HL Deb 23 June 1981 vol 421 cc967-76

3.11 p.m.

Lord Skelmersdale

My Lords, I beg to move that this Bill be now read a second time. The principal intention of this Bill is to enable the disposal of shares in Amersham International Limited, known until its recent change of name as the Radiochemical Centre Limited. This is a company which has a worldwide reputation as a leading supplier of radioisotopes for industry, medicine and research. The Bill also clarifies the present powers of the Government to dispose of shares held in companies operating in the field of atomic energy in general, and clarifies the present powers of the Atomic Energy Authority to dispose of shares in any company. I shall explain later why the Bill has done this.

I should like to begin by explaining the background and history of Amersham International Limited. The beginnings of the enterprise go as far back as 1940, when the British Government invited a small company, called Thorium Limited, to undertake the refining of radium and radium-based luminous paint for use in compasses and other aircraft instruments. In 1954 the centre became part of the newly- created United Kingdom Atomic Energy Authority, whose primary purpose is to carry out research and development into atomic energy. Although the company has undoubtedly benefited from the increase in general scientific knowledge as a result of research into atomic energy, I ought to emphasise that Amersham International's products—namely, radioactive substances for use in medicine, industry and research—are not, I repeat, not, relevant to the nuclear power programme.

The story now moves on to 1971, when the relevant part of the Atomic Energy Authority's business was transferred by the Atomic Energy Authority Act 1971 to a wholly-owned subsidiary company set up under the Companies Acts and known as the Radiochemical Centre Limited. That was done to encourage proper commercial and financial disciplines, and it was also envisaged that there might be a minority private shareholding in the future. Since the organisation was reconstituted as a limited liability company, it has developed into a very successful worldwide business, employing some 2,000 people, and its future is even brighter with the recent fall in sterling. It manufactures radioactive drugs and sources for industrial use. From the modest beginnings of a house in Amersham, the development has grown to such an extent that the name of Amersham is synonymous in many parts of the world with the production of radioactive substances.

The present proposal to sell shares in Amersham International is a result of the Government's policy to introduce private capital into public sector companies where this is a feasible proposition. As I mentioned earlier, the idea of introducing private capital into the company is not new. When the centre was constituted as a limited company in 1971, the then Conservative Government said that they favoured eventual private participation in the company. That would also appear to have been the view in 1970 of the Labour Administration, who introduced a Bill similar to that which became the 1971 Act and which lapsed with the General Election in 1970. At the time of the 1971 Act the intention was that the Government and the authority would retain a majority shareholding between them, and this was provided for in the Act. No sale of shares has in fact been made. What we are now proposing is simply an extension of this philosophy; namely, to enable a majority, or all, of the shares to be sold.

I should like to say a few words in order to explain the main purpose of the Bill. As I have said, when the company was set up in 1971, it was then envisaged that a minority shareholding would be sold off at some time in the future. As a result, the Act provided for a majority of the company's voting shares to be retained in the public sector. Although the Government have made no decision on the number of shares to be sold, they wish to have the option of selling more than half. The Bill therefore removes the explicit provision in Section 11(3) of the 1971 Act, which requires that the Atomic Energy Authority and the Secretary of State between them should hold at least 50 per cent. of the voting shares.

Until recently, it was thought that, subject to that provision in the 1971 Act, the Secretary of State or the authority could dispose of any shares held by them. However, the Government have recently been advised that these general powers are constrained by the duties of the Secretary of State and the powers of the authority. This stems from the way in which atomic energy is defined in Section 8(1) of the Atomic Energy Authority Act 1954, which originally set up the Atomic Energy Authority. As I said earlier, Amersham's products are not relevant to the nuclear power programme, but the definition of atomic energy in the 1954 Act covers matters much wider than the nuclear power programme, and, in a technical legal sense, Amersham's activities come within that definition.

