mind at present to be consulted under the provision? I beg to move.

Lord Bradshaw

In his reply, will the Minister tell us whether the pension scheme is to be fully funded, unlike those that we administer outside which are funded from the police authority's budget? The employees make a contribution but there is no employers' contribution, which is leading to a catastrophic future for police pension funds. I should like some sort of guarantee that the nuclear industry will make a contribution to the pension equal to that of employees, so that it is funded, not like that of the Fire Service and police nationally, which is not.

I assume that, such persons as he has reason to believe represent the employees", will actually be people from the federation of the UKAEA police force.

Lord Triesman

Let me deal with the issues in the order in which they arose. First, I understand why words such as, "appears to him", rather than, "has reason to believe", may be thought to imply a relatively subjective test, but that is the standard phrase that is used in legislation and a test is applied to it: that is, whether the method used by the Secretary of State is reasonable. The Secretary must act reasonably in the application of that test.

I am not 100 per cent certain that I have understood the full purpose of the amendments, but I would like to try and explore that, if I may. Paragraph 7 of Schedule 10 makes provision for the future pension arrangements of the members of the Civil Nuclear Constabulary and other employees of the police authority.

Baroness Byford

If I may help the Minister, I think he said that he would refer to "amendments" in the plural. My understanding is that we are debating the amendment on its own. I made that mistake earlier; it is easily done. We are discussing only Amendment No. 92.

Lord Triesman

"Contributions" was my plural word, I think.

Baroness Byford

I shall read Hansard.

Lord Triesman

I shall make sure that Hansard reports me as I assert. I was trying to deal with the fact that there are two contributions.

As I said, Paragraph 7 makes provision for future pension arrangements for members of the Civil Nuclear Constabulary and other employees of the police authority.

The White Paper, Managing the Nuclear Legacy, made clear that the Government's intention was that staff terms and conditions should be fully protected on transfer of the UKAEA Constabulary to the new statutory police authority, precisely in accordance with the TUPE regulations. It also gave assurances that existing staff would retain their membership of the UKAEA pension scheme and that present and future employees of the police authority would continue to be eligible for the UKAEA combined pension scheme. That remains the case. I am happy to confirm that commitment, which stands.

I hope that I can reassure the noble Baroness that staff terms and conditions will be fully protected during the change. For the first time, there will be a statutory obligation on the police authority to implement any relevant Police Act regulations that address conditions of service for other police officers, unless differences for the constabulary are justified. The Bill will also make statutory provision for a police federation to provide representation for members of the constabulary on matters of welfare and efficiency. Those arrangements mirror those for other statutory police forces.

I know that the Police Federation for the UKAEA has been involved in discussions on these provisions of the Bill and would be involved in future. It is an independent part of the Police Federation as a whole. Therefore, there are links across policing as a whole and there is some chance of ensuring that, as things move forward for one group of police officers, they may move forward for others. That body will be the appropriate one to consult. I hope that that answers the noble Lord's question. The UKAEA pension scheme is a contributory, publicly funded scheme. That is how it will remain; that is the intention.

Paragraph 7 also provides for the Secretary of State to issue directions to UKAEA to modify its pension scheme, should that prove necessary. It requires consultation to be undertaken before a direction under the paragraph is given. The intention is to take account of the views of all those affected before issuing such a direction.

Reading the amendment—this is why I said that I was not 100 per cent clear that I had understood it—it does not substantively change the meaning of the paragraph or the duty of the Secretary of State to consult. As I said at the start, the Secretary of State will have to act reasonably when deciding which persons represent affected employees and therefore need to be consulted. I hope that I have given the most straightforward explanation of who will be consulted: the appropriate body that currently represents that group of employees. The wording is consistent with that used elsewhere in the Bill and it achieves the intended policy objective. On that basis, I hope that I have dealt with the questions raised in the two contributions. I ask the noble Baroness to withdraw the amendment.

Lord Skelmersdale

Before my noble friend responds to that invitation, perhaps the Minister would clarify something for me. The words "appear to him" are in the Bill. Does that mean that, if he gets it wrong, that would be open to judicial review?

Lord Triesman

As I understand the test applied in judicial review, it is a test of reasonableness in the administration of legislation. If unreasonableness were demonstrable or arguable, I guess that that test would be applied by judicial review in the courts.

Lord Skelmersdale

Thank you.

Baroness Miller of Hendon

The Minister mentioned Paragraph 7(2), which states: "The Secretary of State may, by direction, require the UKAEA to make such modifications of a UKAEA pension scheme as the Secretary of State considers appropriate in respect of the participation of persons in such a scheme by virtue of this paragraph". Will the Minister explain what sort of things the Secretary of State might think appropriate to modify in a pension scheme in such a way? Would it have anything to do with the amount of money—whether it was fully funded—or the number of people involved? What does that mean, because the power is wide?

Lord Triesman

Modification of the scheme, should it prove necessary—which, I hope, was how I expressed it—would cover several possibilities. I do not want to be too speculative about that, but I could probably identify one or two possibilities. Perhaps in correspondence I could go into greater detail.

Legislative changes in pension schemes and how they operate may make it necessary to ensure that a scheme was modified to meet those requirements. These days, there may be changes to ensure that the scheme can fully meet all its commitments. It may need to be modified in that sense. The best way to deal with the matter may be for me to ensure that the examples of ways in which I know some pension schemes have been modified, because it has proved necessary to do so, are precisely what is intended here. That is my understanding.

6.30 p.m.

Baroness Anelay of St Johns

I am grateful to the Minister for assisting us and addressing some of the points made by the noble Lord, Lord Bradshaw, regarding funding of the scheme. I note that the Minister was puzzled about why I tabled the amendment as in his view it adds nothing and places no burden upon the Secretary of State regarding making a decision. The Minister said that the terminology used in the Bill is in general use. It may be used in the Bill but it is not used in other Bills. My experience is of Home Office Bills and social security Bills. In those Bills it is more usual to refer to the Secretary of State having to have a reason to believe something or reasonable grounds for believing.

I was very grateful indeed to my noble friend Lord Skelmersdale for asking the Minister whether the Government's drafting enabled someone to apply for judicial review. I was reassured when the Minister said yes. However, I still have a difficulty. If one applies for judicial review it may be more difficult to prove one's case if the Secretary of State simply has to say, "It appeared to me" rather than, "I had reasonable grounds for believing and these are the grounds upon which I reached that decision".

