Electricity Bill

HL Deb 10 July 1989 vol 510 cc18-72

3.31 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Baroness Hooper.)

On Question, Motion agreed to.

Clause 65 [Transfer of property etc. of Area Boards]:

Lord Williams of Elvel moved Amendment No. 130: Page 48, line 44, at end insert— ("(1A) If there is any doubt as to the ownership of property between an Area Board and the Generating Board it shall be assumed for the purposes of the transfer scheme that such property belongs to the Generating Board and will be transferred to a company designated under section 66(1)(b) below, the sale of whose securities or rights to securities is restricted by section 70 below.".

The noble Lord said: It may be for the convenience of the House if I speak to Amendment No. 149, standing in the name of the noble Lord, Lord Peyton of Yeovil. I regard these two amendments as being inextricably linked. Amendment No. 149, in the name of the noble Lord, Lord Peyton, argues the case for continued public ownership of the national grid. If that amendment is to be accepted—and I very much hope that it will be—then there is the problem of defining the limits at which the new nationally owned grid company will operate. Amendment No. 130 addresses itself to one part of that.

I ought to explain that there is a subsequent amendment that I have not tabled. It relates to the other end of the grid: the relationship between the grid and the generating companies. In other words, it relates to what property should remain with the grid and what property should properly be that of the generating companies.

Amendment No. 130 addresses the procedures—assuming that the grid is to remain in public ownership—by which the property which will properly belong to the grid and that which will properly belong to the area boards will be determined. My amendment attempts to put forward a scheme which will allow preference to be given to the grid in cases of doubt.

The bulk supply points—which are the points where the voltage is stepped down to the distribution voltages of 132 kilovolts from the 400 kilovolts of the high voltage transmission system operated by the grid—are the property of the GECB and will presumably continue to be the property of the grid company. There are some 132 kilovolt sub-stations which were transferred some years ago to the area boards. However, not all were transferred. The remaining 132 kilovolt sub-stations are still owned by the CEGB and will be transferred, we know not quite where at the moment. There has been long debate between lawyers acting for the CEGB and lawyers acting for the area boards to determine where those should go. The problem is that metering equipment which is not required at the moment other than in the final point of distribution by the area boards will be required between the generating companies and the area boards in order to determine the source of the generating capacity which is used and the amount of supply that is taken off by the area boards.

The central point on the boundary of where the grid stops and where the area boards begin is intimately related to the question of the ownership of the grid. If the grid were to be a subsidiary of the collective body of area boards, then I do not think that the problem would be so great as it is if the grid remains the property of the public. My party and I believe that the grid should remain in public ownership and under public control, and that therefore the problem that I am addressing in Amendment No. 130 arises.

I shall not argue the case for continued public ownership of the grid at the moment because I do not wish to anticipate what the noble Lord, Lord Peyton of Yeovil, will say when he speaks to this group of amendments. However, I believe that a case has been made out; and if it is made out and accepted, then consequential amendments along the lines of Amendment No. 130, and subsequently to determine how the grid and the generating companies interact in terms of property, will be required. I beg to move.

Lord Peyton of Yeovil

My Lords, at this moment I think that I should declare an interest. I am the chairman of British Alcan. It is one of the largest generators of power, which it uses largely for its own purposes. It is only fair to add that the company stands to gain rather than to lose from the provisions made by the Bill for access to the grid on fairer terms than those which are presently available.

I neither oppose privatisation nor am I a noisy and eloquent champion of present arrangements. However, the present arrangements have this merit. They have worked. They have withstood the vagaries both of weather and of human behaviour. The new proposals would involve the severance of generation from transmission. My anxieties about the Government's proposals centre very largely on what is suggested now for the grid. I believe that the disturbance involved will be real and that the benefits may well turn out to be less so.

My Amendment No. 149 is grouped with that of the noble Lord, Lord Williams. Perhaps I may also refer briefly to Amendments Nos. 150 to 153, which stand in my name. The aim of those amendments together is to offer a breathing space during which the industry could settle down and, in the light of that experience, it would be possible for the Government to have a time for reflection and to decide what best to do with the grid company. The amendments offer an alternative of leaving it for the time being in public ownership, or, alternatively, dividing the ownership up, with 40 per cent. going to the distributor companies. 40 per cent. to the generators and 20 per cent. remaining with the Government.

I do not think that the Government's proposals are easy either to locate or to understand. If we piece together the bits of the puzzle, we find, as I understand it, that something like this emerges. The grid company will be owned by the distributor companies through a holding company. But it will be singularly free from parochial interference. The operation of the grid will be in the hands of its own board. I imagine that its borrowings—and I assume this because I have seen no clue that it is under the control of anyone else—will be a matter for it to decide for itself. In the charges that it makes, it will be responsible to the director.

I am indebted to my noble friend for her speech the other day. So far as expenditure is concerned, that expenditure which is required to enable the company to fulfil the conditions of its licence will be free from any control by the holding company. A similar provision exisits for research and development. The operating company will be free—I use my noble friend's words—to decide at what level, and what type of, R & D it will carry on in pursuit of its licensed activities.

I find it difficult to understand with any certainty what provisions are made for the appointment of directors in the future. What my noble friend said was to the effect that they would be governed by the articles of association, which focused mainly upon part-time non-executive directors. It would be of great assistance if she could tell us more specifically how and by whom executive and non-executive directors will be appointed in future.

In the course of her interesting remarks in the debate the other day my noble friend said that the operating company would have the benefit of what she called cast-iron safeguards. I should have thought that that was an unusual position for a wholly-owned subsidiary company to enjoy. To have cast-iron safeguards against its own parent is surely a somewhat novel situation.

The position which I have attempted briefly to describe seems to me to merit the description of the operating company as an unusually powerful middle man. It will also have, in addition to those privileges, further extensive powers and duties. It will instruct the power stations in the same way as it does now on the basis of the merit order, but there will be this difference. Whereas now the instructions carry with them the authority of ownership, in future those commands and instructions will have only the force of a contract. Sometimes it will be a contract made between two other parties.

The grid company will have the oversight of all contracts which involve the use of its own network. I imagine that it will also have its own contracts with the generators. Presumably those contracts will be reached in competition with its own owners. Both the grid and its owners will be obliged to enter into contracts with the generators. I find it a little difficult to understand how such a delicate relationship will work out in practice.

Since the grid company will be the only body in any position to verify the amounts of power consumed, it will necessarily be the clearing house for payment. It will also manage the generators' and distributors' pools, which we have heard rather coyly referred to in various government statements.

I find it a little odd that, in an industry as complex and as vitally important as this, there should as yet be available no explanatory document setting out the precise arrangements whereby a whole network of contracts and payments will mesh in with one another, not to mention the role that the Director General of Electricity Supply will have to perform.

Even if such a paper is not now available—that is, if I am correct in saying that it is not available —perhaps my noble friend can assure your Lordships that it will be available before the House finally passes the Bill on Third Reading.

Against the background, which gives me considerable concern, that this new grid company will in effect be answerable to no one—I do not want to take up too much time—I should like to dwell for a few moments on the distributor companies, which I understand are known to their friends as "discos", a rather ominous word. These discos will have the somewhat doubtful privilege of approving annually the mid-term strategic plan. I wonder whether in the light of experience they will come to regard that as a great privilege to be enjoyed to the full.

They will have the right to shop around for the cheapest source of power. None of us is very certain as to what surplus will exist. I wonder how much of a privilege that will be in the event. The generators are now being relieved of the statutory duty to supply. That statutory duty to supply is being imposed instead upon the distributor companies. Those companies will have no present capacity to produce and they will have to rely for the performance of a duty which is statutory on duties which are simply founded upon contracts, the interpretation of which will sometimes be uncertain. The distributors will be monopoly suppliers to most consumers. Of that I do not think there can be any doubt. However, where there are particularly large consumers, or where a sizeable consumer, one worth having, is close to a border, such consumers will have the undoubted advantages of competition because both generators and other distributor companies will all have the right to compete for their business.

The distributor companies—which I venture to believe could develop into a situation of some discomfort—so we are told by my noble friend, will view their shareholding primarily as an investment. I wonder how long that view will endure. As I hope I have already made clear, the distributor companies through their holding companies will have no influence whatsoever upon the prices charged by the grid. They will have no influence upon their general investment, expenditure or borrowing. I find that difficult to live with and I wonder how far it will work.

The Government must answer the principal question, and I have not yet heard a clear answer to it although there may have been one. It is to whom will the grid company be answerable? If the answer is to the director general, then he in his turn is answerable to the Secretary of State. There is then an easier alternative available, and I find most odd the fact that I should be advocating it. It is the alternative of leaving the industry where it is in the public sector. But the Government cannot maintain—not for one moment—that the grid company will be answerable to its shareholders, which surely is the answer one desires if looking for a free enterprise solution.

In conclusion, I wonder how greatly the distributing companies will, after a few years' experience, cherish their over-mighty offspring. I cannot entirely suppress my inquisitiveness. I am curious to know how Professor Littlechild is now feeling, confronted as he has been for a few weeks with a very difficult problem to unravel. Without in any way being impolite, I also wonder what the noble Lord, Lord Marshall of Goring, is thinking. I wonder whether in the future he will have the same confidence in the arrangements of which he was principal architect and which until recently he defended with such vigour.

Lord Ezra

My Lords, we have heard a most forceful, logical and clear analysis of one of the major problems arising in the Bill. Let us be quite clear and remind ourselves that essentially the electricity supply industry consists of three parts: the generation, the transmission and the distribution of electricity. Regarding England and Wales, under the existing arrangements the generation of electricity is a virtual monopoly and the generating company owns the grid. That is a clear system which, as the noble Lord, Lord Peyton, has said, has worked well over a number of years.

The Government decided to change the system; to privatise the industry and thereby introduce a greater degree of competition. In seeking to introduce that greater degree of competition, the question immediately arises: what will happen to those three integral parts? The Government have decided to take away transmission from the generating companies and give it to the distribution companies. I was most surprised by that decision because it seemed to me that if one was to provide open and fair access to the grid the very best that could happen was that it should be independent both of the major generators and the distribution companies.

But the Government have decided otherwise. However, as the noble Lord, Lord Peyton, has pointed out, what they have decided is not at all clear. They have stated that the management of the grid company will operate independently of its board. The Government must have realised at an early stage that to enable the grid to be owned by the distribution companies which are themselves in competition would be anomalous. Therefore they have said that the ownership must vest in them but that the management will be relatively independent.

As the noble Lord, Lord Peyton, has pointed out, that immediately raises big questions. What are their shareholder rights? What will they be expected to do regarding capital investment in the grid company and in approving its profit returns? Where will they stand in relation to the management? That is totally obscure.

I regret to say that another major obscurity is in the way the industry will operate in practice. We now understand that the distribution companies will be able to shop around and make contracts for the electricity which they wish to distribute. They can buy it either from the successors of the Central Electricity Generating Board—that is the two big companies which have been set up—or from a number of independent sources. That is from Scotland, France, and a number of private contractors.

In addition to that, the generating companies, whether existing or new, will be free to sell their electricity direct to industrial users. Therefore one has the creation of a market situation. But the essential feature of that market situation is the use of the grid. It is the route by which electricity moves from the producer to the user. As the distribution companies will be only one part of the competitive network, on the face of it it seems to be wrong that they should be owning the means by which electricity can go from its source to its end use.

However, there is a further technical complication. It is that the suppliers of electricity will have to enter into contracts with the distributors or with the end users if they choose to supply to them. They will make contracts for three, four, five or 20 years—whatever they agree—at whatever prices and under whatever conditions. But then the grid will intervene on a merit order basis. It will call forward the supply of electricity at prices which at the time it does so are the lowest. So one will then have a number of contracts being made with different contracting parties and the grid calling for the supplies to move on a different basis. That is another anomaly.

We should give the most serious attention to that problem because for decades we have had in operation in Britain an electricity industry which has worked successfully. Some may say that it has not been the cheapest and some may argue that it has not been the most innovative but it has certainly been extremely reliable and effective. As the noble Lord, Lord Peyton, said, it has worked. Without in any way being apprehensive about more competition because I am all in favour of the Government's intentions on that—and I happen to be personally involved in competitive companies in this sector and should therefore declare an interest—I am concerned whether the formula which they have adopted will work. I ask them to take very seriously into account what the noble Lord, Lord Peyton said.

The whole position of the grid company is anomalous, uncertain and unclear. It would be wise to keep it independent for a period from both the generating side and the distribtution side so that it can really open up the pathway to anybody who wants to use the grid on fair terms without hindrance, fear or favour. I believe that this is one of the most important aspects of this Bill which we have so far considered and I ask your Lordships to give it very careful thought indeed.

4 p.m.

Viscount Hood

My Lords, I should like to restrict my remarks to the problem of the ownership of the grid company to which my noble friend Lord Peyton and the noble Lord, Lord Ezra, have already referred.

As proposed, it will become a very important trade investment for the 12 distributing companies. The proposed structure is that the holding company, on which the 12 companies would presumably be represented, will be totally divorced from the fundamental financial activities of the operating company. Within the licence there may be very important enterprises. I believe that it is to be expected that another link with the continent may be necessary as may another link with Scotland. Those are both important and expensive capital expenditures which are no doubt justified with the licence.

From where are those funds to be derived? One option is for the operating company to borrow or for equity to be injected by the owners, but as set out the owners can only act if the company's financial viability is threatened—and I am reading from what the Minister said in Committee. In private enterprise that is nonsense. Any noble Lords who have served on boards of companies will know that the operating management depends very much on non-executive directors, or should do, in deciding financial policy. That is where total divorce is placed in the articles of association. I hope that the Minister will think again on that.

Perhaps I may be so bold as to make a suggestion. I recall in history that when the Government bought control of the British Petroleum Company, then the Anglo-Iranian Company in 1911, they had problems where they wanted to guide or control certain aspects of the company's affairs. To that end they appointed a minority of government directors whose instructions were incorporated in what was, I believe, called the Bradbury letter. That lasted for 50 years or more. Might that not be a much better solution than creating these terrible articles of association, assuming that the ownership continues in the hands of the distribution companies? That perhaps would be an alternative which would allow a degree of independence while retaining essential government principles.

Baroness Hooper

My Lords, I take it that we are speaking to Amendments Nos. 130 and 149 although my noble friend Lord Peyton referred to his Amendments Nos. 150 and 153. I must say that I was somewhat baffled as to the justification for the grouping so I listened with interest to the noble Lord. Lord Williams, because it seems to me that on the one hand Clause 65, to which Amendment No. 130 applies, deals with the transfer of assets of the area boards to the successor companies and on the other hand Clause 70, to which Amendment No. 149 applies, deals with the proposed structure of the electricity supply industry.

However, in view of the fundamental importance to both Amendment No. 130 and to the Bill as a whole of Amendment No. 149 which changes our proposals for the shareholdings in the transmission companies, I hope that it may be agreeable to your Lordships if I deal with that amendment first.

In Committee we discussed an amendment similar to Amendment No. 149 which was grouped quite properly in my view with what are now Amendments Nos. 150 and 153. I was unable to accept them then and I cannot accept them now.

As the House knows, we propose that the transmission company, or the National Grid company as it will be known, will move to the private sector under the joint ownership of the supply companies, the successors to the area boards. The National Grid company's shares will be owned, through a holding company, by the supply companies. There will be no government shareholding other than the special share.

The amendments before us today envisage wide-ranging changes to these proposals. My noble friend Lord Peyton has said today and on previous occasions that the intention behind these amendments is to offer the Government a choice in reconsidering the proposed shareholding in the transmission company.