For those technical reasons, it is possible that the disposal of any of the shares held by the Atomic Energy Authority might be challenged as being inconsistent with the existing powers or duties. It is obviously necessary to clarify the general powers of disposal in this case. As these possible restrictions on the general powers of disposal are really an accident of earlier legislation, it seems wise to take the opportunity to clarify the position for the other two companies in which the authority holds shares—namely, British Nuclear Fuels Limited and the National Nuclear Corporation Limited and indeed for any shares in any other company that the Government or the authority may acquire in the future. The Bill therefore ensures that the authority has powers to sell any shares owned by it, and that the Secretary of State has powers to sell any shares held by him in companies operating in the atomic field. The purpose of this is quite simply to return the general situation to what, until recently, it was always thought to be.

The specific restriction on the disposal of more than half the voting shares in British Nuclear Fuels Limited, which was imposed by Section 11(3) of the 1971 Act, has been retained by the present Bill. While the Government wish to maintain the option, which was previously thought to exist, of selling a minority shareholding in British Nuclear Fuels, they have at present no plans to do so. Similarly, the option of selling shares in the National Nuclear Corporation is being kept open, although again there are no such plans at present. Therefore, apart from the case of shares in Amersham International, where the restriction on the sale of more than half the shares is lifted by this Bill, the Government's intention is purely that of clarification.

Although the Bill allows 100 per cent. of the shares to be sold, the Government have not yet made a decision on the precise proportion of shares to be sold, nor on the method of disposal. The Government are not thinking in terms of a disposal before next year at the earliest. I appreciate that some employees may be uncertain and anxious about the disposal, and I should like to reassure them that their worries are unnecessary. The Government recognise that it is the dedication and ability of the company's employees that have secured its success, and they have every wish to see Amersham International prosper in the future. My honourable friend the Parliamentary Under-Secretary of State for Energy made this quite clear during the Bill's Third Reading in another place, when he said: In deciding precisely how the disposal will be made and the manner and number in which shares will be sold, the Government have every desire to see the company prosper. We would not agree to plans which would endanger the future of the company or the livelihood of those who work in it".—[Official Report, Commons, 20/5/81; col. 382.] In conclusion, I would say that I believe that Amersham International's record of success demonstrates that it is perfectly capable of standing up for itself in tough, international markets. I believe that the Bill will benefit the country, Amersham International, and its staff. The Government see no benefit, either to the nation or to the company, in continuing to own all the company's shares. They wish to give the company the means and encouragement to develop in an atmosphere of the fullest commercial freedom and to allow it to build on its past success. My Lords, I beg to move.

Moved, That the Bill be now read 2a.—(Lord Skelmersdale.)

3.20 p.m.

Lord Strabolgi

My Lords, we are grateful to the noble Lord, Lord Skelmersdale, for explaining this Bill to the House. He has done this most competently, if I may say so, as one would expect; but I am sorry that one of the noble Lord's first Bills from the Government Front Bench should be a Bill for which there seems to be little need—except, perhaps, for display as a trophy in some Tory Valhalla, where the household gods believe that all private enterprise is wondrous and every state-owned company is to be condemned.

As the noble Lord has said, the Bill will enable the sale of up to 100 per cent. of the shares in the Radio-chemical Centre Limited—a company owned by the AEA. The centre, which employs 2,000 people and is a world leader in its field, has received the Queen's Award four times for exports during the last few years. Turnover has risen in 10 years; and profits during this period have been £26 million, with a high average return on capital investment. The board consider, I understand, that the Government should retain some holding; and the staff of TRC believe that the Government should retain a controlling interest. In short, there does not seem to be any demand from management or the workforce for this change. Indeed, the staff, to whom the noble Lord paid tribute, are worried about their future under a new régime, and they have asked the Government for an undertaking not to sell more than 49 per cent. of the shares. Will the Government assure the House that the company will not be sold off willy-nilly to the highest bidder, and that preference will be given to a British controlling company?

