Electricity Bill

HL Deb 26 June 1989 vol 509 cc484-531

3.7 p.m.

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

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Baroness Hooper.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 93 agreed to.

Schedule 12 [Nuclear liabilities: financial assistance]:

Lord Ezra moved Amendment No. 233K:

Page 117, line 26, at end insert— ("(d) the burying of electric lines to be installed or kept installed in areas of outstanding natural beauty or National Parks designated by the Countryside Commission under the National Parks and Access to the Countryside Act 1949.").

The noble Lord said: I can be very brief on this amendment. As it makes clear, it concerns the burying of electricity lines to be installed in areas of outstanding natural beauty. It could well be argued, as I am sure the noble Baroness will when she responds, that this amendment is in the wrong place. However, it has been put there because there seems to be no other place where a grant can be made by the Secretary of State for such purpose. Therefore, in putting forward an amendment of this sort, I should like to obtain from the Government their views on two matters. Do they agree that this is a desirable objective? If so, and if they feel that the amendment is in the wrong place, can they suggest where it might be more appropriately included in the Bill so as to attain the objective in mind? I beg to move.

Lord Renton

I am sure we all agree that it is better if possible for overhead lines to be placed underground, if that is not a contradiction in terms. So that Members of the Committee will understand exactly what I mean, some years ago I had experience of this matter and was involved in a good deal of controversy on behalf of people with whom I had great sympathy who wanted enormous sums of public money spent on putting the supergrid underground. If we can remove these vast overhead lines and the tremendous pylons which support them so that they do not spoil places of natural beauty, then that will of course be a great help to the environment. But we have to keep a sense of proportion and realise that it can be enormously expensive. Moreover, in some of the national parks where there are rock formations it becomes even more expensive and physically more difficult. Therefore, although naturally we have sympathy with the noble Lord, Lord Ezra, I assume and hope that this is a probing amendment rather than one which he insists should be applied in every case.

Lord Peston

I should like to add a few words in support of the amendment. As I read it, this amendment would enable the Secretary of State to make grants to this end. The amendment certainly does not say that all such lines should be placed underground, merely that grants should be available so that where possible and reasonable to do so that should be done.

I slightly disagree with the noble Lord, Lord Ezra, who is not convinced that his amendment should come at this point in the Bill. My own view is that since in Schedule 12 we are discussing the expenditure of enormous sums of money for nuclear decommissioning, and so on, which at least to some degree must be thought of as having an environmental aspect, surely this is an appropriate place to raise such considerations. I am entirely with the noble Lord, Lord Renton, in recognising how much money would be involved but, in a sense, that is placed in context by the vast amounts of money we are about to spend on decommissioning.

The noble Lord, Lord Renton, is also right—and I agree with the noble Lord, Lord Ezra—that this is an objective that the Government should bear in mind. I have to say that, despite my appreciation of modern art, I do not find these lines particularly attractive. As regards the living environment, undergrounding is an objective which one would very much like the Government to take into account. The amendment does not commit the Government to that objective; neither does it compel them to spend these vast sums of money. The amendment proposes that the Government should recognise, at least to some degree, the desirability of this particular objective. Therefore, on those grounds I believe that the amendment is worth a modicum of support.

Baroness Hooper

I accept that the sight of electricity lines above the ground can be unattractive. Indeed, a great deal is already being done to go underground where practicable and possible. I have seen some excellent examples provided by the Yorkshire board in this respect.

There are some difficulties which must be taken into account, and my noble friend Lord Renton mentioned some of them. The cost of underground cable ranges from one and a half to 18 times as much as overhead lines, depending on voltage. It also takes longer to carry out the necessary work; and it is correspondingly more expensive to locate and rectify any subsequent faults on underground cables. In some areas—in particular agricultural areas —placing cables underground is unsatisfactory since cables are at risk of being ploughed up.

There are two further points I wish to make. Under the new electricity regulations, anyone who wishes to install an overhead line may be required to make an environmental statement about the impact of it on the countryside. The Secretary of State will need to take any such statement into account when deciding whether or not to grant a consent to the placement above ground of any electric line, other than a low voltage service line. Further, paragraph 1 of Schedule 9 requires any licence holder or any person authorised by an exemption to generate or supply electricity to have regard to the amenity provisions of that paragraph in formulating or considering any proposal for the installation of an electric line, whether above or below ground. This paragraph also applies to the Secretary of State when considering an application for an overhead line consent under Clause 36.

I appreciate that the amendment deals with grants, but I felt that it was important to reiterate the fact that we are taking this matter seriously. I agree with the noble Lord, Lord Ezra, that the amendment does not sit comfortably in Schedule 12. In the context of the amendment made by my noble friend Lord Norrie, and indeed other amendments relating to the environment which were made at earlier stages in our Committee proceedings, I am in any event looking again at the question of undergrounding as well as all the other matters raised. I hope the noble Lord will accept that I will certainly take into account his amendment in that overall consideration.

Lord Ezra

I thank the noble Baroness for that explanation, and also for the assurance that she is looking at this whole question of undergrounding, particularly in regard to areas of outstanding beauty. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.15 p.m.

Lord Peston moved Amendment No. 234:

Page 118, line 47, at end insert— ("(5) No grants, loans or guarantees shall be made in relation to qualifying expenses under this section if incurred in connection with nuclear power stations commissioned after the enactment of this Act.").

The noble Lord said: In discussing this amendment standing in the name of my noble friend Lord Williams of Elvel, with the permission of the Committee I shall raise a number of general questions concerning nuclear liabilities and related financial assistance. It would be useful if the Minister could answer these questions in one reply rather than continually having them raised throughout the afternoon.

Having said that, I must make a point that is only partly political; namely, nothing brings home to this Chamber more clearly the foolhardiness of placing the nuclear industry in the private sector than this question of nuclear liabilities. The more one examines the problems that arise with decomissioning and related matters the more one asks about the nature of the public interest and providing financial support. It seems to me, at least, that to almost any dispassionate person studying this subject the nuclear power industry should simply not be in the private sector. Separate from the issue of general privatisation which we are not debating now, when confronted with these problems it is impossible not to see that the obvious answer is to leave this industry in the public sector, at least for the time being. That is my first general comment, which I insist is not just a political comment but one that could well be made by those who favour privatisation.

On the subject in general, essentially the amendment revolves around the question of what is in the national interest. After all, if we are to use public funds our criterion must be to use them in the national interest. I am sure that noble Lords opposite, given their present economic policies, do not believe in using public funds to support private enterprise. They have set all their philosophy against that. Therefore, the only argument is that these loans, grants and guarantees arise because of some concern with the public interest.

What is that public interest? One argument—and I speculate on these matters because they are difficult—is that the existing power stations, once they cease to be economically viable, give rise to problems of storage and the reprocessing of nuclear fuel. They give rise to problems of radioactive waste and, more generally, problems of decommissioning. All those matters relate to existing power stations as a public matter because those power stations are in the public sector. That led my noble friend Lord Williams and I to this amendment.

However, even there one reflects on whether that is entirely a valid argument, because one could at least argue that these matters could be included in the sale price in the first place and that no issue of public responsibility should arise later because it should arise ad initia. Can the noble Baroness assure us that these costs will not be double counted and that industry will not be sold net of decommissioning cost and then obligingly come to the Government and ask for more money once it is decommissioning? In other words, if one buys a power station its value must be net of what it will eventually cost to decommission. One way of arguing is to say that that is how the industry will be privatised and therefore that none of the other issues will arise. Can we be reassured that if that is already taken into account in the sale price it will not arise a second time?

The schedule concerns grants, loans and guarantees. To the best of my ability I have thought through the case for grants, and I can see it. I should like to know what is the nature of the case for loans and guarantees. Given that the privatised industry will have access to the free capital market, why does it need loans from the Secretary of State with the approval of the Treasury? Why cannot it get its own loans? Why does it need guarantees? Why cannot the industry itself provide the appropriate collateral? What is there about this activity that justifies guarantees and loans? This is not the argument about grants. I can see the argument about grants because the industry will be stuck with certain problems for which it was not fully compensated when it was privatised in the first place. That is why grants may be appropriate. I should like to know about those three headings. What do the Government think at the present time the appropriate mixture of grants, loans and guarantees is likely to be?

Can the noble Baroness tell us what sums of money are involved? What is the public purse letting itself in for with regard to this financial assistance? What is the scale of this operation? I am not a technical expert on nuclear plant generation. I am certainly not a technical expert on any of these matters of storage, reprocessing and decommissioning. However, the documents that have been sent to me quote large sums for these costs. They talk of sums equal to one-tenth and one-fifth of the building cost of a power station. They talk of sums of £100 million and even £200 million for decommissioning. I do not suggest for one moment that there is any way of avoiding spending large sums of money, but to pass into law a commitment to financial assistance—I shall come back in just a moment to the word "commitment"—without knowing quite how much is a little worrying.

I use the word "commitment", but I notice that throughout the schedule the word "may" occurs rather than any other word. If I were in the nuclear industry I would like to know what the word "may" means. "May" normally means "may" or "may not". In what sense is the Secretary of State liable to give assistance? In what sense is the Secretary of State obliged to give assistance? In what sense is this other than a blanket permission which will be negotiated in due course but without any full commitment? Is the word "may" correct, and does it mean "may" meaning "may not"?

Can the noble Baroness tell us the present state of knowledge of these matters? Do we know how to carry out any of the activities referred to in the first paragraph of the schedule? Have we had much success yet in decommissioning? I think I am right in saying—I always emphasise that I am not an expert—that we have not yet decommissioned a power station in this country. If we have done so—I speak as an ignoramus—I should like to know about it. The only thing that I can think of more difficult than building a nuclear power station is decommissioning one. What are we letting ourselves in for in this respect? Are we at present financing research on these matters so that when the time comes we will be able to do the job that people have in mind? As noble Lords will be aware, I do not speak on these matters as someone who is against nuclear power. That is not my point. I speak as someone who is in favour of using resources efficiently and of knowing the answers to key economic questions.

I have two final questions which are at least worth considering. When the original Magnox stations were built not a great deal of thought was given to such problems as decommissioning and so on. Those were exciting and experimental days. It seemed a good idea to start to be in this business and to build these stations. I add that I do not think that that was a mistake, but even a long time eventually comes round. Economists, because of their emphasis on discounting the future, tend to regard anything longer than about 10 years as never. However, I am afraid that 10 years go by, 20 years go by and 30 years go by and eventually chickens come home to roost.

I am aware that when we built the original stations we were not thinking of the problems that arise with decommissioning, but I also understand—and I hope for reassurance on this point—that now when we plan our stations we take the problems of decommissioning into account. I am led to believe that that is true for Sizewell. Can I be assured that any future power station construction will take account not only of the technical side of decommissioning but also of its cost, and that that will be part of the decision-making mechanism?

My final question is a typically boring economist's one. Is there any way of answering the question—I put it no more strongly than that—of whether the nuclear stations already in existence have had a contribution made to their decommissioning costs by people who have bought their electricity from them over the years? On the economic side the price of electricity ought, strictly speaking, already to have taken that into account. It is a genuine capital cost, even though it is discounted for the future, and ought to have been included in the price. If that has already been taken into account it would be quite inappropriate for the Exchequer to have to find that sum of money a second time because in some sense it has already been found. I agree that this is a rather tricky matter. But speaking as an economist who is always intrigued by questions of this kind, I should at least like some analysis and discussion of the question of whether these costs have already been met.

My questions have covered a broad field. This has been not exactly a Second Reading debate but a broad debate on the general subject. I look forward to some comments and answers.

Lord Peyton of Yeovil

The noble Lord has raised a number of wide questions on this amendment. I seek to follow him to a certain extent, though without repeating the debate we had the other day on the desirability of separating altogether the nuclear section of the industry. In this schedule there is the clearest possible admission on the part of the Government that nuclear power is indeed very different and deserves and requires very different treatment. It requires treatment of a kind which the Government would never contemplate handing out to any other section of the industry.

Let us consider the wording of the schedule. The Secretary of State is empowered to make either grants or loans of such amounts as he thinks fit under certain very broad headings of expenditure including the storage of fuel, the handling of waste and the decommissioning of a nuclear station. As I understand it, a decommissioning has not yet taken place although there is the commencement of putting one nuclear station into cold storage—if that is the correct term to use.

We have no idea how much that expenditure will be. The schedule states that the amount, shall not exceed £1,000 million or such greater sum, not exceeding £2,500 million, as the Secretary of State may by order specify". Even in these days those sums are fairly considerable. I wonder what those who are now Conservative Ministers would have said in the past if such liabilities had been imposed upon the taxpayer without even providing for a cursory reference to Parliament. I have never found the negative procedure to be anywhere near remotely satisfactory. In another place I may have been tempted to use stronger phraseology.

I conclude with two questions for the Government. First, I should like to know who within the electricity supply industry has such confidence in putting the nuclear stations into the same bracket as others and then to one side, to an extent, for special treatment? Such a process seems to me to be blowing hot and cold in a very unacceptable way.

Secondly, I should particularly like to know—and I think we are entitled to ask this question—who, with any authority in this immensely important industry, is more than content in the matter and is actually encouraging and supporting the Government in their present proposals? I shall be most interested to hear the answer to that question. Further, have the Government any evidence to suggest that potential investors in the generating section of the industry, which will include the nuclear aspect, are in any way encouraged by the proposals which the Government are putting forward?

