HL Deb 23 April 1970 vol 309 cc863-90

3.27 p.m.


My Lords, on behalf of my noble friend Lord Delacourt-Smith, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now re-solve itself into Committee.—(Lord Bowles.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Lord MERTHYR in the Chair.]

Clause 1 [Transfer of part of Authority's undertaking to Nuclear Fuels Company]:

On Question, Whether Clause 1 shall stand part of the Bill?


May I raise a small but I think an important point? I hope that this is the appropriate occasion on which to raise it. Your Lordships will have noticed that both the Title of the Bill and Clause 1 refer to the setting up by the Minister of Technology of British Nuclear Fuels Limited, and I understand that the Minister has already referred to this as "B.N.F." That I think may lead to some confusion. There is already a body, British Nuclear Forum, which is commonly known as "B.N.F." We do not want to have two "B.N.F.s" and I suggest that British Nuclear Fuels might be called by some other name, such as Nuclear Fuels International. I hope the Minister will consider this point, and that, if necessary, some Amendment will be introduced at a later stage.


This matter has only just been put to me, but I think that the noble Lord, Lord Wade, has made a point with a good deal of sense in it and I should be very happy to support him.


I can undertake that we will give consideration to the point which the noble Lord has raised, but at the same time I do not think I ought to hold out any hope that we shall necessarily be able to meet him. I am conscious of the coincidence of initials, but I am afraid that it is the case in our modern world, with its proliferation of organisations and of initials, that we cannot always avoid coincidences of this kind. However, in view of the comments which the two noble Lords have made, we will examine this point.


Would my noble friend notice that the term "fuel" is being used in an extraordinary way? According to the normal definition, the word "fuel" in the term "nuclear fuel" is quite inappropriate. In fact, there is no such thing. A fuel is something which is combustible, and the essence of the material that is used is that it is not combustible but is decomposed by a process of spontaneous fission. One would have thought, therefore, that it is quite wrong to perpetuate this misuse of the word "fuel" and that we should rather use a word like "resource" or something of that sort.


I will also examine my noble friend's point, but again I should not like to hold out much hope of being able to meet it. The use of the term has begun, as my noble friend implied, and therefore it is not going to be easy, nor am I convinced that it is necessarily appropriate, to try to effect a change at this stage. But I will examine the point my noble friend has made.

Clause 1 agreed to.

Clauses 2 to 7 agreed to.

Clause 8 [Employees in transferred parts of undertaking]:

On Question, Whether Clause 8 shall stand part of the Bill?


On the Second Reading of the Bill, I said that generally speaking we welcomed it but that I should like a little further information on some of the provisions as to employees in the transfer of parts of the undertaking, who are dealt with in this somewhat complicated Clause 8. It appears from this clause that the Authority employees who are being transferred to the new companies would automatically become employees of the appropriate companies on the appointed day.

The Institution of Professional Civil Servants have put the point to me that this is an unusual provision, in that staff are not given an option of whether they would prefer to transfer to the companies or remain with the Authority. I was given to understand that the Minister of Technology felt that the only practical pro-position was to provide for this automatic transfer and that there was a special obligation to ensure that the terms and conditions of service with the new companies were satisfactory. It seems, however, that the staff who would be transferred automatically are concerned about what their future terms of service will be. I understand they feel that they are en-titled to know precisely where they will stand during the interim period, and they would like to have an assurance that they will get the benefit of any change in Authority terms and conditions of service.

I also spoke on Second Reading about Capenhurst, where a considerable development team is engaged on this centrifuge process. Some of the staff are concerned that when development work on this process is run down, there will be no alternative work for this team. The staff naturally hope that they may be given an assurance that if they do run out of work the Government will make every effort to find them work elsewhere. I think that since Second Reading the noble Lord has had an opportunity of discussing this matter with the I.P.C.S. and I wonder whether he has been able to meet them on this point.


I am glad to respond to the questions of the noble Earl and try to provide a little more information about the point to which he has directed attention. There have been, of course, a number of consultations with the I.P.C.S and with other trade unions and staff associations who represent the staffs who will be affected by the transfers. Since Second Reading I have had an opportunity of meeting representatives of the non-industrial staff concerned, which includes the I.P.C.S., and I can say that there was a useful discussion. A number of points were taken for further consideration, and while I should not like to say that we shall necessarily be able to reach completely satisfactory arrangements on every point, I hope that any further exchanges will reach finality well before this Bill has completed its progress through Parliament, so that if there are any points upon which any of the staff concerned feel that Parliamentary attention should be directed, they will have an opportunity of doing this before Parliamentary proceedings are completed.

As for the position of staff who may find that the particular work on which they are engaged is running down over a period of time, I should not like to become involved in detailed discussions about a particular matter which is mainly the responsibility of the Authority or of the two companies in the future, but in the field of public service there is a pretty well established practice of seeking to look ahead as far as possible, to fore-cast changes in work load and to try to make appropriate provisions to ensure that the staff will be satisfactorily and effectively allocated to new work. This is nothing new. It is a continuing process which is well established.

