HL Deb 17 July 1995 vol 566 cc44-70

5.14 p.m.

House again in Committee on Clause 1.

Lord Clinton-Davis moved Amendment No. 3:

Page 1, leave out lines 15 to 21.

The noble Lord said: In moving Amendment No. 3 it may be for the convenience of the Committee if I take with it Amendments Nos. 4 to 6.

Amendment No. 3 is a probing amendment. What we seek to do—we could not apparently achieve it in Standing Committee in another place—is to ask the Government to suggest how the situation will work out in practice. We know that the Government have stated a number of things. They suggest that licences will be held by the AEA Government Division. The Institution of Professionals, Managers and Specialists has stated: The statement 'The UKAEA will remain the site licensee after these divestments and therefore ultimately responsible for safety' is misleading".

That institution goes on to say that the Government Division, have announced publicly at the 4th International Conference on Decommissioning of Nuclear Facilities … that they would like contractors bidding for decommissioning work to consider taking on site nuclear licences for some installations. Specifically they have invited bidders for decommissioning the Windscale Piles to construct their bids on the basis of taking over the nuclear site licence, if they wish. Whilst UKAEA might remain site licensee for the particular investments mentioned above … and for the immediate period following divestment there are strong indications that in the future UKAEA with DTI support would prefer not to remain nuclear site licensee for some contracts".

We should like to know the situation.

Perhaps I may first deal with Amendment No. 6 and then Amendment No. 4. Amendments Nos. 4 and 6 refer to Warren Spring Laboratory, or indeed its successor activities within AEA Technology. We suggest that the words should be added: any property, rights, liabilities or assets that can be identified as having previously formed part of, or contributed to the work of the former Warren Spring Laboratory".

It is reasonable that we should seek to insist that the general way in which Warren Spring is set up within the AEA should be preserved in the public sector. It is appropriate that we pay tribute to the work of those engaged in Warren Spring over the years. They created a highly prestigious organisation which obtained a remarkable reputation not only nationally but internationally. Its work in the environmental field on clean air, landfill sites and all forms of pollution has been exemplary. I believe that the Government have to be assured that those activities should continue. We would have preferred to see them continue under a nationalised or publicly owned organisation, but that is not now happening.

When Warren Spring was absorbed into AEA Technology, something like 50 per cent. of those employees did not transfer. It is probably true that quite a lot of them voluntarily decided that they would not go. But the fact is—I hope that the Government will accept it—that some of the skills involved were lost when those people refused to move to Harwell.

Warren Spring is now broken up into its constituent parts. It is subsumed into the AEA organisation. We believe that that has not been helpful. Do the Government agree that they have a special responsibility to assist in monitoring the environment, and that it should be done objectively and independently of private interests? Do the Government also agree that they should maintain some expertise in the field, and that it is an issue which should not be contracted out to private agents exclusively?

A perfectly reasonable point was put by my honourable friend in another place, Dr. Lewis Moonie. He said: What will happen if an activity is insufficiently profitable and no private agency is prepared to undertake it?"—[Official Report, Commons, Standing Committee D, 23/3/95; col. 21.]

Will the Minister answer that specific point? It was not properly answered in the debate which took place in Standing Committee D.

It may well be that in many instances in the field work of this character cannot be carried out profitably but there is a question of national interest in it being carried out. Consequently, there may be some important residuary role for government in that regard in ensuring that work which no private company might wish to undertake in the field is done, nevertheless.

Amendment No. 4 would insert into Clause 1 the words: any employees of the Authority required for the safe management of any nuclear liability arising from the previous activities of the Authority".

My understanding is that Government Division is to keep responsibility as a purchaser of decommissioning services. I understand that that is what the Government wish it to remain. A purchasing authority will not necessarily include on its board anyone who has any or any sufficient expertise in nuclear waste management. That requirement is to be withdrawn subsequently in the Bill. Retaining that function allows many other functions to go to other companies which may bid for part of the decommissioning process for nuclear reactors. But the many responsibilities for safety should, in our submission, remain the concern of the Government rather than a company.

We are talking here about important issues. They have been listed by the IPMS as the following: Managing the safe decommissioning of nuclear liabilities; Custody and maintenance of radiation dose records; Medical supervision of employees in subsidiary companies; Restriction of UKAEA Constabulary's powers over employees, or extension on the same footing to subsidiaries and contractors … The definition of the nature and extent of work provided to or undertaken for [the Ministry of Defence]; Restrictions, if any, on commercial trading".

That is how the IPMS has listed the issues and no one could doubt their extreme significance.

The records have of course to be maintained over a long period, long after employees have departed from the company. It is critically important therefore that we take the issue into account. These are matters which I hope the Government will take fully on board in dealing with the amendments.

Lastly, I come to Amendment No. 5, in which we seek to prevent the transfer out, under the Bill's provisions, of people working in areas stated to be the mission of UKAEA Government Division. The Government Division published on 31st March 1995 the forward plan. The document stated that UKAEA had agreed with the DTI that Government Division's mission was to be: To complete the UKAEA nuclear mission, whilst rapidly reducing the annual cost to the UK taxpayer of Government Division, by: Caring for and, at the appropriate time, safely dismantling active facilities no longer in use. Disposing of radioactive waste in an environmentally acceptable way. Making use of those UKAEA assets which cannot be disposed of, including live active facilities. Always ensuring that the programme is carried out at lowest economic cost consistent with safety and environmental requirements and acceptable financial risks".

In the amendment we seek to prevent those activities from being privatised through the procedures of the Bill. We believe that privatisation along those lines would create wasteful duplication and competition between Government Division and privatised functions, with a balance in favour of Government Division which will have access to government subsidy and underwriting.

Perhaps I may offer a resumé of the Government's arguments in another place. They said that they intended Government Division to contract out all or most of the work, some to AEAT, and that putting work out to competitive tender reduces costs in itself. The Government spoke of savings of at least £50 million expected in the three years to 1996–97. What evidence is there of any such saving in terms of costs? In my submission, there is none that competition in that area is likely to reduce costs on that or any comparable scale. Government Division chief executive Dr. Derek Pooley wrote to the trade unions on 26th June this year saying that the projected savings would be due: first, to planning; secondly, to highly commercial, and if possible competitive, negotiations; and, thirdly, to firm management of contracts. He added: We do not yet have much evidence about the relative importance of these three factors".

The extra costs of items two and three, which I have just mentioned, from—to use a horrible term—"contractorisation", including maintaining an adversarial four-tier management structure, would probably outweigh any competitive savings. I believe that the provisions which we suggest would substantially improve the Bill. I beg to move.

Lord Fraser of Carmyllie

The noble Lord began by indicating that the first amendment which he moved, Amendment No. 3, is in the nature of a probing amendment. I am not entirely surprised that he indicated that, otherwise, taken at its face value, it might achieve exactly the opposite of what he was arguing for.

Clause 1(3) is in the Bill for a specific purpose. AEA Technology is currently not a legal entity, it is simply an operating division of UKAEA. In practice, there is a clear dividing line between it and the Government Division. But because it is not a legal entity, it is not possible to say expressly on the face of the Bill that the activities of the UKAEA transferred by scheme to a successor company will be those activities carried on by AEA Technology.

What is possible is to specify what will remain with UKAEA. That is what Clause 1(3) does. It makes it clear that ownership of and responsibility for the management of UKAEA's nuclear liabilities and those UKAEA sites subject to nuclear licensing will remain with Government Division in the public sector.