The industry is a complicated and very difficult one. Therefore, it is vitally important to recognise that adding to its problems at a time of immense change could be very unwise and something which the Government may ultimately greatly regret.

3.30 p.m.

Lord Renton

During earlier exchanges in Committee both sides have agreed that safety should be one of the principal responsibilities of the Secretary of State and of the various electricity authorities. The noble Lord, Lord Peston, and my noble friend Lord Peyton of Yeovil have been clear that we should insist upon safety. The twelfth schedule goes to the heart of the whole question of safety. I should perhaps remind Members of the Committee that among the threats to safety which have given rise to public anxiety both at home and abroad are the reprocessing of nuclear fuel and the treatment, storage or disposal of radioactive waste.

As has been rightly said, we have not yet had the decommissioning of a nuclear power station. I hope that it will not seem too self-assertive if again I remind Members of the Committee that when we embarked on this concept more than 30 years ago we did not know how long a reactor core would last. That was the most expensive part of the equipment. Further, we did not know how long the ancillary machinery would last; we had to guess. It is some reassurance to those who committed themselves to nuclear generation those many years ago that so far all fears expressed at that time about the length of time which the plant would last have been unjustified. Windscale was opened in 1956 and other nuclear power stations have been opened in stages since then. However, I do not think that one has been opened now for at least 10 years. It is some satisfaction to find that there has so far been no decommissioning. Nevertheless, we must face the possibility that there may be such decommissioning in the future. I say that because nothing is everlasting, alas, in this field.

It is right to make the point that the nuclear power stations so far built, the radioactive waste created and so on, have all resulted from the expenditure of public money. If the expenditure of that public money has given rise to anxiety about safety, it is surely reasonable—it would be a form of insurance for the public—that we should have further public money spent in order to prevent accidents of any kind occurring under the three headings in the future. If we are to have nothing like Schedule 12 in the Bill, that would be a very serious omission. Indeed, we could rightly be accused of failing to observe the safety standards which are required.

As I understand it, because the Opposition did not vote on the matter—although they indicated on the Marshalled List that they would perhaps vote against Clause 93 and Schedule 12—I assume that they accept basically what is in the twelfth schedule but that they want any power station built or decommissioned in the future to be excluded from those benefits. Would that really be a wise exception to make? Would the public be happy about that? After all, we are legislating now, we hope, for a great many years to come. I should have thought that it could cause some real anxiety. I also find it illogical and inconsistent—if I may follow the phrase used by my noble friend Lord Peyton of Yeovil just now, although he used it in another sense—and we should not blow hot and cold in this matter; we should not say, "Yes, it is all right for anything arising out of what has been done in the past. Oh, but in the future we should leave it to chance, even if the Secretary of State is convinced that public money is needed to make safe the decommissioning of a power station. No, we must not let him have that". There is no logic in that.

Lord Harmar-Nicholls

My noble friend's points are sound when taken separately, but he did not face up to the one point made by my noble friend Lord Peyton of Yeovil. I agree that power in these matters should be given to the Secretary of State to meet the eventualities to which my noble friend referred, but I find it difficult to accept that £1,000 million—it can go up to twice that amount—should be available to a Secretary of State without Parliament even having a chance to give a nod or a wink in connection with it.

While normally one wants to give powers to Ministers to enable them to make vital decisions quickly, when it gets to the point of spending that amount of money, bearing in mind the stringencies that we have to face in other fields, I feel that Parliament should in some way, as I said, give a nod and a wink—no more than that—to the Secretary of State when he makes his decision.

Lord Trafford

In answer to the point just made, I believe that it is fair to draw my noble friend's attention to paragraph 4(2) of Schedule 12 where it is clear that there must be a resolution of the other place. I believe that the nod and a wink that he was requesting is probably taken care of.

I do not wish to reopen the question of the privatisation, or otherwise, of nuclear power which we debated last week, interesting though that subject may be. I accept entirely all the comments about safety made by my noble friend Lord Renton. Safety is a matter for the general public. It is not a matter of whether the installation happens to be in the public or the private sector, now or in the future. It is the preservation of the safety of the public with which we are concerned.

However, having made the decision which has been made, and it having been approved in both places on a vote, about moving nuclear installations into the private sector, that leads to certain inevitable consequences. One of them relates to maintaining the diversity of supply, which I would regard as important with regard to the future of the electricity industry as a whole. At the moment, of the non-fossil fuel generating sources, nuclear is by far the most mature of the technologies.

Although there have been anxieties, and I am sure there always will be anxieties expressed about such installations, their safety record over the decades since they were introduced has been remarkable both in Europe and here, despite the Three Mile Island business in the United States. One can never entirely rule out the possibility of human error. In so far as one understands what happened in Chernobyl, it appears to have been human error to a large extent that led to that incident. Again we are assured, and I accept the assurance, that it was a design that would never have been approved or accepted in Western Europe or this country.

I shall return to the points made by the noble Lord, Lord Peston. As I said, I cannot believe that safety should apply only to something in the public sector, and therefore, once the decision is made to put it in the private sector, public safety must be ensured subsequently. I shall not develop further the argument eloquently put forward by my noble friend.

There are two consequences which, in a sense, answer the questions asked by the noble Lord. For example, it is clear that the total costs of decommissioning are not known. One can make "guestimates" but not direct estimates. That, I assume, will answer his question as to whether decommissioning costs are taken into account in the current price of electricity. How can they be if those figures are not, and cannot be, known?

It is a technology which is constantly developing. Although there are many people in this country, and of course around the rest of the world, who believe that they know how decommissioning should take place, even the experts are the first to say, "We cannot be certain that the cost of carrying out a particular decommissioning, or part of a decommissioning, exercise might not be greater than we have anticipated".

On all those grounds, it would seem reasonable to keep Schedule 12 as it stands and to reject the amendment. I make two more points. The noble Lord, Lord Peston, asked why the word "may" was used. I imagine that "may" is a word that allows the Secretary of State, but does not oblige him. Clearly, no Secretary of State likes to dish out £2.5 billion, £2 billion or £1 billion unless he has to. Therefore one does not put an obligation upon him, one allows him so to do, subject, as I say, to paragraph 4(2) which states: No order shall be made under this paragraph unless a draft of the order has been approved by a resolution of the House of Commons". It is not possible, because the costs cannot be known, that there would be, so to speak, double accounting of that figure. It does not seem reasonable. It would in one sense be easily spotted.

Finally, the noble Lord asked about insurance. The Nuclear Installations Act 1965 requires the operator to sustain insurance up to £20 million.

After that, there is an obligation under that Act, which I presume—I am sure that my noble friend on the Front Bench will tell us whether that is so—falls on the public purse. The answers to many of the questions asked by the noble Lord are self-evident. The safety problem has been discussed and it seems to me that the amendment does not stand up to detailed investigation.

3.45 p.m.

The Earl of Lauderdale

I cannot help feeling that the schedule is needed in some form. I read it as a type of open-ended commitment to ensure that there is provision in the future for a sum which is up to so much at the moment but which I am sure that Parliament will have to change as matters go along.

I should like to ask whether, when the nuclear power station company is floated, there will be provision in its flotation documents to take account of the prospect of government help. I am clear that we must have nuclear power. I believe in it. Its safety rcord is exceptional. How on earth anyone will get people to subscribe to shares in a company or companies owning stations which have those indefinite anxieties far away in the future, I do not know.

We must not reopen the debate we had the other day. The only pity about that debate was that the vote was taken too late for those whom I believe to be wise to succeed. Anyhow, that issue is closed and we cannot go over it.

I do not see—perhaps we shall be told—how investors' funds for those future nuclear power stations will be raised unless it is made clear to the investors what degree of help will be available for the decommissioning. I shall take an example from another side of the energy industry. All the oil companies have for years been making provision for the dismantling and removal of their platforms. It is a regular thing. We have been doing it for at least the past 10 years. The provision for decommissioning in that case is familiar to those of us involved in the oil industry. With regard to the nuclear industry, it is uncertain. I hope that we shall hear from the Government to what extent, and how, the proposed flotations will take account of that fact. The Government are right to make provision, but I should like to know how investors will be assured of how much or how little the companies they invest in will be protected by it.

Baroness Hooper

Last week we debated the Government's proposals for ensuring the future of nuclear power in the private sector. As has been said, on a Division on the amendment tabled by the noble Earl, Lord Halsbury, and others, we succeeded in having your Lordships confirm support for our proposals. Clause 93 and Schedule 12 provide the final plank in the proposals, but I am happy to respond to the general remarks of the noble Lord, Lord Peston, because this is a very important topic.

Nuclear power has costs which extend, as we all recognise, for a considerable time after the electricity has been generated. Spent fuel is reprocessed, the resulting wastes need to be treated and ultimately disposed of and nuclear plant has to be decommissioned. Some of these costs are very long term. High level vitrified waste has to be stored for up to 50 years before it can be disposed of. The final decommissioning of nuclear power stations may well not take place for up to 100 years after the station has closed. In some areas, it is not yet possible to identify firmly what the cost will be. For example, the cost of disposing of nuclear waste will depend on the site for a repository, on which no final decision has yet been taken. All those costs are subject, quite rightly, to stringent health and safety and environmental regulation. The requirements of this regime have become more stringent over time, and it is clearly not possible to rule out the chance that there may be further changes to the regime over the long periods involved.

To date, these uncertainties have meant that provision of nuclear services and the supply of nuclear electricity have been governed by a cost plus mentality. As we all know, the effect is that there has been little incentive to keep under control those costs which management can influence.

Following extensive discussions with the electricity industry and BNFL, we have concluded that it is possible to distinguish between those areas which are capable of control and those areas which are so uncertain that some degree of assurance and support is needed. Our proposals in Clause 93 and Schedule 12 are targeted at these areas.

The noble Lord, Lord Peston, asked what provision had been made to date. At present, electricity customers are charged in their electricity prices the best estimates, at the time, of future costs relating to this electricity supply. This is only right, and we propose that it should continue after privatisation. But these prices clearly cannot take into account unforeseen future cost increases. If these costs increase later, for example as a result of what I quoted, changes to safety and environmental regulation, the costs inevitably fall to be met by the industry. So long as the industry remains in the public sector, this has meant that the Government ultimately stand behind it in respect of all such unforeseen cost increases. We believe that after privatisation it would be unreasonable for the Government to stand aside entirely from such a burden. Clause 93 therefore permits the Government to contribute to costs associated with reprocessing, waste treatment and disposal, and decommissioning of nuclear plant.

Our aim, as Ministers made clear during consideration of the Bill in another place, is to target government assistance in a selective way, dealing with unforeseen and uncontrollable cost increases, but leaving management in National Power, the Scottish nuclear company and BNFL, with adequate incentives to keep down those costs which are subject to management control.

The noble Lord, Lord Peston, also asked what "may" meant. Although my noble friend Lord Trafford has responded adequately, I would say yes, it does give a permissive power. However, as I said in Committee a week ago, we intend at Report stage to table amendments designed to reinforce this message by permitting the Government to commit themselves contractually to meet their share of such unforeseen costs. I emphasise that this does not represent an extension to the policy announced in another place, simply a strengthening of the Government's commitment to it.

Electricity customers will continue, as at present, to pay the best estimate of such costs at the time they get their electricity. If the costs rise subsequently because, for example, of changes to the safety or environmental regime, or in areas where the costs are genuinely unknown, the Government will contribute to the costs when they arise.

We are confident that by agreeing to contribute to unforeseen and uncontrollable cost increases in this way, it is possible to move to a contractual regime which provides proper incentives for BNFL and the nuclear operators to operate efficiently and safely and to keep costs under control. Negotiations are taking place at present between BNFL and the nuclear operators to conclude contracts for nuclear fuel cycle services which will be essentially fixed price, except where costs go up for reasons of regulatory change. In these latter areas, cost increases will be shared between the Government, the nuclear operators and BNFL.

By these means we shall be bringing proper commercial pressures for the first time into major areas of nuclear activity. And by paying particular regard to the reasons why nuclear costs go up, and spreading the financial risk associated with such cost increases, we shall be providing the assurance needed to ensure that nuclear power can operate efficiently and profitably in the private sector, while maintaining the levels of safety and security which have applied to date, and which we all certainly recognise as being of the utmost importance.

The noble Lord, Lord Peston, further asked me to quantify these unanticipated costs. I have to say that it is quite impossible to do so because the costs are, by definition, unanticipated. The Government will, however, only pay a part of any increase above the level provided for, not the full cost, and only if the increase is unforeseen.

I turn to paragraph 4 of Schedule 12 which will place financial limits on the provisions and which has been referred to—the £1,000 million, which may be increased by order. I point out to my noble friend Lord Peyton that the order must be subject to the affirmative procedure. The amount may be raised to £2,500 million. Anything over and above that would require primary legislation, but this will ensure that Parliament has an opportunity from time to time to scrutinise the Government's policy and payments made under the provision. In the event that the provisions appear likely to be insufficient, the Government will return to Parliament to seek an increase. Of course, we do not anticipate an increase for many years to come, if ever.

