HL Deb 10 July 1963 vol 251 cc1399-434

4.4 p.m.

Debate resumed.


My Lords, your Lordships have listened for nearly seventy minutes in complete silence and with the closest attention to one of the greatest speeches I have listened to on domestic matters. I believe that it was as painful to deliver as it was to listen to. None of your Lordships, irrespective of Party, who has heard the noble Lord, Lord Coleraine, could have the slightest doubt that every definite statement he made was to him a statement of fact. Indeed, many of his statements are beyond dispute. And if these facts cannot be disputed, then no one can be in any doubt that the noble Lord was absolutely right in thinking that our electricity undertakings are likely to be destroyed because of a decision which is arbitrary, unjust, irrespon- sible and completely without logical foundation.

If we have listened to what in a large measure was an accurate account, no one can dispute that the reply given by the right honourable gentleman the Minister of Power in another place arose from the fact that he was misled. No one, after a letter of intent had been received, after no fewer than 151 different production meetings between representatives of the U.P.C. and the Board and after listening to the account of the meetings between Sir Christopher Hinton and the noble Lord, Lord Aldington, between January and June, the announcement on May 24 and the further statement this morning, could dispute that the description of the noble Lord, Lord Coleraine, of these as dishonourable methods is an accurate one.

The noble Lord described these events as an abuse of power, and, indeed, if the account we have listened to is accurate, then it most certainly is an abuse of power What we have heard this afternoon is a national scandal that must be put right. I would say that it would be quite impossible, with the best will in the world, for the noble Lord, Lord Carrington, to answer completely all the points that have been made. I would go further and say that it was impossible, in a debate of this kind, properly to arrive at all the facts. It is for that reason that we, and I hope all Members of your Lordships' House, will support the demand made by the noble Lord, Lord Coleraine, in his Motion for a full inquiry.

I have not the knowledge to comment on the individual points with regard to the negotiations on the construction of the Wylfa Station. I say only that the noble Lord's speech was remarkable in a Parliamentary sense. He spoke for seventy minutes on a detailed and complicated subject, not only concisely but consecutively and virtually without notes. For that alone he deserves our grateful thanks. But I think that the country is indebted to him, not only for the facts that he has revealed, but also because, in my view, the prosperity of the nation rests in large measure both on the Government's answer to these points and on the steps they take to remedy the obvious and major faults in our power policy which have been exposed, not only by the noble Lord this afternoon, but also by the Select Committee.

I feel that the most important of the noble Lord's revelations is the evidence that the Chairman of the Central Electricity Generating Board has misused or misinterpreted his powers and that the Minister of Power has failed to use his. This is painfully apparent from the Report on the electricity industry by the Select Committee on Nationalised Industries. As the noble Lord has said, it was agreed in 1955, and according to the Select Committee it is still agreed, that we should need all the current which can be supplied by the nuclear power stations. The noble Lord said that we are in the Stephenson's Rocket age, and that in twenty or thirty years' time the situation will be very different. But at the moment this form of power, though much cheaper than it was, is still costing more than the power from conventional plant, although it is hoped that it will become competitive after 1968.

Meanwhile, the C.E.G.B. are charged with the statutory duty of producing electricity as cheaply and efficiently as possible, and reconciling revenue with outgoings. The Generating Board and the Electricity Authority are thus forced, outside their remit, to compel consumers of electricity to pay extra costs arising from nuclear production which, surely, in equity, should be paid out of taxes, at least at present. I do not say that this is necessarily wrong, but the obvious by-product of it most certainly is—and I am referring to the apparent usurpation by Sir Christopher Hinton of the direction of national policy, which is the sole prerogative of Parliament. As we have heard, Sir Christopher reduced these five consortia to three by shot-gun marriages. Firms were bluntly told, "You will do as I say if you want orders, and if you do not you will not get the orders".

As the noble Lord said, we had something similar in the aircraft industry a few years ago; but what was done there was directly negotiated by the responsible Minister and fully discussed in Parliament. In the present case, it would appear that the Minister of Power has stood idly by and allowed his job to be done by another. Planning for a national industry can be on only a national scale, taking all relevant factors into consideration. It is disastrous when a strong- willed chairman of a public national undertaking is allowed to act as a dictator in pursuing a narrow interest, and thus becomes a one-man interpreter of overall national policy.

We have only heard, so far, of the big companies, the great consortia, and the effect on them. But it is not only the effect on companies; it is the effect on everyone employed, and the towns where they work; it affects the whole country. Consider, for example, the case of Richardsons, of Hartlepools, one of the smaller of the firms in the U.P.C. consortium. They were told that they would get a share of nuclear power station contracts only if they joined the U.P.C. consortium. So they did. They spent £2½ million on modernising their factory. Now they are told that they are not to share in the Wylfa contract, because the U.P.C. have not got the Wylfa contract. Commander Kerans is the honourable Member for Hartlepools. He saw me yesterday and told me (I have the authority to quote what he said) just what this means to this firm and to his constituents. The loss of their expected £9 million share of the Wylfa contract means that, out of a total staff of 2,500 men, 1,000 are likely to become redundant by next spring. Of these, 110 are the design staff team, who, once they are broken up, cannot be got together again. Most of the others are skilled men. Unemployment in Hartlepools is already at the depression level of 9.2 per cent. With this new blow, and the addition of school-leavers at the end of the month, it could reach the frightening figure of 16 per cent. wholly unemployed.

This is an area which had its hopes raised by the heartening presence of the noble Viscount, Lord Hailsham, and his encouraging forecasts. Are they to be plunged into despair?—because it becomes a moral issue if, through lack of Government control, these people find that they have again been deceived. Small wonder that a few weeks ago 1,700 of them marched through the streets of Hartlepools in protest! It is idle to suggest that these skilled men can, and must, find jobs elsewhere. If they go, it downgrades industry in the area; it destroys the hopes and future prospects of the whole area. The promises which the noble Viscount (now, I am glad to see, in his place) to build roads and modern schools become a mockery if there are no jobs for the skilled men. That is why I say that contracts like this cannot be decided by one man speaking alone and in secret. They are part of a national plan and should be decided at Cabinet level, bearing in mind the whole picture.

The noble Lord, Lord Coleraine, gave an account of the qualities that a chairman of a national Board should have; and I agree that in such a position a man must have very high qualities. But I submit that no man can possibly be found having all those qualities and exercising correctly all the judgments that must be exercised in a matter of this kind. When they impinge on national policy they are matters for the Government. I can understand why, with an eye on costs, Sir Christopher wanted to reduce the plan from one nuclear station a year to one every two or three years. But this was not the way to go about it. Nuclear policy, as the noble Lord said, must be decided by the Government, and it is their duty to deal with the extra costs that must arise without distorting the power policy and without creating additional unemployment in badly hit areas.