Briefly, the general position is that in this case the necessity arose to choose between two methods of transference of staff: the method of giving an individual option or the method of making a bulk transfer of staff from the Authority to the proposed companies by the Statute itself. This choice has arisen on previous occasions when there have been transfers of work from one employing authority to another. In cases such as at present, where the scale and nature of the transfer—and this involves some-thing like one-third of the staff of the Atomic Energy Authority—make it difficult, indeed impracticable, to use the option method, the other method of transfer under Statute has been applied. This is by no means the first case in which the transfer from one employer to another has been effected by Statute, and in my discussions a day or two ago I had an opportunity of re-emphasising the point to which the noble Earl has referred, that where such a transfer is effected by Statute, special obligations arise to ensure that the position of the staff is safeguarded.


I am grateful to the noble Lord for looking at these points once again. I hope that they will be resolved satisfactorily either during the course of the passage of the Bill through this House or in another place.

Clause 8 agreed to.

Clause 9 [Machinery for settling terms and conditions of employment]:

On Question, Whether Clause 9 shall stand part of the Bill?


On this point regarding the machinery for settling terms of conditions of employment, I am told that there is some concern regarding subsection (2)(b) and subsection (3) of this clause. Sub-section (2)(b) says: … the agreement shall provide for arbitration in any case of dispute on the question whether any particular terms and conditions proposed to be so substituted would conform to that principle. Then subsection (3) states: … references to terms and conditions of employment shall be construed as not including any terms or conditions relating to pensions or to inclusion in a pension scheme. While I have not put down any Amendment to this effect, pending the Minister's reply, I think that the I.P.C.S., whom I have already mentioned, would like to see the word "not" excluded from subsection (3). Otherwise the two subsections are rather contradictory. If an Amendment to that effect were made, this would en-able the new scheme to be put to arbitration.

I should be grateful to the noble Lord if he could say whether he thinks that such an Amendment, if it were put down at Report stage, would have any chance of being accepted. The matter is again rather complicated, and perhaps he can elucidate the situation. It seems to me that it would be useful to have an assurance that it is not the Government's intention to set up new schemes as a matter of policy if the A.E.A. scheme can be suitably amended to cover the new companies, and if this is acceptable to the new companies when they are formed and have had time to consider the matter.


Clause 9(3), to which the noble Lord has referred, following upon his reference to subsection (2), deals specifically with the provision covering people who are transferred. This clause is addressed to the terms and conditions, other than in respect of pensions, which shall apply. Sub-section (3) appears here because the question of pensions is dealt with separately in Clause 19, and the considerations in dealing with pensions are somewhat different from those which arise in dealing with other terms and conditions. It there-fore seemed far better, and to make for clarity for all concerned, to separate them in this way.

The noble Earl has particularly referred to the point about the availability of arbitration in respect of the pension pro-visions. Let me say, first of all, that it has been the practice hitherto in the Civil Service for pension provisions as such not to be the subject of arbitration. Pensions in the Civil Service have tradition-alley been dealt with by a series of Superannuation Acts of Parliament and have not been within the scope of arbitration. At the same time, the particular point with which we are dealing, and which I understand has given concern, is not so much a general issue of arbitrability of the items of a superannuation code (I think we can all see that there could be difficulties about subjecting items of a superannuation code to abritration), but the narrower point of whether, when the Minister comes to make his decision, as he must, on the subject of pensions under Clause 19, he should make that decision himself, or whether the acceptability of the schemes as a whole which the new companies have established should be referable to arbitration.

We have already given an assurance (and I put it on record here) that before the Minister reaches his decision upon that point he will give an opportunity to the trade unions and staff associations representing the staffs in the companies to put forward any views that they wish to put forward upon the schemes. It is envisaged that the schemes within the companies would be negotiated between the trade unions and the companies. We have given this undertaking about consultation. We have also undertaken to look further at the matter to see whether there is anything more that can be done. But here again, as I said on Clause 8, I should not like necessarily to hold out the expectation that We shall be able to move any further on this point. However, I hope that we shall reach a final position before the Bill completes its progress through Parliament.


I am grateful to the noble Lord for that clear explanation.

Clause 9 agreed to.

Clause 10 agreed to.

Clause 11 [Provisions as to shares in the companies]:

3.48 p.m.

THE EARL OF BESSBOROUGH moved Amendment No. 1: Page 12, line 24, leave out subsection (3).

The noble Earl said: Clause 11 is the main point of contention that we have with the Government on this Bill, and it is for this reason that my noble friend and I have put down this Amendment. To begin with, I was not entirely happy with subsection (1), which states: The Minister may at any time by order made by statutory instrument transfer to him-self all or any of the shares in either of the companies which are for time being held by the Authority; and any shares transferred by such an order shall vest in the Minister by virtue of the order and without further assurance.

However, I see that subsection (2) says: Any statutory instrument containing an order under subsection (1) of this section shall be subject to annulment in pursuance of a resolution of either House of Parliament. It seems to me that this subsection would enable us to annul the instrument if it seem necessary to do so.

However, it is subsection (3) that really worries us and that we propose should be deleted. Subsection (3) states: In the case of each of the companies the Authority, at any time when any shares in the company are held by them, and the Minister, at any time when any shares in the company are held by him, shall so exercise—

  1. (a) all such rights and powers as may be exercisable by the Authority or the Minister, as the case may be, as a member of the company, and
  2. (b) any power to dispose of any shares in the company,
as to secure that, at all times, the shares in the company held by the Authority or by the Minister, or the aggregate of such shares held by them collectively, carry in the aggregate more than half of the voting rights exercisable at general meetings of the company. The point that I want to emphasise, which I outlined on Second Reading, is that even if at the outset it may be appropriate for the Minister and A.E.A. to have a majority holding in the companies, I do not think this should be written specifically into the Bill. The noble Lord, Lord Delacourt-Smith, knows that we on this side consider that these two companies should be healthy and profit-making, and that they could well be suit-able companies in which the public at large should be entitled to invest. We know already from the Explanatory Memorandum that these parts of the Authority, which are to be transferred to the new companies have been showing surpluses of not less than £3.5 million in respect of fuels—I am sorry to use that word again, but it is in the Bill—and about £200,000 in respect of the isotope company which is called Radiochemical Centre Limited.