The noble Lord, Lord Peston, also asked for an example of a decommissioning to date. I can only quote the example of Berkeley, one of the first Magnox stations to be closed in March this year, when Lord Marshall said that adequate provision had been made to meet decommissioning and nuclear fuel cycle cost.

Lord Dean of Beswick

Will the Minister give way? I rise to intervene because in the very early stages I helped to manufacture some of the turbine parts for Berkeley power station. Can the Minister indicate, in regard to the decommissioning and closure of a nuclear power station, that the nuclear power is not the whole of the station? Is it not true that a large part of the station consists of conventional turbines and rotors, and only the heat comes from the nuclear part? Is it not possible with a large percentage of the bigger stations to have half the plant demolished anyway without safety risks to anybody? Has that factor been taken into account? Whether a turbine is set at 100, 250, 350 or 500 megawatts, the whole of the turbine section can be removed without any threat to safety whatever. I hope that when the Government decide what to make available that exercise will be looped in.

4 p.m.

Baroness Hooper

The noble Lord speaks from a considerable knowledge of this subject. Nevertheless, the reference which I made to Berkeley shows that adequate provision has been made in advance, according to the statement made by the noble Lord, Lord Marshall of Goring.

The Earl of Lauderdale

I wish to clear up that point. Are we to understand that the provision for decommissioning Berkeley has already been covered by the CEGB's electricity charges?

Baroness Hooper

Yes, that is my understanding. I shall now move on to respond to the question which I believe the noble Lord, Lord Peston, asked me as regards whether double counting would apply if grants are provided. The answer is "no". The Government will make their policy on the use of grants clear in the prospectus when National Power is sold. The shares will be priced against the background of this policy; there will therefore be no double counting.

As regards the use of guarantees and loans as well as grants, I should say that we anticipate that grants will be the major means of support. However, there may be occasions when loans and guarantees are appropriate—for instance, if there is a cash flow problem rather than a need for additional expenditure. This provision provides the necessary flexibility.

My noble friend Lord Peyton of Yeovil asked who in the industry supported this policy. I can say that in a speech to National Power managers on 25th January, Mr. John Baker, the chief executive designate of National Power, said that the Government have recognised the special needs of privatising nuclear power by the inclusion of specific provisions in the Bill for the nuclear levy, and assistance with the nuclear fuel cycle costs. Only recently the CEGB put in its application for the fourth PWR in the family of four following the original Sizewell PWR. Surely this must show confidence in the future.

Lord Peyton of Yeovil

My noble friend has not, with respect, answered my question. Mr. Baker and others within the industry must perforce in the positions they occupy do their best to follow the line being laid down by the Government and confirmed by Parliament. I asked my noble friend whether there was anyone of stature within the industry who positively counselled the line now being taken by the Government of including nuclear with conventional generation.

Baroness Hooper

I am grateful to my noble friend for clarifying what he meant. I responded by quoting a leading figure from the industry. As I said in relation to the PWR applications, I believe the fact that the industry is pursuing that policy shows confidence and enthusiasm for the future.

My noble friend Lord Trafford raised a point about nuclear insurance. That, of course, will not change. We have treaty obligations with regard to nuclear insurance which mean that the company is required to bear the liability up to £20 million while between £20 million and the value of 200 million special drawing rights—currently around £250 million—liability falls to the Government, as it does in other countries which are signatories to the treaty. Beyond that amount, it is for Parliament to decide who should bear the cost.

I now turn to Amendment No. 234 which is before us. The noble Lord, Lord Peston, as he said, is seeking to restrict the payment of grants or the making of loans or guarantees to activities resulting from the operation of nuclear stations commissioned before Royal Assent to this Bill.

The first PWR will not be commissioned until the mid-1990s. It is then likely to operate for 40 years. PWR fuel does not need to be reprocessed and the decommissioning of PWR stations is more straightforward than for Magnoxes and AGRs. The impact of regulatory change is therefore likely to be less for the PWRs than for the Magnoxes and the AGRs and, because it has yet to begin generating, National Power should be able to foresee and take into account the majority of costs associated with PWRs in its electricity prices. That is indeed what we would expect.

But we are dealing in this provision with the unforeseen. While we do not anticipate major cost increases arising with "back-end" PWR costs, as I said, it is not possible to rule this out: entirely. It would be wrong therefore at this stage to forego the possibility of the Government providing a contribution to such cost increases if and when they arise. We do not believe that the Bill should constrain the Government's freedom of action to respond to events in this way.

I believe we have had another useful discussion on this matter, and on more general points. I trust the Committee will show consistency in its support of the Government, based on the fact that the amendment which was placed before the Chamber last week was not accepted.

Lord Peston

I thank the noble Baroness and other Members of the Committee who have joined in the discussion on this amendment. I do not apologise for raising one or two of the general issues, partly because I did not take part in last weeks' debate—I am sure the Chamber always wishes to hear me express my views—but also because the discussion has enabled us to clarify a number of key matters. I am bound to say, listening to the reply of the noble Baroness, that I think she put up a better argument for my position than I did myself. It seems to me that she shows ovewhelmingly, by her emphasis on the uncertainties of the matter, and by the need for government involvement, why it is foolhardy for the Government to follow the line they are doing with respect to nuclear power.

However, I wish to add another point. I do not accept logically, arising from the Division of last week, that Schedule 12 must follow. I repeat the point I made on an earlier occasion. It is that nuclear power stations could be offered to the private sector tout court—for it to buy them if it wants to. However, the firms who buy the nuclear power stations must meet legal safety standards. The noble Lord, Lord Renton, is entirely right to raise the matter of safety. There is no difference between us on that matter. The Government could say, as they say to private enterprise generally and in the case of ferry companies, that safe ferries must be provided and that the Government will not subsidise firms to provide safe ferries. Therefore, why should the Government subsidise private industry to provide safe nuclear power stations? It is the duty of private industry to do that. To return to my point, we could certainly tell the private sector that this industry is offered for sale for what it will fetch in the open market, including the liability of the purchasers to meet these costs.

I raised a question which I do not believe has been answered. I asked why the Government should meet this liability. I must point out logically to the noble Baroness—I do not wish to make difficulties for her with her right honourable friends in another place—that the overwhelming case for the private sector is allegedly that what it is good at is bearing these risks. That is the whole point of the Government of which the noble Baroness is a member. It does not hold as an argument that there are long-term risks here, and that therefore the public sector must bear them.

I believe that the points that we have made are important. We have also learnt a great deal. I was particularly interested to note that when it comes to decommissioning we are talking about something that will happen 100 years from now. That is a measure of our difficulties in this respect.

To conclude, I accept what has been said about safety. I believe that safety is enormously important, but what is not obvious to me is who should bear the cost. That is the reason why I raised the amendment.

I shall not press the matter to a vote. That would not be appropriate because this is a matter of clarification and perhaps for a vote subsequently. In reminding us of the amendments which the Government will bring forward on Report the noble Baroness has guided us from the "may" to the "will" of the schedule. Therefore, having profited from listening to the debate, it seems to me that it would not be appropriate for me to press the matter now. However, I warn the noble Baroness that I look forward at Report stage to seeing her amendments which correspond to this amendment, so that the matter can be explored in more detail. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Peston moved Amendment No. 235:

Page 118. line 47, at end insert— ("( ) No grants, loans or guarantees shall be made under this schedule except in relation to unanticipated costs connected with changes in regulations.").

The noble Lord said: We have covered most of the ground of this amendment but it enables us to clarify one further point. The regulations that I have in mind in connection with the amendment are regulations laid down by the Government. Here I concede—and this is connected logically with a point raised by the noble Lord, Lord Renton, about safety—that the private sector could validly argue that, if the Government invent new and more stringent regulations on such matters, grants, loans or guarantees might be forthcoming. In other words, it seemed to me that there could be a case for public intervention if the problem is created by the Government in the first place.

To revert to the point which I made earlier, I do not believe that the private sector should be insured by the Government against normal market risks because in that case one should not privatise the industry in the first place. However, in an industry as sensitive as this, in which safety is so important, the public are excessively sensitive about safety. As noble Lords have pointed out, our experience of the nuclear industry is not that the industry has been dangerously unsafe, but nevertheless the public believe that it is. Therefore the public may exert excessive pressures which might cause the Government to place additional pressures on the industry. The industry might argue that the Government should pay for that out of the public purse. In that event I believe that there is a case for some form of government intervention. The sting in the tail is that, logically, I cannot see the case for such intervention other than in this instance. I am trying both to win an argument and to support the Government in this matter. I beg to move.

Lord Renton

I see the purpose of the amendment, but the wording of it perplexes me. It says: except in relation to unanticipated costs connected with changes in regulations". We do not want to spell things out too much if we can find the plain meaning, but how are the costs anticipated? Is the noble Lord saying that if they are mentioned in regulations once they have been anticipated, but if they are not mentioned in regulations but arise later they are unanticipated?

Lord Peston

I am grateful that the noble Lord asked that question. To put it in the most commonsense terms, let us assume that I make a bid for a nuclear power station and I am the lucky winner of this great asset, which I assume has a discounted net value that is positive—in other words, I have bought something that is worth buying. Let us then assume that some time goes by and the Government change the rules of the game with respect to what I have to do to run my nuclear power station in a way which I could validly argue no one could have foreseen. The resulting constraints on my actions mean that I incur significant costs which will convert a profitable operation into an unprofitable operation. It would not be unreasonable for me to go to the Government and say that because they have imposed new regulations on me they should compensate me. The converse would be if the Government were to say to me that what they had done was something that any reasonable person would have anticipated, that I should have included it in my bid price and they would not compensate me.

The issue revolves around what would reasonably be anticipated and what would not. That is what I had in mind. I do not say that the drafting is necessarily good.

Lord Renton

The noble Lord has made his intention clear, but I do not think that his amendment expresses it. However, in my opinion, even if the purpose of the amendment were acceptable, because of the way it is expressed—which is so vague and does not relate specifically to the regulations as originally laid—we should not accept it as it stands. It would have to be amended at a later stage even if it were added to the Bill now. I do not say that it should be.

4.15 p.m.

Viscount Hood

I do not think that the amendment is practicable. However, it suggests another area on which clarification might be given. We are given to understand that the CEGB has made very large provision against the risks which are foreseen for the future. A provision is an accounting term. I suspect that it is not cash, but it probably has the effect of reducing the book value of the assets which at a point in time are to be sold to the public. It would be interesting to know whether the Government intend to take that into account in the price at which the generating companies are sold to the public, which would be reasonable. In future that must necessarily apply to all the stations in the PWR programme because, as the Minister has just stated, none of them will be open before the Bill becomes law. Perhaps the Minister could clarify an interesting problem.

Lord Harmar-Nicholls

I believe that this is a point which at some stage ought to be clarified if the Government want people to make bids. If something is altered as a result of government action and it results in additional expense being incurred, I believe that a claim for compensation ought to be looked at favourably. I believe that there is a precedent in planning. If one has planning permission to develop a site and for some reason before the plan has been put into operation there is an alteration in the law and the planning permission is revoked, one is paid compensation. The land was bought in anticipation of its being capable of development and the revocation was not the result of one's own actions but of a government decision.

I should have thought something along those lines should be considered in order that any bidder would not feel that he was taking on something that could be a real blockbuster if something were to happen.

Baroness Hooper

I am grateful to my noble friends for their suggestions and to the noble Lord, Lord Peston, for having accepted the point that changes or tightening of the regulatory regime come within the scope of government support. Given the timescales involved, which we have already discussed, we believe that there may be other situations where it may be equally appropriate for the Government to be able to make a contribution if costs rise even though the cost rises may not have been the direct result of the regulatory change itself.

Perhaps I may give an example which will be helpful to the Committee. As was explained during the Committee stage in another place, there are still a number of important decisions to be made on waste disposal. I have already referred to that issue this afternoon. For example, it is not yet decided where the repository will be sited and the design has not yet been finalised. At the moment, therefore, the nuclear generators are making provision in their accounts, based on the best estimate and on the information that we have today, for the costs. But decisions on the site and design of the repository could significantly affect the cost of waste disposal. If those decisions resulted in higher costs, there would be a backlog effect and an impact on National Power's profits. That would have arisen for reasons beyond National Power's control, but there would have been no change in the regulatory regime.

It would not be fair to expect electricity consumers or National Power itself at that stage to fund the shortfall in the provisions. The shortfall would clearly be unforeseen and not within the control of the nuclear generators, even though it was not a result of a change to the regulatory regime. It is only fair, therefore, that the Government should contribute towards those costs.

I believe that it would be better to allow the powers in Schedule 12 to be used as we intend. They will be used to provide the minimum amount of government support necessary to make sure that National Power will be able to meet its obligations and to deal properly with the wastes. The provisions proposed have been carefully designed to provide support in areas that are potentially subject to the greatest risk. We believe that they will provide assurance that the Government will assist in meeting cost increases in those areas. But our proposals will ensure that those involved also bear a proportion of the increased costs sufficient to give them the proper incentives and minimise the costs in areas that they can control and influence. We believe that that should give potential investors the necessary confidence in the future to invest in those companies.