The Bill also repeals the provision that shares should not be sold to mere investors with no interest or expertise in this field. I accept that the Secretary of State can stop a sale if this is not considered to be in the national interest. But how is that to be determined? The centre's success has been partly due to its close association with the AEA, and the fusion of scientific talent and research associated with the Atomic Energy Authority. What benefit will there be in severing these links? Will the Government consider allowing the AEA to continue to hold, say, 25 per cent. of the shares, so that these links are maintained? This would prevent TRC from being taken over by some multinational conglomerate with little direct interest in this field. What is to be the position of patents if the centre is to be taken over by a foreign company? Perhaps the noble Lord will tell the House when he comes to reply.

Finally, there is no provision in the Bill for a Government decision on disposal to be ratified by Parliament. This Bill will allow privatisation without any parliamentary accountability. As I have said, we on this side of the House can see no need for the Bill. TRC is to be sacrificed for doctrinaire reasons as the victim of Tory dogma and because this Government cannot bear to think of any successful enterprise being publicly owned.

3.24 p.m.

Lord Lloyd of Kilgerran

My Lords, I thought I detected a considerable lack of enthusiasm indeed in the almost apologetic although competent manner in which the noble Lord, Lord Skelmersdale, presented this little Bill to your Lordships on behalf of the Government. This is understandable in view of the extraordinary vagueness of the scope of this Bill. It seems to me, as the noble Lord, Lord Strabolgi, has indicated, basically an unnecessary Bill.

The Liberal Party has always endeavoured to support measures to dispense with Government ownership of shares in enterprises, and to introduce private capital; but a Bill which is headed "Atomic Energy (Miscellaneous Provisions)", requires a more cautious approach to be adopted. The title immediately raises prima facie questions as to safety and control of atomic energy in its widest sense, particularly having regard to the wide definition of "atomic energy" in Clause 4 of the Bill. In view of the general vagueness of the scope of the Bill and the manner in which it has been presented by the Government to your Lordships, it may be that this Bill is in danger of turning into a kind of Red Riding Hood Bill, and that perhaps it is really a little wolf in sheep's clothing.

In the field of atomic energy it is a platitude to say that general safety standards and standards of control assume paramount importance. I of course am aware that much of the business of the Amersham Company is concerned with radioactive isotopes of great value to the medical profession. Arising out of that—and the noble Lord, Lord Strabolgi, has emphasised how successful this company has been—it is not clear to me, however, whether, if the shares of this Amersham company are sold, these important isotopes, capable of being of such use for medical purposes, would be as readily available as they are now to United Kingdom medical institutions. There seems to me, therefore, an inherent commercial danger here, particularly if all the shares are allowed to go into the hands of a foreign company.

As the noble Lord, Lord Strabolgi, mentioned, there may be patents involved in the assets of the Amersham company. Your Lordships do not know who are the present licensees, if any, of these patents. If there are licensees, is there any obligation on the company at present to supply or to disclose to the licensees know-how relating to any form of atomic energy as defined in the Bill? It is common form to have disclosure of know-how in licence agreements under patents. If so, what are the sources from which the Amersham company now derive their know-how in the field of atomic energy? I have no information about this; and it would appear that in general your Lordships have no information about this important matter. Immediately, doubts must be raised—if, for example, information and know-how on atomic energy is to be supplied by the United Kingdom Atomic Energy Authority—whether adequate safeguards, which only the Government can provide, have been included in this Bill. We really should have more information about the present commercial activities of the Amersham company if the Atomic Energy Authority and the Secretary of State are to dispose of all the shares.

As the noble Lord, Lord Strabolgi, has indicated, what is clear is that this Amersham company is a highly successful company commercially and technologically. It has been successful over a large number of years. ft has competed successfully against intense foreign competition; and this success is due almost entirely to the splendid staff of that company. There are over 2,000 on this staff; and the success of the company is entirely due to very good management, the outstanding ingenuity and the skills of that staff. Large profits have been made, and these have been ploughed back regularly into the company so that very largely public money has not been used to subsidise the efforts of this splendid company.

If there is to be a disposal of shares, clearly a significant proportion of these shares—say, of the order of 20 per cent.—should be made available to the staff. But there is no indication in the Bill that the staff will be considered in any way if the shares of this Amersham company are to be disposed of. I submit that this gives the Government a splendid opportunity to put into practice schemes for employee participation on a substantial scale as a recognition, at least, of the splendid work that this staff has undertaken.