The first option we are being offered is to recast the shareholding between the supply companies, the generators and the Government in the proportion 40:40:20, and we shall come to that later. The second option, Amendment No. 149, involves retaining the entire shareholding of NGC in government hands, thereby keeping it in the public sector. This is not a real choice. Both options would undermine the basis of our proposals for restructuring the electricity industry. Indeed, I would go as far as saying that they strike against the very essence of the White Paper.

Perhaps I may remind your Lordships of the reasons why we propose that the transmission system should be owned by the supply companies. The essential point made in the White Paper, to which we have adhered consistently ever since, is that the responsibilities for the generation and transmission of electricity must be entirely separate if competition is to thrive. That is why in restructuring the industry we intend that the transmission function should be split from the CEGB and so far I believe that we are all agreed.

It is a keystone of our proposals that the supply companies should have the choice of who generates their electricity. That is the only way that they will be in a position where they can shop around for the cheapest supplies. The supply companies will have the obligation to supply after privatisation, and it will be imperative for them to ensure that the grid is operated in an open and transparent manner, which will encourage new generators to come into the market. For those reasons, we believe the supply companies should own the grid.

Further, in order to ensure the maximum independence to the grid company there are clear cut duties and responsibilities governing the transmission company's business set down in the Bill and in the draft licence. The articles of association of the operating and holding companies underpin those duties and responsibilities and set out clearly the relationship between the two companies. The fundamental point is that these documents ensure that the operating company will have the necessary freedom to meet the terms of its licence and the day-to-day management control of its business. Again, I must remind my noble friend that the articles are protected from change by the special shareholder. Therefore, we do not accept the proposition that there should be any other government shareholding in the transmission company. The transmission system is, and will continue to be, the very backbone of our electricity supply industry. The comments made by the noble Lord, Lord Ezra, underline its importance. I hope that reassures noble Lords on the various points that have been raised.

Some of your Lordships expressed the view that over time the position of the transmission company within the industry will shift. It is alleged, on the one hand, that there will either be a tilt to the supply companies, who will not only own the grid company but also control it, and in so doing create for themselves a monopoly in supply. On the other hand, it is argued that the grid will develop in splendid isolation, answerable to no one. I do not accept either thesis.

The powers which the supply companies will be able to exert through the holding company over NGC are clearly prescribed and set out in the articles of association. I know that my noble friend Lord Hood expressed considerable concern about that. My noble friend said that the articles of association of the operating company do not adequately protect the grid company from interference from its shareholders. To give reassurance on this critical point, perhaps I may say that the key to limiting the degree of interference by the holding company is Article 89 of the operating company's articles.

The safeguards that this article sets out include the fact that the operating company will need to submit its investment plans and proposals to the holding company. The holding company will be able to discuss issues of policy and scrutinise these plans. Ultimately, subject to the terms of the articles of association, it will be able to recruit and dismiss National Grid company directors responsible for them. However, its powers to interfere with investment proposals are clearly set out in the operating company's articles of association.

The holding company will have no power to withhold consent over expenditure required by the licence or for work required to enable the National Grid company to comply with its obligations in the Bill. The holding company will be able to withhold approval over the expenditure concerning the carrying on of national grid business, but only where it has reasonable grounds for believing the implementation of the proposals is likely adversely to affect the financial viability of the company. It will be able to give or withhold approval to any other proposals made by the operating company.

These rules, we believe, strike a fine balance between National Grid company work required by the terms of the licence, and subject to supervision by the regulator, and other permissible activities over which the holding company has powers of approval. Tile National Grid company will be able to take its own day-to-day decisions, but its directors ultimately will be accountable to the holding company. We also intend to establish the company with the financial independence to finance its own investment plans. In short, the supply companies will view their shareholding in NGC as an investment, not as a means of control.

Lord Peyton of Yeovil

My Lords, I am grateful to my noble friend for giving way. She said that the directors of the operating company will be answerable to the holding company. How far can that possibly be the case? I am sorry to say that my noble friend will have to go into far more detail if she hopes to prove to the satisfaction of this House that that is anything like the case.

4.15 p.m.

Baroness Hooper

My Lords, I intend to deal further with the points raised by my noble friend concerning directors, and I hope he will be a little patient if I endeavour to cover all the points raised in the debate.

Regarding the suggesting that the National Grid company will have responsibility without accountability, the transmission company will at all times be accountable to the regulator—the Director General of Electricity Supply—and will be required to meet the terms of the transmission licence. The director general will set the price control formula and oversee the National Grid company to ensure that it is meeting the conditions of the licence and the statutory duties to be imposed by the Bill. However, the holding company will have a role too. It will be able to probe investment decisions and the policies underlying them. In the final extreme it can dismiss directors responsible for those policies. Finally, let us not forget that the National Grid company, like the other successor companies, will have to finance its investment plans, and will be exposed to the disciplines of the market.

My noble friend Lord Peyton, and other noble Lords, asked what information is available on the operation of this system. I shall endeavour to respond as fully as possible; but the short answer is that the National Grid company will operate in virtually the same way as the CEGB's national grid control and transmission division does at present—directing power stations in order to meet demand at lowest cost and ensuring that the power flows and the quality of supply on the system remain within technically acceptable limits.

Perhaps it would assist your Lordships if I elaborate on how the system will operate, and give the information about it that is already available. Given the integrated nature of the electricity supply system, with numerous entry and exit points, the National Grid company will need to continue to exert a considerable degree of operational control if the quality and integrity of power flows on the system are to be preserved. The rules governing this will be contained in a technical operating code—the grid code. A draft code has been circulated to potential users of the system for their comments. The National Grid company hopes to finalise consultations by the end of the summer when it will be put to the Director General of Electricity Supply for his approval.

The National Grid company will levy charges for the use of its system under the draft transmission licence, and it is working up the necessary detailed proposals to meet this condition. It expects to circulate these shortly. As the draft licence makes clear, it will be required to offer terms to users on a transparent and non-discriminatory basis. The director general will have the power to settle disputes over the terms.

To reduce their costs, suppliers are expected to wish to pool their contracts in a distributors' pool, run on their behalf by the grid company. The National Grid company would then call on these contracts to meet demand, with the lowest energy rates first. This process will determine the overall level of contractual payments to be made to generators. At the generator end, the grid company is expected to run a generators' pool. Power stations who bid the lowest energy price will be despatched to meet demand first. A generator with a contractual commitment to deliver power can either produce it himself or, if another generator bids a lower price, can in effect sub-contract for generation at an agreed price. This pool therefore enables generators to meet their contractual commitment at lowest cost. In line with the transmission licence, NGC will be responsible for running these pools and organising the necessary financial settlements. The Government will approve the rules for the pools and the settlement arrangements.

I am sure it is recognised that this is a complex area, involving much discussion and negotiation. Our intention is that further information will become available on the new contractural and operational regime in time for all players to participate in contract negotiations on a properly informed basis. I can assure your Lordships that we shall make this information and supporting documentation available as soon as we can.

My noble friend Lord Peyton asked about grid instructions to generators. The generators will be required by the conditions of their licences to comply with merit order instructions from the grid company.

The Earl of Lauderdale

My Lords, my noble friend said that she will make information available as soon as possible. What does that mean? Why cannot we have the information now? We are now on Report and we still do not know. I am sorry to press my noble friend on this matter, but my experience is that "as soon as possible" almost always means never.

Baroness Hooper

My Lords, I find that difficult to accept. For example, I have said that the grid code is currently in circulation and being commented on by potential users. It will depend on the completion of that process as to the time at which we can issue it. I can assure your Lordships that, just as these matters are complex, we also believe that they require adequate and thorough consultation. That has to take place before draft documents are produced for wider circulation. I hope that my noble friend will accept that. It is a very valid point.

Lord Peyton of Yeovil

My Lords, I am so sorry to interrupt my noble friend again. In the presence of the Leader of the House I ask her whether it would not be sensible and fair to postpone the Third Reading of the Bill until such time as this very necessary information is available.

Baroness Hooper

My Lords, I agree with your Lordships. This is a very complex matter. It is difficult for the average citizen to grasp and it is clearly difficult even for those noble Lords who are experts. A great deal of work has, and continues, to be done by the experts who will continue to operate the system after privatisation. They are confident that they can meet the challenges and complexities to which your Lordships have drawn attention. I believe that they will be successful. If my noble friends wish me to continue to respond to the points that they have raised, I shall be happy to do so, if I am permitted.

As regards the question of grid instructions to generators, generators will be required by the conditions of their licences to comply with merit order instructions from the grid company. If a generator fails to comply with an instruction, it will be in breach of a licence condition and the director general can take enforcement procedures, if necessary making orders under Clauses 27 to 30.

I now turn to the appointment of directors. The holding company appoints National Grid company directors at its shareholders' meetings. The holding company and public electricity supply employees explicity cannot be appointed. Non-executive directors must always be in the minority. As may be seen from the draft articles, the directors may appoint one of their number to be 1 he chairman of the board of directors. The holding company is the shareholders and they have every incentive to ensure that the operating company achieves the maximum possible efficiency savings so that they achieve a good return on the investment. It is in the interests of the shareholders to do all that they can to enable the National Grid company to operate efficiently with continuity of personnel and policies. It is also in their interests not to stand in the way of the operating company meeting the conditions of its licence.

Lord Ezra

My Lord, I realise that the noble Baroness has been interrupted a number of times, but I wish to ask a question because I am very puzzled. If the Government and the director between them are going to lay down exactly how the grid company is to operate, it seems to me that the locus of the technical owners of the business is diminished enormously and that their existence as such seems to be very much in question.

Baroness Hooper

My Lords, I am trying to explain how there is a delicate balance. In the very complex situation that we have before us, we have endeavoured to provide for arrangements which will preserve the necessary balance between equity and detailed control. I believe that the arrangements which have been put forward and which we have been discussing (further details will be produced as soon as possible) will adequately meet the needs of the industry and the concerns that have been expressed today.

Perhaps I have missed out one particular issue raised by my noble friend Lord Hood concerning the relationship between equity and borrowing. It will be some months before we reach a final view of the capital structure of the grid company and of the balance between equity or share capital for the shareholders on the one hand and debt on the other. I must make it clear that we shall ensure that the company has the financial independence to finance its investment programme.

At this point I turn to Amendment No. 130, moved by the noble Lord, Lord Williams of Elvel, some little time ago. In cases where there is any doubt between an area board and the CEGB as to the ownership of any property to be transferred under the CEGB's transfer scheme, the allocation of such property through the CEGB transfer to the transmission company will be dealt with by Clause 66. This amendment is to Clause 65, which deals with the transfer of area board assets. It is Clause 66 that deals with the CEGB transfer scheme.

Furthermore, I believe that the amendment is unnecessary. The CEGB is currently undertaking a detailed study of its assets, paying particular attention to the interface between the boundaries of its shadow successor companies, how property should be divided, how this fits in with the boundaries of the area boards and how in consequence the CEGB property should be divided between successor companies. In this context it is possible that for operational reasons some property will be transferred from the CEGB to the area boards prior to the transfer date.

In most cases the property in question is close to substations already owned by the area boards on CEGB land, as the noble Lord, Lord Williams, pointed out. This is a totally amicable process. It will be concluded well in advance of the transfer date. There should not be any cases where the ownership of property is in doubt as between the CEGB and the area boards on the transfer date. Amendment No. 130 is unnecessary and inappropriate. Amendment No. 149 strikes at the heart of the Government's clear intentions for the future structure of the electricity supply industry. The independence of the grid company is safeguarded by its having its own statutory duties and its own licence, besides the detailed provisions of the articles of association to which I have referred. I therefore ask your Lordships to reject these amendments.

Lord Harmar-Nicholls

My Lords, my noble friend has been answering questions on two issues. The first is the general principle behind the Bill which I believe most of us will accept wholeheartedly. The second is the charge that she has to answer made from various parts of the House; namely, that the machinery that has been set up is unusual when considered against normal practices. It will not work. Is my noble friend in a position to say that advantage has been taken of the expert advice of the merchant banks—that is, quite apart from the principle which it is for the politicians to settle? Can she say whether the machinery that has been constructed has passed a test set out on the best technical advice? Can she put our minds at rest as regards the machinery and tell us that the technicalities have been approved not just by amateurs—by politicians arguing? It is the politicians' job to deal with the principles.

A noble Lord

Speak for yourself!.

Lord Harmar-Nicholls

My noble friend is the chairman of a company that is connected with this industry. I am the chairman of several other companies and I disagree with him that there is anything unusual about inter-company ownership of shares. Competing companies will often have a minority shareholding in another company. They may have no control over that management, but they accept that as part of the general way of running the business. While we may be expert in narrow quarters, can I be assured that the overall technicalities which have been questioned by various noble Lords have passed the test of the outside expert guidance that is available to the Government?

Baroness Hooper

My Lords, with the leave of the House, I am grateful to my noble friend. It is perfectly true that we have had a wealth of advice from all our advisers, including technical advisers and the industry. As I said at an earlier stage, the experts who will be running the new National Grid company are the same experts who are running the grid system now. Although these technicalities are extremely complex, the House can rest assured that not only wide consultation has taken place but advice has been gathered from appropriate sources.

4.30 p.m.

Lord Williams of Elvel

My Lords, perhaps I may first refer to the point raised by the noble Lord, Lord Harmar-Nicholls. The answer to his question must be "no". There is no assurance from outside sources that this will work, not least because the documents on which such judgments would be made are not yet available. They may be in the course of consultation with experts and various parties but they are not commented on by technical expertise. That technical comment has not been made available to Parliament. The answer cannot be given to Parliament because it simply is not known.

The main points made by the noble Lords, Lord Peyton and Lord Ezra, seemed to be thoroughly proved. Either there is a company in which shareholders have authority and can appoint directors, manage and so on, or there is a company in which shareholders have an investment but are not allowed to change the articles of association —those are determined by the Secretary of State; in which they are not allowed seriously to examine the investment plans—those will be examined by the director; in which they are not allowed to comment on the operations—those are properly commented upon by the director under the licence; in which they are not allowed to call to account directors—their role is severely limited by the articles of association which are determined by the Government in the form of the Secretary of State. In other words, these shareholders will have none of the privileges of shareholders but they will have the onus of shareholders because they will be the owners of the business.

The area boards will have as their investment in the grid a major investment, and possibly the major investment, that they will have to show to the stock market on flotation. The grid has around £5 billion of assets. Those are higher than the assets of the 12 area boards combined. If one splits £5 billion into 12 one will find on flotation that each area board will have an enormous item in its balance sheet—investment in National Grid. That is what the stock market will concentrate on because it will want to know what control the company in which it is buying shares has over this major trade investment. The answer is none at all. We are faced with a simple problem. It is a technical problem—will the system work technically?—and a financial problem, in terms of whether the financial structure is right.

I do not want to follow other noble Lords in their criticisms of the noble Baroness for not producing the information that we need to judge this properly before Third Reading; that point has already been made. But I have to endorse it. One of the curious things about the Bill is that it is being rushed through without proper consideration of these vital points about which, even now, on the third day of Report, we are still arguing. We do not have the information that we need. I do not want to detain the House as we have spent more than an hour on this amendment. I am sorry that the noble Baroness did not understand my grouping. I am sorry that she did not understand Amendment No. 130. However, in the light of my explanation, I hope that she understands it now. Indeed, towards the latter part of her reply she indicated that she had understood.