We on this side of the House see no reason why these companies should remain at all times, as the clause says, under Government control. There is, in my view, a curious ambivalence in the attitude of the Government in regard to the formation of these companies. As I said on Second Reading, the Government seem at last to have come round generally to our view that the various undertakings of the Atomic Energy Authority, both in regard to the design and construction of reactors, and the manufacture and sale of fuel and isotopes, should now be dealt with entirely on a commercial basis, and the Government have used the word "commercial" on various occasions. That is why we welcome the Bill in principle. The Government, on the other hand, also say that these two companies must effectively continue to be con-trolled by the Government and the Authority, by their majority voting rights. That means that decisions made by the boards of the two companies will inevitably have to be referred back to the Minister, and that will result in delays of the kind we may have experienced in the past when the Government (or shall I call them parastatal authorities? such as the A.E.A.) have been in control. In the United States, for example, all these activities are undertaken by commercial companies operating in a normal fashion. They may be operating under licence, but they are commercial companies.

In my view, our effective competition in world markets may be vitiated if too many questions ar referred back to the Government, and not only the Government but also the residual Authority. Surely the advantages to be gained by the creation of these companies—which we welcome—would in a sense be can-celled out or neutralised by this pro-vision. It is interesting that in the case of British Petroleum the Government now have a holding well below 50 per cent, in that company, and that seems to work reasonably well. There is now no mystique about fuel, enriched uranium or isotopes which should preclude for all time the manufacture and sale of those products from being in the hands of commercial companies with not necessarily a Government majority. I consider that there should be a proper balance on the boards of these companies and that industry should be well represented on them. I do not know whether the Minister would claim that there are security considerations here, but, as I said on Second Reading, I do not think that that is an adequate excuse. American companies operate under a healthy system of free enterprise in these matters, as do a number of industrial companies in this country in manufacturing defence equipment. It is for this reason that my noble friend and I are moving this Amendment.


I hope my noble friend the Minister will resist this Amendment. I have always believed that the community ought at least to have the advantage of what we have our-selves created, and nuclear energy and the nuclear industry was born nationalised. Therefore I hope we shall continue to safeguard not only the health and welfare of the companies themselves, but also the advantages to the community. I do not think there can be any possible argument that the community, the Government in this sense, the A.E.A. or whatever it may be, should in fact retain the majority rights.


Following on what I said on the Second Reading of the Bill, I rise to support this Amendment. It does not seem to me to be necessary to legislate at this time and in this detail about events which may or may not occur. Nor do I feel it is necessary that the Government—or a Government agency—should at all times hold more than 50 per cent, of the shares. The precedent of the arrangements in respect of the British Petroleum Company, to which the noble Earl refer-red, had also occurred to me. Those arrangements have worked very well over a number of years in the case of oil fuel. I do not see any reason why, if the circumstances changed, they might not work equally well in the case of nuclear fuel. I should not have thought that it was necessary to make any provisions at this time for something which may occur in the future. In any case, these companies will be producing radioactive substances and therefore will at all times be under the control of other legislation which covers the production and sale of those substances. For these reasons, I support the Amendment.


I should like to support the noble Lord who has just spoken. I think that the Government are mistaken in this matter and it is much better to let free enterprise work under reasonable Government supervision. That is how we do it in America, and I see no reason why we should not do the same thing here. The Government did not get the Post Office working very well, and there is no reason why they should get nuclear fission working very well.


I usually find myself very much in agreement with the noble Earl, Lord Bessborough, and the noble Lord, Lord Sherfield, and I am rather surprised at their attitude in this matter. Here we have moved from a position in which the production of the nuclear energy stations in this country has not been sufficiently well organised, and the Government have accepted the recommendation that in order to do this these new companies should be set up. This seems a very sensible situation, and 1 am sure that all noble Lords agree with this general proposal.

The question is, what sort of ultimate control are we to have? The proposal here is a very simple one: that there should remain a control which is not a control by a Minister but a control in general by the Government. That is to say, the Government should have ultimate control. That does not in any way affect the running of the organisation as a commercial one. I think the noble Earl has already admitted that essentially the new body will run as a commercial organisation, for definite commercial use and for commercial profit. Therefore, it would seem very reasonable that the Government should include in the Bill a statement that there should be reserved the right to preserve a majority—not absolute control, but a majority—on the board of the company. I should have thought that this was a very sensible and realistic thing.

