British Energy (Hansard, 10 June 2003)

§ Lord Ezra
asked Her Majesty's Government:
Whether the worse than expected results announced by British Energy on 3rd June will affect the rescue package which the Government have in mind.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the restructuring plan announced on 28th November last year is British Energy's plan, not the Government's. The bulk of British Energy's reported loss announced on 3rd June is made up of write-downs in the value of its generation plants. The write-downs are based by the company on the expected future cash flows of the business and consequently have already been taken into account when considering the ongoing viability of the business. Significant progress has been made but the proposed restructuring remains subject to uncertainties, and, therefore, the Government remain prepared for administration.

§ Lord Ezra
My Lords, does the noble Lord recall that during the passage of the Electricity (Miscellaneous Provisions) Bill both these Benches 129 and the Conservative Benches expressed concern that the liabilities taken over by the Government from British Energy should be, as far as possible, limited. and that the provision of other support should be used for the purposes defined. As the noble Lord gave certain assurances during the passage of the Bill, will he confirm that they still stand in spite of the recent worsened results?

§ Lord Sainsbury of Turville
My Lords, I give that assurance. As these are essentially write-downs of fixed assets, they do not affect the liabilities.

§ Lord Jenkin of Boding
My Lords, the noble Lord, Lord Ezra, reminds us that it is only two months since we took the Bill through this House. The Government were at the time quite confident that the sums they were prepared to lend to the company would be sufficient to see it through, provided that a restructuring was approved by the competition authorities and the European Union. Is it not now looking much less likely that the competition authorities will smile upon that help as an acceptable state aid given the enormous opposition from many other people active in the electricity market?

§ Lord Sainsbury of Turville
My Lords, no. The situation on state aid is no different from that which we expected, namely, that the Commission would formally investigate and that it would probably take nearly to the 18-month time limit. That is proceeding as we expected.

§ Baroness Miller of Hendon
My Lords, does the Minister concede that one of the difficulties in the sale of Amergen, which was required in the restructuring, is that potential purchasers are aware from numerous government statements that that is a key part of the financial support scheme? British Energy in that respect is at an enormous negotiating disadvantage. Do the Government see any way around that? Do they have any ideas about what should be done given that that company was always going to be required to be sold?

§ Lord Sainsbury of Turville
My Lords, the noble Baroness makes an important point. That is why, even though the deadline of 30th June when the company thought it would sell Amergen has passed—well, it has not passed but it looks unlikely at this point that British Energy will enter into an agreement by that time—we have not insisted on it. That makes for a different situation where the company is not being required to sell under any conditions but has some latitude which will strengthen its bargaining power.