HL Deb 22 March 1973 vol 340 cc881-6

4.8 p.m.

LORD DRUMALBYN

My Lords, it may be for the convenience of the House if I now repeat a Statement which is being made by my right honourable friend the Secretary of State for Trade and Industry in another place on the Nuclear Industry. It is as follows:

"Last August the Government announced their intention to encourage the consolidation of the nuclear design and construction industry into a single strong unit. Since then we have held wide and detailed consultations with firms both inside and outside the nuclear industry, and with the Atomic Energy Authority, trade union and staff association representatives and the electricity supply authorities.

"These consultations have confirmed strongly the Government's view that there should be a single nuclear company which will use the skills and experience of the existing industry; that its management should be dedicated solely to the company's success; and that the present consortium arrangements are not compatible with the strength and unity of management which we all regard as vital.

"The basis on which I am now discussing the establishment of the company is that 50 per cent. of the share capital would be held by the General Electric Company whose international standing and financial and managerial strength will be most valuable, 35 per cent. of the share capital would be offered to other companies with an important interest in the nuclear design and construction industry, and 15 per cent. would be taken up by the Government through the A.E.A. This would give the new company a private sector shareholding of 85 per cent. G.E.C. would also play a supervisory role on a basis agreed with the main board of the new company and would be paid for services provided.

"The Government would have special rights in certain matters where the public interest is closely involved. These would include the formation of international links and securing that an open purchasing policy is pursued in order that neither the company's shareholders nor G.E.C. subsidiaries should obtain preferential treatment in the allocation of contracts.

"The company's normal business will be the design and construction of nuclear steam supply systems, since the main domestic customer, the C.E.G.B., wishes to be free to place separate contracts for the nuclear steam supply system and the turbo-generators and associated plant and works. The company will however be able to supply complete power stations, in association with other firms, where the customer so requires.

"The Government with the support of G.E.C., considers that the board of the company should include people of experience and standing in the nuclear and electrical business. I am glad to say that Lord Aldington has agreed to become Chairman and Lord McFadzean Deputy Chairman.

"The Atomic Energy Authority will continue to play a vital part in the nuclear industry as the principal instrument for carrying out research and development. British Nuclear Fuels Limited will be closely associated with the new company in marketing and exploiting reactor systems and their fuel.

"The skills and experience of the staff of the existing consortia are crucial to the successful completion of the existing business and the prospects of the new company. It is essential that the power stations now being built by the consortia should be completed successfully and quickly. To achieve this, it is intended that current contracts should be completed by existing staffs under arrangements to be agreed between the present consortia, who are responsible for the contracts, and the new company. The employment of staff on new work will be negotiated by the new company as a matter of high priority in full consultation with the unions and staff associations concerned.

"These complex discussions on the reorganisation of the nuclear design and construction industry have necessarily involved prolonged consultation. Now that the basic decisions have been taken the important thing is to complete quickly the formation of the company so as to give renewed momentum to our nuclear business at home and abroad. The company structure we are adopting offers good prospects for this and I ask all involved to co-operate fully to ensure its success."

My Lords, that is the end of the Statement.

4.13 p.m.

LORD DIAMOND

My Lords, I am sure it is your wish that I should thank the noble Lord for repeating that Statement, and may I say straight away that we on this side of the House welcome the Government's achievements as made clear in the Statement. We welcome the part- nership between private and public enterprise and we welcome the wise intervention in the private sector along the lines of the modern Conservative Government; and we think that nothing but good will come of the enterprise that the Government have shown. So, my Lords, I have very few questions to ask and they relate really to management and to control.

The noble Lord has been good enough to tell us what the share capital is. Can I take it that control would follow the shares in the proportion which he has indicated? With regard to management, has he anything more to say or should we make the natural assumption as to who would be the chief person concerned in management having regard to the interest of G.E.C.? Thirdly, with regard to that, do I take it that the distinguished individuals, indeed Members of your Lordships' House, who have been good enough to consent to act as chairman and deputy chairman of the new company, will be part-time and not full-time? I do not think the noble Lord, Lord Aldington, for example, would accuse me of impertinence if I were to suggest that he has not all the time in the world to act as a full-time chairman of this new organisation. And may I say straight away that I acquit the Government of having intervened at this moment to declare the onerous responsibilities which he has undertaken just at the moment when he was about to deliver a withering attack upon the Government on the Bill which we were considering. I acquit them of that.