We often hear quoted the wonderful example of the American industry. In fact, noble Lords will recollect that a few years ago a book was produced (I think that the author's name was David Burns) on nuclear power; and in that book it was suggested that the whole of the working of the industry in this country had been disastrous and that the whole of the working in America was wonderful. It was the most perfect example of selective choice of detail that I have ever come across in my life. I went through that book carefully and I think it is a book which is almost completely nonsensical. I was rather interested this last winter, when I spent three months in America, to find that during the period I was there the New Jersey Public Utilities Company were protesting strongly that General Electric, who were under contract to them to pro-duce a nuclear station, were two years late—I repeat, two years late—in commissioning this station, and that it was still not able to work. This of course was back last December: it may be working by now. They were thinking of suing General Electric for a large sum of money, something of the order, I think, of 5 million dollars. So the idea that the Americans do everything perfectly is by no means true, and in this field of nuclear energy I do not think we have anything to be ashamed of at all. I believe that this proposal in this Bill before us is a very sensible one, and one that should guarantee that we proceed in the future along the right lines.


I should like to support my noble friend in this Amendment. I shall be very brief. I would say to the noble Lords, Lord Ritchie-Calder and Lord Wynne-Jones, that although nationalisation has been approved by their Party, and in many cases has worked very well, we are dealing in this particular case with what the Minister in another place has publicly stated he hopes will lead to increased international trade. Experience has shown that when one is dealing with foreign trading corporations there is somehow an easier atmosphere if they are not dealing with a fellow industrial body which is Government-controlled. It may be no more than a psychological feeling, but I think that feeling exists.

The Minister himself stated that one of the objects of these two companies was to create an organisation which permits the sort of international industrial links that will be of critical importance in all sectors and not just in atomic energy; and he also said that it was intended to do this with a special eye on the future of the European nuclear industry in co-operation with our partners in Europe. In these international trading agreements which we have had, as my noble friend Lord Bessborough and the noble Lord, Lord Sherfield, pointed out, we can consider British Petroleum, I believe with 49 per cent, control, which was con-sidered to be not absolute. That control was considered to be an advantage to British Petroleum in their trading dealings with the rest of the world. I personally should like to see the public allowed to come into this later. In that case, it could be considered whether we could have a quotation on the market. In any event, for the reasons I have given I beg to support my noble friend.

4.5 p.m.


In the Amendment which the noble Earl has moved we have had put before us a very fundamental point which goes to the very character or essence of the Bill which the Government are placing before the House. The earlier interventions of the noble Earl were very much directed to the anxieties of the staff who are to be transferred to the Nuclear Fuels Company and the Radiochemical Company. I cannot help thinking that the Amendment he is now moving conflicts most strangely with the points which he was raising earlier, be-cause from all that I have seen, nothing would increase the concern of the staff of the Authority more than the adoption of this Amendment. But I hope I shall be able to show your Lordships good reason why it should not be adopted.

In this Bill we are dealing with the development of what I think everybody will accept as a part of a great national asset. That asset has been built up by public effort of public servants with public money. It is the intention of the Government that this new stage of development upon which it is entering should be to the public advantage. We are of the opinion that the form of organisation which we are proposing, with its flexibility but maintaining its essential characteristic of a predominant public voting majority in the two companies, is the right one.

I must confess that I think some of the anxieties which have been expressed are not well founded. It has been suggested, for example, that it is desirable in the important field of development which these companies have before them that they should have an independence; that they should be able to co-operate with organisations in other countries. Indeed, in moving the Second Reading of the Bill I explained that that was a part of our thinking. Reference has been made to the possibility of interference by the Minister or by the Authority in day-to-day management of the affairs of the company. The very purpose of the Government in establishing the companies in this form is to ensure that, while the necessary degree of public control is maintained, there should be the maximum flexibility and freedom and the maximum scope for single-mindedness in the day-to-day activities of the companies.

Reference has been made to British Petroleum. I am far from thinking that this is a particularly apposite comparison in this connection. But I would draw attention to the fact that the holding in British Petroleum was a 51 per cent, holding by the Government for about half a century, and that that position was maintained without interference in the day-to-day management of the British Petroleum Company.


No longer.


No, no longer; but after a period of fifty years in which there was no interference with the day-to-day management, since British Petroleum has been quoted I think I am entitled to point out that a Government interest of this kind does not involve interference with day-to-day management.

What in fact are we envisaging? We are envisaging under the Bill that private companies should be given an opportunity to participate in this development, but within the framework of the public advantage. The companies to be set up will not be concerned with the admission of private firms which may look upon the nuclear fuel industry or the radiochemical industry from the prime point of view of representing advantageous opportunities for a profitable investment. But the prime concern in admitting participation of private companies will be to find those which have a real contribution to make by way of their marketing experience, their financial experience or by way of other relevant skills and experience which they may have to offer to the development and advancement, both at home and abroad, of the companies with which we are concerned.

The test of the framework right through is the national and the public benefit. There are two main reasons which I should like to adduce as creating the justification for this proposal. First, in the fields with which they are respectively concerned the Nuclear Fuels Company and the Radiochemical Company will have important monopolies. The fuel company will be the supplier of an important source of energy to the generating boards, and the Radio-chemical Company will be virtually the only supplier of radio-isotopes, for ex-ample, to the National Health Service. That is one of the reasons why the Government believe that in the present stage of development there is a strong argument for a majority public share-holding. But I think when one comes to the argument of national security, the case is even more overwhelming. Let us take the fuel company and concentrate on that. It will be engaged in the enrichment of uranium and the production and separation of plutonium, both of them materials forming vital constituents of nuclear explosives. The fuel company will have the custody of the national stock of uranium ore, and it will be responsible for supplying fissile materials to the Government for incorporation in atomic weapons and the propulsion units of nuclear naval vessels.