The position, in the industry now, as the noble Lord, Lord Coleraine, said, is a shambles, and the companies concerned with building nuclear reactors for electricity production have lost millions of pounds. They took a long view, and they hoped to recover their losses in the years ahead. But, apart from what has been announced to-day—and the position about that does not seem very clear—the present programme will be completed by 1968. Naturally, they are asking themselves: Is this another version of the groundnuts scheme? I would submit that the Government must intervene urgently and make new arrangements which recognise that an apportionment of cost to the consumer has an important bearing on the attitude of the Central Electricity Generating Board to future nuclear stations, and then settle and announce their future programme, which must be related to need and to the capacity of the consortia which they themselves have created. I think the Minister should also review the remit of the Board and the Authority to ensure that it is fair and realistic, and then take steps to see that it is not exceeded in matters which affect employment in, and location of, other industries.

This disease seems to spread. For example, Professor Edwards, Chairman of the Electricity Council, speaking on March 7 this year, after setting out very fairly the problems of a monopoly buyer dealing with British firms, and indicating that preference should be given to home manufacturers, said that it was for those who run nationalised industries to judge this question. With respect, I disagree. It is the job of the head of a nationalised industry to run his industry, but when his actions are likely to impinge on public policy in other directions, it is a matter for the Government.

The noble Lord, Lord Coleraine, referred to my noble friend Lord Roberts who, he said, rightly does not conduct the affairs of the Coal Board in a way which usurps the functions of Parliament. That is clear proof that this is not inherent in the conduct of a nationalised industry. It depends on the chairman of a particular Board, and on the guidance he receives from the Minister to whom he is responsible.


My Lords, would the noble Lord go so far as to say that the tendency of a nationalised industry is to centralise power too much?


My Lords, the name, "nationalised industry" almost means that it is an industry covering the whole nation in its particular field. Power, therefore, must obviously be centralised; in fact, that is the basic justification for it. What I am saying, however, is that when that power is used, as it were, outwith the particular terms of reference in such a way as to affect the national policy as a whole, then it is outside the terms of reference of the industry and is a matter entirely for the Government and for Parliament.

I think, too, that it is imperative that the Cabinet should bring to an end these unseemly dissensions between the Atomic Energy Authority and the Generating Board which emerge so clearly from the Select Committee's Report. Imagine a senior scientific organisation playing such juvenile tricks as refusing to show its papers on a costly prototype to the Board, who are its main potential user. The trouble is that it seems unlikely that the present parties will resolve their differences themselves. We on these Benches, therefore, strongly support the proposal of the noble Lord, Lord Coleraine, for a Committee of Inquiry to investigate and report on all these matters. We need impartial, objective, investigation, followed by ministerial decisions to which both Authority and Board must adhere.

As the Select Committee point out, very large sums of public money are at stake. It would be scandalous if such a state of affairs were allowed to continue: because it is not only the money, but the supply of electric power which is at stake; and that is already causing acute concern. In my view, the C.E.G.B. and the supply authority have placed the whole N.E.D.C. programme in jeopardy—the programme for an annual 4 per cent. production increase—because this target cannot be achieved unless we have the electric power; and we shall certainly not have the power unless the Government make drastic changes in the conventional plant construction programme, quite apart from what they do about atomic power.

Last year new plant construction totalled 2,750 megawatts. It is planned to run at or below that level for the next three years, and the construction programme does not jump to 4,500 megawatts until 1966. That is the year when, "Neddy" tells us, the gross domestic national product is to reach £32,000 million. The important thing, however, is that the present planned programme is a year behind the actual demand for power, and new construction is not even keeping pace with the increased level of demand. Last winter—on January 22 of this year—the demand for electricity rose to 32,000 megawatts, and the maximum load that could be carried was less than 30,000. So we suffered load-shedding and blackouts. New plant coming into use this year will enable us only to satisfy last year's maximum demand but, meanwhile, demand for electricity has increased this year by 12 per cent. In other words, in the first five months of this year we sent out 66,500 million kilowatt-hours against less than 60,000 million last year—a 12 per cent. increase. This means that if conditions are the same next winter, then the blackouts and load shedding will be even more serious. It is obvious that the Minister of Health thinks so, because he has instructed all hospitals to make sure of emergency arrangements for the winter. We have been used to the idea of the electricity industry doubling itself within ten years, but if demand continues to increase, as it is now, at the rate of 12 per cent., it means that it will double itself in six years.

The Select Committee squarely places the blame for this state of affairs—that is, the short supply—on the C.E.G.B. and the Electricity Council. They rightly accuse them of building up peaks which they were unable to meet. They also point out that, although for years demand tended to outstrip forecasts, the industry did not find out about the changing character of demand until it was too late. In paragraph 307 they make this stinging remark: … that security is the first requirement of a system of electricity supply and that any system which leads to a series of breakdowns is open to serious criticism. One does not usually have from a Select Committee a more stinging condemnation than that. I take an even more emphatic view. I believe that the Board and the Council gambled on a succession of mild winters, and that there would have been no trouble if the construction programme had been geared to their own demand forecasts. But they kept it below estimated peak demand and, as usual, the public had to pay for the mistake. And they will go on paying for the next five or six years.

All this is not the fault of the Board—and I think this was a point made by the noble Lord, Lord Coleraine. On several occasions, on financial grounds, the Board's forward plans have been substantially cut by the Government. It is true that the last cut was in 1958, but the 1958 construction is only now, five years later, coming into use. We are still suffering from those financial cuts. We on these Benches have repeatedly pointed out the disastrous consequences of the "Stop and Go" policy, and the Government must accept their share of the blame. In an industry of this kind we need, at the very least, planning five years ahead—I think considerably more—and the plans must be geared to anticipate the demand. Once the plan is made, it must not be arbitrarily interfered with. We also need improved contractual arrangements, because it is not only in the nuclear power section that we need an improvement in the system of tendering, pricing and contracting.

Sir Christopher Hinton believes that competition stimulates efficiency and technical progress. I have no doubt that it does, under free commercial conditions. But it is very different when the sole buyer is free from competition, and exercising monopoly buying powers in a field such as large turbo-generators, where the normal conditions of competition cannot exist in the home market. For some years the Board have wielded the threat, "We will be buying from Canada", or, at every meeting with high executives, "We shall be buying from Europe". One result of that kind of monopoly pressure (I see the noble Lord, Lord Carrington, looking at me in an inquiring way) is that it is actually true to-day that turbo-generators are selling in Britain at a price 20 per cent. lower than they are in Japan. You may say immediately, "That shows the success of the policy". But at what cost? The Select Committee make clear the cost of that success. They point out that the net income in the electrical engineering industry is the lowest among the major industries they reviewed, and is not sufficient to enable manufacturers to pay for essential research.

Nor, my Lords, is the industry earning enough to enable it to attract fresh capital on the market. It is neither clever nor successful to put your suppliers in such a position that they cannot finance the expanded programmes on which the nation depends. Only four firms can construct the 500 megawatt turbo alternators. Not only have they the capacity to supply the 1966–67 requirements but to-day they are working at only 60 per cent. capacity, so they could greatly increase output very much earlier. They should be given the work, and given, too, the new negotiating machinery recommended by the Select Committee so as to ensure a better working relationship with the Board and fairer prices. These prices should take into account the capital employed and the return necessary to service it and also to finance research, because—and this point is often overlooked—none of these large plants is standard. Every single one is a prototype because of the sudden changes which are made.