The noble Lord made something of a statement by Government Division at a conference, and as the noble Lord is aware, it was considered in some detail in another place during Committee stage. What was indicated then was that with regard to a particular decommissioning proposal, the Government Division is at an early stage of exploring how to structure that decommissioning project. To help inform the process, it has asked other organisations to give their views on not only the conventional option of working under the Government Division's nuclear site licence but an alternative involving the contractor holding the nuclear site licence.

That approach would involve a departure from Government Division policy, but the division would be failing in its duty if it did not examine any method of achieving value for money for the taxpayer. However, I emphasise that it would only pursue that alternative if it were to be satisfied that safety would not be compromised and significant savings could be made. Whatever views the noble Lord may take about the matter, I can confirm to him that nothing in this Bill alters that position.

I also take this opportunity to reassure the Committee that UKAEA's current responsibilities for nuclear security, the policing of nuclear sites and fusion R&D will also remain with Government Division. Government Division will retain responsibility for the management and disposal of associated radioactive waste.

The privatised AEA Technology will be a leading player in the nuclear services market and operate some active nuclear facilities on UKAEA sites. But the nuclear market is only one of the many sectors in which AEA Technology operates and work on nuclear materials accounts for a relatively small proportion of its total business.

We are not talking here about the sale of a major nuclear operator in the privatisation of nuclear facilities. Ownership of all the facilities used by AEA Technology for its work on nuclear materials will in fact remain with Government Division.

I turn to the other two amendments. Amendment No. 6 would prevent the inclusion in transfer schemes of any property, rights and liabilities of the former Warren Spring laboratory or which contributed to the work of Warren Spring.

Warren Spring and AEA Technology's existing environmental technology business were merged last year and now operate under the flag of the National Environmental Technology Centre, NETCen, at Harwell and Culham. I join the noble Lord in paying tribute to those who worked at Warren Spring; but the merger has created a comprehensive centre of excellence in environmental technology. It will help British business both by helping it to minimise waste and pollution, itself reducing costs, and by providing a technology base to help British business meet ever more demanding international standards.

The merger has provided an organisation with a broader capability than either of its constituent parts and with a lower cost base. It is able to call on the broadly based technical skills and the marketing base of AEA Technology as a whole. It is also able to operate in wider markets than Warren Spring could ever have done it if had remained independent—and thereby make a more substantial contribution to UK competitiveness in the environmental services market.

For all these reasons it would make no sense to undo the merger, and indeed might run contrary to earlier arguments advanced that we should keep these activities all as a single unit. It would harm the prospects for AEA Technology as a whole; and it would deprive the UK of one of the world's leading environmental technology centres.

Let us now look at Amendment No. 4 and the first leg of Amendment No. 5, which would both have the same effect. Since they do not distinguish between employees of AEA Technology and UKAEA Government Division, they would deprive AEA Technology of the ability to compete effectively for future work by precluding the transfer of those of its employees currently working on projects for Government Division. They would undermine its competitive position in the UK and undermine its ability to compete in the international market for decommissioning and waste management services.

There are enormous opportunities in that market which we would all want to see AEA Technology and other British firms exploiting to the full. But this amendment would put a major obstacle in AEA Technology's way.

It would also not only deprive the staff concerned of the opportunities that a privatised AEA Technology could offer them but could leave them stranded in Government Division with an uncertain future once the projects on which they were working come to an end. I cannot believe that that is anything other than an unintended consequence of the noble Lord's proposal.

To turn finally to the last limb of Amendment No. 5, it would, if adopted, wreck the sale. AEA Technology is a people business. It is nothing without its staff. If the staff could not be transferred, there would be no point in making a transfer scheme. No doubt we shall spend a good deal of time this afternoon debating amendments designed to improve the already very substantial protections for employees written into the Bill. I make no complaint about that. But I believe that their best hope for a prosperous future will he in privatising AEA Technology and allowing it to realise its full potential as a world-class business.

I have taken some time to respond to an important set of amendments, and the noble Lord quite properly took his time to spell out his concerns. I hope that I have answered them fully.

5.30 p.m.

Lord Clinton-Davis

I thank the Minister for that considered reply. With respect, it does not really meet the case that I put forward. I accept that the amendments as drafted are by no means perfect. The Minister is right in saying of my first amendment that it could lead to great difficulties. That is why I described it as a probing amendment. The deficiencies that we have on this side in drafting will of course fall on the noble and learned Lord in the not too distant future. He will then begin to experience the problems that we experience.

So far as Warren Spring is concerned, the Minister did not answer the point that I made which gives us some cause for concern; namely, there has been, I contend, a substantial loss of expertise on the part of those who did not want to move to Warren Spring. That cannot be to the advantage of the industry as a whole.

The Minister said something about a better contribution towards UK markets being effected as a result of this merger. I rather suspect that that has not yet happened. It may be a hope that the Minister has for the future, rather than spelling out the present situation. Perhaps he will clarify that point.

The Minister said that Amendments Nos. 4 and 5 effectively constituted wrecking amendments, since the sale would be wrecked as a result. We are dealing simply with a Bill that devises a way forward towards a sale. It does not affect the sale at the present time or when it is enacted. But when the Minister said that we should be affecting disastrously the situation of the employees, it is odd, is it not, that they have taken the view that these amendments should be moved? We are doing so on the basis of representations made to us by them. I think that they are probably in a better position than is the Minister to understand the situation—although I accept once again that the amendments may not be drafted in the most adroit way, for which I accept responsibility. It is quite a usual function on my part to submit maladroit amendments! However, one does try to get a point over. I invite the Minister to comment on the two or three points that I have just made and then I shall indicate that I propose to withdraw the amendment.

Lord Fraser of Carmyllie

Perhaps I may respond to two of the points. It may be that there are some within Warren Spring, previously employed before the merger took place, who did not think that that was the best way to proceed. It is certainly our view that, following on that merger last year, a first-class organisation is being brought together which is well placed now within the privatised AEA, in parts or as a whole, to take advantage of the opportunities that lie there. So it is not simply an expression of hope. I believe it is an objective assessment of the benefits of the merger.

I make no criticism of the noble Lord's amendments. I suspect that he drafts very much better than, in a modest fashion, he indicated. My clear understanding of the position—and it may not have been understood by the employees—is that there will be a number who are working for Government Division at the present time, and it would not be desirable to put them in a position of uncertainty as to where their future lay once the particular projects on which they were working came to an end. I put it in that way so that the noble Lord and those who made representations to him may reflect on what I believe may have been an unintended consequence.

Lord Clinton-Davis

I thank the noble and learned Lord for that explanation. I shall certainly reflect further on the matter, as I am sure will the employees. Having heard what the Minister said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 to 8 not moved.]

Lord Haskel moved Amendment No. 9:

Page 2, line 4, at end insert: ("( ) No direction to make a transfer scheme shall he made before a period of one year has elapsed after the passing of this Act").

The noble Lord said: Since Second Reading we have had the Nuclear Review and the suggestion that Nuclear Electric will be sold. It would seem to be sensible to co-ordinate the sale of AEA Technology with the nuclear power sale that is proposed in this White Paper. Not to do so would almost certainly fail to get the best price for AEA Technology because more than 50 per cent. of the work of AEA Technology is nuclear. Equally, uncertainty over the future availability of AEA Technology's services would reduce the market value of the nuclear power business when it comes to be sold. If the Government want to get the maximum value from both those sales, they should co-ordinate them. This amendment encourages them to do so. I beg to move.

Lord Fraser of Carmyllie

As I indicated previously, the Government's aim in this legislation is to keep sale options open. One element of that strategy involves preserving the possibility of early or late vesting. Once the transfer scheme powers have been used to vest property, rights and liabilities of the authority in a transferee, then in general the property concerned cannot be re-vested by the scheme.