The noble Baroness said that the proposal to keep the grid in public ownership would strike against the essence of the White Paper. Indeed it might, but nothing in the White Paper is sacrosanct. This House should declare that this amendment is the right way forward. This will help the Government. It is not designed to wreck the Bill but to make a proper Bill out of it. It will allow the grid, which will be the central point of the whole system, to operate properly. Instead, we have a mish-mash and a fudge of area boards, articles of association, the Secretary of State, the licences, golden shares and so on. The noble Lord, Lord Peyton, has put forward a perfectly simple formula. I recommend it to the House.

4.35 p.m.

On Question, Whether the said amendment (No. 130) shall be agreed to?

Their Lordships divided: Contents, 100; Not-Contents, 126.

DIVISION NO. 1
CONTENTS
Addington, L.	Hampton, L.
Airedale, L.	Hanworth, V.
Amherst, E.	Harris of Greenwich, L.
Ardwick, L.	Hatch of Lusby, L.
Attlee, E.	Henderson of Brompton, L
Aylestone, L.	Hood, V.
Birk, B.	Howie of Troon, L.
Blease, L.	Hunt, L.
Bonham-Carter, L.	Irvine of Lairg, L.
Bottomley, L.	Jay, L.
Briginshaw, L.	Jeger, B.
Bruce of Donington, L.	Jenkins of Putney, L.
Buckmaster, V.	John-Mackie, L.
Burton of Coventry, B.	Kilbracken, L.
Campbell of Eskan, L.	Kilmarnock, L.
Carmichael of Kelvingrove, L.	Kinloss, Ly.
	Lauderdale, E.
Carter, L.	Leatherland, L.
Cledwyn of Penrhos, L.	Listowel, E.
Cobbold, L.	Llewelyn-Davies of Hastoe, B.
Cocks of Hartcliffe, L.
Darcy (de Knayth), B.	Lloyd of Kilgerran, L.
David, B.	Lockwood, B.
Davies of Penrhys, L.	Lovell-Davis, L.
Dean of Beswick, L.	Macaulay of Bragar, L.
Dormand of Easington, L.	McGregor of Durris, L.
Elwyn-Jones, L.	McIntosh of Haringey, L.
Ennals, L.	McNair, L.
Ewart-Biggs, B.	Mason of Barnsley, L.
Ezra, L.	Mayhew, L.
Falkender, B.	Milner of Leeds, L.
Falkland, V.	Molloy, L.
Fisher of Rednal, B.	Murray of Epping Forest, L
Gallacher, L.	Nicol, B.
Galpern, L.	Ogmore, L.
Graham of Edmonton, L.	Peston, L.
Greenhill of Harrow, L.	Peyton of Yeovil, L.

Phillips, B.	Stoddart of Swindon, L.
Ponsonby of Shulbrede, L.[Teller.]	Strabolgi, L.
	Taylor of Gryfe, L.
Prys-Davis, L.	Taylor of Mansfield, L.
Ritchie of Dundee, L.	Tordoff, L. [Teller.]
Rochester, L.	Turner of Camden, B.
Russell, E.	Underhill, L.
Sainsbury, L.	Wallace of Coslany, L.
Seear, B.	Walston, L.
Seebohm, L.	Warnock, B.
Serota, B.	Whaddon, L.
Shackleton, L.	White, B.
Shepherd, L.	Williams of Elvel, L.
Stallard, L.	Winstanley, L.
Stedman, B.
NOT-CONTENTS
Ailesbury, M.	Kimball, L.
Airey of Abingdon, B.	Kinnaird, L.
Alexander of Tunis, E.	Kinnoull, E.
Ampthill, L.	Layton, L.
Annaly, L.	Long, V.
Arran, E.	Lucas of Chilworth, L.
Auckland, L.	Mackay of Clashfern, L.
Belhaven and Stenton, L.	Macleod of Borve, B.
Beloff, L.	Margadale, L.
Belstead, L.	Marley, L.
Bessborough, E.	Marshall of Leeds, L.
Birdwood, L.	Merrivale, L.
Blatch, B.	Mersey, V.
Blyth, L.	Monteagle of Brandon, L.
Bolton, L.	Montgomery of Alamein, V.
Borthwick, L.	Morris, L.
Boyd-Carpenter, L.	Mowbray and Stourton, L.
Brabazon of Tara, L.	Munster, E.
Braye, B.	Murton of Lindisfarne, L.
Caccia, L.	Nelson, E.
Caithness, E.	Newall, L.
Campbell of Alloway, L.	Norfolk, D.
Campbell of Croy, L.	Norrie, L.
Carnock, L.	Nugent of Guildford, L.
Coleraine, L.	Onslow, E.
Colnbrook, L.	Oppenheim-Barnes, B.
Cullen of Ashbourne, L.	Orkney, E.
Davidson, V. [Teller.]	Orr-Ewing, L.
Denham, L. [Teller.]	Oxfuird, V.
Dilhorne, V.	Pender, L.
Dundee, E.	Penrhyn, L.
Eccles, V.	Platt of Writtle, B.
Elibank, L.	Plummer of St. Marylebone, L.
Ellenborough, L.
Elliot of Harwood, B.	Quinton, L.
Erne, E.	Rankeillour, L.
Erroll of Hale, L.	Renton, L.
Faithfull, B.	Renwick, L.
Fanshawe of Richmond, L.	Rodney, L.
Ferrers, E.	Romney, E.
Fraser of Carmyllie, L.	St. Davids, V.
Fraser of Kilmorack, L.	Saint Oswald, L.
Gainford, L.	Saltoun of Abernethy, Ly.
Gardner of Parkes, B.	Sanderson of Bowden, L.
Gisborough, L.	Savile, L.
Goold, L.	Selkirk, E.
Gray of Contin, L.	Sempill, Ly.
Gridley, L.	Sharpies, B.
Halsbury, E.	Skelmersdale, L.
Harmar-Nicholls, L.	Strange, B.
Harvington, L.	Strathclyde, L.
Havers, L.	Strathspey, I,.
Henley, L.	Sudeley, L.
Hertford, M.	Swinton, E.
Hesketh, L.	Teviot, L.
Hives, L.	Thomas of Gwydir, L.
Home of the Hirsel, L.	Trafford, L.
Hooper, B.	Trefgarne, L.
Hylton-Foster, B.	Trumpington, B.
Ingrow, L.	Vaux of Harrowden, L.
Ironside, L.	Windlesham, L.
Jenkin of Roding, L.	Wolfson, L.
Johnston of Rockport, L.	Wynford, L.
Killearn, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.44 p.m.

Lord Williams of Elvel moved Amendment No. 131:

Page 49, line 7, at end insert— ("(5A) Any company nominated as a successor company under any of the above subsections shall have a duty to further the conservation and enhancement of natural beauty; and the conservation of flora; fauna, and geological or physiographical features of special interest; and, where consistent with its other functions, for securing the public enjoyment thereof; on any land transferred to the company, whether it is held for the purposes of generating electricity or otherwise. (5B) Where any company nominated as a successor company under this section plans to dispose of any land which is a National Park, Area of Oustanding Natural Beauty, or land which has been designated by virtue of its scientific or geological interest; or is designated under this section by virtue of its natural beauty, amenity or recreational value, it shall not do so without the express consent of the Secretary of State. In giving such consent, the Secretary of State shall consult with the Countryside Commission and the Nature Conservancy Council and shall not give consent without first ensuring that the requirements of subsection (5A) of this section has been satisfied. The Secretary of State shall require any such land that is offered for sale to be offered first to a competent body, and shall not approve the sale to any third party without the provision of a management agreement and/or restrictive covenants prior to sale for the purposes of securing the conservation of such land. (5C) For the purposes of this section a "competent body" is a body whose inclusion on a list of competent bodies held by the Secretary of State has been agreed by the Countryside Commission, Nature Conservancy Council, English Heritage, Historic Buildings and Monuments Commission and, in the case of Wales, Cadw.".

The noble Lord said: My Lords, when we were in Committee on this matter, we had a short discussion about disposals of land in areas of natural beauty such as national parks and others. I have brought forward an amendment to be rather more explicit about what we think should happen. It is now, I believe, common ground that the CEGB land holdings in 1988 amounted to some 48,000 acres. I recognise that that is substantially less than the acreage owned by the water authorities which are to be privatised under the Water Act; nevertheless, it is substantial.

There is, curiously enough, little information about where that land is, although most is associated with existing power station sites or potential power station sites. To give one example, the CEGB owns land which has never been developed but which is earmarked as a possible future PWR site at Druridge Bay, Northumberland, although no planning application has yet been made. Nevertheless, it has a stake in the land there.

There is almost no land owned in any of the national parks except in Snowdonia. Here I must declare an interest as president of the Council for the Protection of Rural Wales. The estate in Snowdonia of some 6,000 acres is rather larger than that owned by the water authority and includes three plots of land, one of which is adjacent to a major National Trust estate and is of profound conservation importance. The other main areas are near the Ffestiniog hydro scheme around Trawsfynydd. If there is no second generation nuclear power station at Trawsfynydd, that will mean that that land will be disposed of. That could happen soon and at short notice.

There are other sensitive areas of the countryside in England—for instance, around Marchwood in the New Forest—and redundant power station sites are seen as ideal candidates for development. Those of course are assets which are highly pertinent to the industry's flotation, witness the argument that took place over the water authorities and the problems which have been highlighted by the Royal Ordnance sale.

Even though the areas involved are much smaller than in relation to the Water Act, some of the land owned by the CEGB is highly sensitive and deserving of exactly the same protection as is provided by that Act.

The amendment addresses two issues: first, the good management of all land owned by the CEGB successor companies, where it is appropriate to further conservation; and, secondly, the safeguards on disposal. In Committee the Minister indicated her readiness to consider the first question in the context of amendments moved by her noble friend Lord Norrie. I have seen no indication that she has come back with anything that looks satisfactory.

As regards the second problem—safeguards on disposal—I am afraid that she was less sympathetic, possibly because none of us knew exactly where that sensitive land was distributed and how it was owned. I hope at this time that the Government will show themselves more enthusiastic about giving the same protection to CEGB land as is being given under the Water Act to the water authority-owned land. I beg to move.

Lord Renton

My Lords, I hope and believe that on this amendment we have got into a realm of non-controversy, a realm quite different from the one which we suffered on the previous amendment. Clearly the amendment moved by the noble Lord, Lord Williams, has a great deal to commend it. I am sure that the Government would wish to fulfil the purposes stated, but it is a question of how. It seems to me that subsection (5A) is covered by Clause 40 and the ninth schedule, especially as amplified by my noble friend either at the Committee or Report stage; I cannot remember which. At any rate, the first subsection may well be covered already in the Bill.

As to subsection (5B), it may well be that the laudable purpose stated there (on which we could all agree) is already partly covered by the National Parks and Access to the Countryside Act and partly by the operation of the planning laws. Clearly Schedule 9 as it stands, even as it was amended, does not deal so far as I can remember with the disposal of land; it deals with the use of land which comes into the possession of one of the new bodies.

We need to apply our minds very carefully to what will happen when a successor company plans to dispose of land which is of particular scenic interest and beauty or of scientific or geological interest. The system of SSSIs will also cover what the noble Lord has in mind, although I do not think that he mentioned that in moving the amendment.

Although I support the purposes of the amendment and hope that they will be fulfilled in one way or another, I shall be interested to hear what my noble friends on the Front Bench have to say about the way in which those purposes will be fulfilled.

Lord Ezra

My Lords, the noble Lord, Lord Renton, may well be right in that parts of what is intended in the amendment put forward by the noble Lord, Lord Williams, might be covered elsewhere and in other legislation. Nonetheless, the importance of the physical environment is such that I can see no harm in the restatement of such proposals at this stage of the Bill, where the functions of the successor companies are mentioned. Therefore I hope that, even though there may be some risk of repetition, the amendment should be considered seriously by the Government.

Lord Howie of Troon

My Lords, I happily support my noble friends on the Front Bench as regards Amendment No. 131. However, I fear that I must bore the House for a moment or two by referring to my King Charles's head which arises under subsection (5C).

In moving the amendment, my noble friend Lord Williams referred to the disposal of certain lands which are related to hydro-electric schemes. He referred to power stations and he might well have referred, but did not, to dams, reservoirs and areas of that nature. All of that is perfectly correct and I entirely support him. I hope that the Government will accept the amendment, but I wonder whether it might be extended in subsection (5C) where it refers to a "competent body", which is also mentioned in subsection (5B), a few lines above on page 2: a 'competent body' is a body whose inclusion on a list of competent bodies held by the Secretary of State has been agreed by the Countryside Commission, Nature Conservancy Council, English Heritage, Historic Buildings and Monuments Commission and, in the case of Wales, Cadw". Cadw is a body of which I have never previously heard, but I am sure that it is utterly excellent in every way.

What bothers me is that the philosophy underlying this part of my noble friend's amendment, which I support, seems to me to be based on the one side of C. P. Snow's two cultures; that is, the rather "moist" side of the two cultures. All the bodies mentioned which are to be called upon to agree to what are competent bodies are estimable groups. Of that there is no doubt. But they all come from one side of the two cultures.

Here we are dealing with a problem which is partly to do with the countryside as a whole and also to do with the countryside in the context of a technical Bill. I wonder why the groups which can agree to the list of competent bodies are limited. What they have to do is nothing very great; they have to be consulted and agree on which the competent bodies are. Why should that list not be extended beyond the Countryside Commission and other such organisations to include some of the more muscular members of our society? I have in mind, for instance, the Institution of Civil Engineers, or the Institution of Electrical Engineers, which would be most appropriate on this occasion, or even the Engineering Council.

Why should we always lean towards what I have unjustly and defensively called the "moist" side of society and not balance the matter rather more than my noble friend's amendment? When I say that, I am not attempting in any way to criticise his amendment. It is excellent so far as it goes. I merely say that it should go a little further and that the Government should accept it and carry it further along the lines which I have suggested.

Baroness White

My Lords, this is the first occasion on which I have taken pail in any debate on the Electricity Bill. It is the first time that I have even been here to listen to the debate because, while the Water Bill was still in progress, I was so deeply immersed in water that I decided that I could attend to only one Bill, and not this one.

I can offer no comment upon the remarks of the noble Lord, Lord Renton, as to what might have been said on earlier occasions in these debates. However, I doubt whether the point is covered in any other legislation about land for sale first being offered to a competent body. Your Lordships will be aware that there was considerable concern in the Water Bill about what had been understood by a number of bodies, in particular the National Trust, to be an undertaking that under that legislation there should be an offer of land in designated areas to one of the appropriate bodies, of which the National Trust was quite clearly one.

In effect the offer was withdrawn in favour of substituting sites of special scientific interest. I know that the noble Lord, Lord Gibson, who is not able to be in his place today, was deeply disappointed. That was made very clear indeed in letters to the press by the director of the National Trust. It was one of a number of bodies which came together and made a corporate plea, so to speak, to Her Majesty's Government as regards the water industry.

To the best of my belief, no such co-operative effort has formally been made under the Electricity Bill. However I may be wrong about that. It certainly was under the Water Bill, because the Council for the Protection of Rural England and the Council for the Protection of Rural Wales were concerned in the discussions about the Water Act; mutatis mutandis, a number of the same considerations apply to the land which would be affected under this legislation. That is naturally a matter of concern to me as regards the Principality of Wales, and I am delighted that my successor as President of the Council for the Protection of Rural Wales, the noble Lord, Lord Williams of Elvel, has seen fit to move this amendment under this legislation.

However, I must stress to the House the deepest possible disappointment which arose. As I said, this was made manifest publicly in lengthy letters from the director of the National Trust in the national press when the expected co-operation with these bodies on the Water Bill was reneged on by the Government. I can only hope that in this context there may be a more satisfactory relationship.