The Select Committee recommends an independent arbitrator with power to inquire into these relationships and with power to approve pricing, tendering and placing of contracts. This may well be the best solution, and I hope that the noble Lord, Lord Carrington, will be able to tell us, when he comes to wind up, that the Government accept this recommendation and will implement it as quickly as possible.

It may be within the recollection of your Lordships that within the last twelve months I have on three separate occasions drawn attention to the dangerous situation which has arisen in the electricity supply industry. On each occasion my suggestions, now confirmed by the Select Committee, have been ignored. To-day the demand for action comes from both sides of your Lordships' House, and I would say that if the Government do not act now it will be proof that in yet another major field they have ceased to govern.

4.32 p.m.


My Lords, I have had many doubts whether or not I ought to take part in this debate, for I am, as my noble friend Lord Coleraine told your Lordships, the Chairman of the United Power Company, which is one of the nuclear energy consortium companies and the one from which he thought it right to resign. I must, therefore, declare to your Lordships right at the outset this special interest in what I have to say. I also had it in mind that in the circumstances of the offer which was made by this company for Wylfaand I should like to say that even yet not all the circumstances have been made public—I have been anxious that I should not do anything behind the backs, as it were, of the Central Electricity Generating Board, either through Parliament or through Ministers, which might influence, or appear to influence, their commercial judgment. To have done that would, in my opinion, have been bad and wrong and it would have been quite contrary to the philosophy about nationalised industries which I tried to encourage others to share during the years 1957 to 1961 while I was Chairman of the Select Committee on Nationalised Industries in another place; a philosophy which I think shines out from the most recent Report of that Committee, which has been referred to and on which I should like to congratulate my old colleagues.

The situation I am in, as your Lordships may have thought to yourselves, has a certain irony, but I do not share my noble friend's view on all these points. I do not share his view attacking the date of the announcement of the decision of the C.E.G.B. The nationalised industries boards should be allowed to take these decisions and announce them free of interference from others. If national interests are involved then they may have to come in later. I must admit, therefore, to your Lordships what my noble friend Lord Coleraine has already said to you: that I greatly regretted not only that he thought it right to resign as one of my colleagues in industry but that he thought it right to start a debate here which, apparently, might refer to this particular company's affairs. But, of course, I knew him well, and his high standards; I respect, too, the high purpose which he has always had in mind; and I know that he did not do what he has done without a very careful searching out of where his duty lay. Having heard him, I must join with the noble Lord opposite in congratulating him on a masterly performance in your Lordships' House. I do not think I have ever heard anyone else speak for so long, so concisely, so lucidly, and with barely a glance at his notes on such a complicated matter. I should like to pay my tribute to him.

I should think it wrong for me either to adopt or to reject here to-day any of the arguments which he put before you, or the history as he announced it to your Lordships, for I think that this is not the right place, at this juncture, to argue the details of this dispute. And, frankly, I must say this to the noble Lord opposite, with some humility, too: that I really do not think it is right for us here to attack the character of Sir Christopher Hinton or to impute to him the dishonour (which was the word used) without hearing his side of the case. I think we have to be careful here. We know one side; I think my noble friend knows it, and I know it; and I would not ask your Lordships to pass judgment on that man or any man without having heard his side.

There is one particular point which is important and to which my noble friend made reference. He referred to the statement by my right honourable friend the Minister of Power in another place on June 27, and in that statement reference was made to the cost or the price of the tender, and the implication of what was said is that the price put in by my company was high. I want to say this one thing to your Lordships with, I hope, a full sense of responsibility. It is quite simple. If like is compared with like, but maybe only, the price of the United Power Company's offer was both quite substantially lower than the price of previous stations, as it should have been, as it followed them by some years, and it was not, if like is compared to like, more costly than English Electric's. My noble friend can call for the figure if he likes, and I must say to him that it is most damaging to the reputation of British industry to spread a false idea that we are a high-cost people. It does no good to our exports; and I must say that one of our export customers is in this country at the moment reading these statements. I feel it necessary to say that to your Lordships with a full sense of responsibility.

The last thing I want to say about these Wylfa negotiations is just this. The decision has been announced and I am, of course, free—and I am obliged—to take the action that after full consultation I am advised is justified. The facts have been fully set out in a letter which I myself wrote to Sir Christopher Hinton on June 25, and he has not thought fit to challenge the facts set out in that letter. I am, of course, responsible for the careers of many first-class scientists, engineers, technicians and administrators and I have no intention of leaving things as they now stand. All the things which the noble Lord, Lord Stonham, said about the responsibilities of those in charge of industrial decisions like this for work-people and highly-skilled scientists are very present in my mind and I do not think noble Lords opposite will accuse me of neglecting them. The nation, of course, has an interest in ensuring that what I might call monopoly State buyers have good and sensible relations with private industry and that they use acceptable standards in conducting negotiations. But I do not think that a debate in your Lordships' House at this time is the right occasion on which to rehearse what has happened. I am quite prepared at the appropriate time to see full publication of the facts of this case.

But I now come back—having told your Lordships that I was doubtful whether I should take part in the debate at all—to say why I have eventually decided that I ought to, and that is because there are very important considerations about nuclear energy policy which greatly affect the national interest and which in my opinion need emphasising to-day. Not only is it quite probable that those of us who are engaged in the nuclear energy industry will be able to offer some useful contribution to such a discussion, but, indeed, in thinking about it all—and I have been very worried about this matter for many months now—I have come to the conclusion that I should be failing in my duty here if I did not join in the debate.

Chief among these important considerations, one I believe at the very basis of my noble friend's Motion, is the simple question: how competitive is nuclear energy with conventional forms of energy, each in the form of electric power, and how competitive will it be in the future? Or, put another way, are the high hopes of the future of nuclear energy that we all held in the earlier years, 1952 to 1957, being proved to be false? There are some people who think like that. I am not one. We are not, I think, going to reach very sensible conclusions about all the points that have been made by the two noble Lords who have already spoken unless we are clear about the answer to this question. Indeed, I would think the fact that the two public authorities, the C.E.G.B. and the Atomic Energy Authority, would give a somewhat different answer to that question is the main explanation for the situation described in the latest report of the Select Committee on Nationalised Industries and for the Committee's anxiety about the relationship of these two bodies.

The comparison of the costs of nuclear power and conventional power is bound to be an intricate and detailed problem, but is fundamental to the subject, and so I hope your Lordships will be patient with me whilst I analyse the figures and I hope your Lordships will tolerate a bit of statistical jargon. The most recent authoritative figures comparing the costs of electricity generation from nuclear plant and conventional plant are set out on page 120 of the Select Committee's Report. The latest nuclear power station covered by these figures is, I understand, Sizewell. It was designed and tendered for in 1960. Since then the Oldbury station has been started and two designs have been submitted for the Wylfa station. On the basis of the figures given here for the latest station, electricity produced from nuclear power plant commissioned in 1965–66 will cost 0.16d. per unit more than electricity produced from conventional plants newly commissioned that year.

