§ 3.41 p.m.
§ THE PAYMASTER GENERAL (LORD SHACKLETON)
My Lords, I apologise for interrupting the debate just before my noble friend Lord Balogh makes his maiden speech, but, with permission, I should like to repeat a Statement which my right honourable friend the Minister of Technology has been making in another place about the reorganisation of the nuclear industry. This is the Statement:
"In the debate on May 23, I summarised the Government's objectives 334 in seeking a reorganisation of the nuclear industry following the report of the Select Committee on Science and Technology on this subject.
"I have now had the opportunity of considering the matter further and have had the advantage of hearing the results of the informal consultations conducted by the Industrial Reorganisation Corporation.
"I have to-day written to the I.R.C. to invite them to help in the reorganisation of the industry and I am circulating the text of my letter in the OFFICIAL REPORT. The Industrial Reorganisation Corporation of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
"I am asking the I.R.C. to assist in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. We have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear 'islands'. The proposed two new corn panics would need to work in close conjunction with the highly successful fuel organisation set up by the Atomic Energy Authority, which is already operating on a commercial basis.
"The Government have decided that to make this co-operation more effective in the exploitation of reactor systems, it would be advisable to establish the Authority's fuel business as a publicly owned company under the Companies Acts with the initial share capital wholly subscribed by the Government. In order to emphasise the interdependence of fuel and reactor design and supply the Government intend that the fuel company should take up and hold a minority shareholding in each of the two design an' construction organisations. Since the establishment of the fuel company will 335 require legislation, I am proposing that initially the Government shareholding should be taken by the Atomic Energy Authority.
"The exploitation both at home and overseas of new reactor systems, as well as the Advanced Gas cooled reactor, would then primarily be the responsibility of the new companies, whose activities we would seek to concentrate geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
"In addition, when the proposed new industrial structure takes shape, the Government have in mind the establishment of an Atomic Energy Board on which the Atomic Energy Authority, the design and construction companies, the fuel company and the generating boards would be represented. This Board would concern itself with research and development programming, export co-ordination and major policy matters. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
"As part of these arrangements, the Government will have to consider the necessity for some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems. The necessity for these new arrangements arises from the great success that the Atomic Energy Authority has achieved in developing commercial reactors. The reorganisation will be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry but also in conjunction with the Government's own research establishments in the development of industrial technology.
"These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent, since it is new design and construction organisations upon which the task of selling our reactor systems 336 abroad will fall. They need certainty for the future and I hope that we shall soon be able to reach an agreement at least in principle, which will allow us to exploit our national research and development in atomic energy to the full.
§ Following is the letter referred to in the Statement:
§ "I am writing to you, as Chairman, to ask whether the I.R.C. would be ready to help to carry through a reorganisation of the nuclear industry, which has now been under discussion for well over eighteen months.
§ "In our earlier talks about this, you were kind enough to advise me personally from your own long experience of atomic energy matters, as a part-time member of the A.E.A. Board. Later you and your I.R.C. staff also took informal soundings from all the parties involved both on the recommendations of the Select Committee and on the development of their thinking in the light of the Committee's report. All this has been most helpful.
§ "We have, of course, discussed this very fully with the A.E.A. throughout and have now had an opportunity of considering your suggestions in the context of the Government's objectives which I summarised in the House of Commons on May 23 as follows:
§ "First, to make the best possible use of all the existing resources in this field, cutting out overlapping and duplication, of which there manifestly is some;
§ "Second, to allow those who have worked in the Atomic Energy Authority full scope for carrying their work forward into the exploitation and sale of the systems which they have developed;
§ "Third, to get the maximum possible advantage of the technical standardisation, coupled with the most effective design competition in engineering detail and construction method;
§ "Fourth, to try to link and co-ordinate the effort in such a way as to relate reactor systems to the fuel elements and reprocessing business at which the A.E.A. has excelled, both technically and commercially, through its fuel production group;
§ "Fifth, to create an organisation which permits the sort of international industrial links which will be of critical importance in all sectors of advanced industry and not just in atomic energy;
§ "Sixth, to do this with a special eye upon the future of the European nuclear industry in co-operation with our partners in Europe;
§ "Seventh, to change the emphasis of our national effort in such a way as to increase it on the exploitation side and see that future nuclear research is guided and shaped more directly by the needs of the market at home and abroad
§ "Eighth, to establish a creative partnership between the public and private sectors as far as possible by reaching a consensus of 337 agreement so as to allow all the other objectives I have described to be achieved.