It is said by the noble Earl, "Ah, but in other countries a different situation prevails." Of course, it is true that in other countries there is a degree of private participation in the atomic energy field, as we are proposing that under this Bill there should be in this country. But in the Western World the only organisations which possess a complete cycle of facilities for the production, fabrication into fuel elements and the re-processing of fissile material of all degrees of enrichment are public authorities. In the United States of America it is the Atomic Energy Commission; in France it is the Commissariat à I'Energie Atomique, and in this country of course hitherto the production group of the Atomic Energy Authority, whose activities are to be transferred to the fuel company. In both the United States of America and in France enrichment facilities in particular remain under Government control, and in France Government control extends over other parts of the fuel cycle as well. The recent Tripartite Agreement with the Netherlands and the Federal Government of Germany for the development and exploitation of the centrifuge process of enrichment contained provisions to ensure adequate political control over the activities of the Tripartite enterprises.

Of course, there are companies in other countries which undertake various stages of the fuel cycle, and which in particular manufacture nuclear fuel elements, but there are no commercial companies over-seas which are in the position that the Nuclear Fuels Company would be, to manufacture materials which form the constituent of nuclear explosives. The Government are therefore satisfied that the Bill must provide for the Nuclear Fuels Company not to pass into private control.

The noble Lord, Lord Sherfield, asked why this should be put into the Bill. First, I think it is desirable that we should make clear in the Bill what our conception is of the basis upon which development should take place in the future, so far as we can foresee it. But, of course, nobody can foresee the ultimate developments in this regard. The noble Lord, Lord Sherfield, asked whether this was to be for ever. I would submit to your Lordships that this is not a decision, as far as I understand it, that anybody is urging should be taken immediately. I think everybody accepts that what is envisaged in the Bill should continue, at any rate for a period. We are asked whether we should put this into the Bill and make necessary a further Act of Parliament if there is to be any fundamental change.

In the earlier part of this clause— and the noble Earl welcomed this fact —even if the Minister is to make a transfer of the shareholding in the fuel company from the Atomic Energy Authority to himself, it must be subject to a Statutory Instrument over which this House and another place would have a negative control. It is not something which can be done by the administrative act of the Minister without the knowledge of Parliament and without Parliament having an opportunity to express an opinion.

That is a feature which, compared with the point now before us in this Amendment, is quite a secondary point— merely the transfer from one form of public authority to another. When it is emphasised that that should be something which can come before Parliament and which Parliament must be able to veto if it so desires, I am astonished that it should be suggested that we should allow a situation to arise from this Bill now before us in which, by some administrative process, by some act of which Parliament need have no knowledge, and one which it certainly would not be specifically required either to endorse or allowed to veto, we should be prepared to allow such a fundamental change being made to the development of so vital an industry in this country as the Amendment implies.


I have listened most attentively to what all noble Lords have said, and I would first emphasise that what we object to most are the words "at all times". As the noble Lord, Lord Delacourt-Smith, has said, in the case of British Petroleum the Government majority holding did not last for all time, and that is one of the main reasons why I still feel that this sub-section cannot remain as it is now. I agree with the noble Lord, Lord Wynne-Jones, that not everything Americans do is perfect—by no means. Nevertheless, I think that there are advantages in these companies' not being necessarily under public control. What is the point of creating these new companies if the ultimate effect is to transfer the work from one public authority to yet another public authority? In these circumstances, what is the object of setting up these companies?

With regard to the point of the transferability of pensions, I propose to speak about that under Clause 19. This is most important, and I agree that the noble Lord has a point when he says that the

staff—and we all wish to consider their interests—would naturally prefer to re-main with a public authority with the same superannuation terms as they had in the previous authority. But what I am going to advocate under Clause 19 is that we should work to this system of the transferability of pensions, of which I know a number of noble Lords on both sides of the Committee are in favour. I will not at this moment pre-empt my own remarks on this subject but if we do achieve transferability of pensions from the public sector into the private sector— from public industry, so to speak, into private industry—then surely any objections which the staff may have will be met.

On the security issue the noble Lord has not convinced me at all. He has admitted that military weapons are manufactured by private industry and, as I have said, I still do not see the need for this subsection. There is this basic difference between us and for the reasons I have given I am afraid I cannot with-draw my Amendment.

4.19 p.m.

On Question, Whether the said Amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 75; Not-Contents, 63.