This is what I call a "bread-and-butter amendment", as in discussing Bills one always considers how the Secretary of State reaches a particular decision. I wish to reflect a little further on the matter and I may return to it when I have had a chance properly to consider the Government's responses to other amendments. I shall consider the drafting of Amendment No. 92 in the context of the generality of what the Government are trying to achieve. I shall withdraw the amendment at this stage, as, indeed, one must do in Grand Committee anyway. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Anelay of St Johns moved Amendment No. 93: Page 186, line 4, after "determining" insert "or varying a determination of

The noble Baroness said: In moving Amendment No. 93, I wish to speak also to Amendment No. 94.

We now move on to Part 4 that sets out the financial arrangements and responsibilities of the police authority. It sets a borrowing limit and allows the Secretary of State to guarantee loans, make grants and determine the financial duties of the police authority.

My amendments refer to paragraph 11 which gives the Secretary of State the power to determine the financial duties of the authority. Subparagraph (2) requires the Secretary of State to consult the authority before she determines any financial duties.

Amendment No. 93 would ensure that she consulted the authority not just when she first determined the financial duties but also when she varied them at a future date. Do the Government expect this requirement for consultation to be covered by the existing drafting of paragraph 11, and, if so, how?

Amendment No. 94 would require the Secretary of State to take account of the recommendations made to her by the police authority as a result of her consultation with it. Presumably the Government expect the Secretary of State to take account of their recommendations, so why not make it clear on the face of the Bill? I beg to move.

Lord Bradshaw

It is wise to support what the noble Baroness has just said. I am afraid that a police authority is often called upon to carry out what I call conflicting duties. At present Mr Blunkett's strictures force one to direct one's resources at the priorities of the day, be they burglary, street robbery, drug trafficking or whatever. At the same time the authority can be beratedwe shall discuss inspection later—and called to account for the fact that it is not addressing certain other issues. The Secretary of State can give an authority insufficient resources to carry out the functions that he has placed upon it. That leads to all kinds of dissatisfaction.

If, as a result of these amendments or some other provision, the police authority were no longer simply the subject of consultation—which I am afraid often consists of being told what to do—and were able to answer back in a more forthright way, that might be an improvement. The examples I have drawn upon apply to any government. I remember when Mr Howard was Home Secretary, he visited the Thames Valley force and told us to lose 200 officers. We have had huge difficulty in replacing those officers and it has taken a long time. Secretaries of State can sometimes be quite unreasonable.

Lord Skelmersdale

At the risk of infuriating my noble friend, will the Minister say whether the words "determining any financial duties" mean any financial duties at the same time or whether it includes redetermination?

Lord Triesman

I thought that the noble Baroness would be tempted to reply to that.

Baroness Aneiay of St Johns

I merely commented sot to voce that that was a question I should have asked.

Lord Triesman

I shall do my best to answer it. I start by saying to the noble Lord, Lord Bradshaw, that I ought not to get drawn into a discussion regarding the decisions that my right honourable friend the Home Secretary has taken on policing or rehearse the arguments regarding the record numbers of police now in post and so on, as I fear that I would try everyone's patience. The noble Lord will not be wholly surprised to hear that his analysis of the current burdens on the police and possible conflict in that regard do not correspond with my impression of the situation, but there we are.

I agree with what I take to be the intention of the noble Baroness's amendment that the police authority should be consulted if there is a proposal to vary a determination of its financial duties under paragraph 11 of Schedule 10. We would, of course, consult the police authority prior to such a variation taking place.

My understanding is that varying a determination of financial duties by adding to or changing the duties would in effect be a fresh determination of financial duties—I hope that answers the question that was raised—and therefore the Bill already provides for the circumstances that the noble Baroness's amendment is intended to cover.

While I therefore have no objection in principle to the noble Baroness's amendment for exactly that reason—the provision is in the Bill and is intended to deal with the issue of a fresh determination of financial duties—the current draft already achieves the outcome that she seeks to achieve. On that basis I hope that the amendment can be withdrawn.

Again I have no objection in principle to Amendment No. 94. A consultation duty would be meaningless if the views of those consulted did not have to be taken into account. Such a process would have no value. It is therefore unnecessary for the Bill to spell this out. I am familiar with the argument that attention is not always paid to views expressed in consultation. Often people who are consulted feel that more strongly than those who read the outcomes of the consultation process. None the less, the fact is that consultation is, and has to be, a serious process in which those who are consulted are able to put forward views to which serious attention is given. The current draft already achieves that outcome. I believe that is precisely what the noble Baroness seeks. On that basis, I hope that she will feel able to withdraw Amendment No. 94.

It is, of course, always possible to regard any consultation process in a wholly cynical light. However, I do not think that we can write the consequences of cynicism into legislation. Surely we must try to ensure that provisions of this kind are fully and properly exercised.

Baroness Byford

Before my noble friend responds, I wish to say a few words. While I agree with the Minister's latter sentiments, I wish that it always occurred in practice. I do not think that it does. I hope that we do not make the Minister more cynical the longer he stays in this House. Certainly my experience is that the Government consult on many occasions, but the consultation does not always take into account the recommendations. Someone has to make a decision along the way. If the Minister is sympathetic to my noble friend's argument—I think that is the case—and understands where she is coming from, I urge him to accept the amendment. It is important.

One of the matters that is doing politics and Parliament a great deal of harm at the moment is the cynicism towards them felt by the general public. The public feel that consultation is held but people's views are not taken into account, or if they are, those views are accorded very low priority. It is important to include a provision such as the one we are discussing on the face of the Bill.

The Minister may hope that legislation is interpreted appropriately but I believe cynically that sometimes that process percolates down to the lower levels at a rather slower rate than he would wish. I support my noble friend's amendment. I urge the Minister—and perhaps my noble friend if she is not satisfied with the Minister's response—to return to the matter at a later stage.

Baroness Miller of Hendon

I very much agree with what my noble friend Lady Byford said. I have never looked up the word "consult" in a dictionary. However, I shall do so after the debate this evening. I shall check to see whether the definition of the word "consult" includes the phrase, "and must take into account". However, I do not think that it does. It is all very well to say that "consult" means you will take note of what is said, but I do not think that is always the case. I make that point gently.

Baroness Anelay of St Johns

I am grateful for the support of my noble friends Lady Byford and Lady Miller of Hendon and of the noble Lord, Lord Bradshaw. The noble Lord, Lord Bradshaw, got to the nub of what I am concerned about; that is, the potential for financial direction to lead to conflict within a police force regarding how it uses its resources. It may consider that resources are being diverted away from what it considers to be its core function.