It is my serious submission to your Lordships that the methods used for making the calculation of the cost of nuclear power are wrong, and that the basis of comparison of those costs with conventional power costs is also wrong. That is two things: the methods of calculation are wrong and the basis of comparison is wrong. Nuclear energy, as a result, is being wrongly undervalued and underrated, and I want to tell your Lordships why and how. The calculations behind the costs of power from conventional plant are based on long experiences, and I do not intend to analyse them except to note that the period of depreciation is 30 years and the load factor assumed at 75 per cent. The costs of generation from nuclear plant, on the other hand, are calculated according to what are known as ground rules—that is part of the jargon of the industry—rules that were devised eight years ago and are now far too pessimistic, taking account of experience since.

There are two basic elements in these rules, load factor and depreciation period. It is assumed that the load factor of nuclear plant would be exactly the same as that of conventional plant—75 per cent. That is assumed although the costs of fuelling conventional plant are so substantially higher than the costs of fuelling nuclear plant that there can be absolutely no doubt that nuclear plant will always claim the base load. The Authority (I think this is common knowledge) and I certainly consider that a load factor of 85 per cent. seems reasonable, and this makes a lot of difference.

Not only does it seem reasonable, but the fact is that those who have been designing nuclear stations recently have been designing them to have a factor of availability of at least 85 per cent. And we have also been told that the plant at Calder Hall and Chapelcross has been available for over 90 per cent. and during last winter the Berkeley station was available for 99 per cent. So what is happening is that not sufficient account is being taken of proved technical progress or, indeed, of design requirements. An increase of 10 per cent. in the load factor used for this calculation—that is, from 75 por cent. to 85 per cent.—would in fact reduce the cost per unit sent out by 0.05d. I will do the addition a little later on.

The second element, the depreciation period, is also much too pessimistic. A 20 years' period is laid down for nuclear plants against 30 years for conventional. This was possibly right in 1955 but is not justified to-day, and seriously falsifies the cost of nuclear power. A life of 25 years is not at all on the optimistic side. But much must depend on the design, and what I want to emphasise to your Lordships is that it was part of the instructions for Wylfa that the reactor should be designed for a life of 30 years, and the design, of course, cost more for that reason. For that station, therefore, and for others in which that life is required, or has been required, the calculation should be made on the basis of depreciation over 30 years, and not 20. If not, we are getting the worst of both worlds—that is, higher capital costs and shorter depreciation period. For the sake of my argument here, if we take 25 years life, and not 30, the cost of nuclear power would be cut by a further 0.04d. in 1965–66, which would get the gap down from 0.16d. to 0.07d.

There is a third element which relates to the cost, and that is the life of the fuel. I will take first the life of the fuel, and that is referred to in the Blue Book which the noble Lord has in front of him, the Select Committee's Report, at paragraph 384. It is assumed at the moment to be a life of 3,000 megawatt days per tonne. If that fuel life increases as the Authority expects, there will be further savings in costs. If, for example, the increase were to be to 4,000 megawatt days per tonne there would be a saving of about 0.03d. per unit. And, on ton of that, from what is shown in the Select Committee's Report at paragraphs 388–9, about the price of uranium ore, there should bps a further reduction of 0.04d. These figures together close the gap and will make the cost of nuclear power comparable with the cost of conventional power.

There is a fourth important consideration that affects the cost of nuclear power, and that is the rate of interest. I have no quarrel at all with the rate of interest included in the present rules and calculations, but I think we must avoid being frightened of the capital cost of basic industries if we are to achieve sound growth in the economy of Britain.


My Lords, may I interrupt the noble Lord? I take it he is talking entirely about development of the Magnox reactor?


I am sorry if I did not make it clear. I am talking about the Magnox reactor; I am taking the figures on page 120 in that Report and saying that in 1965–66, on the basis of those figures and the ground rules I have put to your Lordships, nuclear power will be competitive with conventional power.


My Lords, may I ask the noble Lord a question on one point? Has he taken into account the perpetual question of currency?—because that would come out still more in favour of atomic energy.


My Lords, I am most grateful to my noble friend. This is a point I make, but I usually make it abroad on other countries' currencies and not about the pound sterling. It is, however, a good point and one that we should certainly bear in mind about British stations generally. It should be much more acceptable to overseas countries than they have so far thought. They are apt to like things that cost less. But there is that factor about inflation which makes it wise to spend a lot early on the capital and have low running costs.

I want now to come to the basis of comparison, which is also important, between the cost of generation from nuclear plant and that of generation from conventional plant. The chief element in the cost of generation from nuclear plant is the capital cost of the plant itself. As my noble friend has said, these capital costs are normally expressed in so many pounds per killowatt sent out, and in the table for 1965–66 we can see the capital cost for nuclear stations. That appears at page 120 of this Report. I want to emphasise that these are the capital costs of one station a year, on an average, each of a different design. They are the capital cost, therefore, of the only station of a particular design. Included, therefore, in those capital costs are the full, substantial overheads of the consortium companies, even including the design costs, the pay of the scientists, the technologists, draughtsmen and so on.

But the element in design does not stop there: it goes leaping on through the sub-contractors; for a large part of the plant required for a nuclear station, and even for some of the conventional plant, has to be specially designed, and so sub-contractors' costs are inflated, too. All the designs in the nuclear programme prior to the recent Wylfa offer for one reactor were designs for twin reactor stations. To that extent, therefore, the design costs were spread over two units. I think it is quite obvious that the more reactors of a particular design that are ordered the more widely spread the design costs will be and the lower the price of electricity produced. It may not however, be so well known how great is the order of magnitude of the saving in capital costs per kilowatt that results from ordering more than one unit of any design. I will just give some figures. If one reactor of a particular new design could be offered at a cost of £105 per kilowatt, the capital cost per kilowatt of four reactors ordered at once for consecutive building would be about £85—a saving of just under 20 per cent. To give some indication of what this means in terms of generating cost, I may say that the cost of each unit sent out from a four-reactor station, each of between 500 and 600 kilowatts, would be of the order of 0.466d. per unit on the basis of my ground rules, and without allowing for any increase in the present estimated life of fuel, whereas the cost of each unit sent out by a one-reactor station of the same design would be something over 0.525d. per unit. That is a big difference; and a further replication of the design would have given further reductions.

My Lords, what I am trying to do here is to establish a proper basis of comparison. We know what the figures are for conventional power station costs. The estimate is that something between 2,000 and 3,000 megawatts of power will be produced from each design of conventional plant; and so, if we want to get a fair comparison—and this we must try to do—and if we want to compare like with like, we must try to compare the cost of electricity from nuclear plant and the cost of electricity from conventional plant on the basis of repetition of the same design of reactors.

It may well be said that all this is pure theory, and that in practice there can be no probability of building a sufficient number of stations of nuclear plant in the next few years. But the main reason why the Central Electricity Generating Board do not build more nuclear power stations is that they consider them to produce more expensive electricity than conventional stations. We have, therefore, got into a vicious circle. Nuclear power is thought to be non-competitive, largely because there is insufficient repetition of design. There is insufficient repetition of nuclear plant design because nuclear power is thought to be non-competitive. It can also, I suppose, be said that the whole basis of the C.E.G.B's nuclear power ordering programme has been to encourage steady development from design to design of reactor. That is true; and I should like to say that I think that there has been steady development. We have done much better in this industry—and did long before I got into it—than we ever take credit for: indeed, we are constantly denigrating Britain's best progress.