Aberdare, L. Elgin and Kincardine, E. Monckton of Brenchley, V.
Aberdeen and Temair, M. Elliot of Harwood, Bs. Mowbray and Stourton, L.[Teller.
Abermarle, E. Emmet of Amberley, Bs.
Aldenham, L. Falkland, V. Napier and Ettrick, L.
Alexander of Tunis, E. Ferrier, L. Nugent of Guildford, L.
Allerton, L. Fortescue, E. Rankeillour, L.
Ampthill, L. Goschen. V. [Teller.] Rathcavan, L.
Auckland, L. Gowrie, E. Robertson of Oakridge, L.
Baldwin of Bewdley, E. Gray, L. Rochdale, V.
Barnby, L. Grenfell, L. Rowallan, L.
Belstead, L. Grimston of Westbury, L. St. Aldwyn, E.
Berkeley, Bs. Hawke, L. Sandford, L.
Bessborough, E. Ilford, L. Sandys, L.
Blackford, L. Inglewood, L. Selkirk, E.
Brecon, L. Ironside, L. Sempill, Ly.
Brooke of Cumnor, L. Jessel, L. Sherfield, L.
Brooke of Ystradfellte, Bs. Killearn, L. Somers, L.
Brougham and Vaux, L. Kilmany, L. Stonehaven, V.
Cottesloe, L. Lauderdale, E. Strathcarron, L.
Craigavon, V. McCorquodale of Newton, L. Strathclyde, L.
Daventry, V. Mancroft, L. Teviot, L.
Denham, L. Massereene and Ferrard, V. Thurlow, L.
Derwent, L. Merrivale, L. Trevelyan, L.
Drumalbyn, L. Milverton, L. Vivian, L.
Dudley, E. Molson, L. Wolverton, L.
Dundee, E.
Archibald, L. Gardiner, L. (L. Chancellor.) Pargiter, L.
Ardwick, L. Garner, L. Phillips, Bs. [Teller.]
Beswick, L. Garnsworthy, L. Platt, L.
Boothby, L. Hanworth, V. Plummer, Bs.
Bowles, L. Hilton of Upton, L. [Teller.] Raglan, L.
Brockway, L. Hughes, L. Sainsbury, L.
Brown, L. Hylton-Foster, Bs. St. Davids, V.
Buckinghamshire, E. Jacques, L. Serota, Bs.
Burton of Coventry, Bs. Kilbracken, L. Shackleton, L. (L. Privy Seal.)
Chalfont, L. Leatherland, L. Sorensen, L.
Champion, L. Lindgren, L. Southwark, L.Bp.
Citrine, L. Llewelyn-Davies, L. Stocks, Bs.
Clwyd, L. Llewelyn-Davies of Hastoe, Bs. Strabolgi, L.
Cork and Orrery, E. Longford, E. Summerskill, Bs.
Cowley, E. Loudoun, C. Walston, L.
Delacourt-Smith, L. Lucas of Chilworth,L. Willis, L.
Donaldson of Kingsbridge, L. McLeavy, L. Wilson of Langside, L.
Douglass of Cleveland, L. Milford, L. Winterbottom, L.
Faringdon, L. Morrison, L. Wise, L.
Fulton, L. Moyle, L. Wootton of Abinger, Bs.
Gaitskell, Bs. Nunburnholme, L. Wynne-Jones, L.

On Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.

Clause 11, as amended, agreed to. Clauses 12 and 13 agreed to.

Clause 14 [Accounts of companies to be laid before Parliament]:

LORD DELACOURT-SMITH moved Amendment No. 2: Page 14, line 10, leave out from second ("of") to end of line 20, and insert ("any accounts which, in accordance with any requirement of the Companies Acts 1948 to 1967, are laid before the company at that meeting. and of any documents which are annexed or attached to any such accounts.").

The noble Lord said: The Amendment before your Lordships is designed to cure certain defects of a technical nature in the clause as at present drafted. This clause refers to the requirements of the Companies Acts 1948 to 1967. The first defect is that, as drafted, it appears to suggest that the Acts require accounts et cetera, to be laid before any general meeting of the company, or at any rate that there are certain general meetings before which the Acts require accounts to be laid. That is not the case: the requirement is simply that the accounts have to be laid before a general meeting of the company. Further, the clause as drafted fails to cover certain statements which require to be annexed to the accounts, and wrongly refers to "statements" required to be attached to the balance sheet. The intention of the clause, to which the Amendment seeks to give effect, is to cover the profit and loss account and the balance sheet; certain documents annexed to the accounts containing various particulars such as the directors' emoluments and the auditors' and directors' reports which are attached to the accounts. I beg to move.


This Amendment is perfectly acceptable to us.

Clause 14, as amended, agreed to.

Clauses 15 and 16 agreed to.

Clause 17 [Grants in connection with gas centrifuge process]:

4.33 p.m.

LORD DELACOURT-SMITH moved Amendment No. 3: Page 16, line: 4, leave out from ("for") to (" but ") in line 5, and insert (" any investment grant for which it would have been eligible ").

The noble Lord said: I beg to move the Amendment standing in my name. Briefly, the position is that under the Tripartite Agreement, with which your Lordships are familiar, the two companies which are to be established under that agreement either will or may establish plants in the United Kingdom, Germany and Holland; and the enrichment organisation, for example, is to establish a subsidiary company which will operate a plant at Capenhurst. The subsidiary company will itself have a minority holding held by the British Nuclear Fuels Company. It has been agreed with the German and Dutch Governments that investment grants will not be claimed in respect of these companies operating and established under the agreement, because such grants would disturb the sharing arrangements between the three Governments embodied in the agreement. But the Bill provides that the Minister is to make compensatory grants to the British Nuclear Fuels Company.

The Amendment before your Lordships has the purpose of amending in a small respect the assumptions which the Minister is required to make when calculating the amount of any grant that he may make to the Nuclear Fuels Company under the clause, the general effect of which I have sought to explain. While the proposed grants to the Nuclear Fuels Company are to be based on the amount of the investment grant that would have been paid to the disqualified company (the "designated company" as it is described; that is to say, the company which I described in my example as the enrichment organisation's subsidiary company), it would not be appropriate to make the compensatory grants equal to the investment grant. The reason is that the receipt of an investment grant has certain tax implications, in that it affects the capital allowances that may be claimed in respect of expenditure incurred on the asset in relation to which the grant is paid. Because of this, the actual value to a company of the investment grants it receives may be less than the amount of the grants themselves. In order to ensure, therefore, that any compensating grant which may be paid to the Nuclear Fuels Company under this clause does not exceed the net loss suffered by the designated company, the clause provides that the grant to the Nuclear Fuels Company is not to be equal to the amount of the relevant investment grant but is to be equal to that amount abated by reference to these tax considerations.

