HL Deb 10 April 2003 vol 647 cc344-8

11.31 a.m.

Read a third time.

Clause 1 [Expenditure relating to British Energy p.l.c.]:

Lord Ezra moved Amendment No. 1: Page 1, line 6, at end insert "for the purposes of—

  1. (i) ongoing operational support of the British Energy company whilst a restructuring deal is being put in place,
  2. (ii) the funding of trading arrangements of the operating companies of the British Energy company should a restructuring deal fail, or
  3. (iii) funding in the event of British Energy being put into administration"

The noble Lord said: My Lords, I am happy to be able to speak to Amendment No. 1, the purpose of which is to define the circumstances under which the financial assistance can be provided to a British Energy company under Clause 1(1)(a). It is a reworded version of similar amendments moved at earlier stages, which takes account of the Minister's comments, notably in Committee on 17th March, at cols. GC3–5, and on Report on 3rd April, at cols. 14–17.

Throughout the consideration of the Bill, we on these Benches and the noble Baroness, Lady Miller of Hendon, the noble Lords, Lord Jenkin and Lord Hodgson, on the Conservative Benches have sought to define the nature of the special package of support to be provided to British Energy in the difficult circumstances in which it find itself. Because of the nuclear implications, it has been singled out among other generators that have also suffered from a substantial fall in wholesale prices. It is therefore important that there be absolute clarity about the form and limits of the assistance to be provided.

The noble Lord, Lord Jenkin, referred in Committee, at col. GC5, to the concern of other generators. I, too, have heard of that concern, especially that the support to British Energy has enabled it to offer electricity to the market at prices that it could not otherwise sustain. I hope that the Minister can deny those rumours. But they explain why it is important that the Bill should make as clear as possible the purposes for which the assistance is being provided. As the Minister's own words have been incorporated in the amendment, I trust that he will find it possible to accept it. I know that the noble Lord attaches great importance to flexibility, but there must surely be some assurance about how the money is to be used. I beg to move.

Baroness Miller of Hendon

My Lords, I support the amendment. I apologise that I was in the House too late yesterday to put my name to it; otherwise, I would have done. We on these Benches and my honourable friends in another place have been concerned that the Bill as drafted was just a little too wide. We believe that it gave the Government scope to indulge in matters not connected with the problem it was intended to solve; namely, to back up the rescue of British Energy.

The Minister, at a meeting that we held recently, gave us certain assurances, for which we are all grateful, about the Government's intentions and their interpretation of the powers that they were taking in the Bill. Amendment No. 1, which has now been virtually redrawn by the noble Lord, Lord Ezra, gives effect in black and white to what the Minister told us. I see no harm in the Government's stated intentions being enshrined in the legislation.

If the amendment truly gives effect to the Government's stated intentions—I am sure that it does—it is to be hoped that the Minister would not feel that it was not flexible, as the noble Lord, Lord Ezra, said, or that it was too prescriptive.

I hope that the Minister can accept the amendment. If he cannot, perhaps he could state in the clearest terms that it represents the Government's present and future policy and intentions.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, I thank the noble Lord, Lord Ezra, for giving the department advance notice of his intention to table this amendment. I very much understand his desire to pin down the Government as to what they intend to use the clause for. I am very happy to make absolutely clear the Government's position.

We see Clause 1(1)(a) as being used almost totally for the three areas referred to in the noble Lord's amendment. Any further use of the clause would be very minor compared to those three main purposes. But I do not believe that it would be appropriate to try to constrain the use of Clause 1(1)(a) to just those three items.

There may be a limited need for expenditure on a British Energy company in other areas. I think in particular of expenditure and pursuance of the Government's support for BE's restructuring plan. We said previously that our financial assistance for restructuring was based on support for nuclear liabilities. The intention is to give that under Schedule 12 to the Electricity Act 1989. That remains the case.