One of the issues that we shall need to consider is the interface between the new Civil Nuclear Police Authority, the other Home Office police forces and the Met. I should be grateful if the Minister would tell us what the Government envisage would happen if the Civil Nuclear Police Authority were asked to use its resources and its police officers to assist Home Office forces.

I was made aware of the existence of a national policing protocol through the kind assistance of the officials. They even gave me the relevant website to consult. Unfortunately, I was either barred from getting into that website or it had been moved. I did a complete search of the Home Office website and was given more information about anti-social behaviour orders than I ever wanted to see. The DTI website was the same. I tried every which way but failed to find the relevant text. Some clear, easy answer is probably winging its way to the Minister at the moment. He will know that concern has been expressed by the UKAEA police authority—that body has done sterling work— regarding what happens if it is required to use its forces to assist Home Office forces. Will there be such a requirement, and, if so, where is it stated in the Bill and where is it stated in the policing protocol? If the Minister is able to respond to that point now, that is fine. If that is not the case, I can return to the point in about two groups of amendments from now. I hope that will give the officials the opportunity to think the matter through. Clarification is wanted regarding whether or not the police will be required to give assistance to other forces, and, if there is such a requirement, how it would work. The noble Lord, Lord Bradshaw, certainly opened up the can of worms that I was going to leave until a little later. We shall return to that.

With regard to Amendment No. 94, my noble friends are absolutely right. This is another matter to which I may well wish to return. I am sure that the Minister was absolutely sincere when he said that he was not cynical about consultation and that it is taken seriously. As he said, what is the point of consultation if one then ignores the views expressed in it? The response from these Benches is always to say that we shall not always have the current Secretary of State. She may be a model of good behaviour in the way that she operates—I am sure that she is a model of good behaviour—but one can never guarantee that misbehaviour will not occur in the future. We are trying to get the Bill right for now and the very long period over which it will apply to the new police authority and to the industry.

I assure the Minister that it is common practice in other Bills regarding the matter of consultation to include the "sting in the tail"; namely, that the Secretary of State should either take account of, or have regard to, the responses and information that are received. As always, I shall read very carefully what the Minister said and try to subdue my cynicism about consultation. However, I may have to return to the matter. I wonder whether the Minister has been handed a response to the question about the requirement on police forces to assist Home Office forces.

6.45 p.m.

Lord Triesman

I am happy to tell the noble Baroness that her remarks did not come as a complete surprise to me. Therefore, I am able to answer her question.

The constabulary that we are discussing is focused entirely on the protection of nuclear materials, the sites and the immediately adjacent area. I believe that later amendments address the issue of what is an adjacent area. It will not have the resources to engage in a wider policing function. Indeed, as I understand it, the geographical circumscription of what this force will be able to do will not in any case put it in the same position as the constabulary in general working under the Home Office that has a capacity to operate over very much wider areas and in some senses almost without restriction. There is no requirement in the Bill in that regard as we shall not require the relevant force to undertake the tasks that have been mentioned. We expect people to talk to one another and make sure that everyone is up to speed when a problem arises; that is unquestionably desirable. However, as I say, there is no requirement in the regard that has been mentioned due to the detailed circumscription of the function of this particular police force.

I make one further comment on Amendment No. 94. I have been consulted on various matters from time to time and have sometimes—although not always-found the process somewhat frustrating. When we have been consulted and when we consult others, we are all aware of the fact that a completely homogeneous set of views is not always presented. There are often differences and variations and you have to pick your way through them. In those circumstances of course there needs to be proper regard for all of the arguments and the most effective phraseology in which to express them. I do not deny that for a second. However, none the less, one has to arrive at the best judgment possible. The people whose views did not come to the surface sometimes feel that they were not properly consulted.

I am not trying to make a commonplace point here other than that I suspect we have all experienced that at one time or another. I ask the Committee to take the Bill at face value. Of course there should in practice be a proper regard for everything that is said by those who are consulted, but we should understand the nature of the process that is involved in arriving at that point. I conclude what I hope is not an overlong answer on this matter by saying that I believe the current wording of the Bill meets the objectives that I have tried to describe. I hope that on that basis the noble Baroness will feel able to withdraw the amendments.

Baroness Anelay of St Johns

I believe that I would cause everyone present to suffer a heart attack if I refused to withdraw the amendment. That would be a first. I am very grateful for the Minister's "postscript". Certainly there is no requirement in the Bill regarding the circumstances that I described. I shall read the Minister's comments carefully but the implication is that there would be no requirement upon forces to assist in the circumstances that I described. The Minister will be aware that police forces could be actively engaged in the transport of material from one site to another. As the constables of the relevant force are constables in the full sense of the word, members of the public will view them as constables. They could find themselves in an interesting situation. I shall reconsider the matter carefully. I shall also consult and take account of the consultation.

I may wish to reconsider Amendment No. 94 simply because, as I said, I believe that we need to get the Bill right in the first place. We need to give consultation proper weight in the first place. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 94 not moved.]

Schedule 10 agreed to.

Clause 48 [The Civil Nuclear Constabulary]:

Baroness Anelay of St Johns moved Amendment No. 95: Page 41, line 22, leave out "appears to it to be likely to" and insert "it has reason to believe will

The noble Baroness said: Amendment No. 95 relates to the provisions of Clause 48. The Explanatory Notes tell us that it places an obligation on the Civil Nuclear Police Authority. The obligation is to secure the maintenance of the Civil Nuclear Constabulary. Subsection (6) gives the police authority the power to, do anything which appears to it to be likely to facilitate the carrying out of its functions, or to be incidental to carrying them out". The objective of my amendment is threefold. First, it would require the police authority to make a decision about what it should do in an objective rather than a subjective manner—back to the same old subject again. The Government's drafting says that it can do anything which appears to it to make it easier for it to do its job. My drafting requires it to take such action as it has reason to believe will make it easier to do that work. Does the Bill's wording follow exactly the wording of Section 6 of the Police Act 1996? I hasten to assure the Minister that I do not seek to return to the earlier debate on judicial review and differences in wording. I simply ask whether the Bill's wording follows exactly the wording of Section 6 of the Police Act 1996? If it does not, what are the differences and why?

Secondly, I wish to probe what the Government consider may prove to be the incidental activities that the new police authority may wish to carry out. Thirdly, I am trying to probe just how independent of the Secretary of State the police authority is likely to be. I beg to move.