I am not, of course, suggesting that there should not be at appropriate intervals changes in design. Indeed, at this particular moment we are obviously on the verge of trying out a new system which will show further cost reductions than Magnox has yet achieved. But I am saying that there should be more than one station produced of each design, and certainly more than one reactor. I would say further that in forming a decision as to how competitive nuclear power is with conventional power, the calculations must be based on at least four reactors of the same design and not on one or two. There is just one further point that I would add, before I try to sum up this argument. Some will say that the estimate of cost should be increased because of a risk factor. But it must not be overlooked that the safety requirement is present throughout the design and has already added greatly to the costs before any of these calculations that I have been talking about are made.

My Lords, I draw these conclusions from the points I have made. First, that if the right methods of calculation of costs are used, nuclear power will be proved broadly comparable with the best sources of conventional power from 1965–66, even with the specially high cost of having only one nuclear station of each design. My second point is that if the same output is programmed in future from each design of nuclear power station as for each design of conventional plant, the costs of nuclear power will prove to be substantially lower. My third point is this: that since the adoption, up to the present, of what I regard as the wrong methods of calculation of costs has led to the wrong answers about the competitiveness of nuclear power, that has discouraged the building of more nuclear stations—a result which itself has appeared to confirm the wrong answer. This is not only a vicious circle, but has a whiff of the old story of the chicken and the egg—which came first?

I remain very much of the opinion that the high hopes held out for nuclear power in its early years were fully justified. We have done much better than we think; but we could do much better still. We are in the habit of taking a justifiable pride in Britain's pre-eminence in the civil uses of atomic energy; yet many people with influence have got into the bad habit of talking down the progress of its development, without any justification at all. To those—and I am one—who are concerned with increasing Britain's exports in nuclear power stations this is as damaging as it is inexplicable. And the failure to have a properly planned programme at home does even more damage to our export prospects.

The history of the relationships of the United Kingdom Atomic Energy Authority, the C.E.G.B. and the industrial consortia is important now only because of the lessons of the future. It should not be thought that all these relationships have always been bad; indeed in many ways they have been very good. But the lessons that have been learned have in fact cost many millions of pounds. Certainly the relationship between the Central Electricity Generating Board and the United Kingdom Atomic Energy Authority—which will, I expect, have to change in detail from time to time—must be one of partnership. Certainly the C.E.G.B. will have to take account of private industry's problems—as, to be fair to them, they have sometimes tried to do. And I believe that private industry must appreciate the problems of the C.E.G.B., which I think they do.

But I believe the most important lessons for us are that national policy on nuclear power should be guided all through by a sound belief in its competitiveness and in its economies, and that it should provide a firm programme on which everyone concerned can plan ahead, and which will ensure the economic use of the undoubted technical advances available to us by providing for the construction of more than one station of each new design. It is not the technical efficiency of nuclear power plant or the efficiency of its designers, nor is it anything inherent in nuclear energy itself, that apparently keeps its costs above those of conventional power. I believe it is mistaken methods of calculation and, from time to time—but only from time to time—the refusal to plan a proper programme which are the causes of the pessimistic attitude adopted by some people to this problem.

5.2 p.m.


My Lords, I am sure your Lordships must have listened to this debate with somewhat mixed feelings, but the speech of my noble friend Lord Aldington was most moderate and most helpful. He has renewed my faith, which I have never lost, in nuclear power, which I believe is one of our great national assets and which will prove to be even more of an asset in the future.

I did not decide to take part in this debate because I was a former Minister of Power. I did not do so because I had the privilege of setting up the first Central Electricity Generating Board and appointing Sir Christopher Hinton as its Chairman. We have heard many things about Sir Christopher to-day, and perhaps this is not the point at which to talk about it, but I should like to take an early opportunity of saying that, in my view, he is a great public servant and has been largely responsible for the successful operation of the electricity side. (There is another noble Lord who has given much of his life, very successfully, to the electricity industry—I am referring to the noble Lord, Lord Citrine. He has been followed by Christopher Hinton and by Ronald Edwards, who make a very admirable team.) Nor did I decide to take part in this debate because I knew first-hand the negotiations regarding the Wylfa station, to which the noble Lord, Lord Coleraine, referred so forcefully and with such feeling. I decided to take part in the debate because I disagreed with the Motion put forward by Lord Coleraine himself.

During my term of office I was responsible for three nationalised industries, and I always felt that it was imperative to let them conduct their business affairs as best they could. I was always particularly careful to think that it was their problem to deal with the supplies they required and to conduct their tendering themselves. I have always looked upon the nationalised industries in the same way that I look upon private industry. They have to be efficient; they have to carry out their duties in the way that seems proper to them. The Minister has power, if he is not satisfied with any particular member of the Board—the Chairman or otherwise—to make a change, but if every time somebody disagrees with a decision there is going to be a public inquiry then the business of carrying on the nationalised industries will not be pursued. No one will be anxious to do it, and rightly so.

This Motion draws attention to the development of the nuclear energy programme, with particular reference to the relationship between the United Kingdom Atomic Energy Authority and the Central Electricity Generating Board. I was concerned in some of the early developments in nuclear energy. I well remember our pride, which was frequently expressed in this House, on the results of the researches of the Atomic Energy Authority. We thought it necessary at that time to rely upon nuclear power in a big way to bridge the gap between the foreseeable requirements of electricity and the availability of our resources.

I would remind your Lordships of two things. First, we were short of coal: coal could not at that time meet our requirements. I am sure we should all congratulate the industry on what they have done since. At that time we had just emerged from Suez and I think we should have been considered foolish to rely upon imported oil to bridge that gap. So we decided on this large nuclear power programme, and the Atomic Energy Authority—very ably—took steps to bring into being consortia of manufacturers so that the programme could be implemented. But what happened? Coal became more plentiful and the supply improved so that we had large stocks of coal. The design of conventional stations was so improved that the apparent costs were below the cost of nuclear power, a subject about which my noble friend Lord Aldington has had much to say. So it was decided to phase out the programme. That was done twice, and I should say very wisely done. But, of course, the firms catering for the design and supply of nuclear stations had to take the necessary steps to adjust their arrangements and resources to meet the phased-out programme. The number of consortia eventually came down from five to three. I know it has been said that this was due to the force of Sir Christopher Hinton, but I think the firms would have had to adjust themselves even if that force had not been there to help them to do that. There has been much published and much said—


My Lords, before the noble Viscount leaves that point, could he, with his previous experience in this Ministry, say whether this phasing out was done purely on the initiative of the Central Electricity Generating Board, or did the Government play a part? Because this was a main point in the speech of the noble Lord, Lord Coleraine.


The phasing out was largely done by the Central Electricity Generating Board, but they were in constant touch with the Minister of Power. We always overlook the part played by the Minister of Power. The Minister of Power does not sit there knowing nothing. He is well aware of the proposals of the Central Electricity Generating Board and has the opportunity, if he wishes, of saying that he does not agree with them. That was always the situation, and it is the situation to-day.