That argues for vesting AEA Technology in the form in which it is most likely to be sold. It is therefore possible that vesting by scheme would not take place for more than 12 months after the Bill has been passed. Equally, it is possible that, subject to the performance of AEA Technology, vesting in a shorter timescale would become desirable. That could be the case, for example, if AEA Technology were to perform in a way which confirmed that unitary sale was the best option. I understand the argument that the noble Lord advanced but I would not wish to limit the scope of the powers by introducing an arbitrary time limit on when they might apply.

I might also emphasise, although I am sure that the noble Lord is well aware of it, that what is being proposed for privatisation within the technology is not an area of expertise that is in any sense exclusively related to nuclear expertise. The expertise that they have now acquired across a broader front is equally valuable and the directness of the relationship between that and nuclear power is possibly not as tight as he suggested.

Lord Peston

Perhaps I may intervene at this point. The amendment had a slight ulterior motive, which the Minister chose to ignore. We were trying to winkle out whether the noble Lord had any news for us on nuclear power privatisation. He will have noticed the remarks made by my noble friend but he did not say a word on that subject. May I assume that he is not yet ready to tell us anything about the timetable of that particular divestment?

Lord Fraser of Carmyllie

The noble Lord makes a correct assumption. I wanted to underline also that I did not accept that in this context there was any particular parallel to be drawn. I thought that there were other reasons why he wished to delay for 12 months. We could possibly explore that point at another date.

Lord Haskel

It seems that once again the Government are using the phrase "keep our sales options open" as a means of saying that they are unprepared for what will happen. Indeed, it may well be that it will be 12 months before this privatisation goes ahead, by which time we shall know more about the position of Nuclear Electric. We shall have to come back to this matter on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Schedule 1 [Transfer schemes: supplementary provisions]:

[Amendments Nos. 10 and 11 not moved.]

5.45 p.m.

Lord Peston moved Amendment No. 12:

Page 9, line 4, at end insert: ("provided that no property which may contain any fissile or other controlled material shall be transferred unless the Secretary of State is satisfied that control of that material meets any requirement of the Treaty on the Non-Proliferation of Nuclear Weapons (Cmnd 4474).").

The noble Lord said: I have chosen this amendment as the peg on which to hang a number of concerns about nuclear proliferation, security, safety in an international sense and other international matters.

At Second Reading I asked various questions about whether the AEAT, once it was privatised, would be able to assist in the construction of nuclear power stations abroad. I hasten to add that I am not opposed to nuclear power—quite the contrary. I simply hold a consistent position in that I wish electricity to be generated in the "least cost" way. If nuclear power turns out to be "least cost", then that is fine and if not, it is not fine. I do not see the fundamental issue on nuclear power that often my honourable friends and noble friends have seen.

So my remarks are not antipathetic to nuclear power. My concerns are about nuclear technology one way or another falling into the hands of nations which are actually or potentially unfriendly towards us. I am concerned about the acquisition of fissile materials which could be used for other purposes by nations which are or are potentially unfriendly towards us. I believe that, over the years, our Government have kept up a very good record in that respect. I do not in any sense intend to criticise the present Government or their predecessors in this area.

All that has happened so far has been within the public sector domain, if I may use that expression. Everything changes somewhat in the context of privatisation.

The related matter—the expression that we all emphasized—is that the business we are talking about is essentially based on human capital with the expertise of individuals. Individuals are mobile. I assume that at the present time employees who are now public servants could go and work abroad, acting as advisers to governments who are unfriendly towards us. I reflect on whether the Government have considered that matter sufficiently.

The point about employees was raised in another place. Once that part of the industry is privatised, I am not entirely certain how far the kind of protection connected with the Official Secrets Act and so on will continue to help. After all, the employees of AEAT will be in the private sector and no longer in the public sector. Since they undoubtedly have knowledge and will acquire new knowledge, possibly of the kind which ought to lie within the ambit of the Official Secrets Act, it is not obvious to me how that protection can continue. What replaces the Official Secrets Act is commercial confidentiality, which is not the same thing at all. That is the area in which we now operate.

There is another related matter and I cannot now remember whether I asked the question at Second Reading. Do the Government have any view on whether the purchaser of AEAT could be wholly or largely foreign owned? More to the point—we shall come later to further transfer of these assets —will any controls remain in subsequent years over foreign acquisition of the company? Again, I pride myself on being an internationalist and my point reflects no kind of antipathy to foreigners. It has to do with the sensitivity of the nuclear area and in particular access to that kind of expertise and those kinds of materials.

My difficulty in pursuing this issue, as noble Lords will be aware, is that there are so many different Acts of Parliament which apply in this area. The original atomic energy Acts apply. Certainly the 1965 Act applies among other measures. It has certainly been rather difficult for me to plough my way through all the different measures to answer my own question, so to speak. But that is the whole point of having the Government and the Opposition; namely, on matters of this kind I ask the difficult questions and the Minister has to work through the problems and give me at least some semblance of an answer.

This is not a matter that we can simply let go. Serious questions arise in relation to the future stability of the world. We know, if only from hearsay, that small nations are still trying to acquire nuclear expertise and the relevant raw materials. What is of considerable interest is that, on the whole, we have prevented that from happening. The extent of nuclear proliferation is a good deal less than I would have predicted, given my worst fears.

The Bill represents a serious change. I cannot believe that neither the Minister nor his colleagues in government have thought about this issue. The reason for my raising it is to give him one additional chance to place on record any thinking that they have had. I read the remarks made by his honourable friend in another place and my interpretation was that we may be expecting a fuller statement on the whole area in due course. It may be that today the Minister wishes to make that fuller statement.

To conclude, I repeat that I do not wish my remarks to be interpreted in any way as anti-nuclear and certainly in no way as undermining the desirability of AEAT, if it is to be privatised, being commercially viable. But in that regard we must be ultra cautious so that we do not suddenly discover, whoever is in government, that nuclear expertise has developed elsewhere and that we were somehow involved in it. That would not be a satisfactory state of affairs. I beg to move.

Lord Fraser of Carmyllie

I have no intention of accusing the noble Lord of being anti-nuclear. I can say briefly to him that the amendment is unnecessary but, given the nature of his anxieties, I shall take a moment or two to explain why. I say that for two reasons. First, it is not our intention to transfer any fissile material to a successor company. Secondly, a fully adequate regulatory regime is already in place—and it is the latter reason that may be of greater interest to the noble Lord.

The Export of Goods (Control) Order 1994 provides that any exports of such materials and equipment require a licence. No licence is issued unless my right honourable friend the Secretary of State is satisfied that the requirements of the treaty are met. In addition, the Nuclear Safeguards and Electricity (Finance) Act 1978 gives effect to the international agreement between the UK, the IAEA and Euratom for the application of safeguards in the UK, pursuant to the non-proliferation treaty. And we are bound by the Euratom Treaty, under which all civil nuclear material in the UK is subject to safeguards administered by the Euratom Safeguards Directorate.

The regulatory framework set up under the Euratom Treaty ensures control of all civil nuclear material, wherever it may be held. That framework applies, and will continue to apply, to all activities carried out in the UK irrespective of who carries them out, and irrespective of whether they are carried out in the public or the private sector. So the noble Lord's assumption was correct; that is, that there would be the necessary continuity.

Let me now say something about the basis on which AEA Technology will carry out work on special nuclear material. After privatisation, that work will be carried on in buildings which will remain under the control of UKAEA's government division for licensing purposes and subject to arrangements for nuclear accountancy approved by Euratom. In other words, there will be no change in the basic regulatory provision. And employees of AEA Technology, or a successor company or companies, who deal with SNM will continue to be vetted in accordance with the UK Government standards.