As I have said, I submit that the Atomic Energy Authority should, for a number of technical reasons, retain a substantial interest in Amersham International. It has been said in the other place that that kind of action would diminish the value of the shares, but in my view, depending on the source from which the company receives that technical information, if the Atomic Energy Authority were to retain some of the shares, such action might enhance the value of the shares and the assets to be disposed of. We on these Benches submit that no single company should acquire the remainder of the shares. Ownership of the shares should be diversified as widely as possible.

So far I have spoken to the Bill only as it refers to Amersham International. I should now like to turn briefly to the other company mentioned in the Bill, British Nuclear Fuels Limited. In the case of that company it is intended that the Atomic Energy Authority and the Secretary of State should continue to hold shares. This is understandable because that company is concerned, for example, with processing nuclear products, and therefore it is obvious that some direct control by the Secretary of State and the Atomic Energy Authority is necessary for safety reasons. It would appear therefore that it is largely for safety reasons that the Government do not propose to sell off the majority of the shares in British Nuclear Fuels. However, the Government are not proposing to retain the shares in Amersham International, and as at present advised it is not clear to me what is the technical dividing line between the activities of British Nuclear Fuels and Amersham International which justifies such different treatment in regard to the disposal of the shares. Perhaps the noble Lord the Minister will be able to clarify this point for me.

I have referred to the vagaries of the scope of this Bill and it seems to me that what is in the national interests should be defined somehow. There are some extraordinary clauses in the Bill. May I refer your Lordships to Clause 1(2), which states: The power of the Authority to dispose of shares shall, subject to the following provisions of this section, be exercisable"— now comes the extraordinary passage: (a) whether or not the disposal is consistent with the exercise and performance of their functions.". This seems to be very ambiguous, but it may mean that the Secretary of State can dispose of these shares despite, and irrespective of, the functions of the authority.

Clause 1(3) states: The power of the Secretary of State to dispose of shares shall, subject to the following provisions of this section, be exercisable— (a) whether or not the disposal is consistent with promoting or controlling the development of atomic energy.". It seems to me that this is too wide a clause to include in a Bill of this kind dealing with atomic energy, but these matters will be dealt with later, at the Committee stage. In the other place my party, the Liberal Party, voted against the Bill at the Second and Third Readings. Obviously we cannot go as far as that in your Lordships' House, but I have real doubts whether it is really necessary for this Bill to go forward at all, or at least not without substantial amendment.

3.35 p.m.

Lord Harmar-Nicholls

My Lords, there was only one sentence in Lord Strabolgi's speech to which I took exception, although I also took exception to an implication in the remarks made by the noble Lord, Lord Lloyd of Kilgerran. The noble Lord, Lord Strabolgi, very promptly put a point of view, and that is part and parcel of his job. He put his point of view very well. He explained the importance of various sections of the authority and the way in which it ought to be preserved because of the vital nature of the functions which it carries out. But he skimmed over another aspect, when he said that the national interest has to be left in the hands of the Secretary of State and that one did not know what that interest was.

I took exception to those remarks by the noble Lord, and to a lesser extent to those made by the noble Lord, Lord Lloyd of Kilgerran, when he spoke about not interfering with the efficiency of the Atomic Energy Authority. What better person than the Secretary of State to decide what is in the national interest? Is the noble Lord, Lord Strabolgi, saying that we in this country have reached a situation where, because there happens to be a party difference over the general principle of whether the authority should be solely or partly owned by the country, that that would interfere with the impartiality and the acumen of the Secretary of State of the day? The moment we allow that to be acceptable as a basis then we can do nothing. I know of no occasion when this side of your Lordships' House questioned the impartiality or ability of the Secretary of State when the party opposite were doing things which, on principle, we thought were wrong but which provided for the Secretary of State to have the final say. The Secretary of State has more knowledge than anybody else and has access to more advice than anybody else in making such a decision.