Lord Peston

I thank the noble Baroness for her answer. All I can say—this rather follows what the noble Lord, Lord Peyton of Yeovil, said in regard to the earlier amendment—is that the more I listen to the discussion, the more bizarre the privatisation of nuclear power seems to me. It is the strangest of strange privatisations. That emerges more and more clearly. However, having said that, we have again learnt at least something of what the Government have in mind, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 236 not moved.]

On Question, Whether Schedule 12 shall stand part of the Bill?

Lord Peyton of Yeovil

I want to mention a few further points about the schedule. I would not wish it to be withdrawn from the Bill, but, in her opening remarks on an earlier amendment, my noble friend appeared to take more encouragement than I thought she should from the fact that the amendment of the noble Earl, Lord Halsbury, was defeated the other day. She can hardly be surprised that a schedule of this kind should at least attract a minimum of discussion. Self-denial is almost my middle name when it comes to making long speeches and I refrained from expanding my remarks as I think I might well have done and repeating a great many of the things that were said in that earlier debate. After all, repetition is not a phenomenon entirely strange to the Committee.

The presence of Schedule 12 to the Bill is a further indication of the Government's awareness of the need to treat the nuclear sector of the industry entirely differently from the rest. I do not believe that the Government have adequately met that point at all, nor, in my view, has my noble friend sufficiently answered the two questions that I asked her.

First, I marvel at the silence that has overtaken the supply industry. I cannot believe that the Government would be right in deducing from that silence any measure of enthusiastic or positive support for their proposals. I am still looking for a name—Mr. Baker, who made the speech to which my noble friend referred, is not that name—of some leader in that industry who is a positive enthusiast for the Government's proposals in the lumping together of nuclear and conventional generation.

Secondly, have the Government any evidence of the reaction of investors who may be contemplating investment in that bit of the generating industry which is to include the nuclear sector? I have more than a suspicion that not only the debate the other day, but also the impossibility of attracting outside money into a hotch-potch are responsible for the Government looking again at the question.

However, I still think—and I want my noble friend to be very clear about this point—that the Government have not recognised the extent of the uncertainties which they have acknowledged, but which, I think, will in the end cause them very much to regret the steps that they are contemplating.

Baroness Hooper

I made reference, in relation to the general remarks that the noble Lord, Lord Peston, chose to make in introducing his first amendment this afternoon, to the interesting debate that we had in Committee last week. I believe that, in responding to those general remarks, I covered as fully as will be acceptable to many noble Lords the points at issue in relation to both Clause 93 and Schedule 12.

Schedule 12 is an important schedule and should be looked at in the detail with which noble Lords customarily look at those important matters. However, I should like to reiterate that the Government feel it necessary to make those provisions simply because we believe that the nuclear industry has a better future in the private sector. We feel that the future of nuclear power is important to this country, both for reasons of security of supply and for environmental reasons. That is why we have taken such pains, in trying to make the necessary provision, to give all those with anxieties responses to their doubts. I hope that noble Lords will accept that that is the spirit behind Schedule 12.

Lord Harmar-Nicholls

Before we finally leave Schedule 12, I should say that I accept the two propositions that my noble friend has just made at the end of her speech, but the only reason why I am interested in the matter is that I want to see that we get value. That is very important because, if we are seen to fall down on obtaining the real money value from the privatisation of this great industry, confidence in the privatisation policies, which I think are right, will be undermined and we shall not get support.

I hope that my noble friend will see that the department looks at the points that were made in the amendments to Schedule 12 because the offer must be made attractive enough for people to want to take on the obligation and buy the shares. When a worthwhile auctioneer has a varied lot to sell, he does not put too many of the good sellers with the bad sellers because, invariably, the bad seller interferes with the price that one receives for the good one.

People are frightened of the nuclear aspect. I do not think that they have grounds for such fear. However, the fact that the fear is present will affect the situation to some extent. In terms of people buying these shares, the more we can clear away the doubts the better the finanical result will be. At this stage it is the financial results that I have in mind when I make any point on this clause.

Baroness Hooper

I need say no more than I believe that our proposals are designed to achieve—and certainly aimed specifically at obtaining—full value for the industry.

Schedule 12 agreed to.

4.30 p.m.

Clause 94 [Provision of statistical information]:

The Chairman of Committees (Lord Aberdare)

If Amendment No. 236ZA is agreed to, I cannot call Amendment No. 236ZB.

Lord Peston moved Amendment No. 236ZA: Page 65, line 1, leave out from ("may") to ("serve") in line 3.

The noble Lord said: With the permission of the Committee, in moving this amendment I should like also to speak to Amendment No. 236ZB. I hope that we can deal with this matter fairly rapidly although it raises one or two points of importance.

I am viewing this procedure as a learning process. I did not know that the present position regarding provision of information was operated solely on a voluntary basis. It is stated in the Notes on Clauses. Therefore I assume that it is on a voluntary basis. My view, and that of my noble friend Lord Williams of Elvel, is that in terms of generation, transmission and supply, the electricity industry will always be one in which there is a public interest. That interest derives in part from such a matter as energy efficiency. However, it arises because of our concern with the environment and for safety. It arises because even though the Government are proposing to privatise the industry, they are proposing to subsidise the privatised industry directly, so far as we can discover, and because of the non-fossil fuel guarantee. It therefore seems to us to be important that this industry should be obliged to provide the information that the public generally require to comment on and criticise its performance. Certainly it means that once the industry is in the private sector, we cannot rely on voluntarism.

The Bill uses the words "statistical information". What do the Government have in mind when they use that expression? Do they use the word "statistical" simply to mean quantitative? In other words, is this amendment solely to do with the provision of numerical facts? If that is all that it provides for, that is not good enough. Although a great deal of the information that we require will be statistical and quantitative, much that we require might be of the more general, prescriptive kind. That is why we have added the expression "and other general" information. On reflection, perhaps a more general statement that the Secretary of State may instruct the industry to provide all the information that is required in the public interest is probably the simplest.

I put it in that way so that the noble Baroness is aware of what we have in mind. I hope that we shall not go down any track where the provision of information to the public would be less than it is at present. That is the answer that I wish to hear: that the position with respect to the private industry will be no worse than it is with respect to the national industry—and with any luck it might be better. We have put these amendments down to obtain some Government response on that issue.

The Earl of Dundee

First, let me make it quite clear that this clause is about the provision of statistical information to the Government. That is information that is collected and aggregated for the purpose of measuring the contribution that the electricity industry makes to the economy of the United Kingdom and its constituent countries. It has nothing to do with regulation, and should not be confused with the other powers in the Bill which deal with the collection of other types of information. For example, the director has a duty under Clause 45 to keep under review activities connected with the generation, transmission and supply of electricity. He may under Clause 28 obtain information on possible contraventions of licence conditions, and there will be conditions in the licences as well about the provision of information to the director. Nor should this clause be confused with Clause 54 which prevents the disclosure except in specified circumstances of information about any particular business which is obtained under Part I of the Bill and which relates to the affairs of the individual, or to any particular business.

Clause 94 is purely and simply about the provision of statistical information. Members of the Committee will be aware that the Government prepare a wide range of statistics of many kinds: statistics relating to employment, earnings, output, investment, producer and consumer prices indices, and supply and demand for electricity. The Government fully intend to publish statistical information about the electricity supply industry after privatisation similar to that published now and similar to that published for other fuel industries. I hope that that may give some reassurance to the thrust of the concern of the noble Lord, Lord Peston.

The statistical information relating to the electricity supply which the Government publish at the moment is provided by the electricity supply industry on a voluntary basis, of which the noble Lord mentioned that he had recently become aware. We expect this to continue to be the case after privatisation. However, if, contrary to our expectations the voluntary arrangements should break down, Clause 94 would give the Secretary of State the powers to ensure that the necessary statistical information would be forthcoming from the industry.

The amendments proposed by the noble Lord seek to widen the powers of the Secretary of State to seek information. As drafted, Clause 94(1) enables the Secretary of State to serve a notice under this Clause if he considers it expedient for the purposes of obtaining statistical information relating to the generation, supply or transmission of electricity. The amendment would widen this provision by enabling him—regardless of whether he considered it expedient for the purpose of obtaining statistical information relating to the generation, transmission or supply of electricity—to serve such a notice if he considered it expedient for the purpose of obtaining not only statistical but also general information.

Clause 94 is concerned with statistical information for the purpose of preparing national economic and energy statistics as I outlined a moment ago. It has nothing to do with the information that the director will need to carry out his functions and which is provided for elsewhere in this Bill. Because this clause is about the provision only of statistical information, it follows that if the Secretary of State wishes to serve a notice to ensure that information is provided by any licence holder, or any person authorised by an exemption to generate or supply, he should be able to do so only if he believes it expedient for the purpose of obtaining statistical information, and there is a clear need.

I appreciate the anxieties that the noble Lord, Lord Peston, has expressed. However, I hope that in the light of what I have just said, he will feel able to withdraw the amendment.

Lord Lloyd of Kilgerran

The Minister has been helpful in referring to Clauses 28, 45 and 54. Having regard to that clarification, this amendment has some significance and requires further consideration. It is perfectly clear that Clause 94 relates to the provision of statistical information. Although the word "statistical" has been removed by this amendment, it can refer only to the provision of statistical information. If the Secretary of State wishes to obtain some statistical information, it seems to me right and proper that he should be able to comment on the performance and ask for the statistical information. It would be quite unnecessary to consider whether it is expedient. If he wants it, it must be expedient. Therefore I believe that these two lines should be deleted. I support the amendment. I should like to urge the Government to reconsider the provision again.

The Earl of Dundee

I am grateful to the noble Lord for his comments. He was kind enough to say that the Government had quite a number of aspects for consideration here concerning the powers and the background. We have considered this amendment sufficiently. I do not wish to belabour the point any more.

Lord Lloyd of Kilgerran

I hesitate to intervene again, but I do not recall in my reading of the comments on Clauses 28, 45 and 54 whether there were specific provisions in relation to statistical information. Clause 94 tries to clarify that by providing statistical information. I am suggesting that the lines to be deleted by the amendment are totally unnecessary in the circumstances.

The Earl of Dundee

It may be of assistance to the noble Lord if I remind him that information on the performance of companies will be collected and published by the director under Clause 40.

Lord Peston

I thank both the noble Lord for his intervention and the noble Earl for his answer. I am well aware of the earlier clauses and I hope that I am not confused between them and this. My problem is statistical, if I can put it that way. I have a feeling that the noble Earl's department thinks that the word means something in this context. I am certain that it does not. In other words, if the word "statistical" were left out it would not make any difference. That is the point I am trying to make.

To put it differently, as long as one can say that the information required involves some numbers, probably the Secretary of State can get away with it by saying that it is statistical. Either way it seems to me to be a bit peculiar. However, the noble Earl gave me the one answer that I wanted to hear, which is that the position with respect to the kind of information that I have in mind will be no worse under the privatised industry than it is under the nationalised industry. I am certain that the noble Earl said that. That is mostly what my noble friend and I wanted to hear. Given that that is what the noble Earl said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 236ZB to 236B not moved.]

Clause 94 agreed to.

Clause 95 [Competition and restrictive trade practices]:

Lord Peston moved Amendment No. 236C: Page 66, line 16, leave out from ("section") to end of line 19.

The noble Lord said: I hope to deal with the matter very quickly to get some reassurance. As I understand it, Clause 95 is meant to clarify how the various competition Acts apply to this new privatised industry. I have tried to read the clause, but it is highly technical and I have had great difficulty in understanding it. The Fair Trading Act 1973, the Competition Act 1980 and the Restrictive Trade Practices Act 1976 apply to the privatised electricity industry in so far as they apply to any other privatised industry. My difficulty with that—can I be told that there is no difficulty here?—is that I cannot make head or tail of the subsection in Clause 95 that our amendment seeks to delete. From line 16 onwards it seems to me impossible to work out from the wording what the Government are saying.

I am willing to accept that I shall be told shortly what the clause means. But it seems to me that the easiest way to deal with the matter is to ask for it to be removed so that whoever replies for the Government can tell me what difference that would make. What we want to know is whether Clause 95(1), which seems to me to be the only part that matters, says in terms that these Acts will apply. But can we be sure that they will?

4.45 p.m.

Baroness Hooper

Clause 95 is intended to clarify the effect of general competition law on the electricity industry after privatisation. I am sorry that it has not sufficiently clarified it for the benefit of the noble Lord, Lord Peston. For the first time it means that the Restrictive Trade Practices Act 1976 will bear on the industry. There is nothing mysterious about the power in subsection (2)(b)—which the amendment seeks to delete—to make exemptions from that Act. There are already procedures for such an exemption-making power, for example, in the Gas Act 1986 and in the Restrictive Trade Practices Act 1976 itself.

The 1976 Act will apply to agreements relating to electricity whether they existed before the clause commences and continue after it or are made after it commences. Any exemptions would be granted only after full consultation with the Secretary of State for Trade and Industry and subject to prior consultation with the Director General of Electricity Supply and the Director General of Fair Trading. Moreover, such exemptions can only be made by order subject to the negative resolution procedures of Parliament so there can be no question of any furtive attempt to circumvent normal competition rules.

In fact we believe that the clause is a major step forward in applying competition law to electricity, and the exemption power will be used only in a limited number of cases necessary to enable a competitive and efficient industry to develop. I trust that that helps to reassure the noble Lord.

