§ 2.48 p.m.
§ LORD SHERFIELD rose to call attention to the report from the Select Committee of the House of Commons on Science and Technology on the United Kingdom Nuclear Reactor Programme; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion which stands in my name on the Order Paper. When I put this Motion down, I never expected to move it. The Select Committee on Science and Technology met first in February of last year, and produced its Report in October. I anticipated that the issues would have been settled by now, and that to initiate a debate would have been superfluous. However, six months have gone by, the matter is still hanging, and I make no apology for pressing my Motion this afternoon. I hope that the members of the Select Committee in another place will feel that my initiative here will be helpful in accelerating action on their Report by the Government and the interested parties.1478
§ This is the first Report of the first specialised Select Committee. It is interesting that the Committee should have selected nuclear power for its debut, and though, in terms, the Report is limited to the United Kingdom Nuclear Reactor Programme, it raises some rather broader issues which I shall endeavour to identify. In the first place, it establishes certain facts about the United Kingdom nuclear programme which have long been in dispute. The original purpose of this programme, say the Committee—the establishment of a new lower cost primary energy source for the British Isles—is already attained. The existing Magnox stations have more than lived up to expectations, in terms of both output and availability. It was right, they conclude, that the United Kingdom Atomic Energy Authority should have devoted so much effort to the development of the as graphite reactor; indeed, they should press ahead for the development of high temperature reactors of this type, and should complete the Dragon experiment at Win-frith Heath if our European partners drop out of it. It was right, too, to diversify into the field of water reactors, and the A.E.A. and the industry are encouraged and should be enabled to speed up the development of the steam generating heavy water reactor. The Committee approve of the fast reactor programme, and spur the Atomic Energy Authority on to further efforts in this field.
§ The Committee accept the view that as far as the advanced gas-cooled reactor programme is concerned, electricity produced by nuclear fission will be commercially cheaper than electricity produced from coal, and is likely to become cheaper still. The arguments put forward by the Coal Board and others against tin; view are decisively rejected, and the Government are urged to face the consequences of a rapid contraction of the coal industry.
§ The Committee go further in saying that the United Kingdom is in drawer of falling behind other advanced countries in the rate of installation of nuclear power, especially the United States. They very properly emphasise that nuclear fission is a cleaner and more sophisticated way of obtaining energy than burning fossil fuels, and that cleanliness and avoidance of atmospheric pollution in the large-scale production of electrical energy is already important. The Committee 1479 therefore draw attention to the economic advantage to the country of an increase in the size of the present nuclear power programme. It would be interesting to hear what the Government's position is on this. The Committee, although they are quite clear in their conclusions, recommend that, in order to set all doubts at rest, there should be an examination by an independent outside agency of the purely financial aspects of costing of all methods of energy supply. The subject of costing has indeed become almost inextricably complicated, and I should like to know whether the Government intend to accept this recommendation.
§ The Select Committee, after full inquiry, have thus given complete endorsement to what has been done so far to develop the nuclear power industry, and I need hardly say that this will give great gratification to all in the Atomic Energy Authority, in the Central Electricity Generating Board and in industry who have been responsible for these developments. This has been a collective endeavour by a very great number of people over twenty years, but perhaps I may be allowed to single out for mention to-day the late Sir John Cockcroft, who did so much to conceive and lay out the programme, and the noble Lord, Lord Hinton of Bankside, who was largely responsible for the remarkable engineering feats of the early years and who, I am delighted to see, is taking part in our debate to-day.
§ I now turn to the more difficult and more controversial question of the future organisation of the industry and of the Atomic Energy Authority. This has, quite rightly, to come up for review now, mainly because the first phase of the civil nuclear programme has come to an end with the establishment of competitive nuclear power, and we are entering a new era. The Committee first throw an envious glance at the American system under which the main research and development work is let out by the Atomic Energy Commission on contract to universities and to industrial firms. Virtually all the Commission's installations are run for them. This system has proved to have many advantages, but in 1946 it was not one which either British industry or the Government were able or willing to adopt. We plumped for 1480 State monopoly in research and development and, as far as the fuel cycle was concerned, for State manufacture. It is too late to put the clock back now and to undo what has been done, though it is not, of course, too late to introduce modifications. The Committee's solution is of a root-and-branch kind. It involves the disbandment of the consortia, and the disintegration of the Atomic Energy Authority.
§ In considering this question, there are two broad issues which affect one's judgment. They are the question of exports and the question of competition. Our export performance in the civil nuclear field has not come up to expectation, and it is relevant to ask why. I think that part of the explanation is the following. One of the main consequences, and perhaps the main disadvantage, of the enlargement of the civil nuclear programme in the mid-'fifties was that it threw such a heavy load on the industry that the consortia were not able, or not willing, to make a real effort in the export field. On the other hand, the Americans laid the foundations of their success in this period. They moved in quickly after the so-called Atoms For Peace Conference in Vienna in 1956. They made an agreement with Euratom. They offered cooperation and attractive incentives for nuclear development. Whenever one visited a European nuclear laboratory there was a representative of Westinghouse or of General Electric working in the laboratory alongside the local experts. Of representatives of British industry there was little sign. The benefits of this careful groundbaiting were later realised by the United States.
§ Another consequence was that such tenders as were put in by British industry were greatly in excess of American and Canadian tenders, which were also accompanied by extremely favourable financial terms. Finally, the Central Electricity Generating Board hesitated over-long in ordering an advanced gas-cooled reactor, which gave the Americans two vital years in which to establish their strength in and inside overseas markets. The Select Committe are inclined to pooh-pooh the suggestion that a domestic order is a prerequisite of a foreign order. Personally, I think that in this they are mistaken. But, however this may be, British industry and the Atomic Energy Authority did make a fresh start in the export field in 1966 with 1481 the formation of the British National Export Executive. This has not so far been successful in securing export orders, and the Select Committee recommend that it should be wound up and the problem of exports passed to the Board of Trade for study. What do the Government think about that? To me it is not very clear what a Government Department can achieve where the A.E.A. and industry have not succeeded.
§ One should not overlook the difficulties that have been encountered, the lost opportunities in the past, the nationalistic attitudes of the present, which lead countries to follow uneconomic and expensive protectionist policies in order to build up their own resources rather than to use overseas facilities. In these circumstances the Committee may have been rather unfair to the British National Export Executive, which has done what it could with the resources and terms of reference given to it, and there seems little point in abolishing it without putting some other system in its place. In practice, I believe that future export arrangements will depend on the industrial organisation to be adopted. But it is, I think, a general rule that only the manufacturer of a product can sell it successfully abroad.
§ One of the purposes of the organisation of the nuclear industry into a number of consortia was to prevent monopoly and to preserve competition. This view perhaps had some merit, as leading to diversity of approach to a novel engineering and construction programme, at a time when a number of orders for relatively small nuclear stations were contemplated. But it largely lost its raison d'être when the size of the individual unit increased beyond expectation. This meant that with, at most, one order in a year, or in an even longer period, the C.E.G.B. had either to give an order to each consortium in turn, or, in effect, to put one or more out of business. The fearful expense of tendering made the position all the more difficult. Thus, competition in the full sense is not attainable.
§ The Select Committee recognise this problem, and they advocate two new monopolies, one for the construction of the nuclear boiler—what they call the "nuclear island"—and one for fuel manufacture, the competition coming from the foreign manufacturer, and the 1482 Central Electricity Generating Board being encouraged to seek foreign tenders. This is pretty drastic. It involves the elimination of certain vested interests which are not necessarily bad ones; it involves the radical reorganisation of the industry, and the virtual dissolution of the Atomic Energy Authority. Moreover, it is not a solution which commands even majority support, since the Central Electricity Generating Board and an important part of industry are against it.
It seems to me that this puts the Government in a difficult position. Suppose they were to accept the Committee's recommendation? How are they to impose it—by legislation? Moreover, the proposal itself is not very precise. The new company, that is to say the Nuclear Boiler Company, is to comprise a substantial part of the United Kingdom Atomic Energy Authority, together with
those design and manufacturing resources peculiar to nuclear engineering
so much of the Authority's facilities as is at present devoted to research and development of a commercial nature
To one who is fairly familiar with the organisation of the Atomic Energy Authority, this poses a problem of dissection so difficult as to be liable lead to the death of both halves of the patient. By propounding so controversial I. solution, the Committee have left others to make what they can of it. I cannot help wondering whether there is not some rather less far-reaching method which might prove to be more workable: for example, having the Atomic Energy Authority and two industrial groups with interlocking shareholdings, a large consortium with a single export organisation, capable of standing behind any export order. This would not provide competition in the true sense, for the reasons I have given, but it would provide a check on monopolistic practices, and it is relevant that the Central Electricity Generating Board consider that the degree of competition offered by two industrial groups in the domestic market would be of value to them.
§ The second proposal is that a new British fuel supply and manufacturing company should be established to take the place of the present Atomic Energy Authority monopoly of the fuel cycle. I 1483 do not myself find this proposal to supersede the existing Authority's control of the fuel manufacture and supply very attractive. This part of the Atomic Energy Authority's activities is, and has been for some time, on a commercial and profitable basis. It is not a process which private industry has taken up in this country, except to a maginal extent. It therefore differs from the design and construction of nuclear stations. Many may regret that it is a State monopoly, but this one is possibly better than some. And there would be real difficulty about giving private firms a stake in this enterprise, if only on account of its size and the value of its assets.
§ The Committee's reason for making this proposal seems to be partly connected with a belief that it would make easier collaboration with the European Economic Community. But I find this argument rather difficult to follow; nor has it yet been borne out by experience, vide the contract for the supply of plutonium to Euratom announced only this week. In any case, the present system is undoubtedly working well, and there does not seem to be the same urgency about dealing with it as there is in the case of the organisation of the rest of the nuclear industry.
§ Finally, as regards the Atomic Energy Authority itself, the Committee say they are satisfied that the Authority has done its basic task, that of nuclear research and development, with success. But the Committee go on to suggest, really without further argument, that the Authority should now be broken up into four parts. The consequences of this proposal do not seem to have been fully thought out, and I would suppose that it will have created anxiety among the staff of the Atomic Energy Authority which ought to be allayed as soon as possible.
§ These personal doubts and opinions are perhaps not important, and I expect there will be a diversity of view expressed in the debate. But the essential point is that a decision in the matter should be reached without delay. The present uncertainty is having an unsettling and damaging effect on the nuclear industry, which in turn has ramifications throughout the rest of industry, as well as on the Atomic Energy Authority and the Central Electricity Generating Board. 1484 So the uncertainty fans out over a wide field. The time has almost come when the fact of a decision is more important than its nature. I recognise that this question is an extremely difficult one for the Government, and that its solution has been made more complicated by the difference of view which exists about the validity of the recommended solutions. I recognise, too, that it would be much more satisfactory if an agreement could be worked out by the interested parties themselves, the consortia, the Central Electricity Generating Board and the Atomic Energy Authority.
§ It would not matter, in my view, if such an agreement were to depart from the Select Committee's proposals; nor, if there is a real prospect of an agreed solution, that it would take a few more weeks to work out. I hope the noble Lord who is replying to this debate will be able to throw some light on how the Government's mind is moving; what steps they have taken or propose to take in the matter, and when a decision may be expected.
§ Up to now, I fear that this has been a speech of restricted range, but there are in the Report two points of much more general interest which I will mention in conclusion. The Select Committee were impressed by what they thought was lack of control of the Atomic Energy Authority and, by extension, of other public boards by the responsible Ministers. They have two proposals to deal with this problem. The first, on a narrow front, is that a technical assessment unit to advise the Government on items in the Atomic Energy Authority's programme should be set up.
§ Now, my Lords, I hope this proposal will be firmly resisted. There is in this country a growing trend towards the superimposing of bureaucracy on bureaucracy. A national board works out a programme and sends it to a Minister, whose Department does the work all over again. In this case, the Select Committee seem to think that the Ministries of Technology and Power do not do their work very well. So it is proposed to insert a third group of bureaucrats, which will not, of course, prevent the same work being done by three groups rather than by two. Since the Central Electricity Generating Board is heavily involved in a programming of civil nuclear power 1485 projects, they may well make a fourth group. Surely, my Lords, the system of public boards is based on the principle that they have responsibility for their decisions, subject to finance, and that they are accountable for their decisions? If the Government Departments are inadequate, which I do not believe, then strengthen them rather than bring in a tertium quid.
§ The second proposal is that a body should be set up within our system of Government to perform functions similar to that of a United States Joint Congressional Committee. I personally would greatly prefer this proposal to that for an assessment panel, and it is, of course, of much wider scope. But there are two points of considerable importance. The first is that it should be a Joint Committee; in other words, Members of this House should be associated with Members of the other place.
§ The second point is that if a Joint Committee must have its own secretariat—and there is certainly a case for this—then there is a danger that this secretariat may become another little bureaucracy interposed between the public board and the Ministry concerned. Thus, the Joint Committee plus its secretariat may become an element in the Government mechanism, having power without responsibility. This phenomenon can be observed, as I know by experience, certainly in rather different circumstances in the United States, and it is not one which it is easy to guard against.
§ The question of assistance to specialised committees was examined in 1959 in a Special Report from the Select Committee on Nationalised Industries. In fact, this Report never seems to have been followed up. Again, there was some reference to the general question of joint specialised committees in the debate in this House on April 23 on the organisation of government. But here in this Report there is a specific proposal, and I am sure the House-would be interested in any views which the Government wished to express on it. The Select Committee's Report is wide-ranging, and I fear that in the time available I have not dealt with all its implications and its recommendations. But I hope I have sorted out some of the salient points in such a way as to throw attractive flies 1486 over the speakers who are to follow, and even over the Government Beach itself.
§ In conclusion, my Lords, the Report of the Select Committee in effect confirms the view that the British nuclear energy programme is the foremost postwar technological achievement of this country. I am concerned that its further development should not be held up, or its success jeopardised, by difficulties over the structure and organisation of the nuclear industry, and I earnestly hope that a solution will now be sought energetically and with all appropriate, speed. My Lords, I beg to move for Papers.
§ 3.15 p.m.
THE EARL OF BESSBOROUGH
My Lords, as a former Chairman of the Atomic Energy Authority the noble Lord, Lord Sherfield, is eminently qualified to move this Motion to-day, and he has done so in his usual cogent and convincing manner which makes him such an asset to your Lordships' House. Having worked with the noble Lord in some of his previous incarnations, I know what an incisive brain he has and what an able head he made of the Atomic Energy Authority, We are all grateful to him for having expressed his views in so forthright and uncompromising a fashion in a debate which clearly promises to be of considerable importance, especially in view of the fact that the noble Lord, Lord Hinton of Bankside, a former Chairman of the C.E.G.B., is to make his maiden speech. I think we ought to congratulate the noble Lord, Lord Sherfield, on having persuaded Lord Hinton to speak, and to congratulate Lord Hinton upon doing so. He, too, will speak with the great authority of his former post behind him, and we look forward to what he has to tell us.