In a matter such as this, one cannot be precise. The noble Lord, Lord Lloyd of Kilgerran, being an expert in patent law, knows that in this particular field one cannot anticipate what might happen. One cannot anticipate who will bid for the shares. One cannot anticipate the qualifications of the people who may bid for the shares, when it comes to knowing anything about the work that has to be done and the atomic energy matters which they would have to deal with. When one has the safeguard of involving the Secretary of State—and one should remember that it may not be the present Secretary of State concerned, but a Secretary of State from the other party—then I for one have enough confidence (although certain things might happen which could undermine my confidence) in the people from either party who are likely to hold the high office of Secretary of State, to know that they would not allow shibboleths of party belief to interfere in what, with all the special knowledge they have, they believe to be in the nation's interests.

The noble Lord, Lord Strabolgi, skimmed over that and rather doubted the ability of the Secretary of State to do an impartial job. On a matter such as this one either has to do nothing and allow matters to deter- iorate, if one's belief is that matters would deteriorate if one altered the structure of ownership, or one has to place one's trust in somebody to know what is happening on a day-to-day basis, what is likely to be in the nation's interest, and to act accordingly.

I cannot anticipate a Secretary of State, from either side of your Lordships' House, failing to veto as shareholders undesirable people from another part of the world. I cannot envisage a Secretary of State from either side of your Lordships' House who, seeing that the people who were bidding for the shares were doing so to accumulate them for speculative reasons and did not understand the business, would allow their purchase of the shares to go forward. I believe that from the choices we are likely to have as to who is to exercise this vital power, the one proposed is that one would wish to have. It has worked in the past and I know of no alternative to it.

I am rather sorry that the noble Lord, Lord Strabolgi, skimmed over this and made the implication that he did. I can think of no safer way of doing the right thing than letting the ultimate power be in the hands of the Secretary of State, with all of his colleagues in the Government to share and to come to some conclusions to see that we are doing the right thing.

Lord Lloyd of Kilgerran

My Lords, the noble Lord has been so kind to me that I hesitate to interrupt; but has he thought of the second-stage position, as it were, where the Secretary of State has approved the sale to firm X; and firm X now is in complete control and then sells it to Y? If he is satisfied about the safeguards initially, is he satisfied at the transfer all along the line?

Lord Harmar-Nicholls

My Lords, I am saying that nobody is more likely than the Secretary of State, with his special knowledge and access to knowledge, to know whether firm X is a bona fide buyer which will remain or whether it is merely in transit in order to make a quick profit. No one can ascertain that more quickly than the Secretary of State. That safeguard is fundamental. If it is on the question of principle where there may be differences of view as to the hiving-off and if one forgoes that, then the safeguard of the Secretary of State being there is one likely to prevent us getting into the kind of trouble that the noble Lord, Lord Strabolgi, envisaged or even that which the noble Lord, Lord Lloyd of Kilgerran, mentioned. I intervened because I thought that a rather dangerous sentence for the noble Lord, Lord Strabolgi, to put in his speech, and the rest of it did not justify having to deviate from the established practice in looking after the nation's interests.

Lord Strabolgi

My Lords, with the leave of the House, I should like to explain that all that I was asking was how difficult it was to define the "national interest". I take the point of the noble Lord and we are glad to have him here from Europe. Having served in Government, I have as much respect as he has for the Secretaries of State. All I was asking is how this can be defined. It may be that the Secretary of State for Energy may not want it. He may be overruled by a more powerful department—say, the Foreign Office—who might want to have this sale made for diplomatic reasons. I take the point that the noble Lord has made, but these are some of the difficulties that may arise.

Lord Skelmersdale

My Lords, I am sorry to hear that the noble Lord, Lord Strabolgi, regards me as one who provides trophies to hang on the wall in some Conservative Valhalla. Can I push the argument to him? Why on earth does he think we have a public sector in this country? I believe that there are only three reasons, one of which the noble Lord, Lord Lloyd of Kilgerran, will not appreciate. These are for companies which are concerned with defence or where it is in the national interest that they should be so, or where the Government, in some exceptional circumstances, should provide a safety net. Rolls-Royce is an obvious example of this, for which we are frequently criticised. Once any of these is no longer required, it is the Government's philosophy—and I cannot state it more clearly—that there is no earthly reason for keeping any firm in the public sector.