Of course the Minister's powers to make investment grants is a discretionary power, and he does not in all cases pay grant up to the full extent of his powers but withholds grant on various classes of assets, even though they are in fact eligible for grant. The wording of the subsection as drafted, however, requires the Minister, in calculating the tax reduction factor, to assume that he would pay grant in every case in which he could do so, irrespective of whether, in the exercise of his discretion under the Act, he would in practice have made any grant. This is not the intention, although this is how the Bill as at present drafted reads. The aim of the provision is to require the Minister to compare the actual tax position of the company with what would have been the position in this respect if the Minister had been paying investment grant to the designated company in the normal exercise of his discretion.

It is therefore proposed by the Amendment which I am moving that the sub-section should be amended so as to provide that in assessing the tax reduction factor the Minister should be required to assume only that if the designated company had not been debarred from receiving any investment grant it would have applied for any such grant for which it would have been eligible. The Minister will then be free, in calculating the tax reduction factor, to estimate what investment grants he would, in the exercise of his discretion, have paid to the designated company. This is a somewhat complex matter, but I trust that I have been able to summarise it to your Lordships' satisfaction and that your Lordships will accept the Amendment.


As I understand it, this Amendment is quite reasonable. Indeed, I thought it was quite reasonable after the noble Lord had said his first three sentences. I appreciated then that the investment grants would balance the tax. Matters seemed to get a little more complicated later. However, I think that the basic principle behind the Amendment is perfectly acceptable to us.

Clause 17, as amended, agreed to.

Clause 18 agreed to.

Clause 19 [Pension schemes]:

4.40 p.m.

LORD DELACOURT-SMITH moved Amendment No. 4: Page 18, line 41, leave out (" service with the Authority") and insert ("previous service ").

The noble Lord said: I beg to move the Amendment standing in my name on the Order Paper. As the noble Earl has indicated, this is a clause for which he has considerable concern and which he regards as an important one, but the Amendment I am moving is really no more than a clarification of one detailed point in the clause. The clause is concerned to secure that the Minister does not make any order withdrawing the application of the Authority pension schemes to employees of the companies unless he is satisfied that each company scheme is, taken as a whole, no less favourable than the corresponding Authority scheme.

In order to comply with this requirement it would be necessary for the company scheme to treat as reckonable ser-vice of the employee in question first of all any service which the employee had with the Authority in an Authority scheme; secondly, any service which the employee had with the company in an Authority scheme; and thirdly, any pre-Authority service which was rendered by the employee before he entered the employment of the Authority in the first place which was reckonable under the Authority's scheme. The most obvious example is that of civil servants who transferred at an earlier point to the employment of the Authority and who are entitled under the Authority's scheme to reckon, subject to certain conditions and regulations, their civil service as though it were service with the Authority for the purpose of the scheme. The Bill, as drafted, did not quite satisfactorily and clearly cover that point, and that is the reason for the Amendment now before your Lordships.

Perhaps I should say a word about the words "and otherwise" which appear, because it could possibly be held that "and otherwise" makes this clarifying Amendment unnecessary. Those words are primarily intended to cover matters germane to the pension schemes in question but other than reckonability of service, and it was felt better to have the Amendment now before your Lord-ships which would make quite clear the intention that in the company schemes individuals should be placed in no worse position in respect to reckonability of service than they would have been if they had remained in Authority employment.


I am grateful to the noble Lord for having explained this point to us. My first reaction on reading the Amendment and in looking at the words "previous ser-vice", was, what previous service and where? Would it apply only to civil servants, or would it apply to others? It seemed to me that this particular phrase could have been rather more precisely defined. The noble Lord has defined it in what he has said, and since I imagine we shall all read his remarks when we are applying the Bill when it becomes an Act, and that it will be applied in the light of what he has said, I accept the Amendment—certainly the principle behind it.

While on subsection (4) I should like to say something about the superannuation schemes. As the noble Lord knows, the staff organisations again make the point that they see no practical or other need to establish what seem to be three separate superannuation schemes: one for the Authority and one each for the two companies. Since there will no doubt be a need to interchange expertise between the Authority and the companies, I am a little puzzled by these three rather complicated separate provisions. As the noble Lord knows, ever since reading the Sutherland Report on the question of the transferability of pensions I have been in favour of some system, similar perhaps to that in Sweden, whereby qualified staff in industry, in Government establishments and in the universities have transferable pension rights. I think the Government must have been working on this, and there may be financial considerations which make such a scheme in this country impracticable.

At the same time, I feel that any system which inhibits easy transfer—and I know I have support on this from noble Lords on the other side of the House—-of well qualified engineers or scientists from one sector of the economy to another, particularly between the private and the public sector, is unhealthy. Since the nuclear power group, in so far as the design and construction of re-actors is concerned, have agreed to amend their scheme to provide benefits comparable with those of the Atomic Energy Authority, I wonder whether the Government are now reconsidering this matter.

