Atomic Energy Authority Bill [H.L.] (Hansard, 19 December 1985)

§ The Minister of State, Scottish Office (Lord Gray of Contin)
My Lords, I beg to move that the Bill do now pass.

§ Lord Stoddart of Swindon
My Lords, I do not intend to speak for very long at this stage of the Bill, but I should like to say that during the Second Reading and Committee stage we were able to probe the Government's thinking, particularly in regard to their future intentions relating to privatisation, and we were very glad to receive some of the assurances which the noble Lord, Lord Gray, gave us. Indeed, I feel that we have now firmly established that the Government are in complete agreement with the Opposition that the AEA, by the nature of its operations, is quite unsuitable for privatisation and therefore in the foreseeable future there is no intention to privatise the authority in whole or in part. I would certainly welcome confirmation of this from the noble Lord, Lord Gray, when he winds up the debate this morning.
I am not entirely satisfied with the financial arrangements, which we believe may put an undue strain on the AEA's resources and its ability to undertake a proper level of underlying research. However, I was encouraged by the noble Lord's assurance that the Treasury itself had no intention of making predatory raids on the AEA's reserves and that surpluses earned would be ploughed back into the authority itself and 901 its work. We have taken those assurances very seriously indeed and I can assure the noble Lord that we shall remember them for the future.
At Committee stage we had some interesting debates, particulary on questions of public dividend capital and worker participation, and though we did not press the issue of public dividend capital, I hope that the Government realise that it is a serious issue to which they should give continuing attention in the future. I myself believe that it was unfortunate that the House felt unable to agree to the modest amendment which I moved, which would have given the AEA's workers some rights of participation in the running and future planning of the authority and the authority's programme, because there really is a crying need for greater involvement of working people in the running of the industries which they serve. It is only in this way that people will feel part of the organisation and committed to it. Again, we believe that deep thinking is necessary on this subject, not only on the part of the Government but from all sides of the House.
In connection with the staff of the AEA, I believe that they remain unsettled and fearful of the future, particularly in regard to future staff levels, salaries, pensions and conditions of service. I hope that the noble Lord, Lord Gray, can assure the House that consultations will continue and that every endeavour will be made to reassure the staff on these very important matters.
Finally, I should like to thank all those who have taken part in the debates on this Bill and, in particular, the noble Lord, Lord Gray, for his patience and courtesy in dealing with our questions and amendments. I regret that we have not been able to agree on a number of issues and I cannot really wish the Bill well—and I am sure the noble Lord will understand this. But at least our disagreements have been conducted with courtesy and good humour and we must all be thankful for that, particularly at this festive time of year.

§ Viscount Thurso
My Lords, I share the misgivings about this Bill, which I fear is leaving your Lordships' House imperfect in many respects. I understand the underlying philosophy behind the Bill. In fact I and my colleagues on these Benches agree that it is right that there should be more public accountability by the Atomic Energy Authority and that where it is commercial it should be carrying out its business on a more commercial basis. But we are most regretful that the initial capital could not have been in the form of some sort of public dividend capital. I remain unsatisfied with the explanation which the noble Lord, Lord Gray, gave me and particularly with his claim that the operations of the Atomic Energy Authority are not and never will be cyclical in the same way as other public enterprises that have public dividend capital. I feel that this is a matter for people in another place to look at at this stage.
I still think that the Government have got it wrong in putting ceilings on the amount of borrowing, the borrowing limits which this Bill affords to the Atomic Energy Authority—if, that is, they agree with me that 902 what we are trying to do here is to produce eventually an Act which will last as long as the previous Atomic Energy Act. Here again I feel that possibly people in another place may have another look at this Bill. I still think—and in this I very much share the view put forward by the noble Lord, Lord Stoddart of Swindon—that the Government are missing a golden opportunity to encourage effective participation in planning with the workforce of the Atomic Energy Authority. I think that the size of the vote in favour of the amendment speaks for other people's feelings on this subject.
I still feel dissatisfied with the explanation which was given, that in fact the staff and the trade union side are to be kept informed. What the amendment was asking for and what we on these Benches were asking for was participation in planning—not for people to be informed about what has been planned. I think it was a golden opportunity to have included this concept in the Bill and I am sorry that we missed it. I still worry whether the Atomic Energy Authority will have enough money to hold on to their expert teams and to carry out the pure research which they have so successfully carried out in the past.
The AEA has enjoyed a special status in the minds of many people as an expert and dedicated body of scientific thought which is most useful in monitoring and foreseeing the uses that might be made of atomic energy and scientific advances and which is still the Government's main source of advice and expertise on this important subject. I fear that in an unfavourable climate under the financial arrangements it might find itself short of funds which would stop it from doing the work it has done in the past. I hope I am wrong.
I am grateful to the noble Lord, Lord Gray, for the patient way in which he has dealt with all the matters that we have raised throughout the discussions on the Bill and for the most useful and informative letter which he wrote to me and which I referred to at the Committee stage. I am also grateful to him for his usual friendly disagreement across the Floor of the House. I join with the noble Lord, Lord Stoddart, in wishing him, and indeed everybody else in your Lordships' House, a merry Christmas and a good New Year.