Lord Peston

I thank the noble Baroness. It half reassures me. I entirely agree that the purpose of the clause is correct. Is there any chance that she can give me an example of the kind of exemption she has in mind? It seems to me that, as people begin to contemplate the reality of privatisation, two aspects are dawning on them. One is that there may be a good deal less competition than was hoped for. That is quite clear. The other is that different parts of the industry may engage in anti-competitive or unfair behaviour. There was quite a good example in the Financial Times today where there has been some discussion about the possible unfair behaviour of the generating companies compared with the area boards.

We are totally with the noble Baroness that it is vital that these Acts should apply. I am reassured on that, but I am a bit worried about the exemptions. It is possible that there may not be a specific example that comes to hand. Perhaps she can write to my noble friend and to myself on that. I should be a good deal more reassured on this matter if I could see why the scope for exemptions is there.

Lord Lloyd of Kilgerran

I should like to support all that the noble Lord, Lord Peston, has said. I too would like to know what circumstance might arise where it was necessary for any exemption to be specified in an order. What is the kind of situation that may arise? I do not understand the reason for this and it is entirely in my ignorance that I ask the question. When I first read the provision I thought it was a belt and braces technique on the part of the Secretary of State to cover every circumstance to which the Act should not apply. Prima facie I think that that is quite wrong and therefore I support the deletion of this subsection.

Baroness Hooper

I shall endeavour to help the Committee by giving examples. They include certain agreements which are essential to the future operation of the industry and which are currently in the process of development. For example, there is the technical grid operating code which will enable the transmission system to be run efficiently. The distributors and generators pooling agreements will enable the economic benefits of the merit order and energy trading to be realised. As the noble Lord, Lord Peston, will remember, we agreed that this was a complex area.

Also, in the national interest we see a need for a fuel security agreement on how the system would be run during a fuel supply emergency. The agreements will underpin the operation of the industry's new structure and they are not yet in final form. When they are we must consider how they are likely to interact with RTP legislation and whether any exemption is needed. Certainly we shall not be giving industry carte blanche. I hope that that answer is helpful.

Lord Peston

Yes, that is enormously helpful. The point that the noble Baroness is making is that at certain times there will be co-operative activities on the part of individual enterprises which prima facie look non-competitive or anti-competitive. However, in the way that the industry must operate they must behave jointly and the exemptions will allow that to take place. We look forward to seeing how that works in practice, but I now understand the nature of the Government's thinking. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 95 agreed to.

Clause 96 [Rights of entry]:

On Question, Whether Clause 96 shall stand part of the Bill?

Lord Williams of Elvel

Clause 96 amends the Rights of Entry (Gas and Electricity Boards) Act 1954. I accept that on the whole it does so in a way which should benefit the consumer. A 28-day limit on the warrant issued by a justice of the peace is not in the original legislation. Nevertheless, it would be wrong to let the clause slip by without making two points.

First, the right of entry of representatives of British Gas is amended at the same time as the right of entry of representatives of electricity boards. To say the least, it is curious that regulations for the gas industry should be amended in an electricity Bill.

The second point is more important. In this clause we are allowing right of entry on warrant by a private company—that is, assuming that privatisation takes place—into other people's premises. We need to pause and look at the consequences. In the case of gas it is probably easier because on the whole supply is based on the town gas network. Most of the customers of British Gas who will be affected by the change are part of the town gas system and are normally private consumers. Of course that is not the case in respect of electricity because its provision is more widespread than that of gas. It is almost inconceivable to think of an industry, factory, farm, domestic dwelling or commercial establishment in the financial services network which is not supplied with electricity. It is the major source of power for such institutions.

As I read the Rights of Entry (Gas and Electricity Boards) Act 1954, by its amendment we are allowing representatives of private companies (post privatisation) the right of entry into arty premises after persuading a justice of the peace that the case is proper. We are allowing private companies to move into any establishment, be it domestic, commercial, industrial or whatever. Before we do so we should reflect to see whether there should be some constraint on those private companies in respect of this very important power.

One of the interesting features of the privatisation of the area boards—and I continue to call them that—has been that a number of people have told me that the amount of information which they have accumulated about their customers is enormous. I speak with some experience of Wales because I am involved in small matters there. The South Wales Electricity Board has an enormous amount of information about its customers. There is a great deal of talk that, as the privatised area boards diversify, they will have a data base which can be used by other people in the same way as data bases have been used by various commercial concerns for reasons which may or may not be legitimate but are certainly commercial.

To give such a privatised concern an absolute right of entry into any commercial, industrial or personal premises appears to us to warrant a question or two. It is for that reason that I wish to speak on clause stand part.

Baroness Hooper

I am grateful to the noble Lord for raising these questions because we believe that Clause 96 is an example of our intention that the Bill should improve the position of consumers. I first pick up his point about gas being included in an electricity Bill. The Act is the Rights of Entry (Gas and Electricity Boards) Act, so it is inevitable that we must deal with both. However, we believe that it is important to keep the procedures consistent as between the two industries. The Act which is being amended treated the two industries equally and we believe that we should follow that through.

No one wishes to see rights of entry given unnecessarily but the Bill recognises that there are cases where they are essential—for example, in meter reading and in the interests of safety so that suppliers can ensure that their installations are safe and the requirements of the electricity supply regulations are being met. Also they must have access in an emergency. Unfortunately in some cases rights of access are also needed to enable suppliers to take action against customers who have been using electricity fraudulently or who have wilfully interfered with their supplies. In the latter case there are safety implications.

Existing legislation provides a number of safeguards against misuse of the powers. We have ensured that not only will that protection for consumers be maintained but also that it should be strengthened. We have introduced a number of realistic periods of notice to be given to consumers so as to reduce any inconvenience to them. For example, when a public electricity supplier requires entry to a consumer's premises in order to carry out work on his lines or plant, five working days' notice must be given.

The information held by the area boards will be controlled by the provisions of the Data Protection Act. It can be used only within the limitations imposed by that Act. The amendment made by Clause 96 will ensure that in future any warrant granted under Section 2 of the 1954 Act shall be valid either until the reason for which the warrant was granted is satisfied or until 28 days have expired from the initial granting of the warrant, whichever is the earlier.

We have given a firm undertaking on many occasions to use the opportunity presented by the Bill to modernise and consolidate the current law relating to the supply of electricity. We believe that this is one provision in the Bill which will accomplish just that. Therefore, I commend the clause to the Committee.

5 p.m.

Lord Williams of Elvel

Perhaps I may take this argument further with the noble Baroness. Let us imagine a case where an industrial customer contracts directly with National Power post privatisation through the transparency which, through this Bill, we are now going to give to, for example, the South Wales Electricity Board. In other words, the South Wales Electricity Board acts as a simple conduit for electricity supplied directly on contract from National Power to, for example, British Steel in South Wales. Let us imagine that there is a problem concerned with British Steel's consumption of electricity or that there is a dispute between British Steel and National Power. Are we really saying, as we seem to me to be saying in this clause, that National Power can apply to a justice of the peace, a lay magistrate, for a warrant to enter the Llanwern and Port Talbot steelworks in South Wales to simply barge in and march about? Is that what we are saying?

With the complexity of the new electricity industry, it seems to me that the Government may not have thought through the proposed provisions. I understand that it is sensible to have proper rights of entry to what I call domestic consumer premises. That is why, although I made a point about the gas industry, I shall not pursue that very far. However, I reiterate that the electricity industry is much more far ranging than the gas industry and I believe that on some occasions we may need to think through a little more carefully as to how far a justice of the peace can give to one large corporation the right of entry to another large corporation.

Baroness Hooper

I should point out that the right is granted only to public electricity suppliers and that the requirements of the Act that appropriate notice be given and that the consent of the owner or occupier be obtained are important. After all, when a warrant is sought the 1954 Act requires that the supplier gives to the magistrate sworn information in writing to show the purpose for which entry is required, that there is a right of entry for that purpose and that the relevant requirements which attach to the power, such as giving notice, have been complied with. Therefore, it is a fairly thorough procedure.

I add that the proposal has been supported by a wide range of consumer bodies, including the Electricity Consumers' Council, which is in total agreement with it and the time limit to be imposed. I believe that that probably refutes the suggestion that insufficient time and consideration have been given to this proposal.

Lord Williams of Elvel

We on this side of the Committee have had our arguments with the Electricity Consumers' Council. We do not necessarily see eye to eye with it. As was pointed out earlier on in Committee, it seems to stand alone in these matters against other consumer organisations. However, I am not arguing the consumer point. Following on from what the noble Baroness said, can she tell me what happens when National Power contracts with British Steel and there is a problem? As she said, the right of entry only applies to public electricity suppliers. Does National Power say to South Wales Electricity plc, "Will you please go into Llanwern and Port Talbot steelworks on our behalf, although they have contracted directly with us for electricity?" How will this work?

Baroness Hooper

As I said, public electricity suppliers have this right but they are the only ones to have the statutory right of entry. I believe that the procedures to which I have referred about notice and the information to be given are adequate to cover the problem about which the noble Lord seems anxious. I do not quite follow his argument in relation to the example that he gave.

Lord Williams of Elvel

Perhaps the noble Baroness will be good enough to read what I said and she may then understand my argument. It is quite important to clarify what will happen if the South Wales Electricity Board, to take an example, is to be required by National Power, which has contracted directly with British Steel, to go in and investigate a problem on sworn affidavits and all the rest of it, when British Steel used to be a customer of the South Wales Electricity Board. This is not a consumer argument but an argument about what will happen after privatisation. I do not wish to pursue this argument. I have no doubt that the noble Baroness will read what I said and perhaps she will answer accordingly at a later stage.

Clause 96 agreed to.

Clause 97 agreed to.

Schedule 13 [Production and supply of heat or electricity etc. by Scottish local authorities]:

The Minister of State, Scottish Office (Lord Sanderson of Bowden) moved Amendment No. 237: Page 119, line 14, leave out ("thinks") and insert ("think").

The noble Lord said: I should also like to speak to Amendments Nos. 238, 239, 240 and 241. These amendments correct minor drafting errors in Schedule 13 to the Bill, which inserts new sections into the Local Government (Scotland) Act 1973, the effect of which is to give local authorities in Scotland the same powers as those enjoyed by their counterparts in England and Wales in relation to combined heat and power schemes. I beg to move.

Lord Carmichael of Kelvingrove

I thank the Minister. I did not realise that my syntax was so bad until I read what I thought was a rather pedantic group of amendments. I shall need to think very clearly when using this sort of language again so that I have it right next time. I am very grateful to him for drawing my attention to this matter.

On Question, amendment agreed to.

Lord Carmichael of Kelvingrove moved Amendment No. 237A: Page 119, leave out lines 29 to 31.

The noble Lord said: This is an exploratory amendment. The Committee will be aware that it was common, particularly in the days of old open fireplaces, for local authorities to burn their refuse collections in order to produce electricity, which was sold to the grid. With modern heating and very few open fires, the same residue energy is not available. However, there is a large movement in some parts of the world, particularly in Germany, to use recycled waste for the generation of electricity. That is surely something which should be encouraged with advancing technology. Let us suppose that some cities decided to set up their own generating station. For example, I believe that Milton Keynes has a fairly large experimental scheme along those lines. What would they be able to do? Would that be part of the process prescribed by the Minister to allow a local authority to produce electricity? I hope he can help on this matter. I beg to move.

Lord Sanderson of Bowden

This matter was raised in another place. It is not our view that it is a proper course of action to allow local authorities unrestricted powers to sell electricity. In future, as a result of the introduction of these new provisions, local authorities in Scotland will be able to engage in the production of electricity through CHP schemes. We have no wish, however, to encourage them to engage in the production of electricity for sale for its own sake. In our view that would bring about an unnecessary extension of local authority powers which could only result in greater demands being placed on the ordinary citizen to finance such activities. We see little merit in this amendment which would grant to local authorities in Scotland wide-ranging powers to expand their activities in a complex and highly technological industry in which they have had little expertise, at least since 1947.

We do recognise, however, that some local authorities which, for example, may produce electricity either directly or indirectly from waste, might find themselves in a position in which they are producing more electricity than they can use themselves. As my honourable friend made clear in the other place, the proposed new subsection (3) allows for such circumstances to be taken into account through the words "except as may be prescribed". Each case will be judged on its merit. If the intention of the noble Lord opposite is simply to ensure that this eventuality is catered for in the Bill I can give him the same assurance. I hope, therefore, that the noble Lord will agree to withdraw the amendment.

Lord Carmichael of Kelvingrove

I am disappointed that the provision is not spelt out a little more clearly in the Bill, though I suggested that the subsection would allow a way out for local authorities. The supply and provision of electricity through waste disposal, for which we all wish, may in future become quite a big industry. It would be wrong if local authorities were to be restricted. Depending on how successful it became there could, unfortunately, be difficulties with a commercial producer of electricity who may object to the electricity being sold at a cheap rate.

I am sorry that the Government are only able to give that assurance without it being spelt out more clearly. However, I do not suppose we shall get it clearer and I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Nugent of Guildford)

Amendments Nos. 238 to 241 have been spoken to, and if no noble Lord wishes to speak further to them I propose to put them en bloc.

Lord Sanderson of Bowden moved Amendments Nos. 238 to 241:

Page 120, line 12, leave out ("which") and insert ("whom").