I should be grateful, too, if the noble Lord could tell us how many people may be involved in such a scheme. I understand that there are some 86,000 members of the I.P.C.S. as a whole and that there may be some 6,000 to 7,000 in the Atomic Energy Authority. I under-stand that in another place there was a Private Member's Bill dealing specifically with the whole question of transferability of pensions. I understand that it was dropped, but that it is hoped that the Superannuation and Social Insurance Bill may be amended to cover this point. I do not know whether the noble Lord can enlighten me on this matter. Clearly the staff do not like the provision at the end of subsection (4) which gives the Minister power, by Statutory Instrument, to direct that no pension scheme maintained by the Authority should, on or after such a date as may be specified in the Order, apply to any person employed by the companies. No doubt the Institution would prefer that Clause 19 (4) should be left out altogether, but I shall be glad to hear what the noble Lord has to tell us about this matter and whether he has been able to meet the staff organisations to any extent.


I must at the outset say that I would be very reluctant to get drawn on this Amendment to this clause into a wide discussion of the complex question of general transferability of pensions. We are dealing, after all, with a narrow point, with a particular group of staff. The situation in regard to total numbers is that it is expected that of approximately 31,000 total staff of the A.E.A., some 9,500 will be transferred to the Nuclear Fuels Company, and some 500 to the Radiochemical Company. I understand that if one takes non-industrial staff the figures are expected to be a little over 3,000 transferred to the Nuclear Fuels Company, and virtually the full 500 to the Radio-chemical Company. In other words, virtually all the staff who will go to the Radiochemical Company will be in the non-industrial category, and of those who will go to the Nuclear Fuels Company it is expected that 3,000 will be non-industrial, while some 6,500 will be out-side the non-industrial category.

It is the desire of the Minister through this legislation to safeguard the position of the staff so far as possible in the ways indicated. The provision to which the noble Earl referred, that the Minister may make an Order which, after their transfer to the Nuclear Fuels Company, removes certain staff from the scope of the Atomic Energy Authority's pension schemes, is of course a power to be exercised only after there have been negotiations between the representatives of the employees and the companies upon the terms of the new pension schemes which the companies will maintain, and after the Minister has satisfied himself— and I touched on this point earlier, and mentioned some of the discussions that we have had—that the conditions pro-posed under those schemes, taken as a whole, will be not less favourable.

I touched earlier on the reckonability of service, and on our desire to see that the position was made quite clear. On the question of transferability, so far as it arises in this context, I can say to the noble Earl that we appreciate its importance. We have looked at the provisions for transferability which exist under the Atomic Energy Authority's own scheme, and in the discussions which I mentioned on an earlier clause we have indicated to the representatives of the non-industrial staff our willingness to consider their points about the desirability of not impeding interchangeability between the two companies and the Atomic Energy Authority. We shall be looking at this matter and I hope we shall reach some form of finality before the Parliamentary process of this Bill is completed.


I am most grateful to the noble Lord for having looked at this matter again, and also for his assurance that there will be further consultations and negotiations with the staff organisations. I am very glad that, generally speaking, he appreciates the importance of transferability, and I accept what he has told us to-day.

Clause 19, as amended, agreed to.

Clause 20 [Savings and transitional pro-visions]:

LORD DELACOURT-SMITH moved Amendment No. 5: Page 19, line 37, at end insert ("in relation to any premises transferred by virtue of the said section 1.").

The noble Lord said: This Amendment gives me an opportunity of drawing the attention of your Lordships to the fact that in the Explanatory Memorandum the paragraph relating to Clause 20 refers to prohibited place orders being in existence in relation to Springfields, Windscale and Capenhurst. To that list, Chapelcross ought to be added.

This is a drafting Amendment to make it clear beyond doubt that the subsection does what it is intended to do. The general intention of Clause 20 is to preserve the position of the Authority's special constables at establishments which are transferred by the Bill to the Nuclear Fuels Company, and to preserve the effect of any prohibited place orders subsisting in relation to such establishments immediately before the transfer. The Amendment, to which I invite your Lordships' agreement, turns upon the point that the Authority's special constables are appointed in respect of any premises in Great Britain which are for the time being in the possession or under the control of the Authority. It follows that, when premises are transferred from the Authority, the Authority's constables will ordinarily cease to have any power on these premises. The object of subsection (1) is to secure that, notwithstanding the transfers effected by Clause 1 to the Nuclear Fuels Company, the Authority's existing special constables at the transfer date will continue to be able to operate at the establishments transferred.

The Amendment is intended to remove any doubt. If the Amendment were not made there might be doubt that the sub-section did no more than make it clear that the transfers did not affect the position of the Authority's special constables at the establishments which the Authority retained. That is not the intention. I beg to move.


I agree that this is purely a drafting Amendment and I am very glad to accept it.

Clause 20, as amended, agreed to. Clauses 21 and 22 agreed to.

Clause 23 [Interpretation and supplementary provisions]:

LORD BELACOURT-SMITH moved Amendment No. 6: Page 20, line 34, leave out ("8(1)") and insert (" 8(2) ".)

The noble Lord said: This is a very simple Amendment and corrects an error in the Bill as it stands, by substituting Section 8(2) for Section 8(1). I trust that your Lordships will accept it.

Clause 23, as amended, agreed to.

Clause 24 and Schedule agreed to.

House resumed: Bill reported, with Amendments.