All work on special nuclear material will be undertaken in facilities owned by UKAEA's government division, under the terms of licences to operate. The government division will make it a condition of all such licences that all employees operating these facilities continue to be appropriately vetted. Equally, the statutory framework of the Official Secrets Act binds all employees of AEA Technology and will continue to do so after its separation from UKAEA and after privatisation. Employees and ex-employees will therefore continue to be under a duty not to reveal any information gained in the course of their employment on sensitive government contracts.

I hope that that reassures the noble Lord that a solid regulatory framework is in place. He also asked a question in relation to possible foreign ownership of AEA Technology. Of course we welcome overseas investment into this country, provided that the potential buyers of a privatised company meet all the criteria attached to the sale. If that is the case, there is no reason why they should be discouraged simply on the grounds of nationality.

In this case the decision of to whom the business will be sold will depend on a wide range of criteria. They will include the need to maintain its reputation, independence and impartial advice, and the interests of its customers who will include the Government. It follows that the Government will consider the need for a special share and for any other form of protection in the light of decisions on the form and method of sale and of discussions with the business's major customers. I hope too that that explanation is helpful to the noble Lord.

Lord Peston

I thank the Minister for that explanation. It was particularly helpful for it to be on record. Again, one cannot judge these issues until we are slightly closer to knowing who the new owners may be and on seeing later developments. There is an amendment to come relating to the special share and we shall be able to talk about its role at that time. Again, I thank the Minister warmly for that answer and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel moved Amendment No. 13:

Page 13, line 19, at end insert: ("( ) Before giving or refusing his approval for the purposes of this paragraph the Secretary of State shall consult the trade unions and other bodies representing the employees of the Authority.").

The noble Lord said: In moving Amendment No. 13, I shall speak also to Amendments Nos. 20, 21, 31 and 38. These amendments concern a number of matters, one of which is that they require the Secretary of State to consult the employees and their trade unions before ordering, approving or modifying a transfer scheme or selling the shares in a successor company.

We all agreed that this is a people business and everything that that implies. We want to ensure that the Secretary of State does not simply go through the motions of consultation, but that he carries the employees with him. We are trying to ensure that he carries out best practice. We must remember that when the employees were signed up, they were employed as public servants. The Minister's department supports and encourages Investors in People. It held a seminar in London recently on that very topic. The main speaker listed a string of policies endorsed by Investors in People for improving a business by concentrating on employee development and welfare. We have all agreed that AEA Technology's competitive advantage will only be through its people. We want to make sure that those practices are carried out. It is an old saying in business that if one is not a good employer, one is training staff for one's competitors.

If the company is floated, we want to ensure that proper opportunities exist for employees to benefit—not just executive share options as in the privatised utilities. Bonuses should perhaps be paid in shares to encourage long-term management and company loyalty. We want to ensure that the result of this privatisation will not be 40 years of training and experience in AEA Technology simply being transferred to overseas competitors because of poor morale and poor management.

The amendment seeks to ensure that there is a sense of nurturing and developing a sense of direction. That is in accordance with best practice preached by the Minister's own department. The weakness in the Bill is that everything seems to require the approval of the Treasury, not the agreement of the staff and the employees. That indicates to us that the Government are purely interested in the short-term financial aspects of this privatisation. We, on the other hand, are interested in the long-term continued success of the business and so it is just as important to carry the staff and the employees. That is the difference between us.

Some of these amendments refer to the TUPE regulations. They will be dealt with by my noble friend Lady Turner of Camden. I beg to move.

6 p.m.

Baroness Turner of Camden

I believe that the Government may argue in connection with these amendments—I believe that they did in the other place—that the TUPE regulations cover consultation and cover it at the appropriate level. The Government made that point in Committee in the other place. However, it is not all that clear how TUPE will operate and in the meantime the staff could be left in limbo. As this is a publicly-owned enterprise, the Government have the main responsibility for ensuring that consultation takes place at the appropriate time and cannot simply leave things, as I think they may argue, as a matter for the current management of the authority. The main responsibility is that of government.

I should have thought that the Government would want to retain the support of this highly trained and extremely valuable staff. As my noble friend has just indicated, we are talking about a very sophisticated workforce. They are unlikely to do so if the people are left in doubt and are not taken along with the arrangements that will be made on their behalf about their futures. It was to relieve employees of that kind of anxiety that the acquired rights directive was first promulgated. That is referred to in Amendments Nos. 14 and 15 but it is part of this whole group of amendments which concern consultation. I hope that the Government will agree this time round that what is being suggested here is important and that they will accept what is being said. While they may argue that they do not have to put it into the Bill because the TUPE regulations are there anyway, in order to ensure that people know that they will be properly covered and appreciate that they are being cared about, I think that it has to be put on the face of the Bill.

Lord Peston

Before the Minister replies to those comments, we may be—I am sure it is my fault—slightly at cross purposes. I have in this group Amendments Nos. 31 and 38 which relate to Clause 7 and Schedule 2. They are to do with the disposal of securities. I had intended to raise the question of the so-called golden share, or government share, under that heading. Would the noble and learned Lord rather deal with the points that have just been raised and then I can speak later? Which would he prefer?

Lord Fraser of Carmyllie

Given the width of the querying from the Opposition Front Bench, perhaps I may leave the golden share issue until later.

In spite of the comment of the noble Lord, Lord Haskel, that we were concerned only with short-term financial aspects of the privatisation, I would wish to reassure him that I entirely agree with him that AEA Technology is a people business. I have used the term already. I have no doubt that one of management's key tasks now, as well as after privatisation, must be to ensure that staff are properly incentivised. The performance and profitability of the business depend on that. As regards employee participation, we believe that it is in the long-term interests of any privatised company that a significant measure of employee share ownership is provided for. The noble Lord may wish to return to this at a later point in the Bill, but perhaps I may say to him that we shall look carefully at any proposals for employee participation put forward by the management of AEA Technology or its successors.

The Government would expect any scheme that is put forward to be broadly-based and recognise that AEA Technology ultimately depends on the efforts of all its staff. We are committed to involving employees as much as possible in the privatisation process. Where we part company is in our assessment of what is the impact of these amendments. It would appear that the trade unions and staff associations would have an automatic right of consultation before the Secretary of State was able to exercise any of his powers in relation to transfer schemes or before either the Secretary of State or the authority could dispose of any of their securities in a successor company. While they are not overtly asking for a union veto over the purchaser of AEA Technology, it appears to us to be tantamount to that. I do not think that would be right. The final decision on the sale has to be made by the Government in the light of market circumstances at the time and in the best interests of both AEA Technology as a business and of the taxpayer.

Turning to the TUPE amendments—I anticipate that we shall be returning to them before the evening is over—I would remind the Committee that the authority will in any event be under a duty to consult staff on the transfer of terms and conditions under the TUPE provisions. In addition, paragraph 9 of Schedule 1 to the Bill specifically places a duty on the Secretary of State, before giving any direction, to give sufficient notice to the authority to enable it to comply with its obligations under TUPE. I hope that that has been helpful in bringing together what we wish to achieve and giving a specific impact—

Baroness Turner of Camden

Does that mean that the Secretary of State will do the consulting? It seems to us that the Secretary of State is taking the decisions rather than the authority. He has an obligation to consult rather than simply leaving it to the authority. I have raised this point because I believe it was raised in Committee in the other place. The view expressed there was that this is a publicly-owned undertaking which is being privatised and it is up to the Secretary of State to undertake, and take responsibility for, consultations under TUPE.