The noble Lord, Lord Sherfield, has given us a good deal of homework in our efforts to master this very useful 500-page Report. We should thank all the members of the Committee for their arduous work. Personally, it has involved my going to bed with it over the past week—somewhat to Lady Bessborough's pique. Not, perhaps, since the eight volumes of the Robbins Report on Higher Education have we had to master so much data, and our own inbuilt computers must have been working overtime. But if all this data—500 pages of it, or about over 200,000 words—had 1487 been fed into a computer and processed, and had we asked the machine to give us the optimum solution to the problems of this industry, it certainly would not have come up with the Government's so far sterile answer which, in this dynamic, technological age, has, in the past three-and-a-half years, been, in effect, to do absolutely nothing. Not even the infallible, if mischievous, computer HAL 1900 in the film "2001" would have come up with so negative and dangerous a reply. But more of the Government's do-nothing attitude later. I recognise that when you are so well documented it is the more difficult to make up your mind.
However, I think, in the first place, that we should accept the Select Committee's view that, in so far as the programme for the advanced gas-cooled reactor is concerned, electricity produced by nuclear fission will be commercially cheaper than electricity produced from coal, and is likely to become cheaper still. When this will be, we do not know. This is not, I think, an occasion on which we can discuss in detail the effect which this will have on the Coal Board, but we must accept the fact that there must be a rapid contraction of the coal industry, not only in consequence of possibly cheaper nuclear power but also because of increased oil supplies, North Sea gas, and a general change in consumer preferences.
I think that a good case has been made out for the A.G.R., in that nuclear fission is a cleaner and more sophisticated way of obtaining energy than burning fossil fuels. The A.G.R. has, not least among other advantages, safety margins which mean that A.G.R. power stations can be located nearer the main need—that is to say, in densely populated areas—than can other nuclear reactors. And in view of its economic and other advantages, I should like to join with the noble Lord, Lord Sherfield, in asking what the Government intend to do to increase the size of the present nuclear power programme. Do they consider we should continue to give priority to gas-cooled reactors—I should be glad of the noble Lord's attention on this very important point—or do they believe that greater effort should now be directed towards the development of water reactors? Which do they think is better?
1488 In regard to the Committee's recommendation that there should be an examination by an independent outside agency of costing all methods of energy supply, I think I ought to make the point that the Select Committee were very much pressed for time in getting out their Report because the Minister of Technology was exerting considerable pressure on the Committee to publish it when they did last year, so that the recommendations might be taken into account in the Government's proposed reorganisation of the industry—which was claimed to be a matter of great urgency. As a result, when the Committee's Report went to press they had not had an opportunity of giving full consideration to the Coal Board Memorandum. Had they been able to study this Report carefully—especially the comparative figures which were agreed upon with the Coal Board—I suspect that the Committee might have taken a rather different view. In view of the pressure brought to bear by the Minister to cut short the Committee's proceedings, it seems extraordinary that the Report has still not so far been discussed on the Floor of another place. Surely, Parliamentary time should be given to it. I find the Government's attitude over this matter to be quite arbitrary and even insulting to another place. It is curious indeed that we should be allowed time to discuss it, but not they. I think that my right honourable friend and honourable friends there have justifiable complaints on this score.
In regard to the future organisation of the industry and of the Atomic Energy Authority, I recall that ever since 1964, when I made a tentative study of the structure of the British and the American nuclear industries, I was more impressed by the way in which the United States Atomic Energy Commission and American industry managed their affairs than I was, I regret to say, by our own organisation, good as it may have been in the beginning in fulfilling immediate postwar requirements. Three and a half years of Labour rule have gone by since I came to this conclusion, and I still think that the American system of leaving the design and construction of reactors to industry itself, particularly to Westinghouse and General Electric, and placing even basic research out to contract with firms such as Union Carbide, has 1489 proved more satisfactory than our system here by which the Atomic Energy Authority have so much wider powers of their own in these fields.
I would certainly agree with Professor Blackett, the Special Adviser to the Ministry of Technology, when he said only last year—and I strongly endorse what he said—thatBritain, after the war, inadvertently took a wrong turning when it continued to rely so much for defence and atomic energy research and development on its own Government stations rather than on industry.I think that Professor Blackett agrees that in the United States, with a bigger fraction of Government funds for defence and atomic energy going to industry and a smaller fraction to Government stations, the United States has gained greatly from the resulting strengthening of industry and the building of very strong firms, and that, relatively speaking, Britain lost over this.
I believe, too, that with at least one of the consortia the monolithic nature of our own development organisation was largely responsible for the slow progress made in producing a reactor system that was competitive with American water reactors. Germany, for example, commenced reactor development later than most industrial countries, but by adopting American technology and the American organisational structure made up lost ground. As a result, both Siemens and A.E.G. are themselves developing prototype fast reactors and must thus become strong competitors of this country. As we know, no British reactor has been exported during the present Government's tenure of office. Indeed, Britain has obtained only two export orders—one from Italy and one from Japan—both of them over four years ago; whereas the Americans, with or without the Germans or the Japanese, have sold very considerably more reactors; and even the Canadians have effectively entered the field, especially with their CANDU reactor, which they have sold to Pakistan.
If, therefore, we are to capture a larger share of this market, it is clearly essential to improve our reactor systems rapidly. And in this connection I would accept fully the view put forward in the Amendment moved in the Select Committee to paragraph 130, on which I was interested to see that even one Labour 1490 Member abstained. That Amendment, which I am sorry was not adopted, rejected the proposal that a single Nuclear Boiler Company should be established. Personally, I would certainly agree that there should be two Nuclear Boiler Companies which would undertake the work under Government development contracts. Your Lordships must be impressed, as were the Conservative Members in the Committee, by the fact that the Central Electricity Generating Board, the dominant customer in this country for nuclear boilers, were opposed to the setting up of a monopoly organisation for the design and construction of nuclear power stations both at home and abroad.
The reasons for C.E.G.B. opposition were set out clearly in their memorandum, which stated that while the A.E.A. were the major repository of nuclear knowledge—and we all agree with that—they were far from being so as regards design, manufacture, erection and operation of commercial plant. Moreover, the proposal for one Boiler Company would, if accepted, virtually abolish technical competition and this, the C E.G.B. thought, would be undesirable. They believe—and I am glad they do; and I shall be interested to hear what the noble Lord, Lord Hinton of Bankside, has to say about this—that competition is the best spur to efficiency, stimulating, as it does, a response to market requirements, and that the one-company proposal would relegate industry to the role of component-makers only. Indeed, to deny industry responsibility for the development of designs or for the overall end result must inevitably lead to stagnation with little lasting incentive to cut costs or improve performance. The Conservatives on the Select Committee could not, therefore, accept the proposal that as the present consortia were phased out a single Company based on the A.E.A. should be established.
In this respect I would agree with the views of one of the consortia, that the simplest way of adopting the best features of the American method of working would be to transfer the work of the A.E.A. headquarters design team, as and when practicable, to two Companies and to make these Companies responsible for the control and the development of new reactor systems or improvements to existing systems.
1491 I also agree that Government funds which are now available to the reactor group of the A.E.A. should be channelled through the two Companies, who would place contracts for the necessary research and development work—which itself would nevertheless continue to be run by A.E.A. personnel. A small committee drawn from the A.E.A., the C.E.G.B., and the two Boiler Companies would ensure that work was not being duplicated. Gradually, I believe, Government financial support should be tapered off and made available only for the development of entirely new reactor systems. I agree, too, that in the future, if at all possible, such development should be carried out jointly with European countries.
In this very important context I should like to stress the importance of British Boiler Companies having associates overseas in selling our types of reactor. I know that one consortium has been having discussions with German, Italian, Belgian and French organisations, and has now agreed to set up an international company and sell its reactors through this company. I believe that this basic principle also applies to-day to other industries in this country if we are to ensure that we gain orders in Europe, and indeed in other parts of the world. If there are to be mergers, it seems to me more important that they should be on a European or international basis, rather than on a purely national monopolistic basis. Otherwise there seems less likelihood of our being able to sell reactors on the Continent or elsewhere overseas.
This view, my Lords, ties in closely with the desirability which the Prime Minister has expressed on more than one occasion of creating a European Technological Community through a European Centre or Institute which would encourage technological co-operation through mergers of this kind. Such mergers can, I believe, be achieved more effectively by the industries concerned than by Government itself, although Government no doubt will have to play some role in all this. One of the reasons why, for example, in the space field ELDO has not been as successful as it might have been is the fact that it is basically an inter-Governmental rather than, as I might put it, an inter-industrial organisation. I 1492 think the same kind of considerations apply also to Euratom, which has not proved to be a very effective organisation.
In regards to exports generally, I agree that the British Nuclear Export Executive, B.N.X., should be wound up. Moreover, although we can have no objection to the Board of Trade studying this whole problem of exports, and of course giving firms what help they can, I think that they should pass primary responsibility for exports to the kind of international companies which I think we must all have in mind. We cannot ignore the kind of nationalistic attitudes and uneconomic protectionist policies to which the noble Lord, Lord Sherfield, has referred, which are bound to obtain in certain countries if a company is purely national in scope. And I would urge strongly that, where they have not already done so, companies in this country should be allowed to merge with their European rather than with their purely national counterparts. We must, as I say, be associated with indigenous companies in other countries and encourage private enterprise co-operation. We must think internationally. Big firms in this country should, I consider, have a German partner, for example. Some already have. We have a considerable lead in Britain, especially in fast breeder development, but now the Germans are developing a fast breeder, too. And in certain parts of the world the Germans are, I believe, doing even better than the Americans.
But, above all, I agree with the noble Lord that the Government must take decisions in these matters as soon as possible, in order to relieve the growing uncertainty which is doing it a lot of damage. Vacillation and indecision will be the death of the industry. I gather also, although it has not, I think, been announced officially, that the whole future of the industry is to be referred to the I.R.C. We always seem to be referring things to the I.R.C. I wonder whether it is right to use it in this way, or whether this will not result in further disastrous delays.
There are a few other questions which I should like to ask the Government very briefly indeed. First of all, what is being done about fusion research? In paragraph 75 the Committee state that they heard only little evidence of the fusion research work which is being done at 1493 the Authority's laboratory at Culham. They add that the decision greatly to reduce the expenditure on such research is in contrast to the general increase in fusion work in other countries. Can the noble Lord, Lord Winterbottom, justify this reduction?
Then in regard to the steam generating heavy water reactor (S.G.H.W.R.), is Britain going to order one? It seems most unlikely that we shall be able to export this reactor overseas if there is no order even in this country. Although I recognise that this smaller reactor is likely to be more of a requirement overseas than here, where the A.G.R. should fill the bill pretty well, there may well be certain areas in the United Kingdom where a steam generating heavy water reactor would prove suitable. It is three years since the A.G.R. was announced but so far there have been no orders from overseas. How are we to avoid this situation in the case of other reactors, such as the steam generating one, the high temperature water reactor, and later the fast reactor of which the first prototype is now being developed at Dounreay?
I would also ask the noble Lord—I am coming very near to the end of my remarks—whether we are going to press on with the high temperature water reactor. Would he not agree that this is most important if we are to compete in the export market? This ties in with my earlier question as to whether we should continue to give precedence to gas-cooled reactors or now concentrate more on water reactors.
Then in regard to fuel supply, it is clearly important that the A.E.A. should also have foreign partners. In this respect we should look at the demand and then see how we can meet it. Can the noble Lord say how far we have got in negotiations concerning Capenhurst and the building up of a fuel supply other than from the United States? Am I also right in thinking that there is a new Dutch diffusion method which may be cheaper?
I should like to ask one further question, this time about nuclear marine propulsion. The noble Lord the Leader of the House will remember that, as a 1494 very "new boy" to the Front Bench on the other side of the House in 1963–64 I was pressed on this subject almost every week in a series of Unstarred Questions from the late Lord Alexander of Hillsborough, who urged very toughly—and I had a very rough time over this matter that we should go ahead with civil marine propulsion. I notice, in reading the relevant part of the Committee's Report on this subject, that it might well have been written in 1963 or 1961, since the arguments which I then used regarding the deferment of such a project are repeated in this Report. Even if it may be some time before it becomes economic, I do not think we should forget about nuclear marine propulsion. This is a subject in which I think the noble Lord, Lord Winterbottom, is also most interested. I am certainly surprised that a Government who when in Opposition pressed so strongly for further development in this field do not appear to have got on with it themselves. Then what about nuclear rocket motors for the aircraft and spacecraft of the future? Are we doing any research in that field? And, if so, should we not press on with it? We must look ahead to the needs of future generations.
Finally, I should like to support the noble Lord, Lord Sheffield, in his plea that we should establish a Joint Parliamentary Committee on similar l[...]nes to the U.S. Joint Congressional Committee, and that noble Lords in this House should also be members of such a Committee. As we know, the present Select Committee consists solely of Members of another place. There is a great deal to be said for such a Joint Committee, and I believe that our friends in another place would welcome Members from your Lordships' House. I shall not express any views on the secretariat, because I suppose it clearly must have one, and if it is going to have one it must have an efficient one, but I think I agree that it should not be too large. We are most grateful to the noble Lord, Lord Sherfield, for having initiated this important debate, and I look forward to hearing the answers which the noble Lord, Lord Winterbottom, will five to the questions which we have raised in what I can only describe as this sorry tale.
§ 3.37 p.m.
§ THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM)
My Lords, I should like to echo the noble Earl's last remark, that we should be grateful to the noble Lord, Lord Sherfield, for having initiated this debate to-day. It has enabled me to do a little stimulating homework, and I hope that the discussion which follows will be equally stimulating. I shall now make a formal statement of the Government's attitude to the "state of play" as at present, and I hope to reply to the debate, with the permission of the House, at a later stage. So if the noble Earl and the noble Lord will forgive me, I shall answer specific points later in the debate, and at this stage do no more than state the Government's position.
From the outset the basic aim of the United Kingdom's civil atomic energy policy has been to encourage the sure and safe development of a low-cost energy source for the benefit of the country's economy. The lines of advance have been, first, to secure the general development of the new technology as rapidly as possible; second, to seek to meet the requirements of the Generating Boards; and third, to develop and exploit export markets for United Kingdom reactors and fuels.