May I press the noble Viscount further? Is it correct, then, that the Minister agreed with these decisions? This is really germane to the whole argument.


Well, my Lords, I will leave my noble friend Lord Carrington to deal with that point. I was not the Minister at the time when the phase-out was done, and I cannot say whether or not the Minister agreed. I can only tell your Lordships what was my experience in relation to the Central Electricity Generating Board.

If I may, I will go on to this question of the relationship between the United Kingdom Atomic Energy Authority and the Central Electricity Generating Board. There has been much written and much said about this relationship. In fact, the noble Lord, Lord Stonham, in the kind of immoderate speech which we have come to expect from him, talked about unseemly deception. I am very doubtful whether that is justified at all. Your Lordships will be aware that a research department and an industrial department concerned with production do not always follow the same line of thought, and they cannot be expected to. I believe it is true that the personal relationships between the members of the Generating Board and the members of the United Kingdom Atomic Energy Authority are absolutely first-class, and leave nothing to be desired. The extent of any difference is brought out quite clearly in the Report of the Select Committee. I think it is healthy that they should think differently. They think differently on this question of the load factor and the life, and I can understand why. I think it is right that the Central Electricity Generating Board should be conservative in their estimates, should not lead us up the garden path, but should put forward what they think is the practical thing to do at this point of time.

The Motion calls for Her Majesty's Government to set up a Committee of Inquiry to investigate and re- port upon the present arrangements and prospects of the Nuclear Energy industry. Not only, as I have said, is the Ministry of Power continually in touch with the Board on the matter, but it is well known that a committee, the Powell Committee, consisting of representatives of the Atomic Energy Authority, the Generating Board, the Ministry of Power, the Treasury and the Board of Trade are currently examining this position; and that, meanwhile, as has already been announced, the Central Electricity Generating Board have issued a statement to the effect that, subject to satisfactory experience in the Atomic Energy Authority's prototype at Windscale, and to any Government decision affecting the nuclear power programme, they intend to place an inquiry for a reactor or reactors of the gas-cooled type to competitive tender at the end of this year or early in 1964. In these circumstances I ask your Lordships, what is to be gained by setting up a Committee of Inquiry to consider the present arrangements and prospects of the nuclear industry?

In addition, as your Lordships know, the whole electricity supply industry has been under the examination of the Select Committee on Nationalised Industries. Their very comprehensive and able Report was published as recently as May 23 last. The Report concludes with the following paragraph: Your Committee's examination of the electricity industry occurred at a critical moment in its career, when on the one hand a combination of exceptionally difficult conditions had emphasised its weak spots, and on the other, when its policies were being given an invigorating new look to match its ever growing responsibilities. Your Committee conclude that the adoption of these policies and their vigorous pursuit at all levels are the means best calculated to enable the industry to discharge its responsibilities to the nation in future. My Lords, do we really want to embarrass the industry with another inquiry, when, I submit, all the facts are well known and are under examination from every relative point of view?

The remainder of the Motion asks for the Inquiry to include the system of tendering, pricing and contracting". As I have already said, I have always regarded this matter as largely one for the Board of the nationalised industry. Should they really be treated differently from private industry in this respect? I am sure that in business we have all at one time or another been disappointed at the result of a tender. But, because this happened in the case of a nationalised industry, are we justified in setting up a committee of inquiry to look into it?

The noble Lord, Lord Coleraine, described the decision of the Board as arbitrary, irresponsible and unjust. I submit that he has a perfect right to do that; he took part in the negotiations, and he is entitled to his opinion. But I think the noble Lord, Lord Stonham, was a bold man to make a statement to the same effect without hearing the other side.


My Lords, if the noble Viscount will allow me to say so, I prefaced my quotation of what the noble Lord, Lord Coleraine, said, by saying: If these facts are true, if they are established, then that is a correct description. Equally, I would remind the noble Viscount that the proposal with regard to tendering, pricing and contracting comes not from the noble Lord or from myself, but from the Select Committee, who surely are impartial in these matters.


If the noble Lord's rendering of what he said proves to be correct when we look at Hansard tomorrow, I will apologise, but I certainly took him to repeat these words on his own responsibility. In fact, he went further and said, "This is a national scandal"—a word which I am sure appeals to him very much.

Then the noble Lord said that the National Economic Development Council's proposals had been placed in jeopardy by the failure of the electricity industry to plan for adequate supplies; and he also said (although he did say it was 1958–59) that the forward plans had been substantially cut by the Government. There is no truth in that whatever. The capacity of the industry has never been interfered with by the Government in any shape or form.


My Lords, I must ask the noble Viscount to allow me to intervene. He must be fully aware that the Government, in 1957–58—that was the last occasion that was mentioned—did in fact cut down on the amount of money which was allowed to be spent on new plant construction. It is no good denying that.


I am not denying it. I am saying that they did not interfere with the generating capacity of the country. What happened was that there were more conventional stations used at a lower capital cost, but the generating capacity of the country as planned was adhered to; it was not interfered with by the Government. But on this question of the capacity required to meet future plans, I think there has never been any secret about what the Electricity Council have done in this respect.

I have in my hand a booklet written by Professor Ronald Edwards, the chairman of the Electricity Council, and Mr. Clark, the chief planning engineer of the Central Electricity Generating Board, about a year ago; and if you examine the evidence before the Select Committee you will see, again, that they have never made any attempt to hide up any discrepancies between what was required and what they had planned. But when one considers that they had to plan ahead six, seven or eight years, it is not surprising if they did not always hit the targets. The severe weather which we had this last winter, and which perhaps the Board ought to have provided for—it is easy enough to say it after it has happened—was a very severe strain on their resources. But it appears to me that if they do provide what we think is adequate cover, then we are inclined to grumble at the cost.

I think that, on the whole, they have done a remarkable job; and I would just quote from an article in the Economist which perhaps puts it better than I can. It refers to these inadequacies, and then says: Even as regards these central inadequacies, the Select Committee gives the electricity industry a pretty clean bill of health, because by the time that it learned of them the industry had already begun clearing its house of outdated notions. A radical review of electricity's commercial thinking has been set in train (and the committee makes little secret of the fact that it puts this down mainly to the sheer intellectual impact of Professor Edwards, the least academic of professional economists, supported by the unorthodoxy of Sir Christopher Hinton at the Generating Board). I do not think that I want to add anything to what I have said. I feel that the noble Lord, Lord Coleraine, intently believes in what he had to say, but I do not believe there is any justification for many of the strictures that were passed on Sir Christopher Hinton—or, I should really say, on the Generating Board, because Sir Christopher never acts without his Board. I am sorry, too, that occasion was taken to criticise the Minister of Power, because he has always taken, and I am sure will continue to take, the keenest interest to see that the national Boards do the job which they have to do thoroughly and well.

5.29 p.m.