Lord Fraser of Carmyllie

As I understand the arrangement that we are allowing for here, the Secretary of State, before giving any direction to make a scheme, should ensure that there is sufficient notice so that the authority can carry out proper consultation. I could see a legitimate complaint if the Secretary of State made a direction in such circumstances that, however willing the authority was to carry out that consultation, it was effectively precluded by the shortness of time. That is the purpose behind allowing for this specific provision within Schedule 1.

Lord Peston

Perhaps I may comment on the Minister's choice of words. The amendments were not tabled, and one or two subsequent amendments on consultation were not tabled, to give the unions a right of veto. The unions do not own these enterprises; the taxpayer does. But there is a difference between saying that the employees, particularly where the employees are the essence, ought to have some chance to be consulted and to make representations, even though in the end the Minister is free to say, "I am still going to sell this business, and I am going to sell it in my way rather than in the way you would like", and a veto power.

Certainly, I do not think that I or my noble friends are asking for a veto power. If I were a senior scientist who had devoted my life to AEA Technology and had been a public servant I would accept that in the end Parliament decides these matters, but I would not regard it as unreasonable on my part to say, "But don't you think you ought at least to talk to me and my representatives on matters of this kind?" That is what we are saying. I do not expect the noble and learned Lord to agree with that, but our point was certainly not to ask for a veto.

Lord Fraser of Carmyllie

I accept that from the noble Lord. I am at pains to stress that as regards the taking forward of AEA Technology, I would be very concerned if that were to happen with any feeling, sense or perception that there was to be unthinking hostility between management and staff. On the contrary, we would very much welcome participation in taking the company forward.

Lord Haskel

I was delighted to hear the Minister say that it is the managers' task to "incentivise"—

Lord Peston

That is not an acceptable word. It should be, "give incentives to".

Lord Haskel

"Incentivise" must be in the Department of Trade and Industry dictionary of words in order to confuse the public. I was also delighted to hear the Minister say that it is part of the management's duty to look at proposals for employee participation. Perhaps I may point out that the Government, through the Secretary of State, are the owners of the business. It is their duty to give a lead. Having put this matter on the record, I hope that the Secretary of State will now give a lead to the management and try to encourage it. Certainly, there is no intention that the staff association or the trade union should have a veto. But they should have a right of consultation, again, largely because the plans are very unclear and they need to know what their future is. Having made that point, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

Baroness Turner of Camden moved Amendment No. 16:

Page 15, line 25, at end insert:


If any employee is transferred to a new employer by a transfer scheme and is declared redundant,

  1. (a) the Authority's redundancy rules and benefits applicable to that employee at the date of the transfer shall apply unless the trade unions or other bodies representing the employees transferred by the transfer scheme have agreed to their modification for such employees, and
  2. (b) the redundancy rules shall be applied as if the Authority were the employer and all employees transferred from the Authority's employment by transfer schemes were employees of the Authority.").

The noble Baroness said: This amendment carries on from earlier amendments when we spoke about the TUPE regulations. This amendment seeks to make clear that any employee who is transferred to a new employer by a transfer scheme, takes with him his redundancy rights. That is very important because a possible transfer to a smaller unit could mean that redundancy is more likely than it would have been had privatisation not taken place.

I gather that the present redundancy scheme is a good one. It provides good compensation for long years of service. It is essentially a voluntary scheme based on the first option being an attempt at redeployment. As I say, it is essentially voluntary and under its provisions I understand that the authority has been able to reduce its workforce from 14,000 to 7,000 with hardly any compulsory redundancies. In the main, it has been reduced through voluntary means.

It is hoped to achieve a profit target within a year of £20 million as a result of privatisation. That means between 300 and 400 people will probably have to go, many of them scientists and engineers. However, I understand that a great many of them will be administrative staff. I am informed that scientists and engineers will also be included in that number.

That seems entirely inappropriate. Surely, they are capable of being redeployed because there may be a waste of highly skilled labour involved. If such people are to be made redundant as a result of decisions made by Parliament, which decided to privatise, at least let the employees keep the favourable terms they had. That is the very least that can be done. If it is claimed that a smaller enterprise cannot afford it, then let the Government stand as a guarantor. We owe something to employees who over the years have committed themselves to a highly skilled and successful enterprise. If they are to be made redundant, they should have that kind of guarantee, which should be written on the face of the Bill. I beg to move.

6.15 p.m.

Lord Fraser of Carmyllie

Perhaps I may answer briefly. Employees will have all the protections in respect of redundancy provided by the TUPE regulations. I know that that will be appreciated by the noble Baroness, but I repeat it for the record. Modifications to contractual redundancy rights will require the consent of the employees. Where the agreement of the trade union is required at present, the requirement for that agreement will be preserved. If the noble Baroness is seeking yet further confirmation that the TUPE regulations will apply, I am happy to give that to her.

The large majority of the 300 to 400 redundancies announced by AEA Technology last February involves administrative staff. Management is simultaneously recruiting technical staff. All the redundancies are taking place on UKAEA terms. While I understand what it seeks to achieve, I hope that it will be understood that this amendment does not add anything to the protection which is already available under the TUPE regulations. On that basis I hope that it can be withdrawn.

Baroness Turner of Camden

I thank the Minister for his assurances to the effect that the amendment does not add anything to the protection which he confirms already exists under the TUPE regulations. We shall look carefully at those assurances when we read Hansard tomorrow. I was simply anxious to ensure that something was written on the face of the Bill because of the concern that has been expressed to us by the employees represented by the unions who have been in touch with us.

We note the assurances that, in the main, it is administrative staff who are being made redundant. I have already been told that, although I have also been told, as I said earlier, that scientists and engineers are included in that number. I also note that simultaneous recruiting among staff of that calibre is taking place. I agree at this time that there is no point in pressing the amendment. We shall look again to see whether there is a need to do anything further at Report stage. I am glad to have the assurances from the Minister on the record. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 2 [Powers of Secretary of State]:

Lord Clinton-Davis moved Amendment No. 17:

Page 2, line 9, at end insert: ("( ) No direction under subsection (1) above shall be given unless a draft of such a direction has been laid before both Houses of Parliament and approved by members of each House.").

The noble Lord said: In moving this amendment, it may be convenient to speak to Amendments Nos. 18, 19, 30, 34 and 37, in various names. This group of amendments deals with parliamentary accountability—or, to put it more accurately, the lack of it—as far as this Bill is concerned. It really is not good enough that this Bill should be allowed to leave the House in its present form. That would be an insult to Parliament.

The Government are seeking to assert here a "trust us" policy. Nobody will trust them. The fact of the matter is that it would be quite wrong for Parliament to have no role at all in dealing with these issues. The Government would be able to say "We have a general enabling Bill". The Government can do whatever they like as regards any schemes without giving Parliament any meaningful role whatever. It will be interesting to learn from the Minister what role he believes Parliament can possibly assert in dealing with these schemes. Are we just to rubber stamp them now? If that is what the Government believe, then they will be strongly challenged on that issue.

What it comes to is as serious as this. As a result of the Bill, the Government will be in a position to sell off the entire atomic energy generating capacity, subject only to Magnox reactors, without reference to Parliament. That is a grotesque abuse of the powers of the Executive. It is a pity that we have such a thin House today because that is a serious constitutional point.

It is not only the Opposition who have taken up the point. It was raised by a very respected Back-Bench Member of another place, Mr. Robert Jackson, who is a Conservative and the Member for Wantage. Perhaps I should say by way of a preliminary—this is my second preliminary point—that Mr. Jackson was excluded from serving on the Standing Committee which considered the Bill. It was known that he was a critic of the Bill. The same happened to another critic of the Bill whose name eludes me at present. The two of them, but particularly Mr. Jackson, made strong representations to the Government Whips' Office that they should be permitted to be involved in that Standing Committee because they not only had considerable expertise on which to draw but also a substantial contribution to make which might not have been all that convenient for the Government but would certainly have been convenient for Parliament as a whole. It is not the job of the Government to silence all opposition—although they did so on this occasion.