5 p.m.

Baroness Gardner of Parkes

My Lords, I wonder whether the parallel between the Water Bill and the Electricity Bill is an appropriate one. The water authorities did and do own vast tracts of land which are of great amenity value. However, I am not so sure that the electricity authorities are in a parallel situation. I should be interested to be informed on that. I should also be interested to know whether the proposed subsection (5B) of this amendment deals with land which is not presently owned but which may be owned in the future, as well as land which is presently owned. It should be appreciated that certainly all the area boards—I believe that this applies to the generating authority also—are very environmentally conscious and carried out great tree replanting exercises after the terrible storm. We should not, therefore, underestimate their interest in the environment. However, I have some queries as regards the amendment.

The Earl of Swinton

My Lords, like the noble Baroness, Lady White, I too have not spoken on this Bill apart from on Second Reading. I did not intend to speak today until the noble Lord, Lord Howie of Troon, accused me of being a "moist", as I am a member of the Countryside Commission. My best friends have never accused me of being "moist" before.

Lord Howie of Troon

My Lords, in the noble Earl's case I withdraw totally my remarks. He is as muscular as any noble Lord in the Chamber.

The Earl of Swinton

My Lords, I think one is 80 per cent. water, so there is an awful lot of moisture in me. However, I should say that the reason that these bodies are singled out—here I agree entirely with the noble Lord, Lord Williams—is that they are experts on the landscape. It is marvellous to have engineers and other such people, but then we may as well have the association of second-hand car dealers or the association of pawnbrokers, or whatever. If an amendment such as this one is to be accepted, the bodies stated are the ones which should decide who constitutes a competent person.

At the same time I am not sure that this amendment is necessary. My noble friend has gone an awful long way on this Bill to satisfy what one might describe as the greens in the many amendments that she has agreed to and supported. I also wish to pay tribute to my noble friend Lord Norrie, who has done so much to help to persuade her. However, there is a difference between this Bill and the Water Bill. Water authorities own a lot of land, particularly in the Lake District. People were accustomed to have access to that land. Therefore, the water authorities were a special case. However, as regards this provision on the national parks, there may be a lot of land in Snowdonia, but I do not think there will be quite the same pressure for people to walk there. They may wish to admire the view, but that will be from a distance. I should not have thought that it was necessary for the successor companies to be pinned down and be advised about whether they can buy certain land.

Lord Taylor of Gryfe

My Lords, the presence of the noble Lord, Lord Sanderson of Bowden, on the Front Bench encourages me to ask whether the protection which is outlined in the Bill, and which presumably refers exclusively to England, is the kind of protection that is sought in this amendment for some of the large and rather beautiful areas of Scotland where the hydro board and even the SSEB hold their fief. I plead ignorance on this matter, but I should be interested to have some comment or assurance in that regard.

Lord Dormand of Easington

My Lords, the noble Lord, Lord Renton, made a legitimate point, as he always does in our debates, in suggesting that another part of this Bill will take care of at least the spirit, if not the content, of the amendment which my noble friend Lord Williams has proposed today. However, your Lordships will know that on a number of occasions, particularly in the privatisation Bills which have been before us for some months now, we on this side have felt that it has been necessary to be more specific about certain things rather than to accept the generalities contained in various Bills before us.

My noble friend Lord Williams mentioned Druridge Bay as an area which should receive special attention. I hope that your Lordships will forgive me if for a few minutes I say something about that area, which I happen to know very well. I am sure that what I have to say could be repeated in a number of areas throughout the country. There has been a Druridge Bay campaign for many years now. I am not directly associated with it, but I know of the splendid work that is being done.

The organisers of that campaign have brought attention to nature reserves, parks, dune parks and open cast restoration. They say that of the sites north of the Grange Moor fault, three have been restored to farming and have important nature areas on them, two are run by the Northumberland Wildlife Trust and one is the Northumberland County Council's Druridge Country Park. At the East Chevington site, which is currently worked, there are plans for a 100-acre reed bed site after restoration. No less a body than the National Trust has purchased 100 acres of dunes of beauty and importance. The National Trust opposes the proposal to have a CEGB power station at Druridge because of its damaging effect on the environment and on the amenity of the trust's property.

One could go on in this vein for some time, but one particular principle will apply to any area where a nuclear power station is to be built. At the end of the power station's useful life—we know that that may be 30 or 40 years—what remains will need to be sealed and covered in the various ways that apply to nuclear power stations. That process may last for something like 100 years. As the Druridge Bay campaign states in a leaflet, "It sounds like a fairytale, but that is the official CEGB policy".

There is another side of the coin as regards Druridge Bay. It happens to be situated on a coal field. We on this side of the House, at least for some time now, have pressed the Government to change their policy as regards the coal industry. There has been a considerable reduction in the number of collieries in the North-East. We could have, without any problem at all, a coal-fired power station well away from Druridge Bay and adequately supplied with proper coal. I repeat that that is simply an example of the kind of things which should be looked at more closely than the Bill suggests. The merit of my noble friend's amendment today is that it proposes that this is precisely the kind of area which should be looked at more closely than the Bill suggests.

Lord Renton

My Lords, with the leave of the House, I wish to make one short point before my noble friend replies. The reference to the amplification of the ninth schedule, to which I referred—my memory let me down temporarily—is to be found towards the end of our previous Sitting on 6th July at cols. 1301 and 1352 of Hansard.

Baroness Hooper

My Lords, as the noble Lord, Lord Williams, said in presenting this amendment, we have already had a discussion in Committee about substantially the same matter. With the greatest respect to the noble Baroness, Lady White, I say as I said then, that I believe that the amendment is based on a false analogy with the water industry, which owns very large areas of attractive land to which the public have access. In contrast, the land held by the electricity industry is primarily industrial. I did undertake, however, to consider the first part of the amendment further, and indeed, I did so.

A successor company will be subject to the duties defined in Schedule 9. As amended by the House last week, following the acceptance of government amendments, licence holders will have to have regard to the desirability of preserving natural beauty and will also have to do what they reasonably can to mitigate the effects of their proposals on the beauty of the countryside and on flora, fauna and the other aspects defined. I believe that, to some extent, the noble Lord's point is covered, as indeed my noble friend Lord Renton suggested.

I have explained previously that I believe that mitigating the effects is much more apt than wording which refers to the furthering of conservation and enhancement of natural beauty in the context of the electricity supply industry. A power station can hardly be said to enhance the countryside, unless perhaps one has the sensitive appreciation of engineering enjoyed by the noble Lord, Lord Howie of Troon. Therefore, I believe that the first part of paragraph (5A) of the amendment is already covered by Schedule 9.

The paragraph then refers to securing public enjoyment of the land transferred. Because most electricity industry land consists of essentially industrial sites, where safety is an important consideration, the scope for public enjoyment of the land is very limited. However, where possible the CEGB and Scottish boards encourage recreational use of land. The joint statement on environmental policy issued by the three CEGB successor companies in May refers to the CEGB's policy of implementing creative conservation measures and the establishment of study centres and nature trails at several locations. Those seem to me to be matters well suited to the environmental guidelines which licence holders will have to prepare.

The noble Lord, Lord Williams, and other noble Lords referred specifically to Snowdonia. The CEGB currently owns approximately 7,800 acres of land in the Snowdonia area. This land supports the Trawsfynydd nuclear power station—cooled by water from the lake which the CEGB does not own—the Dinorwig and Ffestiniog pumped storage stations and the Dolgarrog and Cwm Dyli hydro-electric stations. The greater part of this land, some 4,600 acres, is attached to the Dolgarrog hydro-electric station. This land—which is used for rough grazing—is needed to collect and channel the large amounts of water needed to "fuel" the hydro station.

I understand that there are public rights of way over some of the land held by the CEGB at, for example, the Dolgarrog power station. If successor companies were to sell land in Snowdonia or elsewhere any public rights of way would continue.

In view of the interest which the noble Lord, Lord Williams, has expressed in the board's land in Snowdonia, I shall be happy to discuss with the CEGB whether it would be prepared to follow the spirit of the noble Lord's amendment when disposing of any surplus land on the Dolgarrog site.

Druridge Bay was referred to by the noble Lord, Lord Dormand of Easington. I car confirm that Druridge Bay has not been chosen as a site for one of the small family of four PWR nuclear power stations that the CEGB wishes to see in operation by the year 2000, since the four applications are already under consideration. As things stand at present, the Government cannot force the board to sell its land.

The noble Lord, Lord Taylor of Gryfe, asked whether the amendment would apply to Scotland. The answer is no. Clause 65 applies only to area boards in England and Wales. Amenity provisions for Scotland are set out in paragraphs 2 and 3 of Schedule 9. I believe that that covers the Scottish situation.

To revert to the second part of the amendment concerning the disposal of land, I have already said to the noble Lord, Lord Williams, that I would be prepared to talk to the CEGB about Snowdonia. The amendment would prevent any sale to a third party without a management agreement or restrictive covenant securing the conservation of the land. That could prevent a third party from putting the land to another use, despite the fact that planning permission might be granted, perhaps following a public inquiry. I explained in Committee why I did not think it right to place restrictions on the electricity industry which do not apply to other industries, apart from the water industry which I think we are all agreed is unique in respect of its land holdings and the beauty of those areas.

Last week the House welcomed the Government's package of environmental amendments to Schedule 9. I am grateful to my noble friend Lord Swinton for his welcome of that action. A welcome was also given to the Government's undertaking to introduce an amendment to Clause 4 reflecting as far as possible the spirit of the noble Lord's amendment to that clause.

I hope that in the light of that proof of the Government's good intentions, and of what I have said about the amendment now proposed, the noble Lord, Lord Williams will not feel disposed to press the amendment.

5.15 p.m.

Lord Williams of Elvel

My Lords, I am most grateful to the noble Baroness for her full response to this amendment and to those noble Lords who have taken part in the debate.

I accept at the outset that there is a difference between the electricity industry and the water industry so far as concerns the land owned. The only exception that I would make to that general proposition is in the case of Snowdonia. I hate to come back to the subject of Snowdonia, but as I remarked in my opening statement,the land owned by the CEGB in Snowdonia is larger in surface area than the land owned by the water authority in that area. It is therefore a matter of great sensitivity in Wales that that issue should be covered properly. I accept, however, that apart from Snowdonia, in the other areas there may be operational consequences. Although I believe the amendment to be strong and tight and that it should be strong and tight, in the light of what the noble Baroness has said perhaps it needs to be looked at further.

I must take issue with my noble friend Lord Howie of Troon, as did the noble Earl, Lord Swinton. I am all in favour of the engineering institutions. I am not sure that my noble friend felt able to declare an interest as an engineer, but I am sure that he is also a conservationist, and at heart as moist as we all are, and therefore will accept the spirit of the amendment as offered.

My noble friend Lord Dormand again drew the attention of the noble Baroness to the issue of Druridge Bay. That also is a matter of great sensitivity in the North-East. I hope very much that the Government will pay special attention to that area.

We welcome the Government's concession on my amendment to Clause 4 which introduced the protection of the environment as a general duty of the Secretary of State and the director. We welcomed in broad terms the Government's amendments to Schedule 9.

I am grateful to the noble Baroness for her assurance that she will talk to the CEGB about Snowdonia. I imagine that she will also talk to National Power about Snowdonia. I should be most grateful if she would keep me or the Council for the Protection of Rural Wales informed about the course of those discussions. I should not like to feel that that was something that was said in debate, but on which nothing much happens. If the CPRW were brought into the discussions at some stage I am sure that everyone would find it profitable and a proper compromise could be reached.

In the light of what has been said I am most grateful and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 [Transfer of property etc. of Generating Board and Electricity Council]:

[Amendment No. 131A not moved.]

Lord Peyton of Yeovil had given notice of his intention to move Amendments Nos. 132 and 133: Page 49, line 13, leave out paragraph (a) and insert ("(a) one shall be designated as the generating company"). Page 49, line 13, after ("two") insert ("or more").

The noble Lord said: My Lords, these two amendments have been discussed previously rather thoroughly. The Government have made it absolutely clear that they are more or less impervious to every argument on the subject, no matter how great its weight. I shall therefore bow to the inevitable and not move the amendments.

[Amendments Nos. 132 and 133 not moved.]

[Amendment No. 133A not moved.]

The Earl of Dundee moved Amendment No. 134: After Clause 67, insert the following new clause:

("Transfer schemes under sections 66 and 67.

.—(1) This section applies to any scheme under subsection (1) or (2) of section 66 or subsection (1) of section 67 above (in this Part referred to as a "transfer scheme"); and in this section and section 68 below "the relevant subsection", in relation to such a scheme, means that subsection.

(2) A transfer scheme may—

1. (a) define the property, rights and liabilities to be allocated to a particular company nominated for the purposes of the relevant subsection—
1. (i) by specifying or describing the property, rights and liabilities in question;
2. (ii) by referring to all the property, rights and liabilities comprised in a specified part of the transferor's undertaking; or
3. (iii) partly in the one way and partly in the other;
2. (b) provide that any rights or liabilities specified or described in the scheme shall be enforceable either by or against either or any, or by or against both or all, of two or more companies nominated for the purposes of the relevant subsection;
3. (c) impose on any company nominated for the purposes of the relevant subsection an obligation to enter into such written agreements with, or execute such other instruments in favour of, any other company so nominated as may be specified in the scheme; and
4. (d) make such supplemental, incidental and consequential provision as the transferor considers appropriate (including provision specifying the order in which any transfers or transactions are to be regarded as taking effect).

(3) An obligation imposed by a provision included in a transfer scheme by virtue of subsection (2)(c) above shall be enforceable by civil proceedings by the other company for an injunction or for interdict or for any other appropriate relief.

(4) A transaction of any description which is effected in pursuance of such a provision as is mentioned in subsection (3) above—

1. (a) shall have effect subject to the provisions of any enactment which provides for transactions of that description to be registered in any statutory register; but
2. (b) subject to that, be binding on all other persons, notwithstanding that it would, apart from this subsection, have required the consent or concurrence of any other person.

(5) Where a lease of any land is granted in pursuance of such a provision as is mentioned in subsection (3) above, any right of pre-emption or other like right affecting that land—

1. (a) shall not become exercisable by reason of the grant of the lease; but
2. (b) shall have effect as if the lessee were the same person in law as the lessor.").

The noble Earl said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 135, 136 and 176.

The main purpose of the amendment is to enable the CEGB's transfer scheme to require each successor generating company to enter into a long-term lease with the National Grid company in respect of the land occupied by the switch house and other transmission-related facilities on each power station site. It would also facilitate arrangements for sharing intellectual property and would provide for liabilities to be enforceable against two or more successor companies.

Amendments Nos. 135, 136 and 176 are consequential. I beg to move.

Lord Peston

My Lords, when considering our amendments, the noble Baroness often says that she is interested to know what our amendment might have meant. I am bound to say that I had not the faintest idea what this amendment meant when I read it. I am still having great difficulty in discovering what it contributes to the question of transfer.

Perhaps I may first work backwards a little. I gather that the amendment has something to do with intellectual property. As we are discussing intellectual property, I am delighted to see that the noble Lord, Lord Lloyd of Kilgerran, has arrived. I stand only second to him in my interest in intellectual property. I cannot fully understand what the amendment does in terms of intellectual property and why it does it. I must therefore ask the noble Earl whether he can tell us any more, or whether he could in due course write to us to clarify the matter.