§ Lord Gray of Contin
My Lords, I thank most warmly the noble Lord, Lord Stoddart of Swindon, and the noble Viscount, Lord Thurso, for their generous remarks and also for the constructive approach they have taken throughout the stages of this piece of legislation. I particularly appreciate their reference to courtesy on my part. But in my political career I have found that courtesy is generally a two-way function and so I am grateful to them for their courtesy throughout our deliberations.
Having said that, none of us would be doing our duty if we agreed on each and every topic that was discussed in your Lordships' House; and so I was not surprised that there were certain times during the progress of the Bill when noble Lords opposite took a different view from the Government's. But we have been able to discuss matters in a civilised way and with a degree of good humour. At the end of the day we are 903 sending to the other place a Bill which, although unamended, will give Members there cause to read our deliberations and see the useful contributions that have been made.
We have had a number of interesting discussions. At Second Reading and Committee stage I sought to explain the background to the Bill and some of the details of the financial framework that we are proposing for the authority trading fund. We have perhaps gone further into the financial aspects than is usual in this House, and that was referred to by the noble Viscount during the Committee stage, but our debates here have of course been without prejudice to the discussions which will follow in another place.
The purpose of this Bill is to enable the authority to operate on a trading fiund basis with powers to borrow. Our approach has been to make the minimum additions necessary to the legislative bedrock of the Atomic Energy Authority Act 1954. One of the main themes running through our debates has been the revised capital structure. Both the noble Lord and the noble Viscount referred to that again today. Noble Lords opposite have emphasised that the move to a trading fund provides an opportunity for settling a new financial framework for the authority, bringing it up to date and providing a sound basis for the future. The Government agree with that. We consider that the structure we have proposed, whereby the authority's capital employed will comprise debt, reserves and provisions, is a sound and sensible structure.
We have had an interesting debate on alternatives, particularly the proposition that capital employed should include public dividend capital rather than commencing debt. As your Lordships know, we regard a commencing capital debt as a sound element in the revised capital structure and see no need for equity.
Another key point raised during our debates is the need to ensure that continued independence of the authority, particularly in the field of nuclear safety research. I have been glad of the opportunity to confirm the importance we attach to this and to point to the Government's intention to continue funding a substantial programme of safety related research.
More generally, the authority trading fund expects to have a range of customers. These will include, as well as the Department of Energy, other government departments, the CEGB, British Nuclear Fuels plc and other private companies. The authority will therefore not be beholden to any particular interest group. The Department of Energy will be making a very significant contribution to the funding of the authority's underlying research programme; other customers will also be contributing, but programme content will remain firmly under the control of the authority. The Government consider that these arrangements will ensure that the authority pursues a vigorous and independent programme in keeping with its reputation for scientific and technical excellence.
Noble Lords have also been concerned to know whether there will be any reduction in accountability to Parliament for expenditure on nuclear R & D. The short answer, I repeat again, is no. Expenditure by the Department of Energy on nuclear R & D by the 904 authority will continue to be funded from money voted by Parliament through the Estimates procedures; and the AEA's accounts will continue to be audited by the Comptroller and Auditor General. The department will answer on policy and overall programme specification and the authority will answer on its technical advice and efficiency of programme execution. There will thus be the same opportunities as at present for questions and debate.
Finally, I should like to repeat two assurances. The first is that the Government have no plans to privatise the authority. We consider that placing the authority's operations on a trading fund basis, with the Department of Energy as one of its principal customers, is a good way forward. It will bring to bear increased commercial and market pressures for efficiency and continued technical excellence, while safeguarding the role of the authority as a key source of independent research and advice. We consider that these arrangements will provide an incentive for all concerned.
The second assurance which I give to the noble Lord and the noble Viscount, who both raised the matter, is on the role of the trade unions and their relationship with the authority, and whether there will be an opportunity in the future for participation by the trade unions and consideration of their views in decision-making. The noble Lord went a little further and included future planning. I assure noble Lords that discussions are taking place at the present time. That was one of many reasons that I gave for not accepting the amendment which both noble Lords supported at Committee stage. The trade unions are involved in discussions at the present time, and I felt that it would be inappropriate for us to do anything which might prejudice the outcome of the discussions.
The national joint council and others who are participating in the discussions are very experienced, and I felt that it was better that we should leave such deliberations to them. It is the intention and certainly the wish of the Government that those discussions will lead to a satisfactory conclusion between the unions and the authority, and I have no doubt that that will be the case.
We consider that all the arrangements that I have described in the Bill will provide an incentive for all concerned. I commend the Bill to your Lordships.