Lord Bradshaw

Will the Minister in replying to the amendment remind us exactly what power these constables have? I believe that the British Transport Police legislation established that the British Transport Police could, at the request of a chief constable of an adjacent force come, as it were, off the railway to pursue people and to conduct investigations. However, we must be aware that most chief constables are in the process of designating police powers to certain people who are in fact civilians. Chief constables will naturally turn to other police forces for help in policing football matches, for example, when they require extra resources. No doubt if there were demonstrations outside a nuclear power station, they would want to bring in constables in from elsewhere and to deploy them. I hope that the Minister will clarify the extent to which the people whom we are discussing may assist the civil police.

Lord Whitty

The role of the new constabulary will be the same as that of the old constabulary and will be focused on civil nuclear security. As my noble friend said in answer to an earlier amendment, there is no requirement on the constabulary to act in support of other police requirements. No doubt in particular situations there will be co-operation that will involve joint exercises, but there is no statutory requirement on the constabulary to provide resources to help the local or any other police force in that activity. The situation may well work the other way as well.

On the issue of independence, Clause 48 gives the police authority sufficient independence to allocate functions to the constabulary within the constraints of its role, while ensuring that the Secretary of State can fulfil her accountability to Parliament for the activities of the new authority as a non-departmental public body and her responsibilities for civil nuclear security. It is not a detailed hands-on role for the Secretary of State; it provides parliamentary accountability for a non-departmental public body which is subject to far fewer ministerial constraints than some other NDPBs. The issue of independence is sufficiently covered.

I have written down a third point but I cannot read it.

Baroness Anelay of St Johns

Perhaps it refers to the drafting of Section 6 of the Police Act 1996.

Lord Whitty

I am not sure whether we have found the Police Reform Act 2002, but my notes tell me that this clause is in a similar form to Section 10(6) of the Police Reform Act 2002, although it is not quite an equivalent provision. I had better undertake to write to the noble Baroness about that.

Baroness Anelay of St Johns

I welcome that. It is a technical point. As ever, when there is a reference in the Explanatory Notes to something being similar one wonders why the Government are trying not to make it exactly the same. Often there are extremely innocent and worthwhile reasons. I shall look forward to the letter. I am grateful for the intervention by the noble Lord, Lord Bradshaw. I am concerned that the new police authority should not be stretched beyond the core activities to which its energies should relate. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48 agreed to.

Clause 49 agreed to.

Schedule 11 agreed to.

Clauses 50 and 51 agreed to.

Clause 52 [Jurisdiction of Constabulary]:

Baroness Anelay of St Johns moved Amendment No. 96: Page 43, line 6, leave out "5" and insert "24

The noble Baroness said: Clause 52 sets out the jurisdiction of members of the constabulary. The Explanatory Notes tell us that that, in terms is similar to that set out in section 76 of the Anti-Terrorism, Crime and Security Act 2001". The notes state that there are two minor changes and my amendment probes the reason for one of those changes. I can easily understand and support the first change, which is that the Bill removes the constabulary's jurisdiction on premises that are not nuclear sites but that are in the possession or under the control of UKAEA. It seems right that there should no longer be any need for the constabulary to protect premises that do not hold nuclear material. They have to be protected but I appreciate that there are others ways of doing that.

However, I do not follow the second change. I am sure it is me. As I explained to the officials when we met, I found the Bill and the Explanatory Notes somewhat opaque. The Explanatory Notes say that the second change, will remove the Constabulary's jurisdiction to exercise police powers in respect of the property of UKAEA or certain nuclear operators within a 15 mile radius of their premises". We are told that that is no longer relevant to the force's core duties. Can the Minister tell the Committee why that is considered to be the case? How does that fit in with the drafting of subsection (l)(b), which provides that the members of the constabulary, shall have the powers and privileges of a constable", but that the radius is reduced to 5 kilometres from the existing 24 kilometres? My amendment would simply restore the radius to the original 24 kilometres to get that explanation from the Minister. How does that provision compare with the powers of those responsible for the security at MoD premises? I beg to move.

7 p.m.

Lord Bradshaw

I support the amendment because it seems to me that it is often necessary for material to leave a site and go on a journey somewhere. Usually it is transhipped or on the railway. It would be wrong if the escorting of such things was a duty that could be transferred to the civil police, because they are heavily burdened as it is and are not always available at the time that the nuclear authority may wish to move something. I seek some assurance that the boundary on the police force is not unduly restrictive, that account has been taken of all the things that may have to go on in connection with nuclear power, and that the jurisdiction of the police extends that far.

Lord Skelmersdale

It is even worse than that. Subsection (4) refers to the constabulary having, the powers and privileges of a constable at every place where it appears to him expedient to be in order to pursue or to detain a person whom he reasonably believes"— and this is the important point— to have unlawfully removed", the material. Therefore, the material might be anywhere in the country.

I would ask a question that goes rather further than the one asked by my noble friend. I do not ask why 5 kilometres or why 24—I ask why not anywhere?

Baroness Miller of Chilthorne Domer

When a local authority is responsible for the emergency planning of its county—in undertaking that duty it would need to call on the constabulary to give it advice—would the constabulary be very much part of the emergency planning system? If the matter was outside its geographical jurisdiction, would it hand over that section of responsibility to someone else to liase with the local authority as regards emergency planning, because it was an authority outside its jurisdiction?

Lord Whitty

As the noble Baroness knows, special provisions relate to the emergency planning situation more generally. If an emergency involved or potentially involved a nuclear site, the whole management of that nuclear site would need to be involved in the emergency and contingency planning for emergency. That would include the constabulary, but the constabulary would not have any additional powers. Clearly, however, it would be part of any emergency provision to cover the Sellafield site and Cumbria's responsibilities for emergency contingencies in Cumbria. That does not affect the powers of the constabulary as such, because everyone carrying responsibility within that site would almost certainly have a role in those contingencies.

As for the question of 5 or 24 kilometres, there is a distinction here. The Anti-terrorism, Crime and Security Act 2001 increased the constabulary's jurisdiction to include the area within 5 kilometres of a civil licensed site. That is because to secure the site that it protects, the constabulary needs to be able to patrol the area, deter possible intruders and check on and counter the activities of those who pose a threat. The constabulary clearly needs police powers within the perimeter area to undertake the task effectively. There is not such an equivalent security basis for a further extension in the general jurisdiction up to 24 kilometres, which is why that figure no longer appears. However, when the matter relates to stolen or interfered-with nuclear material, or attempts to steal, interfere with or otherwise dispose of nuclear material, the jurisdiction is unlimited.