My further difficulty is that we were originally told that the Bill was satisfactory so far as transfer schemes are concerned. I am not an expert on transfer scheme or on those matters to do with the law—I hope that I do not have to emphasise that point because it is perfectly obvious—but, when a clause as large as this is added to the Bill, I am bound to ask what it will provide that is not already there. I have looked at Section 66 and the earlier section and, to be perfectly honest, I cannot make head nor tail of what more is here.

I realise that this is perhaps a plea for elucidation from one non-expert to another, but is there any possibility that the noble Earl may explain to us in rather simple words precisely what the measure achieves and its contribution to intellectual property? I appreciate that this is a technical matter, but those few of us who take part fully in the debates might as well at least try to understand what we are about. I apologise to the noble Earl because I do not want to be excessively boring at this hour, but I should like him to enlarge on the new clause, either now, if possible, or in writing later.

The Earl of Dundee

My Lords, I am grateful to the noble Lord. He has no need to apologise at all. The measure is, I grant him, a little obscure and he is certainly entitled, as are all noble Lords, to an explanation.

On the question of the relevance of the new clause to intellectual property, the CEGB may hold intellectual property under licence from its proprietor (for example, it may be using an invention under licence from its inventor). The transfer scheme process will allow the CEGB to allocate that intellectual property to a successor company. The proprietor of that property will have exactly the same relationship with the successor company as he had with the CEGB. Subsection (2)(c) of the new clause would allow the transfer scheme to require the successor company to license another successor company to use the intellectual property. Subsection (4) of the new clause would make that licence binding on the proprietor.

On the arrangements for the transfer scheme, subsection 2(c) would enable the transfer scheme to require a successor company to enter into written agreements in favour of any other nominated company. The most important case where that provision is needed concerns substations within the boundary of a power station site. These are essentially concerned with the transmission rather than the generation of electricity. It is therefore appropriate that they should transfer to the National Grid company.

However, because of the intimate and complex relationship between the substation and the rest of the power station—for instance, some pieces of equipment within the substation will belong to the generator and the generator will provide common services such as pressure water spray systems, compressed air systems, security and so on—the substation will be transferred to the grid company by way of a long lease rather than freehold. Subsection 2(c) would enable that to be done. It would enable the transfer scheme to require each successor generating company to enter into a long-term lease with the National Grid company in respect of the land occupied by the substation and other transmission-related facilities on each power station site.

On Question, amendment agreed to.

Clause 68 [Schemes under sections 66 and 67]:

The Earl of Dundee moved Amendment No. 135: Page 50, line 31, leave out subsections (1) and (2).

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 136: Page 51, line 2, leave out ("specified date") and insert ("date specified in the Secretary of State's direction under the relevant subsection").

On Question, amendment agreed to.

[Amendment No. 137 not moved.]

Schedule 10 [Transfers under sections 66 and 67]:

The Earl of Dundee moved Amendment No. 138: Page 110, line 23, leave out ("proper discharge of their respective functions") and insert ("carrying on of their respective undertakings").

The noble Earl said: My Lords, the purpose of this amendment is to delete the word "functions" where it occurs in relation to a successor company of the CEGB. I beg to move.

Lord Peston

My Lords, I thank the noble Earl for explaining or, rather, restating the amendment. As I spend a great deal of my time trying to understand the noble Earl and to be educated, perhaps he will tell me why the new wording is better than the old wording. Is some meaning to be attached to it in terms of the future of the industry? My natural inclination would have been to argue that the phrase, proper discharge of their respective functions is rather clearer than the phrase, carrying on of their respective undertakings". Looking at it again, it seems to be rather better English. Am I missing something here? Do the two versions mean the same thing? If not, do they mean something different and, if there is a difference, what is it?

The Earl of Dundee

My Lords, again, I am grateful to the noble Lord. If it were not for the context, he would be right to say that the word "functions" would be a very good word. However, in electricity industry statutes, the word "function" is generally used to refer to the statutory powers and duties, taken together, of statutory corporations—for example, of the CEGB. However, paragraph 2(2) of Schedule 10 is concerned not with statutory corporations but with the CEGB's successor companies. The word "functions" is therefore inappropriate. The purpose of the amendments is to delete the word "functions" where it occurs in lines 23 and 28 of paragraph 2(2), and to substitute the word "undertakings", which is altogether more fitting to the activities of private sector companies.

Lord Jay

My Lords, that does not wholly explain why it is necessary to alter the word "discharge" to "carry on". Can the Minister say whether there is a difference in the meaning of those two words and, if so, what it is?

Baroness Phillips

My Lords, it seems curious that this should be an issue at this stage of the Bill. It has gone through two Houses of Parliament and only now been discovered. Can the noble Earl also explain why that is so?

The Earl of Dundee

My Lords, I am grateful for the noble Baroness's intervention. It is precisely because of interventions such as those from the noble Lord and the noble Baroness that all the time in a steady way we are able to improve our drafting. To pick up the point made by the noble Lord, Lord Jay, as I understand it the term "discharge" can just as equally be applied to "functions" as it is to "undertakings".

On Question, amendment agreed to.

5.30 p.m.

The Earl of Dundee moved Amendment No. 139: Page 110, line 28, leave out ("proper discharge of the respective functions") and insert ("carrying on of the respective undertakings").

The noble Earl said: My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Lord Peston moved Amendment No. 140: Page 110, line 39, leave out ("without such a representation").

The noble Lord said: My Lords, I shall speak just as briefly to this amendment as did the noble Earl to the previous ones. It stands in my name and that of my noble friend Lord Williams of Elvel. Paragraph 2(4) of this schedule reads: If transferee A or transferee B represents to the Secretary of State, or if it appears to the Secretary of State without such a representation". The words "without such a representation" are simply not needed because the word "or" already does that. We are constantly improving the Bill's literary style, but in this case the argument seems to be very clear-cut. In a spirit of tidying up, we believe that it would help simply to leave out those words. It would save a little space and may preserve from being cut off in due course one twig on one branch of a tree. We strongly recommend this amendment to your Lordships' House. I beg to move.

Lord Lloyd of Kilgerran

My Lords, as it appears to me that the submission of the noble Lord, Lord Peston, is going to be a winner, I should very much like to support it.

The Earl of Dundee

My Lords, the noble Lord, Lord Lloyd, is a hardy fighter. He does not only just back winners, he often picks horses which may not necessarily be thought capable of winning but do indeed come home.

Lord Lloyd of Kilgerran

My Lords, I don't back horses!

The Earl of Dundee

My Lords, I withdraw that remark. The noble Lord does not back horses. Perhaps there is some other sport.

The amendment of the noble Lord, Lord Peston, would remove the reference to representation. The noble Lord may consider that that improves the drafting by removing unnecessary words. Here again, I have a great deal of sympathy with him on that point. However, in the present case I believe that the existing drafting states with admirable clarity the two possibilities that are present and there is no possibility of misunderstanding. The substance of the matter is that either a transferee asks the Secretary of State to act or the Secretary of State himself sees reason to act. Those are the only two possibilities and it seems to me that the present drafting expresses them quite well.

Lord Peston

My Lords, the noble Earl has put my point much better than I did. He gave exactly the reason why we should leave out those words. As the education spokesman for these Benches I hate to press the point about the use of the word "or", but that is exactly the meaning of it. On the other hand, it seems that I cannot persuade the noble Earl.

The Earl of Dundee

My Lords, to answer the noble Lord, there is a slight point of substance here. There are two alternative routes: one is that the Secretary of State may receive representations; alternatively and completely differently, he may think that he should act even though he has not received representations. If we were to delete those words, as the noble Lord suggests, the Secretary of State would be denied that alternative course of action.

Lord Peston

My Lords, with the permission of the House, although we do not wish to continue this discussion, perhaps I may say that I entirely agree with the noble Earl. It is purely a matter of the wording. I still insist that my wording is correct. It may well be that in due course the noble Earl would like to consider the matter with his noble friend. I do not press the point. Having had what I think is an extremely interesting interchange of views, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee moved Amendment No. 141: Page 111, line 27, leave out ("not earlier than the transfer date").

The noble Earl said: My Lords, the effect of this amendment is to make clear that variations of the transfer scheme under paragraph 4 of Schedule 10 shall not be retrospective. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 142: Page 112, line 21, leave out ("joint certificate by or on behalf of both or all of the transferees") and insert (`certificate issued by either or any of the transferees ("transferee A") with the concurrence of the other or others of them").

The noble Earl said: My Lords, in moving this amendment I shall, with the leave of the House, also speak to Amendments Nos. 143 and 145. The purpose of Amendment No. 142 is to provide for transferees B and C to concur in a certificate by transferee A that land is transferred to him under the scheme. Amendment No. 143 is a consequential drafting point. The effect of Amendment No. 145 is to provide for a transferee to appeal to the Secretary of State if one transferee fails to concur in giving a certificate that land has been transferred to him under the scheme. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 143: Page 112, line 26, leave out ("such one of them as may be so specified") and insert ("transferee A).

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 144: Page 112, line 27, at end insert ("and shall constitute a link of title for the purposes of section 5(1) of the Conveyancing (Scotland) Act 1924 (deduction of title)").

The noble Earl said: My Lords, this amendment will ensure that a certificate under paragraph 6 shall constitute a link of title for the purposes of Section 5(1) of the Conveyancing (Scotland) Act 1924 (deduction of title). I beg to move.

Lord Peston

My Lords, since I am, as it were, the residual spokesman on this matter at the present time and I am not a Scot, perhaps I may ask for one word of reassurance from the noble Earl; namely, that this is simply a technical amendment and (which reveals my ignorance) that there is absolutely nothing in this amendment to which any Scot, in particular, would object.

The Earl of Dundee

My Lords, I can give the noble Lord that assurance. It was a point raised by the honourable Member for Glasgow, Cathcart in another place. It is an important matter in Scottish law but it gives rise to nothing of substance.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 145:

Page 112, line 29, leave out from ("transferees") to end of line 33 and insert ("(transferee A") for the other or one of the others of them ("transferee B") to concur in the issue of such a certificate, transferee B has failed so to concur—

1. (a) transferee A may refer the matter to the Secretary of State; and
2. (b) the Secretary of State may direct transferee B to concur in the issue of a certificate prepared in such terms as are specified in the direction.").

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 146: Page 113, line 22, leave out ("Any transaction") and insert ("A transaction of any description").

The noble Earl said: My Lords, with the leave of the House I shall also speak to Amendment No. 147. These amendments are, again, technical amendments. The effect is to make it clear that transactions made under Schedule 10 are subject to the provisions of any Act which requires transactions of this description to be entered in any register. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 147:

Page 113, line 24, leave out ("shall be binding on all other persons, and") insert ("— shall have effect subject to the provisions of any enactment which provides for transactions of that description to be registered in any statutory register; but (b) subject to that, shall be binding on all persons").

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 148: Page 113, line 52, at end insert—

("Interpretation

10. Any reference in this Schedule to a transfer effected in pursuance of a transfer scheme is a reference to a transfer effected by this Act in pursuance of such a scheme.").

The noble Earl said: My Lords, the purpose of this amendment is to correct a small drafting error. It provides that references in Schedule 10 to a transfer in pursuance of a transfer scheme are references to a transfer effected by the Bill in pursuance of a transfer scheme. I beg to move.

On Question, amendment agreed to.

Clause 70 [Initial Government holding in the companies]:

[Amendments Nos. 149 and 149A not moved.]

Clause 73 [Target investment limit for Government shareholding]:

[Amendments Nos. 150 to 153 not moved.]

Clause 74 [Statutory reserves]:

5.45 p.m.

Lord Williams of Elvel moved Amendment No. 154: Page 54, line 7, at end insert ("calculated by reference to generally accepted accounting principles").

The noble Lord said: My Lords, in moving this amendment I am at something of a disadvantage. When I came to the House this morning, I received a letter from the noble Lord, Lord Sanderson of Bowden, on the matter. The amendment was tabled before I had sight of his letter. I have had a very quick read through his somewhat complex letter; I understand why it is complex. If I may refer to the discussion that we had in Committee on accounting principles, I shall cover one or two of the points that the noble Lord made in his letter to me.

On the question of the statutory reserves—which is the objective of Clause 74—in his letter the noble Lord told me that he did not think that the matter had a great deal to do with general accounting principles. I would take issue with that general statement of principle. I believe that when reserves are created in any form they have to be reserves, statutory or otherwise, which are set up on the basis of accounting procedures that are generally accepted. One cannot simply create reserves out of nothing. They have to be created out of something and that something has to be established by reference to some form of accounting procedure. That is normal practice in both statutory bodies and in commercial law.

In his letter the noble Lord told me that the Government have had professional advice to the effect that, with three very limited exceptions, the accounting policies of the area boards are in all significant respects in accordance with UK accounting standards and would be applicable post-privatisation. The exceptions concerned deferred taxation where there is a complication because of the impending changes in the structure of the industry and other small items which I shall not bother to go through.

Three questions arise. First, will the accounts of the successor companies be established, as is normal practice in flotations, to reflect a five-year history; and will that five-year history, which will be produced in the prospectus, be according to the accounting principles then available and used at the time; or will they be re-worked to put in some form of different accounting principles? Secondly, will the new Companies Bill, which is at the moment in another place and which gives effect, according to the latest government amendments, to the conclusions of the Dearing Committee on the status of accounting standards, also apply to the future accounts of the successor companies? I imagine that it will. Thirdly, and in a sense the most important question—I shall come to the nub of the question on a later amendment—will the accounts of successor companies be constituted on exactly the same accounting principles?

The accounting standards set up by the Institute of Chartered Accountants, and possibly to be made effective under statute as a result of the Dearing Report—I say "possibly" because we are not quite certain how that will work—give latitude to companies and their auditors to give certain variations, quite understandably, depending on what trade the company is in. It is supremely important in our view that the accounts of National Power, Power Gen, the area boards and the transmission company should be in all respects on the same standards so that the market can assess the difference in performance on the same criteria. It would be rather absurd if one area board deviated, for instance, in respect of its depreciation policy from another area board, and, similarly, the generating company, so that the market could not judge like against like. I should be grateful if the noble Lord or the noble Baroness who will reply can give me that assurance. Having posed those three questions, I beg to move.

Lord Lloyd of Kilgerran

My Lords, I had intended to say a few words on this amendment. However, I understand that there has been some correspondence between the noble Lord, Lord Williams, and the Government on these matters and that a letter has been sent to the noble Lord containing professional advice given to the Government recently. In order not to delay matters, I wonder whether I could have a copy of that letter in due course so that I may consider the position, having read what the Minister will say in due course.

Lord Renton

My Lords, one appreciates the sentiment behind this amendment. However, I wonder whether in order to comply with the Bill it would be possible to calculate the accumulated realised profits except by reference to generally accepted accounting principles. One wonders therefore whether it is necessary to write this quite obvious concept into the statute.

Baroness Hooper

My Lords, I am grateful to the noble Lord, Lord Williams, for saying that he found the letter helpful. I must apologise for the fact that the letter was received by him only this morning. I shall of course ensure that the noble Lord, Lord Lloyd, receives a copy of the letter. Perhaps therefore I do not need to deal with the points made in it except very briefly to say that we reaffirmed that the term "generally accepted accounting principles" is generally taken to refer to statements of standard accounting practice issued from time to time by the six main UK and Irish accountancy bodies, together with the UK law and established accepted precedent.

I also confirm that the accounting policies of the area boards and the CEGB are, as the noble Lord, Lord Williams, stated in all major respects in accordance with UK accounting standards, which was the professional advice that we received.

However, perhaps I may mention the legal requirements which impinge here The accounts of the CEGB and area boards have hitherto been prepared so as to give the information required under the Electricity Act 1947, as amended. After privatisation, the accounts of the successor companies will be prepared in accordance with (at present) the Companies Act 1985. The overriding requirement of this Act is that the accounts give a true and fair view.