As we move forward in drawing up the very detailed arrangements for the formal undertaking between the Government and British Energy, we are keen to ensure that there are no items that might fall through the net. For that reason, we want to make sure that Clause 1 is still left flexible enough to allow us to fund any small items that might not be captured by Schedule 12. I should stress that we would expect any such items to be small. To some extent, having Clause 1(1)(a) available is simply a precaution. It makes it absolutely clear that we have absolute authority to incur expenditure on a British Energy company, ensuring that there is no legal uncertainty over whether some small item of expenditure fully fits within Schedule 12 or not.

In the end, we may never need to use Clause 1 for that purpose. None the less, the mere existence of Clause 1(1)(a) could have helped to remove any doubt. The company's creditors need to have certainty over the Government's commitment if they are to support the restructuring, and having Clause 1 helps them to do that.

As part of the restructuring, the Government will commit to fund any shortfall in paying to decommission BE's stations. Schedule 12 allows for funding, the decommissioning of any installation the operation of which requires a licence under section 1 of the Nuclear Installations Act 1965". But we want to make sure that nothing slips through the net. We want to ensure, for example, that there is no doubt that funding could be provided for the complete decommissioning of a site, including, perhaps, the cost of dismantling construction on the nuclear site, such as sea walls and office buildings, which have not been subject to irradiation, and where there might be some uncertainty as to whether the provisions of Schedule 12 apply. Rather than get bogged down over a matter of legal interpretation of Schedule 12, it would be very useful to have available the flexibility of Clause 1(1)(a) to ensure that the items that fit within the spirit of Schedule 12 clearly have parliamentary authority. I accept that it is a question of having both a belt and two or three pairs of braces. But, in the circumstances, I think that it would be appropriate.

The amendment would limit the flexibility that Clause 1(1)(a) gives in relation to the provision of assistance to a British Energy company. As I have explained, that might give rise to legal uncertainty at the margins as far as concerns creditors, which could undermine the restructuring plan. We are, of course, keen to avoid that.

I hope that, with my explanation and clarification of the Government's position, the noble Lord will be prepared to withdraw his amendment.

Lord Ezra

My Lords, I thank the Minister for that response. I note that he agrees that the three purposes mentioned in the amendment are the main ones for which Clause 1(1)(a) would be used, and that any variant from that would be extremely limited. Under those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Sainsbury of Turville

My Lords, with renewed enthusiasm, I beg to move that this Bill do now pass.

Moved, That the Bill do now pass.—(Lord Sainsbury of Turville.)

Baroness Miller of Hendon

My Lords, the Bill was clearly necessitated by the unfortunate problems of the flagship company, British Energy. It is not a secret that on these Benches we have reservations about the Government's approach, especially after the Bill began its passage through Parliament, when the immediate threat of administration was lifted. We felt that the Government could have gone back to the drawing board and presented a Bill that dealt specifically with the company's new situation. We also thought at the time that the Bill gave the Government excessive powers.

However, we are grateful to the Minister for having courteously paid attention to the representations made by both me and my noble friend Lord Jenkin of Roding and by the noble Lord, Lord Ezra, and that he has taken time to discuss those views with all three of us. It probably did not escape his notice that the amendments we put down, except for that one today, bore the names of all three of us. We appreciate his efforts to accommodate us as far as he could. We therefore support the Motion that this Bill do now pass, and we all hope that it will achieve the objectives that everyone shares.

Lord Ezra

My Lords, I, too, would like to thank the Minister and his department for the efforts that they made to discuss with us our reservations about the Bill so that they were fully aired. I believe that they have been dealt with fairly and reasonably—particularly after the most recent remarks of the Minister on Clause 1(1)(a). Therefore, we also agree that the Bill should now pass.

Lord Sainsbury of Turville

My Lords, I commend the Bill to the House. In doing so, I would like to thank all the Bill team for their hard work, and all the noble Lords who have taken part in the detailed discussion of this apparently simple, but in fact complex, Bill. It has been a valuable exercise, and I hope that we have been able to reassure noble Lords that our objectives are common to the whole House. We will pursue this Bill with close financial controls.

On Question, Bill passed and returned to the Commons with amendments.