§ "With these in mind, I am writing to invite the I.R.C. to assist the industry in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. I have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear 'islands'. The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure of the industry. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
§ "The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation built up by the Atomic Energy Authority, which is already operating on a commercial basis. The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly owned Company under the Companies Acts, with the initial, share capital wholly subscribed by the Government. In order to emphasise the inter-dependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two new design and construction organisations. The establishment of the fuel company will require legislation, and I would propose therefore that initially the Government shareholding should be taken by the A.E.A.
§ "Exploitation both at home and overseas of the new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies. The design units of these two new firms, together with the fuel activities, should be, so far as is possible, concentrated geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
§ "When the proposed new industrial structure takes shape, the Government have it in mind to set up an Atomic Energy Board, including representatives of the A.E.A., the fuel company, the two new design and construction companies and the Generating Boards. This Board would concern itself with the composition and financing of R & D programmes (to which the two new design/construction companies, and the fuel company, would be expected to contribute), the co-ordination of activities in the export field and major matters of policy. These proposals have already been the subject of discussions between our respective officials. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
§ "The Government, as part of these arrangements, will have to consider the necessity for 338 some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems. This reorganisation would be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology. The necessity for these new arrangement arises from the great success that A.E.A. has achieved in developing commercial reactor systems.
§ "These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They need certainty for the future and I hope that the I.R.C. will be able to achieve an agreement, at least in principle, as soon as possible.
§ "Sir Frank Kearton. 0.B.E., F.R.S."
§ 3.53 p.m.
THE EARL OF BESSBOROUGH
My Lords, we must thank the noble Lord for having repeated in this House that Statement. I think it will probably be greatly welcomed by your Lordships, especially the decision to create the two design and construction companies, and especially in the light of the Conservative view on the Select Committee and in the light of our debate on May 8. I think that your Lordships on this side of the House and our colleagues in another place may perhaps take some credit for this.
I should like to ask the noble Lord one or two questions. First, will the two new companies now come in much earlier, not only in design and construction but also in earlier research and development into new reactors? Secondly, in regard to the fuel business I under-stand from the Statement that this will, at any rate initially, be wholly publicly owned. Will there be the possibility of European participation in this company, too? I gather from the letter attached to the Statement (which I have not yet been able to read carefully, though I will do so) that the two design and construction companies will be encouraged to have international links, and that the whole future of the European industry will be considered.
Thirdly, it is clear that we must stand up to international competition, as the 339 Statement says, and step up our power to sell abroad. Can the noble Lord tell me what the future of the British Nuclear Export organisation is to be? Fourthly (I hope I am not asking too many questions) can the noble Lord say whether any decision has been taken, or whether the Government have taken any view, on the proposal that a Joint Select Committee of both Houses should be appointed to consider this subject—a point also raised in our debate? Finally, when will the new set-up come into being? The letter says that it has taken 18 months to come to this decision. I do not know whether or not these have been 18 wasted months; but I should like to know when this decision will be fully implemented.
§ 3.55 p.m.
§ LORD SHACKLETON
My Lords, I think the noble Earl is justified in expressing some satisfaction. Whether the Government listen to the views expressed by your Lordships or whether "great minds think alike", at any rate certainly noble Lords who advocated this particular arrangement (and I think in that interesting debate they were the majority) should be pleased at the result. The two companies will of course come in earlier. This is the most important and most urgent of the arrangements. And of course it is true, although I cannot at this stage say precisely how it will work, that we, and I am sure the industry and all concerned, do attach importance to the European links. This question of foreign investment in nuclear power companies is a subject upon which I would rather not express an opinion; but the noble Earl rightly drew attention to the point that the Statement says that initially it will be wholly publicly owned, which would seem to imply that there is a possibility of further investment. But again I think it is early to speculate.