Page 120, line 28, leave out ("which supplies or proposes") and insert ("who supply or propose").

Page 120, line 48, leave out ("which provides or proposes") and insert ("who provide or propose").

Page 121, line 30, leave out ("which") and insert ("whom").

On Question, amendments agreed to.

Schedule 13, as amended, agreed to.

Clause 98 agreed to.

5.15 p.m.

Baroness Hooper moved Amendment 241A: Before Clause 99, insert the following new clause:

("Amendment etc. of Electricity Supply Pension Scheme.

.The provisions of Schedule (The Electricity Supply Pension Scheme) to this Act (which provide for amending the Electricity Supply Pension Scheme and for giving special protection to certain persons who have or may acquire rights under that scheme) shall have effect.").

The noble Baroness said: In moving this amendment I speak also to Amendment No. 242ZA and explain the reason for my notice of intention to oppose that Clause 99 shall stand part of the Bill. The main purpose of these amendments is to introduce new provisions to protect the pension rights of employees in England and Wales who are transferred to the successor companies. The Committee will see that in incorporating this provision we have transferred Clause 99 into a new schedule; hence the need to oppose it.

In the White Paper on privatising electricity the Government gave an undertaking that privatisation would not affect the benefits payable to members and pensioners of the industry's pension schemes. As part of meeting that commitment, during the Committee stage in another place, my honourable friend gave an undertaking that the Government would bring forward an amendment to protect the pension rights of existing employees transferred to the successor companies in the event of the electricity supply industry's pension scheme being wound up.

This special protection replaces the existing no worsenment provision contained in Section 54 of the Electricity Act 1947. Under that Act the Secretary of State, when making pension regulations in respect of the electricity supply industry, is required to ensure that any amendment to an existing pension scheme or its winding up should not place a person with pension rights under the scheme in a worse position. The Electricity Supply Pension Scheme (commonly known as the ESPS) itself contains certain protection against any detriment of benefits for its members while it remains in existence. However, this was not considered to offer adequate protection in the light of the repeal of the existing statutory protection. The department has therefore had long and detailed consultations with the industry and the trade unions to find a way of offering an equivalent no worsenment protection after privatisation.

Paragraphs 2 to 5 of the schedule are the result of that detailed consultation. The Committee will appreciate that these are very complex provisions. Essentially, they establish a category of protected persons and require that such protected persons will not be placed in a worse position by reason either of the winding up of the ESPS or of other specified circumstances.

The persons to be covered by the no worsenment provision are employees who are contributing members of the ESPS on transfer day, persons who on that day are pensioners or have frozen benefits in the scheme, and dependants of all such persons. Employees will retain their protection so long as they have continuous employment as defined in the schedule—which essentially means continuous service with employers participating in the ESPS.

The protection will operate in a number of different circumstances: in particular if the ESPS is wound up, whether in whole or in part; or if, as a result, say, of a reorganisation or merger, a protected person became employed by a company which did not participate in the ESPS and the person had to leave the scheme.

In essence, if any of the specified events occurs, regulations will require the employer or employers from time to time of any person affected to ensure that protected persons employed by them will continue to enjoy pension rights which are no worse than they would have been if the ESPS had continued to exist, or the other specified events had not occurred. The schedule will also enable the protection against any detriment to existing pension rights in the ESPS itself to be entrenched in respect of protected persons. The schedule enables the regulations to provide for any dispute arising in respect of the no worsenment provisions to be referred to arbitration.

I have given only a very brief summary of the no worsenment provisions, but I am sure the Committee will recognise, by the length of the schedule, the depth into which we have gone to try to provide for every type of circumstance. I should explain that it is because the pension provisions have become so long and complex that it has been considered more appropriate to transfer them into a schedule.

I now turn briefly to paragraph 1 of the schedule which incorporates the contents of Clause 99, which deal with the amendments required to the ESPS on its transfer into the private sector. In transferring Clause 99 into the schedule we have made some relatively minor amendments. In particular, these amendments permit non-successor companies to join the scheme, enable requirements to be imposed in respect of the funding of certain liabilities, and extend the provisions for the transfer to other persons of functions currently exercisable under the scheme following the dissolution of the Electricity Council which exercises them at present.

The Committee will appreciate that the schedule merely provides the framework for the regulations which will set out the various amendments to the ESPS and the detailed provisions of the no worsenment protection. The regulations themselves will clearly have to be very carefully drafted and this will, of course, be done in consultation with the industry. The regulations will be subject to the negative resolution procedure and there will therefore be an opportunity for the Chamber to consider the detailed implementation of these powers. However, I am sure the Committee will wish to note that the Government have given an undertaking to the trade unions that they, as well as the industry, will be consulted on the draft regulations.

The regulations will be essential for securing the continued approval of the pension scheme by Inland Revenue, for securing the pension position of the new categories of persons being transferred into it, and for setting out the no worsenment provisions which will replace the present protection under the 1947 Act. My right honourable friend the Secretary of State accepts that it is clearly necessary that these changes should be in place before the transfer date so that all parties would be fully aware of their rights and obligations. I can therefore give the Committee a firm commitment that my right honourable friend will make the necessary regulations, after consultation with the interested parties, before the transfer date in order to implement our White Paper undertaking. I beg to move.

Lord Williams of Elvel

I am sure the noble Baroness will be glad to hear that I am advised by the trade unions who are interested in this matter that they wish no points to be raised.

On Question, amendment agreed to.

Clause 99 negatived.

Lord Sanderson of Bowden moved Amendment No. 241B: Before Clause 100, insert the following new clause:

("Amendment etc. of Scottish Pension Schemes.

.The provisions of Schedule (The Scottish Pension Schemes) to this Act (which provide for amending the Hydroboard Superannuation Fund and the South of Scotland Electricity Board's Superannuation Scheme and for giving special protection to certain persons who have or may acquire rights under those schemes) shall have effect.").

The noble Lord said: In moving Amendment No. 241B, I should like to speak also to Amendment No. 242ZB and to oppose the Question that Clause 100 stand part of the Bill.

This amendment relates to the Scottish pension schemes. It has been prepared along similar lines to the amendment which my noble friend has introduced in relation to the Electricity Supply Pension Scheme in England and Wales and like that amendment, it does two things. First, it gives the Secretary of State for Scotland power to make regulations amending the two Scottish schemes and, secondly, it gives him the power to make regulations for protecting certain persons against any deterioration of their pension rights under the schemes. In both these respects our intention has been to provide compatibility, wherever possible, on both sides of the Border. I shall not, therefore, delay the House by reiterating the full explanation already given by my noble friend in relation to the previous amendment. Instead, I shall restrict myself to remarking on those aspects where, because of the existence of two separate pension schemes in Scotland, the provisions of this amendment necessarily differ from those relating to the ESPS.

Paragraph 1 of the new Schedule generally mirrors the provision being made for the ESPS and recreates much of what appears in Clause 100. However, unlike the ESPS, which embraces a number of participating bodies and employers, each of the Scottish schemes essentially embraces the employees of its own board, together with staff of the respective consultative councils (of which there are two in Scotland, one for each board area). Within the framework set out by regulations, each board is empowered to make rule changes without reference to the Secretary of State. The relative simplicity of the Scottish schemes is reflected in the fewer regulation-making powers which the Secretary of State requires to take in paragraph 1 to ensure that the schemes can be appropriately amended.

Likewise, the policy intention behind the provisions for protection, as set out in paragraphs 2 to 5 of this proposed new schedule, is the same on both sides of the Border. In Scotland, as in England, the same categories of person will be protected against worsenment of their pension rights and in the same circumstances. The variations in these paragraphs arise only from the need to cater for the existence of two pension schemes in Scotland rather than the single scheme in England and Wales. In particular, we need to provide for transferability between the Scottish schemes. This is necessary primarily because of the creation of a nuclear subsidiary jointly owned by both companies. To allow free movement between the subsidiary and its parent companies, we need to create links between the two Scottish pension schemes and allow for members to transfer between them without losing their protected status.

The protections outlined in these paragraphs will be achieved through regulations to be made by the Secretary of State. I echo the commitment which my noble friend has already described in relation to the ESPS, that such regulations will also be made by the Secretary of State in relation to the Scottish schemes. I therefore commend to the Committee this amendment and the substantial protection which it provides for members of the pension schemes. I beg to move.

Lord Carmichael of Kelvingrove

I am sure the Minister will be pleased to know that I too have a communication from the trade unions. We accept this amendment in the new clause.

On Question, amendment agreed to.

Clause 100 negatived.

Clause 101 [Regulations and orders]:

Lord Williams of Elvel moved Amendment No. 241C: Page 68, line 44, after ("(2)") insert ("Subject to subsection (3) below").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendment No. 241D.

These amendments have to a certain extent been superseded by the amendments to Clause 92 which were agreed in Committee last Friday. Clause 92 as amended by this Committee gives the Secretary of State the requisite powers to deal with matters of nuclear safety and safety of the public. It is only if the Government announce their intention to try to overturn the amendments that the Committee has passed to Clause 92 that I would wish to pursue these amendments.

I am using this opportunity to allow the noble Baroness to declare the intention of the Government in respect of the amendments to Clause 92. If the noble Baroness thinks that the Government intend to overturn them, then I shall wish to pursue the debate on the present amendments. I beg to move.

Baroness Hooper

The Government do not intend to do anything about the new clause and the amendments to Clause 92 in your Lordships' House. It is not for me to comment on what may happen in another place. I point out, as I did when I argued against the amendments at an earlier stage, that we see a danger in this new clause, with the associated amendments to Clause 92, in that they risk undermining the existing safety regime which we believe to be extremely good. By providing in the Bill for a procedure different from that in other safety legislation we believe that the risks are exacerbated.

I should be very happy to discuss these amendments if the noble Lord wishes.

Lord Williams of Elvel

I am grateful to the noble Baroness for reiterating that the Government will not wish to overturn the Clause 92 amendments in this House. What happens in another place is for another place to determine.

In the light of that fact, I do not think that there is any virtue in pursuing the debate on the amendments that I have put before the Committee because these would only be relevant if the Clause 92 amendments were not in place. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 241D not moved.]

Clause 101 agreed to.

Clause 102 agreed to,

5.30 p.m.

Clause 103 [Offences by bodies corporate]:

Lord Williams of Elvel moved Amendment No. 242: Page 69, line 14, leave out ("manager") and insert ("any other officer appointed or elected, or capable of being appointed or elected, by a general meeting of that body corporate").

The noble Lord said: Clause 103 deals with offences by bodies corporate. It tracks wording which I have seen in previous legislation and therefore I am not surprised to see it here. Nevertheless, as we have remarked on a number of occasions during the Committee stage, just because wording has appeared in previous legislation does not necessarily mean that it is right.

The problem concerns a manager and a secretary. It concerns a manager because a manager has no special powers other than those accorded to him by his superiors. He is not, generally speaking, elected by shareholders. He is appointed by a board of directors. It seems odd therefore that he should be accused or arraigned if an offence is proved to have been committed through negligence or neglect. Managers in businesses have a wide variety of different tasks. They may not be told things which their directors or superiors do. "Managers" can include people down to junior manager level. It is odd that a manager should be put in this rather difficult position instead of an officer appointed or elected by a general meeting.

The same problem arises with secretaries. On these Benches we tried to insert into the Companies Bill which is now in another place a definition of what the secretary of a company is meant to do. The Government turned that down. Nowhere in the Companies Act 1985 or in the present Companies Bill is there a definition of what a secretary is, who elects him and what his functions are. The Government have persistently set their face against introducing such a definition. In the light of that it seems odd to find in Clause 103(1) the word "secretary" appearing yet again. I wonder whether the Government have looked at this point. I understand that the wording is reproduced from other legislation. I should be grateful if the Government could show that they have looked at this point afresh in legislation where we are dealing with offences of a serious nature by bodies corporate. I beg to move.

The Earl of Dundee

Clause 103 is a common provision in statutes. It creates offences which can be committed by bodies corporate. Similar provisions can be found in Section 45 of the Gas Act and Section 102 of the Telecommunications Act. Clause 103 enables the individuals responsible for the commission of an offence under the Bill to be prosecuted and punished as well as the body corporate itself.

The noble Lord's amendment appears to remove managers from the categories of persons who might be prosecuted for such an offence. I cannot really understand why the noble Lord wants to protect managers and other similar officers from the provisions of this clause. It may be that the noble Lord does not wish to do that, but if he did it would be rather strange. Managers hold positions of responsibility within organisations. Therefore it is only right that if they abuse that responsibiliy and commit an offence under the Bill they should be liable for prosecution. It would clearly be unacceptable for directors, secretaries and other board appointees to be liable for prosecution but for managers to be exempt.

The amendment replaces the reference to "manager" with a reference to, any other officer appointed or elected … by a general meeting". In relation to companies, which are of course bodies corporate, the term "officers" includes directors, managers and secretaries. So it appears that the amendment seeks to replace a clear and direct reference to managers with a rather unclear reference to officers, which includes managers. Still in relation to companies, auditors and liquidators can be appointed by a general meeting. I do not think that they are generally regarded as officers of a company and they are certainly outside the Companies Act definition of the term. I do not think it would be right to extend the clause to cover auditors and liquidators.