I refer the Government to a cogent statement that was made by Mr. Jackson in another place. I am afraid that I cannot quote from it, but I shall give your Lordships a résumé. It came to this: Mr. Jackson took the view that the Government behaved as though they regarded the House, the Standing Committees of the House and, indeed, the elected Members of the House as a dignified rather than a working part of the constitution. That is a pretty serious indictment for an honoured Member of Parliament to make about his colleagues. However, Mr. Jackson said some very complimentary things about this House. Again, I can offer only a résumé. He thought that the unelected Peers were more dignified—

Lord Peston

Hear, hear!

Lord Clinton-Davis

That ought to carry the amendment. The Minister is on difficult ground already. Mr. Jackson also thought that this House was more effective than the House of Commons—

Lord Haskel

Hear, hear!

Lord Clinton-Davis

—is permitted to be. To use a Conservative word which is so frequently overused, Mr. Jackson looked forward to a "robust" attitude being adopted by Members of this House. His statement was a serious indictment of the procedures adopted by the Whips' Office in another place.

We are talking about a unitary process and about the preservation of an important national asset. However, we are also talking about Parliament being able to decide how that organisation should be sold, if at all, and to whom. What the Government want is a blank cheque. They want a blank cheque so that they can rearrange, break up and sell parts of UKAEA. That is what they had under the Electricity Act 1989.

I know what the Minister is likely to say—that is, unless there is complete inconsistency between the Minister in this place and his honourable friend in another place. He will say that the Secretary of State can direct the transfer scheme only at the point of sale; that time taken by parliamentary processes could jeopardise the sale or reduce the proceeds; that bidders might be deterred because of the possibility of public scrutiny in a trade sale or that bids might be reduced contrary to the interests of the taxpayer, as though the Government considered the taxpayer in all regards, which is certainly not the case.

This is not the sale of a manufacturing operation. We are talking about a research institution which provides commercial services to the Government and to industry. Its form of ownership and the provision and availability of its services must be approved by Parliament. The arguments that have been adduced in another place are simply not good enough. A trade sale should be made only to an organisation of such standing that it is able to accept public scrutiny of the sale. The arguments relied on by Mr. Jackson were powerful, but they did not receive a sufficient reply from the Minister. If, for the reasons that they adduced in another place, the Government feel that they cannot make a clear statement about the form of the privatisation in line with their commitment to keep AEA Technology as a single integrated whole, when on earth will they be required to make a statement? What is the Minister's view of parliamentary accountability? Are we here simply to rubber-stamp the Government's suggestions?

I think that Mr. Jackson's arguments deserve better treatment than the almost contemptuous dismissal that they were given in another place. I hope that the Minister will give Mr. Jackson and this Committee of your Lordships' House the benefit of a proper response. I am told that it was Mr. Ian Bruce, another Conservative Member of Parliament, who was also excluded from that Standing Committee. I am not arguing that both of them should have been included, but it might have been polite to their own side if the Government had included one of them. I beg to move.

Lord Thomson of Monifieth

I should like to say just a word or two about this group of amendments and to speak in particular to Amendment No. 18 which stands in the name of my noble friend Lord Ezra, who is unfortunately prevented from being here today. I am a very unsatisfactory substitute. Since we on these Benches do not deploy quite such an impressive batting order, I am here because there is a broadcasting order down for consideration later. Nevertheless, I turn my hand with good heart to this issue because the more I have studied it, the stronger appear the arguments which the noble Lord, Lord Clinton-Davis, has made.

My noble friend Lord Ezra is employed in industry and knows these matters in great detail. He declared on Second Reading that he was a very satisfied customer of the energy technological support unit and described it as a valuable national asset. He argued strongly that we should maintain the unitary character of the AEAT organisation. I add that there should be a public flotation of the operation. The alternative of fragmentation, which is among the many options which the Government want to leave entirely open, seems to have grave disadvantages. The most probable is that purchasers of the organisation would presumably be its competitors. That does not seem to be in the national interest. The Government have a proper interest in competition, but a sale to an existing competitor would simply reduce competition in the marketplace.

I am sure that the Minister recognises that we fear that, if it is not possible for the Government to deal with the organisation as a unit and to handle its sale by means of a public flotation, they will be driven by the Treasury into purely short-term financial considerations and into what would amount to little more than asset-stripping. It is against that background that this group of amendments has been tabled.

On Second Reading, my noble friend Lord Ezra said that in his experience—which is very considerable—no other privatisation measure had retained such wide options. It is a rather extraordinary situation that in your Lordships' House, which is very properly concerned about Henry VIII clauses, the disposal of a vital national asset such as this should be subject to a wide variety of possible options, all of which are entirely at the discretion of the Government once the legislation has passed through Parliament. It is against that background that we strongly commend these particular amendments.

It is a false economy to believe that fragmentation of the organisation will produce financial benefits. On balance, I doubt whether that will happen. In debate on previous amendments mention has been made of the co of TUPE. I am told that the severance costs of a relatively small number of staff may amount to several tens of millions of pounds. I was modestly reassured by what the Minister said at an early stage in the discussions about the Government's genuine feeling that the unitary option was a serious one. I hope that that is the final outcome of this matter. However, on the principle of the matter and the rights of Parliament, I believe that the arguments in favour of one or other of these amendments are very strong, and I give my fullest support to them.

Lord Fraser of Carmyllie

The noble Lord, Lord Clinton-Davis, asks far too much of me. It is one thing to have to promote the Government's legislation and argue in support of it but quite another for the noble Lord to try to get me to answer on behalf of the Government Whips' Office in another place as to what they may or may not have done in twisting arms or otherwise.

I do not believe that these amendments are helpful, not because I wish to be contemptuous in my dismissal of them but because I am concerned that, against the very interests that he wishes to promote, he may be overstating the situation. Two possible consequences may flow from these amendments. First, they may reduce the proceeds of the eventual sale. The noble Lord may not be particularly concerned about that, but no doubt he will wish to see that a proper price is secured.

Secondly, I would be concerned, as I am sure he would be, that these amendments could work against the best interests of AEA Technology and staff. Whatever form the sale takes, the Government must have the necessary flexibility to manage the sale process and the inevitable uncertainties involved in it. Any restrictions on that flexibility would, in our view, work against the interests of all concerned. For that reason, they are inherently undesirable. For example, if it is assumed that the decision is taken to offer AEA Technology for sale as a single whole, choices will have to be made on whether to vest AEA Technology as an independent company early in the sale process or at the point of sale. A consistent line will be taken between what has been said in another place and what I say. Whichever route is adopted, the requirement to secure parliamentary approval for the direction to make the requisite transfer scheme, and for the scheme itself, will inevitably make for delay which will perhaps be considerable. If vesting were tied to the point of sale, those delays might well undermine the whole sale process.

Equally, Amendments Nos. 30, 33 and 34 would require the Secretary of State or the authority, as appropriate, to secure parliamentary approval for the disposal of any shares in the company. The consequence of that, however, might well be to deter potential purchasers—whether they be financial institutions backing a sale to management and employees or trade purchasers—from bidding on the basis that their bids would be subject to close parliamentary scrutiny, even before detailed negotiations about the terms of sale could begin.