About three years ago, in May, 1965, with the award of the Dungeness "B" contract to an advanced gas-cooled reactor design the exploratory phase of the atomic energy programme can be said to have ended, in that it marked the stage when nuclear power was seen to have become the most economic source of energy generation in this country. At the same time British reactor designs were shown to be fully competitive. The estimated costs of nuclear power generation have continued to decline. Thus the estimated cost of generation from Hinkley Point "B" is 0.52d. per kWh compared with 0.57d. for Dungeness "B". Further and considerable cost reductions are expected from advanced gas-cooled reactors in the post-1975 period, and the recent White Paper, Fuel Policy, predicts that A.G.R. costs will be down by 20 per cent. by 1980. Fast reactors in the 1980s and 1990s will provide even cheaper power.
The disappointing results so far of our efforts to sell nuclear reactors abroad 1496 stem from a number of reasons. Some of these are connected with weaknesses in organisation which we now aim to correct. Others lie outside the scope of normal commercial transactions, since in this sort of field where national prestige plays a part—where even foot-and-mouth disease plays a part—political as well as economic considerations are sometimes decisive. There are also technical factors. The A.G.R. system designed for the domestic market and generating about 500 to 600 megawatts is not ideally suited for overseas markets where smaller units of about 100 to 150 megawatts are in greater demand. The steam generating heavy water reactor (S.G.H.W.) recently unveiled at Winfrith has been designed specifically to meet this demand, and we have high hopes of being able to exploit this versatile design in the export markets.
While it will be necessary to maintain a sizeable effort on research and development in support of systems now in hand, it is clear that the emphasis of our civil nuclear programme has now shifted to the stage where we must do everything possible to exploit the vast store of experience and expertise which has been built up in the last twelve or thirteen years by selling our reactors and fuel in overseas markets. It was because of this change in emphasis, and because of our comparative lack of success in the export field, that early in 1967 the Government came to the conclusion that the existing organisation of the nuclear power industry was unsatisfactory; and this led to the initiation by my right honourable friend the Minister of Technology of discussions with all sectors of the industry and Government concerned with the nuclear power programme with a view to making changes in that organisation. The examination of the nuclear reactor programme by the Select Committee and its subsequent Report was, therefore, most timely.
Since the publication of the Report there have been a number of informal discussions with most of those interests which will be involved in the reorganisation of the industry. It has become clear from these discussions that there is considerable disparity of view about what is practicable and what new form of organisation will be most effective. As 1497 noble Lords are aware, the Select Committee was itself divided on the major question whether or not there should be a single organisation to design and organise the construction of nuclear boilers. The arguments for and against this recommendation can be read by your Lordships in the Minutes of the Committee's meeting of October 25, 1967, on pages lxxix-lxxxii of the Report. This division of opinion is reflected in industry and the public authorities concerned.
It is clear, therefore, that any reorganisation will be difficult to achieve. There are, quite naturally, vested interests to overcome. One consortium has already a healthy programme of work. As is only too clear from the evidence given to the Select Committee, there are conflicting views to be reconciled. The interests of the staff of the various organisations involved must be carefully considered, and continuing uncertainty about their future is not conducive to the maintenance of good morale.
In spite of all the difficulties, the Government continue to be most anxious to arrive at an early solution to the major problem of the future structure of the industry. Initial talks with the chairmen of the consortia were held more than a year ago. Inevitably, the work and the Report of the Select Committee have prolonged the uncertainty both in industry and in the Atomic Energy Authority. Apart from the effect on the morale of the people concerned, our efforts overseas are also handicapped, owing to uncertainty about where future responsibility in this field will lie. In particular, arrangements for the commercial exploitation both at home and overseas of the two new reactor systems, the steam generating heavy water reactor and the fast reactor, cannot long be deferred. Both noble Lords who have spoken so far have stressed this point. Moreover, the possibility that these new reactor systems and an improved version of the advanced gas-cooled reactor may be very competitive with American designs, particularly in the light of the trend of current costs in the U.S.A. and elsewhere, makes it desirable from the commercial standpoint that any new organisation should quickly be brought into being to take advantage of them.
1498 Successive Governments have over the years spent considerable sums on research and development on nuclear power systems, and the present Government have the right and the duty to see that this investment produces dividends by way of an increase in overseas trade, in addition, of course, to whatever royalties may be obtained from the Central Electricity Generating Board and the long-term industrial and domestic advantage of using a cheaper mode of generating electricity than burning either coal or oil.
The design of the nuclear boiler constituent of a nuclear power station entails the participation not only of the nuclear engineers but also of the boilermakers and manufacturers of other major components who are normally responsible for the detailed design of their respective components within the parameters set by the nuclear engineers. This brings in a number of different industries; and in the actual construction of the complete power station the turbine and other electrical gear manufacturers, working to their own designs, and the civil engineers also have a major part to play.
As your Lordships know, it was decided at the outset of our civil nuclear programme that firms in these various industries should band together in nuclear consortia to design and build nuclear power stations on a turnkey basis. Latterly, after these nuclear consortia had in the process of time been reduced to three, they have been transformed from associations of firms into companies with a separate existence under their own management, and operating to some extent independently of their parent firms. Thus, the present organisation is exceedingly complex, and negotiations on a new structure for the nuclear industry entail discussion not merely with the nuclear companies or consortia but with a large number of their parent firms, many of them of major importance with widespread industrial interests, and often with associate and subsidiary companies overseas interested in one or other aspects of the nuclear business. Discussions are now in progress with the various interested parties. They are bound to be delicate. In these circumstances, I would ask noble Lords to excuse me from giving any further details of what it is in the Government's mind to achieve during these negotiations.
THE EARL OF BESSBOROUGH
My Lords, will the noble Lord forgive my interrupting him for one moment? Could he tell us what role the Industrial Reorganisation Corporation are playing in this; or is he going to mention that later?
§ LORD WINTERBOTTOM
I am glad the noble Earl is waiting upon my words with such impatience. I am going to say something about this in a moment. I am sorry I have to speak for so long. To resume my statement, whatever I might say could possibly prejudice the success of these negotiations, and I am sure that noble Lords taking part in the debate on this Motion will share the view of the Government that the objective must be to try to secure as satisfactory an organisation as possible. I am sure that many of those who will participate in this debate will have had much more intimate and detailed knowledge of the situation in this industry than I can claim. Their views on what it is desirable to aim at and what may be achievable in the reorganisation of the industry will undoubtedly be helpful to the Government in a somewhat tangled situation.
The benefits of competition in this highly specialised field can be overrated, and in this industry such competition as might take place is much more likely to be between different reactor systems rather than between different organisations. From this standpoint there is much to be said for the majority view of the Select Committee, that we should aim to set up a single, strong design/ construction organisation, in which the Atomic Energy Authority and the principal manufacturers will participate, formed from elements of the existing consortia and the U.K.A.E.A. The Government have in fact invited the Chairman of the Industrial Reorganisation Corporation to seek the reactions of industry to a reorganisation along the lines of the majority view of the Committee. The Chairman's preliminary report to the Minister of Technology will not be available until later. Following that, delicate and complicated negotiations will be required. We are all anxious to reach a rapid decision, but I think your Lordships will agree that it is even more important to get the right results than to get them quickly, although I 1500 know that the noble Lord, Lord Sherfield, believes that speed is an important element in our calculations.
The scope of the present negotiations covers the Select Committee's recommendations in the beginning of the Blue Book, 1(a)(b) and (c), 2(a) and (b)(i). So far as Recommendation 6 is concerned, I should like to say that British Nuclear Executive has done valuable work in studying the prospects in export markets and establishing contact with possible customers, and publicising the achievements of the British nuclear power programme. Until the future organisation of the British nuclear industry becomes clear B.N.X. must stay in business. As regards Recommendation 3, the Government believe that there appear to be good arguments that a separate fuel organisation should be set up. However, the existing organisation has operated very successfully and a decision on the nature and timing of any changes cannot be taken until the shape of the new organisation for the design and construction of reactors has been determined. The remaining recommendations are being considered by the Government Departments concerned, and it is proposed to incorporate the Government's views on these matters either in an early statement or, if negotiations on the major problems of reorganisation are speedily concluded, in a comprehensive White Paper.
My Lords, we are debating here to-day the future of an industry which is the forefront of technological advance. The story of nuclear power generation is one of great success, and given the right organisation the industry and the nation now have a great opportunity to reap the rewards in overseas markets of all the effort and money which has gone into research and development over the past twenty years. To achieve that organisation, sacrifices may have to be made, there may be inconvenience both to corporate bodies and to individuals. But given flexibility of outlook, singleness of purpose, and true co-operation between Government and industry, the opportunity can be seized to the great advantage of us all.
§ 3.52 p.m.
§ LORD HINTON OF BANKSIDE
My Lords, I crave your Lordships' indulgence. I do not agree with all the recommendations made by the Select Committee on Science and Technology but I should like 1501 to pay tribute to them for the very thorough and useful examination they have made of the nuclear power industry. Although I suppose it is unfashionable and it may be indiscreet to confess to disappointment, I am disappointed—and I am sure that my disappontment is shared by many of the other men who worked on the development of nuclear power in the 1950s—over the way in which the industry has developed in this country in the years that have passed since. We felt at that time that we were creating a new industry and we felt too that this country was leading the world in that new industry.
But, my Lords, the success of industry must, I suppose, be measured to some extent by the size of its order books. If we use this criterion in judging the success of the nuclear power industry, we find that the picture is not a very happy one, because in the two years 1966 and 1967 orders for about 40,000 megawatts capacity nuclear powered plant of American design were placed, while less than one-tenth of that capacity nuclear powered plant of British design was ordered. But, perhaps even worse, one finds that while reactors of American design have been ordered and are being built in eight overseas countries, only two countries have ordered a reactor of British design—and that more than ten years ago.
When one meets with disappointment of this kind, I think it is wise to seek the reason for it. I should like to suggest to your Lordships three reasons why progress has been, as I see it, disappointing. In the first place, I think the technological progress in this country was retarded by the large, obligatory, nuclear power programme of 1957. I do not seek to criticise the people who were responsible for that programme; indeed, I had some part of it myself. At that time the programme appeared to be absolutely necessary. The official forecast warned the electrical industries that at no date in the future would more than 52 million tons of coal a year be available for electricity generation; the Suez crisis curtailed supplies of oil; and it looked as if we must make extensive use of nuclear fuel, irrespective of cost, as quickly as possible.
But although that programme was reduced when supplies of fossil fuels 1502 improved in 1959, the programme remained large. The servicing of that large programme made heavy calls on the resources of the A.E.A. and of the generating boards and I think it diverted attention from the development of more advanced forms of reactors. But, even worse, it gave a guaranteed programme to the nuclear power industry, and that industry knew that, irrespective of economics, the Electricity Boards were bound to go on ordering nuclear power stations—each one of which was certainly better than the last but all of which were less economic than the conventional stations which could have been built concurrently—simply to meet an immutable long-term nuclear programme. That, I suggest, is one reason.
The second reason which I should like to suggest for our comparative lack of success is that it takes too long to build plant in this country; it takes us too long to get off the drawing board and out of the development laboratories into full-scale production. I believe that the figures published by the Central Electricity Generating Board giving a comparison of costs for the Dungeness reactor should convince an unbiased engineer anywhere in the world that in most circumstances there is very little to choose between the A.G.R. and the American reactor systems. But overseas buyers—and particularly those overseas buyers making a choice between two systems whose economics are more or less equal—are likely to follow the majority lead and to place their orders (remembering that there is little to choose) for the type of reactor for which most orders have been placed. If we in this country had been able to get the A.G.R. through the prototype and development stage 18 months or two years earlier than we did, I believe that position could have been reversed and we might have h id the American manufacturers trying to catch up with us, instead of our being in the position of trying to catch up with them. That, I suggest, is the second reason.
The third reason lies, I think, in the extremely vigorous and very expensive promotional campaign waged by the American manufacturers. In considering that, I think we should remember the great support that they get from the large power-plant consultants and engineer architect firms in the United States. Those 1503 organisations are an important component in getting overseas orders, because they are most likely to recommend to their clients the reactors which have been developed in their own country and with which they are familiar.
If, as I believe, those are three reasons for our disappointing performance, I think that we should be wise to ask ourselves what lessons we ought to learn from them. In the first place, I think that we should learn that it is a mistake to lay down a long-term, fixed, immutable programme for the use of given quantities of any type of fuel. Certainly broad, long-term Government planning is necessary, but I suggest that it should be flexible and that the decision on the type of fuel to be used in any power station when its construction is under consideration should be determined by the economic evaluation of that specific case; that the fuel to be used should be the fuel which gives the greatest economy and not the fuel which has to be used to meet an immutable Government programme.
In the second place I think that we must learn to do our construction work in this country more quickly. This is important not merely in the field of nuclear power, 'it is important in all the fields of engineering. The prospective buyer, particularly the prospective buyer from overseas is not impressed by the idea, however brilliant, that he sees on the drawing board, or in the development laboratory; he wants to see ironmongery working, and in order that we can show this before our competitors we must do construction work more quickly.
In the third place, I think we should be careful to see that we build up in this country strong teams of consultants and engineer architects. The existing consortia in the nuclear field, can, I believe, already act satisfactorily as engineer architects. The consultants have recently—I think with a great wisdom—formed a joint organisation for the design of nuclear power plant, but I think we ought always to remember that the great American power plant consortia and engineer architects get off-shore business because they are regularly employed by the United States utilities. Their off-shore business is built on the basis of the work 1504 that they do at home. We must aim to achieve this in the United Kingdom. British consultants should, I consider, be similarly employed, and this should be done even though it demands some change in the organisation of the electricity authorities; although I feel that it would be possible to conceive an organisation in which it could be done without any dramatic change in those organisations. I think that we must look to the future, and that as we do so we shall find that it is much brighter than the past has been.
My Lords, the Atomic Energy Authority has within the last six months commissioned the steam generating heavy water reactor at Winfrith Heath. Although that was developed with the primary purpose of competing in the small reactor field, I believe that it has great potentiality in the field of the larger reactors. It may well prove to be a better reactor than the A.G.R. and perhaps, with some limitations on the very largest sizes, it may well prove to be better than either of the American established reactor types. The techniques of manufacture and construction of the steam generating heavy water reactor are very different from those of the A.G.R. and are much more in line with the techniques of the American reactor manufacture and construction. I think that in deciding how to exploit the steam generating heavy water reactor it would be worth while to look at the pattern of industry which has been adopted by those great American manufacturers who have met with such success.