In those circumstances, for hot pursuit of people who have taken nuclear material from one of the sites, there is no limit to the jurisdiction of the civil nuclear constabulary. It has a limit of 5 kilometres for the recovery of stolen property, whereas previously a limit of 24 kilometres was established for that purpose. The core task of the constabulary no longer covers that area; its core task is to protect the nuclear sites and materials. When it requires UK-wide jurisdiction and the ability to pursue supposed criminals over the whole of the UK in relation stolen nuclear material, it has that power. It does not have a general police power that it is necessary to exercise to the limit of 24 kilometres solely to protect the site itself—instead, there is the immediate 5-kilometre penumbra.

Lord Skelmersdale

If the nuclear material goes AWOL and the nuclear police are chasing it all around the country, where in the Bill are they given that extension of licence to chase?

Lord Whitty

They already have that power.

Lord Skelmersdale

Under what?

Lord Whitty

I shall have to write to the noble Lord about that. I suspect that it is a power that is cross-referred to here, but it is in the earlier atomic energy Act that established the constabulary in the first place, and any amendment thereof. But that is different from having general police powers within 24 kilometres.

Lord Skelmersdale

It is a totally different situation. I accept that.

Lord Dixon-Smith

Would it not be better to introduce the word "normally", in restricting the limit to 5 kilometres? Then, in any special circumstances, away they go!

Lord Whitty

Clause 52(4) refers to the power mentioned by the noble Lord, Lord Skelmersdale, but it is based on the previous legislation.

Lord Bradshaw

We are discussing a place where a consignment of nuclear material in transit is transhipped or stored. We can think of taking nuclear materials from Barrow-in-Furness to Sellafield, for example. Does the jurisdiction of the force that we are discussing extend not only over the transhipment site, as it obviously does, and Sellafield, but also to the bit in the corridor in between? Sometimes it may be a different corridor from other times, as the routes of the transhipments are varied for security reasons. I would like to be assured that the route to the transhipment centre is included within the radius in which the force can operate.

Lord Whitty

The noble Lord is referring to having a moveable 5-kilometre jurisdiction, but the jurisdiction that is implied in that case is to pursue any criminal intent, whereas the general power relates to pursuit of those who might attempt to interfere with or steal nuclear material. The corridor for the transhipment does not require the constabulary to have general police powers of 5 kilometres on either side of it, but only to ensure that people cannot interfere with nuclear materials.

Lord Bradshaw

I was talking not about theft, but about the possibility of people attacking flasks in transit, and that sort of thing—which they do. It is not a figment of my imagination. The 24 kilometres would almost certainly cover most of the distance that we are talking about, whereas the transhipment sites are often more than 5 kilometres away from the nuclear site. I want to make sure that the jurisdiction is wide enough to cover eventualities.

Lord Whitty

We are still confusing two issues. If there is transhipment and there is criminal or potential criminal interference with that transhipment, the jurisdiction is unlimited. In that situation, neither the five nor the 24-kilometre limit is relevant, so the corridor is protected in that sense.

Lord Skelmersdale

Did I mishear the Minister? In answer to my question about the nuclear police searching the whole country for missing nuclear material, did he refer to Clause 54(2) of the Bill? If he did, I cannot see that it has anything to do with the matter at all.

Lord Whitty

No, Clause 52(4) was the reference.

Baroness Anelay of St Johns

I am grateful to all Members of the Committee who took part in the debate. It has opened up the important issue of what comprises the jurisdiction of the constabulary in particular circumstances. I can see why the Government have constructed the clause as they have, because they are trying to build up a picture of how the constabulary will operate according to the requirements of its core function. The difficulty was that it was unclear what the differences were and how it would operate in protecting a site or dealing with someone who has stolen goods, or tried to steal goods from that site, as against what happens when it is protecting something at a transhipment site or when the material is actually being transhipped.

The Minister has taken us a considerable way. I shall need to consider his remarks carefully before Report stage, because there may be one or two issues to tease out to make it clear that we all have the assurances that we want about the security of items that are being protected by the constabulary and the fact that the constabulary has sufficient room for manoeuvre. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 52 agreed to.

Clauses 53 to 57 agreed to.

Schedule 12 [Planning and reports about Constabulary]:

Baroness Anelay of St Johns moved Amendment No. 97: Page 193, line 23, leave out from "which" to end and insert "would, if disclosed, endanger national security

The noble Baroness said: In moving Amendment No. 97, I shall speak to Amendment No. 98.

Schedule 12 makes provisions about planning and reporting. The Explanatory Notes state that the schedule is based on provisions in Section 16 of the Police Act 1996, differing only where necessary to meet the specific needs of the Civil Nuclear Police Authority. I return to a similar theme to that which we have discussed previously. Can the minister explain where the provisions do differ, and why? Are the differences related only to matters of security? If not, what else is different?

Amendment No. 97 provides the basis for that and other questions. I have simply amended subsection (3), whose intent is to ensure that information that should not be in the public domain for security reasons could be excluded from published reports. My amendment would ensure that information could be excluded if it might endanger national security. I make it clear that the amendment is crude and that I am not wedded to its wording; it is simply there to hang my questions on it.

Amendment No. 98 would ask the Government to explain the process by which the Police Authority's annual report is published. Sub-paragraph (4) requires the Government to lay it before Parliament and arrange for it to be published in whatever manner the Secretary of State thinks appropriate. My amendment adds an element of urgency about all that laying of information. I require the Secretary of State to lay it before Parliament as soon as is reasonably practicable. I believe that that is a reasonably cautious and good practice measure, which has been in Home Office and LCD Bills, so I wait to see whether the DTI follows that good practice. I beg to move.

7.15 p.m.

Lord Bradshaw

I make very little comment on Amendment No. 97. On Amendment No. 98, I believe that while the annual report of any police authority can hardly be described as riveting bedtime reading, there should be some provision for it to be put in front of some scrutinising body. It is difficult to think who it could come before except before Parliament.

Lord Whitty

If the anxiety is about delay in the provision of the report, there is also a requirement to act reasonably. Acting reasonably in providing reports to Parliament is part of the duties. The paragraph merely follows the practice of how the provision is expressed in other legislation and in this Bill with regard to other non-departmental public bodies. We do not need to change that; indeed, the amendment tabled by the noble Baroness would not significantly change the requirement.

The clause to which Amendment No. 97 applies sets out the grounds on which the Chief Constable of the Civil Nuclear Constabulary can request the Police Authority to refer to the Secretary of State any requirement the authority has imposed on him to submit a report. In the event that the Chief Constable makes such a request, the report would have to be provided only to the extent confirmed by the Secretary of State.