Lord Clinton-Davis

I am obliged to the Minister for allowing me to intervene. Is he saying that there is to be no parliamentary scrutiny, other than in the course of this Bill, in relation to any scheme that the Government may devise?

Lord Fraser of Carmyllie

The Bill has to pass further stages. I have no doubt that, as has been the case in another place and in the course of this afternoon and this evening, detailed consideration will be given to what is proposed and careful attempts made to secure a particular line of approach. At the present time I am not prepared to give an indication one way or the other. Let us see how matters stand in the autumn. The noble Lord is correct. I am in the business of explaining why it may be against the best interests of the very people that the noble Lord wishes to see protected if we introduce unnecessarily elaborate arrangements. Even if bidders were not deterred, it might only be possible to explain a preference for one bidder over another by revealing information that the bidder was not prepared to have disclosed for good commercial reasons. Equally, it might not be in the interests of the taxpayer to disclose details of competing bids, because that might cause the lead bidder to reduce the value of his offer or back out of the purchase. These are not academic points; they reflect commercial reality. Delay and consequent uncertainty may easily cause a sale to fall through or reduce sale proceeds.

I appreciate that on the Opposition Front Bench there is a genuine concern to achieve a unitary privatisation. I believe that the Government must have the freedom and flexibility to act in the best interests of the taxpayer and to deal with the business on the basis which best enables it to maximise its contribution to the national economy. That is also the course best calculated to serve the interests of the business and its staff. It is in nobody's interests, least of all theirs, that the business should be sold in one form and then restructured, or broken up more or less immediately, because it is not commercially viable in that form. That is why the Bill is structured as it is, and why the Government wish to keep open their options.

We recognise that the Government are accountable to Parliament and the taxpayer for decisions that they will have to take in the near future on the form and method of sale. But, consistent with that accountability, the Government must retain flexibility to act in the light of information that will become available over the course of the next few months and market circumstances at the time of sale.

I do not suppose that that answer will immediately satisfy the noble Lord.

Lord Clinton-Davis

The Minister is right!

Lord Fraser of Carmyllie

Nevertheless, I hope that the noble Lord appreciates that there are good reasons for this, not least the interests of those who work for AEA Technology, to which regard must be had before any precipitate change is made.

Lord Haskel

Before the noble Lord sits down, perhaps I may ask him why the arguments that he has given this evening apply to this privatisation but have not applied to other privatisations. In other privatisations a considerable amount of restructuring took place before the businesses were sold. For instance, the electricity industry was restructured into supply companies. The Water Act 1989 created a number of water and sewerage companies to succeed the regional water boards. As a result, Parliament knew what was to happen. However, in the case of AEA Technology we know nothing. AEA Technology as a company does not even exist yet.

Lord Fraser of Carmyllie

Given the scale and nature of what is to be privatised, I believe that these are very different animals. I have indicated to the noble Lord that when we return to this Bill for further consideration at a later stage we hope to be in a position to indicate rather more clearly the intention of the President of the Board of Trade. I would hope then that if noble Lords were concerned that insufficient explanation had been given to Parliament as to what was proposed, that concern would be allayed. It may well be that the way in which we wish to privatise this undertaking will be in the very form that the noble Lord has been urging upon us this afternoon.

Lord Clinton-Davis

Those words are not exactly Delphic. We thank the Minister for his response. He has not given an undertaking, and we understand that. We have a new and rather more caring, at least in the terms of Parliament, President of the Board of Trade. What do they do about industry? The Government are always dropping industry. That is typical, is it not? It seems that the new President of the Board of Trade will consider the representations that have been made. That is good news.

The Minister said that I was asking too much when I asked him to condemn his own Whips' Office in another place. I suppose that I was, but I did not think that he would respond to that. I wanted to make the point, because I think it was worth putting on the record.

There is no point in prolonging this discussion. My noble friend Lord Haskel made a powerful point. There seems to be an exceptional situation which did not apply in relation to other privatisations. All the arguments adduced in this and another place could perhaps have been anticipated by the Minister. They have at least caused a little ripple in the Department of Trade and Industry. In those circumstances, we look forward to the spill-over in the autumn and to the Minister coming forward with amendments along the lines we have contemplated here. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 18 not moved.]

Lord Thomson of Monifieth

Perhaps I may say one word in relation to Amendment No. 18. In the light of the hopeful, if not promising, tone in which the Minister has responded, I am sure that in October my noble friend Lord Ezra will be here to give his considered reaction to whatever the Minister says.

Lord Fraser of Carmyllie

Before the noble Lord sits down, I hope that what I said was not in any way misinterpreted. I was not offering to bring forward amendments. What I was indicating, as I have done on previous occasions, is that what has been urged upon me is that the appropriate mode of disposal is in a unitary form. I said that we should look at that matter in the autumn, because if that were to be the preferred model many of the concerns expressed from the Opposition Front Bench would fall away.

Lord Peston

I had interpreted what the Minister said as being that in the autumn he would try to give us some more information. Is not that right?

Lord Fraser of Carmyllie


[Amendments Nos. 19 to 21 not moved.]

6.45 p.m.

Lord Peston moved Amendment No. 22:

Page 2, line 44, leave out subsection (8).

The noble Lord said: Amendment No. 22 is grouped with Amendments Nos. 23 and 24. The amendments raise a matter of some seriousness. The essential amendment is Amendment No. 22. It is an attempt to discover why Clause 2(8) is there. My honourable friend the Member for Kirkcaldy in another place referred to this point. He referred to the Atomic Energy Authority Bill as one in which the Secretary of State may do whatever he likes to facilitate this. That echoes the point made by my noble friend Lord Clinton-Davis on the previous group of amendments. This is an enabling Bill which allows the Secretary of State to do whatever he likes.

I speak as someone who is always studying drafting and trying to understand the law. This is one of those bizarre clauses. First, it tells us that the Secretary of State may exercise his powers. I do not understand the nature of the legislation if one has to say in the middle of it, having given the Secretary of State his powers, that he is allowed to exercise them. That strikes me as being most strange. Then, in lines 12, 13 and 14 we get the bit that really puzzled me. It is: "whether or not the exercise of those powers, the giving of that direction or the doing of that thing is consistent with promoting or controlling the development of atomic energy".

I was completely mystified by that, because the Bill is called the Atomic Energy Authority Bill. It appears that the Secretary of State can exercise his powers whether or not they have anything to do with atomic energy. As far as I can see, under this provision he could decide to reform the football Premier League, or anything else he dreams of. One sits here saying, "What is this all about?"

Then one has the Notes on Clauses, a document which becomes increasingly useless. I say "increasingly useless" because nowadays Notes on Clauses do not seem to be notes on clauses but just the clauses themselves repeated. If one looks at page 4 of the Notes on Clauses it says that subsection (8) makes it clear that the Secretary of State may exercise his powers under that clause. It goes on and on and on. Then it explains that that is so whether or not it is consistent with promoting or controlling the development of atomic energy; that is, his general duty under Section 1 of the Atomic Energy Authority Act 1946.

The upshot of all that is that the Notes on Clauses throw no light on the subsection. The Bill is mystifying as to why the provision is needed. Even if one does not have a suspicious disposition, one asks oneself why it is there. The next thing one can do is to turn to the Minister's statement in another place. The Parliamentary Under-Secretary—I do not know whether he is still the Parliamentary Under-Secretary—in the middle of a reply, most of which had nothing to do with the amendment—I believe I am allowed to quote the Parliamentary Under-Secretary, am I not?—said that it is intended to avoid any argument that the transfer to the private sector of any activities carried on by the authority might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Authority Act 1946 to promote and control the development of atomic energy.