In the early promotional days the American manufacturers were prepared to accept turnkey contracts for the design and construction of complete stations, but as they emerged from the promotional stage they firmly adopted a policy based on the fact that the design and construction of complete power stations, with all the heavy civil and structural engineering which is involved, is not the line of country in which they are outstandingly expert. They now aim to undertake to contract only for what they call the nuclear components; that, in the case of the American reactors, is the fuel, the control mechanism, some of the instrumentation and the reactor vessels. This accounts for about one-third of the total cost of the power 1505 station, and the purchasing utility is left free either to design the station himself and place his own contracts for the other two-thirds of the work, to employ consultants to do this for him, or to place the whole station in the hands of an engineer architect.
My Lords, I believe that that system could well be employed and should be carefully considered for the exploitation of the S.G.H.W.R. The A.E.A. could design and supply the nuclear components plus the fuel. The overall design of the station, the civil, structural and other engineering work, could be done either by the purchasing utility or consultants employed by him, or by the consortia acting as engineer architects. This would have the advantage of keeping together the very highly competent design teams of the A.E.A. but it would confine them to those sections of the work in which they are outstandingly expert. I suggest that the adoption of such a system would not destroy competition because the existing consortia, either merged or kept separate, as they judged best, could still offer the A.G.R., for which they have licences; and they would in any case be able to tender for the two-thirds of the station which represents the bulk of it and comprises everything other than the so-called nuclear components.
With respect to the Select Committee, I do not agree with their proposal that the manufacture of fuel elements should be divorced from the design of the nuclear components, and indeed of the whole power station. I disagree for two reasons. In the first place, many overseas buyers do not like to feel that they are dependent on two separate organisations for the satisfactory performance of the reactor they have purchased: they want to hold one manufacturer responsible both for the design of the reactor and for the performance of the fuel. And in the second place there are, I think, occasions when negotiating for off-shore contracts where it is an advantage to offer a reactor at a promotional capital cost, counting on making one's profit from the later sale of fuel elements. That can be done only if an integrated organisation is retained. If one looks forward into the future, it seems that such an organisation would fit well with the de- 1506 sign of the fast reactor as it is at present envisaged.
My Lords, I have been warned that a maiden speech should be brief and uncontroversial. I have tried to be brief. I hope that at least I have been concise. If I have been controversial, I can only ask your Lordships to forgive me and say that even respect for the practices of your Lordships' House does not make it easy to break the habit of a lifetime.
§ 4.10 p.m.
§ VISCOUNT CALDECOTE
My Lords, it is a tremendous privilege to follow the noble Lord, Lord Hinton of Bankside, and to have the opportunity of congratulating him on his maiden speech. With his vast experience of the nuclear power and electrical industries, he has certainly chosen well the subject for his maiden speech, and I know that it has delighted the whole House. I know also that the House will hope that the noble Lord will not restrict his contributions to our debates to his specialities and that we shall often have the benefit of his great intellect and wide knowledge and experience. I should like to congratulate him very warmly on his maiden speech.
I must declare an interest in the subject of this debate, as I am connected with a company which works in this field. It also gives me particular pleasure to take part in this debate as President of the Parliamentary and Scientific Committee, because we are debating the first Report of the Select Committee on Science and Technology, which was set up in another place largely on the initiative of the Parliamentary and Scientific Committee. I am delighted that the first Chairman of the Select Committee is also the Chairman of the Parliamentary and Scientific Committee, and I am sure that he will study this debate with great interest.
As the noble Lord, Lord She-field, said, this debate is largely about future policy. It is particularly about the future structure of the United Kingdom industry. It seems to me that there are two major objectives—first of all, to ensure that the industry is properly constructed so that it can provide the requirements of the United Kingdom satisfactorily and efficiently and, secondly, that the industry can maximise its exports to take full advantage of the money that has been spent in this field.
1507 I should like to deal with the export point first, and try to put it a little in perspective. There has been much criticism of the industry because of its alleged lack of exports. May I look at the record for a moment, not to justify what has been achieved, but to learn from it. The United Kingdom programme was initiated in the early 'fifties. The original designs were based on the Magnox type of reactor, and these were first available for export about 1955. That type of reactor was certainly competitive up to about 1960–61, and in fact United Kingdom firms were invited up to 1962 to tender for five different requirements. Out of those five, the United Kingdom industry obtained two and the United States three. That is not an unreasonable record, and I certainly would not accept the proposition of the noble Lord, Lord Sherfield, that the consortia did not try. I think that they tried very hard but, for reasons which I will come to in a moment, they have not been very successful. In that early period I do not think the record is bad.
But after 1961 the Magnox reactor clearly became uncompetitive. There followed that unfortunate period, which may be called the period of uncertainty, from 1961 to 1965. The United Kingdom had no competitive reactor, for the A.G.R. was not adopted until later in 1965. In the meantime, as has already been pointed out, the United States took quick steps forward in the light water reactor field. It is true to say that not all those exports from the United States were entirely successful. Clearly this is a case of the United Kingdom suffering to some extent for its pioneering efforts.
In 1965, there were great hopes that the contract for Dungeness "B" Power Station with its A.G.R. would restart exports in this field. Unfortunately, this proved over-optimistic. The reactors, as has already been pointed out, were too large, on the whole, for exports, particularly to Europe. The United Kingdom price per kilowatt was considerably higher—£70 per Kw for a 1,200 Kw station, compared with some £40 per Kw for a 1,000 Kw station from the United States, who were offering their light water reactors. Also at that time no A.G.R. was yet in operation and we had to compete with several years' experience in the 1508 United States of L.W.R.'s being used in power stations and for the nuclear submarine programme. Nevertheless, during that period United Kingdom consortia did tender, using A.G.R. designs, and they showed that they could tender competitively. One design, for instance, was the cheapest per kilowatt of all designs submitted, but it was rejected for other reasons, one of which was that competitors offered a 25-year financing programme.
To sum up the export position, it seems to me that the United Kingdom has suffered from its pioneering activity in this field. Perhaps the consortia and the whole industry, including the A.E.A., misjudged the pace of development in the late Magnox era from 1959 to 1961. There was certainly too long a period of uncertainty between 1961 and 1965, and during that period the United States pressed forward with its L.W.R. They sold from proved designs, backed by home orders and the usual powerful United States marketing and financial support, including strong links with European companies and licensing arrangements which they had already made. Against this the British A.G.R. had little or no cost advantage and it had not yet been proved commercially.
But in the earlier period, when they had a competitive product, the United Kingdom consortia did not do too badly. There is no evidence, I submit, that they lost competitive position due to too much internal competition or to lack of liaison with A.E.A. or to any other organisational difficulties. I think that the moral to be drawn is rather that there was some lack of effective marketing in the broadest sense. For one reason or another, Britain's nuclear power policy in the early years was too inward-looking. They looked too much to supplying the requirements of Britain, just as has happened in other fields—for instance, in the aircraft industry at some stages. It is essential, particularly in these fast and big technological developments, to look outwards and to consider what the customers overseas are going to need, as well as what will satisfy our home requirements. This situation is not peculiar to the nuclear power industry, and many lessons have been learned since the 'sixties, not least that technical advance is of no merit in itself in this competitive 1509 world. It is useful only if it gives commercial competitive advantages in the world market.
How then to apply these lessons in settling our future organisation? I suggest that the nuclear power industry is not unlike the aircraft industry. It involves huge development expenditure to keep pace with a fast-moving technology. There is great difficulty in achieving adequate production to absorb the high development costs. Yet there is the need to keep ahead and to maintain first-class development teams. Then there is the long interval between the decision on a new product and commercial sales. The noble Lord, Lord Hinton of Bankside, said that this period is too long, and I fully agree with him in that connection. Again, that is not peculiar, as the noble Lord said, to the nuclear power industry. Hence the tremendous importance of efficient, adequate market analysis by people with strong, world-wide commercial and sales content. These, I believe, are paramount considerations.
Above all, no doctrinaire political considerations must confuse or distract the decisions. Alas! such bogies seem already to be raising their heads, and I am sorry to see that in the Select Committee Report the decision on a major issue, whether they would recommend setting up one consortium instead of several, was carried on a strictly Party political basis, with six Labour Members and one Liberal Member against five Conservative Members. It is inconceivable that all those Members in each Party really thought the same way. Surely there are wider considerations than Party considerations. One can only feel that they must have voted in that way out of Party loyalty.
§ VISCOUNT CALDECOTE
I am glad to be corrected by my noble friend. At any rate, this principal recommendation therefore seems to have been reached on a largely political basis. It gives one little confidence that in the future these important decisions will be taken without any doctrinaire political bias, and with market consideration as the only factor. But I hope that I am wrong about this.
1510 My Lords, what are the alternatives? The alternatives for the future organisation, surely, are, first of all, to remain as we are with three consortia, and the A.E.A. outside them; secondly, to concentrate industry into two consortia making comprehensive contracts or contracts for reactors only; and thirdly, to form one organisation, as recommended by the Select Committee, based on the A.E.A., to design and construct reactors, described as nuclear boilers. I think that we can quickly discard one of these three, the preservation of the status quo, owing to the changing pattern of demand and the fewer orders for larger stations. So the issue is really between alternatives two and three; that is, between having two consortia and one single consortium proposed by the Select Committee.
Like most major problems, these issues are not clear cut. There are obvious advantages, first of all, in not creating a monopoly. We all know the arguments about that. But the Select Committee have made their case very clearly, in paragraph 136, against having two teams, and in favour, therefore, of a monopoly. I rather doubt whether they have the premises right. They make a strong case by pushing the figures about demand in the industry and the size of individual reactor plants to the limit. In particular, I think it is important to take account of the fact that at present the programme of the C.E.G.B. is to some extent artificially depressed, due to the fact that the previous programmes have gone ahead faster than was needed to meet demand, with the result that an excess of capacity hits been created.
Some who are expert in this field will say that there will be adequate work for the consortia to carry on in an efficient way, particularly (and I will come back to this point in a moment) if, instead of the A.E.A. itself constructing full-scale prototypes, this work is put out to industry. I therefore believe that the case against two teams has been overplayed. For there is no doubt that competition is valuable. There is no doubt at all that the teams that have been working in this field have had their wits sharpened and their energies increased by the spur of competition, in trying to get contracts from the other consortia. While I am no expert in this field, I have been close enough to it to know this from first-hand experience.
1511 Certainly competition in the consortia has produced some very spectacular technological advances. It has produced a quick progress from 150-megawatt sets to sets of up to 1,200 megawatts. It produced the idea of concrete pressure vessels. Above all it produced the idea of the integrated building between the reactor and the whole power station, which has had a big effect on cost reduction. In passing, I would just say that I think it is a little doubtful whether it is right to separate completely the two contractors, one doing the civil work for the power stations as a whole, and the other making the concrete pressure vessels. This, I understand, is now a very much integrated operation, on which a great deal of money can be saved by carrying it out through one contractor.
Again, it is not very satisfactory in a specialised field like nuclear power to have only one career opportunity for those who want to go into the business. Is it not much more healthy that a man can feel that if he goes into consortium "A", and does not get on with, does not agree with, his boss, he can keep in the same business and go into consortium "B"? If there is only one consortium, then he simply has to go abroad and add to the brain-drain.
I doubt whether the argument that international competition is sufficient to spur people on is a good one. Once there is only one national consortium, all kinds of political considerations come into the choice of the contractor. If his design is not the best, clearly people in the consortium will argue with the people who are placing the contract, and probably with the Government: "The contract must come to a British firm. You cannot possibly place this contract abroad." Therefore choice and competition are devalued. It increases greatly the difficulty of choosing on merit, and it is tantamount to nationalisation, which has not proved altogether successful in the export market. I would also draw the attention of the House to the danger that this organisation might lead to the same sort of situation that has been prevalent in the naval shipbuilding industry over the years, where the Admiralty had a design organisation and designed ships, and they simply put out the designs to builders who built to the Admiralty design. This has not 1512 proved wholly successful or stimulating in the shipbuilding industry.
There has been an alternative compromise proposal, which was mentioned in the Press last December, and which I understand emanated from the Ministry of Technology: that there should be a holding company, with two contracting companies under it, owned by it. This seems to me to have most of the disadvantages of both the other schemes. It would not lead to real competition, and I should not have thought that it was worth further consideration.
What then, my Lords, is the solution? I believe that the industry should concentrate into two companies dealing with reactors, equipment and as much of the station design as is necessary for full efficiency. The turbines, the generators, the switchgear and all the ancillary equipment can be let out to separate contracts at home, if that is the desire of the customer. For overseas contracts the reactor companies can be prime contractors, since overseas customers usually wish to have one contractor with whom to deal.
I believe that the A.E.A. should concentrate more on research and early development work, such as the development of small prototypes, but should not build full-scale prototypes, which should be put out by contract to industry. This, surely, would help continuity of work in industry; it would give experience there; it would help the rapid exploitation of new designs and technology. This, as has been pointed out already, is the American practice; it is also the practice in the aircraft industry, which has led to average exports over the last three years of over £180 million. I believe there was an early mistake, which we should now seek to correct, when the nuclear power programme moved over from research to development and construction. The Atomic Energy Authority hung on to the development and manufacture of prototypes instead of passing that over to industry and concentrating more on research.
My Lords, I have only touched on the fringes of these problems, and I have already spoken too long. I would make a plea again that commercial realism should be the only factor that is considered in the decisions that are to be taken on the future of the industry. Let us get away from vested interests, 1513 wherever they are. Let us get away, above all, from doctrinaire politics.
I wonder whether the Government (I should like to put this question to the noble Lord who is to reply) would consider giving new instructions to the I.R.C., so that they are not confined to considering a single consortium but can also discuss with industry the formation of two consortia from the present three, and see what industry thinks about this and whether that might not be a better way of proceeding. For there are great opportunities in this field in Britain and we must not be discouraged by early setbacks in the export field. There is plenty of skill, enthusiasm and knowledge. I would certainly agree wholeheartedly with the noble Lord, Lord Sherfield, that decisions are needed soon. They are needed to release the talent that is there, to release the talent in a sensible new structure, decided, as I say, by commercial and marketing factors only, combined with a long-term stable programme at home. And, my Lords, we need to take those decisions soon.
§ 4.32 p.m.