I have described the reason for keeping Amersham International Limited in the public sector as a carryover, an historical accident. That is what it is. The noble Lord, Lord Lloyd of Kilgerran, asked me the difference between BNFL and Amersham international. The answer is that they are in quite different categories. The one is an historical accident carried over from the formation of the Atomic Energy Authority and originally, as I said in my opening speech, it came into the defence category where it was making luminous paints for aircraft instrument dials. As regards British Nuclear Fuels, it will, as far as I am concerned, for all time for obvious reasons remain in the national interest to keep it principally in the public sector. This the Government will continue to do.

The noble Lord, Lord Strabolgi, asked about the position of the staff. The staff representatives met my honourable friend Mr. Lamont, the Parliamentary Under-Secretary, on two occasions and the management on, I think, four occasions. I, too, have been to see the management of this company. Both the staff and the management have expressed anxiety that the integrity and independence of the company should be safeguarded. This was the point the noble Lord drew attention to. They would like the Atomic Energy Authority to retain 25 per cent. of the shareholding and the employees to be allowed to acquire a shareholding in the region of 10 per cent., with an undertaking that the company would not be sold to either a single foreign or a single British buyer. While not closing off any of the options for sale, my honourable friend has assured them that the Government will not sell shares in such a way as to endanger the future of the company. That would be a ludicrous thing to do. It would be too silly for words.

Although the Bill enables the sale of up to 100 per cent. of the shares, we have not decided how many will be sold or who the purchasers will be. We will want to consider all the options carefully to ensure that the disposal is in the interests of Amersham International Limited as well as in the national interest. In deciding on the method and extent of the sale, we will have the future of the company very much in mind and would never agree to plans which would jeopardise the future of the company or its workforce. My honourable friend has undertaken to consult with the staff before any major decisions are made.

On the question of a corporate buyer, if the Government were to go down this route, they would want to be sure that the sale had industrial logic and that company was not just going to be bought and then broken up. The important criterion would be that the purchaser should be responsible and likely to enhance the company's prosperity. On the employees' shareholding, the Government will consider various possibilities and this will depend in part on the advice of the financial advisers which will be needed for the proposed sale. It must be recognised that if the Government decide to sell shares to a corporate buyer, introducing such a scheme would present considerable problems and might not be feasible. We shall have to be guided by the advice given at the time.

The noble Lords, Lord Strabolgi and Lord Lloyd of Kilgerran, talked about patents. Lord Lloyd of Kilgerran, having been instrumental in dealing with the Patents Bill two years ago, knows more about this subject than I do. The thing is that Amersham International is already a Companies Act company and therefore any patents in the future would carry on in the same way as at present.

Lord Lloyd of Kilgerran

My Lords, I hesitate to intervene but I asked a difficult question and I was not expecting the noble Lord to reply at the present time.

Lord Skelmersdale

My Lords, I am grateful to the noble Lord. The noble Lord then went into what are basically Committee points on various words in the Bill. To save time, may I recommend him to look at the two earlier Acts to which I referred—the 1954 Act (which set up the Atomic Energy Authority) and 1971 Act—because, when we get to the Committee stage on this Bill, we shall be referring a lot to those Acts, and making the position of those Acts clearer. We have used the same words as in those Acts.

Finally, the noble Lord, Lord Lloyd of Kilgerran, asked me about the safeguards, and as, I understand it, there is no reason to believe that a disposal of Amersham International Limited would result in the Atomic Energy Authority's secret information becoming divulged to others capable of acting against the public interest. This would be one of the matters that my right honourable friend the Secretary of State would recognise as being very firmly in the public interest. I am very grateful for the words of my noble friend, who has helped me out of a considerable hole and made a far better speech than I have.

On Question, Bill read 2a, and committed to a Committee of the Whole House.