One presses the point because it all seems very strange in terms of the drafting of legislation. Either the legislation is drafted correctly, in which case no problem can possibly arise, or somehow it has got itself drafted incorrectly so that this blanket provision has to be added: "Well, if we have made a mess of it, then we add the following excuse that it does not count". It is like what we used to do as children when we played games. If we did not like the outcome, we just invented a new rule.

I seek two things. First, I should like an explanation of what this is all about, and if I have a point—I have a strong feeling as a layman that I do—it has nothing to do with undermining the Bill or anything like that; it is to do with good legislation. If I do have a point, I should like the Minister to go away and think about it and come back with at least a better answer than the one his honourable friend gave in another place.

I agree with the point made earlier by my noble friend when he quoted Tory MPs in another place. We do things much better here, as we all agree. We also have the great benefit that when your Lordships sit as a Committee we debate the things we want and we do not have any arguments as to who is on the Committee and what amendments we debate. We do things in a sensible way. This is an example of where we have a responsibility to try to clarify what the Government mean. It reads as if the Government are somehow worried about the Bill, so they think that they had better throw in the extra clause just to be on the safe side. I ask myself whether it would not be rather better if the Bill were drafted properly in the first place. I beg to move.

Lord Fraser of Carmyllie

I appreciate that in advancing his amendment the noble Lord is not trying in any sense to wreck the Bill. Similarly, perhaps I may reassure him that there is nothing suspicious about the provision. Clause 2(8) is designed to put beyond doubt the ability of the Secretary of State to exercise his powers under the Bill. It is intended to avoid any possible argument that the transfer to the private sector of any activities carried on by the authority might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Act 1946 to promote and control the development of atomic energy. The provision makes it clear that the Secretary of State is entitled to exercise his powers under the Bill, irrespective of any constraint arising from that duty.

Once upon a time I had responsibility for the drafting of legislation. Therefore, I can understand the argument that the provision is unnecessary. However, I think that I had better leave that to those who have responsibility for drafting now. As I said, I can understand the noble Lord arguing that it is unnecessary, but we have to be careful even though our caution may seem to the noble Lord to be excessive. Nevertheless, I assure him that there is nothing sinister about the provision. Indeed, it is appropriate to have such a provision in the Bill.

Lord Peston

I thank the Minister for that response. However, I am not entirely happy with the situation. The Minister has admitted in his response that the expression used by his honourable friend in another place is the correct one; namely that it, might be inconsistent with the duty placed on the Secretary of State under Section 1 of the Atomic Energy Act 1946".

The Minister did not say that it is not inconsistent; he said, "Well, in case it is or it might be, we had better throw the clause in". My worry is: how might it be? Someone must have been advising the Minister and saying, "Minister, we are doing this Bill and on these grounds it might be inconsistent with your responsibilities under the 1946 Act. Therefore, you had better throw in this blanket clause to protect yourself. That does not seem to me to be the correct way to do it. My point is that, if there is such a danger, then the Bill should have been drafted so that it was not inconsistent with the Minister's responsibility.

I do not know enough to know whether or not it is inconsistent. However, I do know that such blanket clauses ought not. to be in legislation. Someone ought to do the work and either say, "Yes it is inconsistent, so we will write the Bill so it is not"; or, they ought to be able to say to the Minister, "It is not inconsistent, so don't put that clause in because it is silly".

All I am asking the Minister to do is, in the interests of good drafting, to convince us that his department has thought through the matter properly—with, of course, no commitment because this is not that kind of Bill— and to say that he will ask the experts who advise him on the matter to tell him a little more about it so that, if we return to it, he can then tell me more about it. I am rather uneasy when it is said that it might be inconsistent and, therefore, the clause must be put in. The point is that it ought not to be inconsistent if we have done the job properly.

Lord Fraser of Carmyllie

I shall certainly look again at the matter to see whether the drafting can be polished. It may be that the accusation can be made that we are unduly cautious in the matter, although, as the noble Lord pointed out, the matter was considered in another place. No doubt the draftsman has already reflected on the provision. It is possible that we shall find it difficult to improve upon it. There is nothing of substance here which needs to be addressed, but we just want to make absolutely sure that a continuing duty imposed on the Secretary of State in terms of Section 1 of the 1946 Act should continue. However, there is no risk that the powers given to the Secretary of State or the President of the Board of Trade under the Bill would give rise to a conflict between the two sets of provisions.

Lord Peston

I thank the Minister. I do not wish to prolong the discussion because I think that we have reached a stage where we could continue all night as regards what the precise words are and what they mean. It is possible that the noble and learned Lord would not wish to weary Members of the Committee with the matter and that he may wish to write to me in that respect. Indeed, I shall be happy if that is the case. I shall not pursue the matter at present, but it is one that I should like clarified. We can do it one way or the other: either by returning to this kind of amendment or to one in some other form. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 23 and 24 not moved.]

Lord Haskel moved Amendment No. 25:

Page 3, line 14, at end insert: ("( ) The Secretary of State shall not give any direction to the Authority under subsection (2) of section 3 of the Atomic Energy Authority Act 1954 to acquire an undertaking unless a draft of such a direction has been laid before both Houses of Parliament and approved by a resolution of each House.").

The noble Lord said: In moving the above amendment, I shall speak also to Amendment No. 27. The purpose of the amendment is to draw to the Minister's attention the fact that the Bill as worded is unnecessarily all embracing. At present, the Bill can be used to privatise any part of the Civil Service or other publicly-owned undertakings. All the Minister has to do is to transfer the undertakings into the United Kingdom Atomic Energy Authority and order a transfer scheme under the Bill. Indeed, that has already happened to Warren Spring Laboratories, which were transferred into the UKAEA in 1994 and which are now expected to be privatised under the Bill.

At one point there was discussion in the nuclear review and it was suggested that Berkeley Nuclear Laboratories should be transferred to AEA Technology and then privatised. Another possible candidate could be the Office of Fair Trading or any other government organisation. I cannot believe that that is the intention of the Minister. The purpose of my amendments is to draw his attention to that fact. I beg to move.

Lord Fraser of Carmyllie

I am not sure that I entirely understand what is sought by Amendment No. 25. However, my understanding is that it seeks to prevent the Secretary of State from using his powers under Section 3 of the Atomic Energy Authority Act 1954 to direct the authority to acquire an undertaking in which to vest AEA Technology without parliamentary approval. Amendment No. 27 appears to prevent the authority from acquiring such a company, for what I assume to be that purpose, without parliamentary scrutiny.

If I have understood the position correctly, the approach would appear to be flawed. It would be open to the authority to dispose of AEA Technology without first acquiring a company in which to vest its assets. It could, if it wished, use one of its existing subsidiaries.

What the amendments would do is make any acquisitions by the residual UKAEA subject to parliamentary approval. I do not believe that that is what the noble Lord intended.

My noble friend Lord Ferrers made it clear on Second Reading that Government Division, which will remain in the public sector as the residual UKAEA, is a management and procurement organisation charged with managing the safe and cost-effective decommissioning of the authority's nuclear liabilities. It has no plans to make acquisitions. It is not a commercial business.

Government Division has suggested that in the longer term it might be given the responsibility of managing other civil nuclear liabilities in the public sector. That is a worthy enough aspiration, but the Government made it clear in the Nuclear Review White Paper that they have no plan to move in that direction. It is a possible option for the future but Government Division has to prove itself first.

I may yet not understand the position, but I hope that I have explained what we certainly understand to be the import of the noble Lord's amendments.

Lord Haskel

I thank the Minister for that clarification. The amendment was purely designed to draw the noble and learned Lord's attention to the fact that the Bill is all embracing. However, having placed my concerns on record, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Lord Chesham

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.