§ LORD WYNNE-JONES
My Lords, I rise as, I suppose, the first amateur in a set of highly professional speakers who have shown us the great problems which arise in discussing our nuclear energy industry. I should like to congratulate the noble Lord, Lord Hinton of Bankside, upon his very distinguished maiden speech which it was a great delight to hear and from which I personally have learnt a lot. The introductory remarks of the noble Lord, Lord Sherfield, I found also very interesting. I hope he will not expect me to agree with them all, but I am sure he never expects anyone to agree with him; he merely hopes that he will incite us to think, and to think deeply. I have at least tried to think.
With regard to this problem of the development of nuclear energy, we have bandied about words such as "competition" and "nationalisation" and so on. More than one noble Lord has referred to the necessity for keeping away from these shibboleths, but unfortunately, in doing so, the noble Lord introduced the very shibboleths which he asks us to avoid: because it is just as ridiculous to say that there must be competition when competition may be unnecessary as to say 1514 that there should be a monopoly. In considering this problem of the development of nuclear energy it is very doubtful whether it is possible in this country to have more than one effective group of people manufacturing a station, because one knows perfectly well what happens. The number of stations needed is so small that, as the noble Lord, Lord Sherfield, said, in effect if you have a number of consortia you give the first station to one consortium, the second to another consortium, and the third to another consortium—all this in the blessed name of "competition". This is not competition at all; this is merely sharing. It is merely deciding that there is a certain market and that it shall he shared out.
The real point of competition does not arise in having just a number of different firms like this. Surely it is having a number of different ideas, a number of different ways of thinking about things. This is where international competition is, I think, in a field as vast as this, the biggest spur and the one which should be most important to us. Naturally one wants to ensure that if the work being done by a certain body that body is not allowed to get some of the worst features of monopoly. I would again agree with the noble Lord, Lord Sherfield, that it is very dangerous to try to prevent one body from reaching a decision by putting a whole tier of other bodies above it, so that each decision has to be reconsidered by another body on exactly the same evidence as was available the first time. This is a stupid way of judging anything, and one should certainly riot do tha[...].
When one looks at the recommendation put forward in the Report of the Select Committee one finds that they did not commit themselves to say that there must be only one manufacturing authority. Recommendation 143, for instance, includes the following statement:Finally, Your Committee wish to emphasise that they do not present their recommendations as an unalterable solution to be adhered to for all time. They have been very much aware throughout their enquiries that great changes in marketing opportunities may take place in the future, particularly if links can be established with continental and other interests. With an increase in the scale of ordering by utilities and others and greater success than hitherto in securing orders it may be that ultimately there will be scope for 1515 the operation of additional nuclear boiler companies, whether British or jointly owned with overseas manufacturers.This is not a statement that a monopoly should be set up, and this is clearly stated in the Report. I think that we should be doing a great disservice if we misquoted the Report and used it simply in order to attack certain bogies which noble Lords and others may feel are appropriate at a particular time.
When we are considering this question of nuclear energy there is the all-important matter of time-scale, and this is what the noble Lord, Lord Sherfield, called our attention to at the start. He asks that an immediate decision should be reached. There is a certain risk in demanding immediate decisions. The noble Lord, Lord Hinton of Bankside (I hope that I am allowed to refer to a maiden speech), pointed out to us very clearly that one of the big troubles in our development of the nuclear energy industry was that we rushed on too big a scale in 1957 into a programme. There is no doubt at all that that precipitate move was one of the most disastrous moves that were made. So there we have an illustration of the danger in merely coming to a decision. I would suggest to the noble Lord, Lord Sherfield, that it is excellent to come to a decision, but it is even more important to come to the right decision; and it is not always true that any decision is better than none.
In this particular field I am very doubtful whether a rapid decision is better than taking time to reach the correct one. Look at the present position with regard to the advanced gas-cooled reactor, the one which has been developed out of the other reactors. It is simply the same sort of reactor running at a higher temperature, and therefore able to run at higher efficiency. The scheme was put forward for it. It was excellent; it seemed to be highly competitive, and one suitable for going ahead with. But are we really certain that the A.G.R. is the right reactor to go ahead with? We know perfectly well that it is in any case a stopgap reactor. It is not the reactor that we should hope to see in another fifteen years' time; it is a reactor which is a development out of existing reactors.
1516 I make no comment upon the development. I have no doubt that it was very well done; I have no doubt that it was technically good. But it is important to remember that when you raise the temperature you bring in new problems altogether. There is the very grave and serious problem of the reaction between carbon dioxide and graphite, and when the temperature is raised this reaction increases in speed considerably. It is all very well to say that tests have been carried out. I have done research on this reaction for twenty years, and all I can say is that you may still find, when you start working under conditions which operate inside the reactor, that you have failed, however careful your preliminary work was, to take into account all the consequences of this reaction.
The reaction is considerably speeded up by impurities. If you happen to get some impurity, particularly a metallic impurity, inside then the rate of reaction is considerably speeded up. I know quite well that the Authority have examined them, but until you build a reactor you will not know its life; and it is not yet safe to say that, because the life of the Magnox reactor has been greater than was predicted, therefore the life of the A.G.R. will be greater. It may be less—we do not know. It is difficult to judge the costs, but at the present time it seems to me that the advantage of the A.G.R. over conventional methods of producing electricity is marginal. It may turn out to be better than we think, but on present evidence that does not appear to be so. Therefore, I believe that we should be making as big an error as was made in 1957 if we precipitately decided to develop a programme of nuclear energy production.
I have no doubt at all that anyone can see that in the long term we shall be getting our electrical energy from nuclear sources. A fast reactor may well come into production in the 1970s. If it does, we think it will give us power at a much lower rate than to-day, but I suggest that, while we may well ask the Government to give the closest consideration to it, it would be wrong to say that we expect the Government to produce an answer out of a hat. Science and technology is not a rabbit to be produced out of a hat.
§ 4.41 p.m.
§ VISCOUNT MILLS
My Lords, I, for one, am glad that the noble Lord, Lord Sheffield, put down this Motion for debate, because we have had the opportunity of listening to his own well balanced introduction and to the maiden speech of the noble Lord, Lord Hinton of Bank-side. I have been waiting for a long time to listen to that speech, because the noble Lord could not be controversial, and nor was he. I was well aware of his great knowledge of the subject, and, as he explained, he also has the advantage of hindsight. So far as the noble Lord, Lord Wynne-Jones, is concerned, and his reference to the 1958 programme, I would remind him, as the noble Lord, Lord Hinton, said, that we could not get the coal, we could not get the oil—it was rationed—and we were faced with the necessity of making sure that at any rate electricity supplies were available.
My basic reason for participating in this debate on the Report from the Select Committee on the United Kingdom Nuclear Reactor Programme is to be found in paragraph 116 of the Report, which says:Your Committee wish to stress their strong conviction that the production of electric power by the processes of nuclear fission will in the future be seen to have been a great technological revolution which lifted mankind to a higher level of living. Britain must remain in the forefront of this revolution.As a result of my interest in the first extension of the nuclear programme, in 1958, I expressed a similar view, both to your Lordships and elsewhere. This remains my view, and if it be the correct one it is important that the nuclear organisation should be the best that can be devised, to deal adequately with our requirements both here at home and in world markets. As commercial stations based on the prototype Magnox reactor at Calder Hall developed by the Atomic Energy Authority are now being superseded, we are at a turning point, and it seems most opportune that we should have the benefit of this Report being available for consideration.
I should like to pay a tribute to the work of the Select Committee in producing such a readable and well arranged Report on this important subject. I am sure the Report is the result of much research, hard work and great care by 1518 Members of another place. I believe I am right in stating that it has not yet been debated there, and therefore perhaps we have been at a loss to know what view Ministers were taking of its recommendations. But I was sorry to hear—if I understood the noble Lord, Lord Winterbottom, correctly—that the Government are proceeding by consulting industry on the main recommendation, in other words, that of one organisation. I would much rather have heard that they were consulting industry on all the alternatives which are open to the Government.
The Report gives a summary of the recommendations at which the Committee have arrived—in some important cases by a majority vote, even if "Party vote" is a wrong description, and I do not think it is. I should like to devote my remarks mainly to recommendation 1(c), which says:In present circumstances the best interests of the country would be served by the combination in a single organisation or company of the skill and resources of those now separately engaged in the design and construction of nuclear boilers.This seems to me to be the nub of the organisational problem. Is competition in this industry to be destroyed? And, if so, is it wise? I do not believe that there is any false competition. I believe there has been very serious competition, as is evidenced by the fact that some of the consortia have had to get out. I take the view that competition is essential to ensure progress both in reactor design and construction.
I find it difficult to reconcile this recommendation with paragraph 45 of the Report, which begins in this way:Whatever may be the advantages or disadvantages of continuing or modifying the consortium system, Your Committee found general agreement that an element of competition in the home market was considered vital, but there was some ambiguity as to whether this was intended to mean technical or commercial competition.The Central Electricity Generating Board in their Memorandum, Appendix 17, on page 403, says thatthe proposal virtually abolishes technical completion".They also say in paragraph 6:The Board feel that the benefits arising from such preservation of commercial and technological competition would greatly exceed 1519 the savings which theoretically could be claimed from the reduction of design and construction organisations to one.With this I entirely agree. Although the recommendation is for a single organisation or company to combine the skill and resources of those now engaged in the design and construction of nuclear boilers, this apparently is not the general view. It seems to be agreed, however, that the tendency to bigger reactors no longer justifies retention of three consortia and that they could well be reduced to two, which would preserve the necessary degree of competition.
There is one other aspect of this matter to which I should refer, because while recommending the establishment of a single organisation concerned with design and construction, the Committee say they are aware of the need for competitive pressures in the home market, and emphasise that the corollary to their proposals must be willingness on the part of the Central Electricity Generating Board to invite tenders from abroad in respect of nuclear boilers. I doubt whether we can exclude political considerations from such an arrangement, and I am quite certain that we should have frequent Questions, both in this House and in another place, if that arrangement were followed.
Now I should like to say a word about exports in this important field. As has already been mentioned, they got off to a start in 1958. I was privileged to attend the preliminaries for the Latina power station and later the opening of that station, and, as has been mentioned, this was followed by the sale of a station to Japan in 1959. It is quite clear that owing to developments in the United States we have for some time had nothing really to sell, and I suggest that here again the stimulus of competition is needed. Many large firms have their own companies or associates abroad, so if there were two groups there would in fact be two international groups, and the share of business which we would have the chance of receiving would be increased.
Perhaps I may just say a word about the Atomic Energy Authority. It is good to read in paragraph 145 that the A.E.A. have done their basic task, that of nuclear research and development, so well and with success. That is my under- 1520 standing. I for one hope that they will not be tempted to become the base of another great nationalised industry but be content to serve British industry in their development of nuclear power reactors and to advise the electric power industry generally. The A.E.A. have indeed a proud record. They have had brilliant men at their head and in their ranks. Among them I must again mention the noble Lord, Lord Hinton of Bankside, who has done so much, not only for the nuclear industry but for the electric supply industry in general. I can again only express the hope that the researches that are going on now will take into account every alternative, and that the Government will not put pressure on British industry to accept the Report of the majority of the Select Committee.
§ 4.56 p.m.
THE EARL OF HALSBURY
My Lords, when my noble friend Lord Sherfield told me that he was putting down this Motion for this afternoon I was naturally grateful to him for the opportunity to debate the subject, but at the same time I had qualms of the kind the noble Earl expressed when he addressed your Lordships' House this afternoon. It seemed a rather odd situation that we should be debating the Report of a Select Committee of another place before it had been debated in another place itself. But when I looked at the date of the Report it seemed to me that the date alone justified our discussing it.
We cannot treat the subject as taboo for ever because the Government of the day have temporarily put the subject into cold storage. Nor can we debate it under the shadow of the knowledge that this Report exists without referring to it. So I think that in bringing this subject forward, the noble Lord has done something for which we are all grateful, and I am particularly glad since it enabled me to attend your Lordships' House this afternoon to hear the truly excellent maiden speech of my noble friend Lord Hinton of Bankside, on which the noble Viscount, Lord Caldecote, has congratulated him in your Lordships' traditional way.
Before coming to the subject, I must follow the noble Viscount in declaring an interest. I, too, am connected with the industrial side of nuclear power 1521 station building, and I wish first of all to deal with this question of the contractual pattern of building, because I believe it to be a great mistake to think that the contractual pattern of building a nuclear power station is so different from all other contractual patterns that it needs special treatment and intermeddling by the Government. When a very large and complex installation in which many technologies converge has to be constructed—an oil refinery, a large chemical or petrochemical plant, an integrated steelworks or power station of either kind—somebody has to design it and somebody has to undertake the procurement, the installation on site and the commissioning. That "somebody" can be the same person or different persons, and that is the first division of the subject of contracting.
Secondly, and quite independently of that, the persons in whom these responsibilities vest may be employed internally by the customer who is finally going to possess the installation, or they may be employed externally, in which case we can talk of constructor, contractor, designer, architect engineer, or whatever it may be. Thirdly, they may be individuals, as individual consultants or firms or consortia, in which case the consortium will of course operate through their own instrument which will itself be an architect engineer. And, lastly, there will be the terms of the contract.
Will the procurement responsibility involve a professional man acting as purchasing agent for his client? That is one possibility. Alternatively, will he take a turnkey contract and take overall responsibility for the entire installation, from soup to nuts, at a fixed price, win or lose? It would be quite wrong to suppose that one of these innumerable combinations of patterns is right and the others are wrong.
You will find particular combinations everywhere, each of them characteristic of some particular situation which reflects a customer's free choice of how he would like his future assets built. It would be wrong to suppose that a customer would necessarily employ only one pattern in the context of a particular installation. It is commonplace in the chemical industry for the main plant unit of, say, a petro-chemical installation to be built by a turnkey contractor, a consultant-de- 1522 signer, and for the customer itself to take responsibility for the off-sites, the boilers, the cooling plant, the water purification, the effluent purification, and so on. There you have two patterns on one site.
In the nationalised gas industry, before the days of hydro-carbon reforming, the industry acted as its own architect-designer. But then came a new and revolutionary process, hydro-carbon reforming, and it went over to the pattern of employing an architect-engineer on a turnkey contract. The old carbonisation plants were designed a hundred years or more before and the industry knew how to build them. The hydro-carbon reforming plants were new and unconventional, and the industry did not know how to build them. The history of thermo-electric and nuclear power plants in the electricity supply industry has gone through a similar pattern.
I do not think we ought to regard the current phase as something special, something that needs special attention. I belive that you should treat the Central Electricity Generating Board exactly as if it were any other customer, and allow it to come to its own free conclusions on such matters as whether it wants to condense the nuclear boiler area into one design organisation and treat the generating sets as the subject of contracts which it will itself place as its own contracting authority. It may want to mix its techniques and have two consortia or three and restrict the consortia to the central part of the plant, the nuclear boiler.