Those are the only questions which I put to the noble Lord, and I share with him the hope that this new body will meet with success.

4.15 p.m.

LORD AVEBURY

My Lords, I also thank the noble Lord for making that Statement. May I ask him whether he is aware that the solution now proposed by the Government is remarkably similar to the one put forward by the Select Committee on Science and Technology in its Report some five years ago? The two reasons why at that time the Government did not accept our Report were that the C.E.G.B. favoured continuation of competitive tendering by more than one consortium and we were assured that the possibility of European links with companies such as Siemans would be jeopardised if there was only one company in the design and construction industry here. Could the noble Lord assure us that the C.E.G.B. is happy about the arrangement he is suggesting, and that he personally is satisfied that the future possibility of link-ups with European design and construction companies are not being jeopardised by these arrangements? Will he also say whether among the other companies with important interests in the design and construction industry who will take up this 35 per cent. is included British Nuclear Fuels Limited? Further, what arrangements are going to be made in regard to the staff concerned who were seconded by A.E.A. to the nuclear power group? Finally, under its articles of association will the new design and construction company be able to build and offer all reactor types, including American light water reactors?

4.17 p.m.

LORD DRUMALBYN

My Lords, I am grateful to both noble Lords for the welcome they have given to this Statement. First of all, may I say to the noble Lord, Lord Diamond, that the share capital is expected to be £10 million fully paid up. As to management, there will be two companies, the main company and an operating subsidiary. Directors of the main board will be appointed with agreement between the Government and the G.E.C., and the chairman of the main board will also be chairman of the operating subsidiary. Other shareholders will be invited to make proposals for board membership. I can confirm that the chairman and the deputy chairman will be part-time.

My Lords, in reply to the noble Lord, Lord Avebury, I note what he said. I can confirm that the Central Electricity Generating Board is happy about the arrangements. I can also confirm that the link-ups with the international companies so far from being jeopardised we think will be enhanced by these arrangements. As to the shareholders, it is not expected that they will include British Nuclear Fuel Limited. I am afraid I have forgotten the noble Lord's last question.

LORD AVEBURY

Staff seconded from A.E.A.

LORD DRUMALBYN

My Lords, it is through the A.E.A. that the Government's shareholding will be held, and they will be represented on the board.

LORD AVEBURY

And whether they can build American light water reactors.

LORD DRUMALBYN

My Lords, this will be a matter entirely for the board themselves. Of course, so far as this country is concerned, the type the new company builds will be largely determined by what the Central Electricity Generating Board, who will be its main customer, will want.

LORD BROWN

My Lords, may I ask one or two brief questions? There is a very important electrical firm, Parsons Reyrolle, on the North-East coast. Can the noble Lord say whether their commercial interests are likely to be deleteriously affected by this change, because employment in that part of the world is very important? Secondly, can the Government give the House some assurance that the comments in the Statement about opening up for free competition—that is, I take it, international competition—for power equipment will not be carried into effect until it is clear that other countries in Europe are also doing the same thing? I am very much afraid that the Chativenistie instincts of most countries in Europe will continue to mean that those companies will order their power equipment from their own national concerns; and we certainly do not want to be the first to lead the way to letting other European countries supply our equipment unless our companies have equal rights to supply their equipment.

LORD DRUMALBYN

My Lords, in reply to the first question, I fully appreciate the noble Lord's anxiety, but it is of course intended that most of the participants in the existing design and construction companies will have an opportunity to offer for shareholdings, and they will thus be able to participate in the new company. We attach the greatest importance to open tendering for the orders that are put out by the new company, but we expect that the new company will build the reactor systems ordered by its customers, and particularly by the Central Electricity Generating Board. I agree with the noble Lord's final comments.