The requirements of the Stock Exchange are that the prospectuses at the time of flotation should be able to say that the accounts have been prepared in accordance with generally accepted accounting principles. The Government therefore, accept the spirit of the amendment, though, as has been explained, it is inappropriate in the context of Clause 74, inappropriate in the context of a Bill that does not address general accounting matters and anyway unnecessary given the need to comply with Stock Exchange requirements.

On the question of whether the accounts of the successor companies will reflect a five-year history of previous accounting policies, the accounts of the successor bodies for the five-year track records will be restated in line with the principles adopted by the successor companies. I believe that it would not be in the interests of bodies emerging newly on the market to introduce new systems because it would be rather difficult for the market to judge their track record, as the noble Lord has pointed out.

I was asked a question concerning whether the accounts of successor companies would be constituted overall on the same accounting principles. Accounts will be a matter for the respective companies and their auditors. For flotation purposes there will be benefit in keeping those policies in line so far as possible, and this is for discussion between the companies, their advisers and the industry.

I hope that I have covered the questions that the noble Lord raised. I feel that I have not dealt with the matter concerning the Companies Bill which is at present in another place. If I find that there is something I should include, perhaps I might add by letter to what I have said, as I did previously.

Lord Williams of Elvel

My Lords, I am grateful to the noble Baroness; and I am sure that the noble Lord, Lord Lloyd of Kilgerran, will also welcome a copy of any letter that is sent to me.

We have discussed these questions. They are matters of fundamental importance, but they are not matters that should go into the Bill. I have put down this series of amendments to elucidate how the successor companies will treat their accounts. We shall come shortly to Amendment No. 155, which concerns a similar problem; but I want to go into rather more detail into one aspect of the problem.

In the meanwhile, I should say to the noble Lord, Lord Renton, that the answer is, I am afraid, yes. Even with the best will in the world, companies using generally accepted principles can produce different profits at different times. Without going into the labyrinth of the Companies Acts and the Companies Bill which is before another place, if by some chance an area board, once floated, were to take over another business in another trade—it has been mooted that that may happen—it may not even necessarily be domestic but an investment in a foreign company, different accounting principles might apply on consolidation. In our view it is very important that UK accounting standards and UK accounting principles should apply wherever the successor companies may make their investments. That could be almost anywhere.

I am grateful to the noble Baroness. If she considers the points that I have made and she feels it is appropriate to write, I would be grateful if she would send a copy of the letter to the noble Lord, Lord Lloyd of Kilgerran. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 75 [Statutory accounts]:

Lord Williams of Elvel moved Amendment No. 155:

Page 54, line 34, at end insert— ("(1A) The Director shall ensure that the annual accounts (including group accounts) of successor companies shall be prepared in such a manner as to ensure that the accounts of those companies carrying on the same trade are comparable one with another.").

The noble Lord said: My Lords, this is a more concise amendment, although it is rather longer than the previous one. The noble Baroness in response to my previous amendment said that so far as was possible—I believe I remember her words—accounting policies of the successor companies would be aligned both prior and post-flotation. It does not seem to me to be right that accounting policies—which are determined by the board of directors subject to the accounting standards laid down from time to time by the Institute of Chartered Accountants or under whatever jurisdiction the company may be constituted—should vary between one area board and another or one generating company and another when privatised. Accounting policies given effect to the accounting standards which are broad statements of principle. As I said in my introduction to Amendment No. 154, they allow considerable variation—for example, in depreciation rates.

I wish to refer to depreciation rates. There is a major problem in the replacement of assets in individual area boards. The age profiles of plant in the area boards are remarkably different. The Yorkshire board, for example, has among its assets a relatively large number of old assets in both number and value, while the London Electricity Board has somewhat less than the Yorkshire Board in terms of age profile. The South Wales Electricity Board seems to have invested a great deal during the 1960s and not so much later on. There is a different profile for each board.

The problem is that unless this profile has changed substantially since the composition of the paper that I have, the area boards when privatised will have to invest large sums of money in replacing assets. It is tremendously important that the depreciation provisions, which are applied in the new assets required and in replacement of assets, should be consistent between one privatised area board and another, otherwise the market will have no idea of what is going on between one and another.

On flotation, whether the cash flows of the different area boards will be properly set out—this comes back to whether the depreciation charges over the past few years will be properly set out—and will be comparable one with another so that the market can take a view between one area board and another will be another question and will determine whether or not the market wishes to invest. I am sure the Government are aware of this point because I am sure that their financial advisers will have made them aware of it. But it is worth asking for an assurance in this House that the Government understand that there are two main facts. One is that the age profile of plant in the area boards is such as to require massive re-investment over the next few years in substitution of old assets for new, and that the market needs to take a clear and decisive view as between one area board and another. None of that can happen unless the annual accounts of successor companies are prepared in such a manner as to ensure that the accounts of those companies carrying on the same trade are comparable one with another. We seek to impose this as a duty on the director that he shall ensure that rather than leaving it to the companies and to their auditors. I beg to move.

Baroness Gardner of Parkes

My Lords, I am slightly puzzled by this amendment, I would have thought that all the accounts of any company would be in accordance with what is required by the Inland Revenue, and that depreciation, for example, would be allowed only on a certain basis. I do not understand that point.

Lord Williams of Elvel

My Lords, I shall willingly enlighten the noble Baroness. Tax depreciation is quite different from accounting depreciation.

Baroness Hooper

My Lords, I am happy to say that there is no conflict between the aims of the noble Lord, Lord Williams, and ourselves. Perhaps I should say a brief word about the purpose of Clause 75, as there may have been some misunderstanding. This is essentially a transitional provision which will apply only this year. Its purpose therefore is to ensure continuity of accounts between the successor companies and their predecessors. Clause 75 will cease to have practical effect after the successors have prepared and published their first accounts after vesting. I say this because it may be felt that the clause has a more general application, beyond that transitional period.

As has been said, there are already very rigorous statutory and other requirements on companies that are about to be floated on the Stock Exchange, and the Stock Exchange itself, in its Yellow Book, already requires that accounts of such a company should comply with generally accepted accounting principles. The amendment before us would go beyond these existing requirements, by adding a further requirement that the accounts of successor companies carrying on the same trade should be comparable, and by requiring the Director General of Electricity Supply to police this requirement.

In the Government's view it is neither appropriate nor practical to place such an additional requirement. The prospectuses before flotation will include financial information that complies with generally accepted accounting principles, and will make full disclosure of material facts. In the Government's view the proper vehicle for any additional safeguards such as the noble Lord has in mind in general legislation, such as the Financial Services or Companies Acts, rather than this Bill. To some extent the noble Lord made that point.

The generating companies will contract for the sale of power from their stations. Those contracts may be of different nature and length. It would be appropriate for their depreciation policies to reflect their contracts. That could well lead to differences between National Power and Power Gen after the transitional period to which I have referred.

As regards the area boards, I can reassure the noble Lord that their accounting policies in respect of depreciation and other matters will be reviewed for consistency in the flotation documents and accounts. After flotation no such requirement will be needed. In other sectors analysts and investors can develop views on different companies in the same sector without such a requirement. We see no reason why that should not be possible in this situation.

In the light of those comments I hope that the noble Lord will be able to withdraw his amendment.

Lord Williams of Elvel

My Lords, I am grateful to the noble Baroness. I accept the fact that my amendment may be in the wrong place. Nevertheless, it illustrates an extremely important point.

The noble Baroness has stated that, because of the nature of their contracts, the accounts of National Power and Power Gen may well contain different accounting policies in respect of depreciation. They may be based on different accounting policies in respect of other matters because accounting policies can be and are decided by directors and shareholders. They are contained in the annual report.

What bothers me and bothers the market is that after a year or so it will be impossible to make an assessment as between National Power and Power Gen because by then their accounting policies will have become radically divergent. Again, I accept that my amendment is in the wrong place because we are talking of a transition provision.

I am afraid that it is not the case that analysts are God-given, God-like creatures who can make up their own accounting policies and automatically readjust the accounts of large companies in order to arrive at comparable figures. Analysts, bankers and so forth generate a great deal of heat over that matter. When companies in the same trade produce accounts, and where their accounting policies are radically different—as has happened in the past—and acquisitions have been based on accounting policies being radically different, then the market begins to worry.

I am concerned that, as regards investors particularly in the generating companies, which are more important than the area boards, the market has a fair idea between the two and the accounting policies should be kept broadly in line. I believe that the director has a role to play in that area.

I do not believe that I can repeat my comments because I have now made them twice. However, the Government need to pay attention if they want to float the companies successfully. I am afraid that if they do not pay attention the market will take a very dim view of the matter.

Does the noble Baroness wish to comment further? No. I have had my say and that is all I can do. If the flotation fails because the Government have failed to take account of this matter it will not be due to failure on my part. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 156 and 157 not moved.]

Clause 81 [Responsibility for composite listing particulars]:

Lord Williams of Elvel moved Amendment No. 158:

Page 59, line 11, at end insert— ("(1A) The Secretary of State and his advisers shall take full responsibility for information contained in the listing particulars for securities of successor companies.").

The noble Lord said: My Lords, this amendment is somewhat different from that which I moved in Committee on broadly the same subject. It goes much wider than the other amendment which dealt with composite listing particulars.

The problem that I seek to identify is that, given that the Government are to float a series of successor companies which inherit assets from a government corporation, at the end of the day will the Government take full responsibility for the information contained in the listing particulars? In my view, it is not enough to say that the listing particulars are the responsibility of the directors, their advisers or accountants. They are assets which are being floated by the Government and therefore I believe that the Secretary of State and his advisers should take full responsibility. By that I mean that they should take full responsibility under the terms of the Financial Services Act 1986.

I speak professionally when I say that I find it most difficult to see how National Power can put together a sensible prospectus. I said that on Second Reading and I shall say it again. Having regard to the problems associated with nuclear power, and also to what the noble Baroness will bring forward as Schedule 12 amendments, the complexities of putting together a prospectus which will stand up as not being misleading under the Financial Services Act appear to be overwhelming.

I believe that the Government must take responsibility for such matters. They cannot shuffle off the responsibility and say, "Oh well, auditors have done this and merchant bankers have done that". I believe that it is a matter which will submerge the whole flotation unless the Government stand behind the information contained in the prospectus and take full responsibility in the fullest sense of that phrase.

I remind noble Lords, as I did on Second Reading, that under Section 47 of the Financial Services Act 1986 it is a criminal offence for anyone to make a misleading statement, deliberately or otherwise, in order to induce an investment. I believe that if a misleading statement is made other people should not be in the dock; the Secretary of State should be in the dock. I beg to move.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

My Lords, we debated the matter in Committee but this amendment goes wider. I must go through the matter in great detail because the noble Lord has raised a particularly important point.

The amendment seeks to make the Secretary of State and his advisers responsible for the whole of the prospectus, that is listing particulars in the terminology of the clause, for each of the successor companies.

First, I must explain where responsibility actually lies. The rules allocating this are set out in the Financial Services Act 1986, or the "FSA" as I shall refer to it hereafter. Section 152 of the Act provides that the issuer of the securities—that is, the company, its directors and any persons who have agreed to become directors—are responsible for the listing particulars. The noble Lord knows that well enough. This is simply because much of the information which the listing particulars contain usually lies within the personal knowledge of the directors of the company in question.

In addition, Section 152 provides that a person is responsible for listing particulars if he or she accepts, and is stated in the listing particulars as accepting, responsibility for the whole or part of the listing particulars, and if he or she has authorised the contents of the particulars, either in whole or in part. This is clearly appropriate because nobody will accept responsibility for any part of listing particulars unless he or she has the knowledge necessary to enable him to vouch for the accuracy of that part. Section 152 goes on to provide that, where a person has accepted responsibility for or authorised only part of the contents or the listing particulars, responsibility is limited to the part in question and arises only if that part is included substantially in the form and context to which he or she has agreed.

To complete the picture, I should add that persons who are responsible for listing particulars may be liable under Section 150 of that Act to pay compensation to a person who suffers loss as a result of an untrue or misleading statement in the listing particulars. This liability also extends to the omission of anything required under Section 146 or 147 of that Act to be included in the listing particulars. These rules are clear cut and have provided the basis, either in the current form of the FSA or previous legislation, for offers for sale to the public—whether in the form of government privatisations or as private sector flotations—for a good many years.

This is not to say that there will not be parts of the listing particulars for which it will not be appropriate that the Secretary of State should accept responsibility under the FSA. In past sales, of course, the Government have taken responsibility for defined sections of the prospectus of companies being privatised. In the sale of British Gas, for example, the Secretary of State was responsible for sections dealing with the company's relationship with government, part of the section dealing with underwriting, the section on applications and share dealings and the section on terms and conditions of the offer. These are matters where the information concerned was provided by government. It is clearly proper that government should take responsibility for that information.

But as I have said, it is quite inappropriate for the Government to be responsible for the entire document; and that is the point of difference. Much of that document will contain information lying within the personal knowledge of directors and personnel of the companies involved. Why, for example, should the Government, even less their advisers, be expected to have first hand knowledge of the ages, the other directorships or the interests in shares of directors of the successor companies? I should also comment on the proposal that advisers should share in responsibility through the act of giving advice during an offer for sale. Again, this is not acceptable. Section 152(8) of the FSA makes clear that a person does not become responsible for any particulars merely because he or she gives advice as to their contents in a professional capacity. I am sure that the noble Lord, Lord Williams, understands that. Again, it is fundamental that those with the personal knowledge of information used in a prospectus should be held responsible for it. Advisers simply do not fall into this category. The role of an adviser is to advise, not to make the final decision. That is up to the person whom he advises.

I should conclude by saying that responsibility is, of course, openly stated for each section of the prospectus so that the potential investor can clearly ascertain from whom the information has been derived and who is responsible for its accuracy.

I understand well what the noble Lord, Lord Williams, is seeking. I hope that with the explanation I have given of the Government taking responsibility where appropriate, the noble Lord will understand the position and will withdraw his amendment.

6.15 p.m.

Lord Lloyd of Kilgerran

My Lords, before the noble Lord sits down, perhaps I misunderstood what he said but I thought he said that the Government and the Secretary of State have taken responsibilities in regard to what he referred to as the "defined sections". Does not Clause 81 fit into that category where we are dealing with defined sections? Such sections in an electricity Bill are those dealing with securities of two or more successor companies and their specialist terms in relation to the Bill.

Therefore, in accordance with precedent I believe that there is something to be said for accepting the amendment of the noble Lord, Lord Williams.

Lord Williams of Elvel

My Lords, the noble Lord had sat down before the intervention and does not appear to wish to respond.

I believe that the issue between us and the Government is twofold. First, who is actually issuing the securities? We had this debate in part in Committee. I believe that in essence—although this may not be technically so due to a fudge—that is a secondary issue. The Government are selling shares to the public. It may be in the form of new shares of a successor company, of a £100 company, being issued but fundamentally it is a secondary issue; the Government are selling shares to the public. Therefore, the Government are really the issuer.

Secondly, the important point is that in previous privatisations there has, broadly speaking, been privatisation of companies as a whole: British Gas, British Telecom and British Steel. Those companies were privatised in their entirety and were not broken up just before privatisation. Now there is a complex of public corporations being broken up prior to privatisation. Therefore, the Secretary of State has an even greater responsibility than he would have if this were privatised as a single entity.