If this matter is left to the free choice of the Central Electricity Generating Board, I believe they will get the answer right. That is not because I think the Central Electricity Generating Board is incapable of making mistakes, but I believe that it is the best judge of its own interests, meaning only that any third party who tries to do its work for it without its responsibilities will probably make more mistakes in the long run than would the Central Electricity Generating Board.
On the question of competition, it is clear that the C.E.G.B. do not want to be in the hands of a sole contractor. That is one factor in the situation. Admittedly going through competitive tenders is laborious. That is another factor. The manifest wish of the C.E.G.B. is to undertake this labour for the sake of 1523 having a competitive situation. Why should we impose on them what they do not want, and then ask them to operate as if they were free agents? I think we should leave them free here.
In this context, while we are all most grateful for the Report, our gratitude for the compilation of this immense amount of subject matter does not necessarily run to agreeing with all the conclusions of the Select Committee. They have come to one recommendation which seems to me a most odd one. It seems characteristic of an attempt to try to please everyone. The C.E.G.B. wants competition, so it must have it. The Select Committee would like to see a monopoly supplier, so we must have that too. And so we must have a situation in which foreign tenderers are to supply the competitive element in this country. This appears to be justified on the rather odd argument that if British firms are to be free to tender abroad, then foreign firms must be free to tender in this country.
In a permissive sense that is of course true. Of course foreign firms must be free. But it does not mean that foreign firms ought to be in a sort of mandatory position to quote here because without them the C.E.G.B. would not have a competitive situation. Does anybody suppose that public utilities in America are proposing a system in which British consortia must quote for supplies in America? Does anybody suppose that in Europe there will be rules and regulations saying that to ensure a competitive situation the British consortia must quote? I do not think so. They will leave it on a permissive basis, not a mandatory one. I find this recommendation extraordinarily difficult to justify.
First of all, from the export point of view, supposing you have a single consortium what will happen? No one supposes that you could export an entire nuclear power station across the world. The civil engineering will have to be done locally, which means that anybody who is making a nuclear boiler will want a partner abroad for some of the local supplies. Of course there are many potential partners abroad, and they are competitors. They compete with one another.
1524 If you restrict yourself to a single consortium in this country you restrict yourself to a single set of partners abroad. Then what do the competitors of those partners do when they themselves seek a partnership? Do they come to this country and tie in with another group over here? No, they cannot, because if this argument applies we have extinguished all other groups over here. Instead of having a free selection of partners in this country they must go elsewhere, possibly to the United States, possibly to another country. But why should we restrict ourselves in this way from our ability to get as many power station orders as possible?
Lastly, I come to the status of the A.E.A. I am not one of those who want to see the A.E.A. dissolved. In as unconventional a technology as this, I am sure you need an authority on health standards and an authority on safety standards. I do not think you can separate that authority from its research programme—research into fission, research into fusion, research into power generation, research into weapons. The authority ought to have an integrated character. But it ought to be an authority, not a judge and jury in its own cause. If, in addition, it is going to be a contractor on all those matters in which it ought to exercise independent judgment as the Government's principal adviser, then it loses its character as an authority and will acquire a quite different one. I do not think we should acquiesce in its acquiring an entirely different character.
Currently, the A.E.A. is under pressure from the consortia to modify some of its policies. They want to see more speed on the steam generating heavy water reactor. They want a faster rate of development on the high temperature reactor, spreading from the Dragon project. They would like to see more progress made in investigating a gas cooled as opposed to a sodium cooled fast reactor for the late 1970's, early 1980's. It is good that the Authority should come under pressure from the contractors but it never will come under pressure from the contractors if it is itself one of the contractors. These are healthy pressures.
The only change I should like to see is the one advocated by the noble Earl in 1525 his speech to the House this afternoon, that is, an earlier transfer of responsibility on the design side, once the prototype stage has been reached, from the Authority over to the consortia to be absorbed for the future, and then some direction of research and development from the consortia back to the Authority. I believe that that would make for good health. It would mean only a small progressive transfer of some of the Headquarters design staff, and in his evidence to the Select Committee the noble Lord, Lord Penney, whom I am sorry not to see in his place this afternoon, made the point that he did not expect the Authority to be designing power stations in twenty years time. If that is so, what I would propose, and what the noble Earl has proposed is nothing more than a phased transfer to the forward look as adumbrated by Lord Penney in his evidence to the Select Committee. It seems to be important to get the interests of the parties clear so as to allow each to exercise its own effective pressures. I do not believe in static situations. I believe that movement takes place as a result of a balance of forces.
The interest of the C.E.G.B. is in cheap electricity; cheap electricity in this country, not cheap electricity in some other country. If the circumstances of generation here are different to the pattern of public utilities in other countries, the C.E.G.B. will inevitably foster the design of stations which will not be readily saleable abroad because they will be too large. The interest of the consortia is in getting orders. They are not, in the normal sense of the word, profit making bodies, because the profits are ploughed back into their members. They are concerned primarily with getting orders not only for their members, but for others as well. They are the only people who have a direct interest in exporting nuclear power stations. Everybody else's interest, that of the C.E.G.B., the A.E.A. and the Government, is indirect. Only the consortia actually make money out of exports in this field, and I want to see a situation in which the consortia are exercising direct pressure on the Authority, because they have an independent existence from it, to modify its policies so as to enable them to absorb designs which will be the basis for a satisfactory export business. They will also have to exert pressure on the C.E.G.B. to purchase 1526 some of these designs in this country so as to give a demonstration to foreigners that we have got something to sell that works.
My Lords, why have the members of the consortia come together? Simply because they believe they will get more orders that way. Why? Because they believe that acting together their joint quotations will be more competitive. Why will they be more competitive? Because the product will, in their opinion, be better and cheaper. Why has the C.E.G.B. so far acquiesced in this situation? Because so far it has agreed. If two parties to a transaction can come to a free arrangement based upon what each believes to be in its own interest, why should any third party enter a claim to know better? That is my argument, and I believe it is as simple as that.
§ 5.14 p.m.
§ LORD STRATHCLYDE
My Lords, I would join with other noble Lords who have spoken in thanking the noble Lord, Lord Sherfield, for having put this Motion on the Order Paper, and I should like to congratulate the noble Lord, Lord Hinton of Bankside, whom I believe I am privileged to call art old colleague, on the notable speech which he made to us this afternoon, and to express the hope that he may see his way to give us the benefit of his great knowledge and experience on many future occasions.
It is certainly a very comprehensive and voluminous Report that we considering this afternoon. I find, on going over it, that it appears to contain fifteen recommendations. These are listed on page vi, and I propose to refer to them as they appear in order on that list. Your Lordships will be relieved to know that at this stage in the debate I do not propose to comment on those recommendations which are numbered 1(a), 1(b), 2(a), 7, 8, 9, 10 and 11, which brings me to recommendation No. 3. This is that a new British fuel supply and manufacturing company should be established. This was referred to by the noble Lord, Lord Sherfield, in his remarks. At the present moment the production and reprocessing of fuel is carried out by the A.E.A., and, so far as I have been able to discover, to the complete satisfaction of all concerned, 1527 while the costs which the Authority quotes would appear to be competitive with American figures. In all these circumstances it would seem to be quite unnecessary to interfere with the existing organisation and arrangements.
Recommendation 4(a) proposes the establishment of a technical assessment unit capable of advising Her Majesty's Government. But are not the Ministries of Science and Technology and of Power equipped to perform just that function? If that is so, as I believe it is—and if it is not, then I believe that it ought to be—why do we need to set up another body for the same purpose: a body which would no doubt require a staff of highly skilled experts, people who are already in very short supply, merely to duplicate the work which is already being carried out by these two Ministries in that connection? I entirely agree with the noble Lord, Lord Sherfield, that the proposal should be resisted.
Much the same argument applies to recommendation 4(b). That suggests there should be another new body set up to deal with all the aspects of energy policy, and it lays down specifically that it should be provided with an adequate expert staff. Again, I would question whether this new body is really necessary when the Ministries and industries together should surely be capable of dealing with all the aspects of energy policy.
Recommendation No. 5 proposes the setting up of yet another body, this one to examinethe purely financial aspects of costing of all methods of energy supply".That appears to me to assume that those who are presently responsible for the supply of energy are seemingly lacking in economic sense, or that they have some particular axe of their own to grind. So far as my experience of the electricity supply industry is concerned, that is most certainly not the case. Indeed, that industry envisaged its job to be the production and supply of electrical energy, to the nation, to industry and to individuals, by such means as would give it to them at the lowest possible cost; and to that end it keeps under constant review the financial aspect of all its operations. To that I would just add this: that when, for one reason or another, the Government have on occasion stepped in and stopped 1528 the industry from taking action which it had proved to itself would reduce the cost of electricity, the industry resented it, feeling that it was being unjustly treated, and indeed abused. When I speak in this connection of the "industry", I mean the entire personnel from top to bottom, and not merely the top management.
Recommendation No. 6, that the British Nuclear Export Executive should be wound up, will probably not meet with very much opposition, because that body has, unfortunately, so far not been able to serve any very useful purpose. But when in that recommendation the Committee go on to recommend that the Board of Trade put in hand an intensive survey of potential overseas nuclear needs and opportunities, it is again putting forward a proposal which will lead to the duplication of work and effort. The consortia, after all, are not asleep; they are out to do business, and they know full well the overseas needs and opportunities which are available to them. It is probable that the Board of Trade knows them also, but, if not, it would likewise in all likelihood set out on the proposed intensive survey by asking the consortia any number of questions, which will multiply paper work and duplicate effort.
Now none of the 13 recommendations to which I have referred, nor the five of them on which I have briefly commented, are really of major importance, but those put forward in paragraphs 1(c) and 2(a) are crucial to the future of the industry. The dominating word in each of the paragraphs is the word "single"—a single organisation for the design and construction of nuclear boilers is recommended, and the transfer to that organisation (which is called "the new single nuclear boiler organisation") of the Atomic Energy Authority facilities at present devoted to research and development of a commercial nature. The argument would seem to turn upon whether a single organisation will contain within itself the same measure of specialist skills, inventiveness, foresight and the will to experiment as would be found in two or more competing organisations.
However skilled and impartial any single management may be, the possibility of a serious error of judgment cannot 1529 be ruled out. My own experience does not lead me to believe that where competition is absent there is that same compulsion which drives one to be constantly on one's toes, to be continually examining one's organisation, methods and current practices, which forbids complacency and prevents acceptance of any established process, custom or routine as beyond challenge. But neither do I believe that one organisation, no matter how expert, alive and keen it may be, will inevitably produce at any given time something which is incapable of being improved. I therefore support the view expressed by a number of parties in evidence to the Select Committee that during the British nuclear power programme certain major design innovations owe their success to commercial competition.
Your Lordships may remember that in the Minutes of Evidence, on pages 95 and 96, five examples were given which it was claimed led to rapid advances and significant cost reductions. As regards competition leading to rapid advances, the reply given by Lord Penney to a question put to him on page 27 in paragraph 98 is somewhat significant. Lord Penney's answer was that H.T.R. would be later than the second nuclear programme. But I understand that now, at least, one of the consortia has tendered H.T.R. as a fully commercial and practical proposition. The inference that could be drawn from that reply is that had there been a sole authority at that time, H.T.R. would not be as far advanced as in fact it has been under the spur of competition.
There are in this country two main customers for nuclear power reactors and boilers, the C.E.G.B. and— I am sorry noble Lords have not mentioned it—the South of Scotland Electricity Board, which has a very large part to play in my own country in this connection. Both Boards are utterly opposed to a monopoly organisation for design and construction. It naturally follows that they are also opposed to such an organisation's being entrusted with the design and construction of complete nuclear power stations. The consortia are also opposed to, while the Committee was only marginally in favour of, a single nuclear boiler company being established. The noble Viscount, Lord Caldecote, has reminded us of the vote 1530 on that issue which was 7 to 5; that is to say 6 Labour and 1 Liberal for, and 5, all Conservative, against. Like other noble Lords, I was sorry indeed to hear from the noble Lord, Lord Winterbottom, that the Government propose to reconstruct the industry on the lines suggested by the Committee. I hope that they may think again.
Reference was made more than once in the Committee's Report to the "nuclear island"; that is, the reactor and the boiler. Particularly when it is desired to ensure completion to schedule and possibly a performance guarantee, there is a very great deal to commend the comprehensive contract, even for conventional power stations. I understand that at this moment the South of Scotland Electricity Board may well he considering this type of contract for their next conventional station. Hitherto the Atomic Energy Authority has been responsible for research and development involving the production of new basic designs of reactors, constructing experimental plants to prove them, and thereafter a prototype. Those tests being satisfactorily completed, the Authority is able to issue licences to the consortia for their design and construction on a commercial scale.
The experimental reactor may be comparatively small. To talk of something of which I have knowledge, the firs t fast reactor at Dounreay was 15 Mw—that is larger than many others—and the prototype now under construction is 250 Mw. The first commercial set may well be of 1,000 Mw., or even more. The problems associated with the construction of these various reactors must obviously be very different, and may indeed call for considerable alterations to the detailed design of the reactor and boiler—atteradons which, it is argued, the consortia are, in consultation with the Boards, well-equipped to carry out. So I would suggest that there emerges an alternative both to the present system and to the single organisation—an alternative which has much in common with that put forward by the noble Earl, Lord Bessborough, and the noble Viscount, Lord Caldecote. It is that Atomic Energy Authority reactor group personnel should be divided among the consortia, whether they be two or three, and that the consortia should then be responsible for de- 1531 sign and development, the research associated with these activities, and construction, leaving A.E.A. responsible for fundamental research into nuclear matters in the broadest sense.
The noble Lord, Lord Sherfield, mentioned that some people might think that this would mean the dissolution of the A.E.A., but at the end of the day the Authority would be left with the operation of their productive factories, with particular responsibility for the procurement of uranium ore and the manufacture, enrichment and reprocessing of fuel. As at present, they would continue to be responsible for fundamental research at Harwell and other laboratories which would continue to provide a service to nuclear power plant industry, as well as developing and investigating new ideas and methods of using energy. They would, as at present, advise Her Majesty's Government on all these various matters. Such a solution would enable the Atomic Energy Authority to concentrate their effort on their primary task of pure research and development in the most effective way, and to pass over such of their other activities not inextricably linked with their primary task to other more appropriate organisations.