The noble Lord mentioned the position of secretaries. The duties of a company secretary vary according to the requirements of the directors of the company and the company's size. We have considered the position of secretaries about which the noble Lord sought an assurance. In the light of my general remarks I hope that the noble Lord will feel reassured and will be prepared to withdraw his amendment.

Lord Williams of Elvel

I am grateful to the noble Earl for his explanation of the duties of a secretary—the duties as specified by a board of directors. We all understood that. I am grateful for his explanation of why the drafting of the amendment may not be perfect. I agree with that. However, he has not addressed the problem of how managers—they may be junior managers who are not involved in the business and who have had facts kept from them by their superiors—can be fairly prosecuted for offences of neglect under the Bill as it is presently drafted. Is a manager under a statutory duty to find out everything that will protect him in the case of such a prosecution?

Secondly, the position of a secretary is vague, ambiguous and ill-defined. Nobody knows what he is meant to do. Nobody knows who a company secretary is. It is not defined in the Companies Act 1985. There are references to secretaries but, as the noble Earl says, a secretary is a chap who is told by the board of directors what to do. He may be kept informed by the board of directors. However, in the case of a noted public company transferring its headquarters north of the Border, the company secretary was not told what was going on. That can happen. The company secretary has no rights. Although he is a legal officer of the company he has no right to attend board meetings or committee meetings. None of that is set out in companies legislation as at present drafted. Perhaps the noble Earl will comment on what I have said before I consider what to do with the amendment.

The Earl of Dundee

I am grateful to the noble Lord for elaborating further his concern. The degree of knowledge and level of responsibility of the manager would be a factor to consider in deciding whether to bring proceedings and in considering the amount of any fine. The word "manager" can be defined loosely. One can manage at different levels. The level of responsibility is judge. The same goes for a secretary. The term "secretary" may to a certain extent be vague but that is not to say that the level of responsibility or respective levels of responsibility of people who may hold the position of secretary in one sense or another are vague. It is a question of judging the level of responsibility.

Lord Williams of Elvel

I hate to disagree with the noble Earl, but it is wholly vague. Nobody knows what the responsibility of a secretary is. It is not defined in the Companies Act.

Lord Mottistone

The noble Lord is barking up the wrong tree. The subsection says that the offence must be, proved to have been committed with the consent or connivance of", and then refers to these various people. Had I hazarded my ship—fortunately, I did not—in these terms as a junior manager in the navy, the noble Lord says that I should not have been punished because I was not a member of the board of directors. Surely there are times when companies have people who offend against the law. Quite often, managers are the ones who are responsible for it. I do not understand the thrust of his argument; it seems to me to be quite out of keeping with ordinary life.

Lord Williams of Elvel

I have in fact moved on from the argument contained in the initial amendment, as the noble Lord would have recognised if he had been following the debate. I am seeking a definition somewhere in the legislation of what are the responsibilities of a manager or a secretary under which he can be arraigned as regards any neglect in an offence committed under the provisions of the Bill. Since no responsibilities of either a manager or a secretary are defined anywhere in the Companies legislation—unlike the manager, or officer in charge of a ship, whose responsibilities are very carefully defined—it seems most odd to have this loose expression in the Bill.

The Earl of Dundee

Picking up the remarks made by my noble friend Lord Mottistone, perhaps I may say that his expression was not totally apt when he said that the noble Lord, Lord Williams, was barking up the wrong tree. Indeed, the noble Lord seldom barks up the wrong tree, and earlier in Committee I think the reference was to barking up the wrong pylon.

However, returning to the noble Lord's concern regarding legal definitions, my understanding is that in this context a "manager" would refer to an employee who has a job of some responsibility in the company, as I said earlier, and who would therefore be in a position to commit an offence under the provisions of the Bill. The vagueness of "secretary" as a general term is I think irrelevant. The courts will judge a particular case in the light of the circumstances of that case. It would be clear in a particular case what the secretary's responsibilities were.

Lord Williams of Elvel

I am grateful to the noble Earl for doing his best as regards what is an unfortunate tree, or pylon, to have barked up. Nevertheless, we have had a good debate on the matter. If the Government are determined simply to copy all previous legislation into new legislation then there is nothing we can do. However, I wish that they would look at the matter clearly and sensibly and start afresh. I think they should look at the matter with a new mind. Indeed, the noble Earl has a fine mind, so why does he not look at the matter to see what can be done? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 103 agreed to.

Clauses 104 to 107 agreed to.

Baroness Hooper moved Amendment No. 242ZA: Before Schedule 14, insert the following new schedule:

("SCHEDULE

THE ELECTRICITY SUPPLY PENSION SCHEME

Power to amend scheme

1.—(1) The Secretary of State may make regulations amending the Electricity Supply Pension Scheme (in this Schedule referred to as "the Scheme") for any of the following purposes, namely—

1. (a) for enabling the following persons to participate in or acquire pension rights under the scheme on such terms and conditions as may be prescribed, namely—
   1. (i) members and former members of existing bodies;
   2. (ii) officers and former officers of the Electricity Consumers' Council; and
   3. (iii) persons (other than successor companies) whose participation in the scheme will not prejudice its approval for the purposes of the relevant enactments, and employees of such persons;
2. (b) for requiring any persons (including persons not participating in the scheme) to make payments to the trustees of the scheme in such circumstances as may be prescribed;
3. (c) for requiring or enabling any functions exercisable under the scheme by existing bodies to be exercisable by such persons, and in such circumstances, as may be prescribed;
4. (d) for enabling the scheme to be wound up (in whole or in part) in such circumstances as may be prescribed; and
5. (e) for securing that the scheme continues to be approved for the purposes of the relevant enactments, notwithstanding the transfers made by this Act and the repeal by this Act of section 54 of the Electricity Act 1947.

(2) Regulations under this paragraph may make such supplemental, consequential and transitional provision as the Secretary of State considers appropriate.

(3) Regulations under this paragraph may be made so as to have effect from a date prior to their making, so however that so much of any regulations as provides that any provision of regulations shall have effect from a date prior to their making shall not place any person other than existing bodies or Scottish Boards, or their successor companies, in a worse position than he would have been in if the regulations had been made to have effect only from the date of their making.

(4) Regulations under this paragraph shall not be made at any time after any supply or generating company has ceased to be wholly owned by the Crown.

Protection for certain persons

2.—(1) The Secretary of State may make regulations for the purpose of securing that—

1. (a) no person to whom paragraph 3(1) or (2) below applies is placed in any worse position by reason of—
   1. (i) any winding up, in whole or in part, of a relevant scheme, that is to say, the scheme or any other scheme which is provided or amended in pursuance of the regulations; or
   2. (ii) any amendment of a relevant scheme which results in benefits under that scheme being reduced, or contributions by employees being increased, and is made otherwise than in such circumstances as may be prescribed;
2. (b) no person to whom paragraph 3(1) below applies is prevented from continuing to participate in or acquire pension rights under the scheme by reason of any change of employer—
   1. (i) which does not affect his continuity of employment and is made otherwise than in such circumstances as may be prescribed; and
   2. (ii) in the case of which his new employer either is a participant in the scheme or is wholly owned by one or more companies which or each of which is such a participant; and
3. (c) no person to whom paragraph 3(1) below applies is placed in any worse position by reason of any change of employer which does not affect his continuity of employment but prevents him from continuing to participate in or acquire pension rights under a relevant scheme;

and the references in paragraphs (a) and (c) above to any worse position shall be construed, in relation to a person to whom paragraph 3(1) below applies who, after the transfer date, ceases to participate in or acquire pension rights under the scheme, as references to a position which is any worse than his position immediately before he so ceases.

(2) Regulations under this paragraph may impose duties (whether as to the amendment of the scheme, the provision or amendment of other schemes, the purchase of annuities, the making of payments or otherwise) on persons who are or have been employers of persons to whom paragraph 3(1) or (2) below applies; and duties so imposed on any person may include duties owed to persons of whom he is not and has not been an employer.

(3) Regulations under this paragraph may also provide for any dispute arising under them to be referred to arbitration.

(4) Sub-paragraphs (2) and (4) of paragraph 1 above shall apply for the purposes of this paragraph as they apply for the purposes of that paragraph.

3.—(1) Subject to sub-paragraph (3) below, this sub-paragraph applies to—

1. (a) any existing employee who, immediately before the transfer date, is a participant in the scheme;
2. (b) any existing employee who, after that date, participates in the scheme within three months of his attaining the minimum age for such particiption;
3. (c) any former participant who, after that date, participates in or acquires pension rights under the scheme in such circumstances as may be prescribed by regulations under paragraph 2 above; and
4. (d) any person who participates in the scheme in pursuance of regulations made under paragraph 1(1)(a)(i) or (ii) above.

(2) Subject to sub-paragraph (3) below, this sub-paragraph applies to

1. (a) any person not falling within sub-paragraph (1)(c) above who, immediately before the transfer date, is not a participant in the scheme but has pension rights under the scheme; and
2. (b) any person who, after that date, acquires pension rights under a relevant scheme by reason of the death of a person falling within sub-paragraph (1) or paragraph (a) above,

but only as respects the pension rights by virtue of which he falls within paragraph (a) or (b) above.

(3) Any person to whom sub-paragraph (1) or (2) above applies may elect in such manner as may be prescribed by regulations under paragraph 2 above that that sub-paragraph shall cease to apply to him; and if any person to whom sub-paragraph (1) above applies—

1. (a) ceases to be in continuous employment; or
2. (b) voluntarily withdraws from a relevant scheme,

otherwise than in such circumstances as may be so prescribed, that sub-paragraphs shall cease to apply to him except as respects pension rights which have accrued to him before that time.

4.—(1) So much of Schedule 13 to the Employment Protection (Consolidation) Act 1978 as has effect for the purpose of ascertaining whether any employment is continuous shall apply for the purposes of paragraphs 2 and 3 as if—

1. (a) those paragraphs were contained in that Act; and
2. (b) in that Schedule "associated employer", in relation to a company participting in a relevant scheme, included any oher company participating in such a sceme and any other company of which a company so participating has control, or two or more companies so participating together have control;

but regulations under paragraph 2 above may provide that no account shall be taken for those purposes of any person ceasing to be in continuous employment for such periods and in such circumstances as may be prescribed by the regulations.

(2) For the purposes of sub-paragraph (1) above, a company has control, or two or more companies together have control, of another company ("the other company") if—

1. (a) that company, or each of those companies, is a member of the other company and that company controls, or those companies together control, the composition of the other company's board of directors;
2. (b) that company holds, or those companies together hold, more than half in nominal value of the other company's equity share capital;
3. (c) a company of which the company has control, or those companies together have control, has control of the other company; or
4. (d) two or more companies of which that company has control, or those companies together have control, has control of the other company;

and subsections (2) to (4) of section 736 of the Companies Act 1985 (as originally enacted) shall, with any necessary modifications, apply for the purposes of this sub-paragraph as they apply for purposes of subsection (1) of that section.

Interpretation

5.—(1) In this Schedule— Consultative Council" means a Consultative Council established under section 7 of the Electricity Act 1974 for the area of an Area Board; employer", in relation to a person employed by a company which is a wholly-owned subsidiary of another company, includes that other company; existing body" means any of the following, namely, the Area Boards, the Generating Board and the Electricity Council; existing employee" means any person who, immediately before the transfer date, is employed by an existing body or a Consultative Council, or falls to be treated as employed by an existing body by virtue of regulations made under section 54(4) of the Electricity Act 1974 (service as a member to count as service as an employee); former participant" means any person who, immediately before the transfer date, is not a participant in the scheme but has pension rights under the scheme by virtue of his having been such a participant; pension", in relation to any person, means a pension of any kind payable to or in respect of him, and includes a lump sum, allowance or gratuity so payable and a return of contributions, with or without interest or any other addition; pension rights", in relation to any person, includes—

1. (a) all forms of right to or eligibility for the present or future payment of a pension to or in respect of him; and
526
2. (b) any expectation of the accruer of a pension to or in respect of him;

and includes a right of allocation in respect of the present or future payment of a pension; the relevant enactments" means Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (retirement benefit schemes) and Part III of the Social Security Pensions Act 1975 (contracted-out pension schemes); relevant scheme" has the meaning given by paragraph 2(1) above; the scheme" has the meaning given by paragraph 1(1) above; "wholly-owned subsidiary" has the same meaning as in the Companies Act 1985.

(2) For the purposes of this Schedule, a company is wholly owned by one or more other companies if it has no members except

1. (a) that other or those others and its or their nominees; and
2. (b) wholly-owned subsidiaries of that other or those others and their nominees.

(3) Subject to sub-paragraph (1) above, expressions used in this Schedule which are also used in Part I or II of this Act have the same meanings as in that Part.").

On Question, amendment agreed to.