The amendment would have the effect of changing the public interest test in paragraph 6(3)(a) to one of endangering national security. The public interest test is a standard one in police legislation, and I am sure that the noble Lord, Lord Bradshaw, is familiar with it. There is an equivalent provision in Section 22(5) of the Police Act 1996, for example. A similar provision also appears in the transport police legislation of 2003. The public interest test of course includes consideration of national security, but it is not exclusive to national security.

There are likely to be cases in which the Chief Constable of the Civil Nuclear Constabulary is of the view that it would not be in the public interest for certain information to be disclosed, even though it might be stretching it, to say the least, to say that it is a matter of national security. An example might be information about criminal investigations dealing with nuclear material; that might not be directly a matter of national security, but it is certainly one that we would not particularly want to have in an annual report or any other publicly available report. I do not see why we should have a different requirement on the Civil Nuclear Police than we have on other police authorities with regard to public interest.

Baroness Anelay of St Johns

The Minister took us a little further with regard to what might be considered within the public interest test in the special circumstances of this new police authority. I am grateful to him. My intention has always been to make it clear that I accept that there are circumstances in which information should not be released because it would be unhelpful to national public interest. That is always a fine line for a government to tread, when they are putting through legislation that could restrict the publication of information. There are those who say that all information should go before the public. However, as the Minister rightly says, with a criminal investigation regarding the theft of nuclear material, it may not be appropriate to release all the information at that time, particularly if the investigation goes on for some time. One does not want to alert other people, not only to the information but also to the techniques being used to track down those who may be culpable. I thank the Minister and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 98 not moved.]

Schedule 12 agreed to.

Clause 58 [Inspection]:

Baroness Anelay of St Johns moved Amendment No. 99: Page 46, line 5, leave out "from time to time" and insert "at least once every three years

The noble Baroness said: In moving the amendment, I shall speak to Amendment No. 100, which is grouped with it.

I turn now to the issue of the inspection of the new constabulary. At the moment, the UKAEA Constabulary is subject to a voluntary inspection by Her Majesty's Inspectors of Constabulary. Clause 58 puts that onto a mandatory, statutory basis. Subsection (1) provides that the HMIC must inspect the constabulary from "time to time". Amendment No. 99 would introduce a minimum requirement of an inspection at least every three years.

Other Members of the Committee who have the advantage of better sight than I have can see what is happening on the monitor.

Noble Lords

They won by five!

Baroness Anelay of St Johns

I return to more mundane matters—although they are absolutely vital for the Civil Nuclear Police Authority.

I tabled Amendment No. 99 to ask the Minister to explain to the Committee what the Government's intention is—first, with regard to the funding of the HMIC to cover this statutory work. Will there be any change in funding now that the work is on a mandatory basis? If so, what? If not, why not? Secondly, how often do they anticipate that such inspections should be made? What is the current expectation with regard to the UKAEA Constabulary? How does that compare with other police forces under Home Office responsibility? Do the Government anticipate that there will be an early report after the transformation to assist the constabulary in its transition into the new statutory force? Do they consider that an early report might hinder rather than assist that transitional period?

Amendment No. 100 refers to the report that is made by the HMIC after the inspection. It requires the report to be laid before Parliament after the Secretary of State has received it and before it is published. Does that follow the pattern of what happens to reports on other police forces and, if not, how do they differ? How do the Government anticipate that the HMIC should deal with a report on inspections of operations that have a sensitive defence implication? What will in fact be published? That slightly goes back to the previous amendment.

I am not sure that the passage of this Bill will have quite the attention that the passage of the Bill in another place is evoking elsewhere, but I beg to move.

Lord Bradshaw

I certainly very much support the first of the amendments. Her Majesty's Inspectorate of Constabulary has, as I am sure that the Minister is aware, become much more active in the way it inspects constabularies. It does not simply go around looking at shiny shoes and whitewashed coal any more; it goes around looking for best value, and it is very much in the forefront of the Government's initiatives to achieve best value and spread best practice between police forces. Therefore, it would be important for no more than three years to elapse between each full inspection.

I am well aware that the HMIC undertakes thematic inspections, inspecting constabularies to look at just one thing, such as firearms. However, once every three years, the police force would benefit from the wisdom that the inspectors garner from the inspections that they carry out throughout the country, improving the efficiency of the force.

Lord Triesman

I am sorry to interrupt the excitement of the Division result in the other place with something so mundane as a response to the amendments.

Both the amendments relate to the inspection arrangements that will be in place for the Civil Nuclear Constabulary. The noble Baroness has already made the point that the UKAEA Constabulary is currently the subject of voluntary inspections by Her Majesty's Inspectors of Constabulary—the HMIC. They take place about every three years. The clause puts those inspection arrangements on a mandatory, statutory footing for the first time. In doing so, it follows the precedent of the Police Act 1996, the Ministry of Defence Police Act 1987 and the Railways and Transport Safety Act 2003, which established the British Transport Police. None of those Acts sought to constrain the HMIC in deciding the frequency of its inspections of a particular force.

I can reassure the noble Baroness that it is the intention of the HMIC to continue to undertake regular reviews of the Civil Nuclear Constabulary, but specifying a minimum period in legislation is unnecessary and overly restrictive. The constabulary is very keen to establish its own programme, to use its professional judgment and to rely on its professional competence in establishing that programme—and, of course, inevitably to be judged on the basis of what it decides.

One reason why I emphasise that point is that it is certainly the policy intention for the HMIC to continue to review matters regularly. There are also examples of inspectors moving to a system of baseline assessments, followed by reviews of selected areas of performance, in most years—not just every three years. The aim is to cover all aspects of the force over the period of years to ensure that all parts of the force's activities are properly covered.

Clause 58(2) also gives the Secretary of State the power to require an inspection at any time should that prove necessary. Therefore, there is a pretty foolproof way to ensure that, were the HMIC to be negligent in doing the things that I have described as its intention, the Secretary of State has a direct way in which to make sure that it does what is expected of them. However, I would believe, so long as there is a balance between the good sense of regular inspection and the frequency of inspections, that the new patterns are likely to be much more useful.

As for Amendment No. 100, my understanding is that while the annual report of Her Majesty's Inspectorate is laid before Parliament, that is not the case for individual reports. A good deal of the best practice comparisons, which the noble Lord suggested would be a valuable part of the use of all the reports, is done by getting a synthesis into a report that looks across all of them. The arrangements for making public the reports of the HMIC on the Civil Nuclear Constabulary mirror those for Home Office forces, the Ministry of Defence Police and the British Transport Police. None of those require the equivalent HMIC reports to be laid before Parliament. Of course, it is very important to ensure that the report that draws together everything learnt by the HMIC is before Parliament, so that all the proper judgments can be made.