These are not my words. These are the words contained in Recommendation 2(b)(i) and (ii) of the Committee's Report. This is what the Committee recommend, but in view of the other recommendations it is not capable of fulfilment. I hope that Her Majesty's Government will give some further consideration to a solution on the lines suggested by the noble Earl, Lord Bessborough, and the noble Viscount, Lord Caldecote, and also, I think, by the noble Earl, Lord Halsbury, which all the evidence goes to show would be more acceptable to many of those who appeared before the Select Committee and, in particular, to the two Boards which are responsible for the production of electrical energy in this country.
§ 5.29 p.m.
§ LORD HANKEY
My Lords, I hesitated somewhat before I put down my name to speak in this very expert debate, but I did so because I have been connected a certain amount with export promotion in this field and I also have been connected in O.E.C.D. with the development of the Dragon Reactor.
1532 I believe that this question is of enormous importance. We have had a somewhat critical debate and the Report itself is somewhat critical, but if we stand back for a moment and look at the broad picture we see that this is a field in which we have had extraordinary success. Nobody could have foreseen twelve or fifteen years ago that by this time a considerable proportion of the British base load of electricity would be generated in nuclear power stations. It seems to me a remarkable success, attained by the quite remarkable men who have pioneered in this field. Among them I should like to include in particular the noble Lord, Lord Hinton of Bankside, whose maiden speech we heard with such great interest to-day.
It seems to me that we have often lost enormously since the war by not having had confidence in what we ourselves have started out to do, by not seeing it through with courage and determination, and by giving it up halfway. There is no surer method of wasting money than to spend millions on developing a new aeroplane, a new rocket or, for that matter, a new reactor or a new system of fusion or fission, and then to give it up after a few years because it seems to cost too much, because it is rather a lot of trouble and so on. What is remarkable about this story is that the Government set their minds to make reactors that would work, that the remarkable men in this field made them work, and that we now have a great success to our credit. I do not think we should be too self-critical about it.
The important thing now is to look forward; not to look backward and regret that we did not have more success in the past in exporting this or that. We have to look forward to the High Temperature Reactor and to the Fast Breeder Reactor which is under construction at Dounreay. I am sure that that is going to be a prototype which will be of enormous interest to the whole world. I should like to say—though it is obvious to the experts who have spoken in this debate—that as the fast breeder reactor will use the plutonium and uranium produced by the present generation of reactors and will produce more plutonium than it consumes, it should be enormously valuable as a supplement to our present system, quite apart from its own merits. 1533 I think that that will greatly change the economics of nuclear power production. If we do not get this working soon, somebody else very soon will. It is interesting that the Americans are now very active in this field. I was interested to see from the Report that they are experimenting not only with sodium cooling but also with steam cooling, and I think that we ought to be pressing on.
I agree with the noble Lord, Lord Hinton of Bankside, that our construction periods are inordinately slow in this country. They are very much faster in America. Anything the Government could do to hasten construction work would be of great value, not only in this field but right across the whole field of export industry. I must say that the disastrous delay in construction of some of the Government offices within half-a-mile of this building does not encourage one to believe that the Government are making much progress here.
I have no doubt at all that we shall need any amount of electricity which we can produce in this way. I do not believe that we are in any danger of overproducing it. It is obvious that our economy cannot be allowed to continue for many more years in the doldrums where it now lies, and the experience of other countries shows that, when it increases, the consumption of electricity per head will rise. Our present consumption of electricity per head is not very high compared with the consumption in the United States or Canada, and it is very low by comparison with Norway. I have no doubt that there will be a great field for further construction in this sphere.
Another reason why I personally am anxious that we should make progress with nuclear power production is that I have felt for some time that we were getting too dependent on oil. The closure of the Suez Canal has greatly complicated the oil supply. The announcement of the Government that they propose to withdraw our forces from the Persian Gulf leads me to wonder whether we can long continue to count on the stability in that area which is necessary for getting the oil which industry is at present receiving. I do not like to think what would happen if we were much more dependent on dollar oil, or if we had to pay in dollars for the oil from the Persian Gulf. These 1534 matters ought to be considered together, because we cannot develop our economy without adequate power. Electric Power is absolutely primary, and it is the Government's duty to see that we get it. Therefore, I think we ought to aim at diversification as an essential plank of our energy policy, and nuclear power production has a central part to play in that policy.
Much has been said about the importance of our getting more exports. After studying this Report, I rather doubt whether the reason for our lack of success is to be found in the organisation of the consortia or of the British Nuclear Export Executive. I believe that the fundamental reasons were very well stated by the noble Lord, Lord Hinton of Bankside, and the noble Earl, Lord Halsbury. The fact is that we have needed very large installations for carrying our base load. Other countries have not needed such large installations and therefore our system has been too large. The very large installations require a good deal of capital and, as we have had rather high rates of interest and cannot give such long or low credit terms as the Americans, it has not been easy for us to persuade potential clients abroad that this would be the best system. I believe that the conclusion to be drawn from that is not that we should cease to produce the type of reactors which we ourselves need, because I believe, in spite of the great importance of exports, that our own needs ought to come first and that we shall continue to need these large installations for carrying our base load.
On the other hand, there would be great advantages in diversifying our research work and in multiplying the number of types which we are prepared to produce and sell abroad. Certainly we ought to be interesting ourselves in nuclear reactors which are capable of driving ships. We have talked for years about the interest in the Belgian project, the Vulcain, but it seems to be advancing very slowly and I cannot help wondering whether we ought not to be trying to press it forward much more actively. I am sure that this will prove to be very interesting in the future.
I do not wish to go too much into the field of industry and the Atomic Energy Authority, because others have spoken so very authoritatively on the subject, 1535 but it is difficult to believe that we ought, more or less, to abolish the Atomic Energy Authority or divide it into four as the Report suggests. Personally, I think the present system has served us very well and is probably still doing so. There is very much work still to do. I believe that the huge new installations, such as Dounreay, are really beyond the power of any consortium in this country to build and run. I should like to say that as Dounreay is virtually (using very untechnical language) a controlled atom bomb, it would perhaps not be very desirable to leave it in the hands of any one consortium. Personally, I would much prefer that a public authority should see this thing through and make sure that it works. I have therefore come to the conclusion that this very large-scale research and prototype construction really ought to be under Government control, in spite of what is said in the Report. But I would suggest that more of the work could in fact be farmed out to industry than already is, and that in that way industry could be brought more into association with the A.E.A. The division in the United Kingdom between private industry and Government institutions—and, for that matter, the universities—is much too watertight. We ought to do everything we can to break these divisions down, and in that respect I agree with everything that has been said in this debate.
There is another reason why I am very doubtful about the proposal to divide up the Atomic Energy Authority. It seems to me that the closest co-operation across the whole field is in practice necessary in order to ensure the best results. If the fuel elements are not entirely suitable or cannot stand the temperatures or pressures involved, all sorts of expensive corrections have to be made, and I should have thought that the need for close co-operation between the fuel element authority and the reactor vessel authority (if one likes to speak of two authorities) makes it very desirable that the same authority should do the work. Another consideration is that there is an increasing tendency to use enriched fuels, and this tendency will undoubtedly grow. My Lords, enriched fuels have such a close connection with defence work that I find it impossible to believe that it is desir- 1536 able to have defence work and the enrichment of fuels undertaken by two totally separate bodies. I should have thought that there was a very good case for such close co-operation that the same authority did this work.
There is also the question of technical fall-out from defence work. If you shut the defence authority away, and if everything is labelled "Top Secret", then obviously it is very hard to organise the passing on of technical information derived from defence research to the civil authorities, who may be able to make very good use of it. I am very impressed by what the Americans do in this field. They have a way of passing defence information out to their industry which we in this country have never been able to match because we have a much more rigid system. If we were to have a much more rigid system in the nuclear field, I am sure it would be a very great disadvantage. Therefore, here again I personally come down, with all respect, in favour of a more unitary authority such as we have already.
As regards the number of consortia, I find it almost impossible to believe that we would find that it would pay to go over to a monopoly. My Lords, monopolies get lazy. It would not pay, I am sure, to have a single consortium dealing with this question. I do not believe it pays, either, to have three; but I would hope very much that the I.R.C. can help the Government to reduce the present three consortia to two. It is true that this involves two design teams, but then competition between two design teams is a good thing. Also, it facilitates cross-fertilisation of ideas and cross-promotions of staff, and produces better careers for the people concerned. Equally, I really do not believe that it would be a good idea for the Atomic Energy Authority to let their industrial staffs go over to the consortia, or to a single consortium. If the Atomic Energy Authority are to do the work which I am sure they have to do, then surely, they must have their own industrial staffs. Here, perhaps I may add that the presence of industrial staffs in a public authority makes it possible for personnel to move between private industry and that public authority, and I believe that is enormously valuable. If you want anything done effectively and for profit, it is best done by 1537 private industry; but in this field there is undoubtedly a good reason why the public authority should know a lot more—and I mean a lot more—than the public authorities which have controlled, for instance, the aircraft industry. Undoubtedly, if in the case of the aircraft industry they had had larger numbers of industrial personnel in the Ministries concerned, we should not have had some of the difficulties we have had.
In conclusion, I should like to say that I warmly agree with what the noble Lord, Lord Sherfield, said. The important thing is that we should get on with this work. It would be a disaster if hot controversy and argument about the correct shape of the industry or the organisation of the Atomic Energy Authority led to decisions being delayed and the work not being proceeded with. This work is of the utmost importance and urgency. We have a big success story behind us, and it is essential to press forward towards further successes at the earliest possible moment. Especially is this true of the breeder reactor at Dounreay. The last time I was there the remarkable manager who showed me round said, with a wry smile on his face, "Well, there you are; you see what our motto is here—'If it works it is obsolete'". That is a quite remarkable state of affairs, and I strongly hope it continues.
§ 5.48 p.m.
My Lords, it has been a very great privilege to listen to a debate in which so many distinguished scientists and industrialists have taken part. When my noble friend invited me to take part in his debate I read most of the 500 pages of the Report and I wrote a beautiful speech. That has now been torn up, and so I shall not be very long.
If the Minister chooses to take the advice given him in this debate it will save him a tremendous amount of trouble, because I can well see that the whittling down of three consortia into one consortium would be an operation of considerable difficulty, whereas to get it down to two might be a more feasible task. I prefer the solution of two, suggested by my noble friend Lord Caldecote, but I still do not think that by any means it will necessarily be perfect, because one still does not really know whether there will be enough business to 1538 keep two in operation. If doubtful, it becomes a case of Buggins's turn—and then what sort of competition do you have, if they each take it in turn to have a station? And if, every time they have to tender, it means a ton of specifications, as was mentioned in the Report, and one consortium never seems to get the business, how long is that consortium going to stay in business unless, despite the merits, it is given a station by the rule of Buggins's turn?
The noble Lord, Lord Hankey, seems to think that we need all the current we can get. I have always been rather dubious about that question. For several years I thought we were over-investing in electrical generating plant.. I believe that we should look much more to our load factor and should try to use what we have more efficiently than we are doing at the moment. But if we are reduced to one consortium by the fact that there is not enough business to keep two in operation, that does not mean that it will be completely devoid of competition, because it will be competing against people who are submitting conventional designs, oil or coal. You can target them. You can say that you are not going to place an order unless it is a certain percentage cheaper than the last. And I suppose that they could internally employ two design teams and use only the team that seems to be the winner when it comes to tendering. However, these are only very makeshift arrangements and are no substitute for genuine competition from two keen teams.
My Lords, there are one or two snippets of information that emerge from the Report. They have not been mentioned today, but they give me some food for thought. First, apparently the ultimate future of these reactors is not nearly so difficult as I had imagined. They have found out how to dismantle some of them so that not a very great deal will have to be buried for all time. I see that the authorities still state a 75 per cent. availability and a 20-year life, thus handicapping themselves in what one might call the "performance boasting race" against the Americans. Much to my surprise I found that the Treasury do not take account of inflation—which was, I thought a very curious decision. One can imagine the Treasury, rather like Canute, wanting to keep inflation at bay. But I think that 1539 by now it is time they recognised that the tide does come in. Further, I read a certain amount of the evidence submitted by the National Coal Board, and I must say that to my untutored mind the arithmetic contained in those reports on the future price of coal and the arguments derived from it were extremely dubious.
My Lords, the Report has confirmed me in my conviction that we must go steadily ahead, as we have done in the past. After all, the progress is steady but sure. Dungeness "B" expects to generate at a cost of 0.57d. per kWh.; Hinckley Point "B" at 0.52d.; and later stations in the 1975 programme at 0.46d. Then, after that, the next generation, the Dragon will be at 25 per cent. less generating cost and 40 per cent. less capital cost. Then we get on to the fast breeder reactor, where we are talking about generating costs of 0.3d. per kWh. Of course all these things are merely on paper; but in the past the paper and the facts have not been too widely different. That leads me to believe that we are quite right to go along developing; but I am a little dubious as to whether we should be right to go all out for a really big programme until we get somewhat nearer the ultimate of perfection.
§ 5.53 p.m.
§ LORD WINTERBOTTOM
My Lords, with the permission of the House, I will try to answer the key points made in this interesting and important debate. If, on reading Hansard, I should find that I have not answered any noble Lord who requested an answer I will try to reply in writing. I should like to join with all those Members of your Lordships' House who spoke to-day in congratulating the noble Lord, Lord Hinton of Bankside, on a most valuable maiden speech. I cannot conceive how he thought there was the slightest element of controversy in it. I am used to quite a different sort of controversy. I thought that he stated one side of a complex argument and that he helped lighten our darkness to a substantial degree. I know that we all hope that he will help us find our way through the thickets of scientific thought and controversy in the future.
One or two speakers have questioned the action—I will not say "the pro- 1540 priety"—of this House in debating a Report made by a Select Committee of another place before the other place has itself debated the Report. From what I have heard, no such resentment exists. In fact, the Minister concerned is most grateful that this House has found time to debate this excellent Report. I think it is timely that it should be debated; because although I spoke in somewhat guarded terms about the date on which the Government may make an announcement of their intentions, that time is not so far off that the expression of your Lordships' views is inopportune. I think it is desirable that your Lordships should express your views upon the Report while the various organisations concerned with the organisation of the nuclear power industry are making up their minds.