Lord Sanderson of Bowden moved Amendment No. 242ZB: Before Schedule 14, insert the following new schedule:

("SCHEDULE THE SCOTTISH PENSION SCHEMES

Power to amend schemes

1.—(1) The Secretary of State may make regulations amending the Hydroboard Superannuation Fund (in this Schedule referred to as "the North Scheme") and the South of Scotland Electricity Board's Superannuation Scheme (in this Schedule referred to as "the South Scheme") for any of the following purposes, namely—

1. (a) for enabling members, former members and former employees of the North of Scotland Hydro-Electric Board to participate in or acquire pension rights under the North Scheme on such terms and conditions as may be prescribed;
2. (b) for enabling members and former members of the South of Scotland Electricity Board to participate in or acquire pension rights under the South Scheme on such terms and conditions as may be prescribed;
3. (c) for requiring any persons to make payments to the trustees of the schemes in such circumstances as may be prescribed; and
4. (d) for securing that the schemes continue to be approved for the purposes of the relevant enactments notwithstanding the transfers made by this Act and the repeal by this Act of section 37 of the Electricity (Scotland) Act 1979.

(2) Without prejudice to the generality of paragraph (c) of sub-paragraph (1) above, regulations made for the purposes of that paragraph may require persons not participating in—

1. (a) the North Scheme to make payments to the trustees of the North Scheme;
2. (b) the South Scheme to make payments to the trustees of the South Scheme.

(3) Regulations under this paragraph may make such supplemental, consequential and transitional provision as the Secretary of State considers appropriate.

(4) Regulations under this paragraph may be made so as to have effect from a date prior to their making, so however that so much of any regulations as provides that any provision of regulations shall have effect from a date prior to their making shall not place any person other than the Boards or existing bodies (within the meaning of Schedule (The Electricity Supply Pension Scheme) to this Act), or their successor companies, in a worse position than he would have been in if the regulations had been made to have effect only from the date of their making.

(5) Regulations under this paragraph shall not be made at any time after any Scottish electricity company has ceased to be wholly owned by the Crown.

Protection for certain persons

2.—(1) The Secretary of State may make regulations for the purpose of securing that (regardless of which scheme an existing employee of the Scottish Boards is a participant in immediately before the transfer date)—

1. (a) no person to whom paragraph 3(1) or (2) below applies is placed in any worse position by reason of—
   1. (i) any winding up, in whole or in part, of a relevant scheme, that is to say, the North Scheme or the South Scheme or any other scheme which is provided or amended in pursuance of the regulations; or
   2. (ii) any amendment of a relevant scheme which results in benefits under that scheme being reduced, or contributions by employees being increased, and is made otherwise than in such circumstances as may be described; and
2. (b) no person to whom paragraph 3(1) below applies is prevented from continuing to participate in or acquire pension rights under the North Scheme or the South Scheme by reason of any change of employer—
   1. (i) which does not affect his continuity of employment and is made otherwise than in such circumstances as may be prescribed; and
   2. (ii) in the case of which his new employer either is a participant in that scheme or is wholly owned by one or more companies which or each of which is such a participant; and
3. (c) no person to whom paragraph 3(1) below applies is placed in any worse position by reason of any change of employer which does not affect his continuity of employment but prevents him from continuing to participate in or acquire pension rights under a relevant scheme;

and the references in paragraphs (a) and (c) above to any worse position shall be construed, in relation to a person to whom paragraph 3(1) below applies who, after the transfer date, ceases to participate in or acquire pension rights under the North Scheme or the South Scheme, as references to a position which is any worse than his position, immediately before he so ceases, under whichever of the schemes he is then participating in or last acquired pension rights under.

(2) Regulations under this paragraph may impose duties (whether as to the amendment of either scheme, the provision or amendment of other schemes, the purchase of annuities, the making of payments or otherwise) on persons who are or have been employers of persons to whom paragraph 3(1) or (2) below applies; and duties so imposed on any person may include duties owed to persons of whom he is not and has not been an employer.

(3) Regulations made under this paragraph may also provide for any dispute arising under them to be referred to arbitration.

(4) Sub-paragraphs (3) and (5) of paragraph I above shall apply for the purposes of this paragraph as they apply for the purposes of that paragraph.

3.—(1) Subject to sub-paragraph (3) below, this sub-paragraph applies to—

1. (a) any—
   1. (i) existing employee of the Scottish Boards; or
   2. (ii) existing employee of a Consultative Council,
   who, immediately before the transfer date, is a participant in the North Scheme or the South Scheme;
2. (b) any existing employee of the Scottish Boards who, after that date, participates in either scheme within three months of his attaining the minimum age for such participation;
3. (c) any former participant in either scheme who, after that date, participates in or acquires pension rights under either scheme in such circumstances as may be prescribed by regulations under paragraph 2 above; and
4. (d) any person who participates in the North Scheme in pursuance of regulations made under paragraph 1(1)(a) above or in the South Scheme in pursuance of regulations made under paragraph 1 (1)(b) above.

(2) Subject to sub-paragraph (3) below, this sub-paragraph applies to—

1. (a) any person not falling within sub-paragraph (1)(c) above who, immediately before the transfer date, is not a participant in the North Scheme or the South Scheme but has pension rights under either scheme; and
2. (b) any person who, after that date, acquires pension rights under a relevant scheme by reason of the death of a person falling within sub-paragraph (1) or paragraph (a) above,

but only as respects the pension rights by virtue of which he falls within paragraph (a) or (b) above.

(3) Any person to whom sub-paragraph(1) or (2) above applies may elect in such manner as may be prescribed by regulations under paragraph 2 above that that sub-paragraph shall cease to apply to him; and if, otherwise than in such circumstances as may be so prescribed, any person to whom sub-paragraph (1) above applies—

1. (a) ceases to be in continuous employment; or
2. (b) voluntarily withdraws from a relevant scheme and does not forthwith—
   1. (i) become a participant in another such scheme; and
   2. (ii) transfers to that scheme the pension rights which have accrued to him before that time under the scheme from which he is withdrawing,

that sub-paragraph shall cease to apply to him except as respects pension rights which have so accrued.

4.—(1) So much of Schedule 13 to the Employment Protection (Consolidation) Act 1978 as has effect for the purpose of ascertaining whether any employment is continuous shall apply for the purposes of paragraphs 2 and 3 above as if—

1. (a) those paragraphs were contained in that Act; and
2. (b) in that Schedule "associated employer", in relation to a company participating in a relevant scheme, included any other company participating in such a scheme and any other company of which a company so participating has control, or companies so participating together have control;

but regulations under paragraph 2 above may provide that no account shall be taken for the purposes of this paragraph of any person ceasing to be in continuous employment for such periods and in such circumstances as may be prescribed by the regulations.

(2) For the purposes of sub-paragraph (1) above, a company has control, or two or more companies together have control, of another company ("the other company") if—

1. (a) that company, or each of those companies, is a member of the other company and that company controls, or those companies together control, the composition of the other company's board of directors;
2. (b) that company holds, or those companies together hold, more than half in nominal value of the other company's equity share capital;
3. (c) a company of which that company has control, or those companies together have control, has control of the other company; or
4. (d) two or more companies of which that company has control, or those companies together have control, together have control of the other company;

and subsections (2) to (4) of section 736 of the Companies Act 1985 (as originally enacted) shall, with any necessary modifications, apply for the purposes of this sub-paragraph as they apply for purposes of subsection (1) of that section.

Interpretation

5.—(1) In this Schedule— Consultative Council" means a Consultative Council established under section 7A of the Electricity Act 1947 for the district of a Scottish Board; employer", in relation to a person employed by a company which is a wholly-owned subsidiary of another company, includes that other company; existing employee of a Consultative Council" means any person who, immediately before the transfer date, is employed by a Consultative Council; existing employee of the Scottish Boards" means any person who, immediately before the transfer date, is employed by one or other of those Boards or falls to be treated as so employed by virtue of regulations made under section 54(4) of the Electricity Act 1947 (service as a member to count as service as an employee); former participant" means any person who, immediately before the transfer date, is not a participant in the North Scheme or the South Scheme but has pension rights under one or other (or both) of the schemes by virtue of his having been such a participant; pension", in relation to any person, means a pension of any kind payable to or in respect of him, and includes a lump sum, allowance or gratuity so payable and a return of contributions, with or without interest or any other addition; pension rights", in relation to any person, includes—

1. (a) all forms of right to or eligibility for the present or future payment of a pension to or in respect of him; and
2. (b) any expectation of the accruer of a pension to or in respect of him;

and includes a right of allocation in respect of the present or future payment of a pension; the relevant enactments" means Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (retirement benefit schemes) and Part III of the Social Security Pensions Act 1975 (contracted-out pension schemes); relevant scheme" has the meaning given by paragraph 2(1) above; wholly-owned subsidiary" has the same meaning as in the Companies Act 1985.

(2) For the purposes of this Schedule, a company is wholly owned by one or more other companies if it has no members except—

1. (a) that other or those others and its or their nominees; and
2. (b) wholly-owned subsidiaries of that other or those others and their nominees.

(3) Subject to sub-paragraph (1) above, expressions used in this Schedule which are also used in Part I or II of this Act have the same meanings as in that Part.").

On Question, amendment agreed to.

Schedule 14 [Minor and consequential amendments]:

The Earl of Dundee moved Amendment No. 242A:

Page 121, line 42, at end insert— ("(iia) section 33 of the Coal Act 1938;").

The noble Earl said: This amendment will ensure that British Coal continues to seek the consent in writing of the successor companies to the electricity boards before working coal under land owned by the successor companies.

Let me explain further. The Coal Act 1938 provided that unworked coal should be vested in the former Coal Commission. Unworked coal was, of course, subsequently transferred to the National Coal Board, now the British Coal Corporation. This included coal owned by statutory undertakers, but Section 33(1) provided that coal formerly owned by a statutory undertaker should not be worked without their previous consent in writing.

Several of the area boards have significant land holdings in coal mining areas acquired before 1938; it therefore seems only right that their successor companies (which will continue to be statutory undertakers) should be consulted when British Coal wish to work coal lying beneath their land, as provided by Section 33(1) of the 1938 Act. This amendment to Schedule 14 achieves this and I commend it to the Committee. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 243: Page 127, leave out lines 14 to 19.

The noble Earl said: This amendment simply seeks to remove a consequential amendment which is being separately effected by other legislation. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 244: Page 132, line 28, at end insert ("; and").

The noble Earl said: This is simply a constructive amendment concerning the use of the word "and". I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 245:

Page 132, leave out lines 33 to 40 and insert— ("38. In section 159 of the Water Act 1989 (protection of certain undertakings), in subsection (3), for paragraph (f) there shall be substituted the following paragraph— (f) the undertaking of any person authorised by a licence under Part I of the Electricity Act 1989 to generate, transmit or supply electricity;").

The noble Earl said: This amendment serves simply to ensure that the Water Bill currently before this Chamber will correctly reflect the changes in the electricity supply industry resulting from the provisions of the Electricity Bill. I beg to move.

On Question, amendment agreed to.

Schedule 14, as amended, agreed to.

5.45 p.m.

Schedule 15 [Transitional provisions and savings]:

Lord Sanderson of Bowden moved Amendment No. 245A: Page 140, line 28, leave out ("the Generating Board or an Area") and insert ("an Electricity").

The noble Lord said: Paragraph 36(1) of Schedule 15 as drafted is limited to the property of the CEGB and the area boards. However, because the South of Scotland Electricity Board serves a small area in England around Berwick-upon-Tweed, it owns some property in Northumberland—consisting of houses, a depot and a showroom—on which it pays rates under the General Rate Act 1967. The amendment I put forward therefore extends the transitional provisions of paragraph 36(1) to include the SSEB's property. I commend it to the Committee. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 246:

Page 140, line 42, at end insert— ("36A.—(1) An application or claim by an Electricity Board for hazardous substances consent which is effective on the transfer date—

1. (a) shall have effect as if made by the appropriate successor company; and
2. (b) in the case of an application or claim made to the Secretary of State, shall be determined by him notwithstanding that the land to which it relates is no longer land to which section 1B of the Town and Country Planning Act 1971 or, as the case may be, section 56B of the Town and Country Planning (Scotland) Act 1972 applies.

(2) A hazardous substances consent granted or deemed to be granted to an Electricity Board which is effective on the transfer date shall have effect as if it had been granted to the appropriate successor company.").

The noble Earl said: This amendment provides transitional arrangements for certain consents. I beg to move.

On Question, amendment agreed to.

Schedule 15, as amended, agreed to.

Schedule 16 [Repeals]:

The Earl of Dundee moved Amendment No. 247: Page 147, line 49, column 3, at end insert ("immediately").

The noble Earl said: This is a minor drafting amendment. It will clarify the drafting of a repeal of the Local Government (Miscellaneous Provisions) Act 1982. I beg to move.

On Question, amendment agreed to.

Schedule 16, as amended, agreed to.

Clause 108 [Short title, commencement and extent]:

The Earl of Dundee moved Amendment No. 248: Page 71, line 19, leave out ("Except as otherwise expressly provided").

The noble Earl said: This is another drafting amendment. It concerns the words, except as otherwise expressly provided", at the beginning of Clause 108(2). These words are not necessary as all provisions of the Bill will be brought into force by commencement order as provided for in Clause 108. I beg to move.

On Question, amendment agreed to.

The Earl of Dundee moved Amendment No. 249: Page 71, line 36, leave out ("5 of Schedule 3") and insert "3 of Schedule 5").

The noble Earl said: This amendment to Clause 108 corrects a drafting mistake in the Bill. I beg to move.

On Question, amendment agreed to.

Clause 108, as amended, agreed to.

House resumed.

Bill reported with amendments.