My Lords, I apologise lo your Lordships for intervening in this debate at very short notice, and particularly to the noble Lord who will reply for the Government. I hope your Lordships will also forgive me if it is felt that I am prompted more by personal loyalties than by anything else in what I am going to say. I must declare an interest. I am a part-time member of the Atomic Energy Authority, and I was until the end of the year a part-time member of the Central Electricity Generating Board. It is perhaps unusual for a Member of this side of the House to dispute with another Member of this side, but I am bound to say that I was moved to intervene by the speech of the noble Lord, Lord Stonham, although I have come to the conclusion, having heard the noble Viscount, Lord Mills, that my intervention may not really be necessary.

The noble Lord, Lord Stonham, defends his most appalling accusations on the grounds that he prefaced them with the remark, "If these facts are accurate". That is no defence in this case, because he started off by saying that the statement of the noble Lord, Lord Coleraine, was to him a statement of fact which could not be disputed; and if the noble Lord, Lord Stonham, accepted what had been said as a statement of fact which could not be disputed, then, when he talked about "dishonourable" things and about "irresponsible, arbitrary dictatorship", it was not qualified at all; it was in relation to matters which he accepted as facts. I want to suggest to him, and to your Lordships, that it may be that it is difficult to dispute that a fact is a fact; although it has long been disproved that facts are facts. Some facts are facts; but only some of them. In this case, although I was only a part-time member of the Generating Board, and for only a very short time have been a part-time member of the Atomic Energy Authority, I would have no difficulty whatever in disputing many of the inferences from the facts that have been submitted to your Lordships' House.

Let me take one only, a very simple one. The noble Lord, Lord Coleraine, in the course of his speech drew attention to the fact that the engineering member of the Central Electricity Generating Board was absent in Japan when a decision was taken. There can be only one purpose in that submission to your Lordships. It was, I submit, to indicate that the Central Electricity Generating Board took a decision in the absence of its—


My Lords, forgive me for interrupting. If I gave that impression I sincerely apologise. I did not mean to give that impression at all. My argument was that on May 24, which was the first occasion on which Sir Christopher Hinton announced his personal view of the design, the engineering member was in Japan; and that is right.


My Lords, since the noble Lord has been interrupted, perhaps I may be allowed to add my voice. If the noble Lord reads in Hansard to-morrow what I had to say, he will find that I said that many of the statements made by the noble Lord, Lord Coleraine, were facts beyond dispute, because indeed they are in the Select Committee Report and have not been disputed before.


My Lords, it would be amazing if the noble Lord, Lord Coleraine, were to have made a speech in this House without some of it being factual. With respect to the noble Lord, Lord Coleraine, I accept his explanation. The point I wanted to make was this: he himself said that Sir Christopher Hinton was one of the greatest engineers in the country; and the deputy-chairman of the Generating Board, before he was appointed his deputy, had been the member for engineering on the Board. So clearly when this decision was made there was no—


My Lords, the deputy-chairman was also in Japan on May 24 when, whatever the Board's decision was, I am convinced that Sir Christopher Hinton's decision was made.


Then, my Lords, let us leave it on the basis that there are inferences which can be drawn; and the inference was that the Board, in fact, made their decision without proper engineering advice. This, I think, is completely wrong. The noble Lord, Lord Stonham, comes along and says all these things: irresponsible, arbitrary, dictatorship, dishonourable, and national scandal—and then what does he say? He says that it is impossible in this debate to arrive at the true facts. I could not agree with him more. But how on earth can anybody get up and make these, with respect, absolutely outrageous statements on the basis of their being facts, and then admit that one cannot arrive on the facts? I find it extremely difficult to follow this line of reasoning.

Let us come to the point about the letter of intent, which he says was dishonourable—and, with respect, even in the privileged precincts of your Lordships' House one should be very careful about talking of servants of the nation in terms of "dishonourable"; one should be very careful indeed. But I wonder whether the noble Lord, Lord Stonham, has read the letter of intent. Is he implying that the letter of intent was placing an order? As I understand it, the letter of intent in this case, as in all cases, says, "subject to price and design". Am I to understand from the noble Lord, Lord Stonham, that once you have given a letter of intent, subject to price and design, the only people who are to decide whether the design and price are right are the tenderers, the sellers? The only people who can possibly decide that are the people who are going to buy.


My Lords, my noble friend has asked a question (I had refrained from interrupting him before) and I must again say—and I hope your Lordships will read what I did say—that he has misquoted me completely in this. I made reference to what the noble Lord, Lord Coleraine, had said: he himself recounted the whole facts of this transaction and then said, "I regard this as dishonourable". I came to refer to his speech and briefly mentioned the whole range of what he had dealt with, and I said "If this is correct, then I agree that that was a correct description to make." I still think so, and I would hope that my noble friend would quote me more accurately if he must quote me.


My Lords, I apologise to my noble friend if I attacked his sensibilities. And if in my criticism I have not included the noble Lord, Lord Coleraine, I will now do so. The fact is, if we are dealing in facts, that reference was made to a letter of intent and reference was made to the decision arising from that as being dishonourable. All I am putting is this: what was the letter of intent for? What did it say? It cannot possibly be dishonourable—in the light of the terms of the letter—to decide, on the tenders submitted, that it was not acceptable.

Now I include the noble Lord, Lord Coleraine in my criticism when I come to this question of the terrible ogre, this super-Hitler, Sir Christopher Hinton, who sits astride the whole electrical industry, trampling down all opposition with complete disregard to justice or anything else! This man compelled consortia to combine together. As a matter of dictatorship? No, my Lords, as a matter of helpfulness. I repeat this: as a matter of helpfulness. And anybody who knows anything about it knows it to be true. What was the position on the known nuclear programme? It was clearly impossible to place orders with a large number of consortia. There had to be a limit. The more you had, the less likelihood was there of each getting an order; not because Sir Christopher Hinton as a matter of vindictiveness was going to refuse to give one, but because it was physically impossible to give one. You could not keep them all going. So he went to them in a spirit of helpfulness and said, "This is the situation", and they wisely faced up to it. Now it is turned round to signify compulsion by this arch-villain ! Really, my Lords, I must ask your forgiveness. It is perhaps because I am feeling a little warm about this.

I have had the privilege of sitting on the Board under this man and, remember. I went into it as a trade unionist with no knowledge whatever of the industry—as an ignorant Socialist, if you like, who was opposed to all these "people on the other side". And I say this: on the contrary, rather than Sir Christopher Hinton being the man he has been painted here to-day, an arch-villain, he is not only a great engineer—and I thank the noble Lord, Lord Coleraine, for that—but a great man and a great public servant, and he has only this service in mind. Certainly he is a little ruthlesss in the pursuit of efficiency; and I, as a Socialist, am not one to criticise somebody who tries to make a nationalised industry efficient. Why should he want it efficient? He wants the efficiency in the national interest, so that he can get the best possible supply of electricity when it is wanted and at the lowest possible price.

I sit back amazed at those wiseacres who can to-day say what should be done in five years' time; those who knew that last winter was going to be the worst winter of the century; those who knew, when this had to be done, what ought to have been done. I wonder whether they realise that, when a power station is to be built, it takes at least five years before it can be commissioned, and the forecast of what is going to happen is not of what is going to happen to-morrow or next day, but in five or six years' time.