I should like to make a further point in relation to this matter. The noble Viscount, Lord Mills, implied that I had stated that the Government were pressurising their advisers to reach a certain decision. I should like to read to your Lordships again what I actually said:The Government have, in fact, invited the chairman of the Industrial Reorganisation Corporation to sound the reaction of industry to reorganisation along the lines of the majority view of the Committee.That is not an absolutely firm order to the Industrial Reorganisation Corporation, but a request that they should try to find out, over the very wide range of interests concerned with the promised reorganisation, what their views are, and to advise the Government on this. The advice, having been given, will be subject to debate in both Houses, particularly if, as suggested, the Government issue a White Paper on these proposals. So there is not going to be a solution imposed automatically on the suggestions of the Committee. Obviously this is a very valuable aid to thought, but it is not necessarily the last word.
§ LORD STRATHCLYDE
My Lords, I hope the noble Lord will forgive me for interrupting him at this point. I understood him to say that the Government had decided to follow the recommendation made by the Committee.
§ LORD WINTERBOTTOM
My Lords, may I with your permission again read what I said?—The Government have, in fact, invited the chairman of the Industrial Reorganisation 1541 Corporation to sound the reaction of industry to reorganisation along the lines of the majority view of the Committee.I should imagine that this means that the Government would like to see something of the pattern suggested by the Select Committee. But if the advice of the Industrial Reorganisation Corporation—which is not a completely kept animal of the Government—after consultation with the consortia, with the Atomic Energy Authority and with the two Generating Boards is that these proposals are unacceptable to organisations or to individuals and that more heat than light would be generated as a result, then the Government are obviously not forced to accept the Select Committee proposals. I am certain that in this very important and sensitive section of the economy careful attention must be paid to the points of view of the very able men who are running its various elements. They cannot be overruled—nor would they agree to be—as simply as that.
§ VISCOUNT CALDECOTE
My Lords, could the noble Lord confirm that the chairman of the I.R.C. will be free to discuss with industry the two consortia idea instead of the one consortium idea?
§ LORD WINTERBOTTOM
My Lords, I cannot give an absolutely clear answer to that point, but I am pretty certain that the consortia will put this point to him. I am certain that he will not be allowed to overlook the views of those consortia which wish to continue to survive in their present form.
THE EARL OF BESSBOROUGH
My Lords, can the noble Lord tell us how long it is expected the consultations with the I.R.C. will take, in view of the urgency which has been stressed during the debate by various noble Lords?
§ LORD WINTERBOTTOM
My Lords, I should like to be able to do this, but there are a number of factors which make it rather difficult for me to give a firm statement to-day. I think that a preliminary statement is not very far off; on the other hand, nothing final has been decided. As your Lordships will remember, the discussions started over a year ago, and it is about time that something came out of the debate. I am sure that the noble Lord, Lord Sherfield, need not feel too great a concern that the arguments will drag on for too long.
1542 My Lords, may I now turn to what I think is one of the key divisions of opinion in the House on the reorganisation of the nuclear construction industry. It revolves around the concept of what is meant by competition. This, in my view, is something that it is very difficult to define. The noble Lord, Lord Hawke, mentioned forms of competition other than straightforward competition by the two consortia. We know that the Select Committee have recommended that if a single joint body is created, the Electricity Generating Board should be free to go abroad to get competitive tenders from outside the British economy. I think it was the noble Earl, Lord Halsbury, who thought this an idea that at was not as sound as it might be. But, as I read this document, it is not mandatory upon the Electricity Generating Board to ask for tenders from abroad; they would be free to do so if they felt that British industry was not serving them properly.
THE EARL OF HALSBURY
My Lords, perhaps the noble Lord, Lord Winterbottom will allow me to explain my point. The point I was trying to make was that it would be almost, as it were, mandatory if they wanted competion. There could be no competition from this country; and if they want competition they must go abroad.
§ LORD WINTERBOTTOM
My Lords, I do not think we can deny them that right, other things being equal. Possibly there would be occasions when the position of the United Kingdom economy was such that one would not want to bring in foreign contractors. But we hope that its present delicate state of health will pass, and that British industry, which shows such promise, as was pointed out by the noble Lord, Lord Hinton of Bank-side, will in fact stand up to competition from the outside world strongly and without fear. Thinking about this problem, I am wondering whether it is not the crux of the matter.
My Lords, in this country we now have one single major aero-engine industry which has been brought about over the years by the fusion of the various aero-engine manufacturers under the umbrella of Rolls-Royce. I have not heard any argument related to this particular merger of interest. It is quite clear that Rolls-Royce is facing strong competition the 1543 whole time from firms like Pratt and Whitney and General Electric of America, and they have reacted most successfully to this foreign competition. I think that the same competition would be brought to bear on a unified British industry. My noble friend Lord Wynne-Jones made the valid point that competition is not really between the consortia but between ideas; between the concepts of what a reactor should be and how it should be made. I believe that, with the insatiable curiosity of the scientist, this is something which will continue, so long as we are building this type of source of energy.
Having said that, may I say that out of the debate have come two or three points in the argument in favour of having two consortia, or two design organisations, rather than one—points which I may have missed in this Report, and which I missed in earlier arguments, though they nevertheless have validity. The noble Viscount, Lord Caldecote, mentioned the damage to individual promotion prospects if there were only a single organisation within which a person could rise. The noble Viscount, Lord Mills, mentioned the possibility of two consortia forming a relationship with firms abroad and that these joint Anglo-European consortia, two altogether, would have a double chance of obtaining a share of the European market. The noble Earl, Lord Halsbury, mentioned this aspect in reverse: that if European firms wished to form a partnership in this country, we should be twice as able to get, or it would be twice as probable that we should get, such a relationship if there were two consortia here.
These are, I think, valid arguments, and they will be considered by the Government, together with other advice which they receive. I know that this debate, in which so many scientists and administrators have taken part, cannot be ignored. I shall make certain that my right honourable friend the Minister of Technology receives a copy of the debate and I know that he will study it. My Lords, I think that is all one can say at the moment on this question of whether we should have a unified design team or two consortia, on which the views of your Lordships have been most helpful.
1544 The other recommendations which have been referred to the Industrial Reorganisation Corporation are less difficult. They include the ending, or rather the reorganisation, of the fuel-producing body. In my speech I pointed out that in fact this seems to be working satisfactorily and that the Government are in no hurry to change the present situation. I thought that the noble Lord, Lord Hinton of Bankside, made a most interesting point, and he seemed to compare the fuel manufacture in relation to the generator construction as being rather like the Gillette razor: we sell the razor cheap and the blades expensively. The noble Lord was perhaps suggesting that we sell the British reactor very cheaply and then gouge the consumer in future by a good profit on the fuel that we supply for the reactor. That is an important factor, in strictly commercial terms, when determining our commercial policy towards future stations that we shall be selling abroad.
Talking of selling abroad, I think your Lordships will probably agree that the British Nuclear Export Group has been blamed for shortcomings which were not really its own fault. It was set up at a difficult time when it had not very much to sell; and while, as I said in my speech, it has done very valuable market research, it has not yet landed a major order. It is still in the running for one major order in Finland and "travelling hopefully". I think your Lordships would agree that it would be foolish to wind up this organisation before we have decided what the future structure of the nuclear industry should be.
My Lords, the noble Lord, Lord Hinton of Bankside, pointed out that the steam generating heavy water reactor which is now viable—it has been commissioned and I believe is producing electricity—may be the answer to the needs of the exporter. It does not have to be of a very large size. I believe it could start at about 125 megawatts, which is not possible with the advanced gas-cooled reactor, and it is thus more suitable, for instance, for export to countries like Greece which have not the enormous demand for base-load that we have in this country.
My Lords, is not there one other point which the noble Lord, Lord Winterbottom, has not mentioned, 1545 the fact that other countries do not tax the oil which goes through their power stations, and therefore nuclear energy has a much tougher competition again oil in those countries?
§ LORD WINTERBOTTOM
My Lords, the noble Lord is correct. We have an expensive oil policy in this country, and there are other factors as well. One of the complaints I have heard expressed is about the royalty payments to A.E.A., which somewhat raise the price of British designed nuclear power stations when we are competing abroad against systems of generation which do not pay royalties to a central Government authority. But the fact is that we now again have something to sell. We have an organisation which, although it has not yet produced markedly successful results, is nevertheless in being and trying very hard, and I think we can be hopeful that with these new types of station coming on the stream foreign buyers will not only be able to study their operation in theory but also to go and see the hardware on the ground.
I have been interested in the reactions of noble Lords to the proposals of the Committee to set up a technical assessment unit and a body similar to the United States Joint Congressional Committee to deal with all aspects of energy policy. This did not find a great deal of favour in your Lordships' House. Obviously in the light of to-day's debate the proposal made by the noble Lord, Lord Sherfield, and other noble Lords that there should be a Joint Committee of both Houses is a point which must receive serious consideration. Probably there is more expertise in this House than in another place. I should have thought—and this is also the view of the Government—that the creation of additional secretariats and secondary bureaucracies is not desirable. After all, a Select Committee of another place has produced an outstanding Report of a scientific nature using the existing facilities of the Table Office of another place. That Office might have to be increased, but I do not see the need of another bureaucracy designed specifically to service a Joint Committee. So far as the technical assessment unit is concerned, such units already exist. The Central Electricity Generating Board, for 1546 example, does not have generators simply imposed upon it. It is subject to pressures from other sources of energy—coal, oil and so on—and has a very competent team making assessments for it. It is my view that these proposals are somewhat redundant.
If your Lordships will forgive me, I will try to answer quickly some secondary points made during the debate. The noble Earl, Lord Bessborough, was pulling my leg slightly about marine reactors. I think the House should not forget that this country has built and is operating a fair number of marine reactors—after all, we have the nuclear submarine programme. I am speaking from memory, but I believe that when the programme is complete some 13 reactors will be operating of which 12 will have been built in this country, the last of which will be of an advanced design. We have very good maintenance facilities for these ships, and your Lordships will be aware that maintenance facilities for nuclear ships are of the greatest importance, because the rods have to be extracted from the reactors without radiating half the dockyards in which they are operating, and that needs very sophisticated handling equipment. This equipment exists in this country.
§ LORD HANKEY
My Lords, could the noble Lord tell us whether the Polaris reactor would be suitable for commercial ships?
§ LORD WINTERBOTTOM
My Lords, we are working with Belgo-Nucléaire on the Vulcain reactor, which already exists. A lot of thought is going into ways and means of using marine reactors of this sort. The problems of marine reactors are the same as those of nuclear stations; the reactors have to be kept functioning most of the time. A reactor cannot be allowed to lie in port while a ship discharges and then be started up again when the ship goes to sea. We are experimenting with a power-pack which can be attached to a whole series of ships—tankers, oil ships and container 1547 ships—so that the nuclear power pack could be in constant use at sea and not lie about in harbours where it would be costing a tremendous amount of money and would also perhaps cause some disquiet in the ports in less sophisticated parts of the world where everything nuclear is considered to be dangerous. This is not a subject that is being overlooked, but it is one which is very difficult to take to the point of economic success.
The noble Earl also asked me a question of importance relating to fusion research. Perhaps we hoped too much when the first indications of the possibilities of fusion research came to our notice. The position is that the A.E.A. appointed a working party to review the present effort at Culham. After considering the views of the working party, the Authority have advised the Minister that the effort should be reduced over the next five years by about 10 per cent. a year. The reason for this is that the less "way out" systems of generating electricity are making such progress that it is felt that the scientific effort should be concentrated on them rather than on something that might bring us benefits in the year 2,000, when we want benefits in the 1980s.
It is in particular the fast breeder reactor which shows real promise, as a result of the work done at Culham, and the enthusiasm of the team is high—indeed, this is internationally recognised. There will be a rundown during the next five years and by the end of that time research should be going on at about half its present level. Interpreting this information, I would say that none of the work would be just stopped short; it would be brought to a certain conclusion and then some scientists would transfer to other fields of research, leaving half their number to carry on research towards the end of the century. I do not believe that rapid results will come from this, because it requires long-term analysis to find out whether this extremely complex source of energy can be controlled.
Finally, the noble Earl asked me about the development of the high temperature reactor, the steam generating heavy water reactor and the fast reactor. The recommendation of the Select Committee is that all these new forms of reactor should have 1548 substantial resources devoted to them. We should try to bring them to a point of commercial exploitation, and the proper resources should be devoted to it. This would be one of the reasons for cutting back the rather long-term research going on at Culham.
My Lords, I think this is as rational and tidy a response to your Lordships' debate as I can make without keeping your Lordships to some inordinately late hour. I have enjoyed the preparation for the debate, and I have enjoyed even more listening to your Lordships' views. As has been said, we are all grateful to the noble Lord, Lord Sherfield, for making this discussion possible, and the Government also are grateful to him for enabling the views of this House to be brought to the attention of the Minister.
§ 6.22 p.m.
§ LORD SHERFIELD
My Lords, I need say only a few words in closing this debate. First, I would echo other noble Lords and add my congratulations to the noble Lord, Lord Hinton of Bankside, on his maiden speech. He will be aware that it is the custom in this House to congratulate maiden speakers on all sides, but I am sure he will have been impressed by the very real sincerity and warmth of the tributes to what he said this afternoon.
Then I should like to thank other noble Lords who have contributed to the debate. I think that I owe an apology to the noble Lord, Lord Strathclyde, for not mentioning the South of Scotland Electricity Board—an organisation for which I have always had the highest regard. I should also like to assure him that I did not regard his remarks as equivalent to proposing the dissolution of the Atomic Energy Authority.
I am grateful to the noble Lord, Lord Winterbottom, for what he was able to say on behalf of the Government and for the clear replies he was able to give on a number of points. It was useful to have official confirmation that the problem of the reorganisation of the industry has been referred to the I.R.C. Personally I think this is a good move; indeed, it is one that might with advantage have been taken earlier. Few people know the elements of this problem better than Sir Frank Kearton—one of the veterans of the development of nuclear 1549 energy in this country. I wish him and his colleagues every success in their efforts, and I am glad that they will not be tied down to a single solution. I hope and believe that nothing that has been said in this debate will make their task more difficult, and I quite understand why the Government spokesman was unable to be more specific.
I agree with the noble Lord, Lord Winterbottom, and the noble Lord, Lord Wynne-Jones, that it is better to get the right solution than an instant answer, provided—and this is an important proviso—that the decision is not long delayed. We must not forget that this problem has already been under consideration for nearly two years.
I was aware, of course, of the political undertones in the Select Committee's Report, but I did not think it appropriate to deal with them from these Benches. However, I am encouraged by what has been said to hope that no considerations of political theory or Party controversy will be allowed to impede an agreed solution for the future of the industry and for the relationship between the firms, the A.E.A., and the Generating Boards, if one can be found through the good offices of the I.R.C. My Lords, I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.