In answer to the noble Earl's comment, I would not myself think that the 18 months have been wasted. I know that a number of your Lordships, among them the noble Lord, Lord Sherfield, and the noble Viscount, Lord Mills, who has had so much experience in this matter, were pressing the Government hard to take an urgent decision. This is a most complex area. I think that the proposed solution represents a rather interesting mixture of public and private enterprise. 340 I remember being critical at one time when the noble Viscount, Lord Mills, hived off the Atomic Energy Authority from the Ministry of Supply. I am bound to say that history has justified his decision, as I hope that history will justify the decisions that have been taken on this occasion.
I am afraid that the noble Earl defeated me on certain questions. I cannot answer the question on British nuclear exports. I may have an answer before we conclude. On the point of a Joint Select Committee, which is an interesting one, and in which I personally am interested, I have always thought that your Lordships' House had a particular role to play in these technological subjects. Whether this must wait on House of Lords reform is a question on which I would not speculate now.
§ 3.59 p.m.
§ LORD BYERS
My Lords, I should like to thank the noble Lord, Lord Shackleton, for making this Statement. I am sure that the British nuclear industry could have a great future. I believe that part of this great future will depend upon the strength of the marketing organisation in the export field; and we shall certainly study this Statement closely to see what strength there will be in export promotion. I am sure the market is there; and I am also sure that our designs are right. But the real problem, as the noble Lord will agree, is, to get into the market.
§ LORD SHERFIELD
My Lords, is the noble Lord aware that the progress represented by his Statement will be widely welcomed by all those who are concerned with the Atomic Energy Authority and the nuclear industry, particularly because it seems that in principle the kind of integration which is contemplated appears to be the one best suited, at least in my judgment, to lead to an excellent result.
§ VISCOUNT MILLS
My Lords, I shall not detain your Lordships for more than a minute, but I should like to say that I was very relieved to hear the Statement by the noble Lord, Lord Shackleton. Three weeks ago I visited Dungeness, and I was very impressed with what the Atomic Energy Authority, private industry and the Generating Board had done in combination. It was a wonderful show. We ought to be very proud of it. I think the plan which the noble Lord 341 has presented to us will work. It must be a very great temptation to the Government to set up a monolithic structure consisting of one Government-controlled Corporation. They have resisted it, and I am very glad that they have. I think the proposal makes sense.
§ LORD PEDDIE
My Lords, there is one point on which I think certain assurances would be welcome. At the present moment, the Atomic Energy Authority is involved in a highly important bid in the erection of a nuclear reactor in Finland. I had a certain major personal involvement in this at the time when I visited Finland recently, and it may be that if there is any suggestion that the continued existence of the Authority is in some doubt, it may have some ill bearing upon this bid and the attitude of the Finns. I am sure that all would welcome at this point an assurance that, whatever commitment is involved on the part of the Authority at this moment, there will be no challenge at all to that in any developments which may take place as a result of these suggestions.
§ LORD SHACKLETON
My Lords, I am grateful for the reception given to the Statement by the noble Lords, who have spoken, and particularly Lord Sherfield and Lord Mills. I think this is an important development. We should not underestimate the difficulties of bringing this scheme into effect, and I must stress that, while the Minister has made his Statement, as it was right to do, certain negotiations have to take place and there is no suggestion of a diktat in this matter.
I think I could now answer the noble Earl, Lord Bessborough, about B.N.X. The answer is that this is still to be decided, but probably the Atomic Energy Board—the new Board to which I referred, and which brings all forces together—may supersede it, but we cannot speak further on this. The point made by the noble Lord, Lord Peddie, is, I think, worth stressing. It is extremely important to make quite clear that there will be absolute continuity, and the Atomic Energy Authority will continue to prosecute with all energy its present responsibilities, and no doubt enter, if necessary, into new ones. I think we ought not to leave this subject without paying tribute to the Atomic Energy 342 Authority: it has been a great centre of technological development, and the country owes a great deal to it.