The noble Lord said that it is not within the personal knowledge of the Secretary of State whether the chairman is aged 53, 65, 72 or 33 years. The ages of fellow directors are very rarely within the knowledge of directors of companies. I can guarantee that the noble Lord, Lord Sanderson, could not tell me the ages of his colleagues on the boards on which he used to sit before he became a Minister of State.

The fact is that people are employed to ascertain those facts and to verify them. We all have to sign verification statements produced by lawyers such as my noble friend Lord Mishcon who have done their work, but as directors we accept responsiblity. I believe that the Secretary of State through the appropriate channels, that is the Civil Service, should accept responsibility for the issues which he makes. It is a simple and absolutely fundamental proposition. I do not believe that the arguments of the noble Lord have any merit whatever and I believe that it is appropriate to test the opinion of the House. I commend the amendment to your Lordships.

6.17 p.m.

On Question, Whether the said amendment (No. 158) shall be agreed to?

Their Lordships divided: Contents, 72; Not-Contents, 99.

DIVISION NO. 2
CONTENTS
Addington, L.	Buckmaster, V.
Airedale, L.	Carmichael of Kelvingrove L.
Ardwick, L.
Attlee, E.	Carter, L. [Teller.]
Aylestone, L.	Cocks of Hartcliffe, L.
Blease, L.	Craigavon, V.
Briginshaw, L.	David, B.
Bruce of Donington, L.	Davies of Penrhys, L.

Dormand of Easington, L.	Mishcon, L.
Elwyn-Jones, L.	Molloy, L.
Ennals, L.	Morris of Kenwood, L.
Ewart-Biggs, B.	Mulley, L.
Fisher of Rednal, B.	Nicol, B.
Galpern, L.	Northfield, L.
Gladwyn, L.	Ogmore, L.
Graham of Edmonton, L. [Teller.]	O'Neill of the Maine, L.
	Peston, L.
Hampton, L.	Phillips, B.
Hanworth, V.	Pitt of Hampstead, L.
Harris of Greenwich, L.	Prys-Davies, L.
Hatch of Lusby, L.	Ritchie of Dundee, L.
Hooson, L.	Rochester, L.
Houghton of Sowerby, L.	Russell, E.
Jenkins of Putney, L.	Seear, B.
John-Mackie, L.	Shackleton, L.
Kagan, L.	Shepherd, L.
Kennet, L.	Stedman, B.
Kilbracken, L.	Strabolgi, L.
Kilmarnock, L.	Taylor of Gryfe, L.
Lawrence, L.	Taylor of Mansfield, L.
Lloyd of Kilgerran, L.	Thurso, V.
Lockwood, B.	Tordoff, L.
Lovell-Davis, L.	Underhill, L.
McGregor of Durris, L.	Walston, L.
McIntosh of Haringey, L.	White, B.
McNair, L.	Williams of Elvel, L.
Mason of Barnsley, L.	Winstanley, L.
NOT-CONTENTS
Aldenham, L.	Lucas of Chilworth, L.
Arran, E.	Macleod of Borve, B.
Ashbourne, L.	Margadale, L.
Beloff, L.	Marley, L.
Belstead, L.	Marshall of Leeds, L.
Bessborough, E.	Masham of Ilton, B.
Blatch, B.	Merrivale, L.
Borthwick, L.	Mersey, V.
Boyd-Carpenter, L.	Morris, L.
Brabazon of Tara, L.	Munster, E.
Caithness, E.	Murton of Lindisfarne, L
Campbell of Alloway, L.	Napier and Ettrick, L.
Campbell of Croy, L.	Nelson, E.
Carnegy of Lour, B.	Norrie, L.
Carnock, L.	Nugent of Guildford, L.
Clitheroe, L.	Onslow, E.
Colnbrook, L.	Orkney, E.
Colwyn, L.	Orr-Ewing, L.
Davidson, V. [Teller.]	Oxfuird, V.
Denham, L. [Teller]	Pender, L.
Dilhorne, V.	Penrhyn, L.
Dundee, E.	Platt of Writtle, B.
Elibank, L.	Quinton, L.
Elliot of Harwood, B.	Rankeillour, L.
Faithfull, B.	Renton, L.
Ferrers, E.	Rodney, L.
Fraser of Carmyllie, L.	St. John of Bletso, L.
Fraser of Kilmorack, L.	Saint Oswald, L.
Gardner of Parkes, B.	Saltoun of Abernethy, Ly.
Gisborough, L.	Sanderson of Bowden, L.
Goold, L.	Savile, L.
Gray of Contin, L.	Seebohm, L.
Greenway, L.	Selborne, E.
Halsbury, E.	Shannon, E.
Harmar-Nicholls, L.	Sharpies, B.
Harvington, L.	Skelmersdale, L.
Havers, L.	Strange, B.
Henley, L.	Strathclyde, L.
Hesketh, L.	Swinton, E.
Hives, L.	Teynham, L.
Holderness, L.	Thomas of Gwydir, L.
Home of the Hirsel, L.	Trafford, L.
Hooper, B.	Trumpington, B.
Hylton-Foster, B.	Ullswater, V.
Jenkin of Roding, L.	Vaux of Harrowden, L.
Johnston of Rockport, L.	Windlesham, L.
Killearn, L.	Wise, L.
Kimball, L.	Wyatt of Weeford, L.
Lauderdale, E.	Wynford, L.
Long, V.

Resolved in the negative, and amendment disagreed to accordingly.

6.25 p.m.

Clause 83 [Dissolution etc. of existing bodies]:

Lord Williams of Elvel moved Amendment No. 159:

Page 60, line 27, at end insert— ("( ) All records and documents belonging to the existing bodies shall become the property of the Secretary of State unless transferred to successor companies under a transfer scheme.").

The noble Lord said: My Lords, this amendment stands in my name and that of my noble friend Lord Peston. In Committee we had a discussion about certain matters which would remain somewhat in the air after dissolution of the Electricity Council and other existing bodies. At that point the noble Earl, Lord Dundee, introduced me to the concept of a common service organisation, which I had not appreciated was to exist. I am grateful to the noble Earl for sending me a copy of the press release which I had missed.

It is announced that there will be a service organisation which, I understand, will be owned by all the successor companies; in other words, there will be no official ownership of this body which will deal with certain matters, such as personnel, training and some R&D matters, which are central to the whole industry. The problem is that it does not meet my concerns about records and documents belonging to the existing bodies. In Committee I expressed concern that the records and documents which have been compiled by existing bodies such as the Electricity Council will be transferred to successor companies and, because they contain information of a confidential nature, might be used by the successor companies to improper advantage—I put it no stronger than that. I could give examples that have been suggested—and not responsibly suggested—of how documents, lists of customers, credit arrangements, and so on, might be used for other purposes than simply the sale of electricity.

I believe that confidential information that has been given to existing bodies should be in the hands either of the successor companies themselves or of an organisation directly owned by the successor companies; that is, an organisation to which successor companies have immediate and direct access. I should be most grateful if the noble Lord, Lord Sanderson, could assist me on this matter. I beg to move.

Lord Sanderson of Bowden

My Lords, we all recall very well the discussions on this matter in Committee. I shall endeavour to assist the noble Lord, Lord Williams of Elvel, who made the point very well at the last stage of the Bill.

The records and documents associated with the property, rights and liabilities of the boards and the council will be transferred with that property etc. to the successor companies by the transfer schemes. After the transfer date, the residual boards' main function will be to assist in perfecting any transfers of foreign property to the appropriate successor company. As each transfer of this description is completed, so the residual board can hand over any relevant documents and records to the company. The residual council will have the additional function of winding up the tax affairs of the pre-reorganisation industry. Here also, we expect most of the documents and records to be passed on to the successor companies.

There will therefore be only a handful of records remaining when the residual bodies are dissolved—probably only those relating to the statements of accounts to be prepared under subsection (5) of the clause. By that stage, we do not envisage any problem in making administrative arrangements for the future custody of the few documents and records which will remain. The important point is that these arrangements will, of course, be discussed with the Secretary of State prior to being put into effect. I draw the attention of the noble Lord to Clauses 66 and 68 in the new print of the Bill where these provisions are contained.

During our debate on this amendment at a previous stage, several noble Lords were concerned that commercial confidential information held by the boards or the council would be handed over to the successor companies—the point made by the noble Lord, Lord Williams—who could make use of that information. But of course, as my noble friend Lord Dundee explained, the obligation of confidence on a piece of confidential information would be transferred to the successor company and would be as binding on the new company in the future as it had been on the board or the council.

I believe that the noble Lord is referring to certain sensitive information that should not be in the hands of any successor body. I hope that the provisions of Clause 66 will mean that the Secretary of State has to approve schemes and that the provisions of Clause 68(4) and (6) in particular will in fact give the Secretary of State the necessary powers. I am sure that the noble Lord will be asking me whether the Secretary of State has those powers to deal with sensitive documents in the way that I have suggested.

6.30 p.m.

Lord Williams of Elvel

My Lords, can the Minister tell me, as regards those subsections, what will happen if the Secretary of State decides to exercise the power that the noble Lord says he has under the Bill as drafted? If the Secretary of State decides to exclude from the transfer scheme certain documents, what happens to those documents?

Lord Sanderson of Bowden

My Lords, I believe that I have made that clear and that is the sensitive point. If the Secretary of State decides the future custody of the few documents which will remain, it is for him to decide where they should reside. They may very well remain within the purview of the Secretary of State himself.

Lord Williams of Elvel

My Lords, I am most grateful to the noble Lord. I believe I understand what the Government are getting at but I am not sure that it is right. The Secretary of State has the power to nominate certain confidential information, if he considers it very sensitive, and to retain control of it himself. In other words he will take it over himself from the existing bodies. That is insufficiently spelt out in the Bill, but if the noble Lord tells me it is there I shall be perfectly happy with that.

Lord Sanderson of Bowden

My Lords, if the noble Lord looks at Clause 68(4) and the last line, it states, The Secretary of State may himself make the scheme". He has the power.

Lord Williams of Elvel

My Lords, I am most grateful to the noble Lord. The Secretary of State may himself make a scheme, so in other words he may transfer to himself the sensitive documents. I wish to place on record that we consider this to be a very important matter. The idea that successor companies can use what is sometimes confidential information for purposes other than those for which they are carrying on a trade, is a matter that concerns us very much. I should be very loath to allow this Bill to leave your Lordships' House if I were not satisfied that, for instance, credit information that may be in the hands of the generating board in the case of companies (or area boards in the case of domestic consumers), were to used automatically and properly for the purposes of generation and supply of electricity.

There has been a good deal of talk about the privatised area boards selling their lists of customers to other commerical organisations in order that the latter may use the list of customers for their own purposes. I use the expression "there has been talk"—I am not saying that this is necessarily the case—that in future area boards shall decide that they wish to introduce credit card schemes or help the banks to do so. To that end they will be using all the credit apparatus that they have built up as public boards. There is talk that generating companies may in future use the CEGB's material of a confidential nature concerning industrial companies to try to encourage other people to get business alongside them. I shall be grateful if the noble Lord can comment on that matter.

Lord Sanderson of Bowden

My Lords, with the leave of the House I can say that credit information will be covered by the Data Protection Act.

Lord Williams of Elvel

My Lords, I understand that, but I am not sure that that Act is strong enough for the purposes that I have in mind. Perhaps the noble Lord will consider that point and write to me and send a copy of the letter to the noble Lord, Lord Lloyd of Kilgerran. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 85 [Discharge etc. of certain advances and loans made to existing bodies]:

[Amendment No. 160 not moved.]

Schedule 11 [Taxation provision]:

Lord Sanderson of Bowden moved Amendment No. 161: Page 116, line 10, at end insert—

"(Transactions effected in pursuance of section (Transfer Schemes under sections 66 and 67)(2)(c)

4A.—(1) Sub-paragraph (2) below applies to any disposal (within the meaning of the Capital Gains Tax Act 1979) which is effected, and sub-paragraphs (3) and (4) below apply to any lease which is granted, in pursuance of a provision included in a transfer scheme by virtue of section (Transfer schemes under sections 66 and 67)(2)(c) of this Act.

(2) A disposal to which this sub-paragraph applies shall be taken for the purposes of the Capital Gains Tax Act 1979 to be effected for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the disponer.

(3) Subsection (6)(a) of section 37 of the Finance Act 1978 (capital allowances: long leases) shall not prevent the application of that section in any case where the lease is a lease to which this sub-paragraph applies.

(4) Where, in the case of any machinery or plant which is a fixture and on the provision of which for the purposes of the transferor's trade the transferor incurred capital expenditure, a lease of the relevant land (with or without other land) is a lease to which this sub-paragraph applies—

1. (a) the lessor shall not be required to bring the disposal value of the machinery or plant into account in accordance with section 44 of the Finance Act 1971 (writing down allowances and balancing adjustments); and
2. (b) so far as relating to the bringing of disposal values into account, that section and Schedule 17 to the Finance Act 1985 (capital allowances for fixtures) shall have effect as if—
1. (i) the capital expenditure incurred by the transferor had been incurred by the lessee on the provision of the machinery or plant wholly and exclusively for the purposes of the lessee's trade; and
2. (ii) the machinery or plant had become a fixture, immediately after the grant of the lease.

(5) In sub-paragraph (4) above "the transferor" means the transferor under the transfer scheme in question and expressions which are used in Schedule 17 to the Finance Act 1985 have the same meaning as in that Schedule; and in construing that sub-paragraph the provisions of section 511(2) of the 1988 Act and the corresponding earlier enactments shall be disregarded.").

The noble Lord said: My Lords, this is a technical amendment, and it is consequential upon the insertion of the new clause after Clause 67 and the amendments to Clause 68. Noble Lords will recall that those amendments allow a transfer scheme made by the Central Electricity Generating Board or the Electricity Council or by a Scottish board to impose on one successor company an obligation to enter into agreements with another such company; for example, in the case of the CEGB, to enter into a long-term lease in respect of land within the perimeter of a power station. The purpose of the present amendment is simply to ensure that the fulfilment of such an obligation is tax-neutral.

The new paragraph in fact contains three effective provisions. First, sub-paragraph (2) provides that any disposal effected by a successor company in pursuance of a provision included in a transfer scheme by virtue of subsection (2)(c) of the new clause is to be taken for the purposes of the Capital Gains Tax Act to be effected for a consideration of such amount as secures that neither a gain nor a loss accrues to that company. It follows that the disponer company has neither a taxable gain nor an allowable loss, and that the successor company which makes an acquisition as a result of the disposal is treated as having given an appropriate amount of consideration for it.

Secondly, where one successor company grants a long lease of an industrial building to another successor company pursuant to such a provision, sub-paragraph (3) allows the companies to elect that any industrial buildings allowances clue in respect of that building can be claimed by the lessee. Such elections cannot normally be made by two companies in the same ownership. That is the effect of Section 37(6)(a) of the Finance Act 1978. The effect of sub-paragraph (3) is to allow the making of an election even though both companies will be owned by the Secretary of State. Thirdly, under the law relating to capital allowances for machinery and plant a taxpayer generally claims relief for expenditure made as reduced by the disposal value of machinery or plant which ceases to be used for the purposes of his trade whether that is because he no longer has the machinery or plant, or for some other reason.

Where one successor company grants a lease of land or a building which includes machinery or plant affixed to it, the grant of that lease, or some act subsequently done by the lessee, might mean that the machinery and plant allowances subsequently available to the lessor were reduced. Sub-paragraph (4) has the effect of preventing this. Sub-paragraph (5) supplements sub-paragraph (4) with appropriate interpretational provisions. I beg to move.

On Question, amendment agreed 10.