In the light of what I have said, I hope that the noble Baroness will feel able to withdraw the amendments. Having a good inspection regime, in which the people responsible for it take absolute responsibility for ensuring that the programme is serious and that lessons are learnt in the reports that come to Parliament, are desirable aims that are covered by the Bill as it is.

Lord Bradshaw

I feel fairly strongly about this issue. The fact is that the police are a venerable institution. This force may not be as venerable as others, but it does need a pair of very keen eyes watching what it is doing and how it is deploying resources, given that they are very expensive. The requirement that there should be an inspection every three years is valuable.

I am well aware of the thematic inspections that happen into all sorts of matters, such as firearms, motor vehicles, forensic science and so on. Many valuable lessons come from them, but I do not believe that any police authority can do without having a proper inspection at least every three years. I hope that the noble Baroness will consider returning to this issue at Report stage, as at the moment I would be minded to support it.

7.30 p.m.

Baroness Anelay of St Johns

I am grateful for the second intervention of the noble Lord, Lord Bradshaw, and I assure him that I shall look at the matter carefully again between now and the Report stage. I shall consider it against the broader background of other inspections. We are going from a voluntary to a mandatory system and he is right that inspection is always vital. It is always taken extremely seriously by the HMIC.

I understand what the Minister says about intervals not being prescribed in all other legislation, but one needs to get in good practice from the beginning. I want to consider the matter further but at this stage I shall be asking leave to withdraw the amendment in a moment.

I notice that the time is 7.30. However, it has been put to me that I should complete the last two groups of amendments to take us unusually beyond the 7.30 cut-off time in Grand Committee. I have agreed to do so, but only because I appreciate that there would be a cost: to taxpayers and the time of the officials involved if they were to be brought back only for this section of the Bill. They would not necessarily be involved in other parts. Although my Chief Whip may have words to say to me for being so compliant with the Government, I now beg leave to withdraw Amendment No. 99 with the expectation of having to move the next.

Amendment, by leave, withdrawn.

[Amendment No. 100 not moved.]

Clause 58 agreed to.

On Question, Whether Clause 59 shall stand part of the Bill?

Baroness Carnegy of Lour

Perhaps I may briefly ask the Minister whether he is content that Clause 59, which relates to the Secretary of State's supervision of the nuclear police, should not include the consultation or involvement of the Lord Advocate, to whom the police answer in Scotland.

In the case of the inspectorate, Her Majesty's inspector will consult Scottish inspectors before undertaking any inspections relating to Scotland. Clause 59 lists the ways in which the Secretary of State will supervise the nuclear police. The Minister has already said that there will be some interaction here and there with the local police and local people and has said that they will be kept up to speed and so forth. However, the Secretary of State for Trade and Industry will be directing the police in Scotland when a member of another Government, the Lord Advocate, who is the person to whom the Scottish police are answerable, without reference and I wonder whether the Minister could look at that. I have not tabled an amendment because it occurred to me only as we went through the Bill today.

There may well be a gap there and we must remember that the Scottish Parliament may have a different political complexion from the Westminster Government. The Lord Advocate is a Member of the Scottish Parliament and the Secretary of State for Trade and Industry will be a Member of a different Parliament. It may be that there is a trap and I wonder whether the Minister could look at it before the Report stage.

Lord Whitty

I do not believe that there is a direct responsibility for any Scottish Minister, but I will undertake to look at whether we need to do anything to ensure that Scottish authorities are informed.

Clause 59 agreed to.

Schedule 13 [Directions by Secretary of State about Constabulary]:

Baroness Anelay of St Johns moved Amendment No. 101: Page 195, line 41, at end insert— ( ) that practices and procedures are followed that properly secure the nuclear sites that the Constabulary is to protect, including the deployment of the appropriate number of constables; ( ) that practices and procedures are followed which provide the appropriate level of training, special operations and exercises;

The noble Baroness said: Schedule 13 gives the Secretary of State the power to issue the Police Authority with directions setting out objectives covering such matters as its activities and conditions of service. The Explanatory Notes state that the main purposes of these powers will include ensuring that the Police Authority and the constabulary should implement the security standards, guidelines and procedures set out by the Secretary of State.

The text of my amendments has been taken from the explanation in paragraph 193 of the Explanatory Notes. I found it quite difficult to tie in the provisions of paragraph 2 of Schedule 13 with the explanation in the Explanatory Notes.

I therefore tabled this amendment to ask the Government the following questions. First, will the Minister clarify what kind of guidelines and procedures will be set by the Secretary of State? Does the Minister agree with me that it will be important for the future of the new constabulary that they are given every opportunity to have the training and standards of other police forces—Home Office police forces and the Met? And if he does agree with me, what measures will be in place to ensure that this happens? I understand that currently the special constables have the same training as the Met. Can the Minister confirm that this is the case?

Thirdly, will the Minister reassure the Committee that the Government will ensure that the Police Authority is allowed to recruit a sufficient number of constables—I can hear the noble Lord, Lord Bradshaw, in the wings— to carry out its work effectively? What is the current strength of the UKAEA constabulary? What do the Government intend the number of constables should be by the end of the transitional period and by the end of years one, two and three of operation?

Amendment No. 102 was tabled as a result of the publication by the Government of the Written Ministerial Statement on police weapons on 3 December. That appears at col. 61WS in Commons Hansard. The Home Secretary announced that he had laid before Parliament a code of practice on the police use of firearms and less lethal weapons. He is required to do this as a result of an amendment inserted by the Police Reform Act 2002 under Section 39A of the Police Act 1996.

The code sets out the principles for the selection, testing, acquisition and use of firearms and less lethal weapons by the police. It also sets standards for the way in which these principles should be implemented.

The Home Secretary said at that time that by providing a statement on the standards of competence and accreditation, the code aims to ensure that all officers involved in operations involving firearms and less lethal weapons are trained to a high standard. He said that he also intends that the code should encourage the sharing of best practice between police forces on operations involving firearms and less lethal weapons.

What weapons does the UKAEA constabulary have the right to use now? Is there any difference between the UKAEA and the MoD in this respect? How will the code of practice announced in the Home Secretary's Written Statement apply, if at all, to the new Civil Nuclear Constabulary?

How will the new constabulary be brought within the sharing of good practice within police forces that are under the Home Secretary's departmental responsibilities as against the new constabulary in the Bill that is responsible to the DTI? I beg to move.

Lord Triesman

The noble Baroness asked a number of specific questions and I shall try to deal with as many of them as possible in this response. Where it is not possible to give the whole of the answer, I shall ensure that it is provided to her.