My last word is this. One of my earliest memories on the Generating Board was that, in considering the plant forecast of the ensuing year, the Board under Sir Christopher Hinton came to the conclusion that the previous forecast was wrong and that it was necessary to "up" it—to review it in an upward direction. Any suggestion that Sir Christopher Hinton is not only a dictator but a blind dictator is nonsense. I apologise to your Lordships, but I say this. To much of what has been said, I would not attempt to reply. I am not technically qualified to do so and I am not attempting to reply to it. But this country has never been better served in a public position than by the Chairman of the Central Electricity Generating Board.

5.42 p.m.


My Lords, I have never had the pleasure of meeting the Chairman of the Generating Board. I can pay tribute to him only as a most effective television artist, who puts over his case remarkably well. But the acid test of the policy of the Board is going to be whether, if next winter is not the worst for the century, we have power cuts; and I am afraid that I am not altogether confident. I wonder whether some of the phasing-out in the past has been the result of periodic financial crises, because whenever there is any run on the pound or any weakness of sterling Government expenditure takes a frightful lambasting from the City of London, journalists, bankers and all. I think there has been a great failure of the Government over the years in not putting over to the City of London that the Government are responsible for power in this country and have to get power years ahead.

Electricity is unique in that the price cannot be suddenly put up to reduce the demand. Power has to be switched off, if the demand cannot be met. The Government, as the responsible body, have simply to provide the capital expenditure, and it is more important than capital expenditure in private industry. This has never been put across by the Government to the financial commentators and bankers. The great judgment on this item, of whether atomic energy or other fuels are to have our short capital, is whether we are prepared to spend more money to-day, knowing that we shall probably have lower running costs in ten years' time. That is an extremely difficult decision for the Chairman of a Board which is running as a commercial proposition. I, for one, think that the right person to decide this is the Minister of Power, after consultation with his Cabinet colleagues. I do not think that the decision with regard to the size of the atomic programme is a right decision to leave in the hands of the Central Electricity Generating Board. From the point of view of general public security, one would believe that it is right to back all three horses—oil, coal and atomic energy—but that can be done only by the Minister giving directions, in that atomic energy may be more expensive in the immediate future though cheaper in the long run.

5.45 p.m.


My Lords, I am not sure now whether it is worth starting my speech. I had hoped to finish before the Royal Commission. But since we have a few minutes, I may start off by dealing with some points, I must admit that until the noble Lord, Lord Hawke, spoke there was a greater atmosphere of tension in the House than there is now. I was hoping to lower that a little but he has succeeded in doing so, for which we are grateful.

We have had a most vigorous speech from my noble friend Lord Geddes of Epsom, which was also an unexpected one. I suppose that he was exercising his own discretion, as a member of the Generating Board, to speak on this matter, and it was interesting to get this other view of Sir Christopher Hinton. We have a clear picture of a very dark villain, on the one side—perhaps that was not suggested, but certainly a nasty man—and on the other of a knight in shining armour. The real point in this matter, whether he be a knight in shining armour or an ogre, is that Sir Christopher Hinton ought not to exercise these powers at all. This was the main contention of the noble Lord, Lord Coleraine, and I hope to develop some points on this aspect.

There is no doubt that the speech of the noble Lord, Lord Coleraine, was an absolute tour de force. Everybody has emphasised how long it was, but I was impressed by his ability to speak without notes on such a difficult subject. In whatever way we look at this issue, there is no doubt that an important principle is involved. I think it is a good thing that this should be debated, and even though our knowledge is necessarily not complete, even though we may not be fully briefed on the comparative costs of nuclear fuel, and even if we may not personally know Sir Christopher Hinton, we need to press our investigations. I consider it is right to ask for a committee of inquiry—not that I think for one moment that the Government are likely to grant it, but we live in hope. There is a field here, as successive speakers have admitted, in which we do not really know the position.

The issue over the Wylfa contracts which has triggered this matter off, needs to be clarified. On the one hand, we have the noble Lord, Lord Coleraine, saying in effect that they had expected this con- tract; that they had countless technical meetings; that they had no reason to suppose that they were not to receive the contract; and that there had been the planning of the consortia, including that about which he and the noble Lord (I know him as a Member of Parliament better than as a Member of your Lordships' House), Lord Aldington, spoke They expected this contract and came together in a consortium with Richardsons Westgarth who, I gather incidentally, are going to participate in some way—a generous and possibly also not unastute move by the Central Electricity Generating Board—


My Lords, I want to be very careful not to have arguments put into my mouth which I did not use. I said nothing about the letters of intent. I refused either to adopt or reject what my noble friend said, because I did not wish in this House to be involved in the argument. I deliberately did not state to the House my attitude on the letters of intent and I hope that the noble Lord will take that from me.


My Lords, the noble Lord was very careful to disassociate himself from the remarks of his noble friend, though the only ones that bore on it seemed to agree with him, certainly in regard to the matter of price, which is a very important issue. It is argued on the other side that the Central Electricity Generating Board, as a dutiful public body, decided not to give the contract, presumably because they thought the product was not technically good enough and the price was not right. It is impossible for us to choose between these two points of view. We know that the contract has been given to another consortium, the English Electric Group; that they will now build a 1,000-megawatt station, which is much more sound economic sense; and that the U.P.C. are out in the cold.

The consequences, of course are not confined purely to a simple commercial decision. They have not only an effect on the employment of those in this particular industry, but a tremendous effect on our potential export trade. I visited, in the early stages, the power station which this particular group, and G.E.C., in particular, were building in Japan; and, whatever else may have been the prospects of the Magnox reactor, I should have thought that this particular episode has killed what remaining prospects there were of its being of value to our export trade. It may well be that they had already gone; it may well be that the smaller reactors, boiling-water reactors and so on, will hold the field. I think we need to know what has happened on this particular issue, bearing in mind (and this is why I think noble Lords on both sides of the House are concerned) that there is this great power which we maintain ought to be exercised by the Government.

This brings me to the point with which the noble Viscount, Lord Mills, was dealing, and where I think he knew he was on delicate ground. The real issue is, how far in this matter the Central Electricity Generating Board have acted with the agreement of the Government. Perhaps I should ask the noble Viscount the Leader of the House whether I should now break off. I do not know how long we need before the Royal Commission. I am about to embark on a rather intricate argument.


My Lords, if the noble Lord wants to break off now, I am sure the House will defer to his judgment. We do not know what he is going to say, and this may be a convenient moment in his speech. But the Royal Commission is not until six o'clock, and if he can employ the next five minutes usefully, then by all means let him do so.


I will employ them, whether usefully or not. I am sorry to have to make this judgment for the House. I realised that I was embarking on a difficult part of my argument. I was dealing with the amount of influence that the Government have exercised in this matter.


My Lords, perhaps I may interrupt the noble Lord. I am told that I made a mistake of judgment a moment ago. Someone who is wiser about these things than I am came in and was evidently much worried by the answer that I gave to the noble Lord. I think it would be convenient if we were now to adjourn during pleasure in readiness for the Royal Commission.

House adjourned during pleasure.

House resumed.