Lord Sanderson of Bowden moved Amendment No. 162: Page 117, line 48, leave out ("Electricity Board or the Electricity Council") and insert ("existing body").

The noble Lord said: My Lords, in moving this amendment I shall also speak to Amendment No. 163. Amendment No. 162 is purely a consequential amendment to standardise the usage of the term "existing body" throughout this schedule of the Bill. It replaces a reference to the boards and the council which requires correction.

As regards Amendment No. 163, your Lordships may recall that at the Committee stage of the Bill we moved Amendment No. 169F clarifying what will be meant by a public electricity supplier in England and Wales and in Scotland after privatisation. The public electricity suppliers will of course be the successors to the area boards in England and Wales. The amendment we are now considering follows on from this in that it clarifies what is meant by the expression "existing body in England and Wales" and "existing body in Scotland". The former means the area board, the generating board and the Electricity Council and the latter the Scottish boards. I am sure your Lordships will agree that this is a simple amendment that need not detain us further. I beg to move.

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 163:

Page 118, line 37, at end insert— (" "existing body in England and Wales" means an Area Board, the Generating Board or the Electricity Council; existing body in Scotland" means a Scottish Board;").

On Question, amendment agreed to.

Clause 94 [Other interpretation of Part II]:

Lord Lloyd of Kilgerran had given notice of his intention to move Amendment No. 164:

Page 65, line 15, at end insert— (" "property" includes intellectual property;").

The noble Lord said: My Lords, subsequent to my raising matters relating to intellectual properties, the noble Baroness, Lady Hooper, on behalf of the Government, agreed to write to me in time for Third Reading. I have spoken to the secretary of the Chartered Institute of Patent Agents, which is interested in these matters. It may be that the institute has already spoken to the Government. In those circumstances, I shall not move the amendment.

[Amendment No. 164 not moved.]

Clause 95 [Directions for preserving security of electricity supplies etc.]:

Lord Peston moved Amendment No. 165: Page 66, line 27, leave out ("or the commercial interests of some other person").

The noble Lord said: My Lords, I hope that we can deal briefly with Amendment No. 165, which stands in the name of my noble friend Lord Williams of Elvel. I say immediately that we entirely approve of Clause 95 of the Bill. We are simply a trifle puzzled by the logic of subsection (5) of the clause.

Under subsection (4) the Secretary of State would lay before each House of Parliament the directions that he gives unless it would not be appropriate in the interests of national security. There can be no argument about that. Subsection (5) is a little bizarre. Having not laid the directions before the two Houses because of national security, the non-disclosure provision would follow. However, it appears from the subsection that the Secretary of State could lay before each House of Parliament a copy of a direction but that no one could disclose what had happened about the direction because of commercial interests. The Secretary of State would lay before each House of Parliament a copy of this direction, which I assume would be for noble Lords and Members of another place to comment on, but no one could disclose anything about the direction or what has been done about it if it involved the commercial interests of some other person.

That is extraordinary. The whole point of laying down the direction is for it to be discussed. I cannot imagine anything more absurd than laying down the direction and then telling us that nothing can be said about it because of the commercial interests of some other person. Subsection (5) does not make sense. Can someone tell me what, if any, sense it makes?

Baroness Hooper

My Lords, I apologise if my response does not satisfy the noble Lord, Lord Peston. However, I feel that I have to refer him to his noble friend Lord Williams, who is responsible for the drafting. I was under the impression that the amendment is consequential on one that was previously agreed. In fact I was proposing not to speak against it on that basis. By not speaking against it I did not feel that the Government's hands would be tied in another place or elsewhere in relation to it. Perhaps I may leave it like that and refer the noble Lord to his noble friend.

Lord Peston

My Lords, I thank the noble Baroness. No one ever tells me anything. Given what she has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Schedule 12 [Nuclear liabilities: financial assistance]:

Baroness Hooper moved Amendment No. 166: Page 119, line 6, after ("incurred") insert ("or to be incurred").

The noble Baroness said: My Lords, during our debate in Committee on 19th June on what was then Clause 32 I gave a commitment that the Government would introduce at Report stage an amendment to Schedule 12 to enable the Secretary of State to enter into binding agreements to contribute to costs associated with re-processing, waste treatment and disposal and de-commissioning of nuclear plant. These amendments fulfil that intention. They have therefore been grouped together.

The main amendment in the group is clearly Amendment No. 167. It allows the Secretary of State, with the approval of the Treasury, to enter into contractual commitments to make payments of grant if certain specified conditions are met. These specified conditions will be contained in the contract. In the course of our deliberations on the Bill many noble Lords have expressed concern about the future of the nuclear industry. With some notable exceptions, who do not appear to be present this evening, that concern has been to ensure its future viability and the continuing safety of its operations. In this context the existing discretionary powers contained in Schedule 12 were perceived not to go far enough. Given the uncertainty as to the costs involved, and the time scales and the large amounts of money potentially involved, this would have been most unfair. When it comes to writing any prospectus for a nuclear generator we shall need to be able to say with certainty that the Government will keep their side of the bargain.

Contrary to what has been claimed in the press, this amendment does not represent a change in our policy towards the nuclear industry, merely a strengthening in our commitment to meet our obligations. Amendment No. 166, when read in conjunction with the new paragraph (1A) of the schedule, allows the Secretary of State to enter into agreements to make grants well before any qualifying expenditure is actually incurred. Amendment No. 170 takes this power into account for the purposes of paragraph 4(1). Of course, it is not the Government's practice to make payments of grants ahead of need. But these amendments allow the agreement to cover future expenditure.

Amendments Nos. 168 and 169 are drafting amendments which are made necessary by our requirement to be able to make grants or loans in advance of the recipient incurring the qualifying expenditure to be met out of the grant or loan. Amendment No. 168 is made even more necessary by the previous amendment, which enables the Secretary of State to enter into binding agreements to make grants. He clearly needs to be able to make grants at various times.

I apologise to the House. I may not have made it clear that, in moving Amendment No. 166, I am speaking also to Amendments Nos. 167, 168, 169 and 170. I would add one final point. These amendments do not change the financial limits which are set out in paragraph 4 of the schedule. Indeed Amendment No. 167 is specifically subject to those limits. Perhaps I may remind the House that the initial limit is of £1,000 million which may be increased by order to £2,500 million. That order will be subject to affirmative procedure in the other place, as is customary with money matters. Any amounts needed above £2,500 million will require new primary legislation. This will ensure that Parliament has an opportunity to scrutinise the Government's policy and payments made under this schedule. With that explanation, I beg to move.

Lord Peston

My Lords, I thank the Minister for her account of the amendment. Noble Lords on this side of your Lordships' House are troubled. Whatever happens, one will have to look carefully at the record to see what she said. I shall express our concerns. Our first anxiety relates to pre-payment for expenses that have yet to be incurred. That pre-payment may mean one of two things. It can mean an assurance, "If you incur these expenses and you convince us that you had to incur them and that they are as low as they should be" (and various other points to deal with Treasury control) "then the Government will seriously consider paying those expenses". It is pre-payment in the sense of commitment. I am not clear whether the amendments do not go further than that, and say, "We agree to pay those sums of money now, ahead of what you do". We need some clarification of what is meant.

The second anxiety—the Minister will not be surprised that I raise this point, especially about Amendment No. 167—is whether the existing Secretary of State binds, or could bind, future Secretaries of State. The Minister will forgive me if I point out that future Secretaries of State may belong to a different political party. We would be concerned if it were possible for the existing Secretary of State to bind future Secretaries of State to give guarantees in relation to expenses which are not yet defined and which may arise when future Secretaries of State may say, "We do not want to spend public money for that purpose". When I refer to future Secretaries of State, I refer also to Parliament in the future.

Towards the end of her remarks, when she was discussing various orders and such matters, the Minister made some points, which might be relevant to that point. I should like some further clarification, with examples, from her.

Perhaps I may return to a point that I have made to your Lordships before. If we are going to privatise an industry, then privatisation is what we are doing. The private sector must then accept responsibility for things which in the past the public sector has accepted. It seems to me, not least given the Government's rhetoric, that private companies cannot expect to be called privatised and also expect the Government to enter into the kind of precommitment which is much more appropriate for a public enterprise.

I do not believe, and I have argued the point previously, that it would be wrong for the Government to indicate—the noble Lord, Lord Renton, raised this point to do with uncertainties—that it might well bear some of those uncertainties, although we may argue a bit about those. I am of the opinion that it would not be desirable in any form once one privatises to take all the risks away from the private sector by entering into what appears to be an open-ended commitment. Above all, I am concerned about the binding of Parliament and Secretaries of State in the future. They are important matters. In deciding how we approach them, I look forward to hearing what the Minister has to say.

Baroness Hooper

My Lords, if I understood him correctly, the noble Lord, Lord Peston, asked whether it was intended to pre-pay those obligations now. I must point out to him that in the light of our discussions at a previous stage, because the sums involved are uncertain, unforeseeable and unascertainable—whichever word one chooses to use—we have felt it necessary to introduce the amendments.

I confirm that it is intended that the amendments will allow the Government to make advance commitments. It will be on the basis described by the noble Lord. Once those costs are incurred, the Government will obviously look strictly at them and ensure that they are not out of line, that they have been properly incurred and so on. He also asks whether they would bind a future Secretary of State. As with any other contract entered into by a Secretary of State, a future Secretary of State would indeed be bound to meet his or her obligations under such an agreement. We are talking largely about commitments which relate to activities, and policy decisions taken before privatisation. Any future Secretary of State would be subject to the financial limits to which I have referred, which are set down in the schedule—the £1 billion which, subject to procedure by order, could be increased to £2.5 billion—or otherwise primary legislation would be involved. That is a total aggregate figure.

Lord Peston

My Lords, before the Minister sits down, I should like to elucidate the matter. The control of public expenditure must clearly still lie with Parliament, notably the other place. Parliament must therefore be in a position to say, "We shall not vote you these moneys". That is the point that I have in mind. A Secretary of State late in the 1990s may get up and say, "The noble Baroness, Lady Hooper, and her right honourable friend the Secretary of State for Energy, entered into those commitments, which now involve spending £x million". The later Secretary of State may say, "This is what my predecessors committed me to which I feel that I must obviously bring to the other place", and the other place may say, "We do not want to spend public money on that, and we shall not vote any money for it". I am concerned whether that decision is still left for the other place.

I find it inconceivable that we could pass into law amendments of that kind which would in any way prevent the other place from not voting moneys. I am sorry to press the Minister on that point. It is an enormously important matter. I wonder whether she can tell us the answer to the question.

Baroness Hooper

My Lords, my understanding is that a future Secretary of State would be bound, as I have said. It is of course always open to Parliament, through its procedures, to raise questions, initiate debates, to take some action, to question and to open up the matter. If the Government are under a legal obligation to pay in that respect as much as in their purchases of, say, stationery, they will have to find the means.

On Question, Whether the said amendment (No. 166) shall be agreed to?

Their Lordships divided: Contents, 82; Not-Contents, 54.

DIVISION NO. 3
CONTENTS
Aldenham, L.	Hooper, B.
Ampthill, L.	Jenkin of Roding, L.
Arran, E.	Johnston of Rockport, L.
Beloff, L.	Kimball, L.
Belstead, L.	Lauderdale, E.
Blatch, B.	Lindsey and Abingdon, E
Borthwick, L.	Long, V.
Boyd-Carpenter, L.	Lucas of Chilworth, L.
Brabazon of Tara, L.	Macleod of Borve, B.
Brookeborough, V.	Margadale, L.
Caithness, E.	Marshall of Leeds, L.
Carnegy of Lour, B.	Merrivale, L.
Carnock, L.	Mersey, V.
Colnbrook, L.	Morris, L.
Colwyn, L.	Munster, E.
Craigavon, V.	Napier and Ettrick, L.
Davidson, V. [Teller.]	Nelson, E.
Denham, L. [Teller.]	Norrie, L.
Dilhorne, V.	Nugent of Guildford, L.
Dundee, E.	Orkney, E.
Elliot of Harwood, B.	Orr-Ewing, L.
Faithfull, B.	Oxfuird, V.
Ferrers, E.	Pender, L.
Fraser of Carmyllie, L.	Penrhyn, L.
Goold, L.	Platt of Writtle, B.
Gray of Contin, L.	Quinton, L.
Greenway, L.	Rankeillour, L.
Halsbury, E.	Reading, M.
Harmar-Nicholls, L.	Renton, L.
Harvington, L.	Saint Oswald, L.
Havers, L.	Sanderson of Bowden, L.
Henley, L.	Savile, L.
Hesketh, L.	Seebohm, L.
Hives, L.	Selborne, E.
Holderness, L.	Shannon, E.

Sharples, B.	Trafford, L.
Skelmersdale, L.	Trumpington, B.
Strange, B.	Ullswater, V.
Strathclyde, L.	Windlesham, L.
Swinton, E.	Wise, L.
Thomas of Gwydir, L.	Wynford, L.
NOT-CONTENTS
Addington, L.	Lloyd of Kilgerran, L.
Airedale, L.	Lockwood, B.
Ardwick, L.	Longford, E.
Barnett, L.	Macaulay of Bragar, L.
Briginshaw, L.	McNair, L.
Carmichael of Kelvingrove, L.	Masham of Ilton, B.
	Mason of Barnsley, L.
Carter, L. [Teller.]	Molloy, L.
Cledwyn of Penrhos, L.	Nicol, B.
Cocks of Hartcliffe, L.	Northfield, L.
David, B.	Ogmore, L.
Dean of Beswick, L.	Peston, L.
Donoughue, L.	Phillips, B.
Dormand of Easington, L.	Ponsonby of Shulbrede, L
Elwyn-Jones, L.	Ritchie of Dundee, L.
Ennals, L.	Seear, B.
Ewart-Biggs, B.	Shackleton, L.
Fisher of Rednal, B.	Shepherd, L.
Graham of Edmonton, L. [Teller.]	Stedman, B.
	Stoddart of Swindon, L.
Hampton, L.	Strabolgi, L.
Hanworth, V.	Taylor of Gryfe, L.
Harris of Greenwich, L.	Taylor of Mansfield, L.
Hatch of Lusby, L.	Tordoff, L.
Kagan, L.	Underhill, L.
Kilbracken, L.	Walston, L.
Kirkhill, L.	White, B.
Lawrence, L.	Williams of Elvel, L.

Resolved in the affirmative, and amendment agreed to accordingly.

7.7 p.m.

Baroness Hooper moved Amendments Nos. 167 to 170:

Page 119, line 11, at end insert— ("(1A) Subject to paragraph 4 below, the Secretary of State may, with the approval of the Treasury, enter into an agreement with any person under which the Secretary of State undertakes that, if such conditions as may be specified in the agreement are satisfied, he will exercise the power conferred by this paragraph in such manner and to such extent as may be specified in the agreement.").

Page 119, line 12, leave out (Grants under this paragraph may be made") and insert ("A grant under this paragraph may be made at such times, in such manner and").

Page 119, line 20, leave out ("Any loans which the Secretary of State makes under this paragraph") and insert ("A loan under this paragraph—

1. (a) may be made at such times, in such manner and subject to such conditions as the Secretary of State may with the approval of the Treasury detemine; and
2. (b) ").

Page 120, line 17, after ("made") insert ("or agreed to be made").

The noble Baroness said: My Lords, I beg to move Amendments Nos. 167 to 170 en bloc.

On Question, amendments agreed to.

The Earl of Dundee

My Lords, I beg to move that futher consideration on Report be now adjourned until 7.45 p.m.

Moved accordingly and, on Question, Motion agreed to.