The amendments specify particular types of directions that the Secretary of State should be able to give to the Police Authority. Paragraph 2 provides for the Secretary of State to be able to direct the Police Authority on a quite wide range of matters relating to the activities of the constabulary. It is required principally to preserve the existing arrangements where the Office for Civil Nuclear Security, acting on the Secretary of State's behalf, specifies and inspects compliance with the security standards, guidelines and procedures that are to be followed by the UKAEA.

These can currently be specified by the Secretary of State in directions made under Section 3 of the Atomic Energy Act 1954. That is the kind of range of direction about which we are talking. The direction-making powers in this paragraph and elsewhere in the schedule also allow the Secretary of State to intervene in the affairs of the constabulary should that be necessary.

These amendments highlight specific purposes for which the Secretary of State should be able to issue directions. I have no real objection to the intent behind the amendments, but I am advised that they are already within the scope of the powers of Schedule 13. For many years, for example, the UKAEA constabulary has had the capacity to provide an armed response to a terrorist threat. In doing so, it adopts the code of practice on the police use of firearms and the manual of guidance on the police use of firearms drawn up by the Association of Chief Police Officers. These arrangements were last reviewed by Her Majesty's Inspectorate of Constabulary in 2003—quite recently—and the inspection found the constabulary to have a very effective armed capability effectively and appropriately deployed.

I am sorry that I cannot today say what range of weaponry they use, but I shall find out. I can tell Members of the Committee that it is likely to be the same range of weaponry that is available to other police services—not least because of the commonality of training. It would be extremely difficult to do that were there not to be commonality of the implements with which the forces are trained. I hope that that answers the basic question.

It is important to underline a couple of answers to other detailed questions that the noble Baroness asked. Members of the constabulary receive the same training as other police; that will continue. We intend that that should continue and be funded. There will be roughly 550 constables and there be no significant change due to the transition.

I hope that, given those assurances, the noble Baroness will feel able to withdraw the amendment. She has raised several key points and understandably has pressed them. They relate to the guidelines and procedures, particularly in relation to firearms; training and standards, on which I have been able to comment; what measures will be in place to ensure that special constables are trained on the same basis as full constables; and that there will be enough of them. I have tried to touch on all those matters in my answer, but I know that there were a number of other detailed questions. I shall endeavour to ensure that she receives an answer to those that I have missed. I believe that some reasonable inferences can be drawn from my point about commonality of training.

Baroness Anelay of St Johns

As ever, I am grateful to the Minister. I am certainly grateful for his offer to write to me with details about the range of weaponry available.

He referred to his anticipation that the range will be much the same as that available to other Home Office forces. I asked a question specifically about how their weaponry will compare with that of the MoD and I hope that in writing to me he will take that inquiry into consideration and provide the information.

It is the expectation and wish of all that training should be to a like standard as that of Home Office forces. Although throughout one is referring to lethal and less lethal weapons, less lethal weapons can sometimes, when deployed, also be lethal. Training is therefore important. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 102 not moved.]

Schedule 13 agreed to.

Clauses 60 to 65 agreed to.

Schedule 14 agreed to.

Clause 66 [Nuclear transfer scheme for UKAEA Constabulary]:

Baroness Anelay of St Johns moved Amendment No. 103: Page 52, line 14, at end insert— (6) The Secretary of State must make a payment by way of a grant to the Police Authority to pay for all the costs of the nuclear transfer scheme and related transitional costs.

The noble Baroness said: It will be important to get the transitional arrangements for the Civil Nuclear constabulary right from the beginning. It is important that there should be a seamless and safe transfer of its activities into the new statutory force. It is important not only for the safety of the nuclear establishment and society at large, but also for the morale of the Constabulary. It has been clear that all Members of the Committee have that morale at the forefront of their considerations today.

Clause 66 lays the ground for the transition from UKAEA to statutory force. My amendment probes the Government's intentions about how the transitional costs should be borne. I was pleased to read the comment made by the noble Lord, Lord Whitty, in winding up the Second Reading debate. He said that UKAEA, BNFL and URENCO, will not have to meet the costs of the transitional arrangements".—[Official Report, 11/12/03; col. 921.] That was in response to an inquiry made by my noble friend Lady Miller. Can the Minister tell the Committee what the Government estimate those costs will be? What kind of transitional arrangements will be covered? Will all the costs come from the DTI budget? Finally, at what stage do the Government expect to start committing expenditure to these transitional arrangements? I beg to move.

7.45 p.m.

Lord Triesman

The Government have already given a commitment to the companies concerned that they will not have to meet the transition costs of the separation of the constabulary from the UKAEA. My noble friend Lord Whitty repeated the assurance in responding to the noble Baroness, Lady Miller of Hendon, when she asked a question on this point during Second Reading. There is no intention of going back on that assurance and I restate it here today. However, it need not be enshrined in law because a commitment is being given openly and publicly. I hope that that will do something for the morale of all of those involved today.

The proposed amendment also has the effect of requiring the cost to be reimbursed to the Civil Nuclear Police Authority, which will be incurred by the United Kingdom Atomic Energy Authority. The UKAEA already receives a considerable amount of money in grant from the Government each year to fund its activities, of which those transition costs will be part.

On the basis of the assurances I have given, I hope that the amendment is no longer pressed, but can say what the costs will be. The estimate—inevitably it is to some extent an estimate—is £1.1 million over two years. We believe that that is what will be incurred; that is the figure about which the assurances have been given. Costs relate to additional staff and members of the police authority. Those staff are needed to ensure that the whole process goes as smoothly and properly as can be achieved.

Baroness Anelay of St Johns

I thank the noble Lord for repeating the assurances given by the noble Lord, Lord Whitty, that the transition costs will be covered. Will they come from the DTI budget as currently structured?

Lord Triesman

It is a direct grant from the DTI. If I am wrong about that, I will ensure that it is corrected in writing.

Baroness Anelay of St Johns

I thank the noble Lord for that answer. The question had been put to me. I shall consider carefully what the Minister has said. I appreciate the fact that the Government have tried to give reassurances on these matters, but they will be aware that uncertainty remains outwith this House with regard to that matter. I shall consult and have regard to any representations made to me before the Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 agreed to.

Clauses 67 to 71 agreed to.

Schedule 15 agreed to.

Clauses 72 and 73 agreed to.

Lord Triesman

This might be a convenient moment for the Committee to adjourn until next Tuesday at 3.30 p.m.

The Committee adjourned at twelve minutes before eight o'clock.